1930's and betting unfamiliar companies. and valeant stock has tanked this year. lawmakers are skeptical and now the ceo is on medical leave. ♪ david: welcome to bloomberg go. i'm david westin. brendan: and i'm not stephanie ruhle. david: we welcome brendan. brendan: matt winkler is also here. inventor of bloomberg news. and vonnie quinn is also here. good morning. a suicide bombing in pakistan has killed at least 18 people. more than 30 others were

wounded. people had been lined up outside the building to get their national identity cards. no word on who is responsible. police in brussels arrested two people described as suspected terrorists as part of an effort to prevent terror attacks in belgium during new year's celebrations. the texas teenager in the so-called affluenza drunk driving case has been arrested in mexico with his mother. ethan couch had been missing for weeks. his lawyers argued that his wealthy parents coddled him into a sense of irresponsibility. he could end up in prison. we are seeing a rebound in futures today after declined yesterday on the last trading week of the year as stocks declined yesterday with oil. we are seeing the bounceback today. change fromg little

the averages for the full year. seeing a little bit of a list this morning. lift this morning. let's check on oil. we will be getting stockpile data from an industry group today. natural gas has been an interesting story. we have seen this rally in natural gas that might even turn positive for the month of december. that's because the forecast are for cold weather to becoming. some localching newscast and they seemed ecstatic that finally we were getting some cold weather. bounce of 1.5% in natural gas. and it's worth mentioning the ruble this morning. we are seeing the dollar rise versus the ruble. the ruble is at a record low versus the u.s. dollar.

steam alonglosing with oil prices. european stocks rise for the first time today in three days, trimming their worst december drop since 2002 parent caroline hyde is in london. you have had a rough patch the last month or so. we keep hearing that european stocks are the place to go in 2016. how do we square these things? it has been volume. it's the same out in the united states. we are seeing some pretty stellar gains. maybe it's exactly what you are talking about. the optimistic bullish calls. 16% expectation of increase. 16% growth for the stoxx 600 over the course of 2016.

the most bullish says it will be up 23%. are comingis why we off of those lows. but we are on course for the worst december since 2002. minors not looking so good today. until we start to see a bounce back in copper which is trading lower today, and still you are seeing these significant moves. cautious.king traders david: tell us about the pound. caroline: this is interesting. it is up by .4% today -- by almost 5% this year versus the dollar.

-- it is up by .4% today, down by almost 5% this year versus the dollar. the likely theme for 2016 is options traders. they are the most bearish in more than six months. we haven't seen so many downward bets against the pound. the reason is worrying about slowing growth and the referendum. the referendum that the u.k. and whatve the eu concerns that leaves for british growth in general and what it stops the boe doing. there's that disparity in the moment in the dollar versus the pound. erik: is it fair to say that european -- brendan: is it fair to say that european stocks have settled in? caroline: i don't know. let's have a look. we are still putting in

perspective coming off of those lows. draghi not aim as high as expected. he didn't live up to market expectations. what will the u.s. policy helped through in terms of european stocks? until we start to see some sort of stabilization then you will see oil and gas companies come higher. then you will see minors come higher. i think we are cautiously starting to see those bets for 2016 coming into action. that is why i leave you with a picture of a sea of green. maybe it's time to follow those alleged bets. matt winkler, we can't

have you here without asking you what you think about european stocks. matt: outlook should be better. if you look at the track record for draghi pretty much everything he set out to do is happening. not in a straight line, but it's happening. in 2015.d a great job time's person of the year. remember the greek crisis? it's gone. these are things that you could have said were stumbling blocks, but europe is a regularly moving better. and that's probably good for stocks. it's fair to say the driving stories of the year were europe, china, and oil. we have vincent piazza from bloomberg intelligence on set with us. we have been looking at reporting about what happens to the fractures in america --

ackers in america. at some point they will turn those taps back on your they can be stilled momentarily. >> when we think about u.s. unconventional output we have this phenomenal. drilled, uncompleted wells. ducts. think of them as shorter cycle just-in-time inventory. responds, the drillers turn on the spigot and bring those wells online. it has become very short. the times have become very tight. that's where we are seeing enormous efficiency gains. don't underestimate the texas oilman. thed: when it comes to price of oil, that effectively means it can suppress the price

of oil even if they are not pumping. >> a tighter band both on the low end and the higher end into 2016 because of that phenomenon. that just-in-time shorter cycle inventory that can come on. brendan: we are going to talk about saudi arabia in a minute. breakea that opec could the price of oil seems implausible. it seems when you look around at countries that are oil producers that they are coming to terms with the long-term reality of some 50 oil. matt: remember the 90's? brendan: barely. i was in new orleans in college. matt: people forget that the 90's was a decade of low oil prices. a prettylly it was good decade. at least for the u.s. it was certainly a good decade. you could argue it was a good decade for europe, too. the berlin wall collapsed.

nowsituation that we are in probably looks a little bit like that in the sense that it's kind of hard to see how we get back way abovecolating $100 a barrel. brendan: and when we look at long-term trends in the price of oil, one good side benefit is we are seeing a shift toward better governance in a lot of oil driven economies. venezuela, not argentina, brazil certainly. matt: that's true. the american oil situation is so completely different today than it was back then. we talked about the resiliency of the u.s. producer in 2015. we will likely have more subdued output in 2016 but don't underestimate their ability to come on down that cost curve and become much more efficient. great deficiencies in 2015, 2016 that becomes much more challenging.

think of the output decline is very modest relative to two years of 25% cuts. brendan: the efficiency gains we saw have not been tapped out. >> it would be challenging to see those gains in 2015. in 2016, the operators still have some wood to chop. brendan: thank you, vincent piazza. matt winkler is staying with us. up next, we are talking free internet in india. facebook's mark zuckerberg finds himself in the middle of a new debate. ♪

vonnie: welcome back to bloomberg go. bridgestone will decide by the end of the week whether it will try to be carl icahn's bid for pep boys. and carl icahne are trying to expand their presence in the tire and repair industries. toshiba is asking banks for a $2.5 billion credit line to pay for reform is very the struggling company faces mounting calls from an accounting scandal. last week toshiba forecast a record $4.5 billion annual loss. here in new york, two former jpmorgan personal bankers are accused of stealing from the dead. prosecutors say they used atms from an active00 bank accounts. at least eight of the account holders had died. the suspects have pleaded not guilty. brendan: that story is hard to swallow. go, we areglobal

focusing on india, where facebook's mark zuckerberg is making a personal push to allow a free internet service. it has invited questions from regulators and stirred controversy. we have david kirkpatrick, who literally wrote the book on this. it's not free internet. it's the free zuckernet. >> it's a free set of services. not just facebook. tos what zuckerberg believes be of use to people who are not on the internet at all and would like a taste of it. brendan: but he's not doing this out of the goodness of his charitable heart. facebook stands to gain something from this. >> i wouldn't put it that way. facebook of course will gain tremendously over the long-term as people get on the internet and as the internet advertising market grows in these countries, which doesn't exist now, by the way. but that's not the reason he's doing it. is a greatuckerberg

entrepreneur. the richest young person in human history. amazing businessperson. idealist also quite an and something of an altar list. he really is trying to do something he thinks is good for poor people. think he's trying to do something that he believes is in shocked good and he's he's getting pushback. brendan: put aside his motivation. what's the effect? if i were there in india and this is available to me, what i not be able to get at rival services to facebook? >> not for free. this is a service offered only to people who are not on the internet at all and in many cases who barely know the internet exists. of the worlds like this, people who get on the internet for the first time, the only thing they use typically is facebook. in indonesia -- many countries. shocked he's getting pushback. brendan:that aside, these are po are not on the internet. they are offering them a free pathway to get started. that's the idea. the objection is basically,

people who cannot get the whole internet for free should not get any of the internet for free. i think it's idiotic and i think it's frankly very elitist, this objection in india and i don't think net neutrality has anything to do with it. even think net neutrality is an understandable concept. i think it's misused and misunderstood in the united states and we've gotten so deeply wrapped up with this idea and it has infected global thinking about the internet in a and unpleasant and unusual unconstructive way. the south -- free internet, how can you object to it? tradition ina competition and antitrust law that someone can't go giving things for free if it's reinforcing their position. matt: you've heard that line, no good deed goes unpunished. is going onreally here. good to people say, too

be true. zuckerberg has a history of doing things considered unconventional. anytime somebody does something unconventional it's going to incur somebody's wrath. brendan: what will this do to investment in internet infrastructure in india? there is right now a huge push up the g's.ple o there's tremendous spectrum acquisition. if he shows up and says, here's what you can get, facebook, wikipedia, what does that do to to the investment climate? >> that's a sophisticated question. brendan: i'm a sophisticated guy. >> this is the reason they are really doing it long-term. have beenrs frustrated in india that people are coming online as fast as they could. they are installing increasingly high-bandwidth wireless networks.

