♪ from bloomberg world headquarters in new york, welcome. i am betty liu. this is what we're watching. the dollar down, oil prices up, and stocks around the world are largely higher, except for here. claims for front, first-time benefits fall into a four-week low. a bumpy week for autos, from cheating scandals to faulty airbags. we talk about the road ahead in 2016. high-frequency bait and switch scams, libor rating, aaron bond errant bond trades, what a year of wall street drama. first, we have half an hour before markets close for the christmas holiday. ramy inocencio is standing by. we are drifting lower. too: there has not been

much movement, but we are drifting a little into the red right now. let's look at where we are. the s&p 500 is down 0.2%. the dow off of 2.25%. the nasdaq is pre-much flat. we had initial jobless claims, 5000 fewer than the week before, so better than expected. consumer confidence is also at its highest in two months. not having too much of an impact on the markets, especially in this shortened trading day. a lot of traders are probably on the christmas vacation. nymex crude has been dictating a lot of the story, now pushing for four days of gains in a row. the nymex intraday is up nearly 1%. gain is itsy longest winning streak since april, and its biggest weekly advance in two months. let's look at nymex this week today, starting -- to date,

starting on monday. it is up about 9% between monday and wednesday, and this total rises in the markets led by the energy sector is actually adding $350 billion back to the markets. energy,taying with natural gas, what's going on? you would think it would be going lower with warmer winter weather. it is supposed to be 74 degrees today in manhattan. natural gas is rising today. an interesting technical to note, it is back above the two 1.5%r mark, about up-to-date. intoer forecasts going january arthritic and colder than normal temperatures in particularlyu.s., new england. as oil rallies, the greenback is heading the other way, falling again today.

this year is the fifth day in a row of losses, down about 0.4%. it is the longest losing streak since april. similar to the equity markets, u.s. treasuries are pretty much, they are unchanged right now, with traders not really going into the markets right now. the yield is about 2.25%. betty: thank you so much. ramy inocencio, at the markets desk. let's check in with bloomberg first word news. courtney donohoe? courtney: we go to the middle east first. the death toll is now at 31 in a predawn fire that roared through a hospital in saudi arabia, happening today in a southwestern port city. the flames a rugged in the -- erupted in the intensive care unit and maternity ward. the civil defense agency says the cause is unknown. 19 refugees today drowned when their ship sank near turkey. six of them were children.

at the 3500 people have drowned this year trying to reach europe. the government of syria is willing to join talks aimed at ending the country's bloody civil war. issued the minister statement while meeting with his chinese counterpart in beijing. talks will resume next month in geneva. a proposalook at from russia, but the proposal does not mention what is to be done about syrian president bashar al-assad. candidate ben carson says he is planning a major shakeup to his campaign. could beome top aides let go pick carson is falling back in the pack in polls, losing his, foothold as one of the republican front runners. voting starts less than six weeks from now in iowa. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. betty? betty: courtney, thank you. much more ahead in the next half hour. a new battle in the auto world. no longer just for versus gmd,

but detroit versus silicon valley. google and forward partnership -- ford showing both trying to make peace. ♪

♪

>> chris, we will start with you. when you look at what's going on in the markets today, looking for companies to drop bombshells and surprises? undoubtedly, there are examples of that going on that i did not pick up on the way in, but there is still time before trading ends, so look out. coming in here, i hoped to discuss the great energy stock rally of december 2015, which has been going on this week, just about the only movement in the market. unfortunately at the moment, it is petering out. i guess they are taking profits after a three-day run, but some gains were pretty immense. courtney: was it a short squeeze? chris: it is the stock market's moves inake reasonable mature markets and turn them

into crazed reactions, for the most part. a short squeeze makes a lot of sense. it is sort of the last refuge of scoundrels expedition. corey: when you can't find something anywhere else -- chris: but this is by far the most heavily shorted industry in the s&p. makes it sound like they were forced to do so, when they might just have been closing positions at the end of the year for convenience. chris: it's not necessarily pejorative to say it is a short squeeze. one of the narratives that went around the august selloff was jv team was this sort of on the trading desk over the summer. all the guys who run the desk might come back at the beginning of january and find other guys bought a bunch of energy stocks. doubtful, but maybe that's going

on as well. hastney: rich, the data been mixed, but let's focus on this morning's initial jobless claims. claims is270,000 pretty much the average since the beginning of the year. we have seen the average, year-to-date, of 270,000. we are lingering around and now. the economic data have not changed all that much, in line with the treasuries, what the treasuries are signaling. one thing that has changed economically, though, is the u.s. dollar. ed since a has scream year ago. the federaln reserve's broad measure, and now we are over 123. impacted how has that

stocks? see what is hard to market effect was a bigger drag on stocks. stocksld think small cap would do well in a strong dollar world, but that has not totally been the case. about the lack of growth, how only a handful of stocks were responsible for the rise in the index, the index being flat for the year, but if you own most securities -- mostly securities, you probably lost money this year. what does that mean in economic terms? chris: this year was the year of the dollar. everything was the dollar. everything from crimping manufacturing activities to crimping exports to hurting profitability. for the multinational companies

that have to repatriate funds into u.s. dollars earned abroad. treasurye former secretaries in 1971 said, it'ss yoururrency, but it's problem. apparently now it is our problem. it's hurting a lot of businesses, and dampens the price of dollar-denominated commodity prices, like oil and metals. down,ou see this come you have all these forces, forcing a lower inflationary environment, whether it is commodities, crude oil. you see a big problem developed for the fed, i suspect. how do you rectify a deflationary spiral, should it come to the shores of the

u.s.? >> give us a gauge of the year. what were the indices that did well? chris: one thing that's important to look at, the s&p doing nothing, but a totally fascinating thing is the s&p equal weight index, taking market cap bias out of the index. aat is down 4%, and it is better gauge of more investors who won't naturally market weight themselves. it's a litmus for mutual funds, too. they don't want to see that doing badly. they want what happened the first five years. corey: how does that work? share foru get one

