the rise of etf's but we have seen the trading and the volume of them increase even into this year. etf'sou come around to being a form of index investing? best we can tell, most of the trading is done by institutions trading back and forth in a standard and poor that trade is around $30 billion per day. it is a manipulative trading vehicle, sometimes hedging and sometimes used for speculation. it is an institution. you get to the individual share of the market, by my calculation, about 40%, probably 10% of that 40% is a relatively long-term mutual fund investor who found a more convenient way

to invest. it's a small part of a very speculative business. perfectly good business as long as investors don't trade too much. i think trading is tempted to do. betty: even retail investors do the trading. >> yes, on a much smaller scale. is continuing with that indexing works and investors believe it works. if you don't believe that, look at our cash flows here at vanguard has taken in $210 billion this year and the rest of the industry has seen $20 billion go out. that is a powerful force. in the our businesses traditional index funds, a decent amount but we the lows traded etf's in the business by

far. you can do it right but it's not that easy. betty: with the fed raising interest rates, given that the punch bowl is being taken away from the investor community, is stock picking going to come back in fashion for some and does that mean index investing will not have that favorable environment anymore? >> it can't mean that. think about a stock pickers market. kicker, you are a bad stock picker. there is somebody on the other side of every trade. a stock pickers market is a giant myth that needs to be shattered. i will try to shatter it with just that comment. atty: that's a good point which to end. thanks for joining us this morning. i want to go to london where the

european markets are just closing. caroline hyde is joining me for the european close. you guys were rallying throughout the session? >> yes, it seemed the investors were full of festivities but they were hungry to buy. it seems every index an industry group was higher. gains inas leading the germany with only one stock falling. even chemical companies were doing well. was higher with only one stock falling as well. miners are an area of weakness but every other industry group is higher. 7/10 of 1%own by which is a surprise. betty: what about the banking sector? let's have a look, deutsche

bank was up 2.2% getting rid of chinese assets. they are selling one of their 20% holdings in another bank to an insurance company. they're looking to beef up capital. we will talk more about the banking sector and mining coming up next half hour. ♪

>> welcome back live from london and new york. i'm caroline hyde. it's gorgeous in london. the big story in europe is a possible shakeup in the kremlin. russian finance minister is in talks to return to a senior post to help deal with the country's worsening economic crisis.

will be thes now bloomberg russian editor c. can give us ayou sense of why this is significant that vladimir putin is reaching out to a former finance minister. >> he was the finance minister for 11 years, amana vast withience credited by many establishing russia's reputation for economic validity. he was responsible for setting up the stabilization fund, the reserve fund, and the national welfare fund which helped russia get through the 2008-2009 crisis easier than many expected and now russia relies on this as a tries to battle the oil slump. what a be sensible for us to

assume they are trying to use previous expertise now because they are confronting quite a crisis in the economy? they have a contraction of 4%. >> yes, it's a contradictory message because vladimir putin told russians all caps of weeks ago that the give the crisis had passed. now it seems he is reaching out to those who don't take that view that thinks it was premature for them to say the worst is over. it's clear evidence that maybe is reaching out to people who are more semester who need to be listened to. some of the prognoses for next year might not be as optimistic as others are saying. >> what will investors take from this? will we see a bounce in the stocks or the russian ruble? ruble was something like

30 to her office when the finance minister left office and now it's 72. from an investor point of view, his return to government within the kremlin or within the government under the prime minister would be an indication that vladimir putin is listening to the most experienced officials he has available and he is willing to take on board unpleasant messages about what needs to be done to improve things for the russian economy. >> this is a great scoop from bloomberg news that we don't know when this announcement could come yet. set to runthing is will he see this in the new year? >> russia has a new year holiday for like the first 10 days of january so we would be surprised if something happened that early. sources, theyur

are talking about a but nothing is firmly established. if it happens, the earliest would be mid-january. you and thankve you so much. are digging into politics into another region dependent on oil? turning to's right, another geopolitical hotbed in iraq, the prime and mr. there vowed that his country will feet islamic state. amadi again. rm is this a turning point against the islamic state? former adviser a to democratic and republican secretaries of state. is this a turning point in your view? >> the question is whether this headline or a trendline

and i will keep my expectations low. the issue is not the absence of military power. a better trained iraqi army supplemented by airstrikes, the question is whether the military gains can be secured and consolidated through the kind of political reforms that are critically important not just of putting the iraqi humpty dumpty back together but undermining and blocking the islamic state. in a dysfunctional region which is composed of long shots and hopeless causes, and migraine headaches for this administration, i will keep my expectations low. it is good news but history has a long arc and i will wait and see. say the nextaqis target is mosul. what other chances of success? proposition,ferent

much morer city, deeply ensconced with islamic state presence. i think that will be a much tougher battle that will be waged. the obama administration clearly vindication of policy, near the two hot nor too cold. -- neither too hot or too cold. from the standpoint of military perspective, that will be incredibly difficult to take. and to hold. betty: a pentagon spokesperson said the taking ramadi is hitting a look islamic state in the head of the snake. is that your view?

is it too early to say something like that? >> i remind you that 14 years after 9/11, a decade or more after we killed osama bin laden and dismantled al qaeda, you are still dealing with derivatives that is capable of serious international terrorism. in the last month, you have seen three attacks not directed or controlled by the islamic state but more or less inspiring adherence against the french and the russians and in the united states. isis has jumped the borders. i think the fight against what globalrly a jihadist effort is a long warp that it took us six years for the allies to defeat the axis powers. than 14 years, some would argue 30 years, into the emergence of this kind of asymmetrical terrorism. no, i would keep expectations

low. betty: thank you so much for joining us. >> my pleasure. on the corporate front, breaking news on dupont which is merging with dow to the company plans a $700 million cost reduction and also that it will cut 1700 jobs based in delaware. that stock is up about 1.7%. ♪

