from bloomberg headquarters in new york, this is what we are watching at this hour. a record amount of crude last month. adding to the selloff. slowing factory output in china, a key manufacturing index dropped in january for six months in a row. it is decision day in iowa. donald trump and hillary clinton where it front -- were in front but be a tight race for the contenders. has the latest. we have news on manufacturing. : 48.2 is the number. the median estimate came in at 48.4.

this continued contraction for this month prior, we were on pace for the fastest pace of contraction in six years since june 2009. let's take a look at what is happening in the markets in the s&p 500ction to is down 9/10 of a percent. similarly the nasdaq is down around the same amount. now eight to triple digit change in a row. of the last 16 sessions, we see a lot of villa tilde t -- a lot of volatility there. i want to show you what is happening in terms of the s&p and sector health right now. nine of the 10 s&p sectors are in the red. down by more than two per --

2.7% there. minorly in the green. energy. down by 5%, and definitely breaking four days in a row last tuesday through friday. take a look at what is happening with those, first off in gold. we do expect gold will rise and that is what we are seeing right now. up $1100 for rounds -- per

ounce. we expect the yield would be going down. down play -- down by .4%. we see this sharp plunge down. yen andthe u.s. dollar losing strength against the yen. 120 against the dollar. >> counter to what the doj wants to happen. ramy at the markets desk. vonnie quinn has more. vonnie: after months of campaigning the first votes will be cast today in the race for the white house. the des moines register poll shows donald trump with a five-point lead over ted cruz in the iowa caucuses. pundits question whether child supporters will actually show up hillary clinton has a slight lead over bernie sanders. sanders is helping -- sanders is

coming on young voters. -- is counting on young voters. the u.s. has expanded its fight against the islamic state. u.s. forces have carried out at least a dozen attacks on militants linked with the group. that is according to the new york times. the world health organization is holding a crisis meeting to decide if the zika virus should be considered a world health emergency. 50 of the 4s million zika cases 60 or. cases. who were able to escape lost their homes.

iran now has access to $100 billion of frozen overseas assets in the aftermath of a nuclear deal. much of the money has been piling up in banks at china, india, japan, south korea, and turkey. 24 hours a day, powdered -- powered by our news bureaus around the world. betty: oil and stocks continue to hit their lows of the session. theaw the longest rally of year. that now has come to an end today. prices of oil are down 12%. data came out. -- alsooser look joining us is bart shilton, former commissioner of the

commodities trading commission. he is currently senior policy advisor for the global law firm. first to you on oil. bethought we might finally bouncing back. is a china alone? >> when we push aside the suggested rumors of opec and rita -- and refer to the fundamentals, you have this cross current stack and demand growth colliding with this really salient -- with this resilient supply. we have 9.2 million barrels per day. extremely resilient over the course of the last year. plus despite this precipitous decline in overall prices. again towardgoing our low, which is where we to get to this rally.

it hasn't been at these levels in 12 years. you are worried what this is going to do to the economy. >> we have these $9.2 million of production. we are expecting to drop by 600 million barrels per day. they could make that up in a heartbeat within a matter of and they could be trading around 4 million barrels per day. they are looking for the rest of the world, venezuela, u.s., and brazil. average gas price is 79 per gallon nationwide. it is having a ripple impact in the oil patch. sort of resounding throughout the economy.

about in a commodities futures market, where we have seen some incredible volatility. do you think it is almost destroying market structure? >> certainly when you see volatile markets like this you rely on the extra exchanges. that overseas with their brent contract. exchanges toese make sure that volatility remains in check and you have circuit breakers in place to avoid these crazy highs and lows. thought it may be stabilizing at the $32 range but already down 5% on the day. it reminds me of that song living on the edge. some of us hoping it stabilizes pretty soon.

>> it does feel a queer living on the edge, especially for some of these oil producers. we haven't seen all these oil producers who are basically paying to get this oil out from the ground, why are they folding? welley came in today year hedged, capital markets were indeed open. 2016 becomes much more challenging. although their costs have really come on down. iny have done a great job managing cost structures through service cost concessions, through their own drilling efficiencies. in 2016 that becomes much more difficult. we will likely see a much more modest decline in output. we think there are those producers who are in much better

shape in the various bases. while this has been a precipitous stick -- a precipitous decline, to see 2 million barrels come off would be somewhat difficult to foresee. you will see that output be made up by iran and other opec producers. >> on coffee, on cattle, and other futures. >> these things are all interrelated. people don't understand that. cheaper gas prices for cheaper oil, it will impact transportation cost. it will reduce the price of those commodities. for a coupleh ride of years now. is that a precursor to another

