♪ coming up on bloomberg best, the stories that shape the weekend business. at long last, if it takes interest rates office zero balance. reaction reverberates around the world. >> not too hot, not too cold. just down the center. >> it is a tragedy, it is a complete joke. >> meanwhile it's been a typically busy week in global business with big deals going down in key numbers going up. insiders tell us where things are headed in 2016. >> we are looking at a recession and the next 12 months areas scarlett: it's all straight ahead in "bloomberg best haircut

-- hello.t: welcome to bloomberg west. a weekly look at the most important business news, analysis, interviews from around the world. while the most dramatic were about the federal reserve, interest rates were not the most important story that we covered this week. a look at the top headlines. announced, losing capital partners and shutting down. this has liquidated its entire portfolio. they returned $900 million under management. we heard about the distress fund. we heard about 3rd avenue. gentlemen, what is going on in the market? something a lot of people have predicted for a few years now. baseave more of a retail and high-yield venue used to.

flows are more volatile. you have some price volatility and ill liquidity that he did not have an prior cycles when there was more bank involvement in trading. dodd-frank has really affected the high-yield market. we will see more of this. >> are we overstating things that we blame this on dodd-frank? nobody wants to buy bad bonds in a good or bad market. >> when you buy the high you are committed to selling low. that will play out again and again. i think it has something to do with it. i would not underestimate that. every problem is accentuated because you do not have people bidding as aggressively as you had. i don't know much about this business, but i know if you are using highly liquid assets and offering daily redemption, that is not going to work out.

it may take five years, it may take five minutes, but is not going to work out. it seems to me they had a pretty good run and may 15% compounded for five years or so and now they give it all back. today, the committee district -- decided to raise the target range for the federal funds rate by one quarter percentage point bringing it to one quarter one half percent. this action marks the end of an extraordinary seven-year timeframe during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the great depression. >> i think she'll do it. think -- it was not too hot or too cold. just right. i think it was a very well scripted conference. during the q&a -- she knows

every answer very well. interpret it as a little dovish. i think it is right where we should be. i think the opportunity that they missed in september when -- market were so unsettled we had no clarity on their actions. in this case, they really expressed exactly what they are looking for, how they are looking at it. their forecast going forward. once again, she will say that we are data dependent going forward. she gave such great clarity that i think the marketplace can be calm and i think the marketplace can understand looking at numbers and how the fed will operate. president is live in moscow at his annual news conference. he talked about oil. he started to talk about the downing of the russian plane by turkey. what he has been saying is basically he touched on oil. >> geopolitics aside, the most

important take away from this press conference thus far is the russian president handling the play she made at last year's press conference where he said that under the worst possible scenario, russia's economic crisis and recession will last for two years. that means he has one more year to pull the country out of recession. today, he said that that forecast was based on higher oil prices and that even $50 a barrel -- the government estimate for the price of oil going into 2015 -- is simply to optimistic. he talked about monetary policy. there played people in russia that say the key rate of up to percent -- 10% is way too high. he said russia's main problem this year, unlike the rest of the world, is inflation. it is only appropriate for it to come down when that problem has been addressed. the russian president creates a little bit of wiggle room for

himself, preparing russians for the idea that because of low oil prices, this recession that russia is and could extend into 2017. he did say that the worst is behind the country and the government's current forecast is the economy will rise a little bit less than 1% next year. scully is bad boy martin used a company that he founded as a personal piggy bank. fund a former hedge manager, arrested this morning on fraud charges. this indictment is unsealed today. what do we learn about what is alleged that he has done? >> that is the great irony of this story. this has nothing to do with what he is famous for -- jacking up the price of life-saving drugs. under some of the companies that he runs. it is essentially a web of lies and deceit. prosecutors allege on how he managed a group of hedge funds.

