from bloomberg world headquarters in new york, good afternoon, i'm david garrotte. he is known as the father of indexing. what advice does jack bogle have for investors in 2016? a major disconnect between cable and consumers. cable prices are going up again. 2015 was a rough year for the world's wealthiest. before richest people shed a combined $19 billion this year. a look at the bloomberg billionaires index. first, let's go to the markets desk with julie hyman. julie: rising to the highs of the session, the s&p now up 1% year to date as we see this burst of activity for the major averages, all of by more than 1%. it is a broad-based rally. you will see a lot of green on

your screen. information technologies leading the gains but health care and consumer discretionary our neck at that. financials have been strong throughout the day. we should mention, this is on lower volume, of course, being a holiday week. volumes are 40 percent below the 100 day moving average. technology is the best performing group today, individual stocks lending the most to the gains include apple, which is bouncing back after what has been a week month for the company. amazon has gotten a lot of positive analyst commentary. microsoft gaining 1.5%. david: we tend to see some rotation at the end of the year with the worst performers. is that happening today? a little bit, and that tends to happen. netflix and amazon doing

well today. chesapeake energy, consol energy, southwestern are the three worst performers. not surprising here, energy, the worst performing group, down 20% year to date. as for those three stocks, we're seeing a bounce back along with underlying oil. natural gas is up, too. southwestern not seeing the benefit of any rotation or the increase of energy prices. it is still down. david: thank you. now let's check in on the first word news desk with ramy inocencio. ramy: new developments for the future of bashar al-assad. russia is moving closer to letting him compete in presidential elections sent in 2017. western and russian officials admit u.s. opposition is weakening to that. it would follow a transition period starting this january.

russia also agreed that millions who have fled their country could also take heart in the vote. operative withte close ties to the paris attacks has been killed. thatmy spokesperson said they were among 10 people to die in the past month. the death occurred in the iraqi city of mosul where he was a part of an external operations group. good health news, the west african nation where the ebola outbreak began is not the of the disease. the world health organization is signaling the all clear in guinea. outbreak spread to liberia and sierra leone after starting in guinea two years ago. the chicago police officer accused of killing a black teenager has pleaded not guilty. jason van dyke was arrested on charges of misconduct and murder. americans got out in 2015, a big

year for many of the nations most prominent national parks. overall visitation is on track to hit a record 3 million people. the grand canyon, yellowstone, and other parks hit records and even bigger crowds are expected next year, when the national park service celebrates its 101st day. -- 100 birth today. 100th birthday. u.s. economy got a vote of confidence from janet yellen when the federal reserve decided to raise rates for the first time in almost a decade. marc faber as a different read on the decision. he spoke to bloomberg yesterday. >> in 10 years, u.s. treasuries , because oftractive my outlook for a weakening economy. we are already

entering a recession in the united states. david: he also predicted stocks would fall next year, but jack moneys advice is to keep in stocks, and what comes to investing, to keep it simple. future.y knows the i'm guessing the economy will slow a little bit. it's been doing reasonably well. i don't see large changes in the growth of -- gross domestic product, for example. probably 3% next year. i don't think a recession is very likely. investors have to understand anything can happen in the economy and the markets in the course of a year, so it is better to that in the long term. betty: speaking of investing, you are clearly a long-term index investor. you recently wrote in a report,

three factors that help you predict returns. you talk about looking at starting yields, earnings growth , and speculative returns. how did you come to this formula, why do you say that is a good predictor of returns on an asset? >> you want to look at the source of the returns -- in the case of stocks. i call that investment return, which is today's dividend yield. add to that teacher earnings growth, whatever that may be, for the next 10 years. yield at 2%, possible earnings growth at 5%, 6% over the next 10 years, we could have a return of 6% to 7%, but then we have speculative return. investors can change their ideas about the valuation of stocks. right now, stocks are selling at 22 times earnings. if they were too drunk to 17, 18

times earnings, you could take that 7% return down to 4% or less. we don't know what will happen there. there is a tendency for all of these things to revert to the mean. average, theye will revert back to average over a brutal of time. modest returns in the next 10 years. betty: you and i have talked about this be or. i know you are not crazy about the rise of eds but we have certainly seen the trading volume of them increase even into this year. have you come around to etf's being like a form of index investing, that it benefits a long-term investor? >> most of the trading we can tell is done by institutions who are trading back-and-forth. standard & poor's spider.

