congressman hanna has graciously waved his time. i want to say that i think this an instructive and been timely hearing. we deeply appreciate your willingness to be with us. we have a common goal. the congress in the united states, along with the executive branch and the federal reserve, we have that common goal to implement sound policies that achieve a dynamic economy that provides meaningful employment for our generation and future generations. the more we work together, the more we can share. we can pass that on to future generations. that is clearly a goal that has to be pursued with a lot of passion and intellect. with that, the hearing is adjourned.

>> you are listening to janet yellen. earlier today, mario draghi .ecided to cut the deposit rate joining me now is michael mckee. michael: she made the same point she made yesterday, the economy you wouldo the point want to raise rates. unemployment is close to its neutral rate. she made the same point to congress that she made to investors yesterday. the sed cannot -- the fed cannot

afford to wait longer. here's what she had to say. betty: we do not have that available. michael: if they wait too long, they will have to raise rates faster and perhaps farther. away that a lot of people looked at yesterday, why they believe the fed is going to go into summer now is because she is signaling they do not want to wait longer. she did hint that the fed might be behind the curve. michael: it is much easier. they know what to do to respond to inflation breaking out. they would like to get started

because they want to have ability to respond without additionalesort to qe, which they feel has lost its ability to stimulate. the other questions were focused on politics, things that did not come up yesterday. she was asked about the highway bill legislation that will take the fed's capital and put it into funding the highway bill. this is just bookkeeping. it does not create additional money. it is basically congress messing around. shifting money around. she talked about the idea that the fed should be audited. betty: let's move on to the

exciting moment in the morning, mario draghi, came out with an announcement. expectations are built in. the euro has surged. if would expect it to weaken the ecb comes up with measures to boost economy through quantitative easing. what was the most significant measure? thing they was the did not announce. an additional amount of bond buying each month. a lot of people or betting. if you do that, you're going to have a weaker euro. up by a significant

amount, over 108. it was at 105 when the press conference started. a lot of disappointment in what mario draghi said. betty: he has been consistent in over delivering on his promises. meeting, they have telegraphed there will be a lot done. what does it say about dissent within the governing council? michael: that is an interesting question. there are too many countries in the eurozone to vote. they are taking turns. they rotate the voters. in this meeting, the euros -- the germans were voters. the germans have been less enthusiastic about additional stimulus. that may have hurt druggie. he did say it was not a

unanimous decision. they may be do not go as far as they might have. cutting the deposit rate should have some effect. he did not get as much as he wanted. it goes further into negative territory. now ons no clarity right whether the ecb could cut that again. in the future, are we going further into negative territory? does it have any kind of effect? michael: we are working on theory, not reality. this is equivalent to the interest on excess reserves. they leave their excess reserves at the fed. leave moneyrging to at the ecb.

we are not seeing huge gains in lending. if we go further down, it will put more pressure and squeeze profit margins. so far, there has not been enough of an effect. where you are seeing that is the bond market. traders bet the ecb might move lower and they push down lower. yields have gone back up. we could see a positive impact, but it will take a while to play out. betty: does mario draghi need the fed to tying up on its part? michael: has the market already priced in what the fed is going to deliver? that is the key. a lot of people were thinking what mario was going to do is cut significantly.

have we lost some of that because the euro is stronger and the markets believe the fed is going to do 25 basis points after janet yellen yesterday. i have talked to traders today and they do not know yet. impact of get the diversions that we thought we were going to get. betty: a little bit of recalibration for everyone involved. discusswill be back to the jobs report coming out tomorrow. later today, and anticipated conversation. michael will speak with jean-claude trichet. that will be a good one. how janet yellen's testimony is impacting markets, we will head over to julie hyman. tell us what the fallout is on equities. julie: let's look at u.s. stocks.

we are seeing all three major averages lower here. not seeing big the kleins. what janet yellen has said has -- greatdifferent than idea that the fed is likely to raise at its december meeting. the s&p 500, we are seeing it bounce around a little bit. lows. off of it went back down to the lows. a little volatility. at the bond market in the united states, where you would expect to see more reaction. event of the day, talking about yields him a 10 year going up to 2.3%. we saw an increase on the shorter end of the to her -- shorter end of the curve as well.

that is the movement we have been seeing. package, that is having a big impact globally. julie: take a look at my terminal here. we have one of the broader measures from european stocks. we do not necessarily see them as tight, but the magnitude of the drop in european stocks still remains lower than the trajectory of u.s. futures. if you look at european stocks, you see the steam this of the declines we see here. all three major averages are down 3% with draghi taking the -- movementramatic

upward. the biggest one-day gain in the ye since march 2009. we have been seeing a dramatic lift in european bond yields. betty: that is huge from where it had been. thank you. we want to get you some headlines with bloomberg's first word news. >> authorities are trying to determine the motives behind a shooting rampage that left 14 people dead on wednesday in san bernardino california. president obama discussed the latest mass shooting. pres. obama: we do not know why this terrible event occurred. we know that the two individuals were equippedd and appeared to

have access to additional weaponry at their homes. incident could have been work related. the scenespects fled and later died in a shootout with police. janet yellen conditions necessary for an interest rate increase has an met and she wants to tighten monetary policy slowly. she appeared before congress this morning, telling lawmakers she anticipates continued healthy trends in employment and inflation. yellen: i expect to generate additional increases in employment. the economic outlook is always of thein, i see the risk

outlook for economic activity in the labor market is very close to balanced. >> the policymaking fomc meets later this month. it is likely to and a decade of near zero interest rates. a warning from john carey, speaking in belgrade. he said the feeding islamic state will not be possible without troops on the ground. he called for a political solution in syria, saying that would allow all nations to fight islamic state together. that is a look at first word news. you can get more on these and breaking stories 24 hours a day at bloomberg.com. scarlet: we have much more coming up on bloomberg markets in the next hour. subway taking a step to refresh their image in the wake of the jared fogle scandal. mark zuckerberg and his wife are

pledging 90% of their shares to a facebook charity. take you to paul ryan. his first major address. he will set out his agenda. ♪

scarlet: welcome back. businessthe bloomberg flash trades service industries hitting a speed bump in november. they expanded at the slowest rate in six months. service industries make up 90% of the economy. it does not include manufacturing, which reported its weakest month in more than six years.

