u.s. stocks closing higher today. in december. 3.5% joe: the question is what did you miss? alix: we track the move and where this weakness stems from. and spain's inconclusive election. we will stay that we will speak with tina fordham -- we will speak with tina fordham. a prettyt was lackluster day in terms of direction and where we were going. we had a rally. we are coming off of flows of the session. joe: we're back to that action

that we had at the end of last week, and then we bounced back. very quiet today. a lot of the charts were very jagged. the kinds of things you see when not many people were trading. alix: energy on the downside, you can blame oil. --was the quotes of the day this was the quotes of the day. one gallon of oil cheaper than one gallon of bottled water. $.80 for a gallon of oil. joe: a few years ago a boil of youl -- a barrel of oil but -- definitely weakness was europe. a spain was down 3.6% following their elections.

a lot of uncertainty coming out right now. we did see a weaker dollar and a move to the 10 year treasury, so kind of reversing the traits you thought would happen after the fed hike rates. in the dollarly and a pullback now. overall, very quiet. alix: oil was on my mind today. how much more can we go when it comes to downsizing more prices? i want to take a deep dive into the bloomberg terminal. that white line is the view ti's long position versus rent's long this edition -- the white line is wti's long position versus .rent's long position will we see parity with wti and brent at the same price? joe: interesting.

, this chartort would suggest there is a way to go. alix: that has not factored into those long positions. joe: i want to talk about the -- i could not name the currency before this morning. like a lot of these other oil expert -- oil export companies -- export countries -- this is the world currency page. the very worst currency, the just beatinganatt, out the cause extent 10 day -- the kazakhstan 10 day.

a lot of speculation about saudi arabia. other weaker countries have capitulated in a big way. saudi arabia has given no inclination they are inclined to do the same thing. you can see all of these charts and the more on twitter. chiefdavid kotok is a investment officer at cumberland advisors. we were talking about brent at an 11 year league low -- 11 year low. is this capitulation? capitulation in azerbaijan. don't know many people who could have named it. >> we are getting there. do we go below $30? may be. cooling tobal reverse this, we are not going to get that.

the more pressure on the dow and spry role remains -- a sleeper might be venezuela, a regime change in venezuela. they lived and sell every barrel they can. they need revenue and that is sitting across the gulf of mexico and there are refineries in the united states. alix: that is capitulation. >> we could get into the 20's before this is over. gets into the 20's, what does that mean for the high-yield space? >> the high-yield spaces in trouble. the degree of trouble is which areas reserves, no longer viable at current prices, get taken off of balance sheets, and lenders re-examined the assets.

-- re-examined the assets. assets.amine the alix: is the risk that the selloff in high-yield would spread to say the european say,t -- would spread to, the european market? you can see the divergence. you can make the argument that the high-yield had a screaming settlement. don't own it, we don't like the space. funds have emerging-market high-yield. the u.s.slate to dollar and it is backfiring on them.

>> is there anything in that space that has been unfairly punished? of ae we at the start regime change where tighter monetary policy -- you can see across they have risen everywhere. high-yield and energy and industrial has been the worst. there is no area that hasn't weakened. >> it shows when mutual funds have to liquidate because they get redemptions. they can't sell one piece to raise the money to pay the redemption. everything goes, even the good stuff. there is clearly a difference between companies and the high-yield space. we don't know how far it goes. clearly it does.

making the distinction between the systemic issue in the energy space, versus selling we are seeing outsidof that because of which will funds that were leveraged into the energy space. -- because of mutual funds that were leveraged into the energy space. fund has totual liquidate, that manager need so much cash to pay a redemption, or you get a lockout. now we have had three gates. as soon as you have a gate, what do you broadcast? you better get out now or you are going to be dated that going -- get out now or you are going to be gated. area that has been slammed thanks to the crash and oil is canada. we have seen the loony go from parity to $1.40.

do you see these up north? >> it is amazing how we went from parity to affordability. a it pays for things with canadian dollars and it is able to give a better bargain to an american fisher who comes to visit. are seeing changes and if you shop across the border in michigan, you lost one third of your buying power. softther thing that the the radar screens for many americans, we talk about china, we talk about trading partners. is a 3000 mile continuous border. joe: it certainly sounds like

there are bargains in the fishing lodge. >> i can take you -- that is a bargain. alix: you are looking at his locations between the u.s. and canada, what is the biggest risk in 2016? >> we have this thing called the virgins. we are diverging policy and that is the biggest risk. and second-largest bloc in the , for is now 22 countries expanding at a rate of 100 billion per month in sovereign debt trading at negative interest rates. the largest block is going the other way. the divergence is of a type we have never seen in our history, a negative rate in one place and a rising positive place in

another. what a good know is volatility's rise under such circumstances. we have had more big basel big volatilee events. you talk about them on your show, they are big. alix: david kotok is sticking with us, because coming up we will tell you where the next major banking crisis maybe. maybe europe? that's next.