each stock. it's important, because mutual funds, unless they are market cap weighting, they are picking stocks from a universe. so if it is doing badly, it is a bad landscape to create alpha. --s been a horribly year horrible year for actively haven't managed funds. the otheriscount oil, watching, what stands out? chris: biotech ran into its first problems of its seven-year rally. valeant is probably the the year, at of signal event for biotech, though the whole space did not get

hammered, just fell out of his directory. consumer discretionary, a handful of huge stocks pushing up, and some problems in retailers and media existing under the future. >> thank you so much. a managing editor at bloomberg, and a senior economist for bloomberg lp. we will hear from both of you throughout the rest of the year and into 2016. you are listening to "the bloomberg advantage" on bloomberg radio and television. ♪

betty: welcome back to "bloomberg markets." time for a look at the biggest business stories. puerto rico has reached a deal to restructure $8 billion of , easing the pressure that has left the government fighting a mounting fiscal crisis. it would cut the puerto rico

electric power authority's obligations by $600 million. a boston chipotle where 136 people fell ill with nora virus is being allowed to reopen. "they office near boston college passed -- of the chipotle near doston college passe inspection and can reopen. the illnesses are not linked to a rash of e. coli infections at chipotles over the summer. the median price for manhattan's most expensive dwellings dropped to $3.6 million in october, down two point 2% from a year earlier according to an index from streeteasy that measures resales. prices have fallen every month since february, defying the broader new york market. that is your bloomberg business flash this morning. and, is this the best year ever for u.s. auto sales? job growth is growing, and

falling gas prices boosted consumer confidence in u.s. -- the u.s., the world's second-largest auto market. is the december report enough to 2000, or the record of does the industry have to wait for rising demand to make 2016 be better year for autos? we look inside the auto world and what is next in the year ahead. i want to bring in kevin tynan, senior analyst for new vehicle and auto part many factoring. kevin -- auto part manufacturing. kevin, could we get to a record here? kevin: if not for 2015, than 2016. demand drivers are in place. maybe the consumer is a little holidayed out here at the end of the year, but the demand is there going forward.

if not 2015, than 2016. betty: is demand mostly still in trucks? kevin: it is all trucks, and it will only intensify. advances in technology, drivetrain and chassis and light waiting -- lightweighting technology has made the driving dynamics of trucks very car-like now, but you get more utility in a truck, so when you think about revenue and profit contribution for the automakers, that's something they are going to promote. they will be devoting the investment to marketing, engineering, design of trucks versus cars. the last couple months we have had a 60-40 split, truck to car which could get near 70 in, 2016. betty: the margins on trucks, though, they are much bigger than on smaller vehicles. are they going to be able to expand margins on trucks? kevin: they should be.

as the driver there will be -- a big driver there will be technologies. not only getting consumers into the showroom, but if you look at the average vehicle age being over 11 years and the new technology that has come out into the marketplace between post-2008 global financial drivers with older vehicles probably would not recognize half the technology you are able to put into your vehicle now. when they see that, that will continue to be a driver of demand going forward. betty: what new technology do you think will really take off in cars or trucks in 2016? kevin: some of it is very out front. -googlethe ford announcement in self-driving, which might be way out in the future but is generating interest. connectivity is one that is very visible. the other two areas are fuel economy and also safety, which

are not as much out front but everybody is willing to pay for those. when you have things like lane keep assist or emergency braking, adaptive cruise control, putting us on the path to self driving vehicles, consumers are willing to pay for the things. betty: absolutely. very quickly, what about leasing versus owning dynamic, will that change much in a year? kevin: the concern is that interest rates are rising a little, but if you look at some of the dynamics behind leasing and the brand loyalty that comes from leasing versus owning or financing, much higher leasing. you get the consumer back into the showroom. you know they have a need for another vehicle, so that is something automakers and captive finance companies will promote through 2016. betty: kevin, thank you so much. kevin tynan of bloomberg intelligence. now for the flipside. it has also been a rough year for automakers, from cheating

scandals to recalls. i want to bring in bloomberg view columnist and auto industry analyst ed niedermayer to talk about the biggest three that come to mind. let's start out with the takata airbags. you heard kevin talk about how safety will be more important for consumers. what did we learn from this recall? ed: we learned most recently that it's going to be really challenging to get these vehicles off the road and fixed and safe again before more death s happen. from a saw another death vehicle. this recall has been targeting warm and humid climates that seem to be causing the defect, which causes exploding airbag. unfortunately, the latest vehicle was in the gulf states, then moved to pittsburgh where the explosion happened,. what a hugeates

challenge it will be to get all 23 million of these airbags off the roads and fixed. betty: not to mention, there is no hard and fast rule about reselling cars that have not been fixed yet on the recall list. ed: there's a lot of uncertainty with rental cars with used cars. ,new car dealers have to comply by the federal rules, but there's still a lot of leeway. the sheer size of the recall, the sheer number of defects out there, it's really scary. it will be years before these are all fixed, and hopefully we will cross our fingers and hope more deaths don't happen in the meantime. betty: the cheating scandal at volkswagen. what did you learn from this? ed: it exposed real cultural problems at volkswagen itself. that company has to take out a $20 billion line of credit and rethink a lot of things about management and business at that

company. it also expose broader issues with the regular scheme around emissions. europe, theand concerns have been felt the strongest, and there is a political push to move omissions testing out of the -- emissions lab, where of the people fear is too easy to cheat, and to move them out into the real world, which is a huge technological problem. betty: finally, driverless cars. are we being taken aback by how many accidents are being reported? be expected.s to the real challenge, it is not the driverless cars that are crashing, it is human drivers crashing into driverless cars. the problem turns out to be that driverless cars are too good at following the rules of the road, whereas we humans have a much more loose relationship with

road safety. so that is a challenge, but it proves that the technology is good. what we have known all along is that the real challenge for self driving car technology is not making the technology itself work, it is making it an human drivers work together. we have known for a while, and it continues to be an issue, how we segregate self driving cars from the rest of the human drivers in order to keep both safe? betty: thank you so much. ed niedermayer. just ahead on "bloomberg markets," hero presented bernie made off -- he were presented bernie madoff. marc powers joins us on wall street crime, next. ♪ . .

