♪ guy: japan tells bloomberg that still has monetary policy. france's biggest bank will take a 900 million euro hit with fourth-quarter earnings. telecom companies set to have a profit next year for the first time since 2009. good morning. this is bloomberg "surveillance." i am guy johnson in london. .ane is in new york

'twas the night before christmas, what a stirring. tom: record warmth here. securely on the eastern seaboard . it is a solid 35 degrees fahrenheit. for our temperature conversion we go to our bloomberg meteorologist vonnie quinn. we are bringing the show to a halt. is sevens, that degrees centigrade else? -- centigrade delta? vonnie: i don't know. which --rd dividend owitz is joining us. before dawnappened

in a southwestern port city. the flames arrested in the intensive care unit and maternity ward. the saudi civil defense agency says the cause is unknown. the death toll is 7 from a huge storm that swept across the u.s.. touched down in mississippi, wrecking homes and tossing cars. it took 2 lives in tennessee. the high rain extended into arkansas, killing one person. tornadoes were also spotted in indiana. 2 migrants were sentenced to death in thailand. international rights groups criticized the verdict saying police tortured the suspects and used questionable dna evidence.

the foreign minister made an announcement while meeting with his chinese counterpart in beijing. .alks resume next month it is not resolve the key controversy, was will be done about the syrian president boscher all assa -- basshar al-assad. stepping up its military presence as tensions with china and greece. the french parliament will approve fundamental changes in their constitution. the revisions propose a tax that would shield state of the .hallenges from courts it would make warrant-less searches. for more news 24 hours a day, powered by our journalists, around the world. i rowhe second day and with one screen with not much

going on. futures are negatives. euro-dollars are way away from parity. interesting that the dispersion all cause -- the dispersion on euro-dollar. why oil popped up on wednesday, that will be my morning must-read across tv and radio. what do you have? guy: we are not far away from european equity markets closing at noon. the mining stocks are lifting a little. i would show you the education and. the egyptian pound. we are waiting for a decision. this is a normally independent central bank, but it needs to convene with the government. there is serious talk about a currency evaluation. the currency, what is it?

the pound? vonnie: this is the first time we have looked at egyptian -- tom: and on christmas eve to boot. let's go to the terminal. we adjust for inflation, and we see department stores. pricing, macy's is off of a cliff. isn't happening, thank you amazon. we go back to 1991. a huge recovery in retail. inflation adjusted department stores in america are back to where they were 24 years ago. vonnie: there are 2 retail americas. the department stores and luxury america. reel asre is malls

online roars. let's talk to the director .f research and strategy good morning. let's kick off with copper. how much copper is there is in china? david: that is not clear. -- imports are flattened. the general expect tatian was that imports of copper would fall. has copper binstock piled in other areas? possibly. there was a talk about classified financing. we think it is less of an issue this year. doesn't really understand what is happening inside china when it comes to the copper trade.

people were using it to carry trade. copper thatores of are stored all over the place that have not been realized into the market. tsingtao scandal, copper did fall out of the market. we did not realize it at the time, but it was nickel rather than copper. in terms of trying to estimate what inventory is lying around in china, it is fairly difficult. tom: you have a brilliant citigroup piece on a major deal. the market is moving from lme, the london metals exchange, and chicago as well. brief us on how shanghai is taking over your world. volumes takee seen off in terms of contract

turnover. the big volumes have been focused on copper. you saw that in march and april of last year with volumes taking off, then in january of this year, and lastly in october. volume has taken off in all the other metals. we saw the shanghai markets launch contract in nickel and tin. ,he nickel contract dwarfs lme but it is the same story over all of the metals. the turnover is huge. tom: is your world of commodities becoming like equities in china. -- in china? james: in terms of what has happened with volume, it looks like it. have seene significant short positions on the shanghai market since mid-october or early november.

we think there are new flows of money coming into the commodity space within china, where previously it had been exclusively in chinese hedge funds. since mid-october we have seen retail money coming into the metal space. with chinese equities, we saw a similar scenario developing to the one that you are describing. what is it mean for volatility? james: can retail investors make margin calls taking short positions? what are they going to do? are they likely to take the short stocks? , yes.nk probably we will get lots of moves into positioning around small price ranges. if we look at shanghai pricing over the last two-weeks, prices

have then rising. the price mark between china and has been rising, suggesting that more copper will be sucked into china on the arbitrage differential. greater levels of shanghai volatility, which will impart greater levels of volatility on the lme. theie: you talk about shanghai warehouse inventories. it doesn't matter if the copper is in inventories and china, or wendon, or wherever -- will need storage. storage will become an issue. james: metals are a hell of a easier to store than oil. like aluminum, people have been putting them in fields.

we are buying massive amounts of physical metal and storing it almost in the back garden. there is the story of chinese take farmers -- chinese pig farmers buying copper in 2008. of the retailre investors going back in and buying volumes of metal. we know the srb has been buying copper. they bought 8.5 million tons this year, roughly 200,000 this year. in terms of retail, it is hard to say. wilson getting us started on commodities. it is the story of the year. we have a guest of the year in our next hour. daniel yergin giving us the story on oil.

good morning. ♪

♪ guy: this is bloomberg "surveillance." this is london. not as warm ast new york on the final day before christmas. it does not look very christmasy . i am guy johnson and london. tom keene is in new york. vonnie: puerto rico's elected utility will restructure debt. the agreement guarantees bondholders the first step on the island to ease pressure that has left the government fighting a fiscal crisis. puerto rico obligations are lifted by more than $600

million. jp chase is blocking wisdom on the yen. they will strengthen 100 or dollar. tokyo-based head of market says a gain to 110 to 121 is possible. forecastsllish among compiled by bloomberg. unit.ll to the cnl france's biggest bank is setting aside more capital for the italian corporate and consumer banking units to have a positive effect on regulatory capital. they reiterated 45% of profits in dividends. i know that you have been covering the story all day. another write-down for a major bank. was remember the bnp

exposed to greece for a while. it is not comparable, but the division in italy, the bank says it was not quite what it anticipated when the business was integrated. of an areans part within europe that has a lot of underperformers. that is part and parcel of this story. tom: i understand you release this on christmas eve or new year's eve when no one is looking. tell our american viewers who bnp is. i they a ginormous french bank? guy: they are the heavyweights in france. going for aen series of restructuring in terms of how they manage their divisions. this is the big heavyweight.

there are stories of people putting out bad news before christmas. proposeduilding as down the road and london, and they have been trying to force through the planning commission before christmas. tom: building another ugly building in london. our economist was lovely on bloomberg radio. vonnie: you can go back to that on itunes or the podcast. if you have not listened to it already. that news on christmas or christmas day, the bank of japan will not expand its stimulus program. thato abe told bloomberg they have options for the 2% inflation target. pessimistic. the bank of japan's unorthodox policies are working. at the last meeting policy makers indicated they are

willing to deal with any post fed lift off situations. they still have policies to pursue. .onnie: he would say that let's bring back in david wilson from citigroup. lots of data from japan. weaker prices. what is your assessment of the economy, both monetary and both monetarywhat and fiscal officials have done? james: in terms of where we think it goes through next year, there's obviously a lot of talk with further easing. guy: what do you think that easing may have in terms of what you cover in the metals market? what does that do to the metals market? we can andaw the rmb copper imports accelerate the

the second half of the year. that was a surprise. therally, i reviewed in case of china, on the weaker r&b versus the dollar will been negative to those metals were of,a that offers exports aluminum and steel in particular. where likely to see greater exports. we think for the metals that they import, it will be less of an impact, essentially. depending on how far we go in terms of the r&b devaluation -- rnb evaluation. you would be looking to see an impact. we have seen decent buying of gold in europe and japan. in exchange rate hedge has not supported dollar policy, but -- vonnie: the currency forecasters had a terrible year in 2015. almost all of them did not go

through. tom: what a shock that the forecasters had of the year. year.sters had a bad we will get it out. -- it up. still, we care with the forecasters say. we thank them. howard davidowitz has been out front and the decline in selected parts of retail. one of our most popular guests is joining us this christmas eve. ♪

♪ tom: good christmas eve morning. you are looking at new york city. it is warm. ofhas changed the landscape retail america. that is the theme for the next hour. lexington avenue is getting a little bit of a bustle on this christmas eve. vonnie quinn is channeling santa. is a very similar one. in the financial times, he is writing about santa claus becoming an activist investor. he gives advice. he compares santa claus to amazon and facebook. that the logistics competitor has copied your tax fix.

retailers, it cannot topple you. you know they're having fun, but there are lessons from these in terms oftters how an old business regenerates and makes itself relevant to the 21st and 22nd century. the word "disruption" will not go away. john hasfact that taken what is happening now and applied it to this. walmart, hp, and federal express we would have virtual businesses in the virtual fulfillment and event spaces. maybe they can be a part of the split them up that we are having in the m&a world. i'm not sure what roles are martin would play. vonnie: he might be driving the

reindeer and making the advertisements for us. tom: i could see him as the grinch. guy: i wasn't going to go there. tom: he could do the grinch-thing, with the dog out front. vonnie: to a certain extent, it is wish fulfillment. the story of the year without question, my chart of the year, was on commodities and their decline. they had given up the value in 2015. can you begin to accumulate shares in u.s. oil? stay with us. bloomberg "surveillance." ♪

tom: this is in bethlehem as they get ready for christmas celebrations, december 25, january 7 in the eastern

churches. this is a pedestrian only square. a significantly readjusted tenor as they began to celebrate christmas. we say "good morning" to all of the worldwide on bloomberg television and bloomberg "surveillance" on behalf of our journalists and news bureaus around the world. vonnie: it is 12:30 in bethlehem. iraq is sending more troops to ramadi to fight the islamic state. they are securing states that by theen recaptured militants. they seized the capital last may. andgovernment is willing to the country's bloody civil war in syria. he made the announcement meeting with the chinese counterpart in beijing. they will continue talks in geneva. a counter plan

proposed by russia does not decide the fate of the president assad. a fire in a saudi arabian hospital in the port city. they arrested in the intensive care unit and in the maternity ward. the patients were moved to nearby hospitals. the cause is unknown. americans and foreigners in china are being alerted to a possible threat. the u.s. embassy in beijing has learned that westerners could be at risk. it centered on a shopping district. embassiesh and french also issued similar warnings. getting an early christmas present. the beatles' tunes are being streamed after years of resisting. universal music announced the change yesterday. 4 compilations are available. day,berg news, 24 hours a

powered by our more than two hundred 50 news bureaus around the world, and our journalists. tom: i heard elvis presley digitally a couple of days ago and was thunderstruck by the sound. i cannot wait to see the magic they did. the first song i will listen to was hard days night. it was a miracle out of at the road. i cannot wait to download every song. they sound totally better and totally real on streaming. even the recording mistakes that they make. guy: my parents are huge fans. it will always be my childhood driving around in a series of 1980's cars listening to the beatles and the beach boys at loud volumes. have you seen the obama's and

the bidens have posted their christmas playlists? the bidens have led with springsteen. of: do you know the amount children can consume and an hour. talk about a stock and flow economic analysis. the flow from 20 years old to 30 years old is off the chart. it was bottle empty. off the charts. guy: i don't know how to segue that into the dollar, but i am sure there is a segway. tom: the dollar was spent, trust me. u.s. dollar will strengthen against all of the group of 10 peers, except the british pound and the canadians

