and paying for experience. stephanie: welcome. you are watching "bloomberg ." it is monday morning. we are in new york city. i'm stephanie ruhle. david: i'm david westin. it is also pearl harbor day. stephanie: it was an important day for new yorkers yesterday. thejets beat the giants, in -- david: you are not happy with the jets win, are you? happy to be am also here. i spent the weekend in miami. it was a pretty good time, but i am back at home. david: we are looking forward to

hearing about it all. stephanie: i did not buy any really expensive art at about you, david gura? david: the chicago police department will reportedly be investigated by the justice department or the associated press has a wide-ranging story this week about -- critics say the police department was slow to investigate the case. in beijing, the sky is the limit. the city issued a red alert because of smog. it imposes limits on factories and traffic, and schools are advised to close. three consecutive days of smog are predicted. is december 7, 74 years ago today that japan attacked pearl harbor and brought the u.s. into world war ii. ceremonies will honor the 2400 americans killed. you can get these and other

stories 24 hours a day. now over to matt miller. matt: taking a look at futures, after the blockbuster day friday. nasdaq futures all gaining today. even after we put on a gain of more than 350 points in the dow friday. take a look at how far we are .way from record closes here you can see the record close for the s&p, 21.30. s&p, 2130.at -- the 400 50 points before we hit a record. european shares are up across the board. especiallyng gains, in germany. x.re than 2% on the da oil continues its decline. down to 42, brent

point 6 -- down to 42.61 after opec says it did not put a strong ceiling on production per not that there was a very strong ceiling on production in any case. let's also take a look at chipotle. the price plummeted on friday after more equal i cases were uncovered by the cdc. right now we're looking at a 10% jerk -- at a 10% drop. the company cut same-store sales. the president spoke to us last night, addressed the nation from the oval office, only the third time in his tenure that he has done that. his remarks came days after a mass shooting in san bernardino, california, that left 14 people dead. we want to turn to megan murphy. every presidential address has simple at parts to it and a real change proposed. can you sort through it for us,

please? megan: if we look at what the president said last night, what is more important is almost what he did not say. he did not give us any new information on last week passed mass shootings in california. he did not outline a strategy to combat islamic state. to convince people that he has taken the lead. he has not come across as really presidential. i am not sure he was successful at doing a leslie picker the address was shorter than expected. a -- there was no lengthy defense of welcoming everybody, proposing -- whether or not he gave any real concrete steps last night is difficult to judge. he mentioned something a little bit about asking for enhanced time duration -- enhance

cooperation, and mentioned tighten scrutiny with the waiver program. outside of that, it was pretty much what was said before. let's take a look at what he had to say. president obama: the threat from terrorism is real, but we will overcome it. we will destroy isil and any other organization that tries to harm us. our success will not depend on tough talk or abandoning our values or giving in to fear. that is what groups like isil are hoping for. instead, we will prevail by being strong and smart, resilient and resort this -- brazilian and relentless, and drawing on every aspect of american power. david: those are strong words. stephanie: are that? david: you don't think so? that is interesting. arehanie: i think they strong words, but one of the responses is that there is no strong action. david: what reaction will it be

from congress? what is going to change? megan: stephanie makes a great point. what does it actually mean, that we will tap into every avenue of u.s. power? there were few specifics. he did say we will step up scrutiny of the visa waiver program, which allows people from 39 countries to come to america without having a visa. that is a program that has significant economic benefit in terms of drawing tourism into this country. has is a proposal that attracted bipartisan support. but whether or not we can get it has divided congress. as for gun control, the president called on congress to take action that would limit -- to armedapons of assault weapons, machine guns, the kind of arsenal we saw the terrorists have in california. it is an area where he has very little ability to actually get anything done with the congress he faces right now. so a lot of talk, not a lot of

action last night. stephanie: i talked to my kids and i say this is serious and this is important -- unless action, theyal will not look up from their devices. megan murphy, thanks again. now we have to talk about markets. this last week was a true roller coaster. the euro took a hit as the ecb outlined further easing measures. europe, oil continued its downhill freefall. it has sunk below 40 bucks a barrel, it as opec ministers ended their talks without agreeing to it -- without agreeing to anything. all eyes are ahead to the next meeting on the server 16 were people assume we will see array rate hike. let's break it down. by andrew carr -- andrew cosgrove. gentle men, what are you watching in this trading week ahead? we have so much information.

some of it is conflicting. investors do not like that. they like security and certainty. >> everybody is going to be watching the dollar. if you look at commodities across the world, correlations have been rising. they are really going to be looking out happens going into the last part of the quarter, with how u.s. production is going to act and how some of the producers outside of the u.s. are going to take this. david: michael, are we looking at less volatility? ecb and opec surprises. >> over the weekends a whole we were not volatile. the ability of this market to move 1% or 2% is extreme. it seems to be an almost fiction market. that once it starts moving at 10:30 in the morning, a continues in that direction through the end of the day. what matters is not so much the

equity market, it is the quality of the credit market. the credit market, there is a very bad act end to 2015. everybody is very hopeful that once the fed gets it, it is out of the way, maybe the credit market can do better again. i am skeptical about it. stephanie: how skeptical he? could we see default? bankruptcy isl what you have seen. buts not exactly a default, if you are a bondholder, it kind of feels like a default. certainly within the energy sector, you are going to see a wave of defaults and forced restructurings. the big question is going to be whether other sectors which have nothing to do with commodities also go through the production cycle overrun. david: when it comes to oil, is it just a market defining the price? opec is out of it.

>> that is correct. anywhere else offshore, brazil, anybody in the middle east or opec is going to act independently. you will see continued investment, whether it be saudi any country, iraq, in the middle east part of opec will be the stronghold. they will increase production as time goes forward, and you will see the deepwater and the offshore fields, nigeria and venezuela, those guys will curtail production. david: matt, why don't you give us some perspective here? matt: the best perspective is looking at the 50-year or 40 year chart of oil. step back and look at this chart, we did not hit $40 a 2004. at all until i have a 10-year moving average. 81.38.ld be at about

we were in the $20 a barrel for decades. what has changed to bring oil -- why all of a sudden should be worth $40, $50, $60 a barrel? michael: there was a very interesting decade between 2004 and2015 -- between 2004 2014. i do not see why oil could not be range bound below $40. if it is, that will be painful for people. stephanie: it is all just supply and demand issues. , it iswhat oil is worth worth what people are willing to pay for it. michael: i think at some time supply will force people to stop supplying. willy of any significance stop drilling, so we will go lower. stephanie: trying to help you with his look ahead this week. we would like to have a positive

week. andrew cosgrove, and michael shaoul. you have to take a look at this. after days of delays, the private space company orbital blasted off one of its spacecraft for a resupply mission. the sickness kraft took off from candor the space center sunday sickness -- the theus kraft took off from kennedy space station. up next, a look at the future of policy and investment in venezuela. with aosition party majority income is for the first time in two decades. ♪

david: welcome back to bloomberg . it is time for the bloomberg business flash.