that he was running a few years ago. isically, lying to investors straight up security fraud. as didings as simple they have an auditor? how much money did the hedge fund have? what were the returns? >> you have this brought up in the eastern district. sec -- fcc -- released an indictment. >> delta apparel also the complaint. fcc cases are interesting. when you have brought charges against a public company, some of his companies are public others are private. you can't be a ceo of a public company and have been convicted of securities fraud under the sec role. that does change the dynamic. people are looking to see how that will shift them of the companies that he is working with. up, globalming

reaction to the fed rate increase. what will it mean for market. straight ahead. ♪

♪ scarlet: welcome back to "bloomberg best", i'm scarlet fu. federal reserve decision to boost interest rates raises questions. what is the impact on global financial markets and economies? said discussion kicked off with a pointed reaction from bill gross. today, said in, the press conference suggested, to me, a rather hawkish stance. she is definitely not thoroughly modern millie, or thoroughly modern janet.

she is a fed in a fed model that emphasizes transitory rather than structural factors. she suggests short legs in monetary policy. the site is living -- the fed is living in an old age as opposed to a new age. it is reflective of high leverage. reflective of globalization. --ective of laughter's factors in terms of demographics. >> i want michael to jump in. i have to ask you the key question of the dysfunction between full faith and credit and the high-yield market. which way will that spread differential play out? is a going to move higher in yields or do we see real carnage in the high-yield market? >> i think we reached a point, at least to rarely, of spaces in the high-yield market. for the most part, it is a function of retail.

retail conference. it has been shaken over the past few days. and over the past few months. high-yield prices have gone down i 5%-10%. moment with high yields where they are, and the 500-600 basis point spread over treasuries -- they reflect a value that can hold its own for the moment. i think treasuries are attractive. they cannot be that attractive if janet yellen continues to insist that monetary policy operates with short legs. and that inflation ultimately and very shortly gets back to 2%. where is she in terms of what is happening in japan? reishi in terms of commodity prices on a global basis? where is she in terms of monetary policy on the continent

of europe? old-fashionedan central bank her and she needs to modernize her and her staff thinking. >> do you buy her idea of increases next year? or is that wildly off the mark? >> i don't. a significantly dependent -- on inflation moving back up from what are transitory -- she insists that even if oil stabilizes at the current price, inflation will go back up. there's a certain mathematical equivalent to that. let's face it, commodity prices continue to go down. it is reflective of deflation and high leverage and of the global economy that is not doing well. the u.s.ize only economy which is only growing at 2% -- to me that is not really reflective of reality. it will not bear

a one and done type of move as reflected by the press conference and her attitude and philosophy. to the extent that we have -- she is going to be waiting on inflation hitting 2% for a long time. >> which camp are you and? coming out of this momentous event. it was about time or no it is all wrong? >> i think she is all right with the timing. the september stumble looked like it was potentially a big mistake, but the truth of it is, we are off and the market reaction around the world this morning tells you that the market are delighted with the way that she handled it. it is a massive vote of confidence in the fed. markets voting that the price is right in saying

that she is doing ok. >> speak of markets, let's put up some of the volatility markets. let's look at the bond market. stocks volatility dropping by 15%. fx plummeting. the question for the ball market. janet yellen is overly concerned about inflation. that is just not an issue. >> it's about looking through the windscreen or looking in the rearview mirror. i know you look at the inflation print it looks like inflation is not an issue. we all know that. we said by sprinting zero. we all know because of basis that the headlight rate is going to move a very substantially. we know the core inflation is rising. core inflation in the u.s. is at target. you might -- what are they doing with interest rates?

with inflation already at target. they should move quicker. he is that one side of the argument. there is a spectrum. you would expect that. the fed's job is to go down the middle. it seems to me that most of the markets with the exception of the treasury think that she is going at more or less the right speed. that was the reaction overnight. got smart clarity, but as we look ahead to 2016, and certainty -- uncertainty when it comes to when they will hike again. mythology, aat tragedy is a hero who destroys himself. i think the fed is about to do that. because, they kept interest rates next 20 47 years. zero 47 years.

