here in new york, good morning. i am betty liu. here is what they are watching, the fed, is janet yellen doing enoughhelp the u.s. economy? hubbard joins us, saying the fed got a few things on about the economy and he will tell us what exactly. then, lower for longer. oil demand will keep sliding, does that mean lower oil prices? what is ahead for hedge funds after a rough year that saw a growing number of liquidation? still, there are quite a few winners to talk about. we have breaking news. out. of economic numbers you home sales and consumer sentiment, those numbers are out. amey. first up, r

ramey: 490,000 new home sales for the month of november. this is less than what we were expecting for the month of november coming in at 500 thousand, so amiss. for the this is a miss month before. you're looking at the revised number for october of 470,000, so a miss. that would have been three a row of gains, but we are missing that. let's go to university of michigan consumer data and that is beating estimates, coming in at 92.6. iswere expecting 92, so this meaning we are seeing five months in a row of rises and better than what we saw from prior 91.8 for the month of november. with see what is happening the markets. the markets opened in the green earlier and this is where we

are. the markets looking like they are continuing to rise. the s&p 500 is up by three quarters of 1% and the dow jones is up similarly and the nasdaq up by about two thirds of 1%. we are in positive territory. down to the bloomberg territory, leading that the -- let's take a look at the leading and lagging. let me toggle through and there we are. we can see that energy is the leader right now. the past from half-hour and that by nearly 2%. followed by materials which is up by 1% and telecoms up i nearly 1%. in the sector.g let's take a look at oil and how bad is doing. nymex crude is seen their third day in a row of gains, just like our markets. right now, we are near session highs, up by little more than two .5%. overnight, the industry sponsored petroleum institute cannot with their latest

inventory numbers. that showed a 3.6 million barrel fall and that may be some factor in what is happening. also, we have talked about how traders have been pushing oil higher on the possibility that the u.s. will lift embargo on oil exports. we are looking ahead to 10:30 a.m. when i get the numbers showing the data from the past week with an expected rise of 1.2 million barrels. let's go over to rent crude -- bren crude. we did see a lot of bread,t but rising today and break in that fall, up by about 2.25%. yesterday, we did see brent and momentous late hit parody, which has not happened since january. that means the world is in the global left and we might not see the calibration until 2017. betty: thank you. let's check in on first word news with vonnie quinn. thank you. officials in iraq are claiming islamic states were bombing across the country that killed

at least 15 people. the government says it forces are gaining the upper hand over the militants and ramadi. iraqi troops of reach the center of the capital. it is the strongest advance that they have seen since last may. a human rights group says russia may be guilty of for crimes in syria. amnesty international says job andets our cluster bombs are densely populated areas. amnesty international says hundreds of civilians have been killed. robert durst will face a murder charge in los angeles. they agreed to execution by mid-august. in newbeen jailed orleans since march. they say that he killed a friend who is helping police investigate the disappearance of his wife. view 24 hours a day powered by our 24 hundred journalists and more than 150 around the world. betty: thank you. much more ahead. the warning from republican presidential candidate john kasich about what he thinks may

happen to small and midsize banks and when he says he would do with dodd-frank if he becomes president. also, donald trump says we could be in for a big fat bubble, and if it pops, watch out below. why trump may not be the only one who was worried. ♪

>> my cohost cory johnson is off

to become a little more about what is going on in the markets. a slew of economic news and getting it all in before the holidays kickoff. ine in the house with me and studio on bloomberg radio, i want to welcome everybody on bloomberg tv to bloomberg radio. mike regan, a member of the u.s. stock team, and on the phone, from bloomberg intelligence to talk about the housing data. mike, let me start with you. we have a continuation of that positive momentum that we saw yesterday. mike: i think that is the keyword, momentum. yes, the economic data was decent, not really blowing anybody out of the water. decent economic data, but it is that funky time of year. in the most time wonderful and funkiest time in the stock market. i hate to even say this because it sounds so ridiculous, but there is something to this notion and people debate what

the reason is. the traditional reason you've read in the stock trader's almanac is, well, for one thing, people just get in a bind kind of mood this time of year but you have year-end bonuses, active fund managers trying to show performance. all sorts of names that sort of conspired to cause this end of your strength. it is not necessarily look like january or december will be as strong as it normally is, but we are getting this bump at the end of the month. one really fascinating thing i saw with the research report out from birinyi associates and they talked about monday was a funky day on the market. it opened very strong, triple digit gains in the dow jones and then it faded. not really a nod of news, and that we had a strong rally at the end. birinyi associates pointed out, that was the payable date for dividends and capital gains on index funds and so much of the money has flooded into

passively managed index funds that track the market. that is the day when their dividends are paid. what happens to dividends? they are reinvested in the fund. the money goes back in. an amazing technical thing that could cause a rally like that. a lot of people probably know that it's happening and tried to get ahead of it. it is one of those funny parts of the market. you expected to be predictable, but here we are still sort of surprise. 1/3 of500 down about 1%. ok, drew, i know you covered housing, and we did get a ton of economic news. we to get data on your phone sales. break it down. drew: in general, it continues atthe steady path forward least from demand. underline markets have not changed much. rates are still low, lending is somewhat restricted and improving.