idea is that facebook and offer this free service that gives people a taste and they start paying. interestingly, yesterday, zuckerberg said that only a small percentage of these people are still getting free services 30 days after they start, which suggests it really is working to get them to start paying for data on the services, which is what the wireless carriers want. so it helps their business which will then give them more resources to invest in infrastructure. brendan: i saw that statistic and i thought it was interesting. another explanation may be that it's a little bit like aol. you get this tremendous service that is limited in scope, but you've got the internet out there, the internet always wins over a closed system. >> that's probably true. the internet will win. nobody says otherwise. this is for people who don't really realize the internet is

even there. taste is beneficial because it leads them to say, maybe i will pay even a small amount of my limited resources to get this regularly because it helps me. we know how important the internet is to having a happy and informed life in all parts of the world. we at all concerned about potential rivals to facebook not even being able to get started? at the other way. i see this more in the context of where we are in the 21st century. there are three things going on. one is globalization. this is very much part of that process. the second of course is climate change and then you could say urbanization is the third. but globalization is this force we are living with in the 21st century and here is facebook right in the center of it driving it. david: there you have it. david kirkpatrick, you are going to stick with us. we will be looking at top trending stories on bloomberg

news. that's coming up next on bloomberg go. ♪

david: welcome back to bloomberg go. we are looking at a pretty rainy washington, d.c. now we are turning to bloomberg trends. here are the top five. matt, what caught your eye this morning? matt: i couldn't avoid seeing marc faber saying once again doom and gloom is upon us and we will have a recession in 2016. i thought, that's pretty good news actually. brendan: he was actually on bloomberg tv yesterday.

let's take a look at what he had to say. u.s. treasuries are quite attractive because of my outlook for weakening economies. and actually i believe that we already entering a recession in the united states. brendan: that's classic marc faber. matt: this is not new from him. this is something that he has been saying periodically over the past decade, by the way. brendan: sooner or later he will be right. matt: like a clock. like a broken clock. when you have someone like marc faber who is respected and has a following saying, things are getting worse, when actually all the data point to just the opposite, that's probably a very positive situation for an investor. you don't like everybody to be

going one way. part of his argument is that expansion's diet old age and that's not necessarily true and that is something janet yellen pushed back on in her press conference. they die for reasons, not because of accidents. matt: that is certainly true. we saw that with the onset of the financial crisis. david: what did you find? brendan: i'm looking at this company that makes lingerie. they have a policy where, if you leave, they will write you a for $10,000. it seems like an extraordinary story. if you dig down into the detail, it's a really good piece by , it's agreenfield subjective call. the ceo can say, i feel you have been a good worker, so you burn arn $10,000.ouou e what this says to me is it's a

perverse incentive to get people to work really hard in case they feel like quitting. people theynus for like to happen to leave. that's also a relatively cheap way to get a great article in bloomberg and discussed on the air. back when i was at abc news we would give goodbye parties for people and it was as much for the people staying behind as it was for the one leaving. you wanted people to feel good about the organization. david kirkpatrick, thanks for being here. matt winkler, you will stay with us. next on bloomberg go, we will continue talking about valeant. the ceo has taken a medical leave of absence. ♪

brendan: welcome back to bloomberg go. i'm still not stephanie ruhle. matt winkler is with us.

vonnie quinn has the first word news. vonnie: a former israeli prime minister is going to prison. ehud olmert will serve 18 months instead of six years. the african nation where the ebola outbreak began is now free of the disease. one fourth of the 11,000 people killed by ebola lived there. the outbreak spread to liberia and sierra leone after starting in guinea two years ago. keep your drone away from president obama. a small drone was spotted flying near the president's motorcade in hawaii. the operator landed as he was approached by secret service agents. he said he didn't know about the motorcade and no charges were filed. i'm vonnie quinn. brendan: now let's take a look

at our morning must-read courtesy of matt winkler. here's an extract. the number one stock picker in america in 2015 is no out the mail, she is the manager of the fidelity select retailing portfolio. all.ecret is no secret at how often do we have to rediscover value investing? actually we don't have to rediscover it. it's there. it has been there since the 30's. colombia finance professors started this and warren buffett is their most famous avatar. year ase hathaway every an example of value investing. atyou look at dena friedman

, we looked at the top us-based investing in equities funds, she's right at the top. what is she doing? using all of these principles of graham and dodd. research, book value, cash flow, dividends. and she comes up with a recipe int is sorely successful 2015 and that is by focusing on a very important trend, the american consumer. been an uneven situation. the what she did was specifically selected companies that performed well like netflix which has been spectacular. like amazon. why she liked those stocks? is an international company that is constantly taking advantage of e-commerce

everywhere in the world. and amazon is the ultimate disruptor. brendan: what fascinates me about this strategy is it is mosttly paired to the successful macro strategy which is a bet on the american consumer. the assumption is america will survive because we like to buy the things we make. matt: absolutely true. except she would qualify that point by saying, the economy, slow and steady, grinding upwards. that is different from historic expansions coming out of a recession which have been very robust. she has been specifically focused on the companies that are going to do best in this slow and steady expansion. david: i love this piece because yesterday julie put up a chart that showed some stocks that really outperformed and it matches to a surprising degree. julie: it's almost uncanny. we looked at the s&p 500 retail index yesterday.

it's uncanny how many of the top performers are in dena friedman's fund. netflix, amazon, autozone, priceline. these are the holdings she increased over the course of the year. it was just remarkably prescient. brendan: something that just said explains a question i had about this yesterday. a stock to me is not is for an economy, it's when you want to go and get your own batteries and put them in the car yourself. if you are talking about a slow grinding forward, looking at something like that, if we are adding value to our old cars, then autozone is the right pick. matt: we have an aging fleet of automobiles. that's absolutely true. she would say automobiles today are more sophisticated.

they are actually computers in some sense. so the need for repairs, addressing all kinds of quirks that didn't exist decades ago are now upon us. that's what makes a company like autozone especially relevant and successful. david: do you know how she's done over a longer term? i was looking at her returns over the three and five year period. this year she's in the 95th percentile. over the three year period, 86th percentile. five year period, 83rd percentile. she has done very well. here is her fund at the top with a 19% return today. two other funds were also at the top. i.t. services and biotech. it's not as though value in retail alone was where the returns were. it happened in other industries as well. david: but there's a big step

between number one and number two. brendan: i want to understand how important culture is in picking these strategies. i was struck reading your piece but the thing she does our word for word the things that horton gecko says not to do in the beginning of wall street. painstaking research, looking at reports, analyzing earnings. to do? not a cool thing matt: it depends who you ask. for the people at fidelity this is exactly what they do. they are supposed to be patient. they are supposed to be thinking long term. they're supposed to be thinking about their company 24/7, her words. she has been following these companies for a decade. she lives with them. she knows then. she is the opposite of the swashbuckling trader we are all getting to know better with big short dominating the movie scene these days. led by denavestors

friedman and warren buffett have been with us for decades and they are not going to go away. the reason is because they are successful. david: thank you very much. let's go to a must cover. that's valeant. yesterday we broke news that the be j. michael pearson will taking a medical leave of absence from the company. shares closed down yesterday more than 10%. drew armstrong of bloomberg news is with us. what is the latest we have to report? we still don't know a lot on exactly what his condition is. we know he was hospitalized over the christmas holiday with severe pneumonia in a hospital in new jersey. that is a pretty serious hospital. it is not some little regional community hospital. dischargedwas sometime over the last weekend

but he is still in a hospital. we don't know which hospital. don't know if he's just resting or in serious condition or in the icu and the company hasn't provided that level of information. appointed a three-member executive team to run the company in his absence in what is a really pivotal time for valeant. i read that the second medical facility was actually even more sophisticated. do we know if that's true? drew: i don't think anybody knows if that's true. there have been reports that he has a family member helping care for him. we don't know if that's at the hospital. we really don't know and the company is saying very little. which is probably part of the reason the stock was down. there is a level of uncertainty about -- how is he doing? how long is he going to become? -- how long is he going to be gone? david: do we have any indication

of how long this is going to go on? is onanytime someone indefinite medical leave it's going to be longer than a few days. , i mean, he's a middle-aged guy. he is about 56. he doesn't come across as the healthiest looking guy in the entire world. severe pneumonia is a serious thing he is dealing with. it can take people a while to recover. that's going to depend tremendously on the details of his individual case that we don't know yet. implicationsoader of this is, how important is the ceo to the strategy of the company? are they synonymous? julie: i'm looking at valeant. it has been aggressive in making acquisitions under michael pearson's leadership. he took over in 2011 as the ceo.

