from world headquarters in new york, i am betty liu. here's what we are watching at this hour. stocks are opening higher but are drifting off after the worse week in and the -- in the index. take m&a news -- big m&a news. the work for some time. we will tell you what is driving that deal, including some big tax savings. howill have the latest on el chapo's secret interview with sean penn may have led to his arrest. markets, we are half an hour into the trading session. the nasdaq just turned red. i want to head to the markets

where julie hyman has the latest. julie: last week we have worst start to a year ever. like we weretially going to see a rebound from those losses, but that does not appear to be holding, at least at this moment. the s&p and the dow hanging onto very small games -- small gains. declining as even the european stock market continues to gain traction. take a look at my bloomberg terminal. i have the world market cap. this is an index that tracks it over the past year or so. had 4.5 trillion dollars from the value of global market caps. that does not include a decline we saw in china today.

what is responsible for the deterioration today? you may see the defeat of oil once again. oil prices are taking another leg lower here. earlier in the morning, oil tried to make attempt -- make an attempt to ghigher. morgan stanley saying for brent prices they could get as low as $20 if you size spike in the u.s. dollar. betty: let's check in on the bloomberg first word news. vonnie: diplomats from four nations are aiming to bring peace to afghanistan. for the country's warring actions is not at the table. taliban representatives were not invited. they will negotiate only with the united states. rolledfilled with food

into a syrian town today where starving people are reportedly eating grass and pets. 4000 peoplean feed per month. starved to death since december 1. fans and musicians around the world are paying tribute to david bowie. >> ground control to major tom. statement on his facebook page says he had been battling cancer for 18 months. he wrote space oddity in 1969. he also performed as ziggy stardust. david bowie was 69 years old. global news 24 hours per day powered by our journalists and 150 news bureaus around the world.

>> so far the start of 2016 has been an unhappy new year for u.s. stocks. the s&p capping its steepest and sparked by those worries that china slowdown is worse than anticipated. the chinese yet remains unstable. today the dollar weakening against the chinese currency as china central banks kept its rate largely studied for a second day. can the market shake off these woes in china? the equityring in strategist at stable nicolas. he has a target of 2100, joining us from baltimore. i also want to bring in our first world currency analyst. let's start with you on stocks here. ishought my first question -- first question was going to be how are we shaking off those

traits from china, but half an hour in we may still be worried, right? have rogan below the 100 week moving average. we understand the deflationary fundamentals of what is going on in china. >> how long do you think this impact is going to have? people are saying it is not that bad in china. do we need to calm down here and reserves peakhina the same month and starting in july 2014 the dollar took off. the deflationary pressure never let off since then. >> hang on, i want to bring in vincent. they let their reference rate hold steady.

are they done with the declines in the reference rate or do they not want to roll the markets too much? >> markets taking a little bit of a break now from last week. it was an exhausting week for traders and investors alike. there was a surge in the borrowing rate, and that made the cost for kerry short. that is awesome covering in the dollar trade. >> does that tell you there is no confidence? >> it is a little bit expensive on a quick burst. >> there was also an article about how according to the state news services in china, quoting the premiere, saying don't look for any more stimulus from the chinese central bank.

the market seems to be wanting china to do this. goading chinae into cutting the interest rates even more. >> the market needs to realize the focus needs to be more domestic, not so much international in the sense that china's domestic economy comes first. if adding more reserves is going to create a counter stimulus to create more speculation, that is not necessarily good for the domestic markets. theird to concentrate efforts into stimulating the domestic economy, which may be to the detriment of the global economy. >> outside of china we are looking at several factors. i see you shaking your head, what is that about? >> china is already stimulated fiscally and monetarily they

still have read cuts and there should be some flow through to the credit side. i don't understand why the offshore rate even exists. ofa degree china is a victim a currency attack of its own making from hong kong. that might subside and in china's growth stabilizes and if the fed lowers the forecaster rates, we should see a turn up sometime in mid-here. now the market is in an air pocket. >> they are not in an attack from the offshore market, they have $3.3 trillion in reserves. what they are trying to do is push the market away from a dollar pegged to a peg of a basket of currencies, where the .uan is strengthening that takes the pressure off of their currency. it makes it more of an international currency, which is what they are trying to do. >> before i saw your reaction i

want to ask you about to mystic issues. not just earnings, kicking off later today. you also just mentioned fed. might this volatility caused the fed to take down their guidance? >> if you look back at the most similar environment to what we have been going through, it is the late 90's. china used to have $4 billion in reserves. consider the fact that the fed cut rates -- today the equivalent of a rate cut would be lowering the dots, lowering the path of rates. >> we are going to leave it there. thank you so much. much more ahead on bloomberg

markets. what does the future look like for the world's biggest carmaker? we will hear from the president and ceo of toyota north america first on bloomberg television.

