♪ nejra cehic: u.s. markets are closed for president's day, so let's have a look at how european markets are trading right now. we are four hours into the european equity trading session, and the stoxx 600 is up for a second day. european stocks looking at europe's equity benchmark heading for their biggest two-day gain since 2011. up as much as 6% over two days for today. they're up over 3% at the moment.

thanks are still the worst performers this year on the stock 600. but they are some of the best performers today, along with carmakers. what's driving this optimism ha?ns: coming up on "bloomberg ? it has the biggest rally since 2013. 8.4 trillion dollars wiped from global equities this year, taking the stock 600 down as much a 17% from an april high on friday. but despite the route, strategists are still largely bullish on the stoxx 600, they are projecting a rebound on average of 23% from friday's close through the end of the year, all signs of an approving -- and improving economy. euro, this will be the currency to watch what we hear from mario draghi later today. at 3:00 p.m. brussels time, 2:00 p.m. uta time -- u.k. time. he will be speaking in front of

lawmakers in the european parliament. it will be a test of his powers to whether he can still move markets, where you can push the euro lower, it's off by .5% against the dollar at the moment. mario draghi and his colleagues are grappling with a stronger euro, it's the second-best performer after the yen against the dollar this year. criticisms over negative interest rates as well. finally, just want to show you gold, losing it shine, heading for its first back-to-back mom -- back-to-back loss in a month. money is moving away from those safe haven assets. we have seen money moving out of the yen today as well. that is your bloomberg market check, i'm nejra cehic. i will be back in about 30 minutes with another market check. what we got of course is the "best of bloomberg," up next. we will be back with another market check, talking about stocks and the euro ahead of mario draghi and talking more about the safety of assets. london looking quite glorious on

this monday morning. as we see stocks move higher as well. ♪ hans: coming up on "bloomberg best," interviews from the davos -- tech sees a mixed picture from head, and deutsche bank spend some tense days trying to soothe anxiety. this is a long-term game. toare reacting from traders budget composers to primary votes, it's been an eventful week in politics. >> a democratic battle is going to be a lot nastier and longer than i think a lot of people thought it would. cons: the finest minds in business try to make sense of market turmoil.

>> markets are being pod by the bear. they are going to be mauled. you have to ask yourself why is that happening? hans: all that straight ahead on "bloomberg best." david: hello, i'm david gura. welcome to "bloomberg best." let's start with the day by day review of the top headlines. on monday, markets picked up where they finished the week before with a big selloff. grexit was kind of an unbelievable day, and one point we had the nasdaq off by almost 3%. but really into the close, stocks contributed to a rally. the s&p only off 26 points, the dow only off 177 points.

>> and ugly day, it could have been much worse. >> there's more anxiety, that's a relatively new developed. clearly focused on many of the european banks. beyond that, there are a few things that in a driving markets lower. last week on most of economic data in the u.s. was on the soft side. it's reinforcing those concerns about the health of the global economy. even the health of the u.s. economy. second, we 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 adopt more unconventional monetary policy. and so far, that is not having the intended effect. it is making investors nervous about what happens in a world where central banks may be out of bullets. >> we have 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 what is keeping the bonds up.

>> it defies everything we learned in school. you have close to half the european sovereign bond markets with negative yields. that wasn't supposed to happen. you were supposed to have to pay the government for the privilege of lending to them. so instead of going up, they have plunged into areas we do not think was possible. >> 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. >> simon 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 in 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. what they say is, they have enough to cover 350 million coupons due in april. this is if the sale goes through with what could be a bank. and that there are not any litigation costs. this isn't just a deutsche bank story though. you take a look at lenders in the stoxx 600. all across there, they are down significantly. you see in 2012 -- that is when mario draghi said, he would save the euro. look at how far they have gone down. quite a precipitous decline. 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 janet yellen's testimony. >> she was not sure if they would be legal in the united states, but she seemed open to the idea. >> in the 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. >> first of all, 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. it did not harm it anyway, compared to actually messing it up? 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. this could disrupt the paper funding system. this could disrupt companies funding themselves. she did allude to it. she said, it would be remiss for them not to look at it more closely. >> you've just been listening to fed chair janet yellen. what is the message you heard from today's testimony? >> i think again, negative rates, very back-and-forth on the legality of it, but whether she was prepared to use it. take a listen. >> 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. but, we had this act out. -- axe out. we are sharpening it, and it's a signal to the markets. >> a little bit of theater, psychotherapy, a lot of politics, and very little information. i would disagree with one of brendan's characterizations. she was asked about the axe of negative interest rates. it doesn't mean that they are sharpening it. >> it is a fourth successive day of declines here in europe. >> the pressure is building up in japan.

