>> and im alix steel. joe weisenthal is on assignment. u.s. stocks rebounding into the close. .hat a day, oil keeps tumbling >> the question is, what did you miss? posted a 17% gain, helped by youtube and advertising. and the numbers don't lie. we dissect how oils plunge has taken a toll on axon. >> but we -- eight hole on exxon. ll on exxon. >> but we begin with the markets. stocks doing fairly well,

except amazon. netflix gaining almost 6% on speculation that apple could make an offer to get access to the tv content. >> we had a lot of data that came out today. speaking withr tom keene and saying look, we are paying attention to overseas developments. we don't know how that is going to fare. the fed is not committed to four rate hikes this year. their mind is open. on the downside, today was about oil. energy down about 2% on the s&p. exxon the biggest drag overall on the dow. at one point, we had a exxon and chevron dragging the dow down by about 19 points, despite the fact that oil was down around 7%. scarlet: with oil prices can see a, you

buildup of long positions as well. hedge funds are increasingly bullish on oil. long funds are rising from last week. alix: the markets are so short. breaking news. google is coming out as we speak. per-share,rnings $8.67. scarlet: that was higher than the consensus estimate of $8.08. that has come down over the last 24 hours. this is now alphabet. alphabet is the company that includes google and the other parts of the business, which include everything from ofverless cars to internet state. headcount.e a of $2.1spend it spurs billion. --capital spend it sure is

itures of $2.1 billion. it gets a little bit of forgiveness from investors because it puts money back into its other businesses. billion.$14.936 i have asure comparable estimate. this is sales excluding revenue passed on to partner sites is $17.2 billion higher than what analysts had been looking for. analysts were looking for just under $16.9 billion for that. the stock right now getting a big lift, up more than 8% in trading. alix: it's so interesting. google ad revenue coming in at about $19 billion. it has been difficult to get a

read on these stocks because facebook -- blowout. amazon -- disappoints. netflix -- disappoints. add revenue coming in at about $19 billion. we continue to monitor headlines. meantime, twoe key charts stood out to us today. one is investors trailing the s&p 500. cahn's influential, but returns are lagging behind. these are the returns for the last 12 months. companiesthat tracks targeted by activist investors is the orange line, and it has 25%n a big five, down about over the last 12 months. down&p for -- a big dive,

about 25% over the last 12 months. dividends, basically unchanged. here today is interesting. there's a big divide here. 12%.ists down about s&p 500 down about 5%. you want to look at it -- this is where activist say you don't want to look at it over the past 12 months. you want to look over a five-year or 10 year period. i charted the historical spread function between the s&p and gold. the more they get to negative one, the more they are inversely correlated. what i wanted to point out is that we have been really risk off since september. this is not a new phenomenon. yes, you have this inverse correlation at its highest level since last april, but nonetheless, overall market sentiment has been very negative

since september. don't be fooled that this is a january phenomenon. scarlet: absolutely. it has been going on for quite a while. you can see all these charts and more on twitter. kathy, you just heard us give a ortle bit about google alphabets earnings that just came out. they have started to change the way they present themselves to investors. do you credit that to the cfo in terms of how accessible they are to investors and giving into some of what investors are looking for? i do credit her a lot. during her interview process, this was one of the conditions on which she would accept the job. we are focused on moonshot businesses.

fairy comfortable that the move to online advertising, digital advertising, has passed the tipping point globally of 20%. so now we can look at the rest of the company. what are autonomous vehicles going to do for them? what is artificial intelligence going to do for them? alix: in terms of earnings for google, $8.67 was the bead on the bottom line. line, $17.3 billion. that's revenue. aboutsts per click are 13% down. up about 8%g shares in post-market trading. is the most, important metric number today be in five it will

years for google? cathie: the stock is reacting positively even though we are in double-digit cost to click the kleins -- declines. we are seeing technology see been to every sector, and google epitomizes that. scarlet: i want to bring in cory johnson, our editor at large. what do you see in terms of what investors are reacting so positively to, up 8% in after-hours trading? ory: for all the excitement about self driving cars and balloons filled with internet wonder, the main reason they are growing faster is that on a constant currency basis you have revenues up 24% year over year. a year ago, they were growing 18%. one of the biggest companies in the world growing at a 24% year over year clip. there are a lot of internal metrics starting to look at in terms of the value per click.