is hovering around a four decade low. report get the jobs tomorrow. we will have more on that. -- it'saking a step to tarnished image. subways previous to marketing officer left after authorities raided jared fogle's home. to head back to the markets. julie hyman has a check on company movers. a couple of stray ones. julie: the best and worst in the s&p. been one of the big consolidators within the semiconductor industry and what has been a busy time for consolidation.

topping estimates by a wide margin. with 199re compared earlier. hadis what analysts estimated. ofgo is in the process acquiring broadcom. avago up 42% this year and 10% today. broad chair -- broadcom shares are rising today. 500,e bottom of the s&p chesapeake energy. askingpany is bondholders to exchange junior debt for new, higher ranked notes. it will give $1.5 billion in new second lien notes to investors who agree to swap at a discount. the company is struggling with the ability to pay back debt.

the statistic, i never get tired of hearing, $11.3 billion is the amount chesapeake set. they have lost so much value with the declining value of commodities. shares down 9% today. down 74% year to date. worst-performing stock. scarlet: that is staggering. jeffrey is staying -- is saying the exchange buys chesapeake some time. they see this as a market test for chesapeake and all bnp companies overall. julie: this is one of the worst case examples. scarlet: thank you. we have more coming up. new developments in mark zuckerberg's pledge to give away $45 billion to charity. how does he plan to do it?

what is the structure? we will break it down next. ♪

scarlet: welcome back. mark zuckerberg and his wife have pledged to give away 99% of their facebook shares, valued at $45 billion to charity. the catch, they will not set up a charitable foundation. they will set up an llc. joining us now, sarah frier, who wrote the story.

how does this llc work? what options does it give the zuckerberg that a charitable foundation does not? sarah: they are not legally bound to give any money to charity at all. an llc is a corporation. is, up is trying to do with a way to solve problems that is not just about giving money away. he wants to make investments, work on politics and policy. if he has an llc structure, this gives him the flexibility to lobby for things he cares about in washington. he says he wants to cure disease. he could invest in biotech startup. he has a range of ways. not all of it has to be the traditional, charitable, tax-deductible things we know about.

scarlet: one thing to keep in mind is his past experience. togave a $100 million gift the new york school system and it did not deliver what he wanted it to. how did that play into his decision this time? instant andwas an where he said i am going to give a hundred million dollars, that should be enough to solve problems i see, like teacher tenure. teacher tenure is a state law, so he could not change it through all of the money in the world through the school district. a lot of it went to consulting fees. did have the money to push on policy situations, that might have been more effective. beyond that, he cares about health, education, immigration. these are things that had rigged

tie-ins. be -- he might make a profit off some of these investments. profits reinvest the into the fund. scarlet: the llc does not limit them from making profits. does setting up this llc give the zuckerbergs? he will be able to dodge taxes on his charitable the directions when he sells stocks for charity. it would go to whatever he is funding. that is a good way for people to get things done and also to never have to pay having taxes if you are as rich as zuckerberg

is. scarlet: a gives him much more flexibility. the same flexibility, really. scarlet: thank you. 's story ond sarah bloomberg.com. ahead, paul ryan will deliver his first major address at the library of congress. we will take you there live when it happens. he will be setting his agenda as speaker. ♪ . .

. . the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. scarlet: from bloomberg world headquarters in new york, welcome back to bloomberg markets. let's start with the headlines with mark crumpton at the news desk. investigators have not

ruled out any possible motives for yesterday's massacre in california. obama spoke to reporters in the oval office and thatssed the possibility the killings could be terror related. president obama: this is now an fbi investigation. that has been done in cooperation and consultation with local law enforcement. it is possible this was terrorist-related, though we do not know. it is also possible this was workplace related. mark: a witness said one of the suspects left a holiday gathering for county employees, returned and then began shooting. federal reserve chair janet yellen delivered a cautiously upbeat outlook for the economy today, signaling the conditions necessary for an interest rate increase have been met and she hopes to tighten monetary policy slowly.

chair yellen spoke before the joint economic committee. the appearance comes to weeks before the fed meets in washington. policy makers are expected to end a historic era of near zero interest rate in the u.s. that dates back to december of 2008. belgian authorities have charged to more people with taking part in terrorist activities in the paris attacks. a 20-year-old french national was detained at the brussels airport trying to board a plane headed to morocco. a 20-year-old belgian national has also been taken into custody. eight suspected terrorists are now jailed in belgium. turkey was a theme in vladimir putin bosque state of the nation speech today. he called for international teamwork to stop militants and those who support them, citing turkey saying the country buys oil from islamic state. russia has slapped sanctions on

turkey since it shot down a russian warplane. that is a look at our first word news right now. you can get a look at these and other stories at the new bloomberg.com. scarlet, back to you. scarlet: it was a disappointing day for investors, betting on extra accommodation from the european central bank. one analyst weighed in on mario draghi's announcement today. guest: it is quite clear when the announcement and implementation of the program how much difference it has made two specific things -- the exchange rate is one, but draghi emphasized the spread of credit availability. it's no longer these huge interest rates spreads representing imperfections in the euro area, where because of sovereign problems, similar

borrowers across borders could not get access to credit. there's no question that has made a difference. woulds no question how it be worse. we sought it in the years up --l then and sought in japan saw it in japan. i do agree we are not satisfied with where inflation is and he is right to emphasize that in the mandate, but that is something we are seeing is a global issue, in japan, in europe, in the u.s., despite qe working the way we would think on financial market, it's not having as big an effect on inflation. stephanie: the fact that we don't have to be concerned about that diversion between u.s. and -- monetaryuntary policy makes it easier for them to step in and raise rates. diversion -- a a

diversions here because we are talking about a path where the fed is likely to raise rates three times between december and the election in november versus the ecb is going to keep doing what it is doing and possibly expand it further. that divergence is for real. it just may have been priced in. your i was just looking at point -- anyone who has gone dollar long since november 5 is losing money. but if you look at the bigger , you are right. now isdy from 2003 until taking profits off the table. i had a quick question and i want to illustrate it with a great chart i've got here. you may have heard a reporter say during the press conference that if the ecb bond buying program does extend until march

of 2017, the balance sheet would be 40% of total eurozone gdp. right now, it is about 20%. it shows the fed balance sheet has gone up to about 25%. is it bad if the ecb balance sheet as of 240% of gdp or do you just assume gdp gains a lot more as the balance sheet expanse? guest: president draghi had it exactly right -- the balance sheet is a tool. there's nothing inherently right or wrong about any side of the balance sheet. it's a question of what it does for achieving the mandated goal of the central bank. they're going to pay attention to side effects and to costs, but they need more to get to where they are legally required to go in you shouldn't focus on the balance sheet, you should

focus on the goal. that said, the other thing they expanded is they have and now that they can buy some national government bonds in various countries, which is another way of saying since germany doesn't in -- doesn't issue enough bonds to keep the full share in the amount they're going to be buying, they have to make this technical adjustment to buy slender level bonds. means to a goal. if the size of the balance sheet doesn't present a danger one way or another, the flow stuff matters more than where the problems would be. that was from bloomberg this morning. before we had to the break, i want to give you a glimpse of what's going on in washington right now. for house speaker paul ryan to make his first address at the library of congress. he plans to lay out his agenda.

