selling off its main internet businesses. what does that mean for ceo melissa meyer? mark benioff on leadership, what is wrong with ibm, and how to win the race for the cloud. ♪ david: welcome to "bloomberg ." stephanie: we tried to say we would give information that will make you more competitive. we have a roundtable that will do just that. bloomberg intelligent economist, and on the market. neighbor, i want to point out and cofounder and managing director of funding circle. if you have a business you want to start, this is the guy you need to impress. we have a lot we want to break

down. first, let's get some first word news. so much.hank you david cameron is making his case before parliament today. u.k. shouldg the extend the airstrikes against islamic state into syria. cameron is likely to win the votes. the labor leader will argue against the attacks. russell senate knew forces a special operations to battle islamic state. defense sector -- carter says they will conduct raids, free hostages, and capture islamic state leaders. they want to deploy special ops forces more aggressively. house and senate negotiators have agreed on a five-year highway bill. the measurable also revised the .xport import bank congress has to either pass a new highway built by friday, or agree to another temporary funding extension.

you can get more on these and other stories 24 hours a day at the new bloomberg.com. futures're looking at gaining a little bit. really little change here. this unchanged look at something you will see across asset classes and regions. expecting janet yellen to speak. take a look at w.a.r. p on my terminal, i am blown up the charts so as you can see where we are headed. obviously, the market expects a thisincrease coming out of next meeting. chances are about 72%. that is something we will talk about in just a little bit. janet yellen is said to speak today in washington around midday. you can definitely wants that here on bloomberg, or check it out on bloomberg.com. as far as european markets, you're seeing the same kind of little change.

especially on the continent. dax is very little change. the ftse is seeing some change. we see some decoupling there as we continue to focus on the divergence between u.s. policy and european central bank policy. the euro, by the way, declining as the inflation rate held at just 0.1% we were looking for a %, which may be more stimulus for mario draghi. matt, i want to point out that the headlines crossing entre'sw, pdg says estate of us is no longer a controlling shareholder. this is a ceo that just last week was arrested, embroiled in this bribery scandal. they are taken action very quickly. i said this man was the

superstar of independent banking in latin america, that would be an understatement. clearly, they're taking action very quickly. so well in such a short time they are trying to not lose more ground. this is part of the much bigger story in brazil that we will come back to in our program. but first, u.s. stocks have been gaining near record highs. anticipation of a rate hike mounts. us, janetst told yellen the scheduled to speak today at the economic club in washington. what will you be looking for? : this is your opportunity to put the final paint on the december liftoff. she can lay the runway today and will confirm it tomorrow. is basically all systems go. the one potential grain of sand in the gears is the jobs report on friday.

200,000ely, we will see on the unemployment rate. if we get a real lousy report, this could make the situation very difficult for the fed to adjust. david: be specific, what number might cause it to slow down? payroll need to see gain a 50,000 or less and a backup in the unemployment rate. maybe even at 50,000 they would go. if you see a really weak payroll number, then things become really interesting. the swings one of very belligerent to deal with which is what the ecb does on thursday. if they cannot with a dovish move it pushes the euro further towards parity. the dollar is really the tightening mechanism. if that happens, and we had the surge in the dollar which is a perhaps a very weak employment report, that may be enough for her to --

is a fed that cares about the currency impact. we saw that yesterday. very weak export orders. the strong dollar is having a real dampening effect on u.s. industry. david: that is why they care about it because there is a headwind. carl: a big headwind, and if the mario draghi bazooka is more than they think that could have problems. stimulus potential? draghi has articulated that they will do more. how much more, there is a lot of details left of the market can't price because we don't know of are getting more stimulus in terms of duration, or size, or all of the above. those details are going to be very very relevant. > the last time we read this level, the fed basically blinked in the first quarter of this year. the fed said dollar is doing the

work for us we can delay. i don't think that is the case now. certainly in outside currency move would be of note. stephanie: one of the reasons the fed blinked as they get additional data every last bit that they get suddenly makes them pause. sam, take us into the real economy. you drive a company that lends to individuals who are starting businesses every single day. what does it really look like out there? across boththis sides of the debate. we operate in the u.s. and the u.k. and europe. economy looks really strong. credit demand is really high, there is huge amount of potential for business. is kind of a different story in that it is so pocketed country to country. demand is strong and germany, but certain parts of the financial sector are very weak. it was a gap developing that

which we think is an opportunity for us. >> europe it is at a different stage in their recovery. we were first in a recession, now this is very evident here. this is only emblematic of the divergence of monetary policy you will see for some time to come. the fed is sensitive to this will stop. regardless oft december liftoff, the fed just wants to get it out of the way. andill be a much slower fed thereafter. the rule for the next two years is 1, 2, 3. a very slow moving fed. i want to share a piece of charles edmonds just yesterday. there still is nervousness. >> should we raise rates are not? nervousness about our upcoming decision. i would prefer to have more confidence than i do today. tolation is still getting

head higher. given the current low level of core inflation, some evidence of true upward momentum and actual inflation would bolter -- bolster that confidence. i am concerned that it could be well into next year before the headwinds from lower energy prices, and the stronger dollar, dissipate enough so that we see some sustained upward movement. so this underscores the importance not just of whether they go up, but how fast. we heard the 1, 2, 3 rule, i take that is pretty dovish. the victory of how we escalate rates at think is a huge question. if you break it down from an unemployment picture, that has been shipping up the well. we at 5% and adding steadily. relatively reasonably predictive. the trauma and -- volatility but -- there is volatility but how

much can you paint as a picture? there is a lot of structural displacement forces. it will be battling one way or the other. basis, core inflation has been grinding higher. i think the big swing variable is what does the headline number do? that really gets down to oil. that $20 oil price call is a huge variable that is a hard thing to predict. oil prices are notoriously very hard to predict. if you do get that in march, what does that mean for deflationary forces? what does that mean for earnings growth? this has to be factored in. there was a lot of unknowns out there that the fed left to deal with. dollar,e talked u.s. and oil, we have emerging markets. matt, what you have? matt: i wanted to show you the

emerging tail market risk. the things a look at that could affect the janet's decision. here are the msci emerging is the asia blue dollar index. the green to the latin american dollar. when china's devaluation happened, this crashed. a weak payroll number, you can see doesn't have as much of an effect as what happens when emerging markets go haywire. i think that is maybe one variable that we have to keep in mind. look at the volatility framework sent august when it spikes up the china devalue, it was a very weak september report that really got them back to normal and got risk back on. the following report was very strong, which support the dollar, the emerging market was a showing that it stabilized.

exhilarated to the downside. what that is saying is that basically this whole thing is so far over the last month and a hat and is relatively managed. you start to see china data starting to stabilize. there are big wildcards other like brazil. it has an u.s. dollar sensitivity. , idman was out yesterday think it was saying brazil could go into a depression next year. that is exacerbated by a strong dollar move. gentlemen, great conversation. thank you so much, sam, we are not letting you go anywhere. we have a lot more to cover. we are talking about climate change in paris. you have to take a look at beijing. the air pollution reached its highest level in 2015. look at this. has on the totist

show for it. he spent four hours a day for 100 days walking to the city with an industrial sized vacuum cleaner. he collected so much pollution he was able to make a brick. he made a brick out of the smog and dust. if that isn't a wake-up call, if this isn't a crisis for the planet, i don't know what is. up next, which aqaba crisis for someone else. yahoo!, report said the board may be discussing a sale of its core business. more focus on yahoo! when we come back. ♪

stephanie: [to "bloomberg -- bonnie: welcome back to "bloomberg ." j.p. morgan chase plans to maintain its performance levels.

we give the banks and advantage over rivals the may cut compensation. ecb president mario draghi discussed another increase. inflation disappointed last month but remained at 0.1%. draghi has been trying to get prices to rise. atcould boost asset prices tomorrow's meeting. the owners at volkswagen a broken the silence. the head of the family that owns the majority stake says the company will get through the crisis. they spoke last night. he, and other family members are speaking to workers today. stephanie? stephanie: thank you. according to the wall street meet to yahoo! will weigh a selloff of the tech companies. -- in recentn years yahoo! his face major pressure to merge with aol,

microsoft, and we're never seen a deal come to fruition. maybe people argued that the only real value in the company is alibaba. year four andn have seen very little to show for it. he was the thing that is interesting. how much worse off would they be if it weren't for marissa and her management team? she inherited a very difficult business. that difficult to say these are her responsibilities. that this is all down to her. having said that -- stephanie: hold on a second, we're going to back that up. why -- what does you get paid? tom: she is paid well. stephanie: so why is she not responsible? inherited a struggling business. it was really passed up by social media and facebook.