risees are expected to about 4% in the resale market and about 11% in the new bull market. when you are talking about the strength of the market, it is important to distinguishing the broader "housing market and combo the market," because builders have to deal with challenges that the existing market does not and that is mainly the supply chain. >> that is a good point. in general, the housing market, we care more about existing home sales then activity. drew: wright, the existing market is about 90% of total u.s. home sales from the historic normal about 85%. as far as economic growth is concerned, the residential construction brought single-family and multifamily which is important. key in termst so of an indicator of what is going on broadly? home markete new

and related construction creates jobs. for every new single home constructed, you are creating about three jobs and for a multi-family unit, you are creating about one general. it is one of the areas how housing drives things. >> mike, go ahead. it dries things. mike: do you expect to see a flurry of purchases as people realize rates are going up? how do you gauge what is natural strength in the housing market and what is people trying to finally get off the fence and buy something who are worried about potentially higher mortgage rates? dew: it is difficult, -- to say. is difficult this time is different because it is the first time the fed is making a move, so it is possible you will see that. as far as rates are concerned in the near term, i would not expect a major impact on housing. the problem comes as rates continue to rise and it is more

of a key militant effect. more they keep elected effect. really, it continues to rise with a modest 3%. affordability falls back to 2008 levels. given the way that consumers likely digest increases in monthly cost, that could be a bigger concern. >> what is more important, they affordability issue or is it the issue of home prices going up, home values going? up and people feeling kind of fluffier for a lot of americans, their home is their biggest asset. drew: we still have over 5 million homes in the position, and that is part of the reason why there is not a lot of inventory on the market. a lot of those are concentrated at the low end of the market, which is part of the reason the first time home buyer has not come back because inventory is not there. mike: i am a stock market guy, so i always went to pull it back

to the stock market. i am looking at the s&p 500 homebuilders index of 13 homebuilders. pretty stronger, about six point 4% for that index. not clot buster, but compared to a pretty flat market, most people would take that. looking at the best movers, top billed corporation, installed d.r. horton,ucts, all up 26% or more. on the lower end, kb home's, trackpoint group, is there anything telling them that? is it individual companies and how they are performing or is there any trend you can read into on what is going on in luxury homes versus starter homes? is there any sort of gradation that as an investor you would look at? >> about 20 seconds. think ofically, you this as a rising where it lives

on both, but we have seen performance in valuation across on both sides of the group. it really has to do with what markets are focusing on. it has to do with how you are leveraging your cost, driving gross margin, so all the broader market is definitely in play, it has to do with how builders are managing their business in a challenging environment. of hebdo skill expensive homes and some that are the first time buyers. we have to leave it there. through ready november intelligence talking about housing market and mike regan of our bloomberg stock team.

betty: welcome back. turning to presidential politics, we are 41 days until the iowa caucus. donald trump has dominated the conversation and for the underdogs, it has been tough to get on the radar. he caught up with john kasich on the road to new hampshire. kevin joins us from manchester. you set out with john kasich on .is campaign bus

he is pulling i believe in the single digits. what is he going to do and what did he say? kevin: you know, he says that a lot of voters appear in the granite state are still undecided. i have to be honest, to his credit, a lot of the people i talked to tell me that the polls are useless and they are trying to make up their mind between the more moderate and more independent minded governors floridan kasich, former governor jeb bush, chris christie, and to some extent marco rubio, but some people think he is too young. i really think it is fluid. this is going to move very quickly in the next couple of weeks. some would say that governor bush has gotten a bounce back after the debate from going after donald trump. governor k-6 thinks he has a shot. and he isnow he does, also focused on the economy and

what policies he would bring. i know you talked to him about that dodd-frank, let's play that conversation about dodd-frank. john kasich: it will run the medium and small banks out of business because the rules are so heavy. if you are a big thing, you can absorb regulations, but if you are small, it crushes you. we are seeing the ones we know in our communities as the ones that are threatened. the last we look over three years or so, small banks have actually gone up in value if you look at stock prices. how does he testified that? kevin: i think that a lot of other small businesses would say that the compliance cost and the regulatory burden placed on them as a result and the implementation of dodd-frank, they argued that this is a one size fits all approach that does not really work, that big banks -- onside, that smaller banks

and community banks should not be held accountable for the same regulatory regime as big banks because they are not really the ones who caused the financial collapse in 2008. that is a much larger debate, but the bottom line is what i thought was interesting is i asked the governor, would you repeal dodd-frank? he said he would keep parts of it. i thought it was an much more nuanced approach. i have interviewed carly fiorina and she said she would get rid of it all. trump has said, so dodd-frank is clearly on the mind of these candidates. i think the much more nuanced approach is there to say the least. betty: more of a middle ground ever for compromise. thank you, kevin. staying in 2016, we have to talk trump. economic clout hovering over the

u.s. economy because he spoke to a crowd at a rally in iowa on saturday and trump said, "the market has gone down the last couple of weeks. we could be in a big fat bubble, and adaptable crashes, it is a problem." economyscussed the while taking shots at his rival jeb bush. economicbard is an adviser to jeb bush and former chairman of the council of economic advisers under president george w. bush. i know you have also looked at john kasich economic plan and you do agree with parts of the, but when you hear trump say that we are risky of a bubble, you say what? i do not think donald trump is a serious candidate and i don't think his views on the economy are well formed. at the same time, there are dangers sounds out there in the economy and serious policies