this has never existed before. such a long time of next 20 interest rates. zero interest rates -- by a quarter of a percent. thetly at the time when global economy is weakening dramatically. 2012, 2011, they could have raise rates because the global economy was expanding. commodity prices were going out. global treasury was going up. china was booming. now, everything is slowing down wherever you look. exports are down. when exports are down, what does that tell you? the demand is weak. so, they are increasing interest rates at precisely the wrong moment.

i am against monetary policies anyway. if you use them, you should use them wisely. the problem with this institution, the federal reserve, is that a plan is worse. a wrong plan is the problem. the fed is on the wrong plan. >> you said you're not too interested in the fed. it's not the fed, what is the game changer in your eyes? >> it's obvious. before, someone said that this is an extra ordinary era. it is in the sense that central bankers have interest rates lower. believeet does not entirely. credit,ook at lower they have raised in price

significantly not only on junk-bond interest rates. the fed cannot control. weakening markets are substantially. market,ook at the art the bonds markets, the high-yield market, you look at the typical stock in the u.s., 570 new 12there were month lows on the new york stock exchange. rose,esterday, as the s&p 30 points, or close to, they were four times more declining rising issues in terms of new lows. marketset -- inside the it is not healthy at all. all the emerging markets are way down. the global economy, as i said, is slowing down meaningfully.

that janet time yellen is increasing interest rates. it is a tragedy. it is a complete joke. ♪

♪ scarlet: you are watching "bloomberg best", let's take a look back at more important business stories around the world. starting with mixed signals of economic growth in europe. own pmier, we had euros data. it rose to 53.1, beating a forecast of 52.8. that follows figures from france and germany today.

let's go to hans nichols in berlin. good morning. what reaction are we seeing with these figures? >> not a huge reaction because the figures are in line with expectations. we see the services number coming in at 54. expectation was 54.2. it is modest and tepid. monotonous growth. he was 51.38 year ago. overall, we will have a set to percent growth in germany for the year. that is the best numbers that we may get in the core euros m. disappointing numbers out of france. and someone is, we are ending the year the family we started it. political uncertainty out there with greece. uncertainty about what will happen in terms of monetary policy. gross, but not really growth. growth that is so low that you can barely perceive it. we have growth, but it is not explicit. explicit is asking for too much. will the stimulus measures their

fruit? >> definitely believes they well. hence the caution to accelerate the program in early december. it is fair to say, yes, it will be slow growth. the people have got to come to terms with the fact that we have been through one of the biggest recessions since the first world war. you could argue the deepest -- it will take time to recover. >> front-page news in hong kong. alibaba group is buying the south china morning post for $266 million. jack ma is following in the apparent footsteps of amazon's jeff bezos and pursuing the revival of the century old newspaper. peter joins us from tokyo for all of this. why would an e-commerce company like alibaba want to buy old

media? >> alibaba has an interesting explanation for this deal. they say that they see an opportunity here to combine their digital assets and their digital reach with the assets of scmp and they will be able to make something out of it. they see opportunities more broadly in china. >> it's a good opportunity, they say. certainly, there are political risks and financial risks. >> there are. you mentioned the deal was for 256 million dollars, this is not a big deal financially for alibaba. they have cut $15 billion in acquisitions so far this year. they bought their way into online video and to brick-and-mortar retail stores and startups. politically, it is more sensitive. scmp is the highest profile english-language newspaper in greater china. there are risks on both sides. if it is now critical of the

chinese government, that could create blowback for alibaba within china. conversely, if it is very gentle on the chinese government, it could create blowback for alibaba outside of china. they need to strike a balance. farou have made to offer so from norfolk southern, both have been rejected. where do things stand now? >> little progress has been made. certainly within this, we have made a breakthrough with the shareholders. i think our polling says that they are very interested in the transaction. we would love to sit down with norfolk southern. at this point, they refuse to sit down and talk to us. i think the next 10 days will bring a lot of action. >> has so? >> we are getting to the end of the process of just talking. -- they will have to talk to us are we will have to

take another tactic. >> if they refuse to engage in a conversation that you want to have, if jim squires does not sit down with you are get on the phone, being the ceo of norfolk southern, what is that other tactic? >> we have done our polling and they have been theirs. i think they are of the view that if they're waiting is out, they're going to wait a long time. ♪ >> argentina has just scrapped currency controls and apparently the peso will trade freely when the market opens tomorrow. that seems rather abrupt. what needs to happen next couple of months for this to be a success? >> i'm extremely impressed and leslie surprised by the quality not only of the -- but of that policy adjustment. there are three things they need to do. devalue the currency. it is extremely expensive.