they really miffed long before she got there. it is a very difficult business. stephanie: no one said it was easy. shimkusknew the john walking into. yeah, and as you pointed out, they're looking at what do they do. they find a buyer? that is the question, who wants this business? you're getting a whole lot of eyeballs, a billion people coming to the site. of e-mail users. not a lot of growth. is a private equity? or is it a strategic? stephanie: isn't growth the number one thing you need as a public company? a private equity comes in and they can use the cash? the question is, what do you do for the alibaba asset irs said you will not get

preapproval to do it. there was a big risk if they get rejected. david: there are two assets -- $30 billion, $9 billion, that's what a lot of people are in the stock for. you take those out, and basically the business is worth zero. matt: you talked about this, there is a lot of value in the japan business. momver, if you're just a and pop shareholder and you bought shares because you got melissa meyer was going to do well you have been rewarded handsomely. competitors as an index she's outperforming them a 45%. she's outperform them a 51.5%. i could be for whatever reason it is, you are still making money than you would if he just bought an smb index tracker or an infotech. stephanie: i'm sorry, matt using data to look at -- make a

company look at? what day is it. tom: that happened to coincide with alibaba going public. it is pretty suspicious. sam, i want to put you on the spot. stephanie: don't forgive him. david: we don't know what the board is going to do. it strikes me that the one thing we do know is that something has to happen. this does not seem to be sustainable. completely agree. i live in silicon valley, this is a hot topic there as well. yahoo! has some valuable properties, but they don't seem to be able to grow them. it is going much more to social and demographic targeting. having a hard time on it hasn't. i think it is likely bill take a big structural change with these assets. the question is, what exactly do they do? david: melissa's big plan was mobile, video, and social.

has she made progress is for it you can tell in those areas? sam: not my area of expertise, but from the outside it is hard to see any distinct process. david: so tom thomas of the has to happen. you could see a media business come in like a disney. these are named for the been speculated about. at&t, those are also possibilities. we don't think one of the asian asset come in and take over. david: why wouldn't alibaba essentially buy up and spin it back out? tom: they could buy the stock back. they need a tax efficient manner of dealing with that. that would not be very easy if you just went in and bought it. stephanie: is it fair to say -- simply blameless a minor. is there someone out there in the tech world that is an

obvious choice if it wasn't marissa? tom: no. i don't see where that comes from. i think you want that to be folded into your business. and get the caching to the eyeballs. work withid some yahoo!, i have a lot of sympathy. i think they have a amazing assets in terms of traffic. go through people their homepage. in enormous amount of assets. they are trying to do some the no one else is done which is merge the huge pipeline with the media content and i applaud that. i don't think there gotten there yet. she did not that surly inherit a disaster. she chose to leave google, she proactively left, she wanted to take this job. jerry yang is responsible for alibaba it was a treasure. it's not like she walked into a

bankrupt company and was there for a rescue deal. she went there for a huge pay package and the biggest opportunity of her career. i will not say don't cry for me, look what she inherited. i'm sorry, you remain ceo of yahoo!. that is a pretty special thing. let's go to your particular area of expertise. we were struck by the announcement of jpmorgan. a major bank getting a business with a tech lender. what is that doing? sam: we think it is a really exciting bellwether. partnering with another lender. i think it is a first step towards many banks doing that. we are working with a number of banks ourselves. banks that are buying loans, i guess i was a this speaks to a broader trend. they are veryzing

good at certain things. delivering high touch relationships, but for certain theysmaller ticket loans -- there are service providers much better positioned for customer experience. when you're seeing the jpmorgan and other banks is really around getting the best of both worlds. stephanie: if banks when a different position, if the financial crisis is not happen, if they were not public enemy number one, when you came to market would banks have tried to squash you? what they've got to washington and say regulate them? given the environment, and they have low mojo in d.c. -- sam: i think that is a slight significance. the way to respond very tremendously. even within banks there are different responses.

with jpmorgan, there was another article weeks ago where they were talking about limiting data access to service providers. they are aggravating current-account data than using bank lenders.tate i think it is a complex reaction. but i would say is public opinion is not -- consumer preference is not with the banks. it is second only to airlines as an industry. they have done a lot of things wrong in the way they treat consumers. i think this is a huge opportunity for better service providers to come in. david: thank you very much. stephanie: stay with us, we're back with more "bloomberg ." ♪

stephanie: what a beautiful midafternoon. we are sitting at our desk

watching "bloomberg ." we are in new york a bloomberg's headquarters. with us is sam hodges managing director at lending circle. we will be sharing my exclusive interview with the founder and ceo of mark benioff. he is a guy that has a company that is growing 30% almost every single quarters as going public. -- that guy makes it happen. we set them for half an hour last night talking to some leadership, management, going public, activist investment, we covered a lot. david: it is a great success story. is up tohe hard work the lower-level delegates. 1000 american delegates told bloomberg there is a disconnect between calls for action between leaders and what is happening in negotiations. it will try to work out differences by december 11.

on capitol hill, the house ruled against president obama's environmental plan and the vote fell well short of those needed. would the measures nullify tougher epa restrictions on coal fire. the other was set aside if rules to renew coal fire factories. a new study shows high school and college players may risk the as proain injury football stars. researchers studying the brain of 66 minute late contact sports and schools had a third of them with the to degenerate brain condition cte. you can get more on these and other stores 24 hours a day of the new bloomberg.com. stephanie: tom keene now joining us from london this morning. read, welcome. normally we let you lead with your favorite read but today is so special that i'm going to take it over and share.

just yesterday he and his wife posted an open pledging thatbook they will be giving away the bulk of their wealth to charity. frier came out with a very special piece that i will say is a must-read specifically on why this play just so important. take a listen, -- sam, the has been a lot of criticism in the valley. laster, mark benioff was very criticism that critical of his others for been so successful but not being philanthropy.

do you think we will see a shift in the valley with all of these billionaires changing the way they are running their lives? certainly hope so. the motherwell that has been generated is just tremendous. i think zuckerberg making this decision, hopefully that will be a sign that other entrepreneurs can follow. two things really stand out, the first of which is he is planning to give away the money during his lifetime. he's not getting his name slapped in the side of a building at the end of his life but is trying to impact. theas been very clear about areas he doesn't want an impact. i'm hopeful that other entrepreneurs follow suit. it different makes than warren buffett. he's basically giving it away when he dies, and is not been engaged. he is basically said bill gates is great at managing it, this is very different. david: there is another difference, this is not being

put into a 501(c) foundation it is going into an llc that will give money not just for inprofits but also for-profits it will be reinvested. about like what sam said the philosophy of what to do with a good fortune of wealth. one of the great things about a mark zuckerberg is that he realizes he struck lightning ones it does not seem to want to go out and strike lightning twice he wants to build on it. a differentwith it philanthropy. i like the idea it is not good enough to just put your name on a building. a different philanthropist, steve schwarzman with his incredible contributions to the new york public library is another idea of how to nurture a big pot of money. i think they have a lot of merits to them, and could be a new philanthropy. stephanie: by doing this now, mark zuckerberg is living during his peak earnings capacity. he is clearly going to be very

involved. he is not just designating it away. i try not to use the word philanthropy and it is a lot more about impact. we see mark zuckerberg do this, what does it mean for evan spiegel, or the guys at uber? heard any kind of active commitment like this. if you're running a company that has a $50 billion valuation, and mark zuckerberg a single life is, if your travis -- the ball is in your court. sam: i would agree with that. some different where they want to make an impact, but you see a traditional shift from just my company. now how about an impact across all the other things that i do. it is not as innovating the next social app. you can put a change in the world other ways as well. stephanie: you said to the ceo and he talked about the responsibility of ceos today

isn't just about the bottom line . thing,oing the right making sure your employees and shareholders feel great about what you're doing. it strikes me that the zuckerberg's are focused on education. they put a lot into education. we are turning to a different part of the world. more bad news for brazil. we learned the economy shrank 1.7% in the third quarter alone putting deeper into what goldman sachs is calling out right depression. for more, let's bring in julie. here, and its up strikes me this is more than just an economic problem. only makingis things worse. it is souring sentiment even further. the economy is already tanking every day. we see corruption in the newspapers, and political

crisis. brazil is nearing a government shutdown because they will not vote on the new fiscal target. it is bad news on top of that news at this point. david: where is the finance minister? he was thought of the great hope for the beginning of the new term. is he being heard from? julie: he was supposed to save the day. he is facing a lot of problems. he is having a rough time getting things approved. the things brazil needs approved right now are not very popular. you need to increase government revenue, which means more taxes and complex reforms. bestession is not the time to approve the sword austerity measures. stephanie: clearly, expansion is important for growth strategy, when we get news like this out of brazil. back?r does this push you would separate our

general international strategy from brazil specifically. a lot of things are attractive about brazil about the size, their other parts of latin america which may be more interesting for us. mexico, for example, is a country with a strong middle class. ould probably go there first given the structural challenges that brazil has. stephanie: four people on the street, given what is happening there, how does this affect day-to-day lives? lie: for businesses, you see a huge step back and investment. no one is investing because we don't know what the next they will bring. no one will plan a huge investment for two years down the line. you just don't know if the government will be about the economy will be doing. shut, a lot of stores it everything is on sale. we had a huge black november, black week the couple weeks ago.