the 2016 north american international auto show gets underway in detroit. all eyes will be on the innovation the future holds for the auto industry. matt miller is there. is the president and ceo of toyota north america. toyota's -- the ceo of toyota north america here

of the auto show. thank you for joining us. for a long time it was kind of a i'm assuming the crown is not only yours but solidly placed on your head after the emissions scandal. we won't have our final numbers for a couple of weeks. i think we will have the crowd but we will have ourselves on the back for five minutes. >> you know the u.s. sales numbers, another record year for you. of tailwinds with low gas prices, falling unemployment, and more fuel-efficient vehicles. do you expect another record for 2016? >> i think overall industry is going to be up. 7.5 million this last year.

toyota is going to be very similar. i think you are going to have some drag as well. a lot of cars cutting off the marketplace. that is going to compete with some of the new car sales. bit of an uptake in interest rates that may tamper down the market a little bit. we think the market is going to be strong, but not that much growth. luxury will continue to be strong. mid suv will be strong, pickups will be strong. and passenger cars will continue to be a bit softer. >> i really think of the dealership network. the bestone of dealership network relationships in the industry. how do you help your dealers out as interest rates start to increase. more expensivees to hold and customer financing becomes more finance this

becomes more expensive. >> we tend to keep low gauge supply. we tend to target may be a 30 day supply. we tend to keep our inventories lower than most manufacturers. theyll try to make sure are competitive on the retail side it to be able to help their customers out. >> there are some vehicles you can barely keep on the lot. what have been the most successful vehicles? >> pickup trucks are hot. the all new tacoma is in short supply. highlander has been red-hot. a trend we are seeing in the entire industry's move toward light trucks. december alone, all verse 61% of all vehicles sold were light trucks. that has to be close to a record.

sales are pretty hot. if you have production bottlenecks, you can make that up with most suvs by bringing in production from outside. with the tacoma you can't. track thats pickup pickup truck tax in america. >> all of the pickups we sell are sourced in north america. all of the highlanders come from north america. there are certain plans we can only get through north america. we are expanding a little bit at a time. we understand that part of what is driving this is fuel price. prices tend to go up, feel prices tend to go down. our idea is to keep a portfolio approach of passenger cars and light trucks, suvs, minivans, but be aggressive.

i can't tell you three years from now what may be hot. >> prius just came out with the all new previous. what do you expect for sales their? with gas prices at one dollar per gallon, it is not necessary to have a vehicle that is so fuel-efficient? >> there are 2 million prius on the road today. this is the first dramatic change we have seen in a generation or so. a lot of those fires will be back in the marketplace. last year we sold 109,000. this year we believe it will be closer to 140,000. >> where our interest rates going. what is your take on the u.s. economy, because you have such a great view of that on your position.

>> if you look at where the industry has been since the deep recession we went through, six , its of continuous growth was far in advance and improving economy. we still see loan delinquencies. we still see growth consumer confidence. even though we are going to see a rise in interest rates, relatively speaking it is still quite moderate. >> may be two moves, three? >> the higher interest rates move, the greater the strength of the economy is. we are still very bullish about the marketplace. it will probably set a seventh record. it will not be another one million units. that is still very strong. >> always great to get your take. ceo of toyota north america.

betty, biggest carmaker in the world. >> thank you. i know you have a lot more interviews with us. live in the north american international auto's show in detroit. staying with cars. volkswagen under pressure from the big emissions scandal, making a big push at that auto show. valid desk is vowing to continue investing in the u.s.. he will be live a little bit later. don't miss that interview.

betty bank that betty: we want to head to the markets where julie hyman has a check on company movers and analyst calls on various companies.

julie: the company is seeing declining share in women's apparel and lower than average selling prices in footwear. says it isk return the first time in three years under armor is losing shares in apparel. the shares are down by 7.5 percent. it was a downgrade. the price target is now at $62 per share. take a look at the short interests. is the middle chart, short interest on a thesis, now at 13%. armour -- for any a high-level.

of betty: gm has been on this losing streak until today. julie: it was down for 10 straight sessions. it lost 15% and that period of time. upgraded to outperform over neutral. analysts say overall there is too much pessimism about the car cycle, the global auto sector. the concerns about it are overstated. and gm'snings power -- earnings power is higher than analysts are anticipating. it will be a much better product lineup for 2016 and 2017 three at another stock is apple. a losingk has been on streak to some extent. there has been concern about demand for the iphone. apple should be bought at current levels, the stock is very inexpensive you may be the margins for december won't be as

great. maybe there will be a buildup for iphones at inventories forrester bidders. even on the opposing side, there are some analysts who are still cautious on apple. shares are up. just another look to see what the analyst estimate is more broadly, this is a map over the past two years. here we have the buy rating. the price targets have been taking down and this bottom chart is the gap between the current share price and where analysts estimate the stocks should be. the gap has been growing. >> equities are showing signs of stabilizing. muted for 2015. there are fresh signs of further economic misses.

bloomberg television caught up with one global bank ceo, who says he is not worried about doing business in china. >> it started out how 2015 really ended, quite volatile. i think we have to expect some kind of adjustment for 2016. those are good times to plan for the future, and that is the reason why we are starting to implement our strategic plan in the next five years. we think we are going to double our account in this region, we are going to grow all of our .usinesses in asset management, business banking. to expand the giving company that is outsource functions to our group. is a greatna opportunity, like it has been

for the last 20 years. card --ing the head .oubling the headcount how many jobs is that? >> it was roughly 600 people and we plan to double it within the next five years. going to beat distributed between investment banking and wealth management? >> asset management to fixed income, the origination and m&a, and wealth management. as you look at the wealth last few years and the one that will be heated, this is a great business to be in.

bloomberg'sfrom world headquarters in midtown manhattan, you are watching "bloomberg markets."

i'm betty liu. let's go to the first word news desk. the supreme court hears an argument whether public employee unions can collect dues those who do not join the union. unions say they can require workers to pay for the cost of collective bargaining areas hillary clinton is once again defending the way she handled in as secretary of state, appearing on face the nation, clinton said a newly released e-mail did not show she mishandled classified information. is investigating information sent to a private e-mail server. the trial of another baltimore police officer in the death of freddie gray has been delayed.

it is on hold until it is decided whether officer william porter can testify in the trial of his colleagues. standoff at an oregon wildlife refuge has entered a second week. they say they will not leave until it is time to transfer locals.to and lottery officials say wednesday's powerball jackpot will be the largest ever -- $1.3 billion. the odds of winning are one in 292 million. global news 24 hours a day powered by 2400 journalists in 150 bureaus around the world. betty. betty: i am still going to play. are you?

it's not going to stop anyone. betty: a french drugmaker announced two big deals worth up to $1.2 billion, trying to lay catch up in the heart -- hot field where they are looking for the next big sure. they saw a move by shire to acquire another company. joining us, the president of research and global development for sanofi. thank you for joining us. i want to talk about one of these deals. an extension of an agreement with work bio, on and in college he deal. tell me what this deal is about. we cocreated this

ourselves for years ago with third rock ventures in boston. the co-creation was related to the fact that they had a platform where they could look at the genome of the organism and look at unique molecules, and they found that some of these molecules can act on cancer targets. that is where we find this deal. touching another area, antibodies that have two actions at once. grow and begoing to a major need and we are making catch upeed to do to and leapfrog, if necessary with our own internal assets. when you say the -- betty: when

you say the target is the genome , as far as differences with what other people do, what does that mean? products comethe from nature. we can nevers figure out what organisms come from good treatment. so, the scientist we paired with actually had an idea of sequencing the genome of natural organisms to identify in the genome areas that will code for specific, unique molecules. that is what i was excited about, and we came together, we created this company for years ago and over the four years we have made enough progress that tells me now we can address one of the toughest targets in cancer, a very, very central target in cancer. betty: also on the antibiotics

front though, why target antibiotics and focus on that, when it seems antibiotics has been pretty limited in the return for drugmakers? guest: that's a good question, antibioticsto -- in , you realize the major problem is the rise of drug-resistant organisms. i think if we do not do beething today, we will very, very ill-prepared 5, 10 years from now. cancer,tform addresses but also can address antibiotics, so let's use the science to advance in the antibiotics field. i am one of those who comes from public health. i was the director of the nih, and i know in infection diseases companiestics, we as have the responsibility to stay in those fields and develop

those drugs. that is what this is all about. betty: right, even if the returns are not as spectacular as with other drugs. guest: betty, governments have been really smart about this. they finally understood that without government help you could not develop these drugs. i think the new rules, statutes --nce robotics make it antibiotics make it more likely you can make a decent return to fund innovation. it is not as bad as it used to be. zerhouni, betty: dr. there has been a lot of talk about drug price increases. a group of analysts put out a report saying drug prices since december have continued to increase 9%, 10%, even more. is that going to be the trend to stay, or what responsibility do these companies have two lower the price hike?