that is usually around $30 billion a day. a manipulative trading vehicle, sometimes hedging vehicle, sometimes use for speculation. it is speculation. even the ads say this is a institutional fund for investors. market, get to the about 10% of that 40% is at a relatively long-term ritual fund investors who have found a more convenient way to invest. it is a small part of a very large, speculative business. that 10% is a perfectly good business, as long as investors do not trade too much. trading is always tempting to do, but overall -- betty: even retail investors do trading to a small scale. isyes, but the real point etf's is continuing proof that indexing works. investors believe it works.

if you don't believe that, just look at our cash flows here. vanguard has taken in $210 billion this year and the rest of the industry has seen $20 billion going on or in that industry cash flow of 90 billion. that is a powerful force. most of our business is in the standard, traditional index funds, but a decent amount is in etf's. we are the lowest rated uts in the business by far. you can do it right, but it's not easy. betty: with the fed raising interest rates, given the punch bowl is now being taken away from the investor community, is stockpicking going to come back in fashion, and does that mean that index investing will not have that favorable environment anymore, going forward? >> it cannot mean that. think about a stock pickers market. if i am a good figure, by

definition, 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 that comment. david: that was betty liu speaking with jack bogle, former ceo of the vanguard group. now let's get a check on stocks with abigail doolittle. abigail: the biggest story here at the nasdaq is this broad-based rally we are seeing. the nasdaq up 1.4%, all sectors participating, energy going between green and red, the leading the charge higher is consumer discretionary. on top of that list is amazon, one of the top point influencers on the composite index today. there seems to be a lot of year-end buzz. the company said they had a record-breaking holiday. was positive on that development, reiterated his overweight rating and his $800

price target. with chairs at a record high, it may be triggering more momentum buying. qualcomm is another top performer in the tech sector after the company said it 4g patent3g and agreement with two chinese companies. lots of positive news flow here on a stock that is down more said30%, but merrill lynch last week it was a top pick for 2016. david: thank you. coming up in the next half hour, the world richest people got a whole lot poorer this year, losing $19 billion in 2015. then the debate over gun control. how the obama administration is requiring more gun sellers to perform background checks. and surprise, your cable bill is going up again. why, and by how much. ♪

welcome back to bloomberg markets. it is time for the bloomberg business flash, a look at the biggest stories in the news right now. seneca capital is returning money to clients after 20 years. longer ablee is no to make the commitment and sacrifice is required to run outside capital. the hedge fund was established

in 1996 and has about $5 million. to thes is objecting delisting of their shares. they failed to file quarterly reports. the hearing is scheduled for february. two jpmorgan bankers are accused of stealing from the dead. prosecutors said they used atms to take $400,000 from an active bank accounts. the sox backs have pleaded not guilty. dupont says it will cut 1700 jobs in delaware where it is headquartered. earlier this month, they agreed to merge with dow chemical. the combined company will eventually be broken up into three corporations. shares of pep boys is running today. investmentraised his in the company to $1 billion. bridgestone says it will decide

by the end of the week whether to increase its offer. world for richest people got $19 billion poorer in 2015. whose net worth shrank the most? losers on thed bloomberg billionaires index, coming up next. ♪

david: welcome back. metals, andheap soft demand humbled many investors this year. lost00 richest individuals a combined $19 billion in 25th teen, according to the bloom in their -- bloomberg billionaires index. pamela roux joins me now. as you look at these billionaires, is it possible to

generalize which sectors did best? out.chnology really stands among those, jeff bezos added $30 million to his net worth, zuckerberg added $12 billion. sergey brin, larry page from google added a combined $20 billion. those were the three big winners. david: how about losers? ela: one that stands out is carlos slim. the government is trying to break his monopoly of part. his stock took a big hit. david: talk about the regulatory issues they are facing. some new competition from at&t. before he controlled about 75% of the land lines and most of the mobile phone industry, now he is having some competition. david: i wanted to ask you what

we have seen from china, softening demand for commodities. there were so many chinese billionaires, about 50, and it has been reduced as the year has gone on. when the stock market was taking off, there were 50 new billionaires in the first half. every new week we had one more. the collapse in july, only 19 were left. david: and we have seen a contraction in russia as well. russia used to have a lot more on the index, now we have about 19 people. definitely the sanctions have taken a toll on their net worth. david: thank you very much, pamela. coming up, we will talk about gun control. excuse me, financial services titan eli broad is 163 on the index.

