another turnaround plan, this one involving the possible sale of the company. and the zero option. jim grant says interest rates may have to go down again because we may be on the verge of a recession. we will speak with him and david's are most in just a moment. zervos inid just a moment. stephanie: it is wednesday morning. we are in new york city at bloomberg world headquarters. you are watching "bloomberg . david westin is off this week. matt: i am excited to be here on hump day. to ring in jim zervos.nd david servo

i am excited to see that they disagree on a couple of things. first off, vonnie quinn with the "first word." vonnie: hillary clinton is trying to assure democrats over her razor thin victory over bernie sanders in iowa. sanders is from next-door vermont. donald trump is in new hampshire trying to restore his winning image. he has been second to ted cruz in the republican caucuses and barely beat marco rubio. he is a big favorite in new hampshire. the syrian peace talks are close to collapsing. they barely even got started. opposition groups are threatening to pull out unless russia and syria quit bombing rebel-held areas. the united nations mediators are overseeing the process and are hoping for a nationwide truce. global news 24 hours a day,

powered by 2400 journalists in more than 150 news euros -- 150 news bureaus around the world. i am vonnie quinn. missing streets estimates by a little bit, $.81 versus $.82. the revenue, 19 point $25 billion -- $19.25 billion. that is impressive for a cable operator. they operate theme parks as well. comcast out with a little bit of a miss. check out futures. we are still looking at gains after flipping over just about an hour ago. we had been in the red. yesterday was a big red day with the dow down almost 300 points. the s&p down 200% -- the s&p down 2%. crude, we saw a 10% two-day

loss, and now we are looking at a most 10% gain. it has been very volatile but it has not moved much higher than this. check out europe right now. let's see what those indexes are doing across the board. the dax is the biggest loser of the national indexes, down 1%. and there are a lot of earnings stories out there. with a spin. stephanie: don't they always have spin? betterhipotle had a quarter. but there is another subpoena. just when you thought it was safe to go back. matt was even there the whole time through. i want to dig deeper into the markets. market volatility across the causing more investors to sit in cash. what is causing all this turmoil? what precedes turmoil is

technically serenity and meditation.nd -- and levitation. stephanie: and that is where we were last year? jim: one of the unintended effects of monetary policy is to pull forward in time of the speculative gains, distributing more evenly over time. stock market gains pushed into the present rather than the future, thanks to certain bank actions. to the extent, volatility is a natural consequence of what they did. stephanie: if volatility is a mohamed consequence and el-erian is say we could extraordinarily be facing able market or a bear market -- where do you think we are headed? say, stephanie, that first of all, the turmoil that you started talking about should largely be expected. we are unwinding qe.

we are unwinding this monetary policy experiment. it was never going to go without some volatility. so i think the idea -- what is striking to me is how many people have come out of the woodwork saying, oh, my god, qe does not work, this thing is a disaster, creating huge problems, bringing forward stock market gains or consumption or whatever it is. the point is, when you take it away, the dollar is going to strengthen, emerging markets are going to weaken, commodities are going to weaken, and credit is going to get messy. vonnie: what you are -- matt: what you are both saying is that it is driven by central policy and not concerns over china. jim: china certainly is a part of it. oil is as well. i think to a degree we can look at this remote cause of this as the consequence of exercise and price control. interest rates are the most

sensitive prices in capitalism. and world over, central banks have been manipulated, if not administering, interest rates. to the extent that this is a price control, to the extent that the price control is a failed policy -- matt: we know that already. jim: then we are looking at the consequence. matt: does this passage -- does this presage a recession? generally speaking, when the fed starts to raise rates, we go into a period when the economy is stronger. there is a required tightening of monetary policy, and many times those tightening's have led to recessions in the past. if they over tighten, which almost invariably they will do at some point -- maybe not this wee, and maybe jim is right,

have to go back down and ease again because they went for lift off a little early or there were other headwinds that they were not taking into account -- nobody really knows the answer or is able to predict that. the point is that when you ultimately raise rates too high, pull the punch bowl away and he goes too far, we end up getting a recession. the best version of that is an inversion of the yield curve. whatever your favorite measure is, a recession usually comes. stephanie: janet yellen, if she has to course, what does that say? be ai think that would very welcome invitation to re-examine the premises of 21st century monetary policy. stephanie: really? jim: i was in the presence of vice-chairman stanley fischer on monday, and he said the fed is entirely data-driven. which sounds a little bit like

runnerlessness. there has to be -- which sounds a little bit like rudderlessne ss. i think what the fed thinks it substitution of command and control for spontaneous action. the central banks the world over are treating markets as instruments of national policy rather than places for price discovery, it seems to me. that is a very bad way to proceed. stephanie: let's get out of the central banks and go into the overall markets. i want to look at sectors, the economy, and where you see signs of weakness, strength, and that does not necessarily mean recession. they are in the obvious places. we have seen a very large rise up in the dollar since the tapering and ultimately the tightening. those that are in industries that are sensitive to exports, those that are in manufacturing

are finding it a little tougher. we have seen that with the manufacturing isn versus the service isn. i think a lot of this stems from the fact that we are very slowly, very carefully trying to take away one of the biggest punch bowls we have ever put into the marketplace. jim: one of the sources of strength, one of the exhibitions of strength in the economy is car sales. this is an interesting intersection of interest rates in the so-called real economy. never has the cost of borrowing for a car been lower. never have terms been easier, never have lease terms been more inviting, or low maturities longer. and 17 millionon annual selling rates of automobiles, to a great extent, begin with the federal reserve board and not with the salesforce of detroit. david: a lot of guys want to drive ubers. stephanie: look at retailers.

they are getting smoked. degree, that is a migration to different forms of retail. services rather than t-shirts. experiences rather than genes. say.so they certainly a lot of retailers are doing a lot less retailing. stephanie: also it is margin pressure. people are still buying goods, but the prices they are willing to pay -- the power has gone out of the retailer's hands and gone into the consumer hands. i had never seen you as bullish -- you are more doom and gloom. not say that. i'm definitely more bullish with the u.s. than i was last year, and i also think the policy is more symmetric now. one of the things that scared me a little bit about the

volatility was they really did not have that ability to go back this movet away, toward withdrawal of stimulus. so for me, this year, i am more than happy for the fed to be on hold the entire year. if the data come out weak, that is what they are going to do. strong,ata come out they are going to raise it a couple of times. rubicon ofossed that withdrawal. you have gotten off zero and proved to many people that you can get off zero. there was a large contingent of folks out there -- and i debated them for a very long time -- that said we could never get off zero. matt: but we are not really that far off zero. david: we are not. stephanie: that is a beautiful point. we are barely off zero, and we are acting like we are in an extreme situation. itid: i am not saying that does not need to be reversed and

it may very well, but the point is, the mechanics of being off zero, the draining of reserves, the targeting of the fed funds rate, the running of a core system we have never run before in a nonzero rate -- all of the mechanics of this new interest rate policy that we set up in 2008 and 2009, it works. funds rate is one little tiny at not terribly significant rate. junk bond yields have gone from about five to about 9.5. stephanie: maybe they should. they are junk. david: they have done that before. matt: we are going to take a quick break. we are going to be able to delve deeper into this because we have jim and david with us for the whole hour. this is just the tip of the iceberg. up next, we will talk about

china setting a new growth target for the first time in decades as $30 oil weighs on energy producers, helping stocks in china extend a monthly rout. stay with us on "bloomberg ." ♪

vonnie: welcome back to "bloomberg ." it is official. offering to buy syngenta. if it is completed, he will be the biggest acquisition ever by a chinese company. syngenta's board is recommending the agreement to shareholders. lowe." owe's has agreed to

buy canadian competitor rona. and amazon is going to open between 300 and 400 bookstores, according to the ceo of general growth properties. it opened its first store in seattle several months ago. stephanie: love that story. don't you? matt: for sure. i am a big fan of all of their services. in today's "global go," we focus on the country setting arrange for its economic growth target for the first time in two decades, saying the second largest time you would expect -- 7%would go 6.5 percent to growth. all the way over from asia this morning. thanks for jumping on that flight yesterday morning. let's talk about how significant this is. answer jim has question, is it a good thing or a bad thing?

enda: it is definitely a good thing. it gives china some wiggle room. a littleing themselves bit of wiggle room, between 6.5% and 7%. theot forget, it is still only large industrial economy that sets a growth target that is a hangover. what about that debate? david: i never believed that marxian economics was the right way to go. maximum that you have employment in the context of price stability seems to be where the western world has settled in terms of policy makers, and if that translates into a potential growth rate, that is at half a percent or 3%, it just depends. japan's potential growth rate is

probably a lot closer to hours. they are losing people quite quickly. their population is going down, so they cannot produce a high gdp growth rate. i would not necessarily set a growth target, but i think it is was central banks have done, which is set up a maximum employment in the context of prices. that seems like a much more reasonable storyline for china, but i agree that the sort of wiggle room idea, or moving away from something rigid, is positive. enda: there is significant debate around the inaccuracy of china. second bear market within the space of one year. they have falling currency, record capital outflow. reserveseign exchange are flowing. it sounds like a perfect storm -- translation, hard landing.

matt: that is what jim thinks. tell me, 30 seconds. there was a great story this morning that china is planning on losing rules with capital outflows -- on loosening rules with capital outflows. also trying to stem capital outflow at a moment, so time will tell. stephanie: i agree with jim -- hard landing. enda curran, wow. there you go. enda curran joining us. return, marissa mayer is open to selling yahoo! for business. -- to selling yahoo!'s core business. will anyone buy? marissa mayer will be speaking to our own emily chang. it will be a big morning here on "bloomberg ."