-- look good in terms of the value per click. the main business in terms of most of the cash, most of the revenue, most of the prophet, that business is growing at an enormously fast clip, faster than it has in years. scarlet: we tend to think of google and services companies as not being affected by a strong u.s. dollar, as a manufacturing company, but it does affect their headwind. global, so are absolutely, they do face a currency headwind. looking for real unit underlying growth, true growth. but: i know you own google, hearing some of these numbers, where is the worry spot and what is the most positive part for you? their page six

was better than expected and 20% ins a notion of 20% as advertising, percent of total advertising. that is where they are. they are beginning to understand the concept of price elasticity and demand. scarlet: cost per click being down 13% in the quarter that just ended, paid clicks are up 31%. alix: you make less per click but you get more of them. a technology company. price goes down, volume goes down, unit price goes up, and i think people begin to understand that. we were talking about the

other businesses like a nest, like self driving cars. do you feel management will ever feel the pressure to rein in those expenses when they break them out like this? >> i think once they break these do the companies analysis around the opportunity on a thomas vehicles -- we think that is a $500 billion business , we thinkous vehicles that is a 500 billion dollar business just in the united states. when people start sizing those opportunities, we think they are going to understand how big the other part of their business has become. they have done so well with digital advertising. it's a little i cam is. amazon has been allowed to invest in those -- it's a little like amazon. amazon has been allowed to invest in those businesses because they have done such a good job there.

are: coming up, people saving more. when will spending start to pick up? we have the three charts you cannot miss, and next. ♪

alix: i am alix steel. let's get right to mark crumpton with first word it news. mark: voting begins in iowa tonight. voters there will make the first official statement of the 2016 presidential campaign. they will attend nearly 1700 caucus sites to pick a nominee. off ay clinton is fending challenge from vermont senator bernie sanders. she told voters she can do what she is promising. mrs. clinton: stand up for someone who can be president, be commander-in-chief, take the fight to republicans, and after we win, unite our country to

actually get some things done for america. mark: more than 150 million dollars was spent on political ads to reach iowans leading up to tonight's caucuses. republicans have 44 delegates at stake. democrats have 30 -- democrats have 44 delegates at stake. republicans have 30. we have coverage from iowa with a special edition of "all due at 5:00 p.m. ning the who has been holding a crisis meeting to discuss the zi ka virus. the agency last declared an emergency over the ebola outbreak. americans could see up to 4 theion cases of zika in next year. a judge has sentenced a woman to to syria tooing live under the rule of islamic state. she and her son boarded a plane to turkey and then traveled to

syria. she returned to written after three months, was arrested at heathrow, and -- written -- britain after three month, was arrested at heathrow, and her son was taken into care. a vessel was adrift for five footwhen high wind and 20 waves made a rescue attempt impossible. the ship is carrying 3600 tons of wood and equipment. news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. you miss? did three charts that tell you what is going on in the economy right now. the first has to do with the savings rate. come inside the terminal. a riselast month, we saw

in the savings rate. that's not necessarily something you want to see. toyou make more, you want spend more. what will be the tipping point for when people actually spend that cash? the senior loan survey said demand for consumer loans sell in the first decline in over five years. and that was the first to klein in over five years. decline in first over five years. scarlet: whatever savings we are from gas prices are going under our mattress. if you are concerned about gasoline when it comes to consumer spending, we have a better overall picture for 2015, but not so much recently. is yellow line right here the same thing without gasoline. it is higher. $1.99 perumbled to

gallon. alix: this is supposed to be when everyone is spending all the money, so you really don't want to see that. cyclet: the high of the was five point 1% in august of 2014. that is down versus the high -- 5.1% in august of 2014. we have not been able to get to those levels when it comes to consumer spending x gasoline. housing and consumer are the two things going well in the economy. at overallking construction spending. the orange line. that is going down. commercial real estate is also 4.5% inabout 45% -- 2015 alone. that is worrisome. are tighter standards for

