you can get all a card or little bundles, etc.. the cable just has to evolve and it alex: what do you think that does work? what do you think is the model that goes through. i think that the cable operators are essentially now in ,he data transmission business and no longer in the program business. they used to be in the program business, with a healthy margin. there was a decrease. now, when you have so many alternatives, they are in the data business. does that explain some of the rationale behind the at&t-time warner deal? i don't know if you think there

is a logic behind that deal. think there is a lot of industrial logic because i don't think that a data company needs to own a content company or a tech company. contents at the fair market prices. no content, i think, in this area will be exclusive. it is their strategy. they are smarter than me. have flown in from l.a. to hear. is there anything you are particularly looking forward to seeing, maybe some networking? mr. diller: that is a horrible word. nice segue, but not for me. i will wander around, go to a few different places and do some things. if you came to cbs three years

ago, you would never see a car on the floor. do you have a vision for putting content into cars? bullish onally putting screens into cars. it is an ipad where they push out videos. time.you so much for your as insightful as ever and i hope you have a wonderful show. diller was barry speaking with bloomberg's alex webb at the consumer electronics show in las vegas. they started off the conversation by asking barry for his thoughts on donald trump's

-- he didn't come it publicly, but his view that the at&t-time warner merger should not go forward. barry diller is no fan. >> he basically made the point that ceos can't be worried about one or two day stock move because of a tweet or something. it doesn't change the fact that this is a new reality for a lot of companies and ceos, that they have to consider trump tweet risk, so to speak. >> the whole media structure and the tech world seems to be operating in a different right now that donald trump is president. now, they are very much seeing on their back heels because they obviously did not favor donald trump as a presidential candidate. >> that is true. you think about the one industry that really grew up to prominence during the obama era, it would have to say mediatech,

internet, facebook, google, amazon, netflix. these companies have been around prior to obama but they -- that this is the year. scarlet: he did share his thoughts as well on an intraday &a in the media and tech space. at&t, he says, can just buy content. >> everyone is trying to figure out who needs to own. let's look at where the major averages a stand as we head towards the close. abigail doolittle standing by. at the: we are looking first day of mixed trading action in the young year of 2017. down slightly. we do have the nasdaq trading slightly higher. all of this ahead of the jobs

report out tomorrow at 8:30 eastern time in the morning. some jitters ahead of that report. a confirmation. the worst two day drop since june. green, represented in trading lower. it is having its biggest drop in yields and about four months. the dollar is falling against the yen. finally, looking at bitcoin. bitcoin yesterday hit a record high, down sharply against a declining dollar. this risk is confirmed by gold. in yellow, we have gold. in white, we have the 10 year

yield. we can see they traded in verse for some period of time. now, gold is starting to rally so perhaps this will be a dynamic we will see as the year goes on. some tech names, facebook, amazon, netflix, alphabet all trading higher on the day. since with its best day november 15, really being helped out by a solid 2016. 50% shipped many units and were shipped during the holiday season. sharp contrast to the weakness that goals and macy's. up, morecoming interviews from the consumer electronics show. from new york, this is bloomberg. ♪

>> "what'd you miss?" the consumer electronics show is in full swing in las vegas. earlier today, we caught up with aol ceo tim armstrong and we asked about the status of the yahoo! hack. mr. armstrong: the yahoo! deal is strategic for our 2020 goals. we are hopefully -- we're hopefully will go through. one is the strategy planning with marissa and the executive team and yahoo! which is going very well. the second piece of information is about the breach is and what the effect of that is. yahoo! is going through their investigation.

we won't have any comments on that. on the strategy and execution side, we are on track. hopefully, the deal will close. we will know more in the first half of this year. i think the team is doing a thorough investigation so i am sure they will have more to say about it. isn't -- and theoretically possible that the series of hacks and the public knowledge of them has any affect on the brand? i think that is one of the things yahoo! is looking at and will continue to look at, the total effect of what the brief line and what the outputs are. of course, we have a viewpoint on that as well. from the standpoint of where we 2017, ournow, into strategy is clear. yahoo! is one piece of that strategy overall.

