[closing bell ringing] alix: u.s. stocks closing higher after yesterday's global selloff. scarlet: the question is "what'd you miss?" walk -- are our locked in bearer markets around the world. we will show you which markets are getting hit hardest. alix: oil trading between $20 to $40 over the next six to nine months says goldman sachs. we ask what is spooking investors. -- doesvaluation limbs currency intervention really work? begin with the markets -- u.s. stocks paring their gains by the close. banks give up some their early gains and energy losing steam with mario draghi's promise of more stimulus ahead to stoke the rally. the new normal is triple digit point moves on the dow

industrials. past seven today, a 33 point swing in the dow. alix: and can we look at the volatility on treasuries? we are at a four-month high right now. treasuries are supposed to be the safe haven asset and they are getting whipsawed. scarlet: but relatively speaking, they are out forming other classes. wherewe want to look at the bear markets are around the world after the last three weeks of a total melt down in stocks. we have a map that shows when you have bear market territory, over a 20% decline from the highs. , you have those in correction territory, somewhere between 10% and 20%. interestingly, the best markets are in new zealand, getting hit least. the u.k. getting hit the hard

right now but the worst part of the selloff has been here in asia. emerging markets is where we have seen the majority of the pain. away from joining the bear market around the world. this shows you the heat map of how bad it has been in the last three weeks of the year. scarlet: canada joining the markets because it is so dependent on oil. now we are looking at the two most important things that happened inside the market today. i want to show you how the s&p 500 broke below its key levels, falling to as low as 1812. the percentage of stocks making fresh 52-week lows is still below where it was in august. here is where it was in august -- right now, just under 37%. in august, it was 38%. in october of 2011, it was

almost 40%. what we aref looking at that has been holding up the overall markets has been .he strain of the jobs market but is that starting to rain? correlation,rfect but you do sometimes see them match. both of them spiked together here and you can see the correlation across time over the last two years. what is interesting now as we see both of them rise. initial jobless claims have been rising. when you ask anyone about the possibility of a recession in the u.s., they point into the strength of the job market. scarlet: you can see all these charts and more on twitter. reagan,ining us is mike and all of her running who

covers stock for bloomberg news. scarlet: today we psy bounceback from stocks on the lowest level in 15 months. even that yesterday we failed to hang on to the bounceback. yesterday looks like a pretty oversold market. they did dip below, but it closed above the s&p 500 cash index. the rsi, the relative strength index, that's a moment engage andwe tipped into a level that usually signals some kind of stability. it doesn't indicate any reversal trend that all, but it gives you a nice rally. it is hard to distinguish whether it was about the technicals were being oversold or if people put a lot of faith in mario draghi. something we keep missing

is that it is earnings season. american express and starbucks both crossing. scarlet: starbucks topping the consensus by a penny. the second-quarter forecast looking for as much as $.39. in terms of its full earnings-per-share forecast, starbucks is reaffirming that. when it comes to american express, earnings per share is and adjusted to $1.23 higher than analysts anticipated here. in terms of revenue, we are pretty much in line with what analyst were looking for. american express giving a forecast of $5.45 when the consensus was $5.41. potentially a beat for the earnings-per-share forecast alix:. looks like starbucks is higher in after markets but american express up about 3%.

when you look at the overall stock market, the guys who short the market last year were in a lot of pain. but if you were short the market, this is a trade working for 2016. guest: a lot of people are still short, sort of this short hangover from the august correction we have. you are starting to see someone cover those positions. the companies with the worst ratings, we wrote a story about investment grade companies outperforming to a large percent and junk rated companies getting hit hard. if you look at that on the daily trading, the junk rated companies led the market downward and as we paired those losses, it reversed and then outperformed. creditdivide it by rating and what their short interest is, the worst your

