scarlet: from bloomberg world according to new york, welcome. alix: here is what we're watching -- >> we have the power, the willingness, and a determination to act. mario warning from draghi says the economic wrists are growing more stimulus might be necessary. scarlet: stocks and oil are bouncing higher at this hour as markets recover after yesterday. will this rally last? alix: emerging markets are feeling the turmoil this year. governor willxico join us from davos to see what he will do to prepare mexico to weather the storm. scarlet: we want to get a snapshot of today's market activity at go to the markets desk. green hours for now? ramy: [no audio]

it looks like we have technical difficulties. the stock a look at market, the dow is up by 242 points. where sitting a 1% rally. it is what we were hearing yesterday. we were oversold that it's not surprising we were seeing some kind of rally today. can that continue? scarlet: you had the attempted recovery that lost steam after a while but we seem to have picked up where we left off. alternative to groups are higher led by energy stocks, up 3.7% so far today. -- mirroringing the increase in oil prices. oil is up inching to $30 per barrel. wex: it's confusing because look at the department of energy inventory and we saw a 4 million

barrel build that was more than estimated. we also saw a building gasoline but we saw a slight draw in desolate inventories which was -- in desolate inventories. -- distillates. scarlet: we want to get you to the headlines to check on what else is going on . mark: the syrian peace talks may not start next has planned. u.s. secretary of state john kerry and his russian counterpart could not reach an agreement in meetings in zurich, switzerland. the issue is gets a seat at the table in the two sides cannot agree on which syrian opposition group should be labeled terrorists and barred from the negotiations. vladimir putin probably of a former russian spy. that's the ruling today by a british judge. london 10soned in years ago allegedly by two

agents of the fsb. a click of president vladimir putin and russia is dismissing the findings. -- inals in syria lyon sierra leone says another person has a ball and it's the second discovered in the six days since the united nations declared the epidemic over. those who had contact with the patient are being monitored and the epidemic has killed more than 11,000 people in west africa. as the new hampshire primary nears, john kasich is rising in the polls. he is second in five out of six state behind donald trump. he is tied for second and the other polls. -- in three other polls. scarlet: thank you so much. 2015 -- 2016t

economic summit in davos. the world bank president was with us this morning. >> the emerging markets are facing a lot of headwind. the three major factors affecting growth are the over threeycle is years ago and commodity prices are low and will stay that way for some time. trade is down. there is increase in demand in the united states and europe that that has not made up for the demand in export .oriented companies had its hard to get access to capital it's moving to safety with increased rates in the united states. capital is difficult to come by and it's affected byre-. risking becauseof the basel requirements overall, growth and a mixture for the emerging market will be over percent. that includes brazil and russia.

it is not as bad as we thought that there is a lot of difficult situations where we really need to see leaders of the emerging tough countries making decisions and making the structural reforms we know they need. david: you mentioned trade and of you look at it as a percentage of gdp globally, it's down slightly. what is the cause of that in what's the solution? there is increased demand in the united states and some increased demand in the developed economies. exporters, the countries that have seen the value of their currency go down, that decrease in demand has affected global trade. we think it will pick up over now, theseght difficulties in the emerging markets, we see it as an opportunity. our business is booming. keep looking for more capital and are looking for policy advice are coming to us.

this as anng to see opportunity and low commodity prices will be around for some time. this is the time to think about new growth. i was just in colombia and that's the conversation they are having emily tickets healthy. david: tell me about your business. you are investors in developed economies. where are the best investments right now around the world? >> we still think the opportunity for large growth come over 10 or 15% are in the developing countries. we think there are huge opportunities in infrastructure and africa. most people running funds are not thinking about investing in central africa as a way of balancing their portfolios. they should think about it but our business is to go to places that normally people would not think about for investment and structure deals so they feel this is something they should take advantage of. these pension fund managers do not have the ability to really

assess risk and reward but we do. we have been in these countries for a long time and we give loans for specific projects and others are generally to support the budget. to get the next but on any a bank issue related to the economy or health care or education, we have somebody who either is the best expert or knows the best expert. china,come to us like our latest big project is they assess to help fix their health care system. a thorough study of their system versus the best systems in the world. my expectation is that china will make changes. the president will say will change the system and they will get on a more effective for better health. as you look at the

markets, what is your best advice about what people should be wary of or excited about? >> i think they should be wary about reacting to market fluctuation on any given day. with the chinese government and the minister of finance in the central bank governor. these are top nationals. they have been a little surprised at how quickly the world will react to changes in policy. my advice is to try to understand the fundamentals. what we see in china is a very thoughtful transition to a different growth model. we are not looking at the fluctuation or the policy changes, we are looking at the basics. andnow their rate of growth

investment has gone down since 2009 and we know. that consumption has gone up we know that the services industry is growing quickly. the transition they have been saying they will make they are actually making. i still think you would be crazy not to think that china is a country you got to do business with. that was an interview with the world bank president from davos. as we bring you the latest from soros will be giving his speech to be followed by a question and answer with francine lacqua. that is an exclusive interview comingoday the scarlet: up in the next 20 minutes, the european central bank is leaving rates unchanged for now. mariota draghi is hinting more help on the right alix: we will have an inclusive interview with the bank of mexico governor. scarlet: oil prices rallying today but few traders believe this is an end to their price plunge. ♪

alix: welcome back. it is time for the bloomberg business flash. a surprise my labor market last week, because time claims run implement benefits rose to a six-month high. 293limbed by 10,000 to thousand and plunging oil prices may lead to more job cuts in the energy sector. coca-colahe ceo says -- the ceo of coca-cola says chief commodities like gasoline are driving consumer spending and boosting sales. j.p. morgan chase has left a message investment bankers -- take it easy.

a newnk rolled out program today encouraging workers to take weekends off unless there is a deal in the works. the bank is among a growing list of wall street firms making efforts to improve the worklife balance. that is your businessflash. work scarlet:/life balance is a lie. scarlet:let's go to our markets desk. you are focusing on analyst calls? ramy: first, we go over to ge. much at session highs by about 3.2%. is citibankreason is initiating a column a stock for a by enterprise target of $36. is citibank analyst says ge a top and the diversified industries sector despite the recent run in the stock. last year, they saw a rally up to 3% another stock and getting

a bump is home depot. highs, by a session little more than 4% after jpmorgan reiterated its overweight column the stock. jpmorgan says home depot is seeing impressive demand with transactions leading sales growth and this year will be the orr of the national home guy girl and will drive sales. rally in the stock of the 5% last year it grubhub is going the other way. it's down by about 1% but off of its lows for the day. the reason for this is in part because the food delivery service come up against stiff competition because of another delivery service and that wouldbeuber which said it go into food delivery along with amazon prime. it cost and feed

advantages. it has about 400,000 drivers across thecountry already and 16 million users in the u.s. grub stock is down by 60%. this is the anr function, the analyst recommendation and cream means buy and yellow means hold and red means to self. ever since grubhub was a public company there have been no reds whatsoever. it's interesting because the stock price is been taking a hit and it's adam all-time low alix: thank you so much. mario draghi left key interest rates not change but he is ready to act. environment, the euro area inflation dynamics continue to be weaker than expected.