you can see the number of acquisitions the company made that year was right around 11. that number when tire the following year. this is the value of the acquisitions. that has been what he has done at valeant. he has built the company by buying a lot of other companies. brendan: the broader valeant story -- what we have been reporting over the course of the year -- these are decisions that you had to make for 20 years at the helm of bloomberg news. i have been meaning to ask you this anyway. how do you decide whether a story like this is just interesting or actually important? matt: there's no question it's an important story. valeant is an important story every single day of the year. more in terms of challenge, how do you go about reporting it? what's the context? was the perspective you put into it? brendan: but why is it important?

matt: any surprise makes it important. any change makes it newsworthy. so those are the two things you are dealing with. change and surprise. and they are often the same thing. the best reporting is nuanced. it is full of detail. and it gives people an opportunity to understand in the hoping, ofere's time, the relevance of this particular event. drew armstrong with bloomberg news, thank you for joining us. matt winkler, please stay with us. still to come, but the biggest u.s. banks face in 2016. ♪

vonnie: welcome back to bloomberg go. it hasn't been a great year to be rich. according to the bloomberg billionaires index, the wealthiest 400 people in the world saw their net worth decline by $19 billion. that's almost the amount lost by carlos slim. jpmorgan will become the first of the big banks to pay more interest on deposits after the fed's decision to raise rates. biggestorgan's institutional clients will have their rates raised next month. only so-calledt operating deposits. which are less likely to be withdrawn in a crisis. your funds are betting morning cup of coffee will get cheaper. money managers have been aeration coffee for 18 -- have been bearish coffee for 18

straight weeks. heavy rains have boosted coffee crops in brazil. that has lowered the cost for starbucks. and that's your latest bloomberg business flash. david: in 2016 the largest u.s. banks could face tougher capital requirements in order to pass their annual said stress tests. issue governor dan tarullo spoke about in november. i asked him where the fed stands. >> you have to distinguish between regulation for the very largest institutions and the regulation for the regional banks and the community banks. , thatespect to the latter is the regional and community banks, i think we have done everything we probably should do. if anything we probably need to take a look to see if there's a way to simplify the regulation in place. these are not the institutions posing a risk to the financial system. we want to keep track of common

exposures to things like subprime mortgages, we certainly don't need to have the level and the intensity of regulation that we do for the largest institutions. >> is that in response to those community and regional banks simply saying, we are getting strangled with these regulatory costs, we are going to get priced out of the market, only jpmorgan can afford to pay these. >> certainly we have listened to them. i've always been an advocate of the tiered approach to regulation. i never understood why it was that we had the same regulations applying to a half billion dollar bank in the midwest as applied to jpmorgan. >> jpmorgan has better lobbyists. >> in those days i think it was actually just the way in which people thought about banking precrisis. with respect to those larger institutions, i think we now see the outlines of the framework that will be in place. but that framework is not fully

implemented. thetill have to do resolution planning process making sure the banks can be resolvable. liquidityave regulations in the form of a net stable funding ratio to get out. to implementoing the higher capital charges that are applicable to those largest banks. not all yetit's implemented, i think we can see the outlines of the framework and that is just a matter of getting in place and making those banks safer and sounder. >> do you consider a possible danger of overregulation? what would be the downside of that? theertainly with respect to banks i was mentioning a moment ago that provide credit to american households and businesses, i think there is such a danger and that's why we have been mindful of it. over the course of the next couple of years we will be able to further simplify some

of the already applicable regulation. respect to the largest banks, we do have to be mindful of the fact that the financial crisis and the great recession cost this country trillions and trillions of dollars. but they gos vary, up to essentially an entire year's gdp of the country. i think it's incumbent on us to make sure that the vulnerabilities that could lead to widespread financial distress are addressed. those older abilities rest in two principal places. one, the very largest institutions whose stress or failure could bring down the entire financial system. of operatings within the financial system such as the widespread use of short-term wholesale financing, which can lead to a domino effect. that is where we want to concentrate our efforts. >> what we go back to capital surcharges. talk about the stress test. test hask the stress

been the most important supervisory innovation not just to come out of the financial crisis but over the last several decades. we started our stress test in the middle of the crisis in 2009. now other central banks around the world are conducted rigorous stress tests. the ecb, the boe prominent among them. after five years we thought it was a good opportunity to step back and say, where can we further improve and refine the stress test? how can we make the process of the stress test easier for both the supervisors and the banks to have to go through it every year? how do youportantly, make sure we not missing something in the stress test? the best most rigorous scenarios can only capture so much. heard ink one thing we our widespread consultations from academics, analysts, other people in other governments was,

we need to think further about enhancing what we call the macro credential element of the stress test. which means impact not just on the bank of a particular loss but on the financial system. although we haven't decided exactly how to do that, i think there's a pretty good chance that in the end of the day, whether it is through the incorporation of some or all of the capital surcharge as a postarrest minimum or through other mechanisms such as more emphasis on shared counterparties, that there will be some net increase in the post stress minimum capital requirements. >> how embedded in the financial system is dodd-frank at this point? clintonseen hillary call for doubling down on dodd-frank and others like donald trump saying he would repeal it if you were president. -- if he were president. >> dodd-frank has become a bit

of a symbol for regulation more generally. david was asking a moment ago about commodities which of course are not really mentioned in dodd-frank. what we did on capital in 2010 was not explicitly called for by dodd-frank. specifywe all have to where the regulation we think needs some ways to go, where perhaps we would like to modify , and oftentimes that is within the province of the banking regulators, and where people think it's just about right. in there.re was a lot your reaction to the basic notion that we have overregulated the smaller banks and under regulated the larger ones. do you think bank regulation has been effective? matt: without a doubt it and i think you have to be careful and you say under regulated. if you look at the performance and whatgional banks

investors think of them, they have out performed the big banks and they have been doing it consistently in this expansion. if these banks were really hurting, investors would be the first ones to raise the flag and say, this is a troubled industry. and that has not happened. the second thing that's really important is that the stress test that he talks about in this interview, really great interview, was the most important reality check the banks had ever seen. probably in our lifetime. if you go back to 2009, most of the ceos at the big banks were very dismissive of the stress test. wash the treasury secretary a proponent of. even larry summers at the time was skeptical about introducing it. plenty of brilliant people wondered why are we doing this. and in fact, it was the biggest step forward to bringing the banking system to heal and provide transparency that didn't exist before. brendan: and they were a great

deal more robust than the european stress test. matt: precisely because of the stress test. it was because of what was done in 2009 that enabled the u.s. banking industry grilli to climb banking industry really to climb out of -- brendan: when you look at the smaller banks and consolidation as proof that they back off from dodd-frank is what's driving it, it's hard to tell it that is a long-term trend or if it's something that is really a direct consequence. itt: if you just look at from a shareholder perspective, the regulatory burden is the cost of doing business. brendan: matt winkler is going to stay with us. later this morning, david abney, the ups ceo is going to talk to bloomberg go. just got out of one of the busiest weeks of the year. ♪

brendan: we are back with bloomberg's matt winkler. what are your final thoughts on banking regulation? following interesting the very thoughtful discussion on it. you cannot have a working successful economy without a vibrant financial system. goinge reality is today into 2016, the u.s. financial system is healthier than it has been in a very long time and it's likely to get even healthier. brendan: matt winkler, go tell that to donald trump. thank you very much, editor emeritus matthew winkler. ♪

>> saudi arabia gets the squeeze. they will slash spending. we will talk to the ceo of the world's largest package delivery

service, ups. and why they leave the world when it comes to defaulting on debt. ♪ brendan: welcome. is humbert's senior editor, bob. we want to sell some books for you, bob. ob: you have gift cards for christmas so go buy the book. the prime minister of iraq a day after the iraqi troops liberated the islamic state. still talk of the islamic state forces and the city.

plenty of people killed outside of the office building to more than 40 others are wounded. people have been lining up to get national identity cards. no word yet on who is responsible. taking to the streets after a grand jury declined -- a white police officer for shooting a black boy. says theret attorney was no way for officers to know the gun was not real. journalists and at your around the world. i am vonnie quinn in that is julie hyman on the market. bouncewe are seeing a back after declines yesterday as we saw crude oil declined. seeing a high correlation between crude oil and stocks, as we talked out yesterday. oil is higher today is well.

that is helping matters. they may have dropped a second straight week. that is giving some fuel to the oil trade. we have been looking more broadly at the commodity index. beene here today this has a terrible performer. it fell to about a 16 year low. down 25% year to date. another commodity i wanted to highlight today is iron or. percent, even worse. it is seeing a little bit of the balance off at the bottom. there has in a report china has been stock piling because of its low price lot -- price level. that is making the price go up over the longer term, however it .s fanning more concerns in currencies, i want to highlight the pound today. options traders are most bearish in more than six months time.