betty: live from bloomberg's world headquarters here in mid-town manhattan, you are watching "bloomberg markets."

let's head to the markets desk where rami and a since it was the latest. i know you're looking at energy stocks, but we are coming off our rally, aren't we? has the ramy inocencio latest. ramy: a lot of that has to do with volatility, volumes that are not happening today because of the christmas holiday. part of it has to do with oil and dynamics crude, still pushing higher. nymex crude, fourth day in a row of gains, the longest winning streak since april. has risen by 9%. the caveat is it is still it lows not seen since february 2009. with that, oil stocks have been rising with the rise of wti earlier this week, but you can see our majors are all taking a beat. exxon mobil down more than 1%. chevron down the most, 1.3%.

tonic of the lives down over 1%. phillipsy -- conoco down 29 percent. sun edison shares have actually been rallying today. they were up about 10%, and now they are up by 8%. the good news, the company says it is in talks with possible financing sources for a credit facility, and some of the proceeds would go to repay its existing line of credit. with that fund, shares year to there.e down 8.70% pep boys staying on the radar. boys up by 13.5% month to date. sterne agee is saying the company will likely be broken up service parts,

operations, betty, as well as retail operations. betty: thank you, ramy. vonnie quinn has more from our news desk. vonnie: police in brussels have staged a series of raids in the neighborhood with some of the paris gunman lived. the attacks in paris last month killed one hundred 30 people. americans and foreigners traveling in china are being alerted to a possible threat. the u.s. embassy in beijing has learned that westerners could be at risk during the christmas holidays. the unspecified threats centered on a popular shopping district. the british embassy has issued a similar warning. are securingements neighborhoods recaptured from isis militants. by the the third attempt

government to retake the city. government forces are holding onto a key district after two ws strikes overnight drove off the television -- cws airstrikes overnight drove off the tele-band. taliban. carriers expect about 38 million passengers between now and new year's. that is an increase of about 3% from last year. in business news, bnp paribas is writing down part of its see in dell unit. france's biggest bank says it is setting aside more capital for the italian, corporate, and consumer banking units. the bank reiterated its plan to pay 45% of its profits and dividends. dayal news 24 hours a

powered by 2400 journalists in more than 150 bureaus around the world. i'm vonnie quinn. betty? betty: much more in the next half hour of "bloomberg markets ." for your need netflix dose of drama. wall street has enough. a look at the top scandals of 2015. and the oil route dragging down energy companies. the point where it all turns around? ♪

>> we would like to welcome you on bloomberg television am bloomberg tv. this is bloomberg advantage. this is a roundup of what has been a difficult year for hedge funds, as much as we do not like to use that term as a catchall, catherine, it did seem that many of the big ones did feel some headway -- headwinds in that

category, catherine. well-knownhad managers, known for their performance do horribly. bill ackman, david einhorn. their funds are down more than 40% this year. and yet there are others who have done very well. exactly. were there strategies that just did not work, and should they be taking january to december is any kind of timeline at all? is that even relevant? : it is relevant for investors because they pay fees based on the performance of the too, and for the managers, a get paid and if they have lost money, they don't. -- they get paid and if they have lost money, they don't. cory: that crucial difference is

a norm is for a fund that depends on money to keep their staff and managers incentivized to get lower salaries and get that big payout over the year. that is true. that is why some of these smaller funds have decided to close down this year. there are a number of more funds opening. managers are hoping they can be the ones that make money. vonnie: tell us the strategies that work. long-shortyes, some equity strategies did very well because there was divergent in the markets and people were able to bet against stocks that were doing poorly. many concentrated funds, activist funds, like bill ackman's did very poorly because they were only in a few names, and those tended to be very crowded names. so, once someone start selling, then everyone fails and the

price goes down and down. and the people who did very well are multiplatform, multi-strategy funds with a lot of teams that manage little bit of money. and they are fairly market neutral, and those did very, very well. the: so, you are saying phrase is true -- it was a stock picker's market this year, finally. katherine: it actually was this year, yes. vonnie: we saw some major closures, funds giving back all of their money, some hedge funds managing their own money or turning into family offices, it feels like. are people raising money next year, will there be new hedge funds? to beine: there are going new hedge funds. there are big funds coming on board. late thison board year. we undoubtedly will see more

closures. prime brokers, thanks have will be a lotre more redemption of funds that have not done well this year and last year. investors are probably going to pull their money. the u.s. and from certain stocks as corey was fundsning, where have been doing well? distressed countries or provinces, and so forth? year, beginning of the europe was a much bigger story than it was at the end of the year. did some hedge funds do really well in europe? katherine: yes, there were some hedge funds that made money in europe. and tradinghere stocks there. there was a company called lan stone doing really well. they were all in developed markets. but i think all of their investments were in europe. at

all of the european stocks did pretty well last year. and of course, currency fluctuations would have played well for hedge funds. katherine: they did, but a lot of that badly. by the swissrised franc at the beginning of this year and also lost money in brazil. cory: when you talk about funds closing down, this is the time of year -- october actually -- this is the time of year when funds to close down and new funds get their selves ready to launch. are these unusual? katherine: you mean for the number of launches and closures? cory: how do both compared to the averages? katherine: they are a little bit more than they were last year as .ar as closures

i think the launches are maybe about the same, a little bit more, too. vonnie: that's interesting. there was some high profile pension funds, redemptions, if you like, sometimes showing how -- changing how they allocate their money, diverging from private equity, putting them in hedge funds. give us the roundup on that. katherine: there is still money coming into the industry. less than in previous years, but it still positive inflow. funds, most of the of the pension funds that pulled money from one hedge funds are going to allocate it or have already allocated it to another one. the beathat about structure then? is there going to be a change? i'm sure in some funds it is

already happening. perhaps for newer funds, the fees have come down a tiny bit, but not as much as you might expect. andink the average is 17% for what you make on the profit and maybe 1.8% for management fees. so, really not that much lower. vonnie: a few hundred basis points there, right? katherine: and for funds at starting out where the manager has a good pedigree, they're absolutely still getting the usual. it depends on the environment, where you can look between a good money manager and about one, investors would probably pay up for performance. you can see the difference in the stock picker's market. katherine: absolutely.

