betty: from bloomberg world headquarters in new york, i'm betty liu. we are just one half hour into the trading session. stocks are rallying after european shares were up for the first time in five days. china took dramatic action to defend its currency. sparking a record surge in money market rates to deter speculators. why is a group of investors backing the controversial ousted ceo doug charney making a $300 million bid for american apparel? we will talk to the lead investor about why he thinks wrong. was we are about one half hour into the trading session. julie hyman has the latest on a market that is rebounding. julie: we will see if it can sustain itself. yesterday we had a lot of

shopping around and ended the day with a little bit of strength. the nasdaq in particular is bouncing back. it had fallen for eight straight sessions, the longest losing streak for the index since 2008. now it is rising the most of the three major averages. see most of the sectors are in the green with the exception of utilities. utilities were up yesterday. we have health care leading. energy is also trading higher. strength and some of the groups that have been beaten up over the past several days. technology has been one of those. big cap tech is coming back. apple is rising. analysts saying its recent weakness was not perhaps warranted or at the least it is a good long-term buy. facebook and microsoft are also coming back in the session. betty: biotech got hammered.

coming back a little bit. julie: biotech and health care. the nasdaq biotech index is up 2.5% today. health insurance company anthem coming out with earnings that leave it room to meet analyst estimates. there has been concern recently. .elgene coming back celgene fell after that company came out with a forecast and replaced its ceo. energy stocks are rebounding. if you take a look at what is going on with commodities today, interesting action in crude oil up by .5%. this represents a rebound as well. gold, which caught a bid in the early days of 2016, has given that up in the past few sessions. as it has been over the past

couple of weeks, the asset to watch has been the chinese yuan. we are seeing little change. this is the dollar versus the -- it does not revisit a huge move in comparison to what we have seen. betty: it looks like it is but it is not. julie: the range is relatively small. people are looking for stability . today, they got it to some extent so that is helping fuel this rally. .etty: let's check in now vonnie quinn has more. vonnie: turkey's prime minister says islamic state is behind that deadly suicide bomber attack. the explosion killed at least 10 people and injured 15 others. most of those killed were german tourists. turkey suffered two major bombings last year.

violence in germany. police say about 250 far right protesters rampaged last night. 57 were arrested after windows were smashed and cars were torched. five officers were hurt. hours before his final state of the union address, president obama is looking to strike an upbeat note about the nation's future. obama will use his speech to set up his legacy touting economic progress and the recovery of industries including auto manufacturing. the president discussed the nation's political divide and republican presidential candidate donald trump. >> talk to me if he wins and we a conversation. i'm pretty confident that the overwhelming majority of americans are looking for the kind of politics that does feed our hopes and not our fears. vonnie: the president said that he wanted to remind americans the u.s. remains strong. bloomberg will bring you mr.

obama's speech tonight at 9:00 eastern. rand paul's proposals to require an audit of the federal reserve will call attention to his presidential campaign weeks before the iowa caucuses. mitch mcconnell has scheduled a procedural vote for today. the measure requires 60 votes to advance and democrats will look to block it. day.l news 24 hours a i'm vonnie quinn. betty: so far in the first week of this year you have seen investors bending most of their time worrying about turmoil in chinese stocks and whether it would spread through the rest of the world. today the s&p is starting to signal that that fear is subsiding. has the market been overreacting?to help us answer this, i want to bring in barry ritholtz. mike mcdonough

who has worked and focused a lot .n china michael, you say absolutely, we have been overreacting. mike: nothing has really changed from a month ago to today in china. things may look a little better if you look at the underlying. betty: how? mike: china has a lot of problems. if you look at the effect the stimulus they have done has had on the economy looks like there has been a bottoming. if you look at some of the manufacturing indices that are out there, things look a little better on the fundamental side. the equity performance in china and economic fundamentals have been divorced for a long time. betty: it is retail traders in the chinese market. mike: there was a university study in china that showed that of the new investors that have entered the chinese equity market in the past year, to

thursday not have a high school degree. you basically have people who have not finished high school holding the world's financial markets captive. barry: i don't think you need a high school degree to be an effective trader of chinese currencies or stocks to say the least but look, in the united states will we look at the correlation between how the economy has performed and how the stock market has done, there is no other way to say this, this has been a soft, mediocre, post credit crisis economic recovery. at the same time, the s&p has tripled. we're up well over 200%. if you are looking for a week economy, let me stay out of equities, probably not the best investment strategy. the other thing to keep in mind is, and this relates to the idea of younger or less experienced, less knowledgeable traders in the chinese market. in general that is an immature market. there is not a lot of institutional stability.

