from bloomberg world headquarters in new york, good friday afternoon, i'm scarlet fu. stocks declining for a second day as optimism over the rate hike begins to fade. crude oil prices on the rise but many say we have not touched bottom. how low can prices go? and a big acquisition turns into yahoo! sin will -- simple -- symbols for its failure to innovate. julie hyman has more on the news today. activity, not the very much. lift, you have the fed but since then it's been choppy. disclaimerdoing this all day, that this is a

quadruple witching day, it expiration futures and options contracts, and s&p rebalancing their indices, which does tend to cause volatility. something to think about, even as stocks fall to their lows of the session. i do want to talk about one of the biggest drags on both the dow and s&p, disney. the stock downgraded from cell to neutral. interesting when everyone is talking about star wars. the movie took in an estimated $87 million thursday night, but and rich greenfield is not impressed. he is making the downgrade. it is tied to espn. he says disney is making the fundamental mistake of .verpaying for sports nonetheless, the stock is down 3% as a result.

scarlet was talking about the s&p 500 for the week. we are seeing a gain of .4% as we saw this ramp up with the fed , and then the hangover following that. crude oil had a pretty dramatic turnaround here, now higher by 1%. it looks like the senate has approved a listing the oil export ban, something that has been talked about or quite some time. not a done deal yet, but enough to send oil to the highs of the session. something else that is happening, the dollar is giving up some of its recent game. now down by half of 1%. scarlet: the weakening dollar giving a boost to metals prices. not just the energy complex but the metals complex as well. copper, rising. they have been beaten down as the dollar has been on an uptrend. they switch at least for today.

however, the forecast is for the dollar to do well in 2016, particularly against the euro. you.et: thank apple shares continue to decline, at their session lows right now. up 1.5%. if you look back over the past five months, shares are now trading at their lowest level since august 25. we had morgan stanley's note that they expected and unexpected drop in iphone unit sales next year, when they had looked for a gain previously of 1.6%. certainly something waiting on their shares. weighing on their shares. let's get to the first word news with brendan greeley. brendan: the obama administration will meet with reporters on his way to his summer vacation but. in california first to meet with

the families of the san bernardino victims. we will bring you the news conference later this afternoon here on bloomberg. congress has taken the steps to ensure the school peace in washington through most of the year. the house and senate have passed a 1.1 chile dollar spending measure that ever to a shut down. lists a 40 --year-old ban on exporting crude oil. the bill now goes to president obama. donald adelson says incredible support among the republican base, but he is not ready to sign on yet. the republican supporter was asked to he is supported for president. the adelson family has not made up its mind on who it will support. we may wait until a number of the primaries are already established, and who is garnering all of the largest delegates. adelson donated $100

million to republican candidates in 2012. the u.s. will give $80 million to help feed people in you feel be a. it brings the total amount of aid to the country to more than $435 million. the eq can government is asking for -- ethiopian government is asking for more than 1.4 billion dollars to help feed his people from worldwide sources. the wife of golf for jason day have to be removed by stretcher after jason -- lebron james ran into him. she is now safe at home watching her husband, world number two golfer. you can get this and other breaking stories on bloomberg.com. happy star wars day to you. scarlet: that is where alix steel is, i think. 55 minutes before her screening begins.

she has been talking about it for weeks. they are stills, digesting this week's decision. andrew levin, a former advisor to janet yellen, told us earlier this week he sees a collision over the path of future increases. >> i believe the markets are misreading today the extent to which tend out of 17 fomc committee members expect the funds rate to be up at 1.5 but the end of next year. who gets to define that? the committee, not the market. bishop is the lead fixed income strategist at rbc, which has $271 billion in assets under management. do you agree, that the markets are misreading the fed? >> no, i don't. we think the market may have a better idea of where rates will eventually end up. our view is, going into 2016, we expect to see the projection

from the federal reserve, those numbers ratchet down and again to converge closer to where market expectations are. scarlet: what would profit federal reserve to bring them down? they didn't do anything here except to tweak the edges. >> they did bring down the intermediate. that signals -- supports the view that they will take a gradual approach to raising interest rates over this long, extended tightening cycle. what would cause them to bring them down is this realization that, even though the economy has made progress over the last few years, is still very tender. it will be a long and stable growth process, in our opinion. inflation will remain low. central banks around the world will remain on easy street with slow growth. in our view, what will bring those down is the realization that the u.s. economy, while the

driver on the economic front, cannot do it by itself. slow growth, and that will bring everything down. scarlet: if you look at the terminal, option volatility estimates for treasuries is at its lowest of the year. that is the white line. currency volatility has come down as well as the fed has begun liftoff. you say that the little will persist. explain what you mean by that he w. to march of 2015 when the fed moved away from targeting a specific date to provide policy direction. then, we saw noticeable uptick in fed induced volatility. that is something that markets and investors will be coping with as we go forward. volatility risk is a new risk along with interest rate and credit risk, that investors will have to play for. if you look at market movements days ago,meeting two

we have seen a lot of volatility there as well. scarlet: how do you position for that in 2016? >> that is the key question for investors. the natural inclination for investors is to become very cautious and maybe do nothing, stay in cash or cash alternatives. -- in our view, volatility can be managed. it cannot be eliminated completely, but looking at portfolio positions on the yield curve. intermediate maturities or us are the most attractive levels for us. diversifying the portfolio across different asset, focusing on credit quality. there are a number of things that can be done. it just makes it harder for investors to effectively manage the port olio, but volatility can be managed. more importantly, it can create opportunities for investors as well. scarlet: volatility management,

the theme for 2016. thank you very much. we have more coming up on bloomberg markets. more job cuts at wall street firms. the latest, morgan stanley, which plans to get rid of 5% of its staff. what this is about the shifting landscape. apple shares tumbling today. we will take you behind that. and we will continue to monitor the price of oil. historic lows back to 2008. how much further could they fall? ♪

scarlet: welcome back to bloomberg markets. it is time for the bloomberg business flash, a look at the