would therefore be necessary to review and possibly reconsider our monetary policy stance at our next meeting in early march can scarlet. alix: joining us now is dan moss. he said there are no technical limits the size of its deployment. what does that mean? >> that's a great question, that line about technical limits came a little later. right out of the gate, the second or third sentence of his he said things, have changed in our target is in jeopardy and many to do something. the line about no technical limits as wondering if they might do more than just buy bonds. could they by corporate debt? if they want to be bold, they could buy etf's but they are

probably not there yet. scarlet: is that a possibility? technicale about no limits has attracted attention but it has been overshadowed by the big bang of his broader message. once that wears off and people start to look for the march meeting, what might they do? they might come back to that comment. alix: where is the feds communication ability? they underwhelmed of the market market felland the against the dollar when mario draghi started speaking. did he do the right thing? is he communicating correctly to the market? has foreshadowed something is coming but the problem they get into in december where they signaled something was coming in december and they did do something, cutting interest rates further, but they did not of that's whatch people were looking for. they will have to be careful there is no committee occasion

missed you this time around or the move you saw in the euro will just go the other way. scarlet: what does it do to the credibility of the ecb? after the december meeting, they failed to meet expectations. >> he cap referring back to his at thethe next day economic club of new york where many people thought he made a very powerful presentation. couldn't he have said that in this press conference? of the was passed question, he said stuff has changed, what do you expect us to do? nothing? target is in jeopardy and events have happened, we've got to play the hand we are dealt with. alix: what is this do for the fed? an interesting situation because unlike the other major central banks, they have started raising interest rates. drug he, janet

yellen does not have a press conference next week. that could be a blessing or a curse. it's a blessing in the sense they can craft the statement about theire. it could be a curse because there will not be much room for her to elaborate and people can read into a things that might not be there. they will have to wait for congressional testimony or the press conference in march to scarlet: it seems to be a blessing right now because no officials of made any comment on market volatility we have seen. one thing mario draghi mentioned was to press the european leaders to do more on the fiscal front. what evidence have you seen that they are following through on that? made a reference to fiscal policy becoming somewhat looser. i don't think many people have really seen that. referringa constant to the central bank how the world as their colleagues in the

fiscal side to do more but they cannot control them. they feel they are left holding the baby in scarlet: what is he referring to when he says the fiscal situation is getting looser? to theight be referring fact that some of the hard-core austerity rhetoric which were common in europe at the peak of the eurozone crisis, you don't hear that so much anymore the alix: that's a good point -- when you look at what the euro did after, did that reaction surprise you? what is the commentary around the range bound euro for the next few months? that is going to have implications on a stronger dollar. of hisn the forcefulness comments from the get go, it's probably not a surprise that we saw the euro weakened significantly, almost immediately. dide goes from here will depend on how they calibrate their language between now and then next meeting. scarlet: thank you so much.

we will go to jonathan ferro. scarlet: he's in davos. alix: he has an interview with the mexican central bank governor didjohn: thank you very much. governor, thank you for joining us. it's a very cold evening. morning is so this at a fresh hello you said the dollar auctions have found the soap trading. do you think the current mechanism and the amounts should continue the on the expiration date of the end of this month? >> that is something we will have to deal with next week with the minister of finance. there are different things going on right now. the price of oil has fallen dramatically. a currencyes depreciation can the mexican so

is strong so we will have to evaluate everything together to see if the intervention is the answer to. john do you think: it's actually working? >> we think it's working. what you think because the objective has never been to fix a certain lever or defend a certain level. it's to smooth out the variations. and more than anything to what to show in the market. those objectives have been achieved. in that sense, we feel comfortable with the mechanism. as i said, we will revise it in the coming weeks. when you make that decision about revising or

extending it, will you have a look at increasing the size of it as well? >> again, it depends on different factors. for me to attempt any amateurs that might change. you said it emerging-market economies and central banks should get ready for a severe shock. what did you mean? >> i think the last couple of weeks, we have seen there has been a lot of volatility in the markets. some markets have lost look 50. there has been some adjustments in foreign exchange rates. i think they are not really guided by fundamentals. more than anything, they are guided by the lack of liquidity and probably some crowded trades. it's important markets have the conditions to work it more than

anything, governments and central banks and ministers of have to try to hold as much is possible there to box to try to assure -- to build their toolbox to try to assure liquidity. me an examplegive of what would be in the toolbox? >> in mexico, one thing we did long-terms to scrub interest rate risk short-term interest rate risk for market participants. you have uncertainty and somebody would want to get rid duration, they can do it without leaving the country. and use up swap long-duration for short duration, you might end up with a better result. the mexican so slipped

into a record low against the dollar it the direction is pretty clear. reflectit does not economic fundamentals. does it concern you? we are on a floating exchange --e right now the the change the exchange rate has to do his job. there's a big shock and the price of oil. the price of oil has weakened around 25-30 four cents and a couple of weeks. -- 25-30 four cents in a couple of weeks. . that's one reason why it is not attuned to the fundamentals. once the dust settles, my sense is that the market will be calmer and much better fitted to

evaluate risks and my sense is that the so should return from the levels where it is now. john: as you look at the mexican regardless of whether you think it should or it shouldn't, if it gets weaker, would you consider direct currency intervention? >> we have been doing some intervention. it will be rules-based. to leteve that we need the floating exchange regime rate work of one thing is to smooth the fluctuations on the other is to defend the level . rules ofhe marketplace intervention have worked well for mexico. it allows markets to evaluate the power of monetary policy. that is another instrument we have.

john: when doesn't it become an ultimate concern? >> that's something difficult to project. right now, we're happy the way things are. -- ourthe boxes perking toolbox is working. we are happy with sharp depreciation but i think it's a worldwide phenomenon. it's an issue where markets are re-risking and there is the perception that risks have increased. fundamentals will probably show market participants that we should not be considered to take risks. we have additional support from the imf. we are under surveillance and that guarantees strong fundamentals. i am happy that christine

lagarde is being nominated for a second term. i think we have done all the hedging we can. we have contracted additional liquidity support through the fcl and on our work from the policy point of view. with the floating exchange regime, there are over shootings and right now, we are seeing an overshooting in the mexican peso canjohn: there was talk that you would yourself in the running for the top job at the imf. is that ruled out? >> not right now. christine lagarde has done a wonderful job. the membership should give you the chance to continue working. i'm sure she will have a very

good additional five years. john: thank you for joining us today. scarlet: thanks for the good work. as we go to break, quick check on markets. producer has noted, they are off their best level of the sessions. we're still up by better than 1.3%. another way of looking at what we are seeing is to consider the intraday spring of the dow. this is another way of view in the wild swings in the dow industrials. we have had triple digit moves in 10 of the 13 sessions so far this year. in six of the past seven sessions including today. we have had a spring of 230 it's today. --terday, it was five or 44

