>> coming up, the stories that shape though week around the world. janet yellen speaks on capitol hill. a mixed picture in the year ahead. deutsche bank spends tense days trying to sooth investor and zaidi -- investor anxiety. from budget proposals to primary votes, it has been an eventful week. bow will beratic longer and nastier than people thought it would. david: the brightest minds try to make sense of market turmoil.

>> they're going to be mauled. >> you have to ask yourself, why is that happening? david: all of that next on bloomberg best. ♪ david: hello, i am david gura. let's start with a day by day review of the top headlines. startedy, the markets with the week before, with a big selloff. stephanie: an unbelievable day. at one point, you had the nasdaq off by 3%. but into the close, stocks made -- contributed to a rally. the s&p only off 26 points. the dow only up 177 points.

>> an off day but it could have been worse. >> what is this all about. >> there is more anxiety about the financial sector. even a few weeks ago, it is a relatively new development. the focuses mainly on european banks. but a few things have been driving markets lower. last week, most of the economic data, even the u.s. was on the soft side. it is reinforcing concerns about the health of the global economy, even the health of the u.s. economy. have had an environment for the past few weeks where you have seen more effort by some of the world's central banks in japan and europe to either consider or. more unconventional monetary policy. and so far, that is not having the intended effect. investors nervous about what happens in a world where central banks may be out of bullets. been looking for the bond bubble to burst for years.

it seems like the bond bears can go home right now because it is exactly that it -- exfo what is keeping the bonds up. >> it defies everything we learned in school. you have close to half the marketsn sovereign bond mog with negative yields. that wasn't supposed to happen. you were supposed to have to pay the government for the privilege of leading to them. >> deutsche bank slumped yesterday after being the biggest lenders to reassure investors it has enough cash. >> a report yesterday raising the specter of deutsche bank's ability to pay. this is a huge torch paper. -- simonm&a and adamson wrote this report, questioning deutsche bank's ability to pay their coupon in

2017. if their profitability comes in lower than expected or if there are further litigation costs. this is a big cloud when we talk about deutsche bank. we don't know where they are going to be an long-term litigation costs, what that will do to the profitability. yesterday, they put out a statement saying, yes, they do have enough capital to cover. they say they have enough to cover 350 million coupons due in april. this isn't just a deutsche bank story though. you take a look at lenders in in 2012, 600, you see that is when mario draghi said he would save the euro. look at how far they have gone down. there appeared to be two stories. one is a sort of concern about

deutsche bank and our own ability. but then there is a broader concern about the bank stocks in general. but it looks like deutsche bank is taking the brunt of that. >> so the question of negative interest rates came up today during it -- during janet yellen's testimony. spirit of prudent planning, it is something that, in light of european experience, we will look at, we should look at, not because we think there is any reason to use it, but to know what could potentially be available. >> it's interesting that she, like sam fisher, came out and said, based on the european experience -- it makes me wonder if they think it has been successful. if so, what are they looking at to gauge the negative rate experience. >> or if it didn't mess it up. did not harm in any way, versus weather -- the help. >> later on, she did allude to

u.s. money market funds. she said they have to study whether the potential advent of negative yields in the u.s. would disrupt the plumbing of the u.s. financial system, in particular money market funds. you are already seeing in japan some money market funds closing down to new investors because it doesn't work. this model doesn't work. and europe does not rely on money market funds as much as the u.s. does. disrupt the paper funding system. she did say it would be remiss for them not to look at it more closely. >> you've just been listening to fed chair janet yelling -- janet yellen. you is the message heard from today's testimony? >> negative rates, very back-and-forth on the legality of it, but whether she was prepared to use it.

