scarlet: good afternoon. alix: here's what we're watching . another selloff in global stocks. the dow down more than 400 points to read the dow and s&p recording their biggest drop in 4.5 months. scarlet: legal bills take a bite out of goldman sachs' bottom line. profits drop 55%. alix: crude oil falling below $27 a barrel, touching lowest levels since 2003. scarlet: first we need to get a check of where the markets stand and for that we had over two ramy inocencio. ramy: right now we are hitting session lows. take a look at these numbers behind me.

a couple of superlatives you will not want to remember or forget depending on how your mood is. the s&p 500 now down by about 2.8%. 90% -- 96% of the stocks are trading in the red. all dow 30 components are in the red. 95 of the nasdaq 100 stocks are trading lower. a lot of this has to do with global commodities and the selloff in wti crude. take a look at my terminal. i want to show you the performance of the doubt on a monthly -- the dow on a monthly basis. this blue bar represents the latest fall for january, down 10.75 percent. a few months prior in october we saw a jump of about 8%. we're seeing not only a turnaround but volatility coming into the markets.

all of the sets do with crude. crude right now hitting session down 6.5%. , not hit fresh low since september of 2003. looking ahead to thursday in iea report expects global glut will continue with higher u.s. inventories. stephen shark was saying oil likes to move and five dollar buckets. the selloff really started overseas. you could see in the australian dollar. you saw it hit in china and spread to europe. ramy: the ripple effect to europe now hitting us here. taking a look at the major averages that we want to look at, stocks europe 600 about -- down about 3.2%.

interestingly, all of these here are all hitting their market territory. intraday, taking a look at some of the biggest losers on the dow ibm chevron, and boeing. down on the order of 6%. scarlet: thank you. stunning superlatives on a day like today. alix: especially with no catalyst we saw this morning that started to wipe out stocks. first were news this afternoon, mark crumpton has more. it isthe taliban says responsible for a deadly attack on a university in northwestern pakistan. at least 19 people, including students and professors were killed. pakistan's military says it killed four of the gunman. it was just over a year ago when 144 students were killed in a similar attack on another school in pakistan. international monetary fund says the influx of refugees will give an immediate boost to europe's

economy. according to a report out today, germany plus gross thomistic product could rise 3/10 of a percent next year. most detroit's look schools are closed today due to teacher absences. more than 85 of the city's 100 schools were shut as teachers continue a sickout to processed school conditions and work environments. donald trump will be joined by his newest supporter, former vice presidential nominee sarah palin will be with mr. trump in oklahoma. governor palin endorsed the candidate at a rally in iowa saying when donald trump is president america will no longer apologize. a volunteer in ben carson's campaign is dead after a traffic accident. their van flipped yesterday on an icy highway. carson was in south carolina at

the time and suspended campaign events. global news, 24 hours a day from the bloomberg first word news desk, i mark crumpton. scarlet: we returned to the selloff in global markets. -- sees guest predicted more downside after an expected rally. noted athe index he different times when the bottom came in and when the time came. alix: predicted 7933 could be the level we hit. what is next for the market? joining us is tom demark, founder and ceo of the mark analytics. because we have you, i want to start with the s&p. what kind of downside little do you see? -- downside level the you see? tom: we did record a cell. we were looking for the market to sell off the december and

january. it moved sideways through december. we get debt -- we did get decline. this is what we had looked for originally. we are in a point right now -- we think today could be an interim low. the intensity of the decline is somewhat akin to what we saw in november of 2008 and august 10 of 2011. both those prior lows, a reflex rally of somewhere around 5% to 8%. another decline in the s&p which did take us down to around 1770 to 1780 and that should mark below. scarlet: how long does the interim low last? tom: it could be a good rally. it will be two step a fair.

probably a low today or tomorrow. people take a deep breath. after we see that rally, anywhere from a week from three weeks. i think that is confident with the shanghai composite and hang seng index declining. we projected off the may and june highs in china this past year, we called the days of the high every look for 79 .33. we're were on the air with you the first day in germany -- in january. we did not envision it unfolding and 13 trading days. now it looks like we are going lower. we are confident the next level just below 7500. 7480. we think what we will see in the hang seng index is four consecutive lower closes. that should bottom that market.

markets do not go straight line typically. we think we will see brief interruptions but ultimately we should get down below 7500 on that index and the shanghai composite, we can still get to our objective. scarlet: there is a lot of noise, commentary, expectations on government regulators stepping in. what do dismiss as simply noise? tom: we are looking at -- we are a firm believer that markets bottom when the last seller is sold and markets top when the last buyer is bought. thate looking for a bottom is a secondary bottom. low and, make a lower the internals of the market show there is strength. at the same time when we make that low there is a lot of native news. we do not want -- a lot of negative news. we do not want to see positive news. that interferes with the rhythm of the market which ultimately

should move to these levels. our biggest difficulty currently , we look for 7933 being the low on hs cei. we thought our market timing model would be coincidently that objective. they are both out of alignment. alix: for the short-term, if we see some kind of relief rally in the s&p, are you going to be buying to play that rally or waiting until you put in the bottom on the next leg down? tom: i would wait. i think you would see a diversions area -2500 net declines in the new york stock exchange. we will make a lower low and maybe we do -1500 for a few days which would be a divergence and indicate we are at a bottom. we could recover 40% subsequent to that but we do have a lot of damage done to the market long-term. alix: tom, thank you so much for joining us. founder and ceo of mark

rkalytics -- of dema analytics. 500, he for the s&p said 1770 to 1780 is the possible index low. alix: after a rally in the next the quantitative as low as that. scarlet: coming up, we had to davos for a conversation with ted rogoff -- with ken rogoff. alix: aside from a massive legal bill, earnings were not that bad. scarlet: dan shulman explains why cash is still his biggest competitor. ♪