you can feel the recession down here. david: what does bloomberg cap because of a few risks in brazil? matt: we have a really interesting screen. sovereign credit risk shows from our analysis that may be the blowing theover problems. for example, we modeled the five-year and it should be run 235 basis points. theyf the reasons is that have so much currency reserve here -- about 8%. that is 217 times the debt that they oh compared to mexico and chill a. brazil's risk which is right here is pretty low risk of an actual default. that is not quite as bad as the market is making it up to be. stephanie: you are so optimistic today it is like a whole new world. i don't know who you are. david: the good news is they will not default on their debts

but come back to the basic point. i would've thought given the currency changes that their exports would have climbed substantially. in these numbers, that does not suggest that is happening. can you hear us? i'm sorry, we lost julie i'm sorry. the tech gremlins have hit us. stephanie: i think we have lost -- you know what? we will thank you julia. we have lost her. it is not because we're not paying the bills in brazil. i promise. we will take a quick break. before we do, what of my favorite bloomberg functions aside for most viewed person is -- the producers alike were not ready for this. this is from aristotle. we are what we repeatedly do. excellence, then, is not an act, but a habit. i really like that. i try to give my kids a quote every day. this one might not be a good one

for them but it is good for us. when we return, we've got to share the exclusive interview i had with marc benioff. we talk about his competition with oracle, and his partnership with microsoft and where he is seeing unicorns, possibly dead ones in 2016. ♪

stephanie: bonnie: welcome back to "bloomberg ." todi arabia will listen concerns of other opec members. opec is expected to stick to the decision a year ago to defend market share. the saudi's back that position. of losing tock yell, and it has a plan to fix its endowments. it is the world's largest, but over the last five years he yells funds have been by an

average of four percentage points. now the ceo has vowed to improve returns by revamping the decision-making process and leaning on the rich alumni network for opportunities. on blacke big sellers friday was firearms. background checks set a record. the fbi says it received more than 180 5000 requests, 5% more the black friday last year. urges his20 million have been process since the start of system 17 years ago. that is your business flash. stephanie: it is the fastest-growing software company in the u.s. on target to be the fourth largest in the world by 2016. the company is benefiting from the shift to cloud, which is its signature business. that is why i sat down with the chairman market benioff. i began by asking how the last of the imperfection platform can affect his company. technology itself is

always changing. what will not change for your business is your important relationship with your customers. that is our job at salesforce ,eather in sales or marketing building communities, analytics. in everything we do it we are only focused on one thing which is customer focus. stephanie: when i look at other big tech companies like microsoft. lost it to have groovy. everything is about disruption. about separatists go, if you are a mature tech company like a microsoft, what would you do? realize at theto world is really changing. you can see that is walking around the streets of new york and talking to our customers. the conversations are radically different in this post 2008 most prizedthe commodity is growth. every ceo that i met with today wants one thing -- more growth. they know if it will not have more growth the bustling else

which is an activist shareholder. when they don't have growth they don't have market capital improvement. for is a serious issue everyone of the ceos. it does not matter what industry you're talking about. they all wanted this. my advice to them is a very simple -- let's talk about what is your vision between now and 2020. what is your vision to connect with your customers in new ways? what is your customer growth strategy? stephanie: we have seen oracle start to do well. is that a real threat to you? marc: we are not about the cloud, we're all about customer connectivity. stephanie: your about the cloud. been crystal clear about the future of technology. we have done a great job using the cloud to grow our business. ultimately, our sales force is not about the clown. it is about the number one

market in sales, service, customers,building customer analytics, and customer apps. also the internet of things. that is our focus. the cloud is important. we are one of the very largest of the enterprise cloud providers. it is the vehicle we do that with. no ceo that i meet with today to they ask me any questions about the cloud. they don't care about the cloud. it wants to know how they will grow their business. that is all they really care. stephanie: all of these buzzwords that make us feel like tech is in a bubble, the internet of things, importance of social, being a disruptor, they start to feel gimmicky. when you think about the ultimate disruptors are, it is activist investors. you are a founder and in operations guy. and activist gets to commentary what to do? : back in silicon valley, we

are the dreamer of dreams. stephanie: that is nonsense. it is giving silicon valley to much credit. spacethis whole country's on the concept of ideas. that is what we do. that makes the united states great. that is what makes silicon valley great and different from everyone else. what i love about my job is creating value. i have to tell you with those dreams come from. you can be the dreamer of dreams, but at the end of the day the dreams come from the customers. the reason why i come to new york city or any other major city is to listen. listen deeply to our customers. youhanie: but the risk for in this customer experience, what do all customers want? low prices. you have gotten pressure before that your margins aren't high enough. if you want to deliver your customers, they don't want to pay premium prices. our customers want to pay premium prices were premium product. we havend of the day,

deliver world-class customer transactions, incredible uptime, reliability, availability, security. that is the very core to our business. is thebasis of all that customer relationship itself. that is the key. it is not just about low prices. competitorsee, our all price way below where we are. if you want a low price product, you can go somewhere else. stephanie: there are so many businesses that talk about who is on their board and all the money they raised. does this mean we will see a whole lot of dead unicorn to 2016? saying this been for a while, the unicorn thing is not a great. it is not that these companies are not a worth this much money, we don't actually know. they have manipulated the private markets to achieve these valuations. i don't think a day goes by

today that i don't get a call from a company raising money at a billion dollars or more. this is just unheard of. -- it isn why this is a self-esteem issue for these entrepreneurs. if the company is not worth more than a billion dollars -- when salesforce went public we were i think between $100 million and $200 million. it has been an incredible run salesforce,15 for but at that level of market capital i'm like wow, that is just amazing. i am not investing anymore and companies with a billion dollars or more valuation. i just don't believe in that unicorn theory anymore. them,ell you what i tell i say if you think you're at a billion dollars then get out in the public markets. you compareow would

it to 1999. what san francisco is like today differencerc: the that those companies were going into the public markets ever getting rationalized. for good or for bad. tot is what really needs happen today. you will some great companies emerge. we were just talking about fitbi t, i was an early investor and it is fantastic. the market rationalized fiti bit. earningsas to have calls, he must run his company in the same way that i run mine. that is my advice to the other ceos. they need to get out of the market and run their companies with the right level of governance and let the market rationalized these valuations. stephanie: how much easier with your job be a salesforce was private? marc: i don't think easier at all, i think harder. being a public company is a good. my friend michael dell might

disagree. and our case, it was good for us. it forces us to make sure that we keep the cadence -- you talked about we are number one in sales force automation, customer service, we have to keep our eye on the ball. there is no reason why these companies who claim to be worth billions of dollars to stay private. they should get out into the public markets. the unicorn mania going on is dangerous. unicorn mania. i can talk unicorn's day. what stood out to you? marc says it is all about the customer, but isn't it that way for every business? sam: i think a lot of business is rely on their position in the market. they make permanent on the damages. what we firmly believe is we can be the first point of contact for small business customers looking for the credit they need

to expand. one of the things that is expiring about what marc benioff is done has built base -- a get access you can to customers and deliver great experiences. we are a similar approach to financial services. stephanie: one of the things you both have in common. marc has a way of making even the smallest company feel like they are a big, important -- what's the word and looking for? significant force in the universe. that matters. you want to be the best in class. he needs the ceos of tiny businesses and walks through what do you do if and activist investor comes your way? how do you avoid getting disrupted. that is fantastic. that is customer service. david: to stephanie's point, the

big banks missed out on this? earlier to customer service for stuck the big banks figure this out? them are.nk a lot of i think banks and many advantages, obviously the ability to get low costs and low structured lending. for many lines of business, particularly smaller lines of , that is very hard from a cost perspective to serve those customers well. that is where companies like funding serco have an advantage. " our hybrid approach and high-quality customer service. there is a huge opportunity in front of the business, it is global and we want to be and are becoming the first point of contact for a small business customer in the markets where we are. we think there is a lot of

headroom beyond. david: would you enter into an exclusive arrangement with a bank? sam: our vision is to become part of a financial structure. different banks have different regional footprints and bring different goals with regard to how they're serving the customers. we are not currently in any talks with a bank to anything exclusively stephanie:. absolutely great having you want today. he is the cofounder of funding circle. we have more to cover, two more hours of "bloomberg ," including more with mice was of interview with marc benioff. mike platt isn't bp today. ♪

stephanie: changes the london -- changes in the london strategy.

puerto rico may have more problems even though they made their last payment. what it will mean about the other 70 billion they have waiting in the week. ings. ♪ welcome to the second hour of bloomberg , it is in :00 -- it is 8:00e a.m. right here in new york city. ining us.u for jo cameron minister david that the allies must answer the call. real. threat is really

we work with our allies to just grade and destroy this threat do we go after these terrorist or do we sit back and wait for them to attack us? >> a 10 hour debate is scheduled. to his is expected request. john kerry says he told members are ready to step the fight up against islamic state. he said several alliance members will be bringing more to the battle. the u.s. is one of them. a new special ops unit will gather intelligence and capture islamic state leaders. , there's going to be in agreement on climate change at -- and it will be the delegates that make it happen. what is actually happening in negotiations brady can get more on these and other breaking

stories of the new bloomberg.com. thank you. we are seeing futures turned down. very little change. ahead of not only janet yellen -- speaking,. we get the adp report out. also watching the actual cash trade in the major indexes. look at this record close. we are not far away from that. pretty lofty on the dow. we are still a few percent away from that. we are close to those highest. s. it has given up a lot of the gates as we get closer and job member.e

the euro has declined and you can see it is down again. the client has really lifted european stocks. we look at those versus the euro. the stock goes down the euro goes up. on the bottom of your screen, if you type this into your bloomberg terminal you can see all of the charts we use on your own screen. >> took an optimism pill. i am telling you. >> yesterday we broke the news wouldedge fund lou crist

close on operations and would return $7 billion to client and we want to take a deeper look at what these changes in these headphones -- hedge funds might mean. lisa abramowicz is here. tell us what this says about the larger picture of hedge funds. lisa: is awake of the crisis you saw this influx of cash. mark is saying that we know you just got her and buy a portable credit crisis, we will not let that happen to you again. we will hedge against your downside and provide you outlook. that has been increasingly difficult to do. frankly they have not accomplished it. stephanie: is it fair that they are simply saying that across-the-board hedge funds are

not delivering? >> there are a number of friends that have hundred performed. if there is an unfair commentary think it is the timeframe in look at these. they will perform a shorter time frames. there are other strategies that focus on changes. that takes time. the michael really focused on derivatives. smartwas looking for the bet that is becoming harder to execute even the fact that indexes are not, whether it is credit default swaps on corporate names, whether it is interest rate swaps versus the benchmark rates.