>> we had previously considered them and decided that they would not work well to foster accommodation back in 2010. in light of the experience of european countries and others that have gone to negative rates, we are taking a look at them again because we would want to be paired in the event that we needed to add accommodation. >> the mere fact that she is saying, again, confirming this is a tool we are considering, it may be something we are going to use -- it doesn't mean we are going to use it -- we are sharpening it, and it's an signal to markets. theater,le bit of psychotherapy, a lot of politics and very little information. i would disagree with one of brendan's characterizations. she was asked about the acts of negative interest rates. it doesn't mean that she are -- the ax of negative interest rate. it doesn't mean that they are sharpening it.

it is a full successive day -- a fourth successive day of declines here in europe. >> the pressure is building up in japan. >> does this mean we can expect more stimulus from the boj? >> i think that is the question we are all asking ourselves right now. kuroda was in parliament all morning talking about how he is ready to employ more stimulus if it is necessary, that he will not hesitate. i think those are pretty strong comments. i think more action is definitely possible. there are some economists already focusing -- forecasting that we will get more in march. >> the boj has completely lost control. banks have central blanks> generally lost a lot. in reality, people put their money in the mattress.

bankinge it out of the system. n aging segment that relies on pensions. kind of for the economic theory breaks down with the practical reality. will have more on deutsche bank a little later, how it rallied from tuesday's plangent how it got the whole world talking about cocos. then company news from tech to media to beer. ♪

david: let's continue our review with some business activity. sunda patch i is getting a

big payday, very big. he is poised to become one of the highest-paid chief executives after the parent company offered him restricted stock. >> that is an awfully large restricted stock grant. any upside was really something shareholders would be happy to give him, given the performance of to a point. google right now is just firing on all cylinders and i think that he has come in and done a terrific job taking over the core property. so i'm not surprised they want to reward him. i think it is testimony to just how successful google thinks it is right now and how critical he seems -- he is seen to be in the company. >> for google, these are payout firms through 2019.

and their ultimate value will be the stock rice. but the number he is getting is the number he is getting. if you allowed him to invest all of these today and he has a few options, and the company, they would be worth 650 million. obviously, we are in a down market so he is getting close. he could definitely get there pretty quickly. corrects the japanese government bidding for a rescue plan is pitching the creation of smart appliances that include another major.d electronics >> we have taiwan's foxconn and we have innovation network core of japan.

they are looking to inject some capital to boost the led business. this idealso pitching of a smart home appliance giant. foxconn is offering a package that is worth about ¥660 billion . some of that would go into sharp in the form of buying new billion would¥225 be used to acquire preferred shares. isthe other side, ha offering ¥203 billion to uphold these operations in the future. oath want to change operations fundamentally to make sharp more competitive. it has been losing money for years. --my question to you is this profit will increase in 2015 externalncreasingly environment. where are your sales and profits going to rise in 2016

and by how much? >> whenever make those kinds of price predictions -- precise predictions come as you know. but we have a portfolio brands that allow us to spread the risk. on the one hand, you will have headwinds, but on the other hand, you have oil consuming countries like vietnam that will benefit from low oil prices. overall, our balance and our portfolio footprint leaves us to make that confident statement, there willtting that with i be some headwinds. >> is this an opportunity to get more out of the european business? translateces do not one-on-one to beer consumption in european but that will bring some additional discretionary purchasing power to people, which beer is a small part of it and we want to play our part.

think europell, i can benefit from lower oil prices in the you succumb. made a pledgemona to prove doubters wrong and bring floundering stock to a new high. he's been with the company for a while. what does he have land? >> this is probably getting back to a six for viacom. it comes to programming and ratings. it is a challenge for this company. this is a company that has some real ratings weakness. the company is reinvested in their programming. a lot of new shows. the ratings have started to turn. let's see if that is a long-term trend. they believe that they will start to see real improvements

in the cable networks by the end of next year. unfortunately, investors are hoping to see the turn a little bit sooner. >> disney reported earnings after the bell yesterday, beating all estimates to >> really the best corner does has ever recorded on every front. you look at profits of $2.9 billion. that double the massive profits from three years ago. a fantastic quarter driven by star wars. merchandising activity at the beginning of star wars. spectacular quarter. and yet concerned that there is a slowdown and espn and subscribers have adapted to a new world of cord cutting. >> i saw bob iger went out of his way to see there is an uptick in subscribers. but it did not make the market feel any better. >> etch right. --le they got more revenue

that's right. while they got more revenue per we certainly haven't seen that behavior in the marketplace. at 2016, we have seen a fairly rapid drop in commodity prices. it is not just add materials. it is also oil and gas and a range of products. we are on the front foot. we are taking proactive and prudent action to reduce our costs and to reduce our dividend policy. this is a sensible step we are taking here to protect long-term value to shareholders. >> what does this tell us about your m&a thoughts. >> we are trying to get the balance right between shareholder returns. of assets thate