alix: welcome back to bloomberg markets. it is time for your bloomberg business flash. a look at some of the biggest business stories in the news. staffys is cutting according to a person familiar with the matter. no word on how many people will be affected. this comes as jeff staley tries to shrink the securities unit further. the bonus role for the investment bank be cut by 10% from the previous year. medicines is working with advisors and has reached out to potential buyers. -- sharesy's revenue of medicines are rising on the news. alix: jcpenney is bringing back home appliances to some of its stores. company stopped selling appliances more than 30 years

ago. that is your bloomberg business flash update. scarlet: ramy inocencio has a check on individual company movers. plenty of names getting beat up in the tech space. ramy: information technology right now as a sector is down on the order of nearly 3%. let's take a look at some of the tech stocks. we had to ibm. down by about 5%. it has been sort of at a seesaw motion. it had been as low at about 8%. a profit forecast missed analyst expectations. its cfo saying they are expecting $13.50 a share but analysts have been projecting $15 a share. the share price, hitting a five-year low. out. of teeth are coming facebook is down by 4.5%.

this sea of red. netflix down on the order of 6.5%. apple, reacting to a couple analyst notes that came out earlier this morning. apple reacting to those down 2.7%. ubs saying it's apple iphone shipments appear worse than it actually thought they were because fewer people are upgrading their phones from the 5, to the 6. the not expect any growth in -- until 2017. the do nothing the iphone seven which should come out later this year is going to provide much of any boost. apple does report its first-quarter results on january 26. alix: thank you. thelet: let's head over to economic forum in davos, switzerland.

rogoff sports with francine lacqua and tom keene. >> we have gone through a debt super cycle. it started in the u.s., and china. when china was growing in the early 2000 every reset their exporting deflation, now they are collapsing. something is missing. tom: are the exporting deflation? ken: it always was a fallacy when they were growing it was a productivity shock, now they are collapsing it is not good. i think the overarching phenomenon is that central banks are facing lower interest rates and that has driven them down to zero. they have to think about having negative interest rates. i have written for 20 years about phasing out large denomination notes so you could go to more negative interest

rates. that is still considered wacko. francine: you would be the first one to do that in your eyes. this is considered extremely unlikely. the consequences of doing something like that would be immeasurable. ken: they are quite measurable. you have to lay the groundwork. japan would phase out paper currency. they are not held widely and they could use it. they are thinking about everything. tom: a delicate optimism. within your economics. i just spoke to larry summers at length about his secular stagnation and how he links it into confidence within a system. is there confidence in the textbook rogoff? ken: karl marx wrote between the first and second industrial revolution. alvin going best

tom: it is on page 17 of special saidthe 1970's, everyone inflation for everyone. i think we are in a cloud of this debt super cycle. i do not think we are in secular stagnation. francine: can central banks fight deflation? they have not been able to so far. is qe working in europe? does it work if we are not in a financial crisis? ken: i think qe has a limited effectiveness. they are looking for other insurance like negative interest rate -- other instruments like negative interest rates. they are hoping there will be structural reform. fiscal stimulus for infrastructure. i don't know if it is coming. francine: how do you look at inflation and the conundrum it means for your interest rate setting if your mario draghi? ken: he can do more qe. he probably will. unless he can change more radically instruments, it is not

easy to do. scarlet: ken rogoff speaking with tom keene and francine lacqua. alix: coverage of the 2016 world economic forum in doubles, switzerland will continue tomorrow -- in davos, switzerland tomorrow. plusman john rice, adam pozen. it are not want to miss that. scarlet: we have ceo bob greifeld, mike corbett, james gorman, and ceo of coca-cola. as we had to break, we want to get you a check of how oil prices are trading. we were talking about how there is a lack of catalysts for nymex crude and brent. we have broken through that $27 level. alix: critics lease saying --

credits we's next support level is 25 for oil. , that's kind of said never going to happen. a crazy call. as we see more oil coming online from around the question is, how quickly is it getting there and will that fall prices even lower if oil has to be store at sea. scarlet: no surprise, you see energy stocks losing 5.4%. they are now at their lowest since 2010. since late april the group has lost almost 40% of its market value. the damage done. alix: still ahead, goldman sachs fourth-quarter earnings. topping estimates. we will get the outlook for the new year after the break.

scarlet: welcome back. alix: goldman sachs reporting

fourth-quarter earnings today. income drops 65% on cost to sell a mortgage probe. when you have financials leading the client of the s&p it is important to take a look at the future of the banks. scarlet: it is a good time to check in on the stock and the sector. shrum. us is eric wasser fine, goldman sachs would have posted earnings increase. >> i do not know if it was a kitchen sink type quarter. outside of this litigation, costs went down quite a bit. i think it does represent the fact that at this stage, five or six years on from these issues, they really wanted to put it to bed. indexthe kbw bank in

has been down for over a week. at what point do you say the fundamentals are not terrible? i think that has been our argument over the past few days. when there are concerns about the macro, the banks are the most macro sensitive sector so i'm surprised that they are leading the decline. in terms of earnings growth, not very much has changed. my revisions have been very moderate to zero. scarlet: the theme for earnings season for the banks was -- is there a seasonality to trading anymore or does the volatility we have seen make whatever seasonal strength or weakness is we have become accustomed to become less relevant? eric: i think you're probably right. typically the fourth quarter was expected to be seasonally slow as people took the last couple of weeks of the year off. that was characterized by such profound as locations.

