>> i'm carol massar. welcome to a special edition from bloomberg businessweek. my cohost is jason kelly. jason, a lot going on. it is the friday before new year's but still a busy day. jason: the markets are a little bit calm her, but anything -- this is where we saw a 1000 plus point move in the dow,. carroll: and we will dig into the trade because it has been a volatile and talk about corporate news, because we have a lot going on. we will talk tesla and general electric, and also talk about marijuana and meditation. jason: and wrap it up with a drink. carol: that's for sure. we will also talk a little bit about the yankees. they are not up for sale but we are talking about a possible deal. we will see what happens. jason: including a possible deal with amazon, and that would really start to reshape the whole media landscape as it relates to sports. we know from looking at teams

and their values, the media piece is crucial to how people are valuing this. jason: and speak -- carol: speaking of crucial we will not forget about washington. but first, let's get a bloomberg business newsflash. here is what is happening, facing an sec deadline tesla is adding a pair of eight names to its board of directors. walgreen's karen wilson thompson and --. they also want to closely monitor elon musk's social media activity to tesla. news, the deadline to buy sears out of bankruptcy is today and no one is bidding. sears holdings will close 80 sears and kmart stores in late march 2019 on top of 40 other locations expected to close by

february. bidders interested in buying the bankrupt retailer have until 4:00 p.m. eastern today to announce their intentions. the iconic company last chance survival is a $4.2 billion proposal from the former chairman of the company, but he has yet to former life the bid. mark zuckerberg said facebook is fundamentally altered its dna. zuckerberg noticing the social media giant is focusing on preventing harm in all of its services and making sure people have control of their own information. he also writes that facebook spent ilion's of dollars on security each year and has 30,000 people working on safety. that is a quick look at your business flash right now. taylor, back to you. taylor: let me get a quick check on the major averages. gains and losses, gains and losses, and finally seeing gains again today. .5% and theeptor of

stocks index of 1.2% after being crushed so far this year. beenis a three day, it has up, up, and a little bit of some congestion today. so finally a little bit of consolidation. from new york, this is bloomberg. you are listening to a special edition and watching a special edition of bloomberg businessweek, live from our new york studios. i'm jason kelly with carol massar. when we opened the show we barely touched on the headlines. one of my favorites, you mentioned it in passing, tesla. elon musk hitting some adult supervision. but one of the adults is larry ellison. carol: let's remind everybody, there was a great story in the magazine earlier in the year that talked about one of the great things tesla and elon musk need specifically are people who are not family or friends to create some smarter oversight in terms of what is going on at the company. yes not saying they are

people, but you need some pushback on what they are up to. larry ellison it is like one of my sons asked a lacrosse bro to come babysit. maybe it is in the letter of the law but not the spirit of the law. jason: having -- carol: having your favorite uncle babysit you. jason: tesla shares -- , and: tesla shares are up another additional person, a woman, is on the board. tesla shares are up 7% this year. jason: we are also going to talk about marijuana, a hostile takeover. joe weisenthal was talking about this yesterday. he said the cycle has really compressed because we have already gone to the consolidation phase of this industry. carol: and the target is like, what are you, high? jason: you really went there hard. carol: it is a friday. do you want to get to the markets.

jason: we have a couple of gentlemen we would love to talk to you, like greek and. a global macro strategist at bloomberg. now you see what you look -- what they look like on our show. now you see them here with us. michael, i want to start with you. you have been going through a lot to try and make sense of what is going on today. what is the market sentiment and the driver? mike: you nailed it when you put it out that at least we are not swinging like we were in the last few days, and that in on that shelf -- that in of itself should allow people to exhale to some degree. not the quietest market in the world. swing from a 1.5% peak to trough for the day. carol: but there are gains and they are holding. mike: i think even a strong upward rally would make people nervous because it is this

pattern of the market can get into when there is heavy volatility, big of one day, big down the next, and it is not really cost inducing to see the back and forth like that. this is more what you would expect holiday trading to be like. looking at the three-day gain, it is pretty amazing, some of the moves. the leader as far as industry groups, 7.5% for the consumer discretionary space since the close on christmas eve. will notich investors be buying into it they are worried about the economic outlook. mike: right. this is after the major cross we saw -- crash we saw on christmas eve. carol: and we have to bring in vince, because you are a global strategist at bloomberg. if you were back on the trading desk, what would you be saying about friday? what are you hearing? vince: i think what we are

