from bloomberg world headquarters in new york, good afternoon. here's what we are watching at this hour -- stocks are down to start the week but moving slightly off their lows as energy shares sink the broader market. crude oil touching its lowest level since the financial crisis, dropping below the $38 a barrel mark. opec deciding to abandon its production cap. when is oil going to bottom and recover? it may be game over for the staples-office depot merger. the government moving to stop the deal, saying it would hurt large companies that buy office supplies. anti-competitive. well, we are one hour away from the close of trade on this monday as we kick off the week. abigail doolittle has the latest on this selloff. it seems to be just be

accelerating here. abigail: you are right about that. we have been seeing stocks trade lower all day long. they opened lower. the three major u.s. indices have traded lower as the day has progressed. specific to the s&p 500, seven out of the 10 sectors are lower. thisop performing sectors time in telecom. the worst, not surprising based on betty's comments, is energy. crude oil down more than 5% today, hitting its worst level since february 2009 on a strengthening u.s. dollar index and the opec production -- the opec decision to abandon its strategy to limit production. this may have thrown a curve ball to investors and men nude fears that this year's correlation between the s&p 500 and crude oil could renew. the two have diverged over the last few months, but if crude's bearish lead is any tell, we could see that continue.

let's take a look at u.s. treasuries. they are rallying with yields dropping significantly on the 10-year and 30-year. yield does trade in verse to price. some investors clearly prefer to play it safe, even ahead of a likely rate hike later this month. betty: that's right. a very likely rate hike. thank you. i want to get a check of the headlines now with the bloomberg first word news this afternoon. mark crumpton has more. much.thank you very at this hour, federal, state, and local officials are holding a press conference, letting san bernardino county and the world know that the county is open for business, just five days after that horrible mass shooting took place at a county office building, a center for people ,ith developmental disabilities a social services building. you see the live shot with the

fbi assistant director speaking to reporters. meantime, the woman who carried out last week's mass shooting with her husband attended an islamic religious school while she was living in pakistan according to intelligence officials and the school. few details have emerged about her life in pakistan where she lived in 2007 through 2013 before she left or the united states on a fiance visa. speaker for the house of representatives, paul ryan, says the house may miss its friday deadline to wrap up a spending bill. ryan interview, speaker said, "it might take us more than just this week to get these issues put together correctly." the comments came after weekend talks on several unresolved issues failed to produce an agreement. u.s. secretary of state john kerry says a climate change agreement being negotiated in paris has the potential to change the world. so far, the proposal lacks a

specific temperature change limit and does not have a legally binding structure. secretary kerry he was hopeful negotiators would reach an agreement by a ride a deadline, but he added he would not be surprised if talks extended into the weekend. department of justice says it will investigate the chicago police department. the move comes two weeks after the release of a video showing a white chicago officer italy shooting a black teenager 16 times. the u.s. attorney general, loretta lynch, says the focus will be on the chicago pd's use its systems of accountability. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. back over to you. thank you so much. oil dropping below $30 a barrel today, hitting its lowest level since 2009. a prompted a drop in treasury yields as investors are looking for a safe haven.

more, lisanow with and alexandra. alexandra, let's start with you on this. bond markets underestimating, not pricing enough the impact of higher rates and what is going on with oil prices? alexandra: at the very least, on the short end, we covered this recently -- basically, the bond market is thinking that head is going to go maybe in december and then twice next year. it has been going twice as quickly as that. i will be for next year as long -- as well as with december. betty: what could possibly be the result of that disconnect? lisa: for the past every number of years, the bond market has been right and again and again, the fed has been a wrong, has not come through with what they have been forecasting.