it all comes ahead of gross data out on monday. >> does this mean we can expect more stimulus from the boj? >> i think that is the question we are all asking ourselves right now. governor 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 forecasting that we will get more in march. >> look at japan. my goodness, it is like the boj has completely lost control. >> i think central banks have generally lost a lot. in reality, people put their money in the mattress. they take it out of the banking system. it doesn't make them go out and spend.

especially, in japan, where you have an aging segment that relies on pensions. it is kind of for the economic theory breaks down with the practical reality. david: we will have more on deutsche bank a little later, how it rallied from tuesday's plunge, and how it got the whole world talking about cocos. then company news from tech to media to beer. ♪

♪ david: welcome back to "bloomberg best." gura.avid hur let's continue our weekly review with some business activity. let's continue our weekly 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. at the time jobs got that, he was making a dollar a year because he was in the mode of turning the company around. any upside was really something shareholders would be happy to give him, given the performance up to that point. but 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 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. >> stock is tumbling by worse than a year.

the japanese government bidding for a rescue plan is pitching the creation of smart appliances that include another troubled electronics major. >> we have taiwan's foxconn and we have innovation network core of japan. the bid is pretty complex. they are looking to inject some capital to boost the led business. this is the business that makes glass panels for iphones and other mobile devices. they are also pitching this idea 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 shares, about ¥225 billion would be used to acquire preferred shares. on the other side, ha is offering ¥203 billion to uphold

these operations in the future. both companies want to change the operations pretty fundamentally to make sharp more competitive. it has been losing money for years. >> my question to you is this -- profit will increase in 2015 with an increasingly external environment. a very confident statement looking at the macro picture at , the moment. where are your sales and profits going to rise in 2016 and by how much? >> we have a very diversified portfolio of countries and brands, which 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. so, overall, our balance and our

portfolio footprint leaves us to make that confident statement, while admitting that there will be some headwinds. >> where does that leave europe then? is this an opportunity to get more out of the european business? >> oil prices do not translate one-on-one to beer consumption. it would be fullest to make that case. it certainly will bring some additional discretionary purchasing power to people, which beer is a small part of it and we want to play our part. so, no, overall, i think europe can benefit from lower oil prices in the you succumb. best in the years to come. -- in the years to come. >> philippe dimona made a pledge 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 planned? >> this is probably getting back to a six for viacom. dax -- back to basics 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. if it is, which they believe it is, 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 the estimates. >> really the best corner does -- quarter that disney 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.

but really a spectacular quarter. and yet, concerned that there is a slowdown at espn, and subscribers adapting to a new world of cord cutting. >> i saw bob iger went out of his way to say, there is an uptake and subscribers. but it did not make the market feel any better. >> there is concern that it will not last. more bundled packages -- we certainly have not seen that behavior in the marketplace. >> looking 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. the belief that you are getting ready for those 21 assets to become available? >> we are trying to get the balance right between shareholder returns. there is a range of assets that could be more natural than some others. at this stage, there is out -- there is nothing 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. twitter's user growth stagnated last quarter. sales are expected to miss

analyst forecasts, and ceo jack dorsey is still struggling to make this site more alluring to consumers and advertisers alike. >> 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. -- flattened out. been getting around this avenue revenue per user. the been able to tweak up quarter over quarter. that masks the declining users by increasing the amount of revenue you get from each of your existing revenues -- existing users. until you re-energize user growth, you are struck -- you are stuck. >> aig posted is second straight quarter loss yesterday. they announced a $5 billion share buyback. 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 -- than analysts estimates. a lot of people knew hedge fun

-- hedge fund performance had been bad at aig. and i guess activists came in at the right time. >> luckily they still have $5 billion lying around to buy shares. so they put a couple of activists on their board. >> right. they put john paulson himself on the board, and a representative call icon -- carl icahn. he is on the board of navistar. he's been through this before. why didn't carl go on the board himself? >> he said he was busy. ♪