collection alone is worth nearly $3 billion. for years, he and his wife shared the art with people, and now they have built a museum of their own. a few weeks before it opened, he gave me a tour. downtown los angeles now has another spectacular looking building. it will house 2000 works of art. a concrete veil covers the building and the natural light that slips through makes sculptures gleam. >> i can think of no museum that has light of this quality. david: eli brody built the museum, a self-made billionaire who ran two fortune 500 companies. a lot of these words hung in your home. what is it like to see them here in this space? >> it looks great.

my wife wishes of you would return home. david: he and his wife have amassed one of the world's most valuable collections of contemporary art. more than 100 photographs by cindy sherman and paintings by jasper johns. it is a collection many major museums coveted. york talked to moma in new , and they said the most we can show is probably 20 or 30. the rest would end up in storage or elsewhere. appeal tot did not 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. >> this building literally is about that interplay of opacity and transparency, and those

viewing windows are the most obvious example. david: she says the goal is to make contemporary art more accessible. >> i know this will be an amazingly popular piece for visitors because it is just a delightful. it has multiple layers of meaning, but on one level, it is simply a delight. and the museum is designed to delight. the main gallery is up a long escalator, and the first piece visitors will see is a sculpture by jeff koons. >> this is one of our favorite pieces. david: he is one of the broads favorite artists. they own his works more than any other collector. what sets them apart is how much time they have spent with the artists whose work they collect. >> i was always interested in

how people thought outside of the world of business because i was spending all my time with business people, lawyers, and artists have a view of what the world is really about socially and otherwise. broad wants his easy and to be just as eye-opening for visitors. art lovers have flocked to the museum since it opened to the public in september. no tickets are available between now and march, that is how high the demand is. coming up, could we see a big change to good control in the country? what the president may do to get around congress in the new year. ♪ the only way to get better is to challenge yourself,

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♪ 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: from bloomberg world headquarters in midtown manhattan, you are watching bloomberg television. let's get a check on the first word news with ramy inocencio. police in brussels have arrested two people that they had described as terror suspects. military training gear and islamic state propaganda. the upcoming prison term of a former israeli prime minister has been reduced. olmert will serve 18 months

as opposed to 60 years. -- six years. oklahoma residents were shaken awake this morning by a 4.3 magnitude earthquake. there are no reports of damage or injuries but it is blamed for power outages affecting thousands of people. bill clinton is hitting the campaign trail for his wife asked week. he is said to start stumping in new hampshire a month before the february 9 primary. mrs. clinton has called him her not so secret weapon. this comes as donald trump accelerates his attacks on the couple. global news 24 hours a day powered by our journalist around the world. now let's head to the markets desk where julie hyman has a check on today's retail movers. consumer discretionary has been the best performer this year. xly tracks then.

up 1.2% this year. retail has outperformed in what has been a broad-based rally. if you take a look at what has happened, drill down a little bit for the year to date, i am looking at the bloomberg terminal. this is internet retail, this white line. it includes things like amazon, netflix, priceline, which i really outperformed. nontraditional retail, for example. you are not buying stuff, but this is still a part of consumer discretionary. then you have the department stores which have gone decidedly in the other direction. another way to measure it is the spread between the two, the outperformance of internet retail has continued to go up as the year has gone on. it's been an interesting divergence.

obviously telling about what we have seen in the broader economy. if you look at the individual movers, amazon has been the best performer in the s&p 500. they and netflix arne duncan that. priceline as well. these are some of the things power wing consumer discretionary higher. on the flipside, you have those department stores. mixed bag. a jcpenney is the only of the department stores that have gained, and that is because the sales have seen someone of a rebound. kohl's, dillard's, all down year to date. david, did you go to any stores for shopping? david: i did not go to any of the big department stores, some smaller ones. most of my shopping was online. more coming up in just a minute, we will talk about the president planned for gun control. ♪