session. it usually is the opposite way. the commodities are trailing behind and other bottles in the economy. while i'm concerned about the roller coaster we have seen and particularly on oil in the last couple of months. and i remain optimistic about the economy even though it is living on the edge. >> is that a sign of a price rise or actually their sign? >> the market is an amalgamation of different time horizons. significantve storage overhang that you need to push through. lastf you take a look at year from january for april, we

added roughly 100 million barrels of storage and we have a lot of wood to chop. it seems we still have this elevated structural imbalance we have to push through. >> we have the iranian elections coming up with president rouhani up and what happens in iran. there is going to be an earlier opec meeting. there are two sort of dates where we have impact before the prices go forward. me forare staying with another segment. thank you for joining us on oil. dark pools and high frequency

trading. stay tuned to bloomberg television for conversation. will be sitting down with fisher to discuss the economy, the fed, and monetary policy.

>> barclays and credit suites -- the banks were accused of misleading investors of how they manage their trading platform. poolargest levy on a dark operator. 84 million. he of course is a former commissioner.

marketses the modern initiative, which advocates the trading firm. what you make for a settlement like this? -- noww the you new york the new york attorney general is not the enforcer in a private trading pool. is good to see regulators are working together to get the state regulator and the feds in the sec. this file a show in, 1782 -- this violation is really about integrity of what you are telling your investors. that is where these whole cases stem from. greater transparency is definitely what we need in these markets in particular. >> greater transparency is something we talked about with one of the founding members. they just announced this deal.

--y are essentially going to going to take over the trading operations. you expect to catch you essentially have a high-frequency trading firm that is going to be over seeing a plethora of securities traded on the nyc. that raises some questions about security. >> at the end of the day everybody wants the same thing. and you get that by applying smart, thoughtful, and data-driven regulation. it is everybody's responsibility, every actor in the industry and exchanges. we continue to have the best market in the world. >> what do you think? >> i heard it twice because i never miss your show.

i agree with them 100%. automated trading is changing how markets are operating for 100 years. times.cary for people at they are what you are interviewing -- it would be on the other side of the trade. how they make money, being able to provide liquidity, better price discovery, and that should be better for all investors. absolutely they do need to be vigilant. secenforcement staff of the and others continue to work on these things. where they send out false

signals, traders with high-frequency traders. they should be called upon. i feel good. one thing they might watch out for. mary jo white is holding a advisory holding an committee. less transparent than any other exchange. i think those things need to be brought to the light of day. >> i know you have had a change of heart on them. >> i just change what i am working on. nobody seemed to care about it. it inwasn't a word about dodd-frank, not one word about automated training. i said they need to be regulated. if they don't come to the fuld

they will be overregulated. thankfully they want to be overregulated, but appropriately so. that's what i'm doing. >> good to talk with you. -- the former commissioner talking to us. stocks are joining the selloff in commodities to global equity, manufacturing data putting chinese policymakers in a bind. much more after the break.

>> the stakes just got a little higher for policymakers trying to prop up the china economy. signaling a record sixth straight months of deterioration. in tom.ing the gauge continues to fall.

they want to see manufacturing so why are we disturbed by this. >> it is not so much they deteriorated, they're basically the same level of the last few months. they haven't started getting any better. the question is everyone has gone. why are we seeing a pickup and manufacturing? >> the answer to that would be what? that goes to the concern there is much too much investment and too much borrowing, industries have to much capacity. so even though you stimulate aggressively, businesses are key .o finance borrowing rates >> what is the chinese government to do? what is the pboc expected to do?

they always relied on monetary policy. that doesn't work so well anymore. they stop the economy getting worse. they haven't started making it better. they acceleration in fiscal spending and then at the end of , our local governments expectation is to see more of that in the year ahead. i don't think we are going to see a shock and austan millis package like the one we sought the end of 2008. i do think we are going to ca study drumbeat. worked.seems to have so why not? the costs outweigh the benefits.

lies is the stimulus not so effective now? that 2008 stimulus, they have to much debt. that is the reason there is so much capacity. really quite limited. we have 6.9% growth in 2015. if you look at the official numbers, there is going to be a moderate slowdown in 2016. the official dates are still credible. we see these alternative many more that 6.9%. >> it is down to 6.2, 6%. unlikely we are

going to see the official data diving so low. i think they are concerned by unemployment and that is when the government is going to stop. asia economist for bloomberg intelligence on chinese manufacturing numbers. 2015 is the best year for m&a. this year is it -- this year is looking good. we are talking deals with --

betty: live from bloomberg world headquarters in midtown manhattan, you are watching bloomberg television. i am betty liu. let's check in with vonnie quinn.

