betty: from bloomberg world headquarters in new york, i'm scarlet fu. alix: and i'm alix steel. decline in china stocks and oil prices keeping the pressure on u.s. sales. nasdaq posting its largest losing streak since 2008. is feeling the backlash from the volkswagen emissions scandal. how they intend to bring consumers back. mexico begins the process of extraditing el chapo to the u.s. and actor sean penn is under investigation for his interview with the drug lord. we will go with -- go to mexico city for the latest. let's get a snapshot of

today's trading activity. the selloff in commodities continues to drag on u.s. stocks. start withoing to commodities. the move we have seen in oil is pretty dramatic. take a look here. wti has been declining. lowerlly took a sharp leg just after 10:00 after earlier making a run at a recovery. now it is at the lowest since at least 2004. if you look at the year to date chart, it is pretty ugly as well. down 14%. this is on top of a 30% drop last year and a 46% drop in 2014. has been marrying this move is copper and gold. down an astonishing 17% today.

freeport is down sharply as well , 34% after a 71% decline in 2015. anything commodity related is just battered. alix: morgan stanley with the lowest downgrade to potentially getting into the 20's. is that capitulation? is sort ofan stanley a worst-case scenario. note here from a guggenheim's scott minard who says we could see oil fall $25 a barrel and stocks fall along with it. if you look at stocks today, we are also seeing them turn lower mostly. it is a mixed picture at the moment. we have seen downturn along with oil prices. a look at what is helping mitigate the decline. we have utilities helping lift things up.

weighing on it here. here. care movers celgene announcing a new ceo. earnings are going to be weaker than analysts estimated. alix: thank you so much. scarlet: let's check in on the bloomberg first word news. the u.s. supreme court hears arguments today in a case that could have a huge impact on the labor movement. at issue, whether public employees can collect fees from workers who choose not to become members. collectyee unions can fees from workers who choose not to become members. unions say they can require workers to pay for the cost of collective bargaining. the mexican attorney general's office says it probably will take at least a year to extradite drug kingpin watching

el chapo guzman to the u.s.. -- drug kingpin watching el u.s. guzman to the it depends on how hard the defendants lawyers fight each stage. hours after the arrest, actor sean penn revealed he had secretly interviewed el chapo in northern mexico. that has triggered questions about how the mexican government handled the manhunt. jong-unrean leader kim wants his scientists to build better bombs. he spoke to those responsible for building what the north has called a hydrogen bomb. he says it is his expectation that they will advance their sentrch.

three private e-mail server. at the golden es at the golden globes, the revenant actor in a drama for the star, leonardo dicaprio. of ceremony marks the start the award season that ends with the oscars next month. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus from around the world. back to you. china is still roiling global markets and creating quite a dilemma by the fed. alix: for more on what could be in store, we are joined by priya misra. what was really fascinating last week is odds of a march rate hike have decreased to about 40%. do you agree with the market sentiment? >> we don't. we look for the next rate hike to be in march. the market is a little bit confused about the pressure for

the fed. the fact that we are 25 to 50 basis points actually makes the threshold for the fed relatively low to hike again. we are grappling with a world economy that is slowing much faster than anybody would have expected, but the u. domestic fundamental momentum is still fairly strong. we saw the jobs report. the base effect is going to kick in so invitation is going to rise. i think the fed has just started normalizing. this could actually give the fed a reason to slow down, but we have just started. we're not there yet. they can certainly go in march. they're still holding on to the entire portfolio of treasuries as well as mortgages. scarlet: where are we on policy divergence? >> there is still a significant amount of policy divergence.

only oneis really the raising rates. if you look at the front end of all developed market o bonding shows a significant amount of divergence. these spreadsheets are telling you that the market is expecting the fed to raise rates faster than other central banks. in our view, canada -- the bank of canada -- the probability of an ease should be higher. we see a little bit more divergence. what about the long end? long anit has much more room to

flatten. not much because the fed is forcing it. it's because global factors make the treasury still the safest asset out there. scarlet: even though china might be selling at other reserves. >> that would further argue for flattening. if you sell the front end, you can see the front and yields higher because of sales or because the fed is hiking faster. d stays anchored.