commercial real estate loans. we have seen a more modest increase than in the last few years. that means the demand is not there as much as it was and standards are tighter. that is part of the reason for the worry. people areen ever talking about the economy, housing has been a bright spot. maybe not now. alix: can a manufacturing recession push the u.s. into a full-blown recession? here is fed vice-chairman stanley fischer with tom keene earlier today. >> growth has declined, and we will have to, again, wait and see what develops, that the the americanut economy is in a very long process of manufacturing declining as a share of gdp and services continuing to increase

as a share of gdp. there is a tendency for manufacturing to grow less rapidly than gdp for some time. alix: nevertheless, the recent rate rise is the first with the index below 50. ,e are joined by james pomeroy global economist. services can make up the slack in manufacturing? james: we are looking at not just the u.s. economy but most developed markets. the manufacturing sector in the u.s. and europe is only about 20% of the economy. when we get weak manufacturing data, what we are really looking at is the service sector, which globally continues to do pretty well. non-manufacturing i sm is still around the 55 mark. iseloped market growth

holding up quite reasonably at the moment. fed vice-chairman stanley fischer also spoke with tom keene the efficacy of negative interest rates. take a listen. that have used it continue to use it. they have not given it up. and we even had the danes continuing a contractor he -- continuing the policy. working more than i can say that i expected in 2012, but i wasn't on the committee at that stage. about thee's talking the ecbt sweden and

have also cut interest rates to negative. negative interest rates have a nonlinear reaction or function on the markets overall. what do you worry about in terms of unintended consequences? to look atbest place negative interest rates is sweden. they have cut rates three timesb have also cut interest rates to negative. and are down -35 basis points. what we have seen in sweden is that inflation has not picked up. the swedish krona has strengthened year over year. if you are sweden, it hasn't really worked. in denmark, yes, there has been some improvement in the economy, but what is striking in both cases is the pickup in house prices. sweden's house prices are up 15%-18% and rising quickly. denmark is the same. these are both countries with extremely high levels of household debt. in sweden, gdp growth is up 3.9%. really need atry negative interest rate? i don't think it does. scarlet: we were just showing a

chart of the output cap. do negative interest rates reduce the output gap? james: it depends. if you get a real acceleration of growth like we have seen in sweden, that could help. wellmer continues to do really because of low inflation and low wage growth. on howrd to put a finger much contribution negative rates have toward closing the gap and above trend.wth in the case of sweden, i would argue that it is more dangerous than necessarily a great policy. alix: how does the fed sustained rate hikes? rate hikes? james: we think it's difficult when inflation is low. will raisee fed

rates twice this year. manufacturing is slowing but consumer is doing well. the labor market is doing well. if you are willing to accept that inflation is low for reasons such as globalization, technology, and oil prices, you can continue to tie it to policy. good stuff. thank you for joining us. james palmer a from hsbc. from hsbc.meroy ♪

you miss? did just how bad china might be. side the bloomberg and a

look at south korean exports to china. this is a good proxy. we got data today that shows south korean exports were down about 20% in january, the weakest since august, 2009. barclays was saying this was a structural trend of weaker demand because china is becoming more self-sufficient. they make their own semi conductors. and the chinese economy is changing. sayset: morgan stanley south korea's central bank is cutting interest rates as its next move. ministern finance announced measures to boost export demand. are really heating up there. are we recession bound? it is a question we are posing to most of our guests. scarlet: next, why some

high-yield investments look enticing. ♪

scarlet: i'm scalet fu. "what'd you miss?" let's get the mark crumpton with the first word. mark: thank you. after months of campaigning, the first votes will be cast in the race for the white house. among republican voters in the most recents, the poll shows donald trump with a five-point lead over ted cruz. pundits questioned whether trump's supporters will show up. for the democrats, hillary clinton has a slight lead over bernie sanders, who says he's counting on young voters to give him an upset victory. bloomberg will preview the caucuses live from des moines

