from bloomberg world headquarters in new york, good afternoon. so much for a happy new year. stocks struggling for the second straight day. if last year was bad for retailers, this year could be even worse. why many merchants will default on their debt. and -- president obama: that is why we are here today. not to debate the last mass shooting, but to talk about how to prevent the next one. david: how effective could expanded background checks be? julie hyman has a check on the markets. julie: stocks trading at a tight range after the drop we saw yesterday. the major averages have been going between positive and negative throughout the day. just turning positive for the s&p again.

if you take a look at what we tend to see after a big drop in the first day of trading, it is not an indicator for the rest of the month. these are 1% losses or more going all the way back to 1932. these are the yellow bars. the orange bars, the rest of january. the first day of trading of the year is not a good predictor for the full year. the whole of january is a better predictor. even when we've had a negative and steeply negative start to the year when january has been positive for the majority of the time. it is not necessarily a negative particular here for the rest of here for-- predictor the rest of the year. david: i know you've been looking at this note that there could be better opportunities elsewhere. julie: citigroup coming out with its strategy note, looking globally and saying we are not at the risk of a bear market as of yet.

it has various indicators it looks at. it does say maybe u.s. equities are due for a bit of a breather. it is not negative on u.s. equities, just more positive on other areas of the year. quitter profit margins could be under pressure. there's this preference of europe and japan. a forecast for 12% gains inequities with a 7% gain in profits in the nine states. there has been muted optimism and the big risk to this scenario is a global recession. -- 7% gain in profits in the united states. david: thank you very much. let's get a check of the bloomberg first word news this afternoon. mark crumpton has that. mark: president obama says it is time for the american people to demand congressional action on guns and for elected officials to stand up to the gun lobby.

in an emotional to her and scum of the president unveiled a series of measures aimed at tightening control and enforcement of firearms. he drew a distinction between the u.s. and other industrialized nations. president obama: we are the only advanced country on earth that sees this kind of mass violence europe with this kind of erupt.ncy -- h it doesn't happen in other advanced countries. not even close. ,s i've said before, somehow we've become numb to it and we start thinking this is normal. mark: the presidents republican critics are weighing in. mitch mcconnell says the president is more focused on undercutting second amendment rights than fighting terrorism. ted cruz is promising a repeal of the president's executive

actions. a former illinois resident who admitted to giving money to terror groups in iraq and syria will learn her fate in court today. she pleaded guilty in september two conspiring to provide ,aterials to terrorists including islamic state and al qaeda in iraq. in became a u.s. citizen 2006. she was living in germany at the time of her arrest. kuwait is the latest saudi arabia and ally to and diplomatic relations with iran. -- prompted byby a on saudi offices in iran. -- prompted by act's on saudi offices in iran. some scary moments for air passengers in washington state this morning. the united airlines flight bound

for denver slid off an icy runway. no injuries were reported. global news 24 hours a day powered by our 24-hour journalists in 150 news bureaus around the world. nation's leading economists are gathering in san francisco for the american economics association's conference. brendan greeley is joined by google's chief economist. >> google has a chief economist, he is sitting on top of an extra near a wealth of data. -- an extraordinary wealth of data. let's start with the question of productivity. have beeneconomists walking around openly asking at this conference is, why can't we create more growth? why are we stuck at or below 2%? huge component of that is productivity. are we measuring productivity right? >> we are certainly not

measuring productivity right. we did not measure it right before, either. are we doing a worse job than we used to? there are some arguments that suggest we are. we are looking at services for the most part, where we have seen growth. we've seen situations where they on quality -- brendan: the argument has been that, as amazing as network computing has been, the real proximity does productivity -- it network computing actually provide the productivity boost the model t did? >> i agree with robert gordon that the 20 century was a hard act to follow. my grandfather was born when people got around by horses and buggies and lived to see a man

walk on the moon. that is 70 years. really remarkable. it is difficult to get booms like indoor plumbing twice. because of technological innovations we are seeing in i.t. are incredible. brendan: are they creating economic growth? many of the things they create become free. hal: look at the gps systems. measurable a big productivity impact on the shipping trucking, logistics industry. the price has fallen so much that everybody has a gps system. you don't get lost anymore. that is a big productivity increase in reality. it doesn't show up in gdp. the question is always how do we turn this into policy?