could be more natural than some others. at this stage, there is out there on the market that interests us. but we are holding our powder dry while we focus on developing our own assets. >> twitter reporting a loss of $90.2 million in the fourth quarter. staggereduser growth -- stagnated escort her. jack dorsey is still struggling to make this site more a lowering. >> the company so far has kind of been able to get around this stagnation because this is at the first quarter that growth has find out. it has been happening for some time. they got around it by the average revenue per user, which twitter has trailed facebook at but has been able to tweak up quarter after quarter. that has massed the declining

users. that's all a shell game. until you reenergized user growth, you are stuck. straightsted is second quarter loss yesterday. this is not great news. >> it was a really bad loss. people were accounting for some of the trouble at aig, but this was worse than our most estimates. a lot of people knew hedge fun performance had been bad at aig. and i guess activists came in at the right time. >> so they put a couple of activists on their board. >> right. he's been through this before.

early this week, dow's around europe's largest investment bank. sharply bank stock fell . it all began with cocoas. the co-ceo tried to calm employees saying deutsche bank remains absolutely rocksolid given our strong capital and risk is issued in. >> fears yesterday were triggered by a note from credit

sites that question deutsche bank's ability to pay off coco bonds. this is a type of debt that, if things go badly, the bank converts into shares. but there's nothing significantly different. fear that the markets brought up front yesterday. >> it is quite amusing and away. they converted into equity is .he ratio falls it is sitting at 11% at the moment. i was getting calls from people saying are they going to raise more capital. >> right. europeank some of the banks have been slow to getting themselves recapitalized and getting their financial balance sheet in the best place they could be. >> i think deutsche bank is pretty sound, actually. at the end of the day, it is a

german national icon. is doing all the right things. >> we don't have a rating on deutsche bank. my guess is they shall are holders face some serve dilution in the capital structure. >> we have seen differentiation in europe. ubs is only at 86 basis points. it is important that the banks are still that's the markets are still differentiating between the banks. >> i think we are in a situation where we have a much better handle of the balance sheet. but that doesn't stop people from having that fear factor. >> one bank come no one institution raising that level of concern that you get the german finance minister to weigh in, to shore up confidence, i

haven't seen this since some bankers told me they were solvent in 2007-2008. onwe have the latest deutsche bank. it is important that he made that statement, a public vote of confidence in deutsche bank. that it also tells you what little confidence there is in the market. we have the potential plan to buy back some senior date -- senior debt. earlier, the financial times reported on tuesday that day could potentially be buying some senior debt, buying back senior debt. this crucially would not include those convertible bonds that have been the center of the story the last 48 hours. i have seen this train wreck before. we have seen this theater. it is one part international finance trust liquidity, one part the corporate plan and one part the over arching macro

economics the deutsche bank has to deal with, which is the most important? at think it is the macro issues he has to deal with. people are scared. they're worried about the banking system. they don't see much growth in europe. all of these banks in europe have been overly aggressive in the past. he needs to dial that back. he needs to talk about what they are doing, buying in bonds. it makes a lot of sense when they are buying at that price. an overreaction. this is deutsche bank. this is the bank of germany. this is the long-term game. we are reacting to traders. who can take advantage of volatility. on a long path, is deutsche bank it bank that will fix her problems, figure out a way to get confidence back into their shares in my belief is yes. >> let's look at the soap opera known as deutsche bank.

charta five-day intraday showing all the back and forth. what i want to know, folks, is the german view. how is -- how has the story adapted and morphed in the last few days? >> it has gone up and down come up and down. and it is all of about say whether deutsche bank has the money to pay's coupons. whether or not it is triggered is on an up secure provision on an accounting metric. it is done under german commercial law, not international standards. and investors are trying to figure out whether or not deutsche bank and ask a pay them. the big question here is does the european central banks try to weigh in and clarify on these new rules? they have 169 thanks that they serve rise. will the ecb tried to calm the market. they going back-and-forth with deutsche bank on how they can maybe offer a little more

clarity? confirmation -- deutsche bank is indeed going to buy back some of its debt. it looks about like 3 billion $2 million. >> that's right. ending a quite crazy roller coaster week, this is a five-day chart. we started the week with concerns that deutsche would not be able to pay the coupons on its riskiest debt. deutsche coming out saying, of course it would be able. then there were rumors that it would buy back debt shares. shot up.ve interestingly, over the week, shares are actually down by 1%.

