from bloomberg world headquarters in new york, good morning, i am alix steel. here's what we are watching. bears remain in control, brent oil sliding to an 11 year low. political uncertainty in spain. voters break up the two-party dominance, giving power to some newcomers. now that washington has extended a tax credit for solar energy, is it time to warm up for solar stock? marketead over to the desk ramy inocencio has the latest on the holiday week. markets started in the green but now the dow is losing steam. the s&p 500 is up by only about a quarter of a percent. we did see this number, up by

about five points. looking here it is actually interesting to see where we are. the dow going negative earlier. china suggesting it could add more stimulus and metal stocks, but energy stocks are following as oil is falling. let's take a look at the s&p year to date. we are looking for a loss for the year right now at least. we are down by about two and one third percent with eight trading days left. the index has finished higher in the past three years but we are at least for now on track to break that. alix: we typically see what people call a santa claus rally into the end of the year. at looks like right now we are not on track for that. your denny research coming out with that us saying that a year-end rally for the s&p is actually in doubt. we do have eight trading days

left this year and the s&p has only done that in the last eight days of the year just five times since the year 1928. in that time, the last eight days of the s&p were positive, and it was negative 72 times, 83%. let's check out global commodity prices. this is what is weighing on the market right now. you can see pretty much read across the board for energy stocks, nymex crude down, brent crude down. our metals are in the green, gold, silver, as well as copper. were talking about commodities, energy taking off about three and a half percent from the return of the sp y today so not a return, the definitely one of the laggards in the market. now let's check in on the bloomberg first word news.

mark crumpton has more. mark: five suspects are being held in belgium in relation to the paris attacks but the gunman is not related -- among them. they conducted raids yesterday that lasted five hours. a prime suspect is still being sought. the attacks in paris killed 130 people. for people being questioned about the discovery of a fake bomb in the bathroom of an air france jet bound for paris. it was diverted to kenya yesterday. the device posed no danger but was made to look like an explosive device, and the hoax was the fourth against air france. lindsey graham is ending his bid for the presidential nomination, but there is still plenty of republican candidates left to choose from.

the south carolina senator announced he is dropping out. 13 gop hopefuls are still in the race. president obama says donald trump's exporting the financial anxieties of blue-collar men. in an interview with npr, the president attributes trump's commanding lead in the polls that "they are no longer getting the same bargain they got and they were going to a factory and able to support their families on a single paycheck. when you combine those things, there will be anger, frustration, and fear." schoolnew hampshire's districts is closed after receiving a threatening e-mail. 12,000 students are staying home today in nashua. closed and newre york state opened after dismissing the threat is a hoax. wordis a look at our first

news right now from the bloomberg first word desk. i am mark crumpton. alix: coming up on bloomberg television, oil prices keep plunging, brent sliding to an 11 year low. is there any and to the collapse in prices. fears mounting in spain following the election. ♪

alix: will -- welcome back to bloomberg markets. brent crude trading at an 11 year low on the fear that suppliers will worsen the glut. it is narrowing the difference between wti and brent. ifl they hit parity, and

they do, how long will that last? shore, stephen is with us from philadelphia. thank you for talking about my favorite topic today. when you took a look at the spread between wti and brent and you see that narrowing, is that due to wti strength or brent weakness? >> that is a brent weakness because certainly wti is not strong. couple of weeks since the opec meeting what we the persiansow will fight one another for market share. where is this market share? all the growth is in asia. china is in the midst of quantitative easing. they have cut interest rates six times in the last 12 months. the rd evaluating their currency.

-- they rd evaluating their currency. then you look at japan, in its fifth recession since 2008. fightingsaudi arabia one another for market share in a market that clearly is sick at this time. here in the united states -- excuse me. like it is also a demand story and a supply story. do you see it like that? is the weakness justified? >> there is a major demand issue. when you add on top of that, you have a u.s. marketplace that is significantly over supplying, and you have inventories that are quite high, there is a lot of crude washing about. alix: both of you bring up the fundamental, supply, demand, oversupply. what part of this is really bearish positioning?

debbie tirted positions versus brent long positions, and wti has been wiped out at a low. brent position still high. could we say end of the year rebalancing season? >> at this point what we have seen is as debbie ti has crashed , it's pricesashed have fallen. open interest has surged. this is clearly a sign that as prices are surging, open interest is their view. as prices falling, open interest rising, there is clearly a tremendous amount of irish on a now coming into this market. -- bearish money coming into this market. want to disconnect from the economics, you start to look and and we areonomy,

trading on extreme bearish psychology. alix: i want to bring up this chart from socgen. that fundamentals have actually been rolling over in terms of how much they contribute to the oil crisis, that redline, whereas the yellow line which is the macro environment is becoming much more important. >> there are many factors influencing it. there's the overproduction, resiliency of production in the u.s. it has been quite remarkable ever since the price. in june 2014. there is currency issues as well , so a lot of things coming together at one time. that paint a very challenging picture for the emp's. alix: what is share value for oil? >> if you take a look at your cash cost, the operators have come down the cost curve and

become more efficient. roughly around $30 or less. alix: we are not even there yet. >> you are around their. alix: stephen, fair value for oil? >> it is also geological specific but what we are seeing now, or the bulls have gotten it wrong over the past year is that production is much more resilient. higher cost production has been exercised out of the market so on this standpoint, absolutely, we are looking at $30 i think is aggressive. i respect vince's perspective. i think on a more general term, i would say $40 to $45 is attractive. what we are seeing now as far as the resiliency in production is the bank.