-- biggest stories right now. you can work to settle a case related to failures. it referred to put clients into its own products. the bank will pay $267 million. two of its units admitted wrongdoing. glaxosmithkline has agreed to buy the portfolio of an experimental hiv treatment from bristol-myers squibb. earlier this year, bristol-myers decided to quit discovery efforts. the median pay of female cfos jumped 11% last year, more than their male counterparts. women are still outnumbered overall. only 60 female cfos in the s&p 500 companies. at can always get more news bloomberg.com. let's go back to the markets

desk. julie has a check on individual movers. , the: darden restaurants owner of all of garden, coming up with earnings-per-share that beat estimates and raise their full cast for the full year. at restaurants open at least a year of 1%. the biggest gain for one of its smaller chains, season 52, second-largest for longhorn steakhouse. 2% gain for bahama breeze. shares are up. carnival corporation is up by 5% after it said advanced bookings for the first three quarters of 2016 are well ahead of the previous year. they are also coming in at slightly higher prices, which is driving up share even after the company beat profit estimates but sales missed at submit -- estimates slightly.

it looks like the forward guidance is what is helping stocks. isther stock that is higher a chinese developer of mobile phones. $9.3 billion including debt is the price. it is an investor group that is taking it private. it is getting $77 per abr. a quick look at natural gas companies as we see natural gas rebound. up by nearly 2%. southwestern, chesapeake, all getting a boost from that. .carlet: thank you morgan stanley is the latest investment bank making cuts to its staff. the bank is preparing to eliminate 1200 workers globally, including 470 in its fixed income and commodities business. i want to bring in michael moore, who covers banks. cuts,time there are job

they are mentioned. >> morgan stanley doing a large cut, we have seen this at other banks. the wall street journal has a story about morgan stanley cutting their equities business. this seems to be more of the annual cull at the end of the year where it is not so much shrinking but replacing people. the fixed income side is definitely shrinking in the business. scarlet: beyond that, where else is morgan stanley making cuts? >> a lot of it is in back office. you may see this in other banks as we head toward the end of the year, bringing their cost down. revenues have not picked up. and they are trying to control what they can. in the first nine months, the biggest banks have brought their cost down significantly, a lot of that is on the legal front, fewer settlements this year. a good portion of that is bringing down the cost by replacing people with technology. scarlet: you would expect to see

news of cost cuts helping the stop, the shares are down one point or percent. like these reduction do not have an impact on shareprice the way these two because investors have gotten accustomed the fundamentals of the business need more addressing than simply tweaking here and there. >> the day that we broke the news of the larger cuts, the stock did react a little to that. in general, you are right, there has not been a lot of enthusiasm for the bank stocks lately, even .ith the fed raising rates i think investors want to see some of these revenue gains come through because you can get a little better on the cost-cutting side, but a lot of these banks are pretty far away from their cost of capital. to get there, then you revenue growth. scarlet: not much fat left to cut. michael moore, thank you.

still ahead on bloomberg markets, shares of apple trading at their lowest level since late august. what is contributed to these declines? ♪

scarlet: welcome back to bloomberg markets. it's been a rough week for apple shareholders. faced athis week, apple trifecta a trifecta of lowered estimates from major wall street firms. today shares are plunging to their lowest level since august 25. what is contributing to the losses, what does it mean for apple moving forward? really us to discuss is stevenson from san francisco. fundamentale rethinking with apple and its prospects for 2016. is always top of mind for investors, the biggest earner for apple, makes up two thirds of revenue.

there had been some reports out of asia out of their suppliers that there is a little bit of a trained in demand, and that has caused a few banks to cut their forecasts or at least narrow their forecast for iphone sales in the last three months of the year, which as you know, is the biggest quarter for apple. scarlet: any indication that the weakness would be in china versus the united states? china is mostly taking over as the biggest market for the iphone. >> in fact, china is the bright spot. apple makes plenty of money in china, still a large untapped market. the issue is international markets outside of china. the dollar is getting stronger, the fed just moved to days ago. that will cause the dollar to go higher in 2016. that also has an impact on the amount of money they can bring back home. i want to bring in pat

acker, and investor. you have been looking at shares of apple. are you concerned by this drop? no, we think the valuation in apple currently takes a lot of this into account. you go through these cycles with a company where people get to negative on the cycle going to end, things are slowing, and then you get to the next cycle. the stock is trading at 11 times earnings. we think a lot of that is priced in. we think the ecosystem is not going away anytime soon. noise inthis is the between cycles, and we do not think that this cycle is over. scarlet: you talk about the discount that they trade at, 11 times versus 18.7 times overall innotech space.

why is apple trading and such a discount compared to the rest of its peers? as aeople valuing it hardware company when they should see it as a services company? >> that is part of it, the hardware versus software discount. they are not giving credit to the ecosystem. it has always been one of the most controversial stocks out there. everybody has an opinion about apple one way or the other. i think that affects the evaluation as well. scarlet: in terms of the supply chain issues, we know apple made a management announcement formalizing the successor to tim cook as coo. tell us what this means for the functioning and efficiency of apple. backbench,lishes a succession plan, whatever you want to call it.

there was no coo after tim cook was elevated to ceo. this is a sign that at least apple is thinking hard about the top levels of management at the company. jeff williams followed him from ibm, a trusted lieutenant. it is just an endorsement of the confidence that tim cook has in jeff williams. scarlet: absolutely. patrick becker, in terms of what management should do about it growing -- i'll -- growing cash hold ise amount it monumental. always a debate about what it should do with it. are you in the carl icahn camp of returning it to shareholders and dividends? >> we do. it would be positive if they went on an acquisition run. the company has not done that in the past. this is a company built organically.

we don't know if they have the skill sets to be a great acquirer. technology in general, that is a tough route, when you look at the microsoft acquisitions, hewlett-packard acquisitions, tough strategy to execute on. scarlet: although they have made several acquisitions, like the headphones. does that not add to the synergies they could create? that is a relatively small acquisition, dovetails into what they are trying to do within the ecosystem, so we didn't have any trouble with that. at would reed, whe you be looking for in the next couple of weeks? >> he is right, that this is cyclical. also, shares came off of a record. some pullback is inevitable. there are a lot of moving parts. never a slamdunk, but moving forward, the earnings for the last three months of the year,

in january, will be a good day to point. as we come into spring, we will start to see more products. then september of next year, another iphone. scarlet: thank you so much. before we go to break, citigroup least 2000plan at job cuts globally, according to people familiar with the matter. down top's shares are $51.61. planning 2000 job cuts globally. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. scarlet: prom bloomberg world headquarters in new york, welcome that. let's get to the first word news. latest greeley has been -- has the latest.