it's been a quite incredible volatile week. >> what do you think of this deutsche bank move? >> the market is responding well. it makes a lot of sense. there debt has been crushed basically in recent weeks. they can buy this data back at less than the issued it. that makes a lot of sense. it reduces their leverage, sends a signal to the market that, hey, we have the cash on hand. we are not worried about being able to pay our bills. the potential downside is that deutsche bank is taking some of the flexibility away. cash thatiquidity, a they could use down the road to protect themselves. david: up next, the best of the week's interviews. and bold predictions on the price of oil.

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david: welcome back to bloomberg best. volatile markets make first bearded conversation. a bold prediction on the price of oil from one of the world's leading independent traders. ian taylor spoke exclusively with brian shall coat. >> we are in a situation where we have too much supply probably. but balances do not look like they are tightening up yet. i wouldn't say that we can say for sure the price has bottomed out. >> if you had to put your money on a number, the brent price at the end of the year would be what? >> $48. back and killme me because i'm sure i would be wrong.

[laughter] >> so you don't see a sharp rebound and prices. why not? don'tnow that -- we because there's so much stock built up in the world. i think we just believe it will take a lot of time to work off that stock and it will happen over time. so nobody is going to wake up and suddenly see there is no oil there. i think there will be plenty of stock of vital -- of oil. >> how long does it take to get back to $100 oil? is that a genuine question? genuine i think it is a question. there is so much my supply. we are being more efficient. oil consumption going down, not much, but it is going down. the efficiency of cars is going up tremendously, as it is in airplanes. i have to believe that there is a possibility that you will not necessarily go back to $100 ever. >> the point is that this is a

turnaround, a turnaround of the dynamics of debt that have been drawing for eight years now. and given real growth and possibly given a bit more inflation that is beyond our oftrol, we will see dynamics the debt accelerating downwards. this will change the perception of the markets. levels, somen the people look at the amounts and say, well, that is a tiny amount to come down. how important do you think the momentum is? >> i think it is very important. what matters about debt sustainability is the direction that is taking rather than substantive level. let me add that those numbers what i expect to be the receipt from privatization, including into any 16. >> the risk to all of this come -- including in 2016. this, youk to all of

talk about deflation being the greatest risk. >> inflation in the euro area has to go as quickly as possible to what is considered the equilibrium value, 2%. the ecb is doing a great job. my view is they should continue to do so. and on the side of the countries, we should do our best to facilitate the transmission of qe towards the economy, which in the case of italy, includes dealing with the banking system. >> when you take a look at the investment climate, what is your assessment? evenve seen ford, chevron, harley davidson pulling out of indonesia. it doesn't look optimistic. >> it's true. we have fallen somewhat behind where we should be with respect to the regulatory regime investment climate him up permitting licensing, all of these things. but the important thing is, as a big effort was

admitted, to have all of us admit the problems and want to change them. i think that's the first step. thoughtful about the reforms and not overreact to individual cases. i think in aggregate, we are still ok. although i would admit that we still have a long way to go. >> negative interest rates seem to be the solution for central banks. we have a quarter of the world gdp now in countries where we've got negative interest rates. what does that do to the global economy? >> the honest truth is that nobody really knows. the thing about these experiments is that they are experiments. we have no extra -- no historical precedent of this kind of behavior from central banks at all, ever. so the answer is we don't know.

i will give you a small example of this. the general idea is, if you charge negative interest rates on the reserves that the banks borrow to the central banks, they are actually squeezing the banks margin, squeezing bank profits. this is something we actually don't want in these circumstances. we want them to make more money so they can build a capital buffers. so what are banks going to do? one possibility is they lower the deposit rates for customers. that is possible within limits. but then there is worries about people taking money out. the other alternative is that you raise the rates that you charge people to borrow, which is the exact opposite of the purpose for which the policy was intended. so i repeat, this is all experimental. we will wait and see how it works out. but i'm rather skeptical. >> you are not an easy about negative rates? >> absolutely not.