as we get more information about the breach, we will update people on that. what our goals are and what we have been tasked with getting done with yahoo!, it remains on track. an investigation that is still ongoing. cory: i think that the size of the business of yahoo! is -- it is just such a very big business with so many users. when you look at that, what do you see that holds such value? breachcern over the tends to dominate the discussion. what ucf the underlying asset in its value -- what do you see as the underlying asset in its value? mr. armstrong: we live in a world with billions of consumers coming online that are all digital first. yahoo! is one of the largest footprints in the world on the consuming's -- on the consumer

side, and as an e-commerce business in asia. would have over one billion consumers, do billions and billions of dollars in ad revenue, and had a very big footprint. the verizon opportunity with data and targeting is huge. i think there is a breach information and breach investigation, but from a business strategy standpoint, especially in the next five to 10 years, it presents a very unique opportunity and unique scale. we have gone from company consolidations to industry consolidations. verizon has been very forward thinking, very clear on the execution of where they think the world is going in media, wireless, and mobile. we are excited about yahoo!, excited about the team overall. there is this one issue that needs to get resolved. i would look through that on my side, the integration side.

i think the strategy remains intact. >> that was a well ceo tim armstrong. -- aol ceo tim armstrong. >> a federal judge has confirmed of thees against four world's biggest banks in their role of manipulation of markets. royal bank of scotland, , androup, barclays jpmorgan. a jetliner shopping spree that lasted a decade is now waiting. both companies faced dwindling scales and -- gwendolyn sales and the highest number of deferrals in years. sales numbers will likely show that aircraft orders are trailing shipments. aircrafts have less incentive to retire older planes because of the low cost of jet fuel. amazon's alexa will begin riding shotgun this summer. offering thein

digital assistant in cars. the first alexa applications began rolling out in for electric cars and hybrids this month. alarm bells coming from soundcloud today. the online music company warning ifrisks running out of money the service doesn't gain traction. 250,000 compared to spotify's 40 million, or 20 million for apple. it has already explored a sale of the company. that is your business flash update. we want to stay with company news intake a deep dive now. find ourr that you can search using the function at the bottom of the screen. i am taking a look at macy's. it is cutting jobs. the holiday sales have been disappointing. i wanted to take a look at how macy's stacks up.

what you will see here is that the same number for the third quarter -- again, macy's only pre-announcing the fourth quarter. they have been reported with a drop of 3.3%. it sounds bad but it is doing better than its peers. its peers have a low of a 7.4% decline. following on that, the margin at macy's is much better than its peers. 12.5%, near the high of the rate. the median is somewhere in the neighborhood of positive 6% or so. you can come if you wanted to, .ook at more details you can see that, over the past year, macy's has seen a revenue drop of 3.5%. joe: you look at that.

peer -- you look at that exactly the companies you associate with doing all that well these days. doing,bad as macy's is relative to its peers, not too bad. i am looking at some data we got out this morning. initial jobless claims coming in quite low. i have a favorite way of looking at this data which i bring up on the show every couple months or so. a twost a claims with week moving average -- unadjusted claims with a two week moving average. theorange dotted line is number for the entire year, smoothed out. another post crisis low on this metric. if we assume it over the last year, it is steadily lower.

this is one measure of the labor market. of course, we will have the jobs data tomorrow but it just keeps grinding lower. it is a reminder that you shouldn't pay attention to the weekly numbers. joe: very noisy data. there are all kinds of factors. weather could be a factor, a strike in a random state could be a factor. scarlet: i'm glad you brought up the jobs report. this is where bloomberg users can enter their own estimate for what they think the payroll numbers will be. right now, the consensus estimate of economists we surveyed was a gain of 175,000. in november, we had 178,000. joe: folks are feeling kind of bullish. scarlet: the u.k. could be heading for a hard brexit. that is according to the chief

ratings officer or snp. today and warned that the parties at the negotiating table are still far apart. >> in my mind, the likelihood of a hard brexit has been increasing over a number of months. that means that u.k. would leave the eu without any substitute in place. one reason is the lack of time. of time tort period negotiate such a complex web of relationships. the second one is that the starting positions of the negotiations are so far apart that they are struggling to see overlap where compromises could be struck. that.k. seems to be saying , if we want to control immigration, we wanted to be not under the jurisdiction of the european court of justice, full stop. -- they are suggesting