seeing a lot of and people have n thisushing back o all day, but that is fine. jason: when he says it is fine it means it is not fine. month most of this in the of december, it has shown very little in the way of fundamentals to me. ure, machinep driven algorithmic stuff. realizeetting pms that your end, they will be marked up to market versus their peers and the industry standard. they are lightening up in certain areas that are prohibitively expensive when not producing positive results. basically it is ok if they lose money as long as they do not lose more than they have next to them. this is not so much as the fundamentals or where the market is going, but a career saving underkeep my assets management where they are, and we will look at 2019 -- joke: there has to be a

about not outrunning the bears, but your buddies. carol: we were talking about a lane of peanut put out a story -- a report put out a story that talks about pension funds -- vince: $60 billion. carol: the biggest single stock day turnaround since 2010. an analyst at wells fargo tributes it to pension fund buying. it is it that names the cheaper and they are thinking about what makes sense? vince: mike and i were speaking about this earlier, the market bounces off that correction level and you can't tell me that is not how in some way machine driven, and could have been produced by pension funds saying people have had to push stops, this is a relative bargain compared to what we have seen throughout the year. we have seen a big downturn in the markets for the quarter, for

the month, for the year, oil and everything is on the downside. if you are going to take a longer-term debt into 2019, the pension funds might be a way to go. mike: that is a more reliable way to go when you see this performance. at the worst, the s&p was down 14% or 15% for december and treasuries were up. if you want to hit the 40 to 60 ratio, or whatever that target is for pension funds, it is an unpredictable thing heading into the month. our guests. you to it is time for a check on our headlines. this is bloomberg. i have your bloomberg first word news. white house budget director mike mulvaney says at the moment, there are no active negotiations underway to end the partial government shutdown. delaney indicated he does not expect talks to resume until

democrats officially take control of the house on january 3. it has been open all week. it will be closed [inaudible] it would have been different under a republican administration. [inaudible] maldini also adds there is a consensus that in his words, everyone agrees the u.s. needs a steel barrier along the southern border. mexican news, the president is reacting cautiously to a threat by president trump to close the border. the president tweeting today, we build the wall or close the southern border. responded, president we are always seeking a good relationship with the united eighth. we do not want to be rash. in egypt, a roadside bomb has vietnameses carrying tourists near the key the pyramid, killing two people and

wounding 12 others. this is the first attack in egypt to target foreign tourists in almost 10 years, as the vital tourism industry starts to show signs of recovery following years of decline. this week, an election tied to the protests in congo might hurt a positive effort underway in the fight against the able outbreak. demonstrations arrested this erupteddemonstrations in the, this week. health teams are now unable to carry out critical fieldwork. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. let's throw it over to taylor riggs for more. taylor: fed chairman jay powell to a meetinge open with president trump. kumbaya preparing for a possible sit down. we are joined now by our fed reporter.

why is this meeting a good idea? >> if the meeting does occur, i think the meeting is to basically show good faith potentially on the white house's side, and show they are not planning on firing jay powell, as the president reportedly asked several advisors if he could do late last week. that could be the reason for this meeting. it is not set in stone yet but it seems to be shaping up. that might be the reason. taylor: walk me through what powell has to gain and what he has to lose? out,ve a great story saying there is more to lose than to gain from this meeting? jeanna: probably. we talked to a lot of that watchers and former analysts for this story, and the overarching conclusion was that powell could find himself in a bit of a pickle coming out of the meeting like this. the reason, president trump had this track record of tweeting or talking about his big meetings after they occur and giving his

own readout on what happened at them. if you do that with the fed meeting and if the readout was something to the effect of wow, jay powell is coming around to my view, markets could take that as a dovish signal and back powell into a quarter. we face a real risk for this meeting, then jay powell would be facing. taylor: when you talk about tweeting, we have talked more than ever this year about fed and what question this brings up, can the fed maintain their independence while facing pressure from the presidency? jeanna: absolutely. that is a real question, not only a question of substance but a question of perception. the fed chair meeting with the president is not historically abnormal. it has happened a lot. but there is a possibility that given this intense spotlight on these two right now, the people with the as a sign that jay powell is on how bending to the

presidents will, which would be and hissue for powell colleagues, especially if market started to believe it. to me about powell's speech, coming up next week. what can we glean from that? >> i think it will be saysesting to hear what he in that speech. it will be interesting to see whether the fed with its upcoming communication tries to send a clear message about what they are expecting in 2019. it seems like there is some confusion coming out of the post-fomc press conference. anything we get along those lines could be really important. jason: does it -- taylor: does any of this recent volatility make the fed take a step back? jeanna: what is interesting is volatility can feed into data. from the fed's, they are closely watching what happens with financial condition indexes right now. if you see financial conditions tighten, it could do some of their work for them. they might not have to work so