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stephanie: welcome back. you are watching "bloomberg ." got a new ceo marissa mayer is considering a sale. ,he announcement came too late it part of her plan to revamp the company, which included cutting staff by as much as 15%. ron josey joins us now from d.c. ron, marissa has clearly put a sale on the table. is she out of options, and where has she been all along? it was less than two months ago that she threw a multimillion dollar christmas party. ron: it is an amazing turn of events. in december they decided to stop the spin of alibaba and do the reverse spin of yahoo! in t stead.

now we are talking about all options being on the table as they move forward with reverse spin, including a 15% reduction of force. now they are looking at all options. when you look at the numbers, everything going on across the global market space, particularly the internet sector, it is not a bad idea to test the waters. that is what they are doing and it makes sense. if they have the time, i am sure maybe they could fix it, but it takes time. stephanie: give us a timeline. maybe now is a good time for her to look, but should they have done it sooner? julie: this goes all the way back to when marissa mayer became ceo. stocks were up during her tenure , and here are a couple of bullet points. in 2014 -- ipo

alibaba saying it plans a spin , or yahoo! plans a spinoff of the alibaba stake. so the stock has had a big come down. the whole proposition for yahoo! for so long has been that the value lies in its assets, not necessarily in yahoo! itself. so i think investors are now trying to figure out, what is the value in yahoo! if you exclude the value of those others. matt: what do you put the value of the core business? ron: it is one of the few 6 million that has users. there is value in terms of what it is. it has been around forever. i would think that basically whoever buys them, whether it be strategic partner or a private equity firm or an operator like a media company, i would say somewhere maybe in the seven to nine times -- the issue that we are seeing with the company is

that as results come in and they go through this transition and move search on to their platform and do a bunch of things with her display business, their property is coming down. regardless of what the stock is doing, it has come tough. stephanie: what price did microsoft offer so many years ago? of buyere has been a lot back since then. at the time, i think alibaba was maybe working private markets, $40 billion-plus versus today. it is hard from a stock perspective because of all of their value is part of alibaba ownership, which is around 15-plus percent. it is not a slam dunk in terms of what the core is worth, but there are tax implications to think about when you think about what the value is to maybe a media company or a private equity firm. stephanie: at what point did

buy orach buyer sale -- sale status? there is no one obvious. reportsave read press around verizon and at&t. comcast, but in terms of firesale, who knows about the firesale? clearly every day that goes on there is a lot more going on within the company that they are changing. maybe it is twitter, right? they only have a third of the monthly active users. josey,ie: thanks to ron managing director at jmp securities. we will talk with marissa mayer at 9:30 this morning. ♪

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matt: shares of chipotle down big, seems that food safety crisis is not over, it received another subpoena into a norovirus outbreak, it came out

with earnings in which sales missed the streets estimates. subpoena,st another not that they have more e. coli cases. stephanie: it adds doubt when people have so many options for food. this is not even the recovery, the marketing. this is a huge hit for the company. matt: it is a stock issue more than a burrito issue. general motors, earnings out, the company beat the street estimate big. of $1.39, the eps street was looking for $1.20, fourth quarter evidence, $39.6 billion, the street was looking for $39.3 billion. this means the full year, a record, they earned almost $11

billion in earnings before interest and taxes for the year. general motors seems to be running on all cylinders. the stock is another issue. i will talk to the cfo about that. first the news. vonnie: a terrifying moment to the sky over some all you, and exposure of a hole in a commercial jetliner, it was able to make an emergency lander and reports a passenger was sucked out of the plane. everyone on board was set. -- save. angela merkel changing her tone on refugees a state elections approach, she is turning away from the inviting rhetoric at critics say encouraged more than one million refugees to arrive last year. her cabinet is expected to approve a package to restrict the flow of migrants. ireland's promised are prepared to call elections. parliament ande set february 26 as election day, he came to power five years ago during the worst recession in

their history and is favored to win reelection. news powered by our news euros around the world. -- bureaus around the world. stephanie: that airplane story was a lot. that was an image i do not want to see again. time for morning must reads, tom keene with us. here to enjoy it is tim and david. what do you like today? tom: a huge information flow today in the currency markets in particular the yen, and the queen markets, justin fox has written a beautiful piece, when rob writes people listen. this is on google, congrats to google but do not get too excited. in total class, he mentions the map is shaky, of the 10 companies with the highest market caps come a good amount

went on to underperform the stock over the next a gate making it near the top of the market cap list, a sign the company has been successful and appears to be a sign that investors have gotten too enthusiastic. this reeks of westinghouse. you look at the dow and has it rolled over the year and we get comfortable over a set of technology and the technology moves on, is it still the same? >> a little bit different. a man from the s&p said that 10 companies in history have had that title, the biggest market cap, at&t, dow. we have a similar chart to this from yesterday, he looked at companies in the first year after retaining $500 million -- $500 billion dollar market cap. pretty much all of them fell.

exxonked at apple at mobil and exxon and cisco, ge, microsoft, and alphabet. is the onlyatt: ge one that held above. julie: yes. not even above. matt: it's cap its head above water one year out. -- it kept its head above water one year out. julie: it speaks to the point tom is making. stephanie: many people are concerned that the tech companies have so much enthusiasm around them and that enthusiasm should not be wanted nor should the stock price where it -- be where it is. announcessecurities there are always ebbs and flows -- analysis, there are always ebbs and flows and you have to go through rollovers, like margin 2001 where you gather some humility. stephanie: from whom?

tom: from seeing share price loss. everybody has skeletons in their closet, except for jim grant. you have never made a mistake. stephanie: he has a french wine in his closet. vonnie: you have to take the overall, we do not know were aggregate demand will be or growth will be in the u.s. or g3 or g 10 countries. there is that one part to the selloff, including with tech companies and the other is the fundamentals. >> the whole concept of the story reminds me of a quote by mike milken who says he never lies a aa company or aaa company because it only has one way to go, down. he made his life in the junk-bond business. .s we all know he is looking for value and the point is you are not going to find value in the guy that is

best at thee be at market profit. vonnie: historical top companies ,y full market value, alphabet among the others, apple is in their and ibm, walmart, general motors, they have had a storied history. 2000, -- when cisco was up there. owned --se banks were matt: speaking of japan, let's and not theuroda possible leak from the bank of japan which is the story of this morning but the monetary easing and the push towards negative interest rates. you disagree with stanley fischer whom tom spoke to who said that he has been impressed with how it is done, better than

--s expected in 2000 expected. >> i missed that, must've been eating lunch. set if low bar he has that is doing well, japan has not done well for a generation. with respect to negative interest rates, it is clear that mr. fisher is not doing his savings in that currency. nor is he perhaps thought ,hrough the self-contradiction negative interest rates say that you prefer something in the future rather than the present. it confounds the theory of what we know about human behavior. central bankers have instead impose their own notion of what they ought to be doing. matt: i think he was referring to the experiment in europe than in japan, but speaking before the japanese parliament, the bank of japan governor said they can reduce negative rates

further if needed. listen in. >> as we have more monetary policy options, we will not hesitate to add more stimulus in necessary to achieve the inflation target. in terms of the timing of the additional easing, we will continue to examine the economic condition and the risk factors of the time and make a timely decision. you have written about it before, the before you go negative the more -- what is the effect for americans? >> radical policy begets more radical policy. iowa was supposed to be about the rage of the electric, wait till they hear they will be going to take their money for existing. concept that japan after 25 years not getting this right and is willing to take

such a radical step is a huge change. they only did 20 basis points but the last time they cut rates was a long time ago because they have been stuck at zero for a very good long while. i do not think we should desire toate kuroda's keep going, the europeans have gone to -30 and will be at -40 or -50 by the end of march probably any swiss aren't the -75 and the swedes are negative and the danes are negative. this has done the job it has meant to do, keep the person see -- currency from strengthening, seese sense that ease that the pain of balance sheet it is helpful. minus: wealthy have to go because they have given back -- >> there should not be a line in the sand. we talkconomics world, about negative real rates, nobody has a problem with negative real rates. they are the lifeblood of any economic model.

we do not think about nominal rates, they do not mean anything to an economic decision, a real rate matters, the rate net of inflation and if we have a lot of disinflation there he pressures that means our thinking of for nominal rates should be is a lot lower than it used to be. if you areer number a saver? >> we have a 5% rate in feds funds rate, could you tell me if policy is tight or loose, no because if we attend percent disinflation, that is a tight monetary policy and if we had 10% inflation that would be a loose monetary policy, the nominal rate is not an issue and the zero bound is not an issue, we got caught up with this idea that zero matters, it does not matter. tom: i would say the nominal rate is something that business people focus on when looking at investment and jobs. the demand is the search for aggregate demand.