beginning in august you had a week third of the year that was manifested in the fourth quarter results. alix: here is what is confusing in terms of big tags in trading. you would think volatility would be good for them. their increase in net interest margins would be different them. those are not necessarily coming through on their results. eric: volatility is good for them if clients are engaged. when clients choose to disengage, that is the worst possible thing for them because all they are doing is holding inventory that gets less valuable with each moment. i think you are right with respect to the interest income outlook to the extent that the fed hike is raised. there is some debate about how much and over what time frame it should be helpful. it is hard for the market to get justd he outlook improving because the macro gets better and that is effectively what that argument is. i think people need to see where the more fundamental improvements that the banks control it drives earnings upside. the bounce sheet expansion and

cost -- the balance sheet expansion and cost control. scarlet: debt and underwriting is going to be a big scene. -- a big theme. up a percent revenue year-over-year but down 21%. given the stress we have in high-yield credit, what is the best case for goldman? eric: the best case scenario has to do with advisory revenues because i think underwriting will be compressed in a difficult market. scarlet: that you so much for joining us. alix: a quick check. the dow data -- the dow deteriorating. will be back. ♪

alix: i'm alix steel. scarlet: and i'm scarlet fu. news from ourhas news desk.

mark: upcoming syrian peace talks. -- they'reand sergey la trying to reach an agreement on which syrian opposition groups should be barred from these talks when negotiations begin next week. the fbi is investigating a professor at kent state university for possibly supporting islamic state. also being investigated for allegedly trying to recruit students for the terror group. the professor denies any wrongdoing. near london, a spelling error by a 10-year-old muslim boy led to a police investigation. the school notified authorities when the child mistakenly wrote terroristved in a house rather than a terrace house.

police said they dropped their investigation and that there is no reason for concern. askedpollution in china the air pollution in china is getting better. the report found average concentrations of pollutants in the air were down by 10% last year despite catastrophic levels of smog in northern china this winter that shut down schools and roads. dayal news, 24 hours a powered by more than 2400 journalists around the world. scarlet: thank you so much. big story in china is not necessarily the stock market. it is the currency that threatens to disrupt global economies. the devaluation of the yuan prolongs the uncertainty. at the worldman economic forum in davos. steve: the west tends to see

china through its markets and currency. where there have been a lot of major slipups and mismanagement of the stock market and what you did afterwards. that creates an issue of confidence. the same currency. alix: currency woes extend beyond china as commodity currencies see big slides thanks to lower oil prices. seeing iseak, we are -- joins us now from london. thank you for joining us. as we speak, we are looking at near record lows for the ruble as the dollar continues to strengthen. the canadian dollar, the kiwi, all getting pummeled. is this overdone? >> from a fundamental perspective i think it is overdone, not just for a currency space it also a

commodity space. there seems to be quite a lot of concern with what has been happening in china. that, in my view has pushed commodity prices very far away from fundamentals. the market is what it is and it frequently does that. frequently stretches things to one or the other extreme. from fundamental perspective, i do not see the world, global demand, as being as doom and gloom as commodity prices are showing. scarlet: eric nielsen has made the point that central banks are targeting specific currency rates. you be able to tell us what levels the bank of canada, the bank of england, are targeting? are the arbitrary? or are they moving targets? vasileios: you mentioned a number of central banks. i do not think they have very explicit level in mind.

i'm sure they do have some target ranges in mind. for example, you mentioned the bank of canada. i think at 145 or above were we are trading i think the bank of canada is very comfortable with this level. it would not really mind if the loonie appreciates. today's communication hinted to that. further depreciation could start pushing inflation higher. alix: one area where a central bank may be pretty unhappy with any kind of movement in the currency is the bank of japan. you can see what has been done yen.e as it is declined, the dollar is pushing lower. a yen at a one-year high.

that is a good observation. i would have to say, central bankers tend to look at things from a big picture perspective. in that sense, dollar yen -- the yen has come off significantly off of the past two years. i do not believe these people are going to be concerned about three, four big figures. on the back of these massive wave or risk aversion, i suspect they will start stepping up rhetoric. in terms of doing something, over the past couple of months or so, following the rhetoric both from the boards as well as the government, i am getting the sense that these guys have started thinking monetary policy does have its limits and therefore the boards may not want to put further quantitative

easing in place. scarlet: do you think the market caught up with that or anticipated that already? vasileios: as far as the yen is concerned, i'm not sure the market is caught up on that. two developments which are interrelated to each other. the dollar yen trade was probably the most boring trade in 2015. the yen shorts were pretty much close throughout last year so i do not think the market was really wrongful in that one. it is do think is likely that i believe central banks may start making some noise about the need for some fiscal stimulus in order to help for inflation in the sense that monetary policy has its limits. scarlet: i want to get your thoughts on saudi arabia, hong

kong. places where there currency is pegged to the dollar. saudi arabia cracking down on traders betting against -- at what point will it be too painful for the hong kong monetary authority to defend their currency peg? one thing we have to remember is these pegs were placed there for a reason. i do not think we are approaching these levels right now. as far as saudi arabia is concerned, this is very much interlinked to what is happening in the oil price. these guys still have a relatively small, but they do have a positive margin in terms of profits. what you want, when you have a pegged to the dollar and the dollar in general is strong across-the-board it makes it difficult for you to keep

hanging on the currency into that peg. it really corresponds to a tightening of financial conditions. this is what china did. i think some of these countries are moving there. alix: thank you for joining us, vasileios gkionakis. blanche said if we see some kind of reality peg in saudi arabia that would be like the black swan event for oil prices. scarlet: so far no sign of that but it is something investors have in the back of their mind. waiver -- axela weber. alix: we will hear from the ceo of paypal on was next for the payment platform. scarlet: stocks are tumbling. the dow and nasdaq off by greater than 3% at the moment.