, andthe eu is not a buffet you have to take it all or nothing. if you want to control your borders on immigration, that means the customs union and single market would be available to you either. it's -- it seems to be going rather slowly in terms of the u.k. defining its strategy. -- >> people will not show their hands before negotiations began. they have to wait until the article 50 is actually presented. >> i think they are showing their hand. they are saying, we want full immigration control. it is not a secret that is going to be very difficult to reconcile. but, i think what many people so much -- it is not

the trade in goods, cars and stuff. the thing that really matters to the u.k. much more is services. the u.k. is a major service exporter. even if you get the free trade of goods and services, this countries like germany, france, which are exported mostly goods to the u.k.. financial services, business services. that is much more difficult. arrangementpreset that you could adopt. i think time is really very short and we haven't really seen any clear formulation of the road the u.k. wants to travel. was snp ratings cheap speaking earlier. w.ing up, the ew

we will get a strategist's take. ♪

>> time for options insight with julie hyman. >> a special edition today. joining me is jim of mpm holdings. we are seeing a sort of chink in the rally today. one of the things we have been looking at is the skew on the spy as well as the s&p 500. it is kind of creeping back up to more normal levels after being suppressed during the election. thatnk we have a chart of that we can look at. you can talk about how people are sort of doubting the rally or hedging it.

>> what this graph represents is the relationship between volatilities. is the it is flattenned way that volatility has been bit up. people came into the election more or less on their heels. they have chased up implied volatility. volatility has flattened out this graph. over the last week, what we have seen as people looking at the other side of the trades that have been put on since the election. energy, financials have been fantastic. if you look at other asset classes, u.s. treasury yields gold lower. many of the changes today or the

past few days have taken the other side of a of these positions. something we talked about last week was using that skew to your advantage. if you are long in stock and a skew is apparent at the single index level, you are long a single stock protection of data protection around the inauguration, you can sell an downsidell and by a put. >> as you say, we have had a lot of trends since the election. it now seems to be waffling a little bit, whether it means people hedging. we saw it again today when he tweeted about toyota establishing a plant south of the border. ,ou are looking at the eww

which tracks mexico. this is a product that is worth putting on your screen and watching on the bloomberg for the next up -- for the next several months if not couple of years. go back to the election. around that period, there were w.00 open interests in ew that has come down sharply. three or four tweaks from the fromdent-elect -- tweets the president-elect over the past few days specifically related to the products in mexico. what we are looking to do here is playing directionally long. the reason is that is down about 18% since the election. it is almost all related to the peso. the underlying components are down about 2%. it is all about the mexican peso. the mexican monetary authorities

look to tighten this morning. we just want to go out to march and put on 44, 49 risk-averse. >> got to leave it there. market close, coming next. ♪

>> the market closes here. the nasdaq reaching a record high. this comes after a two-day advance. if you are tuning in line, we want to welcome you -- tuning in live, we want to welcome you. we began with our market minute. the nasdaq actually creeping up to a record high. kind of a stealthy move up. joe: we saw the s&p and dow in the red. nasdaq moving higher. at a sector's look breakdown. this gives you a breakdown of what the performance has been. financials leading. gainers the biggest after the election. what surprised me was that

consumer discretionary, which includes retailers, actually missed on the day. today camees courtesy of donald trump. donald trump reportedly told a confidant that he still opposes the merger of at&t and time warner because it would concentrate too much power in one company. he also said he is frustrated with comcast and nbc universal. we saw both those stocks go down after that headline. joe: the thing you look at government bonds. quite a bit of action there. pretty dramatic. also a pretty big decline at the two-year level. we are seeing some big reversals of these postelection trends. a rally today in treasuries. also on the spotlight, 10 year yields above 4%.

some of those are peripheral. european yields starting to rise again. then, i will look at a one-month chart of the u.s. 10 year yield. how much dramatically yields have come in. notice something, which is that we are now below where we were on december 14, the day of the fed meeting. long-term yields now below the levels of that day. quite a turnaround. maybe to get as much attention. -- maybe did not get as much attention. scarlet: let's look at the dollar index. if you look at the one-month chart, clearly it has moved to a new low. along with that idea that yields have come down -- we also have the dollar losing steam. an intervention by central banks in mexico and china.

bloomberg first word reminds us -- corporate'sis are not really in the market. if you look at the mexican peso basis, theday central bank defending the currency. this accounts in the lower dollar against the mexican peso. since then, you have seen the dollar made its way higher again. the actions did help the peso rebound temporarily. joe: traders not letting that move happen. scarlet: a two day glitch of the offshore yuan. the prediction was that china would continue to let its currency weaken. that consensus seems to be blowing up a little bit in the new year. joe: one thing to look at, commodities, where we see a rally in platinum and gold.