the banks are looking at their ps, and are allowing them to kick the production can down the road which is why we cannot get u.s. production above $9 billion -- 9 billion gallons. alix: you have to pay the bank so you have to keep pumping oil. the other part of the energy complex that gets less attention that is very dramatic, our natural gas prices. look at the destruction that is happened in the past few months. i just want to max out this chart. lows that we have not seen since like 1998. vince, how many producers get put out of business because of this? the dynamics and the natural gas market relative to the oil market, if you step outside, it is quite warm. you have the secular output

colliding against a cyclical demand story. you have not seen the weather come through. you still have very resilient production. oil, if you take a look at you are saying fair value for oil prices is $40 or $45. what about natural gas? >> that is a different animal because it is a domestic market. so if you are looking at production in marsalis, gas is well below two dollars. you are still getting record production and in fact, the only thing holding back marsalis production is a lack of infrastructure, a lack of get that into demand market areas. there is a much lower threshold as we are talking about two dollars gas. that is $18 a barrel gas equivalent. gas,roblem with natural

you only have two drivers, industrial demand and the weather. i have maintained for the past year the u.s. industrial complex is certainly in session. you factor it in. it is going to be 80 days -- 80 degrees and washington, d.c. on christmas eve. there is no demand. alix: thank you very much. still ahead, a new political era for spain. ♪

now for thetime bloomberg business flash, a look at some of the biggest is the stories and news. fired shkreli has been from his position as ceo. he has also resigned from the board of directors. he told wall street journal he was targeted because of his controversial drug high -- hike.

j.p. morgan chase has agreed to pay $150 million to individuals cert -- hurt. they were accused in a class action lawsuit of issuing false and misleading statements of its trading activity, to try to -- describing risky trading as mere hedges. that is your business flash. let's head over to our markets desk where ramy inocencio has a look at some of the top performers in the s&p. ramy: first off, to natural gas. shares are rallying now, up by more than 11 and a half percent. this is the top performer on the s&p right now. this is also their best day since july after the company said they will keep its current dividend, as well as delay any future stock sales until late

2017. shares have lost more than half their value year-to-date so investors are definitely seeing a positive day. hospital stocks are also among the best performers because help exchange enrollment numbers were announced after the january 1 sign up deadline. take a look at these company movers. tenet healthcare up 8.8%. universal health services up by nearly 3%. 7 million americans sign up for help exchanges by that december 18 deadline. back to gaske you companies in the energy and gas sectors, those are also on the rise. consol energy up by more than 7%. southwestern and cap it up by about 4%. this is therefore street gain following the rebound in gas prices. after the first cold snap in a month to actually hit the eastern u.s., which we saw this past weekend, but that could be

short-lived because christmas day temperatures could very well hit a record of around 60 degrees. christmas eve could even hit 70 here. alix: what? that does not make any sense. i was really cold the other day. thank you very much, ramy inocencio. there is more uncertainty ahead for spain. the ruling conservative party fell short of a majority. after decades of a two party ,ystem, two newcomer parties stocks and bonds sank on the possibility of instability ahead. the ibex fell more than 2% today. director of european -- thank you for joining us. what happens here, do we see another round of elections in 2016?

that is definitely a possibility. we will try to avoid that. one of the two new parties, citizens and england -- in english, is the party that underperformed. it was a bit of a surprise for the markets. parties, they will try to form a coalition. s may be the one more willing to go back to elections, but it is really complex to find a stable coalition, even a coalition that can start by winning the confidence of congress. alix: what was the cause? here we look at the rise of the nonestablishment party. it is the disenfranchised that take the cake. the same in france. what was the cause in spain that triggered this? marco: the first cause for the

emos is the pain of the crisis. spain did reform partially and butted performing better, the cost was very high in terms of unemployment and youth unemployment. that pushed podemos higher. then came the liberals, the new citizens party. by somebably would help legal controversy around the traditional parties above all the center-right parties. alix: take a look inside the bloomberg terminal. i am looking at spanish real gdp versus eurozone real gdp. spanish is almost double of what eurozone is. do we see some kind of deceleration? marco: we do see a deceleration in q2.

it was growing three times faster than the euro area. timescannot go three faster than the euro area forever. there should be a deceleration. still, if you leave aside a moment political uncertainty, i think spain will continue to outperform the euro area next year and the following year. by a lesser extent, but it will continue to outperform the euro area. alix: particularly on the 10 year bonds for spain versus beer tradingample, 20 basis points higher than they are in italy. do you feel like that is justified? marco: it depends on where you are looking. how quick the economy is growing, and spain is growing much better than italy. italy is not growing and has not been growing for two decades. he still also have a lot of

political problems in italy. the difference that italy does not have a huge external debt, they are not different from the u.s. or france. the problem for spain is that the net external debt of spain is three times higher than the one of italy. they need to keep investor confidence to be able to have yields at the current level. alix: marco, thank you very much. also in that political uncertainty ahead for spain after the elections, i want to get some insight from tom mackenzie who joins us from the ground of bloomberg news. procedurally, what is the next step that happens over the next few weeks? tom: there is the horsetrading that is going on right now, all the main parties went back to their home bases and started discussing how they would play this one out. it is going to be very complicated, days, weeks, maybe longer.