♪ david: you are watching "bloomberg best." i am david gura. early this week, doubts around europe's largest investment bank. deutsche bank's stock fell sharply. it all began with coco's. >> the co-ceo tried to calm employees saying, "deutsche bank remains absolutely rocksolid given our strong capital and position." >> 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. this is a fear that the markets brought up front yesterday. >> it is quite amusing in a way. they converted into equity is the ratio falls. it is sitting at 11% at the moment. i think this was more about cash in the bank actually running into initial difficulties. -- genuine financial difficulties. that is why they got that vote out last night, to call -- calm investors. >> i think some of the european banks have been slow in 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. i think john is doing all the

right things. >> we don't have a rating on deutsche bank. my guess is the shareholders there faced some kind of 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. >> i do not have concerns about the bank. >> one bank, 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. >> we have the latest on deutsche bank. a public vote of confidence in deutsche bank. it also gives you a sense about how little confidence there is out there in the market. but we have is a potential plan to buy back some senior debt. no decision on this has been made. that's according to a person familiar with the matter. the bank has ample cash to make such a purchase. earlier, the financial times reported on tuesday they 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. >> you and 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? >> i think it is the macro issues. people are clearly scared about the banking system. they are not seeing much growth in europe. all of these banks in europe have been overly aggressive in the past. so, 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. i think it is 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. the real question is, on a long path, is deutsche bank a bank that will fix their problems? get confidence back in their shares? and, my belief is yes. >> let's look at the soap opera known as deutsche bank. it is a five-day intraday chart 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 how you define a certain 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 -- can actually 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. are they going back-and-forth with deutsche bank on how they can maybe offer a little more clarity?

>> we have confirmation on the story that bloomberg news reported yesterday. deutsche bank is indeed going to buy back some of its debt. it looks about like 3 billion euros or $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. the wen by 1%. on monday, 4% on

tuesday. rose on wednesday but fell on thursday and now they are up over 10% today. it has been a volatile week. >> what do you make of this? >> the market is responding well. ,heir debt has been crushed basically, in recent weeks and they can step back at less than the issued at and it makes a lot of sense. they can reduce their leverage and it sends a signal to the market to say that they have cash on hand. they are not worried about paying bills. thatotential downside is butch a bank is taking their flexibility away. they are using quiddity crash that they could use down the road to protect themselves. up next, the best of the week's interviews. bold predictions on the price of oil. ♪

>> hello, i am in london and you are watching bloomberg tv. closed fors are president's day but european markets are trading. we are 4.5 hours into the session in europe. let's take a look. dayx 600 is up 3.3% on the but i'm looking at the gain over today. we have had the biggest two day gain since 2011, up as much as 6% over two days. thanks are the worst performers of the year. but they're the best on equity benchmarks.

what is driving the optimism on this monday? of aes come after a bit drought. he rally on friday came after the stock 600 hit the lowest level since 2013. $8.4 trillion in global equity this year, taking it down as much as 70% from an april high on friday. so we are seeing an increase from a low there. a lot of this has to do with increased prospects and speculation about stimulus. we are going to hear from mario draghi later today. about the questions european parliament and lawmakers -- they will be in -- investors will be watching this closely. the euro is the second-best performer after the yen against the dollar. that will charge mario draghi with strengthening currency and also falling oil prices weighing

on inflation. and there has been criticism over negative interest rates. there will be a lot to contend with today. we have to see if he is able to push it even further lower on he speaks later today. we have seen it stocks rising today. money is moving out of goals. downis losing its shine, 2.4% at the moment. it is heading for the first back-to-back loss in a month. we have the best performing commodity this year on the bluebird commodity index. the has turned around now and gold is moving and losing its shine. for now, i will be back in 30 minutes with another market check after this. you will see more from bloomberg's best. ♪

david: welcome back to bloomberg best. volatile markets make for spirited conversation. we begin with a bold prediction from one of the world's leading independent traders. he and taylor spoke exclusively with ryan chilcote. we are still in a situation where we have too much supply, a balances do not look like they are tightening up yet. we have seen this build in the u.s. so maybe prices will bottom out. >> if you have to put your price on a number -- >> which hopefully we don't. 48. you can come back and kill me because i am sure i will be wrong.

sharpyou don't see a rebound? >> no. we don't because there is so much stock buildup in the world. take a lot it will of time to work on that stock and it will happen over time. so no one is going to wake up and see that there is suddenly no oil there. there is plenty of stock in oil. >> how long does it take to work through the stock and get back to $100 oil? it is a genuine question. morenk there is so much supply and we are being more efficient and the u.k. consumption of oil is going down. not much, but it is going down. efficiency of cars is going up, as it is in america. you have to believe that there is a possibility that we will not go back up above $100 ever. >> the point is that this is the

turnaround. the turnaround of the dynamics of debt that has been growing for eight years now. and a bitreal growth more inflation, beyond the dynamics which will help to accelerate downwards. this will change a section of the market. >> can ask you about -- some people look at the amount and say, it is the tiny amount to come down. it is very important. what messes with the sustainability is the direction taking. on the absolute level story, let me add that those numbers are what i expect to be the receipt from presentation -- from privatization in 2016. inflation the biggest risk