.avid: welcome back 2016 may be the unit we see a big change when it comes to gun control. president obama will likely go around congress and require gun control background checks. joining me now is one of our reporters. what does this mean in the business of selling firearms? >> this is the president's effort to get past the long jam in congress on good control. we already have a statute on the books that bans everyone in the business of selling firearms from transferring a gun to anyone unless they perform a computerized background check using the fbi database to see if the person is a criminal, has been adjudicated, mentally ill, illegal alien, that sort of anger. now what the president will propose is to expand the definition as a matter of implementing the law to include people who sell occasionally or

from their personal collection, so you have a broader universe of people transferring guns who would have to perform a background check. there will be huge pushback from pro-gun forces. you will see lawsuits, republicans in congress saying the president's lacks the authority. we remember the shooting at newtown, the president advancing a lot of legislation, that getting shot down by congress. he did make some executive orders on view from that. why was this not included in that package? >> because it is more ambitious and almost certain to provoke a push back. at this point, the president has a year left in his term to serve , and i think, frankly, he is frustrated with his failure to date to push through greater restrictions on the marketing of firearms, so he is just going to go for it at this point, even if

the move will be seen as controversial. it is a strange notion, given that we already have a law on the books that bans the categories of individuals from getting guns, so it is a peculiar thing to resist the idea of just making those background checks more conferences. is the threshold to become a federally licensed seller of firearms? i know people can sell privately, but what is the threshold? basically, be a lie allow thetizen and fbi to check your inventory if they come around. basically it is not a high threshold. it helps to have a brick-and-mortar store. ae atf did sweep through collection of licensed dealers to make sure it included people who really were in the business as opposed to people who just wanted to sell a gun every now and then. but it is not a terribly demanding threshold. david: you alluded to the fact

that there will be challenges to this up in the courts. does this change the conversation and ongoing control , or have the contours of that conversation already been placed? the broad shape is already there. you have democrats and liberals pushing for what they believed to be reasonable gun safety measures. on the other side, you have the nra pushing back and saying any step in this direction is a big step toward confiscation of all firearms. sadly, that is the extreme way the debate is framed. but because this particular proposal will strike a lot of people as fairly modest, i think it has a somewhat greater chance of sparking an actual debate as opposed to the kabuki theater around guns. david: paul barrett, thank you. debate overrs, the cord cutting. grownice of cable has

5.9% every year since 1995 according to the fcc. 2016 promises more of the same. the average bill is now about $66 a month. joining me now is our media reported gerry smith. we talk about it going up in 2016, by what measure? here and there. this has become an annual tradition for anyone with a cable subs commission. get a monthly bill in january saying it will go up a few dollars. this has been going on for years and years and there is really no sign that it will stop. david: the cable bill formed of all of these component parts. what in particular is pushing up the price of cable? >> companies say they are paying more for sports programming. charging almost seven dollars purse of scriber per month. up,he cost of sports go espn is paying a lot of money to the sports leagues for the rights to broadcast those games.

then they pass those costs on to the cable companies, and then they pass those costs on to you the consumer. david: espn is paying a lot for sports because we have been told they are so important to cable networks, two people still watching live events. seen so much of companies doing spinoffs like hbo. is that still working? livertainly, if you have sports programming, you can charge more for advertising because you have a larger audience. super bowl is coming up in a few weeks. the amount that they can charge 0-second ad is huge. at the same time, it's costing billions of dollars to get the rights to broadcast these games. certainly, espn and the other the nba, have paid

nfl, major league baseball a lot of money to air the games. that money gets passed on to the players. some of these big contract that you see from these athletes, you could draw a straight line from that to your cable bill going up a few dollars. circlethere is a vicious where you have people who are leaving cable because they hate to pay for it, yet it keeps going up. it seems like an awkward response from the cable company. >> they say they are paying more for the cost of sports as well as the broadcast channels, so they pass it on to the consumer. the consumer gets fed up, cuts the cord, and it becomes a vicious circle. i'm not sure the tv industry has figured out how to get out of it yet. thank you. coming up, it has been a roller coaster ride for bitcoin. a banner year for the technology. we will discuss what is ahead. ♪