policymakers are scratching their heads try to figure out how we create growth. his productivity even the culprit? do we need to look somewhere else for growth? it is not growing as much as it used to. hal: we saw a similar phenomenon around the turn-of-the-century. -- have big logical advances technological advances. dishwashers, vacuum cleaners, lawnmowers. were much more productive but it did not show up in gdp. many of the kinds of productivity advances are not in sectors that are easily measurable. how do we capture that and policy? we should not be so obsessed with these measures of productivity and continue as economist trying to measure this unmeasurable phenomenon.

it is not a completely bleak picture. brendan: one thing that is changing the profession is this availability of data. you might be going to google or some other firm. is there a way to generalize what it is we are learning when we have all these transactions that can help us to macroeconomic predictions? hal: there's two things good more data and timely data. gdp comes out once a quarter. you can look at a lot of these economic online data measurements. google queries are released on an hourly basis. brendan: i'm going to the bureau of labor and statistics this friday. is there a time when i will also be going to the google jobs lockup? hal: absolutely.

go to google trends and look at queries. is anybody hiring? where's the unemployment office? these are taking a pulse of the labor market, these kinds of queries. brendan: back to you, david gura. david: brendan greeley with google's chief economist. , 2015 was a grim year for retailers. this year could be even worse. the growing number of companies expected to quit paying their debts. who is most at risk. i will be speaking to the former u.s. ambassador to bahrain. ♪

david: welcome back to bloomberg markets it time for the .loomberg business flash jpmorgan will pay $40 million to settle accusations that it mishandled for closures. jpmorgan is one of several banks accused of florida generally best fragility -- fraudulently authorizing affidavits.

netscape capital shutting down its $1.5 billion hedge fund. the move comes amid computer driven trading strategies. the lending from returned just over 18% as recently as 2013. it was up less than a percent in first 11 months last year. a change at the top at spirit airlines. by aeo is out, replaced board member and longtime airline executive. shares fell 47% last year. that is the bloomberg business flash. julie hyman as a check on couple he movers. julie: fitbit coming up with a new watch cold the blaze -- called the blaze. $199, cheaper than apple watch.

we are seeing the stock selloff pretty sharply today. we did hear from analysts at ther jaffray's who say selloff is under done and this could be a buying opportunity. that is not helping stocks, that commentary. we've been watching go pro today. it has been rallying on positive analyst commentary as well. particular single pro results may come in better than initially feared. -- saying go pro results may come in better than initially feared. the persistence of that negative view of the company. solar sharestching pretty goldman sachs out with a look at the whole industry an individual stocks. the whole industry being downgraded to neutral saying the stocks underperformed in 2015.

there is a selective bias. it will be the companies that have stronger balance sheets and improving returns. first solar is one of the topics. hanging onto a gain of 1.5%. as u.s. stocks struggle to shake up yesterday's selloff, jeremy siegel says first day moves generally are not a good bellringing for the rest of the year. he made his case this morning with betty liu. news isotential good that if oil stabilizes, the dollar stabilizes, we can resume and organic increase that we saw in the earnings 7% outside the oil sector. that was a less aggressive fed. we are about a year behind,

maybe a year and a half behind what i had thought years ago, but i don't think the bull market is over. david: he remains optimistic or to our next guest says stocks will continue to struggle this year. i will have you react to the good professor. what you make of what he had to say? aref all of his if's correct, he is right. i don't see any reason that oil would stabilize, the earnings will struggle. the fed has given us no indication that they will do anything less than four rate hikes. changes, he is right. i don't think it will. that is why the market will continue to struggle. david: let me get your reaction to what we saw yesterday. this giants a lot yesterday giantng with china --

selloff yesterday. the first dayy, of the year is usually one of the most volatile days of the year. there's always an outside move on the first day of the year. yesterday was even bigger than the outsized move. dr. siegel and others are right, the first aid is not -- first day is not the trend for the year. if you start off at 2% in the hole, that increases the chances of a down week or down month. it was not a good start no matter how you want to cut it. david: we saw this momentum driven died yesterday in china. -- dive yesterday in china. momentum, it is hard to explain -- will this be increasingly troublesome?