this, withlooking at the concerns of ablation, your prediction of higher yields and someday maybe that will happen. how do we generate the aggregate demand? >> finance is reciprocal, there is aggregate demand and supply, the fed has pushed in aggregate helpedbut it has not necessarily create marginal excess. tom: talk about that. >> if you punch enough holes in the ground, given texans -- liabilities, the fed wants access to levitate's, it has done that and similarly has sosed the cost of liability, pension funds are going broke and insurance companies are in trouble the world over. these policies are cosmetically clever. fed has a goalhe

of raising asset prices, they did that, how did that help the real economy? paper byis a wonderful kevin. spence and fed argue that the preoccupation with financial assets has robbed the everyday workaday economy. vonnie: foo at certain extent, it is take whatever you can get because if they cannot directly create jobs, -- >> they are not hiring people but we have created 14 million jobs in 2008 and the usage rate .as gone from 17% to 10% we have that on average 2% growth since the greatest recession since the great depression. it is not that bad. stephanie: we have pushed people

into the credit markets where they should not necessarily be and they could be in trouble. >> we push people to take risk, qe incentivizes risk. how do we grow, we take risks, if we do not take risks we will never grow, some will win and some will lose, that is the nature of capitalism. you dug a hole, you lose. you invested in a human genome company that is up, you win. the pricestrue but work best typically when they are discovered and not administered. >> the fed is not administering any other price than one which price,incentive position a real short-term interest rate, they're not picking winners and losers, everybody says fiscal policy is the solution, we should let mitch mcconnell and nancy pelosi go pick solar companies and build bridges to nowhere. that is the worst thing we could do, monetary policy just does one thing, takes all of us and taxes us for not being

entrepreneurs and not being risktakers and does not pick winners and losers. that is the beauty of monetary policy. >> when ben bernanke gets out of -- gets on bloomberg and talks --ut -- he means that you >> he never said pick solar or biotech. >> he said pick risk, wall street's as know your customer. -- says no your customer. everyone should have -- >> if we will not be entrepreneurs and we will not take risk we will never grow. those investing in risky markets are not hedge fund managers simply and who are the hedge fund managers investors, pension funds, insurance companies. >> you can sit on the sidelines

and not take risk but the fed will tax you, you will lose 2% of your real wealth. that is what a -2% real rate does. if that makes you happy, if losing guaranteed, a guaranteed loss of 2% of your purchasing power is what you would like, that is fair. if that is not enough to stimulate growth -- matt: i do not think that is fair, look at savers, people trying to retire who are not sophisticated investors, you are saying they should either get in to triple seat yet or lose 2% -- >> i am saying in order to get the economy to grow after a near depression state, you have to incentivize risk. otherwise you state in a depression state. brutal depression in 1920 and 1921 that ended with a balanced budget and high interest rates in the 1920's roared. >> i understand that.

we have a depression in the 1930's that created the second world war. let's go to 25% unemployment and decide -- >> why is the 1930's example more relevant than the 1920's example? >> i am saying you are taking a risk. >> we are taking a risk with interest rates below zero and qe. >> i figure 25% unemployment rate which is both we've had -- what have had if the government did not do what he did whatever created an enormous amount of stress in our political system. stephanie: how does monetary policy create jobs in a service sector? >> you do not buy a treasury bill you give your money to a biotech company and by the debt and that integrates them to hire people and innovate. why'd you buy the debt and equity of a triple c company, because you think they will create something that will better your life and create jobs. could you listen to this

all day, tom? one of the observations of the day goes to the energy jim has been writing about, she says when she speaks to her clients, the set of fears they have are greater than they were in twit -- 2009, jim, do you see that? within the research, that the instabilities are out there or something the fed has to address by not raising rates or retracting on their recent rate increase? >> i believe the fed will backpedal. you will be reading speeches about it will not be a good idea to raise it four times this year or three times or two times and i think that is a reflection of the reality, you can see this in the marketplace, stock prices are going down. the yield curve is flattening and things seem to be not working. clear tohe only way we

history, through currency depreciation? >> he said the root cause of some of these difficulties is misallocation of capital reflected in wobbly balance sheets. your idea is that the fed should facilitate feeling through qe and this will allow us to get out from under. at the cost of substantial passage of time, it will -- it has been seven or eight years since we have had dynamism and the cost of that is reflected in our policies. matt: they are getting older -- stephanie: they are getting older, it has been savers who are being punished. >> nobody puts on a trading book and has all of their line items work all the time. we misallocated resources, we are not perfect. the point is we take risks. when the system does not have any risk-taking it does not grow. we will have winners and losers,

that is the beauty of capitalism. >> we agree on the necessity of taking risks and of entrepreneurs and dynamism, your point is that the fed can institute these things with policy, my thought is that markets work when they are left -- left alone. >> we did that in japan for 20 years. we had hired real rates and nobody took risks. >> to -- japan is the capital of statism. >> it created 25% an appointment. the question is, do we have a central bank that has a mandate, the answer is yes, a mandate to create full employment. you disagree with the mandate. >> the mandate should be first, do no harm. >> you disagree with the mandate, it is the law of the land. stephanie: this debate is getting -- our viewers are loving it. a bloomberg question, if the fed

has no -- has to turn around and cut rates, does the market lose faith in central banking? >> absolutely not. the federal reserve should be able to say they are completely data dependent, unwinding the greatest experiment in monetary policy history in the u.s. if factors are such that they need to go zero times this year or four times this year, that is the way they should, if they have to go to negative rates, they have to go the negative rates. matt: mario draghi disappointed the market desperately to meetings ago. then he came out and convince them. stephanie: we have to take a break. things are getting wild. we will be right back. ♪

matt: welcome back. i am in the green room. set andjoins us on the talks about his business and new versus old. stay with us for that. ♪ stephanie: from monetary policy to a different angle of the economy, a cashless economy, we are asking, is it a good idea? we looked at a future without cash. have introduced hundreds of digital currencies in the past few years of which , or mosts the only famous, now governments one end, the people's bank of china says it intends to issue a digital currency, central banks in the door, the philippines, u.k. and canada are proposing similar

ideas. is this not a good idea because we can i get monetary policy right with the dollar? matt miller was lived on big bitcoin.once lived on matt: for two weeks but i do not know about the government issuing it. >> i figured would be great if intervals -- individuals chose to have it but if the government said you cannot have cash, that is trouble. the editorial from bloomberg makes a bleak -- direct reference to big brother and brushes that aside, that is the point. reminded me of the book of revelations, one pro-government, one world currency. government, one world currency. i do want them monitoring all my transactions, some of it i have to do in cash to keep it on the

down low. not do- stephanie: i do anything i need to be private. >> digital currency makes sense from the monetary policy side and every part of the economic side and the transaction costs side and the consumer experience. where it gets people bothered is that there is a tracking of everything you do. increasingly in our life there is a tracking of everything we do. every keystroke is stored. matt: which is what makes bitcoin attractive am almost anonymous. >> there is an element of coercion because it failed all cash was the editorial was means that your central bankers can take the nominal interest rate 1, 2, 3. stephanie: he is not letting it go. >> if we would have taken

nominal interest rates to -3% or -4% in 2009 we would have never had to be to or qe3 and would have bounced back quickly. that is a different debate. i think it is an extremely powerful tool and always has been and there is nothing magic about zero. >> you say always has been, what other historical examples? >> i am looking at real rates as the driver and i do not see the reason. the reason we did not have a lot of negative in the past because we had a gold standard. stephanie: we are out of time, the beatable new greenroom they will continue to conversation. matt: we will take a quick break. in the next hour, talking to the gm cfo. ♪

stephanie: general motors comes out with earnings after a year in the record books. s&p is telling customers to store their data where you want cloud, and a ceo will

be with us. don't count out oil. some are projecting that the deficitwill become a and prices will climb 50% by the end of the year. ♪ stephanie: welcome to the second hour of bloomberg . we have a high bar. i am stephanie ruhle. matt: david is off this week and inave the honor of filling for him. vonnie quinn, what have you got? vonnie: president obama is traveling to a mosque near baltimore. a rebuke to one of the

presidential candidates whom they say has islam a phobia. meanwhile, donald trump is a new hampshire trying to restore his winning image. took a beating in iowa where he behind ted cruz and barely beat marco rubio. hillary clinton's move last year for fundraising alliances with 33 state democratic parties is paying off. a bloomberg analysis joked she has already added 27 million dollars to the amount of money she raised so far. bernie sanders find only one such deal. 24 hours a day powered by 2400 journalists and 150 bureaus around the world. here is julie hyman in the markets. take a look at s&p futures, very slightly higher. slightlynd nasdaq

lower. oil prices this morning are having an effect on u.s. futures as well. we are continuing to watch earnings reports that come out and have a negative effect on stocks yesterday because of a number of negative reports. we had seen oil actually werending as some traitors coming in and saying the drop was finally a little bit overdone. oil a little lower, cutting essentially in half. aboutis a lot of talk what happens with oil next. one thing we have been watching is the correlation between oil and stocks. one thing bloomberg news pointed out is if you look at volatility versus volatility in stocks, oil volatility is higher than stock volatility. between thespread oil vix, volatility of oil, and stock picks.