539. unbelievable, you can credit the rally today to energy of oil up by about 5%. because of that, you are seeing the best performers like chevron adding 12 points and ask him about nine points to the rally. it's an evening out of the positions. it's a far cry to say the worst is over. absolutely, we will continue to monitor market moves. let's go over to mark crumpton for first word news. obamatoday, the administration may announce new visa rules for europe and travelers. the requirements are aimed at those were dual citizens of iran, iraq, sudan, or syria or those who have visited those countries last five years. the rules are designed to make it harder for europeans have fought for islamic state to

enter the u.s.. the german finance ministers of the european refugee crisis will cost more than expected. davos, he said nations will need to spend billions to deal with the biggest influx of refugees since before. two the eu is still trying to come up with the $3 billion it promised turkey to help refugees. at least nine people were injured when a 6.4 earthquake hit a remote region of northwest china. the quake caused cracks and 20 homes and other damage. fearful residents ran from their homes into freezing temperatures. nova tallies have been reported so far. the detroit public schools are back in session after massive sickout by teachers closed most of schools. 90% of the classrooms were close wednesday. the school district went to court to force teachers back to work after more than a week of sick outs. global news to four hours per

day for the bloomberg first word desk, i am mark crumpton fit alix: china is the focus of attention at the world economic forum in davos this week. scarlet: in a panel discussion, 2 of the chinese delegates heard for a call on their economic policies. >> there is no basis for china to depreciate the currency. if you look at the fundamentals of the economy, we have a very sizable surplus. the economy is growing at 65% >> having a certain degree of volatility is all right and it's compatible with this market-driven principle that china is adhering to. when you say governments can match volatility, if volatility becomes excessive, yes, intervening is legitimate. >> most market participants continued believe -- continue to

believe that china will devalue their currency. this is one of the areas of volatility. how will the devaluation go? will it be very slow? china is sticking to market economics. it has been declared publicly to the world that the market will play a decisive role in economic development. >> if you compare also the politics of the government, there are no loose cannons running china. system, youat the have to be a competent leader and devoted to the country. >> the investors are not getting the same message as we are getting. china may be the elephant in the room but one central

banker says worries about china are overblown. president of the reserve bank of india says the chinese economy is not falling off the cliff and markets will soon stabilize. >> the markets had reached a level where people were reaching when the correction comes in on what basis. i think china is a trigger. oil prices are a trigger. faces are trying to find an appropriate level and have been inflated. you had some volatility and a lot of have been telling us to expected this. at what level does it settle? i think the news coming out from china is not changed significantly over the past few weeks. there was a certain change in byi but this was not about depreciating it but adjusting to the new basket. i think one should take them at value. oil this is another issue.

with low prices, who are the leopard players who were exposed and what happens to the countries exposed because of low prices? window countries like venezuela already have problems but what about countries elsewhere? there are uncertainties that they are a trigger to already high levels of asset prices. china.me ask you about what kind of numbers do you expect china to grow at? you forecast these things. what sort of number are you looking at? >> do you focus on the efficient numbers or the various industries that together? my sense is there is underlying growth in china. it's not falling off a cliff. >> maybe 6%-7%? the would go with that but real question is, what does this imply for the various commodity

markets? in terms of the quantity of there is still a lot of growth coming from china in terms of dollars. the percentages falling over time and that is naturally to be expected of an economy growing richer. therefore, it will slow but i'm not excessively worried about chinese growth it the big question is how this plays with leverage. where is the growth? francine: how can we be sure that the chinese will not devalue the yuan? let me say that the chinese move to a basket is understandable. the dollar is trending but the yen and the euro are weakening. clearly, some of the actions that have been taken to weaken currencies have effects else. see the chinese move

not as moving toward these things. in the heart of the financial crisis, we saw faultlines. you were roundly resized at the time for many dead by many economists. larry summers has secular stagnation and has a mandate to say we need to maintain confidence. how did the developed countries maintain confidence and avoid secular stagnation to assist emerging markets? >> growth would be good. we would love the industrial companies to grow faster. the real question is how we can make that happen. my sense is that monetary stimulus has run its course. exit is an issue. once you are in a situation, how do you get out of it without creating an abrupt change in asset prices.

broadly speaking, the answer has to lie in looking at the underpinnings of the structural reforms will know and love but can't actually do it alix: that was the reserve bank of india from earlier today. george soros will be giving a speech of the world economic forum in davos followed by a question and answer it that is an exclusive conversation coming up this afternoon that minutes,the next 20 well the u.k. out of the european union? richard branson says britain needs to use some common sense3 . he will give us his take. andlet: the oil global glut 10 is to mount at two dollars barrel. alix: we will hear from the bti chief technical strategists called the rally. ♪

>> welcome back, we have stocks trading higher and the averages are up more than 1%. the composite index has pitted up and down at the nasdaq in roughly 2%. it's been led by biotech. 1%had been down by more than earlier and now is fighting to reclaim this up of last years lows. whether that could happen could take an important telling what happens overall. balancing out the biotech weaknesses technology including

shares of the chipmaker touring today after the company did third of fiscal sales that beat estimates and keeping guidance for the fourth quarter unchanged. what stands out is the fact that inx is outperforming the index itself. shares of alchemy is plunging. it's the worst point drag on the index. one analyst says it's a major step back as the stock has its worst in they plunge since july of 2002. that's your markets update. scarlet: you're watching bloomberg. alix: this is your global business. betty: scarlet: with global markets in a downward spiral, we

hear from the imf on her biggest concerns. deutsche bank is expecting to post a big loss in the fourth quarter. behind their current struggle? the debate over the possible exit from great britain over the euro and what does richard branson think of the possible move? let's start with comments by christine lagarde speaking in davos.she explained what her biggest areas of the moment. >> the biggest concern is to make sure the global economy is actually on track to providing of growth to respond to the needs of those people who are looking for jobs and those people expecting more sustainable growth. scarlet: that is the big concern. post it bank expects to billion dollar loss in the fourth quarter. they are setting aside more money for legal manners and is taking -- in the setting aside money for retirement costs.

to vote in likely whether to leave the european union in the next few months. richard branson weighed in on the brexit debate. >> i think it's likely to happen this year. i think it would be a great mistake if any country that the european union was to leave. scarlet: there is a battle over the struggling japanese electronics maker sharp did foxconn is offering one $5 billion. sharp is leaning toward taking a cheap rescue by another corporation. alix: it's time for our quick pick. oil as areic is how set to it's one of the most-watched commodities in the world come up to $4 trillion

market. the factors that set prices are more complex than supply and demand. oil hithe situation -- $107 barrel in june of 2014 even as the underlying fundamentals deteriorated. demand started to slow production continued to rise. chinese imports sagged and europe teetered on the back of a recession and u.s. supply hit a record. the market got wind of this and oil began a rapid descent. wti reached a new low falling under $27 per barrel. how did we get here? middle east exporters are engaged in it place more to defend their market share. decision,t recent opec effectively stopped trying to act as a cartel dropping any semblance of an output target and maintaining production levels. at the moment, their output is more than 32 million barrels per day and iran hopes to export another 500,000 barrels a day.