if you are up 10%, 12%, 20% this year, people will pay for that when the s&p is basically flat. burton, ourine hedge fund reporter. you're listening to "bloomberg advantage" on bloomberg radio and bloomberg tv. i'm cory johnson in san francisco, vonnie quinn on the east coast. you have the markets basically flat for the year. an amazing thing to see. this is bloomberg. ♪

betty: good morning. welcome back to "bloomberg markets." businessthe bloomberg flash. apple pay is making resolutions to grow in europe and in asia. the service allows consumers to pay using their iphone at consumer terminals. it will be introduced next year in china, hong kong, singapore, as well as spain. and jamaica may bring to mind marley, daiquiris, beaches, but it has a new claim to fame. the jamaican stock exchange newed, bolstered by acquisitions and a strengthening economy. the market has about 5 billion

dollars, infraction of the dow's $5.2 trillion. now let's get to abigail doolittle live at the nasdaq where she is looking at stocks on the move. including qualcomm, abigail? absolutely. let's do a chip check. qualcomm, identified as one of the stock picks by merrill lynch four 2015.- merrill lynch says the headwinds around the decline in chips is over and there are large global up for as set them rebound in 2016. it suggests that qualcomm could move higher by more than 50%. and micron, the company that recently offered what some are calling "atrocious guidance" for quarter.ary some are indicating this could

be a bottoming. there is a suggestion that the pricing could be better and the guidance could prove conservative. this is in reference to numbers back half of 2015. after this week, the nasdaq is up 16%, erasing losses as a patent war between nvidia and samsung may help amd. it will be interesting, betty, to see what 2016 holds. betty: interesting. a lot to watch. anye there is never shortage of drama on wall street, this year was no exception. we have an investigative reporter who has covered some of the biggest transgressions we've seen on wall street. he is also the author of a book -- "the seven sins of wall street." narrowed it down

to a top three scandals. let's kick things out. number 3 -- bond market surveillance? bob: the first thing i want to say, "the seven sins of wall street" makes a great christmas gift. it is not too late to order -- betty: [laughter] yes, you can overnight on amazon. the bricks and mortars. the bricks and mortar's deserve our support. the numbers do not matter after a certain point. this bond market is so big. yet regulators have been a little bit behind in the shenanigans some of the bond traders are using. the ftc says we're going to use this newfangled thing called a computer to track trading in the bond market. it is like back to the future. betty: they have woken up.

bob: that's good news. i should not mock the sec. betty: you don't want to be the next target. like martin shkreli is their target right now. spoofing is number two? betty: spoofing is one of the -- bob: splitting is one of the newest laws. dodd-frank made spoofing and dodd-frank was 2010. spoofing has only been against the law for five years. i think the amount of prosecutions has been one or two. i am exaggerating downward by one or two do. margin of error. there are only half a dozen people called to account for spoofing in five years. has theinally technology -- my colleague matthew wrote a terrific story last week -- about how finally the regulators of shown they have the will to do this because they have been going after people more in the last year or

two, and they have the technology to do it now. there are software programs that in debt of going through reams and reams of spreadsheets, in order to find abnormalities, they can now do it using software with a little pictograph of all of the trades. betty: i agree with you. i think they have woken up to things like spoofing and we will talk about that in a moment with our next guest. one.t to see your number you say benchmarks have not broken in paying fines? bob: look at two of the most important markets for consumers. a lending rate that is your mortgage or you're auto loan, based on the libor rate. auto loan, based on the libor rate. and currency, which everyone uses every day. we are trying to figure out the currency scandal, which has sent bankers to jail -- excuse me,

the libor has sent bankers to jail. the currency has really read shuffled wall street. some firms have gotten rid of their currency traders en masse because of the scandal -- betty: it's true. bob: it does matter for consumers in some way. with me.b, stay i want to take a different angle on the drama. about those in some of these messes? marc powers has more than 30 years of security litigation. cftc.one of those is the -- the cftc. you say they are a sleeping tiger that is about to be woken up? marc: that's right. dodd-frank has given them power. they make clear that spoofing --

it has been around forever. now it is clearly against the law. that is something they have to go after. in november, there was a , the judgenviction michael cost of, it took the jury one hour. it was a criminal case brought a year or two after the cftc brought that case. over $4.6 billion in civil penalties over the last year. -- the had of of their enforcement is very aggressive. betty: so, watch out. marc: and then the alleged flash crash case. some flattly lives in in the u.k. k and he is on extradition. betty: and that was on television. ok, martin shkreli, what you say about him? marc: i think he needs a good life coach. betty: [laughter] bob: don't we all? bob, don't you need a

life coach? bob: absolutely. maybe i will have shkreli be my life coach. marc: if you want to go to jail. price from to the $13 -- they had a public outcry. he said, oh, g, i don't know if i'm going to make any money on this. the problem is, once you start -- any publicity is not good publicity. need to be squeaky clean. because once you are in the crosshairs and they start do it. at you, they will it only took them two months. he apparently did not he things. the other thing to watch for our insider trading cases, right? turnings newman case, a

point, hard to prosecute -- 100%, 100%. up until last year, the u.s. attorney's office had a complete when record with respect to insider trading cases. there were reversals of two important criminal defendants. the court made clear, my view made clear -- i thought the u.s. attorney was overstepping in terms of their reach, what they believed to be insider trading. they made clear what the parameters were. this year, oh, my god -- it turns out that was not the case. some of these are being thrown out. , thank you.powers bob, great to see you. merry christmas to both. >> merry christmas. ♪

it is 11 a.m. in new york and midnight in hong kong. welcome to "bloomberg markets."