-- vix. that spread is climbing. another story we are watching this morning is what is the forecast for oil going forward? to reach the median forecast of a 50%ts surveyed, we see gain in oil prices. $46 for wti by the end of the the and $48 at the end of year. looking at u.s. crude stockpiles, the predation seems to be based on the idea that you would see these stockpiles start to come down, that you would see more production come off line, particularly in the united states, that you would see a lot of shale producers shut down or continue to cut back and that will bring supplies more in line with demand. see $46 per barrel by the end of the year. could be. matt: an important topic for general motors, which beat

analyst estimates. sales strong in the u.s. and car sales in china held boost margins in both regions. joining us now is the general motors cfo, chest events. thank you for joining us. let me ask, i pointed out you beat estimates on sales and earnings for the full year, $152 billion in sales. 10.8 billion dollars in earnings , and yet the stock has not done well. you have had a number of years of incredible growth in stock in the last five years, barely treading water. what is happening that the market is not awarding your company for different growth? >> good to be here. we had a great year and a great quarter. is demonstrating gm will do

what it says it will do. we continue to execute that an obviously driving shareholder value is top i already as we continue to execute and improve performance. improvement, capital allocation strategy, shareholders in 2015. we continue to lead in the definition of the future of the auto industry. we are confident we will drive shareholder value and it will be reflected in the share rice. mentioned the money returning to shareholders. the dividend has been strong since you reinstated it. are you concerned you are not keeping enough cash left over in case of a downturn to weather the storm, or enough cash to invest in self driving cars or electric vehicles? >> we have a disciplined and well thought out capital allocation strategy on three

principles. toest the appropriate amount drive returns of 20 plus percent return on investment capital and that means the appropriate amount of investment in advanced technologies and innovation in the future. maintain a strong balance sheet, which gives us great alice infection, and maintain $20 billion of cash. the reason we maintain $20 billion is to invest in the cycle. investl allow us to through the cycle. it is a cyclical industry. matt: how much do you have to invest to get buyers in showrooms? .eal growth meanwhile, your biggest rival in pickup trucks has had issues with a 5% drop in january. is that because your incentives are stronger or do the consumers just like your truck that are?

>> -- debtor. -- better? >> it is another step in that progression. i think it is a factor of improving brands in chevrolet, and a great dealer network. that is what is driving overall performance in trucks. shares driving our retail increases. you look at the incentives, i think we demonstrated a strong track record of disciplined incentives spending. it is the product that is leading the charge. you have been talking for a few years about reducing the fleets. shareint out your retail has gone up and your reliance on fleets has been less. going to turn around? a lot of analysts are concerned we will push more metal now.

>> that is not in the general motors playbook. we're focused on profitable growth. we expect it to be down in 2016 into morelocate profitable channels like retail and commercial fleet. have inthe strategy we deploying in the last couple of years. of the strength in the u.s. has come from improvements in cadillac. do you think you are investing enough there or do you need to invest more in cadillac? look over the next couple of years, i think we are investing an appropriate amount. today come we compete in something less than 50%. we will be launching a number of new products, including important crossovers.

it replaces -- by mace -- by making those investments, we will be completing -- competing globally. globally is aac big part of how we will drive margin expansion going forward. i was excited to watch corvette win in a one-two punch. it has been awesome because i am a gearhead. it is important to me. is what you do in all your racing efforts, does that come through on the bottom line? >> absolutely. we do a lot of analysis around race thing and what that does perspective but also actual sales. we all is try to run events around the races to bring potential customers. another person who was excited is mark rice. i saw those posts on

facebook or congratulations. has been incredible to watch. the record results, you have got to be crowd of. -- proud of. joining us next, we will talk to more people from sea suite. steve lacey will tell us how he re-strategizing. stay with us for the next ceo interview. ♪

vonnie: welcome back. the largest u.s. cable provider comcast added more video in the

fourth quarter than anytime in a the last eight years. earnings came in a little short of estimates. dividend by boost 10% and buyback $5 billion in stock of this year. another subpoena in the investigation of a norovirus outbreak. that raises concerns that the food safety crisis is not over. yesterday, better than forecast profits. china plans to loosen the rules. that is according to people familiar with the matter. investment of stocks and bonds -- i would like to welcome ceo of the meredith corporation, stephen lacy. you were quoted in the new york post, in the last week, you

presented possible allocations to the board. put some context behind that. i believe our industry will rapidly consolidate and we have operated as a net consolidator for quite a number of years. business,arts of our scales are really matter. it matters a great deal in terms of how we buy programming and negotiate with cable and satellite providers. and on the digital side, it matters a great deal in terms of aggregating a large audience and being able to serve up the audience to our advertisers. stephanie: are their names that you find attractive? steve: i cannot really comment but i can explain what we have done recently and you might make some sense from that. we took over media properties from martha stewart and added shape to our portfolio.

operateyou will see us in that space. wem a digital perspective, are in technology to make us advertise more effectively. those are the areas we are looking. millennial women, is a time merger on its way again? steve: no. stephanie: digital merger, that advertisingective and investments. where will you get that money from? how do you continue that making great investments? is ourthe good news leverage is very low. our effective darling rate is 2.5% right now. we have a lot of dry powder. about five deals are in the works. we have tremendous capacity to execute acquisitions. that is the least of our

worries. finding good and creative deals is really where we are focusing our attention. take you toe will julie hyman. adp numbers are out right now. break them down. julie: we are seeing in addition of 200,000 jobs in the month of january. 195,000 was the average economist estimate. inis a decrease from 270,000 december. at s&p futures here which have been taking a little higher. we have seen bond yields higher as well in the leg of the numbers. of the numbers specifically is 190 2000 service jobs and 13,000 goods producing jobs or manufacturing jobs. this is the head of the government jobs report that we get on friday. the estimated change in payrolls is 190,000. stephanie: thank you. when we look at your properties, can you see yourself splitting

broadcasting and publishing? we have seen other countries do that. steve: we have with it that a number of times but we would need to execute a scale play and do a spin merge. put one business or the other together with a strategic partner. we would like to double that. local business or our national business, with a good partner. aboutnie: let's talk content and brands. martha stewart, that is a marquee name and it does not come cheap. hugeme bloggers gaming power and popularity. -- gaining. -- gaining huge power and popularity. billions of followers? steve: we do have relationships with up-and-coming celebrities if you will. we add value to their businesses

by giving them credibility with our brands. i think it is all part of the future and we are looking for the next martha stewart and we would love to help that young be a great celebrity. those relationships are just part of it. i do not think it is either/or. i think you have to be on all of those platforms and with great content the consumer recognizes and up-and-coming celebrities as well. with the growth of native advertising, does the line not get blurred in terms of journalistic integrity? we have been in that business for 40 years. that createsiness custom content for advertisers to help them advance their brands. we are transparent and aggressive about that. as long as you do not confuse the summer -- the consumer, it is a safe place to play.

we put the responsibility and control in the hands of our editors there it if they are comfortable with it, we are confident our consumer will be as well. there is question around a brand like martha stewart is a case maker, and a product creator. you do run the risk of blurring the line. if you're selling products to consumers reading your magazines and watching her broadcast, how can you be impartial? i am only telling people to watch bloomberg tv. about 3000 better homes brands and products in every walmart store across the country. she is speaking with her shopping cart and we believe she views it as another form of service journalism. it completes the circle. inspiration in print, action online, and helping her execute at retail. we also have a large real estate business and we are the third

largest rands licensor in the world. stephanie: is there a risk the bigger you get the more acquisitions you make, the tougher it will be for you to be nimble? biggestlook at the companies out there, media, technology, and finance, it is both the myths that have a hard time moving. balancedat is a concern but we have a long way to go before we are a company of that scale. we operate around the individual brandon give the brand leader a lot of leeway. it is a worry but for us, i think it is way downstream. stephanie: local stations is what you have. what does cord cutting me to you? what does it do to you? it is a concern to it i was excited to see the comcast announcement that seems to be going in the other direction. we have not really experienced that in the local market. we are fortunate. our portfolio tends to be larger

. most of them number one or number two in the market. that is where you tend to get most of the eyeballs and most of the advertising and we are leaning into an exciting political cycle, which is fantastic for our business. the worry is if you have a lot of small properties in small markets. sure there is a future for that business but we have tended to stay in the bigger market and that is where the advertisers want to be and that is where the population is. stephanie: how much uptick will you get because of this year? >> incremental, very high margin political. i think it is a fair range for our next fiscal year, which starts for us on july 1. stephanie: steve is the only person who loves the drama in the political race. it helps him. for the rest of us, it gives us a headache. ♪

julie: gold futures near him three months highs -- near three months highs. building momentum as stocks continue to sell off. here to discuss the next move is out inining me from chicago. we have seen this strength in what is a low inflationary environment. there is a lote, of turmoil in risky assets. do you think it will have more likes here? >> gold futures look good right now. gold wears two hats. you have geopolitical risk and you havee when negative interest rates. what is going on as we have negative interest rates up ross the board in nine different

countries here. , negative interest rate on the two-year yields. if you look at other countries like germany, spain, switzerland, they are all negative. gold is holding that value each means if you put $100,000 into gold, in 100 years, you will not have any return on it. that in italy put and invest in a two-year bond, you end up earning a negative rate on their and lose 1.i've percent on it. right now, gold seems to be the sought after commodity at the moment. it is interesting gold prices have not done even better this year. if it is such a no-brainer, why have we not see more people pile in? >> in december, the fed raised rates. we saw the payroll come out at 292,000.