>> i think so. china has two problems going on. their economy is slowing. they are trying to make a transition from being a main factoring economy to a consumer-oriented economy -- to aacturing economy consumer-oriented economy. the government has made serious errors. arresting people to try to stop the bear market in the summer. then putting in those trading halts which kicked in the first day of the new year. they made the decline yesterday much worse than it would have been otherwise. the government continues with its series of missteps in trying to manage the free market. ,aybe they should learn managing the free market is something you cannot do. get out of its way and let it sort itself out. wrote monetary policy matters. you look at it this next year

how do you see that playing out? what guidance are you giving investors as they try to navigate the uncertainty? >> when the fed was pumping money and doing qe, all assets were going up in price. but a commodities, stocks, bonds, real estate. back,at the fed is pulled last year was one of the worst years we've ever seen. no asset class and whether you invested in bonds come oil stocks, commodities, nothing was up more than 2% last year. --t is the lowest along among all asset classes we've seen in 78 years. that is because when we had easy monetary policy pushing everything up, now we have restrictive policy pushing nothing up -- will stocks struggle? yes. you would be hard-pressed to

find if the fed continues to raise rates four times this year and we still continue what we have come and you will be hard-pressed to find anything that will return more than 3% or 5% and and maybe if you get the security selection right, you might get the 5% number. it will be a difficult year unless thing start a change. change.s start to the economy is showing no signs of picking up. manufacturing data yesterday was rather poor. david: still ahead, 2015 was a grim year for retailers. this year could be even worse. investors braced for more companies to default on their debt. looking at a live shot of town hall in manhattan. bernie sanders speaking about stubbl --t -- if you --ew ste subway stops

bernie sanders at town hall in manhattan. he will join with all due respect tonight at 5:00 eastern here on bloomberg television. ♪

david: welcome back to bloomberg markets. despite a late surge in holiday sales, retail is still struggling under debt. more retail defaults ahead. jodi is with us now to explain. you say that the outlook here is grim. we see some of the fundamentals of the economy have strengthened here. >> the economy is picking up, but the new shopping habits are here to stay.

customers are picking up their financialing the crisis, know everybody is looking for a valley. bargains, discounts. the sellers are not giving it to us. a 50% discount is a great deal. ,ow, you are looking at 70% 90%. is 90 present the new 50% -- 90 90% donehe new 50% -- new 50%? lbo's play a big part into it. if you look at the top eight worst-performing bonds, the hateful eight, six out of eight lbo's brought

private. they are approaching a narrow -- and iran that they can no longer drag things along -- an era. authority, they have to in may.it by this year ahead, gas and oil production boomed under the obama administration. what the american petroleum how hise says about wha tenure has impacted the industry. ♪

david: from bloomberg world had risen york, this is bloomberg

markets. -- from bloomberg world headquarters in new york, this is bloomberg markets. i want to start with the headlines. mark crumpton is standing by at our first word news desk. mark: president obama unveiled his plan to tighten control of firearms in the u.s. he's using his executive authority to bypass congress. he accused the gun lobby of taking congress hostage. it is possible to pull the second amendment while doing something to tackle mass shootings that have become the new normal in the u.s. when american soldiers dead and two others wounded in fighting .n southern afghanistan -- one american soldier is dead. the u.s. deployed troops there bolster afghan troops after

they suffered setbacks against militants. ceremonies were held in paris today to remember the 17 people killed in islamic extra missed attacks on charlie hebdo. in a kosher market one year ago this week. francois hollande unveiled plaques around the city to honor the victims. charlie abdo is also releasing a special anniversary issue packed with that scene and controversial cartoons -- obscene and controversial cartoons. they are flaunting their freedom muslimoon everyone from fundamentalists to catholic priests. bernie sanders is ramping up his attack on wall street. senator sanders promised that in his first year in office, he will break up the banks now considered too big to fail.

those banks have too much economic and political power over the country. bernie sanders: we will no longer tolerate an economy and a political system that has been rigged by wall street to benefit the wealthiest americans in this country at the expense of everyone else. sender sanders will join us on bloomberg television to discuss his stepped-up attack on wall street. he will be a with mark halperin and john heilemann on with all due respect. global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. david: let's look at today's biggest movers. copper climbing 1.5%, the most in two weeks after 10 intervened in its stock market. andinum and zinc also gain oil dropped to a two-week low on speculation that the government

report showed u.s. crude inventories slide last week. the nation's biggest fossil fuel trade group delivered a state of energy -- about the keystone xl pipeline. he expressed a lot of disappointment that the obama administration did not let that go through. about energy infrastructure at a time when this country needs to be building more pipelines to transport oil and gas across the country. more broadly, he took game at some administration policies. aim at some administration policies. he cited upcoming mandates on methane emissions, things of

that nature. david: that is what's in the report. , this write in your piece administration has been fairly kind to oil and natural gas. it has done fairly well under president obama's tenure. >> it has. in the past seven years, weeds and oil production surge, getting 2%. -- we've seen oil production surge, gaining 2%. much of this was in place before he took office. much of it has unfolded on private land. you are seeing the result of drilling and hydraulic fracturing and horizontal drilling on private lands. you are seeing the production resulting from that to a large degree. the folks at api would say this surge in production has happened in spite of obama, not because of him. david: what how difficult it has