it is hard to capture that differential. >> i do not know the fund or the founders but something that is evident is that they have turned out feepaying capital for her minute capital. stephanie: when you saw this headline, when you read this, walk us through how you interpreted it. >> i said someone else's deciding they will manage their own money versus outsiders money. you will not ready the revenue. economic feastn you should do something else for a living. that means the prospective returns by taking less liquid why they sayplain we do not want a liquid strategy or short-term investor money that is subject to redemptions and potentially leaving at the very time when you want to deploy more capital. what that tell me is that in that strategy, which is consistent with what we're seeing in our own, the dispersion between returns or

liquid instruments is the widest i have ever seen in my career. stephanie: would your life he significantly easier if he did not have investors to answer to? >> i love having investors to answer to. [laughter] of course you will say that. they are two reasons. having outside capital which is sharper and better because you need to perform. stephanie: if it is your money, it is to perform. it is better than losing your own. >> and is harder to lose other people's money. and if the challenge that a lot of investors are facing, when they see and attract opportunities how long it will take to realize fair value and will i have the staying power to see that through? we're seeing enormous

opportunities. the best we've seen perhaps ever for liquid opportunities relative to the return. we were talking off-camera about the price action that you see when something goes wrong. it is severe. banks are not taking the same level of risk, but more importantly the investor community is saying i'm not begin to provide liquidity until i can get this assess at a price that is extremely attractive. >> because so many hedge funds really were trying to almost -- promise that safety, they are not available to pick up some of those credits. you are seeing freefall in some distress credit you are seeing nothing happening to the companies. this probably is why. they are all trying to provide that liquid strategy. stephanie: how do you make good

decisions for those investors? you have to -- match your investment strategy and your liquidity. liquidityirly onerous terms in our funds because it takes time for us to work out sometimes we will hold an investment for able to timeframe -- multiyear timeframe. it is still a very interesting investment. there are pockets of that we think are interesting. is something in portfolio for an extended time it is the that matches that time horizon for stephanie. stephanie: how do you care that with more investors wanting more look entities. >> don't take that money. you choose to be small. stephanie: it does not mean

giving money back it might be that he does not want that money. mattt: investors were not allowing him to make the invest us that he wanted to. if you look at crest in the terminal you can do this with any funds into, we can see his asset allocation is a huge block toward energy. 30% toward energy. you might think that is a good place to get in and you want to double down while it is long. but investors do not like it is one of the reasons they. so much money from the fund. matterhis a cyclical with respect to hedge fund alternatives or is this more of a structural long-term change we're seeing? >> there are a number of points at play here. the first point i would say is that without reference to blow across specifically, nighttime -- 90% of the time, it is not

because they want to is because they have to. they were facing massive withdrawal redemptions. all contracts are not alike. charge to a 20 and your people doing a thousand different things under that rubric of being a hedge fund. it is true they had a tough year last year for the more traditional or main street funds are having a reasonably good year this year. that is where we are. i do not think hedge funds are going out of business. there will always be a few that do not work out for one reason or another. those energy holdings have a rocky road given what has happened in energy. the rest of the energy will go on. economy the global going sideways, can you heard to a 20? -- two and 20?

>> it is hard in a low return environment to justify two and 15%ecause if you're earning across returns you can pay the 20, and life is not so bad for the investor. if you're any 4% gross returns to off the top goes in the two and then 20% of what is left goes at the investor has 1.5% and is not so good. it is much harder. stephanie: result of money going? are you trying to take it? >> no. cash now we have sizable out onto stork norms. we do not need additional capital to pursue investments of the market. stephanie: do you agree with steve that when you see a hedge fund designed that we will give investor money back that there is a problem? others have been because of

the family office rules that went into effect where the either had to register with the sec or give back all his money. given how little outside money he had it that point he chose to give it back. that is a different scenario. related investor who i think probably is closer to that 20% with a smaller group of people who said i had enough he has had a rocky time when he give the money back. he has done well since then but he just needed to do that. you have to go case-by-case n--re you this is a sign of the times -- stephanie: this is a sign of the times. >> for every one that is closing there are some that are opening. is hot and and enormous. money is not leaving it.

>> is not just coming in quite as fast as it was really 50 the total investment in hedge funds it is not going down. stephanie: it depends on what kind of hedge fund. are a lot of different strategies relative to value. it have been leveling off with respect to the total assets under management as well as a slowdown in inflows. they had a good story about how the hedge funds are always -- poised. stephanie: you live in a know it. what is the answer? wewill see inflows, will see outflows. investors have their own views as to where the best places to allocate capital going forward in different strategies will see flows at different times. that like they is markets in general those flows often lack performance as

opposed to lead performance. if i were allocated to it by now i would see where are the managers that have historically performed well, not had a great last 18 months, and still have what it takes to perform. that is probably the best place to be in allocating. the are some spectacular managers that had a very difficult to thousand 15 that if i were closing my fund and allocating my personal money i would be happy to have the management. stephanie: thank you for joining us to w. we have the number. give it to us. another sign in favor of janet yellen and the fed raising rates at the december meeting. w.a.r..y went into the to look at the probability of a month. it has come down to present as first futures with the futures market predictions. jamie is telling me it takes 10

minutes to update. i will check on that. 217 was the actual number. -- 217,000 with the actual number. we got a revision of as well. we got the 10 year yield. a spike in the 10 year yield. divergence is the new disruption. one of the keywords to focus on. stephanie: that was invented in silicon valley five years ago. i want to talk rico. they paid their bill. is holding off a default

tiny island house $7 billion and will redirect cast budgeted to repay bondholders. you are one of those bondholders. hasr main electric utility been an important holding for you. tell us about yesterday. paying yesterday does not solve anything. >> they make statements that they can't service their debt. if you have a mortgage any go into a bank and say i want to increase my mortgage but i cannot repayment it is unlikely you will get a test to increase your borrowing. what puerto rico is facing is a need to do a host of different things. there is a great opportunity in puerto rico to restructure the way that the island covered they taxso and that themselves with the way they approach development and new business. amazingico is a really

untapped resource that should be attracting a lot of capital. it is very difficult to attract new capital and investment formation when you are approaching a debt crisis from the manner they are approaching it. >> everyone is talking about restructuring. extending maturities of the everything. they are talking about fiscal reform or governance reform. i'm not sure how they can really address the underlying problems. >> that is absolutely fair. need toa lot more they do it if fundamental way to have a more viable economy. otherwise restructuring the debt by itself will not matter. greece.ico is our the amount of debt and structural problems they have are really enormous. i do not know that amy restructuring without some help

from washington and additional resources is going to be viable to matter what they do. thate structural issues they point to are important. tax isan 60% of sales collected on the island. they have certain real estate taxes based on assessment from the 1950's those types of things are the problems that greece faced six months ago. where puerto rico is different than greece is that the stock of debt, the amount of debt they oh per person is less than the lowest state when we fully load what somebody in alabama or wyoming owes per capita. even adjusted for income they are lower. are not obligated to pay any of the national debt. they have to pay federal income taxes. frankly, if you look at a pure

bill he is trying to get equivalent treatment under health care payments for national healthcare. think there are some things than it be adjusted as well. when you adjust the amount of debt that everybody owes, making an apples to apples comparison, there are the lowest of any state. it is a willingness to pay problem. >> it is also a leadership problem. leadership in terms of puerto rico. what will it take to get the leaders to step forward and address the underlying issues? >> i think what you need is someone who is willing to say there are certain problems and issues that need to be addressed and fixed as we are beginning to see that an iraq might affect parties or candidates, but there are candidates that are running as office in puerto rico

relates to what needs to be done. what they need is a dialogue about what pursues those things. stephanie: in terms of a restructuring, compare a sovereign situation to a corporate restructuring and the ability to make changes happen and get this done. >> in the fundamental economy? stephanie: in making those changes made the ability to affect oneself up by your bootstraps and save these are not changing we have to change them. everything happens with a lot more easily corporate america that in the government. never let a crisis go to waste and this is puerto rico's opportunity to take the crisis to the people and say this is what we need to do. the other way this will play out i suspect, is a form of conditionality, similar to europe. what whoever is going to provide some resources to puerto rico says i will give you those but you need to do next, why, or z.