gold prices got a small bid on it. average, weving just blew through it at 1135. i think gold as long as we can hold above those levels, will start to build on this. also other metals like the silver market as well, look at as the poor man's gold or but it has volatility. i would expect investors to as the prospects for growth and the problems with stock markets continue. thank you so much. bullish on gold and a little bit on silver. we will have more next. ♪

stephanie: welcome back. this show needs a commercial camera. westin is off this week

but matt miller is in. a very special guest. i'm sorry you missed the dance jam. .e have got a lot to cover let's give you first word news with vonnie quinn. in germany, angela merkel is changing her tone on refugees. she is turning away from the inviting rhetoric which encouraged more than one million people to arrive last year. package to restrict the flow of refugees. a terrifying moment over somalia. a commercial jetliner was able to make an emergency landing. there were reports it was seth out of the plane. the airline says everyone on board was safe or no evidence it was a criminal act. jimmy carter said a scan conducted last week found no signs of what the doctors

discovered last summer. he will go ahead with treatment set for next week. global news 24 hours a day powered i more than 150 news bureaus around the world. markets now with julie. than: futures look better they did earlier. we had the adp payrolls report better than economists estimated. futures have taken a leg up here. if you look over in europe and what is been going on there, we have not seen much strength, markets in the red, stoxx 600 leading declines down 1%. i want to check the 10 year in the u.s. in the wake of the adp report. yesterday, we saw the 10 year yield fall. it has been coming back up closer to 1.89%. present is where we are now. oil prices we have been watching, and we have seen some

volatility already still hanging on to a gain of 1%. the key data point for oil will be the weekly inventory report at 10:30, i will bring you that number when it comes out. matt: oil volatility climbing to its highs level since march of 2009. how should investors position themselves in the ever-growing speculative market? we discussed this in our morning meeting with tim evans. thank you for joining us. we just saw a headline across that russia says it will be a while before it could get together with opec and talk about reduction cuts. we get the likelihood any kind of news out of opec that is meaningful? i think it is uphill battle to try to pull some sort of production cut agreement together. the economics make a lot of sense. there is no need to rush to drain oil reserves at a time of

low prices, and production cuts 5% reduction in output across the board, would translate into sharply higher oil prices. revenues would rise on the production cut. so it makes economic sense and there is incentive to do it. the hurdle here is more political than economic. politically, it is a tough lift a get everybody in cooperative mood, in the same room together to hammer out a deal. deal, theree such a would also be market concerns with compliance with the deal. they might have to aim for a just to gettion cut a significant reduction in output. speculatorsk about

more in the oil market than we do in the other. though they exist across markets. there is a lot of managed money going long oil right now. pockets especially strong in brent. why? >> we have seen managed money loan positions in some respects fugitives from the wti market. if you look at the calendar curve, the spread yesterday was $1.73 settlement. that is fairly punitive for anyone holding a long position in wti rolling that position forward. they are losing that steep yield curve. instead, they are tending to move over to the brent market where the curve is not quite as steep and they do not lose quite as much each month when they enroll. it does represent vulnerability brand net long

position, the largest since last may. there is some risk of long liquidation out of the print market, not today necessarily, but say over the intermediate term. matt: thank you for your time. let's move on. s&p raised his 2017 forecast last month, showing progress in its shift to cloud computing software. it that s&pt is move its business clientele to the cloud? >> very important. today pauses customer wants to get the maximum impact of technology and the value of technology as quickly as possible. if you deploy a service in the cloud, it is the fastest way to value. so it is really important. in 2010, we had nothing going on the cloud. havethe early days and we 95 million users in the cloud and the fastest-growing application software company in the world in the cloud.

to a new wellspring of growth in the company and it is exciting. do analysts understand how revenue will come in? in the past, a big lump payment in the beginning and now there are payments over time. it seems analysts overestimated how quickly the revenue will accrue. >> there is a sea change in the way enterprise computing is happening. about the old days of erp systems, we invested -- invented something called the r three, the standard for erp. in 2015 recently, we launched something, a next-generation erp ontem, natively integrated an in memory database, the fastest in the world. companies will sometimes choose to own that because it is a long-term asset to the company. other times, they choose to rent that in the cloud. is interesting is we are growing in the core with the

upfront license revenue by 20%. we are also growing in the cloud in triple digits. on bothany is growing vectors and we are seeing no sign of slowdown. it is a battle royale. clearly a competitor, here is what he had to say. >> i do not think they are doing much. i think they acquired properties, let those properties from sap.eparately they have not done any work from the bottom up to rearchitect that software from the cloud stephanie:. could one make the argument the whole categories getting bigger so there is simple more business to go around? >> you could say that but from our case, that is not entirely accurate. they have -4% growth and we have positive 20.

cloud, they are growing organically around 15% and we are growing around 100%. the facts are the facts. he is absolutely wrong but look, they are doing a lot there with their acquisitions. with s&p, you're so focused on essentially their baby. >> you think about a picasso. only a planner could invent something like s4 hana. it is a unique invention in the industry. others talk about fusing things for the last decade and they cannot get it off the ground. the markett hits last year. 2700 customers in the first six months, large ones all over the world and another 7200 in the pipeline now. we are executing on all cylinders. matt: what is it like competing in this aggressive space?

>> it is good fun. the reality is the locker room talk does not help you get growth. that is the problem oil -- oracle has you have to distract the fact that s&p is running away with market share by knocking sap. that has been their personal interest. i think the shareholder giving us 30% year on your credit on price,ck first -- stock -- >> when you look at someone like ge as a competitor -- >> i like ge and i think jeff is doing a great job of changing the image of the company and moving to important businesses with health care being one of them. he along with his people were quick to realize the internet of things. that is why hana is playing a critical role at ge. think about making big jet engines. you could think about the 60% of profits that tied in to the big hardware products? het if you could preventable

maintain them, always have the customer happy? what if you could have an efficient network that got the parts, lighted with the person qualified to fix the machine, and did it before the customer had a downtime? all of that is possible here it a great customer in a great partner. matt: what about companies that were once smaller? workaday as well. focused best of breeds are going the way of the 90's. they all consolidated and either got really small or they got bought. this will be history repeating itself. workday is now below their ipo strike price from over four years ago. not cheap. they have a proprietary database. now all the big ones have that.

they are alone on an island without the strategy to win against the big ones and the big ones. x got better than their spirit it is a bad spot. dilemma,e has a bigger a situation where they are about to make a change ceos. then ousted and the stock goes down 6%. the market is obviously speaking on that level. the idea with salesforce, there once was a great moment for salesforce. manage mymate how i sales pipelines and marketing campaigns and i can do it in the cloud on service and the monthly rental. now the ceo is saying, i want to connect with her in any channel on any device. and i want to take my business model and reinvented so i could connect to communities, can -- channels, and e-commerce. an whole thing turned from internal automation conversation to a next earl transformation conversation. that is one s&p has because we

and thed demand chain supply chain of how you manufacture products all the way to the demand chain and how you connect to the consumer on any channel and ratify this all in one system of innovation. the game has totally changed. that will be reflected in an ongoing away -- ongoing way with results. do not watch the revenue p or whatever a -- whatever a cloud company books this year, they sold last year. keep an i on the bookings of these companies on an ongoing basis. it will be interesting to watch. one thing analysts will have to continue to try to account for. he will stick around and i'm excited about this. talking about having this conversation for a long time. stephanie: i was in our morning meeting. there was no talk. you can check out my review of their cruiser in the latest issue of bloomberg pursuits.

it has 100 56 horsepower and comes loaded with tech innovations for safety. it is usually reserved for race machines. consumers can hook up smartphones, lcd via bluetooth. you can listen to your tunes. it is a cruiser but maybe too fast to take too much market share away. stephanie: we will take a quick break. s&p tech stocks have been beating estimates this earnings season. we will break down the scorecard of the winners and losers next. you are watching bloomberg . ♪

stephanie: more with the s&p ceo in a moment. do not miss yahoo!'ceo today. ♪ vonnie: welcome back. here is your latest bloomberg was -- business flash. a record-breaking year for general motors. with $9.7 billion for the year. earnings rose in the u.s. and china. gm is still losing money in europe and south america. to payargo has agreed $1.2 billion to settle a justice department investigation. the case has to do with lending between 2001 and 2010. the settlement would cut profits by three cents per share. thank you. now it is time for the earnings

scorecard. we are focused on tech today. here are the numbers. 41 s&p tech stocks have been reported so far and 38 of them earningsing -- beaten estimates, which seems an easy feat this quarter. 62 have beaten sales estimates. those figures are much better than the overall s&p, down 5.1% in earnings and only about half of beaten sales estimates. what do you think about the trend we are seeing? even on the bottom line, companies have proven time and again it is the revenue number that is hard. >> the ones that they seem to be beating have good business models. if you look at facebook, they would be the standout in terms of beating and if you looked at the average daily users, they climb in every single geography so you see the top and bottom line leverage in an outstanding business model. i think shareholders like that. other companies have not done as

well on the top line but what i try to watch out for is what is on the horizon. what is coming? what are they doing next #-- next? are bettinghey their portfolio to extend their challenge strategy. they have sub hub growing really fast. they have a very good ceo. successfulonducted a spinoff. even companies that did not blow it out, that have great leadership and a good strategy, they are doing the right thing for the future. i try to watch those things. stephanie: the ceo seems forced to not look out on the horizon because of short term is him. larry put out a piece where he said we should not even report quarterlies or even giving these guys, because you cannot make long-term decisions. >> he has got a very interesting point and i read the article and i think it is terrific. i think it is a delicate balance. we are where we are and where we

are is a capital market that wants to see results. on the other hand, you have got to make the right long-term debt . we set up a strategy in 2010 to help the rolled run better and improve people's lives because we said runny better is our core, but improving people's lives is the way we change people's minds, give them a beautiful experience to make their life a little better. puts in new industries, maybe it is health care. you have to start the investment cycle. what you might want to do five or six years from now -- >> you cannot give quarterly guidance. one of the reporters lined up every quarter waiting for your guidance, the only numbers we cared about. you have to keep doing that. >> we have to keep doing that. the reality is we have got to keep hitting it. it is therefore a tough challenge and a delicate balancing act. put out ay to do is five-year balancing plan for 2020.