this after the restaurant chain revoked it -- sales plunged 20% after e. coli illness was reported. to be down 8%cted to 11% for chipotle. ford is recalling hundreds of thousands of its ford fusion and mercury milan models. the reason is that the fuel tank may crack and leak gasoline, possibly leading to a fire. 452,000 vehicles were affected, almost all of them in the united states. general electric is abandoning plans to sell the unit at $3.3 billion. electrolux regrets ge's move. that is the bloomberg business flash. weid: in today's global go, go to venezuela with big news

over the weekend about an oppositional alliance. this marks a major political shift and coded mean changes ahead for the economy? and investment opportunities in venezuela? exactly what i just said. how big a change is this, catch up was a can skate? katia: just because they won a majority, one vote does not equal one seat in the house. because in venezuela you have some votes that go directly into a simple name, a name that goes into a seat. we need to really see how much of a majority of a majority the opposition has in congress, because that is the ticket to getting big changes done. is such a oil export big business for venezuela. does it matter who is in office, even what oil prices look like? and a lot ofally, economists say the situation has

gotten so terrible there, there is not anything anybody can do to turn it around. you need to see oil rebound to see substantial change. the distortions are so great that it is not something that can be turned around overnight. stephanie: what does the terminal have, matt miller? matt: you look at the black-market rate is one of the most useful rates because it is most readily accessible. if we pull up by bloomberg, we can show you that. up, the rate has shot up to 911. i googled the official rate. it is 6.25. katya, what is going on? this coincides with the collapse of the oil price. katia: you see multiple rates on the screen. the top, the one that is way up 9.11, that is the black-market rate. there is very little liquidity of dollar, so it will overshoot

a lot. -- have a realist or should you have a real distortion that keeps the rate fixed, and you have these other rates that can be used to import certain items into the economy that you can use. but the liquidity in those markets is very small as well. all the demand goes into the black market for day to day purposes. so high,nflation is some estimate inflation at 125%. i have heard estimates of close to 1000%. there is no clue as to how bad it is. that is where all the pleasures going -- that is where all the pressure is going. you can access this chart on bloomberg. david: thanks for joining us. with retail giants struggling, we have been talking about this. who are the winners and the losers? we will find about -- we will find out about all of this on "bloomberg ."

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david: welcome back to "bloomberg ." this holiday shopping season we have heard words of caution from macy's, from the gap, from target. michael is the vice chair and and a shopping center owner. we have heard from bricks and mortar online. give us some perspective. michael: it used to be black friday was one day and we think about what happened on black friday and we keep measuring it. the truth is, it is a season. year, look at this wednesday through the weekend, it is a day up until christmas that is probably the busiest shopping day of the year. it is not as if people are not going, they are going over a period of time. knowanie: retail analysts

this, yet your stock is trading at a 52-week low. are merging two companies together. we have not had a time to get things going. if you look at where we are going over the next you're two and the amount of space that we are leasing to tenants interested, the projections are to go in credibly upward. stephanie:'s is those tenets have not signed yet, and retail sales being what they are come have you lost your leverage? michael: in spite of the fact we are seeing today last week or the week before sales are not quite what we were, the truth is we are signing 5, 6, 7-year leases. we are actually moving in a positive direction. you just do not see it yet. david: so occupancy is good and what about the rates? if you charge less, you can get the occupancy up, right? moreel: you have a lot

leverage when you are sitting at 90%. it is more about leasing space than gaining occupancy per but our dear flow -- when gap sales are closing hundreds of stores, that has no impact? michael: it absolutely has an impact. but we are doing business with old navy, athleta. stephanie: who is winning and who is losing? uphael: victoria's secret is year-over-year. people ask me about what other new concepts. i look at american eagle, hollister. it is the same store, different merchandise per even though they are not new retailers, they are becoming new retailers inside their four walls. david: what about the new like best buy is doing new things with their stores. michael: it is marrying on line between bricks and mortar and online.

were sales offshore? they were. people want to interact, go out to eat. we have change the next that we provide. so we are 20, 20 5% food in our shopping centers. we have fitness, yoga studios, gyms.bike places, stephanie: if there is one store killing it, who is that? michael: victoria's secret. stephanie: hot chicks. there you go. michael glimcher, stay with us. you are watching "bloomberg ." ♪ 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. david: welcome back to "bloomberg ," we are here with michael glimcher and tom keene. -- tom keene: it was a

good trip. to have youe glad back, despite the boom in london. let's get started with david gora. have a cease-fire announced within days, nearly 6000 people have been killed since the civil war broke out months ago. -- have been fighting a shia group of muslims. been bombingia has favorables. a manic used of stabbing two people in a london subway stop is due in court today. police are calling it an act of terrorism. he is charged with attempted murder. he threatened with a knife while shouting, this is for syria. and jimmy carter revealed four months ago that melanoma had spread to his brain, 91-year-old carter had continued his busy pace. you can get more on these and

other stories on the new bloomberg.com. stephanie: we know what you are reading today. mike bloomberg has a view piece out. i will say that is our morning must read. leadership with the mayor in paris. i was really surprised at the granularity of the conference. much more of, this is what we are going to do, these are the specific actions. let's go to the bloomberg article by michael bloomberg. our majority owner and founder. -- argue that companies cannot accurately value companies and efficientlynnot allocate capital without reliable data on the risks they face. governor carney with the bank of

england, he wants to put together a committee that will focus on gathering the data. mike bloomberg will provide leadership there as well. david: it is consistent with our security in this country. do as atell you what to company, but you have to tell us what you are doing. this is on terri, as i understand it. -- this is voluntary, as i understand it. will this work? tom: yes, this will work. we talked about this late in paris on friday afternoon, i you see the follow-on. is, they arery doing it, we have to do this. it feeds on itself. that has been proven many times. going back centuries, i would say. yes, but if we go

back to your conversation on friday, jeff said it was on top of the market. and there are more examples that it doesn't take subsidies or philanthropy or celebrities to say, this is important. national targets aren't what makes it happen, it is business decisions. that is why we need to do it. tom: yes, within the economic standard worldwide, everyone with climate,g,g change. everything down to the bloomberg coffee cups that we have upstairs, those are micro decisions. aephanie: decisions are made sans all of the given information. today we have so much information proving why this is a necessity. tom: i think that is true. others, i thought the

mayor of symphony, 14 years in that job -- even with australia in the extremes in whether, there is a shift. david: i'm going to put you on the spot. in your malls are you dealing with the climate change issue? michael: there are a lot of things we can do. we do led lighting. we have a national recycling program with waste management. it is such a big footprint, it is 10-20 different things that we do. it is economically positive for us. david: we will go on to another story we are following. stephanie: not economically positive. david: no. it is puerto rico. they have a crisis and it landed in the supreme court on friday. the supreme court decided they would take up the case, they are trying to get around the federal bankers statute and have their

own anchors. there is a $.2 billion that is owed by the puerto rico electric power company. greg is with us. i was a bit surprised when i saw this. this was certainly a case that the court didn't have to take. had decided this case had ruled against puerto rico. what is at issue is the law, they are trying to get around the federal and cropsey flaw. the federal bankruptcy law says that takes cannot set up their own systems to allow for restructuring of debt. that lawco said, doesn't apply to us. we are allowed to set up our own system and force the creditors into accepting a partial payment. david: as i understand, and i am not a federal bankruptcy expert,

they say that they are not at debt or it doesn't count. so congress has addressed this issue? the: there is a part of statute that says a state may not set up its own local law to -- bankruptcy. include puerto rico. there is another part of the law that says some states may authorize their municipalities to use the federal bankruptcy system. and that part of the law does not apply to puerto rico. puerto rico is saying, look, we are getting killed both ways. either we should be allowed to take part in the federal system or we should be allowed to set up our own bankruptcy. time to bey have deliberate and move forward over months or quarters? or is there in media see? indication is no

that they will ask ahead of schedule. they are on track to hear arguments in late march and by the end of june -- we are talking six months. if puerto rico wins, the bondholders have another argument, so that will go back down to the lower court. if the court rules against puerto rico, the issue is settled. stephanie: clearly this matters to on holders. what are those deals looking like? matt: the yield curve seems to have recovered a bit. it is interesting to visualize with the 3-d function. you can see here that the front end of the curve shot up to about 40% in the middle of the year. now we are back down to about 20%. if you go longer out, you can see that we are down around 8%-9%. it seems like the front of the yield curve has been changed