the question is, do they have enough cushion of reserves in order to handle the lower demand that will likely occur when outflows occur. they seem to be showing up. finally, they need to do something -- i'm also optimistic. one of the first countries in the world where the new film has open to the public. nothing brings up the diehard fans like a star wars film. that is especially true. it reunites the heroes from the original trilogy for the first time in 32 years. the midnight screening just ended. the key question is, what did the fans think of it? >> they did such a good job. everything was awesome. >> it was amazing. i couldn't rave about it more.

i'm very much looking forward to the next one. >> it was great. i've been waiting for years. [inaudible] >> 7000 sessions scheduled in the opening week. the original films which opened in 1977 was great in a few theaters in the u.s. when disney brought -- bought star wars from george lucas in 2012, some analysts questioned their wisdom. the hype around the movie and the merchandising is increasingly starting to look like a bargain. scarlet: when "bloomberg best", we will review some of the week's best interviews. we will also share global predictions. first, some of the best images captured by bloomberg news photographers. ♪ 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: welcome back to "bloomberg best", and scarlet fu. a legendary real estate mogul and former u.s. treasury secretary, presidential candidate from the republic of china, those were a few of the business and political leaders

who spoke with bloomberg tv this week. let's listen in to some of our most interesting conversations. >> the world bank is also one of the biggest funders of green project. does this deal change anything? >> absolutely. was scaled up at this historic meeting. shooting fort just two degrees celsius, we are shooting for 1.5 degrees celsius. in other words, we have to get much more serious everywhere we work about finding low carbon solutions. our investments in the noble energy have to go up. we have to find ways of making deals around geothermal energy and hydroelectric power. there will be a lot of very powerful economic opportunities for the private sector. all over the world, companies moving in that direction. >> what do need to get to the next step and be less optimistic about it -- do you need crisis like the pollution in beijing to drive the conversation forward?

>> tom, there is no question that the fact that the red alert happened right during the meeting, did have an impact. the other thing that had a big impact was the representative of the small developing countries, marshall islands in particular. they said, this is real today. it is not something that will happen in the future. this is happening right now. -- facinghing extinction. christ is ongoing. price of $30nable will not physically work. from a $30 -- need to take five dollars. $15 from brazil. a means you're talking about price of $25 for must really a or $15 from brazil. there is a lot of high-cost

producers that will not pass that price range. it is not sustainable. it is fantasyland at that level. >> is that what needs to happen to wash out some of this excess supply? >> is what happens in every cycle. i suspect that right now the regular price of $39 a ton -- there are people that are suffering pretty loudly. it is still looking pretty crowded in many ways. >> it is crowded. there are a lot of producers that we believe would lead the market. that's life. they are burning up cash reserves of the shareholders. that it does the decision for them and offer me. >> i recognize the political atmosphere now as not for our party.

7.5 years, they have successfully put the attack on kmt. it is too close to -- including, the younger generations going to the mainland because of the policy. response -- the response from the people. >> it they were to win the presidential election and take control of parliament, will it be the obvious political impact, but also the economic impact? >> a big impact on kmt. we should do reform. >> what? >> inside reform that we should change our policy and try to get closer to the younger generation. to the people.