scarlet: what metrics will you be looking at? the central banks of the world have figured out how to address that stress. vix would be one area. if you see significant equity weakness you could potentially see it in fixed. vix. bor?: what about hi are you now currency analysts at the end of the day. y? >> we are all currency analysts at some point. betency is a relative value rather than interest rates. you mentioned what is happening with china. it forces china to actually ease.

they need to do a qe program or they need to cut rates. by trying to smooth out the process what they are doing is tightening domestic monetary conditions. that is exactly the opposite of what they should be doing. they should let the currency we can. aken. we need china to launch a pretty big program. what is happening -- it has to happen by what's happening on the currency front. china has said they are not going to do massive stimulus and focus more on the supply side. from your point of view, that is a policy mistake. what's the transmission effect to rates in the u.s.? >> as much as i would like them easing,in and institute even if they were not to do any

big stimulus, if the structure programs that they were going to initiate actually stemmed capital outflow, that would be a big positive. the fact that even though -- if you look at the extent of the ny depreciation, that suggests that had they not had the intervention, we would have had an even anger move -- even bigger move. we need some stalling. anything that infuses confidence in china and prevents capital outflow can actually be a very big positive globally. scarlet: priya misra, thank you so much for joining us today. audi coming up, a carmaker has been caught up in a diesel scandal involving its parent, volkswagen. the president will tell us how he plans to redirect the attention of consumers. scarlet: shire wins over

baxalta. and worries about china's economic slowdown may be overblown. economiste-winning joseph stiglitz explains why we may be overreacting to china. ♪

scarlet: welcome back to bloomberg markets. alix: time for the bloomberg business flash. signed a deal with general electric aviation valued at more than $1.5 billion. alcoa says it will provide super alloy titanium components for jet engines. busby has required art

agency partners for $85 million. the founders will become cochairman of a new fine our division that will initially focus on impressionist modern and contemporary work. alix: the head of microsoft has been given a box seat for president obama's final state of the union address. he is one of the 23 people invited to join the president's wife michelle and the house of representatives. we bring you the state of the union tomorrow at 9:00 p.m. eastern in new york. scarlet: and that's your bloomberg business flash update. alix: let's head over to julie hyman taking a look at the negative sentiment in the market today. julie: one of the internals i'm looking at is 52 week highs versus lows. high low is how you get here. you can chart the highs versus the lows.

we have seen a big uptick in the number of new 52-week lows. this is the highest number of lows relative to highs we have seen since at least late september. in turkey's the individual stocks hitting lows, not just 52-week lows but record lows, we have gopro continuing to express weakness. -- in terms of the individual stocks hitting lows, not just 52-week lows but record lows, we have gopro continuing to express weakness. as gopro become commodified is one of the questions investors have been asking. comeas gopro bee commodified is one of the questions investors have been asking. those shares are down 11%.

both gopro and fitbit are at record lows on an intraday basis. ontter is at a record low a closing basis. there has been negative sentiment on twitter as well. alix: thank you so much. press preview of 2016 north american international auto show got underway today in detroit. matt miller spoke to scott keogh, president of audi america and asked about the effect the emissions scandal has on the brand. >> we had a fantastic year. if you look specifically at the awareness of the diesel issue, it's quite small. this isn't a business metric issue. even if there is one customer that has been let down by the brand, we need to make that right. i am focused on making it right for customers, dealers, and our employees. business metrics are one thing. making things right is

important. matt: how are you going to do that? >> we are working on it. we are holding conversations with the epa. we are to fix these cars and make it right with our customers. audi had a 2.5 tdi. i loved it. drove it on the autobahn. is that going to continue? >> it is. the basic principles don't change. these cars are popular. they have the range. i think they work specifically well on suvs. that's what we will continue to see. matt: one of the new ones you are bringing out is a hybrid. sell these.ting to how much do you expect to do in volume? i think that car is going to be fantastic. we will see at least 4000 to 5000 cars a year. it will be coming for another year. but these are popular cars because people get to balance.