the data director for bernie sanders campaign is out of a job after snooping on hillary clinton. he took advantage of a software error to look at a private document from the clinton campaign. democratic candidates are preparing for their final debate in new hampshire tomorrow. hillary clinton leads bernie sanders in the latest poll. 64% say clinton would do a better job handling the threat of terrorism compared to 26% for sanders. when iteads clinton comes to honesty and trustworthiness. congress has taken steps to ensure peace in the house. they have averted a government set down and also lifted a 40 --year-old ban on crude oil exports and revives dozens of tax breaks. has called a news

conference for monday to respond to the ethics committee verdict. rulings are expected in the day against sepp blatter and michelle putting the. both are facing several years in jail for conflicts of interest. mother teresa is headed for sainthood. the vatican says pope francis has credited her with a second miracle, a requirement for sainthood in the catholic church. that is a look at the first word news. you can get these and other breaking stories on bloomberg.com. scarlet: thank you. oil prices tumbled to six-year lows today. they are back down again. a brief moment where they moved into the positive but that was fleeting, currently lower by seven cents. right around the $35 bear -- a barrel level. birds eyeuest has a

view of the oil industry. we will look at the tanker market with nikos tsakos. he is the chairman of the international association of independent tanker owners. nikos, thank you and welcome. what about the movement in oil prices has surprised you? it has taken so many experts by shock. what about the movement toward 35 that has taken you a back? s: it is surprising everybody and we are the carriers of the product. the only ones benefiting from the decrease in the price of oil. from beingn business average after the recovery in 2008 2 now booming back to levels that we have not seen for the last 10 years. the lower the price, i think the better the freight rates. there is more demand what we do.

we are the carriers. however, we have not seen this reflected in prices. the underlying business is doing very well. scarlet: talk about some of the macro changes sweeping the industry. potential iranian exports, a possible shakeout of u.s. shale producers. increased demand from asia in 2016. what are you focusing on the most? looking at growth in demand and the growth in ton miles. a lot of oilve coming from west africa to the united states on a 15-day route. right now that is going to the far east, and that is 40 days.

things are not available for a longer time, which increases utilization on the other side of the business. we are seeing now the effect from the relationships between turkey and russia, a lot of russian oil that used to come out of the black sea and the bosporus streets. however, for political regions -- reasons, there are tensions between those countries. there has been a big move of russian oil coming out of the north, out of the baltic see. that takes much longer to get back into the mediterranean than it would be if it came down from the black sea. miless increasing our ton , and is helping the business grow. a lot ofcarlet: crosscurrents and geopolitical tensions that you have to watch. how do you plan for your business years out when people

are confused about what may happen next week? nikos: every company has its own strategy. we do not try to speculate. clients and our they give us guidance. we hope they have better knowledge of what is happening in that world. scarlet: what are they saying? nikos: they want to take more long-term coverage. we have a fleet of 68 vessels with very big growth all over the world. we could charter all of our vessels today for a period of two years or longer. this is a good sign, a sign that companies are hoping that the rates will go up, so they hope to keep long-term employment by chartering ships long-term. scarlet: there is a lot of talk about how tanker supply is expected to outpaced demand next

year. does there need to be consolidation in a taker industry? usually, supply is what brings the business down, oversupply. it happened in 2006, 2008. i think the supply right now is more balanced. a lot of investors in the oil rigs,t are investing in hunting vessels, so there is not much money going toward tankers as it is. though,to be careful, over the next two years, we will have a positive market. but if we over supply the market, we will be shooting ourselves in the foot. what is the one thing that investors on wall street miss the most about the global oil markets that you have perspective on? nikos: in our case, we have a price distortion.

look at takers as an oil service, which we are, but very few have identified that it oil service that is positively affected by the drop in price. so we are treated like the other oil services. people are tired, they want to have a nice holiday and start the new year. i hope that by the new year we will see this recognized and share prices will move in the right direction. scarlet: thank you so much, nikos tsakos. breaking news we just told you about this 10 minutes ago. citigroup is going to be cutting 2000 jobs globally. this will happen next month, according to people familiar with the matter. let's go to the person who broke the news. 2000 jobs, citi is a huge bank. >> this is roughly 1%.

they had 239,000 employees. they have been doing this for a while. 374,000 at the end of 2007. they have been bringing down their numbers and shutting businesses for a long time. cuts.s another round of people will lose their jobs. the cfo, earlier this month, told us that they would take a $300 million restructuring charge. he did not give details about what that meant. there is an assumption that that means jobs. here, we have been able to figure out how many. scarlet: is this part of the end that mostr culling investment expo through, or is

this link to have citigroup is positioned strategically? >> as i understand, more than half are in middle and back office. there are people that would tell you, because of decades of acquisitions, citi is pretty bloated in that area. so this is an addition to normal end of your calling -- end of year culling. to the extent that investment bankers will be, and some could be, i understand most of it is , poor year culling performers, things like that. scarlet: what is the background on the ceo of city? -- citi? he is not a former commodities trader. what is his background, how does that play into where he envisions citi going? >> michael corbett is a salomon

brothers guy, he went to harvard, joined in the 1980's out of college. when they were a big bond trading powerhouse. he is a bond trader and a bond salesman. he spent a lot of years as a salesman in emerging-market debt. he is quite familiar with the banks institutional businesses. , he has has become ceo had to do some learning about the consumer side. i think he is probably committed to growing both of those. it is safe to say is familiarity is the institutional side and the bond traders, salesmen that are still there from solomon. scarlet: thank you so much. citigroup is set to start laying off workers, perhaps as early as next week. more breaking news.

