betty: good morning, i'm betty liu. tumbling as the commodities slumped defense. iron ore prices falling to a point where they threaten the profits of the world's biggest miners. prices keep dropping with brent below $40 a barrel for the first time in almost seven years. bottom in sight for commodities. it is bonus time on wall street, but should executives expect a merry holiday season compared to last year. why one executive says guys like him are paid too much. lebron james signs a lifetime deal with nike. what kind of return is nike looking at in the long run?

a lifetime contract. we are half an hour into the trading session. it has been quite a big cello around the world. matt miller has the latest. matt: i'm looking at oil prices, especially. crude, not only nymex crude, started dropping precipitously around 7:00 this morning. brent is also down. west texas intermediary, you can see the big drop that we had to $36.85. we bounced up a little. brent came down earlier and drop to below $40 a barrel. both of these products, commodities, are down till those that we have not seen since february of 2009. brent had a bounce it is now at

$40.39. i graphed a spread. even see it is getting tighter and tighter. the less of a difference and they are correlating more. betty: stocks are moving in tandem with the slide we're seeing in oil. matt: stocks have come down for the third day in a row. looking at the major averages. we have recovered a little. we are off 1% of the dow jones industrial average. the s&p have recovered down a tense of 1% -- down 8/10 of 1%. they have recovered substantially. ,e saw exxon down more than 3% chevron was down almost that much. chevron has recovered by about one half. if you look at the smaller stocks, kendra morgan has been

down for the last nine days in a row. it is said yesterday that it may not be able to pay its dividends because it should divert those bond payments. it has lost executives. nine days has seen a lot of news on kendra morgan, which is the middle part of the equation as far as getting the oil from the ground into your car. betty: the dividends are reason that investors have stayed. that will be an issue going forward. let's check in on the bloomberg first word news. david gora has more from our news desk. rest of the1's the eu to speed up their attempts of cutting off funds to terrorists. prepaid bankking cards and freezing assets. the european union will increase cyber security. toy have agreed to new rules

increase defenses against hackers and require companies like google and amazon to report attacks. air france will resume flights three times a week starting in april. tilloperated in tehran and october 2008 when they were suspended because of sanctions against iran for their nuclear program. , republicanparis senators have tried to undermine pledges made by president obama saying any climate agreement needs to be ratified by the senate. republicans and democrats are condemning donald trump's call of muslims entering the u.s.. trump is calling for a complete shutdown of muslims entering the united states until our country's representatives can figure out what the hell is

going on. another candidate, chris christie, said this is the kind of thing that people say when they have no idea what they're talking about. you can get more on these and other stories 24 hours a day at the new bloomberg.com. betty: thank you so much. the selloff that we have just seen an global commodities shows no sign of letting up. it is getting worst. brand below $40 a barrel. silver is down. oil benchmark. i want to bring in the bloomberg intelligence officer joining us from london. also michael widmer. peter, let's start with you. : it is a continuation from

friday. opec made a no decision decision. blanche topec carte produce whatever they can. the supply being constrained by opec will not happen. other markets are realizing that and you are seeing the reaction. betty: is this just spillover from opec? michael: i would probably agree with that, but on the metal side, what would take us out of the four or five year bear market. it is similar to what you have seen from the oil site. markets are oversupplied until you get the rebound. the supply site, it will be difficult. , you seem to see

the companies capitulate. are right sizing at the moment. if you look at the last three or four years, initially producers cut back and it didn't do anything for producers. continued prices have to fall, the market is forcing them to look at their portfolios, what makes sense? chart of howwas a far the shares have gone down. walch had joined us earlier in february when iron ore prices were higher, but still battered. whatt to do here, michael, he said about iron ore going down to $30. is fantasyland. it may be a wish list. it cannot have been if you look