-- the canadian currency. for more, let's bring in the sbc.or fx strategist at h what is your call? : the call is that yesterday, the dollar's troubles seemed far away. today, they are here to stay. we do see the dollar getting weaker in 2016. most participants think the euro will decline toward parity. we do not think that is the case. please -- we think the dollar-euro is going back up to 120. by the end of 2016. we also think we have dollar ulls leading the charge.

we think the dollar bull run is over. guy: the mario draghi reaction has been based on what happens with the euro-dollar. he do?: what can they have boxed themselves into a corner. they have constraints coming out of their ears in europe with regard to the t where they can buy their bonds. we know that the blend is bank does not qe want to issue more huge amounts of qe. levels. have lower the ecb want to see a weaker currency, but it is hard for them to do that, because they did not have the ability to do more qe. to say that hsbc has more of an outlier call in being away from consensus. what is the trade in commodities that will be run over if we get

the hsbc or citigroup call? there is a massive bet on commodities that can go wrong? the issentially, that continued dollar strength and the relationship with commodities going weaker. there's a lot of money writing on that. we could get, is the call is correct, then we could get significant short covering rallies. when the rallies stop, you would start to get cta and momentum money on the other side, the long side. that is definitely something -- that is a risk for next year. it back to hsbc, the idea of the canadian dollar being the dominant hydrocarbon economy, how do you play it? , canada-euro?en

dominic: we are positive. that is down to the policy differences that have been impacted by the end of the straight differential argument. in canada, even if the economy stalls, you will see fiscal stimulus. tom: do you play it against the adjacency of the united states, or do you play it against a different currencies? dominic: i play it against the dollar. you have a huge amount of dollar longs in positioning. it has been impacted by commodity prices. acrosse is long dollar the board. that isn't sustainable. we think that the the cad will strengthen in 2016. we don't have a strong view of

the aussie. you have the china story where there will be a bit of a stabilization. you have a commodity story which could remain soggy. we do not have a particularly strong bias. it will be a repeat year for the aussie dollar. you will see policy try to react to that strength. we will not see a large amount of directional movement in the aussie, even if it moves in a volatile way around that area. guy: it seems like some of the most important currencies are the weakest. what will happen to the land and something toat has do with the competitiveness of that currency. they are playing in a different ballpark. are they the more important currencies?

david: we have seen production costs in russia for aluminum fall. in dollar terms, their energy have been falling significantly. in south africa, looking at the platinum producers, we have seen significant downsides in the random versus the dollar that has been providing a cushion against weaker prices. dn japan, this is an iron an coal issue. we do not see any improvement, suggesting the aussie situation will not change. dominic: we are fans of long euro poland. risks ina lot a policy poland. changes to the mpc is january

and february. you get to the market fall of love with the polish currency. it has been a strong favorite. long euro poland. in the g-10 space we are looking at euro-dollar. around 108 or 109. tom: have a great holiday. euro-poland. i need to do that after what was spent. the guest of the year. daniel yergin was screaming about five dollars a barrel five years ago. next, he is on oil. ♪

guy: welcome back. live pictures out of hong kong. christmas is almost upon them. it is warmer in hong kong. we have new revenue growth for the european telecom industry for the first time since 2009. last year so bad? why will next year be better? last sixeen over the years improvement in revenue generation. acceleratingion is . for the first time in 2016, we may see a return to growth driven by data. guy: consolidation? erhan: it helped to get back

pricing power. in 2014e down and back and 2015. we will see the impact in the next five years with a better understanding. the regulators have not made up their mind is 4 or 3 is to providecompany the right level of competition. erhan: the change in the european numbers, we also see a change in the competition. the competition has been strict on the remedy side. i think there will be less appetite for telecom operators to seek consolidation going forward. we have seen many markets, germany, austria, ireland, italy, and the u.k., already consolidated. liberty media going into europe was a big acquisition.

with a weaker euro, do you anticipate more cross channel acquisitions or mergers? erhan: europe is an attractive operation for u.s. operators. the average spending is low. there is room to grow structurally. as a result, we might seem more , pay-tv operators, and media companies coming to europe . we have seen that with disney launching in the u k and in the rest of europe in the coming years. are goingat what we to see? the media element? it is being mashed together. it is hard to decide what is media and what is telco. what are the points of value that exist in terms of that space? we are seeing convergence of telecoms and media.

telecom is becoming more operators. tv to let hiscontent need to monetize their assets. that will be increasing. we will see higher broadband options. we can expect the cross deals to continue. media.lking telecoms and coming up, david wilson about how the weather is impacting the metals market. it is a nice line from one to the other. we are streaming on your tablet, phone, and bloomberg.com. ♪

tom: good christmas eve morning. i am tom keene. guy johnson is in london. trading day according to bloomberg radio. at 1:00 p.m. n we are going strong without bloomberg business flash. annie: the former chairman of

chinese finance newspaper is going to prison, convicted of extortion and other counts. he will spend four years behind bars. companies were told that they would get negative reviews if they did not buy advertising. recently warned overseas inflation will limit the fed's ability to raise interest rates. goldman is i otherwise, saying they will lift four times. apple pay hoping to grow in asia and europe. service has had a sluggish start in the u.s. sense its debut. next year it will be in europe, hong kong, and spain. guy: david wilson, the director of metals research and strategy. you and i were talking during

the break. you said something fascinating. how do i draw a line between the , and theher, lead battery market? traditionally driven by the northern hemisphere replacement market. for a very cold weather, batteries fail, and people buy more batteries. people usually stock up by buying more physical lead. last year lead prices were supported through q4. this year, we have seen lead prices being well supported. you have to look at the weather. it is very warm. we won't get the weather .ifferential coming into spring that means a likelihood of less battery failures. you have to thank the battery

manufacturers will think, should i be restocking to the same extent? does the warm weather mean for agriculture? your people at citigroup, and i know it isn't what you do every day, it will soybeanseat, corn, and globally? is stretching what i can cover in terms of agriculture. it is suggested that you will get a better supply in certain regions. it is regional, i guess. it is not something that i can -- tom: i really wonder what all of the weather means. will be good for some and bad for others. you will be talking about el niño on radio. we talked about the weather in new york and london, but that affect is having an effect.