the negative rates environment, the banking system in the last three to four years, banks like us, the changes to a is this model can have a significant benefit. are moving to wealth management products. so if you're in a good position to convert from government bonds or bonds to assets under management, you can make much more money than lose on either side. and if you compare for banks are made issuance during times of icc never get opportunities coming from this scenario, not threats. and also for banks that are not in a position like a desk like us, it could be anybody, it could be 10% of income but not 50%. so the implication of valuation is [indiscernible] >> given what global markets

look like, are you worried that we will see an interest slowdown? >> i am worried that we will run out of the number of countries. [laughter] there's only 70 countries to expand to. -- there are only so many countries to expand to. but, no, i'm not concerned. content butthe nba, the nba are truly global and breakthrough in differentiate themselves in a way that haven't happened historically. that live premium sports content is clearly king these days. >> given how things are going with streaming and digital, how do you get people to those games? many arenas need to be upgraded and there is debate whether public funding should happen. >> we thought 10 years ago, as technology starts to get better, hd was coming down the pike, that people would potentially prefer to stay home and watch games on these big digital screens, especially if they got bigger. but in fact, the opposite has happened.

i think these arenas have become modern-day town halls and people still -- despite all the great digital media, want to gather. they want to be with each other. the statistics on how religious observations are going down. where are people going? they are going to arenas and stadiums.

david: investors around the world are keeping a close eye on politics as the u.s. presidential primaries began and britain draws closer to a referendum on eu membership. we start with president obama's final budget proposal. >> president obama officially releasing his $4 trillion budget plan for fiscal 2017. give us the big numbers first. >> yes, it is a $4 trillion

budget. we see some themes coming out. one is how focused the president is on, change. he really wants this to be -- on climate change. he really wants this to be his -- of the final year. there is also some surprises in terms of how rosie the economic assumptions are. the white house is assuming that the and implement rate in the u.s. won't go below 5%. while we are at 4.9% right now, that is a pretty rosy assumption. so it's a little bit surprising to see how much of the budget is pegged on that. and finally, there is an assumption of $2 trillion more raised of the next decade from taxes. that is a big number and something unlikely the president is able to achieve. >> congress is not going to haul out the budget director to talk

about this. is that highly unusual? >> it is. the republicans in both chambers announced they would not be inviting the omb director, shaun donovan, to come to capitol hill and testify on the president's budget. that is unusual. as you can imagine, the democrats are very upset about it. >> donald trump and bernie sanders have won the latest presidential primary. sanders easily beat hillary clinton. trump came to the top of their crowded field. we've got 10 days before the republican primary and another seven that -- another seven before the democratic primary. for kind of ground game will they be -- will there be? >> there will be staffing changes on hillary clinton's side. she already signaled that she will be making some changes. in terms of the ground game come in terms of john kasich, he doesn't have a ground game in north carolina.

he doesn't have the money. >> are we any wiser about who is going to win any of the nominations? >> we are wiser to the fact that the democratic battle will be a lot longer than i think a lot of people thought it would. bernie's win last night was really cover hence of an stunning almost in its scale in terms of the democrats keep take to up voters -- young voters and women. so that fight is going to be a dramatic one. on the republican side, donald trump really far big last night. it is a big victory. he goes in with a lot of momentum. he will be tough down there. david cameron meeting with angela merkel later today with a big push for a new set of terms for the eu. >> they need to start reading french newspapers. according to four people familiar with the matter, the french are leading the opposition to this draft proposal.

david cameron celebrating this victory.ntial it looks like it has a ways to go. depending on how from you think that opposition is, it tells you whether or not you think something is going to get across the finish line at this february 18-19 summit in brussels. basically the dispute on the and thede is can the eu eurozone have rules -- because they are getting closer to integration -- how quickly can they implement and effectuate those rules? what the u.k. wants is to have a little more autonomy. they want veto power over some of those eu rules. that is what the french are objecting to. is a couple kidded situation -- it is a complicated situation. it comes down to how quickly the regulation can be put into effect. another matter is on welfare payments. eastern european countries are uncomfortable with

the scheme that david cameron has hashed out. it is always hard to tell how from the opposition is and how much of this is negotiating. but it seems like there will be some shuttle diplomacy. ♪