we even give a midterm guidance for 2017 which we just raised. and we give our annual guidance. i do not know of any company and transparent on a 1, 3, five-year level than s&p p or we try to include the shareholders in the long-term prospects of the company and that seems to have been helpful. you can also seems keep the beat going pyramid a companies that have been around for quite some time are losing the desire factor. intel earnings came out and they are down 9%. i almost look at them like ibm that lost their mojo in terms of a desire factor. how do they get that back? >> you have a slowing pc market. let's call it what it is. now we have the internet of is all overh intel and embedding those chips and devices. you think about smart cities, smart manufacturing. think about china, the president's vision.

all of these things will come together in devices, the internet of things, and clouds. that is where intel is putting their investment. i know brian. he is a smart guy and has invested where you want to put all the data and information in main memory so you can execute your strategy and i have a great confidence in intel. started --omm to decided not to quit their tech licensing business p or will they turn around and eventually do that? ebay did not want to put off paypal either. has to a lot of great moves and that has worked extremely well to my immediate reaction was they have some supply and demand things. they have some effects, but overall, and strategy. they overachieved on the bottom line. they have good cost-cutting and good cost management. and on the top line, anyone you talked to says qualcomm is a total winner.

i really am bullish tech. stephanie: i get the sense he is an optimist around the horn. out thebout to close hour. you may be heading over to the terminal here we will see, we will discuss it. up next, how a life event can change your view from this easily leading your company. ♪

stephanie: welcome back. our guest host has faced his fair share of life challenges. an accident last year. tell us how that has reshaped you in terms of your perspective as a ceo. your mind is extremely

calculating when you're injured and it thinks through all the possibilities and scenarios. at one point, it even said, stay down, life will get a lot harder on you if you go to stand up. literally going through that process here it is like lay down and go to sleep and everything is ok. you your will says that have the greatest family the world and a lot of friends and a lot of people who count on you. you need to get up and get out and make it. that is why i think the will always supersedes the mind. what i learned is god will not take anything away from you without giving you something better back. humanea of just being with me, life is too short to play games. it will be just so human and passionate.

life is a blessing. i think this has already evolved with me. as an example, i see an unbeliever or opportunity having been through the health care system to an -- to reinvent it. if you think about human genome sequencing of the data, if you think about the global research save someone's life, technology's's role in solving some of the world's's biggest problems, i want to be in front of that. stephanie: stick with a spirit we will be back with more in a few. ♪

about 30 one are minutes from the opening bell here in new york city. welcome back. by a dear friend of

mine, lisa abramowicz, and bill mcdermott. it is so good, we convinced them to stick around. with me for the hour, my old boss. he will -- he is the president, a part -- a credit manager. welcome back. hello. vonnie quinn. vonnie: step -- president obama will visit a mosque near baltimore today. white house aides say it is a deliberate rebuke to republican presidential candidates who they say have islamophobia. sweeping legislation being unveiled tomorrow. traffic control system into a nonprofit corporation. many passengers from having in-flight conversations on their mobile phones. it would also force carriers to refund too late. foundcarter said a scan

no signs of what the doctors found last summer. he will go ahead with the treatment next week. powered by more than 150 bureaus around the world, i am vonnie quinn. julie: an extension of futures this morning. are pointing here this morning, gathering earnings news, watching economic data. showing a larger than estimated january, andin there is limited predictability for the friday job. aretheless, investors watching. looking at royals this morning, it has been bouncing back. futures rising to the high of the session. oil is rising up nearly 3%. futures appear to be tracking to some extent. it could all change as we get the inventory report at 10:30

in oil pricesop might be overdone. on the earnings front, we heard from general motors, coming out ahead of analyst estimates. helping to boost the numbers, and in particular s&p -- selling more of those in the u.s., shares of 2.5%. the drugmaker coming out with earnings overall that missed estimates. estimates in below because of the timing of the purchases of those medications. that short of what analysts have been looking for. talking a lot about that company. and also coming out saying yahoo! is considering a sale of the company once again, going back and forth on this front. investors are not really buying

it here. stephanie: i do not understand the disconnect of a multimillion dollar christmas party and then you fire your sales force. i do not get the math. china's central bank plans to loosen rules on when foreign investors can bring money in and out of the country. china will loosen roles on how long are in investors will be required to keep funds invested in china through a qualified investment program under the fund, it may be allowed to make daily withdrawals. is your take on china in general? there are two clear schools of thought? . >> slow growth, the slowest in a couple of decades, falling currency, foreign exchange reserves are falling. maybe the biggest problem they

have is currency in the country. go ahead. >> doesn't that show how much power institutional investors have? they are saying we will not go into your country unless you give us more flexibility. >> it is a little irony. you would think -- they are trying to be more common native. setory today, briefly they gdp targets and there are loose so it gives them more wiggle room. way theyernize and the think about the world and loosening the regulation of when capitals come in and out. it ironically creates a little more trust in the system and makes it pickier. are pretty positive on china. >> i was in beijing a few weeks ago and met with most of the state owned enterprises and the head of the government there. belt, one is one road, and the idea of building smart cities, smart health, taking advantage of the internet

of things, a massive explosion of devices, 1.3 million people. you have to be there and not only that, you have to access the workforce. some of the brightest young arele in the world in china motivated, very humble and hungry and we capitalize on that have 7000 people developing beautiful software in china for china but also exporting it for the rest of the world. the other thing is an echo system effect in china that is unbelievable. if we have 10,000 people in china, we will build a neck a system around us quickly. usan echo system around quickly.\ it is still a lot. i basically made the point on the size of the economy, 12 trillion, they will base clique create another switzerland this year. so that is not bad.

number two. oil is up today after a two-day slump. the worst since 2011. oilysts are now predicting prices will climb about 50% by the end of the year. crude will reach $46 per barrel and bread will trade at $48 in the first quarter. goldman sachs thinks the surplus will shift to a deficit. this is the bulls being bowls. -- bulls. do you think this is realistic? >> analysts have been revising forecast for a year-and-a-half now. i am not exactly sure a leading indicator would be analysts forecasting. i would think that would be a lagging.dicator of we have all given up trying to figure it out. i am no expert. there is good news with cap asked budgets so far down this

year, a natural supply reduction. you cannot help but look at the stock pile number, relatively weak demand. the wild card to me is opec. if you have a thesis on the global macro story, maybe there is a near-term bullishness. there are all these ancillary businesses getting a boost. are all of these people driving to the malls to buy" or market is not happening. so far, it is just the negative. fourthtopic was industrial revolution and a lot of the conversation was how do we not rely on oil and use less of it? the other hand, global consumption is actually up. you say why is the price going down so much? u.s. impactede that certainly are production and oversupply has impacted that. russia is getting in the mix now impacting that.

that supply is consumed and it tightens up, you will see prices change. it is a natural flow. the big idea right now in business is the idea of sustainability and how we do create a society that relies less on this. that to me is more interesting versus the price going up and down. but is it idealistic and you love to talk about sustainability in a good year. honestly the conversation on the table? for a lot of companies, it is survival. you that it is not a priority on the table right now. right now, it is supply and demand. to world leaders, prime minister's will tell you they are psyched the price of oil is really low because that is better than any tax incentive a could have given to their constituents. are not actually seeing

that translate into economic growth. earnings thaty basically seemed to indicate they are not ready to start acquiring rivals because they do nothing oil prices have hit a bottom. capitulation? >> it is hard for an end -- an energy company to make money. we are biding our time to come out of this. think about a more macro standpoint. gdp would be maybe looking more like japan right now if we did not have lower oil prices. who knows? look at the hand, negative effect. something like a quarter trillion dollars was raised since 2008 in the credit markets , they just surged, you know, capitalizing the super cycle and energy. look at all the capital that has been lost as a result. enormous.

you have got to think about both sides of the coin. tumbling: chipotle is after the burrito chain supported a sales plunge in january. they told investors it has received a subpoena, renewing concerns that its food safety crisis is not over. let's break it down. of places toot have fast and casual dining. how does something like aaa get past this? >> the customer alone determines whether the business succeeds. this is a crisis. how you manage it is incredibly important. one thing i think chipotle has to do is not just on branding and advertising, to basically say i'm sorry for what i did. i think you have to have really tight communication with customers on how it will never happen again or how all of the provisions have been taken to get an unbelievable experience.

i know they have done those things along those lines. trust is a thing that takes years and years to build and it can be broken in an instant. -- you have to build that up one quarter at a time. it will cost a lot of money to get that back. >> it is not just customers that lost the trust. it is investors. it is people looking for a continued growth story. here is the timeline of what we have seen in the stock. this was first reported in california and you saw the stock start to go down and it spread to the northwest, boston, other states, and that subpoena filed in california states, the stocks have gotten a bump off of the bottom. there were hopes that they were finally closing out the chapter as the cdc concluded its investigation. but now, it just extends this. to pull a of course wants investors and customers to put

this behind them. it is getting more difficult for them to do that. raises more questions. to your point, the cdc closed out the investigation and there is now a potential criminal probe of what actually happened. does this indicate that there is some information that still has not been put out there? answer the question or simply say i will eat somewhere else. >> no breakouts in a long time. this will be a good case study one day. we look back on crisis management. i think the core of it is are you putting your health at risk going to chipotle and the answer sounds like, today, no. stephanie: those are the stories that matter to markets now. thank you for joining us.

we are not letting rich leave. we have got more to cover in the high yield stress and corporate bond markets. toly chang will be speaking the yahoo! ceo, marissa mayer appeared an interview you do not want to miss. marissa mayer under fire. her is her strategy to make way out? let's take a quick look of what is moving up and down in premarket trading. we will have that next. about 15 minutes away from the market open. ♪

vonnie: welcome back. i have your latest bloomberg business flash.