it is also having an impact on the metals market. in asia, there's a heavy monsoon season which upsets the shipping of nickel out of the philippines into china. at the same time, with el niño you have more than nine weather in asia, less monsoons, more shipping. in latin america, we are seeing significant heavy rain which has disrupted coppermine production in chile. that is the difference el niño causes. you have more weather-driven disruption in latin america and slightly less in asia. copper, ironok at ore, and steel -- your typical industrial metals.

are there any under the surface that we should be looking at as an indicator of where prices are going that we don't typically look at? david: we put out a report a week and a half ago looking at lithium. lithium prices have lifted by 70%. it is a market that is difficult . you cannot trade it from an investor point of view, but it has been fundamentally strong. interesting with producing hybrid cars and electric cars, that is causing a massive demand. if you can use that as an indicator or other metals, that might be questionable, but there are some metals that have been more fundamentally relative to outputs now. back six months, most

people forecasted next year that you would have 6% to 9% mine growth. it is now 1% to 2%. toward whatitudes will happen in terms of pricing that year. vonnie: there must be some theseries happy about metals and pricing going down. i'm thinking of mobile phone and chip makers, who use of scare metals that we don't talk about. it has been favorable to them. low aluminum and copper prices. we have seen a huge amount of consumer hedging activity on the bigger metals, and going further , andthe future, 2019, 2020 beyond. in terms of the small metals, the significant left off in atcing, if you're looking

metals like lithium, because they are a small cost component of a hybrid battery, it is not impacting yet at the moment. tom: an interesting hour on the commodities. it is warm here. vonnie: one of the reasons they brought that up, i was looking at tiffany's and you can get a for $15,000. if you buy it as part of the platinum group of metals, you can get it for 500. tom: the information that you need from vonnie quinn. next, one of our most popular , on a, howard davidowitz most unusual christmas eve. ♪ . .

♪ it is 35 degrees warmer than normal.

christmas eve retail adjusts to the weather. amazon vs. bricks and mortar. and in 2015, a conversation with daniel yergin on riyadh, tehran, washington, and oil. good morning, everyone. this is "bloomberg surveillance." i am tom keene in london. guy johnson, tell me about the weather over in london. is it as goofy there as it is here? guy: i put my central heating on once so far, tom. my car has ice on it once. it is so warm, it is spectacular. it really is. the ripple effects of this is really quite bewildering. tom: that was brilliant with david wilson of citigroup joining us last hour. look for that across all of bloomberg digital media.

right now to our bloomberg first word news, here is vonnie quinn. vonnie: thank you, tom. authorities are charging a nice -- authorities are charging a ninth suspect today from the attacks in paris, that killed 130 people cured americans and foreigners traveling in china are being alerted to a possible threat. westerners could be at risk it the christmas holiday spirit of british and french gave a similar warning. court sentenced two men to death saying police and use the suspects question will dna evidence. at least 30 people are dead and 107 injured in a fire in a saudi arabia and hospital. it happened before don today at

the port city of jazan. nearbys were moved to hospitals. the cause is unknown. on a deaths are now blamed huge storm that swept across the midwest last night. at least 40 people are injured, 14 tornadoes touched down. they wrecked homes and tossed cars and trees into the air. the storm already took two lives in tennessee and extensively damaged homes and businesses. they went into arkansas, killing one person there. tornadoes were spotted in indiana. ben carson facing a major shakeup of his presidential campaign. he tells the associated press that some top aides could be let go. he is losing his foothold is one of the front runners. global news 24 hours a day

powered by -- tornadoes, pretty scary stuff, tom. tom: it really speaks to the weather cared we will look at the retail aspects with howard in a minute, but it is something to see the great weather affects of whatever theory you want to believe in, whether it is global warming, climate change, el niño, maybe the collapse -- actually the bruins are doing pretty well right now. [laughter] let's get to the data check. what i notice is oil up $37.56. must readably indenting -- must read liam denning. it has a lot to do with tax adjustments. guy, what do you have? guy: 56 minutes until the london market shuts up shop, tom. we are barely high this morning. shut up inl

frankfurt today. i bring you the egyptian pound. there is serious talk as we've seen in other parts of the world of a massive devaluation of that . i will show you what is happening with dollar yen, jpmorgan saying we could see that move back to 100. there he good your we are thrilled to bring you the terminal right now to set us up with -- tom: very good. we are thrilled to bring you the terminal right now to set us up with howard davidowitz. the buildi in retail, the collapse in retail, howard davidowitz is screaming. i will give daniel yergin a shout out as well. howard, before we get to the cts and the

lease aspects, the underlying real estate, financial aspects of retail, can the department source make it out another five years? howard: yeah, they can, but they will be smaller and different. they are the high-class guy out there. survive when 80% of america is trading down, and you are the high cost operators, and you're stuck in multilevel stores and all kinds of stuff? it is an un double problem -- unsolveable problem. i will calls a gap, it a pop-up store, tell me about the real estate transaction of pop-up stores. howard: it is a big business. toys "r" us has hundreds of them, target has pop-up stores, it is perfect. you build a store win the peak volume is here, and then the store goes away. it is perfect. you sign a four-month lease.