by january 13 all the newly elected lawmakers will have to gather in parliament and they will have two months to try to elect a government. if that does not happen, we are heading toward new elections and therefore more uncertainty for spain, with all the consequences you have been talking about. alix: what happens if they cannot form a government? what is the role of king versus congress? tom: as i just kind of covered, they are going to have two month of lawmakers in the parliament building. the king will have a stronger role than he has had really since their return to democracy in spain in 1978. he will be negotiating with the parties over their leaders and who they are going to put forward, but ultimately it is going to be the lawmakers in the building behind me that decide that. elections and a rerun of elections very much sit on the table, and the economic

consequences you have touched on with your guest. this economy is growing at 3% but they have massive debt, 21% unemployment. almost 50% for those under the age of 25, and the prime minister has added new jobs but many are just temporary. that is from the construct -- corruption scandal surrounding his party. at led to the votes for these two smaller parties. structural reform is needed here in spain going forward. alix: tom mackenzie joining us in madrid, spain. the big bond trade for 2016, i some of the world's biggest money managers are going to europe. ♪

live from bloomberg headquarters in midtown manhattan, you are watching

bloomberg television. let's start with the bloomberg first word. mark: thanks. the man suspected of buying the rifles in the california massacre will injure pleas in a court hearing today. he is facing weapons in terrorism related counts. convictions could carry a 35- year prison term. police say that he bought the assault rifles used by his friend and his friend's wife in the massacre three weeks ago. authorities say a woman who drove her car into a crowd did it intentionally. one person was killed and 11 others were hurt. the driver is being tested for drugs and alcohol. a three-year-old in the car with her at the time was unharmed. spanish government bonds are questions over

the political direction. voters chose a fragmented .arliament tough negotiations will be needed to form a ruling coalition. the ruling conservative party fell short of the votes needed to govern alone. the opposition socialists, led by pedro sanchez, gained parliament seats. they are expected to join with other troops to form a voting bloc. that is a look at our news right now from the first word nest. desk. word i mark crumpton. the 16 is expected to be a banner year for money managers. companies like like rock and pimco are -- like blackrock and theo are betting on writing

wave. joining us, lisa abramowicz, from bloomberg's new gadfly section. been saying have don't fight the fed. now they are saying, don't fight mario draghi. they are saying we will do whatever it takes. frankly the latest statement this month was underwhelming. tot said, if you are going bet on european government debt, why not go for the risky is stuff that has some yield on it and is not negative on the yield? that is why people are going to places like greece, which is still on the brink of economic bailout.ty despite the it's bonds have gained more than 20% this year. italy and spain. why not go for bonds that have some yield? alix: the issue is it is not perfect to there. we just talked about the spanish

elections. small italian banks are going belly up. talk about some of the risks. lisa: there are a lot of risks. the average yield on sovereign debt from italy, portugal, ireland, and spain is absolutely nothing. this is a potential risk should hiccups.any you are facing true economic risk. that said, lower oil prices benefit theately eurozone, and realistically, inflation has got to go up. alix: but to your point about the risk, if you are betting on mario draghi, if you do see a banking crisis in italy, portuguese banks go under, that will only incite the ecb to do more.

that is the money manager thesis for the debt on those bonds. either way the risk of buying negative yield and getting blown out of the water seems more problematic to money managers than a pond with a yield being backed by central bank, even if it is tied to the riskiest governments. alix: it's not like they are betting on a six-month turnarounds. if you're getting 3.5%, 4%, that looks pretty decent compared to what german 30-year bonds are alix: yielding. alix:gadfly is on the bloomberg terminal at gadfly go. energy -- what does that mean for solar stocks? ♪

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>> the s&p up four points, the dow a gain of 20 points. solar stocks have had play this year and are up and moves in congress as of late that have impacted place in that group. we want to welcome everyone on bloomberg tv watching and listening as well as our listeners here on bloomberg radio. is an equity analyst and he joins us on the phone from new york. , good to have you here on bloomberg radio and television. can we bank on longer-term fundamentals and longer-term trades in 2016? you for having me. we are probably more bullish on the solar industry today than we have been for a long time. that probably has to do with a number of events over the last

two or three weeks, all of which nature -- al in it was huge -- it was included in the omnibus spending bill. the vote took place on friday. we knew once it was included in the bill, a was going to pass. it really adds a lot of the u.s. solar industry as well as the global solar industry as a whole. essentially, going down to 10% depending on the projects -- now it gets pushed out to another three years after 2016. then you have to phase out in before it rolls back to 10%. we think that is extremely

important because it gives the industry time and visibility to , whether it be expended internationally or find other plans within the u.s. that was the first real announcement. the other big announcement was kind of the climate talks out in paris several weeks ago. really what is going to happen are the countries will come together and look to accelerate global carbon emissions. carol: you see sun edison up. what companies do you like in this space?

which ones should investors be paying a lot of attention to? angelo: our top pick any space is sunpower. we have a strong buy recommendation. we need to focus on companies with a strong, broad, international reach. in the case of sunpower, they have a great oil and gas partnership and the use the salesforce to really sell their .roduct the reason that sun edison has gotten a lead on other names is because of the sharp correction we've seen in the yield co space. are essentially products or securities that spin off certain assets. we are focused more on companies

first solar. and carol: tim cook talking about how they will be energy independent, they will have of theanels on the top development. do you see commercial development incorporating where it makes sense, solar energy, alternative energy? angelo: absolutely. apple is a leader. all of their data centers will be driven by solar energy and we think they will be leaders among other companies like target and walmart. on the residential side, that is .here we see growth over time, those are also areas you want to be focused. angelo, first solar has

had a tremendous run this year, a 50%. what is your take? still pricey at this level? angelo: on the contrary, we .pgraded the stock we are recommending the name, their prospects will only continue to improve and the coming years. even the margins did not worry you quarterly? with the think investment tax credit extending through 2021 essentially bodes better first solar -- four first solar than any other company out there. we like way there are positioned -- the way they are positioned. carol: 10 seconds for you. real quickly, angelo, what could for these stocks?