5000 jobs last month according to the adpe research institute, which also relies its december figure upward. companies are optimistic businesses will improve after a fourth-quarter slowdown. mark zuckerberg is climbing the ranks of the rich with a $50 billion fortune. he has pushed ahead of carlos slim. and jeff bezos into fourth place on the bloomberg billionaires index. 400 richest people. year, defying gloom across global equity markets. that is your latest. julie? shares ofre watching a chipmaker on the rise after starboard confirmed a 6.7% stake in filing. it also hired a number of outside advisors that have had extensive experience in the technology industry.

this makes starboard the outside holder company. you can see the largest shareholders of this company. a couple of insiders are on the list. you see star board up. . year, amongthe last other things, accounting practices. we will watch today and see what starboard has for its company. up next, is that behavior returning in credit markets? stay with us. ♪

stephanie: the u.s. default rate is expected to climb to a six-point high this year. are they searching for yields in

all the wrong places? we have got the president of benefit street partners. us of the doom and gloom around high-yield markets, the equity market. it seems to be playing out. >> it has nothing to do with energy. we were waiting to see what the catalyst would be. thought it might be china. thought it would be the fed if you have people making bets. oil going from 100 to 50. frosty, i credit was made a good acronym on the elevator on the way over. excess,cipline, crazy as it looks back 2007 again. stephanie: hold on, in terms of companies doing deals? >> it became ok. the risk, all the way free.

stephanie: how bad will it get? >> let me go through my acronym first. deteriorating fundamentals, slow earnings. you have cover that and you know the story. high yields where you do not have an economy boosting things up. a 20% exposure to energy and mining, you really start to see the big effects of that stuff. favoriteuidity, your topic. it is good when it is good and when it is bad, you will see gaps in the prices. r's. poor recoveries. the cousin we kicked the can down the road so far, there is no covenants. companies fair to -- failed to refinance, more vigilant creditors or you will have recovered is -- covenanters.

debt, it is probably now 40 and zero or 40 and five or something like that here i have got two more. regulation, we know that story. lastly, roach motel. inventories are down. you have a daily liquidity. and sells at the same time. who will they sell it to? stephanie: we have really not seen that kind of panic, the rush for the roach motel quite yet. will it be another 2008? >> i would argue you have. 210 have gone from roughly 210 to roughly 20% yield now. away 2008, itake is as wide as it has ever been. you see a less pronounced widening of spreads across the board in other ratings

categories. in used to call the world the old banking days high great and high yield. there are four markets now. high-grade, companies that were once high-grade, and look at s&p, they have got half a chilean dollars in downgraded a lot of those will be fallen angels. then you have high-yield and then you have junk. the market is to give them the benefit of the doubt. eight times leverage. maybe they had something good going for them. stephanie: but that is because you got paid for it and you did get a nice coupon. lisa's's point, where does it get to the point where it then snaps back? we have had the roach motel effect, for example. i know you are not talking about energy specifically, this is the energybetween high-yield and all of high-yield it we are seeing that at an extraordinarily wide level. 9.6%. it goes back all the way tonight and 96.

it is obviously a long time horizon. do you get to the point where spreads are so extended that they will have to come back in? will energy have to come back in? will high-yield generally have to? >> we have been living as credit managers in the ohio desert. differentiation between good and bad credit. now we are differentiating between good and bad. 18%.0% yield is still a lot of babies being thrown out with the bathwater. picker's time to go in there and look at the company's i do not have the commodity exposure to find a good one. even within the ones with those exposures, there are jewels there as well. really based all on fundamental spirit he started

asking about the distress cycle. i think you will see an increase in distress rates. even if all the metals and 20%ng range, just putting of the market is oil stays low for a while and a 10 or 20 or 30% default rate, you will see more defaulted names for process driven firms, for the first time in six years. that is a good thing. bad companies should default to what will be the effect on investors? all of these guys who said i have been trading high-yield for years and i will start a fund. is truly becoming bifurcated and this is the time for real credit investors, what will happen? >> i do not know, i would say maybe only because this seems to be the best opportunity ever. , theverage retail investor

best time to be a buyer, i think this is the best time to be a buyer. it is selective. funds, the 3rd avenue story. i do not think it is a beta play. remember, if defaults kick up and your new yield and the new averages 10% and not six anymore, you have a lot more to defend yourself against default. stephanie: he is saying it is now the land of possible. rich byrne, you are staying with us. we have got more to cover. ♪

the conference call. the ultimate arena for business. hour after hour of diving deep, touching base, and putting ducks in rows. the only problem with conference calls: eventually they have to end. unless you have the comcast business voice mobile app. it lets you switch seamlessly from your desk phone to your mobile with no interruptions. i've never felt so alive. make your business phone mobile with voice mobility. comcast business. built for business. stephanie: welcome back. you are watching "bloomberg ." we are moments away from the opening bell.

futures are up after equities closed down yesterday. it is a headache if you cannot get yourself out of this volatility mess. we are going to take a look at oil, clearly another indicator that is massively volatile this year. slump.y after a two-day we are starting to see some analysts see some green light saying that we could improve by as much as 50%. a supplyy it is simply and demand game. as opec continues to be a wildcard, we just do not have an answer. we are going to take you to san "bloombergwhere west" anchor emily chang is sitting down with yahoo! ceo marissa mayer. yahoo! clearly has gone through a default to us -- has gone through a tumult to us ride. emily, you are joined by bloomberg tv and radio. emily: thank you. i would like to welcome our viewers on bloomberg television and our listeners on the radio. marissa, thank you for joining

us this morning. i would like to start off when -- start off with -- silicon valley turnarounds are rare, and you are focused on making yahoo! the best it can be. odds are history, what you giving yourself that you can really turn yahoo! around? marissa: i think we are really confident. i have been heading up yahoo! for 3.5 years and we have some achievements i am proud of. yahoo! userslion yahoos every month. we have active users on mobile. over the last 3.5 years, in the face of a lot of legacy, from our existing revenue, we have built says revenue -- video, native, and social. totaling 3.6 billion dollars, about a third of our total revenue, that can carry us in the future. four of those areas can

keep us going in the foreseeable future. the fact that we got ourselves a piece of that and have built ofat product and terms mobile and building user base, that is what we would like to do in the future. i think we have really set ourselves up to be successful with future growth. emily: the super bowl is on everyone possible mind. if your 10-year tenure with game, wherefootball are we in the game? is this your hail mary pass with five seconds left? marissa: well, i am not much of a football fan. i do follow it occasionally, so i am not sure i have the right football analogy. what i will say is we are really very confident in our strategic plan for 2016 and beyond, to get focused on a few key products in terms of global platforms.

we are running mail, search, and tumblr. in terms of specific verticals, we are focused on news, finance, and lifestyle. side, we haveser two platforms, yahoo! gemini as well as bright rule. we are going to work on those products on the strategic side. have ourviously also alibaba stake. one of the most important priorities for us is achieving a separation of that stake from the operating business. that is a real way to maximize value. some of what we discussed, we now now paused, and we are working on a reverse spin as well as exploring strategic alternatives. we believe that dovetails with our strategic plan because it is about building the most value and recognizing the most of our

potential that we can. emily: investors say the language is very confusing and you are pursuing three different plans at the same time. how far along are discussions about actually selling the core business? marissa: we view all three of the areas of being very complementary. in the core business, we are focused on being the investors in yahoo! that we can for our users, advertisers, shareholders, and recognizing the value in the assets that we have built here. in terms of the different trends -- actual pieces are aimed at separating the alibaba stake. those are aimed at maximizing value. we think they can be pursued in parallel, and again, they are complementary as opposed to conflicting. , we announced just yesterday that our board will be engaging on strategic proposals and exploring different

strategic alternatives. and we are going to accommodate further on that process until we reach an agreement. emily: so your cfo said that there have been offers for the company. verizon has publicly expressed interest. how are they privately expressing that to you, and how have you guys responded? marissa: again, we are not going to comment on that. those communications will stay private. emily: let's talk about your vision for yahoo! as compared to the board. a lot has been made that chairman web made specifics. there must be debate among board members about the future of yahoo! charles schwab just left the board. are there current board members who do not share your vision? marissa: i want to give a comment to chuck. chuck was a terrific board

member, and he is obviously a leader that i really look up to and have learned a lot from. overall on the board, management and the board are very aligned. yahoo's situation is complicated, and i think that is obvious with everyone, particularly with the assets japane have in both yahoo as well as alibaba, plus the core. that is one of the reasons why you see that we need to have a complicated solution, and a somewhat complicated path forward because we need to address how we receive the most value that we can from the operating business and how do we realize the most value we can, in particular from the alibaba stake, but also maximizing yahoo! japan. the coreme have valued business at zero or less than nothing. 'sw much do you think yahoo

core business is really worth? marissa: everyone models this differently, but i would say my goal is to make it worth the most it can possibly be worth. that means maximizing revenue, executing as well as we can on the revenue plant, really managing our costs well, and something else we pride ourselves on, doing the best we possibly can to return shareholder value. an average return to shareholders in my 10-year over $9 billion of shareholder value, so we really are trying to manage all of those different pieces. so i stay more focused on the tactics and less in front of the high-level modeling and valuation. that: shares all already shares are already opening down, so what are investors not getting? what is the message you're trying to send, particularly to star board? are you repaired for a proxy fight? us, our message is