vonnie: michigan officials proposing a five-part strategy to determine whether flint's water is safe to drink. in 2014, flint switched the flint river from detroit's water system to save money. lead from pipes leaked into homes. more than 2000 pages of information about the deadly amtrak crash next -- last may were released but it would not explain why the train was going more than double the speed limit when it crashed. the engineer says he does not recall what happened. the justice department will investigate the san francisco police after the shooting death of a young lack man. they will announce details of the probe today. the shooting led to protests and san francisco and protesters

want the police chief to be fired. a judge sentenced a british woman for six years in prison for going to live in syria under the role of the islamic state. she and her one-year-old boarded a plane to turkey and moved to syria. she was arrested at heathrow airport and her son was taken into social care. rescuers towing hr -- cargo shift -- ship that was adrift for several days. the modern express is being towed by another ship 28 miles off the french coast. wavesind and heavy prevented a rescue this weekend. it is carrying 3600 tons of wood and equipment. global news 24 hours a day, powdered by -- powered by our 2400 journalists. betty: let's head straight to

our markets desk were ramy inocencio has more on some of the company winners. ramy: a couple of company movers to talk about in making a true merger monday, i want to get to pharmacy. taking a look at abbott laboratories and a lear, they 45 in talks to buy up a lear $.8 billion. a lear has diagnostic testing systems similar to the laboratories, testing for flu, hiv, and malaria. 45% up just in trading today so far. this is its biggest jump since its 2001 ipl. another merger monday is in the pharma world, with striker and smith and nephew's. striker is down by about 1.5% and is in talks to buy sage products for 2.8 alien dollars,

and that comes with a five point quickly, to energy looking at dominion resources and questar corporation, dominion falling by about 2%. it is in its own quest to buy questar for about $4.4 billion. you can see that share price jumping 22%. a 23% premium on that company and it will expand its holdings in natural gas assets. i will show you why that is. over the past year or so and natural gas has fallen less than wt i crude, and this is green, natural gas. it has fallen by about 20% over the past year but crude has fallen on the order of 35%. it makes good sense. betty: ramy inocencio at the

markets desk. let's stay at this merger monday. all this market turbulence we are experiencing will continue to reshape these industries. ,e are joined by rich jeanneret american vice chair of transaction advisory services at ernst & young. rich, i find this interesting. we have had no ipo's at all in the first month of this year and yet m&a is still going. the end of thet day there is still tremendous opportunity to gain through m&a. pressure occurring because of the slowdown in global gdp. companies are looking to grow through acquisition and over the past couple of years, they have been rewarded in their share prices. the average billion-dollar deal done last year, the stock price they acquired traded up 2%. markets are saying m&a are

strategic, a where to create shareholder value, and we are going to reward them. betty: do you expect it to still be a banner year in 2016 despite all this turmoil as we saw last year and years previously? rich: turmoil introduces a level of anxiety by january, the value of m&a traded was almost $40 billion higher than last year. maybek the growth story even is a better story as the gdp around the world slows down. you have trouble in the emerging market economies slowing down m&a had -- activity. up, i activity picks still think it has some room to run. betty: are we still going to see megadeals or will they be smaller deals? rich: i think the mega deal is still in place because that is where you get the greatest scale place. betty: where are we going to see

this mna? let's talk about oil. the companies that were in distress in 2015 were wellheads. the hedgers are starting to roll off. we saw 40 bankruptcies this year in mna -- m&a. the big companies that are well capitalized will see this as a phenomenal buying activity -- opportunity. edge protection is rolling off pretty quickly -- hedge protection is rolling off pretty quickly and the banks will not have much patience to go further. betty: what about tech, year of the mash-up? rich: companies either joint venturing or partnering for new technology. you have seen some interesting transactions occurring,

honeywell by ester group for melrose. they get access to sensors that they can monitor. wearable devices driving transactions and health care and life sciences. i think it will drive that industry to greater heights. it also seems that in tech it has been the year of the breakup. you just had xerox, hp, ebay. people are talking about yahoo!. rich: massive technology -- massive movement occurring in the technology sector. there has been massive disruption caused by clouds, the internet of things. that is disrupting business models across silicon valley so companies are breaking up to make up. betty: lastly, private equity has been a big driver behind some of the merger activity. they still have got a lot of