credit is, the higher your short averages. with those companies outperforming the day, it seems people thought here's a decent time to go win and by. especially when we talk about how the stock market has overshot the losses on the bond market. be have started to say these are decent gains and maybe i will pick it up. scarlet: but they are just looking at the company's ability to make good on their obligation. guest: that's becoming a big topic -- people are wondering if they are going to be able to sustain the markets as they come out. a big week for bank earnings also. it was notable that with credit becoming a central theme, banks did not participate in this rally at all and the bank index fell about 1%, trading at the

lowest level since 2013. not manyhe despite disasters today. and listeningeat to the conference calls, the cfos were much like the big banks last week. they are really not seeing much deterioration which i think everyone's big question is the credit cycle turning and it's not just an energy story. maybe it's the job of the ceo of the bank to say everything is fine, but there are not a lot of revisions being made outside of energy. the market really selling off the banks pre-hard. scarlet: it does seem investors are bracing for something other than the token energy exposure. not any big provisions.

jamie dimon says the credit card corporate lending business is the best he's ever seen. he is not the kind of guy to oversee things and would give the nod to deterioration if he thought. -- if he saw it. buying the external -- the stories coming from the executives in the bank. alix: the other thing that confuses me is the role of high backs. i tracked the s&p by back index versus the s&p. 2003,n see at the end of and really started to outperform the buyback index. little is holding up a and it's also a reversal of what investors want companies to do. tear down your debt and don't give us a buyback. guest: the chart tells an important story and a specific

story about what investors want from companies. what is interesting is people think they are spending all the money on buybacks and dividends. they are spending more than a long time on capex. investors have been asking for a long time -- bank of america does a survey about how they want companies to use cash. to a long time, they wanted prop up share prices and do buybacks. there's or april 2015, a distinct shift where they said we want companies to put money into. i think that is a big deal. alix: thank you very much. china hopes to set the record straight in dominoes. talked to the vice president about a possible

valuation of the yuan. alix: bill gates, were in buffett and jeff bezos have made a combined $20 billion so far in 2016. -- lost a combined $20 billion so far in 2016.

alix: coming up, john kasich joins "with all due respect" at 5:00 eastern time. let's get to mark crumpton with first word news this afternoon. police say a suicide car bomber rammed the gates of a restaurant near a beach in a capital of mogadishu. gunman then fought their way into the building. early reports indicate three people were killed.

the attackers may have taken hostages inside the restaurant. there was no immediate claim of responsibility, which bore the hallmarks of extremist group al-shabaab. saysials in sierra leone another person has ebola. it was the second case of the virus discovered in the six days since the epidemic was declared over. the epidemic has killed more than 11,000 people in west africa. record officials say a number of airline press -- airline passengers were caught last year trying to take guns on planes and most of the weapons were loaded. the transportation security administration says more than 2600 firearms were found in carry-on bags and 25th seen, a 20% increase. the one with the most discoveries -- dallas-fort worth. least three people have died in weather-related crashes as a winter storm moves across the eastern part of the united states.

to accidents happen in north carolina and one in tennessee, all on icy roads. areas to the north are bracing for heavy snow tomorrow. governors of north carolina, virginia, maryland and the mayor of washington, d c, have all declared emergencies. global news 24 hours a date from the bloomberg first word desk, i'm mark crumpton. alix: "what'd you miss?" china admits at all those they messed it up. securitiesairman of regulators says they need to do a better job, saying the system is not structured in a way to communicate seamlessly with the markets. learn. we can that follows a pledge by the vice president to not pursue a policy of devaluing the currency. is professorw jeffrey frankel from the harvard kennedy school. thank you for joining us. the markets just don't believe the tv is see.