many of the players are housewives and day traders. as crazy as things get in the , thereeights sometimes are still large institutional entities that consistency provide some stability even with a down 57% in the 2008, 2009 crisis type of reaction. betty: what we should worry about, the chinese currency. we should worry about that, right? i assume that is what the beijing government is concerned about. barry: we should be worried about chinese currency, not yet. if you were to see a one-off depreciation, something that would indicate the government knows something is more wrong with the economy than we know and that would be reflected in a more sharp depreciation that we have seen or another one-off depreciation, that would be a proper alarm bell that would justify the type of reaction we have seen. betty: so we are being

premature? mike: if you are china and you look at the actual real effective exchange rate, it is really bad for them. the currency has appreciated substantially against trading partners. they're kind of playing catch-up. as long as, by letting the markets separate there is a lot of capital that has been trying to get out of china so that has been justifying the type of moves we have seen. maybe even said they stepped into kind of stem some of the losses they have had. i don't think it is at a point where it is alarming but it is something you should watch. betty: in the meantime, bringing it all back here, there were some mumblings last week that if this continues in china, what is the fed going to do, are they going to have to stop raising rates? robert kaplan, dallas fed president, he made a speech yesterday and he said "i believe that continuing along the path of monetary policy normalization is important.

if we delay for the normalization until we actually see evidence of excessive accommodation there is a risk that we will have waited too long." we know from the december minutes that he wanted this rate hike. reaction?t is your should the fed make sure they hold steady, do what they are doing and forget about what is going on? barry: he is right for the wrong reasons. there is not a whole lot of risk of the fed delaying because there is no wage pressure. what drives inflation is wage pressure. fairly modest inflation across the board before we start looking at the collapse of commodities, which is a big input everywhere for inflation. hold that aside. normalizing rates is what the that should be doing seven years after the crisis, three years after the economy, or four years after the economy has stabilized. zero is clearly the wrong rate. that said, the fed has a dual

mandate and neither of those mandates has to do with the stability of the chinese currency or the chinese economy. the risk is if there is a spillover and china has a credit crisis and there is a collapse and that spills over glover any -- over globally, they will stop that. they have a very different avoide which is mostly being disappeared by the chinese authorities, but in the meantime, the u.s. central bank is full employment and contained inflation. betty: very quickly, i see you agreeing with barry. mike: i think that is on point. hard landing in china is not seem to be a reality. betty: thank you so much for joining me. barry, you are staying with me because you have do's and don'ts an interesting indicators may be showing a top tier in the market. we were talking about robert

kaplan. he will be sitting down with bloomberg television for his first national interview since taking the post last fall. look for that interview tomorrow at 8:00 a.m. in new york on television, radio, and bloomberg.com. ♪

betty: good morning and welcome back to "burke markets." markets."erg are you playing with your social media? barry: i'm tweeting. betty: as we speak, in real time. i know you have seen so money market cycles, ups and downs. you wrote a column recently where you talked about the do's

and don'ts in the markets. o's.s bring up the d you say after having seen the markets in the last few days, what is the most important? barry: the single most important thing is to have a plan and stay with it. there is a fascinating book by a marine general called "war fighting." it talks about how you start with a plan and then you have to improvise based on whatever you encounter. that approach works fine in the fields of germany during world war ii. it does not work if you have a 30 year perspective and you are investing for retirement. chinese yuan is fluctuating or there are is volatility or whatever, the day today should not affect a plan that is designed for decade by decade. that is probably the most important thing.

we have a tendency to react emotionally. betty: you are not just talking retail investors. barry: institutions are guilty also. if there is a human with their hand on the button, they will be -- there will be mistakes made and they are often emotional. betty: do not rely on gurus or talking heads. are you calling yourself a talking head? barry: if you take a shot of this, i i talking head. when i go on television, when anybody goes on television, the viewer, i have no idea what their income is, whether savings are, with the spending rate is. how many kids they plan on sending the college, what their lifestyle was like. i do not know their tax code. how can i say by this, so that and make sure it applies to them uy this or sell that.