you have the peace of mind. you can still drive electric and have all the parts. matt: you have a hydrogen fuel cell concept you are showing. in the battle of electric versus hydrogen, it seemed like battery power had onwon. >> i think near term, it is still going to be battery. the infrastructure is getting better. if you look at the cost of battery as related to a combustion engine, it's getting more and more economical. it's good to have these technologies. we invest in the long term. it's important to show what we can do. battery is still going to be before hydrogen in my opinion. matt: you have an electric r8 coming out. when can we get behind the wheel? >> it is a full electric. as of now, we have not announced

that that car is going to come to america. r8.re launching the we will also be launching a full battery electric version of that car. that won't be coming out for another year. we have not determined if it will launch in america yet. matt: i will be happy to drive the gasoline version. , zero to 60, it's not a bad car. we had the tail end of low interest rates. unemployment is falling. do you see that continuing in 2016? >> i think the basic measures are still good. we had the rate hike. fuel places have only gotten lower. there is still an aging fleet out there. we should also be realistic. the market is at an all-time high. 17.5 million on the main market. we're not going to continue to

see these 8%, 10% growth rates. n all-newk at audi,, all giant segments and new cars. the market is so going to be strong. alix: that was matt miller and scott keogh, president of audi america. up, we will be talking to the head of volkswagen about what's next for the troubled automaker. baxalta.ad, a boom in deal.s $32 billion ♪

alix: welcome back to bloomberg markets. one over finally

baxalta -- won over baxalta. scarlet: drew armstrong is here. this has been a long time coming. it is finally happening. what are the tax implications? a trend we have seen in pharmaceuticals time and time again is companies that are located in the u.k. or ireland where the tax rate is much lower than the u.s.'s 35% corporate tax rate. being able to come in and buy us-based companies like baxalta and get massive tax synergies out of it. midlta is paying in the 20's and the combined company is or 17%. pay around 16% that is not the rationale for the deal, but it doesn't hurt. scarlet: what about the

regulatory implications of this? drew: i don't think there will be many issues. this is a rare disease company. nature, you are talking about drugs that aren't going to have antitrust implications because they are drugs for rare diseases. most three products on the market. that is part of why they can command high prices because they are the only options. patients need something. scarlet: what is the impact on the rare disease market? do they have that much more pricing power? drew: they do. there are a lot of armour under

pressure. sending shares into freefall. scarlet: and we are watching oil. crude oil at the lows of the day. down 5.5%. ♪

alix: from bloomberg world headquarters in new york, welcome back to "bloomberg markets." i'm alix steel. scarlet: i'm scarlet fu. let's get the first word news

with mark crumpton. david cameron wants to reach a deal on the uk's membership in the european union next month. that would clear the way on a national vote on whether to withdraw from the union. he also wants to limit welfare payments to immigrants. trucks filled with food rolled into a syrian town today where starving people are reportedly eating grass and pets. the red crescent convoy can feed 40,000 people a month. gotten no ages since october because of a government blockade. to death have starved since september 1. a maryland appeals court is delaying the trial for the police and driver charged in the death of freddie gray. caesar goodson is charged with second-degree murder. prosecutors say gray was fatally injured in the ride in the back of the van.

are pouring in from around the world for david bowie. the legendary rock scar -- star who helped to shape rock music and the arts died late sunday night. he had reportedly been battling cancer for 18 months. british prime minister david cameron said, for someone of my age, he provided a lot of the soundtrack of our lives. paul mccartney wrote of david bowie, is star will shine in the sky forever. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. thank you. the chinese market turmoil at rippling effects across the global economy. joseph stiglitz of columbia university does not believe the nation is experiencing a cataclysmic slow down. scarlet: he spoke with stephen

engle earlier in shanghai. not good and people are saying 2016 will be better. when i look at the fundamentals, i did not see anything really changing. no reason to believe that 2016 will be better. i think these first 11 days have given a little support to my particular perspective. how much is the market turmoil we are seeing a reflection of the real economy? does the two days in a row of the limit down in the chinese market reflect the weakness in china? >> no, it doesn't. there has always been a gap between what happens in the real economy and financial markets. when the american economy was in bed chit, the stock market was doing very well. what is happening in china is, a slowed down by all accounts, everybody looking at the data,

seems to be convinced that growth is slowing down, but it is not a cataclysmic -- it is a slow process of slowing down. what this does remind us of it is, market rules matter. and the way that you structure those market rules can either diminish the volatility or increase the volatility. what we are seeing here, in a sense, is a consequence of some market rules that were t as well-designed as they could have been. >> the circuit breaker you are talking about. >> those are very important, but when you have two that are too close, one is triggered and people say we will see the other get triggered, and they rush out . that exacerbates the volatility. picked up one important idea, circuit breakers. they did not think through as