with the legislation that gives them great visibility, just quickly -- angelo: the issue with visibility is what you should be investing in these names over the long time. , equityngelo zino analyst joining us from new york. and first solar is down a little bit today. we do see sun edison up almost 2% in today's session. all right, everybody, you're listening to bloomberg radio and bloomberg tv. ♪

are watching bloomberg. i'm alix steel. this is your global business report. here is what we're watching. spain's prime minister wen's the election, but loses his majority. what is next for spain. apple and ericsson have resolved their legal battle over patents.

and how close are two parties to reaching a deal? thet, let's start with election in spain. voters chose a fragmented parliament, ending the domination of the two-party structure in recent decades. tough negotiations will be needed to reach a coalition. the conservative party fell short of the majority needed to govern alone. ericsson and apple have reached a licensing deal that paves the way for a deal between the two tech giants. they will collaborate in areas including 5g development. apple will pay realties as part of the seven-your pact. two most powerful leaders kicked out of the sport. sepp blatter and the man thought to succeed him have been kicked out. fifa is continuing

investigations. sepp blatter says he will appeal. >> this committee has no right to go against the president of fifa. the president of fifa can only be relieved from his activities by the congress. a takeoverhina has offer for syngenta. people familiar with the matter making anmpany is offer to acquire 70% of syngenta now with an option to acquire the remaining 30%. the board is expected to vote at noon. with jobting scandal cuts and restructuring and businesses that may include computers, television, and personal appliances for toshiba. for more stories, visit bloomberg.com. now let's go to abigail

doolittle live from the nasdaq. big macrone of the stories is crude oil. a tailwind.ng as american airlines and jetblue -- american airlines, a difficult year for the stock. down 20% in 2015, even with profits estimated to rise by more than 75% this year, in part because of the low fuel oil. crude oil continues to fall, it could help this airline. it may make an attractive investment opportunity for the beaten up stop next year. turning to jetblue -- jetblue has soared by more than 20% in 2015 and its profits have also risen. have gone up for jetblue.

that could move higher. they have found support on their 200-day moving average. when they found support in the past, they have found higher each time subsequently. alix? you, abigail doolittle, joining us from the nasdaq. treasuries the haven of choice -- yields keep falling. joining us from st. petersburg, florida, james camp, director of fixed income at a management coming. you are piling into treasuries and unloading corporate bonds leading up to the fed decision last week the reporter that was a safety play. what will you do now? that's a great point. the liftoff did go well. i think the markets can relax.

really we have been moving out of credit, out of high-yield, into the treasury market and the real thesis there was the record that was debt issuance being used to fund shareholder friendly m&a and credit quality generally starting to deteriorate. we thought the treasury arc it would outperform on a total basis. and it has. alix: what your projections for corporate bonds versus ?reasuries james: they are really pushing back. the investment grade is wider by 60 basis points, and high-yield is wider by half or two times actually. we will get to a point where it is apparent these companies cannot refinance and i think the pressure on spreads continues

for a couple of quarters. alix: you mentioned that high-yield has been isolated for the energy sector. does that lead to other high-yield or does that leave to investment grade? james: it's a great question. really ait's high-yield phenomenon. liquidity is showing itself to be a challenge. we have seen headlines from funds that have begun to mitigate, investors not able to redeem. i think the contagion, if you will, is starting to show. we are late in the edit cycle. regardless of the incredible monetary stimulus, we are late in the credit cycle, we are late in the expansion cycle. default rates are 30% or lower. that will put additional pressure on credit. out: deutsche bank coming saying that they see a tantrum in the bond market, they could see the yield go to two and

three quarters of 1% as the fed sticks to its.. do you see that much of a cell of? dots aredon't know the going to be followed. tell will be if this is a real normalization and if they are going to follow with a handful of tight things. tonkly, if the 10 year got 75, if draghi continues to cut, negative real rates in the eurozone, i think that would be a buy for the next two or three years at that level. alix: the other question what happened to the curve? if you come inside the bloomberg terminal you are looking at the two year yield versus the 10 year yield spread. the concern has been, james, we will only see control on the front end of the curve. what do you see?

i think that's right. that is probably what is most likely to happen. the 30 year treasury, the ten-year treasury, if they really do rally, the market will say to the fed preempt or was the fed incorrect in the tightening? monetary conditions are tightening. the fed had to prove to the markets -- and frankly talk themselves into -- a tightening. is this going to continue or was verya one and done with a dovish stance going forward given the macroeconomic data? we tend to believe that is what is likely to happen, so the 10-year treasury rallying does not surprise us. aix: so, you see more of flattening of the curve. is there a risk of a lot of supply coming online? is that a buying opportunity? friendly, treasuries, it is the converse.

issuance is expected to be down in 2016. as you know, there is a scarcity of highly liquid, highly tradable assets and the treasury is the beneficiary of that. alix: what is your yield prediction on the 10-year? james: i read a great analogy. i'm going to have to bar with. we are going to have to not be bearish, not necessarily bullish. we will spend indicates likely hamster. we will probably end up where we are. the opportunities will be in high equity, high-yield credit. alix: thanks very much, james .amp coming up, an exclusive interview with disney ceo bob iger. ♪

when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. so your business can get back to business.

sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. to discover the best shows friends together and movies with xfinity's winter watchlist. later on, we'll conspire ♪ ♪ as we dream by the fire ♪ a beautiful sight, we're happy tonight ♪ ♪ watching in a winter watchlist land, ♪ ♪ watching in a winter watchlist land! ♪ xfinity's winter watchlist. watch now with xfinity on demand- your home for the best entertainment this holiday season. alix: it is one p.m. in new york "bloomberg markets. tocome to -- welcome