you have no idea who's going to follow that advice. that can be very misleading. isty: anybody who does that going to have to take the consequences of that and understand that. barry: there does not seem to be consequences. i could give you a list of people who have given terrible advice on tv and the consequences do not seem to be especially dire. betty: i love this contrarian indicator that you talk about. you talk about the media. you say when you look at shows and you look at movies like "the big short" or things about the financial markets you say that indicates a market top? barry: i say the data is still insufficient to draw the conclusion but it is worth watching. by the time an idea makes its way through the entire society where magazine editors and

television producers say, this is really significant, let's do a show about it. betty: or a movie about it. barry: dan gross at newsweek wrote this wonderful piece looking at the 2000's, two big television shows that came out about the markets and everything. just as the market was topping. hdtv put out all of these flip this house stuff. just as the housing market was topping. gross wrote a piece that fox business channel came out literally within does go weeks of the 2007 market top. when suddenly everyone says, this is a huge trend, let's get in on it, very often it is late in the trend and it is a little bit of a crowded trade so it is worth hang attention to that. the most recent example is billions, which premieres this week on showtime. betty: what about the contrarian indicator of barry ritholtz

tweeting out his appearance on bloomberg television? handle?your total ritholtz.t betty: we sit down with george scangos as he restructures n.oje ♪

betty: as we saw earlier the biotech sector is getting hammered in 2016. it is up today. the spider s&p etf has lost since trading opened at the beginning of this year area biogen is making a push

into alzheimer's treatment and last october announced a restructuring that included its workforce.of joining us is ceo george scangos. he joins us from san francisco with a jpmorgan health care conference is underway. they give for joining us. i want to go broader before we talk about biogen. biotech's are getting hammered. the whole sector is. how can things turn around for the industry this year? george: there are always cycles in biotech. we had five amazing years in 2015.hrough it is coming back a bit now. i do not think that is the end of the world. what can turn the sector around is really good news and product news. both our company and other companies have exciting compounds in their pipeline. as those who move forward i think that will bring some enthusiasm and bounce back into the sector.

betty: i know you have some exciting databetty: on alzheimer's treatment. as i undersnd it is still on a smaller scale. smaller trials. what can we expect from those treatments? george: we did have very exciting data reported last year in which we were able to show removal of plaque from the brains of alzheimer's patients. that appeared to correlate with an improvement in their cognitive functions. a slowing of the decline of cognitive functions. it is not proof but it is suggestive and we are now beginning a large phase three program that will hopefully demonstrate safety and efficacy of that compound. if that bears fruit and we have compounds like this come other companies working hard on alzheimer's, it would mean either a slowing or stopping of the progression of alzheimer's disease. that is an incredibly exciting prospect. betty: you mentioned some of the

other companies working on this. how does your data stack up to some of the competition like eli lilly was also working on these treatments? tell.: it is hard to i think we are very enthusiastic about our data. it is too early to make comparisons i believe that i can tell you that we are quite compelled by our data. i think this points to a whole part of the industry that maybe is not appreciated right now. the science and the medicine are advancing to such a stage that you actually can see a line of sight to making a cure for alzheimer's disease, parkinson's disease, certain kinds of cancer that are not treatable now. it is an incredibly exciting time in the industry. we asks about drug pricing as well. we know price hikes have been a hot button issue in this

election cycle. as i understand you will be the president-elect of the pharmaceutical lobby. how would you address this whole issue of prices of drugs going up too much? george: i think there is a bit of a misconception. the drug prices have not increased faster than the cost of health care as a whole. what i would want to avoid is that there would be some knee-jerk simplistic solution to what is a competition issue. we criticize -- what is a complicated issue. at what we have done over the past 10 years we did raise drug prices and the question is, what did we do with that money. we started out with one product with ms and now we have several that we have brought forth. there is no question that patients are better off now with several treatment options than they were with one. we are using the money from those to fund all the alzheimer's research. whatever happens, we cannot have

a policy for drug rices that -- drug prices that discourages that kind of innovation or we will slow the flow of new drugs. betty: i am told we have to leave it here. thank you so much for joining us. george scangos, ceo of biogen, joining us in san francisco. still ahead, meet one of the investors who is going to bet $300 million on dov charney. he says the founder was wrong and is working -- was wronged and is working to bring him back. he joins us after the break. ♪

desk: back to our markets where julie hyman has a check

out some of the company movers as we are losing a little bit of ground. julie: i do want to check on oil in my bloomberg to mineral -- bloomberg terminal. what you are seeing here is the s&p 500 in white coming down as oil comes down a little more sharply. oil is giving up all of its gains. the s&p 500 is hanging onto a gain of about half of 1% but it is definitely paring it as we see oil come down. that is the correlation we have seen in recent days. just something to keep an eye on as we came out of the gate very strong and that we are not nearly as strong in terms of .ocs we are getting into cursing -- earnings season, and alcoa came out with the actual numbers after the close of trading. sales down 18%. to company had a net

>> we approached them. betty: why do you think this is the right person to come back? >> the controversy around dove was contrived. colorful character, really

energetic and charismatic. he had a lot of exposure. we do not feel that the operations were handled -- she did not have proper support in his previous