it will be a capt and mouse game. moment to make these structural changes. it will not happen in good times. in good times nobody was to do anything difficult. an interest in this because of the blonde interest holders. let's listen to what he had to say on the subject. >> there is a deal on the table right now to bridge the way that bee business would structured for payment. he wants to go to washington and say i need chapter nine and i cannot make my payments. and talking with him yesterday we asked him specifically would you be in favor of federal lord that would take over? he said emphatically yes. as you said the governor keeps saying i will not pay my bills. >> there needs to be a nonpolitical entity, whether it

is a ford, whether it is congress, someone who is not elected by the pew were going to be directly affected by these changes. it needs to make this difficult decision. no one was to move to an environment where 100% sales tax has been included. you need that type of independent oversight to make the necessary changes to the number-one thing that puerto rico needs to do is move away from talking about harming those who left the money. most of the people who holds the bonds in puerto rico remains individual investors, either directly in their account holdings or through mutual funds. those investors are taxpaying americans who live in the continental 48 states and are being asked in essence to result the bailout as a of debt restructuring. i cannot not know that that is the right approach given that we are all citizens of the same country. want to throwyou

in the tell, can you get out of your position? >> absolutely. stephanie: who is the buyer? >> when something is true to get the size of prices and with the second letter he the buyer community is going to be distressed funds, no question about it but for every type a distressed buyer buys an asset and $.50 on the dollar there is 100what who bought it at cents on a dollar who is crystallizing the loss. it does not mean that you get to save his acceptable. you are causing enormous and irreparable harm by approaching the problem this way. it will leave a longtail problem for puerto rico to deal with. stephanie: we have to leave it there. we need to take you to matt miller for a little futures and focus. matt: thank you. after that number i want to looks physically at gold right now. fernandez lowest level since 10

-- hovering at its lowest level since 2010. joining me now to discuss the next move is the partners from cme. what you make of that number and what do you think of the move lower? correlationng, the we have coming off friday tends to jump around. over the long-term it has been pretty good. i do not think you will get the kind of miss on friday that would derail plans for december 16. in a speech today they actually admitted some nervousness about this decision. you're still seeing dollar strengthen the correlation between cold and the dollar index that has crept up a little bit. it generally hovers around .65 edge of the 2.67. given weakness in the euro, given the ecb doing work julianne moore easing and the fed tightening there is nowhere to go for gold but down even

with those extra short you mentioned. matt: how much u think gold could go? >> i think 980 is a level through 1000 that you think investors will come in. matt: thank you for joining us. more bloomberg right now. ♪ sure, tv has evolved over the years.

it's gotten squarer. brighter. bigger. it's gotten thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. >> welcome back and with us for the entire hour is the will and advisers chairman stephen reiner.

they have agreed on a highway bill that would allow the info to sellt bank overseas. the itinerary general of illinois once a federal investigation of the chicago police department raided that talk about problems. back to you.

matt: take a look at futures right now. we just got implement figures that show u.s. firms added compares to, that estimate of 195,000 jobs. or more i want to get to the u.s. economy and to the european economy and talk about this divergence, this hot new buzzword with our chief economist in today's morning meeting. an investor in both economies. you know them better than anyone i can think of. how do you think this divergence is going to affect each other's economy and how long will it last? policy withe is a the fed raising at the end of this month. the ecb taking additional expansion in market policy measures this thursday most likely simply reflects the

the cyclestages -- the economies are at. the u.s., despite the cycle rather sake is in recovery. in other areas there are significant underemployment of resources. inflation just came out today. , theynflation below 1% are undershooting their targets and they have the most to deliver. divergence will take place. it will do for the dollar would be kind of divergence does it dollar strength will beat everything else. the euro will weekend. matt: we had a chart earlier suggesting that emerging markets is something we should be wary of when raising rates. hattie we think higher u.s. rates are going to affect economies in asia and latin

america? >> they are clearly more formal -- vulnerablele and fragile. this is the most flagged, the most anticipated rate increased in human history. madepreparations can be will be made. i do not think this is going to be a lot of attempts. there will be some discomfort in turkey, brazil, and the worst afflicted emerging markets. but this is not -- there is no alternative. the u.s. has to start raising rates both for a dual mandate and also for potential reasons.

matt: one thing we are lacking in the u.s. is inflation closer pledge rate. we saw a number that was very does waiting if you're in an inflation fan in europe today. how do you -- 20 make of that and how big will he have to go now? >> he cannot do it alone. drive then basically extreme down through a dense mechanism. but globally there is a zero sum. the u.s. will be supporting disinflation. there is no solution. mario draghi needs help from the fiscal authorities in europe. undershootinge her suck the inflation target is a reason for going slowly. still some work to be done.

will nevertheless start the process and then go to a notd gradually very high level. they will see 2% before they have to cut again. matt: chief wife. > -- thank you. >> oil is down again. this comingets friday. but there is little hope that they will cut production. the outlook for 2016 is weak. joining me now is the managing partner of cushing ashley -- asset management. welcome. it is good to have you here. before b alking a 4

about boyle going to $65 a barrel because there is a natural need in the nation and modest growth to make it happen. today in the financial times there is a piece saying the opposite saying the world has changed and it is never coming back. help us. >> he is a smart guy and his business very well. his analysis look a lot closer to the truth. a littlet of balance bit. it is only about a million , and at current prices, nobody can make money paid we think the numbers are 200 billion underinvestment right now. the projects, which may represent 6 million barrels production that would start to day and come next for five years

will not be there. this window sometime and 17, 18, and 19 is the first time in 15 years that it worries me because we are not going to have enough production. we did not have investor have enough. that it isnce is faster for you can turn around faster. but it is just a model. has never happened before the prices have gone down in the oil part of the shale play. we do not know how fast it will spawn. the underinvestment for a long time is going to come back to haunt us. 1980's and they had 10 million barrels of capacity. nobody thinks they have any spare capacity at all. the tworetty close to big point. if we can demand continuing to increase i think the markets are little wrong. we see demand growth in china. to be very strong.

the u.s. has said the best gasoline demand in 18 years. >> what does this mean to you? we invest a lot in the energy sector. we have a dog in this fight. we have certainly been on the more bullish side of the argument on oil and continue to be for all the reasons you said. the lower prices stay for longer the bigger the increase will be later. the number of capital prostitutes -- project will be canceled. the supply demand analysis is very small. the oakley access we put on there is a bunch of unknown. the protection of the moment is going up to production at the moment is going down because the world were a million barrels a day will make a difference. stephanie: take us into the terminal.

in terms of m&a what could we see happen? matt: i have been playing around with this and i put in the entire oil and gas universe. maybe i included too much. i like my drillers, integrated. is the volume of deals green is the volume count. we have had people even the past but by now it is pretty heavy as far as volume. deal count is also coming down in q4 because we are not through that yet. nott looks like this is peaking as much as you would have affected. stephanie: we have not said demand out of china.

a they put out that they had deal. it is up seven point 9% rated films from the teapot refineries and it comes from oil for their paper chemical plants. from the big picture, it is good for economists to say the economy in china is slow. it just has not happened. our job is investors is going to say here is the truth, here is what is really happening. there this where it is on the demand side. happening is a lot different in the m&a. when things go bad it takes a the bid offered to spread. they think it will hit 50 and it is march 20. it is a mix for david. n extended time frame.

your reserves are not that, you'll have to see on the upstream side a letter deals that is finally starting to get narrow. i think all of the major independence will likely be bid. rumors about apache. i think all of those will be in play in the next couple of years. the oil service business, massive good validation -- consolidation. he will end up with just a couple of people. the business we're most involved in, which has been incredibly seen ave, you just massive deal where energy transfer but -- but williams. lots of people want to be in areas. they have not been able to do it. but the stocks have gone down and the people want to buy people -- stephanie: instant bloomberg

question, you are year. natural limited partnerships are getting killed. what can the future before these? >> for a vast majority of partnerships this is toll road business. $100es not mean that it is or $40, but the market. there are times in the market where good news is good news and bad news is bad news. but sometimes good is bad and bad is bad. that's where we are on nlp. two datae taking a points on those who are close to the wellhead and having issues and extrapolating to the companies that have no exposure. amount about fair mergers in the positions. do you agree with his analysis 't seen nothing yet? until the buyers

and sellers it back in equilibrium that will not be enough buying and selling. things that effectives will be one of us to the fed, and then projected declines, and we will see fewer tools over the next couple of years. >> we're talking about production in the u.s. that might decline one million barrels. i will give you that. a lot of that has already said. if you look at the four major reasons, it is going to be primarily the highs on the railroads. two thirds of production in the railroads will cost you $40 to get that to st. james, louisiana, energy transfers, it will cost you five. capital markets in

general, the cost of capital has gone up. it has to be less good, but it is not like the f street and we're cutting distributions. the rate of growth is going to change. stephanie: great to get your thoughts. those who have the positions marked at 50 when they are really 20 and getting real may be if they were actually women who had this position. just say. ing. the founder and managing partner of cushing asset management. before we go, this one is from matt miller because he's being so positive. i want you to see their new camaro. it is trying to take down their archrival, the ford mustang. enoughelliott was lucky to test drive it herself. , ands a corvette engine

can reach 100 and 60 miles per hour. the base cost, over $37,000. totally worth it. anyway? i never thought i would see a camaro $37,000. >> i am a corvette guy. it is nice to have the corvette engine. not a sports car though. stephanie: we will have more of my exclusive conversation with the ceo and founder marc benioff.