during a special edition of "with all due respect." it's about 30 minutes from now. president obama will ask congress for $755 million in his fiscal budget to fund a moonshot program to cure cancer. the possible billion-dollar investment is intended to increase research into the disease and ultimately find a cure. last year, vice president joe biden's sone beau died, serving as a catalyst. israel will serve as a safe race non-orthodox prayers at the western wall. one of the changes, men and women will be able to pray together without a petition. jewish to nominations have long been unhappy with orthodox control of the site. a truck driver accused of crashing into a limo carrying tracy morgan has pleaded not guilty to aggravated manslaughter. he was driving a walmart truck

when the crash occurred in june, 2014. the crash killed one comedian and seriously injured others. he's also charged with vehicular homicide and aggravated assault. global leaders, 24 hours a day, inered by 2400 journalists 150 news bureaus around the world. alix and scarlet, back to you. scarlet: let's get a quick recap on how u.s. markets closed. at one point, and looked like the major indexes would be on a winning streak, but a late retreat means the s&p and dow finished with little change on the day. gains and facebook, tha netflix, and google. the turning point came at 1:00 p.m. when stanley fischer made comments, saying that the moves are not predetermined because it needs to assess the impact of the recent market turmoil, and they

can't say what it is. alix: they already committed to a predetermined amount. overall, google have a pretty blowout quarter. profit and sales beat top and bottom line, ads up, q4 revenue, if you back out sales, up 19%. someone pointed out earlier that 90%, whichds were up made up for the fact that they made less. scarlet: continuing that trend we have been seeing. alix: although i should point out that it's paring a little bit of gains in after-hours trading. scarlet: hopeful you did not miss our recession where we askweek, the guests as they were fearful

of the u.s. recession. one of the focuses was on credit, especially high-yield. a senior market strategist at morgan stanley does not believe the u.s. will fall into a recession, and that high-yield is currently offering attractive risk reward profile. was my mind. wha-- blows my mind. >> i just want to be clear, the risk of recession has risen, that it is not a base case. we have supportive comments from fedhi, kuroda, the indicating it is watching. the negative of news is already priced into the high yields. spreads-out energy, trading at levels close to 700 basis points, indicating it is already priced in over the next five years. could we get there? sure, in an extreme scenario. but we think it is unlikely. alix: different than deutsche

bank, which says that three times we have seen a huge credit turn in the cycle. why is this time not back? >> well, '08 will be one of those examples, but this is not '08. we don't have the financial system being the epicenter of the downturn. , but io had telecom hask most of the damage been taken out of the market. the worst-case and there be a self reinforcing negative cycle, central banks don't do enough, market still believe they can do spread the blowout. but i think the central banks with the dollar rate, i think it's a reasonable expectation that high-yield's will rally back. scarlet: spread the i want to go

what you said -- the risks of but youn has increased, don't believe he will take intercession. did credit dress that risk, or is it an effect? >> with energy spread blowout to ridiculous levels, the average high-yield energy company is trading around $.50 on the dollar. their ability to access capital has been hampered. banks reporting, coming back, fund managers being forced to sell and getting redemption requests. when you get a redemption request, you might sell something that is higher quality. that contagion mechanism can go from high-yield energy to high-yield nonenergy fairly quickly. it's started to come off since january. scarlet: overall, when you look at the market right now, we are looking at a correction. then compare and contrast what we are seeing to 2011, when there was another growth scare. >> 2011 also have the debt

ceiling, where the downgrade in the u.s. treasury -- there was a lot more going on that was less supportive. i'm but suggesting this year is going to be great, for congress had previously talked about the services sector, and the point is i think we were closer to coming out of it. not that people are willing to go out and take a lot of risk today, but people are a little more used to these corrections which the to becoming more frequently. it's not going to be a repeat of 2011. alix: devils advocate. we recently talked to the former head of goldman sachs. he warned investors they should be careful of being too bullish. take a listen. >> we are at the dawn of the painful deleveraging cycle, and access to capital, especially for these capital structures, is not given. we are likely in the early

innings of what will be a lot of pain, especially with any sort of cyclicality. he says add onto that, the money in the market right now you could categorize as tourists, coming in wanting great returns and don't understand the market. >> my counter to that would be, with the fed potentially on hold, ecb doing more, going further into negative territory, japanese bond yields at all-time lows you might get a brief, youo period of time, but if give the market price denver bad news, i think it will makes sense to look at high-yield, it's risk-adjusted. about how ittalk may be a good time to pick up high-yield outside energy and commodities. what about the earnings picture?