from bloomberg world headquarters in new york, here is what we are watching. i'm betty liu. why a worst-case scenario of $20 oil may not be as bad as you might think. and who has been naughty, who has been nice? we look at the s&p's biggest winners and losers. shedsrtin shkreli -- he light on the industrywide practice of price hiking. kreli. get enough of sh ramy inocencio is standing by the markets desk. we are coming off the lows of the session. ramy: we're coming off the lows, but we are pretty much mixed. on thisheads nor tails

christmas eve. a lot of people heading up on vacation. let's look at the board. the s&p 500 is off by about a 10th of a percent. tad,asdaq is rising just a about a 10th of a percent higher there. the past four days or so, crude has basically been dictating our storyline. but today, we see a separation between what was happening in equities and oil. nymex crude is rising. .t is up high about 1% we are off our session highs. of course, this is coming after congress last week ok'd the listing of the u.s. oil export embargo. nymex crude has actually risen, betty, by about 9%. betty: we have been looking at oil prices and how they have risen. how is that impacting energy companies? ramy: at least week today, this

options, the member rank returns, on your own bloomberg terminal p review can see the energy stocks performing the best over the past week and you can see for example, one oak is the best performer, up by 28.5%. company, they are all doing the best right there. in terms of the worst performing stocks, not a theme here, a bit of a hodgepodge. waltinteresting to note disney company is down by 1.5%. that is despite pulling more than $600 million from "the force awakens." this is perhaps not surprising chipotle mexican grill.

gold futures are rising. equities drifting sideways, slightly to the negative, and similar to the equity market, let's look at bonds. u.s. treasury's right now, those are pretty much, i believe, unchanged -- let's see, this is the 10-year yield. hardly any change here today. betty, back to you. inocencio at the markets desk. let's check in on the first word news. courtney donohoe has the latest. belgian authorities are charging a ninth suspect in connection with the paris attacks. manstigators say that the had been in contact with the husband of a suspected ringleader. the attacks killed 130 people. beijing police have tightened security around popular tourist attractions today.

there is an unspecified threat against westerners. the british embassy says that they have received information of a possible attack against westerners on christmas day. shipees drowned when their sank near turkey. at least nine were children. government will injure talks aimed at ending the bloody civil war. the foreign minister issued a statement while meeting with his chinese counterpart in beijing. talks will remove -- will resume next month in geneva. there is no mention of what is to be done about syrian president bashar al-assad. global news for hours a day powered by our twin 400 analysts -- global news 24 hours a day powered by 2400 journalists in 150 bureaus around the world.

betty: what does the doomsday picture look like next year? wall street's worst-case scenario of $20 a barrel and what that means for earnings. rico a deal between puerto and creditors. the largest ever restructuring in the municipal bond market. ♪

vonnie: welcome back. you are listening to the withmberg advantage" myself, vonnie quinn, and cory johnson in san francisco. we have with us our on the road expert. explained to us -- cory: dead armadillos notwithstanding. vonnie: [laughter]

i don't know, maybe we will get to that a little bit later on. who is hitting it out of the park with regard to lower gas prices? guest: general motors and ford have been doing excellent job. they are helped by the lower guess prices, but higher vehicle sales, in particular higher truck sales, which is helped by the gas prices. the ford f1 50, they have the lighter frame, a couple years under the belt. what is interesting to me is how the carmakers have differentiated themselves. oaks wagon has had a horrendous year. is -- volkswagen has had a horrendous year. volkswagen is not

a company i cover i can't speak to them directly, but in terms of repercussions is definitely benefiting other automakers, giving them an opportunity to still market share and it has hurt them. vonnie: ford can do no wrong pickup. f-150 are we going to see that? efraim: i think we will see continuation of progress. good employment numbers today. it all bodes well for that favorable mix of pickup trucks. and yet, they were trying to steal a little market share for the industry leader. i think ford is in a good position to penetrate and rebound with product. there have been some earlier in the year delays or lost share

because of the left of availability with the new product. with the new products, i think they're going to get share. we've also seen -- tommy if i am wrong -- tell me if i am wrong, please. you will be in good company. car loansalf of the are extended terms. not subprime necessarily, but going up to 60, 72 months. disconcerting. an easing of credit to get people into cars they could maybe not afford otherwise. a risk that is providing factor. i agree that that is not something you want to see, helping people buy a car today that they might not want later. but people are doing better with death and paying on time than in the past. right now it's not a major concern, but it is something to keep an eye on. general motors's financing arm is out. it has nothing to do with the

company anymore. how will that impact their bottom line? are tryinghink they to get an financing because that works with their arrangement, but they're real big business is talking about selling cars in delivering that way. the financing is good. the fundamental business is selling cars. how will they cope with an interest rate increase? they've have the first one. we will begin to see a difference for next year? economics expect, s&p expects an increase, a gradual .ncrease $15 a month is not a big deal for most people. who are some of the best companies that you follow and what have they done to get people into seats? efraim: i like general motors.

it is strengthening its position globally. they are still more profitable in north america. even as there was transition, particularly in the middle of to year, they have been able move with it. they were in position. they had utility vehicles there which gave them in and manage in europe is another area outside the u.s. that is coming back as the volume grows there. vonnie: explain to us where we are at, because the average car on the road is what? 11, 12 years old at the bottom of the cycle? are we still at those levels? are people replacing 12-year old cars? efraim: we are still at the bottom. we think we will have a record

year in 2016. millionget to 17.6 light vehicles. that is after what we assume will be 17.4 million like vehicles. and that's really fundamentals. the economy is growing, consumers are more confident. low jobs, low gas prices. but we are atory, the end of the cycle in the u.s., but not globally. toy: you have people waiting get their driver's licenses a lot longer. the drivers license issuance for people under the age of 25 is the lowest it has been in 50 years. millennialsraim: have said they were not going to buy cars. now they are it eager car but -- bigger car buyers than

gen x. they are starting to make real income. that will be another good, long-term driver for demand. vonnie: bigger that's fantastic. do we know anything about their preferences? are they going green? are they going hybrid? efraim: actually it is a difference between city people and suburban people. city, they in the will want to do a zip car, lyft.g car, cooperuber, in the suburban areas where it is not an option to share cars, then they will buy cars just like everybody else. have seenickly, we consolidation in many industries. do you see any kind of mergers or synergies, as they say? the potential synergies for some mergers, i don't think he is going to get. with gm, i don't think he will force that deal.

