i am david westin. stephanie: i am stephanie ruhle. our guest lineup -- we will hear from bridgewater associates' greg jensen, blackrock ceo and goldmanlarry fink, and sachs coo gary cohn. all week long we have been saying so many people are saying wait it out. do not ignore the volatility, but ride it out. i am going to say maybe the markets are starting to listen. biggestly in oil is the two-day rally we have seen since august. david: unfortunately, there is not much reason to think the markets might not go back down and back up. stephanie: you have got to say what is janet yellen thinking? janet yellen is data dependent. she has to put blinders on with all of this. lots of data, lots of thoughts from a lot of world leaders from davos here it -- from davos. david: let's get thoughts from

matt miller back in new york. matt: we have seen massive rallies, especially in asia, with the nikkei, big gains in japan. 6% there, and the hang seng up 2.9%. the shanghai, pop -- the shanghai comp up. check out europe. we have rallies there as well. that is a live trade right now. the stock 600, the broadest measure there, up 3%. the's the stoxx 600, broadest measure there, up 3%. keep in mind, the cac and the dax are in bear markets, had reached a 20% job from their highs. was justie -- the ftse about there. crude -- yesterday they switched over the contracts. that may have changed pricing a

bit because we closed wednesday at $285, then opened up within the margin contract. 54 -- $1.54 -- correlated to s&p futures over the last couple of weeks. check out s&p futures and you will see gains there as well. actually, 25 points. 202 points,tures up at nasdaq futures of the most, 1.75%. now let's get to the first word with vonnie quinn. vonnie: forecasters are promising it will be a storm for the record looks. a blizzard is taking aim at the dumpingcoast, potentially two feet on washington. air travel has become a nightmare. almost 5000 flights have been

canceled for today and tomorrow. with less than two weeks to go before the iowa presidential caucuses, donald trump is widening his lead in the republican race. trump with anws 11 point advantage over take. the leader of the armed group that took over a federal wildlife refuge in oregon are talking to the fbi. the group is saying they will not leave the refuge until -- i am vonnie quinn. back to davos and david. david: erik schatzker is joining me now per welcome, erik. co-chiefen is executive and co-chief investment officer of the world's largest hedge fund, the $155 billion bridgewater associates. i cannot think of a better person to have here to explain to us what is going on with the

markets because bridgewater is known for having a deep understanding. greg: it is great to be here. the first thing is to understand the secular backdrop. the biggest thing we are trying to help people understand in stress tests is that we are in a major secular turning point. years,982, the last 40 the developed world economies have been stimulated by a major debt cycle. rates wasn interest lower than the one before because it was necessary to offset the global deflationary pressures, to create more debt high wasrld, and each lower than the one that preceded it because it took less, because deaths were higher, to slow down the economy. was cycle -- because that higher, to slow down the economy. interest rates were not enough to offset the debt burdens and you got a credit collapse. then you enter the period of

quantitative easing from 2010 to 2014, and the recovery associated with quantitative easing leading to money in the financial markets leading to driving asset crisis -- to thereg asset levels, but is a limit to how much quantitative easing can affect the economy because it raises it to that point. in a secular perspective, that is where we are. which means central banks cannot stimulate very much. so when you get a downturn, there is not the shock absorber, and you are seeing that kind of volatility in the markets today, and it is particularly precarious, which is why the biggest thing now would be to understand what good policy is. you have to understand the secular environment. think it is self reinforcing that there is a lot of dollar debt, that revenues are falling because the currencies are falling and commodity prices are falling.

we need for the fed to re-examine policy and change course and recognize that what is normal in a deleveraging is different than what is normal in our history. if you look at this and deleveraging across in the attempt toeurope's tighten right after the financial crisis or japan attempts to tighten over the last 20 years, each of them have had too much tightening too fast. why they have to reverse course and eventually end up with qe 4. even a quantitative dish even if quantitative easing is of limited value now. greg: the policy needs to the -- the policy is that -- the problem is that there is so much debt globally and dollars, and the debt needs to come down. if the debt comes down too quickly, you have depression and deflation that comes down. good policy, including qe allows for the gradual diminishment of

that debt through higher income growth. erik: if that is the case, if we are going to end up being qe4, does that mean that the best place for anybody to be, including bridgewater, is long treasuries, more mortgage-backed securities yet -- long mortgage backed securities? i think in our portfolio we have a hundred different positions and are careful because we could not tell you what policymakers are going to do. erik: the last time they bought treasuries -- greg: we think they should and there is a reason treasuries should rally. at the same time, there is a classic mistake that is reasonably likely. if you look at the history of policy and deleveragings, the desire to go to normal interest rates is a constant theme, whether it is 1937 in the u.s., in japan, or in europe. there are constant attempts to normalize and they create major downturns. you have to have a portfolio that is balanced for the risk

that the dollar squeeze might intensify because the fed might continue the course toward normalization. arefully, the policies consistent with that understanding of what deleveraging is like and they will be applied. all-whether fund was designed to accommodate big shifts in the economy. eather fund was designed to accommodate big shifts in the economy. how is that done? all-weather,s which is an asset allocation mix, it is a common sense way that, if you are invested in assets, you would rather be in a balanced portfolio rather than one that is skewed to equities or bonds. what has happened so far this is doingll-weather better than traditional assets, but it is going down.

the reason is because when cash is the best-performing asset or that is also why the fed needs to prevent that. if cash outperforms the real economy, outperforms, you have a problem. her alpha -- pure alpha, if you go through the overtime friend -- david: i am thinking in this period of market volatility. greg: our positions are balancing out. we are flattening out in pure. we are positioning in a balanced way with the expectation that this could get worse if the fed does not shift policy. our bigger view is that the fed will likely shift policy in a way that is not fully discounted yet, and that will ease some of this deflationary debt trap that is happening globally. yellen, if you're listening, he has a message for you. greg jensen, cio of bridgewater.

next, we will talk with chuck robbins of cisco, after the break. ♪

you see a shot of washington, d.c., this morning. it is a beautiful shot, the capital building -- the capitol building. when an two feet of snow is expected on washington, d.c., with a massive thunderstorm. the capital of the united states is expected to be the epicenter of that storm. i want to take a look at markets here. futures up, as we saw big gains

in asia. we see big gains in europe, and up 25 points.cts dow jones futures, up 200. let me give you a couple of the movers we are watching today could apple was a big surprise. gene munster from piper jaffray, a well expected analyst, -- a well respected analyst, things stocks could go up 50% with the launch of the iphone 7. you see apple moving up this morning. starbucks is gaining, falling after the bell. it is down 3.2%. it fell after the bell and continues to remain down after the company said the second-quarter outlook is not as good as the street was expecting. even with first-quarter revenue missing estimates because of the paris attacks. let's go to vonnie quinn with the first word. vonnie: general electric posted first-quarter earnings that beat estimates sales. immelt has been

focusing on industrial manufacturing and data analytics. he's getting rid of the finance and consumer-based operations. having a searching bar on the iphone worth for google? $1 billion. that is what google paid apple in 2014. the figure came out in court proceedings with oracle's copyright lawsuit against apple. back to davos with stephanie. recently, cisco announced some key strategic partnerships, including a big alliance with ericsson. the company believes this will generate $1 billion for each company by 2018. chuck robbins is the new ceo and joins us now. 2015 was a big transition year, eight -- a changing of the guard. what does 2016 have in store? we thicken about the

industry, we are on the front end of this massive digitization phase that every country will think about what those technology mean for our future and how does it change business models, how does it change our competitiveness, job creation? the pace at which the change is going to occur is faster than anything we have ever seen. we believe the strength of the strategic partnerships is fundamentally driving greater value in our customers faster together than we could individually. stephanie: where is growth going to come from? 4% growth is good but not the john chambers double-digit stage. will you get back to those? and how? chuck: there are 18 billion devices connected to the internet. by 2020, there will be 50 billion. beyond that, it will get to 100 billion, then 500 billion over the next decade. to help the opportunity

customers really derive value from the insights of those connections through the data. organizing that data, analyzing that data, and securing that data for our customers are all growth areas, as well as providing data center services and the other things that we do. david: your business is dependent on enterprise spending and investment. when you see turbulence in the markets like this, does it cause you concern that those ceo's may not be able to open up the checkbook? day we look at what are the political and geopolitical dynamics, and customer expectations are changing rapidly. we live in a world of constant change. the thing that is important about how technology is being adopted today, it is no longer viewed as just a cost center or something that is only an investment when we are driving growth. our customers view it as a core part of their overall strategy.

contrived efficiency, greater customer -- stephanie: china has been a challenge not because of the downturn there but really because of the ongoing cyber security spats between the u.s. and china. what is your outlook now? chuck: that is the interesting thing about being in davos and hearing all the concerns about china. in our last quarter, we announced our first quarter of return to growth. in 2.5 years. the chinese government are making the moves they need to make in light of the complexities and the transitions they are going through. we have diversified our business over there geographically and across customer segments. my view is that it is a huge economy. whether it is growing 2%, 3%, 6%, it is a great opportunity for us. stephanie: you do not see china as in trouble?

chuck: there are elements that could be concerning, but for us the value of the technology and where we see our customers in china deploying the technology, our results last quarter showbiz success recently. david: you have made several acquisitions in cyber security. a lot of cash on your balance sheet. do you look to make more acquisitions on cyber security, and will you consolidate the business? chuck: if you look at how we look at innovation and expanding all portfolio -- and expanding our portfolio, we clearly look at m&a in addition to early-stage investments, and codevelopment with our customers. we will continue to use m&a as a vehicle in conjunction with r&d. we have great internal startups going on around machine learning. we will clearly look for those opportunities. the source fire technology we bought a couple of years ago, and our team has done

a phenomenal job of integrating that capability throughout every element of the network. they have created an architecture, and that has been the secret to our success and has created some challenges for some of our competitors. stephanie: as you are trying to move into the subtraction service, where are you, and what does that due to hardware? chuck: customers want to buy more as they use them. portfolioveloped our more as a service. we launched our entire portfolio as being launched from the cloud. we will meet the customer's needs and how they want to consume the technology. we are early in the journey to a recurring revenue model. we are beginning to focus more of our portfolio on software, and that is what our customers and investors want. david: how are the ericsson deals going?