.ow do they -- and the pboc how do the markets follow when they are looking for a devaluation? guest: i have a different perspective of this that a lot of people. they have not communicated the best and appears to have generated a lot of volatility but if it wasn't this, it would be something else. china has been under strong market pressure downward. the chinese currency for the last two years have been under downward market pressure. they've spent more than $600 billion in reserve to slow down the depreciation, but they have a lot to depreciate from. i don't think it is a big deal. 6% is nothing compared to a lot of other currencies. the euro is down three times that much and last summer. it is really a strong dollar

story rooted in u.s. monetary policy. a stronger dollar story might be following this. china travel -- china tried to transfer into an industrial economy. does it help mastic consumption? traditionally a weaker currency does follow exports. it is important to recognize the remedy is not down. it's up against almost every other currency. the most important issue is the one you mentioned -- that china is undergoing a long-term transition, slowing down from the 10% growth of the 80's and 90's. the question whether it's going to be a hard landing or soft landing, they have identified

proper policies and did it three years ago. the shift from emphasis to manufacturing and the shift from emphasis and dependence on investments to consumption. the question is whether they can implement that to make a smooth transition, those are the important issues. scarlet: it's hard to believe it was just over one year ago, the switch the peg -- is switzerland better off for abandoning the peg? what have we learned from that episode? the initiall: market commentary was negative when they did that a year ago. it was negative when they adopted that ceiling against the euro three years ago. looks better, it with the passage of time and it matters a lot.

it was a very strong appreciation of the swiss franc and has sort of come down on a wider basis. the common element is that it's hard to find the markets. if you have a peg in the markets aren't sure if they want to push one way or another, you have to relax and go with the flow. alix: is china actually doing the right thing right now? there's some: market volatility in the market since last summer and they have not handled can indication the best. the structural issues, the reform of the economy and the reform of the countryside and the switch from manufacturing to services, i would say they have correct really identified the right to policy shift and it's a

question of whether they can implement them. scarlet: thank you for your time. our co-anchor,, joe weisenthal sisto with the columbia prime mister talking about the advantages for investors. ♪

alix: i'm alix steel. "what'd you miss?" how the oil slump is impacting the economy of columbia. joe weisenthal sat down with the finance minister of columbia and oil plunge has impacted the outlook for the country's economy. guest: despite the germanic decline in oil prices, our economy grew by 3.2%, which we

think was a relative success. it was the fastest-growing economy among the six or seven economies of latin america. able to offset these headwinds associated with lower oil prices with vigorous to mastic demand, prior -- private consumption and massive infrastructure programs. that has helped columbia very well. last time you came out with a target, oil was higher than it was now. what do you think is right? oil prices and our currency are really interrelated. whatever happens with oil prices, you see it reflected in the currency. with the oil barrels at $40, our currency was about 3000 paces her dollar. that is where i see things going toward the second half of the year. ramy: still around 3000 pesos per dollar?

that is hope so, but contingent on what happens in the oil market. most of what i have heard here suggest prices will remain low for the first half of the year and then there will be a recovery toward the end of the year. ramy: have you heard anyone say prices are going to stay low and plunge even further? guest: people are saying some production is going to be lost and the most inefficient producers will have to cut production. would very much like to see prices go back to the $40 range. joe: you still have -- obviously, costs have been accessing thes of dollar market. what are your plans for that and are you concerned about cost continuing to rise? there is no emergency or no pressure. we have time, so we are looking

and exploring all possibilities, including the euro market and including the japanese market. some japanese banks have approached us saying they have so we have no rush and would like to see where we get the best deal. only 1.5 billion dollars and that's all we need from the bond market this year. joe: you rate yet -- you said raising $2 billion caused some controversy. was -- were any mistakes made or should there have been more explanation? to continueed explaining. we need to convince the population that this is a practical decision and we have to take the ideological content out of that. the $2 billion we are getting from this, we are investing inroads.

we are converting one asset into another asset that is not going to go away from columbia and an asset that we are going to build that we need. it is what will help columbia's economy continue growing in the future decades. obviously, there's tons of anxiety about all emerging markets right now. when you are talking to companies that are thinking of investing, what is the argument that now is a good time? guest: they see columbia as a bright spot. people are looking for thereunities and i think is differentiation among emerging economies and columbia has the credibility and and on top of this, there is the potential of peace. finalizing a peace agreement -- should that happen, we are expecting that to happen soon,

there will be significant investments going into columbia, especially in sectors like agriculture and tourism. joe: thank you for joining us. scarlet: that was joe weisenthal in dabo swinney colombian finance minister. -- 10 tango up, can in the oil market. we will explain what it means for the future of oil prices. ♪

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scarlet: "what'd you miss?" let's get a quick recap on how markets closed -- it was an up day for the equity market, but we did here are gained with tanks and energy losing some steam. the new normal of 2016 is a triple digit point move in the dow jones industrials. we ve seen it in 10 of the 13 sessions so far this year and six of the past seven, including today. we do have earnings coming out after the bell. scarlet: starbucks down 4% because it's profit forecast missed analysts estimates.

you can see they're down by 2% on higher expenses. i want to take a deep dive into the bloomberg terminal to show you something about hong kong joining a club of dubious distinction. the hang seng index price-to-book ratio had fallen to below one. for the first time since the asian financial crisis in 1998 -- that puts us in the same bracket as other markets like brazil and egypt. you can really see the destruction of the past couple of weeks in 2016. of 2.5 500 had a price and the shanghai composite is 1.7. alix: emerging markets makeup two out of every three bear markets. no surprise you have is ill and egypt in that group. i was looking at oil today and something curious is happening

in the market. what you are looking at is it's one prices now are lower them prices in the future. yellow line is what the prices will be in 12 months. because we have so much oversupply, you would expect a strong contango. as wideand 2009, it not as $23 but today it's only six dollars which is surprising because you think it would be steeper with so much supply in the market. commerzbank came out with a note and said the reason why is we have so much storage in the world. the storage can sop up that .xtra oil it's a different situation than anywhere in 2008 or 2009. scarlet: not long ago, people were worried about storage capacity. the global head of

commodities research at goldman sachs and wanted to find out why contango wasn't so extreme if the world was so over supplies -- oversupplied. one thing we have noted is the endgame for a bear market in commodities, whether you are talking oils or metals is long dated oil prices selling off in the curve lightning. our buy signal for commodities is going to be when the curve is sitting flat, whether it's in 40,$30 range or closer to that's still open to debate but it's going to be flat curve that will tell us to go out and buy commodities. just another indication we are in this inflection days of a bear market. the every day correlation between oil and stocks -- why are we seeing a positive

correlation right now? guest: you have to ask where are you in the business cycle? when we see the connection between equities and commodities , it occurs late in the expansion. when it creates inflationary pressures that lead to higher rates as the central banks begin to slow down the economy, the higher rates kill off the equities and we get the negative correlations. that typically occurs when we are in a recessionary phase. the fact we are seeing a negative correlation underscores the market is focused on demand fears and demand concerns as a driver of commodities and equities. fears are likely overdone because what is going on in commodities is likely a supply dynamic more than a demand dynamic. alix: the market is pricing in a demand dynamic?

guest: when you think about a supply shock, that is beneficial on a long-term basis because it lowers costs and should be a stimulus longer-term. looking at the fact you've seen a huge capex and the impact that is having on the manufacturing sector, there's not real weakness taught by what is going on. access is very positive. alix: you mentioned the deflation scenario and because of that, you think u.s. shale production is what is going to trigger some rebalancing in the market and not going to come from outside producers. you look at wti prices versus five year prices. what does that tell you? guest: i want to be careful and

we sail the burden is going to be put on u.s. reducers. short-term, that is true but medium to long-term, high cost non-players will disappear. shale,r cost is above things like very high cost oil sands or ultradeep projects that are expensive, it is going to slowly reached decline rates over time. i don't want to dismiss the impact it has, but these announcements guiding production down as part of that adjustment process. the u.s.hink about producer and were the focal point is, going to the picture that looked at long dated oil prices and producer currencies like the russian ruble, it is flat and that's an important point because what it says is fx has done a lot of adjustments