-- they cannot happen. if you look at the broad range, the cost curve of supply. we are at the bottom making healthy margins. betty: well, sam. you are in fantasy-land, right? there is virtually no commodity in the mining space that you could not have someone that has lost. if you put too much production into the market in a market that is oversupplied, prices will decline. for many commodities, that has not happened. you have the big three or big five trying to gain market share. they are putting more supply into the market. it is a painful game to play. productionn a lot of falling out, that prices came

down along with it. betty: that is the game that opec is playing, right? will seesible that we oil prices going into the impossible territory that people were saying? $20 for oil? trump, oil has become unhinged. we are seeing the risk of unhinged capacity in saudi arabia and you ran. in saudi arabia it is $2 -- it is 2 million and in iran it is one million per day. opec's past the golden age. demand is not sucking up the supply. betty: does anyone expect them to come out with a cut and print option? decision wastual pricing by the market, meaning no decision. asymmetricted an

trade, everyone expects them to do nothing. on the small margin that they cut they will get a bump in oil prices. they miscalculated the degree that everyone was in that trade. people hoping to get an asymmetric opportunity out of the market. applies to oil, but in the metal market, where is the bottom? to we need better data from china? what will signal a call to the bottom? michael: the ideal scenario for 2016 would be one where they are moving into next year with pricer's coming up and producers cutting production -- being cut -- being forced by the market to cut production. i think you have a market that coul -- could perform

reasonably well. betty: thank you, guys for joining me. as we were talking about commodities, let's look at how commodities are trading. nymex crude at $37, they fell below $38. gold futures are slightly lower. copper is down. the board are declining. we will be back with more on bloomberg "markets." ♪

betty: good morning. welcome back to bloomberg "markets." check on theas a company movers when we are selling off quite a bit in all of the markets.

matt: it is mostly because of oil, but i will key on a couple of stocks. chipotle has had real problems. you saw chipotle come out overnight with yet another case of e. coli linked to a that it has near boston college. chipotle is down 3% right now. downgrades came out across the board from a number of analysts yesterday. you can see on bloomberg with the anr function. -- aaa is having a e. coli issues, they do not know what it is linked to. unsolicited bid, 21 -70 a share. this is where there has been a lot of m&a. in 2015, very heavy activity.

check out all of the m&a in pep boys. yesterday, carl icahn took a 12% stake. to mr.s had been talking icon for several months and were concerned he might have too much leverage with other stakeholders trump company that could the bridgestone didn't that was announced in october. page stone date for pep boys. carl icahn said they would pay for all of the shares. boys said they liked carl icahn's offer better. saw staples and office depot trying desperately to get the combination blessed. they said they will bring suits to try to stop the merger. staples is down 6.5%. i cannot believe i said

"merger." we don't use that at a bloomberg, it is always an acquisition. it is never a merger of equals. this would have been staples buying home depot. an important interview on bloomberg radio. tom keene talks with former imf chief economist olivier blanchard about whether the fed will raise interest rates. if they do, what will it mean for the economy? interestou increase rates there are the wrong dynamics. interest rates do not affect spending overnight. it takes about a year or a year and a half for the effect. you have to start before it is too late. i think for all of these reasons , and the fact that even when we have increased the rate by 25 basis points or whatever, we are still far from the rate at which

we should end up. for all of these reasons, this is the time to do it. betty: tom keene joins us. i thought it was interesting. you cannot be too short term? you have to move on fed policy for the next 12 months or eight months. tom: it is always been a nuanced conversation. major messages rome professor his optimism.was optimism about what all central bankers are doing. there is an optimism about what chair janet yellen and vice chairman fisher will be dealing. betty: he is not questioning janet yellen or others who are with her on hiking interest rates? tom: not at all what they are doing on december 16. he said there was a set of questions given new day to that will combine a.

he was very humble about what commodity prices will do, to other nations as well. betty: what did he say about oil? oil pricessue with and the dynamics of commodities, and the narrow effect it will have on brazil and mexico. the mexican peso went through 17 . here is olivier blanchard on the complex. of oil the price collapsed, there was a question of what was behind. there were people thinking it was a high world demand or supply. we took a position that there was a collapse of opec to the right. and non-oil producers, this is good news. did you see how she cut that? it was perfect. that was the most important. betty: i don't know what that

means. tom: the video. chart, they nailed with the imf said about opec. saying that this is about saudi arabia and the oil coming out. professor plan c -- d thought weanchar would be more benefited by oil prices. betty: not at all. i see the lower gas prices, but they are not low enough for me. tom: you are driving a hummer h2. betty: i am driving a hybrid. tom keene. more ahead on bloomberg television. speaking about the climate. will hear from the director of the environmental protection agency and how calpers is pressuring companies to clean up their act. it is the season for bank

bonuses. two is scoring big, and who is being paid too much? fourth-quarter to take sales over the finish line. how is the weather playing into the race, the warm weather? ♪

betty: as the paris talks on climate change continue, washington talks about phasing out tax credits for renewable energy to renew tax breaks. the administrator of the environmental protection agency spoke to caroline hyde in paris where she gave her reaction. we are seeing tax credits work. we are seeing them in the u.s. because it is giving a leg up at the state and national level.