. now we go to the political issues tensions between saudi arabia and i run heightened at the beginning of the year me situation that once might have that military action. could cause a rally in places traders are more focused on the massive oversupply in the market . trumping any geopolitical risk what happens now? companies like bp are bracing for long-term supply slumps as the supplies outpaced demand. in december, congress lifted the united states 40-year-old crude export ban. the global population is using less oil. oil supplied 31% of the worlds energy into thousand 12 down from 46% in 1973. as more groups: less oil consumption to reduce carbon emissions, it could fall even further. that is today's quick pick. been yourhis has global business report and for more stories, visit

bloomberg.com. oil, earlier today, we spoke with jeff curry at goldman sachs. when we think about brick dish about reaching the storage capacities, they are indiscriminate where it will happen geographically and what product it will happen in as was the timing. yes, iran just puts more pressure on already oversupplied market whether it's in print or wti, it's open to debate. alix: that was a snapshot of my interview in you can catch more of that interview later today at 4:30 p.m. eastern. his call for oil over the next nine months is staggering. scarlet: he was out front with eight to dollar call it alix:

citigroup was first but that's what he's saying. up, the fed is expected to leave rates unchanged next week but a rate cut could be in the line. ♪

alix: welcome back. scarlet: let's get a check on the markets. the s&p 500 and the nasdaq are rising at least 155%. 1.25%.

we should note that oil is up better than 5%. wti is now up putting $30 per barrel. it had gotten to a level that was a 12 year low but people said it was far too overdone. alix: it's a 5% swing which is very extreme. jeff curry said a $40 range would not be unusual. that is a lot of volatility that will collate the market did there is a correlation for stocks and oil that has not been there to scarlet: it has increased over the last couple of months. they he says usually when could relate, it's more of a demand story. when there is an oversupply, they don't tend to relate that's the situation we are in now. it's unusual. scarlet: speaking of fundamentals versus market reaction, the fed is expected to

leave rates unchanged at next week's meeting but a rate cut may not be off the table. week, one analyst expects a reduction in interest rates in 2016. an increase in interest rates was ill-advised in december. they should have done that more than two years ago when the bubble was smaller. that, i looked for a rate cut sometime during 2016. it's just a matter of whether they raise it one more time in march before the cut. is theining us now chief financial economist at musg union bank. he is not alone in this theory. >> a rate cut, wow. .25, don't doto it. the fed is out of bullets.

a you were to go into recession now, god forbid, it has not happened without the fed engineering it -- every recession we have had since the mid-1970's has been caused by the fed raising rates too high to control inflation. they over did it and it came back down. this time they have just begun. an effective it's policy tool to go from .5to .25. really movedoesn't the needle but talk about the disconnect. markets are supposed to be for discounting and data is backwards looking. what are investors getting wrong? >> i don't know because we are following oil free much right now. oil is very urgent. ironically, when oil first started coming down a

year-and-a-half ago, oil was going to be good in the imf boosted their gdp and consumers were going to buy a lot. all of a sudden, the optics are wrong. people are focusing on layoffs in energy companies and banks will struggle with some of their loans on energy companies. it has pitched but we are forgetting that oil is beneficial for the consumer. oil is also a good think the economy. we are not off track it for the economy and expect the fed to keep raising rates in march or june or september, december. on target with what they were forecasting. >> i hope so. alix: the things people tend to highlight is the very high personal savings rate. the demand might not be there the goods we were expecting in this recovery.

also the reason increase in jobless claims. how do you reconcile these factors? >> i don't like shouting fire in a crowded theater. want to mention unemployment claims. they have gone up. it looked a little odd but this is the time of year -- we said years ago that god for bid the economy goes into a recession during the winter is unemployment claims go up. it's hard to seasonally adjust the claims. at the moment, claims are elevated and we need to watch them. it would not be a surprise if firms laid off a few workers outside of mining, oil, and gas drilling. i think the economy should be ok. as far as the consumer spending, it was rapid in the middle two quarters last year. it's come down to like 2% now in real terms. it's not that bad. i don't think consumers are saving that much of their incomes. to thell pose a risk

economy forward that i don't see a lot of risk beside this mixing up with china means for the side economy and the down of the commodity boom/bust cycle. i have been for these commodity collapses in the 1980's. it gets down to a certain level and then it hits bottom and that's it. scarlet: thank you so much for your optimism. as we bring you the latest from davos, george soros will be giving a speech to be followed by question and answer with francine lacqua. more bloomberg markets coming up. ♪

alix: 1:00 p.m. in new york, 6:00 p.m. in hong kong. scot welcome --

scarlet: welcome to "bloomberg markets." from bloomberg world headquarters in new york. i am scarlet fu. alix: i am alix steel. a rebound in stocks. bank presidentl mario draghi says monetary stimulus could be on the way. scarlet: the supreme court as immigration to its list of politically charged cases. justice stephen breyer weighs in on what it means for the country. alix: morgan stanley ceo james gorman says markets won't stay down long. first, let's go to the markets desk, where ramy inocencio has the latest on the lady rally coming back today. ramy: coming back in a pretty big way. we are off of our session highs.

still in the green. s&p 500 ended out on the order of 1.3, 1.4%. for both of these indices we are seeing a high not hit in the past week or so. the nasdaq is up by about 1%. this is in part because of ecb president mario draghi saying there could be stimulus in march and also because traders apparently are shortening off new stockpile numbers for oil, higher-than-expected. apparently traders are not being affected by that. going to my terminal, i want to show you what is happening with the s&p's 10 sectors. all of them now are in the green. we had seen some zigzagging earlier today where they were in the green. inost turned red, now back the green here, being led by energy of by 3.5%. not too far behind, telecommute occasions and consumer discretionary.

let's go into the s&p energy sector. show you how this has played out so far intraday. basically it has been a continuous climb ever since the start of trading today and we are just a little bit off of our session highs. 3.5%. 9 of the 40 securities on the s&p energy and a are, get this, trading on double-digit gains today. up.sol energy, 21% southwestern up by about 15%. a lot of this has to do with what is happening with oil. let's look at what of uti crude is doing right now. , off ofup by about 1.6% its session high. it did hit very briefly right here, about the 12:00, 1:00 mark or so, just above the $30 mark. we have come back down $29 and