stephanie: welcome back to bloomberg . salesforce took a stand against

indiana's religious freedom law. mark any of said he will scale back his 70 investment in the state and promised relocation packages if the law is enforced. i spoke with him last night and asked him about the changing role of ceos in today's society. >> i think that the ceos today are as important as political leaders. likethey have a role political leaders, they have to stand for something. i think this is very important. when things happen in the world that you do not believe in, you have a responsibility to come say i do nothe believe and not because it does not support my employees or customers. month.this with us last stephanie: why did you have to do this exercise to write things? >> mostly we were, but we were not to the kind of very tip of

portion we had to hold ourselves accountable to. everybody in the world has an hr database, and they all know the names of their employees and their salaries. can you say this e-mail in a public stage, i stand for the keyword, equality. i stand for equality. give to corporate headquarters like i did today and you walk into the full towers and there's always a plaque close to the elevator that says this is our values at this company. integrity, honesty, hard work, team play. i do not unique that have the word equality. we have a call to arms for ceos that it is time that corporations add to their core value system, the core value system. the word equality. if we have an hr database where we have everybody's name, and we know how much everybody has a

movie is a fun at -- we hit a iston that says everybody paid equally and we stand for equal pay. we have to fight for the rights of your workers. as we see different governments them athe world, we saw the rfra. you have to say we stand for equality. we are the largest tech company in indiana. and the governor says i am sorry, but we are not going to ,et this class be protected then we have to say hold on we just have to stand for equality and i think equality is one of the next great transformations that they have to make. stephanie: marc benioff has a long laundry list of things ceos need to do today to be successful. do you think that has changed? hasn't simply been about the bottom line?

when you talk about the boxes need to check off, that is a lot. >> there are those out there that want to make more complicated in the sense of asking corporations to make a profit or whether does social responsibility or inclusive capitalism in terms of high you take care of your workers. there is a lot of discussion about that now. if they -- it has made life more complicated. stephanie: hasn't made it better? >> i think corporation should go out and make the most money they can and is responsible and ethical way. let other people figure out if we need to redistribute from one group to another. we do not have too many different things to think about. our corporate sector is one of our great strengths in this country. we want to nurture it. that said there is always things to be done in terms of better governance and there are too many times when it is friends of on the board.

there are a number of things that should be done to make corporate governance and little bit better. stephanie: given that you can pursue the american dream and you can go on to become a billionaire. is there not some responsibility, especially at a time with so much income inequality, to have a real responsibility, more than just philanthropic giving? >> to do what? to pay your workers more? stephanie: that salesforce, part of all employees job function, they need to be giving back and doing community service or you do not get to work there. >> i wonder if the answer is not the quality is impressive. is someplace where the two come together. that is what america has been founded on a is good for the bottom line as well. that is what we need. stephanie: why wouldn't every

ceos go to the attorney database and make sure every young tony is on the right side? >> that is just common sense. stephanie: i have not heard gabriel's there was. just heard anybody else do it. times.do regular stephanie: stand and eight podium and say i pay my men and women exactly the same for their job function. >> is there a car in your future for christmas? that is what i want to know. the u.s. sales are racing toward a record pace in november for automobiles. i want to get your take on these great numbers that came out. getting around it. we had in november of the record month for car sales and we will do over 18 million this year.

it is extraordinary. the thing to keep in mind is we headquarter years -- we had four years of the rate of car sales below the replacement rate. the age of the fleet was getting older and older. dustin is nowhere near what it was before the financial crisis. they cansk whether afford the cars they are buying, more subprime loans. need to replace the car and locus prices just make them all that more enthusiastic. >> these are some artificial of theon here because prices. >> it creates what you just said

. stephanie: have you described auto sales? matt: the perfect storm. easy financing, cheap gas, took second great mpg, and 11-year-old cars in your garage. stephanie: a perfect storm. >> we never would have predicted we would be in this position. stephanie: extraordinary. only in america. thank you so much. morell be back with bloomberg in a few.

>> we are now in 29 minutes and from the opening bell.

stephanie: good morning. >> with us this morning is the founder of an activist hedge fund specializing in small fund. a former high school debate champion. we're delighted to have you. began how about the first word? >> the attorney general of illinois was a federal investigation of the chicago police department. that would widen the controversy . he fired to the police superintendent yesterday. house -- secretary of

state john kerry met today montenegro. retaliation will be considered. matt: take a look at the chances as far as features are concerned with the rate increase in december. , it puts the final nail

in the coffin. the number may be a bigger deal. of as year yield spikes that came out better than expected. a batchelling off in that she is decided her. -- in a batch that she is decided. eric: it is time for the five stories that matter to markets.

the spinoff plan is simply too risky because of potential tax cost. you are an activist and not engaged in yahoo!, correct? start small-cap and eric: board went room small-cap. his activism good for yahoo!? >> the best thing that has happened has been alibaba. if you look at the track record, there really has been no organic valley creation other than growth in the alibaba state.

it has drawn so much attention, and they have focused on the proper monetization. doesn't that look awfully good right now? stephanie: hindsight is 2020. it is easy to say that now. microsoft of $1.443 on the table. inevitable that will break it up in one form or another? it is not just alibaba, but also yahoo! japan. we could probably maximize the volume of the department with his everybody is focusing on right now there is significant tax issues is simply that tax leakage will be an argument for giving it together. if you add them all out, the parts should be worth a lot

more. brazil's btgaround factual continues to partners have taken control of the largest independent bank away from andreessen in the wake of his arrest. his been replaced by marcelo. thehas sold its stake in biggest hospital chain to shore up cash holdings. the main operating subsidiary was cut to junk status by moody. he was a really high flyer in latin america. stephanie: everywhere. universe, the highest, wouldn't you say? >> there were a few big fish in brazil, but he was certainly among them. --phanie: the above the think about the kind of money he made. erik: buying it back for a fraction of the cost is how he made all his money. if you look at the situation in

brazil, i do not know how much you care about banks, but at what point do you go poking around for volume? the unitedt only in states. they are above my pay grade. [laughter] stephanie: or below depending on the way you look at it. [laughter] citigroup says it is not making any changes to the bonus pool this year. jpmorgan says they are doing the same. the changes are dependent on market performance in december. the chance to push for more money. is different than we have seen in other use. but the difference is it usually has been universal. banks are saying the same thing except now those european banks that are saying get prepared for zero or maybe less, how do they survive and thrive when jpmorgan saying we aree

strong where we are? >> flat is the new up apparently. i think if you step back, even before any just look across the the morganook at stanley news. look at the blue crest news yesterday. the cost of regulation, the cost of doing business, the charges on equity capital there being placed on financial institution or going up and we are seeing multibillion dollar all saying it is too expensive to do business. erik: i want to play devils advocate for a moment. why not be more ruthless with these pay packages? jpmorgan keeping is the same, citigroup giving at the same. there's different stuff happening because they do not want to lose their people. where are they going to go? stephanie: they are keeping the overall number the same. that does not mean that they will not pay under -- my point is that if you

-- thehe call for a po comp ratio down overall i no caps off guys are being rewarded in those bringing in revenue are being given something else. you bring the overall ratio down the shareholder wins. if these people do not have places to go, pay the top performers but -- stephanie: they need to change sentiment. makes have been getting enough for years. they want to hear cooperation is not changing. they want to say that the bonus full is still strong. they need to keep their mojo. we need to have a longer discussion because there are answers to what you say. it,ou do not really play you should get rid of the people anyway, because you do not all you then. talk about a defeatist attitude --

>> the dollar is where we are going. the dollar is on its longest winning streak since march. influential strategists found alarm will potential for a pullback is growing according to hsbc. three rounds of similar magnitude and it with 3% downturns in march, june, and august. how exposed are you to the dollar? youruch does that affect investments? >> very little. this person when you adjust for waiting and business model. --iness that do companies that do business abroad are also down. king cole is under siege. at least 500 institutions have

avoided fossil fuel investments. more than double the number that had committed a year ago. his investors big for a great deal of money. more than $3.4 trillion in total. pledges, they will not surprise you, they coincide with the climate change talks. currently invested in companies , they arebusinesses termed the dirtiest forms of fossil fuels. this is activism by another name, or maybe the original activism. >> a different type than we do. i will make an economic point not a political point. it's an odd time. would we be going more long on green energy and negative on fossil fuels yemen where oil in grass prices are, there is one

reason. if we were to compare, and we will, compare returns for the s&p 500 fossil fuel free index versus the s&p 500 energy index versus the s&p 500, look at that. fossil fuel free if the performer today. i find that to be surprising and a good investment strategy for the moment. sayresident kennedy did not do not go to the moon based on the price of oil. that is a longer-term issue. i like that. those of the five stories that matter to markets now. stephanie: next, we are 19 minutes away from the market open. we have a lot more to cover.