♪

scarlet: welcome back. i'm scarlet fu. alix: i'm alix steel. scarlet: a look at some of the biggest business stories right now. the cost of living decline in december.

the plunge in energy prices keeping inflation under wraps. prices rose just 7/10 of 1%. alix: the housing industry lost momentum at the end of the year. housing starts fell 2.5% in december. there is an increase in application to build single-family homes. 2015 was the best year for housing starts is 2007. scarlet: is about millennials. just over three quarts of those between the ages of 20 and 24 have driver's licenses. one factor, the rise of ridesharing services. that is your business flash update. alix: ramy inocencio has the latest as markets continue to deteriorate. ramy: i want to go on the flip side of things and go to some glimmers of green. there are a few. just a few. on the s&p i'm counting 11 a stocks.- 11

let's go to that tech stock. amphenol rising because of earnings. amphenol up by nearly 2%. it is basically at session lows. the company designs and makes fiber-optic product. it says it earnings per share came in at $.63 versus an estimated $.59. to the retail sector, best buy is rising because of redbook. best buy coming off of that a bit new the flatline up by a 10th of a percent. redbook service says same-store sales were up 1.6% year on year for the first two weeks of this month. that is welcome news because best buy has been down about 20% into thousand 15. another tech stock, microchip which makes memory products, is

up by nearly 9/10 of a percent. in the acquisition of another tech company is in focus. buyosoft signed a deal to at mel -- that could add about 33 dollars per share. scarlet: you and i were just looking at some of these headlines are markets producer has found for us. s&p 500tocks in the energy sector are down at least 2%. this as oil prices fall below tori seven dollars per barrel. below $27 per barrel. --x: s&p ticking off taking off. financials are getting hit the hardest. energy, a substantial weight on the market. you're looking at the s&p energy 2010., the lowest since

we are still building on those declines. scarlet: 30 losers in the dow. the worst performer is chevron, off by 7.5%. alix: shell came out and said profits could fall 42% this year considering these big oil integrated has not been holding out much better than independent counterparts. be?hard is it to scarlet: the bar will be so low. the 2016 world economic forum in davos. axel weber spoke with hans nichols and francine lacqua. i think they are doing the same for longer at the moment. i don't think really it makes a big difference whether they add another half-year. my expectation is they might do baby steps in reducing interest rates further.

it is not my main scenario. they would do that in very adverse environments. at the moment, what they said is, beyond the end of this year, stimulus ando add have a ma massive purchase program. it is providing insurance against tailored risk. if you look at what we talked today, the market has shifted completely away from europe, switzerland, away from the turnaround of monetary policy in the u.s. francine: i have read somewhere else saying, part of the volatility this year comes from the fed hike. we have the fed saying four hikes this year. the market saying two. who'd you believe? axel: i think if the fed had not moved we would've seen more uncertainty in the market now. it is hard to prove. if you look at what happened between september where some thought the fed might move and later there was added

volatility. faces and where markets need reassurance and guidance by policymakers is, what is the medium-term outlook? policy gives the credible outlook. the fed has said we will roughly move 100 basis points this year. i've no reason to doubt that because it is what fits the u.s. economy. to runcy does not want into a credibility trap they need to give this guidance and followthrough. francine: what are the chances of the fed rate cut this year? axel: i do not see that in the books at all. i think what you saw in the past when the central bank in japan move great up and took baby steps and reversed -- when the ecb started hiking rates in 2011 and in reverse, there is lots of policy credibility. we face a credibility issue in the global economy because the

guidance given by central banks is not taken at core value at markets. that is where markets get nervous. you get a lot of volatility. thing central banks can do is give guidance were there sure they will implement and follow-through rather than speculating about their own future moves. volatility is not a job for the central bank. it is mitigating volatility and therefore you have to be clear and determined in your guidance that you give market. i think there is some lack of guidance at the moment on what the outlook is and the guidance that is given is not perceived as credible. they did fix that problem. is there anywhere in particular where you think there is a lack of guidance? axel: i think what you saw is we are at a turning point. turning points are always hard to predict but what the fed has done in the past was best given such a guidance they did now, they basically followed it through.

was not bad for equity markets. the fed would only hike rates if growth continues. if growth continues that has always been good for equity valuations in the u.s. independent of whether the fed started tightening. my outlook is the fed will continue to tighten him a growth will be strong, unemployment is at full employment level in the u.s. and the u.s. economy is the strongest of the industrial world. we expect growth of 2.5%. it is not the very strong growth of the past but that is more a medium-term demographics and other headwinds driven reduction of growth rates. alix: that was axel weber speaking with francine lacqua and hans nichols in davos. crude now down 7%. the worst day since september. ♪

alix: welcome back to bloomberg

markets. i'm alix steel. scarlet: i'm scarlet fu. many believed paypal as a standalone company would produce for investors. shares are down about 15%. expectations remain high. alix: ceo dan schulman spoke with bloomberg go about living up to them. : for the first time ever on black friday more people shop online and with mobile phones than in-store. secular tailwind around the movement of cash to digital and the explosion of mobile phones. you have all the power of a bank branch in the paul your hand now. -- in the palm of your hand now. we have a lot to execute on but a lot of tailwinds. ik: is there a number of

merchants will support? dan: some of the payment form going on. what merchants are really concerned about is not digital payments but using mobile and software to get closer to their customers. most people conflate digital payments with tapping your phone at a point of sale. erik: contact list payments. dan: if it is just a matter of cap your phone versus swiping your card, it is not exciting to read if it is a real value proposition change, you can order it had, you can skip the line, pick up your food, get automatic rewards on your phone and split tender, pay for some of the transaction with those rewards, that is a real value proposition change. when retailers are the net that -- when it starts to happen, you

will see an acceleration of digital payments. you are already seeing it online. david: how much competition are you facing from traditional providers as well as from the apple plays and things? dan: a tremendous number of announcements. like digital payments you expect a lot of competition. our real competition is not those you mentioned, it is cash. 85% of the world's transactions are done in cash still. incredibly inefficient form of currency. our goal is to take that inefficient use of cash and turn it into much more efficient ways of digital payments which go faster, are easier, and cost less for consumers. alix: that was paypal ceo dan schulman speaking to bloomberg go from problems, switzerland. scarlet: the nasdaq down more

than 3.5%. we want to check in with abigail doolittle who has been checking in on the nasdaq composite. we notice only three stocks are gaining. abigail: it is such a big selloff today. another massive day of selling. the composite index is down more than 3%. the biggest standout losing sector is biotech, down about 20% year to date. the composite index is down about 13%. index, downiotech now than 30% from the july peak. the composite index, the nasdaq is nearing bear market territory down about 70% from july peak. peak.n 17% from july the composite index may follow while text into a bear market.