this one on turing pharmaceuticals, the privately held drugmaker. martin shkreli has resigned as ceo, charged with securities fraud yesterday. he is currently out on $5 billion bond. you can see video of him yesterday being arrested. much more coming up in the next 20 minutes. he has handled the g.m. ignition switch recall. he is now being tapped by volkswagen. we will hear from ken feinberg about the diesel emissions scandal. paying ukraine a bond payment, can they get the money by sunday? ♪

u.s. unitolkswagen's just hired one of the most well-known victim compensation attorneys, kenneth heinberg, who administered the claims over it diesel scandal. he. we handle the gm's which defect as well as the bp oil spill. he was on this morning to talk about his next up. >> we will have to sit down with the company and begin the task of delineating the scope of this program. what will be offered, what will attract customers to maintain some loyalty with the company, get out of the courtroom. it is a claims alternative to litigation. have they given you a sense of how big your checkbook will be? >> no, but the company has given

me a sense that they want to do right by their customers. will probablyre be a menu of options available to customers designed to maintain loyalty and support for the company. david: what sorts of things will be on that menu as you go through this process? >> you have to come up with fixes. epa,egulators now -- california state regulators, state ag's -- they know what has to be done from a public perspective. of course, we have to be aware of that. in addition, legal considerations, will it take to voluntarily get people to opt out of the court system? that's an additional challenge. to a question,ds how many lawsuits have been filed so far to your knowledge? >> hundreds of class actions

involving hundreds of thousands of volkswagen owners. there is a storm of litigation out there that is just beginning now. david: you have been through this several times in some high-profile situations. do you have any sense of a time frame? >> i don't. i will say, this is an economic problem and an environmental issue, but it does not involve human injury or death. i am hoping that we can accelerate the program by not having to take into account these horrible calculations that surround deaths and injuries. but we will see. over the next few weeks, we will get a better handle on a timeline into 2016. scarlet: that was kenneth feinberg this morning. you are watching bloomberg. this is your global business report.

ukraine defaults on a $3 billion russian bond. is legal action next? kept its mainpan stimulus target unchanged. what is the investor take? and a decent corner from blackberry thanks to strength in software. we will hear from ceo john chen. ukraine,rt with the the nation defaulted on a $3 billion bond payment due to russia on sunday. russia refuse to participate in a debt restructuring with commercial lenders, saying ukraine should given better turns. until said it would wait the bond expires on december 30 before starting any legal action. the bank of japan kept its main monetary stimulus target unchanged at an annual pace of ¥80 trillion. the bank is expanding duration of its bond purchases and is starting and exchanged purchased fund trading program. richard clarida explains the strategy behind the decision. >> japan is an extreme case of

the reality that qe programs prevent deflation, but also in the case of japan, monetary and fiscal policy are part of the same department right now. essentially, they are facilitating a fiscal policy right now. scarlet: mexico's largest construction company may some of the largest bond the fall into decades. will not pay $31 million in interest on bonds due in 2024. the company is working on a cost-cutting and restructuring plan. ica has been hammered by cutbacks in infrastructure spending. blackberry delivered stronger-than-expected results in the third quarter. thisman john chen spoke morning from canada giving an optimistic outlook. >> i feel good where we are, software seems to be doing well. the business is starting to turn, getting closer to profitability. qnx, more iness,

the automotive business, they are going in the right direction. knock on wood, everything's to be working fine. scarlet: finally, economic conditions in china worsened in the quarter, according to the chinese beige book. revenue output, prices, and capital expenditures were all weaker than a third quarter. the chinese government has signaled some stabilization in the country's slowdown. so a bit of a conflict. that is your global business report. for more stories, visit bloomberg.com. off, at theselling young too little is at the nasdaq. abigail: the selloff is accelerating at the nasdaq. up 1%,posite index is two days of sharp declines following that three day into the fed rally. all of this leaves the composite index flat on the week. today's trading took the index

back below 5000 and below its 200 day moving average. this may suggest even more volatility is ahead. a drag on the composite index is apple, the biggest index point mover. itsstock is on pace for worst month in two years amid reports of supply chain weakness , some thoughts that demand for the iphone is weak. commentary earlier this week. rbc cut its march and june estimates. the question here is, will other analyst follow? scarlet: thank you, abigail doolittle. big drag, apple is a on not just the dow, but s&p, and nasdaq composite. japan surprise measures to boost its economy jolted investors. what u.s. etf's were most affected. ♪

scarlet: welcome back to bloomberg markets. japan's central bank announced new steps to boost its easing program that was accelerated last year par. point $5t includes two billion in etf's. so what does that? mean for etf's here in the u.s. that track japan joining me now is eric balchunas. what are we seeing in terms of market reaction? down a bit. you hear stimulus and you would think the markets are up. this has done nothing to stop the japan train. this years flows, the year end, look and where the money went, japan etf's taking in $10 billion this year. that is more than double any other single country category. germany is number two at $4 billion. if you go further back to when elected three years ago, japan had taken in $30 billion,

which is 80% of all country flows. this is a major situation with japan, trying to play of a non-xp. investors will not be scared because of today. -- abenomics. the way people are playing this, this is where the dilemma comes in. how do you do this? i equated is to coke and pepsi. do you hedge or not? investors are split. wisdom tree coming in, shorting the edges, and that has half of the assets. , if you haversion not just, is doing better. since abe was elected, they are up 30%. still pretty good, but

relatively speaking, not as good as the others. >> some investors just do not want to go there. certainly, dxj brought hedging to the masses a few years ago. scarlet: there is another etf that allows you to sort of hedge. >> index iq. there has been a dilemma with advisers, should i hedge? they cannot with an etf that is 50% hedged. in case you want coke and pepsi, you can have that. not as many assets yet, still pretty new. what i find intriguing, blackrock and wisdom tree have filings for flexible currency hedging etf's. advisers are saying i like the concept of hedging but i don't know where to do it. so these will look for signals and will change the hedging depending on signals in the market. control so you have no over that, as somebody who buys etf's. >> you are outsourcing the decision-making process, and a lot of people are happy to do that. these filings are in a race to see who could get out first.