we are seeing that renewables are here to stay. they are competing against also fuel. we know they are competitive in the solar world at large and smaller scale. they are 50% cheaper than they were before this president. where 10 field is times more jobs are growing. what we are seeing is the costs are going down. tripled in terms of the electricity it generates and solar has increased 30 times. this is remarkable progress for something nobody thought would play a big role. the solutions are here. we have to take it vantage, invest in them, whether it is a tax system or attracting private sector dollars. >> will they extend the tax

credits? >> we will see. they will have a challenge to look at this. states have extended opportunities. we know that renewables are here to stay. they are competitive, they can survive. betty: let's get a deeper dive on how companies are focusing on climate change. -- anne and simpson simpson is joining us. thatant to ensure companies you invest in will be howronmentally cautious will you make them put their money where their mouths are? calpers is a huge fund. we have $300 billion. it is important to know that our reliability stretch out to the better part of 100 years. is no way tothere

hide from climate change. you can see why we see this as part of the risk, but also an opportunity. betty: it is a risk and opportunity, but combing through your portfolio worth $300 billion, are you looking at divesting in companies that don't match your philosophy? anne: we are interested in change. the most important thing is that the companies in our portfolio kit with the program. in 30 years, energy companies should see themselves as part of a new low carbon future. we were struck by the chief executive of shell saying that solar is the energy of the future. that is what we want. betty: what about the other companies, other fossil fuel companies, that are not? anne: the situation in color on you is we have local legend --

the situation in california is we have local legislation that if we cannot persuade the coal companies to change their strategy, we should sell our sh ares. part of that is a teeny our portfolio. the big game in town is what is happening with international oil and gas companies. those that are looking toward the future, we want to push them to make sure they are aligned. we will continue that conversation. breaking news on china resources. $21.70 a share for more m&a news. we will be back. ♪

betty: we are live from midtown manhattan. where is the snow? the weather has been so warm.

i am betty liu. we are with the global investment director of calpers, anne simpson. outside of your portfolio, what to chew come back with from paris? what is the concrete thing you have come back with? anne: we have 185 countries, including the big ones -- u.s., china, india, russia, saudi arabia -- putting forward plans on how we will cut green house gas omissions. we cannot do anything about cosmic rays, but we can do something about what we put into the atmosphere. scientist tell us that it needs to be two degrees or less. i would say proof of content. plans from countries. next, how will it happened?

two messages from paris, the finance is there. there is trillions of dollars stepping up saying we need this addressed. also, we want to deploy money because this is a huge investment opportunity. what makes it possible is technology. betty: there was a committee set up? physicsw do you get the -- the scientists are over here, and the market to work together? there is a new initiative sponsored by the g-20 that told the financial stability board you are in charge of the global financial markets being safe, we think climate could be a risk. betty: which companies should be measured? measured?and be we only have one minute, but what will be the hot issues?

anne: holding boards accountable for long-term performance of the company. on the climate agenda, we have been working with the new york city pension fund. calpers has been backing them up to nominateright directors to the boards of companies. issue of ae is an lack of diversity, that means competence, independence, and diversity. we want a climate competent board. not people that understood the world as it was, but people that can see the world as it needs to be. betty: do you think it will take a few rounds? companies last season, including chevron, duke energy -- this time we will come back again. whisker.o exxon by a investors will not be sitting on their hands. betty: i get a sense they are on

your radar. anne: for the long term. betty: thank you for joining us. anne simpson, global governance director of calpers. let's continue with the first word news. david? david: john kerry says he confirmed with ban ki-moon on the state of global climate change. i the secretary-general and talked about where we are in the negotiations and the steps to take in the next days to be successful. he has been working diligently with the delegations. we appreciate his leadership. david: secretary is in paris hoping to produce an agreement ibm to the week. you can add speaker ryan to the list of those condemning donald comments on banning muslims to the u.s..

david jolly of florida says that trump should quit the race for the white house. friday's deadline may have to the deal to let the government keep spending. it is on the deal of tax breaks for new businesses, research, and development. that aar suggestion yet shooter in colorado targeted planned parenthood. the man accused of killing three people asked for directions to the facility. is expected and be charged with murder and other crimes in the attack. the navy's newest generation of warships would be ineffective mines, because an underwater drone does not always work. they needed an independent team to review the program. the eagles of death metal returned to paris to perform with u2. it was their first onstage

appearance since the attack. they went to the bataclan placed flowers. the band escaped the carnage by hiding in a dressing room. andcan get more on these other stories 24 hours a day by visiting the new bloomberg.com. betty: thank you. let's quickly look at where stocks are at the bottom of the hour. the dow is down by 181 points. ,e are coming off of our low dragged down by commodities, oil in particular. the dow had been down as much as 245 points. we want to keep our eyes on the tick by tic on the equities. banking ands -- the broader market. hillary clinton will unveil an exit pack to crackdown on corporate inversions, the practice that permits u.s. companies to merge with

companies overseas to lower bill.tax clinton published an op-ed in the new york times that was entitled how to rein in wall street. joining me is william cowan, who wrote a book as well as many wall street tales. , he is in litigation with the bank. bill, adding on. i'm looking at headlines from morgan stanley that just broke. cuttingtanley will be 1200 jobs. cutting 1200 jobs and taking $150 million charges. the job cuts will total 25 of their fixed income trading staff worldwide. morgan stanley will cut 1200 jobs. that is the news, morgan stanley. what great timing. bill: they must have been

waiting for me to appear. of the cutsop announced yesterday in the london trading groups. betty: and barclays is looking at cutting their investment bank. bill: european investment banks are retreating from investment banking. now, morgan stanley -- i think that this is a rarely clear, almost capitulation, of cutting back on trading. trading is not what it once was on wall street. higher capital requirements, inability to make proprietary bets. i think we are in a new normal as the ceo of deutsche bank was saying. betty: you had been saying this for a while? bill: people have finally caught up to me. it is the only way that the math works. you cannot pay people at high levels when there is high

capital and a low return on equity. $.40 to $.50ween of every dollar on revenue -- jobs. thousands of every time we see this, is this the bottom? and it is clearly not the bottom. ors this feel as bad as 2007 2008 for the banking world? bill: not even remotely. you have a capitulation in europe among big banks that they are going to get out of the investment banking business one way or another. it is being forced upon them by regulators, which is great news for wall street. three.r it is, the big even james gorman and morgan stanley. there is a lot of investment banking business. this will be the number one year in m&a and over. equitynumber in debt and

underwriting. they have wealth management businesses. this, as i have written, will be the golden age of wall street banking. wall street new york style. betty: banking, not trading. the: it is all part of puzzle. trading is not going away, it is not is making the kind of money it once did. betty: you mentioned the deutsche bank co-ceo. he has been in his job for five months. "i have no idea why i was offered a contract with a bonus in it. i promise i will not work any hard in anyy less year or any day the someone will pay me anymore or any less." bill: absolutely right. betty: maybe john cryan should cut his own pay?

bill: he might. i worked on wall street for 17 years. bonuses became something that you expected and wanted. betty: that is why you were there, weren't you? bill: that is why most people are there, let's be honest. they can make more money doing that than any other thing they can do without putting their own capital at risk. investment bankers are the most risk-averse people on the planet . they make all this money without putting up their own. when you are giving them these bonuses, they will want more. each year they won't want more, and they will get upset if you do not pay them more. betty: you should be telling anne simpson from calpers that. bill: that is beginning to happen. these big shareholders are