needed, but it won't come from mr. trump. betty: where are the danger zones? glenn: i think we have an economy that is growing but needs to grow much faster to opportunity for more americans and that requires a better fiscal and regulatory policy. it is not a time for slogans but action. betty: we have not had any major help fiscally, so it has been a lot about the fed. you say that the fed, even though they raised interest are stillt there areas of the economy that are missing or they have wrong. what do they have wrong? glenn: we have been depending too much on the federal reserve and not enough on the government. this point isy at not going to solve the labor force for dissipation rate problem, or opportunity issues. that is an issue for fiscal policy and regulation. it is not so much the fed is wrong, but they are the wrong tool for the problem we face. betty: do you think they made the right decision by raising rates last week?

glenn: absolutely. i think it should have happened earlier. there is no reason for this economy to be a life-support monetary policy. we need to be on a more normal monetary sitting and the fed needs to not just raise rates by five basis points but tell us more aware they are going, what is the roadmap for the future. betty: where do think they are going? glenn: i don't think we have a good communication strategy. we do not know and that is unsettling for markets. a fed meats to tell us what they are watching and when doing no when we are there. betty: as we mentioned, you have advised or you are advising presidential candidate jeb bush. being that you are saying that we absolutely need help from washington, fiscal help in order to get the economy going even more, what exactly do you think is going to be a key move if jeb bush ever gets into the white house? hasn: what governor bush said many times is that he

really wants fundamental tax reform, he wants budget reform to make sure we can invest in the future and not just the past, and that he wants regulatory reform. all those are doable. there are people in both parties who want to do them but we had not had the presidential leadership to do it. me something specific. let's say on tax reforms, what would be the first step? what do you need to do when you talk about corporate tax reforms or tax reform in general? glenn: i think governor bush has emphasized the need to bring down marginal tax rates on business income and pay for that by broadening the tax and then use the tax code to give opportunity to more people. strengthening the ei tc, cutting the payroll tax on older workers, and cutting marginal tax rates on secondary earners. these are things that are doable and we can afford them. betty: there is some debate on whether we can afford them and how we will pay for things like that.

i remember when you were advising mitt romney, one of the headlines was, mitt romney promises to create 12 million jobs. we have created audience and millions of jobs through the obama administration. do you give them credit for that? aren: first of all, jobs created by the men and women in the private sector who make those decisions. no president, republican or thecrat, deserves all credit or blame. the real issue for the american people is not just jobs, but incomes. the right tax reform can raise wages as a less business investment. or we can just be stuck where we are now. betty: how do we get wages moving? get wages moving if we raised productivity parried the best way to raise productivity is to improve the climate for investment. the people want to be in america again, which is a statement about tax reform, about regulatory reform, about drupal steps we can take. betty: would you repeal dodd-frank? glenn: i would not repeal

dodd-frank. i think there are pieces of dodd-frank, particularly derivatives that are useful, but the question is, didn't make it safer? the answer is no. i think we need much better legislation that dodd-frank. congress acted before it., not an affiliate pattern. betty: thank you so much for joining us. advisor toal presidential candidate governor jeb bush. much more ahead, diamonds in the broth. a year that saw nearly 700 funds shut down and it produced a couple of jams. we will show you the year's big winners in the hedge fund world when we come back. ♪

betty: we are live from bloomberg world headquarters here in midtown manhattan. i am betty liu. we are about to get breaking news on oil inventories. they have become more and more important as weeks go by and we see oil prices continue to slide near decade lows. oil inventories are out. rami innocenti of has the breaking news. : the survey we were expecting was 1.2 billion barrels -- million barrels positive. this is a huge turnaround we were not expecting. the prior number we saw was 4.8 million barrels. again, the actual number we see crossing the bloomberg terminal, -5.8 million barrels last week, a very big surprise. let's see what is happening in nymex crude -- how that is reacting right now.

up 3.5%. right now we are seeing a spike. it hit a session high earlier of $37.24. we see the spike right now, $37.37 right now. this also dovetails with ,vernight's inventory number showing a 3.6 million barrel fall. let's see how some oil stocks are reacting. up until the inventory news -- they had been hitting the highest in a week. we can see the majors are barreling ahead. exxon mobil is up 1.5%. marathon oil and williams company are up on the order of 5% to 6%. year to date, marathon and williams have lost half of their market share as oil has lost 30% of the market cap. airline stocks always react

quickly to the price of oil. american airlines and delta, interestingly, are down. you might have expected this would have gone up because, of course, a lot of the cost has to do with the price of oil. united airlines is flat right now. let's do a quick market check to see how the markets are reacting. by .6%.500, up an interesting surprise look at the oil inventories. a draw down. betty: absolutely. we were not expecting that by any means. thank you. let's check bloomberg's first word news. vonnie quinn. vonnie: reinforcements rushing overseas. troops called for help after suffering setbacks. afghanistan defense minister says security forces have been pinned down for days by the militants. more than 30 hours after that

huge china landslide. dozen are still missing. no more prisoners will be released in washington state until a computer glitch that freed inmates earlier is fixed. most of the errors are small, but a few got out nearly two years early. amen from the bonhomie -- stealings accused of script. he offered to sell scripts and private sex tapes to undercover agents. he is being held in new york city for identity theft and copyright infringement. drivers will put $1.6 billion back in their wallets during the holidays thanks to cheap gas. gas buddy says prices are under two dollars a gallon, this at 70% of u.s. filling stations.