$.93 there. natural gas. talked about how natural gas stockpiles came in. fairly volatile for most of the day. 10:00 those numbers came in, 10: 30 or so. we saw the sharp drop-off only to rebound. we're talking about the blizzard that could potentially hit the mid-atlantic as well as new england this weekend. alix: putting upward pressure on prices. thank you so much, ramy inocencio. scarlet: let's get a look at the new student mark crumpton has the headlines from the new stuff. mark: breaking news of this hour concerning a u.s. fighter jet. hascials say an f-16 crashed in northwestern arizona. there is no immediate word on the condition of the pilot. officials say the jet was assigned to the 56th fighter wing. the crash site is 85 miles northwest of the base in suburban glendale. 2 powerful shiite militias

behind the abduction of three americans last weekend in a southern baghdad neighborhood. that is occurring to an iraqi lease commander and western security official. the official confirms that iraqi and u.s. intelligence have narrowed the suspects down to those two groups. the identities of those affected have not been made public and no group has claimed responsibility. in other news, a for peace with the taliban from the sidelines of the world economic forum. vice president biden and secretary of state kerry made the case to support a credible peace process with the taliban to the afghan president and the pakistani prime minister. diplomats from afghanistan, pakistan, china, and the united draws have been meeting to what is called a roadmap to peace for taliban groups. they meet again in islamabad february 6. a british judge is pointing the finger at vladimir putin in the murder of a former russian spy. the judge ruled that alexander nenko was murdered by two

government agents of decade ago and those agents were working on orders that were probably approved by president putin. he was poisoned with the radioactivity -- radioactive tea . russia is dismissing the findings. oregon's governor says enough is enough. forces to is ordering end the occupation by the group. officials have taken a wait and see approach ever since. day hourws 24 hours a by hour 2400 journalists in more than 150 news bureaus around the world. i am a mark crumpton. scarlet: thank you so much, mark. china willing to keep intervening in its stock market. he spoke to bloomberg's executive editor john freire endeavors. alix: david, take it away. li madeice president

news in topmost and you were there for it. >> pretty interesting, actually. hasworld economic forum been this engine of economic growth for the economy for the past 20 years or so. now china is the source of a lot of the anxiety rolling markets around the world. vice president li came to the post with a simple message. his messages there are concerns about the chinese economy but everything is under control, the economy is rebounding, and ultimately, no one has much to worry about. d: what struck me about a reporting to see specifically focused on the stock market. from two or some extent what he said about the economy is what you might expect the vice president of china to say goodbye when we got down and talked about the markets for the past year, he sort of came out

with the point that highlights the differences between china's attitudes towards markets and what we in the west understand about markets could he said it is not in the interest of the communist party for investors to lose a lot of money and that stock markets, ultimately, speculation is a bad thing for the economy and the government is going to help people avoid losing money. that is a pretty different approach than what you might see in europe or the u.s. david: one of the differences in china is so many individuals are invested in the stock market, much more than in the united states. it is not like they have just been letting it go. they have been intervening quite a bit since last august. john: and they are prepared to intervene going forward. on one level, the stock market as a percentage of the overall economy is in that big, for what really concerns the party in beijing is the sense of the loss

of control. people in china are not that used to the freewheeling market that we have in the west. there worries when we see the big declines in the -- in shanghai or hong kong that we have seen on and off the last year, there were read it conveys the impression that that is where this drive, this reluctance to let go. david: it seems we have had fits and starts of invention good circuit breakers, they had to take it off. there is a big fall in the market. they have to convince themselves and their citizens that they can do this. john: and people here in dallas bigavos, that is one of the criticisms of china, that they are not communicating their strategy well. that uncertainty is one of the main sources that has prompted

the declines in markets and you see it here in davos. jack lew, u.s. treasury centauri, is saying we need more clarity from chinese authorities on how they will run these markets. china reiterates over and over again that he wants to open up, but it is not really sure how it can do that without relinquishing control and that is one of the big tensions at the heart of chinese policymaking. having been there and listen to what he had to say, did you gain any clarity, other than they are going to do something? i think this first start stop intervention missing over the past year comes in ways. i think there is an understanding that some chinese officials that they do need to improve their communication, but really, what the conversations are in policy makers are goals, it is difficult to clean right now who has the upper hand. ,hen you talk to investors here

they are not expecting much more clarity in the weeks and months ahead. d: interesting that vice president li chose this forum. who does he want to communicate with? it is global markets. -coming here for most of the last 10 years, enjoying these very -- very cold weather we have had here. this is the first time i remember the chinese policymakers talk to directly about financial markets and how policymakers approach it. why he came here -- this is the broadest platform could finde like li to communicate this message. the timing is very important. question these huge marks over the chinese economy and it is for you to say he might not have come if the outlook for the economy had invited than it is. avid: john fraher is in charge

of everything editorial from bloomberg and davos. scarlet: david westin with our very own john fraher. alix: coming up in the next 20 minutes, stocks in rally motive today for the bears just taking a breather. scarlet: the global economy is solid to according to james gorman and michael corbett of citigroup. but they say it takes the market sometime to really realize that. ♪

alix: welcome back to "bloomberg markets." i am alix steel. scarlet: i am scarlet fu. time for the biggest business stories in the news right now. the ceo of coca-cola says the

doom and gloom of the stock market has not hit consumers. he spoke to bloomberg tv in that commodities are driving consumer spending and boosting sales of soft drinks. bex: ford and lincoln will the few auto brands on the sidelines during the super bowl on cbs. audi, hyundai, honda, and kia all buying time. hydrogenhonda's powered car will go on sale by the end of the year starting in california. it will list for $60,000. it will be the second fuel-cell vehicle on the market. that is your business flash update could the s&p 500 in rally mode, but it is not far from an official correction, down 10% of the highs. alix: many believe the markets oversold but that does not mean a sustained bounce anytime soon.

joining us is the chief technical strategists for bt id. if you come in settlements is the relative strength index of the s&p 500 over the past year. the top panel is the price of the s&p 500. we increase the bottom panel. gets to the greenland, it is oversold and ripe for recovery. alix: katie, is this where we are in? katie: we are oversold and it is a reflection of downside momentum or negative momentum. coming into the year, i felt pretty bullish. note breakdowns to speak of for the major indices. but really, that first week of the year, everything changed. i found myself really throwing in the towel on the bullish view. i say that really for two major reasons. loss of momentum was more than just short-term like the previous pullbacks we had seen, but also, we saw a lot of

breakdown. on the stoxx taking out support levels -- a lot of stocks taking out support levels. scarlet: what is the relationship between the breakdown and the overshoot to the downside? katie: once you have a breakdown, unfortunately, there is less support, less potential buying pressure for that stock. even if you get a snapback rally, it becomes overhead resistance potentially going forward. alix: where is that overhead resistance now? tom demarco told us yesterday we could see a 5-8% rally and another leg down on the s&p. what do you see? katie: i definitely respect tom's work and i use a lot of his indicators, and as indicators combined with the overbought-oversold indicators, they are set for a nice bounce could we saw so many market internal measures reach these massive extremes. the catch is with all of this that the conditions started to appear at the start of the year. in that first week of the year,

we have seen no reaction yet. weme that means the bounce will alternately see will be unimpressive. scarlet: you mentioned a leadership that there is been a rotation the last couple weeks to more defensive areas of the market. how do we determine whether we are at the start of the middle of the rotation? katie: to me, when you see the defensive sector, that is when you have to believe this is sustainable on the downside, and that is the utilities sector for one, consumer staples another obvious one, and health care, not so much within the biotech sector, but more so far not. the defensive rotation is led to breakouts. if you look at something like vs.consumer staples etf the s&p 500, you see a break out there. alix: inside the bloomberg terminal you are looking at the s&p versus the moving averages. it has taken out its august low. what would be a significant bottom for stocks?