producers used to have to do in the past. the reason has to do with the fact oil producers have flexible currencies and did not going back to the 1930's. it absorbs a lot of trade shock which cushions the burden on oil producers, hence short-term we expect u.s. producers to bear the burden of supply adjustment. and you expected to come down by $575,000 a barrel -- 575,000 barrels. have they put enough money aside as the production rolls over? the 1980's shed a lot of light on this question. at the total losses that banks were faced with in the 1980's and we saw the 10, overalln to losses were around 10%. we look at what the market is trying to price in today, it's a

little bit above that. i've heard highs of 20 or 30%. look at the flexibility of the system and the system can more easily today than it has in the past. it would reduce the number of defaults, so if anything, the market is pricing too much of a loss rate right now. alix: that was the goldman sachs head of commodities research. we will have more of my commodities with him as the charts that have the oil bulls scared. ♪

scarlet: breaking news on jamie dimon -- the ceos pay being boosted to $27 million for 2015. his salary portion is way 1.5

million and the rest is variable compensation including restrict did stocks, $28 million worth. is spooking oil investors question mark is u.s. oil reduction. here is the dream -- u.s. production rolls over, demand strengthens and boom, higher oil prices. 3009s the problem -- hundred 94 -- that's how many wells that are in the u.s. that are drilled but not completed for three months or more. bloomberg intelligence did a great analysis on this. i got an itemized printout on how much exxon thought it would take to build a shale well. this is in oklahoma -- total $9 billion -- $9 million. typically, drilling makes up only 35% of the wells cost, so to drill andheaper

not frack and wait for higher prices. this is what bloomberg intelligence found when they crunched the numbers. when opec did not crunch did -- they didut back -- this relying on these wells and you can see around 2014, the increase in every single shale play in the u.s. and they save anywhere from $6 million to eight clean dollars. inventory popped. let's take the deeper dive into texas. most of these wells are based in the southwestern corner of texas. these purple areas which are the most used have less than 10 drilled and uncompleted wells. but this one in orange -- in orangehas 200 plus and has between 100 and 200 wells. this is a lot of potential oil.

it's very light, so we don't know if it's going to be used as much as they wanted to. why should you care? the oil rig counts can fall while reduction can rise or stay flat. it could take a year to clear these wells and that could account for about 300,000 .arrels per day very appealing to companies that want to save cash. you can spend the same amount of money and bring more wells online. at eagleady happening for. so what do these wells mean for oil prices? if this wouldurry prolong the oil glut. jeff: we did see some evidence in the fourth quarter that many of these wells are being completed to keep cash flows up. when we think about the inter--- the impact it's likely to have a longer-term basis, it's

relatively small. you could continue to drill through this and complete them, drilled well and not complete them, or not do anything, just not drill. the difference in time between the company that doesn't do anything in the one that drills and doesn't complete them in the one that does complete them is two months. when we think about what's likely to happen as the market needs the new supply, an increase in drilling is the key way the market rebounds in a long-term way. the one thing i want to emphasize is because of globalization, we have built over a billion barrels of oil and it's going to need to be drawn down as the market rebalance is in before we can turning one about the shale machine as we look at into 2017 and beyond. so it is the bear capacity right now? guest: that's a great way to

look at it. do you find what oil prices go high, how quickly can those rates go back to work? at april ofok back last year and it's a real indication of how flexible the system is. in terms of its ability to increase drilling and respond to higher prices. as soon as we got out into those price levels of last year, drilling started to respond. make,e argument you can fracking crews get laid off, they get other jobs and things of that nature, we will find out when the system needs to readjust and how quickly it can respond. but what we have seen, it's much greater than at other points in time. alix: that's going to predict what prices are going to be for the next three years. where are we in two or three

years as we are struggling to in those crews back? guest: terms of thinking about the cost intoture of shale, to get the range to get those back into the field, you are likely to overshoot to the upside. basis, and werm think of 50 or 60 being the cost level that generates this response, there's a lot of risk that numbers going down over time. it's probably going to take an overshoot to the upside to get those rigs back into the market and then we are going to find out how flexible the system -- it may take several cycles before the market adjusts. that was my conversation with the goldman sachs head of commodities research. scarlet: coming up the machine left wall street to create her