stephanie: welcome back to bloomberg . here's your latest bloomberg business flash. says fakes that 27,000 higher than the median forecast. the u.s. economy did not take all productivity. ,igher than the first estimate but not as strong as the previous quarter. purchasesck friday set a record. they received more than 185,000 requests. 220 million gun purchases have been processed. that is the latest business flash. let's go to matt miller for what

is moving in the premarket. matt: yahoo! shares moving higher after the wall street journal reported it is considering a spinoff of its internet is missed -- business. has been matched by star board in that direction. up.o! shares are driving wayfarer shares are rising. we have the ceo on yesterday. obviously there is a very serious short in this. it has gone down, shares rising in the premarket because it rose more than 100% over the thanksgiving weekend. on cyber monday. interestingly enough the biggest sales timeframe for them, and my p.m. to 11:00 p.m. on cyber monday. it is interesting that it is the very end of the five-day retail time that is so important.

you can see the shares gaining in the premarket. qualcomm is out with a deal that is made with xiaomi. it allows xiaomi to develop 3g and 4g file and with its technology in china. it does not give the terms of that deal but obviously it is a very large market. investors like this in the premarket. up almost 5%. sales and brick and mortar stores were a little bit tepid this holiday season compared to the internet real taylor's -- retailers. we will talk to an analyst next. ♪

stephanie: welcome back. you are watching bloomberg. we have to talk it little retail. it is a holiday season. we have to find out if holiday

sales really that bleak. one study estimates that brick and mortar sales slumped over black friday 10%. let's ask the senior retail analyst at goldman sachs. is it fair to say that retail sales are down at brick-and-mortar? so many people are shopping online that a whole category has gotten bigger. >> even though black friday can that weekend is behind us it is a little early to pass judgment and would weaken the is that the outcome of the november timeframe looks like the month before. to the extent that same-store sales have been up about 2% year to date, we expect the same. but there definitely is a big shift from brick-and-mortar to online. >> to have any sense of whether the overall number is growing? encompasses both.

when you throw the online peace and it is not included in the same-store sales report. it will probably get closer to a 3% number. healthy, reasonably consistent to where we have been so far this year. erik: why is it hard to get one's hands on quality data with minimal lag? >> we ask that question a lot. companies are not disclosing a whole lot. the number for any individual company is quite volatile. i will say one thing and the is extremelyetting high-quality because the sources are consistent in what the outcome has been. not a lot of variance. >> can you break it down into traditional's, death top and mobile -- desktop and mobile?

this has been a pivotal the shift from stores to online, which accelerates every holiday but to be tolerating a little bit more this year. specifically from desktop to mobile, and then from tablet to smartphone. i think the smaller devices are able tomuch more transact online. seems to be the new cloud disrupts trend that is so trendy to say. if you look at this chart it shows you the number of cruise going over the last five years. do you by this that they would

spend their money on something to do and a memory rather than a sweater? >> we are deep into an economic recovery. consumer spending resumed growth in six years ago. you see consumers whose clouds are fuller, and better furnished .t this point we look to cruise that yield relative to same-store sales. best cap is bigger to the advantage of the cruise business . erik: there is nothing that retail can do on its own to reverse that trend. people want to spend their money on things. >> it is probably a cyclical trend, and as you can taper to the cycle you will see them shift in that direction. that is what we have seen from cycle to cycle over the past number of years. >> thank you very much. senior retail analyst from goldman sachs, thank you for being here. prefer a cashmere

sweater to a cruise, i would like to point that out. but i do not want that for christmas. [laughter] >> take it on the cruise. priced in thekets cost.

david: welcome back. we're still here with daniel plants and we want to talk about investing ideas. executives in the fast food and construction sectors are citing wage pressure as a headwind and we celebrated the wage increase. as the market priced in this inflation of wages? daniel: that is our biggest risk factor. when we look at where we are for the end of this year, this is a big week for data. adp numbers this morning, chairwoman yellen will talk today and tomorrow we will get the ecb.

we will have the job number on friday. i think the birth of what is acceptable is pretty wide for this data. i think you could argue that the market, with its obsession over these data points through the end of 2015, has probably overpriced risk and not thought enough about 2016. what we are seeing are comments from companies in retail, restaurants, homebuilders, ever-growing -- about growing wage presser pressures. erik: re: talking about a risk factor to corporate profits or a risk factor got a -- that applies to investors like yourselves? trying to determine whether they are attractively priced and this is something you need to factor in? erik: i think it is a risk factor -- daniel: i think it is a risk factor and therefore could affect valuations.

i think it is a risk factor in terms of whether it forces the fed to be more aggressive in raising rates than people are currently expecting. when you look at operating margins -- erik: because people will be making more and spending more? daniel: if wage pressures get out of control but that may have to raise more quickly. erik: you are thinking more in macro terms and security specific. daniel: leaving aside geopolitics and those kinds of things, people have gotten accustomed to expanding profitability of companies over a multi-your period. initiatives to reduce costs, to become more profitable. stephanie: we demand growth. investors simply say, grow every year. erik: they have been more effectively and expanding margins -- daniel: they have been more effective and expanding margins than topline growth. if those efficiency gains tapped

out due to wage pressures that could have an impact on corporate rough ability and can force the fed's hand. walmart has told us there is $1.5 billion in wage costs people were not expecting that will be accounting for 75% of their decline in earnings-per-share. mcdonald's called out 400 basis points of margin dragged in north america you to wage pressures. case, not only is this going to have an impact on profitability and valuations but if wage pressures escalate faster than people are expecting, the pace of tightening may be quicker. it is not so much about the first rate increase, it is about the pace and timing of the subsequent ones. erik: going back to the market risk aspect of what you see, isn't there supposed to be a virtuous cycle aspect to this? companies pay people more,

people spend those earnings on goods, which then generate revenue and subsequently more operating profit for maybe not the very same companies but overall, companies. daniel: that transmission mechanism can take time. in the short run, there could be a real opportunity for corporate profits to be crimped even though in the long run lower energy prices, lower gas prices, all of those things are good for consumer levered stocks. matt: i have a chart users at home can see if they have a .loomberg terminal by typing you can see wages have been even as to grow unemployment has come down. this is a look over the last five years. we were almost at 10%.

5%.we are looking at wages have not shown real growth. almost a flat line. david: you are concerned that the white line may not reflect what is happening in the marketplace? daniel: correct. .t is not just the hourly wage a lot of cities and acting $15 minimum wage laws. it is also health care costs and those are going up. even though we were told they would go down that has not been the effect. ande is classic supply demand going on. unemployment at 5%, demand increasing for services, you can increase in price. on the health care side we have a dramatic expansion and access -- in access to health care but with the cost of consuming it at zero and no increase in supply, you're getting an increase in prices. -- i did notchart think the markets are modeling all of this. stephanie: i am getting the hairy eyeball from you but i'm

not listening. sally smith, ceo of buffalo wild wings. you mentioned health care costs, let's see what she had to say. >> minimum wage effects our labor line. we have seen labor climb. we have seen wage pressure. it is moderated now as we going to the last half. we saw some increases in our health care benefits as well as workers compensation. we are anticipating increased labor costs on an aggregate basis but we base that into our forecast 2016. erik: what i would like to know as a value-oriented equity investor thinking about focusing on small caps, what kind of opportunity does this create for you? daniel: we are looking at it as a risk factor necessarily than opportunity percent.

se. let me look at things that affect the market come a we're all participants in an. fundamentally, a u.s. focus investor, we want consumers to do well in the united states. we want prices to fall -- we want energy prices to fall. i think in a short run if there is a mismatch between what people think about profitability and particularly with the fed being forced to raise more quickly, that will be deleterious for all classes large and small and that is our concern that people are too focused and not looking out. erik: would you put on some kind of macro hedge overlay to what you do? daniel: we would not. there are some who could and would do that and maybe to have already. erik: if this is a real risk, how do you handle it? do you put more into cash? daniel: you could take risk off. i think information and

awareness of risk is the first step. properly understanding, is it a risk to the market. know what you own. do you have companies in your portfolio that are exposed? that is the first step. there are ways you could potentially hedge it. stephanie: i'm going to take you quickly. 36 past the hour. six minutes into public trading day. take a look at the major indexes and you will see red arrows. little change on any of the big three. if you look deeper and i pulled up the imap on the bloomberg terminal. you can see that all of the industry groups are down, with the exception of i.t.. if i click into i.t. you see a big bright green spot. qualcomm is the reason that you see again. -- you see a gain.