been for him to square that with reducing climate impact -- how difficult has that been to navigate? >> tremendously difficult to do this president came in with a very green agenda. he wanted to have a green revolution come a revolution in green jobs. he wanted to aggressively tackle climate change and he ran into a domestic drilling boom providing a lot of good news for this after the 2008y financial crisis. has been an economic success story that he doesn't want to throttle completely. he is very committed to doing something about climate change. we saw the evidence of that in paris just a month ago. he has had to balance these two competing interests. am sure you keep an eye on what environment for groups are saying. is the level of disappointment similar to what we hear from api?

is it hard to please both camps are? >> he is caught between two very divisive groups. they will industry will not be happy with much of what he does and neither are many environmentalists, especially very committed environmentalists. folks who were looking at him with a lot of hope that he would squash also feel production on public lands. -- fossil fuel production on public lands. that he would curtail emissions much more aggressively. they see this disappointment that the epa has not udall of its tools to go after hydraulic fracturing. there's a lot of disappointment by some of those on the environment will spectrum. iran expressing regret over the attack on the saudi embassy in tehran did tension on high after the execution of a prominent shiite cleric. saudi arabia's neighbors have

joined in cutting ties with iran. us about the strategic importance of bahrain. we have a large naval base there. he large shiite population. it is important to american interests in the middle east. adam: absolutely and very important to saudi arabia and security. miles off the eastern coast of saudi arabia. saudi arabia's largest petrochemical facility res is ls than 15 miles from the bahrain mainland. me, ifofficial put it to iran establishes a beachhead on postin, they have a nice to the jugular vein of the

iranian economy. david: we saw some scaling back .oday ov are you worried about how this might play out in the region? this is very dangerous, but not new. the tensions go back a long way. in theve their origin responsibility over the holy sites of mecca and medina. we are about two different worldviews. trade, prorn, pro engagement with the world approach that saudi arabia has historically had. and a pro-u.s. position. on the other hand, we are talking about a pro-subversion, pro terrorism and pro-aggression point of view that iran has a long history of.

to me, it seems saudi arabia has spoken loudly and they should be listened to. if you dot to get us, not help us, we will take action on our own. we are at an interesting point in time as secretary of state john kerry is going to push through this nuclear deal that he has helped write and ushered through. he is trying to find some solution to the end of the war in syria. this is a very difficult position for the nine states to be in. -- for the united states to be in. what is happening between saudi arabia and iran exposes the alice in wonderland nature of u.s. foreign-policy in the middle east. believing that somehow you can moderate iran, that you can buy

bringing it to the table and engaging it in international agreements that we can somehow transform them into irresponsible international stakeholder is just being proven to be false. the fact of the matter is come iran is actively and aggressively undermining the stability of our allies. that is why saudi arabia acted the way it did. sn rounding up other subversive indoctrinated by iran as they are in iraq and lebanon. to think that iran is going to the letter of the nuclear agreement is fantastic. afters than a month signing an agreement, they violate the ballistic missile test regimes, to me speaks volumes. about the me ask you

offer that russia made. russia playing a more active, more involved role in the region. we can debate the potential tongue-in-cheekedness of what they were offering there. it is clearly not helpful. unfortunately, we've made russia and iran indispensable. that is the great tragedy. if from the beginning we had an assertive leadership and commitment and support for its allies in the region, whether ort be the syrian opposition egypt, we would not have created iran and russia to do their unhelpful meddling. now that we've abdicated our role as the ally of first resorts, the countries of the region are scrambling to get behind whoever can help them.

investor, thank you very much for coming up in the next 20 minutes, president obama makes an emotional pitch for tighter gun regulations. republicans are calling it executive overreach. shares of apple falling today on a report of the company will cut iphone production by 30%. sales will slump in 2016. manager ofr from the the best-performing emerging-market fund in the past four years. in he avoided the carnage emerging-market stocks and what is currently in his portfolio. ♪

david: welcome back to bloomberg markets. stocks trying to fight back after suffering big losses yesterday, not getting much help from the tech sector. julie: apple is pretty important to the tech sector and it is not doing well today. a report in the japanese news service that the company may be cutting apple iphone six and 6s production by 30% between january and march. it is difficult to tell if this is part of its slow down before it ramps up production of the next phone that it's making, but it does seem to be in line with a lot of analyst commentary over the past month or so that apple was seen potentially a drop in demand. slowdown was evident in reduced in theto suppliers