starting to say that we want more of the revenue being generated to go to shareholders or 50% of every dollar of revenue going to the work there. wall street has been a gravy train for 25 years. betty: you have seen bonuses come down. european banks have cut theirs. citibank did not change theirs. up.: flat is the new they're still being paid more than they could be doing anything else. let's see how many of these bankers and traders want to become teachers or tv anchor people. i think that is a great profession if you do not want to risk your own capital. on another subject, we were talking about hillary clinton and her wall street reforms. tomorrow, we have another set of

reforms on m&a. what do you make of that? it is on the margins. she is not talking about fundamental reforms, which is not surprising. she is loyal to wall street and wall street is loyal to her. to proposehing changes on the margins, getting them implemented requires an act of congress and the president to sign a bill. the chances of that are very low. betty: it is great to see you. bill cohan. it.a demand, you name as we go to break, here is where commodities are trading now. ♪

betty: this is bloomberg "markets." a quick check on the markets with matt miller. we are coming off of their lows on the session. matt: we were at 10:00. looking at the indexes, we are recovering more. .he dow is up 137 the s&p is down 6/10 of 1%. you can see that well illustrated, i believe i have it loaded up. you can not see as well what happened before the market opened. we cratered when the oil price came down. down sing around for most of the session. oil is the important story.

around 6:40 five turns around from the rebound yesterday at a 6% drop. wear at a drops to point at 8:00 we were looking at $36.85 a barrel. we are now back into positive territory on nymex crude. that is why you see markets getting a little bit back to level right now. betty: thank you, so much. on some of the individual movers that are moving, abigail doolittle joins us from the nasdaq with qualcomm. is one of theomm worst performers at the nasdaq. onck is down 30% in 2015 part of royalty payment concerns

in china and south korea accusing the company of violating local trade laws. now the union is striking saying six may havest crushed rivals. south korea and no longer seems like an isolated incident. address thelcomm situation, and will it affect numbers? thestors are not happy that stock is on its way to its biggest yearly decline. betty: let's follow the sea to europe where mark barton is standing by. say who laid who or what. we are all down? mark: all 19 industry groups on the stoxx 600, everything is red. anglochina, blame america, this dividend is

getting land of two thirds of its work force to counter the slumping commodity prices. shares are down by 11%. one of the stocks is buffing the decline. .t is a conglomerate we are hearing that the telecom group is looking at buying telecom assets. you can see that it is a sea of red. yesterday's gains appears to be in operation. the factory output fell more than forecast. the bottom line is that our economy is lopsided driven by domestic design and manufacturing in trouble. betty: i will see you in 40 minutes for the european close and the battle of the charts. u.s., retailers are banking on the crucial

fourth-quarter to take sales over the finish line. the warmer weather is dampening some shopping habits. outside of columbia sportswear in their new york flagship store, details on how the weather is affecting retail. it is warm, right? >> it is pretty warm. 44.y it is about we are expecting a high of around 50. the average december high in new york is about 43. we are pushing several degrees higher. this does not bode well for .pecialty apparel companies over the past three months or four months, since august 1, the 37%e prices have tumbled by . that is because of the warmer winter weather that we are experiencing. across the u.s., looking at

numbers from a research firm match sees how the weather affects businesses, it turns out that november year on year, boot 7%.s have fallen by winter accessories have followed by 10%. earlier i spoke with the ceo of aytics about what will happen to specialty apparel companies. the is in question is if third shipment is ready and if they will take it at all? >> if they don't get the next orders in and the next two or three weeks, they won't come. they will be sending merchandise that outlet stores and other parties to dump them on to the market for 60% or 70% off. y: the discount, you have to keep in mind that that is the

profit margin. apparel companies like columbia will lose. i did reach out to columbia for comment, they did not get back to me. rome september the ceo was optimistic. but with the share prices tumbling, that is being called into question. betty: in new york outside of the columbia flagship store on the warm weather this holiday season. lebron james is signing this unprecedented lifetime deal with nike. we will bring you those details, next. ♪

nike has signed lebron james to an unprecedented lifetime contract. details have not been released,

but michael jordan's previous agent said it could be similar nike deal.ael jordan he is basically the ceo of jordan shoes. joining us to discuss is the sports business reporter. he is covering the story. who also has his own brand of sneakers, could he approach that size? >> the lebron book has obviously been written by michael jordan. he has his own air jordan brand. in sales lastlion year. this dealstake that is more than basketball. lebron james being a businessman. he is the best athlete in the nba, but he has also a

businessman. fenway sports the groups. he had a multimedia adventure from warner brothers. there is a lot. betty: what is a lifetime contract mean? >> you will not see lebron , or underidas, puma armour anytime soon. but i'm sure that means that nike will continue to work with him. betty: beyond his career. this is literally lifetime. is like derek jeter, they will be an endorser forever. nike believes that they will be an endorser forever. betty: who else has a lifetime contract? iversenk had one with in 2001. there are other lifetime deals that are really through the end of your playing career. betty: kevin durant.