both of those precious metals doing well. gold futures up 1.4%. gold is on kind of a winning streak now, trying to get back to 1200. nymex crude hanging in there with a modest gain. goldet: i feel like rebounds at the beginning of the year. we want to take a deep dive now to the bloomberg. i want to stay with the idea of inflation. what we are is that, in switzerland, on a year-over-year basis, consumer prices have stopped falling. longere cpi is no negative. you will see that cpi has ended the worst slump in 40 years. negativet the rate of 0.3%. joe: raging inflation, consumer

prices at zero. scarlet: six months of decline here, 20 months of decline there. obviously that ended, but not for long. switzerland joining other parts of the euro area. andctations of u.s. growth monetary policy help pulling the world back from the deflationary break. reporter joinsx us now. dan, we have talked about this. it is the existential question that will define 2017. is this the real deal? have we shifted from deflation to inflation? >> i will take the middle part. your graphic on the swiss franc was very telling. it is showing the abatement of possibly the end of deflationary forces. it is not showing a search in

inflation. we don't seem to be going back to a situation where inflation is a problem. some of the sizes and scopes on these monthly moves obscured the fact that they are no longer negative. scarlet: the last time switzerland saw a real inflation was back in 1990 when it was at 60 -- at 6%. this is obviously a key debate for currency traders because they are so sensitive to rates of central banks. how are the currency market so far this year reading these inflationary forces? >> that is an interesting question. for the longest time, the u.s. was one of the few developed .ations it is really moving towards our target.

you're seeing fines in europe. doing sor hasn't been well in the past few days. some are arguing that maybe the rest of the world is converging. >> take the german cpi that was published the other day. inll below where we were 2011. ais could really just be period of abnormality and a return to the trend. >> that was introduced -- that was attributed to an increase of the price of holiday packages. doesn't matter what the catalyst is? if we see inflation pickup in december, will that prompt more inflation whether it is a temporary catalyst or not?

>> that was a catalyst with that particular german data set. there are things that add up to an overall trend. it has attracted much attention. andrea has noted that we have pbid carter years of declines in china. if you buy the idea that china was a source of disinflation trends over the past few decades, it could turn out to be quite a thing. the most consensus views going into 2017 on the dollar -- long of the dollar, inflation, rate hikes. it is not working out. theea: if you look at decline of the dollar today and yesterday, we basically wiped out what moves we had a heart. -- it leadse data

to soul-searching when you have bad data. the trump rally that we have down -- yesterday and tomorrow, when we have payroll data, is when people sit back and think you have the economy's going. crowdeduch is this a trade. if you compare how crowded it is right now compared 2015, i think the position is probably a little lighter than back then. you mentioned how the u.s. is seeing inflation. this kind of highlights where we are seeing that inflation. once upon a time, there was

inflation about that to present mandate. that was in 2012 when oil prices were trading around $100. how much is inflation tied ultimately to how oil prices move? >> it is part of the mix. to come back to this graphic, it still shows that we are more or less around 2%. while andrea is right that the -- it isinflation inflation that for the past few years has been annoyingly below the target. it hasn't generated inflation. that is the thing we have to start asking. maybe after years and years, a lot of victory laps. bloomberg executive editor for global economics and bloomberg fx reporter, thanks to both of you. scarlet: coming up, pretty

numbers to you that come on the heels of some disappointing results out of macy's in cold this week. ♪

>> let's get to bloomberg's first word news. president-elect donald trump deposed today lawsuit involving a celebrity chef. the chef canceled plans to open a spanish themed restaurant. it was in response to trump's inflammatory comments about mexicans. the last time he was deposed within 1998 -- last time a president was deposed was in 1998. an investigation into the finances of president-elect donald trump's choice to head

the department of health and human services. he apparently held shares of health-related companies while backing legislation that could have affected the stock. meanwhile, house speaker paul ryan says revamping the criminal justice system will be a priority in a new congress. ryan: this is something we wanted to get done last year and we ran out of time. we want to get moving again. i think it is good policy, the right thing to do for a lot of reasons. courtney: ryan also discussed the intelligence gathering thing people who work in the field are doing an incredible job but that there is room for improvement. official figures more evidence in that russia interfered

the u.s. election. they are not characterizing the hacking act of war. global news, 24 hours a day, powered by 2600 analysts and journalists. regional stores having the worst holiday season since 2008. shares of macy's, kohl's sinking today. it is cutting 6200 jobs in it has reduced fourth-quarter output as well. december comparable sales gaining 4%. joe: the first headline we see, in store sales up 5.4% december. stocks up 6.5% off that headline.