earnings overall are going to the client for a third straight quarter. people characterize it as an earnings recession. what is the distinction between that and those we have seen in the path that led to a broader recession? >> you're right. last year, a lot of the earnings supply came out of energy and $50-$80. roughly -- $15-$18. it will be less of a headwind if we can get the dollar trading sideways. i think earnings will be a tailwind for credit. people will be more focused on default risk. you can x-out the companies that are at risk of default and find value in sectors. three sectors have positive returns -- bond is down, rso retail, health care -- i am drawing a blank of the other one. energy, hugely spiking.

what is more attractive -- high-yield bonds, high-yield loans, u.s. or europe? >> so i would say high-yield in u.s., and high-yield and high-yield loans. alix: thank you so much. scarlet: coming up, stanley fischer says the price of oil will stop declining. what does that mean for inflation? ♪

scarlet: i'm scalet fu. "what'd you miss?" it's time for the bloomberg business flash. google's parent company is reporting fourth-quarter profit and sales that beat analyst estimates, and its shares are higher in extended trading. results are boosted by sales of online ads. $17.3e increased 19% to billion. analysts were looking for under $17 billion. this is their first report under ganization structure. alix: fourth quarter sales return in green mountain. the coffee company says that sales are $1.26 billion. earnings per share came in at $.69, and the company is updating previous earnings. and the national

football league is erring next week's game. cbs and nbc will each air line of the matchup's. the nfl network will still televise eight games exclusively. and that is the bloomberg business flash. you miss?"'d stanley fischer spoke with tom keene this afternoon about dealing with oil shock. >> we dealt with the oil inflation of the 1970's, and we didn't say that was caused by money tree. it's been around for a long time. we have the same set of issues. there are relevant price changes, such as the price of oil, which have an impact on overall inflation. that is what we are dealing with. it's a significant part of what we are dealing with at the present time.

oil, somewhere below $30, or at least was recently, could continue to decline. i'm talking as an academic now, i'm not making a prediction. tom: you can make a prediction if you'd like. [laughter] >> thanks. the price of oil will start declining at some point. we don't have to have -- [laughter] tom: my job is in jeopardy on radio. >> i'm forever quoting herbert stein, who i had the privilege of working with earlier in my wiser, one of herb's many one-liners was, something can't go on forever, it will stop. [laughter] we are talking about the dollar price of oil, it can't go on forever. it will stop. tom: it will clear markets.

at some point, oil will clear and we will move forward. assumejust inflation will revert, or are there permanent effects of this great recession, permanent effects to the unwinding of the debt many presume? remarkablebeen a correlation, which is actually slightly hard to account for, between what is happening to the price of oil and the variety of other financial variables. equity, itwith happens with inflation expectations, and the connection is remarkably close in a direction in which you wouldn't have originally -- when the price of oil goes up, equity prices have been going out, not

down. me recently, to well, that's because the market treats the price of oil as entirely a demand for normative. it's an index of what is happening. it's largely a supply phenomenon. willcely how the markets digest this, and when they will begin to interpret it differently, will have to watch. fischer,t was stanley speaking with tom keene earlier this afternoon. scarlet: exxon is set to release earnings. how much oil has hurt its bottom line. ♪

alix: i'm alix steele. "what'd you miss?" exxon mobil is to go to stop when markets are volatile. its upstream and downstream units can produce smoother earnings. its refining business can profit up when the business stumbles, which is what we saw in the last few quarters. what about now? let's see what the numbers say. no matter how good your balance sheet is, lower oil prices have got to hurt, down over 35% in the past year, and you can see that hit on exxon's revenues and productions. that straight line down in the back half of 2015. plus, you have their profitability also struggling. net income has taken a sharp turn downward, despite the fact that you have lower input costs. brent,er wti, sell for but that downstream unit isn't