what would be the overhead resistance you watch? katie: the low is being tested. certainly we are already seeing the nature of the breakdown in other major indices here and also globally around the world. to me that would confirm a breakdown. once that occurs, resistance gets ratcheted down from the 2000 level where it stands currently to the 1867 area. scarlet: katie stockton, thank you so much. alix: not very cherry. not a delightful recommendation for stocks. still ahead on "bloomberg markets," big banks turning in a profit. how did they do it? ♪

scarlet: welcome to "bloomberg markets." i am scarlet fu. alix: i am alix steel. 2015 was a good year for financials.

generatedajor banks $70 million in income by cutting expenses to the lowest level in years. scarlet: that made it their most profitable years since before the crisis but this month the sector is down 12%. cory johnson and carol massar have more on whether this is a good area to invest in. carol: thank you so much. we welcome everybody on them or tv. this is "bloomberg advantage" on bloomberg radio. carol massar, cory johnson. ryan, nice to have you back with us here on bloomberg will stop talk to us about this environment. we are trying to figure out -- yes, a lot of names have been beaten down. is it a buying opportunity or do you hold off and wait for things to settle down? ryan: thanks for having me. if you are looking at the financial sector, you need to look at large caps and small caps. i know the large caps off a lot of headwinds facing them when it comes to the price of oil, energy prices, exposure to

energy loans, which they have all done a very good job of quantifying this past quarter. but how much more are we going to see their? carol: do you feel comfortable with their exposure and is it manageable? ryan: i think it is manageable. cory: you think it could be worse? done i think they have their job and when you are talking about economy that has $2 trillion in assets and it is 1% or 2% of the overall loan portfolio, they could a significant losses there, which would hurt the near-term earnings, but it is not going to take on the capital as much as you would think. cory: and the loan-loss reserves they've been talking about boosting. they have been boosting those are many, moving the 5% from 10% of the overall portfolio. they like to break it out for you so you can see how much is dedicated to the energy sector versus the overall loan portfolio. carol: what about the rate environment?

we have been seeing with the fed starting to raise rates this will be good for -- they are doing it really slowly. who knows with the recent market volatility with or not it will hold off longer than everybody anticipates? how is that playing into the outlook for financials? with resumes, many of these company's are going to see the margin expand. we are at the situation with the margins are the lowest they've been in 15 years. i think that is more what is going on now rather than just focusing on what is the energy exposure. if we had issues with oil, to continue to stay -- the total price of $28 a barrel for an extended amount of time -- it is more about how does that delay the fed? re: not going to get rates at all this year? probably going to get them -- are we going to get them one of two times to increase? that is what people are focusing on more with financials. cory: i do wonder if some of the of our analysts

suggests that bank of america will be better positioned in the rising rate environment. but maybe we won't get the rising rate environment and it will be beneficial after all. a little bit had of rising rates but that doesn't do much to the bottom line. they get 25% of the tree five basis points flowing in the margins. they need to continue steadily -- say, two times a year, three times a year. small commit criminal -- cory: maybe it makes the fall in the oil price doubly bad for them. it also suggests that the fed won't hike rates, the fed doesn't hike rates, they don't get the benefit of that. yan: and we tend to think that that will be delayed and the rate hikes will continue to come , but the tone of how they will change their stance is going to change. but i think the other thing to look at here -- we run it 2 different funds. large cap financial fund and

small-cap financial fun. small-caps have done very well in the last 18 months or so. nothing has done well in the last 18 days. small-cap have underperformed large-caps in the last 18 days. carol: your small-cap fund has done better than most of you peers in the past year. give me a name. you like independent bank corporation. a decent portion of your holding. ryan: about a 4% position in the fund. -- justst are solid your solid consumer bank, commercial bank, outside of boston, south of boston. hit have a good franchise they've been very well, completed and acquisition last year. that is one of the things that is to drive the small-cap financials, the acquisitions. whether it is a company acquired out of the fund for the premium or companies that have continued to grow through acquisitions.

right now it is a harder environment for companies. cory: record levels of m&a last year. good pickings. -- ryan kelley from hennessy funds come interesting stuff. carol: absolutely. we appreciate it. alix and scarlet, back over to you guys. you are listening to "bloomberg advantage" -- scarlet: thank you, carol massar and cory johnson on bloomberg radio. alix: we will be talking to big banks and big names. highlights from davos. morgan stanley's james gorman, bank of america's brian moynihan, and citigroup ceo michael corbat. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment,

we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. alix: from bloomberg world headquarters in new york, welcome back to "bloomberg markets." i am alix steel. scarlet: i am scarlet fu.

mark crumpton at the news desk. maryland governor larry hogan has declared a state of emergency in advance of a major snowstorm this weekend. the declaration in effect until 7:00 a.m. friday. heavy snowfall is expected to arrive over the weekend. governors in north carolina and virginia and the mayor of the district of columbia have also declared emergencies. islamic state claiming responsibility for an attack in the sinai that killed five egyptian police officers. meanwhile, the coalition and syriasil in iraq says airstrikes are taking a toll. 6400 militants have been killed by raids in the last three months. the militants may have up to 30,000 fighters. a worker at the los angeles zoo has been hospitalized after falling into the gorilla enclosure.