capital to deploy, but is it going to be a lot harder this year? rich: the debt markets are not as friendly as they were in 2015. they are incredibly patient so expect them to do very smart things. betty: valuations also are coming down. rich: they are starting to trade down slowly but we still have a ways to go. these guys are patient and do not have the same pressure as the corporate do. they have been exiting at almost twice the rate they have been entering last year. betty: much more ahead on bloomberg television. apple started the day with a bigger market top than alphabet, but will today's earnings change all of that? netflix is surging. ♪

betty: welcome back, this is bloomberg markets. mark barton is standing by in europe, european stocks dropping as well. all read, my favorite color but not a favorite of old at all. mark: if you were expecting new themes and this new month, wake up and smell the coffee. falling to aturing three-year low, oil is declining after a good rally at the end of last week. we started february like we started january, with a decline. i will go into further details when we need to in 20 minutes. betty: we will indeed. what is coming up? stephen i will talk china, today's manufacturing data, and what does it mean for policy going forward?

our man was in switzerland today speaking to boris kolodny. the downside was the gross margin, owing to the lowest levels since mr. kolodny took over. hans nichols is in berlin as david cameron did a lot of shuffle diplomacy over the weekend to try and force concessions out of the eu ahead of this crucial referendum, which could take place this year. and is freezing hiring salaries in 2016. we will ask our man stephen morris about that. greeley"the slugger" joins us today for battle of the chart. the rolex 24, daytona took place. were you watching it? betty: i was not. mark: nor was i, betty.

betty: however i know that you have stolen our producer over to london. is that a way to and phil went the battle of the charts? mark: i have got to influence it some way because the current judge keeps voting against. betty: mark, i will see you a little bit -- in a little bit. it is pretty much the same story in the u.s., abigail doolittle has more and you are watching the ninth back. twitter is trading higher on a report that silver lake could be expecting a deal of some sort. down 75% froms its peak as the company tries to make an overhaul to boost growth. what might stand out the most is the juxtaposition between the stock's performance and the

overuse of the finance twitter-atti. if they can boost that growth. quickly, alphabet is trading higher ahead of its q4 report today. later after the bell, it will round out the saying news for the current season. netflix and amazon have done poorly, however facebook put up a great quarter. let's see where alphabet fits in. here, lookingtic for the first segmented report to see how big the growth is, but lots of volatility out of the last three months. betty: thank you abigail. let's stay on google and twitter. to get a preview of their earnings report, more detail, paul sweeney. paul, there is a lot of talk about more transparency coming

out from alpha that. is that going to be a good thing? paul: i think it is. one of the things that the ceo has brought to the company is transparency in turn of -- in terms of where the investments are going. this will allow investors to see the core google business as well as some of the investments that the company has been making over the years, some of its more speculative investments. we can get a sense of the revenue and costs of those businesses that are not core today but the company believes at some point could become material businesses. betty: this company keeps getting bigger and bigger. apple, the biggest company by market cap losing some ground in recent months, and we have a chart. let's pull it up, where it shows the market cap of apple slowly declining and google, just within a hair of catching up

with apple, right at the $500 billion mark. could we see enough out of the earnings today to propel it to bigger than apple? paul: it is possible. i think investors are much more positive about google than i have sensed over the past few years. it is partly because the top so highains very strong growth in terms of revenue growth, but we have seen a greater emphasis on cost control. therefore we have a stabilization of the margins, which has been a very good story and i think we are getting greater transparency in terms of the disclosure. kind will likely be some of cash return policy accelerating for this company going forward. the fundamentals are very good, i am getting greater disclosure about some of these side businesses which google has been investing in, which could have

the effect of highlighting that the google core business is more profitable than we thought. betty: we heard abigail talk about twitter. is this company right for an acquisition? paul: there has been a lot of speculation of the last couple of and it comes down to the fact that it is an indispensable service product for those that are on it. the problem is, not enough people are using twitter. there are over 300 million monthly users but it pales in comparison to the one billion on facebook. one and a half billion. they need to grow their user base and subsequently monetize that user base, and reignite the revenue. the company has not been able to do that over the last year plus, even with jack dorsey coming back. speculation building there would be some interest. silver lake and mark andreasen are reportedly may be taking a look at it, and that raises the speculation even more. betty: andreessen is a big

tweeter, he tweets all the time. markets," we turn to politics and the latest bloomberg poll which shows donald trump and hillary clinton leading in iowa. we could be in for a long night tonight. ♪