the estimate was that it was supposed to be down 1.7%. joe: you can see that short line up. that is not the typical line we are used to seeing from retailers. at least some good news on everything we have seen yesterday. us now isoining bloomberg retail reporter matt townsend. matt, i guess what this really indicates is that apparel is not the part of retail we thought it might have been. perilous said the somewhat ok. -- said that apparel is somewhat ok. positive cost for a quarter. in november.n one with all sort of reports like this come we don't know what the cost was. it could be a backorder overall.

-- a bad quarter overall. old navy looked strong. banana republic estimated to fall 5%. that category looks weaker. i want to go to you. a lot of the weakness seems specifically about mall traffic not doing what it was, not doing well, really hurting a lot of department stores, which are the anchors of a lot of malls. are there any types of calls that are thriving, are there some areas that are doing well? aboutalk about, there are 600 shopping malls in the u.s. shoppinga or b centers, and those are doing pretty well. the problem is, stores like macy's with 700 plus stores,

stores,ith 1000 plus they are in malls where traffic has slumped. there is really no easy fix for that, at least immediately. retailers like gap, which are also mall-based, have done better in september. a lot of that is done by apparel that was driven by kohl's weather apparel. gap, in addition to recording better than expected sales for december, also raised its guidance for the full year. it is now showing full-year adjusted earnings above the prior guidance. when she mentioned that we have all these malls out there and some of them are not doing as anl, that seems to be

incremental way of addressing the problem, reducing store count. it doesn't actually get at the heart of the matter, does it? to dobe a company needs something to get rid of this problem all at once. malls are not dying. there is this big sort of idea that also dead, it is going to go away. certain malls are really troubling. do really well. a headline that really caught my eye today -- amazon is launching a brick and mortar bookstore in manhattan. i think they are ready have one of these in seattle. they are sort of dipping their toe into physical retail. are they just trolling physical

retailers, provoking them with this experiment? what is the idea? >> i think it is a combination of everything. online only retailers have done well online. they are testing the ground with pop-up stores, location, densely populated cities. i would expect in the near future that we would see more online retailers entering the brick-and-mortar space just to get a better perspective. they can also pick up merchandise and use them as hubs for return. scarlet: as well as this off-price concept. isn't macy's a bit late to this game? sale that nordstrom rack have not been as robust as they once were.

>> macy's has been linked to the game but they do have bloomingdale's outlets. conceptsseen off-site only at lunch three brands because that is where you wanted the discounts. to see them at the mid tier retailers is new. scarlet: of course, more headlines there. ceo was onble's bloomberg television today saying store business declined across the u.s. retail landscape. -- that seemsthat to be a common problem with these ceos. he was quick to say it is not just a barnes & noble problem. he said, he had been talking to other retail ceos and traffic was weak across the board. he was really at a loss to explain it. he said he thought the election was the problem, he got a bounce

back. -- he thought they bounced back. is this a long-term trend, a continuation of people going shopping online? joe: is there any reason to think this is not just what has been going on? >> the trend each holiday is that the traditional brick-and-mortar stores do worse. if we wrap this altogether, are these retailers going to end up like sears where they need a benefactor to continue putting money into the business to do financial engineering to hope that can get back to profitability? >> i don't think they are at that stage right now. i think they do need to rethink their business model, rethink how they offered and target goods to markets.

justepartment stores have -- they are trying to fix it. the customer is not interested, not loyal and israeli shopping from home. the 20% of the business isn't enough. they have 60 to 80% of the business which is in store still. scarlet: a pretty big task ahead of them. thank you so much. joe: coming up, planning on investing in bitcoin after reaching an all-time high yesterday? well come you want to see this chart. ♪

scarlet: "what'd you miss?"

let's take a deep dive into the bloomberg. i am taking a look at the dollar. we talked about how there is still more room for the dollar to rise. those that hedge funds are less bullishly biased then at the start of previous dollar rallies. the u.s. dollar does have room. compared to 2016, which is the second green circle, and the green circle which is the start of 2015, the positioning is lower than those three. joe: it is surprising in a way because it seems like the dollar is the consensus. maybe it won't go down as hard. scarlet: there is going to be some consolidation along the way. joe: speaking of getting

slammed, maybe there is some indicator -- last week, we talked about bitcoin and how it was surging. in a bloomberg, getting absolutely destroyed. movehite bars every daily for the past five years. this is not -- it is very volatile. the red line is bitcoin itself. when we zoom in, we can see what is going on. you can see the red line. whenever talk about bitcoin on the show, then one day we talk about it. scarlet: what we need to do is overlaid the chinese yuan over that. coming up next, three u.s. spy thats testified today russian leaders approved interference in the u.s. election. how will they convince a skeptical president-elect trump? ♪

>> let's get to bloomberg first word news. president obama is expected to issue one final batch of pardons, likely for non-defendant -- nonviolent drug offenders. bowe bergdahl, and army sergeant who left his post and was held for five years by the taliban, and chelsea manning, who leaked classified government documents. president-elect trump will appoint his new director of national intelligence. the pick could be announced this week. his pick is a conservative who

spent 17 years in the senate. he did not seek reelection. donald trump is still opposed to the megamerger between at&t and time warner because he believes it would constitute too much power in the media industry, according to people close to him. he blasted the deal during his campaign. mr. trump: as an example of the power structure i'm fighting, at&t is buying time warner, which includes a cnn. that is too much concentration of power in the hands of too few. >> another person familiar with the matter says trump's chief strategist steve bannon is also opposed to the deal. global news powered by 2600 journalists in more than 120 countries. this is bloomberg. scarlet: for more on donald trump's opposition to the merger is bloomberg media reporter jerry smith, who got the scoop.

what does this mean for the deal going forward? does it mean that it necessarily can't happen because donald trump has voiced opposition to it? >> we don't know how he would go about blocking the deal, or if he is expressing his opinion to people in his inner circle. we know that in october during the campaign, he very emphatically said he would block to steal. our sources say he has not changed his mind since then. get,here is what i don't and i am not diminishing your scoop. he said we are going to block it. wendy reported the scoop, -- when you reported the scoop, he still believed it. people believe

this when he said it 2 weeks before? gerry: this says a lot about donald trump, she is unpredictable. -- he is unpredictable. he hase fact that what said on the trail is something that investors have not internalized yet. he means what he says. scarlet: because there are so many instances of one he has done the opposite. is this retribution for how media treated him during the campaign? i believe kevin was complaining heus, timing wise, when voiced opposition to the deal, it was because nbc and comcast releasing the "access hollywood" tapes. sources say that

he is opposed to the at&t-time warner deal because he was ousted by cnn, and feels like their coverage has been unfair to him. he is frustrated with nbc and comcast, and feels like they were responsible for the leak of the "access hollywood" tape. he views that deal where comcast a concentration of media and power that he is trying to fight. joe: how freaked out our media executives -- out are media executives that there is a president that may in theory the exact retribution for their reporting, potentially hurting their stock prices? gerry: what we know is what at&t ceo said at an investors

conference. he said he was confident that this deal would go through. if you look at the matter of the law, he thought this would be very straightforward. he was very confident. easepressed openness to conditions of the deal if that would get it approved. joe: gerry smith, thank you for coming on. "what'd you miss?" u.s. intelligence officials stood firm that russia senior officials authorized hacking in the u.s. election. this is one day before officials will brief president-elect trump on the hacking. donald trump has questioned the findings of the intelligence community. for more, let's turn to our national security correspondent in washington. thank you very much for joining us. what are we learning from these hearings? we are finding out that the

intelligence community is not backing down from their findings. if anything, we heard the record of intelligent james clyburn say since they are coming out publicly, they are more resolute and have confidence that russia is responsible for hacking into u.s. institutions last year. scarlet: this is something percent obama pointed out as well. senator john mccain says he believes this threat of russian hacking. talk about the implications about what a republican mainstream congress believing one thing, and the president elect not believing in this possibility. it is a fractious relationship, isn't it? nafeesa: we heard that repeatedly, from john mccain and lindsey graham, addressing the