at the time people are there, you are there. it all makes sense. it is a very popular business. it is popular accessories, toys, and other areas. it is a good thing to do. vonnie: and it has a novelty aspect. macy's spent a fortune on their flagship store in times square. if you are leasing, i can understand that you're in trouble, but if you own the real estate, is that not a different story? howard: as far as macy's on 34th street, in that particular store, i think it is a good investment, and i said that from the first second. urban, big scaled scores work. departmentbig scale stores work. look at bloomingdale's. those stores make a fortune. it is all good, so downtown, urban, big department stores work. that is about 5% of their stores. [laughs]

but those work, and those are worth investing in. tom: howard, guy johnson is going to join us. we have got bonding between howard davidowitz and guy johnson. guy: i feel i need to bond on christmas eve, definitely. i am stunned that malls are not doing better. lower prices, low gas prices, i would have thought would had people driving to the malls. they do not have that issue in front of them. why isn't that having an impact? howard: that is a tremendous question, particularly for walmart because here is where we are -- here are the facts -- we have doubled the number of people in poverty in our country in the last seven years. doubled! doubled to we have not only doubled our death, we have doubled the number of people in poverty, and they all came from the middle class! that is why t.j. maxx is so terrific. that is why extreme value is so terrific. half of americans have no savings. guess what? half of americans have no money!

even though we are saving money on gas, which is terrific, they still have no money. can't doubled the number of people in poverty -- double! -- and expect everything to go right around here you have destroyed the middle class, they have not gotten raises, we have a health care system that forces everybody into shorter hours, that is where we are. guy: so the best from it or that we can look at in terms of the health of what is going to happen with the sector will be the average hourly earnings. that kind of the number is the yea way looking forward, h? howard: absolutely because despite of all the good things going on in housing, etc., people are not making money. tom: howard, we will be luxury later. we will do online in a couple of minutes. we will talk to you about the magic of madison avenue and bond street in london. i want to talk to you about the lawyers, guns, and money --

january and february -- as the real estate that underlies this racket gets adjusted and what will happen in january and february on all the lease for calculations? -- lease recalculations? howard: everyone in retail is leveraged by their leases. what will happen in 2016 is if you are in the tank and there are about 13 retailers in the tank, you go out and you start renegotiating your leases, and you basically -- tom: who have got the power in that negotiation? howard: the retailer has power over about half the malls because if you leave, the mall guy -- he is toast. e retailer has got a lot of leverage. with onely banjo out of the mall leaders. give me some of the names of the retailer's troubled right now.

can you say that were not? is that rude of me to ask? inard: for example, j.crew new york is not exactly in great shape. tom: when you go in, they do not have what you want! what is that? howard: there is a giant list -- gigantic list a of department stores and we have got a lot of retailers with massive debt, and they have got to do something. tom: howard davidowitz with a spirit we are thrilled to have he with us this hour, and cannot really name who he thinks this terrible -- he named three, but he was kind of dancing howard, elegantly -- you should see him going down fifth avenue. i have seen him charity cruises down fifth avenue. the people at beltran ikebana come out and go howard, howard -- the people at dolce on the gabbana come out and

howard."rd, oil is certainly the story of 2015. stay with us. ♪

♪ welcome back. you are looking at pictures of london. it is very warm here. you are watching "surveillance." let me tell you, the ice rink at the tower of london had to close because it is just so warm. you everything you need to know. let me tell you something else you need to know. it is time for vonnie quinn to give us our bloomberg business flash. .onnie: thank you martin shelley knew the u.s. government was interested with

him before hiking the drug price 5000%. withweek, he was charged securities fraud. his former company said the cfo and accounting firm are resigning. where over 100le people fell ill with the norovirus is being allowed to reopen. it has been closed since december 7. in pay fort decrease bob iger in 2016, but the disney ceo and chairman will be able to afford his holiday shopping. 3.4% to about $35 million -- to about $45 million in cash. iger is frequently among the highest-paid executive in the u.s. i was at the headquarters just the other day. to say has created value

the least over x number of years, and he is the ultimate content king. vonnie: have you seen "star wars" yet? tom: no. we have to wait for a ticket to free up sometime in 2017. vonnie: by then, you will be waiting for the next installment. [laughs] tom: howard davidowitz on what he predicted, which is amazon. this is a stunning chart with a little bit of nuance. first of all, the amazon equity performance, leaning loans, 2008, early 2009. again, with the magic of the cursor, i am going to bring up here so you can see walmart's under versus the standard & poor's 500. 2008, youing back to saw that earlier with amazon outperforming. what did you learn about digital, howard davidowitz, in the last 90 days? howard: well, amazon prime now is where it is at. tom: are they still in fashion?

howard: oh, yeah. fashion isin enormous, astronomical growth in fashion, so they are doing it all, and they have got the biggest assortments, the best prices, and in two hours -- tom: vonnie goes into bergdorf's, she buys eight dresses and returns a seven. it has got to be worse on digital. howard: oh, yes. but it is all calculated. o,m: what is ebitda d digital versus break and mortar? double? howard: double because you can be more flexible. it is a tremendous place to be. tom: overpriced cupcakes. vonnie: it takes too long to get to one store anyway, tom. --question, really quick, is internet buying is growing

exponentially, but it is still there aree teens, so still a lot of people going into department stores and buying by hand. people goingof into stores. here is the problem -- if you are a retailer and you take away 5% of your business or 7% of your business, half of them are not viable. when you say only -- you are operating a business! yourou do not have 7% of business, about half the retailers go broke. vonnie: good point. guy? guy: howard, where the value in amazon? is it the ability to scale into any market you can think of -- groceries, fashion, whatever -- is it the relationship with the ? customer howard: here is the value. assortment or who has got the greatest assortment on the planet earth? amazon. so you have got assortment. you have got price because they are the ultimate low-cost operator. you have got convenience and speed.