we talked about japan, but how about with insect there's, what is doing better than others? i'm sure there has to be an etf for that. wisdom tree launched a series of sectors that are hedged. they hedged health care, which is up 40% this year, which is amazing. a lot of structural reforms put into place. that one sector is now in a top 10 overall of all etf's. eric balchunas, thank you. our senior etf analyst. much more coming up in the next hour. the china beige book shows deterioration in china. we will explain. ♪

in new: it is 1:00 p.m. york, 6:00 p.m. in london, 2:00 a.m. in hong kong. welcome to bloomberg markets. ♪

from bloomberg world headquarters in new york, good friday afternoon. i am scarlet fu. notchina facebook does paint a good picture. we will look at trouble spot. life a on the puerto rico electric. deal witha bondholders, creating the largest ever restructuring in the bond market. we want to go to julie hyman, who has the latest. did we get enough action in one way or another to get a read on what we did for the week? week is still off, but very slightly pretty those gains are getting ever smaller as we see stocks continued to pump along at the lows of the session. a fed euphoria, the

interest rate increase has finally come. and now hav we have had the me down.m,m not just aing day, deep decline, but a broad decline. in the red, all of them. you do not see a whisper of green on your screen right now. financial, technical consumer discretionary, consumer staples, it is down today. i was looking the individual stocks that was computing most of the decline today in terms of point to the clients because they are big companies. apple's down. there have been some analyst comments of bailey leaked about concerns over demand for iphones, looking at the apple supply chain and extrapolating from that. disney down after it was cut to sell. star wars notwithstanding there

is concern about disney overpaying for sport right. and now microsoft, falling even sachs gave up and sell rating and raised it to a neutral, saying that it was -- it wasnalyst saying wrong. analysts saying they had a wrong outlook. moment itor a brief looked like they were going to end their losing streak but we are back in the red once again. julie: we had a bump up in oil prices as we saw the dollar decline today. highs of theto the session as the senate voted to ban in theport u.s.. one of our analysts said you see liquidity drive to the forefront on a friday. we have some indications of saudi arabia that they will

adjust their budget to the long-term oil prices. if saudi arabia's accounting for that, the market is as well. scarlet: they are fighting for their market share. you will be back shortly to give his individual names. let's get to first word news. brandon: president obama will meet with reporters today before starting his winter vacation. on the way to hawaii he will stop in california to meet with families of the san bernardino massacre victims. we will bring you the president's news conference this afternoon at 1:50 p.m. eastern on bloomberg tv. congress has taken steps to ensure fiscal peace in washington through most of the next year. the house and senate have asked a $1.1 trillion spending measure that are virtually government shutdown. it also lists a 40-year-old ban on crude oil experts. goes to president obama. meanwhile, a majority of repair americans of the race relations as worth than at any

other point in the last 20 years. the percentage of latinos who the race relations as bad or very bad jump to 16 was over the last year. jared fogle has been moved to a low security prison in oklahoma city. undergoing psychological treatment. federal health officials are imposing a ban on the use of tanning beds for anyone under the age of 18. it would require 10 good users to sign a consent form acknowledging the risk of skin users to tanning bed sign a consent form acknowledging the risk of skin cancer. that is the first word news. scarlet: china's economic condition deteriorated across the board in the fourth quarter. that is according to a private survey. it does contrast recent indicators that signal

stabilization in the country's slowdown. the president of the china facebook commissioned the report and conducted it. and our editor dan maes joins us as well. you saw some pretty discouraging results. what a data point was most distressing? >> it is going to be profits. we have seen a long-term deceleration, i have talked about the slowdown over the years. profits of stayed pretty robust on this slowdown, talking about need of is no stimulation. but profits deteriorated to the lowest level we have ever seen. need tomething you kee give an eye on. scarlet: china has embarked on fixed interest rate cuts since late 2014. should these have propped up profits a little bit? >> they are cushioning the blow.

most economists ca world cup next year. ruck me from your report was the decline in services. this has been one of the great counter narrative themes in china, and is providing a question. what you're suggesting that is not quite as strong. >> this narrative building to the third quarter, we were hel ping to push this. thise have built into game, that services going to go gangbusters regardless. we did not see that in the fourth quarter peopl. you will have to adjust to a world where this may not be a sustainable trend. scarlet: if you could expand a little bit more on that committee do not see a turnaround as expected, or was it going more slowly? problem here is that some

of the hidden sources of strength in the economy that we've seen for the last couple of years deteriorated in this quarter. we saw the inflation picture look worse or firms. turning ainflation bit of inflation for the first time. labor market was also much less strong than it had been in the past. severalooking at different factors, there just was not the strengthens quarter. -- and the strength in this quarter. >> should we look to seeing more on the physical side? >> fiscal is interesting. they are talking but stricken the economy as they need a narrative for the gdp. been much talk about the fiscal stimulus over the last several months, quarters. but where has actually gone? you transport, transport

construction, these are sectors that showed an update when the chinese had an active stimulus. they did not only not improve, but had an awful performance. if there is stimulus in the economy, where is the evidence? a report that is it is time for reform or bus route is there any areas that they need credit for doing it effectively? they have been relatively restrained on the stimulus side. the old beijing way, to push the green button to keep stimulating the economy, regardless of what was happening or going to happen, they have been much more restrained. analysts4, western have been saying stimulative and beijing have been restrained on this. they have been doing a responsible job on that. we are the next step, we will see failures coursed through for the system to fix. ng iset: how willi

china to let that happen? >> this is an economy that is in transition. they are becoming a bigger and bigger slice of the economy. ,t is a great irony that china and you will remember this from everyime in hong kong, imf, every g-7 communiqué for the past 20 years said that china has to rebalance. the rebalancing is happening, so what is wrong with the picture? >> the rebalancing is happening, but it is two steps forward, one step back. so for all of the good stuff they are doing to give the currency strong, you saw what they did with the market, encourage people to reinflate corporate balance sheet, it is the opposite of reversing financial oppression. they are doing some things right , they're doing something's wrong. it is a painful process and it will take time. to what extenter those weaknesses in the high-profile regions, and we're beijing andt