global news 24 hours a day powered by our 2400 journalists and are 150 bureaus around the world. i am vonnie quinn. betty: still to come, it has been a long, winding road, but for the first time, tonight, the beatles will hit streaming services like apple music and ify.fy -- spot how will that change the music industry? ♪

carol: you are listening to the bloomberg advantage. i am carol massar. cory johnson is off on this

wednesday. --want to talk about our about the energy space, the worst performing industry group. us for aickman joins little bit more on the -- stuart glickman joins us for a little bit more on the energy space. if you love it all together, it has been a tough year. the whole group down, but the big majors took the brunt of the hit, if you will. glickman: yeah, it has been a year a lot of the energy companies would just as soon forget. a lot of the producers are taking it on the chen, mainly because crude oil has been decimated so badly, but it has been almost across the board. in fact, every sub industry in energy, except for the refiners, is in negative territory this year. carol: what does it mean then, for 2016?

it is tied to what happens in energy prices. if energy prices go up, there will be pressure on the refiners, and they can do better, but what are you anticipating for the price of oil do we stay around this level, go up from here -- what are your expectations? mr. glickman: if i look at the forecast to the sister company 52 s&p iq, we're looking at dollars a barrel in 2017. you, get that two ways. the bull argument is that is on a percentage basis, considerably higher in 2016 than where we are now, a healthy uptick. my colleague jody points out the correlation between crude oil as a commodity and energy stocks, it has been rising recently. it is double what it used to be earlier this year. so, that would be positive. on the other hand, the bear

case, and i think we cannot forget this, a lot of producers have real difficulty making some of these shall place in work, economically, at sub-$60 oil. carol: what is the breakeven for making it work for the shale players? theglickman: i think $50 is play for a lot of shale place. -- plays. you are still making decent internal rate of return, but those are few and far between. most companies, what they have been doing, they have been ratcheting back their plans for capital spending in 2016, and, i think, they will continue to tap the brakes until we get crude oil meaningfully higher from here and $46 a barrel is not meaningfully higher. carol: how does opec play into

o-pec.or as we call it n they have been lucky so far --ause government have been have had a lot of cash on hand, but that could change and we already see troubles in the middle east in terms of sovereign government and what they need to do. mr. glickman: it is an interesting strategy being pursued by saudi arabia. it is the first time they have done this in 30 years, pursuing market share instead of trying to prop up the price. it is a reflection that u.s. producers, in aggregate, function effectively as a swing producer. that was something that was not true five years ago. so, they essentially abandoned their role as a cartel. it is everyone for themselves, and they're all producing as much as they can. saudi, of course, is the main orchestrator of the strategy. i was sort of -- i guess the analogy i would use is it is,

kind of, like a dominant airline using predatory prices to drive another carrier out of the market. they are hoping some of these shale players will pull up stakes and move on. the difference is there is an awful lot of inventory of wells that have been drilled, just not completed yet. if prices move up, let's say enough u.s. players pullback hard on capital spending. as soon as prices move up, let's say you get back to the $60 level -- they could very easily jump right back in and it does not take a lot of time to drill a new well. we saw some of his earlier this year in april and in may when oil prices drifted, very briefly, above $60. mr. glickman: -- carol: let me talk about the individual names. slumber j, you have a buy rating.

exxon mobil. you buy at these levels. they could go lower? mr. glickman: sure. you have to have a cast-iron stomach to be investing in energy these days and you have e on the longer term. the 12-month price target suggests a decent amount of upside and these are good entry points for them. the thing with exxon mobil is this, to me, feels like a defensive kind of environment, and you would rather be with companies that still look like they are going to generate positive, free cash flow in 2016. exxon is one of a few companies that are going to be able to do that. they are among the most conservatively run companies. schlumberger, by definition, their revenue stream is really up-spend ofcap those exxon -- of those producers like exxon. on the other hand, they have a

much more international orientation and some of their peers, and i think international, upstream spending, has not been hit quite as badly as the u.s. has. the u.s. is much more of a dynamic, short-term kind of market. carol: just a few seconds left -- talk about valerio energy -- a bullish run. if you are trying to short the stock, you got hurt. i'm guessing a lot of folks did not because they understand how refiners work. you still have a strong by. you see more upside from here. mr. glickman: i do. valerio has done -- valero has done well, as you pointed out. , closee well positioned to export markets, which continue to go higher, i think. the company has pretty strong extraty utilization, refineries, and i think it will be fine. carol: what is the big question -- the big issue investors