chuck: it is great. we have some exciting things that we will be doing at the mobile world congress in a month. i have never seen a strategic partnership where we saw the pipeline from our teams roll up so quickly. when our field teams tell us it was a good decision, then we feel pretty good about it. david: that is great. thanks very much, chuck, for being with us today. coming up, it has been a tough start in 2016 for markets. george osborne's thoughts are next, on "bloomberg ." ♪

david: welcome back to yourmberg ," coming to from davos, switzerland.

francine lacqua is with us now. you spoke earlier today with george osborne, and one of the things he addressed was china. francine: one of the things i asked him was, are we to bank pessimistic about the world -- are we too pessimistic about the world? is a finance minister what you need to do is take a longer-term view. this is the same point that the ceo of credit suisse was saying. china will go through these massive volatility movements as they try and regulate and figure out the complex market, but overall the chancellor told me he was bullish on china. is definitely a tougher start to the year, and we see that in the financial markets. but i would look beyond the markets and say what is driving these things. china is moving to a consumption-based economy. that is a good thing. energy is cheaper. that is a good thing for most

families, businesses, and most countries, but that is a fundamental good thing for the global economy. stephanie: it blows my mind that we are in davos. what do you think of china? talking to the u.k. chancellor, did he address the markets at all? clearly he is not a markets guy, but he has to be, given what we have seen. francine: first of all, they are all here. talking to george soros, talking to george osborne -- no big deal. francine: it all depends on the timeline. this is true for investors and businessmen and for finance ministers. when i asked george osborne if he was concerned about market turmoil, he said, "i do not want to comment because i do not want to exasperate -- i do not want to exacerbate anything."

george: behind the volatility, we should welcome that. francine: he says volatility but longer-term we should have the confidence that they would increase consumption like china will he is confident but then he is a politician, and he said it is better to be confident than not be confident. david: all the economists say that brexit is the biggest threat to the european economy. what does he say about that? francine: he is confident. we did to ceo's, and wpp, martin sorrell was saying that it is a concern because it goes to whether the u.k. can remain stable. this is the anglo-saxon darling of the european union. it creates a problem if the u.k. decides to leave the e.u. for the partners such as germany but also france. if you are credit suisse or wpp,

why would you put money at the moment in the u.k. when there is the risk of brexit? evidence ofsee any that. we will know in the next couple of months. stephanie: but again, if you are george osborne, the last message you want out there, "do not bring money here." francine: right, it is a message of confidence. stephanie: in their defense, everyone talks their book. it does not matter who it is our own francine lacqua, thank you. she will be back later, and hopefully with the george soros interview. when we come back, the ceo of the world's largest money manager, the one and only larry fink of like rock. ♪

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david: welcome back. here we are with erik schatzker. erik: it has been a big week.

arry think will be with us in minute, but we want to bring you up to speed. matt miller has that in new york. matt: thank you. first off, looking that big gains in crude oil. take a look at west texas on the nymex, up 5%. day is the second big of gains for nymex crude. say they, i would not results, but they have been so uncorrelated that i can. futures up across the board. it helps that we have big gains in asia, europe, because the world is expecting central banks, other than our own, to inject more stimulus. s&p 500 futures of 27 points and dow jones up 200. if we get a triple digit gain in markets today, it will be the soak 77% of all the trading days this year have

seen triple digit gains so far. very interesting. david points out a lot of volatility that is not the percentage figure for last term. let's go over to vonnie quinn. travel plansu have today, you will probably change them. threatening at least 50 million almost 5000 57 canceled. washington could get more than two feet of snow and new york make it up to one foot. an american has been arrested in north korea. the university of virginia student is accused of plotting government. north korea arrested another american on spying charges earlier this month. --ile news 24 hours a day back to you. itid: actually, i will pick up. it is a fragile time for markets around the world. oil volatility, a

lot of uncertainty. here is the man who knows markets, larry think, the ceo and chairman of blackrock with $4.6 trillion. i cannot quite believe it, larry. 4.6 toyon dollars in assets. welcome and let's start with the markets. what are the markets trying to tell us about the underlying real economy? larry: probably nothing. [laughter] thethe markets trade on motion. we should not pay attention to the daily swings, but overall, i think we came in the new year really questioning our large assumptions. historically, we have three or four political events a year. if you add up all the political quarter, in the last we probably had one doesn't. everywhere is uncertainty. and then you have the collapse in oil prices in december that brought it down to a little below 30. then you test so many companies

and so many countries, so the market is so nearsighted. the market sees these problems episode immediate and it does not know how to interpret the 4 billion human beings having cheaper heating and cheaper energy costs, and that money will be re-put back into the economy. we do not see that. it is incremental. this is why i think the market still may have some digestion problems. over the course of the next year, we will see a higher market. global gdp will be around 3%, maybe not as high as the imf, but i am not that worried. if you add up all the problems, the most of the problem is understanding that oil has significant issues with countries. since august, we have seen some very large inconsistency out of

the chinese leadership. china is an important economy, important for the emerging world, and that uncertainty from a cohesivelack of message, has really become unsettled. for me, that probably was the most unsettled component of why we had this capitulation. i believe this is a capitulation and not a bear market. erik: you are right. markets are promotional, but having sat in the traders chair, you understand how to read that psychology. whatit feel with transpired yesterday, the dow jones future up 200 points this bottom? that we saw the larry: i don't thickly have enough information. i think we have bled in the street, i think the markets need to digest the lower oil prices. investor, you any buy the tips, especially when you see the suddenness.

this is a real capitulation. it is not the violence of the move. it is so fast and swift and based on emotion, but the better investors across the board use that emotion to buy. let me just elliott to other things i learned. 1 -- in the first week of the largewe witnessed official institutions selling. i think -- many people thought -- that was the unsettled part. wereminded everybody where were in the beginning of the year, but on wednesday, we started seeing buyers. that began the state restate was as the markets. david: institutional? larry: all institutional. erik: is that a better sign of retail money? larry: retail money you will expect over the short corrections. you will expect selling. we saw it.

it takes a lot of retail to come back in the market. that is why i keep on telling our clients who are in retail, you cannot walk away from these movements. you cannot leave the market. use these as an opportunity and learn from warren buffett. these are great opportunities. the other thing, quickly, this finding of corporate spreads, everyone is talking about high-yield markets. this is really good for insurance companies. they're struggling with two low interest rates, they have a lot of money to put door, they get new liability, and they are using -- and we say this -- they're using the widening of spreads to buy. when: speaking of spreads, you were with us last, you said janet yellen killed it with the rate increase. what do you think she will do this year? mary: i think are there -- think mario draghi has been precise and that is another reason. mario draghi's commentary yesterday gave more stability. janet yellen never talked about

the forward curve, so i will not blame janet yellen, but the forward curve, a couple of weeks ago, we never thought they would do even two. wonder to is where they will be. let's see what janet yellen does. what they will do, but let's see what janet yellen does. i think the forward market is too worried about that action. we cannot afford a really strong dollar. that strong dollar -- could you see more capitulation from china? we live in an interconnected world. you can not have such divergent central-bank behavior without repercussions. the world is much more interconnected now than ever before. you just cannot have one central-bank being so divergent than other ones. without expecting huge currency moves. i think the fear of huge currency moves was some of the

reason the market was unsettled. if you tie that into the future curve report of said tight cash of said tight means, back is pure to emerging markets that we will have more devaluations. mexicanst few days, the peso has widened to a larger level. thatone is talking about is a negative, but i say, let's buy mexico. it is a great time to buy. we have to buy canada at these levels. cents, great companies in canada. they are on sale. you do not have to focus on equity. as you think about world markets, you have a great opportunity to invest in great companies in these different countries with tremendous devaluations. erik: if we are talking to

violations. we have to address the china issue. how is china going to solve their balance of payment problem? they appear to have two options, shut the door on the capital or let them be. it is i would say horrible if they devalued the currency parried it would be a huge the negative repercussions. deflationary repercussions, too. larry: i really respect the chinese leadership. leaderships, they -- 10 yearenure plan plan. it is kind of outrageous. it took most western countries 50 years and fewer sessions, so for them to try to do it in 10 years, we cannot expect perfection. economy tom their highly oriented domestic economy ath domestic consumption,

strong currency is fantastic. lower energy prices, their companies are going to benefit to magically by lower commodity prices in the manufacturing process. if they devalued in some narrative, in my mind, the repercussions are far worse because it tells me they're going back to this expert driven economy and they are walking away. how do they stop the erosion in foreign exchange reserves? has had deficits for a long time. let's not get too carried away about what the implications are. they may haverik, to do some kind of capital controls. , all thate learned selling of their currency was a domestic problem. it was people leaving or

companies making sure they had the forward dollar rate. not speculators from overseas. it was a china-oriented thing. generallyntrols are never working. we have seen so many experiments of that type. brazil had that a few times and it did not last 10 years. it did not work. capital controls may work for a short time but over the long run, they don't work. they will just have to fix their economy. importantly, you have to give reason for people wanting to have their savings in their economy. that is part of the reform. what china struggles with, and this is some of my conversation, they have a very immature capital market. for the second largest economy in the world, it is heavily dependent on leveraged retail because they do not have a strong pension fund environment.