they have been way too high with inflation expectations. all across the board, the bond market has been right. either they have capitulated to the bond market or have not seen the bearish views. you have a bond market looking at this, and why should they believe the fed this time around? the fed is saying this time, they believe us, but predicted the same thing in september, so what could happen? there could be a lot of pain in short-term debt. should the fed hike rates faster is currentlyet expecting? there could be somewhat of a substantial amount, especially in some of the rick perry trades or some of the more highly leveraged debts. that could be a problem, and it in thatld be a problem you could see the long end of the curve go down. people could say the fed move is going against what the economy warrants, and that will limit inflation in the long-term, and you could see more of a

flattening or even in version. we are also focused on what is going to happen next week, right tackle what about the next rate rise, right? underestimating, not pricing enough and not paying attention enough to the rate rise after? in many ways, that is what is going to count. >> that is really the question here. the on market is underestimating the pace. but the funny thing is a lot of that depends on inflation. i'm sure you have paid attention to oil prices today, but a lot of this depends on if oil can find stability. stays sort of stable, around $40 a barrel may be, going into a year from now, it's not going to be that far down year-over-year. that he: but stable is anything but the oil market.

alexandra: exactly. so it depends on a lot. atty: you have been looking debt. sales plunged something like 98% in the third quarter compared to the second quarter. index,f you look at the you have seen a steady dramatic .limb over the past four months, it just flat lines. the borrowing has just stopped, and this sort of highlights a turn in the credit cycle, which challenges the notion of rapidly higher inflation, so you start to see more companies run into trouble, have trouble justifying their bloated amounts of debt, and this will also drag on whatever kind of growth the fed even as the fed does slowly tightened conditions. in essence, conditions have already tightened fairly

meaningfully. i know everyone says we are going to see this divergence, see a stronger dollar. that's going to hurt even more these markets borrowing in dollars? people could say the rate hike has already been baked into the dollar. the question really does come down to the oil price. a lot of these emerging economies that really are a areer part of the index just the commodity prices reviving in general. they have gotten hammered. they have gotten completely hammered. what are people saying about what will happen in the bond markets after this rate hike? what exactly are we going to see? alexandra: it really depends on their signaling about the next rate hike. everyone expects next week the fed to raise rates 25 basis points.

that in itself was not going to cause mass chaos, but if they come out afterwards and say they think the economy is strong enough to keep hiking quicker, then you will have to watch and see what happens. much. thank you so for more fast commentary, type terminal.e staples's challenging deal to buy office depot, which would combine the two largest office supply chains. can the merger be saved? n are shares in lululemo down this year. the trades you need to know about the apparel company, and the oil plunge shows no signs of easing as we talked about in december as opec throws more fuel on the fire by announcing it will abandon production caps. how long are we in for this

volatility and these low prices? we'll talk about that. ♪

betty: good afternoon and welcome back to "bloomberg markets." some ofe for a look at the biggest business stories in the news right now. after losing almost $2 billion since 2007, tesla is piling on the personnel. the electric car maker has more than 1600 job openings on its website. models, bigng more -- building the world's biggest battery pack and expanding globally. carriers cfo says the would take a look at yahoo! if

it were offered up for sale. she said it is still too early to know what yahoo!'s board will it could be a strategic fit for verizon. and karl icon is offering to buy $15.50. of pep boys for he says his deal is superior to .ridgestone's offer the billionaire investor says his offer is not subject to due diligence, financing, or antitrust conditions. you can always get more business news at bloomberg.com. shares of stables are plunging the most in over a year today after the u.s. federal trade commission said it would challenge the company's proposed takeover of office depot. the commission has recently believe that the proposed merger is likely to eliminate competition that

large companies rely on. joining us now is david mclachlan. they tried it but war and got rejected. they thought the environment had changed. what happened here? >> the companies that the market had changed, and that's because two years ago, the ftc approved a deal between officemax and office depot. at the time, there were just , and large national chains the ftc at the time released a decision -- they said the market has completely changed since the 1990's due to amazon and walmart and target entering the market, so this deal between officemax and office depot is not a problem. i think it comes as a bit of a to some people that