alix: let's get mark crumpton with first word news. mark: six american soldiers have been killed in a suicide attack near a u.s. run airfield in afghanistan. two other american personnel and one afghan were wounded. the taliban and claimed responsibility for the suicide bombing. a retired french police traveling on air france is in custody after a bomb scare forced an emergency landing in kenya. it was the first arrests since a series of hoaxes began disrupting travel for air france passengers. authority say no one was in danger. five suspects are being held in belgium with connection to the paris attacks. the most wanted fugitive is not among them. other gunmen lead -- gunmen -- theto the attacks police conducted a rate which lasted five hours.

south carolina republican senator lindsey graham is dropping out of the race to the white house. he announced his decision on his campaign's website. he was never able to gain traction in the polls. he was hovering at about 1%. i am mark crumpton. back to you. we are back with david kotok, chairman and ceo of cumberland advisors. you talked note about the italian banking system being in some kind of crisis. the whole thing was triggered with reports that a man committed suicide because he couldn't get the money out of his bank and the bank system is a bail in the system now, not a bail out system. turns out there were four banks in italy about three billion dollars in size. the government has an outrage from citizens who realize bank

departments are not protected. this is a change in regime where depositors are at risk. we are playing it again. there are problems with the banking system in europe. i looked at the debt that was issued. brought an instrument thinking it was safe. >> so they weren't plain-vanilla deposit. they were simple thoughts. safe, ithought it was wasn't safe. i said we are having this high-yield crisis in the u.s. and now with the mutual funds. own any kind funds of debt like that? they own it in the -- phone it in far more jurisdictions.

they hedge the currency, because that is how they can be u.s. dollar denominated, and we don't know what they own. they don't tell us. you think there is a reach for yields during the qe years. are saying in your last segment, it is not just some high-energy that -- high-energy debt, we are going to see it show up in places where people don't expect. what we-- >> that is expect. advise investors to call the manager of the high-yield funds and ask direct questions. debt? own any foreign who is it, where is it, what is it? we don't own any in our shop

alix: what foreign debt is good to own? nuven though it is longer duration -- even though it is longer duration, when that be categorized as risky? david: international clients come to us for u.s. dollar. we put them in investment grade only, and not in treasuries. most,e we liked the people say it is self-serving because you manage it. when i can get 4% on a tax-free thaton a 20 year majority by whole federal basket of moore, why would i buy a treasury at 2.5? joe: speaking of municipal or government debt, what do you think about puerto rico?

david: the saw that is being rewritten. we saw these restructuring of the electric utility. now we have a big payment coming on january 1. tuesday pay it? what does the supreme court decision do? who said i governor won't run anymore and he has no popularity, what happens? it is a story of failed politics . there are a few of them running down their budgets. david: will the 80's and that makes the jerry first payment? the january 1 payment? david: bonds issued by are a few beatable only to the reliability of the

policy in power. obligation moral bonds that gets honored as soon as the politician decides he doesn't want to pay it. alix: you have a divergence of the ecb and the fed. you have the risk in funds getting into debt over europe and the risk with puerto rico. if i'm looking at stocks, how does that translate into a piece of financial stock? david: i don't know how it works with big banks, that is a question. market in the u.s. stock , one has to focus on sectors, the technology sector. look at the hospital equipment. it is in the medical sector.

we will have all the products sales based in u.s. dollar for years. alix: is a pleasure to see you, thank you for coming by. we're going to speak with a technical outlet -- technical analyst who says it is time to short stocks.

alix: what'd you miss?? heading to the end of the year we wanted to dive deep into some technicals. joining me now is founder and president of the leading capital

analysis form. you look at a chart of stocks versus on that lead you to that call. >> this particular ratio is relevant for all investors. this is basically stocks versus bonds. for the last three years bonds have been outperforming stocks. if you look at one of the more oruid exchange traded funds dividends of 20%, look at s&p in the same time frame, you are looking at 11%, 12%. i continue to see treasuries outperforming stocks. dividends ofi would obviously . you can sophisticated, be long bonds and short stocks. i see more evidence that suggest

that trend should continue. >> you think that is just complete nonsense? think you should ignore it. i'm a price guy. look at short-term yields. hitting five year or six-year highs. they are not budging or not going anywhere. it is not that we want to ignore the fed. ignore interest rates and the fed follows along. alix: are you taking a look at the sellout? >> i got to tell you, i think so. we are looking at the 10 year yield minus the two year yield. traditionally the government pays you more to hold for longer majorities.

when you are seeing the short end of the curve roofing and a long and not going anywhere, you are seeing that narrowing of the spread. looking at a two year yield right under 1%. a little over 1.2%. >> a lot of people have apple in their portfolios. i think it is down 20% from its highs. where next on this one? >> i have been very vocal about it. we were talking about that is going to be a problem. i definitely think it is a problem. it has been underperforming the s&p 500. i think it is going back to the low 90's.