should be watching when it comes to the energy path next year, and i have just about 20 seconds here. mr. glickman: i think the biggest issue is the potential for dividend cuts. we saw candor morgan cut its dividend by 70%. we have seen marathon cut its dividend, chesapeake. carol: so just watch for the dividend plays and what could happen. we have to run. stewart glickman. ♪

betty: good morning, and welcome back to bloomberg markets. it is time for the bloomberg business flash, a look at some of the biggest business stories in the news. taken theouthern has bit closer to a proxy fight. the canadian pacific's ceo says the company is ready to go to norfork southern's investors if the board will not discover a takeover. carl icahn has enhanced his offer to buy pep boys, promising to top any bid from bridgestone. ae new offer goes up to maximum of $18.10 a share. bridgestone has until 5:00 p.m. eastern today to respond within new proposal. we will talk a little bit about active investors in just a few moments. that is your bloomberg business flash this morning. let had to abigail doolittle live from the nasdaq looking at

two early laggards on a day when looks at we are making it three for three on a rally. abigail: you are right about the rally, but the losers -- the company missed earnings estimates and guided revenue down. even so, a number of analysts are down -- out defending the stock, saying the earnings are better than feared, suggesting a bottom might be taking place. saidt suisse came out and something along those lines, sane while the second quarter guide was well below expectations, it should mark a bottom. turning to bed bath & beyond, the shares are down after the company pre-announced its fiscal third-quarter earnings, citing softer in-store costs, and there bankber of cuts, including of america, suggesting the stock may drop another 10% on what has already been a difficult year. betty: indeed, difficult is

right. thank you, abigail. abigail doolittle at the nasdaq. bloomberg intelligence is digging deeper into what to expect for 2016. we have looked at what is ahead , andtf's and biotech's today we're taking a closer look at the media world. we are joined by bloomberg senior intelligence analyst paul sweeney. a big story today -- it is not wars."and "star it is actually disney getting out of its stake in fusion. what happened here question mark paul: this --happened here? paul: it was an attempt to appeal to millennial's, maybe bilingual millennial's and it never got off the ground. disney said they would step back because in the interim disney has made other investments trying to tap into the millennial market. e.ey put $400 million into vic

the amd network, which disney owns 50% of with the hearst companies, they are going to create a network targeting millennials. betty: they were doing that because a big trend -- i assume people are looking at -- is the large part --- a huged cutters, who are part millennial. number that dohe not sign up for pay-tv and that is a real challenge. if you are people are paying for television and paying for a big bundle of cable, that impacts the cable companies, the media companies that license channels to the cable companies. it is really an issue. a lot of the media company's are thinking about how to preserve the current ecosystem, which is so profitable for everyone involved, while the same time

trying to pursue different strategies, technologies, to reach some of these demos. betty: what are -- what prices are going to go up, what is going to go down --what is your prediction? paul: the cable bill is likely to go up again because most of the programmers have long-term contracts that include price increases every year. consumers probably will be paying more, but the real challenge is how many of those consumers choose to either drop the cable service were never sign up, or go to a skinnier bundle. over-the-tope players streaming content directly to consumers, that stock continues to do well. up another 100% in 2015, driven by subscriber growth. that is coming, to a certain degree, at the extent of -- expense of media companies. betty: do not forget amazon. paul: exactly. betty: pay are getting of their

quickly. onego, the beatles -- minute past midnight tonight, you'll be able to stream the beatles on nine streaming services. how big of a deal is this? paul: this is a big deal. it is the beatles, and the beatles are still arguing the most influential musical act out there. it drives businesses across the board. they have been holding back -- the state has been holding back the content from the streaming services because they felt they were not getting adequately paid, and i think what is happening is streaming is the only major growth driver in consumption. people do not want to own music. they want to stream it. apple had to come up with an economic model that made sense for them and for the beatles, and that is what we are seeing here. betty: paul sweeney, thank you. another sector we are watching -- it has been a rough year for hedge funds in a volatile market. in fact, nearly 700 of them have closed since november. there were some winners -- a

handful of multibillion-dollar firms like citadel -- they managed to post some gains, as you can see. ken squire, the founder and president of 13d monitor -- we are joking that the beatles of the opening act for your segment here. mr. squire: it is nice when the beatles open for you. of fun fora lot hedge funds. it was not that great for you either, right? mr. squire: activism was down, a lot of the funds you mentioned were multi-strategy, and we were able to do better. bill ackman, in his most recent shareholder letter, said since hasinception of his fund he never had a time when he believes the gap of the portfolio holdings and their value is so big. we expect that to close and 2016 to be a great year for value funds and activists. betty: when you see evidence of that? mr. squire: well, first of all,

the market is an efficient market. the money should be coming back into value stocks. do very wellists when stocks are down for a couple of reasons. first of all, it gives them more targets. second of all, it is harder for bad management to hide when the , theyis down and third are able to get more support from shareholders when the stock is down. those factors bode well for activism. betty: what have you noticed -- in times of turmoil you really see who is made of the right stuff, and who is, kind of, just, you know, writing the tales of others. do you think that was the year --this year for the hedge fund world? mr. squire: i don't. if you did own facebook, amazon, netflix, alphabet -- though stocks did great this year and if you did not own those come it was hard to meet your benchmark and most hedge funds are not