president elect himself, if you're going to be skeptical, that is fine, but you need to rely on this information. you see that friction from the senate, which is strong when it comes to foreign policy. how that plays around the things donald trump wants to carry out , and not onlyform that tension, but tension with intelligent agencies he will have to work with. joe: the heck of the john podesta email is unprecedented -- hack of of the john podesta n.l. is unprecedented. it does not seem like it is some complicated cyber espionage that would have to be executed at the highest levels of technical power. nafeesa: right. we hear that spear phishing campaigns are one of the top

ways that u.s. government systems are penetrated by cyber hackers. there is a lot more that goes into this in terms of how the u.s. can to conclusions about russia. they said that only the most seniormost officials in russia could have directed this attack. what donald trump keeps asking for is more evidence. besides a spear phishing attack, there are other things that researchers have to put together. it takes other kinds of evidence to come to that conclusion. joe: donald trump tweeted about julian assange, saying that he wasn't really on his side, just amplifying what he said. how weird is it for republicans to now have a party leader who, if not supporting julian

assange, is eager to amplify his findings? nafeesa: that also came up from the republicans and intelligence officials. they said he is somebody that we look to, who is putting american's lives in danger. he is not thought of highly among the intelligence community or republicans. it rates this awkward -- it creates this awkward tension, where donald trump even goes to quote julian assange on twitter. it sets them apart from those in his party. he said that russia did not give assange the leaks from the democratic party. thackeray some tension -- that creates some tension. he is quoting assange, even though he says he does not

support him. joe: thank you very much. scarlet: the market may have gotten a bit ahead of itself. he hear his views on future investment. from bloomberg -- from new york, this is bloomberg. ♪

joe: "what'd you miss?" vanguard ceo predicts the amount of money invested funds could double in the next 10 years. recent, he commented on market activity and low-cost investment. >> the focus on fees will continue. if you think about what is driving it, there are two factors. one, we believe that for the next decade or so, we will see lower returns in equities and

bonds. i think that is safe to say. if yo look atu cost as a percentage, it becomes more relevant. the second element is that there has been an embracing of the concept that asset allocation is the most important thing you can get right from the portfolio standpoint. you are seeking retail advisors to clients, big institutions focusing heavily on asset allocation. stocks,the right mix of cash, and bonds, as opposed to -- as opposedst to picking the best security. 90% of your return will be due to the allocation. --o you srs asked y ee investors expressing that.

>> we would not think there would be much space left in the business to grow anymore. where is the pushback on that? bill: u.s. indexing represents 15% of the overall market. 5% on the fixed income side. there is an awful lot of room to grow. part of the debate is in a sense, it is focused on active and passive. i think the debate is better focused on high cost versus low cost. you will see a secular change, where investors and professionals advising them are focused on cost. we manage $1 trillion of active equities and fixed income, but they are very low-cost. we think that is an important part of the active equation as well. now, and taking

the time that we have lowered returns, what is the limit? bill: i don't think there is a limit. you could see it double over the next decade, especially as you go broader and more global. outside of the u.s., indexing is a foreign concept in most markets. >> that money has to come from somewhere. to what extent does it come out of people? what does that do to the employment situation in terms of active management? bill: active managers will have to redefine the value proposition. the prospective managers are currently talented, but have a focus on cost structure, making sure they deliver at a lower price point. this happens in every industry. if you have looked at active

management historically -- just look at the publicly traded firms. they operate with high profit margins. that gets computed away -- competed away in most sectors. scarlet: a breaking news, amgen sales, shooting up in after-hours trading, gaining 5%. amgen winning a ban on sales of a cholesterol drug. we will keep you updated on any further developments. "what'd you miss?" vanguard took amount in 2015. he mostly through into etfs, but also active funds. bucked the trend

for active vehicles. we have with us our authority on all things etf. we talk about this record $305 million for 2016. how does this compare to the old record? >> i have never seen anything quite like it. $305 billion -- they set the record last year of $250 billion. they remind me of apple circle 2007, where they are firing on all cylinders, taking in money from all areas. investors have learned to trust vanguard. that is a keyword that mcnabb alluded to, but i don't think he said. over the years, as you see funds grow, only vanguard lowered their fees on economies of scale. you see investors that trust

them with everything. passive is part of it. it is much deeper than this move to passive. joe: eric, while there are obvious inflows into etf, there is a etf graveyard. etf never got much attention and they had to pull the plug. how concentrated and how winner take all is this? a jungle.ll it there is only $6 billion of revenue in etf. blackrock takes 2.4 billion. they are the only one over $1 billion. the thing with etfs, all of the money is after tax. none of this is 401(k) money. investors tend to be like early adopters. they are seeking out the cheapest, best vehicles.

it is very competitive. i just did something today -- fidelity, gold, jp morgan, combined the total assets, and they only account for 7.5% of the etf revenue. you have to build liquidity. scarlet: so there is more room to grow. we spoke with reginald brown, considered the grandfather of etfs. >> etfs are grabbing markets from hedge funds. come more refined. sharell see more market shifted from hedge funds into etfs. scarlet: this is not the first time we have heard this. in this new market environment, where you don't have central bank intervention driving market poised are etfs better to take advantage of that, or ar

e active investors like hedge funds in a better position? eric: hedge funds can do interesting things. orther people will pay 1.8 1.6 for that, i am not sure. reggie maybe has a better front row of you. -- row view. hedge funds lost about $100 billion this year. that is not money that necessarily want into etfs. goldman sachs is launching replicating hedge fund etfs. they are like clones. but that has yet to be seen. scarlet: who might be best equipped to rival vanguard? eric: blackrock. blackrock token more flows -- took in more flows than

vanguard. they have a lot of liquid products. those two companies will be at it for years to come. ces forhead back to another interview. this is bloomberg. ♪

scarlet: joining us now from the consumer electronics show is of the-- is chairman federal trade commission. one of the reasons you are at ces is to launch a new initiative to stop hacking into the internet of things. can you explain this initiative? >> i am delighted to be here

with you. we protect consumers and promote competition. one aspect of that work is to talk about the impact that technology has on consumer's lives. the internet of things is one important aspect of that. we have been wanting to draw attention to security issues that arise in connection with the inner of things. -- the internet of things. a lot of us have these connectediot -- iot connected devices. it can be a smart phone, a thermometer, a wearable fitness device on our wrist. neighboring a lot of benefits to consumers, but raise security risks and particular. they have low computing power, and may be vulnerable to criminal hackers that can access

them. they might be able to access your entire home network. in order to address the home issue, yesterday we announced an initiative. challenge.the iot we are giving a cash prize of $25,000 to a person that develops a tool that will help consumers protect the security of their iot devices in their home. we are calling attention to security and the creation of technological solutions to these issues. in particular, i will highlight two issues and concerns with iot devices. one is that manufacturers set default passwords that consumers often forget to reset. there is also the issue of outdated software.

there might be a security vulnerability discovered, and consumers forget that they need to update their devices to address them. is generally what we are doing. -- that is generally what we are doing. joe: can you talk about your conversations with the trump transition team? these g onfident about oals continuing with the ftc? a we just spoke with transition team earlier this week. i had the opportunity to meet with that team. we talked about various initiatives that we haven't agency. we are mainly a law enforcement agency, but have important policy initiatives to address the challenges we face. among them, these iot issues i

have been talking about. consumerss to protect and promote competition. i am sure that will continue in the new administration. scarlet: do you see the enforcement priorities consistent across administrations, or will it be likely to change? ftc, you have seen consistency over time, regardless of the administration. we are protecting consumers and promoting competition. we enforce antitrust laws. the best majority -- vast majority of the things that we do are commissioned bipartisan and unanimously. i expect that tradition to continue. scarlet: 10 seconds, do you have any insight on who trump might pick as a replacement? edith: i do not know.

i am sure the transition team is getting false into who will be -- is giving thought into who will be selected. the new president will have a chance to determine who the head of the agency is. scarlet: edith ramirez, chairwoman of the ftc join us from vegas. that is "what'd you miss?" joe: drop support, jobs friday. can't wait for it. this is bloomberg. ♪

>> president-elect donald trump asl appoint dan coats director of national intelligence, according to a

person briefed on the decision. the pink could be announced this week. is a frontuhaus runner for the treasury department. he is being considered for undersecretary for international affairs. the house overwhelmingly approved a bipartisan measure rebuking the u.n. for criticizing israeli settlements. theakers voted to pass measure declaring unwavering support for israel. democrats called it an unfair attack on president obama. reefing ashis last secretary of state, john kerry says the u.s. and his allies are on the right path to defeating the islamic state. cities are being liberated and urged the u.s. to stay on course. when asked about the potential appointment of rex tillerson, secretary kerry said, we are going to have to wait and see. dylann roof's trial has been delayed. supposed toon was