hard to take shine off of growth, weight down inflation and make sure it does not exceed that 2% goal they have said. predictingt are we next year? two rate hikes in the first cap? from economists, but not the market. they have price them out. taylor: we will have to bring you back later on to give us more updates. this is bloomberg. ♪

carol: welcome back to a special edition of bloomberg businessweek live on bloomberg radio and bloomberg tv. we got a story that talked about more board oversight for tesla and specifically we talked about larry ellison of oracle being one of those folks appointed to the tesla board. tesla shares are rallying, up about 5.8%. let's get into the story. we have bloomberg news technology reporter dana hull

joining us on the phone today, she covers tesla and spacex for bloomberg news. fromus about this, because what i understand, tesla had to do this to its board by the end of the year? dana: as we recall in august, -- elon musk tweeted about taking the company the sec sued him, and he agreed to pay a fine and add two new independent directors. today was the deadline, and there is a lot of speculation as to who of those -- who those dependent directors would be. larry ellison is an interesting choice. jason: we have some sound from some comments he made earlier about elon musk. let's listen. oh, you will have to go out for more money, this is all nonsense, and i said, who are you? this guy is landing rocket, you know? rockets on robot

drone rafts in the ocean, and you are saying he doesn't know what he is doing? have you ever landed a rocket on a robot? who are you? jason: that's larry ellison talking about elon musk. now a member of elon musk's board. dana, these guys are buddies, right? independence may be top of mind, dare i say? ellison has said he considers musk a close friend. both in silicon valley, they are similar in terms of personality, but does he meet the barometer of independence for the sec? yes. the two do not have any financial ties and ellison is not on any of the other boards of musk's other companies, but it depends on how you view the spirit of independence. i think what is interesting is tesla had an opportunity with

this element to add people with utility experience or vast automotive manufacturing experience, and they did not. ellison, who has a lot of software experience and is a seasoned executive, and the other woman from walgreens, whose background is more in hr. carol: what is interesting too, i have been looking with the analyst community and what they are saying, and whitworth securities thing that he could help channel musk's energy into a positive and steered him away from the going private tweet storm. will ellison have control over someone like elon musk, who beats to his own drum? dana: ellison himself is very pub nations, very competitive and combative. older gentleman and maybe can help musk pullback from his worst tendencies, but this whole idea, the idea that

the board is somehow going to think is somewhat ludicrous. he remains the largest shareholder, and he can basically get the board to do whatever he wants by calling a shareholder vote. i think ellison certainly is a who brings aname lot of experience to the board, but he does not bring automotive manufacturing experience, which is what some corporate governance experts and analysts were hoping to see. musk hasgiven what said in the same 60 minutes interview about his respect, or , maybeereof, for the sec it stands to reason this is the sort of pick he would support. let's talk if we can, dana, about the company's performance? held a lot of drama, as you have alluded to, and through the fall, lest tweeting and candidly, more making of cars. how has that gone? rena: they recorded a ra

quarterly profit in the third quarter, and now it is all hands on deck and making as many cars as possible in the fourth quarter. we will get in early january their latest reduction and delivery figures -- production and delivery figures. as a crazyk of tesla startup. this is a company that has been around for 15 years. it ipo to in 2010 and is maturing as a company. and starts ands elon musk grounds a lot of headlines, but this is a company that has 45,000 employees and is entering a new phase of growth and maturation. in some ways, the addition of these new board directors is a sign of that. the fact that they now have a washingtonous powerhouse lawyer as their general counsel, you are seeing them taking more steps to really kind of act more like a real company as opposed to the startup of their founding. carol: we talked a lot about

larry ellison, because everyone knows about who he is and what he did with oracle, but what about kathleen wilson thompson? what do we know about her? she is supposed to be a respected hr executive and tesla has had some concerns with how employees are treated. what did she bring to the table? is an african-american woman who worked at walgreens and catalogs. i do not know much about her, but i think it is interesting that tesla is adding diversity to its board. california has a new law that boards have to have women, and tesla's board, with the addition of these two new members is that 11 members, three members are women, two of the three women an, an african-american wome and that is a lot. silicon valley companies are not known for being champions of diversity. they have been kicking and screaming to release their diversity statistics. so having a variety of perspectives around the boardroom table will be helpful. ll, thank youu

so much for your time here on a friday afternoon. you are listening to bloomberg businessweek, especially edition broadcast on both radio and bloomberg television. i'm jason kelly with carol massar. more to come, we will talk about marijuana and a little bit about meditation, and also get an update on amazon's plans for sports. you are listening to bloomberg. ♪