somewhat from the blowout. stephanie: unlike a corporate, work,ill trade out of because you have very few people trading bonds. we are not seeing the basis trade. we talked to tom wagner last week. he is very involved in this restructuring. take a look. amazingo rico is an untapped resource that should be attracting a lot of capital. attract newult to capital and investment formation when you are approaching a debt crisis from the manner that they are approaching it. -- youie: tom wagner have no properties in puerto rico. when you see somewhere like puerto rico in crisis, do you look at this as a possible investment opportunity? what i try to do is have a little bit of exposure everywhere. so whether it is states or

we don't try to overexpose ourselves anywhere. in that case, there are major landlords that owned that area. stephanie: we have to take a quick break. greg stohr, thank you for joining us. michael is not going anywhere. we have more "bloomberg " ahead. how about this? the spanish company waived guard is offering on-demand waves for 30-40 five dollars, no matter how close to a coast you may be. austin texas is in the pipeline and these technology is timely. their sights set on the tokyo olympics. this is amazing. this from theat gopro shot, it actually makes me sick to my stomach. up next, we are going to look at what we like to call the

experienced economy. americans are buying fewer things and investing in more experiences. next on "bloomberg ." ♪

david gura: welcome back to "bloomberg ." -- will probably be left under direct supervision for the first time, according to people with knowledge for the matter. a combination of citibank in dublin and citibank international would have well beyond $32 billion threshold. europe has been slow to join the parade. according to data compiled by bloomberg, they come for the of globalcquisition -- in years. 22% of the $3.5 trillion total.

the u.s. company has been subject to takeovers this year. thehunger games finale let box office for the third straight weekend. the fourth hunger games collected $18.6 million. the second movie is christmas -- krampus. stephanie: whether it is a investorsl or hotel, would rather invest in an experience than products. today we begin a weeklong series on the experienced economy. with us this hour, michael glimcher. who with us, the man created the hotel experience as we know it. developer of hotels like the delano and the mondrian. you must laugh at this.

you created this years ago. how does it work? why have people decided they want the most fantastic experience in a lobby or bar of the hotel, rather than the room? >> the room is important as well. people want elevated experiences. feelingout going in and that you are in a special place. you get treated with the missy. it kind of is the future. stephanie: why are people paying for that now? retailers, it has been -- but when it comes to experiences, people will pay up. goingl: it is not just and buying something off the shelves or sleeping in a bed, it is, what does the environment look like, what is the

architecture? we want to do something different that we can do at home. stephanie: i just thought it was how nerds got into nightclubs. ian: everyone thinks that. but it really isn't. in a nightclub, you are not supposed to be sleeping over. although sometimes they do. it is a different kind of experience, a more civilized experience. there is an alchemy that happens , like what happens in the entertainment world. it is hard to define it people gravitate towards it. hotelsie: you develop with marriott, is that what they need to inject here? entertainment to move the needle? when you look at airbnb, they are moving the needle. ian: the best way to do it is to do a distinct product. that is something that airbnb can't do.

we try to create the magic by giving you an elevated experience. that is something nobody can compare with. david: when you do this, part of the experience is who else is there. you are seen with certain people . do you think about who is the target audience? creative,nk anything -- i'm sureive, you steven spielberg designed the films he likes. i do the hotels that i like. i happen to be a part of a generation that people respond to. it is personalized. oris not based on a rulebook the mass market. it is trying to create a special experience. when you lay a great experience on that special experience, it

is great. stephanie: are you in a tough spot? when i think about a shopping mall, it is a lady in a sweat suit, power walking. michael: we are across america. you want to cater to the customer who is in that market. who is going to be interacting? stephanie: what are you creating? michael: we are creating an experience. restaurants, places to go out to eat, indoor skydiving, cosmetics -- it is about a lot of different things. it is not just about buying things, it is about an environment you enjoy. it has to feel great but you have to say wow when you walk in the front door. our design mantra. the sweatsuitin jogging is also buying an apple product. it is not about markets

or revenue, it is about how much profit you make. and that has always been our business model. it happens to be apples is this model. a distinct product -- nothing matters but the product. stephanie: people are never saying, can i have an apple product on sale? but they are asking for a sale from every other outlet. michael: how do we create something that people have to own? that is up to the retailers that we do business with. we have exposure to thousands of different retailers. we have to get it right and understand who we should do business with. it a catching star, we want to get it while it is going up. stephanie: does that mean department stores are dead? why would i go to dick's sporting goods when i could go to nike town? -- all: it is an idea

the brands they carry and they create a great experience. an outdoor experience, a bat and ball experience -- they are selling a lot of apparel. they are in the euro business just like the department store. go, neitherhere you of them are going anywhere. we are talking more about real estate. we are talking about the condo development in tribeca. and i spent the weekend in tribeca. ♪

stephanie: welcome back only you are watching "bloomberg ." i just returned from miami where they hosted the annual miami art basel. was transformed into one of

the most important centers for cutting-edge design. in schrager is here and michael glimcher. when i think about miami, it is amazing. this is a risk though that innovative and sexy -- it takes us closer to the idea that we are in a bubble. >> anyone that is in business and doesn't prepare for a correction is making a huge mistake. going to beways economic cycles and great things will be impacted and then they will come back even better and stronger. because the other part of a downturn is that it weeds out the weaker product. the great things that then stand taller. basal is sexy and cool. but how to we know we are not facing a crisis again? ian: miami has traditionally been a boom or bust town.

cyclical but it has too many fundamentally attractive areas. i am a big believer in the design industry, i have been there with my parents as far back as the 1950's-19 60's. i think it is too close to so many people. it is easy to get there and it is the cheapest property in the country. stephanie: you are in florida but not miami. why? we have 10% exposure in florida but we don't happen to be in miami. i love the market, you see the cranes up in the air. stephanie: is that a good thing? to me howt is amazing much foreign investment is coming in. it would bet

tempered so that the downside is tempered, but it doesn't feel like it is slowing down. isphanie: maybe real estate tempered in cities like miami or new york. ian: again, it is cyclical. it may fall apart again. but miami is a great place to live at the quality of life is good. i am a big believer in miami. museums, great restaurants and architecture. it have -- it has all of those things. stephanie: he left out great-looking women. ian schrager and michael glimcher. thank you for joining us. coming up, terry duffy. this is "bloomberg ." ♪

david: facebook, twitter and youtube. what role should they play in the fight against the islamic state? ge calls off its deal to sell its appliance business to

electrolux after the department of justice locked the sale. and hedge funds tightened. -- artnside art basil basal. welcome to the second hour of "bloomberg ," i am david weston. stephanie: i am stephanie ruhle. we had a great last hour. we have one sharp dresser, terry duffy. why, his point out mother. terry: absolutely, it's true. david: let's get started with the first word. david gura: u.n. negotiators say there could be a cease-fire within days and that peace talks

will start within days. nearly 6000 people have died since they have been fighting the shiite rebels. the shooting of a black teenager by an officer has prompted an investigation of the entire chicago police department. the department of justice will rightsa wide civil investigation this week. the sky is the limit today in asia, the city has issued a red of theirause conditions. it has been three consecutive days of smog, they are predicted. you can get more of these stories on bloomberg.com. i am watching headlines across the bloomberg terminal. is beingen mountain purchased by jb group. bone peeps coffee

at caribou coffee. gettingight now are taken out for $92 a share. interesting stuff. you can see behind me that the futures are up across the board. not a huge move but greene after that made upgains for the drops on wednesday and thursday. taking a look now at some of the other movers in the market, chipotle is one of them. they are getting crushed in the premarket, down 9%. it was put out on friday that the cdc found additional cases of e. coli linked to triple play restaurants. the first time we found out there was a huge drop in the charts. linked ontime it was october 31, the stocks came down