this deal was blocked. betty: absolutely. so is there any recourse for office depot or staples? david: this case will go to federal court. staples and office depot put out a statement shortly after the ftc announcement saying they are going to fight the case and try to defeat the ftc, and in a statement, they made very clear ont they are going to rely that decision. i think the case will, in many ways, come down to that statement. right, that one particular statement. they have that that they feel

supports them. is it possible that they just do not do this deal and they can survive on their own separately? david: this is a very tough market. very thinies have margins. at this moment, i think they the game ofine skill to improve those margins. so they are going kind of full steam ahead and hope to defeat the case. one thing that will be interesting will be if there is still room for settlement going forward before the announcement today. the company had offered to divest some contracts to another company in an effort to resolve fcc's concerns. that might come up again in the case. maybe they can offer more assets

to satisfy the ftc. of course, they could win the , they wouldch case be able to close the transaction. betty: david, thank you so much. the ftc essentially objecting to the deal. now, let's switch gears. -- a deal hase been called into question for quite some time. media mogulays the is mentally sharp, even makes his own decisions on his own medical care. bloomberg's lucas shaw joining me from l.a. with more details. it has been speculated for quite some time how healthy sumner redstone really is, but all of this came to light because of a filing by his ex-girlfriend. is that right tackle ex filed a suit in

court recently alleging that sumner was not capable of making decisions on his own. some of it has to do, i think, with her role as medical directive, and this sparked a lot of different stories, prompted people to write about it, so the ceo of viacom came out this morning and started off by opining for five or 10 minutes, both on the state of 's affairs as well as rebuking the media for its coverage over the past week or two. betty: it's also interesting -- didn't come to light that sumner , to the point, i believe, his lawsuit alleges he would be making medical decisions for sumner redstone if in fact he became incapacitated? >> that's correct. inlly is now the person charge of that medical directive. it had previously been the ex-girlfriend. at one point in time, his

daughter sherry redstone was involved. historically, it's hit the next of kin that gets involved. preferredng, philly to him as a friend. at this point, there is much friends as colleagues. mario the belly putter in 'sphone call to phillippe office. is this likely to put this to rest, or what else to do investors need? gabelli did tweet out that they laid out what would happen. i think this will be quiet until the next blowup of some kind, any time something happens on this front, if it's with one of the women he has been involved with or viacom has problems. none of them have very much control or very much insight. in the big incher, there still

will not be much change until something happens to sumner. betty: thank you so much. a fascinating story. still ahead, stocks, as i mentioned, trading near their lows of the session. we will look at your options trade, including one involving lululemon. yes, the maker of those yoga pants reporting their earnings on wednesday. ♪

betty: welcome back to "bloomberg markets." abigail doolittle is standing by with today's options insight. abigail thanks. a derivative strategist at mkm holdings joins me. thanks, jim. stocks selling off, crude oil below its last monday lows.

what kind of conversation are you having with your clients? jim: we've seen significant volatility in the last week. it's pretty quiet out there. markets might be noisy right now, but client conversations, i think, pretty quiet and very much now august on the upcoming fomc meeting. abigail: speaking of, you were saying your work is suggesting an outcome pretty different than what the rest of the street is printing. jim: right. cycles weightening have gone through, 1999 was the last late cycle tightening we experienced, but as well telegraphed as fed tightening might be, there is pretty much in that the fed will tighten rates under cymer 16.

volatility will be induced. that's what we know or that's what we think. very interesting response. we know it's coming. volatility higher. equities tend to be lower over the next three months. ulemon reports next week. jim: it's covered by roxanne meyer for us. they will report their quarter before the market opens on thursday. it's a stock we like over the long-term. roxanne expects 23% eps growth over the next four years. certainly a name that has been in the press a lot. they have been battling back some recalls, significant high-level management changes. we like the stock. if there's a retail conference, we expect them to preannounce for the fourth quarter there and earnings out in march. what we want to do is go all the

way out to march next year and 52 point five call spreads. you pay about $2.50 for that. if you come to a downside risk, regular december puts against it to help finance that spread. view.l: very bullish thanks for joining us. "bloomberg markets" will be right back. ♪

you're watching bloomberg markets. i'm betty liu.