>> exactly. through when you are done playing, then there are lifetime deals like lebron. betty: do they pay off for the companies? >> certainly. lebron's issues a not be at the mayl of -- lebron's shoes not be at the level of jordan's, but they are popular in asia. that is why nike has ponied up all of this money. betty: after the break, industrial mining shares leading a global drop in equities. here is where stocks are trading. we will keep our eye on the stock market throughout the day. ♪ sure, tv has evolved over the years.

it's gotten squarer. brighter. bigger. it's gotten thinner. even curvier. but what's next?

for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. tand that's what we're doings to chat xfinity.rself, 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. is 11:00 a.m. in new york and midnight in hong kong. welcome to bloomberg "markets."

♪ bloomberg world headquarters in new york, i am betty liu. oil prices are bouncing off of their lows after brent sank below $40 per barrel for the first time in almost seven years . one of the biggest mining companies, anglo-american, they are shrinking to a fraction of their former size and ending their dividend payout as oil prices plunge. anald trump touches off firestorm of controversy calling on the u.s. to ban muslims from entering the country. we will look at how his statements could affect the presidential race and his business. we will look at how the market could be affect did by the upcoming possible fed rate

hike next week. we are 90 minutes into the trading session. matt miller has the latest on the markets being dragged down by oil prices. we have seen a recovery? matt: we have seen a pretty amazing recovery. nymex crude, until 6:45, 7:30, we were green. then we dropped like a led z epplin. up again.ot back brent crude is the same way. and thensee a big dip, a big recovery, then a bigger dip in recovery. the spread between brand and wti has been getting tighter. this is over the past five years. you can see there was space here until about the end of 2014.

now, the spread and correlation is incredibly tight and close. brent has become the world benchmark, but we still look at wti. betty: what about natural gas? matt: natural gas had a huge drop yesterday. we saw it come down this morning as well. must be a different future. we saw it come down a little this morning and it has recovered with oil. the markets have not recovered completely. oil anddown before natural gas this morning, but we have moved down more fantastically. we have not completely recovered , still down 1% from yesterday. the dow was down 250 points earlier this morning. it has recovered to a loss of less than 100.

we have seen some movers on natural gas and oil. the oil movers are recovering a little. southwestern energy is down 1.5% . interesting news on devon yesterday for buying new land. red is the favorite color in the markets for sure. thank you. we want to check on the bloomberg first word news. courtney donohoe has more. courtney: the government is reviewing the fiance visa program which allowed one of the california mass shooters. she is one of the pakistanis permitted into the country last year to marry a u.s. citizen. it is among the smallest visa category manage by the government. they typically focus on marriage fraud.

eu to speed upe to terrorists.ds they want to cut off transfers, cards, and freeze assets. the pentagon has found that the littoral combat ship would be ineffective in searching for mines, because an underwater drone made by lockheed martin does not always work. an independent review board has been named. paris, republican senators have tried to undermine pledges made by president obama by saying that in a climate agreement must be ratified by the senate. authorities in beijing have raised in air pollution alert to the highest level by one measure. the smog is seven times the

level considered dangerous to health. schools, suspended barbecuing, and a limited car travel. you can get more on these and breaking stories at the new bloomberg.com. betty: courtney donohoe at the news desk. commercial real estate valuations have returned. as the fed rate hike looms, do we see a bubble popping on the horizon? the founder and managing partner real estate investors. it is good to see you in the studio. saying that this thing about the fed rate hike and trepidation is a bunch of hooey. ethan: it is a non-event. betty: a nonevent for real