they can deliver it in two hours! tom: yeah, but they have got inventory is the number one thing. howard: inventory is the number one thing. they are getting better at managing that. and it looks to me -- when you look at the future, it is all going to be about value. this is how sam walton started his business. what he did, no one else did. all of his counters that i worked with at the time, and i worked with all of them, they were selling more peril because they thought they got more margin, and sam was selling more food because he thought that is what the customers wanted. here.uy, jump in bezos being why is interested in being in the server market? the option alley as you can be a technology company, you have got power by the hour, or i can buy my son his legos there.

how on earth do those two things together? what is this business? howard: what i think is on heard bezos' mind -- believes -- and he has been right on every thing else -- that he has to be a leader in technology, and delivery, and all kinds of things. so i think in his mind, this all fits together five years and six years from now, and i am sure it is great. tom: the weather is warming, four of the major department stores are blaming jeff bezos for the weather curacao me about on the channel -- om -- weather. tell me about omni channel. almost all of, them are in the cropper, but they have got to do it. walmart spent billions of dollars on supercenter sales. they have got to do it. they cannot ignore it. they have got to do it. tom: we are going to come back

at luxury. does it work at barney's? howard: it is working everywhere to some extent, but if they do not do it, -- does it work at barney's now? no, it is not viable. they have to get it going. tom: howard davidowitz, we will talk luxury in a bit. coming up here on "bloomberg geit veryce," fadel much focused on equities pierce some people say it is time to buy oil stocks. a bloomberg radio in boston, san francisco, new york, bloomberg radio 99.1 fm in washington. stay with us. we continue. ♪

♪ tom: good morning, everyone. "bloomberg surveillance." scrooge has descended on washington. he has brought gridlock. atlanta about the same temperature as new york, which is all you need to know. be careful of the fog. purity guyissue johnson has our crystal-clear morning must-read. what have you got? tomguy: i take you to "the financial times," tom. you will like this. this is a response to the morning must-read that vonnie brought up earlier this week, talking about the need for statesmanlike bankers. the professor talked about the fact that there are really radical steps taken by

regulators during the financial crisis. he goes on to say -- tom: guy, you are dead on. four years ago, maybe five years ago at davos, you never know with the theme is going to be. this is the back story for years ago where you had the establishment of finance asking -- did they communicate correctly? the clear answer is that they failed at doing that. they did not get the answer out at that most critical time in the crisis. going toknow, we are talk about this and the applications of this is just a moment. we were talking among ago to howard about this kind of bifurcation in the retail market. you have got the upper and doing well, the destruction of the middle class, and people talk about this qe story having led

directly towards that. maybe that is not true, but it was never communicated, and i think that is the point. tom: you read the "ft" with a better accident than me. vonnie: nobody actually mention except for frank lindy roosevelt, who is clearly not a candidate right now -- franklin who is clearly not a candidate right now. has anybody come up with a name? guy: nope. that is definitely something we have to resolve. tom: today's letter to "bloomberg surveillance." coming up, daniel yergin on oil. stay with us. "bloomberg surveillance" futures, -2. don't forget, we close early in new york. 1:00 p.m. dan juergen 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. tom: good morning, everyone. good christmas eve. it is the evening of christmas eve in hong kong, and we send our kindest greetings to all in

asia watching us, and of course many journalists across all of the pacific rim and over to india. time now for our first word news with vonnie quinn. vonnie: the powerful storm that swept across the u.s. midwest caused at least eight deaths in three states. at least 40 people were hurt. 14 tornadoes touched down in mississippi alone. the high winds wrecked houses, uprooted trees, and toss cars into the air. into -- rain a spin it wind and rain extended into arkansas, and tornadoes were spotted in indiana. at least 30 people are dead and more than 100 hurt after a fire raged through hospital before dawn today in the southwestern port city of jazan. were moved to nearby hospitals. the saudi's civil defense agency says because in so far unknown. iraq is sending more troops to fight islamic state in

ramadi. this is the third day of the government's offensive to retake the city. charginguthorities are a ninth suspect in connection with the paris attacks. investigators say the man had been in contact with the suspected ringleader. police in brussels have staged a series of raids. the attacks in paris last month killed 130 people. promptsparis attacks calls to change the french constitution. parliament has voted to approve the changes. they would shield state of emergency powers. authorities could cancel citizenships after terrorism victims. global news 24 hours a day powered by our journalists around the world. tom: very good, vonnie quinn. all about humility, whatever

your religion and belief, we are thrilled to bring you someone with the king of humility. daniel yergin changed american nonfiction and our language with his "the prize" many years ago following on with "commanding heights" and the recent "the quest." dan yergin, i want to congratulate you of the call of the decade on oil. you and a select few others, gary shilling and others, were looking for a collapse. and this time of humility on oil, what will you watch for next year? daniel: i think the most immediate thing to watch for next year, tom, is what happens with iranian oil. well -- now like iran the sanctions will be listed on helpas early as january to president rouhani in the parliamentary elections, and that is the next big shoe to drop in the oil market. is it half a million barrels a

day that comes on or one million barrels a day? that is what i would be watching number one. tom: within that is the calculus of microeconomics oil. phd's that follow this at ihs, do they have a price point where the market clears? daniel: uh, you know, not specifically. the way we look at it instead is -- what is the balance between supply and demand? that is the iranian oil. oil demand this year, which is now coming to an end, has been much stronger than last year, well over double the demand last year. americans are driving more miles than ever before. the number of sports utilities that people are buying now, about 60% of the total new vehicles, so demand goes up when price goes down, and at the same time, of course, we are seeing a really big cut in investment by all companies as they battened down the hatches for this storm that has swept over them. guy: daniel, this is guy in