our view is a need to expand and internationalize their markets faster and allow more foreign institutional investing. that has not happened other than licensear you file the and the award you 200, maybe $1 billion, so it is managed. in my view, they need to open and expend that and they would probably have a more stable and less volatile market. david: you said that some of the headwinds that the market faced toward the end of 2015 came from the m predictable nature of chinese government intervention on regulation. to have a sense that they understand that and have a plan to correct that? larry: i think they know they performed not as well as they should have. i think they all had good intentions of what they were doing. believethey really do

that for the long-term vitality of their economy is to have more stability. i think that is what they are trying to achieve but did not execute well. they communicated quite poorly in the market and it became quite unsettled. and we saw what we saw. china is a topic of conversation and the other issue at the forefront of people's minds, what happens to the u.k. a vi thate eu -- visa e.u. heard that twice. i did not care that much and i don't think they will exit. it would put too much pressure on their institutions and create transgressions and raised the issue of possibly scotland's connection with the u.k. i think it is -- i actually

believe the tensions within the rs arend those fea not unlike the fears that are attracting people to donald trump, or the fears attracting so many people in spain. you are seeing in certain countries moved to the left and others moving to the right. i think there is one consistent theme. it is a really important question that i am sure your father could've answered differently. my father was always bullish about the future and that things did poorly, he believed they could overcome that. i actually think there are a lot of people in the u.k., spain, are worriedhey about their future. they cannot say tomorrow will be

better. i think that should be a big message. i do not have the answer, but the message to me is very consistent. i think because of what we are experiencing out -- and keep in mind, you get frightened and the europeans are frightened of the migrant problem. the get frightened about what is going on with isis and china and all the other issues, the ,ombing of the russian airplane there are so many uncertainties. that is one of the reasons why world growth is a little slower because when you are less certain about your future, you save more, you consume less, and i think that is one of the big drags. i think they should be the narrative. we have many elections, the french election next year, -- david: you mentioned donald

trump. have you thought about what donald trump could mean for your business? larry: no, i have not. david: not at all. orry: that is not a positive negative. i have many more things to focus on between now and the election. david: what economic issues would you like to see god up and addressed to the presidential election -- see brought up and addressed through the presidential election? larry: i think one of the best ways of helping people who are focusing on their lives in the united states, it is becoming one of the worst developed countries and infrastructure. we spend the smallest amount of gdp than any other country. we all see what is going on with roads, bridges. we have ports that cannot have modern ships come in anymore. our airports are truly embarrassing.

i believe the amount of job , if wen, good jobs, plus saw the government spend in it changes, i think ceo psychology and they will spend. i think what of the great weaknesses of our country today is the absence of this desire to build for a better future. getting back to our fathers or the fathers of today, when you see the erosion of our infrastructure, how does that change psychology? andmember growing up watching the new freeways, and i remember growing up in the l.a. and i remember lax and all the changes, and it made you proud. you cannot be proud looking at how our infrastructure is. i believe one of the great dedications of psychology is our

failing infrastructure, and it then produces a more negativity with ceo psychology. back to theings us fed in a sense. we don't talk about the scope and we spent time on central banks. query: if you talk to every central banker, they wish they became less important and we never talked about them again. they were's government focused on fiscal policy much more. when i was starting in the business, we spent much more time focusing on fiscal policy and the central bank was not as important as it is today. the central bankers are the talk of the ecosystem that we live in. time talkinguch about how to improve governments and that is one of the problems of the political system. too few substantive

conversations and too many soundbites. david: that is the wish for the 20 16th presidential election. thank you, larry think. great to have you with us. when we come back, goldman sachs .resident that is next. ♪

matt: welcome back. i am matt miller. if you have not checked your phone, you will be surprised by the asian markets overnight. the nikkei up 6%. hopes foras the world more stimulus from central banks after mark your druggies ecb

meeting -- after mario draghi's ecb meeting yesterday. european markets up, they percent plus gains for the cac up and sos, the dax is the ftse. in the u.s., gaining as well. dow jones futures steadily climbing throughout the program, now up 215 points. one interesting stock to know before i pass it back to stephanie, apple. coming out and saying that they think the iphone seven could aost the stock 50%, adding quarter of $1 trillion. stephanie: thank you. the hot topic of debate in china. i want to welcome -- sorry, i got confused. goldman sachs president and coo gary cohen. -- cohn.

we already heard it will be a hard landing for china. there is a real divide. what do you think? gary: thank you for having me. i do not believe that. i think if you listen to what china has told you for the last 10 years, they are doing exactly what they told you they will do. they started out on a plan a few decades ago to build out the infrastructure of their cities. amount of enormous money, capital on building infrastructures. when they were building out the infrastructure, cities, railroads, airports, all of that, it was tangible and you could see it in the economy parent you saw it imports, commodity prices, and it was growing the economy at 10% to 40% from a low baby. once they built all the infrastructure, they told you they were going to migrate

hundreds of millions of people into the cities and take the chinese and make them consumers. they're taking the chinese people and making them consumers. stephanie:? with what money? think about productivity. them they have made consumers in the cities. when you make them consumers in the city, they start spending money, but it is called consumer discretionary spending. consumer discretionary spending does not show up as predictable as government investments. ,rik: they have one problem which is that there fx preserves are eroding at the rate of e and dollars every six months and possibly accelerating. they are faced with this choice and we talked about it with mary think. devalue or close the capital account. what will they do? choices, theye are clearly evolving their economy to consumer driven. erik: in the next six months, they have to do something.

carrie: they may have to do something in the next six months. -- kerry: they may have to do something in the next six months. they have built up the capital over many years. it is undeniably going down and you can see it in the numbers. they may take actions in the next few months to deal with that. do i believe they will end up devaluing the currency? i do. stephanie: what are you doing about it? we see ubs and credit suisse leaning in hard to china. what is goldman doing? cliente have a robust franchise in china and the world. we are talking to our clients theday long about what opportunities are, what the risks are and what the rewards are to be invested in china, involved in china and what we think the long-term opportunities for clients are today and in the future. erik: if the chinese will devalue, how does that change the outlook for the clients?

whether they be investors or banking clients. gary: it is different. we have been investing clients, corporate looking to grow their business, chinese clients chinag to the best out of and into other parts of the world. it is not a one size it's all. we are in a position to provide the unique position to all clients. we provide the advice that we think best suits their needs. stephanie: and that commercial was brought to by goldman sachs. erik: we got that. he with me and stephanie. more gary when we come back. ♪

stephanie: welcome to the second hour of "bloomberg . "

you know where we are. we are in switzerland for the world economic forum. i am a fortunate stephanie ruhle. erik and also fortunate schatzker. getting back to our interview with gary cohn in a moment, but the bank of japan, the new york stock exchange president tom farley, and ceo of liberty global. stephanie: we have to get you a quick check on the markets. you know i am the house optimist and finally, u.s. futures atwing a rally, dow futures 200 point game and the biggest since august. if we're going to talk commodities, gary isn't the house. erik: yes. you started in the commodity business and were looking for perspective and maybe some crystal ball gazing. wasw months ago, $25 crude crazy talk and it dropped to $26

this week. us werethink plenty of talking about it. some may have thought it was crazy at the time, but if you look at the fundamentals, commodity markets, supply, demand, if you look at the supply and demand picture, we were just holding supply faster than growing demand. ultimately, when that happens, you have to do something with the additional supply being built. we have been storing it, using the storage facilities, and we have run out of those locations. we are having a price in those locations. more expensive and we will get to the most expensive to store floating which is storage, vessels for crude oil and parking them offshore. the market needs the price tag in, and that is what we are going through. in some respects, this is the simplest markets figure out because you just have to figure out what is being produced every

day and what is being consumed every day and what is the difference and where is it going. stephanie: why don't producers that their head around this at some point? somewhat of a rational question and at some point, we will shut in production. you'll get the price of crude oil to a low enough number for a long enough period, that producers will have a negative margin and they will make a rational economic decision in shutting production and we will see a decline in production and the equation will rebound and rebalance itself. if you look at these super cycles and commodities, that is what happens. stephanie: how long will it take approximately? know.none of us we continue to see demand growth. if you look at demand growth year over year, it is not spectacular, but we saw it in the fourth quarter this year over the 1% last year. stephanie: it is nowhere near the supply. gary: that is true. you have more supply growth and

demand. we believe, and i think everyone you talk to tell you that they believe supply is diminishing. there is a natural depletion curve in oil production. we are seeing natural depletion and no new production come on at the prices. this will run its course. it has on every other cycle and it will in this cycle. how many energy companies are you advising right now? dozens? hundreds? gary: many. erik: what percentage are within weeks or months away of $30 crude? don't know specifics, but every company has its unique set of circumstances. what is their mixture? heavy? light? how much natural gas do they produce? , singlee other products product dependent, multi-product dependent? two they have long-term contracts on the rigs?

if they do come at they are spending money on the rig's. there are a lot of factors and not a simple one factor in the equation. aik: i him trying to get sense of how close we are to the capitulation point. production -- where production gets shot in because some companies are not generating enough cash flow to meet their obligation and they have to drop. close.e think we are we think in this $20 range, which is what we had written about months ago -- erik: and you thought it was way ahead of the curve. gary: and we believed will to get down to this $20 oil and it would cause production with the marginal barrel and they would have substantial enough negative cash flow that you would start seeing real production to climb. you will see some companies needing to restructure their dad, needing to issue equity, you willergers, and see those activities that you see in the stress part of the cycle. stephanie: you do think we will have a big m&a year?

from a banking perspective, there is a lot to do. gary: i think the energy and commodity, not just oil and what is going on with copper, coal, they are all depressed in price. i think the commodity sector, the natural resource sector, there will be corporate activity this year. stephanie: help us make sense -- erik: help us make sense of corporate income. they are talking about fixed income, what do you see that others do not? gary: they were asked what is the ball and asked to portray the bull case, to put it in perspective, and we all see bookcases. case asportraya bear well and he said, that is not the way we run the business. we run it on the conservative case, but there is a bullish case for fixed income. we go back to normal monetary policy. we go back to an environment where our clients are not

reliant upon a zero interest rate environment. they are not reliant upon mobile authority. we are going to get steepness back in the yield turf. we put some forward inflation back into the system. receipt breakeven prices and we see the need to hedge for and that that taken out of the liquidity of the market. spreads of gotten wider and they -- erik: they're are reflecting the cost of your balance sheet. gary: in some markets they are, and in some, they are not. don't you think it is a positive to have a real distressed market? when high yield trading at 6% and there was no such thing as the stress, that was a bigger problem. gary: is it positive? stephanie: it is an honest market. gary: every market condition is a positive or some and negative

for others. we are there to help facilitate that for our client base. some will take advantage of the distress situation and others will not be as happy. it will be more expensive with them to raise capital. erik: relative to her goldman was the precrisis period, how much liquidity can you provide today? gary: you have seen what the banking industry has gone through. and they have had more regulation put on them with dodd-frank. we are in complete compliance with all of those rules. erik: i'm not suggesting otherwise. gary: to comply with those rules, we have delivered our balance sheet dramatically, which means we use much less of our balance sheet. therefore, we are not able to commit our balance sheet to the market. have aie: you still robust credit trading business.