we are seeing a little bit of a decline, down point 4% today. we potentially have a vote on whether the nation was the european union. that is one thing laying on the currency. thanks. we will stick with politics. saudi arabia dropped after it announced its biggest shakeup in decades. we are joined from dubai. this is a really ambitious budget. an extraordinary one. walk us through what is different. is the is different unprecedented policies the kingdom has taken, or decided to take, because of the oil crunch. expected to come in the budget. they thought it would be later. they decided to raise the prices and consumerss and cut spending next year in

terms of the budget deficit. incame at about 60% of gdp 2016. dropestimates say it could to about 11% of gdp. they consider kingdom needs to bring back to levels to not exhaust foreign reserves. budget, twony questions -- what are they planning to do and do they have a governance structure they have been working on for the last year to actually pull this off? collects that is what they're saying. if you look at it versus the actual 10 years, they have overshot between 10 and 15%. it increased by 13% and one of the reasons is the war on yemen. the government is emphasizing what they are calling spending

efficiency. they are saying they will stick to their targets, 183 billion right house in the budget just to deal with fluctuation so they don't go overboard. they are saying they will stick to their target and counting on the savings. prices aree therefore a recent any sense of how the people are responding to this? mentioned the war on yemen. does this make this a less popular war? >> exactly. as far as people are concerned, talk to any analyst about saudi arabia and move yesterday. the comment would be the potential change in the social between the family and the population. saudi arabia is a monarchy. the population has been used to

over the subsidies past few decades. the government is emphasizing this will be gradual and the impact will be modest but we have to see that. be difficult get a sense of how popular the war is in the kingdom. if you go to the southern border as you have recently been, you business is affected, schools are closed, people are complaining. know the feeling , a quarter ofread other.get, more than any collects the saudi's are the leaders, it seems.

are they cutting off their nose to spite their face here? >> i posed this question to one of the senior economist and they set remember in the 1980's, oil was down even more than that. no reason for it to work now if they do it. they are relating that drop in oil prices, the massive job, to demand, mainly china. as far as those people have been telling us, there is skepticism strategy, see the leading to sustainable rebounds in oil prices. according to s&p analysts, u.s. companies led debt default in 2016. michelle davis joins us from washington with more. i was struck by this story. it was a surprise to me. if you have any thoughts about

why this is. u.s.'s number one and i guess it is not always a good thing. market, thete bond largest portion or most of the high-yield bond market in the world is made up of higher debt. it makes sense you have seen more defaults from the u.s., is actually at a time where we are seeing oil at $40 per barrel and a lot of the high-yield market u.s. is made up of oil and gas companies. about a quarter of defaults this year have come from that in the u.s. david: as we look forward in 2016, which has more to fear, the decisions coming from janet from saudi arabia about the price of oil? >> a good question. one of the big concerns about high-yield is the impact high interest yields will have. a lot of companies are hanging

on their fingernails. you look ahead to the end of 2016 and look at the impact of legal and technical factors, 3rd avenue, it makes it even if they have strong cash flow and are able to hold onto oil at $30 per barrel, technical factors will make default spike according to s&p. bob: it is by the new york. all this doom and gloom from you, what if you do not live or work in texas, north dakota, or oklahoma? of howe any indication this would be different without the oil and gas? is not is interesting all defaults have been from oil and gas companies. in the u.s., we see a lot of consumer companies following

carefully sock with silver, those are companies you think would benefit from low oil prices. expected to have a low dividend from saving at the pumps. but they are starting to struggle. thank you. a look ahead at 2016 and whether we will see more defaults. several european companies are ofnking of giving a salary $800 per month whether they work or not. done talking about this, i will no longer work on a bloomberg network. that is it for me. >> no. you are doing it for love. thed: brendan greeley is resident socialist on bloomberg . stick with us. ♪

vonnie: welcome back. fiat chrysler is driving sales of the popular jeep line by pushing them into rentals. up 57%. considered risky because they can hurt retail values. in the s&p 500er is -- energy. every six employees. chesapeake has lost 79% of its market value in 2015. have foods stores must their pricing methods at every store. the grocery chain will pay a half-million dollar fine. prepackaged foods and whole foods last summer and down

customers were being overcharged every time. david. david: did not get it wrong every time. the luck of the draw here. collects how do you put a price on something prepackaged and made with love? very much.k you today's big idea comes from trend in here. -- brendan here. theiroking to give citizens a guaranteed salary whether they work or not. i heard the chuckle in your voice when you said that. solutions me as a 1% to a problem. >> a very old idea. first suggested by thomas payne. how old is it? there is a journal of basic income studies i stumbled across while looking into this. the basic idea is you take the various programs of the welfare

state and radically simplify them, get rid of all that bureaucracy, and just cut a check and other precedents for this in development economics. findng studies where they aid is much more effective if you just give people money. not if you buy infrastructure, just give them the money and they will figure out what to do with it. why can you tell ben bernanke about this so he would have sent money to me? is permanentidea helicopter money. the problem is we do not have enough data. have been some experiences in the 1970's and 1980's in the u.s. and canada. men worked 6% less. they were not measuring women's labor at the time. couldn't you stand to work 6% less? and long-term, newer studies and have found that

long-term health outcomes are better. -- it is a radical idea, but in many ways, it replaces the existing social state. >> we are not even asking you to give what you give in terms of work. >> what fascinates me is you might be saving money by cutting the bureaucracy that has to do with distribution of the money. >> you do not save money but it makes it more feasible. we found out that means testing is just as difficult politically to decide where the means testing is cut off. as it is to figure out who gets it. regressive.y we write a check to warren buffett. very regressive. that is ok. >> that is your argument? we have all kinds of taxes.

taxes on capital gains are way lower than income. >> if you choose to think of a dividends,porations alaska does this. this is something brendan greeley brought up this morning in a meeting. a resource driven economy. a check to a gets lot of them use alaska as an example. other things they find is that people do not quit their jobs keep it --. -- jobs. david: what is the issue we're trying to solve? finland is trying to take care of their high unemployment. >> why do old ideas suddenly come to the surface? i think what is happening in europe right now is they have

high unemployment, numbers unimaginable in the u.s. right now. they are at 10% in finland. they lost the major employer in nokia. a way of thinking about this is that it is an effective fiscal stimulus. the multipliers are much greater and if you give the money to those who are most likely to spend it. give the $980 a month to people who do not have a job. they havend employment problems but they have good employment benefits here -- i'm limited benefits. clubs it is hard to get incentives right when you talk about unemployment benefits. not penalized for seeking work even though you are getting your basic income. >> it would not put a dent in my

multimillion dollar salary but second of all, i wouldn't the indenture of sitting on my couch and watching bloomberg tv all day. >> that wraps up my segment every morning call the socialist. [indiscernible] i am happy to say, bob, you will be with us for the next half hour. still to come, bob's thick for 2016. ♪

brendan: welcome back. our guest host bob is presenting this will be the big story in 2016, non-bank lending. , starting to look more closely at how these organizations operate at the fed.

big, theyking is a term. what are you worried about? migrating from the big banks with the big balance sheet, dodd-frank says it makes it a lot harder for them to make riskier loans. them areose or most of migrating to different firms such as buyout firms, private equity firms, hedge funds, and even mutual funds that moment investors have put life savings into. now have junk bonds being bought for the first time in the last eight years or so by folks in muchd normally be better and less speculative investments. it is all about yield seeking missiles over the last two years. this is something allen said a couple of years ago at a conference.

he said, sometimes i think about the 100% reserve banking system. about wherethink the capital would go and who these guys would be to pick it up, that is why don't want to keep money in the banking system. it is certainly an intended consequence of the banking, because we have had the problem of all these bigger banks with solvency in 2007 and 2008, and that was a big problem for everybody. perhaps if all the lending goes out to piecemeal and much smaller and distributed more widely, the smaller firms, and one of them has a solvency problem, it is not a systemic problem. beenet the risk has not lessened. it has been spread out. >> aren't there two different things here? one is systemic risk and the risk.is consumer it will not take down the whole system. are you concerned about both or

one more than the other? both. i talked about the missile for how many years, seven years. we have an experiment of new zero interest rates, which only made everybody want to hunt the best yield they could and therefore the junk on's market went up crazy and now it is starting to come down. from the fed on last month and he addressed it risk issuestemic with shadow banking. let's take a look. private equity funds and hedge funds, i think now our focus at least and we, the fed, do not have any authority to , withte funds as such institutions, i think we looking more at transactions and systems. where transactions are taking place.