paved on stocks like that. betty: but then they own the entire energy sector. mr. squire: some guy crushing energy as well. betty: and solar. mr. squire: you really have to look at the performance from inception, not just one year for a hedge fund. you cannot say this is a bad year for them. since inception, these guys have generally outperformed their benchmarks. do you think something has fundamentally changed in that world -- do you think something has fundamentally changed in investing that makes some of their strategies just not work anymore? mr. squire: no, i do not think something is fundamentally changed in investing. maybe in the hedge fund world, but you talked about, 700 funds that went out of business, it might be harder to start a fund and keep it going, and get the track record, he got there are so many opportunities for investors than there were 10 years ago when there were not as many hedge funds. hedge fund investing is not changed. these guys are still very smart

guys that have an analytical edge on many investors, and they will outperform over the long-term. betty: who gets your a plus this year? mr. squire: my a plus -- in the activist world, there were not many. a lot of the guys you mentioned get a pluses. icahn?bill ackman, carl mr. squire: they had bad years. it is the worst year for pershing square ever. it is the first years since our inception we underperformed the s&p 500. betty: maybe nobody gets a plus. mr. squire: c is the a plus this year. but since inception, they all have a's. ♪

betty: it is 11:00 a.m. in new york, 4:00 p.m. in london, and midnight in hong kong. welcome to bloomberg markets.

from bloomberg world here in new york, good morning. i am betty liu. here is what we are watching at this hour. oil prices rising after the u.s. government surprises with a drop in crude inventories. even some worries about the supply glut. we will look at where prices could go from here. shares of chipotle have been getting hard hit by this food contamination crisis. we will look at with the companies to do now. it is the business week cover story. from oil to metals, u.s. field stocks are getting hit by concerns the anti-jumping measures will not be able to cheaperhe industry from imports from china. we are now about 90 minutes into the trading session. i want to get to the markets desk. the market really took a leg up on this inventory number. remy: this was one of the

biggest piece of data people are looking at, and right now we are at session highs. the s&p 500 up .9%. the nasdaq is up about 7/10 of a percent. crude inventories for the last week falling, nearly 5.9 million barrels. that is the most since june. the dow right now is up by more than 100 points. it has donexth time that in the last eight tensions -- sessions it has done that. the s&p 500 is on its way to the second three-day rally in the last eight days. i want to show you the seasonality heat map. i want to direct your focus to this red block right here. this is the month-on-month top or drop for the s&p. right now it is -1.1%. yesterday it was -2%.

we are getting ever closer to turning positive for december, and for the so-called, at least, santa rally. we will see if we can get there. with the oil inventories, let's look at what nymex crude is doing. you can see the spike we saw at 10:30 a.m. when the news came out. now we are up -- look at that, by more than 4%. that is the biggest jump in the past two months. that is giving support to brent crude, which is the global benchmark. we also saw a spike at 10:30 a.m. let's bring that up and see what that is doing with brent crude. brent crude is coming up, just right now, up about 3%. thank you very much. brent has been trading at lows not seen since 2004. one of the thing that is interesting, yesterday, nymex hit parity for the first time since january. for theeeing that

second time in two days, at least to the, nymex crude is trading higher than brent, and up about 50% -- $.50 higher. nymex crude up 4%. up 2% here. oil stocks see the inventory dropped him. exxon mobil is down about 2%. williams companies really seeing a huge, positive bump. it had been down. it is coming back, up by about 10%. betty: thank you so much. let's check in on the bloomberg first word news. courtney donahue has more from the news deck. -- desk. courtney: russian jets have conducted airstrikes in syria since deploying to a base in late september. amnesty international says russia is using cluster munitions and unguided bombs. some part of cluster bombs often

remain unexploded long after the fighting ends, killing civilians. officials in iraq are blaming islamic state for bombings across the country that killed at least 15 people, but the government says its forces are gaining the upper hand over the militants. in iraqi troops are reaching the center of the provincial capital. it is the strongest advance against the militants since they seized the city last make it rescue workers recovered 16 more bodies from the sinking of a passenger boats in the indonesian sees. meanwhile, the navy was sending search ships. very was reported overcome by waves more than 10 people -- 10 feet high during stormy weather. global news 24 hours a day, powered by our 2400 journalists, 150 news bureaus

all around the world. i am courtney donahue. betty: thank you. much more ahead in the next half hour -- shoppers are hitting stores this week. we will look at how the weather might be heating up holiday sales. plus, chipotle trying to recover from this crisis over its food. we will look at what the food chain is doing to fight its way back. ♪

carol: all right, everybody. we welcome everybody on bloomberg tv. i am carol massar. love talking to this next guest. the folks at mastercard know what consumers are doing at any given second in terms of what they are spending money on. we are joined by sally who joined us in our studio. you guys know exactly what is going on.