"bloomberg markets." from bloomberg world headquarters in new york, good afternoon. i'm alix steel. here is what we're watching at this hour. energy shares are waiting on the market. oil prices fall again. --can they regain their strength in the new year? we will tell you. -- disney ceo" bob iger admits the franchise is than he imagined. the markets desk. ramy in a sense you have the latest. did you see "star wars" by the way? ramy: i did. i loved it. abigail: -- alix: awesome. back to the markets. ramy: the markets are not doing

as well as "star wars" is doing. right now the dow is up by nearly 50 points. .4 percent, the nasdaq up by .6%. china had implied it could pull out more stimulus. that did help raise prices. it iss been falling and falling for the fourth day in a row. let's dive into our bloomberg terminal. s&p's 10 sectors. , we have apple and microsoft, with materials not far behind. energy is the biggest lacquer, down 4/10 of a percent. commoditiesout the right now. nymex crude is down by more than 1% here.

brent crude is down by 1.6%. the $36 handle there. that is the lowest in 11 years. alix: also we are looking at oil, right? there was some buying in treasuries though. ramy: not all is lost. in.stors are still piling the ten-year year yield is down by one basis point. government securities are eking out a gain for the month. gold and copper are on track. up by nearly 1.5%. one and aures up high third percent. so, commodities just a little

bit there. alix: thank you so much, remy. mark crumpton has more from our news desk. hey, mark. mark: thanks. for foreign soldiers accused in -- were killed in an attack. the taliban claimed responsibility for the suicide bombing which was the largest attack on foreign troops in afghanistan since august. aviation experts have failed to retrieve information from a russian warplane downed by turkey last month. an inspection of the recorder has revealed that 13 of 16 microchips are ruined and the remaining three are damaged. turkey shot down the bomber at the border with syria. russia insists the plane did not violate turkish airspace. lindsey graham is dropping out of the republican race for the white house.

the senator from south carolina announced the decision on his website. he was never able to tame traction in the polls, hovering at 1%. the man who has led soccer's governing body for the last 16 years has been kicked out of the sport. fifa is facing corruption investigations in the u.s. and switzerland. several are facing criminal charges. sepp blatter says he will appeal. and an unmanned rocket destroyed . after liftoff, the company will try to land the first stage of the rocket up right on an ocean platform. they hope to make rockets one day as reusable as airplanes. wordis it from our first news desk. right now, i am mark crumpton. back over to you. alix: space, my biggest fear. coming up in the next half-hour

television, where there any insights into the future of the apple car? we bring you those highlights. companies are more eager to merge. will this trend continue? ♪

carol: all right, everyone. you're listening to the bloomberg advantage. i'm carol massar. my cohost, cory johnson, is up on this monday. you're listening to the bloomberg advantage. dave wilson, you're looking at carmax right now? >> actually, let's talk about tiffany. carol: so much for my notes. >> what can i say. this is a stock that has been

less than sparkling lately. shares of the jewelry retailer have fallen as much as 35%. last thanles were expected for the last two fiscal quarters. for jeffries, this all adds up to a high quality discount. time in fiverst years that randall economics hit by. express gross margin or profit after merchandise cost to increase as much as four points in three or five years. tiffany's gross margins are at about 60%. falling prices for commodities and products and a shift toward more profitable items. tiffany's is up 3.7%.

notwithstanding, the stock is down 30% so far this year. dave wilson with comments on tiffany shares this monday. now i want to talk about apple shares. apple in the news, tim cook cbs, talking about encryption security, tax policy. let's head out west to our san francisco bureau. that is where we find bloomberg west anchor emily chang. emily, i watched this on "60 minutes." i thought it was incredible, the access they had. they talked about a lot of things including security concerns, privacy concerns, .ncreased terrorism concerns more: tim cook was a bit emotive talking about these issues. pressureer increasing

from law enforcement, u.s. law enforcement, the director of the fbi. and pimco has taken a hard line on this -- tim cook has taken a hard line on this saying we are in america. we should have both. take a listen to one of the exchanges. there are people who say we should have a back door. but if you put a backdoor in, that backdoor is for everybody, good guys and bad guys. charley: but doesn't the government have a points, if we have good reason to believe that that is for criminal conduct or national security behavior? if the government lays a proper warrant on us today, then we will give the specific information that is requested because we have to by law. in the case of encrypted communication, we don't have it to give. emily, we should point

out that that interview was done before what happened in paris. emily: we are unclear on the exact timing of the interview, but this is a position that tim cook has maintained for years. data isying, apple encrypted. we could not get to it if we wanted to get to it. but i spoke to the ceo of blackberry who has taken the other side of this issue and he pointed out an issue where apple told a judge, we cannot get into because dealer's phone it is a locked screen. yes, we will protect your data, john chen said, but not if you're breaking the law. take a listen to what john chen said to me. if the government will provide a subpoena, we will do so at the time that the court

order or subpoena has been served. to keep ourduties society safe and peaceful. it's interesting to hear tim cook talk about it, john chen talk about it. you mentioned, tim cook got a little bit heated. the response to get to charlie rose where you could see he talked into charlie, was a little frustrated and you could see him glance up, and i'm assuming his press team or somebody he was looking at. at least that is what it looked like. he did talk about the tax policy. right, i understand that went over the course of two ours. we do not know what it took to get to the point were tim cook lost his cool. apple as we have discussed the

ad nausea him has $74 billion in cash parked overseas. if the company brings it back to united states it will be taxed at 40% and people in congress have accused apple of evading taxes. take a listen to tim crook's -- response to charlie rose on this issue. charlie: this is what they say, apple has engaged in a sophisticated scheme to they little or no taxes. tim: that is total political crap. there is no truth behind it. i have never seen temp cook lose his cool like that. one of the things pointed out in interview, this was pointed out in the industrial age and it just is not apply right now. has been lobbying for the tax code to be rewritten, but it is a big hurdle they have to