deeply as they could have, the design of the circuit breakers. proposition,eral you might say. , butts need rules designing the rules is not easy. >> implementation has always been the biggest struggle here. what is the biggest threat to the global economy coming from china? are you a bear or a bowl in 2016 for china? 5.7% growthcting next year, 6.2 this year. hard to beit is very sure of where the growth is going. it is slowing down. it depends. the five-year plan has not yet been announced. how well they formulate that, what they do, will make a big difference. it is a big debate going on, the

balance between supply and demand measures. i'm of the view that you have to have both. push too much on just supply measures and not enough on the demand measures, then you could see a deeper downturn. alix: that was nobel laureate joseph stiglitz. scarlet: under armour shares taking it on the chin today after a note from morgan stanley that said the sportswear company is losing its grip on women's apparel, losing market share for the first time in three years. alix: uncertainty about hurting is more than just weather-related, according to the analyst. so what is slowing down the company? let's get more from stephanie ruhle. $62 now. what was the reason behind a note? stephanie: morgan stanley is basing this based on data that , which from sports camps

gives them an overall look at the retail -- period. while they evaluate many retailers, they don't look at locker, dick's sporting goods, two huge outlets for them. s, where nikekohl' made a huge push, and under armour does not sell through this channel. last year we had an analyst make an early call on skechers based on this data which proved to be inconclusive. this is morgan stanley's call based on the numbers but it is still very early. might be premature and we must say, morgan stanley says it prefers nike over under armour. to under armour and its connectivity to technology, the company has been making huge strides. stephanie: and i will point out that while some may choose nike over under armour, the deiters

had a big year in terms of stock performance. some argue that the whole category is growing. are havings, levi's a tough time but athletic apparel is continuing to grow. cory johnson was at ces last week and sat down with founder kevin plank. they came out with the wearable technology awards. shoes, shirts, and the first connected headphones. he says he is confident about connected fitness, as much as he was about compression t-shirts. clearly that worked out. if you are going to go long on under armour, this has to be a long-term buy. they invested almost a billion dollars in m&a. it will take some time to turn around. alix: they are spending a lot of money up front to grow longer term. on a quarter to quarter

said it is hard to get an industrial led recession at home. she is looking at a few of the rivers like the weak manufacturing data. part of it is frankly just stocks. i have a chart of the 10-your s&p. you can see the dip in 2009. it did not cause the recession, but that is where you felt it. we have seen a decline in stocks recently but we are nowhere near that kind of selloff. not there yet, and digging deeper in equities, she said you can see how volatility picks up when like unemployment rises. it is not a perfect correlation, but we have circled the areas where you can see a pattern for rising volatility with joblessness going back to 1990. we are seeing the vix creep higher yet again. alix: nowhere near other levels

that could potentially cause and effect for the unappointed rate. the third thing she was watching was the credit market. look at the investment grade credit spread. how much investors are demanding for investment grade bonds over the 10-year treasury. in every sector that you can name, we are seeing a spike up. energy and materials, red and yellow, are the highest, but you can see it in utilities, here in health care, telecom. all across the board. scarlet: and looking for recessionary signs seems to be in vogue at the moment. barclays looking at ipo's as an indicator. alix: much more coming up. we will be right back. ♪

scarlet: welcome back to bloomberg markets. authorities confiscated

the products of a company at ces call trotter. we have much more here with cory johnson. cory: cory johnson and carol massar here. interesting story at ces with an doersken is the ceo of one wheel. tell us what happened. got wind that this company from china was going to exhibit a product that we believe infringes on the design and utility patents we have for our one wheel products. lot like thes a

product that you have been out in the market with. >> when you look at our design patent drawings, the designs are very similar. cory: so what happened? >> we sent a demand letter, our letters to the firm, asking that they not exhibit at ces. because of the potential infringement. they came and exhibited anyway. so we filed for a temporary restraining order against the exhibition and sale of this product, as is our right, because of the intellectual property we have. that was approved quickly. cesaunched our product at in 2014, so we know what a difference those days can make in the arc of a company. i think the courts understood that, too. they had a hearing and approved this emergency restraining order. the people who enforced that are

the u.s. marshals service, so they came into the show on the second day and took the booth down, seized the product and marketing materials that this company had. carol: this is carol massar in new york. there has been a lot of patent cases and charges flying back and forth between makers of hoverboards. we have seen this with a lot of different companies. is this going to be the case, that you are going to spend a lot of money on litigation going forward? forward, we don't know exactly what will happen, but we want to make it clear, we are serious about enforcing our ip here and internationally as well. cory: talk about the difference those few days makes. i have been that if you see as shows but have never been an exhibitor. we talk about the business that they are doing there, but for a new company, what happens to you?