>> which is why you would be and to chope s&p to it off with emerging stocks. when apple broke, so did he emerging markets. this is nothing new, emerging markets have been underperforming forever. we are talking about shorting s&p's. they are currently hitting 11 year highs. that speaks about the relative weakness that continues. i think the only remedy is time and it will need a lot of it. very fun. alix: a path forward following yesterday's inconclusive election. we are going to discuss with citigroup next.

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: i'm alix steele. "what'd you miss?" let's get right to mark crumpton with the first word news this afternoon. mark: two american astronauts put a railcar back in place outside the international space station. they took a little more than half an hour to release brake handles on the railcar and help guide it for inches back in place. the railcar needed to be moved, so a cargo ship filled with supplies could dock at the space station on wednesday. rescuers and china spent the day searching for dozens of missing

people following the landslide. a mountain of dirt and construction waste very nearly buried three dozen buildings. authorities say more than 90 people may have been trapped. is a major manufacturing center located not far from hong kong. police in nevada say a woman who raped her car into a crowd did it intentionally. one person was killed and at least 37 others injured. officials say the driver was a woman in her 20's. she is being tested for drugs and alcohol. a three-year-old who was in the car with her at the time was not hurt. carter issident jimmy mourning the sudden death of his 20-year-old grandson. mr. carter made the announcement during his sunday school class in georgia. the 91-year-old shared news he was cancer free. the cause of jeremy carter's death is being investigated. from the bloomberg first word death, i'm mark crumpton.

get a quick recap on how markets closed. it was a relatively boring day right before the close, stocks really surging higher on no news. 22%, but youown did see that big search. joe: basically all day and every asset class there was no news. sorry, low-volume. no action anywhere. you had a sell out there, but everything was so choppy and it felt like a vacation. alix: part of what was able to surn around the markets wa energy stocks in the s&p green,g into the telecom, tech for the out

performers. it was boosted by a little bit of risk in oil. joe: i want to dive into the terminal real quick. spain had their election this week with confusing results. it doesn't look like anyone is going to be able to easily form a new government. you can see that reflected in this chart. this spread between 10 year yield in spain and italy shooting up to nearly 20 basis when it was closer to five just a few days ago. it really reflects the political uncertainty in spain. the spreads were wider earlier this summer but it does reflect this jolt of anxiety from the fact that it was better than expected and the establishment parties across the board did pretty weak. alix: staying on that topic, we are joined now by tina fordham. tina, thank you for joining us. such a pleasure. election hassive cost some political uncertainty and is reverberating in the market. how do you see this potential outcome? >> we are looking at months of

negotiations and the possibility that a condition for forming a government would be a referendum, a binding referendum on independence. that would be difficult to come by but it would be in the mix. if you can't rule out a second election. it comes on the heels of the portuguese result, and it highlights what we talked about in our fox popular political risk theory. populi political risk theory. joe: you mentioned there is a rising risk of independence. are we in a position where one of these small parties will be the kingmaker, just to upper votes?- to up >> it will be difficult to exchange because a constitutional change requires a qualified majority, but what we can say from this, and we also see it in scottish independence,

is that these things don't go away. they sort of repeat over the long-term. alix: this is the chart that came from citigroup, looking at what potential coalitions could happen to get that 176 seats needed to form a government. the ul has two seats but could be central. something else that happened in this election, back in october it looked like the radical left party was dead. they had been falling all year and people thought because of thene and terrorism -- but they came back nicely over the last month and a half. what happened? >> it's hard to say without more detailed exit polls. we expected latebreaking surges but they were trailing so long that they were starting to see like a spent source. then this citizen party came

from out of nowhere ended up doing so well. i think this highlights how centrist parties will always have difficulty capturing voters from the other side, and the centrists will take in those who feel dislocated politically. rise ofo highlights the these populist parties and how different they are in creditor countries where they are more anti-immigrant and personal countries were they tend to be -- joe: he didn't tone down his rhetoric. they are no longer calling for debt restructuring. they pulled back. >> as did syriza. they ended up being the replacement for the mainstream party on the left. alix: if you talk about the change he has seen in politics, back in december, 2011 you can see how the popular party fell off a cliff, and the centrist came out of nowhere.