bloombergcome back to markets. it's been a bumpy few years for bitcoin. against the u.s. dollar, it was the best-performing currency by a pretty large margin, beating the somali schilling. will it come back in 2016? cory johnson joins me from san francisco. let's start with this dramatic performance, increase. what accounts for it? probably not the same thing that accounts for the somali schilling rise. the anonymity really keeps us from knowing what was driving it. i will say, i was getting a lot

of calls from people in the bitcoin world, e-mails, when the rise started in october -- it was really me your wreck after a pretty difficult time. they suggested it had something to do with maybe a devaluation of the rmb, maybe people in to getooking at a place their money out. although the volumes do not support that argument. i still think the most important thing about bitcoin is not the currency or the value at all, but the block chain technology that supports the bitcoin and make this more than just another currency, differentiates it from the dollar, euro, and the somali schilling. david: are there other companies anding at that technology thinking about how it may find its way into traditional banking? cory: it is arguably the hottest area for venture capital writ

large. looking at ideas on how to use that block chain technology. understand, i will over supply what it is, but it allows the currency itself to record every transaction that it is involved in. as a result, -- you think of all the functions that happen in wall street. theof the paperwork, all tracking, the history of those trades that go beyond that, the machinery of wall street, becomes unnecessary with something like the block chain technology. there are literally hundreds of companies looking at ways to use that technology, whether it is with bitcoin or with an alternative currency, to find ways to solve a lot of problems in business. the people who dig into this have this galvanized, evangelical look to their eyes when they discuss bitcoin, because they fundamentally see the future of business in a different light, often comparing

it to the revolution that was ip technology and internet itself. after the advent of bitcoin, people were worried about how to harness it, the volatility associated with it. as the public perception of the changed? cory: frankly, i think it is a failure of journalists, we have been unimaginative in the way we covered the story. so often we put it in the paradigm of the old world that we understand, as opposed to this new thing which bitcoin actually is. the coin aspect of it is more important than the bit aspect, but that is what has venture capitalists and startups and some of veteran bankers and technology people putting all of their cards into that hand. david: i remember whencapitalist heard a lot about it, a few years back, at a conference here in new york. the winkle lost twins were

there. they have not helped the seriousness of the conversation, unfortunately. david: they were talking about the need for an exchange. talking about developing it. how far do we still have to go on that front? cory: as is often the case, we have found a few exchanges where the trades have surrounded around. the most interesting thing we will see is the companies using these technologies to solve their business problems, and whether that is transferring money from one country to the next without huge fees, or eliminating the recording of transactions which is so much a part of business. that is where we will see the real innovation. minds inhe greatest venture capital devoting their time and resources to this. i think we will start to see these companies emerge in the next two years because they are getting so far along. david: thank you, cory johnson, editor at large.

bloomberg anchoring "west" tonight. now let's go to bloomberg radio's kathleen hays. she is speaking about the war of words between donald trump and hillary clinton. kathleen: we also want to welcome our television audience to give a preview of what may be happening tonight on all due respect tonight. on thes here, a regular show, a politics reporter and producer for bloomberg. donald trump.th bill clinton is getting more interesting. >> we are nowhere near the end of this. donald trump has been going after hillary clinton for some time but today he went after bill clinton. she rolled out her announcement that he would be on the campaign trail.

bill clinton will be on the trail next week, and donald trump did not waste time. today he was asked about some tweets that he sent out foricizing bill clinton being a bad campaigner in 2008, and then up to the anti-more, by saying no clinton is a bad campaigner and did a terrible job in 2008. his sexualught up lewinsky,ons, monica and really brought into public discussion, as some have in the past, allegations of his infidelity, kind of put that back into hillary clinton's court to respond to. when you speak to strategists, people that run campaigns on both sides, for republicans and democrats, do

they say, he can talk about bill clinton all he wants. that barely makes it on saturday night live anymore, he is walking a dead horse. or is he saying that it is a legitimate issue? >> it's mixed. the jury is still out about how much of a liability this will be for hillary clinton. in the past, she has, very sympathetic when this issue is raised and it has actually somewhat -- crazy to say -- in her favor, because she has been positioned as the supportive wife who stuck by her man, who forgave him. something the clinton campaign is confident that they can weather just fine. that said, she is running for president. backd trump does not hold when he has you in his sights. he will go for the jugular, and it seems like that is what he's doing. in recent polling, how