maybe there is a partnership. renault nissan, something like that. maybe with the dealers. vonnie: with the dealers? thank you. he is the equity analyst at s&p iq in our studio. this is the "bloomberg advantage " on bloomberg television and radio. cory johnson joins me. he is in san francisco. ♪

betty: good morning. welcome back to "bloomberg markets." time to look at the bloomberg business flash. sac capital will pay $10 million to investors who say they lost money.

hsbc warned that oversees inflation will limit the federal ability to raise interest rates last year, but goldman is saying otherwise, predicting that janet yellen and her colleagues will lift the benchmark rate four times. cavalierseveland visit the golden state warriors on christmas day. it is their first meeting since cleveland lost at home and it is a hot ticket item. it will be a meeting of the and lebronrs, currie james. the mba is trying to make christmas as much about basketball as it is about santa. try to makes christmas as much about basketball as it is about santa. all right, our own alix steel is charts every

investor should be looking at as we head into 2016. what do we need to watch for? alix: oil was one of the biggest 30% and prices syncing it is the focus of this week's "the numbers don't lie." the most important number you have to watch is inventory. when do we hit peak storage. this is the total oil inventory stocks. around 3 billion barrels. bank of america thinks it could rise -- ok, bank of america thinks it can rise so slightly to over 3 billion barrels. the issue is, supply has to come down fast enough to make sure we do not hit that peak supply. looking at canada, u.s., brazil, russia, mexico -- it is 58 million barrels a day.

a decline ofsee about 200,000 barrels a day next year and is basically due to the u.s. you had some cost and areas like canada, mexico, brazil, so they producing even though the oil price is so low. that brings us to one of the biggest risks by h oldman -- by goldman sachs. this is basically a product -- the fuel that we use in cars, and heating, and we have avoided peak storage because refiners have been making product like crazy and that has created an oversupply of distillates. you can see that big surge. peakme point if we hit storage for distillates here in europe, goldman thinks that that could happen in winter chair, refiners -- and winter gear. year.winter next

brent becausesure we will feel pressure globally. the other thing you have to watch, betty, is sentiment. sometimes fundamentals just do not matter. this shows the shirt term -- the short term for pti. you could see a lot of short covering and wti could see a strong rally. the issue is do we want to pay $20 a barrel as the sentiment piles up, betty? betty: thank you, alix, for this -- for those big factors on oil next year. oil has been lengthy balance sheets of energy companies. some analysts say even with all of the factors that we saw from drops to $20 ail

barrel, earnings will not be hurt anymore. could that be true? we want to bring in the reporter for us.e that story ok, what is the reasoning behind this? reporter: a lot has to do with oil andge behind $100 $40 oil has already been done. so, the earning pinch we have seen on the energy sectors is over with and we can see the benefit from consumers spending more money on cheaper gas. betty: where does this come from? dani: an analyst at wells fargo. if it stays in the $40 range, we might see something closer to an 8% growth. so there definitely is an impact, but the idea is it's not going to be a negative year. betty: does that sound right to

you, john? definitely jibes with me. i think cheap oil is good for just about every other sector except for energy. airlines, tire makers, automobile companies, housing. it flows everywhere even into consumer discretionary to some degree. it's interesting, guys. can we pull up the s&p -- the major sectors? worst performers year to date. but consumer discretionary stocks -- energy is on the right-hand side. 's questionnaire and, surprisingly, up 9%. do you think it has to do with the lower gas prices? john: i most certainly think it does. it shows up. you have homebuilders, manufacturers,

retailers, specialty retailers have done better. it is good for the consumer. it is good for consumer staples also. it helps reduce cost in agriculture. we have a lot of inputs. it's good for consumers. it's good, we think, ultimately for industrials and materials. betty: so, what are people saying about energy earnings for next year? consensus is 7% decrease, and that is miles better than the 15% we saw this year. there is definitely this idea that earnings will be slowing again, but the slow is going to be better than we saw this year. it sounds like 2016 might be a year were maybe we do not recover quickly, but we meander along.

john, if falling oil prices will be so good for the rest of the economy and the rest of these companies, why are we tracking oil so closely though? oil goes up, we go up. we go down, stocks go down. why? takes time to settle in. right away it turned up in housing. it helped people willing to go to survive you -- to suburbia instead of surrounding themselves in the cities. the other thing would be takes a while for people to believe it is actually happening. black, 60is the new is likely the new 104 oil. betty: the new normal in oil? john: we think so. that is the big driver, we think, that people are in denial about. it is easier to find oil, produce more, while at the same time, the end-user user, both corporate and the consumer are

more efficient every year in utilizing the stuff. but every drop of oil gets squeezed harder. that demand for oil will be somewhat regulated. it's like having a governor on an engine. betty: thank you both. we have much more ahead as we had to break. a quick reminder you can get 7 on business news 24/ bloomberg radio and the u.s. on sirius xm on stations in new york, boston, san francisco, washington. and of course, on bloomberg.com and the bloomberg app. ♪

betty: good morning. welcome back to "bloomberg markets. "

the markets desk where ramy inocencio has a check on the markets and if you movers now, ramy? ramy: we are in the doldrums because it is the holiday season. but let's take a look. the s&p 500 paring losses from earlier. the dow is down by 2/10 of a percent. the nasdaq is accelerating gains. some stocks are definitely moving. if you have your own travel plans, you won't tv only ones flying -- you won't be the only ones flying higher. airlines is up by 3%. american and delta up by a little bit more than 1%. you will remember there were fears over a ticket pricing war over higher capacity. nike is down by nearly 2%,

almost matching yesterday, a 2.4% selloff. finish line is down by two point 5%, foot locker down by nearly 3.5% there. let's go to the caribbean -- i wish we could go to the caribbean. but over to puerto rico. $8.2 billion in debt. assured guaranty is up 3%. in bia is up more than 8% for stocks.these they are the highest since december. and him km,ss point both waiting in saying this is a positive development. turmoil or not, puerto rico sounds like a pretty nice place to be right now.