when you look at morgan stanley, they look at capital investment, regulation and they are pulling back. why do you have a different view of body want to stay big? gary: we still believe there are great opportunities for our clients and for us to be in that business. we are going to provide liquidity for our clients and get paid to provide that liquidity. erik: gary, you said there is less liquidity for reasons we just discussed. are there any pockets, particularly of fixed income, or anywhere else where you are having trouble finding that liquidity for your clients and giving them the opportunity to buy and sell what they want and that prices that they think a reasonable? stephanie: they will never think the price reasonable. isy: i think every market reflecting some trouble liquidity. erik: really? with fixed income or extending to equities? gary: i said every market.

look at the movements you talk about every day. you talk about the equity market , up going down 200 points every morning before you come on. 200 points every day. that is like normal occurrence right now. you have to factor liquidity into this. when you do not have natural liquidity providers, the marginal fire or the marginal seller is going to push the markets farther than they should if it was a liquid market. everyone wants to talk about is this 1998 or 2008? it is neither, there was liquidity in 1998 and 2008. the liquidity is missing in this marketplace, so the person who needs to buy or sell, they are creating the price. acrossie: when you look your businesses, where do you see a big moneymaker this year? gary: we look at all of our businesses as great potential moneymakers. stephanie: try again. [laughter] gary: i cannot try again because the truth is simple. we have a dominant --

say,anie: he will always you think we will make more money in high-yield markets, but where do you think there is great opportunity? commodities, and credit. the two markets we are talking about the most and there is the most stress or distress. you want to be in the distressed and stressed markets. we just talked about how much activity there will be an corporate advisory and the natural resource segment, so that is good, too. if i had to pick one market, i would go to commodities and credit. erik: on this note, goldman was the only firm on wall street that did any significant hiring last year. you are up, morgan stanley added a little bit and jpmorgan, citibank, down by thousands. will you be hiring on that scale again in 2016? gary: it depends on what the environment looks like. client focused and client active our clients are

and if they need people, we will hire the people. erik: at the very least, you need to be hiring now and not last year. gary: we are on our normal hiring cycle right now. the people that we would be hiring who will graduate in the spring and the summer class, we are going to our normal hiring of those classes right now. that does not mean we will not 5%through our normal bottom exercise. we will go through that 5% exercise. if we choose to hire those people back are not, we will make that decision up a time based on what the environment looks like and what our client franchise looks like. stephanie: what do you think the hedge commenced people look like? when you think about banks that have great relationships with funds, huge prime brokerage business, do you think we will see more funds shutdown now that volatility is here in the markets changed so much? gary: i don't know if he will see more shutdowns. the community as a whole has

gone through a tougher return environment. there are outliers at both ends and there are some people who have done well. it has become a tougher environment. an environment where you have to be really right and have pretty sizable bets in the right place. i think there is a natural aging out some of the earlier hedge funds at got into the industry. the question to me is, is there a second generation that will take over some of the early hedge funds? i do not know. i would guess. this is truly a guess that there will be less hedge funds at the end of 2016 10 in the beginning. stephanie: are you reviewing your prime brokerage business seen that they're making less money and there is more pressure? gary: we review our clients every single day. stephanie: all day. gary: we do. the prime brokerage business has gone through pretty radical change in pricing. five years or 10 years ago, the

prime brokerage business was an entrance business that you needed word you felt like you did a prime broker. stephanie: the doors were open. gary: now, it has to make money. if you cannot make any, you do not want to be in the business. erik: hedge funds are front and center for the trading business, what about investment ranking? -- investment banking? what are their plans for m&a and capital raising? gary: in many respects, unchanged from last year. we had the week this location. corporate boards and corporate ceos do not tend to make long-term strategic decisions based on two weeks of market activity or volatility. the big issue for corporate activity will be the credit markets. the credit markets stay open and you can continue to finance big acquisitions, and there is no indication to me that you cannot -- erik: some are having trouble. gary: the flipside is look at

what happened with in bed, -- inbev, a good indication that you can get deals finance. to the extent that the finance market stays robust, i think corporations will continue to look at should to take opportunities as real a talented. -- as a real alternative. erik: what about financial buyers? game asey are in the well. they have deep liquid pools of capital and capital that needs to be deployed and there was leverage available for them. they are bidding on assets as well, so they will be there. stephanie: silicon valley had lots of capital, dollars raining from the sky. things are turning. do you think we will see the field of dead unicorns this year? gary: i don't know about that. for the silicon valley companies that have robust business model and providing a good service someyou and i want and cannot live without, i think they have a great business model and they will continue to use them. for the business models that do

not quite have a revenue model, it may be tougher for them to raise capital. we think this is a great opportunity for us. what the last few years, it has been really easy for the silicon valley community to raise capital. i think 2016 may not be as easy, but that is an opportunity at goldman sachs. there are clients that will come to us and ask us to raise capital for them. we will go out and raise capital. the marketplace will separate again, winners and losers, they will fund the winners more efficiently than they fund the companies whose business model is less secure. erik: of course you are right. companies with a viable business will become whatever, the next facebook, uber, but of the 140 odd companies with $1 billion plus valuation, what percentage are the survivors? gary: i don't know. not 100%, but i cannot tell you which ones. stephanie: let's talk janet

yellen. given the volatility in the market, given the geopolitical climate, do you think she will praise again? -- raise again? gary: i think she has a tough task ahead of her. stephanie: since she stepped into the job. yes, since honest, she has stepped into the job. she is clearly aware of what is going on in the financial market and keeping and i on financial conditions which have continued to tighten, to the extent where they needed to tighten financials, the market is doing it to some degree. in my opinion, and there is a wide cap of opinions, i think potentially, they tighten once more this year, but i am not a believer that they time for more times. erik: with your traders halfback on, is it 10 year or by itself? gary: how about neither? erik: it will hold at 207? gary: if i had to trade right now, i would sell it. we have been in this 200 to 230

range, 207, if i had to, i would sell it. below 2%, it gets interesting. stephanie: the one thing you are most afraid of by now in the markets? a lack of understanding of what is going on in relation to the different markets. everyone has thrown on the markets into one bucket, and we see this mass move with interest rates, equity and oil almost together. it is not the same market. erik: where everything correlates to one. gary: yes. in times of extreme, negative and positive, everything goes to one. stephanie: quantitative easing did that with a safety net. gary: we are in a different environment right now. the oil fundamentals are the oil fundamentals. what is going on in the oil market should not be dictating

what is going on the equity market and in the fixed income market. i think people are confusing the supply and demand picture in oil and they are saying, a-ha there is a slowdown in the global economy because no one is consuming oil and i think that is wrong. people who are selling equities based on a lower oil prices have it wrong. stephanie: a-ha! an absolute treasure. president and ceo of goldman sachs -- coo of goldman sachs, gary, the man, coh. n. still to come, we will be back. you are watching "bloomberg " from switzerland. ♪

welcome back. i am that miller.

futures up across the board with thane digit moves, more 200 point gains on dow jones mini contracts. oil is up for a second day in a row. a pretty sizable gain, so crude rising today after up again in yesterday. let's go to vonnie quinn. thank you. general electric posted fourth-quarter earnings and sales grows in the power division. the ceo has vocus. industrial manufacturing and data analytics and getting ready of ge finance and consumer base operations. how much is having a search bar on the iphone worth to google? one billion dollars. what they paid apple in 2014. it came out in a transcript from oracle's copyright lawsuit against google. that is your bloomberg business flash. you. thank life masters made her name as one of the financial engineers behind credit default swaps, but she is leaving in your startup

that deals in block change. digital asset holdings is on the cusp of ending the financial industry once again. this time with the code that powers bitcoin. this is a subject that is near and dear to my heart as i looked on at the but bitcoin for a couple of weeks. >> it is a broad technology that is behind it. matt: in this case, they are separating it and it could be one of the biggest changes in the financial markets ever. they have not only got a big investment for a number of firms, but they will use this technology to help settle trade. listen to what she had to say. >> any activity that requires processing post trade is one that can help with this technology. we are ready talked about .quities, fixed income

i think about lending and indicated leverage known space which is notorious for big asset work, credit intensive and imported to the economy carried it takes on average 22 days to settle alone, which is very troublesome, particularly when and buyers are the banks institutional investors who put assets into things like mutual funds, etf's which have mandated liquidity requirements and underlying asset -- >> is not there yet. >> exactly. tore is an enormous benefit speeding things up. think about post-trade processing and foreign exchange. think about derivatives, the world post dodd-frank, where we have mandated derivative transaction reports. as you know, it is a very painful and difficult exercise

to comply with regulations. imagine if in fact, you had a single ledger of record to enforcing what would be rendered redundant. disappearance see real-time rather than after-the-fact. think about the new rules related to arjun -- marching of derivative contracts which are produced an enormous operation. corey: so you know right away what it is. blythe: yes, the strain to reduce this agreement relating to that identifying more quickly whether the disagreements relate to margin cost or are actually rising from the norms numbers of application. it is interesting what this could do for the financial markets. i think people are going to work in lower manhattan to do these jobs and really do the settlement of trades and it takes three days to settle. this could change the settlement, this transparency

around what happens and the ability for regulators to know what happens with every trade. matt: i hear a lot of people comparing it basically to the effect that the internet had on correspondence. you used to have to wait a couple of days for a letter to get from your house in san francisco to my house in new york, whereas now, if you want to shoot me a letter, it takes seconds. corey: i still send cards. matt: that is very kind. corey: that is a great comparison. ofis an arcane methodology what happens with trade across all platforms. equities are simple to think about, but what happens is you have two people on each side trying to figure out what is going on and the ledgers might not match. there is not transparency because they're not really connected or part of the actual trade that happens. this changes all of that, so you can understand what is so attractive to the people in the markets. matt: you point out that not

only do they separate or they did not find a way to separate the block chain from bitcoin and they're not using the block chain but the technology, but it is not the block chain that we think. corey: there are a couple of things that are no goes, for example, customer rules are important in regards to money laundering. the point of the coin is an amenity. and nots not -- amenity. this does not have that. this is to look at the trait and no hope is exactly involved and at what time and let everyone in the markets know that as well. matt: i wonder if you can keep the democratization of the block chain. thank you very much. quick break on "bloomberg ," and we are back in two minutes with more. ♪