you don't really see this outside the u.s. what you hear our prices people list -- manufacturer list prices, and know what people pay, because there are a lot of agreements in the market that reduce that net price to the patient. they really relate to the fragmentation and complication of our health care system, and that needs to be fixed. and that is what you have these outlier examples, people who increase of prices 5000%. that is an outlier. it does not represent what the industry wants to do. we want to make available accessible drugs while sustaining innovation. that is not something the industry alone can solve. it has to be a system solution because right now there is no real way of knowing what the .eal prices are

the agreements that are entered into are really opaque. think theh you mergers that we have seen -- are these going to help at all with drug prices and lowering them? aest: i don't think there is connection there, personally. i don't know. really has to do with the health care market system we have in new york. that has to be really reviewed and made such that we have a decent price, a decent return for innovation, while at the same time maintaining transparency of pricing. everything is blaming pharma, but it's not just pharma. in the u.s., 50% of what patients pay does not go to industry. it does not go to the pharmaceutical companies. in europe, 90% goes to the pharmaceuticals, so it's very

different and i don't think there is an open, transparent debate about this now, which needs to happen, so that you understand that these price changes are really responses to changes in the marketplace. we need to find a solution to make drugs affordable, accessible to the patients. i cannot tell you how much i believe in that. betty: right, but they cannot do it all alone either. guest: they cannot do it all alone. betty: thank you for joining us. sanofi's president of global research and development. coming up, the latest twist to world'scapture of the most wanted drug kingpin. did sean penn help capture el chapo or did he help him? -- manyill look out why

hedge funds are struggling and closing down. ♪

betty: welcome back. this is "bloomberg markets." to europe where bloomberg's mark barton is seeing stocks rebounding after the worst week in more than four years. mark, it looks like you are still struggling with those gains. high .5%., we are of let's put it in perspective. asia and markets sank today. a daily decline to nearly 15%. betty, aside from the fact that we -- the fact that we diverged from china could mean something.

do not forget that the euro stocks diverged in a big, big decline, 6% of decline. the fact that we are rising, betty, when asia fell, that has to stand for something, doesn't it? betty: right, and we have a lot ahead for us in the 11:00, right? mark: we do, betty. drew armstrong will be discussing today's moves. european equities, but short the wider european market. we will be talking about shire's -- billion knocked out low knockout blow for fax else up. howanother big question -- low could oil go? our guest from johannesburg --

the rand sank today. and the battle of the charts. you keep pointing out these price fighters. mike you are weaning out mckee. where is joe? ready -- is mark: mike keeps beating me, julie hyman keats -- keeps beating me. where is someone i can beat? weeding them all out. we are climbing back from those lows we had earlier. abigail doolittle has the latest life from the nasdaq. abigail? abigail: certainly a volatile day of the nasdaq. we were up sharply, than we were down. one of the major drags, health care, being led lower by biotech. 20%.re down -- nasdaq biotechnology

index, will it reaches september lows, and with health care and prizing 16% of the index, could this drag the broader markets lower? only time will tell. one of the biggest drags is vertex pharmaceuticals. down after its forecast for a cystic fibrosis drug mr. the forecast. some analysts are saying to buy the stock on this weakness. they are down 15%. there -- with the mbi closer down 12%, betty. doolittle, with the decliners on the nasdaq. now to mexico where the government is reportedly preparing to extradite el chapo guzman. the latest from

bloomberg's eric martin in mexico city. eric, i think everybody, right, from here to down to mexico and the rest of latin america were shocked when they heard he was captured. the mood in mexico right now on his capture? good morning, betty. the mood here is certainly disbelief, a great surprise. most never thought el chapo would be recaptured, much less six months after his escape. this is an accomplished for the administration and the security forces. but we cannot forget the corruption and the weak rule of in would allow of? to escape the first place in july. this country has been embroiled in a drug war for a decade. 150,000 people killed in the last decade. this is certainly an a college met, but not something where one person alone will make a difference turning the tide.