london. the question we see most on foreign exchange is will the -- is what are your thoughts on that? daniel: all invocations are is that they will stick with where they are now -- daniel: all implications are that they will stick with where they are now. iran wants to come back. their message has been consistently, "we will cut if others will cut." one of two things happen, either the country's cuts, which is less likely, or the market struggles back into the balance that tom was talking about later in 2016 going into 2017. guy: how much more pain cannot economy take? it's is why people are wondering kind of what they do outside of oil next year. how well position are they going into next year to be able to deliver the oil policy that they seem to want? daniel: their reserves are very,

very large. about $600 billion or so. you compare that to nigeria, which, you know, had about $2 billion in the sovereign wealth fund, give or take. so both countries, not just saudi arabia, have the same power. them.s pressure on at the same time, they have been increasing expenditures domestically, and of course the funding of war in yemen now. tom: dan yergin, one more question, and i want to switch gears. oil has been something we have seen come back, and the spread has come in. why is brent trading more expensive than cushing this morning? daniel: you know, tom, that is fascinating. last friday, six days ago, president obama signed a bill that lifted the ban on oil exports, crude oil espor xports, after many decades. that is part of the region, and

maybe psychologically that is a a major region. reason is there is still stores in the united states. all right ryan has said lifting this oil export ban has been one of his biggest achievements as speaker. tom: daniel yergin, yesterday or two or three days ago, they closed the final coal mine in the united kingdom. the first person i thought it was you. the opening of your book, "commanding heights," with labor union leaders in the united kingdom, it really is a changing of the guard, a generational changing, with that coal mine closing. is the united kingdom onto a modern service sector economy, or is all of that legacy still there? daniel: i think that coal mining and the traditional manufacturing in general have continued to be a problem for the u.k. but as you said, that is a very significant thing because how many years ago was it, tom, that

the coal miners launched this massive protest and strikes to try to bring down margaret thatcher as prime minister? at that time, the u.k. really this switcht became to gas to really phaseout coal. of course it is now really tied up with climate change policies and just the sheer economics of coal production in the u.k. but you are right -- 19th century history was written on the back of coal, and britain was the dominant coal country, and really that is what fueled the industrial revolution. moment. an epochal guy: in the postindustrial world for the u.k., does brittany to be a member of the eurozone? britain need to be a member of the eurozone? daniel: [laughs] your question suggests you have an answer for that.

the you mean in terms of currency or a member of the eu? guy: more broadly. in a service sector world, by finance, where does the u.k. said in the world? daniel: the u.k. is one of the world's financial centers. part of the issues for the british government, not the british population, is the degree to which brussels wants to regulate london. and in a sense hand in london's role. that is one of the factors in the state about this coming about britain and the eu. tom: daniel yergin, thank you so much for joining us today. course with ihs. daniel yergin will join us on radio here later this morning. futures -1, dell futures go the other way, up 3. coming up, away from the

macroeconomics, the bigger picture, the price of oil. we will talk to votto gate about eit about the accumulation of blue-chip oil. stay with us. "bloomberg surveillance." ♪

guy: welcome back here you are watching "surveillance." the white christmas has been firmly canceled, replaced by gray and warm. that is all we can hope for in mind it. let's get you up to speed. here is vonnie with the bloomberg business flash. vonnie: all you hear is tom singing in the background, "i am dreaming of a gray christmas." the of the parabolic producing fourth quarter earnings by --

bnp paribas producing fourth quarter earnings by almost $1 billion. reiterated its plans to pay 45% of profits and dividends. mitsubishi said today its regional plane would not be ready until mid-2018. the jet debuted last month. technical issues must be resolved. and jamaica they bring to mind bob marley and run daiquiris, stock market had a better year than any other around the globe. the jamaican stock exchange surged more than 18% in 2015, bolstered by foreign acquisitions, stronger investor safeguards, and a rebounding economy. it has a market cap of about $5.3 billion, just a fraction of the dow's $5.2 trillion. i think i need a few minutes to come up with a joke about the jamaican stock exchange. tom: ok.

in fashion, here is the worst part of the week -- in the "new york times" on saturday to sunday, down here at the bottom where they have got this ad, i will pronounce it -- out of venice, if somebody in the house says, oh, look at that bag. just moved from fifth avenue up to madison avenue. why do they do that? howard: first of all, your lease ends. now you have to negotiate a new lease. they were in a prime space, but when the guy triples your rent, you may want to move to madison where they might only double your rent. tom: and that is the boom in luxury right now. howard: exactly. that is why people move. tom: single best chart. vonnie have them all this year, the trifecta. this is one of the french consortiums of designers. have got mark jacob, fendi,

pucci for the summer, and louis vuitton all the time, 24 months a year. has this calculus worked out? conglomerates are working in howard davidowitz's world. howard: i think they work very much for all the mh. and is a creative business, this guy knows how -- it is all about taste, it is not about math. and his lawyers this guy is running in, it is going to continue to work. tom: vonnie, is in the louis vuitton store in new york a threat to society? vonnie: [laughs] that is for sure. yesterday we did nike "ne ekee" or whatever it was. vonnie: also, makeup and beauty, you cannot forget about that. what about when private equity gets involved? does private equity in the

space know what it is doing? howard: that is a really great question here at what private equity knows how to do is get in and get the hell out in five years. the beauty business is on fire, because moneys business is really good to those are really good businesses. you've got private equity looking to alter -- you have got a lot of growth in those businesses. macy's just acquired a cosmetics company. there is a lot of growth there, so look ahead in private equity, wherever they go, there will be massive bankruptcies and massive growth and massive risks and massive debts, and they cause more damage than they do good, but they make money. because even if the company fails, they take out so much money a lot of times -- they are not lose. there are so many organic and natural beauty bands popping up now. it'll be interesting to see where they all end up.