it's not just spain, it's also france because the regional election didn't pan out as we thought. it's greece, it is italy. talk to us about it. >> i would add another to the mix and say the u.s. has a fragmentation. i don't see this as a purely european trend. the outside candidates, the popularity of someone like donald trump, it was by no means an orthodox republican, is part of the new political reality. the bottom line is the new parties, with the exception of syriza, don't seem to have the pull power to win outright majorities. leaders won'tthe have very much political capital for reform, or to address real crises, which feeds into our risk outlook for the year ahead. you think thato new media is contributing to this fragmentation of politics?

the fact that there are all these different avenues that candidates can bypass traditional media, they don't have to necessarily tell the truth of their twitter feed, because who will stop them? when you weigh the different factors driving this change, how much would you attribute to the way communication has changed? the different means that are available ample five the existing trend. people say the same things about advertising when it came onto the scene, or radio, new media is accelerating. the element of political theater is also important in u.s. politics. i'm also interested in the consumer model. i do like his shoes, i will take them back. i do love the whole album, i just want the one track. we also get bored with our politicians when they don't do with we want. is thing i have identified how people are increasingly choosing or identify with leaders who like they do rather than who are electable or the

best choice to lead the country. i have talked about the rise of political narcissism. alix: that points to the fact that there is a whole segment of the world population in the developed world that it's what these leaders are speaking to. euros double that of the zone so on some metrics they are doing much better. >> that's why we say it is not just the economy. markets are overly focused on the growth as an indicator for incumbentce and political stability, and i think we have to look at corruption perceptions that also played a role in spain and portugal. are often elected with a smaller majority. this kind of outsider insurgency is not enough to overturn mainstream parties, but it is enough to erode confidence in the ability to do very much. alix: tina fordham.

we will talk more about 2016 in the biggest risks she sees in the global economy on the other side of the brick. eak. ♪

alix: i'm alix steele. "what'd you miss?" it's time for the bloomberg business flash, the biggest business stories and news right now. j.p. morgan chase has agreed to pay $150 million to individuals hurt il-1 and wales trading loss. the company was sued in a lawsuit, describing risky trades.

health officials are investigating to bully for possible links to a new outbreak of a different strain of e. coli. five people reportedly became ill in kansas, north dakota, and oklahoma. they had all eating chipotle away in the week before the real mess started. flick pulled wars" in $240 million in north american theaters, topping a record set last summer. it had already broken ticket presale records for total worldwide se sales. my husband is seeing it again right now for the second time. that's the bloomberg business flash. still with us is tina fordham. tina, you have 2015 closing itself out. what is the biggest risk? >> you know my research well enough to know i will not tell you a thing.

what we have done is mapped out the risks ahead, and organized them into two categories, old geopolitical risks and new socioeconomic risks. we talked about how they are increasingly converging in a world without leadership or institutions to solve global problems. we see that in the refugee migration crisis in the threat of terrorism. europe, orse affect especially affect europe, so european political risk is quite acute. it's geopolitical and socioeconomic risks i am most worried about, because that will be difficult for leaders to deal with. joe: one of the things you are concerned about is angela merkel's political future. during the peak of the refugee to the winter your people have been coming in -- but there were concerns that her poll numbers were collapsing when she was a beacon of stability.

what is your future? a vote oft survived confidence and she barely boldly called that. but that was from her party. her party still supports her, which is crucial. the risk of merkel exit, we identified it as one of the top risks, is a serious one. one of the things we say when we think about political risk for 2016 is we haven't got a lot of major elections. the u.s. and a couple others. but it is all about 2017 for europe. the year ahead will lay the groundwork. i think merkel stands a good chance of going on to a fourth term as chancellor. the extent to which europe relies upon her to keep the show on the road, not only with the eurozone and the eu crises, but to deal with the syrian conflict, pressure-ukraine, etc. is striking.

it's hard to think of another later, german or otherwise, who could really lead the way in europe like merkel does. alix: could england fill that void? >> no, because britain is not a member of the common currency. alix: but in terms of stepping up its political power in getting more involved rather than stepping away. could that be a possible solution? >> i really don't see that is very likely. if anything the election we had in the u k this year really illustrated -- there was very limited discussion of the uk's role in the world. it was very much on domestic concerns. remember that brexit and the whole referendum, which is one of our most politically risky signposts, does not only mean that the u.k. leaves the european union that the s&p goes for a second referendum and brexit leads to break up. they're all quite interrelate in, but i do not see the

interest or capacity for the u.k. to replace germany. remember, the eu was founded on the franco german access. joe: going back to germany, if merkel is not victorious in 2017, whether it is because she loses her doesn't run or whatever -- you talked about europe's reliance on her. because she is it is the leader of the most powerful, most stable state? if someone replaces her, do you think they would likely have as much influence, or does she have something the other leaders don't have? >> she has the reelect factor. she isple that know he a quantum physicist and she annoys the other mps in germany. she breaks every problem into little pieces and she gets politicians to deal with the components of the problem rather than do what politicians like to do which is grandstand.