apple, about an 8% weighting of the composite index. as raymond james cuts numbers for the second time in two months we see strong selling an iphone concerns from early november. it'stock series suggests august what monday hold may not hold. alix: i should point out, in terms of commodities, wti down almost 7% yet again. the worst commodity of the day. lots more on markets next. major u.s. indices trading lower. about 3%.ill down scarlet: we will be back with more. ♪

alix: an :00 a.m. in hong kong. p.m. in new york and 2:00 a.m. in hong kong. scarlet: welcome to bloomberg markets.

alix: good afternoon. here's what we are watching at this hour. >> the second half of the year, we could see prices a good deal higher than they are today. a historic time for oil. to 2003prices are back levels but says they will not stay low for ever. scarlet: stocks taking a beating this month as hedge funds are seeing bargains. alix: the mcnabb canada holds a study on its interest rate. bank of canada holds steady on its interest rate. scarlet: we need to get you a set up on where the markets are trading right now.

rami: right now, we are seeing stocks off their session those in the past 15 minutes or so. that does not mean we are out of the red. of in the deep red as it is good the s&p 500 down by nearly 3%. paring some of those earlier losses. the dow also down similar. the nasdaq down by 2.7%. s&p, 170 s&p stocks are now making new 52-week lows. the lowest level since april 2014. for the dow, we are seeing the loss of 450 points or so. we are now down 1900 points this month or this year alone. only three stocks in the nasdaq in the green. i want to show you the imap function. the 10 sectors and their health.

no surprise, a sea of red, energy is the biggest laggard, down by 4.8%. followed closely by financials, down 3.3%. consumer discretionary down by 3%. with that, we have to check out what is happening with crude. crude barely obsession those coming mirroring what we saw inequities -- in equities. 1. worst day since september since may of 2003. alix: energy not looking good. >> not looking good at all. let's look at the s&p energy sector. nearly 5%. it had been down earlier by 5.8%.

let's take a look at a custom graph we have. in the past three days, what we are seeing is that the s&p energy index losing its worst slide in the past four years since 2011 on the order of about 9%. let's take a look at the individual securities that are in the s&p 500 energy sector. deb and down 13.5%. thank you so much. scarlet: let's check in now with the first word is made -- first word news. the: northwestern pakistan, army says it has put down a deadly taliban attack on university. 20 people were killed when gunmen stormed the college campus. the victims include students and professors. four attackers were also killed. the taliban is claiming response ability pretty islamic state has

captured during fighting with syrian government forces. 50 others are reportedly still being held. wondered people were killed when -- 100 people were killed in the battle over the weekend. the search for 12 marines in the waters north of hawaii has been suspended. rescuers searched for five days after two helicopters collided near ouahu. it is looking more likely that the northeast corner of the united states will get hit with its first big snowstorm this weekend. but at this change, point, the cities of new york, washington, philadelphia and boston could be blanketed with snow. the snow will start in washington on friday. it was so hot in 2015 that instead -- it set a record for setting records.

a quarter of a degree may not sound like much, but on a planetary scale come it is a huge leap. most previous records were measured by hundreds of the degree. global news 24 hours a day from the bloomberg first word desk. oil extending its decline from his lowest level in 12 years as supplies continue to increase. at the world economic forum, why the oil slump is here to stay for a few more years. the lower economic growth from china means lower, slower oil demand. which means there is lots of oil in the market. it is the third year in the row we've had more supply than the men.

look at 2016, the supply and demand still under pressure. hadhird year in a row we've more supply than demand. >> what will it take to rebalance? is it one year away, two years away? iran is just about to put more oil on the market. expect year, we production to go down significant only in the u.s. we expect demand to increase 1.2 million barrels per day. other high-cost fields will shut down, reducing their production. in 2017, you may see upward pressure. as we mentioned, oil

extending its decline 7% with crude oil breaking below the bti -- wti $27. crude is down 26% this year amid volatility in chinese markets and speculation that precious supply from iran will drive oversupply even higher. investor anxiety pushing down global currencies. ofe's the president berkshire investments -- we've been trying to figure out a catalyst for this latest leg down. is there one? what does that tell us about where we are in this selloff? >> i think the catalyst was initiated last summer with the exit talk of the fed being more earnest. it's about the fed moving away from providing accommodation to complacency -- fed

bred complacency. if the fed is try to step away market,t, fever in the more and more people are interested in preserving their gains rather than buying the debts. this is a long process to go. you just heard an interview on oil. one of the reasons the supply is not going to be reduced to much too quickly is because of these low interest rates. you can have a zombie fracking .ompany come as they can pay the interest and stick around for longer. you have the chinese interfering in the markets to slow down the adjustment process. is putting fuel on the fire and people are fearful and are running for the exit. alix: we are seeing it play out

in the credit market. take inside the bloomberg terminal, looking at the investment-grade spread for all the various sectors. how much investors are demanding to be paid for over treasuries. all of them are moving up. the yellow line is energy. this is energy, materials, telecom, financials. is this the canary in the coal mine? >> i don't know what i'm afraid appeared i love these markets. people should be fearful. fear is what is normal. the complacency they've had for all these years is not normal. shoes, to see these where they are going to drop your people are reevaluating their portfolios. what is worse, i believe as of december, central banks have

shown they are powerless and mario draghi was not able to talk these markets into the leaving the euro should be weaker. -- believing the euro should be weaker. the markets don't believe central banks anymore. we've seen the beginning of an unwinding that has to take months. you cannot have a washout of the fundamentals are not in place. we will get some sort of relief rally, but this is the beginning of a trend. not the end of a trend. scarlet: how is this different from 2008? like 2000 when we had these markets cascade down and down. much of the risk is spread. mlps were purchased by retail investors. i don't think there is a systemic risk. , there cannotnd be liquidity providers.

it will play out a bit differently this time around. alix: great to get your perspective on this day. scarlet: we will be right back. and nasdaq alln off by more than 2.5%. and dow and nasdaq all off by more than 2.5%. ♪

alix: welcome back to bloomberg markets. scarlet: let's head to our markets desk. i: a look at some tech stocks right now. most of them on the down. are notcome investors

really happy about one thing that came out of netflix's last courtly earnings after the bell yesterday. not happy about u.s. subscription numbers. , off itss down by 6% lows we saw at the 11:00 a.m. mark or so. , netflix logind 5.6 million new subscribers. 4 million of those were outside the united states. estimates were expecting that to come in at 1.6 million as an average. the cfo yesterday said it's the next 50 million that are a bit harder to get to. micron, whether it is apple's fault for what is happening today, down by nearly 11%. this is the maker of memory chips. james going sour on iphone sales in 2016.

apple is micron's second-biggest customer after intel. stocks,at chinese , bothom and alibaba stocks down on the order of 5-6% after their shares lost a third of their value. scarlet: thank you so much. alix: stocks taking their worst beating and months, but not stopping some hedge funds from buying on the debt. what are they buying? bank of america report measures the lows -- >> hedge funds were the only major group buying last week. corporate's were still buying, but private clients and institutional investors selling -- it was across the board. everything except for consumer discretionary, which the prior week was their biggest and flow. scarlet: how does this compare

to last year? >> this is the opposite we saw yesterday. last year, private clients were the ones that were the only net buyers. everybody else was selling. this is a complete reversal of the trend we saw last year. alix: they are buying everything to do energy come industrials come all the ones that are really been up. the biggest inflows were in atx and health care and energy is the next one. care.'s in health the correlation between the oil market and the s&p right now come almost like there's in the oil, too.at you do have people like case capital sending out a note likeg my 6-8 stocks i will , take the cash on the sideline and gradually start putting it into those things again. alix: when you see hedge funds

go against the private investors , how sticky are those investments? will we see outflows because the market has a meltdown? >> you do want to keep an eye on it. are the hedge fund still going to be those buyers? they have been the buyers for the last four weeks. scarlet: the buying has picked up steam. the biggest since december of 2010. >> major inflows from hedge funds this week. alix: they are the smart money. >> they have not been so smart in previous years. we've seen a lot of hedge funds and struggle like bill ackman -- the previous year, he did really well. a be he will turn things around this year. he will turn things

around this year. bank of america sent out another note on that today. i have to take a better look at that. this one just focused on equities. scarlet: thank you so much. alix: still ahead, tech startup foursquare suffering identity crisis in the past, but now hitting its stride. we will talk to the new ceo, next. ♪

scarlet: welcome back to bloomberg markets. alix: foursquare's cofounder stepped down last week,

supporting the company's push to its new strategy. originally a location check-in app, it has expanded its functionality, including its pinpoint platform. the company's new ceo joins bloomberg radio. >> thank you so much. you are listening to the bloomberg advantage. i want to bring in jeff glick. you got the new spot, you are the new ceo of foursquare. what is at the top of your agenda here? >> nice to be here. our business grew 170% last year. building up our enterprise solutions and our developer tools and pinpoint audience network. building on that incredible growth from last year, that's what our financing allows us to hire up. of theady have a third fortune 500 using our intelligence solutions. we've mapped the world. our community is a panel of the

world's off-line economy and we are using that to create all kinds of business solutions. >> describe what the business is now. it has changed over the years. >> people know us initially for our two apps. a guide to all the cities of the world. a chicken game where you become the mayor. through that crowd sourced community, we've been able to map 65 million business locations in the world. we have 65 million business locations, 100 million total locations map. digitalstand there readings through 80 million chickens. we have this living, breathing map of the world. .- through 80 million check ins

have trends on foot traffic at stores, restaurants, services around the world. we have a product that helps people like hedge funds and banks understand how economic trends are moving. we predicted how many iphones apple would sell by watching for traffic at apple stores globally. >> by having people walk into a , you are able to see what the foot traffic was like and how it changed over the previous month. >> that's exactly right. compared how foot traffic was trending compared to previous product launches in prior years. that is just scratching the surface of the capabilities. we are able to understand how black friday patterns moved. that is valuable data. data atis all great

very usable. you have to be able to monetize it. how can you monetize what you guys do better? >> that is how you monetize it. you have media and data revenue. we have a third of the fortune 500 using our audience products. say you are a fast food cmo and you want to find 15 million americans who are heavy users of fast food and go there all the time. people, we canse traffic those as two people who services. kinds of think about the whole e-commerce spending,of consumer

the cookie measures whether ants work. in the off-line economy, what is the cookie? there isn't one part we are using are millions of users has a panel to measure whether ads work. that is a fast-growing business, $60 billion digital ad market in the u.s. we want to be a leader in understanding how location should factor into targeting and add measurement. >> the cookie is an individual thing. you know who that person is. not necessarily what kinds of people there are. world in which your data will be used -- you know i drink a certain kind of --ha from paci >> everything we do is large aggregate. we want to protect our users privacy. in aggregate, it is more

interesting that you really are healthy and you frequent organic juice bars and the gym every day. and nike wants to find you. the new ceo of foursquare. really glad to have you on. back to you guys on tv. scarlet: thank you so much alix: still ahead, as the selloff continues come are we headed for another financial crisis? how to protect your company now so you don't suffer later. ♪

alix: from bloomberg world had curtis new york, welcome back to bloomberg markets. in newd headquarters

york, welcome back to bloomberg markets. the senate today will debate a bill that would block syrian refugees from the united states. until new security measures are taken. the house has already passed it. refusing tocourt is give businesses a new tool for stopping class-action lawsuits. said a defendant cannot and a case by offering full payment to the plaintiff. the washington post reporter in captivity in iran made his first public appearance today. since being released from prison. he spoke briefly with the media outside the u.s. military's medical center in germany. he said "i cannot wait to get home." he is joined by his wife and other family members. he was held for nearly 18 months and three other americans were

also freed in a prisoner exchange. american students studying abroad may be taking that old adage to the extreme. half of those surveyed said they consumed more out the hall while abroad. 11% said they have even blacked out while drinking. one in nine tried drugs for the first time while 29 percent used drugs while abroad. global news 24 hours a day powered by our 2400 journalists in more than 115 years bureaus around the world. -- 150 news bureaus around the world. alix: back to. post 4 the world economic forum. to lorenzoker spoke ciminelli.on he davos world

economic forum. >> we will see what is out there. if something comes up, we will take a look at it. one thing that often gets forgotten, we benefit from having the ge store. you think of aviation, we take gas of the -- we take the turbine. package a lot the content from the rest of ge and bring it to the oil and gas industry. erik: do you have to have an expectation for where oil will in 2016? 16? -- >> we look forward. we look at our backlog and we don't focus on price of oil on a day-to-day basis. if the forward curve suggests oil will stay trapped in the 30's, you are managing

your business according to what the forward curve is saying. >> we look at it as an element of what we need to do from a cost management perspective. we will take up $1 billion in costs commendably -- cumulatively. happens, we what will take up more cost if necessary to be competitive. erik: survival in the business of oil and gas production is all about cost right now. we know the price has collapsed. 75% from wonder hundred dollars a barrel to $27 today. today. a barrel to $27 that question has to be asked to the operators as well. we are helping them reduce the costs. from a project execution standpoint, we are focused on

standardization of the equipment. what isto the basics of necessary from an engineering perspective and standardized. that reduces the cost base. we've been able to see 25% reduction in the cost a's by focusing on standardization. focusing on the lifecycle element and project execution as well. digital is the next big opportunity. downside,ny unplanned reducing unplanned events -- by placing sensors, where able to capture data to see what is happening and reducing unplanned holds. forecast fivean years from now, how much do you think -- i met steve think ge will be able to bring down costs for your customers -- how much do you think ge will be able to bring down costs for your customers? sure we will be

competitive for our customers at a $40 a barrel oil. our focus is to keep on staying on the cost curve and bringing that down. working with our customers. you look at the macro trends, there will be a need for the resource. the macro trend is going to continue to allow us to grow. we will be competitive as we grow. presidenthat was ge's and ceo of oil and gas. we are following the market turmoil in a special report that starts at 3:30 p.m. eastern time. we will bring you right up the market close -- right up to the market close. the s&p 500, dow and nasdaq coming off their lows of the session. despite lackluster growth

in the fourth quarter, policymakers and cha in canada n bullish. what should companies do to protect themselves in a downturn? it is all about leverage and reducing it. we will also keep an eye on what is going on in oil. wti currently down 7.8%. the dow off by more than 400 points. ♪

scarlet: you are watching bloomberg. alix: this is your global

business report. the mostone of authoritative voices on oil says the commodity may see a rebound in 2017. in a world where cash is king, how is the ceo of paypal planning to get consumers around the world to switch to digital payments? scarlet: apple looking to break ground with retail stores and a new country. how they are setting sights on india. let's start with comments out of the world economic forum in davos. a rebalancing and the oil market in 2017. he explains what is at the heart of the price drought. >> this is a geopolitical problem. saudi arabia and iran are at odds. saudi arabia sing we will not make room -- iran's and we want our market share back.

you don't see a basis for them to get together unless everybody including the russians does. agreementigned an with the world's biggest funder of vaccines for developing countries. a study said merck's vaccine was hundred percent -- was 100% effective. paypal has 173 million customers around the world. according to the ceo, and biggest competitor is not apple or be set, it is cash. >> 85% of the world's transactions are done in cash still. insufficient -- inefficient form of currency. our goal is to take that inefficient use of cash and turn it into much more efficient ways of digital payments which go faster, are easier and cost less for consumers. apple has asked the indian

government for permission to open stores there. a move that would help the company do a better job of targeting customers and one of the world's fastest-growing smartphone markets. scarlet: time for our bloomberg quick take. we provide context and background on issues of interest. a bump in the road for canada. after years of modest growth, canada's economy is slowing down. big changes are now on the horizon. the bank of canada decided to keep interest rates unchanged, bedding a weaker loonie will lead them out of the oil slump. the liberal party won the majority of parliament. support -- the problems are long in the making. the canadian dollar is trading at 11 year low against the u.s.

dollar, household debt approaching record highs. concerns that a u.s. style housing crash could be imminent. after the election, oil prices kept falling, and weakening the loonie and leading to more downbeat economic forecasts, putting pressure on him to run bigger deficits. and mining had driven economic growth the past two years. canada's oil sands represent the third largest oil reserve in the country. canada has become a key producer of gold, copper and uranium. with the surge in oil revenue came the rise of the conservative party. oil's rapid decline is shifting the power back to the liberal party. it happens next -- what happens next? his government is facing a bleak economic outlook that may meet

-- need more stimulus. the critical question, with oil in a rut, where will growth come from? alix: that wraps up today's quick take. for more stories, you can visit /quicktake.om for more on the bank of canada rate decision come i want to bring in pamela ritchie, who joins us now from toronto. what else did you wind up hearing from the bank of canada today? lots of talk about growth come inflation, oil prices. >> the big take away in terms of fishing through the words of the decision to look for what is ist, generally he says he optimistic, sees nonrelated -- non-energy-related exports picking up. chance of how that was

going to go today. we do see traders losing no time in lining up for the next interest rate decision. 50% banking there will be an interest rate cut later this year. 50% thinking by april. this is being pushed on down the road. you mentioned fiscal spending. something on the bright side of things. that was one of the bright stars for 2016. we will not know what the government is planning to spend until the budget is brought down in march. their expectations for it to be bigger than what the election -- david dodd said it should be 40 billion a year. lots of different calls on that front. that is where some of the created, manufactured growth may come from. scarlet: we showed how the canadian dollar is now at an 11 year low, it has fallen every

trading day so far this year. it is supposed to provide relief for canadian companies. are they seeing that relief? >> they are, but not to the extent that you would need it to see some sort of rapid growth picture taking hold. numbersseen export creeping up on the nonenergy side of things. can we diversify the economy quickly enough to make up for losses and other parts? the canadian loonie does help manufacturing. many manufacturers and exporters we've spoken to said it is low enough. don't make that bounced down even further. it is where it needs to be on that front. along with to go on the manufacturing front. innovation is where it needs to come from. it could take time. alix: we do want to get you updated on the markets as well.

the dow off by 362 points. we are down, but well off the lows of the session. at one point, we were down -- scarlet: you can see what alix is referring to appear a straight line up over the last 30 minutes here as we are paring our losses. we knew it would be an ugly start if you are long on stocks. alix: oil has not participated. oil is still right around the lows of the session, off by 37%. oil likes to move in five dollar increments. 30-25 is not out of the question. -- off by 7%. scarlet: one stock i wanted to

point out here, twitter. shares up by better than 8%. 7% onock had tumbled tuesday and was down by as much as 3.2% today. we have come way back here on twitter, rebounding off that record low. over howquestion marks viable this company is outside of the niche market. alix: we are following all the market activity in special report starting today at 3:30 p.m. eastern time. we will feature expert analysis of the day. ♪

alix: is the next financial crisis just around the corner? stocks plummeting today. if the dow closes as low today, among the biggest 20 point declines of all time. scarlet: for those worried about how to secure themselves in case of a downturn, john kline has advice for companies on how to shield themselves before a downturn. he joins us now. you guys have done some research on prior crises. look at which kinds of companies tend to outperform. tell us about what you found. john: the companies that tend to do better in advanced preparedness, they take actions to secure their balance sheets and improve their liquidity and reduce costs and bring more

flexibility into their business model. they take steps in advance so when the downturn occurs, they are in a better position. alix: does that leave money on the table when things are good? you are not participating in the same kind of whom your competitors would be. -- same kind of boom. >> you have to have a bit of flexibility within your business. you might leave some money on the table today. in the long run, you would be better off. criticalwhat is the metric you use to determine what kind of company can best right out a downturn or recession? >> we start with a simple analysis of saying how levered our companies. if you look at the end of intember of 2015, companies our country had a leverage of about 2.2 times their cash flow. which is not a tremendously large number. we went back and looked at pre-financial crisis from 2007, a 41% increase.

haveakeaway was companies gorged on debt -- if a downturn occurs, your letdown will be worst because you are more levered. that cheap debt has cap a lot of companies alive. that may be sharpened bankrupt -- maybe should have been bankrupt long time ago. how quickly can they become a good company? >> the case study there would be what private equity firms do. the 90 day turnarounds. three had been six months, you can start taking pretty good steps to start improving your financial position. -- 3-6 months. scarlet: raising cash, reducing leverage. this sounds defensive. you have to work harder on

the operating side to make sure that you are growing and expanding. raising leverage to improve your cash making the can down the road. -- may kick the can down the road. at some point, that that comes due. if you have not improved your business enough, you will find yourself in trouble. what is the relationship between investors and companies? companies want to do what shareholders want her to we will raise a lot of money and do dividends -- what leads what? >> that is exactly what we've seen. managements are put in place to have a longer-term view. courage too have the say we will not buy back stock today. we think it is more prudent to hold cash.

management has to have a prudent strategy and its shareholders will get a line. -- get in line. last downturn, we prepared by doing this. look how good we did. think and position your self defensively. what kind of offense type moves with you endorse -- would you endorse? buying a struggling competitor? >> exactly. if you prepare at the end of the summer come improving or balance sheet come if these market declines have to continue, you have a good chance of an offensive. -- of being offensive. there is a constant switch you have to go back-and-forth on. the companies that will do well over the next 3-5 years are the ones that started playing defense early. alix: can you help quantify that for the oil patch?

which ones did it right? whole isl patch as a down, but the majors like conoco phillips and on, they've been through this many times. -- conoco phillips and exxon. upstarts like pioneer. companies that have had more leverage in less liquidity. you see the stable guys have a bit more financial flexibility than the newer and smaller guys. scarlet: who is best positioned to lead all this effort? the cfo, the treasurer? it has to be a combination of those looking at it strategically and the cfo. they are supposed to be a strategic partner and they're supposed to figure out how to capitalize and fund the business in good times and bad times.

cfo function in support of the company's overall strategy. alix: thank you so much, john kline. thank you for joining us. scarlet: we are following all the days market activities in a bloomberg markets special report beginning at three clock -- 3:30 p.m. eastern time. alix: we are looking at stocks, s&p and dow down 2%. 1%.aq paring its losses to definitely some come back. ♪

anchor: welcome to "bloomberg markets."

from bloomberg's world headquarters in new york, welcome. i am david gura. has lunch more than 500 points and is now paring back its losses. the shanghai composite and me today all in their market territory. crew plunging more than 7%. plunging more than 7%. and apple is saying that shipments of the newest iphone models are worse than expected. and a precipitate loss, but slightly less perspective than we have been seeing. report: we are still knee-deep in the red.