♪ >> we're looking southwest over the roof of 31 west where it appears to be a beautiful day in

new york city. it should snow later or at least get a little blustery as we await this winter storm. let's take a look at the markets this morning. front with the futures. gains across the board, 209 points on dow jones. after asianacts up mouth -- european markets rallied hard. asian markets. the world is expecting central banks outside of the united states to add more the quiddity to the system. take a look at the individual stock movers. american express coming out with fourth-quarter profits that fell 80 -- 80% to $899 million. eating estimates when you take out the adjustments. you can see the stock is down. the ceo says he will spend more on marketing. the company has to make up for its loss with the partnership with cosco. ge's sales down 16%. billion missing the

streets estimates. this is the seventh quarter of eight that ge has missed the estimates. though shares down 8% tied to the -- .8% tied to the drop in oil prices. look at facebook. the first full quarter of for facebook.s the first quarter of the global dynamic launch a product at spirit oppenheimer says that will lead -- yield strong results. those coming out on genuine 27th. over to vonnie quinn for your first new -- first word news. vonnie: if your travel times and vote east coast, you will probably changing them. a blizzard is taking aim at the mid-atlantic and 50 million people. have been canceled or forecasters say washington could get more than two feet of snow and new york to get up to a foot. whenast 42 refugees died 26 -- ships sank in the agency. 17 victims were children.

the greek coast guard is rescuing survivors and bringing them to a nearby island. officials say mothers were having to turkey with asylum-seekers. another setback for the navy's much criticized program. didn'ty says the crew lubricate the years property. had month, a similar ship to be towed into port because it's years fared. -- failed. i am vonnie quinn. matt: thank you very much, vonnie. i want to turn to our coverage in domino's -- in davos. here is his take on how market volatility is impacting business in europe o -- >> what is the european economy really like? >> i think it is in good shape. it has been through the

financial crisis. it came to reasonably well. thequantic dating -- quantitative easing, we like to see the effect it has. i think consumers are healthy. we are not seeing any falloff in consumer demand. the capital markets are good. you have political issues. the refugee crisis, changes in government. matters. brexit those are always in the background, but fundamentally, i think europe is in a good place. we are optimistic about it. >> do those issues matter to your business? brexit? mike: it can not directly. to the extent that it creates uncertainty and makes it harder for us to procure equipment, we would be supportive of the u.k. staying in the eu and having a good relationship with the continent. we are on both sides of the water. it could have an impact. we will certainly be supportive of what the prime minister comes up with. stephanie: what is not getting supported is your stock. it feels like it has taken a

hit. the whole market has. 20% is a lot. is this an increase in competition? factorsu have macro affecting the markets, but our business has never been stronger. we see the next three years being more robust than the last three years. i have said this. we have 10-12,000,000 homes we can build in europe. brand new organic growth. mobile opportunities to we're closing a mobile acquisition and a couple of weeks. nine countries where we have launched mobile. we see terrific revenue drivers. good efficiencies. we have told the market we see accelerating growth and the next years. what would be impacting our stocks specifically? unclear. we have more leverage than some to we are five times leverage, but our balance sheet is completely fixed rate long-term, the volatile issues there at all. we have been 20 plus years as a public company, 10 as an executive, i have seen it all.

we power through. we are a big buyer of our own stock. stephanie: do you look at these markets, the volatility we have seen and say just power through? mike: absolutely. there will be opportunities for a spirit we are in it for the next 10 years, not the next 10 months or 10 weeks. think about john. he has been in this business longer than i have. 50 years.n in it this is not the first bump in the road we have seen in the public markets. it creates opportunity. historically, it creates opportunity. stephanie: do you think it is a big acquisition year for you given in -- instability? mike: maybe. we don't have a pipe on that that we are willing to talk about. it is possible. stephanie: in terms of what you want, cable operators, you have them all in europe. content seems to be what you are most interested in. are there assets you think are interesting? mike: there is still more cable to be consolidated. stephanie: not much. mike: there is still

fragmentation in many countries. content, we are being careful. we are being selected. the deals we have done, these the markets,nto opportunities, businesses. i think we will tread carefully in the content space. stephanie: why does it make sense to you and would i.t.v. come back for more? mike: they are one of the largest producers of content in europe, and america, in fact. for us, it is a good strategic relationship. channels ono launch a estimate on platform, in competition with netflix. there are advertising opportunities. we have 50 billion hours of viewing data that we don't make any money on. we have incredible amounts of consumer data we haven't yet monetized. working with companies like itv we could do interesting things. stephanie: strong come along, positive, power through, there

has to be a negative. what is keeping you up? usually, we would say regulation, but honestly, regulators in europe have it right. i think they have it right on the neutrality. consolidation. telecom single market. nervous byne, i of nature about certain things, but i'm pretty relaxed. i can't control china. stephanie: price of oil. mike: i can't control consumer demand in the u.s. or growth. i see more upside and promise and others. we just have to power through this uncertainty and do what we can do for our consumers. they are in good shape. stephanie: to european regulators teach u.s. regulators a few things?> mike: we have to be careful but around net neutrality, they can for the balance they have struck networksroviders and like google is a healthy balance. we can manage our network,

bandwidth, provide specialized services. they can do it is a healthy balance their and the u.s. could learn something. matt: that was liberty global president and ceo mike fries in davos. when we come back, and exclusive interview with the bank of japan governor and their much anticipated policy meeting next week. that is when you do not want to miss.

vonnie: welcome back to bloomberg go. here is your latest bloomberg

business/. the android operating system has been a huge moneymaker for google. in court for a loss a -- lawsuit against google, android has generated $31 billion in revenue and $22 billion in profits since two thousand eight. google says the figures should not have been made public. in six second time weeks, goldman sachs is revising its forecast for the euro. it is now bearish again. they predict the euro will drop to -- it comes after the comment yesterday from the european central bank. drilling in the north sea has sent to a record. ,ccording to a data provider 63% of oil and gas rates in the u.k. north sea are being used. in the norwegian north sea, the figure is just slightly higher. of june ofan it did 2014. that is your bloomberg business flash. let's get a check on the markets with matt miller. matt: want to give you a couple

of stocks to watch this mine. caterpillar, the dow member is being written up by baird. the selloff we are seeing has been overdone and we could get better here in caterpillar stock was down 12%. in the premarket, up 2%. apple being written up by piper jaffray. the analyst there says that the iphone seven could result in the rising 50%. it is a $533 billion company. that would be more than a quarter of a trillion dollars added to the market cap if gene munster is right. disney is another one. in an article out this weekend, saying that it offers compelling value. it has fallen to a 52-week low with an 11% drop so far year today. buying sharesiger in the stock of the company he runs yesterday. finally, i want to mention macy's. look at macy's in the premarket.

right now, up 2%. if you will get a year to date, it is relatively shocking considering what we have been through on the markets as a whole getting crushed this january. for macy's, it has been a great month. its bestpace for monthly gain since 2011, up 16% on speculation that there could be a buyout. also, this company has used warm weather as an excuse for sluggish sales so far this winter. if we get this cold wet weather front coming into the east coast, we have already felt it in temperatures, but we will get it in snow apparently today and over the weekend. here, you're looking at a picture of washington, d.c.. about to be just clean but about to be just -- don't down. maybe shoppers will be forced to go into bloomingdale and by loads of $700 winter coats to prepare. when we come back, and exclusive interview with bank of japan kuroda. haruhiko

stay with us on bloomberg go.

brendanmatt: welcome back to blg go. you are taking a look at the gorgeous alpine mountain scenery in dollars. we are preparing to hear from bank of japan governor haruhiko kuroda. if you look at futures and equity markets around the world, we have a big rally on her hands. the reason is that investors are optimistic after mario draghi's

speech yesterday that more central bankers are going to add more liquidity to global markets . that is why it is incredibly timely to hear from the bank of japan governor right now. let's watch. i am very pleased to say to all of our viewers that also listeners on radio that mr. is now joining us. thank you so much for speaking to bloomberg. it is almost exactly a year ago that we sat in these very chairs overlooking doubles and its mountains to talk about monetary policy. we world has changed for the worst. kuroda: parley worst but partly better. lower prices provide income, demand. so they benefit from loyal order prices. on the other hand, exporters,

they are suffering from sharply declining oil prices. also, global financial markets have been fluctuating so much. francine: we have had immense turmoil. we talk about oil prices, china oil prices imploding. where is the truth? where do you see the biggest risks? do we risk global growth slowdown? kuroda: the chinese economy is gradually slowing down. i don't think the chinese economy is faced with the risk of a hard landing or anything like that. the growth is still six, 7%. that is quite respectable. rates are growth slowing down, even in china. it is very gradual.