and the shocking twist of sean penn having been involved in doing an interview with el chapo while he was on the run. how is that being received? reporter: absolutely astounding. we have seen sean penn meet with leaders. famously a few years ago. we now know that sean penn in chapo in a with el northern states of durango. they published 10 photos that appear to have been taken with a telephoto lens, showing sean penn and an actress arriving at suggesting in this security file that mexican authorities were tracking him before this meeting and a couple weeks after, and they were close to nabbing guzman. turn in thisating

august. betty: it is. it sums like a movie script on its own. in terms of his extradition to the united states, what are the risks he could again escape from authorities? reporter: betty, that's the big worry. the criminal has proven unrivaled in his ability to escape from the law. he left through tunnels and an altered motorbike. the big fear is the longer the morelds on to him, possibility for corruption or an escape plan to reveal itself again. betty: so, then what is the next to step in terms of his extradition? what are we waiting for here? reporter: the mexican attorney general's office and the head of extradition came out and they said they believe it will be at least one year until el chapo is

extradited to the u.s. based on the potential appeals and the links that that process normally h that that process normally takes. we are looking at another year of el chapo in prison. despite the reinforcement of the prison holding their breath and hoping this time will be different. betty: right, nervous about that. thank you, eric martin, in new york city, with the latest on el chapo. -- demanding money. what does that mean for the hedge fund investing world? ♪

betty: welcome back to bloomberg television. i'm betty liu. back in the game. we learned last week billionaire will be steve cohen ine to manage money again

2016. maybe it has to do with so many hedge funds shutting down. one bloomberg called nest wrote that it is -- columnist wrote it is important to remember that there is one hedge fund investor with a great record and frustrating to remember that no one can invest with them. matt levine joins us now. what kind of reaction did you get to that? attributet of people his great multi-vector track record 2 -- betty: cheating. and you say no? time they haveg said it was insider trading and that is why -- his performance has continued to be solid, both as the head of sac capital and point 72 -- betty: which is only to manage

his own wealth. -- upso, roger at sac 20%, this year he was up 12%, give or take at point72, which is kind of average. so, yeah, there has been a trend over the last couple years of hedge funds moving to the family offices, not because of regulatory problems or returns, but too much hassle dealing with investors and he has the 1 -- he has a very consistent track record and even after all of this regulatory scrutiny. line if i canthe remember it correctly in your column where essentially you said he can't manage money at this moment, other people's money -- it's somewhat of a national tragedy.

matt: it is something of an exaggeration. he has this amazing record of outperforming, which a lot of people thought was due to insider trading, and it turns out even with all of this scrutiny, he can do it. betty: how does this turnout for regulators and for steve cohen? of the mostne scrutinized and regulated hedge funds ever in this have. he might become a model for the hedge fund world to operate. matt: i think part of it was who built really good relationships with industry experts, but also companies themselves. for while it was clear that regulators. that was very suspicious. a lot of -- they

thought that a lot of this, these conversations with companies -- right, it was great matter by then. recent-- matt: the s take a made it trader step back on what is insider trading and what is legitimate relationship building with companies? he has a monitor now installed by the sec. it's interesting to see what is the courts have decided you have a lot of leeway to talk to companies and build relationships. the sec does not seem to like that -- right, because they think it is to grade. you can -- they think it is too gray. you can cross the line before you know it. matt: right, they view that as cheating, but the courts have said, that is not what insider

trading is. betty: you have to profit from insider trading. matt: it's not enough to get the information, you have to get it in a correct way. clearly matt mark toma, one of prison,ysts, in basically for bribing a doctor to give him drug trial results. but a lot of it is conversations on the other side of the line. betty: all right, a great column on steve cohen. much more ahead on bloomberg television. we will talk with the global head of commodities at bank of america merrill lynch. ♪ we live in a pick and choose world.

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so your sleep goes from good to great to wow! only at a sleep number store... find the lowest prices of the season, going on now. save $600 on the #1 rated i8 bed. know better sleep with sleep number. betty: it is 11 a.m. in new york, 4:00 p.m. and london, and midnight in hong kong. i'm betty liu. welcome now to "the european close."

bloomberg's mark barton joining us as we wrap up the trading hour. certainly a bit more calm than last week. mark: yes, european stocks bounced back from their biggest low-end for years. but the markets are little changed. the european close starts right now. betty: we are going to take you from new york to london in the next hour. our markets are just hitting their lows of the session. mark: betty, you know i love my narrative, and this is spoiled binary -- this has spoiled my narrative. i'm not happy. there i was 20 minutes ago telling you how we haveve