city fire officials say the animals in need closure were secured while the worker was rescued this morning. the worker was strapped to a backboard and lifted about 15 feet from a planted moat and take into an ambulance. the zoo was closed when the worker fell. the exhibit his home to western lowland gorillas. global news 24 hours a day from the bloomberg first were desk, i am mark crumpton. alix and scarlet, back to you. this week the supreme court and us it will hear a challenge to president obama's immigration plan. the overhaul would save millions of illegal immigrants from deportation. scarlet: justice stephen breyer set down with jim grasso and michael best to see how this would affect the perception of the high court. gamma the court is becoming more part of the political process, political election cycle. theexample, you just took immigration case. as soon as you read articles

about it, the decision will probably come down in june and it will be part of a fiery debate in the presidential election. do you see the public viewing the court as more and more political? justice breyer: that is a very good question but it is one you have to ask yourself. as far as what we try to do, we try to do our job. our job is to take the cases that meet certain criteria and the we decided did meet criteria in terms of the country needing a decision in terms of whether the lower courts are split on an issue. we took it and we decided in regular course. you are quite right that the regular course is a case that is argued in april will in all likelihood it -- you never can say for certain -- in all likely good be decided before july. now, we follow our regular course of business. what the press likes is a matter you have to ask you and your

colleagues. it may be that if we go back 50 years or 60 years, it was very for an article about a appointed ation who judge or the party, the political party of the person who appointed the judge. today it is not uncommon. is it because there is a change in the judges? i don't think so. frankly, i don't think so. i think that the way politics affects the court is bested by paul freund -- best stated by paul freund, a professor of constitutional law very well-known 60 years ago. he said, using a metaphor, that the court does not respond to the weather. changes in the weather do not affect the court. but long-run changes in the climate, he said, might. and that is because over very long periods of time, different presidents appoint different judges.

not that they are different politically, though they might be, but because they might will have different philosophies about how law relates to the country, about how the constitution should be interpreted over time, in very general jurisprudential terms. scarlet: that was supreme court justice stephen breyer. alix: now for a quick check on the markets and company movers. ramy inocencio is looking at those for us. i'm looking at some the best and worst performers on the s&p right now. take a look at the bloomberg terminal. looks like on the s&p, 12 of the top 13 performers on the s&p right now our energy or oil-related. speaking, of course, to the rise of what is happening with wti crude throughout the day today. i want to talk about gender morgan. kinder morgan is the second top performer on the s&p right now. it is up by about 16.5%.

16.5%. it has been as high as about 18.5%, and that was its biggest jump ever, ever since it ipo'd back in 2011. the company says it will not increase spending as it had earlier plan. instead, it says it is going to reduce its budget and cut its payout to investors. another couple of stocks i want to show comes on the secondary oil companies -- that includes southwestern and one out. consol energy is the top performer on the s&p right now, up by little more than 18%. they have all announced plans to cut their expenses in the face of falling oil. generally speaking, from 2015 through today. on the flipside, though, the railroads not having a great time. canadian pacific as well as norfolk southern both down. canadian down about 2%. fourth-quarter sales fell about 4% because the railroad company

says it shipped less oil, minerals. the ceo says it plans to acquire this company, norfolk southern, but it still made -- may take some time. alix: thank you so much, ramy inocencio. let's turn to the economic forum in davos and the state of global banking. bloomberg had a chance to sit down with the heads of the biggest banks. start with citigroup ceo mike corbat. he says he does not see recession on the horizon. don't see it as a right now in the u.s. we have a puppy recovering consumer. you look at what happened -- healthy recovering consumer. in many ways the purest form of stimulus is the oil prices. it allows about $100 billion to spend a year. that is in the paychecks come in the wallets of our population. we have got to make sure they have the confidence to put that to work.

we have got to get more of it. in terms of the investment bank, you are ranked number five. michael: m&a is a business that depending on deals, you are up and down and we pledge anywhere from three to five. we think we have a good backlog. we think m&a stays active but it is going to be an important tool in the toolbox of corporate ceos as growth probably stays tough. if you look at what has happened in the markets, maybe some valuations just got better. stephanie: there you go. erik: the europeans are leaning into china and how to fixed income. credit suisse, ubs, which japan -- stephanie: morgan stanley. erik: even goldman sachs is cutting. is that going to make fixed income or profitable business for the firms like yours? at what is you look going on in europe, a lot of those institutions become constrained by leverage ratios.

the leverage ratio constraint, or do we have scale or do we have a pathway to scale? you have seen people pulling back and really focus on those things. we think that creates an opportunity for us. we have an upscale presence could we don't have a leveraged ratio as a binding constraint. we continue to take share in those markets. erik: given at the same firms are prioritizing equities as they retreat from fixed income, does it make it more sensible for you to put your eggs in the fixed income basket and maybe not to be in the intense equities business? michael: we are going to continue to invest in that business, but we punch below our weight. erik: what do you do? michael: we have invested in technology, research hit to set the bar here, we are not shooting to display some of van number one. we have talked about a couple places where it is probably worth somewhere in the hundreds of billions of dollars of revenue. scarlet: and here's morgan stanley chairman james gorman.

what is you think it takes to survive in the market environment? one word, bravery. of scarhere is a lot tissue from the financial crisis. throw in the noise about china, throw in where oil is trading, which nobody anticipated, this would take a very brave person, but by people will step in and to or three years from now they will say this is a buy option. erik: is that what you need to see first? before we see bottom, some clients have to start looking at this as an opportunity. james: i think so, but it might be too soon. we have seen the china numbers. 6.9%. is it really 6.9%? we hear people talking but will going below $20 barrel. i don't think you will see enthusiasm in the short run. stephanie: look at the massive swings in financial markets. much of this, many people say, has to do with dodd-frank and

the volcker rule. if they were not in place, would banks like morgan stanley be cushioning a lot of this, protecting customers, some might say? james: i don't think so. i think that is overstating it. what dodd-frank essentially did is recapitalize the banking system. by recapitalizing the banking system, you take away the risk of a run of liquidity. as that taken liquidity out of the market and contributed to volatility? i'm sure it has come stephanie, but more on the margin. this is a more visceral reaction to is the world going to be a safe place over the next few years from -- erik: all of the european banks appear to be trying to do what morgan stanley is doing. scaling back fixed income to varying degrees, but scaling back nonetheless, going big in investment banking, big in equities. what is that going to mean? our investment banking and equities increasingly competitive, and the business of setting prices and fixed-income will be left to a small oligopoly of big universal banks? james: they are all reassessing

the business model given the changes to the industry. this industry was operating with returns of 20-25% precrisis, with capital 40% of the level it is now. and that in all the other elements of dodd-frank is why they are pushed down to 5%. everyone sensibly is stepping back from that and saying what are the steps of businesses that, a, we are good at, b, are sustainable, and c, have the opportunity to generate returns above the cost of capital? werewe started and we fortunate we bought smith barney the time we did come we started relatively early but everybody is going to the same questions. alix: finally, bank of america chairman brian moynihan. he talked about job cuts and boosting the bottom line. brian: our turn on tangible common equity last year -- we have to do three things to get

it up. take expensive down loads of -- expenses down relative to revenue. and we've got to grow core loans. we have taken expenses down -- as i said before, we took down the headcount by 2000 people in the fourth quarter. it is not pleasant. a we just keep driving it down. the pattern to get there is those three things. what we saw it in the fourth quarter, fourth quarter of 4014, first-order 515, expenses were down 3%. we have got to keep that through. in all four quarters we had rising profits. the easiest way to improve profitability and boost returns is by reducing headcount? where will you be at the end of 2016? sub-200,000? brian: i don't know if we will be that low. in that headcount reduction we also deployed more and more