let's start with the check of the headlines this afternoon. >> federal officials say the two shooters who killed 14 people and we did 21 others in san bernardino, california, took target practice with one session coming just days before last wednesday's rampage. officials are still trying to determine what prompted syed farouk and his wife to carry out the attack. as the investigation has progressed, we have learned and believe that both suspects were radicalized and had been for quite some time. how did that question -- how did that happen? and by whom and where did that happen? i will tell you right now, we don't know those answers at this point. >> the fbi has said it is investigating that shooting as an act of terrorism. he said they found 19 pipes in the couple's home in redlands, california, that could be turned

into pipe bombs with all the right components. the u.s. department of homeland security is replacing a warning system to alert citizens and companies about terrorist threats. secretary jeh johnson said replaces an old system. >> we've replaced the color codes, the color bars, with the national threat advisory system. which we have never used, because it depends upon a specific, credible threat to the homeland. i believe that in this environment, we need to get beyond that and go to a new system that has an intermediate level to it, and i will be announcing soon hopefully what our new system is, that i think reflects the current environment and the current realities. >> he said the u.s. has no specific, credible evidence like a terror attack like the one in

paris last month is being plotted here in the u.s.. the man accused of stabbing two people at a subway stop in london last week is in court today. he is charged with attempted murder. prosecutors said he had images onociated with islamic state his mobile phone. he was ordered detained until court appearance on friday. americans overwhelmingly disapprove of president obama's andling of foreign policy dealing with isis. 61% of americans think it is at least somewhat likely we will have a terrorist attack in the next few weeks. these andt more on other breaking stories 24 hours a day at the new bloomberg.com. i'm mark crumpton. betty, back to you. betty: we have some breaking news on pimco. some heavyweights are joining an advisory board at pimco.

then bernanke has already been a senior advisor and will now chair a global advisory board that will also include the former u.k. chancellor gordon brown. as well as jean-claude tricia eight, the former ecb president who was -- john claude trichet. beefing upco kind of the people around them, as of course that scene outflows from their fund and they're very high profile disagreement and drama with the x pimco founder, bill gross. let's get back on oil prices, the price of vote barrel of crude has drop below $38 a barrel. that's the lowest level it has been in six years in a global economy that still struggling to climb out of recession. after opec decided to abandon its draghi of limiting the and

plunge a target, the being felt hard in energy shares today. and on chevron, shell, all firmly in the red. spoke with the chairman and vice chairman, someone who knows a lot about the oil market. >> it's been a question for some time whether it is a cartel because it only controls 30% of the market. right now it is not a cartel by any definition. it is a fractious trade association that cannot agree on basic matters. >> is it having any effect on oil prices at this point? >> the main effect is by what it is not doing. it's divided not only about oil prices but over the nuclear , the struggle for

dominance in the region. on that basis there is no trust and they are very different positions. iran is still saying he wants to come back into the market and the others don't want to make room for iran. >> do you see oil price volatility being just as high in 2016? >> i don't see why that would change. fracking here in the united states and talk to people in the business, when oil is at $92 of errol, they said the input cost would be about $80. when he got to $80 they said the input cost would be around $70. now they are obviously underwater a little bit but i upsideil is cap to the and has room to the downside.

>> let me jump in there to say that because this new factor, swings. now being the producer rather than opec countries, that adds to the volatility because you're talking about the impact of decisions made by thousands of individual producers. the oil were to lift band and it's a bipartisan issue the president of the u.s. thinks it's a bad idea. that would put more into the system that could help with the volatility and keep prices that would help the u.s. consumer to continue to put more money in their pocket. >> it's clearly bad is left over from the 1970's when we had price controls. it's ridiculous for the u.s. to go around telling the rest of the world we believe in open markets and free trade and have this arbitrary ban.

u.s. producers are now under intense pressure. at the same time, consumers would not be particularly affected. gasoline prices are set by the world market, not by lower u.s. prices. >> you have to be concerned about sudden or massive swings. there could be treacherous markets. >> it's no different than what we saw when the market came from $92 and cut its price is 50% in a very short time. we are always prepared for the high volatility market. that's why we spend billions on technology and safeguards. >> over and above the turmoil in the marketplace, this could lead to real turmoil in some countries that are not particularly wealthy and are highly dependent on oil. venezuela, nigeria, go down the list.