that's really the secret to her success. she also gets votes from outside, which i think another politician from her party might be less successful at. markets might not dislike a german chancellor, because they would probably surmise it would lead to more fiscal loosening and other things. thatmight be true, capacity to step in and knock heads together, to go to minsk done, i think is most likely with another leader. we have key person risk when it comes to the eu. alix: it seems like you are more optimistic that she will get reelected for a fourth term. think her leadership is

more at risk now than it any time in the decade she has led germany, and that precipitous decline in her approval rating -- the will see that spike again in the summer sailing season. people don't like immigration. it's now the number one concern and ie european public, was quite interested to see that for americans, terrorism is back to being number one. joe: quickly, what are your odds for the vote? >> i think it is a one in three chance of brexit. i have conversations with many people in high places and low places to look at how these things evolve. there is not the political oxygen at the moment to deal with britain's wishlist because of the refugee crisis. the deal which is doable,, will come later. public opinion is still very fluid. i think the one survey i quite like talks about how the u.k. public sees brexit or how they

feel about the uneasiness. the any of you and is really captures the essence of what the campaigns need to do to persuade. that no voters are more galvanized than the fringe voters. alix: thank you so much, it's a pleasure to have you. tina fordham. coming up, the woman who warned against the housing crisis next. ♪

alix: i'm alix steele. "what'd you miss?" new moviepictures's has put tension on the housing crisis and key players who

predicted the demise. >> how are you? >> i found something really interesting. >> the whole housing market is propped up on these bad loans. they will fail. >> the housing market is rocksolid. >> its timebomb. yet anotherwas financial voice you saw the trouble brewing. our executive editor joins us now for more. so who was she? what happened? have this new weekly podcast and every week we try to find someone who is interesting but not necessarily that well-known. this week, in celebration of "the big short," we talked to the author of a financial blog called "calculated risk." he's great. in 2005, 2006, he had a co-author, and her name was tanta. she was absolutely amazing in

calling some of the issues that were happening in the housing market, forecasting a lot of the trouble that the guys you will see are talking about getting all the credit for. joe: so she died, she passed away in 2008. but those years she was blogging, everybody was reading her. >> that's right. i love "the big short." i love the movie. i read the book. but when you read the book and you watch the movie, you get this sense that there was this select group of smart hedge fund guys on wall street who saw it all coming and they made lots of money off it. it's not entirely true. there were really smart people who also saw trouble brewing. alix: what did they see that so many other people missed? instance, was working in the mortgage industry, and she was really

familiar with the ins and outs and technicalities of the industry, including documentation for loans. she noticed the trends for low or no dock loans early on. she also noticed that a lot of these papers were based on incomplete information that only took in one actual housing cycle. everything had been going fine until 2004. that doesn't necessarily mean house prices are always going to go up, right? joe: what was the most interesting thing you learned during that conversation? >> well, you and i both know that we started our careers around the time when "calculated risk" was writing about all these things. it was a walk down memory lane for me in terms of the financial , and howre influential it was in the run-up to the crisis. another thing that struck me was how well "calculated risk"

chronicled the collapse of the housing bubble, plus the actual recovery. they managed to get one right.on alix: that podcast -- you can get it now. also stuff. joe: thanks for joining us. alix: coming up, what you need to know to gear up for tomorrow's trading. ♪

alix: i'm alix steele. "what'd you miss?" -- nikemiss this earnings out after the closings on o tomorrow. we will look at futures growth and how much they had to discount their products to make a sale. joe: a lot of these regional

surveys have been pretty ugly still, but not seeing that bottom in the u.s. manufacturing sector. this time we will look for the richmond region. alix: that's all for "what'd you miss?" thanks for watching. ♪

mark: i'm mark halperin. 'm megannd i megan murphy. mark: on the show tonight, trump versus clinton. the new hampshire about in rubio doubt. but first, lindsey graham is out. today the senator from south carolina announced his suspension. graham was never expected to be a tight one in this race and he chose to leave on the last day you could get out in time to have his name taken off the south carolina primaryal