own company. don't miss our interview later this hour. ♪

alix: blythe masters is one of the most powerful leaders in finance. she's the former jpmorgan executive that help develop credit default swaps and now she leads digital asset holdings where she is on the cusp of a pending finance went again, this time with the code that powers bitcoin. cory johnson just sat down with masters exclusively to talk about the $52 million investment she just secured from one of the world's largest financial institutions. blythe: today, we just closed our first financial round of fund raising from institutional

supporters. all of those investors who are are current round or potential future customers of the company. what is interesting is that it investors that will put this technology to work. blythe: that's the point. we don't have purely financial motivated investors, though of course our investors expect the company to perform well, but what they are really doing here is putting capital to work to ofp drive global adoption these new technology ideas because they see the potential is being significant for their businesses, cost avoidance and risk reduction, regulatory compliance, these are big strategic issues for financial firms today. why the interest has grown so significantly. iny: who are the investors

this round and when might you expect them to roll out deployment of your service? blythe: we have announced around involving 13 major leading financial institutions. we have a number of large global investment banks from the united states, our lead investor was j.p. morgan chase. also citigroup. .rom europe, bnp paribas we have some non-investment banks or regional banks including pnc from the u.s. in the non-bank space, we have a number of exchanges. there's one last group of supporters that include technology and infrastructure and service providers.

technologybal services provider and implementer along with broad ridge who provide an enormous percentage of capabilities to the street today. whado you think a year from now you want to say -- what the one saying? blythe: the process between now and the next six to 12 months is going to be used to take what are currently prototyped concepts that exist, technology that you can play with and see and convert those to something that is production ready in the real world environment. limitations toe the speed at which you can settle scale for purchases in that context. not every investor in the world wants real time instantaneous

settlement, but somewhat benefit from that. you and i would love to have cash in our accounts. other institutional investors may not have the same needs. thatu delay settlement so you connect a large number of transactions which offset each , you can press the activity and that can help you reduce risk, reduce liquidity requirements. we are not looking for instantaneous settlement in every case. we are looking for something much more sophisticated, which is settlement at a speed that makes sense or optimize settlement. cory: the case for stock settlement is obvious. what's the second trick? blythe: good question. any activity that requires oneessing post trade is

that can be helped by this type of technology. income, i think about lending and the leverage loanwhich is notorious for an asset class that lost it big. it takes on average 22 days to settle alone which is very troublesome, per to really when many buyers of that paper today are not other banks but institutional investors that put assets into things like mutual funds or etf's have mandated liquidity requirements. yet the underlying asset is not liquid. there's an honest and if it to speeding things up there. think about foreign exchange trading and processing there. think about derivatives and the world post dodd-frank where we have mandated derivative

transaction reporting. a painful and difficult exercise to comply with s.gulation imagine using a single ledger of record. it would be redundant. the participants, to see real-time rather than after the fact. think about new rules related to derivative contracts which are going to produce enormous operational strain and the ability to automate and enhance, reduce agreements related to identify more quickly. in norma's numbers of applications. that was cory johnson's exclusive interview with blythe masters.

what you need to know for tomorrow's trading day is next. ♪

>> general electric earnings tomoow before the bell, and sales are dropping below 15%. also, there is a lot of questions about how the prudent lunch played into the oil and gas businesses. really trying to become an oil services company in the next 10 to 15 years. where are they in that transition? existing checking out home sales, coming out tomorrow at 10:00 a.m. we did not have a good number in november, so will we get a pay back in december? less, it was really warm in the

last month of the year. "-- that's all. things for watching. -- thanks for watching. ♪

with all due respect to donald trump, i am not just a president, i am a member. ♪ good evening from the water street cafe in laconia, new hampshire, and national hugging day -- happy national hundred day,, sports fans. day, sportshugging fans. these numbers just out, donald trump leads ted cruz 37% to 26% in iowa. cruz