asia-pacific region. shares down 2% today, suppliers as well happen selling off. if you look at the supply chain function on the bloomberg terminal, apple is in the center, these are the top suppliers on the left. i sorted them to look at the one-month price change. it shows that all of them are in the red. if you slow down just scroll down, you see page after page of declines after you get to a couple of green ones. a lot of these and have been following along with apple. if you look at the spider sector k, it is down .1%. not seeing a huge decline despite this decline in apple and its suppliers. others bouncing back from declines yesterday. microsoft come out that, facebook all higher. -- microsoft come out that,

microsoft, alphabet, facebook. david: expanding gun background theks will not trample on rights of gun owners, the president calling for more action to stem the gun violence and saying the status quo is no longer acceptable. contrary to claims of some presidential candidates before plotmeeting, this is not a to take away everybody's guns. check, youbackground purchase a firearm. david: paul ryan and other republicans denounced the move as executive overreach sing the effort will no doubt be challenged in the courts. -- saying the effort will no doubt be challenged in the courts. what does all of this mean for gun dealers and owners? bloombergbring in

politics -- we've talked many times about gun control and firearms. if what you heard today was measurably new from what the president proposed. >> the president's determination to readdress which people who sell guns have to do background checks is a new initiative. the other things he is talking about really are not that new. the idea of hiring 200 new atf agents or spending more money on research, those are very incremental. even the background check tightening itself would not really have that big a practical affected all of this is much more important as symbol than substance. david: let me ask you about what we heard during the speech and

after the speech. people getting ahead of it, tweeting and issuing statement while it was still going on. -- more of the same. >> everybody has been weighing in. a lot of preamble to this. nothing is really surprising. everybody is taking the position to expect they would. the question for the 2016 race is for who doesn't bring the ring the -- does it most true? you have the democratic side saying we need more of this, we needed to go even further. the question is, when you ask the question of who -- who doesn't ring the most -- who does it ring the most true for? david: something the president

mentioned, how successful connecticut's new gun laws have been. we are beginning to see this play out more and more at the state level, the local level. is a trend that has been quite noticeable since the december 2012 massacre at the -- theerest go elementary school. many red states encouraging people to purchase firearms by making it easier to get concealed carry permits. the very federal american political system in action here. a lot of jam in washington but a fair amount of flux at the state level. none of this is going to really affect the number of people who own firearms. it will not reduce the arsenal

of firearms already in private hands, which numbers some 300 million guns. with that kind of prevalence of gun ownership in american society, the problem of gun crime is going to continue. david: paul and steve, thank you. programming note, bernie sanders "with all dueg respect 5:00 eastern. jesus speaking now at an event in manhattan -- he is speaking now at an event in manhattan. -- can catch this beach life go.speech live at live apple is reportedly taking a drastic move. details just ahead. ♪

david: welcome back to bloomberg markets. a developing story out of apple today on the shares to press after -- shares depressed after the nikkei reported that they would decrease their output of iphones. this is a report from one of newswire. we've seen the stock react to the news. what indication do we have this could be anything other than the cycles we see play out when apple prepares to unveil a new iphone? and lakeland the paper not reporting where it got this information. emily: the paper not reporting where got this information.

all of these companies have hinted iphone declines. what is surprising is the extent of the cuts come a 30% cut. is reporting that is only for the current quarter and that production will resume normal levels the following quarter. because like inventory is piling up in developed markets, places like europe and china. it is all part of a cycle. we hear it every single time apple comes out with the s model. has not performed as welcome of people did not feel the need for the upgrade. the new thing with the rose gold color. looking ahead to the iphone 7 later this year, we could see the cycle pick right back up. when the earnings come

-- theh the apple watch iphone is still incredibly important. it's 66% of revenue coming from the iphone. a significant dip in sales means a lot for apple. apple is not the only company feeling the pinch. we just did a big story on samsung yesterday. they have huge challenges going forward. this could be just saturation or the iphone cycle. david: emily chang in san francisco. tune into bloomberg west tonight at six clock eastern and 3:00 pacific -- 6:00 eastern and 3:00 pacific. ♪

>> it is 3:00 p.m. in new york market."o "bloomberg ♪

betty: good afternoon. i am betty liu. here is what we have been watching. an up-and-down day for stocks as they struggle to close in the green for the first time this year. stocks cannot build momentum after yesterday's huge sellout to trading days, of course. his fun is the top emerging-market performer in the past clutter years. it includes a heavy dose of investment in china. -- a little light in their sales numbers. about in hour away from the close of trade today. i want to bringi