salespeople. you are making a double switch. you are taking out expenses from the legacy issues. you are taking out expenses by the application of technology. most important, you are investing in the business. in the fourth quarter, 2014-2015, 5% more salespeople. 3%, 4% while management. the adjustment that we will make if the economy is not as strong as we may moderate those investments but we cannot not make those investments to be competitive. this is a moment of truth the company to give driving the core franchise through the day i won't give you -- driving the core franchise through. i want to be the headcount projection but there are the two fundamental things, apply technology to activities, to make a good issues -- legacy issues come down. don't take that as we are not investing the business. this judgment we want to make with the board. the investments are paying back. corvette,ks to my

james gorman -- michael corbat, james gorman, and brian moynihan. great snapshot of what is going on at the banks. scarlet: morehead from davos because we have an exclusive interview in the next hour. george soros will be sitting down with francine lacqua in a wide-ranging conversation. alix: coming up next, a $3 billion snub. we will you the details on united's choice not to purchase airliners. ♪

scarlet: in the $3 billion deal, united said it is playing 40 of boeing's jetliners.

the aircraft will enter service mid next year as united cuts its use of cramped original jets. alix: it deals a blow to bombard ier's effort to line up u.s. customers. i want to bring in pamela ritchie, bloomberg canada anger. bombardier this stuck in neutral. why are they having such a hard time? pamela: it has been a difficult time. this aircraft was launched literally into the air in june the paris airfare. since then they have gotten about 243 orders that are firm. 300 is where they wanted to be by this time of the year. of those 243 orders, only one of them, lufthansa, is a top 20 airline. many of them are very small airline companies around the world. it is not the fanfare that bombardier had imagined.

but this jet has been plagued by delay after delay after delay. they were meant to be much farther ahead years ago. they have had bailouts from the federal government, bailouts from the québec government, one very recently. there is the real side of the -- rail side of the bombardier business which is successful but be air business is meant to the future and it has had a tough time nailing down orders. scarlet: in new york, many of them are bombardier cars. alix: i did not know that could when fares go up on the subways we are giving bombardier business. what do they wind up doing from your? -- from here? do they have to cut costs? what do they have to do? pamela: bailouts really seems to be the answer. discovery has been run by a family that has the controlling voting share. the class structure of

voting shares are with of the family. there is a question about whether they have had particularly good management, but the québec government has given a $2.5 billion bailout, they have taken a stake in the actual series. coming to the federal government right now. justin trudeau has a lot of money that people want from him. we will see whether this is the next pop. at the moment it looks like a bailout story. scarlet: pamela ritchie, thank you for that perspective on bombardier's woes. alix: coming up, will gas powered vehicles soon become a thing of the past? we will hear about new technologies into getting more electric vehicles on the road. ♪

alix: welcome back to "bloomberg markets." i am alix steel. scarlet: i'm scarlet fu. the senate energy committee met to hear about the status of the automotive industry. a huge focus is the growth of electric vehicles. the deputy assistant

secretary of energy's book to brendan greeley after testifying on the hill and he talked about the importance of keeping prices of electric vehicles low. >> certainly there is no doubt that consumers are benefiting from having lower oil prices. they are spending less money on gas and more money on going out to dinner with buying gifts for their family. what we are trying to do is ensure that even as oil price spikes again and again, as it has six times over the last 45 years, and as it will again, consumers can be in slated from --se high gas prices insulated from those high gas prices and future spikes. we are investing in battery electric fuel cells another plug-in technologies that will give consumers more choices so they can fight gas prices as they spike over and over again . one thing to realize is operating a battery electric vehicle is cheaper than even gas

prices today. right now driving an electric vehicle is the equivalent of $1.15, $1.16 a gallon. it is still a great bargain. sure welenge is to make keep driving down the price of those vehicles to more consumers can afford them. that?n: how do you do one thing we do know is that fuel efficiency standards and safety features, though desirable come with good societal outcomes, are things that consumers are still unwilling to pay for. this is something that the representative from the auto industry made in the hearing, where you testified as well, which is that the issues not how do you change the products being made, but how do you change the consumption choices that markets are making? people aren't buying those things even when they go to market. think it is i misleading to say that people aren't buying these things. in 2015 there were twice as many plug-in electric vehicles sold as there were in 2012. feel economy overall -- fuel

economy overall is significantly higher than it was five or 10 years ago when consumers were buying new vehicles. clearly consumers are buying vehicles that are more fuel-efficient, buying more and more electric cars. but what we are looking for is 10 years down the road, how fast is that pace going to accelerate? that is why we are investing in driving down the cost of battery electric vehicles to the point where they are cost competitive with gasoline vehicles. it is also why it is so important to have tax incentives that right now exist to help consumers invest in it that technology. why? the more electric vehicles sold, the greater the economies of scale and the more those prices are driven down. at the end of the day, too, this is about setting our consumers up and sending our industry up so that they can survive not just the next quarter, which is all too often how the auto industry looks at business models, but the next 5, 10, and 25 years was that we have seen

what happens when the auto industry looks at the road in front of it instead of down the road. they end up in the ditch. we need to make sure that the industry and consumers avoid the same situation we had in 2007 and 2008 when gas prices were spiking. scarlet: that was david freeman, principal deputy secretary of energy. joining us with more is brendan greeley. alix: what has always confused me is what do we need, more cars on the road or the fueling stations, rechargeable stations? chicken or the egg? brendan: we need to put a price on carbon, but yes, that is what we need to do. all economists come almost all economists, agree that if we want to deal with this, put a price on carbon. shy of that we need more charging stations. there was an interesting bit of testimony from a boston consulting group at the same hearing where they said there are a number of things the government can do good the investments they are making in actual technology are paying off. but they do need to install more charging stations, more fuel

cell stations come even help people convert their electricity to target homes. her structure is important and that is the chicken argument come i think. scarlet: cost is an issue as well. brendan: people are not yet willing to pay market 6% of people are willing to pay more up front. cost is not in material here. you so much, brendan greeley, senior economics correspondent. scarlet: coming up on "bloomberg markets," an exclusive interview with george soros. coming up live in the next hour. ♪ . .

david: it is 2 p.m. in new york and 3 a.m. in hong kong. welcome to bloomberg markets.

from bloomberg world headquarters in new york, good afternoon. here's what we are watching -- u.s. shares rallying, lifting global equities from the brink of a bear market thanks to support from the ecb and chinese government. draghi hinting at more action as the global economy escalates. what does that mean for the said? and an exclusive number station with george soros. francine lacqua will be speaking with him later this hour. first, let's had to the markets desk for the latest. are in the green but sliding off of our session highs. take a look at these numbers. the s&p 500 was up by as much as 1.6%. you can see we are still up