climb when it comes to capitol hill. it's backwards. it should've been fixed many years ago. i know that corey has been a lot of time talking about apple, talking to various executives. there was really incredible access, i thought, to their --ilities and to johnny i've ive. to see howinating much access they gave charlie. my favorite carol, part was the closed table to hide these future apple products. of course, we all want to know what is under the cloak. this was great access for cbs. you wonder what was in it for apple. this is a big time of year for them. the holidays. people are potentially ordering those iphones to put under the tree. this was an opportunity for

apple to do a big media blitz and communicate a message about their products. carol: great to see the campus they are building. emily chang, thank you, our anchor at bloomberg west. you can check out "bloomberg at 3 p.m. in the bay area and also on wall street. apple shares up 1.1%. you're listening to bloomberg. ♪

alix: welcome back to "bloomberg markets." time for the bloomberg business flash. martin shkreli has been fired from his position as ceo of turing pharmaceuticals. word ofned from the directors. he told "the wall street journal" he was targeted because

of his over-the-top public persona. jp morgan chase has agreed to a two pension funds of individuals london whale trading loss. they were accused of false riskyents, describing trading strategies as mere hedges or risk management devices. and for nearly a decade, shoppers have been been doing deals,rgain hunting for but this season shoppers have taken that a step further. they are more open to buying gifts that in the past might have been considered downright cheap. that is your bloomberg business flash at this hour. let's head over to our markets desk where ramy inocencio has a look at company movers. into mywant to take you

bloomberg terminal. let's look at the most popular stories on the bloomberg. m --bsvmpopular vs function. awakens"s: the force setting records around the world, $500 million in revenue. toshiba talking about its record fiscal year loss and also pep boys is popping. let's look at that chart and see how it is performing today. basically, pep boys is seeing this rally right now of 6.8%. this is what is happening after carl icahn put in a new bid to take over the auto parts company for nearly $920 million. bridgestone matched his earlier offer. bridgestone has until wednesday, 5 p.m. new york time, to counter. another company moving, fitbit.

that is up by nearly 3.5 percent. this is in part because pacific press says it sees is holiday sales "exploding" and in-store checks indicate a substantial increase in sales volume. buy is this -- best finding it hard to keep the fitbit charge in stock. they are outperform with a $47 price target. finally in tech, the semiconductor company of other technology it -- avago technologies is up today. rbc calls it one of its top picks for the year. so much, ramyu inocencio. it has been an interesting year for the telecom industry. we will see more opportunities and m&a ahead. carol massar has the details. right, we want to welcome everybody on bloomberg tv. thank you so much for that

bloomberg business news flash. you're listening to the bloomberg advantage on bloomberg radio and television. alix, thanks so much. we want to talk about the telecom sector. john butler knows an awful lot about that. telecomr senior services and equipment analyst at bloomberg intelligence. it has been a crazy year for almost every sector, the you guys have a lot going on. what can we anticipate? what will be major trends to look out for? 2016 will be an interesting year for telecom. for the first time you're seeing carriers diverge in terms of strategy. if you wind the clock back to , it isr three years growing strongly. 4% of the population of the u.s. has some sort of wireless connection -- whether it is a --

40% of the population of the u.s. has some sort of wireless connection. whatevert is a tablet, it may be. you see at&t and verizon going into new services. verizon's go 90 is a pretty well app. video streaming it is new, but it's up to a good start. at&t has diversified outside the directv.y bought and sprint and t-mobile are slugging it out on price. this going to mean for pricing? what does it mean for margins for these companies? guest: yeah, i think going forward, pricing will be under pressure. you see that in every mature market. low-cost providers, t-mobile and sprint are at the heart of that war. they are really battling it out. when you see those promotions for football games, sporting

events, it's always t-mobile or sprint leaving the charge in terms of taking prices. you said that they will look at different strategies. the market growth this kind of cap doubt at this point. do we have any indication what makes the most sense? better margins are better growth potential? guest: i think it is content, carol. i think that is the future for these guys. first, it will have to be distribution. i go back to that new app verizon has, go 90. watchingweekend, i was the jets game. i was looking at the quality of the simulcast. sure enough you could watch the game on your smartphone. it was very good. i will look at it and think, man, this really is the future.

tv screen.as a carol: really complement tree to the cable industry. guest: it is. if you look at at&t, they are one of the largest providers through dreck- tv. they're starting to leverage those contracts or i imagine they are, to expend those two smartphones. carol: what about consolidation. it's going to be a record year when it comes to emanate. what about within the space specifically. is there an opportunity to combine? it does. the bigger you are, the better you are. -- sprint intot

a lesser degree, t-mobile, have really struggled in the shadow of those two big carriers. t-mobile has them better with an aggressive pricing strategy. they took a lot of vc share from the big guys. sprint is not off the mat yet. i look at those carriers and to me, it begs for further consolidation, but the regulators so far have stood in the way and we will see what happens there. what about spectrum? we've talked about options in the value to some of these guys. what will we see in that area? guest: spectrum, for the audience -- carol: 30 seconds. guest: without a doubt the most valuable asset until come. one of the main sources, government auctions. we have the last of the big ones, in my view, march of next year. we will get a nice opportunity to revalue that asset and see what is really worth. carol: interesting.

so watch over that? guest: watch for that. so much.anks john butler, our senior telecom analyst at bloomberg on the telecom area for the 16. you are listening to "be bloomberg advantage" bloomberg radio. coming up we will have a market check for you. we have seen a bit of a rally run out of steam. you are listening and watching bloomberg. ♪ . .