>> venezuela yesterday entered a new period in which power is now divided again. the chief of security support now has to deal with congress that might have a super majority. 200% inflation, contracting 10% next year in terms of its economy. we get a lot of oil from venezuela, similar to what we get from canada in terms of quality. its government revenues come from oil. the third one is iraq. 90% of its revenue comes from oil. said iraq faces an exit stencil threat as a nation. countryyour eye on that also. >> russia is quite dependent on oil as well. what does this mean for them? thatt was thought earlier this would get vladimir putin's back against the wall, but they

have a great cushion because the price of oil has come down and the ruble has come down at the same time. a lower oil price doesn't have the same impact on their budget, but today it's about 42% of their budget is oil and gas. this year russia will probably contract somewhere under 5% but it has kind of leveled out. it's not the kind of crisis that was expected six or eight months ago. have sanctions in russia and russia's putting sanctions on turkey. so this could continue to spiral. betty: staying with energy and its impact on climate change, talks in paris on climate change are entering there's a can we in efforts to curb greenhouse gases . a u.n. study found carbon dioxide emissions from fossil fuels in industries likely dropped this year, the first decline on record during a time

of strong economic growth. with the ceo of pacific gas and electric at the conference. he said the state of california's converting to renewables at a fast rate. incredibleaking progress. today, 30% of the electricity we deliver to our customers comes from renewable sources. hydro anddd in our nuclear, that's more than half the energy we deliver to our customers that is completely non-greenhouse. haveve a partnership and crafted a viable solution to the greenhouse gas issue. he said pg&e is considering their first dividend increase in 2010. shares are trading flat this year. i smart head on bloomberg markets. stocks and currencies dropping for fourth straight day.

we will discuss where they may be headed next, and if the landmark venezuelan election will have any impact on emerging markets. ♪

>> welcome back to bloomberg markets. a look at some of the business is -- biggest business stories in the news right now. chain revoking its forecast due to an e. coli outbreak at chipotle. same-store sales are expected to be down in the first quarter. jmb holdings wants to rule the

coffee world. the investment firm is taking another step toward that goal today by wearing -- by acquiring greenmount. it's the coffee industry's biggest deal ever. the luxembourg-based group has spent billions buying coffee companies in the u.s. and europe. smith & wesson shares are soaring to the highest level in eight years. investors are betting gun enthusiasts will buy more firearms as calls for restrictions increase. spike after mass shootings. overseas, sunday's election in venezuela have settle out of clear message to countries -- to the country's leftist government, no more. opposition leaders say they have a two thirds margin needed to allow them to make profound changes, including trying to out the president.

venezuelan bonds rallied the most in six months after the election. was this the mandate that the opposition was looking for here in venezuela? >> they were probably hoping for this result. this was one of the best scenarios they could've expected. they were hoping for a win of the majority but only the most optimistic people were looking for the two thirds majority. these are not official results yet. opposition leaders are saying this is what they projected. the official results of far, the government has 146 seats and there are 22 seats that remain to be assigned. some of those went to the , the opposition needs 112 to have a two third majority. tell us why global

investors should care about this. there are still a lot of investors, although at this point, there is big risk involved. it is in recession, right? >> it is in a big recession. projected to take another letdown next year. given the high borrowing costs. given this change, the potential change in government, what might we expect out of venezuela in terms of reforms? >> we should not expect it to happen automatically. decide whateed to they are going to do with the results.