set us straight -- consumers -- how much are they spending and one of the spending on? sally: look, it is all about the experience. the recession taught people that acquiring a lot of stuff was not really going to get them anywhere. we physically see people living closer to where we -- they work -- which means they are typically in smaller confines, and they can only have smaller stuff, so they can replace things as they want to replace things, but spending is robust. in the month of november -- the kickoff to holiday season, which goes november 1 two december 31, spending was up 43.6% year-over-year if you take out gasoline, which compresses it to 2.2%. carol: when you look at the retail space, break it down -- we talk about people spending specifically for their homes, travelingnding on

rather than more stuff. you guys see that? sarah: absolutely. think about this. last year with furnishings. we are showing huge confidence to buy durable goods -- the leading category in the month of november. right after that, restaurants -- over 8% growth, then lodging. those were the three. trailing, was department stores. struggles at the department stores. -- which mirrors the struggles and department stores. sarah: you look at small business spending -- spending with businesses with 50 billion or less in cells, that has outpaced total retail sales for four months in a row. it is up over 4.6%. you saw flat apparel in the month of november.

yet, we saw over 50% growth in apparel that was in small apparel stores. people wanted to look unique and different. carol: what is your customer base -- can you say it is higher-end, more affluent, or across the board? mr. glickman: -- sarah: we are across the board. i can see the lower-income shopper, up to the very affluent. we really get that picture. we see 160 million transactions an hour. we basically see this picture from everybody. carol: here we are in december. is anything slowing down? sarah: ashley, the first two weeks in december were robust cap the key challenge, last years comp, we strengthened into the last week of the opinion remains to be seen if we beat those numbers. thus far, it has been good. we want to be really clear, it is about the experience that is leading here. carol: he talked with our

consumer reporter about how a lot of retailers are getting rid of shipping charges to bring in consumers. does that make a difference -- can you tell? think that ist the case this year, although this year for the first time, we saw a surge in e-commerce over the thanksgiving weekend. how much is amazon --can you tell? sarah: we can tell. whenever, we're not convinced it will continue post holiday season. the biggest thing people lack is time. if you give a gift, you are not responsible for the return. the key thing is we have not seen massive acceleration in e-commerce throughout the year. it has basically been steadily growing in single digits, not in anything further than that. to actually see it grow substantially and take away from bricks and mortar, when it is not a holiday promotion -- that would be the interesting thing.

carol: what does it tell you about bricks and mortar -- a demise -- we had a guest saying they are using technology to drive to the stores. sarah: we are seeing bricks and mortar is still king. people love the experience. i have a 24 yield daughter that i -- 24-year-old daughter that i tease and she likes to go shopping with me. we like to go out together, spend that time together. it does not mean that i do not buy things on e-commerce, but i buy things i know i do not have to return. overvember, for example, 58% of shopping done for electronics was done online. it is a commodity product. you know what you are getting their, where something like apparel -- the p we have ever seen is 29% of apparel being done online. carol: what does it tell you

when you look at the data, the trend benjamin seen -- what is it tell you about the overall economy, the health of the consumer, and the health of retail? i think the health of the consumer is great in united states and we see strength in the u.k.. carol: at all income levels? sarah: at all income levels, and we know people are working again, and we were confident labor statistics would come in good because we could see. people do not spend if they do not have a job. carol: you are a true leading indicator. sarah: we are a leading indicator in that regard. that is the key thing. we can see people spending at all levels. one of the reasons i am also confident about the economy, -- so theretailers, value for money approach is coming into spending. carol: we were talking about the

high-end retail space. what you see in that area, specifically? sarah: it is challenge. there is no doubt about that. what a 16 -- it is not chic to be chic. people are not showing their wealth. even though they have a community, we see of the highest end, high-end jewelry, for example, other luxury goods spending, and the highest and restaurants. they are not doing as well as is.basic, casual dining so, it is very just think it we see the pullback at the highest and. that is heard by the stronger dollar. that is with a tourism kicks in. -- that is where the tourism kicks in. carol: that is what i wanted to ask about the stronger dollar. you can see that impact. theh: there is an impact in southern part of the nets this -- a drop-off in latin american torts. carol: what about individuals going overseas -- more americans inclined to go overseas? exley, no, the spending

is staying at home, and with member, only 40% of americans have a passport. carol: unbelievable. get a passport, everybody. great to check in with you. about a month, the consumer looks healthy. sarah: we are positive. carol: u.s. of much. happy holidays. -- thank you so much. happy holidays. you are listening to bloomberg on television, on radio, and, of course, always at bloomberg.com. ♪

morning, and welcome back to the bloomberg markets. it is time for the bloomberg business flash. auto safety investigators have identified a -- eight fatalities linked to a faulty airbag appeared the latest crash occurred in july in the pittsburgh region.

a minor driving a honda accord under recall was killed. khanna agreed to what meet the largest -- to what might be the largest fine in history last month. the university of michigan's 19.6%,r index climbed to highest sincehe july. an increase is made possible does the sales rate for october was revised down. year-to-date, new home sales 4.5% helped by job growth and relatively low mortgage rates. that is the bloomberg business flash update. i want to head to the markets desk. we have a check of the company movers and the overall market being helped by some of the data we mentioned.