12%. this morning, a 20% drop. analysts have reduced the outlooks. has come out to say that the stocks will fall a percent-11%. 8%-11%. deutsche bank has cut their $400.80 -- $480. i want to take a look at phillip morris. the stock moved to .5% on friday. 2.5% on friday. there is a report out that the russian smoking age is being proposed to be raised.

did you know there was a smoking age? stephanie: we can move on. we will take a look at president obama's remarks last night and his call for tech companies to join the fight against the islamic state. >> i am ordering the departments of state to review the visa waiver program under which the female terrorists in san bernardino originally came to this country. that is why i will urge high-tech companies to make it harder for terrorists to escape from justice. we are joined now by our editor at large, cory johnson. welcome to new york. megan, we have touched on this --lier, president obama without an actual action plan. >> no question. we thought this was going to be

a bigger component of the speech last night. this was one of the issues. to do and itasy has been a thorn in the side of obama's presidency for quite some time. there is the issue of the technologies that terrorists are using encrypted platforms. the second is the monitoring. takenficient care being by technology companies to monitor the kind of messages that they fear are being used to radicalize homegrown terrorists? stephanie: lets aim jack dorsey or mark zuckerberg today. i watched president obama speak last night, is it me who is supposed to do something? think one of the things that we know about the terrorists is that a lot of the methods of terrorism is that it wasn't facebook or twitter, all those have been effective recruiting stations.

it was more the playstation and the messaging systems. there is the issue of free speech and then there are the serious business issues where you have seen eggs silicon valley companies like symantec and cisco talk about the business impact of the edward snowden relations. hacking into the devices. it was hurting the sales in europe. that they a year ago were seen as being in bed with the nsa. they found they were losing business. there are some serious enterprise technology issues that go beyond free speech. david: let's go back. you said that there were some indications that we would go further. what could he be asking for from silicon valley? megan: even though the president

has said that he won't reverse the decision to seek legislation asking tech companies to provide a backdoor to encrypted technologies, i think those types of discussions will be renewed. he will be asking them what exactly they are doing, as far as how many layers they are going down. johnson said, silicon valley does a lot on this front. they have always done a lot. they are concerned with free speech and by giving the government access to their platforms, there's concerned -- they are concerned that it opens the door to hackers. they have already had serious problems with this. there is a lot of conjugated issues here in asking them to step up their behavior. stephanie: hacking is a big issue in your world. what was your take on what the president said last night? terry: when you look at cyber

regulator,sues, our i run an exchange, i don't run a social media platform, but they have called to have source codes because of high-frequency traders. to similar anything to what we are talking about. they pass a regulation within the agency. these source codes are worth hundreds of millions of dollars. no different than a social media platform. but with one snap of a finger, regulators can ask for them. why can't they do the same thing on social media platforms? [laughter] stephanie: because they like social media platforms. [laughter] they also promise their what that they are using they promised they are using.

it could fundamentally a road their business. no sign that the backdoor will help terrorists. told we are at war with an entity that is attacking us in our home. we have to modify it or worry about security. if you say that there isn't a ankdoor, isn't that advertisement to the islamic state to say, this is how we communicate? stephanie: do you want to weigh in? megan: there is the argument to be made that having them posts and recruit on twitter and facebook is an advantage to authorities, it gives them a good trail to pursue people and identify people. david, that is the issue. the president didn't make that many new points about how we are supposed to change our strategy.

i think the american people want more, more along the lines of discussion. how are we going to modify behavior? the are we doing beyond visa waiver program? there is the demand for us to be more rigorous, i don't know whether silicon valley is the way to go. alleys thate other would alleviate people's concern against domestic and international terror. stephanie: thank you for joining us. our own editor, cory johnson. you better come back next week. when we come back, new york city just got a little bit more bling. to holiday windows, you have look at this. 7 million crystals. this is beautiful. promotion forf a the newly renovated jewelry

salon. the question is, all of these people who go by these windows, are they going to walk inside and buy anything? when we come back. everyone on the set is shaking their heads, no. back, ge pulls the plug on its deal with electrolux. we will find out what happened. next on "bloomberg ." ♪

david gura: welcome back to "bloomberg ," here is the latest business flash. climb for a second straight week because of slumping oil prices. russia should be for step slower than its current rating. citigroup's move to streamline the european banking operations

will be under direct ecb supervision for the first time. citibank international would assets. billion in well above the threshold for oversight. the reason is that the gas tank may crack and leak, possibly leading to fire. most vehicles are in the u.s., that is the latest bloomberg business flash. david: we just learned about an investment group led by ja be holding. rigy have agreed to buy keu green mountain. mountain --reen ever since david einhorn came out swinging, they have lost their group. >> yes, this is a huge deal. $50 were trading around

something a share, this is around $90 a share. are presenting themselves as a huge rival to starbucks. the saraht caribou and lee coffee company. they are enormous in the united states. stephanie: green mountain, in upe beginning, they had the kc model. but since everyone got in that space, they lost their specialness. so without a deal like this, they were struggling to have any growth opportunities. then there were people who said, it doesn't taste that great. stephanie: that is a problem. -- coffeel coffee who that doesn't taste good, that is a fundamental flaw. connoisseura coffee

, but it didn't taste as good. is a 78%: this premium. this is a company that has struggled. , why? look at m&a what is so special? jeff: there is one main rival, starbucks. green mountain shares are down quite a bit. they probably wanted to get something closer to where they used to trade. david: it is a preemptive price. jeff: exactly. maybe there are others. david: let's go back to electrolux and ge. jeff: this is a worst-case scenario for electrolux. jumped 15% atres

the time. up or downy might go in little bit, but people were so excited about what it would do for electrolux. this is the worst-case scenario. the shares have tanked. there are down 15%-20% they are wondering, what do we do next? stephanie: what can they do? when ge is no longer a player, what can you do? will look into asia, but they have spent 16 months trying to get this deal done. they go ge $175 million in termination fees. their balance sheet seems pretty strong. no other really are obvious places to go, at least in the short term. david: that affirmative justice didn't like the deal. is this a one off?

or is this regulators getting more aggressive? jeff: the regulators have gotten more aggressive. of big consolidation efforts number one buying number four -- stephanie: it goes to the consumer. jeff: yes, and they are getting backlog. it is now taking 12 months before getting an approval. david: thank you very much. of next, a chairman's role on "bloomberg ." ♪

stephanie: welcome back, you are watching "bloomberg ." you are looking at an amazing shots taken from midtown in the headquarters in new york. david: that is arch. stephanie: you could take a

picture of that and save yourself some money. moving forward, we are looking at a chairman's role as a lead advocate for the industry in washington. who better to do it ban terry duffy. .ive me your position you have been a leader in washington in terms of defending the financial industry and shaping regulation. it has been really tough. what is the biggest roadblock? andy: people go in there believe they have the answer to certain issues when they don't have an answer. stephanie: when you say people? terry: whoever is coming into lobby. legislators. you have to do this over a. of years -- you have to do this over a period of years. when someone comes in and says, i have a solution to your , it helps you and what

you are trying to do with your business, it helps you a lot. thatanie: the problem is they don't trust you. not you specifically. terry: our industry is a neutral facilitator. meaning that we do not take a bet on the market going up and down. difference, you can tell legislators that you have never had -- in all of the years of business because we manage on an hour-by-hour basis. stephanie: that is assuming the legislators are taking a close look to see what your job role at cme is. why, to my is earlier comments, you can't walk in town on day one and have a meeting with so-and-so. they will not take you. but if you have been going there

for 25 years, spending time there and cultivating relationships and reading solutions and not problems, it helps a lot. solutions. about if it was all up to you, what would you do to dodd-frank? terry: i opposed dodd-frank. even though it benefited me. why? because i am a market driven guy. i believe you should have certain costs embedded. if not, you pay a different cost. i don't think congress should legislate that. i think economics should legislate that. so i think that is what is important. you can save a bus load of money if you had gone that way. stephanie: what is the difference between a pool and a law? [laughter] have: that is something i an issue with. if i want to compose a law to have bloomberg named as a

national landmark, the next thing i know, time warner wants to tag onto that. and six other businesses and the bridge. and i say, what does this have to do with bloomberg? but that is what's happening. politicsbeen when kicks in because i can't support bloomberg any longer, and it is not because of bloomberg, it is because of the george washington bridge on top of it. stephanie: that is a problem, not a solution. when wecover that's come back. terry duffy will be with us for the rest of the hour. you are watching "bloomberg ." tom brady try to win last year -- last night and he couldn't make it happen. sorry. ♪

david: welcome back to bloomberg . the president of the cme group is still with us. what time is it?