shanghai or masking the signs of progress we might see in other parts of the country that do not figure as prominently because they are smaller and contribute less to gdp. >> that is what we've seen over the course of the last several years. 2012 and 2013 in particular they were much more robust. they slowed less and gained more, so the story was always outside of shanghai and beijing. this quarter, nothing was looking that good. the center did ok, but you're going to see stronger performances outside of the cities. when you see real weakness in them, it means that the media will focus on the sooner, so it will be harder to hide. >> should we be starting to get china as an exporter of capital, not just of manufactured goods? trying to think about the long-term consequences of inclusion in the imf currency basket. >> it might be helpful to think about that way, but what financial reform is done is put a halt to that. as much as you talk about the fact that the chinese have done

some good things with economic liberalization, they are under duress for a number of reasons. i think we are going in the opposite direction. there is some signs of progress and strength in peripheral parts of china. where's the also good news in china's economy? >> every sector is slow, but retail did ok. property did ok. we had a realtor out in construction. that has been a big black eye for the sector for quarter after quarter. we had a real turnaround. the sector is much that are, especially year-over-year than we saw 2014 great retail is looking ok. the consumer is not the theater here, but it is also not the goat. scarlet: thank you so much. coming up in the next 20 minutes of bloomberg markets almost

56,000 jeep cherokee suvs worldwide have been recalled. what is behind that decision? and we will tell you how high-yield mutual fund firms are trying to distance themselves from one's] woes. ♪

welcome back to bloomberg markets, i am scarlet fu. it is time for the bloomberg business flash, the biggest biggest stories in the news stories in- business the news right now. a day after his arrest, the ceo has stepped down as turing's

head. isis pharmaceuticals is changing its name, because it shares the name with the acronym for islamic state. ons new name will be i pharmaceuticals. and citigroup plans to cut at least 2000 jobs during next month. they will be middle or back-office positions through citigroup had 239,000 workers at the end of september. the second two roughly 1% of for -- this accounts roughly 1% of staff. we need to head back to the markets desk were julie hyman has a check on individual movers. that i have to say about

isis pharmaceuticals story, it n egyptian goddess. ,witching gears companies earnings for carmax missing by five cents a share. the ceo saying they had a challenging sales quarter, the combined with higher advertising expenses attributed to the euro for your decline in earnings. you are seeing the pressure on the shares today. down 4% being fromraded to neutral goldman sachs. one of the reasons why it is a culmination of a multiyear passion watch trend -- fashion end.h tran

that has been an issue for the company. there has been a particular issue with michael kors. boeing is one of the worst performers, if not the worst performer in the dow today. it is down by 4%. analysts are talking about a multiyear downturn in sales or the aircraft makers and bowing specifically. is alsohe concerns cutting earnings estimates for , which is also hitting the shares. scarlet: there is also worried that the market is glutted, leading people to think you do not need to be making new ones. julie: the airlines have been toer pressure from investors

restrain the capacity. when they grow their capacity to much, their prices go down, and their profits go down as a result. scarlet: dennis stuff. thank you so much, julie hyman. we get ready to close out a week in which the s&p 500 is up 3/10 of 1%, barely a gain at this point. the nasdaq is still clinging on as well for a gain as most of the euphoria from the fed rate increase, the beginning of normalization, has begun to fade. still ahead of bloomberg markets, the freezing of the credit fund has others on edge. ♪

scarlet: welcome back to bloomberg markets. high yield mutual fund firms

want to separate themselves from 3rd avenue and it's moved to freeze the credit fund. they are assuring investors that their funds are or diversified and easier to sell. investors are not convinced they pulled $3.8 million in the past week. cory johnson and harold massar have more. carol: welcome everybody to bloomberg radio. i want to bring in peggy callen's, our personal finance reporter of bloomberg news. high-yield funds are like, and those who run one are trying to distance themselves from 3rd avenue. week: we spent this talking to a lot of high yield mutual fund managers. we looked at morningstar data and starting looking at those that help 30% or more in non-rated securities or low

rated securities. they all run these types of funds and all of them are trying that we are high mutual funds but we select federated , andties then 3rd avenue have not had any trouble meeting redemption. they liken it to a hedge fund in a terms of its distressed strategy. getting the best return is not the only job at the mutual fund. for regular or even irregular liquidity is part of the job. peggy: absolutely. we were talking about this last mutual the hallmark of fund for average of festers to retirement plans -- average investors to retirement plans is that they can get their money out when they ask for it. in exchange they say we will lock your money out for a time.

this closure did rattle the markets and some confidence. going iefore we got mentioned some be of a data out there today. they talked about bond funds suffering the largest weekly withdrawals in two years. $13.1 billion in outflows of total. how much are they seeing in terms of investors wanting to pull out of high-yield funds? we are seeing a lot of money and fly out of high yield bond fund's. this did not all pop within the last five days. high-yield has been under pressure four months. months. talking to michael, cio of tedium and wealth management, who runs about $10 billion for high worth families. a lot of people are trying to draw comparisons to 2008, and i asked him if this was the signal

the best stuff is about to happen. he said it may spillover into the equity markets if we see credit soften. but he think it is different than 2008 because 2008 was driven by credit in terms of leverage and where they are seeing crisis of confidence is really run the credit of -- allnt companies around the credit of different companies and the ability to get the funding that they need. cory: these are not subsequent leverages in the market of other vehicles. peggy: absolutely. third avenue vehicles were always run differently than a lot of other people. we talked about this in terms of marty whitman, known in the business for decades for having a talent of zeroing in on crop companies. carol: everyone is scrambling to say it is not like me. how much transfer do we have about their holdings and their exposure? peggy: when i go to look at

their holdings, you can go on to the bloomberg terminal, and it is really amazing because they all come up. nonel honesty, of us are experts. it takes a long time to start to go through all that and see what security is this and what is the quality of it. you see how much they have an energy, and that can be an indicator they are struggling or not because of that. cory: we see debt a lot of times because of this. .hey are triple c cowboys you have to have strongly cashed management. peggy: i wanted to see if they would comment, and they said we declined to comment. canl: certain sectors