we have three pops and one dropping we have been talking about oil rising off the good u.s. inventory data drawdown of about 5.8 million barrels. right now, copper is also up by .5%, lending some tailwind to frequent mac ran. it is up for -- freeport mac ran. copper makes up 60% of the companies revenue. stock,on to another sears holding is also up today. sears is up by 6.7% right now. the rise here comes after fair home capital boosted their holding in the stock to 26%. earlier today we also talked about consumer sentiment coming in at its highest in five months, so that might be giving it a boost as people had to the stores. one of the stock to talk about -- hospital stocks, rising even

higher today. not so much of what is happening today, the coming after friday's news that about 6 million people signed up for health care under the affordable care act. hga holdings up by 4%. community health systems and tenant health care up on the order of 4.6%. go highermber could because coverage starts later than generate first. weight watchers is heading lower today. that stock is losing a little bit of weight today. go company is planning to beyond calorie-counting and has investors taking some profit. it is now down by two points of percent today. -- 2.7% today. excuseecember, they -- me, year to date, they plunged. shares had doubled when oprah winfrey said she would take market share. it is or michael.

they have a lot of oil -- loyal customers loyal to the point system, trying to change that. ramy: not that you are i would know about that. not that you would know about it, i should say. betty: well, how do you think i got here. thank you. staying with health and food, in the wake of the food contamination, chipotle shares are taking a beating after the first reports that dozens of customers in several states were sickened. can the chain recover from the food poisoning crisis -- e. coli, norovirus -- that is the cover story of the latest "business week" magazine. a morningstar analyst has a closer look at the company. he has a hold waiting on the stock. up nears told you grew one of the first chipotles, is that right?

rj: that is correct. i grew up near the first location by the university of denver. i have been following them for quite some time. betty: tina that would be your future. see -- you knew that would be your future. seeing what happened here, and we still do not know the source -- this is what is so fascinating about the article. he details how complicated it has been for chipotle to figure out what the source is the e. coli infection. can the company recover -- how are they going to recover from this? i think the question is, yes, they can recover, but you are right -- getting to the source of what the issue is is critical pad once consumers find out what the source was and the company can do -- directly address what they will do about food safety, i think that is quickly. that is when the clock starts ticking in terms of the recovery process. did we, they do not recover until you get the all clear from the governing body -- the cdc in north america, or other regular

tory bodies. once we have the clarity, i think consumers will be more forgiving. in terms of what they can do to bring people back, i think he will be a handful of things -- food safety marketing, and the company has already started to do that. more specifically, what they are doing to regulate the supply chain, get rid of potential suppliers and other at-risk situations. you also see promotional efforts. you will see some free food giveaways, and what the thing the company you might start to see -- they do have some chains. small parts of the business -- i could see them marketing some of those and get them reminded it is not just a chipotle store, but a multiple brand story. but they have to get it right, and one of the criticisms as the company has not explained enough to consumers what is going on. for instance, the founder, his last public comment about this was way back december 18, when he said food safety -- let's bring up the tweeps -- nothing

is more important to me than food that isests safe. this is from december 18 -- shouldn't they be out there every day updating customers? r.j.: that is certainly seven they could have done a better job of, being out there in front of everyday consumers, as opposed to the financial consumer. when the boston situation hit, situationrus us -- hit, they were at a conference. they could have been in boston addressing fears there. the critical thing is they need to figure out what the source of the issue was. at that point, they can better educate consumers. right now, any promises they make without having that issue, at least for the source is, will ring hollow with consumers and traffic will continue to suffer as a result. betty: right. the fourth quarter will be one of its first declines, if not its first decline in top sales ever. is there a timeline here? the stock is already down 30%.

what if this drags on for another six months? could, too.y well until we have resolution, i dig it will continue to languish. the fourth-quarter guidance -- i think it will continue to leg which. the fourth-quarter guidance -- that is shot. there is no way they will meet the number. we're probably talking about mid-teens declines. the question becomes next year, what happens there. i think you're talking about double-digit declines in same-store sales in the first quarter command potentially not raising -- reaching positive comp until the end of the year. it depends on when we have clarity over what really happens. then we start to build the trust act. betty: ok. we will leave it there. ,hank you so much, r.j. hottovy of morningstar. r.j.: thank you. betty: you can check out the full story on bloomberg.com.

we are moments away from the bloomberg -- from the european close. caroline joins us with a lot going on, you pick up, in the u k. figures, we have gdp not living up to expectations, but nevertheless, we are holding on a santa rally. you want a real picture of what a santa rally looks like in europe, check this out -- the dax, every single stock is rising. not one is falling. the same thing goes for france. every single industry group is rallying. the most important one, oil and gas today. the laggards are now leaders. stay with us because the european close is coming up next. ♪

betty: welcome back to bloomberg markets. i am betty liu. it is 11:30 a.m. in new york, and 4:30 p.m. in london where markets are finishing up the trading session i want to bring

in caroline hyde as we wrap up trade over the next 30 -- 30 minutes. caroline? caroline: yeah, betty, we finally got it -- the santa rally is on. we are playing catch up with united states, and this year's laggards are the leaders -- oil, mining, stocks, they are jumping, betty. the european close starts now. betty: and we are going to take you from new york to london in the next half-hour hour, and caroline, you are wearing my favorite color, but it is not the color on your screen right now. i am wearing the opposite colors, but i did hear you are a fan of red. we have a sea of green. this is the santa rally -- the dax