you have a question for howard? guy: why is product charge going in one direction, down, and macy's going up? howard: first of all, the bad business is a little softer than it was. if you're in product, you are in the bag business. if you are lvmh, you are in every kind of business. so it is better to be diversified than focus on one product. tom: howard, when we look at luxury, whether it is guy johnson shopping on bond street or what we are doing here, and really round the nation as well and on the west coast on the how important is the chinese shopper, and to you by the angle that they actually disappeared? howard: i do not think they disappeared, but with the dollar in every thing else, there are fewer of them. the margin is down, and i think it is having an effect on luxury in new york. neiman marcus reported a loss. tom: are our closets full? is vonnie looking in her closet

going, "it is divine, i've got everything i need"? howard: her closet is never full. tom: it is a "surveillance" breaksclusive -- the closet is never full. howard: and there is always new stuff needed. [laughter] howard, this has been great. this is so cool to we have got to do this every year, christmas eve with howard davidowitz. document it. it really works out, to say the least. we will come back with howard davidowitz on retail and talk to them about the bravest guy in american retail. that is one t. lundgren of macy's. stay with us. "bloomberg surveillance "bloomberg surveillance

tom: "bloomberg surveillance good morning, everyone. "bloomberg surveillance-- tom: good morning, everyone. "bloomberg surveillance." our kindest greetings on christmas eve. we go across the island of manhattan, columbus avenue with the christmas glow. and of course what can you say about the change in retail landscape? there is a starbucks, which is

exactly what you want. starbucks cares about four exchange with our global platform. they are not caring much this morning, the churn in the market. tthhe yen in. one of the great changes next year is whether the yen -- ta lk about global distribution, center tennessee, sterling low. with "bloomberg ." david: we will be taking a look at markets and be talking about what went wrong with hedge funds to2015, looking forward 2016. we have two experts, one from inside bloomberg, one from outside, about why janet yellen got it wrong, even though larry recordid she got it

and tom, i want to wish you a very special day tomorrow on christmas. tom: very good. david westin. we looked on line, we looked at luxury. let's look at one of the giants of retail who was flat on its that 10, 12, 15 years ago. lundgren ofj. macy's. i will tell you, folks, it is really something to turn around here. you have seen, howard, mr. lundgren from thick too thin, of course the stock has rolled over. what is the distinctive feature of mr. lundgren's feature? howard: he is a real merchant. he is not just a numbers guy, he is not just a real estate guy. he understands comedy is into merchandising business. he understands that is 90% of the business. he is a talented merchant. he came up from the bottom. the sky was a buyer, ran stores, he knows the business, and he is

good at it. tom: he came out of the west chain he rose up the food . his audience today is radically different when he was on sunset boulevard. howard: of course. and he has made constant changes to deal with it. vonnie: i want to say the last time i was in macy's, i was so pleasantly surprised. there was a lot more free space, open space, it was easier to walk around. and there was entertainment, strange entertainment. there was a transvestite, models walking around. this is part of the process, right, keeping people in stores? howard: of course. terry lundgren, when you rank department store managers, i would rank him number one, and he has got a lot going on right now. he is going into the all price business. he is only five years too late, but he has got into the all price business, and he has got bloomingdale's going into the outlet business area he has

invested more online. he has acquired a cosmetic -- he is doing a lot of correct things in growth areas -- sneakers. when you look at the eight or nine initiatives he has got going, to me they all look pretty intelligent. the best thing he is doing -- he is addressing underperforming stores fast. he is closing them fast. he has got a lot of bad stores because of that acquisition. a lot of mid-level malls. he is getting out of them. that is not bad management, that is good management. i think if you bring to the department store managers, he is in a terrible business -- he is the best guy out there. vonnie: guy? guy: howard, how do you stop department stores becoming theme parks that people go to to get entertainment rather than buy stuff? howard: i think entertainment as part of every retail business. urban outfitters just bought a pizza chain, so they are going to be serving pizzas in urban outfitters source. food is going to be a very

important part of th department stores, and they are all over the world, so department stores have to change. i want to wrap up this wonderful hour, howard, with you. the eighth floor of macy's is ground zero for santa. macy's santa land. that formula work like it in the jean shepherd movie one million years ago? onard: it is still working 34th street. the lines are enormous. the kids love it. it is an extravaganza. it is great. tom: have you ever done the santa routine? howard: i never did the santa routine, but i think macy's does it better than anyone else. tom: the bergdorf windows are extraordinary. they are all great. but santa -- macy is number one. tom: we will leave it there, "santa,avidowitz," s

macy's is number one." guy johnson, thank you cured this is a great christmas eve effort today. what have we got on the data? a barrel, which is something to talk about. columbus avenue on the west side folkshattan, and the gold at starbucks out, and you see the rain-slate 70 degrees weather as the sun rises over manhattan. " next. good morning. ♪

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. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. david: oil's volatility. the exchange after having a little santa claus rally. european stocks slipped on low trading before the christmas holiday. all may not be fair in love,

war, or gender pricing. do women pay more for the same thing? ♪ welcome to christmas eve on "bloomberg ." i am david westin. stephanie: and i am stephanie ruhle. we will have a big show. we might have a shortened trading day, but we have a big show. here to join us is bloomberg's chief economist, the jacket, the bracelet, the tie where i cannot handle it, rich is here, richard yamarone. yesterday, it sounded like we were going to end the year on a positive, and now we are dropping. richad i