rise.r yields are on the up from a one-month low, they took a higher after the adp number came out. we were looking for 190,000 jobs. that has boosted the dollar. the dollar index, you can see a jump. this leg was after the adp number came out. right now about 4/10 of a percent. the euro is lower versus the dollar. gold and oil are trading near five-year lows. second straight down day. oil is at its lowest level since november 20. 4120.crude trading at the spread between wti and brent is getting smaller and smaller. down 20% in the last five days. oil futures still down -- gold .90.es down 27

concern about the emergence or the interest rate increase rises. yahoo! finally big mover in the news after the wall street journal reported the company is meeting to possibly talk about spinning off its internet business rather than ali baba. -- as opposedged to a spinoff, sale. you can see shares trading at 3518 -- 35.18. that offer by microsoft four years ago may have been a better choice. abigail doolittle is looking at truck stocks. abigail: bank of america is out this morning with a sector downgrade of trucking companies. demand remained soft going to 2016 on a week consumer and this could cause rates to decelerate

as driver costs accelerate. trading at the nasdaq, he has -- ch robinson, our best arcbest and werner. we take a look into the financials, we see lumpy earnings and sales growth in 2015 into 2016. could be the reason for a sideways stock performance. most important could be from a macro perspective. what does this say about the economy especially in light of yesterday's isn print? you. thank abigail doolittle at the nasdaq. what does it take to be a great leader? more from mark benioff, next. ♪

vonnie: a civil rights group says google is invading the privacy of students. google says the system collects data about video searches -- saudi arabia's oil minister addresses concerns -- meeting friday in vienna. the saudi's acrobat position. bmw's achieve assess sooner or later using diesel engines mode -- won't make economic sense. the ceo says loss will make diesels impractical. that is the latest business flash. stephanie: i want to take a moment to talk about leadership. we talk or for governance and

what it takes to be a great leader tomorrow. i sat down with mark benioff. he has built quite a big business and i asked him what makes a successful seo. -- ceo. from you have to move being focused on your shareholders to being focused on your stakeholders. that is what will create success. activist shareholders are a key stakeholders. customers are a stakeholder, your employees are stakeholders. the community that you live in is a stakeholder. your k-12 schools that your employees have their kids in our stakeholders. women are a key stakeholder in silicon valley. you better be ready to run a multi-stakeholder dialogue. stephanie: do you think marissa mayer gets judged too much? because she is a woman.

marc: i am a huge fan of marissa mayer. i love marissa mayer. i think she is one of the most incredible people i know. beon't think you can critical or judgmental enough of somebody who is going to be a public company ceo. you have to be willing to be in the fire. that is also why ceos can pay a little bit more. as a big thing. these are hard jobs. this is a tough work. you are committing yourself to something at a high level of performance and she has got a great pay package. accountable. held that is where she is right now. i have a lot of confidence in her ability to create a great yahoo!. i have confidence in her ability to be successful at whatever she does. stephanie: would you hire her if she let yahoo!? marc: in a second.

she is completely magical. stephanie: when i say ibm what do you think? marc: a company with an incredible past. somehow i, somewhat -- some highs, some lows. you have to look at a company today that it struggling to define itself for the future. goneis why they have sideways with their investors. they have been unable to articulate a vision for the future that is compelling. now they are anchored to cognitive computing. maybe that will turn into a key part of their revenue. today it is not. have not been able to show growth, market leadership, statements they made about the future have not panned out. in some ways they have been a false prophet. stephanie: does a ceo

deserve to be paid millions of dollars when a company is not doing well? i look at hewlett-packard. ceo being paid $20 million for stock that is gone one direction and a product people don't want to buy. marc: i think pay has to be linked to performance. critical with the ceo and i think a great way to do that is to make the majority of the package linked to the stock esice and if the stock go up, the ceo should be rewarded and at the stock does not deliver, the ceo should be removed. stephanie: can you partner with a company that has a strong culture if it is not yours? i cannot imagine you and steve ballmer. marc: i think at the end of the day partnerships can be about competition. they can be about cooperation. they can be about rolling products together, distribution strategy.

many different aspects of a partnership. a great example of the great partnership is microsoft. we have a great partnership with companies like oracle and our customers. that is the ability for people to work well together. i think one of the reasons steve ballmer is not the ceo of microsoft is because steve had a hard time having relationships with other ceos. i know that from personal experience. stephanie: of all of your customers, big companies, small companies, what customer of yours do you look at the company and say, i would love to do that. marc: unilever. i think the work call pullman is doing is incredible. the way he takes a holistic view of the world, has a multi-stakeholder dialogue, a

growth strategy for his company-- stephanie: profitable. marc: he is my role model. erik: dan plants is here. marc is talking about what he looks were in a ceo. what do you look for? daniel: the single most important decision abort makes. i sit on a couple of boards. you could work on strategy, capital structure. the person implement it is the key question. you need leadership, you need busy and -- you need vision, you also need execution. someone who gets things done and makes commitments come true. when they don't work out the way as expected they are accountable for it. it means that the on the results -- they own the results and can be counted on to execute the strategy. ceos that do that deserve to get paid a little more. erik: he said link that compensation to the stock effectively.

the problem with that is that the stock price is often a short-term feedback mechanism and it does not tell you how well the company is going to perform longer-term. stephanie: or those ceos are not making long-term good decisions for those companies -- it is not the same thing. i'm done with you today. erik: the hairy eyeballs. the disagreements. daniel: there are things a ceo in the bestare not interest of the company. stephanie: thank you. daniel: you can measure it over longer time. it does not have to be measured in a quarter or a year. you can get at long-term total shareholder returns other than a short window to measure and area stephanie: investors, especially activist investors are saying we want you to deliver today. i think the idea that

an activist in that -- it does not bear scrutiny. investors want to create the most net present value that the camp. n. if investing in a project that will be more profitable in the future, why wouldn't the investor support that? erik: i am not going to beat up on carl icahn but that is not what carl icahn is looking for when he asks for a company whether it be apple or any other to lever up now, issue debt so you can pay me and every other shareholder a dividend or buy back stock. that is not creating long-term value. that is short-term. i don't think that is necessarily the case. daniel: if you believe a company is executing a plan that will result in revenues and profitability, assuming it has

the financial wherewithal to buy back stock as the capital structure to support it, it is very long-term to say let's buy back stock today so as that plan plays out over 36 months, those of us who do not sell stock back to the company will realize even more upside from the company's long-term plan. erik: how many of those people pounding for the stock buyback are going to be there years down the road is long-term shareholders? daniel: we were involved and still are with a company called investment technology group. agreement last march. last month we refiled a new set of issues. we had been shareholders all throughout the year, even after they did a share repurchase. we own more stock now than we did back in march. the idea that all activists are looking for a quick exit -- erik: i'm not saying that for a moment. david: you were saying it does

not bear scrutiny for an activist to come in for short term are you saying they're not activist estimates -- activist investors that going for short-term pop? daniel: i'm not saying thatdaniel:. it is not necessarily the case that it is always driven for a quick hit or .hort-term stock price return my argument is that is not necessarily the case. david: there are two classes you are saying of activist investors. some are going for short-term and some are going for longer-term. daniel: i can speak only for myself. we speak -- we think long-term. i think i mentioned before we have another situation where we owned a company for four years, a company called air methods corporation. never said a word. we finally said we thought they should sell the company. they announced they are pursuing strategic alternatives.

does that make us a short-term investor? we are the essence of long-term investor. you have to be specific about which investor you are talking about. erik: you differentiate -- we can differentiate among longer-term and shorter-term activists. you have another way which is the real activist and those folks we see in the streets of brooklyn. the tourists. what are you talking about when you say tourist activism? daniel: i think there are some of that out there. stephanie: definitely. daniel: it is easy to put out a press release and write a short letter. there is a class of people that want to make noise and see if they can make something happen. those are not the kind of people that own stock for four years. i also think in the institutional investment ,ommunity -- and let's be clear activism has succeeded as well as it has in part because of the support of many large institutions. i think there are some that think, we could do that too,

maybe we will ask management to do a few things. i think there is a risk in some cases and there has been a lot written about how quick openings are getting to settlement. how quick they are making changes. could some of those investors be bought off with cosmetic settlements or things that don't ask the long-term issues. if you got someone who is not , maybemitted activist they are more willing to accept something like a quick fix, a cosmetic change that is not necessarily in the long-term interests of the company. erik: where is this happening. stephanie: put a lipstick on that paidstephanie:. that is what -- on that pig. that is what we are's -- that is what he is saying. are we seeing hedge funds push for cosmetic fixes? daniel: i would differentiate. not all hedge funds have had a bad year. i think we have got to be

case-by-case about it. david: going back to our legal roots, this reminds me of strike suits. lawsuits that are not that meritorious but you filed him because it is easier for the company to settle and pay you out and cheaper for them. it may be a rash decision to make these decisions just to get rid of it. daniel: some investors want to be will to claim credit. we have walked away from a bunch of settlements because we did not think they were in the long-term interest of the company. stephanie: i maintain my position. the lawyers are the ones that always make money. thank you for joining us. that will do it for bloomberg "go" today. tomorrow is a big day. mario draghi will be here. ♪

betty: welcome to bloomberg markets.

we are live from bloomberg world headquarters in new york. i'm betty liu. a lot happening with the fed. -- venture janet yellen weeks later this morning. .edge funds hunker down who will survive as the industry suffers the biggest amount of redemptions and's the great recession. talk about a twisted web. yahoo!'s board reportedly meeting to sell the company's core internet businesses. what could that mean for marissa mayer? we are about a half hour into the training -- the trading session. i want to head to the markets ask where julie hyman can give us more direction. julie: a janet yellenai