people favor different strategies. moderatele are more and think they should negotiate , theyeful transition should engage president maduro and adopting policies that will bring some economic change. some people think they should go for a flat change with the .overnment it's not clear which of the two strategies will prevail, but in this case it may take a bit before we see a broad change in venezuela. betty: thank you so much for , talking about venezuela and the election. we have some breaking news right

now. , rubbermaiddeal said to be in talks to combine , which is a consumer products conglomerate. the stock is up almost 8%. no other details, but newell rubbermaid said to be in talks to combine with a consumer products company jarden. ratchetk continues to up higher, now up almost 11%. we will continue to follow this. on theocks are gaining back of this report. much more ahead on bloomberg markets. we are nearing the close of trade as we had to break. here's a look at some of the other sectors and how they performed. ♪

betty: welcome back. markets are closing in a less than -- a little less than 10 minutes from now. it's kind of been a bumpy sector. we are recovering just a little bit. abigail has a check on trade. abigail: we are recovering a little bit into the close. asittle bit of recovery but you can see, all three major u.s. stock indices are still trading down, even with that recovery. the s&p 500, seven of 10 sectors are lower. energy is the worst, down more than 4%. crude oil down more than 5%, at its lowest level since february 2009. opec decision to abandon its production limitation strategy. it for investors a little bit of a curveball. , u.s.rprisingly

treasuries are rising. the field has brought down toward the 2.2% level with trading in verse two yield. sharese mexican grill are down once again as the company takes back its 2016 forecast on uncertainty around the recent e. coli breakout. it's down more than 30% year to date. curie green mountain, where this year's worst performers is up more than 70% today on news that the ja be led investment group is acquiring the company for $92 per share in cash. not bad at all. betty: thank you so much, abigail doolittle, live at the markets desk. stocks are lower but climbing a bit. with more perspective, i want to bring in mike reagan.

mike.e live as well, what do you make of today's trade? to last you look back week, the market just had so many different pieces of information thrown at it. ,ou have the ecb coming out somewhat disappointing investors as far as expectations for stimulus. you had the jobs report and the opec meeting, a lot to digest. surged 3%y, the euro or so against the dollar. in an be like a ripple pond. it takes a while to settle down. we've obviously had this huge rebound on friday, now back down. to me, the big question mark in the big wildcard is the m&a, the new rubbermaid deal, and the

keurig deal this morning. of nervousness ahead of the fed. the big wildcard about what could push is higher. is this rate hike really going to eliminate that cheap money that we have seen that has powered a lot of the mna? >> i don't think it will be overnight. might accelerate the pipeline a little bit as people try to get deals going quickly. i think that dealmaking possibilities would slow down around the new year. today.the big story crazy move down, under $38 a barrel. betty: that $20 oil prices not looking so we're. take some eye-popping moves in

oil producers today. infrastructure, pipeline companies, a lot of focus returning to energy company dividends. there are some that stick out like a sore bone. kinder morgan saying they were reviewing their dividend, yielding 12% of 13%. washer big mover in energy williams company with a dividend around 10%. companies,ame oil energy and pipeline companies had seemed like secretary that would never get cut. kinder morgan is one of the 10 or 11 biggest energy companies in the country, potentially cutting its dividend. it's making dividends look suspect across the board. betty: is that going to do real earnings and first-quarter results? >> the consensus view is that

energy earnings will rebound next year, and the harder it's going to be. betty: thank you so much, mike reagan. that's it for bloomberg markets. up next is "what'd you miss?" here's another look at where stocks are trading. ♪

scarlet: we are moments away from the closing bell.

u.s. stocks closing lower today. energy shares sinking the most. >> the question is, "what'd you miss?" scarlet: countdown to the fed. what does it say about the central bank and markets? hides risksy money in the economy. alix: and showdown in france. we discussed the implications for the country and the rest of europe. we begin with the markets, the dow is back in the red for the year. weak oil is really the story. there was no economic daily to