also, as you know, the chinese government -- to deal with any i am relatively optimistic about the short-term growth aspects of the chinese economy. marketsglobal financial are in turmoil. it is not like the situation immediately after, the riemann crisis in the u.s., by far the biggest economy, the biggest financial sector, that country has suffered from riemann crisis. that affected the global economy. through the dominant role of the dollar. i don't think, even if china slows down, even if oil

producers and european countries, their growth rate slows down, i don't think there is any sort of global financial crisis or global recession. like the situation after the riemann crisis. francine: how worried are you about deflationary pressures? kuroda: i think that is a real risk. because of sharply declined oil price and commodity price. everywhere is slowing down. the rate in japan, or u.s., or --ope, the inflation will inflation rates are close to zero. the rate isde -- 1-1 .5%. that is not so bad. economythink the global

is on the brink of sharp appreciation. because -- sharply declined oil prices. that affected the inflation rate, but i don't think the situation continues indefinitely. some stage, oil prices will recover. you have been expecting to get 2% inflation a year from now with the continued price of oil going down, how achievable is that? kuroda: it is true that in the last year-and-a-half, oil prices decline. i don't think oil price decline what the -- continue indefinitely. at some stage, it will bottom out. i don't think it will quickly before the turn

of the year. i think it could recover. that would affect the inflation rate. point is the underlying inflation trend in u.s., europe, and japan. it is not zero. it is 1% plus. stabilize, then the inflation rate will go up. rise,f oil prices do not and i think they would at some point start to rise. francine: at some stage. six months? kuroda: at this stage, our focus rate couldinflation be reached sometime around the second half of fiscal 2016.

that means late 2016 to early 2017. that is our focus. focus is focus. ,f oil prices quickly recover trying to reach a target. if oil prices continue to decline, the target reaching timing would be later. do you feel the current impact of the market turmoil but also business uncertainty about china is weighing on japanese corporate behavior? kuroda: at this stage, we haven't yet seen such change of the japanese corporate behavior. , globalined

uncertainty, financial turmoil continues, then that could affect the behavior of japanese corporate sector. at this stage, relatively optimistic. about the profit situation. very strong investment plan for this fiscal year. francine: they haven't come back on capital spending? how long does the turmoil have to continue to have an impact? kuroda: that is a difficult question. francine: you are a master of this. kuroda: it depends on the income situation and the financial turmoil itself. i can't say anything definitely. certainly, if prolonged, that would affect the japanese

economy. we are carefully watching the global financial situation. the economic situation in asia. as you know, half of japanese exports go to asia, including china. a substantial part of japanese investment also goes to asia. asia and japan. they are closely interconnected. watch,inue to carefully particularly the asian economy, and also the global financial situation francine: when we talk about the price of oil. another deflationary pressure devaluation.e yuan given that and your inflation expectations, are you satisfied with the current state of inflation expectation in japan? kuroda: yes.

at this stage, inflation relatively well maintained. at this stage, i don't think inflation expectation in japan is declined sharply. oil price prolonged decline, prolonged financial future could affect inflation expectations. at this station -- stage, not much. francine: but a little bit? kuroda: like inflation expectations in the u.s. or even europe, slightly affected. europe, notu.s. or much. francine: you have the tools to conduct a -- combat that? kuroda: yes.

we have currently been implementing quantitative easing. expand further room to our qqq e if necessary. we were talking last time in 2015, you are telling me you would and could be much more creative and expanding stimulus. pressuresdeflationary and the technical changes to your asset program, would you consider focusing more on stocks? kuroda: i think there are many financial assets in japan government debt, government bonds, but fixed income assets, stocks, bonds, both. as you may know, like in any other country, and japan, the government bonds market is the

biggest, most resilient, deepest market. we have an purchasing government at thisbstantially stage, roughly speaking, one third of the total government bonds has been acquired. we have gone through your vision, how you see deflationary pressure on japan, do you think you'll have to be even more creative than what you thought you would be last january? kuroda: as i said, if necessary, if necessary achieve the target, and particularly if the underlying inflation trend is seriously affected, then, if

expand or we can further strengthen our qqq e in many ways. there are many ways to further strengthen, expand our qqq e as you suggested even more creatively. [laughter] francine: the boj balance sheet has more than doubled in the last three years. is there any limit? anything preventing you from continuing for the next three years? the bank of japan balance sheet expanded. withof japan balance sheet respect to the total gdp is, of -- i really don't think at this stage we are faced with any limitation of qqq e operations. as i said, there are many

financial assets. volume is -- i don't think at this stage we have any of monitorimitations -- quantitive easing or qqq e. francine: how concerned are you that markets are pricing expansion? kuroda: we have committed ourselves to achieve 2% inflation target of the earliest possible time. currentcontinue the accommodative monetary policy, is e, and so the 2% target made and maintained in a sustainable manner.

ourill definitely continue current expansionary policy until the target is achieved. francine: it must be difficult. we always look at exchange markets. stock market, debt market. kuroda: above all, the real economy. inflation, so on and so forth. economyd, the japanese is recovering moderately, growing 1-1 .5%. at this stage, the cycle of

income to spending by the corporate sector as well as the household sector is maintained. where the robust. -- fairly robust. concerned so much about the real economy. the market, the global market. certainly fluctuating. thearefully assess potential impact on the real economy. at this stage -- japan, between markets and the real economy, it is very close because of economics. markets, ceos the power to spend a you must be watching the market more than other central mark -- banks? kuroda: other central banks are also carefully watching. [laughter]

including stock markets. of course, the monetary policy in japan as well as any other is directed toward price 2%bility defined in terms of inflation rate. that is the reality of the monetary policy pursued by any developed country. as i said, we carefully watch. [laughter] francine: it is the real economy. kuroda: also, assess the of the marketct situation on the real economy. when you saw the headline, japanese stocks were in the territory, how much does

that impact japanese psychology and how much does it go to wages and corporate spending? kuroda: as i said, at this stage, the corporate sector is a very strong plan. wages are rising. at this stage, we don't think the current market situation has been affecting corporate behavior unduly. the market could affect the real economy. watcht we carefully market development as well as impacts on the real economy. francine: do you think they are mispricing? kuroda: i don't say anything

about the correct price of stocks [laughter] . francine: then let us move on. in 2014 when japan raised the sales tax, a caused a technical recession. why talk about a sales increase this year? after the negative liket, the consumption tax in 2014, the government decided to postpone the second stage 22017 by 18 months. at the same time, the government decided that they would implement the second stage tax increase so as to improve the fiscal situation. also, they would make economies

sufficiently strong to overcome 2% consumption tax increase impact on the economy. i think the government is doing correct policies to make the grow in a robust way. through appropriate fiscal policy. also, as you may know, the government decided to reduce corporate tax burdens. so as to encourage corporate to invest more in human resources as well as fiscal. three years in economics, why don't we see more structural reform? kuroda: more structural reforms

are needed. the government has a cover hence a program. the government is steadily implementing those. francine: to they need to be faster? kuroda: back of a better. as you know, structural reforms in any country, not so easy. i think the government is steadily and vomiting. many of them require change. organizationrent of parliament, tens of reform years be presented, submitted to the parliament. serious inent is pursuing and implementing structural reforms.

francine: are you uneasy? if you look around the world -- kuroda: yes and no. as far as japan is concerned, japan suffered until 2013. , very3, we adopted qqq e substantial monetary easing. we are improving inflation situation. japan --he bank of they are overburdened. [laughter] they are doing the appropriate thing. one final question.

you're confident. next year, we have another interview in doubles in the same place, things won't be much worse? i think next year will be much better. or at least better. francine: an optimist? kuroda: i am always cautiously optimistic. i am duly cautious. as a former presenter of the asian development bank, optimist. combine these two, i'm cautiously optimistic. francine: only back in a couple of minutes to continue with bloomberg go.

the third welcome to hour of bloomberg lp we are alive at the world economic forum in doubles, switzerland. erik: you just saw an unbelievable interview. francine lacqua doing with the government -- governor of the bank of japan. you saw the impact on the japanese yen. and media. matt miller will bring us up-to-date on that and every thing else. a great interview. i was riveted, and so where markets.

take a look at the currency at a board hearing of currency. i want to show you quickly the russian ruble at the bottom of your screen, coming back under 80. he went to a record low on the ruble yesterday. a little bit of a recovery today. the euro and the yen are both twong their weakest week in months against the dollar because of dovish central banker statement from mario draghi and haruhiko kuroda. u.s.e a live trade of the dollar and japanese yen. a one-day trade here you can to the movement as francine was talking about. i think it is fascinating to go through the yen over a few different time periods. i will widen it out to a year. you can see you can now buy ¥118 for a dollar. back in june, you could buy ¥126 for a dollar. it has gotten substantially stronger compared to that time period. if you look at it over five

years, the yen looks very weak. five years ago, you could buy ¥79 for a dollar. now, you can buy 120. if you look just for academic purposes at the yen over the last 45 years, you can see that it has really strengthened compared to what it was back in 1971 when you could buy ¥351 for a dollar. i think it is interesting to look through those time periods of the enter looking at asian markets overnight, big gains in japan on optimism that central bankers would indeed be as dovish as mr. kuroda and mr. drahgi has said over the last couple days. same for european markets. gains not quite as big, still 2% or the risen gains across the board on the indexes. for u.s. futures, also gains. 15 minutes until the open and the dow jones futures are up 204 points, s&p futures up 27.