that is where i think there is an argument to applying regulation to everyone, no matter who they are, to try and keep that funding safer. >> they are focused on this. they are paying attention. >> they don't have the jurisdiction to oversee this. life this dress me crazy but this argument. it is semantic. .e talk about banking why can't we write regulations that govern not banks, a completely arbitrary definition, but risk? why can't we do that? >> i could not agree with you more. it is a distinction without a difference. safer.t to make the bank everything goes to less and now wentities have a fed governor and there is no more powerful institution in the world and the federal reserve saying we're looking at is. cannot do anything about it but

the risk is still there. it has just migrated to the shadows. a good lawyer. i assume the statute, which i have not looked at, it is not written for regular risk. specific to the institutions. what brendan is talking about is a common sense way to change how we look at regulation. that will never happen, by the way. with the sticking spirit we are moving onto her we will talk about whether digital continues to impede digital tv in 2016. ♪ bring your family and friends together

to discover the best shows 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. david: we will get started with

funny quinn. she has the first word. vonnie: next week, detainees set to be released from kuan, and obey. that will be transferred to other countries. it is part of the obama administration's plan to review be transferred unless officials believe they will not return to terrorism. brussels, police arrested suspected terrorists, part of an effort in belgium during new year's celebrations. police say they see military training gear and islamic state propaganda. drunkexas teenager and a driving case, arrested. missing four weeks, he was on probation for a drunk driving incident that killed four people. wealthyers argued his parents, and him into a sense of irresponsibility. he now end up in prison. journalists,r 2400 i am vonnie quinn.

we have got markets bouncing back and futures showing a gain of half of 1%. we continue to see lower than usual volume on this holiday week here at a lot of folks are still away. wanted to check on individual movers. let's start with cap boys. to 1850 peraces did share, $1 billion total. bid forpetes with a bridgestone. they said it would decide whether to raise -- in the meantime, have voice is benefiting. there are expectations in the market and that data will indeed be raised. the insurance broker in the will beof merging, it going into the s&p 500 and will be replacing watchmaker fossil -- we tend to see funds that use

the s&p as a benchmark when this kind of thing happens. they buy one and sell the other. qualcomm, there have been a lot of questions about negotiations of licensing and china. this is a good sign this morning. patent license agreements higher, and so the shares are getting a boost. >> thanks. that was quite a report. now to the business of media. we spoke with some of the biggest heavyweights in the industry. take a look. >> people are not watching like they used to, but watching as much or more than they used to. an interesting statistic. more people are watching cbs content today then watched a decade ago. they're just watching it in different places. we're in a universe where there is a 500 channel universe were

basically the average household in america gets 180 channels aired we are getting to a place where we are getting more our card and smaller home bills. there is an uncertainty in the marketplace. i think obviously distribution has it easier than the content companies. at the end of the day, content companies will always win. >> the issue is 75% of millennials watch tv down from 95%. 93% of the public listened to the radio. 93% of millennials listen today. big winners will be the folks who listen to the consumer. to watch, the challenge for rights holders is the idea that making more money also matches consumers desire to get what they want and when they wanted.

still 90% ofss, the company, is strong and the world is changing. as a result, we have been focused on how do we improve our hand? is getting more asset value outside the u.s. where growth, more channels in new mexico and eastern europe and throughout india, so we can get more sustainable growth in markets behind the u.s. the other is, what else in the marketplace can we own? a strong balance sheet with a lot of cash, what else can we own where we have good synergy that could improve our relationship with viewers and that could add to a we have, and talk to consumers directly, which may happen in four or five or six years. >> it is clear television is experiencing disruptive forces.

knows what impact just calling it disruptive forces will have. it is clear that is happening. so much more competition and choice for how people spend money and leisure time. that is putting pressure on television to obviously be great, and to be of great value. and the user experience must be great. if you are believe in a market being disrupted, you obviously want the best products out there in a disruptive market and we believe we have that in the company including espn. changing,in a market you would rather have a very strong hand. what is better than espn in that regard? i agree the value is really important. the original programming they do, the brand value, the legions

fanatic,, short for that is, i think, really important. really even in a market being disruptive. we feel long-term, espn will be just fine. we refuse to have our head in the sand about what we're seeing in the marketplace. others may see things differently but we believe there is disruption going on and there is more ahead. and we're spending a fair amount of time make sure we are well-positioned in that market. espn is, we believe, something of great value even in the world. david: covering u.s. media companies, he says there are some agreements and some disagreements. what will you be looking at in 2016? is obvious as we listen to media ceo's is out there that consumption of television

content changed dramatically. seene last year, we have massive up evils. some comments on subscriber losses and really, i think what the market is worried about right now is the fact that u.s. assets, they seem to be more of low growth to moderate growth business. stream,llion revenue once considered the gross driver for media companies, might be a little bit of a concern with regard to u.s. affiliate revenue stream. cutting, which, there was a little bit of doubt whether this in reality was happening. it seems that impact israel and we might see more of those losses happen in 2016.

>> we are seeing an arms race between content providers and cable companies to what is the outlook in 2016 for further cable consolidation? >> we saw big deals happen on the distribution space with charter acquiring time warner and then we had a european telecom operator come in buying suddenly can then cable vision. , $100 billion happen on the cable side. what this is meaningful content is some of the smaller operators might be in a disadvantaged position when it comes to negotiating leverage with distributors. some consolidation with john malone's name at liberty jumping up. will he orchestrate some sort of

consolidation with the stock swap he did, so, you know, we have to wait and watch. >> i could go on a train on my way home and take my phone out and watch the wire from hbo, which has not and on tv for years. and i love it. do you have any idea what his next with the technological advancement is that would allow consumers to do something new not going on right now? consumer isect to ininitely the biggest event 2015, especially with hbo now, and we had cbs come out with all access. the question is, will we see something like that from espn this year? our believe is we might see an offering from espn.

it may not be the full-blown offering. it might be a skinny bundle that espn kind of offers to test the waters. so that they kind of have a plan , and when the time is right and this might take four or five years, they may come out with a much bigger full-blown offering. >> i can win the national championship while riding a train somewhere here that will be a great future. they wife was in india in back of a taxi and she texted me on the air saying, i am watching you on bloomberg . high quality. >> but you have mentioned the fact that multichannel cable growth is tapering off. not necessarily going away but not a robust level. what will replace that? is that direct consumer? with a lot of media

companies, on the content side, they know the u.s. market is a mature market. that growth inng the pay tv universe. internationals are definitely the big growth area. we saw the discovery ceo point that out. internationally is an area we will see a lot of shifts and investments. the growth will be able to offset in the u.s. in india with star tv, discovery is doing that, disney will open, shanghai disneyland and china, so international is the next big growth area. >> one thing is the rivalry between content and distribution. >> i will hide this so you cannot see it are talking about where growth is, guess where that green line is. when you are talking about the media companies.

there is everything and then netflix, at least in investors minds. price. the stock that is the perceived growth. down here, you have bloomberg of thegence index various media companies, disney, cvs, viacom, and then you have more the cable and satellite providers boosted in part because of acquisition activity. this is google which i threw in here because of youtube. why not? another content provider. it is one way of measuring. >> this is a powerful chart. a lot of it is going to the green line below. netflix is paying a lot for content, unlike google. google is not paying for content. theube is not paying for most part it all. one thing to watch is, to watch is how much netflix has to pay for the content. >> that has been the theme there, the challenge for them.

critics of the company have been pointing that out. the high cost of content for netflix. it has not really been the stock prices, at least not recently. chrysler else, are there any questions from consolidation on the cable side? are those going forward? yes, there is a little bit of skepticism surrounding the , especiallydeal with new york and we do not know how that will play out. and time warner cable, it seems right now it will go through and that will happen during the first half of 2016. all right. thank you for this will be a story we will watch all year. coming up, get up -- get out your phone get violence. touted members of the bloomberg billionaires index this year. that is next. ♪

vonnie: welcome back. hedge funds are betty your morning cup of coffee will get cheaper. bearish coffee for 18 straight weeks. prices headed for the sixth monthly loss in a row. heavy rains have boosted costs in brazil to the world's biggest producer and exporter. by the end of the week, it will try to outbid carl icahn for pep boys. it has raised the chain to more than $1 billion. bridgestone and icon are trying to expand their presence. and he does former jpmorgan

personal bankers in new york are accused of stealing from a triumph, some of whom were dead. 'sosecutors say they used atm to still $400,000. at least eight of the account holders had died. suspects have pleaded not guilty. soft demand from china, the stories this year. they have humbled many investors, even the wealthiest. the billionaires team crashed the numbers. we're joined now and let's do the biggest loser? .> carlos from american mobile that is. the stock has been down and hit pretty hard as regulators try to break apart the business and make it more competitive. he controls most of the land lines and mobile phones. there has not been room for anyone oh to get in there until now. >> we have been talking about everybody else getting hit by commodity markets and demand