sometimes manage it better? peggy: yes. we have been tuning in on energy holdings and commodities. carol: thank you so much. back to you. scarlet: thank you so much. still ahead on bloomberg markets, if you look at apple shares they are headed for their sincet monthly decline january. the stock today down by 2%. it has been off four the past five days, and eight of the last 10 days. apple on a bit of a losing streak. ♪

scarlet: from bloomberg world headquarters in new york, welcome back to bloomberg markets. let's get to bloomberg first

were news. dan: more protests expected in chicago as a white officer accused of shooting a black teenager is due in court. democratic presidential candidates are prepare for their final debate of the year tomorrow in new hampshire. hillary clinton leads bernie sanders in a new washington news poll. say sanders could counterterrorism, compared to 46% for hillary clinton. donald trump has a credible -- has along the incredible support among the republican base, but sheldon adelson says he is not on board. family hasson bee

not made up its mind as to who we are going to support. we may wait until a number of the primaries are already established, and they are garnering delegates. brendan: jobless rate fell in 27 states, rose in a letter and were unchanged in 12. the wife of a golf store with removed on a stretcher last night in cleveland after 250 pounds of lebron james crashed into her courtside. -- is watching her husband she is safer watching her husband, the world's number two golfer. scarlet: thank you.

as you were speaking got some breaking news. fed president the who was speaking in north carolina. rateweek's federal increase is a sign that the economy -- how far the economy has come. he added that the global slowdown is not fully -- was not fully appreciated at the start of 2015 but we are stabilized and in a good position going forward. bloomberg terminal customers to see i their e their reaction. of apple,o shares headed for their biggest monthly decline since january of 2014. analysts have voiced concerns about slowing iphone growth.

our next analyst agrees. had he made adjustments to your sales numbers? >> if you look at it, numbers are already below were consensus is good we have taken a cautious stance since back in january, since we thought that this year would not be the year of apple. we have been very conservative and even withe, all the cuts they have been below are estimates for the march quarter. to consensus side numbers which is what is weighing on the stock. why, we in terms of knew that there would be tough comparisons for apple to overcome. but the thing is apple has never been about volume or unit sales selling not the average

price. that remains elevated when he compared to competitors like samsung or xiaomi. abhey: i have to disagree for a minute. when you say apple is all about sales, not unit, it is also about units. smartphone penetration was lower, they were expanding with the growing market. that was helping on the unit front, and then it was the pricing was also premium, helping as well. it was a combination of those. what we are seeing is the unit growth is slowing down. so the total growth will be slowing down even though we are seeing esp uplift. and demand of the iphone 6 is going up. impactift will have an through the next few quarters. scarlet: price cuts from apple? abhey: a mix shift.

it had moved a lot towards large screen size. now i think it will move toward the middle. then there is talk about the launch of iphone 6 c which will be a smaller phone at a lower price point. that will have a deflation impact. scarlet: when you look at apple's shares, there is a time of weakness in the second half of 2012 when there was excess central questions about whether apple could sustain its growth rate. now different from that time in the second half of 2012? , the smartphone penetration was still not present in china in a meaningful way. all of those factors were there that they could go after.

greaterld benefit from illustration of smartphones, and they could penetrate into china. they have expanded their distribution, and we're seeing slowdown in the underlying markets. scarlet: fundamentally worse than it was in 2012. thank you so much. a neutral rating on apple. from publicly traded tech companies to the private market. venture capitalists not stressed about the immediate impact of this week's interest rate increase. into it put a dent startup funding? welcome. >> thank you for having me. isrlet: whether it

rising interest rate for a stronger dollar, or a slowdown from china, what brought her macro trend has the potential to hurt your area of late stage privately backed companies? rates have barely impacted these companies. they barely use leverage. the venture capital funds do not have this built in. what you're looking at is the underlying supporting key metrics that influence the growth of these companies. these companies we're talking 100%, 200% onow an annual basis on the top line. the adjustment of growth of 10% company that was going 100% is actually less than 10% hit.5% and then a that is actually reducing.

these companies traditionally are much less sensitive against macroeconomic trends. what you look for is would there ,e a freeze in capital innovations, and investing in new markets. we do not see that. they has significant cash and continue to invest in markets and innovation. scarlet: we have a chart that shows how privately held companies have attracted a lot .ore money late stage companies have attracted the most. what risk does this surge of money into late stage financing create? , applef you look back has $114 million in revenue in the and 145% per year. a company with this

profile stays private because they can get the money they used to get from the public market and an ipo in the private market. these companies are late stage de facto private companies. the is to be public and you should look at them like that. we should not look at them as backed rival companies. we have a lot of companies going into the sector because they are looking for growth. the are not getting this growth in the s&p 500. they are getting in. you have to learn your way, many have learned, many have adjusted, some have pulled out. we are looking at larger enterprise values. they used to be public. this is something that should be in the public market, but for certain reasons is not. question,ne final very quickly. by one measure there is 130 companies valued at least $1 billion in other too many $1corns out there --

billion. are there too many unicorns out there? is that our expectation each of these companies that continues to be a unicorn, then our expectation is wrong. 25 percent of these companies will face a value correction. are there more than 25% corrections? , and you willhis see it in movement more because some companies got ahead of themselves. it is very hard to grow into it. bey of them continue to unicorns. whether there will be a $15 billion unicorn, we will see that and we will see slight adjustments there. many of them have the fundamentals, the revenue and the growth to justify billion-dollar valuations. scarlet: thank you so much. next 20 minutes of bloomberg markets the new star wars movie has not been out in the theaters for a full 24

hours. did they highly anticipated movie justify the hype? puerto rico's main electric utility reaching a deal to adjust $9 billion worth of debt. what is next for puerto rico? for presidentting obama's end of the year news conference. we will bring that you live from washington when he begins later this hour. ♪

scarlet: welcome back to bloomberg markets. let's head to the markets desk where julie hyman has a check of

some transportation companies. seeing a lot of declines today within the transportation group. knightlook at transportation, it is leading declines today. this is the 13th largest truckload carrier in the u.s.. it is lower today after the company came out and cut its fourth-quarter earnings per share guidance. to 38 been 36 cents cents. last year there with tight capacity, there has been an increase in driver pay, that has put pressure on its numbers as well. i want to look at what has been in spot rates in the trucking industry as well. this is the market demand index. it has been going down over the past year or so. these are the spot rates, all of this has been trending downward as well.