>> there could be a whole number of options. >> exactly. we could see teams jumping ship. we could see a stadium that has the chargers and the rams. all of this is being deliberated right now. there will be a vote this week. there's a chance that both happens. there's also a chance the nfl -- that doesn't happen for it could get pushed back a week or a month. there's teams like the chargers and rams that need a better stadium.

i'm convinced that their city will be able to help them in that endeavor. for the nfl, the resume much money involved in the l.a. market. the celebrities come in a massive corporate sponsorships available, there is more money there for the owners and the league as a whole. >> doesn't make economic sense for the team? >> absolutely. naming rights for the stadium fish in st. louis, the stadium will be staying there if the rams stay. the bin with national car rental for $8 million a year. -- they had been with national car rental. is $25s to teams, it million. you can do that calculation for everything. teams.o teams -- two >> the teams have to change their names? >> it is an option. some wood and someone.. would and somewhat not.

-- some would not. there one of the reasons is a relocation fee involved. the new owner has to pay that. if we see to teams end up in l.a., that is over $1 billion. end up in l.a.nd up i if you are an owner in minneapolis, suddenly you are giving another owner access to the second-biggest media market in the country. you want them to pay a fee for that. >> do the people in l.a. want this publicly? i see a lot more traffic. evan, thank you. markets up next.

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>> president barack obama goes before congress and mark tonight the on final state of address the one focus will be the performance of the u.s. conomy under his administration. the editor in chief emeritus of news wrote about it when president obama was elected 008 the u.s. economy was shrinking at a rate unmatched since world war ii. in seven years since then kpwhroblg investors have enjoyed stellar results in the expanding obama economy. doug, why should obama not make victory lap tonight? >> we have always expected the

u.s. economy to recover. who are we? >> the economic profession for we have had recession and crises and economies bounce back. here's a question of how fast they bounce back. the idea behind stimulus the take credit nt to for is to bounce back faster. his has been a very sluggish unsatisfying recovery and the bigger problem is that going projected rates of growth are low. rate is 2.1%. that is nothing leak what the theulgs.public >> some will say that's the as result of all around with the china slowdown, oil prices anking as a result of that >> bad things happen, good things happen. it is the trend growth. the absence of productivity growth appear absence of real wage growth that

problems for ang long time to come unless we get better policies. tough sident is in a position because he wants to take credit. it is his last chance and say great. are we did this but he's got a party out there on the campaign trail public is unhappy with the state of the economy and if he says we democrats fixed that is t not going to help his party. e has a tough job in terms of how much victory to declare. >> even if he talks about the withmy it may not resonate the american public because we pulled together some of the top related to ics obama's state of the union going on with facebook and these are five trend iing topics. muslims, isis, crime and criminal justice and number five is terrorism. >> it can change overnight.

you think even three months ago, economy was the top issue. gone. it could change again between now and november. >> what do you read into that? how will that shape not just how people react to his address but presidential cycle? really people will do is look at the president and say tax about g and he the good being good they will tune him out t. is when former the dent bush tabgsd about iraq war. after a while it didn't matter what he said. is true for this president and economy for a while. an interest in new pressing problems. i don't think they are looking to president obama for solutions. them he won't provide them. this will be a big picture we are done eat, fine kind of talk to the country. the country is probably not in to hear attachme that.

articles say the last state of the union is usually one of the more forgettable ones. you are looking backwards, not looking forwards. a kucouple other charts to talk you out of this stance. rate has gone t done dramatically under the president. which is what t our viewers care about, up over thatto doubled in the time he became president. it is more than that because it should go back further. but there you go. >> that's good. i think that the issue becomes, a, is that everything? labor force participation doesn't tell you everything. wages haven't been growing. stock markets go down and up and have recently. that doesn't tell you everything. then there's how much of it is due to what he did. i think that is the harder question. the economy was going to recover

was going tooyment come down. how much do we give credit to hat the administration did for the decline. >> what's the natural trend? >> right. good, good to see you. bloomberg will be all over the state of the union coverage and with the chairman of the house financial services committee and republican from texas. to help et his plans with what he says is the financial squeeze on the middle class. that is 11:30 a.m. tonight don't miss the coverage state of the union. ♪ we live in a pick and choose world.

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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. 11:00 in new york. harbgs in erg world new york i'm betty lu. welcome to the european close. barton joins us live from london as we wrap up trade the

hour. it is another bumpy session so far. european stocks set to close higher for the first time in further as china took steps to stabilize its financial markets. he european close starts right now. >> we will take you from new to london to paris in the next hour. us. kicks it off for we thought we were headed for a big rally but we have come off a bit. >> we are still up and tuesday seems to be the lucky day ecause last tuesday was the only other day the stoxx 600 has risen in 2016. today gains end a four-day losing streak. the declines in asia we saw china