from china. this is a completely unique story. it is really a shift in the business environment in his own home country. had a bad year in terms of currency valuation. impact on the currency we have. >> so how much did he lose? >> $20 billion. >> the equivalent of annual gdp of some latin american country. i think honduras or something. >> about how much money my family spent at walmart. carlos slimened to is what happened -- before it was not my fault. you would expect a billionaire to have a lot of political power. iswe have any idea what going on there? has he lost his influence? president, when he was

in, he kind of gave him those businesses. he was in power for a while. that is when he was able to build all this up. --h a new presidency >> there is a new sheriff in town. how about the upside? on the upside, the stock has more than doubled. investors loving that stock. >> i cannot mention amazon when i set my family spent $20 billion. have no effect on jeff bezos. a strictly amazon family. the boxes of diapers arrive every day. into texas, this is actually a consumer plague around the world. >> the big brand, i do not know

if you walks in here, every time i walk in, it seems they're giving things away. they are on the cutting edge of fashion but still affordable fashion. people are still loving that brand. they are at the right price point. exactly. >> i love the fact that we have a billionaires team. it is a great job, to be in charge of the billionaires team. >> what is better is to be a billionaire. >> all right. let that be your final word on the hour. thank you. own oneyou do when you of the most valuable art collections in the world? you build your own museum. the gallery coming up next. ♪

, his focus has been on philanthropy and on heart. in september, his collection was given a permanent home at a new museum in downtown los angeles. david takes a look at the personal museum. ♪ >> downtown los angeles has another spectacular looking building. it will house 2000 works of art. a concrete they'll covers the building. the natural light that slips gleam. makes sculptures >> i can think of no museum with this quality. ♪ collection eli build this museum. he is a self-made arena who ran to does fortune 500 companies. >> a lot of these works hung in your home. what is it like to see them in this space?

>> it looks great and my wife wishes a few of these pieces would return home. >> he and his wife have amassed what has become the world's most valuable collections of contemporary art, including warhol's. fromthan 100 photographs cindy sherman and a painting by jasper johns. it is a collection many major museums coveted. said, 20 or 30d works. storage or basement or elsewhere. >> that did not appeal to him, so he spent 140 million on his own museum. it will be free to the public, a place where paintings that are not on display are still visible to visitors. literally isng about that interplay of transparency and those are the

most obvious examples of it. >> she says the goal is to make contemporary art more accessible. >> i know this will be an amazing popular piece to visitors. it is delightful and it has multiple layers of meaning. on one level, it is simply a delight. designede museum is with the light. the main gallery is up a long escalator. the first piece that visitors will see is a sculpture by jeff. he is one of their favorite artists. they own more of his work than any other collector. >> we love it. .e gave six or seven years >> let's set them apart is how much time they spent with the artist whose work they collect.

was always interested in how people thought outside the world of business. i was spending my time with bankers and lawyers. artists have a view of what the world is really about, socially and otherwise. >> he wants his museum to be just as eye-opening for visitors. >> that is beautiful. it is free to the public and on track to welcome more than 300,000 visitors by the end of the year. i did read the irs is looking into these as i recall. coming up in the next hour, the ceo of ubs. -- ups. find out ahead on bloomberg . ♪ we live in a pick and choose world.

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these no introduction. brendan greeley. it is news to me now that i am here. brendan: welcome p i'm delighted everyone is here. it is time for first word with vonnie quinn. the chicago police officer accused of killing a black teenager expected to enter a plea today. arraigned on six counts of murder and a misconduct charge. last month after the release of video showing van dyck hitting mcdonnell 16 times. direct prime minister celebrating the recapture from the islamic state the forces joe for militants out of the city center yesterday there it there are still pockets of resistance. the nation where ebola began its now of disease. signaling today in guinea. nearly one fourth of the 11,000

people killed there live their parent is starting guinea two years ago. let's head to julie hyman for breaking news. julie: we are talking about the home price index and in particular, 20 rows at a faster pace in the year ending in october. a lagging indicator here. we saw an increase of 5.5% compared with october 2014. that was an increase of 5.4%. nationally, the increase was 5.2% on a year-over-year racist spirit we have seen this acceleration of the increase of home price values. in the markets this morning, we haven't seen an extension and gains indicating a higher open here in the united states. remember yesterday we closed at the highs of the session. fortunes of the stock market

have been tied to what is going on with oil. oil prices rebounding this morning as we get the outlook for u.s. stockpiles, potentially falling for the second straight week. gas has -- natural already arrived to some degree here in new york city. you can see up another 4% today. it looks like natural gas may gain.ly be posting a the latest stocks we should be of them today, a couple bouncing back again from yesterday's decline. >> now time for the stories that matter to markets now, the bidding war that pep boys continues. the stock is up after carl icahn raised his takeover offer to more than $1 billion, escalating

the back and forth with bridgestone. his proposal is superior and has given bridgestone until 5:00 p.m. to make another offer or terminate its existing agreements. a couple of things to add, pep made any new offer recommendation officially, still recommending the bridgestone offer. you know which way the bidding is going. the bidding is more than open. $18 more than $.50 per share. pep boys in the premarket is at 1857. the market anticipates a higher office than bridgestone. >> look at that. >> is funny and we have been watching this back and forth it i have been wondering why this is important. carl icahn is always important but the second answer is something julie held me with. looking at what companies did really well in the last year,

one of them is autozone spirit a bet on pep boys in a way is it that on the exact economy we're going to have, which is reasonable growth, the kind of growth for people have money not to replace cars but actually improve them and work on them. a number of those auto part retailers doing quite well. >> you have to wonder what carl has aneason the company activist. he is a value investor as well. right now i'd yesterday's close, $17 in change, it is trading at 71 times suspected earnings. autozone is trading at 18 times expected earnings. nowe is a massive premium and clearly growth expectation built in, you can see where bridgestone might feel to buy some synergies. >> what can you do to improve

pep boys. >> i tell them what battery i need and they get me the battery. >> you know the position they have it we can find out easily. i think it is 18%. i would be making it up. >> 12% at least according to the latest filing. >> we have seen it play out before. bill ackman has to on that. all fair in love and war. what is number two? bank fraud can follow you to the grave. have beenan bankers accused of stealing $400,000 from an active bank accounts in which eight account holders were dead. withwo men were charged crimes including grand larceny. a third was arraigned and a fourth person remains at large. aam sure -- there have been series of reports about jpmorgan around the country, various

lower-level employees actually not trading cut -- not treating clients very well. >> you are right we are still talking about a number you can count on one hand, a huge bank, but if you are jpmorgan, it is not good for you. >> yes. i just look at this story and think the power of human invention knows no moral bounds. i shake i had when i read it. >> i do not understand how he thought he would get away with it. an electronic record. the person is dead. the state is closing it down. they usually have cameras. i do not understand how they thought they would get away with it. >> were two reasons. one is he would be disgusted. >> as any rank would be. furthermore, he is trying to change the perception of

jpmorgan as is the rest of wall with more than anybody else, regulators and prosecutors. we talked to the justice department and asked him, d.c. the cultural change in wall street, the answer jamie dimon wants to give is yes. stories like this can help. clubs it is impossible almost to regulate against this. feeling dead people's information -- >> you cannot regulate against fraud. >> it is not stealing. it is not just fraud. >> there is in fact a commandment against it. >> the odds may be stacked against the british pound, slowing growth and more importantly the potential for a referendum on britain's potential as option traders the most bearish in six months currency undershot the forecast by the most -- since 2010. this is a political story. david cameron is moving forward

with something he clearly does not want to do. the referendum on exit from the eu, he has been moving forward, furiously trying to come up with some deal that might be palatable to british voters. he is almost painful, watching him having made this promise, desperately trying to back out of it or get the best deal he can to avoid the answer he clearly does not want. agreed ony reason he the referendum is because he had to hold on. given england today, he would not need to do that. he has a substantial majority. he has to follow through in it. there is a risk. >> the same worry, the same concern is popping up in different ways. a great piece on the terminal about exactly this. when you look at the referendum, a trade basically to the fact that within the u.k., immigration has become the biggest concern on voters minds.

this is the way it manifests itself. concerns about people coming in and then taking benefits within the u.k., the main point of contention in negotiations. cut off eu citizens from benefits in your own state. the story manifests itself in different ways. >> which is ironically stimulative in the economy. >> of course. it is helicopter money. >> it is now mark's turn. >> 10 years u.s. treasuries, because of myve outlook for a weakening economy. and actually, i believe we are already entering a recession in the united dates. >> there are two things there.

one is the idea we are entering a recession or that mark leaves we arty have, or and the second is the call that you can make money going long on treasuries. the two are not mutually dependent. as we learned yesterday of jpmorgan, the bond market could continue without a recession. you have to decide what is the justification for that trade and do you believe we are entering that recession or not. >> when we put him at onset -- at odds with janet yellen come i wonder what she is saying privately to the rest of the governor spirit she cannot come out and say america is watching into a recession. way, she has to be a predictor and it sure leader a little bit for the american economy. >> we have had several people, larry fink may be first among them, but several eagle saying obsolete not. no evidence. steady, slow, sideways growth.