bloomberg intelligence is that this company in particular is exposed to those spot rates. something else that bloomberg intelligence is looking at is the revenue that these companies are collecting. the revenue has been going off to some extent, excluding fuel surcharges. but the ratio for the top possibilities for the trucking companies as a whole have been going down. this is because of rising pay. that is the reason profitability has been going down. we are seeing a ripple effect from knight. a lot of concern about what its results and forecast cut means for the industry. all these logistics and truckload carrying companies are lower. the transportation average is also trading lower today as a result of this. incumbents but

other types of transportation companies are off by 2%. if you look at the dow jones average for the month, you can see this as a decline of about 9%. in the second will be the worst month for the transport going all the way back to september of 2011. interesting that that has happened in the face of lower fuel prices. scarlet: it suggests something more compelling, perhaps structural. thank you so much. as for the jets market, there may be a breakthrough for puerto rico's debt problems. the islands main electric utility is said to average a tentative deal to restructure $9 billion in debt and this is according to people direct knowledge of the situation. michelle joins me to talk about this. we have to stress that it is tentative because puerto rico's electric utility reached a deal with some bondholders.

michelle: these are the holders the debt.about 30% of it is a good sign but they are not out of the woods yet. it is a sign that they are on board, and -- scarlet: the bond insurance companies? michelle: yes. it is still up in the air, but it is moving in that direction. that will be a sigh of relief for many people on the island in terms of getting this resolved. scarlet: the timing is interesting because the governor announced ono wednesday that puerto rico will default, but he said in january or may, which is a pretty big difference. why did he give us kind of announcement, and was it strategic to kind of push the bondholders into conceding? it may have been. as a message to congress, saying this is very serious, we need help with this.

anhas always liked to leave open door in terms of these deadlines, saying we are working on making the payment in full, we are doing everything we can. in terms of these potential defaults, we will not know until the actual day. scarlet: do we have any semblance of want to the -- what's the structure will look like? michelle: it will be a debt bondholdersd some who have signed on to this agreement would get 85% of their holdings back. scarlet: not that big of a haircut. michelle: not that big of a haircut, and the details of what they are giving up -- what the bond insurers are giving up his still a little bit iffy. so far we know that the bond insurers are willing to put up about $415 million in the event that there is some type of default. scarlet: and the interest, one hundred $96 million is due

january 1. what other deadlines do we need to be aware of as the two sides discussed, argue, negotiate? michelle: not just the january 1 deal, even ifhis it gets final approval from all the different parties, the puerto rican legislature needs to weigh in on this. soon with a is how weigh in on this, when they actually approve it? scarlet: you think they want? on't? michelle: that is another party that is not a done deal. torequires the lawmakers approve a rate increase. that is challenging. it is politically very unpopular. scarlet: you have a slowing economy, you do not want to add to the pressures of people who live there. thank you so much for reporting on this story. the puerto rican utility deal, .otential restructuring

coming up on bloomberg markets, president obama will be addressing the nation shortly and his end of the year news conference. we will be taking his news speech and collins live when they happen. ey comments life when that happen. ♪

scarlet: welcome back to bloomberg markets. we are looking at european stocks ending the week on a down note here as investors globally look past the federal reserve's first interest rate increase in nine years. the euphoria from that rate increase has faded and the bullish fed rhetoric as not done its job in terms of keeping the gains there. a key story out of europe is ukraine, which is defaulting on a $3 million bond payment due to rush on sunday. -- russia on sunday.

now we can toht our imf everything in program. this decision today, the suspend to payments temporarily is to make sure that we may remain in compliance with our imf program. in addition to the fact that a breachedould have contractual obligations to other creditors under the restructuring we did. i am hopeful that even though we have done this suspension of payment, we can reach a restructuring with the creditors in a reasonable time. we will need to keep talking in good faith. >> you think you can reach an out-of-court agreement with the russians? >> i hopeful we can come to terms on a potential agreement and to that in a way that

satisfies our obligations under the imf agreement, our obligations under the contracts to other creditors, and our own program. >> what are your efforts to talk to the russians about the situation right now? the germans have been indirectly leading talks. >> and has been something that the beginningrom of best restructuring program in march. we have always reached out to them. the international community is being very supportive of this. including the german government, they are facilitating the process. german financee minister in lima, peru. we have had other discussions by i hope that we will continue on

that path. >> you brought up the imf. they have said you need to be making good-faith faith effort to talk to the russians. have they spelled out what a good faith effort is to you? have you indicated what they want from ukraine to get the rest of the imf money? is what you just said, is we need to make a good-faith effort and we are confident we have made a good from the very beginning, in march. rod is really critical right now -- what is really critical right now is that we fulfill all our other obligations. we have a complicated text process at the end of the year, obligated more by the fact we are trying to reduce taxes while maintaining our spending on military jirga very difficult war. maintain an increased amount of social payments for those who suffered most of the past years of recession and

reducing our debt to 3% of gdp. the government's budget is very focused, very prioritized, it includes a lot of structural reforms, massive spending cuts and tax cuts. it is a very important budget for the country of ukraine, and one that is important to our imf program. scarlet: that was the ukraine finance minister speaking. she was born in illinois, which explains what she does not have a ukrainian as accident. president obama, coming up soon. ♪

>> it is 2:00 p.m. in new york, , three :00n london a.m. in hong kong. welcome to bloomberg markets.

-- 3:00 a.m. in hong kong. welcome to bloomberg markets. from bloomberg world headquarters in new york, good afternoon. here is what we're watching at this hour. stocks selling off as the dollar falls. his optimism starting to fade? will oversee a massive recall. -- kenneth feinberg will oversee a massive recall. strategy.y software how they plan to channel that into self driving cars. we are waiting president obama who will deliver a press conference before going to hawaii. he will stop in san bernardino to speak with families of the victims of the shooting last week.