he has been enjoying a honeymoon period. we will see how long it takes for him to get set up. coming up in the next 20 minutes of bloomberg markets, mcdonald's is under fire -- the eu accuses the fast food chain of not having paid corporate taxes in luxembourg for six years. google just expanded its renewable energy portfolio with purchases across three countries. will other countries follow the lead? the november jobs report is due out tomorrow. it will need to be really bad to impact the fed's interest-rate decision. will the jobless rate remained steady at the current 5%? ♪

scarlet: we are currently rate

-- currently waiting for house speaker paul ryan to deliver his first major address at the library of congress. you are looking at the podium where he is expected to make an appearance in the next minute or two. we want to head to mark crumpton for more. word we have been getting from some of chair ryan's aides about what he's going to be saying during this speech. apparently, his first major speaker major speech a of the house, he's laying out an agenda that calls for tough work requirements and cuts to safety net programs. he's sketching a vision for congressional republicans in 2017 and be on that. as the senate was debating the latest proposal of president obama's latest health care law, speaker ryan said we will it to the country to offer a bold pro growth agenda and that's what we are going to do.

excerpts were released by his office ahead of the speech. they were short on specifics but speaker ryan has made it clear he does not have a desire to hang back and play a supporting role to the gop's presidential nominee going into next year. the former house budget committee chair has proposed slashing medicaid and converting medicare into a voucher-like program. these would be new assaults on federal programs, positions that will likely be part of the presidential debate as we go forward. scarlet: great context for setting the stage here as paul ryan gets ready to come out. is -- he has been speaker since october. what has his tenure been like so far in the one-month and week we have seen him as house speaker? we saw speaker ryan come out of the gate strongly with several wins right off the that. responsehe refugee

that he pulled together some votes on, an education bill yesterday, getting this highway bill going, they are supposed to vote on that today. we have seen this honeymoon that you mentioned earlier that people are kind of feeling him out and seeing what kind of and what's going to be kind of votes he can with together. that's going to be tested in the coming days because when everyone is looking for is this big omnibus funding bill and that is what his team is focused on right now. that would be a big win if he could pull together a win for the house and pass something pass the pickering and fighting that we have seen. scarlet: even at landmark vote next week, -- given that landmark vote next week, could that be playing into the timing? guest: it's no coincidence he's

coming out the week before, but he has been talking with this language for a while, so it makes sense he would come deliver it in a more formal way. been talkinghe's about how the party needs to be more specific, that the party should be bolder and house republicans should not be afraid to pass more bills with specific policy proposals that land on the president must desk and force him to veto things he's not going to support. is looking for different tactics. the freedom caucus has played a big role, but mainly in being obstacles. he's looking for them to form policy in shaping policy. party incident being the of opposition, we want to be the party of proposition. we want to put these proposals on the president's desk and i think we are going to see a more

active republican congress. we will see. this is what the vision is. hislet: how has relationship been with the freedom caucus so far? tell: it is too early to and that's what they will say. they want to feel him out and see how he runs the caucus, but we have started to see in recent days freedom caucus members say we like some things, we don't like others. we are awaiting paul ryan to come give his first major address. we are going to go to break and when we come back, paul ryan will be speaking to us. ♪

scarlet: and there we have the library of congress, speaker

paul ryan coming in getting ready to deliver his first major address of his tenure. ask: the first major address a scarlet mentioned, but also a speech where he will lay out the republican agenda and the 2016 presidential campaign begins in earnest with republicans looking to lay out their vision for the country for the immediate future. the speaker of the house, paul ryan, live from the library of congress. so many ofn: i see my good friends and colleagues here. i also want to thank the library and their staff for their wonderful hospitality. the reason i asked you to come here today is i wanted to lay out my number one goal for the house next year. i became speaker just over a month ago and i like to think we hit the ground running. we are dealing with everything from highways to isis to funding the government.

but before we get too far along, i want to take a moment and i want to explain the big thing i think house republicans need to do in 2016. a great frustration in our party is that we have not had a real national majority in seven years. we have controlled congress, sure, but not the presidency, and we need to. this country has enormous problems. but if we do not have a president who will work with us, we will not solve those problems. that is while they are still solvable. whatever the left may say, i know my colleagues in the house i knowcan conference, why they got into politics. someone,t here to be

we're here to do something, to serve our country. ,e believe in the american idea the condition of your birth does not determine the outcome of your life. and what we want to do is do our part to pass that idea on to the next generation. do not see politics as a popularity contest. to us, it is a calling. we do not care for the tricks of ,he trade, what we care about what we love our ideas. so it is with great dismay that we have watched our president transform the country and not for the better. is natural after losing to your opponents for so long, it is natural for people to start thinking maybe they are onto something. maybe the way to win the debate is to play identity politics. maybe what you do is slice and dice the electorate, demonize, polarize, turned out your voters

and hope the rest stays home. is possibleyes, it we could win that way, but to what end? i don't think many people are walking away from this presidency thinking that went well. [laughter] we still have enormous problems. but now, the country is divided and the federal government has grown arrogant, it has grown condescending, and outright paternalistic. say what we have seen in the past seven years is the illusion of success. the left may be good at tactics, but tactics are not solutions. they can win an election, but they cannot win a mandate. they can make you popular, but they cannot solve problems. they can help a party, but they can't save the country.

so why in the world would we want to act that way? country,t to save the if we want to do what we believe in, we need a mandate from the people. if we want a mandate, we need to offer ideas. and if we want to offer ideas, we need to actually have ideas. that is where the house republicans come in. our number one goal for next year is to put together a complete alternative to the left's agenda. [applause] this is a work in progress, no doubt. so today, i want to talk basics, i want to talk fundamentals. do we wantf country to be? i do not presume to speak for all republicans in all particulars, but after giving it a lot of thought, this is what i

think a conservative vision looks like. we want america to be confident again. if you don't have a job, we want you to be confident you can find a job and take it. if you do have a job, we want you to be confident that job will pay well. we want students to know all that school and all that debt will be worth it. we want seniors to know all those years of hard work, all those years of paying taxes will be rewarded. medicare and social security will be there for you when you need them. we want all americans, when they , to seewashington spending going down, taxes going down and that going down. we want to see progress and we want to have pride. we want for people to believe in our future again. we want a country where no one is stuck, where no one settles,

where everyone can rise. on the world stage, it is no different. america, aonfident purposeful america. we want to know we stand for freedom and show it, not with luster or bravado, but with calm, city action. called, steady action. we want our military to inspire confidence from our allies and, when they come home, we want to give our veterans the care they deserve. [applause] we want our president, whatever ie party, to always keep an on our interests and never turned a blind eye to the truth. we want america to lead again. that is the america we need.

that is not the america we have right now. people are not confident. they are downright anxious. and they have every right to be. but there is reason for hope, especially for conservatives. the world is proving us right. technology is making life more decentralized. formulas justwn won't do. for a long time, the left has thought if you want to solve a problem, you get a group of highly trained experts to come up with an answer and impose it on the country. nowadays, most of us would agree that's the last thing you should do. the world just moves too fast. government is always a step behind. so, oddly enough, it is the progressives who are stuck in the past. and this is the one thing they have missed. more bureaucracy means less opportunity. [applause]

and i will tell you why. because big government and big business do not fight each other as much as they feed each other. works -- smart, talented people go into government think the only way to fix a complicated problem is with complicated laws, laws that only people like themselves can understand. a make new bureaucracies and put up all kinds of red tape, and then they go into the private sector and help businesses navigate the very mazes they created. industrysurance doesn't understand how obamacare works, why not hire the person who ran it? [laughter] this works out great for them. what about the rest of us? what about the people who can't get ahead because costs are too

high or what about the people who don't create jobs because the laws are too confusing? so, around and around the revolving door goes, all why the people all -- all while the people are standing on the sidelines. expertsow today's become tomorrow's cronies and that's why we don't think government should bulk up the bureaucracy, we think it should break up the problem so people can solve the problems themselves. don't hire more bureaucrats. don't leave it up to their discretion. set clear, firm rules all of us can live by, rules that tell us what is expected and what is off-limits. then let the people go to work. to me, that's the conservative insight -- don't outsource to the bureaucracy, crowd source. find of government would not only preserve equal opportunity, that kind of government would protect the dignity of the individual.

bad government tries to blend what makes each of us unique. good government defends it. bad government tries to tie us all down. good government frees us to be our best. , is government important? absolutely. it is essential. but there's no mistaking the field for the game. what government is supposed to do is create an environment where the individual can thrive and communities can bloom. in other words, government makes things possible, that the people make things happen. only government that sends power back to the people can make government and can make america confident again. [applause] and we house republicans will do

all we can to give us that government, even if the president disagrees. even if he won't sign them into law, we will put out specific proposals and give the people a real choice. [applause] i don't mean just undo with the president has done as if we could time travel back to 2009. i mean show what we would do, what our ideal policy would be looking forward to 2017 and beyond. we know it to the country to offer a bold, progrowth agenda, and that is what we are going to do. [applause] you know what the first item on that agenda is? it is creating jobs and raising wages. we know what is standing in our way.

instead of attacks code all this can live by, we have a tax code that none of us can understand. toall know how hard it is keep up with the competition overseas, and/or i come from, overseas means lake superior. [laughter] are taxing their successful small businesses at 15%. on successfulte small businesses in america is effectively 44.6%. how can working families compete like that? the only way to fix our tax code is to simplify, simplify, simplify. close all the loopholes and use that money to cut tax rates for everybody. [applause] take the seven tax rates we have now and collapse them into two were three. i know people like many of these loopholes and they have their reasons.

but there are so many of them that now the tax code looks like a huge to do list, washington post to do list. washington has no business micromanaging people's lives, simple. i also know many of these loopholes will be fiercely defended. all i can say is we will not be cowed. [applause] we are not here to smooth things over, we are here to shake things up. i know our ways and means chairman, kevin brady, cannot wait to get to work. and this is the point. we want a tax code that rewards good work incentive good connections. keeppeople know, they will more of their own money, when they understand they will enjoy the fruits of their labor, they will work more, they will save more, they will invest more and create more jobs for all of us. go when there's more work to

around, more people will see their wages going up. that there's not much upside to getting a raise if the cost of living goes up, too. you know, when people asked me what is wrong with the law, i usually say, how much time do you have? if i have to point at one thing, it would be the mandates, the restrictions. how do we know this is failed? you notice we don't talk about lowering premiums anymore. we were supposed to be happy these days if they do not go up by double digits. this is the problem. the other side thinks that to lower the cost for some people you have to raise the or others. is one 10 sum game -- zero-sum game. their solution is, don't give them a choice.

we say, lower cost for everybody by giving them a choice. instead of forcing you to buy insurance, we should force insurance companies to compete for your business. [applause] mark: speaker of the house paul ryan and his first major address at the library of congress. the speaker telling his audience, we want america to be confident again. he continued, the progressives are stuck in the past. here is what they missed, more bureaucracy means less opportunity. this feature continued, we are not here to smooth things over, we are here to shake things up. we will rejoin the speaker in a few minutes but we have some breaking news regarding that mass shooting at that social services site in san bernardino, california. 14 butth toll stands at the number of wounded now up to 21, according to authorities.

the suspect were right tactical gear but not bullet-proof vest. authorities also say the suspect believed to have fired 76 rounds at officers when he and anacondas were found in a vehicle. authorities say there was much more ammunition on their person when they were apprehended. the suspect also reportedly had materials to construct pipe bombs at home and authorities adding they do not have any credible information on any additional threats. that is the latest on yesterday's mass shooting in san bernardino. we will have more news coming up later on. scarlet, back over to you. scarlet: house speaker paul ryan is speaking right now in washington. we want to get some insight on what he said so far from bloomberg politics. we talked about how this is speaker ryan's first big policy

address, laying out his philosophy on how he plans to lead. what did you hear from the speaker that cut your interest? >> what struck me run off the bat was how political this was. he started out calling out the democrats for identity politics, for being too tactical. he said the way to win -- so he is framing all of this in a way of for how republicans can win -- is his ideas. that was his pivot. we cannot really look past that. all frame of this is how republicans can be democrats. framing this conversation about big government and small government, ideas, policies, in that context, it tells you a little bit about what he's playing next year. elections heat up, there will be so much focus on the candidates, and there was so much -- there will be so much focus on congress.

in recent years, it has been framed as such an obstacle or any president. he is saying we are not going to be an obstacle, we are going to be putting forth ideas, we will be leaving from congress. we will not take direction from any president. scarlet: he was also talking about obamacare and how the republicans needed to repeal that. so they have not really moved away from certain ideas. as he proposes, they come up with new ideas. nothing new here, nobody will be surprised about these policies. what is different is he is saying we will be more specific, boulder, and we will not sit on the sidelines anymore and make the symbolic votes. and being reactive. we will see what else he says, but in the first part, he talks about jobs and wages, obamacare, things that we have heard from congress before. he is saying the vision for 2016 and beyond is a congress that is

specific, bold, and that will be putting forward ideas, because that is the way to win. scarlet: of course, the one part of his job or he has to work with house republicans, including the freedom caucus, which gave john boehner so much difficulty, and that he has to work with the senate. we have a sense of the working relationship with them? >> the difficulty in the senate with getting these things past the house that don't make it to the president's desk -- it has nothing to do with the republicans but the makeup of the majority and minority of democrats and republicans in the senate. he was not making the case today, but you can imagine a we need to keep the majority in the senate, expand the majority in the senate, we need these ideas presented in the senate, and we could keep pushing this forward to force the president's hand. his job is to focus on uniting the republican party in the

house. this is his way of trying to do that. scarlet: fantastic context. paul ryan continues to speak in washington. of course, his major policy speech comes before a big funding fight next week as well. we are back with much more. ♪

scarlet: you are watching bloomberg. this is your global business report. khe european central ban injecting more monetary stimulus. opec meeting on friday, saudi arabia says it will only cut output if

countries outside of the cartel joined the effort. mcdonald's pushes back against claims that it and other companies avoided taxes in the european union. first, we want to start with the highly anticipated ecb decision. the central bank saying it will extend quantitative easing until march 2017 and broaden the assets purchased among the program. mario draghi says all of this will help ensure inflation targets. >> we decided to extend the asset purchase program. the monthly purchases of 60 billion euros under the asset purchase program are now intended to run until the end of march 2017, or beyond, if necessary. in any case, until the governing council sees a sustained adjustment in the path of inflation consistent with the aim of achieving inflation rates

below but close to 2% of the medium-term. scarlet: ahead of the friday meeting, some opec members are advocating a production cut. venezuela and iran want them to production cuts. saudi arabia remains opposed to a reduction unless countries outside of the group join the effort. brazil's central bank signaling it is ready to raise interest rates in early 2016, at the start of impeachment proceedings of president dilma rousseff. according to the global head of fixed income at j.p. morgan chase, the problems are mounting. problems,has a lot of ck a lot of ba years to when the currency appreciated while the in 2009 21.5 versus the dollar. then it was recently 4. they are faced with enormous stagflation. scarlet: the european union is

accusing mcdonald's of avoiding taxes in luxembourg since 2009. officials say it avoided taxes on hundreds of millions of euros of profits. ,cdonald's rejected the claims saying it pays a significant amount of corporate income tax in europe. scrutinyows increased of u.s. companies like apple, starbucks, and amazon. biggests the world's buyer of renewable energy and is not expanding its portfolio by buying 781 megawatts of solar and wind power, enough to power 75 average homes for one year. that is your global business report. for more stories, visit bloomberg.com. the fed seems ready to pull the trigger on raising interest rates but there is one ring that could put a freeze on its plans, a disappointing unemployment report. that seems unlikely as companies are reluctant to dismiss workers as labor market tightens.

we get the jobs report tomorrow morning. or some insight, let's bring in michael mckee and the lisa abramowicz. start with the ecb, mario draghi. they have set the stage for the job report tomorrow. we know janet yellen is position to raise interest rates, should the judge report comment as expected. did mario draghi make it easier for him to do that? lisa: he basically handed her a gift. the big concern has been if the fed hikes rates, this month, then does that cause the dollar to appreciate further, does that lead companies to have a less competitive advantage -- american companies -- when doing business overseas, and does this week in the economy? today's announcement would disappoint the euro, down more than 2% against the dollar. scarlet: that is a mammoth move.

lisa: this was an exciting day in currencies. questionhows, raises a of if the ecb is doing so much to be pumpinging 60 billion euros into the european economy through march 2017 at the earliest, and people are disappointed. we can have more? to what extent was mario draghi keeping in mind the job support and what janet yellen has pledged to do that when he made the announcement. that there was a thought the markets would not do as much as expected, which would give them a break. but they did not do enough to make that part of the calculation. we talked earlier about the pop -- possibility that maybe mario

draghi had been undermined by some voting members. the story has come out that the germans and the dutch and the baltic countries would not go along with additional stimulus, which raises the question of what power mario draghi may have going forward if they want to do more. it brings this divergence question closer together and maybe put a cap on how far the dollar goes up. scarlet: there was so much anticipation ahead of the ecb announcement today. mario draghi and ecb did not do much to take down that expectation that they were going to deliver something big. what does that do for their credibility? lisa: part of the problem is the ecb is not like the fed, they are not representing one country with one voice, they have a lot of different parties. they all have different , edginlity profiles does. it makes it much more complicated. and you have, for example, the ecb plans announced today to

expand the debt purchases into local and regional debt. whathe question remains, data are we talking about, whose do you go after, how do you do that? it is hard to affect a plan like this when you're dealing with multiple constituencies. mike: even that was a little off from what people expected. the ecb has the problem of wanting to buy more debt compared to, much they can technically buy from each country. this gives them more options, but it looks like they will have to buy a lot more debt, so people are saying, is this a big deal? it is not really a big deal until they get to a point where they have bought so much debt -- if they go way beyond march 2017. lisa: could i make a point? the difficultys right now in betting on anything in such a credit market that depends so tremendously on what the central bankers say. people were piling into german

two-year bonds, yields going to record lows. this is insane. they were all doing this because otherwise, they would be slammed on the other side, if the central bank delivered. it is such a hazard in the market. you say i like when about the positioning before a big announcement like this. we have heard about these long, crowded trades. massive short euro positions taken up in anticipation of this announcement. when it became clear that the ecb was not going to deliver, they ran for the exits. what is the old saying about the eye of a needle? trying to get that euro camel through. lisa: it was getting very crowded come along dollar. the move we saw today was pretty dramatic.

it was somewhat disappointing news, but they still made a pretty big announcement, cutting further into negative territory. this was not nothing. is interesting is this was all market expectations, not fundamentals. i will put this question to jean-claude trichet a this afternoon. does this were you, that marcus moved so much on their own expectations now, rather than fundamentals? everyone wants in there with the central bank will do to save us, and if they don't think what you think they would do, we will selloff. we are just looking at the amount of bond buying they are doing. scarlet: especially when you consider what the ecb actually announced, a number of measures, all of which are pretty aggressive, when you don't compare it to market expectations. lisa: in the u.s., we are moving a little away from that model, where everyone directs their investment based on what janet yellen says. she is moving much more to the rhetoric of, we are watching

fundamentals. mike: that is what she has to convince people of, assuming we get a decent number tomorrow and they move. when is the trigger for the second rate increase? she wants to move it back to fundamentals. she said yesterday for the first time, talking about the actual pace of inflation. scarlet: of course, we are looking for the jobs report tomorrow to give us further evidence that the labor market is healing, giving the fed room to move ahead with its measured pace of increases. mike: we don't want any surprises tomorrow. scarlet: thank you very much, michael mckee and lisa abramowicz. to listen tone in michael mckee's interview with jean-claude trichet a on bloomberg radio. ♪

scarlet: welcome back to bloomberg markets. ae euro is surging from

seven-month low today after mario draghi's announcement of stimulus measures, which were less aggressive than what investors were anticipating. carol massar will shed some light on this as we look at how the euro is faring. we know that it surged more than 1.0927. carol: welcome to all of our listeners. we are talking about the euro, ecb. david joy is back with us, the chief market strategist at an enterprise financial. so much going on. so many moves coming off of european central bank decisions today. what stood up for you? >> primarily the fact that the european central banks seem to have underwhelmed the market after raising expectations that they would come with barrels blazing. they did not. carol: why didn't they? >> i think you have to take

mario draghi at his word when he said we think this is enough. if that is the case, if he believes that, there is always the ability to do more. , why do moreght than he thinks he needs to? clearly, the market for expecting more, and now you see it reflected in the currency markets. do you thinkch mario draghi and ecb is looking at the global macro picture, just as we have seen with the fed and janet yellen, keeping an eye on china or other overseas developments that impact the global market? >> clearly that is important, more important to the eurozone debt it is to the u.s. they are much more dependent on exports. a lot of those go into the eurozone, but more outside of their own geographic area than the u.s. that is extremely important to them.

we have seen a little bit of firming in european manufacturing, so that has been somewhat gratifying. a lot of that has to do with a relative strength of the euro. currency exchange rates are extremely important to what they are trying to accomplish, and as a result, a little disappointing. carol: you mentioned manufacturing in europe. you are watching the slow down in manufacturing, and that is a modest concern to you. explain that. in the u.s., manufacturing is not a big part of the economy, but it has been one of the weak spots, which to the strength in the dollar, as well as general weakness overseas. interestingly, this week, we had conflicting reports. the isn manufacturing number was below the 50 line, evidencing some contraction, but the report from market showed stabilization . in my mind, that is a more

telling report. it incorporates a wider range of respondents to the survey. also, incorporates some smaller companies. it may be more indicative of domestic conditions than the ism survey, but the markets have not focused on that. carol: i want to focus on your target for the s&p next year. you have it type that 2325. that is about a 160-point rise from where we are. you are anticipating growth coming in better than what we have seen forecast? >> yes, we anticipate gigi group .2%.p growth of the real wild card will be the dollar. if the dollar weakens, we could see manufacturing get a little bit of a boost and growth could come in better than that.

but the s&p 500 target is predicated on that growth estimate, assuming a little bit of earnings growth, mid single to upper single digits, offset by multiple contractions. we think the fed will take rates by this time next year to about 1%. that will result in some multiple compression. all in all, an up year but fairly modest. carol: what is the biggest thing that keeps you up at night? , at 2.8%, that is a little above trend. that assumes the consumer is going to continue to spend at a decent level. personal consumption has to be above 3%. no guarantee that happens. that is one. we are assuming that we will see no meaningful deterioration in china. carol: is it hard to call china right now? >> i think it is.

the one thing we have to remember, they have been trying to stimulate that economy for a while, so you would think we would see some stabilization. even the market pmi numbers have some evidence of that, but no hard evidence. carol: great to check in with you, david. thank you. have a great holiday. scarlet, back to you. scarlet: thank you, carol massar. much more coming up on bloomberg markets. than$750 a pill to less one dollar. we will to you what company is doing to rein in drug costs. ♪

from bloomberg world headquarters in new york, welcome back to bloomberg markets.

get the first word news with mark crumpton. mark: the two suspects in yesterday's mass in california had over 1600 bullets with them when they were shot to death in a gunbattle with police. authorities also say they found homemb-like devices at a that was searched in connection with the shooting. authorities say's i luke and his wife or fiance tashfeen malik also left a device at the social services center where they opened fire. police say the attackers fired between 65 and 75 rounds. the death toll stands at 14. the number of people wounded has risen to 21. federal reserve chairman janet yellen is indicating the conditions necessary for interest rate increase abandonment and wants to tighten monetary policy slowly. chair yellen appeared before congress's joint economic committee, telling lawmakers she anticipates continued healthy

trends in employment and inflation. >> i anticipate continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment and a rise in inflation toward 2%. although the economic outlook is always as uncertain, i currently see the risk to the outlook for economic activity and the labor market as very close to balanced. mark: the policymaking fomc meets later this month. it is widely expected to end an historic era of near zero interest rates dating back to late 2008. vladimir putin's arms traded advisers says russia is trading air defense missile systems to iran, according to the russian state news agency. in 2010, russia froze into a to supply iran with the long-range missile systems linking the decision to united nations sanctions. in a historic shift, all combat

jobs will reportedly now be open to women. defense secretary ash carter is giving the armed services until january 1 to submit plans for the plants. -- change. he noted about 220,000 positions remain closed to women. the marine corps oppose the change but army officials approved it. you can get more on these and other breaking stories 24 hours a day at bloomberg.com. back to you. scarlet: the nation's biggest pharmacy benefits manager has an answer to turing pharmaceuticals $750 bill treatment known as daraprim. express scripts is partnering with pharma company imprimis to offer an alternative to daraprim. .oining us now is mark

tell us how this alternative to daraprim came about. did people come to you asking about this or did you approach them? >> we found out about the price increase and we stopped the chemicals in our facilities and decided to, with an alternative. we made a public announcement that we would offer an alternative to daraprim at $.99 per pill. i think express scripts saw the press release and they got in touch with us right away. scarlet: you say it is an alternative, this is also a compounded drug. this is not a generic version of their prim. >> it is not. this is a compounded drugs that we use, we use fda approved components made in fda approved facilities, and we build our compounded drug from those components. scarlet: the product itself does not have fda approval. there have been some questions -- raised about the safety

and efficy of products, such as companies like turing. obviously, they have a lot of state. how do you respond to that? >> we have been in business for quite some time, we dispense thousands and thousands of doses of sterile drugs. in terms of a risk profile in the compound space, sterile products certainly have a higher risk than the formulation that we have made as an alternative to derek graham which is a nonsterile drug. profile, i the risk would just say it is a far less risky formulation. the other issue that is important to note, our facilities are all fda-registered and fda-inspected. we are not doing this in our basements, we are doing this in facilities that are inspected by the fda. scarlet: the compounded drug

itself is made up of fda approved ingredients and the facility is approved, even though the product itself is not. what do doctors have to do to use this version rather than daraprim?m -- >> instead, they could write a prescription for our compounded alternative. instead of the patient having to take the prescription for daraprim and go to their local pharmacy, the position can fax the prescription to us, saving them sometime, and we send it directly out to the patient. scarlet: and the price differential is huge, obviously. that being said, will express scripts force doctors to prescribe your compounded drug, as opposed to daraprim? >> i don't want to speak for express scripts, they have been fantastic partners. we have been happy to work with them, and hopefully other large pharmacy benefit managers.

willaraprim formulation continue to be unavailable at $750 a pill, or whatever the discount is that is being offered, if they can figure that out, but we will always be there with our $.99 alternative. that includes the core ingredient that is in daraprim, along with another drug that is generally prescribed with this. $.99, certainly a huge drop from $750, or whatever it ends up being. why not $50? you can still make money and it could be something that is affordable. >> our entire business model is designed to be outcome focused. that is where our company is totally aligned with express scripts. we are outcome focused and we believe in accessibility. whether it is with an hiv aids medication or our core business, which is ophthalmology.

we have a formulation which virtually eliminate the need for eyedrops post-cataract surgery. we make formulations accessible. think ofle accessibility, they think it has to be a higher price, but we believe in pushing down drug prices. that is what our model is based on. by the way, we make money at these prices. we will make money in ophthalmology and with these other formulations at these lower prices. scarlet: you will make money on the $.99 pill? >> absolutely, we make a nice margin, even at $.99. frome buying the chemicals an fda-registered facility that is inspected by the fda. it is not like you are buying a substandard component. the price tag, $.99, is that temporary or terminate -- permanent? long as i am the ceo of a

company. there is no reason to charge more than $.99. oddly enough for daraprim, it was always affordable. the pricing was simple. pricing only became complicated when it was acquired by turing. we are not going to make our pricing complicated. we are going to keep it simple, $.99 a pill. you are partnering with express scripts to make this kind of the drug available. are you in talks with anyone else to partner up? >> we have been contacted by all of the big names in the pharmacy benefit management business. we are really excited about our relationship with express scripts. by the way, express scripts spends more than $4 billion a year on compounded drugs, and we hope to earn the right to eventually help them with the other parts of the compounded business, but we have been in contact with others. we hope to create similar relationships with all of the big pbm's.

scarlet: let us know when you have an announcement to make. >> thank you. up, home prices in canada are surging with the average price of a home in vancouver now up to $1.2 million. what is behind the boom? more than half of single-family offices currently invest one/10 of their portfolio in private equity. signals allen december lift up which would add an historic era of near zero interest rate policy. is there anything that. this hike from happening in two weeks? ♪

scarlet: welcome back to

bloomberg markets. it is time with bloomberg business flash, look at some of the biggest stories in the news right now. staples is ready to make more concessions to use u.s. antitrust concerns over its takeover of office depot, according to people familiar. representatives are meeting this week with ftc officials ahead of its tuesday deadline for the agency to decide whether to approve the $6.1 billion deal. former massey energy ceo daniel fornkenship has been charged o explosions. he was found guilty of not speaking of safety rules after an explosion in west virginia which claimed the lives of 29 workers. subway is trying to revamp its tarnished image in the aftermath of the sex crime scandal. they have hired a former coca-cola executive as their

operating officer. of course, you can always get more on that story and other business news at bloomberg.com. we want to return to the markets desk where julie hyman has the latest. you were looking and retail names. , the maker of likeing including labels tommy hilfiger, and it seems like that is an issue. tommy hilfiger specifically. shares have risen after the close of trading after pbh reported earnings which beat estimates. however, on the conference call, the customer -- the company said tommy hilfiger total comparable sales have continued but challenging sales in the u.s. and margin trends continue into the fourth quarter, even as sales are better and better areas around the globe.

apparently, u.s. sales are likely to be affected by weakness in tourism travel, probably going into the second quarter of next year. what we have seen recently is a lot of issues in retail. issues throughout the supply chain. we are looking at the supply chain for pvh. here are all of the department stores. apparently it gets 9% of its revenue from macy's, hudson's bay, kohl's, jcpenney, all of the big retailers. if you look at many of those stocks in today's session, they were not as down as much. macy's, kohl's, jcpenney all trading higher, perhaps because -- as we have talked about -- these guys have been underperforming recently because of their recent results and concerns about the u.s. retail industry. sears shares are not higher today because they came out with their latest losses.

$445 million third-quarter loss. it has been selling off some of their stores, closing some, and selling off others to a real estate investment trust, who is leasing back the stores. in addition to what is happening earning wise, if you look at comparable store sales, down 7% at kmart, 5.6 percent at sears. so we continue to see a drop in drop as shares continue to nude american eagle getting a more permanent ceo. the interim ceo will not become the permanent ceo. this is the second time he will be the ceo. we are seeing this in retail. shares are lower even though analysts have praised his recent performance and what he was able toward ave -- achieved turnaround. however, the company also came up with preliminary sales that missed analyst estimates.

that could be accounting for some of the declines we see in the stock. scarlet: thank you, julie hyman. for no ownership in toronto and vancouver homes are higher from last year, according to a survey. for a look at how the new canadian government may respond to the increase in home prices, we are joined by our canadian tv anchor pamela ritchie. tell us what this report told us, what did you learn? you.od to talk to we learned although the bright spot in canada's economy, some would argue, is the housing market, toronto and vancouver have seen skyrocketing prices for some time. the question was what role are foreign buyers playing in this market dynamic? some of the data was released today and shows particularly in vancouver there are more foreign buyers in the market, almost .oubled from a year ago

toronto also significantly more foreign homebuyers, up to 4% of the market. therell was never that was anything illegal about this, people are allowed to invest in homes around the world. it was simply for the data to be released by this housing agency. the problem is that it has been really increased in quality. they had gone ahead and pulled property managers, talking to them, asking how many are living here and how many are not, and how many might be foreign owners. but it is not really quality data. they have increased in their scope to 16 cities, from 11, but there will be an issue from that. why don't they have the actual transactions that ranks have in many cases? lying is in the canadian housing agency releasing the data for more clarity? scarlet: whenever you talk housing, you want to know how

big the price tags can get. what kind of prices are people for homes iny vancouver, how does that contrast with some of the other canadian cities? it sounds more, dramatic in canadian dollars. in american dollars, the average detached home up to present. 10%.over-year, up over a million dollars canadian. it is a huge rise. in vancouver, the average price jumped to up to $1.2 million u.s. much higher in canadian dollars. this,ny, the concern from and it is tracking lower in calgary and montreal. we are seeing some foreign buyers come out of that market and prices flattening out in montreal. this is a regional story, as real estate is in most countries.

where the government may or may not enter, they have been elected to this liberal platform, they say they are looking out for the middle class, trying to make housing more affordable. they said they would enter in some way. bloomberg has confirmed that the finance department has suggested to the finance minister that people put down 10% of a down payment rather than 5%, which is what they currently have to do. we don't know how he will act on that, but that is the suggestion rolling around. scarlet: with everyone focused on when the fed may begin liftoff, what would higher interest rates in the u.s. mean for the enthusiasm for canadian housing? might mean the government has no problem to solve anyway if the fed does move. that means yields and canada will go higher, making the prospect of house ownership a little more expensive, and that may bring the froth out of the market. scarlet: good stuff, thank you,

pamela ritchie. up, we will take a look at my family offices are increasing their allocation to private equity. ♪

scarlet: welcome back to bloomberg markets. family offices are increasing their allocation to private equity. a survey released today finds most invest at least 10% in the asset class and the majority expect to increase their allocations over the next two years. joining us now is our personal finance columnist peggy collins. when we talk about family home butces, it sounds quaint, we are talking about professional investors. is a firm comeit

in many cases, an investment firm for people with hundreds of thousands or billions of dollars. notle are really investing, just for this generation, but in some cases, their great-grandchildren. they want this money to last for hundreds of years. scarlet: what is driving the more toward private equity? >> in part, their investment horizon is very long. it is getting harder and harder to make returns in the public market. the stock market saw a great run up after the financial crisis but that is getting harder. we are in a long-term low interest rate environment, so they are being driven tour the private market for returns. and they are bypassing traditional fund managers, going directly into private equity. this is a change. >> this is a big trend among family offices. 40% ofital survey found those investing in private equity now are doing it directly. that means they are either going

off on their own and buying a family on is this where they have experience in the industry, or they are doing coinvestment alongside with private equity funds to cherry pick deals, or they are teaming up with other family offices to buy a hotel or business. most mily offices have 10% to 20% of their portfolios in pe's. tell me about the common characteristics that define the group with the highest allocation? >> the group with the highest allocation tends to be the ones that made their wealth by forming their own companies. scarlet: >> punch brewers. it takese used to what to build a company can't make it last, and then sell it. when they are looking to take risk in the private market, they are more comfortable going to private equity because they have more experience running a company, knowing what it takes to fix it, and then eventually sell it. scarlet: what are some impediments to family offices investing in pe. >> the best returns are

concentrated in the best managers. you need to get access to them, first of all, so that requires research. on the direct investing side, we are seeing people have to hire people to sourcing deals. you need staff on your team to source deals, and that is costly come in order to build on the expertise of finding the right deals and then monitoring the companies, being on the board, managing long-term. scarlet: that then brings up this support staff and this sub economy that goes along with managing a family office that you don't often think about. >> they are becoming more of a job center actually. we are seeing people go from private equity firms into family offices because of the explosion of wealth around the world. these families are essentially able to build a company to run their wealth. in some cases, they have longer investment horizons, so they are not under the gun to do so many deals a year or two exit a company after five years. they can hold it a long time. scarlet: what is the biggest

family office you have heard of? >> there are some that have billions. bill gates has a family office, the company that founded the louis vuitton retail chain. we are talking about people that are very wealthy. scarlet: peggy collins, thank you very much. of course, you can read her article on bloomberg.com. coming up in the next hour, we speak with the ceo of mplx at 2:30 eastern time. and then later on, michael mckee speaks to jean-claude trichet, former president of the ecb. ♪

welcome to "bloomberg markets ."

♪ from bloomberg's world headquarters in new york, i'm david gora. central bankers headed in different directions. draghi tries to jumpstart your up with a rate cut. what is more messed up, brazil's economy or its political system? is still obama says it too easy to buy guns in wake of the california massacre. we will look at gun-control policy. first we will head to the markets desk. julie hyman has the latest. ie: we're looking at stocks that have been declining today. it seems to have more to do today with mario draghi than janet yellen. now hitting just abo t