now to vonnie quinn for a first word manus -- first word news. vonnie: nearly 1/6 of the u.s. population could be affected by today's buzzer. flight cancellations are already nearing 5000. forecasters say washington could get two feet of snow. a white officer facing a murder charge in the killing of a black man. demonstrators cheer the indictment of him yesterday. the man he shot last march and a suburb was naked and unarmed. the family says he was a veteran who had ptsd. even though guns were banned from airliners decades ago, nearly 2700 weapons were found at airport checkpoints. 20% more in 2014. most were loaded. news, let's get back to davos and erik and stephanie. stephanie: joining us now, the blackrock chief investment

officer. we have a lot of big picture big thinking into almost. what do you make of this market volatility? >> i think it will be with us for a wild. a series of full lines in the system. one of them is liquidity. china wasabout where building reserves, buying assets, that is not necessarily the case going forward. obviously, the chinese situation, difficult to understand the dynamic. and the middle east around oil, i think what we saw two or three years ago is not coming back, even with better policies. stephanie: volatility is here, how do you invest? rick: we are an environment where volatility will be higher. you have to think about the risk you are going to take in this environment. the downside is significant. opportunities are presenting themselves. people are selling assets. the securitized markets, the

high yield markets like commercial mortgages where you are seeing acids, that weren't coming up before the you're supposed to take advantage of. i don't think you have to be all in today. we haven't seen all of it. but some of it has gone away. you don't want to miss these opportunities. two or three years ago, you didn't see these opportunities. erik: i want to know if there is a market structure with 1.4 6 trillion dollars under management, no one trades more than blackrock. have you found in your business any trouble trading or buying or selling specific securities during the volatile period over the last 3.5 weeks? the amount that is trading in the market is sizable or they have been volatile, but it depends on what your trading. there are asset classes with issues because of fundamentals. don't try to sell a big block of energy in today's environment. stephanie: that would be before dodd-frank. rick: the amount of currencies

in the liquid markets is still good. one thing that people don't talk about, in the last couple of years, returns weren't positive. the conviction in the marketplace about how much risk you want to take was probably at a six year low. becomeppens is markets volatile, less liquid, plus, there are clearly market structures that are different. stephanie: what is your biggest fear? rick: there are four of them. the chinese market. the energy drop. people talk about oil dropping for the economy. it is not true for the default world, but it creates stress that you have to be careful. i think the u.s. economy has seen its best days. toon't think we are going session, but we had three months average payroll of $280,000. maybe we have one more month of good growth, but i think the dynamic, companies are being very careful about inventory

build. i don't we are in a recession, but i think we are slowing. we have to keep an eye on it as "his moderate at best. erik: rick from goldman sachs was here a bit ago and he said 1-1 --correlation -- what is your view? i always find interesting when people say oil is down so stocks have to go down. it doesn't make sense. there are things that are impacted by oil that are significant. we talk about pressure potentially, we talk about sellers of assets because accounts aren't as strong as they are. there is a benefit to the economy, the developed world. we heard mr. jean talk about in india, and a bunch of economies, a tangible benefit coming in. a barometer ofs demand. that is not exact the right. oil started falling because it is a supply dynamic, and technology dynamic. i think people watching in terms of what volatility is. i grossly agree with gary and disagree with those who say -- and i have heard it directly,

this is terrible for the economy, it is not her there have been sent cutbacks. we have seen already. i think they are going to be more deliberate going forward. i think they are going to be a lot slower. they will do one or two. i could see, if pressure continues, i could see them not going. stephanie: that is blackrock's rickglobal fixed income reader. thank you so much for joining us. euing up next, can u.s. and seal a free-trade deal before the end of the obama administration? we will be speaking to the u.s. commerce secretary.

erik: welcome back to bloomberg go. in a few weeks, u.s. and eu negotiators will meet in brussels for the next round of talks for a free trade deal.

the parties has spent two years working on an accord. will we see a deal by the end of obama's term? thank you very much for being here. penny: thank you for having me. of the european parliament said yesterday things are going to slowly and we won't get it done during the obama administration unless things get that up. penny: we are anxious to get a deal done. transatlantic trade is extremely important, particularly as you see parts of the world slowing down. erik: what is holding it up? penny: there are a lot of different issues that have to be resolved. having talked to ambassador from and who is leading the traded negotiation, he is feeling good about the fact that pace is picking up now and his goal is to finish a negotiation this year. let's go to one that is farther along, tpp, turning to the pacific now. this is a big issue for the obama administration. it is one of his top priorities

to get this through. here of the timetable on congress. penny: let's understand why this is important to her that about access to the fastest-growing markets in the world. a middle-class going from 500 million to over 300 million -- you are talking about a deal that lowers tariffs, 18,000 tariffs on american goods and services sold in the asian pacific region. it is really important. i believe you are going to get a deal done this year, we will get a voted on this year, even know controversial in some respects, if you really look through the deal, this is good for labor, the environment, for the first time ever you have a chapter on e-commerce. no data localization, promoting trade between 12 countries. this is good for america. erik: apart from the merits, there is politics involved, as well. when you went for the fast track, you needed a lot of republican support to get it. in this presidential election year, will you be able to do that? penny: i think that when the

political calculus is taken, there will be a decision to get it done this year. erik: that is encouraging. last time we talked, you have just returned from cuba. you seemed enthusiastic. where are we in the process of normalizing relations with them? penny: we have normalized are trade. we have lifted through the regulatory process. we have made it easier to do things like cell telecommunications equipment or make sure that airline parts can be sold into cuba so that we can actually have airplane -- airplanes flying back and forth as opposed to regular charter flights. this will be in evolution. as i said when we talked last time, this is not something the overnight you will turn a switch. remember, cuba has evolution it has to go through. they have a dual currency right now. a lot of restrictions on how you hire labor. you can't necessarily vote --

higher the folks you want to hire. from our end, we still have the embargo in place. what i think the president has done is really important. we are engaging with the cubans. we are working together with them. we are getting to know each other. that bodes well for more commerce. >> did this remain a high priority for the obama administration? penny: the president has not -- has told us not to let our foot on the gas. >> thank you so much. penny pritzker here with us on bloomberg go. european stocks are up after mario draghi hinted that more stimulus yesterday. we will talk about the et beat move on bloomberg go coming up. 's next move. ♪

matt: welcome back to bloomberg go. we are moments away from the opening bell. teachers are very green this morning and climbing. to dow jones futures up

under 23 points. joining me for market reaction, the president and founder of tree kumar strategies and boomer market executive editor tracery on the way. thank you both for joining me. i see tracy every day. i'm always happy to see her. i'm especially happy to see you. >> good to be with you both. matt: fairly bearish guy to see on. for what will turn out to be a bullish day for stocks at the open, the s&p starting to rise up 1%. it has been a horrible start to 2016. what do you expect from the fed -- sorry, ecb is dovish talk. s dovishjapan kuroda' talk. we'll that serve to boost the stimulus stocks were us? >> it will in the short-term. we have seen the benefits from mario draghi's statement yesterday. what it did to european stocks, jack -- japanese stocks.

today, the u.s. futures and when the market opens. the difference is it is only transitory. it doesn't happen for a long time. the problem with europe is lack of structure. the labor markets are rigid. you know germany so well. germany did its reforms and 2003. the secondhese -- man of europe into the most vibrant economy good it was not monetary growth or fiscal deficit. matt: this is something we have heard from everyone at davos. monetary stimulus will boost us for a bit. you need fiscal policy. we haven't seen that. tracie: this is what amazes me about what has been happening. we saw it a couple days ago. it felt like investors were finally sort of coming to the point, this crisis in confidence with central banks where they realized all of this easy money had inflated asset prices and actual economic growth hadn't caught up to the same level.

it felt like investors were realizing that. mario draghi steps up, we have kuroda, the chinese authority there to support stockholders. the markets go up. i wonder if fate has been regained -- faith has been regained. komal: i don't think so. even a dead cat bounce as once or twice. if you have a situation as ethical as matt mentioned in the beginning of the year and you have monetary expansion and if you are running a hedge fund, a debt trader and you think you are going to get some benefits for a day or two, this is your day. why not take it manage of it? if you're going in with the oil price at 27 and you are able to come in at 31. it is a fantastic rate of return. viewerslem is, for your looking at it from a longer-term point of view, what they are with stocks for a

year or longer, this is not the right message. erik: we were spooked by china, spooked all your by the oil prices seem to have no bottom although, as you mentioned, we had a fantastic couple of days of rallying after march. is it the chinese economy with the underlying problem? the lack -- the growth engine? turn all of last week and had the occasion to talk to people in -- in different cities. as part of thes uncertainty with respect to china, they would like to have a free market for equities and the exchange rate. the political system is not willing to let go. that, they have to get over. it is not going to happen overnight. it is going to be tight and go and back-and-forth before they do it.

the big 800 pound gorilla in the room is the fed and the expansion that they have had since 2008 in terms of quantitative easing. matt: i have a chart up on my terminal. if you want to bring up the chart in the control room, i was just looking at quantitative easing, these flags that you see, qe1, qe two, qe3. the blue line is the s&p. it has climbed steadily although the pink mine which is earnings hasn't time that much. you can see is that as and thetive easing ends fed raises its target rate, you see stocks turned out. komal: if you continue the chart and make believe you are at the end of 2016, you have the blue line actually go down a lot more than it has done so far because you have added tremendous run up every time you have quantitative easing. be.ink there will

to make believe that quantitative easing and zero interest rate are going to push up equities. the end of qe and raising of rates will not have negative effects is unbelievable. let me ask tracy. you have been covering davos, how many people are saying we will see qe4? the end of last year. we have seen prominent voices talking about that possibility. at a minimum, it seems that people aren't expecting the fed to continue with an -- an aggressive interest rate hiking cycle. is auestion is this turning point for central banks. what they could do is step back and say we need these market excesses to work themselves out. so far, it seems based on the comments from people like draghi and kuroda, they will not do that. they seem to be promising additional measures. i wonder what happens from here

and back to your physical point, i wonder if the next step is perhaps some sort of fiscal stimulus. those are excellent points. i think there is a sequence. i see the fed cutting interest rate before a qe4. that will not do any good. just as the fed found negative interest rate will not stimulate so they also had to have qe. you have federal funds rate go to zero in the below zero, that doesn't help. then you start a qe4. that is where the sequence is. the problem is they keep trying it and you asked another very good question, what to do about qe not working? they are out of tricks. there is nothing else i can do. they keep doing more and more of it. gives up,market doesn't respond, and there is a big correction. that is the end of qe and low interest rates and we have standard policies after that. matt: maybe we will get that 20 2 -- the trillion dollar interest rate investment. thank you for being on again. komal: good to be back. tracy, always great to see

you, as well. our executive editor of bloomberg market. we are seven minutes into the trading day. let's look at the gains we are seeing right now. the s&p up 1.5% at 1869. the dow adding back 185 points 068.6, the nasdaq also putting up gains. let me pull up my imap so we can see what industry group, i'm sure they are all gaining, but which ones are getting the most? energy and materials are showing the biggest gains which is not a huge surprise. we saw crude oil getting big yesterday. we see crude oil gain again today p or let's look at the atex trade, up 6.5% to $1.88 31-41. here, you see a very interesting obs index. while, eds, vick's index. this shows volatility going back a 10 year chart.