>> the recession call is outlier. anything but the mainstream. i do not know ice it as a favor versus yellen. i see it more as a favor versus fink. >> that is the way it seems to me. >> you keep calling a recession, eventually you will be right. >> sooner or later, twice a day it is right. die for a reason. i do not completely understand what it is but particularly in the u.s., when we see signs of wage inflation, very competitive labor markets. >> on the other hand, is in some of the volatility and underlying insecurity on the part of the investors? they may not see the recession haveg, but they do not great confidence. >> the underlying uncertainty is basically how could this be

going on for so long? at some point it has got to end. the argument is not based on, this is light will happen. it is based on, at some point -- i do not want to be in the wrong side. i remain unconvinced. >> i keep my eye on china. i think china may determine that as much as any other place. >> let's end the conversation there and those are the stories in the markets now. we take a look at the premarket next. ♪

vonnie: welcome back.

a chinese coal official told a court to he still more than $30 million and stashed it in his home. 20 million more cannot be accounted for. china's's anticorruption crackdown. seeking $2.5 billion to a couple from its accounting scandal. the electronic company is forecasting a four-year loss. and just a little poor this year, bloopers billionaires index shows the net worth of the world's's wealthiest 400 people fell $19 billion. carter lost that much by himself. his mobile phone company lost one fourth of its value. that is the latest. markets now with julie. julie: i want to focus in on one stock. $250 million in market cap. this is a company that does not

sell any drugs as of yet. developing treatments for alzheimer's. you can see the shares, down 17.5% after it disclosed in a filing that it had received a subpoena. the exchange commission said it believes that is related to recent unusual market activity or at least may be related to it. the stock is up 850% for the year to date. a spike and then plunge that she saw a couple of months ago has to do with the run up to it treatments for alzheimer's study and selling into the results from that study. the results show it did meet its primary endpoint. relatively positive but it did have a big gyration in the shares. the company reported numbers quarter, ite latest lost $12 million from $10 million. something else i was looking at

was the short interest in the stock here. short interest. you can see rising to a high of 3.1 million shares. there are a number of investors.. bearish.ors who are a relatively high percentage here. a little unusual situation. we will keep monitoring and seeing what happens and if there are any developments on this investigation. next, recommendations isht be signaling the worst over. putting it on a list of companies to watch in 2016. in 10 minutes, we will speak to ,he cpl -- the ceo of ups talking about the holiday shipping season and what is ahead for the company. stick with us. ♪

>> what a beautiful day in london. >> it is gorgeous. >> stocks are up as well. 5.7% this morning. a great interview is coming your way and you will not want to miss it. david just 10 minutes from now. >> bloomberg intelligence puts up 60 minutes to watch and today, we're focusing on a few affected by volatility and oil. julie, take us through it. canadian oilsands, one of these smaller providers. trying to buy it for $4.2 million. oilsands have been resistant to the offer.

it is not a strong position in terms of its defense of that. production oft its crude operation. oilsands is an extension -- expensive proposition. if the price of oil goes lower, particularly for smaller company like this, it makes it more difficult to go it alone. thatd shale, you can turn on and on relatively quickly as the present oil goes down. oil is a very long runway that you have to make a long decision about. >> a maybe offer back in october. there were like $5 billion. why hasn't the price gone down? a lot has happened in the oil business. it seems like the price would go down. howmuch their worth and much you're willing to buy. if you are buying come you would not be willing to pay the same today as october.

>> 4 billion or 3.5 billion as well. >> and wonder why it is a good deal. >> it is interesting because you talked to the ceo of canadian oil. >> you're asking why it hasn't gone down. it has. julie: there you go. >> the ceo of canadian oil actually addressed this. take a look. >> we believe in higher oil prices. it is inevitable. with a lack of investment going into the energy sector, we alieve we will see significant increase in oil prices. the fact remains we do not know when that will happen. >> i do not know how -- high oil prices are in a vrabel. >> it depends where the supply comes from. the low marginal cost of production in places like in the opec world.

those companies can clearly make money if the oil price is high. the cancellation of all these projects, are we going to see a in places like alberta, or are those other countries like billions ofve barrels of cheap reserves to pump at one dollar per barrel, going to step it up with much cheaper oil? >> production is much higher. most of the producers are losing money right now. the question is if the oil price does rebound, do they go right back online and keep the price from going on more? one of the other things to watch his royal dutch shell. there has been a surge in by recommendations now. out there would say

this is not necessarily a reason to buy the company or cause a turnaround. it is something that caught the attention of folks at bloomberg television, also in the process of making acquisitions. you have the price over the past year. it has in in a very underperforming field. it has in one of the very worst performers among european oil majors. >> it is a, the pain is over. lessll now be slightly that. >> may be. >> or maybe at the bottom of the market. stocks have gotten hammered. some point, a bargain. be taxes but at some point, oil will come back and price. >> again, the calculus is very different than it is for canadian oil sands.

given what has happened with opec, i have trouble constructing a world where we get back anytime soon. that is the price they are counting on. whether it hasw changed the business here goldman sachs makes the argument persuasively that as soon as the oil gets back to $55, pretty much every producer in the business is profitable and those will be flipped back on like a switch. >> there are other businesses that depend on oil and in some cases benefit. one of the other companies that is the south korean petrochemical company. it's margins are higher when oil prices go down. it has been adding capacity in those prices and bought a business from samsung that was a chemical business. i think the most interesting thing is not so much what is going on with oil prices but what is going on with management of the company.

there is a tussle for control. the older brother of the chairman of the company tried to have them ousted through their father. instead, the father got sidelined to an honorary position and apparently in korea, this got a lot of attention. these things usually happen behind the scenes. >> a textbook example of why that country needs reform. >> it sounds like game of thrones. it is pretty exciting, pretty dramatic. you.lie, thank good stocks to watch. we will be back in a couple of minutes. we saying goodbye to brandon. brendan. ♪

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. erik: welcome back everyone. you're watching bloomberg go. we're just seconds away from the open on the nasdaq.

it looks as though the dow is going to climb back about 17,600 . there is the opening bell. that is the pomp and circumstance at the relevant stock exchanges. let's move on to talk about holiday shipping for eve. for every shop there is shifting. is ahis season, there winner and a loser. fedex has been compared to the grinch for failing to deliver to many packages. year, ups deliveries were on schedule. the ceo joins us this morning. david, good morning.

david: good morning. erik: what went right, how did you manage the holiday traffic as well as it did? were able to get our christmas deliveries done by december 24, which is always our measure. it is the three c' s. tremely} with our close collaboration with our customers. we developed a good plan. control it isbout not nearly as important how many packages you can put in your totem at it is the ability get them delivered. we looked at the balance between the needs of our customers and maintaining the integrity of our network rate we wil.

we were able to work very closely with our customers. we showed we had an opening in our network the weekend before christmas, and our customers advanced volume that we would have received on monday. they advanced it so much into the weekend that we escalated or day from tuesday, 12 22, to monday, 1221. >> customers, control, what is the third? >> commitment. , whoong-term employees have been in their jobs for years and years, they were determined they were going to give our customers the service they expected. we are very proud of that. did the holiday season the short expectations as far as shipping volume went? isid: the holiday season meeting our expectations as we

go. is not over. we still have the next week of this year and the first week of next year. there have been a lot of surprises, but it has not been a final grove either. we still have a couple of weeks to see how the volume and other things fall into place. >> i understand you do not have all the final numbers. we tried to get a sense of what the economy is doing more broadly based on holiday purchases and shipments around this time. can you tell us about where the economy is based on the numbers you have seen so far? david: it is a mixed picture. i would like to tell you something more optimistic than that, but we did see from an e-commerce standpoint, good healthy e-commerce. survey released showed an increase of about 20%. see a lot of

industrial activity pickup from those types of shippers. it is really a mixed view right now. with the dollar the way it is right now, we did not a pickup from the u.s. exports that we would have liked to have seen. erik: one of your biggest customers, amazon, reported the agri-numbers for its shopping season. it added 3 million new prime subscribers, double the number of items shipped through pride to 200 million. what is that benefit to ups? >> amazon is a good customer of ours. but a lot of other retailers had --e very good retailers had a very good year this year. we worked very closely with him, and we think we were an important part of that for them. erik: our colleague here has something to bring in on the