>> welcome back. this is a very beautiful london. are seeing light trading volumes today, the first day back after the christmas celebration. betty: people are still in the holiday spirit. look at some of the biggest business stories in the news. as we just heard, job cuts are on the way at dupont. it says it will cut 1700 jobs in delaware were the company is had heard. dupont agreed to barge with dow chemical earlier this month and the combined company will eventually be broken up into three separate companies. boys are rising today in carl icahn raised his bid for the chain to more than $1 billion. that escalates a bidding war with bridgestone, a japanese tire company. bridgestone will decide by the end of the week to -- whether to increase its offer.

natural gas futures are headed for the first monthly gain since june and of wiped out mid december losses of 25% after computer models addicted colder weather would boost demand and possibly and the natural gas glut. hedge funds are betting your morning cup of coffee will get cheaper. money managers of embarrassed on coffee for 18 weeks and prices are headed further six monthly loss and likely it's the heavy rain that is posted crops in brazil. that lowers the cost for starbucks and folgers. that is your bloomberg business flash update. bygail doolittle is standing without stocks are trading at the nasdaq. >> the biggest story at the nasdaq is probably is broad-based rally. stocks are sharply higher this morning and all sectors of which is a pity. abovemposite indexes back

its 50 day and 200 day moving average signaling long-term buying momentum. leading the charge is consumer discretionary. amazon is at the top. probably onp general year and buzz. the company said they had a record-breaking holiday. one analyst gave them over rated rating. shares are now at a record high so that may set off some momentum buying. influence of the nasdaq in the world of technology is qualcomm shares up after the company signed a patent agreement with two different chinese companies. lots of good news flow for a stock that's down 30% this year. it's now on the top pick list at merrill lynch so it could be worth taking a look at for some investors. betty: thank you. technology to commodities,

the slump in copper and iron ore and metals have dominated bad lines in the 15 and the trade today as well. >> that's right, it should come as no surprise that the bloomberg index is on track to double-digit losses this year. it's the worst since 2008. today is a bit of a bounce back. we have a precious metals supporter joining us now. copper is suddenly up about 2%. that on to be of production cuts coming from china, how likely is that next year? >> there is a good chance of cutting in china. we have seen smelters talking about scaling back some of their production. that will have some impact on copper. i think it is also a case of the metals coming back a little bit. they have had a fairly good december. the producersk

had something to cheer about this month. >> apart from the rest of the year, i'm guessing they are still down 20% and there is not much hope of them making back those losses. end or willly the upward trend continue? >> i think there is a little momentum growing. willingseen more people to be positive and bullish on the base metals and we had been recently. one analyst was saying we may still see a little bit of pressure on the metals next year but these production cuts will have an effect for the end of next year. >> not hopeful on the demand side of the equation? >> the demand side and still looks fairly weak unless china comes back with a bang which not many people are expecting. china could help gold with

demand. does gold remain under pressure because of more rate hikes in the united states? >> absolutely but rate hikes have been well-placed in. people have been expecting these rate hikes. it's now about the pace of future rate hikes but that will not have as much of an impact as ike.first h we are seeing more positivity. we had 18 of 27 out of the traders calling for price rises next year involving gold with a median forecast of 1200 but dollars by the end of the year. finally some positivity in a metal trade, thank you so much. it's that time.

1 betty: we have let it rest for a few days but it's back. the global battle of the charts where we look at the most telling charts of the day and what they mean for investors. wiesenthal is with us. we were talking about the middle east? >> absolutely, one of the huge currency questions for next year is will saudi arabia unhook it's pathetic from the dollar? from the dollar? this is the saudi arabia to month contract, bets that the riyal and dollar will unpeg. level at its highest earlier this week. there were budget cuts earlier this week and there is a gamble.

it's speculation that next year, they will unhook the peg so traders are making those bets. betty: the pressure has been mounting. until oil stabilizes, it's hard to imagine this pressure will go away can betty: caroline, our favorite beverage of the morning's coffee. that's what you are focused on? >> it is and i needed at this morning. i needed my caffeine fix. there are was committed billion chart of the bloomberg terminal. you would have thought that would involve metal but look at the coffee it has a bearish trajectory, 28% this year. this is not getting any easier. get caffeine fix could that -- could get cheaper and cheaper. it is the lowest in several

years in terms of dollars. that's the lowest since 2011. we could get even cheaper because the good weather will keep slowing and it seems those supplies will keep giving. you feel like your cup of coffee is getting cheaper? i feel like it's getting more expensive. >> i just drink the free stuff we have here. betty: it's extremely cheap for you. we have not seen caroline for a few days so we will welcome her back. she is wearing my favorite color. >> i play to your strengths. weisenthalk you, joe caroline, we will say goodbye for now. what do you have coming up in europe? >> we will focus in on that major rally with green across the screen.

they were hungry to buy after the festivities. more than 100 billion dollars was added market valuation but tomorrow it will be about the economic data. we are obsessed with house prices. we were look at house prices and i will keep a keen eye on the latest money supply figures from the ecb with credit expected to continue to flow. how will that help the euro economy? we will look at that tomorrow but for now, that's it, have a good afternoon. ♪

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♪ from bloomberg world headquarters in new york, good afternoon. are we headed for gloomy economic times next year? why the author of the gloom, from, and doom report says the u.s. is at the start of a recession and stocks will tumble. it's no secret the future of advertising lies in digital. digital voice to overtake television, that amounts to almost $70 billion. which companies stand to benefit the most? will we see more consolidation in the new year? we will look at which companies may be doing the buying or may be sold. let's go over to the markets desk and julie hyman. we see things recovering a little bit. julie: