♪ david: coming up, the stories that shaped the week around the world. janet yellen speaks on capitol hill. tech and media companies see a mixed picture in the year ahead. deutsche bank spends tense days trying to sooth investor anxiety. >> this is a long-term game. i mean -- we are reacting to traders. david: from budget proposals, to primary votes, it has been an eventful week. >> the democratic bow will be longer and nastier than people thought it would. david: some of the finest minds

in business to make sense of market turmoil. >> markets are being pawed by the bear right now, but they're going to be mauled. >> up 200, down 200. up 300, down 300. you have to ask yourself, why is that happening? david: all of that next on bloomberg best. ♪ david: hello, i am david gura. welcome to "bloomberg best." a weekly look at bloomberg news and analysis from around the world. let's start with a day by day review of the top headlines. on monday, the markets started where they finished the week before, with a big selloff. >> it was kind of 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. >> and ugly day, but it could have been worse. based on where we were a couple

of hours ago. what you attribute the selloff -- what do you attribute today's selloff to? what is this about? >> there is more anxiety about the financial sector. even a few weeks ago, it is a relatively new development. particularly focused on the european banks. but beyond that, there are 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. 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. alix: 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 propped up. >> it has gotten worse. we are in a world right now that defies everything we learned in school. you have close to half the european sovereign bond markets now with negative yields. for markets overall you have 25% of 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 rather than rates going up, they have plunged into areas we did not think was possible. >> deutsche bank slumped yesterday, after becoming the lender in -- the biggest lender in four years, to try and 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. >> that is the gist of the report. simon adamson wrote this report,

questioning deutsche bank's ability to pay their coupon in 2017. if their 2016 profitability comes in lower than expected, or if there are further litigation costs. remember, this is a big cloud, whenever we talk about deutsche bank, we do not 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 a billion dollars for 2016, that would cover $350 million in coupons due in april. but that is if the sale goes through with what could be a -- what kiva 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 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 appear 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? and to gauge its success or not. or if it didn't mess it up. it did not harm it anyway, versus two it actually helping. >> 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 frankly, europe does not rely on money market funds as much as the u.s. does. this could disrupt the commercial paper funding system. this could disrupt companies funding themselves. this is a very serious step. she did allude to it. she said, it would be remiss for them not to look at it more closely. alix: you've just been listening to fed chair janet yellen testifying before congress for the second day. scarlet: what is the big headline you heard from today's testimony? >> i think again, negative rates. they were very explicit 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 -- be prepared 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 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. so, she has to respond. it doesn't mean that they are sharpening it. janet yellen cannot go to capitol hill and say things are terrible, and we are getting ready to impose negative interest rates, because imagine what the market reaction when

being -- would be. >> 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 -- growth 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 -- deploy 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. -- lost the plot. in theory, negative interest rates should spurn some kind of action. but in reality, people put their money in the mattress. and doesn't make them go out and

spend. especially, in japan, where you have an aging population that relies on pensions. it is kind of for the economic -- where 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. coming up on "bloomberg best," and round of company news from tech to media to beer. ♪

♪ david: welcome back to "bloomberg best." i am david gura. let's continue our weekly review in business with some company activity that we covered on "bloomberg television." >> a big payday, very big. he is poised to become one of the highest-paid chief educative's after google's parent company, alphabet, offered him restricted stock. >> that is an awfully large,

restricted stock grant. at the time that steve 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 a testimony to just how successful google thinks it is right now, and how critical he is seen to be in the company. emily: how closely tied are these rewards to performance? -- awards to performance?

>> for google, these are payout firms through 2019. and their ultimate value will be the stock price. but the number he is getting is the number he is getting. emily: is he in billionaire territory? >> if you allowed him to invest all of these today, and he has options, from the company, they would be worth $650 million. obviously, we are in a down market, so he is getting close. if he stays on, get a few more awards, and google keeps killing it, he could definitely get there pretty quickly. >> stock is tumbling by most in almost a year. the japanese government fact a -- backed fund that is bidding for a rescue plan. it is pitching the creation of smart appliances that include another troubled electronics major. >> now we have those trying to -- we have two bidders tried to take control of sharp. on one side we have taiwan's foxconn, and on another side we have the innovation network core of japan. the bid is pretty complex. they are looking to inject some capital to boost the led

business. -- lcd 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 money 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 be able to make sharp more competitive. it has been losing money for years. >> my question to you is this -- profit will increase in 2016 with an increasingly challenging external environment. a very confident statement. looking at the macro picture at the moment. where are your sales and profits specifically going to rise and 2016 -- in 2016? and by how much? >> we never made that kind of precise prediction, as you know. we have a very diversified

portfolio of countries and brands, which allow us to spread the risk. on the one hand, you will have some 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? europe also benefits at this time. does this mean this is an opportunity to get more out of the european business? >> oil prices do not translate one-on-one in europe to beer consumption. it would be foolish 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 years to come. >> philippe dimon made a pledge to investors today to prove doubters wrong and bring by a -- viacom's floundering stock to a new high. on a conference call he said our outlook has been distorted by the naysayers and publicity seekers. he's been with the company for a while. what does he have planned? >> this is probably getting 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. is it because of cord cutting, or because they have not invested in their programming as much? it is probably a lot of both, actually. 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 the year, and into 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 quarter that disney has ever recorded, on every front. you look at profits of $2.9 billion. that doubles the massive profits from three years ago. a fantastic quarter driven by star wars merchandising activity at the beginning of star wars. ticket sales, and a suggestion that next quarter we will see a lot more of that. but really a spectacular quarter. and yet, concern that there is a slowdown at espn, and subscribers adapting to a new world of cord cutting. i think that spooked to some longtime shareholders. >> i saw bob iger went out of his way to say there is an uptick in subscribers. but it did not make the market feel any better.

>> that is the long-term concern here. while there is more revenue per subscriber, there is concern that it will not last. as more bundled packages, that do not offer espn, we will see more people go for that. 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 our 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. does it tell us about the belief that you are getting ready for those tier one assets to become available? >> we are trying to get the -- interested in getting the balance right between growth and shareholder returns. yes, there are a range of assets that could be more natural than some others.

at this stage, 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. stephanie: twitter reporting a loss of $90.2 million in the fourth quarter. twitter's user growth stagnated last quarter. sales in the current period are expected to miss analysts forecast. it illustrates that 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 -- this is not the first quarter that growth has flattened out. they have gotten around it by using this function where they are able to trail facebook, but also able to tweak up quarter after quarter. that has masked the declining users. by increasing the amount of revenue you get from your

existing users. that's all a shell game. until you reach energized user -- re-energize your current users, your user growth is stuck. >> aig posted its 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 analysts estimates. a lot of people knew hedge fund performance had been bad at aig. also, i guess activists came in at the right time. >> likely they still had $5 billion around to buy shares. so they put a couple of activists on their board. >> right. they put john paulson on the board, and they put a representative of carl icahn there. he is also 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. earlier this week, doubts around europe's largest investment bank. deutsche bank's stock fell sharply. analysts questioned their capacity to make bond payments. we examined what the implications could be for the global financial system. it all began with cocoas. >> 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 questioned 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. >> and it is quite amusing in a way. this whole situation, that they convert into equity, sitting as a percentage. this is more about cash in the -- then the bank actually running into genuine by nato difficulties. that is why they got that note out last night to calm investors. i was getting calls from people, are they going to raise more capital? >> right. >> 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, formally. my guess is the shareholders there face some kind of dilution in the capital structure. >> we have seen differentiation in europe. yes, deutsche and is trading at -- basis points. ubs is only at 86 basis points. it is important that the banks -- 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. it is not stopping 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 and 2008. >> we have the latest on deutsche bank. it is important that he made that statement, 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. what we have is a potential plan to buy back some senior debt. no decision on this has been made. that is according to a person familiar with this. the bank has ample cash to make such a purchase. earlier, the financial times reported, on tuesday, that 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 confidence 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. clearly, people are scared and worried. they are worried 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 trading at that price. i think it is an overreaction. this is deutsche bank. this is the bank of germany. they are going to get the central bank they need. this is the long-term game. we are reacting to traders. they can take advantage of volatility. the real question is, on a long path, is deutsche bank a bank that will fix their problems? figure out a way to get confidence back in their shares? and, my belief is yes. >> let's look at the soap opera known as deutsche bank. let's bring it up right now. it is a five-day intraday chart showing all the back and forth.

what i want to know, folks, is the german view. how has the story adapted and morphed in the last few days? >> it has gone up and down, up and down. it is all hinging on whether investors think deutsche bank has the money to pay coupons. on their 4.6 billion in coco bonds. that is what he gets down to. whether or not it is triggered is on an obscure 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 can actually pay them. it is going back and forth. the big question here is does the european central banks try to weigh in and clarify on these new rules? they have some 169 banks that they supervise. will the ecb try to calm the market? if not with a public statement, 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 like about 3 billion euros or $2 billion. >> mark what is going on over there? >> that's right. buying back bonds. 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. today shares were rising ahead of this news. since the news half an hour ago, shares have shot up. interestingly, over the week, shares are actually down by 1%. they fell 9% monday, they fell 4% tuesday, they rose 10% wednesday, they fell 6% thursday, and they are up over

10% today. it has been quite an incredibly volatile week. >> what do you think of this deutsche bank move? >> the market is responding well. i think it makes a lot of sense. their debt has been crushed, basically. in recent weeks, that is. they can buy the debt that in less that they issued it. 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. the potential downside is that deutsche 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

>> hello, i am in london and you are watching bloomberg tv. -- the ceo, ian taylor, spoke exclusively to ryan chilcote. >> we are still in a situation where we have too much supply, the balances do not look like they are up yet. you are still seeing built in the u.s., so i would not say we could say for sure. >> if you had to picture money on a number -- .> which hopefully we don't >> the price would be what? >> 48.

you can come back and kelly because i'm sure we would be >> you don't see a sharp rebound and prices. why not? >> we don't because there's so much stock built up in the world. we believe it's going to take a lot of time to work off that stock and that will happen over time. nobody is going to wake up and suddenly see there's no oil there. >> how long does it take to work through the stock. do you ever get back to $100 oil? >> i think they're so much more supply and we are being more efficient. u.k. consumption of oil is going down. efficiency in cars is going up tremendously. you have to believe there's a possibility that you will not necessarily go above 100 ever.

>> the point is that this is a turnaround, a turnaround of the and given the real growth and possibly given more inflation that is beyond our dynamicswe will see accelerating downward. this will change the perception >> somearkets will stop people look at the amount and say that's a tiny amount to come down. how important is the momentum? >> it is very important. what messes with the sustainability is the direction that is 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. >> is inflation the biggest risk to italy's economy? >> -- as quickly as possible, 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. and it will 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? chevron and harley davidson -- it doesn't look optimistic. >> true. we have fallen behind where we should be. with the regulatory regime and investment climate -- but the important thing is that as of last 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 on 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. and this is something that we 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. and then, the main issue -- [indiscernible] i see significant opportunities coming from the scenario. not a threat. it will probably be 10% of the -- but not 50%. it is completely different. >> 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 the nba, content like nba -- 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. >> we saw 10 years ago as 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. and despite the great digital 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. we start the 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. the white house is assuming that 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. >> congress is not going to have 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. >> donald trump and bernie 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. what, in terms of a ground game, we'll be going on with staffing changes? >> there 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? >> we are wiser 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. >> david cameron meets angela 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 was hammered out and it is

being celebrated as a potential victory. it looks like it has a way to go. depending on how firm you think that opposition is tell you whether you think something will get across the finish line at the february 18 summit. we will do another dispute in a 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. eastern europe countries are unfair with the welfare payments with the scheme that they have hashed out.

and it is worth noting that mr. 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. stephanie: pawed? >> but they will be mauled. this is the end of an era. the end of a worldwide europe in which banks 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. we have $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. >> we have had person after 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 can -- 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. >> there are 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. so oil finding a ballroom -- i'm 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. >> and when we 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. a 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. what is the one biggest 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. david: recession and financial crisis. we have to get through pain. assuming we do, six months from 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. and when i 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. but we 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. ♪

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