stephanie: time for first word news. topresident obama try reassure critics last night. he called the shootings a new phase in the fight and repeated calls for tougher gun laws. demanded venezuela change. the opposition scored a landslide jury yesterday -- victory yesterday. more than 3000 people remember the americans killed at pearl harbor. the u.s.hat brought into world war ii. back to you. following the ecb meeting last week it is time to talk market positioning and central-bank expectation.

thank you for joining us. , let me ask you about the u.s. fed. r there any data points that we should be watching that might mind?e janet yellen's lin >> i think it is all the baked in the cake for next week. we are expecting a 25 point -- basis point hike. barring what could be an week, we arey weak all but set for the first liftoff in 10 years. on theet's focus back ecb. maybe you can settle a score. dave mariodraghi -- draghi, was that all well and good, or was he like lucy taking the football away from charlie

brown with that disappointment on thursday? perspectivemarkets he underwhelmed quite significantly. the key message was that the veryt was selling aggressively and buying aggressively. ony came in slightly low our own expectations. rate for deposit reinvestment and extension was not enough for the market which was short euro-dollar in that meeting. extension, no expansion. how has that affected the euro, amazing to watch, and other fx flows outside of the euro-dollar? >> the dollar and the british

pound, the two central banks -- the two currencies that are on wereusp of a cycle impacted the same way. they saw a significant move higher. on the other spectrums you have seen european currencies also move higher. it is the peripheral currencies that were most impacted by the ecb's decision which was seen as rather disappointing. matt: the boe is the next to come out with a decision. what do we expect from mark carty this week? >> we are expecting no change from the bank of england. it is a timing cycle that will convince many of next year or around that. it has been driven by external events, a reaction to the nonfarm payrolls.

in that regard it is really an international dominated market for sterling. but ultimately, if the fed does tighten policy next week as we expect, that could bring the focus back on to the bank of england. matt: thank you for joining us. david? on friday we were covering opec, and we thought a cut ine might be production levels. then there was a room word that they could not agree on anything. this was despite the fact that many users were pushing for usage limits. it's opec still a cartel at all? -- joining us now mr. yergin. question forn a some time whether it is a cartel because it only controls 30% of

the market. right now it is a fractious trade association that cannot agree on basic matters. david: canon agree on anything at this point -- can't agree on anything at this point? >> divided by the nuclear agreement with iran, dominated geopolitical politics in the region. are some that want to come back in and nine others do -- want to make room for a r and then others do not want to make room for iran. you look at fracking in the united states can we talk to people in the business, when oil

is at $92 a barrel, they said that the input cost would be about $80 a barrel. it wouldn't when it got to $80 a barrel they thought it would be $70 a barrel. and then they said $65 as it got closer to that price. now they are underwater in the movie. upside because if the market rallies, when the input costs change, they will get back into the business. the u.s. being the swing producer, that adds to volatility because you're talking about the impact of decisions made by thousands of individual producers. terry: if we were to lift an ban, that would put more into the system which would

actually help with the volatility and keep prices that will keep u.s. consumers putting more money in their pocket? i think that it is clear that ban is left over from the 1970's when we had price control. it is ridiculous for the united states to go around telling the rest of the world we believe in open markets and free trade and have this arbitrary ban. exportsdn't increase in that would be good because we are under intense pressure. consumers would not be particularly effective brady they would have low gasoline prices because gasoline prices are set by the world market not lower u.s. prices. stephanie: you have to be concerned about southern lower massive swings. -- sudden massive lower swings. >> it is no different from when

we came from $92 a barrel in a very short time frame. we are always prepared for the high volatility market. that is why we spend billions of dollars on her technology, our systems and our safeguards. it is treating quite quickly, as we know. even above the turmoil in the marketplace, this could lead to turmoil in some countries that are not wealthy and highly dependent upon oil, like venezuela. >> venezuela yesterday entered into a new timeframe when power they nowd again and have to deal with the congress that might have a super majority. venezuela, 200% inflation, come -- contracting 10%, that is a dangerous place. we get a lot of our oil from venezuela. we getimilar to the oil

from canada in terms of quality. --eria, 70% of its oil from revenues come from oil. iraq.hird country is a rock they face next essential threat as a nation. keep your eye on that. matt: if you together look at my bloomberg screen behind me you the white line is to buy stock. the blue line is e.m. stock. there was a big spread here. but that spread has narrowed and come down to nothing as it seems investors have not been as interested in the dubai stock. no production has taken the charm out of that straight. let me come back to russia for a second. they are quite dependent on oil as well. what does this mean for them? >> it was thought earlier that

this would get vladimir putin's back against the wall, but no w they have this great question because the price of oil has come down and the ruble has come down at the same time. it does not have the same impact on their budget. it is about 42% of their budget. this year and will contract about 5%. it is not the crisis expected about eight months ago. now russia is just putting sanctions on turkey. this could continue to spiral. stephanie: thank you for joining us. daniel yergin. before we go to commercial, matt, take me into the terminal because we want to look at where it is. matt: up 75% right now.

that the the premium purchase was announced. it was a 78% premium. we are at $90.45 a share. $92.roup is offering 26phanie: coca-cola owns million shares. getting a huge premium. matt: if you do the equity phd c5, you can see the holdings broken down. $2.39 billion, that is a big morning for coca-cola. take a look at our next interview, coming up. ♪

bloombergcome back to . here's the latest bloomberg business flash. russian sanctions against turkey are speeding up the flow of acid out of the country. nearly one and a half billions last month. sources say the new barclays ceo's thinking about cutting 1/5 of the bankers in the country security unit -- companies security unit. that is the latest from bloomberg business flash. stephanie: this last weekend, one of 75,000 people dissented on miami for one of its biggest are to dazzle. dazzle.