estate? ethan: a non-event period. drama inve to create our lives to make our lives interesting. exit myslet the drama life, but i understand what you are saying. ethan: it really should not change anything materially. the fact that people are making a big deal about it is silly. will be interesting, and what people should focus on, is if rates trend higher. how sustainable would that be? that will be determined by economic vibrancy. if economic vibrancy is there, ande get wage growth continued employment, then it justifies the rate and we will see continual increases -- ultimately they could be high enough to be of some concern to asset values, including stocks,

bonds, and real estate. betty: 25 aces points should not make a big difference. ethan: it shouldn't be in the conversation. talkinghy are people about liquidity in the bond markets? ethan: there is a completely misguided notion of liquidity, anyway. largek that it stems to a extent from bad planning on the part of investors. would onenk about why need liquidity? the ultimate need for liquidity is the need to pay your bills. we need cash to pay those. we need cash to pay bills, right? they cannot pay bills with stock or real estate. we need cash. wen one thinks of liquidity, think of things that are cash or can be converted into cash. not only quickly, but at not a

great cost. int we have seen is that turbulent markets, the cost of liquidity for things that we can convert to cash, the cost is high rendering them truly il- liquid. if you have to pay 50% of market price, that is not liquidity. we have seen a significant downturn that stocks like apple, drop mobil, they typically as much as 50% from their all-time highs to their lows before they recovered. a two tousually period.covery where if you want your cash you will need a 50% premium. is real estate which

considered to be nonliquid, i would say that even sense 2009, you would be able to sell your apartment in santa monica, california, for example, without paying a 50% premium. it could be argued that real estate was more liquid than the s&p 500. i do think that -- is not a way out of whack, and they are quite amenable? there is a good sense of equilibrium in the markets. yes. betty: speaking specifically about real estate, is there some of the high-end markets like new york, miami, san francisco? ethan: it has been an amazing phenomenon. people talk about real estate and they think -- they will say,

do i think real estate is expensive or cheap? mean?rt is, what do you the high-end of apartment market on new york and miami has a little bearing on the industrial market in riverside county. it is not one business, it is many. you are asking me to comment on the high-end, residential, gateway market where there is a tremendous amount of foreign flight capital that has driven incing and compel developers anticipation of continued capital to build for that demand. it would seem there is an oversupply, and i would be nerve is if i was invested in or lending to speculative developers at today's valuations. it seems there has been an uncomfortable pause with a lot

of supply. betty: does it make you nervous to see the numbers coming out of china? import growth slowing down. there is clearly a slowdown in demand. that that will be affecting the properties in the gateway cities? ethan: it is important to consider, but a great argument could be made on both sides. if china were to do poorly, more flight capital, rather than less, good find its way out. the argument against it is the chinese government would try to curb that flight capital. i becoming part of the imf currency, they have to tell a afferent line -- toe different line for the currency clapped down -- currency clampdown.

chinese investment money is still flowing out of china into the u.s. betty: there's only so much a they can do on capital control if they want to be part of the global currency markets. thank you, so much for stopping by. ethan penner the founding mosaic interstate investments. next, donald trump is at it again, calling for a complete ban on muslims injuring the u.s. gone one step too far? as we mentioned exports are falling for a fifth month. will policymakers keep their foot on the gas? plunging metal prices gelo to downsize. more coming up on bloomberg "markets." ♪

betty: welcome back to bloomberg "markets." it is time for the bloomberg .usiness flash canadian pacific made a revised takeover of norfolk southern. the u.s. railroad has turned it down. is more the new bid attractive and reduces uncertainty. norfolk southern has offered the rest of the bed the railroad had already did. china resources has made an unsolicited offer for fairchild semiconductor. that they would pay for fairchild. fairchild's board of directors will review it.

job cuts from morgan stanley. they will cut workers worldwide and take us average charged in the fourth quarter. morgan stanley is paring back its fixed income trading business to improve profit. you can get more at bloomberg.com. we will go to the market desk where matt miller is looking at the company movers, including stocks like pep boys. stocks arehese moving, but on market news it is interesting to see what carl icahn's take has to do with this. --ima ran -- mac moran getting mac moran crushed. copper has taken a real hit. you can see it down 5.1%. buying thestarted

stock on july 17, and he has continued buying more. he now has more than 100 million shares. sincen see it is down 57% he started buying the stock. ng.'s look at l it is up. liquid natural gas is the ticker. gas futures were down, they were down yesterday and will continue to be down even .hough you see gains in oil carl icahn started buying a niere in august, and now has 13.8% of the company. since he started buying -- august 31, it is down 30%. let's look at boys. carl icahn has bought a stake in cap toys. he had 12%.