betty: welcome back to bloomberg television, i am betty liu. in the race for the white house, it has been leading up to iowa, the iowa caucuses are the first contest. the des moines register poll shows hillary clinton leaving bernie sanders by 3%, edges within the margin of error. donald trump is in the lead with a five point lead over ted cruz. he was asked this weekend if iowa is a must win for him. and do not have to win it

you and i are sitting in new hampshire. i have a substantial lead in new hampshire. i am doing really well in iowa but i am doing tremendously well all over the country with the evangelicals. i am leaving by a lot. betty: who is going to be celebrating tonight? joining me is martin shanker. just back from a two week tour through asia and now you are focused on iowa. martin: and iowa, everyone expressed shock. betty: what are you guys thinking? them youhen you tell should take this candidate seriously, they started to taken seriously. betty: what do you see?

marty: i think they are hardpacked to see how donald trump does not get the nomination. i think he will do very well tonight and iowa, and he is leading in new hampshire. betty: by a wide margin. marty: and south carolina a week later, he could sweep all three. no candidate has ever done that. i do not see a path that stops donald trump. betty: what about the other republican candidates? what if ted cruz does better than expected, or marco rubio? marty: momentum means everything in the primary season. if any one of those candidates is perceived on the upswing, it could change the dialogue, that i expect donald trump to be in the lead for the next three or four weeks. betty: he has certainly gotten the momentum. how about hillary clinton and bernie sanders? has a hillary clinton

rich tradition of being surprised in a negative way and iowa, and i think that is possible. i think it is quite possible tonight. what to look for is turnout. if senders is able to do what obama was able to do in 2008 and get a lot of first time caucus-goers to come out and support him, he could pull an upset. betty: what are the indications? he has said, if he gets a big turnout, he is likely to win. marty: it is a sunny day in iowa but there is a blizzard on the way so that might keep turnout down. if your base is motivated, they will show up so i expect sanders to make a strong showing in iowa. betty: if hillary clinton loses, is that it for her the way it was in 2008? marty: i certainly do not think so. her narrative will be, we have a southern strategy, and sanders is weak in states including south carolina.

she has an air of inevitability about her so she certainly will not be out of the race. ,he leads in the national polls so you will see hillary for quite some time. bloombergre was a story out today about how clomid sacks executives have switched from supporting jeb bush -- goldman sachs executives have switched from supporting jeb bush to marco rubio. asked what he thinks about the way jeb bush is campaigning now. >> i think jeb bush is a great person, did a great job as governor, and i think he is qualified to be president of the united states. he has got experience. he understands the world. >> governing experience? he has done that well. my ideal team would be him as

president and case like as the vice president, that would be a great team. betty: somewhat say on wall street. if it was on policy alone jeb bush would be leading the polls. marty: it is not about politics or money, it is about who resonates with the voting public. i do think this election will basically inflict the most pain it can on journalists. it is going to be very powerless to count anybody out, but i think jeb bush hanging on by his fingertips. betty: he clearly is. at some point he is going to have to drop out. marty: at some point all the candidates except those in the lead have to make hard decisions if they have the money and wherewithal to continue. time, the field will be whittled down and we will see who has the momentum. betty: what are people saying right now between a trump and hillary clinton matchup? marty: a lot of people think hillary has the upper hand but i the outset said, do not

underestimate donald trump. i think a hillary-trump race would be very close. betty: marty, good to see you, marty shanker, bloomberg senior executive editor. we will have in-depth preview of the caucuses from des moines, a special two-hour edition of "with all due respect" starting at 5:00. a check at the market where we are bouncing back from the lows of the session. the dow is down 82 points, no longer triple digits at this moment. ♪

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you've got the power, to turn on the light shape the best sleep of your life. sleep number beds with sleepiq technology adjust any way you want it. the bed that moves you. only at a sleep number store. betty: it is 11:00 a.m. in new york, 4:00 p.m. in london, and midnight in hong kong. i am betty liu and it is time for the european close. mark barton joining me live from

london as we wrap up the trades in the next hour. mark, you are watching this selloff as well. mark: it is a new month for china, the oil price continues to hold the market at a. the european close starts right now. betty: we are going to take you from new york to london to berlin in the next hour, and mark, show us what is going on. mark: january was the worth months since august -- worst month since august. it could have been worst. at one point the european benchmark was down by over 8% but as you know, mario draghi, janet yellen, and mr. kuroda came to the rescue.