relationship between ups and amazon. our supplying at chain function, just to walk you through it and make sure that david can hear what i'm talking about, here is ups in the center, here are the suppliers, here are the customers. according to this, is the largest customer for ups, it's percent of its revenue. amazon,goods sold for related to ups is about 5.7%. point, 6% of ups alone. comes from up amazon we had on earlier, and they were talking about developing their own in-house capability of delivery. is that a substantial effort? could it pose and the competitor to you? as i said before, they

are good customer of ours. we have a good relationship. we work with them and we talk about our capabilities, what we can do. really the things we talk about our our global scale, and what that can do for amazon and other large shippers. we have a lot of customers that are not in retail that he get eak atent type -- p different times. and then we talk about the density. if you take the volume that amazon gives us, other large retailers, and then all of the other manufacturers, it gives us more density, which is going to lower the overall cost and we bring ae we tremendous value. we have invested millions of dollars in the network and technology. obviously, that relationship with amazon can migrate in

different directions as it has over the years. erik: as amazon becomes larger and counts for more and more of ,he shipping business globally how much more difficult they become to negotiate with? they less profitable business on a per shipment basis for ups than they were two years ago? not get into customer profitability. we have those discussions with amazon and with our other large shippers. i can tell you we have interesting negotiations with our customers, and margins would be included. erik: a lot of things that customers complain about our fuel surcharges. have you thought about changing your approach to fuel and walking in that price to the benefit of your customers through hedging instead of

paying market rates and passing it on to them through surcharges? over the years, we just have not seen a lot of success with hedging. move up, as he moved out, and there are a lot of people who are very good at predicting it after it happens. but we are certainly not seeing that before. the concept of this fuel surcharges that it will fluctuate as oil moves up and down. it is not a profit center for us, it's just a way that we weekend pass -- that we can pass separate cost. it is a way to protect ourselves from increased cost and to work with our customers. erik: i know that ups has said consistently that it is not a profit center, but the customers complain because the goal post move. surcharges the fuel

in june of 2012. right now you are charging five 5.2% for a gallon of diesel. a year and half ago you were charging 2%. why do the goal post keep moving? >> with e-commerce, packages have gone a lot larger areas they also go to more residences versus commercial areas. increased miles, increased cost, the fuel surcharges one way that we can all set some of the challenges of that increase -- offset some of the challenges of that increased cost. as i said, it is not a profit center for us that is not the intention of it at all. purchaser latest big

fully integrated? will this holiday season reflect any savings? >> they are a truckload broker and had a big impact on this issue for purchase transportation. we are very happy with the way that this acquisition has started. it is something we knew was part of our overall strategy. we were very stratus -- satisfied that we were able to get as close as we did. one other issue that we need to take up with you before we go with the dollar. to what degree is the strengthening of the u.s. dollar going to be a head when for you overseas in the year ahead? has certainly been a headwind over this past year. hard to predict. but if you look at the forward

curves, it can continue to be a little bit of a headwind this year. where we see is the most of course is u.s. exports. into europe and into the other parts of the world from the u.s. have really decreased. they have not gone the way we would like. gottense, they have cheaper in the u.s.. erik: do you think it will be more of a problem for you in 2016 than it has been in 2015? is hard to predict that it would be more of a problem. the comparison would be a little different. to a15 we were comparing much different rate in 2014. so in that part, it will level out a little bit. it is really going to be on how far the dollar moves in 2016. >> thank you very much for being with us today. now let's see where the markets

are, 12 minutes into the trading here in new york. julie: we have this bounceback going on today. once again, we are in the green and one of my colleagues recorded how many times would have slipped back and forth between positive and negative for the year's performance. wes is the 27th time that have slipped from one to the other, which is a record. an interesting market for intact as we look at this rebound in today's session. for the rebound we can once again say what is going on with commodities? take a look at my bloomberg terminal. just as yesterday was a broad-based selloff, today is a broad-based rebound. energy was in the bottom spot yesterday, it is in the top spot today. oil prices rebounding and energy going with it. materials also gaining some ground.

yesterday, this stock was down sharply after the chairman and cofounder departed the company as chairman. we can see the stock is rebounding as we see commodities rebound as well. i also wanted to check again on a story we have been talking about a lot this morning. , the stock is up 8% after carl icahn raised his offer for the company to 18. 50. it is currently trading at 18.76. let's go over to the nasdaq. >> thank you. we have some checks out of --ific that talks to

videogame checks out of the pacific. up 39.65. blizzard is erik: thank you very much. next up, it is the value proposition. how worried should banks be about the threat of disruption from financial technology? ♪

erik: this is bloomberg . it is time for the value

proposition. where we euro in on controversy and turn conventional wisdom on its head. here is the question. are they big enough to be an uber moment for wall street? we have surveyed the street to find out if they are fact or fad? i thought there were a couple of things that were interesting. we surveyed about 100 investors and participants. about two thirds of them said that financial technology work important, but only about 14% said that this would be a disrupt. tot of them said this is big to disrupt. erik: more adept, then disrupt? than disrupt?

>> exactly. we did some follow-up conversations with the supply it isand part of because banks are so focused on it. this development, the partnerships, and they say the banks will collapse this technology. theher part of this is things are regulated. anytime you try to do something in the financial it is fundamentally different if you try to do it in consumer goods or retailing. with regulators that have to get past the fed, and that's naturally slows down the process. the slower the rate of change, the more opportunity they have. differentre a lot of aspects, how did you define it? >> it is a catchall term, so we

asked what was the thing you thought was most of mor importe? important. most people send mobile pay. you have chip and pin technology, block chain. lendingpeer marketplace , things like that. differenthose categories, which were the ones that rate higher and lower in terms of it is coming, it is going to be big? >> global payments with the biggest. when you go to which is stocks are potential winners, the top two responses would be the mastercard. that focuses on global payments. erik: but they are the entrenched legacy fighters. >> where the view has changed over the past two or three years, they said they are at the risk of being disrupted.

they all use the and mastercard tiles. butrchange a big number, why create them when we only charge 10 debts for this? jpmorgan and goldman sachs got most votes in our survey. >> early adapters? >> yes. and they have scale. an issue of they have been the most vocal in investment banks of converting -- and toe technology technology. this does not happen by accident, that is a cost-benefit of investing in technology over the years. this sounds like something we need to go back to.

thank you for joining us. we are going to give you some of the biggest names in business and what they would tell their 18-year-old selves if they had the opportunity. ♪

>> welcome back. coming up at 11:00 a.m. eastern, the vanguard group founder jack vogel. bogle. we have been asking legends from the corporate world for inside and what advice would be give to their 18-year-old self if they had the opportunity? do, andg what you working hard at what you do are the two best things that you can do. when you cease to love it, find something else. >> don't worry so much about being right. the ride, do your analysis, but the effective. so many times we get lost in being right, and not being

effective, and we actually leave it up to the effective people that are wrong. it would be try to be effective within the bounds of reasonable offenses, as well as being right and figuring it out. foron't go into a field money, go to a field because you have a passion for what that field entails in terms of activity. to say a slightly differently, i say, do what you love, love what you do. you are bound to be successful. biggest advice is be aware that there will be setbacks, and it is all about how you respond to them. when i was 18, i thought life was a linear progression from one stage to the next. it takes a more interesting path than that. >> do what you enjoy, find what you want to spend your time doing, and then focus on it. that does not mean trying to

become the ceo when you're 18. actually spend that time, head down, really trying to learn and understand the business, and making that investment in your future as opposed to focusing on the end result that early on. what advice would you give your thinking to yourself -- give to your 18-year-old self? erik: i have followed some of that advice, which is choose nothing for the sake of money. >> make mistakes. i am not sure i have ever learned from a success that i have had. but i have learned a lot from mistakes. it has been made better and is longer. erik: that a rallying cry for the millennial generation. don't be afraid to fail. not being afraid to fail is easier said than done. >> tend to learn from every mistake you make. be open to it, don't be defensive. the greatest thing i found as i have gotten older is the author

i am the less i know. at 18 i do everything. today, there is so much left to learn. it is a great business to be in. we are very fortunate. that doesn't for bloomberg go today. miss john mack. ♪

>> it is 10:00 a.m. in new york, london, welcome to bloomberg markets.

good morning, i am betty liu. this is what we're watching at this hour. a time-tested strategy at doubling down on well-known companies. secret to her success, coming up. mark farber predicting the u.s. is on the verge of recession, clashing with fed chair janet yellen's view on a recovering economy. it is the return of an endangered species. the female homebuyer is getting back into the market. the about the market, we are about a half-hour into the trading session, i want to go to the market desk where we have breaking news on consumer confidence. an index reading of 96.5. julie: