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. look at the

numbers. the s&p 500 down by about 2%, most of the the nasdaq down the least. still, we have a lot of superlatives to talk about. peak, heating 52-week lows. it is on pace to close at its lowest level since october of 2014. of course, the big reason we know is oil. aboutices now down slightly off the session low at the 2:00 hour. basically, we are looking at a low not seen since may 2003. i top of that, there is so much trading. diving in to the bloomberg that has the volume

happened today versus the past 20 day average, and we can see that over here on the left side, financials i seeing a huge uptick in trading volume, up , and this is versus the 20-day average. as a thresholdlf is about 81% right there, so we can see a lot of volume is happening here. let's look at what is happening over the year to date. i want to go to what is happening with the s&p sectors that are actually getting slammed. show you what is happening with the transport, utilities, and the nasdaq. these are all down at about 11%, 12%, and the least is about 7/10 of a percent or so. david: thank you. mark crumpton has more from our

news desk. david, thank you. the taliban and is claiming responsibility for an attack at a pakistan university that killed teachers and students. the military says they killed all of you are a tackler's. they launched the attack by scaling the walls of the campus. and according to a report out today, germany's gross domestic product could rise 3/10 of a percent next year. the germans have taken in at about one million refugees. u.s. attorney general loretta lynch is defending the obama administration's plan to expand -- checks purchases for gun purchases. they say they have taken lawful steps to stem gun violence. they are lawful, consistent

with the constitution as interpreted by the supreme court and the laws passed by congress. mark: richard shelby told lynch that the subcommittee will have no part in undermining the constitution and the rights that it protects. weaversichigan, mayor said she will not call for the resignation of governor rick snyder. the water became too much contaminated with lead after switching to a water supply. from the bloomberg first word death, i am mark crumpton. david, back to you. word the bloomberg first desk, i am mark crumpton. david: speaking to erik schatzker, and erik schatzker asked about the global selloff.

>> you have economic things, such as the slowing of the u.s. economy, which has been pretty gradual, but consistent despite strong parts of auto and housing. you have got energy goalie down so quickly that you can almost haswind burn, and the world trouble adjusting with things that happen quickly. you have got china as an issue, which is probably overdone, because the rest tends to see china through its markets and its currency, where there have been a lot of major footfalls and mismanagement of the stock , and you did afterwards, and that creates an issue of confidence, and the same with currency, so when you put those

factors together, you have an unattractive brew along with the concern that the federal reserve will raise interest rates and slow the economy further in some effort to save it. a guest says this volatility is here to stay -- our next guest says this volatility is here to stay. me ask you about what steve schwarzman was saying here. he is saying that china is overdone. is that something that you agree with? scott: yes, i would agree with it. the china economy is based more on services rather than just us buying there's don't. that is not an easy transition. directionng in that slowly. this has not been great.

the service status is a lot better, and i would say definitely, at least based on our word, -- all work that this is overdone. david: this has been taking place for a while. how long do you think this --nsition will take to mark will take? scott: it was a very, very short. keeper of time, where it is most dependent,, not so that is a multi-decade transition, so within that, there is a lot of uncertainty. you do not want to watch the chinese stock market and say, boy, that is a good indicator of what is going on in the economy. i do not think it is. the problem with commodities and oil is that the world geared up, added capacity, thinking china

is going to grow north of 10% forever, and that did not happen, and now we are stuck with a lot of oversupply. of a global slowdown, fears of a domestic slowdown, and based on the work we are doing, i do think it is overdone. are things great? no. are they good? yes. david: one of the things giving it something is what is going on in the u.s. how important are the fundamental of -- fundamentals of the u.s. economy? : i think people are underestimating the strength of the u.s. economy. we do are a lot of projections, whether it is leading indicators, jobless claims, retail sales, things like that, and our forward projections of those indicators tell us we're going to move ahead at a modest without much

inflation, and a lot of people a not realize that lei hit record in july. we try to put the puzzle together every day, and what they are telling us is that we are unlikely to slip into a recession, and we will have economic growth may be approaching 2.5% this year. you aboutanted to ask the activity. my colleague wrote a piece about hedge funds as a sign that there are some opportunities that could be had here. what do you see? scott: given our outlook for fundamentals, we certainly think this is an opportunity. we certainly think the market is going to be higher by the end of the year, and the sectors we are most interested in all the ones that have been hit the hardest, things like the consumer discretionary sector, technology. the industrial sector, which, believe it or not, has

outperformed the s&p 500 from mid-july. these are certainly the places we want our clients looking. easier said than done. retail clients are not jumping in and selling with both hands. they are basically sitting on their hands and not doing much of anything. david: scott, thank you. the major market indexes well points, and off 372 this is more bloomberg markets, coming up. ♪

david: welcome back to bloomberg markets. i am david gora -- david gura. getting raises, increase the hourly pay, part of a workforce investment plan. has 1.4 million u.s. workers, will also provide basic short-term disability to full-time hourly employees. and the number of banks backed by it art collection based on a filing, a billionaire has entered into a credit agreement with morgan stanley. do not disclose the size of the credit line or his interest rate. he has previously entered with -- entered into similar agreements with other banks, and still on top when it comes to jersey sales, steph curry number one followed by lebron james of cleveland, with sales from october through november. kobe bryant is playing his final

season in the nba. bloombergs the business flash. we are following some developing news with what has happened with twitter. about 3.6is up by percent, but within the last half hour or so, we have seen the stop rise by as much as 9.7%. the reason here is that cnbc cited a takeover speculation, but news corp. has singed divide -- has since denied that. everer has been falling since the ipo and is now trading at an all-time low, and right now, we can see this leg up as well as the leg down after the speculation of a takeover. also with twitter, let's go ahead and go to the general route that has been happening across the day and across the

markets, in a want to head to the major banks. of course, earlier, we talked about how the financial sector was the most traded sector by volume, and we can see a lot of that trading is in the cell and citigroup is down by about 4%. the s&p financial sector for its part is also down by about 2.5%. pinch, goldmane sachs, morgan stanley, and schwab all down. all of these are on the order of their lows of 2014, and with morgan stanley, in particular, it is at a low not seen since july 2013, and in addition, the blood just keeps on letting, i guess. reits are not doing well. all of these, 3% to 4%, and you

will remember yesterday, david. we were talking about how .ousing starts came in worse david: thank you. shanghai composite index continued its slide, down more than 50% this year. -- more than 15% this year. from the world economic forum in dobbin, switzerland. dabo, switzerland. >> it is medium term of future growth down the road, and i think that is where we are. we have come out of the deepest financial crisis, and we are now nine years out of that crisis. at that time, the global order had reverse. they had fallen behind and were lagging with policy problems,

and the emerging markets have really strong tailwinds, which , andof them used wisely some of them have not used that wisely. now with the old order, the u.s. is having recovery, and emerging markets are seeing a reverse of capital flows. it is a normal correction. it will last for some more time. but i do not think we will see a downward spiral. reporter: what i was trying to get to, something we have been exploit, we are near the zero outs. there is not much they can do. there is fear that bubbles burst, and we are not ready for them.

axel: what is true for europe, still using, and what is true , not true for them. reporter: more recently, an opportune time to deploy some of that. axel: i think they will do that and add to policy stimulus. i think they have just been late to the game, and some of the measures they took were a bit improvised, and there is really some policy credibility issues around some of the policies implemented in some emerging markets. not just china. look at brazil, where some of the other dallas he changes came late, but we expect those policy changes to gain traction. if you look at china, i think we will see further rate cuts and reductions, in general. we will see stimulus start to kick in. the sovereign funds will start to buy a roll.

i always compare china's policy reaction today to europe in the 1990's. for the first time, we have privatization, and the chinese tried to prevent the equity investors from having losses, which turned out not to be a wise policy. reporter: trying to figure out what the chinese want to do, devaluing the you want, but whether they do that or not, there will be deflationary measures. is that the main risk that we are facing at the moment? that we cannot fight deflation? axel: they have not been sexy fiscal -- they have not been successful in doing that. where at a point in time what used to be tailwinds from demographics and other factors that added some percentages of growth and produce pressures is

actually turning into tailwinds, and it is hard to do this in the medium and long-term. china, in my view, will go through a correction that is ongoing, but at the end of the tunnel, i think they will come out stronger. we example, at ubs, announced we will double our headcount there, because we see a huge potential for china. moreare rebalancing to domestic growth. if you look at the service sector growth, it grew at 8.5% in the first quarter, and the service-based growth is much more job creative and income creative, so i think they are doing the right thing. it is just a tiger that needs to turn. it needs to turn slowly, but i am quite confident. dave: in dr., switzerland. -- in dabo, switzerland.

more bloomberg markets next on bloomberg tv. ♪

david: welcome back to "bloomberg markets." i am david gura. mounting legal fees and falling revenue. joinsor financial analyst us, allison williams. we had trillions last year in mergers and acquisitions. allison: that is something they talked about today. even though the stock is down, with all of these reports, i think we have to take into context the general tone of the market. that is sort of creating its own worries for investors, but, in

general, i thought the positive were goldman keeping costs stable. revenue was basically flat for the whole year, down 2% for the full year, and they were able to cut. david: we had news of this big ago,ement a couple of days really weighing on results for this quarter. alison: i think the good news for goldman is they are finally getting this behind them. i think investors were surprised when they saw the big charge for goldman, only because we had andps like jpmorgan citigroup putting the costs behind them, and goldman still had this sort of large legacy cost. they took a charge and finalize the settlement, and i think that is a positive going into 2016 that they are getting that behind them, whether some of the , likeglobal banks

deutsche bank, they still have to settle these large liabilities. lloyd blankfein was praising this about weathering the economic volatility. when you look at goldman sachs compared to other big banks, is it better than the others? i think theyldman, are unique in that they are almost solely focused on the institutional capital markets. they have an out things they are looking at, but in general, they are the most tied to that business. it tends to be a very volatile business, although goldman will point out that the lines do not necessarily move together all of the time. the other takeaway i would say is that credit is really a rising concern, and that is much more of an issue for lenders with the, commercial lending banks. so bank of america, jp morgan, citigroup, we saw losses at all

of those banks as well as wells fargo, and investors are really focusing on energy. what does question is this portend for the future? ofthis going to be the rise a bigger credit issue? will it impact markets? so that will affect things like jpmorgan and goldman. david: thank you very much get more bloomberg markets coming up after the break on bloomberg television. ♪

when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. so your business can get back to business.

sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. ♪ david: from bloomberg's world headquarters in new york, i am david gura.

has more from our news desk. mark: david, thanks. looking for a break in the upcoming syrian peace talks, u.s. victory of state john kerry and sergey lavrov met in zürich, switzerland. figure outying to which groups should be labeled terrorists and which should be barred from peace talks when negotiations began next week. and the air pollution in china is getting better according to a new report. despite catastrophic levels of smog in northern china this winter that shut down schools and roads. a spelling error landed a 10-year-old muslim boy in error in london. the child mistakenly wrote that terrorist house.

areschool says they required to report any possible link to terrorism. their investigation and said there is no reason for concern. republican front runner did donald trump continues to lead his rivals by a large margin in the polls, seeming to be the strongest challenger to hillary clinton according to a monmouth university poll. he is backed by 36% of republican voters in that poll, followed by texas senator ted cruz. meanwhile, a new gallup poll says more americans are pessimistic than optimistic about a trump presidency. global news 24 hours a day from the bloomberg first word desk. i am mark crumpton. david, back over to you. david: that global selloff continues, and gold is picking up losses. the slide is the highest this week, and crude prices have been

plunging, wti closing just under $26 a barrel. brent crude is closing at $27 a barrel. these prices are hitting the energy sectors. the s&p 500 energy sector fell up to 6%. royal dutch shell says profits fell in the fourth quarter. the crude collapse has pushed out of the market value to the lowest in seven years. dan, let's go through this. this is a striking number p of the price of oil dragging profits down. : absolutely. oil is down 17% in the last month. gasl has said their natural made millions including gas moneytion, and oil lost

for them in the first quarter -- fourth quarter. one hundred $16 billion in market cap, their lowest level in seven years, and until oil prices turn around, it is going to be a long, tough recovery. their bread and butter, and the same thing for shale. we have seen similar losses there. : yes, they have been buffeted by similar losses, and the falling oil prices has priceshurt global lng come which can compete around the world, and even those prices, which were $18, $17 last year, they have come down by more than 50%. shell has been looking to acquire the third-largest producer. it seems they are still pushing

for this. even though some investors say this might not make much sense. : there has been one big investor who has come out against the deal. now that it is worth just a fraction of what it was worth when they announced the deal, it does not make much sense in , but of value creation shall really wants to do it. as well as diversifying its portfolio and also, putting the two together would make it the company in the world. david: lastly, looking at what this combined company might look like, are we hearing talks about cuts or hearing about how it might be restructured? yes, one of the things that shell wants to do is to cut to the bone. they have plans to cut another 3 billion this year after the merger goes through, if it goes

through. shareholders will vote at the end of the month. and they have announced 10,000 job cuts, including those that will happen after the merger. very much. thank you and adjusting to a reality of new, lower prices, saying they cannot sustain their current rate of spending, estimating that subsidies alone cost to saudi arabia $3.5 billion last year. imf director the for central asia and the middle east we let me ask you, we have seen some cuts in saudi arabia already. what are they proposing to do more of? saw, david, in the last quarter of 2015 is action by saudi arabia and other countries in the gulf to begin to cut back on spending, to cut back on energy subsidies, and that has put them in a better positioned this year, so saudi arabia, for example, they came in with a fiscal deficit in 2015

of a little under 16% of gdp. that is less than they had been anticipating only a few months earlier, and the number for this year might be lower still. it is not quite where they need year, so over the next over the next two or three years, they will have to take additional actions to bring spending down and to raise normal revenues to try to assure that they have fiscal oilainability with the new price reality. david: when you look at the health of the saudi arabian economy, considering and i go of its oil company, how do you see that benefiting, perhaps, the country's economy? >> it is part of a strategy to help close the gap with their budget, and that is something that has to be done over the next few years in aces ain't way, but second, cap's more importantly, there is an

opportunity to be more diversified, less dependent on oil, and then where the saudi nationals are deployed, how'd do you make that happen? going more into the private sector, part of the strategy of creating more dynamism in the non-oil part of the economy in the private sector of saudi arabia. david: the head of economics at the imf, releasing the forecast yesterday, saying they expect low.o be long what is the forecast for oil prices? >> the imf, like others, recognizes it will be very difficult, so what futures

markets are saying, they are saying that oil prices will rise a little from their current level and go up to about 50 or 60 by 2020. i think what we see is it will oiln that range because the prices are now increasingly set by those producing from shale and other sources, which are , and itt competitive will be low. in that sense, these countries need to recognize that we are very unlikely to get to triple-digit oil prices for the foreseeable future, and it is questionable spending, raising revenue with the new lower oil prices. thed: let me ask you about currency peg, which has been so important to saudi arabia for so long, linking their currency to the dollar.

not allowing investors to make a cheap valuation. speak to the gravity of that, the importance of that. it serves saudi arabia well. the structural economy is one where the of its exports are denominated in dollars. this is also something that they have the resources to defend, -- they aree fiscal undertaking the consolidation, which is what this year and the years to come, and it was hoped to provide greater stability. the greater instrument for saudi arabia is to adjust to a new reality of oil prices. it is the amount of money that the government has spent. this is key to adjusting the currency peg. it was help them, given the structure of their economy, so our view is it is neither

necessary nor appropriate for saudi arabia to move away from the currency peg that has served it well. david: last question. let me ask you about iran. a lot of sanctions on that country, many of them lifted this past weekend. how does the imf see that affecting oil in the next few months? ahmed: we will likely see millions of barrels of oil added. needs,revenues that it and it will show up in better growth numbers. it is probably growing between 4% and 5%. however, it does add additional downward pressure on the oil market. how much of this has really been factored in question mark how much are today's prices reflecting the expectation that oil from iran is going to add to the market? it is very hard for us to judge. but it means there is one more reason why we do not anticipate

a rapid recovery from the oil levels of oil prices that we are seeing. david: thank you, from the imf, and some breaking news about deutsche bank reporting some pulmonary net losses of 2.1 billion euros before income taxes. looking ahead to some fourth-quarter restructuring, it hundred million euros in litigation charges. sublunary reports there from deutsche bank. more bloomberg markets here after the break.

♪ welcome back to bloomberg markets. i am david gura. the lowest level in more than 10 years, falling below $27 a barrel. talks to anqua executive director in. bows, switzerland. switzerland. >> there means there is lots of oil in the market. this is more supply than the demand. 2016, perhaps we would still be under pressure, and i do not see any reason why we have a surprise increase in the prices. what will it take for rebalance? i understand at some point, this

over ballots will come off of the market. it one year away? two years away? i understand that iran is about to put more oil on the market. not expect the oil production to go down significantly, and second, we expect demand to increase by about 1.2 million barrels per day. costs to other high shut down or reduce production. we may see in 2017 -- that is number one. an number two, more important in my view, many companies around theirrld are cutting investments for new projects. for example, last year, 2015, there was a big decline in the investments in the oil sector, more than 20%. moreover, this year, it

continues. our numbers show that 2016, and of further 16 percent decline is boiled investment, which we have never seen in the history of oil. francine: if we go back, the price per barrel, how much stress doesn't put on oil producing countries and companies, and you are saying less investment. is there a risk that it shoots it,and we do not realize and it goes back up? >> very low investments for the in arojects, which means few years time, there will be a strong upward pressure on prices , because there will be more this is very serious, and the second is the economies of major oil betterrs, they are in

shape, and they may even be in worse shape around these levels. francine: but you tell me we are creating a shot. we have the potential of creating an oil shock. is that right? >> i would not use the word "shock." becausean put pressure of the lack of investment two years in a row in the oil sector. david: that is francine lacqua. let's go back to ramy. we are looking at the worst loss since october 2014. toy: that is why, but i want look at the positive side of things. there are some stocks trying to make a turnaround, and one of those is apple. by 1%, butill down it is off of the lows of the day. it had been down by as much as

3%, and that is after they talked about iphone sales not really giving a boost for the through 2016, maybe 2017, but the new news that i was looking at is that apple has applied for permission to open its same-store sales in india for the first time. apple has been looking to china as a growth market, but india does not have those retail stores there, so that may be a key to future growth. besides apple, let's look at another tech stock. had been turning into the green, but now it is down. it has been up in really the last half hour or so by about 1%. earlier, it had plunged by about 10% on the news that u.s. domestic subscriptions did not hit that 1.6 million subscription average that people were expecting. it came in at about one point 5 million. but global growth came in at 5.6 million subscriptions around the

world. also, chesapeake i want to look at. this one is in the green, 3.5% right here. right aroundt pop the 130 mark or so, and i am curious about what is happening here, because i was looking at the bloomberg terminal. it might be because investors are seeing a bottom p chesapeake 15-year lowit a yesterday. in addition, unitedhealthcare is also making a move, making a move higher because of what is happening in health care. the least of the laggards down by about half of 1%, and if we can go over to the unitedhealthcare share price, we can also see what is happening there, and, david, is up about the 130 mark. david: ok, ramy. and another company is close to a deal.

we are seeing the share price really spiking on this news. says they are moving closer to a deal with a china-backed investor. more bloomberg news coming up after the break. ♪

david: welcome back to bloomberg markets. i am david gura. as it been a while since you have upgraded your iphone? don't worry. you are not alone. replacements have been slower. apple has asked the indian government to open stores there. we turn now to our bloomberg editor at large cory johnson and a tech media expert. let me start with this upgrade news. to be a, there seem higher incidence of upgrading there. that breaks down by carrier, as well. ory: yes, we are still kind of

progressing through the policies. however, that is about to change and that we can now in some cases, we will be forced to buy our phones on payment plans, and i think that will provide an opportunity for everyone to start to upgrade their phone more often, so when you look at willollowing years, you see people upgrading their phones more often, as long as apple can continue to improve their phones. me go to you. there are a lot of iphones just sitting on the shelves. that we will start to pay a monthly bill to apple, and it will pay for our phone, and it may include some music or some apple tv or maybe not some tv. he might be using the watch for not using the watch, but it will be sort of a regular part of our spending and that the company will end up with a very

different sort of payment might much more resemble a telecom or a cable company in just sort of the consistency of the payment. quest it is happening in real time because the operators want to do that. like verizon. it will help them when you are being charged $25 a month to give you a new phone and keep you with verizon, so there is a method for them to do that. it just takes time for people to process it. make itim they want to simple for their customers. the reality is by forcing you into the payment plans, they can hold onto longer, and they can improve the economics of their earnings. david: we looked at these reports of a lot of these iphones stacking up. is there something fundamentally wrong with the success of that model, or a people looking at or model, or did apple get something wrong?

>> i do not familiar with the survey, and it is a big world, a lot of dynamics, but the reality is the vast majority of iphone users still have legacy models. not a question of whether they have a six or a success -- have a 6 or a 6s. maybe apple upgrades the smaller phone for those type of customers, so i think you have to look at the fact that while we look around here, and it looks like everyone has a 6 or a 6s, most people do not. most people have a legacy product. now, it is incumbent on apple to improvementough that you get excited about 6s.ng a 6 olr a 6 -- or a to thelooking ahead earnings report we got after the bell yesterday, what did we end up learning?

cory: one in a row. the quarter was a disaster. they had guided way down on earnings-per-share that quarter and even missed that. had they not change their tax rate unexpectedly from 20% to 15%, they would have missed by even more. sales wereare terrible. it had not increased for 16 quarters in a world. cory, ok, walter and thank you. coming up, more coverage of the global market turmoil. that is next on "bloomberg markets." ♪

. .

told >> it's 3:00 p.m. in new york, 8:00 p.m. in london and 4:00 p.m. in hong kong. welcome to "bloomberg markets." good afternoon. i'm betty liu. it has been a whirlwind of a day so far. mass selling across all the major indices. at one point the dow down up to 565 point. we're coming off our lows of the session, particularly with the nasdaq. we want to get to the markets desk. >> it has been a day of superlatives, for sure, but we are in crawl back mode. the s&p 500 is down by about one point 8%. the dow is down by about 2.2%. the nasdaq crawling back, down by about only .1%. at one point at the worst point of the day, these were all down on the order