that is the change we need. >> do you agree with the assertion that china derives the international debate? >> i think china is an extremely important factor for commodity markets. chinese demands, growth, has been the lion's share of the growth and demand for many different commodities. china, according to one calculation, late more cement and concrete down between 2011-2013 than the u.s. did during the 20th century. that gives a sense of the magnitude of heavy investment in china. i think those days are gone. china is working to reform its economy and working to maintain growth. they may or may not succeed. either way, they are unlikely to generate the kind of growth and

global demand that they once did. that has important implications for the commodity market. >> we have her criticism from early investors saying that i cannot get out. i monetize myself if it was worth 20. where is the exit? >> if you are an investor, you want to invest in uber and you say i want you to take my money. you sign an agreement. stocks as you are in for a long haul. >> what does logmein? -- long mean? >> facebook did not go public for nine years. >> is a nine years? help us understand. >> we are five and a half years old. a young company. extremely young. a long way to go. the other day, travis said it is like asking a nice greater what they will wear to the prom? you have time. when we are ready to go, we will go. --go just to go is actually

somewhat of a negative sign. if they are not selling stock, we are motivated to drive the value of the company and we will do a for as long as we take. >> he is on bloomberg radio uber's onlys said exit strategy in terms of monetization has got to be and i know. is that true? >> i think for us, that is probably what we would want to do. >> i think that there is a high probability that we are looking at a recession in the next 12 months. i think that the strong dollar is having enormous impact on u.s. production and u.s. businesses. they are being competitively disadvantaged by an extraordinarily strong dollar. to some extent, it is a function of the fact that we are better than other places.

those places are not competing with us. that is making it difficult for the u.s. to compete internationally. >> take it into your view of the u.s. economy. you invest in a lot of different places. when you say there will be a recession and the next 12 months what are the things that are indicating that specifically to you? >> world trade is flowing. currents is continuing to be manipulated. you're looking at the beginnings of layoffs in multinational companies. we are still looking all over the world for demand. tell me where the demand is. that is ultimately what is going to rectify and move us toward growth. it is very hard to find anyplace in the world, maybe other than sub-saharan africa where there

is better growth but no scale. when you look at those factors, it is hard to see where strength is going to come from. i think weakness is going to be pervasive. what he hasot like in his crystal ball. we will stay with this theme of production. coming up, opinions on the year ahead and an optimistic call on the price of oil. ♪

♪ scarlet: you are watching "bloomberg best", i'm scarlet fu. 2015 is trying to a close. business forecast for next year. therts and our guests in u.s., europe, and asia to time to contemplate the future. >> what surprising events for 2016 have in store for us? give us the pessimists guide

to 2016. chief global clinical analyst is also with us. let's go to you john. walk us through. what is a telling us? >> what we are getting at here is that the world is becoming a more unpredictable, riskier place. the rules governing politics are unraveling to a certain extent. growing putin and his militarism and eastern europe. the euro zone. become moree important for markets. a big concern for a lot of the people we spoke to. cyber, an interesting one. specifically, what would happen if hackers decided to target wall street and the city. >> how does the oil tie-in with the risks that you see ahead?

>> i'm still more concerned about the political risks of low oil prices. and the pressure that puts on producing countries. i think we have to keep an eye on venezuela. the pressure on regimes and the risk of arab spring relapse is one of the things on my mind. a crescendo?ching >> this is the year that rising geopolitical risks and rising vox pop eli risks on the other converged and become significant for policymakers to deal with an incremental piecemeal approach that we have seen. >> lets the oil prices are in a freefall. do you agree with that? >> i thought it was hype. >> news media hype. i like that. that works for us. >> it worked in this case. this reading of the opec meeting

were people left because they had planes to catch and they were arguing not over a number of how much oil to put in the market, they were arguing over who will be the successor to the secretary-general. it was misread. no change at all and the dynamics of anything. >> and may not be in a freefall, but it is not just iran, but the rack, it is way look, no oil producing nation has incentive to cut back on production. >> that is exactly the problem. toy have this -- going back -- political uncertainty. you are seeing a list of risks about next year. saudi arabia is something people are beginning to worry about. it could be premature, but that is the new worry. >> they are looking to proclaim victory in their battle for market share. prices are down.