really that we have a strong future. we think we built a great foundation, both in our end users and our audience in terms of engagement and our products. we feel we have a strong foundation of revenue to look forward on that can really carry us that will work for the next few years. i am very hopeful and confident in what yahoo! can achieve in terms of our operating business. we feel that we have sound plans in terms of how we would approach the alibaba staples in terms of the reverse spin and what we might approach in strategic alternatives. emily: you have said that you want to make yahoo! the best that i can be. if you sell the core business, would you view that as a failure? would you view that as a personal failure? say that whatld

is good for yahoo! is good for me and vice versa. so we just want to see the best possible future and the best possible outcomes for yahoo!, for our users, advertisers, employees, and shareholders. of thegiven the scope cuts, the job cuts and cost cuts you have needed to make to attempt to get there, how are you dealing with the drop in morale and productivity? -- i would says that when i look at yahoo!, we have a lot of people here who are confident. they like our plans. we are as focused as we have ever been on products that we really believe in and love and that people are really excited to work on. so i think there is always going in a some issues of morale complicated situation like this, but i really believe in the resilience of the people here at yahoo! and i believe in their vision

because it is a shared vision that we built together. emily: there are concerns that ,ou overpaid executives overpaid big media personalities in an age where companies are paying their contract graders almost nothing. why does your model and your strategy makes sense? marissa: i addressed this on the call yesterday. there have been a lot of reports that have been in accurate, and there certainly are some perceptions out there that are not quite right. -- i do not want to adjust too many in particular, but the perceptions of what we have paid or overpaid for various things are just misconceptions. but when i look at yahoo!, we talked about it yesterday, yahoo! is a three-leggett stool. -- there is a three-legged stool. each leg of the stool provides a fundamental element to our business.

we have focused on discovery, so research is a key part of that. it is lucrative overall to our business. communication drives a lot of frequency. in terms of the digital content and digital media, that is what differentiates us. people come to yahoo! because of those personalities, because of that original perspective, but also because of aggregation and personalization. all of those work together to create a true digital network. and that is ultimately why it to create ato us perspective of high-quality content. it is what draws people to us. emily: marissa mayer, thank you so much for joining us today. marissa: thank you. emily: and thanks so much to our listeners on radio for tuning in. i will send it back to you. stephanie: thank you to our own

emily chang. great, great interview. i enjoyed that. we are going to break that down in just a few, but the market is open. we are not 10 minutes into the day of trading. julie hyman? julie: let's look at where stocks are we see a little bit of a lift here. the nasdaq is the laggard here. we have been watching closely what has been going on in other asset classes as well. earlier this morning we had the adp report on employment that came in better than estimated, a larger than expected printer of jobs. when we look at the 10-year, we have seen yields come up from where they were yesterday. 1.87%. but still, i believe we touched 1.80 5% yesterday, so a little bit of an increase in yields on that number. watching crude oil. .e have seen a rebound up 2%

we will see what happens at that point in time. the other point in driving markets, general motors coming beatith numbers that estimates, selling more vehicles in the u.s. and in china. but the shares, higher in the premarket, have now turned lower. we will look at something on the conference call affecting the stock. other earnings companies that are falling today -- earnings-related movers, i should say -- merck coming out with diabetes drug sales that missed estimates. .7% afters down earnings were not terrible, but january sales were still trending down. and it disclosed a new subpoena from california, a new investigation into its food safety practices. yahoo! -- we just heard from marissa mayer on the company's plan. this potential sale is not helping shares. isst of all, the stock

outperforming other tech under her tenure. that gets lost a little bit because yahoo! has come down so much, but this is yahoo! in blue versus the s&p information technology index. it has sold off a lot from its highs, but overall, it has been doing better. one more chart, if i can just bring it up. here is yahoo!'s revenue. you heard her talking a lot about revenue. yahoo!'s revenue over the past 10 years, it is a lot smaller than it used to be, but it has bounced from the lowest that it has been as well. let's go now to abigail, live with the nasdaq. she has the latest. abigail: thanks so much. shares are popping this morning after the biotech giant beat fourth-quarter estimates by double digits, this for the fifth quarter in a row. guidance came in a little bit light as the company expects to to make-- expects

between $30 billion and $31 billion this year. thatomberg analyst says decoupling's bottom line, the covert he made nearly $12 per share last year. gilead trades at a huge discount, a 50% discount to the cops, but recently -- to the comps, and there could be more pain ahead and i/o tech -- in biotech. stephanie: we are going to take a quick break. when we return, we will break down marissa mayer's comments. shares are down. headlines crossing. we will find out what all of it means. you are watching "bloomberg ." havewe come back, we will an all-star cast talking about yahoo! and the future. ♪

stephanie: welcome back. i am here in the green room. tomorrow during our 9:00 a.m. hour, we will sit down with -- and weon the day with teeng oil movement -- with stephen pickens. vonnie: welcome back to "bloomberg ." two u.s. senators are urging the obama administration to expand the recall of airbags. millions of potentially defective airbags are still on the road. the push comes on the heels of another fatality, this one in south carolina late last year. 10 deaths and more than 100 injuries have been linked to airbags. there is concern that the food

safety concerns are not overpaid yesterday to public posted better-than-expected profits but warned that 2016 will be a very difficult year. that is the latest "bloomberg business flash." stephanie: we just heard from yahoo! ceo marissa mayer. here is what she said about the company's future growth. marissa: all four of those areas are projected to keep growing. we have gotten a piece of that, the fact that we have built great products that can take us forward in terms of mobile and build our universe -- our user base and building judgment and we have more ideas to what we would like to do in the future, we have set ourselves up for future growth. stephanie: that is what marissa mayer had to say. let's get some reaction. robert peck is an analyst at suntrust. he has a buy on yahoo! shares. also with us, bloomberg news contributing editor paul kedrosky. and from bloomberg intelligence,

paul sweeney. emily chang is here. let's break this down. >> i am not sure we have enough people. stephanie: first of all, you have a buy on yahoo!. is it a buy because there is a buy on yahoo! or because you buy what she is selling. >> they are selling the court. that is why you saw the write-down, the asset sales, the points they have like ip, that an acquirer would need to value. the real question now is what kind of sale process is this? is it active, and what is a qualified big? also, what number would they take? what is reasonable? we said it is worth $6 billion or $8 billion or so. the real piecing is separating the core from the eight assets. that is how you maximize the value. we think it is about $40. stephanie: paul, do you want to

weigh in here? paul: my biggest tech away from this was exactly that. i just feel like we were looking for clarity about the process. what is going to happen next? we did not get any clarity at all. we got an awful lot of strategic qualified possible purchases or buzzwords. that is unfortunate because what has happened is that marissa has wandered into wall street's playground. and the yahoo! does not want any more talk about product growth. we did not get any clarity on that. stephanie: paul sweeney, i am watching the headlines -- marissa says there are complicated morale issues. i take it bill mcdermott, when he said that it is the opposite -- what is complicated about morale issues? paul: it is all about the people, the engineers. your value, your assets walk out

the door every night, and it is all about attracting the cool new engineering talent, and if your stock is going down, it is almost impossible to do that. goter defense, when she back into the company, she did bring the cool back into the company. but the turnaround has not occurred. the stock has not rebounded, and as paul mentioned, we did not get a lot of clarity on how the process is going to work. stephanie: i am looking at our function pay go. marissa made $69 million last year and she gets paid another $158 million if terminated. could that add to the competition in morale when you are firing 15% of your workforce ? emily: there are so many complications when it comes to this company, with regard to how much marissa is getting paid, which how much -- with how much she pays executives, to how much leave.d executives to she made it clear in that interview, she is focused on

turning this company around. that is plan a. land be is the reverse spinoff. plan c is to sell the company. it is pretty clear she does not believe this company should be sold, at least not at this point. they have said they believe the company is undervalued. i am going to take a slightly contrarian view. she is also saying that she is going down with the ship, and i find that kind of admirable. stephanie: rich, what is your takeaway? rich: first of all, in a couple of slow trump news days, this is really filling the hole. back to sort of financial analysis, we have spent all of our time looking at financial companies right now, and where stocks are these days. everything is trading below book value -- all the banks, asset managers, everybody. it is really hard to touch that book value, along with other factors. here is a tech company that

because of alibaba and the japan businesseshose two alone justify a price higher than where it is today. so this one seems easy. i do not know which 1 -- julie: but if you are selling the core business -- i want to bring up my bloomberg, where i was looking at revenue going back a decade -- we have seen it falling, bounce from the bottom. if you look at forward assets, it is expected by analysts to trend downward. stephanie: we have to leave it there. i reiterate, i really like yahoo! weather. thank you. i will be back in just a minute. you are watching "bloomberg ." ♪ ♪

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welcome to bloomberg markets. betty: from bloomberg world headquarters in new york, good morning. i am betty liu. here is what we are watching at this hour. we are half hour into the trading session. stocks are pre-much mixed right now. we are kind of paring back some of our gains. willa volatility continue this year? we will get insight from hank greenberg. and also phil miller joins in on whether the stock market is a buy. the vti crude is still near $30 a barrel. we will tell you why some analysts are forecasting a 50% rise by the end of the year. we get inventories out in about half an hour. yahoo! ceo marissa mayer unveiling another turnaround plan, this one involving job cuts and the possible sale of the company -- of the company. a closer look.