you can see it is climbing to a level we haven't seen since 2009. the forecast for volatility and oil from the market perspective is very high. let's take a look at gold, as well. had gone intotors gold over the past couple of days looking for a safe haven. they are selling out now. trading at $10.97 h royall it's. finally, i want to point out some of the stocks that could weigh on the dow jones industrial average today as we see a 200 point rally. keep in mind that ge had a 60% drop in sales and american express is forecasting a lot more spending after losing its partner, cosco. there will be a new era for amex. i want to go down to bloomberg's abigail doolittle. she is live at the nasdaq where she is looking at apple rising at the open. abigail: the biggest influence on the nasdaq 100 are up-to-date her gene munster said the stock could rally by as much as 50% by september.

saying shares are likely to rise into the introduction of the iphone seven later this year on multiple expansions to on the recent weakness, stocks have been trading well below the 200 day moving average for the longest stretch since 2013 suggesting it could take some time for the buyers to gain control. matt: we will take a quick break on bloomberg appeared stay with us. when we are back and we have the president, tom farley, live from davos up next. ♪

♪ welcome back to

bloomberg go. this location needs no introduction. we are light of the world economic forum in davos, switzerland. joining us from our president -- our friend from nyc, tom, welcome. we or three or four days into davos. very volatile markets. what does this mean for you and your business? tom: in some ways, this is an opportunity for us to shine. i say that cognizant of the fact that investors are struggling and companies are struggling great exchanges are the messenger and the place where people go to in difficult times. the place where people go to transfer risk in difficult times per the most important thing is we are open for business. people trust us. volumes have been very high as you would imagine. 50%, round about 50% greater than average during this year. from that perspective, it is actually to some extent good for our business. on the other hand, the ipo market slows down genetically when there is all totally that

happens every time. this time is no different. we actually haven't had an ipo this year. the fourth quarter was slow. we will have to wait until volatility comes down to see that rekindle. we have had dozens. we have had really great companies that intended to go public in the fourth quarter in leading a bunch that one on the roadshow. entirely through the roadshow process. one more this week. those companies are still out there. they are great companies, brand-name companies. we get substantially all of the large ipos in the united states and many of these were going to be the largest ipos are 2015. they will, by and large, ipo, eventually, the question is when? it is likely a matter of months, not days or weeks. >> something like last week was a stress test for the new york stock exchange. how did you do? tom: you are right. it is a stretch -- stress test when you have so many messages

and traits. during the financial crisis, this sort of volume was the norm. we had a multi-month, even a full year of stress test of this nature going back 5, 6, 7 years. our systems were fine. we prepared for this all the time. we have always prepared for the spirit going back to hundred years for large volume days, we were ready. stephanie: is this a year when you spin off? tom: no. the new york stock exchange is a fabulous business. at its core, we are matching buyers and sellers and processing a large number of transactions. that is what the parent company intercontinentalexchange has done so well. intercontinentalexchange is now the largest exchange in the world by market cap, enterprise value, many metrics. the new york stock exchange fits nicely in the portfolio and it is something we embrace. money that you more pay make more money on big body days? -- on big volume days?

tom: i don't like to talk to much about it, but the spotlight tends to be on our ipo business because it is interesting, fun, on the front page of bloomberg website, for example. generatet of money we from trading volume is not. however, it is a much bigger contributor to our revenue and overall profit. stephanie: you had dozens of meetings in davos. what was your biggest surprise? rotom: the pessimism and cynici. stephanie: cynicism in davos? tom: last year, everyone was worried except the americans and indians and one or two other countries. this year, everyone is worried. there is an a lot of optimism whereas an american, i look at our economy and it is growing and unemployment is at 5% and interest rate are still low and relatively stable and i do see some cause for optimism.

i will tell you that there is a withsour mood over davos respect to growth aspects for the global economy. does a week like this raise any doubt in your mind over allocatinging -- resources to equities? as i make you nervous? -- does that make you nervous? necessarily mean they want to allocate to fixed income or allocate to one of our other businesses, they want to allocate to cash. that someo question of the activity you are seeing is redemptions and liquidations so there very well may be a calm after the storm, the storm being this particularly high period of volatility. i tend to think not just from my perch running the new york stock exchange but from a number of , we are axchange inc. largest futures in the world, and asian exchange, one in

europe, to the extent that there is a allocation for us and our shareholders, we should be ok. stephanie: i am surprised by all of the trunk talk. every dinner, every cocktail, so many questions about donald trump. do you think we could really see him be the next president? tom: it is fascinating how much our european and asian friends want to talk about donald trump. if there is one issue that will come up more than any other, it has been donald trump. there is some bernie sanders, as well. of themet with many leading candidates and i say to them all the same thing. we want a president who takes the economy seriously, who wants to create jobs, once inclusive growth. regardless of how entertaining they are. farley, the new york stock exchange president. thank you for being here. coming up next, an interview with defense secretary ashton carter.

>> welcome back to bloomberg go. earlier today, i had a chance to sit down with ashton carter. he talked me through his meeting with the meeting of the coalition against the islamic state. my purpose and asking them to come together, and i did a jointly with the french to -- defense in a stir, obviously, france brady energized by the , to show themis our concept of operations for destroying isil and defeating it first in iraq and syria which is the parent tumor and we need to destroy it there, and then it's the staff to seek -- metastases around the world and to protect our own people. in our concept of operations for how we are going to do that. what the capabilities will be required to, for example, take most line the rock, rock a -- iraq, and make a

contribution, the united states will be the leader. we always are. we are the most powerful military. there is a lot we can do. we need others. in three weeks, we agreed to convene the other 26 members of the so-called coalition against isil, many of them are doing nothing or not nearly enough. again, the united states is willing to lead this. we need to defeat isil, we will defeat isil, but we need others to carry their weight. there should be no free riders. >> you come away from paris with an overall consensus of those seven? ashton: i think they were grateful to have a specific operational plan. i shared with them in the military campaign plan. there are nonmilitary aspects that have to do with intelligence, a huge political issue associated with iraq and syria, and then the rebuilding

of places that have been ravaged by isil. a lot of different dimensions to iss, but the military part necessary. it may not be sufficient, but it is necessary. there were defense ministers that i need to join in. >> looking forward to your meeting in brussels. to what extent will be get support from sunni countries in the region? ashton: that is very important and that is one of my injectors. it is strange that a sunni extremist group running rampant in iraq and syria should attract sunni-arab counterweight as it has so far. i would look to galvanize that end my approach to that is to -- i think they have and work -- looking for american leadership. they have that. they have a specific plan. i will show them how they can fit in in ways that they have

the capability to meet. remember, those countries can do something that it is difficult for us to do. we can enable local forces to seize territory and all territory, but we know from our own difficult experience there that in the end, somebody else has to take over. somebody else has to run these places. someone else has to govern these places. it can be done from the outside in. at the end of the day, we have to enable rather than substitute for local forces. these other sunni countries can be a great help to us in doing that. can the conflict with the islamic state, can they be feared without sunni boots on the ground? comes to that, we have to do that. i think it would be faster and easier to sustain the victory. at the same time i would never say -- the united states has to protect its interests. it will protect its interests no matter what. at the same time, we don't ask other people for favors.

we don't do favors for others, either. we are following our own interests and we expect others who have an interest to bear their share of the way. >> you run a big business, $600 billion more or less every year? you know it thoroughly. what does the price of oil do for you? ashton: it is good for us in our force iscause our air a huge consumer of jet fuel, our .avy is a huge consumer of fuel geo strategically, it is a little more complicated. we are currently happy to have revenue as have less a consequence of the depressed price of oil, but for others, it creates problems. i mentioned that i know the prime minister in iraq. his budget -- we want them to succeed, we want the state of iraq to hang together, decentralized multi-sectarian state so that some kind of order

can be kept in iraq and they can defeat isil, but they are crippled by the low price of oil. she'll strategically it is a mixed picture -- geo strategically. but for us, we're going to fly the airlines anyway. >> we covered other subjects, as well. we will post on bloomberg.com. they have a tech startup in silicon valley and they are about to do another in boston. stephanie: that is what they need to be doing. if the defense department doesn't have technology down, they'll have the future. one of the best things about being in davos -- it is not like you walk away predicting the future but hearing from people like george soros, it is extraordinary. the bifurcation -- those who are so concerned about china and brazil, who thinks that the u.s. markets are wobbly and that janet yellen raise rates and others who say usa, got a letter, it is amazing. >> it is extraordinary. you run into so many people and have real discussions off the

record as well as on tv. i have been struck from the beginning that a lot of people aren't as worried as you think they might be. stephanie: a lot of people who are here don't have to worry about too much. extraordinary experience. that will do a -- do it for us on bloomberg go. we will be back in new york city on monday if we get out of here. good luck with the weather this weekend. today, you want to state for coverage on bloomberg markets. guess who you are going to hear from? the prime minister of norway. that is coming up next on bloomberg tv. thank you, switzerland. see you monday. ♪

♪ >> it is 10:00 a.m. in new york and 11:00 p.m. in hong kong. welcome to "bloomberg markets." ♪

>> from bloomberg world headquarters, good morning. i am betty liu. we are about into a half hour in the trading session. world are rallying in games. the nikkei surging more than 5% overnight. george soros raising a big red flag saying china's economy is in a hard landing. that will drag down stocks and cause the fed it to cut rates. is it turnaround time for oil? crude is being -- seeing the biggest two-day event jumping more than 16%, hitting a 12 year -- since hitting a 12 year low since thursday. let's head to the markets. ea