they think prices are down because of what they're doing. >> don't they know that the walmart model does not work. you don't make more money. >> eventually it does work in the oil markets. you push out other suppliers who cannot be produced at today's prices. they see u.s. production turning over. same with china. non-opec sliding. storage costs matter a lot. they go up as the market is oversupplied. they feel rightly justified in what they are doing. they think the market will end 2016 at a significantly higher price. and that they will -- >> said again. you believe at the end of 2016 prices will be significant higher. >> i think is the first time that i have been on a bloomberg news cast in which i'm saying something about the market. will be aboutwti 65. and brands will be about 60. >> when? >> fourth quarter.

they should see a drawdown inventory. the market is very tenuously balanced. ♪ fed will raise rates. for emerging markets, the fed will remain a key theme. it's our deceit commodity prices rebound. >> i think social media messaging will take over more of your life. >> people on mobile devices will

learn how to avoid bumping into one another. >> we will see people using their smartphones more to monitor their health. >> i'm predicting at least one hedge fund manager is going to get into the food truck business because it will be so difficult to make money. homeper foods will find a in the future. >> 2015 was gray, 2016 will be better. >> i'm glad cap indy. >> nothing will change. >> the world will be a better place. >> we will see this kind of unrest. these attacks will continue. we are in for a rough ride. >> i'm optimistic. a lot depends on china. >> the new star wars movie will kick the box office record. >> there will be some shenanigans. >> you'll get a lot of not a babies being born. it will be bananas.

♪

♪ scarlet: welcome back to "bloomberg best", as a wrap up our show this week, let's take a look at the charts that tell the story of the week in business. >> take a look inside the bloomberg terminal to see what is going on with high-yield credits and oil and gas. the green line is the snp. redline is u.s. white line is the high-yield from barclays. etf and high bond yield etf have been moving in tandem. s&p has really shaken it off.

can it last? a correlation study to take place over the last few days. there you go. while it last and what you see oil and high-yield stocks further down? >> this is the yield curve. the spread between the two year and 10 year treasury yields. it has been flattening and the past cycles. curve represents investors betting that long-term treasuries will outperform short-term debt. that expected to perform another round of tightening. if history proves correct, look for to flatten. >> is the volatility that we are seeing in credit a reason for the fed to be concerned or is this what the fed is turn to accomplish? tightening policy. what we are seeing here is

the high-yield spread in all the different sectors. the stress all over, not just in energy. with a be worried about that? >> i think they should be. the trouble for the fed is something of a convergence between the corporate sector in the u.s. and the broader economy. the fed has to manage the broader economy. the fed has two mandates. level inflation and implement. behind that, is financial markets. i think the danger for the fed going forward is that the economy is ok. if we have access to supply and numerous sectors, you can have -- collapsing economy looks ok. it is tricky for the fed. they should have raised a couple of years ago. >> you pointed out that the five-year real rate, nominal rates on treasury, at their highest level since 2010. what is the big picture story? >> i love this chart because

this is really shutting the door on the zero interest rate era. if you look at this, you can see all the way back, but going back this went very negative and out is positive again. it is at half a percent. this is sort of the rate that matters to the real economy. this is the rate that consumers borrow after adjusting for inflation. it is kind of back into that normal territory. you could say the normalization has been accomplished at this point. it is just a really poignant example of how far the fed -- >> i like they used poignant to describe interest rates. you say that they were a little dovish going into 2016? >> the statistics are

interesting. the average came down a lot more than the median. back in september, the median were below the mean which suggested that there were outliers to the upside are projecting higher rates. this shows that janet yellen brought the outliers to the outside in. others inas a lot of the new plot that only reject four or less rate hikes xt year. this reinforces this notion that they are going to go gradually. also the variance which means that is -- consensuss to be a gathering around the slower pace of rate hikes which is exactly what someone like janet yellen would want. scarlet: that is all for "bloomberg best" this week, you can get more business news from

around the world at bloomberg.com. i'm scarlet fu, thank you for watching bloomberg television. ♪ . . .

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