alix: live from bloomberg world had quarters in midtown manhattan, you are watching bloomberg television.

i'm alix steel. mark crumpton has more from our news desk. beingfive suspects are held today in belgium in connection with the paris attacks. the most wanted fugitive is not among them. he another gunman link to the attacks live in central brussels. iranian hackers reportedly breached the control system of a dam near new york city. the "wall street journal" reports the 2013 incident raised concerns about the security of the nations infrastructure. to the damccess through a cellular modem. authorities in china's a man-made file of construction waste may have triggered a huge landslide. rescuers are searching for dozens of missing people today. a mountain of dirt and construction waste buried nearly three dozen buildings. it happened sunday. authorities say at least 91 people may have been trapped.

the city is a major manufacturing center not far from hong kong. china's capital is shrouded in a smoky gloom once again. beijing is under a small alert for the second time this month. the pollution is keeping many of the city's 22 million people indoors. those who go outside are risking watery eyes and irritated throats. the problem is not expected to ease until tomorrow. that's the news from the first word desk. we just brought you some predictions for telecom in the new year. a battleground has been copper. the market is oversupplied with china the biggest buyer, but what is demand like? can hoffman sounded the alarm can hoffmanl -- sounded the alarm back in april. happens to copper and china

demand in 2016? ken: you wonder what is the 2016.t collapse in could it be the credibility of management? if metal prices are where they are today or lower, a lot of major minor ceos will have their resumes out there because they will be fired. alix: we have seen a lot of management trying to get on top of this. one shop that is bullish is citigroup. they point to a supply and growth fart showing outpaces demand growth. when you look at that chart, what do you see that they don't? around have seen so far 6.5% growth as far as what the mining companies have put out there. iny have about a 9% growth copper and are not pulling back

new production. on the other side, you see demand down. betweendemand is down 2% and 4%. statistics, particularly construction, looks at week. china is trying to lower that, so you see some things they are doing, but when the chinese , it tells you's how bad the market really is let's dig into data little bit. we have seen china import about 1.1 million tons. at the same time, you have only a slight build in inventories. coppers a lot of sloshing around in china, but you say that is not real demand. ken: there is not that much demand there.

this gets back into a people should be looking at 42016, and that is the carry trade. as the yuan devalues, the need for the carry trade will unwind. worst performing metal in 2015 and the question is will that happen in 2016 for copper? thank you very much. watch out for the carry trade and watch out for the miners and potential management replacement. it is now the time to get into hedge funds? we will hear from an asset manager who says yes, do not be scared by recent performance. we will be back. ♪

carroll: we are going to turn to distrust assets right now. this is the bloomberg advantage. my guest is the asset manager at a long/short hedge fund. rate to be talking with you, when we had to distrust areas that have had so much attention the sheer. have you gotten caught in the downfall? almosthas been impossible to avoid some of the withinl this year but distrust, there is a lot more activity. we have seen a wave enter the energy market with oil and gas companies impacted and any other companies that have exposure to commodities. we start to see the default rate ticking up and with the move

from the federal reserve in terms of raising interest rates, we are expecting a lot more distress going into 2016. carol: is it just the energy space or have you seen it expand? telecom, we have seen some problems. what else have you seen? george: there are problems in lots of different industries. the key is having an excessive amount of that. what you have seen in the last several years is the energy space has been a focus area. both bond and leveraged loan interest. gas companies, drilling companies focused on the u.s. have been hard hit. we expect to see a lot more there, but other parts of the high-yield space are not immune to increasing distress.

weinterest rates climb, and expect that to happen up to four toes next year, we expect see more distress. >> how liquid has it been getting out of the distress? we like to focus long .nd short in this part of the cycle, we opportunity is in post equity deals and shorting companies headed into trouble. we are waiting to watch distressed debt drop, but you really have to pick your companies to find the liquidity. carol: where are you finding areas that might provide some potentials in 2016? you like puerto rico is one area.

there are opportunities in puerto rico. you can find some good at a bigs there discount in terms of a purchase price. it's not the easiest thing to force properties there, but there are some interesting opportunities and there are motivated sellers and we see some litigations and default there. on these lenders that properties that are not natural long-term loners. back on the u.s. side, energy is a place to look. we think the opportunity is in shorting companies facing headwinds. , therea few quarters might be some interesting long opportunities in buying distressed debt. i keep hearing you say

the energy space. we have seen the pressure in that space and like yourself, others even see the value. is that the only area where you can see opportunities? ofrge: because it's such high importance in the high-yield market, but there are other areas. you mentioned telecom. there are a number of overleveraged areas in telecom. there's hangover in distress from when we had a big default cycle. we saw a lot of companies restructure across every industry in the u.s. you saw major banks restructure and get into trouble. there are some interesting opportunity -- interesting opportunities that should benefit from higher interest rates and margins.

in the autoanies space that have interestingly priced securities, so we do the opportunity is in post-organization equity in companies that have previously restructured. there's an opportunity for an event-driven return and opportunity for activism as well. carol: one thing we have been trying to figure out since we have seen all of these headlines is how widespread it is and whether it is similar or akin to something we saw in the financial crisis, do you see any kind of that momentum when it comes to the distrust that area? george: no. we don't think it is systemic, but there have been some headlines were even some mutual funds were forced to spend some redemption the high-yield space.