ago, we packed up, getting ready for the media that is there. it doesn't really compare to anything else. there are people there from all over the world. hours, your product that nobody has heard of is known around the world. also, you are meeting retailers, potential partners, investors. roundually met our seed investors at ces. cory: so you are bootstrapped in ces. >> in 2014. i was tinkering on the idea in my garage for a few years. we launched a kickstarter crowd funded campaign and launched on the same day, would people told me was crazy. it ended up going great. the media momentum and public momentum was based on the crowdfunding and it only took a few days and we were funded. carol: there is a lot of

momentum out there and there is also a lot of competition and some bad headlines. cory and i talk about it all the time, fires from hoverboards, planes banning them. talk about your business and whether you have seen a slowdown in momentum. >> our product is different from the two wheeled devices that we have seen in the market, that are having problems. when we are seeing that underscore is the significant copycats and their ability to damage the market. that was another major reason why we wanted to take swift action, to protect our ip. copycat products in general are often lower quality, they are really tried to cut cost, and cutting cost often comes by taking a safety measures, testing, and shipping products that are maybe not up to snuff. we really see what consumers

face in a world with knockoffs. crappy products that are essentially dangerous as well. cory: cool stuff. skateboarding is pretty well but making some excitement at ces. scarlet and alex, back to you. scarlet: thank you very much. when i was looking at that guy on that one wheel skateboard -- need pads,ld totally helmet, everything. ♪

alix: from bloomberg world headquarters in new york, welcome back.

i am alix steel. let's start with the headlines on the bloomberg first word news. mark crumpton has those. mark: thank you. the u.s. supreme court is refusing to hear an appeal from a group seeking access to records from the department of homeland security. earlier today, the high court let stand and appeals court , saying the department could refuse to release those documents. a group made up of human rights a law wouldes threaten freedom of expression and the right to privacy. they say it uses excessively broad definitions to monitor individuals and groups. global telecom companies also oppose the bill. facebook, google, and microsoft create law would requirements that are at odds

with legislation elsewhere. for 24 plan to walk out hours in three days over a dispute over pay on the london tube. the legal team for oscar the southsays that african court will hear an case. in his hislaims he mistook girlfriend for an intruder when he killed her. he is out on bail and staying with a relative. global news 24 hours a day powered by 2400 journalists in 150 news bureaus around the world. back to you. alix: earnings season ramps up this week. alcoa cooking things off --

kicking things off today. intel on thursday. wells fargo rounds out earnings on friday. markets for more on how may react, we are joined by a chief investing strategist in pittsburgh and a columnist for bloomberg. mark, let me start with you. thesay that a lot of overhang the market is facing right now is carryover from 2015. but there is a different feel this time around. we have people talking about recession in a way they weren't at the end of last year. issue has beenhe building. we are facing another earnings season that is expected to see declines on a quarter over quarter basis. that would make it the third consecutive quarter in which earnings have increased since 2009.

that is conspiring to unnerve investors at a time when china is still unanswered relative to whether it has been able to arrest its decelerating growth rate. there is a rate tightening cycle. we are going to be 100 basis points or so higher in interest rates by the end of the year. alix: part of the issue has stem from oil prices. this is what skin fusing to me, mike. how can analysts -- this is what is confusing to me, mike. connect's out energy all you want, but the ripple effect -- you can mark out energy all you want, but the ripple effect is still there. mike: it has spread from just commodities and energy

companies. financials are forecast to drop in profit, industrials, staples, even technology, which has been a big heart of the earnings growth in recent years. obviously, expectations always come down a little too far and attrition has been better in the last few years for companies who have come out and on a macro level beat earnings expectations. there was a great story on bloomberg earlier this morning looking at if you just bought stocks at the beginning of earnings season and sold at the end of earnings season last year, you would be looking at an 11% gain. the big question is, is that trend going to hold true? we going to see strong markets during earnings season or will this be the season that ends that trend? if we do have a profit

recession, at what point do you start to worry about an economic recession? what indicators may tell you we are heading toward an economy that's contracting? mark: the pmi readings have been as far as a signal of what is happening on the manufacturing side. what i have been looking at is the decoupling that occurred between manufacturing and services. it's unusually wide. typically, it converges. servicesd suggest that are more likely to decay. that would have an impact on employment. we might see a manifestation of .ompanies letting workers go that would be a signal for perhaps this bleeding into the broader economy outside of just the industrial space. alix: thank you for joining us. are going to be busy this earnings season, for sure. onto the other

big story this hour. made hisn's chief first public appearance since the emissions scandal. he apologized for what went wrong. will be meeting with federal regulators in washington about how to fix cars in the u.s. we had a chance to catch up with him at the auto show. >> we had a lot of constructive discussions during the past couple of weeks. we have a good solution package now. >> do you think the market will breathe a sigh of relief when you finally come out with a final number on how much this is going to cost? >> we have an estimation of , so we.7 billion euro

except that should be enough for the situation. it is a difficult situation, as you know. we hope we will have an agreement as soon as possible. buy, do youhave to think, a lot of the cars back? >> in theory, it is possible. in the end, it will be part of the negotiations and talks. matt: a lot of your brands have been successful, and audi, .orsche volkswagen had its problems even before this crisis. what will you do to try to win back market share in that segment in the u.s.? >> we should have a better

understanding of the american customers and market. we have a development department in chattanooga as well. we are doing more market research to see how the customer in america once cars in the future. we will have more new models in the future. we intend to prepare for the automotive future more than before it. matt: your factory is precise, efficient, ecologically sound. the year to continue to employ -- do you expect to continue to employ everyone who works there? >> we have remodeled more than created moreand

than 2000 employees for the future. you aboutme ask brands. you have many that are near and dear to my heart, including lamborghini and ducati. do you expect to be able to keep these brands, or will you possibly have to sell some of them off? is no doubt we will keep them for the future as well. was matt miller talking to vw's ceo. crude oil at a new love. where does it go next? ♪

welcome back to bloomberg markets. im scarlet fu. time for business flash, a look at the biggest business stories right now. jury selection begins today in the first of several trials looming against general motors over the issue of faulty ignition switches. prospective jurors filled out questionnaires today in the case of an oklahoma driver who claimed that a defective ignition switch prevented airbags from deploying when his car crashed into a tree. shire is set to become the biggest maker of so-called orphan drugs for rare diseases. meanwhile, dennis lockhart says he is all for

continuing to tighten monetary policy this year. he also says the global selloff inequity markets is unlikely to affect the u.s. economy. he says he expects the economy to expand at a moderate pace in 2015, pushing down unemployment, and raising the 2% target. alix: let's head back to the markets desk where julie hyman has the latest. taking a closer look at the south african rand, which many are calling a flash crash today. this is something market participants have to get more used to, these unusual market events. this looks like a flash spike because we are looking at the dollar versus the south african rand. this happened right at the beginning of trading before finishing the day lower. are at the we moment. the south african rand at a record low.

that tracksrrency very closely with what we have seen in commodities. about 18% of the country's -- going back five years and looking at a chart of gold and the ranch together, gold is in gold and the land is in white. rand together. gold is in gold and the rand is in white. there are also developments on the political front in south africa. there is a new president who got rid of the finance minister, a move that was criticized by many. wasonday, market reaction negative. he said that was unwarranted.

here we have a chart of south africa and russia. south africa in white. russia is pricing in the -- thisd default risk is pricing in the perceived default risk. isn though south africa investment grade, this seems to imply that will not be the case much longer. alix: good stuff. thank you so much, julie hyman. scarlet: oil sinking to the lows of the day, currently below $31 a barrel. our guest this morning the difference between $55 and $35 oil. >> i don't the gets just the dollars. there is a lot going on in -- i don't think it's just the dollar. there is a lot going on in crude.