ramy: it could be. inocencio, thank you. let's check in on bloomberg first word news. courtney donohoe as more. courtney: let's go to asia. record-setting budget in japan, including the purchase of and fighter jets from the u.s. japan is stepping up its military presence as tensions with china increase. minneapolis-st. paul international airport release are out in full force to ensure a smooth travel day, a day after mass protests led to disruptions . shut lives matter protests down one terminal. as many as a dozen people were arrested. they spray-painted the names of on theshooting victims road nla. nine people were arrested in that instance.

a man who admits to killing three people at a colorado to actonce to -- wants as his own lawyer. he has been convicted of a shooting at a planned parenthood facility. the result of mental exams are pending. ben carson plans a shakeup of his presidential campaign. he says some of his top aides could be let go. carson is falling back toward the pack in polls, losing his foothold as one of the republican front runners. voting starts in less than six weeks in iowa. and beatles fans get an early christmas present. the fab four's tunes are being streamed on spotify, apple music , and other catalogs. theersal music announced changes yesterday after years of resistance.

global news, 24 hours a day, powered by our 2400 journalists and more than 150 euros around the world. courtney, thank you. much more in the next hour of bloomberg television. martin shkreli is public enemy number one. how many more like him are lurking in the drug world? and we are ranking winners and losers and what it means for 2016. ♪

vonnie: welcome back. you're listening to the "bloomberg advantage." i'm vonnie quinn. -- myty cory johnson partner cory johnson is in san francisco. "r guest's latest article puerto rico wins."

does everybody when in this? guest: it may be. everyone gets to breathe a sigh of relief, especially before the end of the year. -- they can hits say, look, we were able to negotiate with our creditors and get a deal done. it certainly helps -- today it's definitely helping the bond insurers. they are up today and bonds are trading up -- vonnie: as insurers you're talking about people like mbia who would've been on the hook if there was an actual default? michelle: yes. this is not a done deal. has torico's legislature

approve the deal and then the transaction that would restructure the debt needs to happen by june 30. there are deadlines here. vonnie: it's hard to imagine that puerto rico would not approve this deal. cory: yes. hello. i wonder what precedent it sets for all of the other debt at risk in puerto rico? the government trying to negotiate their way out of it question mark michelle: -- join to negotiate their way out of it? michelle: it is a 15% haircut. the question is, is that enough orderingcut to ease go's debt load and their obligations? maybe it is. maybe it isn't. it could also be a framework for potential other restructuring, debt restructuring on the island. given the nuts and

bolts of this deal, it has taken reach this deal, agreeing everyone is to. why are bondholders agreeing? michelle: they are agreeing because the alternative is this gets works out in a court of law, and who knows if they will get better treatment before a ?udge it also brings clarity and resolution. 15% people believe that a haircut is a really good deal for the bondholders, some of them are hedge funds that pricesed these bonds at much lower than $.85 on the dollar. they would be making a profit on this even though there is a haircut. we do need to remember, too, oppenheimer and franklin, two mutual funds involved in these discussions that have signed on to this restructuring plan, they have been holding on to puerto

rico debt for a long time. they purchased at full price, and they have agreed to this. so they are willing to take the 15% haircut as well. shows you howthat bad the situation is. maybe they are waking up to the fact that a 15% haircut is better than nothing. bondsle: sure, and their have gained throughout the years by holding puerto rico securities. if you weigh that against the gains they have made them years, who knows? maybe they still come out ahead over the long-term. vonnie: what are bonds that yielding today? what has happened? michelle: they are rallying a little bit today. we have a maturation in 2025 that is trading at a price of 56.2 cents on the dollar. that is an average price.

the cymer 15th, it was trading at 51 cents. tax exempt bonds. the average yield is 13%, 13.2%, where is on the 15th, the yield was 14.7%. these being traded? is it a very liquid market? liquid fort is people that hold puerto rico securities and can trade in and out. among muni bonds, actually, puerto rico is one of the most actively traded bonds, or bonds -- the problem though -- cory: there is so much of it. michelle: there is so much of it. there's a lot of it. thank you. also, the other factor there, too, some of these investors have started signing nondisclosure agreements, which restricts them and their trading, so they can only trade

with other investors who have signed disclosure agreements as well. cory was talking earlier -- we have general obligation bonds, housing bonds, building bonds. this is not even the largest group of bonds out there when it comes to puerto rico. what happens to the others? michelle: yes, there are general obligations, the direct debt. the constitution stipulates those bondholders get paid -- not just other bondholders, but other bills on the island. does this mean that -- oh, and the gao -- the g.o. is $6 billion of tax debt outstanding. the question is -- the governor and puerto rico officials

definitely want to lower those that levels. the question is, will investors holding those types of puerto rico bonds, will they actually come to the table and agree to some sort of haircut? vonnie: hmm. that the line of the story really jumped out at me -- i encourage people to find that on bloomberg.com -- the size of puerto rico's debt is larger than any state, including california and new york. michelle: that is correct. if you pull together the public agencies, you get that $70 billion number. that is not all debt of the central government. that is a problem of puerto rico and its agencies for years. they kept him borrowing to fix budget gaps, and that is unfortunate because then that money just went to making