a sign of risk in the high-yield bond market. it has been pretty frothy. some distressed investors got involved with high-yield debt at the peak of the market and you see downside risk right now. that's going to continue as interest rates keep climbing. the kinde not seeing of systemic selloff we saw in 2008 and 2009. ist because high-yield debt a little pricey, it does mean every country in the nation is at risk of default, which is what we saw in 2008 and 2009. your thoughts for investors as we get into 2016? we're going to be watching the rate environment, what is your advice to investors looking at distressed debt? george: be very careful, but remember there are many ways to

play distressed investing and if you can go further self in the capital structure, there are some great opportunities there. carol: think you very much. let me give you an update on the trade on this monday. we see equities off their best levels of the session, but still up 10 points. the nasdaq better by 33. you are listening to bloomberg. ♪

alix: welcome back to bloomberg markets. i'm alix steel. let's head over to our markets desk for check on some company movers looking at the outperforming areas today. steali want to go to stocks. they are seeing their highest day in a while after u.s. steel reached a tentative three-year deal with the united steelworkers after six months of talks.

details are being withheld but it does cover about 18,000 unionized workers. u.s. deal is up by about 6.8%. rivals are also feeling some tailwinds off of that. airlines are also having a good day, up by the most in a week after two analysts. more positive on their prospects because of cheaper fuel. 9%ustry profit could jump permits prior estimates. -- from its prior estimates. you can see american airlines rising the most, up by 2.8%. "star wars: the force awakens" shatters records on its opening weekend. it could bring in 528 million

dollars worldwide, more than disney anticipated. sat down with bloomberg and spoke about how disney is dealing with newcomers like netflix. : after "the force awakens", we intend to make eight and nine. number eight will start shooting sometime in late january. we have a director for nine as well and we are making some stand-alone films will stop there are five, including this, five star wars films in the work, either written, shot, about to be shot, about to be developed in some advanced form. that's a lot of activity. lands,o big theme park one in california and one in orlando. there will also likely be star wars lands at our other locations. it is huge for our merchandise.

it was always one of the largest that exists in terms of what we call consumer products and it is larger than we even estimated. we have a strong program televisionames and and plans for a lot more. but i cannot estimate. with a successful and high-quality first film, that loads extremely well for not just what is ahead creatively, but what is ahead commercially. david: can you give us any sense to the other acquisitions you have made. you did six are early and your tenure and then you did marvel. they share some similarities. rate content and can be used throughout your franchise. how does this compare in size? bob: it's about the size as

marvel. it's not something we really break, so i can't say. you touched on it, and they do have a lot of things in common. it starts with great storytelling. that's the heart of the company, going all the way back to 1923 when it was founded by walt disney and his brother, roy. it was all about storytelling. we had in pixar, some of the best storytellers and with marvel, great storytelling and with george lucas and star wars and indiana jones, which will be coming, we have more great stories. in no world where there's far more content or intellectual property and much more choice, great stories hold their value and actually stand out given the choice people have. david: talk about netflix.

as netflix a friend or a foe? bob: netflix has been an aggressive buyer of our product. we sell three types of product to them -- we sell off network, programs that have been on abc, for instance, not in season, but past seasons. we make original programming for them. we are producing them and they are buying some fantastic marvel series, the latest one was called "jessica jones" and daredevil, last year. with productrting we release next year, they have been great as a buyer and that is interesting. talked about a lot of disruption and competition, but technology has enabled the birth of new life forms that some may view as competitive, and they are, but they can also be additive in terms of our business and netflix has been

for the walt disney company. long-term, we believe they will be aggressive buyers and they will compete with us because time is finite. if they are spending time using netflix, they may not be watching our other channels, but maybe they are spending time on netflix consuming our product, and that is not necessarily a bad thing. we look at them carefully in the sense that we want to see where things settle down in the competitive nature of the andtionship, but short-term midterm, they are more friend then though because they are a great customer of what we make. sticking with the "star wars" sensation, paul sweeney has been analyzing the force for disney. why is star wars so important to disney?

it's not just the last three days. even before you started spending money on the movie and promoting it, you are $4 billion in the hole. you have to take a long-term view. movie to befor this a home run so they could build all the other revenue streams off of this for the years to come. mentioned that they have five movies coming out over the next five or six years and all of the merchandise, tv spinoffs, decayedrk, it's all upon this first movie being done well and successfully. it looks like from the first weekend that they have done their job. feel like we talk about the death of hollywood and streaming is where we are going. but he called netflix a friend. the market is not sure. we know netflix pays billions of

dollars for their content and that's a good thing. that has boosted the profitability of the big media companies, but it is conditioning consumers to watch content outside of the traditional pay-tv bundle which is where the broadcast networks make most of their money. we saw that with espn numbers over the summer where disney disclosed espn has lost 3 million subscribers, a lot of that doing -- due to cord cutting. media companies have to be careful. they want to maximize their income that they can get from netflix that guard against the long-term threat to their business model. i feel like movies in theaters, i can get them a few weeks later on itunes will stop that has been part of the issue when it comes to the big hollywood blockbuster. star wars" change that conversation?

paul: what has happened is that it's not a u.s. market anymore. is outside ofice the u.s.. a star wars film and these other , tentpoleuster franchises that we see more of, that is the model that works. the real question is can they take these movies and monetize areas likee merchandising and nobody does merchandising better than disney. alix: coming up, martins grell he is ceo no longer. we will discuss. -- artins grell he ♪

2 p.m. in new york and 7 p.m. in hong kong. welcome to bloomberg markets.

from bloomberg headquarters in new york, good afternoon. here is what we are watching this hour -- so much for a santa claus rally. the s&p on its way to the biggest drop with the fall of oil. " brought in an estimated 528 million dollars this weekend. we will hear from disney ceo bob iger in an exclusive interview. and the bad boy of pharma is fighting back, telling the "wall drugt arnold" that his price hikes led to his arrest. let's head to the markets and we did a bit of a fake out today. starting out