they already had a deal to sell to bridgestone, or bridgestone a them.to buy carl icahn said he will buy all of the shares in pep boys, and they say they like his offered better than the offer from bridgestone. you can see that this stock is gaining, and it is part of carl drive moren to consolidation in the auto parts business. he bought a canadian auto parts supplier this year. politics.ning to donald trump is in the middle of the firestorm of controversy he created. republicans and democrats are condemning his call for a ban on muslims entering the u.s. one of trump's middle eastern's

nest partners is drawn the line. this is trump making the comments in south carolina. calling for ap is shutdown of muslims entering the united states until our country's representatives can figure out what the hell is going on. ago, we short time heard speaker ryan telling republicans not to endorse his comments and his policy on muslims was inappropriate. jeb bush called trump "unhinged." joining us is ron christie. bloomberg politics, steve. unhinged, ils him guess that is his retort for being called blue energy. is this the moment when trump becomes unhinged?

donald trump has said provocative things before. everyone says could this be the down?at takes him donald trump's undoing will be by his own hand, but we have been down this road before. this statement that he put out 24 hours after the president asked for patients, trying to calm down the country -- this goes a little further. i think the unification of the republican party, donald trump is uniting the republicans against him. whether it will hurt donald trump remains to be seen. there are a lot of people in the republican electorate that support things like this. betty: including our own that of republicans say that islam is a violent religion. there is a good portion of

republicans that believe donald trump. continuing tod be be helpful for donald trump, but unhelpful for the republicans. ron: i think that if you look at the bigoted comments, they are in reprehensible. what paul ryan said this morning, and i agree with my friend, this is not conservatism. ryan is right that trump's comments violate the first and 14th amendments. how you willat is appeal to voters by being bigoted and violating the restitution, go at it, but it is a bad brand for republicans. that saysre is a poll 76 percent of republicans believe that islam is at odds with american values and way of life. being on pc,e is

but he is reflecting the view of the majority of republicans. ron: sharia law is not compliant with our constitution, but looking at a religion and asking if that is compatible, that is wrong. i wonder what that poll asked. hard time believing that any republicans or americans would have that level of hatred or bigotry. betty: what do the other candidates do? steve: the candidates are coming out boldly. a lot of them have been making the case that donald trump does not have the temperament to be president. that he does not have the ss thater and chiefne they need. the timing is a little suspect. out with thisomes statement yesterday, hours after an iowa poll shows ted cruz

taking the lead. they have been planning this for a while and they chose to do it yesterday. i am not saying they are linked, but -- this is the monmouth poll in iowa that showed cruz leading. in the past, when ben carson would pass him, he went directly against ben carson. rides himself as a counterpunch or. ted cruz has not attacked donald trump. the question is whether or not this is part of his strategy. betty: thank you. ron christie, the former special assistant to george h w bush. we are back in two minutes. ♪

betty: we are moments away from the european close. mark barton as joining us for the half-hour. bitre coming back a little too in europe? mark: it is down for the fifth day, blame china, the trade data. he will be drilling down into the china data. is it in recession? you have u.k. and eurozone data over the ecb decision. what a story, dividends for the first time since 2000. willwn bloomberg reporter be with us. the battle of the charts is back. i'm going to win today. i will look at the value destruction in the mining sector. the european close is next. ♪

betty: welcome back to "bloomberg markets," i am betty liu. markets are wrapping up a crazy day in trade, i want to bring in mark barton as we wrap up the

session in the next 30 minutes. mark: mining companies are dragging european stocks lower. the european close starts right now. ♪ we are going to take you from new york to london in the next half an hour, as you said, the china data kicked off all of the selling here. yesterday's gains -- were they an operation? data fell more than expected. the import data was an improvement. it still has eight-in front of it. grew .3%.a growth yes, it was closed down for the second quarter. it is