david: it's been another worry some week for markets around the world. but experts have widely divergent views about what to be concerned about and how much to worry. here is some of what we heard on the future of the global economy. >> take us behind is overall

numbers. >> i think the markets are being by thethe bear -- pawed bear. but they are going to be mauled. >> well, there you go. >> the reason for it is this is not just the end of a bull market. i think this is the end of an era, the end of a worldwide era in which central banks printed liquidity,cted supported markets, manipulated and intruded in the pricing of financial assets like never before. and what it did was create a massive credit expansion. debt in40 trillion of the world in 1995. we have $225 trillion today. , the united states, europe. secondly, the central banks are all out of dry powder.

the fed has painted itself into a corner. now we hear the market saying no interest rates in the cut -- interest rates increases in the coming year. you will destroy a financial system on eight years of zero cost money. >> we've had person after person come in with a very different picture, saying the chances of recession are very -- goldman came in yesterday saying that it was 25% or less. what is it you see that none of them see? >> out of the last seven recessions, wall street and goldman in particular has predicted none of them. i don't think we are heading into recession at all. but we can talk ourselves into it. people, to some extent, behavior is german by what they hear, what they read. fear is dominating this market. this market is quite irrational. but i agree with you.

the market doesn't have a minute. they cannot associate the way you and i think pair it is a collective reaction. >> the market is either seeing fundamentally something is missing were the market is concerned for the sake of being concerned. >> there are all sorts of things to be concerned about. could be concerned about a meteorite hitting the united states, an asteroid, but to be serious, obviously the china impact is not to be ignored. oil is a source of our economy. there is a lack of reinvestment, capital investment in that sector. that impacts related industries. realistically, yeah, there is a lot to be concerned about. we've had dismal economic good -- economic growth. that is good news and bad news. oil now still hovering at $28 a barrel.

as a goes lower, will it still have as much of an impact on the other markets? >> oil is a real wildcard. icahn 101 says low oil prices positive for the global economy. we haven't seen it. the pain in the oil patches is -- in the all caps is evident. care.t an oil expert there is a bottom. zero issam fish said the bottom. >> you can't go negative. >> my gut tells me we've got a be close. we are starting to get supply cutbacks. and the benefits of low oil should begin to be felt and we have not seen them yet. the optimist in me says that the positive story has yet to play out. >> have markets become too reliant on central banks? -- we arenkers

heading to a t junction where we have to turn right or left. what is the one biggest determinant whether we turn right or wrong? >> whether we get this handoff from excessive reliance on central banks to a more copper has a policy response. that is the key issue -- more comprehensive policy response. that is the key issue. don't get it, it is no longer about low growth or stagnation. it is about recession and financial crisis. >> as you mentioned, we have to get through a period a pain. assuming wei du, 12 months from now, some say we are in recession mode. where do you think we are? >> i think confidence is doing pretty well at the corporate level. i think we are in an era of very slow growth. wei think, in many respects, have a bit of a liquidity crisis

going on in the world today. part of the volatility that we have in these markets i think is really a lack of liquidity in the market. buying orount of selling in any market today has a dramatic impact on's price -- on price. atn i sit back and look these moves and every day now, whatever market you look at, we have unprecedented moves. theou look at the s&p or dow, since january 1, we probably haven't had a time where we had this much a dispersion of prices day in and day out. $100,undred dollars, down up $200, down tuna dollars, up $300, down $300. you have to ask why that is happening? we've gone from economic cycles of unclear monetary fiscal policy. we've got through all the

cycles. we've never gone through one of these inflection point where we had no liquidity in the market. to me, what i really worry about is the fact that there's no liquidity. retailn investors, investors in particular, want or need to get out of the market, their ability to get out of the market at a rational clearing price may not make sense to them. this: that will do it for edition of bloomberg best. you can always find the latest is this news from around the world at bloomberg.com. thanks for watching bloomberg television.

♪ >> he got his start as a journalist and wrote the seminal book on the early years at apple. then michael moore decided to try his luck in venture capital. he went on to become one of the most heralded investors in silicon valley history. then a few years later took a step back for a riverhounds condition he has never revealed. joining me today on studio 1.0 zero, sir michael mauritz, chairman of sequoia