to italy's economy? possible,uickly as about 2%. we are very far from there. the ecb is doing a great job and my view is that it should continue to do so. facilitate the transmission of qa towards the economy, which in the case of italy, includes dealing with the banks. >> when you take a look at the investment climate, what is your assessment? davidson --harley it doesn't look optimistic. >> true. we have fallen behind where we should be. with the regulatory regime and -- but theclimate important thing is that as of year, we made a big effort

to admit it. to admit the problem. that is the first step. we want to be forceful about the reforms and we don't want to overreact to individual cases. we are still ok even though we have a long way to go. >> now, negative interest rates seem to be the solution to shore . in countries where we have negative interest rates. what does that do to the global economy? >> the honest truth is that nobody knows. the thing about these experiments is that they are experiments. we have no historical precedence about these so we don't know. i will give you a small example of this. the general idea that if you

charge negative interest rates ,n the reserves of the banks that somehow, this will translate into lower lending rates and more stimulus in the economy. but you have to remember that these negative rates are squeezing the bank margins. we this is something that don't want in the circumstances. we want them to make more money so they can build up capital buffers. so what are banks going to do? one possibility is to lower the deposit rate for customers. but then there are worries about people taking money out. the other alternative is to raise the rate that you charge people to borrow just the opposite. so i repeat, this is experimental. we are waiting to see how it works out. but i rather skeptical. >> are you not uneasy about native rates? >> absolutely not. because the negative rate

environment keeps the banks and check over three or four years but banks like us who have changed the business model can have a significant benefit from the rate. because clients are moving to wealth management so they can find a solution in order to have a yield. if you're in a position to convert from retail into asset management, you can earn much more money than you lose on the interest side. issue -- the main [indiscernible] opportunitiesant coming from the scenario. not a threat. it will probably be 10% of the -- but not 50%. different.etely >> given global markets look

like, are you worried that we will see an interest slowdown? >> i am worried that we are going to run out of the number of countries. there are only so many countries to expand too. but i'm not concerned about a slowdown. what we are seeing in the marketplace is that brands like like nba --tent anything that is truly global, it can break through and differentiate itself in ways that it hasn't historically. >> given how great things are going in terms of streaming and digital, how do you get people to the games? there is a debate about whether public funding should happen. aswe saw 10 years ago technology started to get better and as hd came down the pipe at people would prefer to stay at home and watch games on digital screens, especially as they got bigger.

but the opposite has happened. they have become modern-day town halls. digitalite the great media, people want to gather and be with each other. -- our religious observation is going down and where people going? arenas and stadiums. ♪

>> you're watching bloomberg best. investors around the world are keeping a close eye on politics. the u.s. presidential primaries begin and britain is drawing closer to a referendum on you membership. week with president obama's final budget proposal. >> president obama officially released his $4 trillion budget plan for fiscal 2017. give us the big numbers first. >> it is a $4 trillion budget.

we see some themes. one of them is how focused he is on climate change. he wants this to be part of his legacy, in the final year in the white house. this budget takes a crack at trying to address climate change on the policy and revenue sides. a $10 a barrel tax on oil. thathite house is assuming the unemployment rate in the u.s. will go below 5% and while we are at 4.9% right now, that is a rosy assumption. so it is interesting to see how much of the budget is pegged on that. and there are 2 trillion more dollars being raised from taxes over the next two years. it is something that the president is unlikely to achieve. to haveess is not going

any hearing on that. is that unusual? >> it is. republicans in sub chambers said they would not be inviting the director to come to capitol hill and testify on the budget. and that is unusual. and democrats are upset about that. and bernierump sanders have won the latest presidential primaries in new hampshire he. bernie sanders beat hillary clinton. there are several days before south carolina, 10 days before the republican primary. a ground game,of we'll be going on with staffing changes? will be staffing changes on hillary clinton side. she signaled last night after her devastating loss that you will make changes. in terms of ground game -- watch for john kasich.

she doesn't have a ground game. it'll be interesting to see what happens to him. >> are we any wiser about who will win the nominations? to the fact that the democratic battle will be a lot nastier than we thought it would. bernie sanders was comprehensive and stunning with the scale of the demographics that he is picked up with women and older voters. so that fight is going to be quite dramatic. on the republican side, donald trump wanted really big last night. he goes into south carolina with a ton of momentum. meets angelaron merkel later today in a final push to get support for a new eu -- britain. plenty of people are paying close attention to this. >> they need to read the french newspaper. the french are leading the opposition of this draft proposal.