likely are people to vote for hillary clinton when you somehow bring that into the mix, or has anybody done that? recentve not seen polling on that. what this really does for donald trump -- the biggest obstacle to his campaign at the moment -- if this was any other candidate and he was leading in the states is leading in, we would say he is the presumptive nominee. reason people do not say that that's the reason people do not say that about trump is because of his bluster and the questions that the establishment raises about how electable he is. thehe argument is, if he wins republican nomination, this would be a doomsday scenario for the republican party because they say he cannot win a general election. polling seems to suggest that, although trump points to head-to-head matchups between him and hillary clinton that suggests otherwise.

this is him saying, i can take on hillary clinton. for is should be looking how effective this line of attacks is on bill, hillary. it really answers the question, if donald trump can convince people that either he is a look or that he would put up a strong fight against hillary clinton, and people start to believe that , then his nomination candidacy starts to look more inevitable. kathleen: "the wall street journal" took a look at the possibility of a chaotic gop convention. ben ginsberg, national council for the mitt romney and george w. bush campaigns, weighing in on what could happen if we get through the summer, and you do not have donald trump so far out in front. you have ted cruz winning enough contests. maybe marco rubio. i think he must've read your story two weeks ago talking about the history and the

possibility of a brokered convention for the republicans this summer. >> nobody knows this better than ginsberg. he was mitt romney's lawyer in 2012, he knows the rules. he has been on the rules committees. he has fought to make the convention as smooth as he could help to make it for mr. romney. doesve him away in on this lend some credence to the chatter that is going on right now about the possibility of a brokered convention. everyone that i talked to in my story said everyone is thinking about it. it is too soon to know whether or not it will happen but everyone is planning for it. one thing that mr. ginsberg said in the story today, defending which took some fire recently for talking about a brokered -- we should not say brokered -- kathleen: let's stop you right there. explain to everybody what this is all about.

the last time there was a brokered convention was a long time ago. 1952. >> brokered or contested convention is when candidates arrived to their nomination convention without more than half of the delegates. delegates are supporters are elected on the state level. this year, they are bound to the popular vote in these states. .ew york votes i believe they are a proportional state. those delegates are bound proportionally by the popular vote on primary day. so you have some candidates getting a lot of delegates, some candidates who got a smaller boat getting a little bit of delegates, and these states are going to get split up and there is no clear winner, and there are this many candidates in the race, the possibility is great

-- states could get split up between three or four candidates, and that could keep someone from reaching the threshold to become the nominee. kathleen: does that mean that the delegates at the republican national convention could be the ones that actually decide out of who is left who gets the nomination? what wouldxactly happen. in this scenario, which is increasingly likely, but not yet , you would have the delegates who are bound through the first round of voting -- everyone would have to vote the way the state wanted them to vote in the first round. on the second ballots, third ballots, they would be open to any kind of deal making, there could be a coalition building, there could be a lot of rule fights, maybe even credentialing fights. which delegates are legitimate and which are not. you can see this turning into a chaotic situation quickly. what would matter there is

organization and whipping delegate votes. swing things a little bit in the advantage of an established candidate. kathleen: does it also mean that you could potentially end up with a candidate who is a weaker choice for the republicans because the democrats would say, this was brokered, the delegates chose. brokerage was in 1952 on the democratic side. they lost that election. the last republican brokered convention was there in 1948, when they lost the general election. 1976, the republicans came somewhat close. it did not turn into a contested but there was no clear nominee going into the convention that year, and they lost the general election that year as well. it does not bode well for anyone with such a public and now televised fight on the

convention floor. kathleen: thank you much. on can catch him every day "with all due respect." ♪

betty: welcome to bloomberg markets.

from bloomberg world headquarters in new york, good afternoon, i'm betty liu. u.s. stocks are stopping their three-day slide, surging to their highest level in three weeks. slipping back into positive territory for the year as commodities trim their losses. while the stock market overall is flat for the year, home prices are zooming ahead, adding another 5.5% to the latest case schiller surveyed. will you return to the days of the pre-crash housing bubble, is anybody talking about a bubble in housing? absent from the record-breaking year in m&a, tech giants. will company start making large acquisitions in the new year? close inre about to less than one hour.