i went back down to miami to talk about how it played out and where the art market is. ubs, the main sponsor of the festival really showing that banks are saying is all about the rich people. >> sotheby's has gone down, it was a trade that worked out on both sides. now it is a little trickier going forward. in large part, international buyers keeping prices this high, chinese buyers, russian buyers. even though we saw a chinese buyer pick up the lovely is on me for a record price last month, is that really reflective of the whole art market? starting about two years ago, what was happening is we had a bifurcation. the market was split between well-known artists and artists who were second-tier or

lower. and now we have seen another bifurcation in 2015 between well-known works by well-known artists and their lesser works. we have seen some softness in ,esser works of famous artists and yet the stock continues to do well. the market continues to get guide. bubble,e: in terms of a last year we were at a seven, if 10 is where it first. where are we at? >> 6.5. stephanie: below? while the prices may be at or above last year's level, there is an awful lot that is not moving. that is why we are lower. arch is not an investment. decorative, very expensive

decorative work. pieces we have are fatally flawed because by definition we have survivorship bias. we are only tracking those that have sold over and over dozens end times -- dozens of times. we really cannot say with any kind of definition that art has had superior returns over stock or bonds. the dataset is pretty problematic. stephanie: living artist versus den artist, who is more valuable? >> it depends upon the art. all things being equal, one of my concerns is that they are supply.ng to equityie: if we see the

markets, a real correction, will you see that reflected in a rt? >> the stock market is hand-in-hand with the art market. it tracks the financial markets almost 141. this past year was the first big diversions we have had in a while. tracks market really wealth inequality more than overall levels of economic growth. stephanie: how so? --intends to do better when it tends to do better when others are doing disproportionately well. wealthie: as the continues to get more extreme we expect it to go up? stayingealth divide

ich isit is, wh problematic for a lot of reasons, -- stephanie: do you actually see it changing? >> i see it coming back. we are in a unique market right now because it is a contemporary market that is interesting because the artist are still bringing out contemporary work. you have almost an infinite amount of supply. that is why i am worried a little bit. thehanie: we are going into end of the year. how do you feel about the equity markets? >> you are ambushing me about the stock market? i am no idea. short-term is trying to pick some of these artists. the best you can do is know what you own or know what you are short and have an opinion about that. but trying to pick where the s&p

500 is going to be in three weeks, i have no idea. stephanie: are you buying anything this week? >> i have put some bids in on a few small pieces and that is it. stephanie: does the hedge fund manager always pay the full ask? >> i hope not. stephanie: what really stood out to me is how super high-end art is a complete reflection of income inequality divide. you will go home to chicago where you have a city that is a mess. protesters outside your office. people are paying hundreds of millions of dollars for art. how do you make sense of this? more for that thanof new york city anything is shown in your video. it is not an investment, it is a collection and when you look at the income inequality routing world, it has been that way forever. i think when we go back to the

we need them to educate them as much as we do -- need them to not do bad things are twitterverse going on in chicago right now, there is a lot of people upset and rightfully so. the need to do it peacefully because they will get a lot more done peacefully then destructively. next onoming up bloomberg , final thoughts before you go. ♪

welcome back to bloomberg. i know you have a final thought or two? terry: i do. thank you for having me here.

a couple of things. we were talking about washington earlier. it's very frustrating that a lot of it comes out of watching too and i am a big believer that you need to have some legislation. and i believe that good, sound legislation has no party affiliation. the only way you will get to that is if you get the politicians -- i have sat in their office and they have said that policy is good politics. we need to change that mindset and vote on what is right. stephanie: we will if they have you. more of bloomberg in the next hour. peter will be with us. ♪

david: we are 30 minutes from the opening bell in new york. stephanie: it is the third hour so we are joined by our own

economics editor. good morning. we also have the legendary chief strategist with us this morning. the 1987 crash. we will get to that later. david: he is wolverine. we will get to that a little bit later. we will also not wait for david gora the with the first word news. david: chicago's mayor will hold a news conference to discuss police accountability. rahm emanuel will be joined by officers, and the department is under pressure from critics for the killing of a black teenager by an officer.

the word from a human negotiator, cease-fire could be over. smoggy skies in beijing prompted a red alert. factories and schools are urged to close. now to matt miller. futures coming off their best days in september 8. they have now turned lower as oil dropped even further. right now crude is trading at less than $39 a barrel. we will continue to cover that. a far as the index go, we had big day on friday getting closer to those record highs. we're just a couple of percentage points away on the s&p. we are trading at 1.9% below the dow.% on

, a story broke this moment. jmp group will pay $13.9 billion to buy green mountain coffee roasters. keurig is going to sold. soda stream is one of the things we thought about instantly when we heard the story. in the u.s., premarket trade 16

and a quarter percent. if greenland could go, soda stream could be maxed? next? stephanie: it is a beverage technology story. liquids.ed to other the five stories that matter now. trading the low $39 a barrel. this is after opec's meeting on friday. they abandoned their strategy of production to limit pricing. here is my favorite quote from the weekend, after they basically dissolved themselves. want,ne does what they that is what opec is now. stephanie: there you go. some, -.ill get to sell best for saudi

arabia. they're the ones the going to pay for this and the most spare capacity right now to continue fighting for market share. stephanie: all of those investors who in the 70's thought this was the time to start playing, oil is going in one direction. do you see a bottom anytime soon? peter: markets always bottom, but anytime soon, that is a great question. for us we think there is a pattern that will take oil down into the lower 30's or the upper 20's which does not seem like a lot but as another 25% from where we were this morning. one thing about markets, they big moves from oversold positions. we have seen that all along in the energy. our theme's weekly the technology, we believe in progress which means you're going to have more supply at every given level. we are using it more

efficiently. automobiles, a licenses to my nest. nest.liances, stephanie: you think $32 a barrel? peter: that is the initial stopping point. it could go into the upper 20's. >> will oil behaves like other commodities, when it gets there? reaches itsnamic peak as opec is no more and we have the swing barrel from the american west, do we look at the move? peter: demand is going to continue to be soft unless we see global growth. we just said we are using each price level more efficiently. unless we see a shift in the demand curve in terms of greater growth, which we are not being, that is part of the message from the ecb last week. it is likely that not just oil but the remainder of the commodity sector will continue to be under pressures.

markets work, economics work in the more supply, less demand, lower prices. stephanie: sticking with commodities, the $2 billion investment firm is starting a hedge fund raising money today to trade industrial and precious metals. some of the biggest traders are shutting down there flagship commodity funds. lowest price we have seen in six years. you know the hedge fund space, can you put additional outside your door today is a we going to start a fund and invest in this vertical? is there a time lag here? peter: they have not lost any money trying to pick the bottom. raise thehe time they money prices will have hit the bottom. work asnot necessarily

we have seen, but here maybe they will get fortunate. you look at the where it is, they are picking the bottom. peter: by the time they raise the money. it could be a few team of, which is a good time. have a slightly worrying chart for people looking for the bottom. take a look at this bloomberg chart. iron ore delivered to china in white. thentially demand and production here. continues to climb as demand falls. if you want to access this bgo24 on yourg# terminal. >> this is from the founder of saying that 70% of my production is losing money.

that is the situation i cannot last. i do not know if that is true? it cannot last, but how long is too long? been talking about electrolux, following the most in four years after general electric abandoned plans to sell to swedish electric. intervened.tors according to sources they have agreed to pay regulatory fees. the background of this is that the department of justice's getting much more aggressive. we have seen it slowly with the at&t, t-mobile deal. we are seeing a slope change signal from the president about how the justice department looks at competition. stephanie: it is not a merry christmas for electrolux, not

yet. i did take you to number four, venezuela. years, first time in 16 this comes as an unprecedented recession and a class -- collapses that turned voters against the populist policies of the president. fueling the world's fastest inflation and stoking storages of essential items -- shortages of essential items. it is a desperate situation of the power of declining commodity prices. the stronger dollar, we're starting to import some of that that is why we are seeing continued, and the pressure. but in the case of venezuela, if you only have the ability to vote, you're going to vote out the people who have been in power. stephanie: if you are

venezuelan, it is a commodities slumped, oil prices that have you down. no new election is going to change that. correct peter:, but you feel correct, but you feel good by venting. >> if you are commodity , would youountry rather be norway's in venezuela? when the prices are high is the time to make fundamental reforms. by the time they come down it is even harder. stephanie: matt miller would not. five, speaking of picking jurisdiction, citigroup could fall under the direct supervision of the ecb after a move to simplify the legal structure of its banking system.