big enough to offset the impact of low oil prices on upstream business. low oil prices hurt capex, so big companies are on stream to/western investments by as o slash 10% -- two slas investments by as much as 10%. historically has been considered a less volatile stock. but this 2006 -- check out the yellow line. exxon has really underperformed on things like utilities with places like duke, investors opting for other less volatile sectors. we will be sure to keep an eye on this company as it reports earnings on tuesday morning, before the start of u.s. trading. i' be watching all those numbersll. scarlet: joining us now is

vincent piazza, our analyst, who covers more than 130 industries. vince, i know you don't focus specifically on exxon, but when they do report, because of the big oil companies, because it is so emblematic of the industry, what will you be looking for? , wehen you think about 4q think it will be largely overshadowed by their views for 2016. and x i will be hosting its analyst day in march, where we get broader views. in general, for exxon and for the industry, you have this is sue of production and price. you have precipitous price decline across a hydrocarbon benchmark that will continue to have a negative impact on .arnings for 2016 for exxon specifically output growth will be anemic. but when you think about the

balance sheet, a very strong balance sheet relative to independent years. it likely throw off some $7 billion in free cash flow, which will allow it to balance the storm. alix: $7 billion -- is here's the rub. are they cutting enough in making enough money to sustain dividends and/or buyback through their cash flow? that is the question mark for guys in chevron, but not so much excellent -- they could totally do it. >> when you have a downstream business, that provides some balance. it lessons the volatility. but when you are purely an independent upstream player, you are relying on two levers, your production cadence and prices, and also on hedging. 2016 hedging overall will be down versus 2015. scarlet: do you think it company

like exxon should be betting more on its refining business at this? like >> well, they have to improving the refining side. alix: but a year ago, the call was for exxon to break up. hey, why do you still have a refining business? do you remember that? >> sure, but when you think about the overall portfolio, you have the refining business, the upstream business, they tend o offset. if you are an investor in a very liquid market, you can re-create an exxon by various investments. you show that by owning a utility or u.s. treasury, that provides you with that low exposure. alix: the big question is what will happen to dividend buybacks? exxonon't be at risk for like others, but what about the

dividend and buyback growth? that seems to be one of the big question marks. >> you're generally not there for the dividends. chevrons,xons and you are there for that capital repatriation. share buybacks will not be there, but the dividend stream will be there. dividend growth will be much more subdued because of the slower cash flow. alix: do you feel like the market has price that in, in terms of slower dividend growth? >> i think it is a relative known at this point, given the cash flow profile. alix: i'm excited. thanks so much. scarlet: coming up, what you need to know to gear up for tomorrow's trading day. exxon's reporting but what else is happening? ♪

scarlet: i'm scalet fu. "what'd you miss?" aaat miss this -- tomorrow, and yahoo! reporting earnings after the bell. itpotle has the cdc saying has concluded its probe into the e. coli outbreak and could not find the source. meantime, marissa mayer needs to convince everyone she has a turnaround plan. that and rumors abound private equities like silver lake were interested in yahoo!, so any m&a chatter that might come out. china pmi services and composite tomorrow at *;45. -- at 8:45. it's right about that 50 level. does it dip below 50 or can it sustain? the the economy seem strong enough to maintain. scarlet: the last burst of economic data out of china before the new year, where everything is very quiet.

alix: putting pressure on the central banks to make sure everything is pretty before the holiday. thanks so much for watching. scarlet: we will see you tomorrow. ♪

john: i'm john heilemann. mark: and i'm mark halperin. and with all due respect to iowa soft sell -- >> if you're sick, your doctor says you can't leave your bed, it doesn't matter -- get up and caucus. get up and caucus. here at the des moines marriott downtown for our special bloomberg politics coverage. are takingg, iowans part in the quadrennial tradition of caucusing. the candidates and the campaigns