budgets balance rather than financing alding new bridge or a new road or new schools. cory: robbing peter to pay paul. a really quick check of headlines. cutting ao electric, deal for debt. interesting piece. your listening on bloomberg radio and bloomberg television. this is the "bloomberg advantage ." ♪

betty: good morning. welcome back to "bloomberg markets." now for the bloomberg business flash. fedex plans to run christmas day deliveries to complete shipments. this was after a severe weather created in her the run-up to the meanwhile, ups says their delivery has been on time for much of the week and they expect that to continue. take that, fedex. and disney chairman and ceo bob iger, despite the smashing saw hisof "star wars," compensation shrink by 3%. his cash bonus shrank. like many media ceo's, is equally among the highest-paid

executives in the united states. that is your bloomberg business flash update. now let's have a quick check on how stocks are trading. we are drifting off while -- off lows of the session. abigail? abigail: we are on pace for our best week in a month. the commodity indexes up 2% this week largely erasing 5% on the month. year up finishing the more than 5%. also, celgene, the top performer on a percentage basis, and shares are up sharply after they sell the patent for a drug. the market is very bullish. one analyst says this is the best -- the biggest overhang on these celgene stock has now been

lifted. maintains a price target that suggests the stock may move. keeps watchabigail on the nasdaq, we are keeping a list of who has been naughty and nice in the s&p 500. this tracks the s&p 500's biggest winners and losers. at the top of the list, netflix, so far this year, best-performing stock. a dramatic slump in oil prices. energy is the biggest loser. a loss of 77%. we want to focus on when resorts resorts. wynn look at netflix andwyn since they both target those who just want to have some fun. let's begin with netflix.

that is easy one. they did supremely well. going to netflix more and more and watching their shows. how will that continue in 2016? chris: i remember at the start of this year, this was going to be the year of online tv. boy, we saw cbs and hbo and all of these other people launch. there does not seem to be anything stopping netflix right now. it's a tremendous value. eight dollars a month compared to $80 for your cable bill. more than likely we will see more of that in 2016. betty: what are their plans? to be they want everywhere in the world. that is the gold. there are a few places left. there are 40 million subscribers in the u.s. in a few years, internationally could be bigger than the u.s.. that is their trajectory. betty: their content spending

is, what, $5 billion now? you see that. you see them releasing movies, winning awards, a lot of high quality product they are putting out. betty: on the flipside, what is with wynn? is it all about macau and the crackdown on wealthy gamblers? crackdownis, and the on corruption in china. it came at a bad time for the casino industry. they are all hosting those new resort. mgm, and lasynn, vegas sands all opening new resorts. the market is saying this will be a tough 2016 for wynn as competitors. betty: right, and steve had that conference call act in october where he had candid comments about how difficult it has been dealing with the chinese. chris: one of the things the

chinese government is trying to do is cut back on the number of tables. if you are planning on may be 400 tables and now people are getting 250 at most, your economics change. betty: interesting. chris, thank you so much. lmeri of bloomberg news. ceoin shkreli, the everyone loves to hate. he jacked up the price of a drug 5000%. he did not invent this practice in the drug industry. it has been going on for decades. it's just that he did it with more gusto. here to talk about how he is holding a mirror to the entire drug industry, our correspondent. this has been going on for quite some time, right? it goes on for two forms. companies that did almost

exactly what martin shkreli did, drugs,s find old repurpose them, and jack the price up by orders of magnitude -- betty: as much as him? reporter: not as much as him, but we are talking about companies like valiant, other companies, they have all tried that maneuver your it sometimes they back off. sometimes they hold their ground. background area where martin shkreli's story is important. you raise the price of prescription drugs a 10% every year, year in and year out, and those are price increases for very widely disseminated products, whether you're talking diabetes, ms, so forth. situation, you have drugs in the united states that are vastly more expensive than

elsewhere in the developed world, and that the discrepancy which, i think, will continue to irritate a lot of people. tipping point the then? we tolerated this before and now this is it? that: it could be, but will depend a lot on politics. republicans are not going to move anywhere toward any new regulation of drug prices, whereas hillary clinton has been talking a good deal about being troubled. we have a long way to go on this. you are talking about the largest, most potentially influential a customer in the united states is the medicare system and there is a law in place that prevents medicare from bargaining at all. that shows you how far we tilt toward not letting the marketplace -- betty: the biggest consumer of drugs. l: which would have tremendous market power if it whirl out to set drug makers

against one another and there's a statute that prevents that. ist shows you how tilted it in favor of the pharmaceutical industry as opposed to canada and a lot of european countries, were governments actually force them to pull their prices down. betty: build the drug companies are it sounds like we jacking this up hundreds of percentage points, actually we -- this is actually a big discount, right? that is the argument and in recent days bloomberg news has done a terrific analysis where they factor in the discounts that are offered privately to insurers and even with the discounts factored in, most of the drugs when they are sold in the united states are still twice as expensive or more so with the discounts. yes, the pharmaceutical industry can talk about that, but when you do the analysis, you see the arguments still hold. the is going on,

international pharmaceutical industry is funding its r&d by having the united states consumers subsidize the worldwide market. betty: have any of the companies pulled back on these price hikes at all? paul: the rev the couple examples, but for the most part, that is not the pattern. thank you so much, paul barrett, a bloomberg. that does it for me. markets close early. i want to wish everyone a happy holiday and we will all see you back here on monday to get back to business. ♪ . .

alix: it is 12:00 p.m. in new york and 4 p.m. in hong kong. welcome to bloomberg markets.

from bloomberg world headquarters in new york, good afternoon. here is what we are watching at this hour. the grinch making an appearance on wall street this christmas eve, stocks snapping a 3-d -- a three day winning streak. we will count you down to the close. it is a final countdown for retailers. just a few hours left in the most critical shopping season of the year. we will look at the biggest winners and losers. the newt ready to toast year, a look at what we can expect from the food and beverage industry. pricesw commodity provide support or will a stronger dollar way on profits? let's go to the markets desk for the latest. a pretty