a necessary condition is a turn in the dollar or the u.s.lization of the dollar. if the chinese stock market commoditiesg over, are not going to go through an easy time. the second condition is that the whole iranian, saudi route eases up a little bit. for the last couple of months we have been left with the saudi's willat the not accommodate any of the incremental iranian barrels about to hit the market in the next couple of weeks, and the iranians are not about to back off either. we could end up in a surplus of oil heading into refinery season.nce >> hedge funds have cut their lowest -- cut their bets to the lowest since 2010. >> we just put out a piece this morning entitled, "can oil find

a bottom?" seen his thing we have wti m brent coming together. this means u.s. production is and a mastic serbia coming a tighter market. that's the first step. -- domestics are becoming a tighter market. that's the first step. we also need to see some better news out of china, although a weaker yuan and a potential government fiscal package could help do that over the next month or two. i also want to see a more stable u.s. dollar. the continuing rally doesn't help. to seecontinuing conditions for a bottom, but we are not there yet. remember, we see strong user that may not come until the summer because the winter has taken a huge demand out of the oil market. alix: it has.

breaching thee to $30 a barrel level. does selling accelerate once we that kind of psychological level? >> remember, one of the things we had not seen yet is inventories reaching maximum storage capacity. the price of oil has come down across the forward structure. , think as we go down from here the price is going to become more stable and most of the pressure is going to come in the front, which, to your point, means that the volatility of prices into the 20's is going to be a lot higher, and ultimately, i think we are going to find a floor may be somewhere in the mid to low 20's. , at this point, it's very much a saudi-iranian price

war. very little common ground for those two nations to come together and stabilize the price. remember in 1998, 2 thousand one, 2008, it was always opec who came in and saved the market 2008, it was always opec who came in and stabilized the market. you heard francisco blanche talking about it and morgan stanley also saying that a rapid depreciation of the dollar could plunge oil into the 20's. options traders are taking in as well. this is the volume for put options at a $20 strike price. this gives you the right to sell option contracts at $20. look at the spike we have seen just since the end of 2012. can see the big spike we saw in december, and it continues to

trade, volume wise, right around that record. scarlet: it's interesting, because when you look at what's going on between stocks and oil prices, it really seems like stocks are being held hostage. this is an intraday chart of crude oil and the s&p 500 over the past seven days. of course, since the new year began, it has been a steady drop lower for oil. stocks -- it's curious today why stocks are not down even more given how much oil has come down. many banks today downgraded their oil price forecast. there was no news that happened over the weekend that would trigger something like that. mike whitner just downgraded over at stock jen. it's now the most bearish call on oil for the first quarter.

$33. i should say that $20 is not a call from the bank but a potential of certain conditions present themselves. $33 is still very low and the volatility will remain. think headlines are playing into the popular message? i can't imagine why. it's not like they are going to pump more or less depending on if they ipo. it just seems to be that investor sentiment is so unbelievably bearish that no tount yet has been enough turn it around. crude loyal hitting the low of -- what was it? alix: $31 right now. scarlet: unbelievable. alix: coming up, investment opportunities in china. ♪

welcome back to bloomberg markets. i'm alix steel. and i'm scarlet fu. our guest believes the volatility we are seeing in china is the perfect time to expand operations. alix: and he is putting his money where his mouth is. he spoke to steve engel earlier today in shanghai about investment opportunities in that country. >> i think it started how 2015 -- ended,olatile volatile. i think we have to adjust our expectations for 2016. but it's also a good time to

plan for the future. in the next five years, we think we are going to double our accounts in this region. equities, fixed income, asset management, banking across the board. we also plan to expand our areices to companies that giving outsource functions to our group. i think china is a great opportunity, as it has been. of the world, or in china in particular? >> china in particular. >> how are you going to investmentbetween banking, wealth management, back-office? >> across the board.

m&a, equities, and wealth management, most importantly. if you look at the wealth created in the last few this is a great business to bn. that was ubs ceo sergio or monty from the conference in shanghai. scarlet: much more coming up. at 3:00 p.m., we will be the ceo of an italian coffee maker. alix: i will be talking commodities. that's fun. ♪

>> welcome to bloomberg markets.

from bloomberg's world headquarters in new york, good afternoon. here is what we are watching this hour. the selloff in commodities picking up steam. crude oil reaching new lows. shire with a sweetened takeover bid of $32 billion will create the world's biggest manufacturer of drugs for rare diseases. it has been two years since the debacle over lululemon's sheer pants. how the ceo is working to bring in new customers and investors. julie: i am excited to hear about that. let's take a look at what's going on today because we continue to see a resumption of selling. ear