>> they are reaching $32 billion in total. -- the amount of pressure banks are under is only increasing. do we see that changing? peter: when you look at this e sheave of the yield curve, the markets have gone ahead of themselves in terms of the banking sector, and this is a case of the yield curve being flatter and putting banks under pressure that way rather than just a simple regulatory change. stephanie: these of the five stories that matter to markets now. when we return we will look closer at those markets in free markets trading. we are 90 minutes away from the markets open. you are watching bloomberg. .

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stephanie: welcome back. the largest investor-owned utility in california is joining the climate talks in paris. the state is pushing to get half of its electricity from renewable sources by 2030. can they achieve this target? joining us from paris is the president and ceo. busess us about the case. california has been in such a difficult situation for years now. what is your stake? what are you doing? >> good afternoon from paris. part of the california delegation to show that there really are win-win solutions to climate change issues. the message we have been delivered in california is we are making incredible progress. 30% of the electricity we

deliver to our customers comes from renewable sources and we knew in our hydro and nuclear assets more than half of the energy we deliver to our customers is completely non-greenhouse gas emitting. our you couple that with electric field goal program, our energy efficiency programs can we really have with a partnership of government and private industry, crafted a viable solution to the greenhouse gas issue. explain to us if this is being driven by business considerations, making more money, or if it is heavily driven by government and government intervention? ofit is driven by a number things. first of all, it is driven less by the fact that customers want clean energy. we have done a lot of work over the years, and we get a clear signal that they do want us to cleanerhaving a generation fleet here in california. it has been helped by the fact that california over the last 20

years as put together a series of policies that not only helped push clean energy but they also make sure that the companies that are participating are successful. if you are not a successful business you will not be able to invest the money in order to convert your fleet. >> does it not also indicates an innovation on your part that you are saving efforts on controversial capital programs, where you will not have as much regulatory issue? maybe the markets are discounting that a little bit? >> you are absolutely right about having to really innovate to make this work. when you think about it, when the grid was first built over fairlyrs ago it was simple. you put power in one end and the customers would take it out the other. it was like the early days of

the internet a island motives sending documents back-and-forth but today the electric grid is becoming more complex with electric solar grids being in power, the wind farms in the mountains feeding in power. had to invest in the system to make it a much more flexible engine to be able to accommodate the credible innovation that is going on today. one of the stumbling blocks in this balance is the relationship between private rooftop solar and energy coming from the grid, in california specifically. you are in paris and you are talking to other utilities. what he learned about the right relationship between private rooftops and coming from the grid? rooftop solar, we know more about it than anyone in the u.s.. we have 200,000 rooftop solar units, that is 25% of the total in the united states.

the reality is our system in california is huge. without a large utility scale solar and wind farms, you're not going to be able to drive the economic growth. so you have to be able to do both. solar has its role to play, but you also have to have large utility scale projects in order to be able to support economic growth and stay as big -- in a state as biggest california. stephanie: do you plan on a dividend increase in 2016? we have not seen one in on a long time. >> we have not. and that is one of my personal goals, to have a dividend increase in 2016. i have a discussion with my board of directors, and we are hoping we will be able to do that. have regulatory issues now behind us, and we see really good growth opportunities. toneed to invest in the grid

really make it more capable, maketh the 21st century grade. we think it will drive a growth.

david: welcome back to bloomberg . green mountain agreed to be acquired by jad holding company. shareice of $92 a represents a 78% premium to their closing price on friday. it has been a record year for

mergers and acquisitions but europe has been slow to join the parade. european targets accounted for the smallest share of global position in 17 years. about 22% of the $3.5 trillion total was european sales. latest bloomberg business flash. matt: thank you. tle shares moving down in the premarket. and said theret are more cases of e. coli linked to them. biotech falling. global blood therapeutics falling. he offered than $13.50 a share

for the whole business but they have already been offered $15 a bridgestone. coming up, how should they adjust their strategies in this new announcement? ♪

david: welcome back to bloomberg . chief strategist peter boris is with us this hour. funds.alk about hedge bluefish capital essentially took their money back and said, thank you very much. what is going on with hedge funds, and what advice do you have? side, on the individual if i have a lot of personal wealth and i have a long way to go before i'm going to be paid senseentive fee it makes to say, i'm going to turn it into a family office.

stephanie: he was a little bit different. peter: a little, and on the other side it holds. if you are in the commodity hedge fund business and you were in these deflationary pressures, it is difficult to make money. the lastis huge, and few years, interest rates have stabilized. we had a 32 year bull market in the fixed income. the stock market as a whole, the industries have not gone anywhere as of september 14. it has been a difficult process. our view is that smaller and nimbler is better. what we try to build our people that can maneuver speedboats around these huge wakes that are being created, and we can take advantage of that. stephanie: how did passport and maverick do so well?

peter: is like everything, you are going to have winners. david: coca-cola is ringing a bell. that is a happy polar bear. say, the last to time i was here i wore my baseball cufflinks because of the mets and today i am wearing them because of the next. -- makes. cks.i stephanie: we are talking hedge funds like maverick capital. all these hedge fund managers are extremely smart but what you were going to have color you are always going to have some winners and always some losers. stephanie: not in the last five years. all you needed to do was own assets and the market would move with you. peter: the winners have been winning and the losers have been losing, and if you have been on

the winners, it is fine. picking the bottom has not worked. academic economists have been saying for a couple of years that the economy is not behaving according to the models have been building over their entire career. are those models broken for you as well? peter: i love it economists but an econ is someone who see something that works in practice and questions whether or not it will work in theory. let's determine the markets work and what we have seen, the traditional model because of the fact that we have had this more extended deflationary pressures that has caused that disconnect. david: one model that is not working in practice is that phillips curve. we are looking at the relationship tween unemployment and inflation -- between

inflation and unemployment. peter: if you take a slice of time when you are concerned about inflation and unemployment in that period of the 70's, and i love to go back. we had alan greenspan who is chair of the council of economic advisers under president ford. he had the whip inflation now button and the phillips curve, and then it broke down. it takes about 20 years of research to figure that as broken down. it does not work because there are much greater factors going on in an economy the size of ours. stephanie: how are you going to create out for? running,nk in a short man versus machine, machine is one. it is difficult to beat an index. we believe in the combination of man and machine, one week to three months looking at a

combination of fundamental factors and earnings as well as tech cofactors. part of that has to do with, we know when there is going to be lumpy volatility. you try to put that in a package to provide a risk management point of view. my perspective is, i am not smarter than the market, i just want to have a disciplined risk-reward approach. if i am wrong, i can get out and fight for another day. it is when you think you are right and you average down and average down. has assigned behind his desk, losers average losers. try to get the risk-reward in a good place. david: i am curious about something, the upper middle class is not doing well. this is not how economist look at it. a look at the top 10% and the rest of the economy but when you

look at places like tiffany's, it is not behaving the way it used to. -- sector,ire sect where i shop and were height have been going, nike, under armour, the home depot, those have held up. stephanie: you do not think i go to any of those stores? >> ralph lorenz, tiffany, whole foods, those have not done well so i'm looking at that as a lead indicator. that is another sign that perhaps the economy is slowing down. i believe the message is always coming from the market, and the markets are telling us demand is weak in the entire sector. part of it is supply continues to come online but demand is low. that is a concern. stephanie: there is nothing in

the economy that is going to shift that. are we getting into a worse and worse situation? >> i do not necessarily want to say that but it looks like, with the fed starting to potentially raise interest rates. at the same time, aggregate demand is low, that we are going to be muddling on for a bit further. david: generally with the economy recovering, 211,000 jobs, would it we see companies like tiffany's, whole foods, wouldn't we see them emerging? what we see them doing better? stephanie: is it more people having jobs at all? >> it is not just the amount of jobs, it is the total income in the economy, and where is that marginal spending going? that marginal spending is not going to those good. uber,n look at airbnb,

the whole robo economy as an indication that people are not as concerned about stuff. stephanie: the experience economy. people are not spending their money on good, especially expensive good. peter: this is a really important point, what is important is not the 211,000 jobs, the other is the stagnant median wage which is not moving. one is the average and the other is the margin. , a six footworrying tall man that drowns in water with an average height of five feet. on average, our wages are not going up. to take a looket at where stocks are open, six and a half minutes into the trading day.