it is hammered out and being celebrated as a potential victory. it looks like it has a way to go. thinking on how firm you that opposition is tell you whether you think something will get across the finish line at the february 18 summit. a will do another dispute in second but on the bank side, can the eu have rules because they are getting closer to integration? how quickly can they implement those rules? what the u.k. wants is to have more autonomy. they want to have a veto power over some of those rules. that is what the french are injecting too. it is a competition situation but it goes back to who controls the regulation and how quickly can i be put into effect. there is another matter on the welfare payments. countries are unfair with the welfare payments

with the scheme that they have hashed out. mr.it is worth noting that cameron has a tough sales proposal at home on what you pay for child benefits for children living outside of the u.k. it is hard to tell how firm the opposition is and how much they are negotiating but it seems like they will shuttle diplomacy. they are all through the european union and he goes to paris, berlin, athens and prague . so i hope you get some frequent flyer miles. he will be busy. ♪

david: it has been another worrisome week for markets around the world. experts we have spoken to have widely divergent views on what people are concerned about and how much to worry. here are some of the views we heard on the future of the global economy.

>> take us behind the numbers. what is going on? >> the markets are being caused by the bear right now. pawed?nie: auled. they will be m this is the end of an era. the end of a worldwide europe in printed money, injected liquidity and supported markets and manipulated and intruded in the prices of financial assets like never before. and what it did is create a massive credit expansion. $40 trillion in 1995 and we have $225 trillion today. china is, the united states obviously is.

the banks are out of powder. now, we hear that the market is saying no interest rates in the coming year. that is 100 months of effectively at zero money market cost. that will destroy a financial system on eight years of zero cost money. person afterd person after person come in with a very different picture. in fact -- came on and said there is a 25% chance or less of a recession. what do you see that none of them see? >> i see that out of the last seven recessions, wall street and goldman sachs in particular, have predicted none of this. >> i don't like we are headed into a recession at all. -- people's behavior is driven by what they hear and read. fear is dominating the market. the market is irrational.

i do agree with you. the market doesn't have a mind. it can't associate with people the way you and i can do. it is a collective reaction. >> the market is seeing something that economists are missing or the market is concerned for the sake of being concerned. all sorts of things to be concerned about. we could be concerned about a meteorite hitting the united states. an asteroid. but to be serious, the china impact is not to be ignored. oil is a source of our economy. there is a lack of reinvestment, capital reinvestment, in that sector and it is down. so realistically, there is a lot to be concerned about and we have had dismal economic growth. performance in this economy has been pretty low. >> oil is still hovering at $28 a barrel. as it goes lower, will it still

have as much of an impact on the other markets? >> oil is a wildcard. because economy no one says it should impact the global economy but we haven't seen it. the benefits have not yet realized. -- i'mfinding a ballroom not an expert -- but there is a bottom and i think sam fisher said that zero is the bottom. >> you can't go negative in oil. find a bottom in oil and my gut tells me we have gotten close. we're starting to get a supply cut back and it should be beginning to be felt. positive story is yet to play out. >> have markets become too

reliant on central banks? you say that we have run out of ammunition and we are headed to a junction. biggestthe one determinant of whether return right or wrong? >> whether we get the handoff from excessive reliance on central banks to a more comprehensive policy response. that is the key. if we get that then we can unlock a lot of cash that we are sitting on the sidelines and you can really get into the equilibrium. if we don't get it then it is no longer about low moral, it is about financial crisis. and financialon crisis. we have to get through pain. months fromdo, six now, some folks say we are in recession mode. where do you think we are? >> companies are doing well at the corporate level. i think we are just in an era of slow growth. in many respects we have a

bit of a liquidity crisis going on in the world today. and part of the volatility that we have in these markets is a lack of liquidity in the market. the small amount of buying or selling in any market today that has a genetic impact on price. sit back and look back at the moves. and whichever day now, we do have unprecedented moves. with a look at the s&p or the dow, we probably haven't had a time where we have had this much dispersion of prices, day in and day out. up 100, down 100. you have to ask yourself, why is that happening? we have gone through economic cycles where we have gone from growth less growth. have gone through cycles where we have had unclear monetary and fiscal policy.

we have gone through these cycles before. have never gone through an inflection point where we have had no liquidity in the market. so to me, but i worry about is the fact that there is no liquidity and investors and retail investors need or want to or have to get out of the markets. the irrational clearing price may not make sense to them. >> pick up the conversation next week. that'll do for this edition of bloomberg best. can always find the latest news from around the world at bloomberg.com. thank you for watching bloomberg television. ♪

♪ >> you are watching bloomberg tv. are close for president's day come up a let's take a look at how european stocks are doing. we are five hours into the european trading day and you can see green across the board. the ftse 100 up 2.2%. the dax in germany up 2.5%. the ftse in italy up 3.8%. it is very much