the markets are in the red. matt: i am still trying to figure out losers average losers. take a look at the index, down across the board. a must half a percent gain on the s the and the dow right now -- s&p and the dow right now. if you look at the terminal and see how that breaks down, energy is the biggest loser that you could average today, down 3%. oil has just come crashing down. 26, coming down below $39 right now. just tumbling down because of the fact that opec could not agree on a crisis -- a price. carteltel is no longer a , although it has been that way for a while. it has never been more apparent than friday. the fact that the dollar is killing it right now does not

help any of these asset classes. let's take a look at gold, really interesting story. china continues to purchase more and more and more gold, and bought the most in november than it has in five months. gold now at 1077. check out the terminal. we have charted china's gold purchases, which are in white versus the price of gold in blue. 2011,loves gold since continues to buy more and more gold reserves. let's go back to the dollar, coming from its biggest weekly loss since may. adding half a percent, but the dollar has just been coming back on a tear after the big drop we saw on thursday after the ecb surprise. --ant to mention greenmount greenmount stock -- greenmount

coffee roasters -- greenmount roasters, $92 is the purchase price. it is a 73% premium. live at theittle is nasdaq. the uncertainty created by the e. coli breakout in western stores first announced on october 19, consumers are clearly staying away. fourth quarter could be down 8% to 11% relative to the previously expected gain. the big question could be whether or not this e. coli situation could cause profits to decline in 2016. suggests itk action is down 30% since late october.

, there could definitely be a boost from the e. coli situation. since the initial breakout, cmg.a has outperformed stephanie: thank you so much, our own abigail doolittle joining us from the nasdaq. estevez, the former head of the tg, his living conditions prisonbank who -- bangu complex are much different than what he is used to. include ratsdgers from a landfill. he shares a collective toilet with other inmates and washes with bar soap cut in slices by

guards who are looking for contraband. just get your head around that. we keep talking about this. get your head around where that guy is right now, and the changes he has seen in the last two weeks. when we come back, we are going to talk value propositions. we are talking about banking. if building the bank of the future made so much sense, why aren't more doing it? we have 20 minutes to go and a lot to cover. ♪

david: welcome back to "bloomberg ." time for the bloomberg business flash. business economists are slightly -- -- slightly less will wish about economic growth next year. it is down slightly from its september survey but they

continue to see the job market strengthening. the unemployment rate right now is 5%. moving closer to moving russia out of junk. the cost of protecting its debt falls for a second straight week. they suggest russia's crating -- barclays rating considering deeper cuts. they are considering reductions that would mean the elimination of another 20% of its bankers in addition to cuts to an existing program to cut investment bankers through 2017. brendan: moving on to our value propositions. , consumer banks if building the

bank of the future makes so much sense, why aren't more banks doing it? girardi toy joins us from boston. that you put study out, that branches are overvalued. who is doing it right? correct, we see this as a once in a lifetime opportunity for banks to take their cost out of the branch and move them to mobile and other digital channels by taking those routine interactions, cashing a , whichand digitizing at leads to a better experience for the customer. the real winners are globally. our sixth annual study of consumer behavior around the world shows that americans in

particular are visiting branches for these routine interactions far more than many other developed markets. consumers of u.s. said they visited a branch in the last three months for a routine interaction, leading to about 10 branch visits per year in america. compare that to the netherlands where only 25% of consumers say they visited a branch in the for an averages of three times a year. that is seven times more than americans are visiting the branch in the global benchmark. stephanie: is the answer that these banks should close their branches? if they are not devoting any money to them, clearly they are not getting better and they need to cut costs. gerard: certainly they need to and the $3 billion i

mentioned is purely variable costs. that is before closing a single branch, so that is the variable cost of going to a teller and driving their instead of the atm or mobile. that is what gets you the $3 billion before you even close the branches. the reason we say focus first on changing the behavior is if you jump to quickly to just closing the branches, that is going to frustrate consumers and get them to something they are not quite ready to do. in other markets where they have moved too fast in closing knows it has frustrated the customer, easy, andmake it reliable for the customer to do these things self-service. sometimes the withdrawal limit is too low on the atm or the deposit limit is too low so they have to go to a teller. first you have got to fix that

before you say there are not any tellers available. once you have done that an educated the consumers in how to do the self-service, only after that are you ready to go after the actual closing of the branch. david: as you look at the landscape of the big banks, who is doing this well? who is making the transition the best? gerard: the real benchmark is not in the u.s., but thernationally, not just netherlands but australia and germany for they have less than half of routine interactions. within the u.s., chase is probably a little ahead in that they have been working for many years making their mobile experience reliable and convenient, and training customers have to do that. is enabling them to take some of the volume out of the branches, and it is many of the original banks who are struggling to keep up with that.

they need to invest as much as possible on the technology and struggling to drive the customer behavior to generate the adoption. this is going to be a problem because in the past have let -- relied on the branch for better customer service, data shows mobile interactions are much better than branch interactions. a branch visit is more than twice as likely to annoy a customer than a routine interaction. brendan: the treasury department is worried about something related, that is how do you get people in the banking system? what is it that banks need to do to get that 7% of american households that do not have a bank account into the branches? gerard: it is not more branches, because branches are expensive and part of the reason why the banks are not very excited about serving the under banked community because it does not look profitable because the cost

to serve is too high. just the variable cost, without the cost of the branch itself is an additional $24 per customer of those routine interactions that on average they are coming into the branch more than the netherlands or australia. first you have to take out the cost so the banks would say, i need the profitable customers, and then you have to find lower cost, digital way to serve the customers. stephanie: thank you for joining us this morning. he is a partner at bain and company in boston. peter boorse, you are not going anywhere. we have heard the nominees for the grammys announced, the 58th grammy awards for 2016. top song award goes to taylor "blank space," along with wiz khalifa and ed shearin.

they are up against one another. sf course ,adele' record-breaking album was released two months too late to be considered for this award season. when we come back, we will get final thoughts from peter boorish and who he wants to win. ♪

david: welcome back to bloomberg . we have time for one final thought from you, peter. when there is a single day rally in energy or single day selloff in the dollar, when you think it is the low or the top, it is not. one day does not change a longer-term supply and demand dynamic.

stephanie: is it possible to have a long-term call on the ofket when it is a time volatility and investors are demanding liquidity? peter: you can always have a long-term view, you are never wrong, you were just early. wondering when central bankers will become irrelevant again. peter: i do not think they will ever be irrelevant but what you are seeing is that like most things, their marginal power is declining overtime because markets adjust. stephanie: peter, thank you so much. that is going to do it for us on "bloomberg ." ♪

betty: it is 10:00 in new york and 11:00 in hong kong. markets." "bloomberg

from bloomberg world headquarters in new york, i am betty liu. here's what we're watching at this hour. the dollar is rising again following its biggest weekly loss since may. what it means for the market and the fed's upcoming interest rate decision, the hike we are all waiting for. overseas, celebrations in the streets of venezuela as the opposition wins a majority in congress or the first time in 16 years. how the government is addressing the deep economic challenges, and what does this mean for investing in emerging markets? shares of chipotle are tanking, down more than 21%. shares of curie green mountain are soaring -- keurig green mountain our surrey