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the lenders practices from 2002 to 2017. those included opening bogus accounts, charging improper fees, and forcing insurance policies on auto lending customers. netflix is giving chief content officer can surround is a 50% salary hike for 2019. the move pushes him into the rank of hollywood's highest-paid media moguls with $18 million as his base compensation. he will also get another $13.5 million in top options -- stock options. the new york yankees could be teaming up with amazon and sinclair broadcasting group. the major league baseball network is in talks to make a bid with a regional sports network called yes. the yankees have first dibs on buying their remaining stock. that is your business flash update for the moment. let's go to taylor riggs for more. junk bonds,s all

another casualty of 2018, darkening the growth outlook. dts outflows in the fall of oil mean this high-yield asset classes looking at its worst returns in years. i want to bring you kelsey butler. you report on leverage, finance, and high-yield. this is interesting. if you want to come into my terminal, we have the u.s. high-yield working now on its worst month going back since 2011. i just want to simply ask you why? what is driving these losses? kelsey: it is definitely the worst months in september 2011. december is having a -2.6 return. there are a couple reasons for that. out of the global growth expectations slowdown that is impacting the lower rated tears tiers of -- rated credit. a lot of be rated credit is in energy, dropping oil prices are having an impact there.

and the asset classes seeing major outflows in the last six weeks, investors have pulled $11 funds to invest in this kind of debt. taylor: it is amazing how you were talking about how energy is in the double be sector. in the high yield space, it has been a best performer so far this year. high-yield usually outperforms investment grade. what is the sweet spot in high-yield? the double bezoar the cripple -- the double bees or the -- double b's or the triple c's? what are you hearing from some of the strategists about 2019 bigexpectations after the run-up in high-yield and you have this horrible month. are they selling and getting out or do you expect another banner year going into 2019? the expectations for 2019, all the big banks are saying there will be positive

returns for high-yield, although the expectations run the gamut. total returns on the lower end, 0.5%, all the way to the higher end, 6% to 7% total returns. we will be watching that to see how that shakes out. taylor: you also cover leveraged loans, and we have done a lot of work in the fourth quarter, talking about the leverage loans the price you have index taking a big hit. what is going on in the leverage loan space? happily recovered a little bit or is volatility making spreads hurt even more? kelsey: leveraged loans are ending the year on a bit of a negative note. prices are the lowest we have seen going back to 29 months. additionally, three weeks in a row we have seen record outflows from the asset class. yesterday we reported that investors pulled $3.5 billion from funds that invest in loans. very interesting. that was bloomberg's kelsey

butler. come and we will do a quick market check. taking a look here at the 10 day real-life volatility, going back to highest in three years, coming up there on a 38 handle. from new york, this is bloomberg. bloomberg. carol: this is bloomberg --inessweek, live on number bloomberg radio and bloomberg tv. we have to talk about the government shutdown. from the, some threats president coming out, but it is ongoing and is going to be into the new year. jason: it will be by definition into the new year, because congress is not coming back until next wednesday at the earliest. thursday, the democrats take control of the house. likely speaker nancy pelosi resuming, re-holding that doubtful, and that will change things pretty dramatically. --ol: let's check it check in with chief washington correspondent kevin cirilli.

kevin, where are we in this process? to the end,re close carol. no end in sight as the week, as the year ends, and it was interesting to hear from the acting chief of staff, mick mulvaney at the white house. he is saying the white house is not negotiating with nancy pelosi, and the reason is because they are not sure she has the votes to become speaker. i cannot really find one democrat chapter in the house of representatives who agrees with that assessment. it would be a political bombshell should she not become speaker of the house. it is also a lot of the chatter here inside the beltway, that the white house is trying to pit senate minority leader chuck schumer against the likely speaker of the house nancy pelosi. a lot oftrategy that democratic strategists are rolling their eyes on, because if the votes existed week ago prior to the holiday recess, you would have had a situation where some of the centrist democrats, like senator joe manchin from

west virginia, what have gotten in line with republicans, and republicans did not elect one vote. watching isyou are just another piece of evidence that would suggest that this white house is also working under the assumption that nancy pelosi will be that ago she'd are for democrats in the house of representatives, given that she was invited to the very memorable pre-government shutdown meeting. carol: and just a reminder for everyone, after the meeting with president trump and was telegraphed, you could catch it on tv, and it was losey and schumer meeting with the president. it was a little uncomfortable in terms of the discussions going on. kevin: and that was sort of the ad hoc press availability where nancy pelosi and chuck schumer said, we could take this is saying, i trump will own this shutdown. it was some pretty remarkable political theater. one of the interesting thing

here, speaking of nancy pelosi that i would love to get your insight on, now president trump is going to have a foe in the way that he has not had in congress until this point. a foe with some teeth. kevin: i think nancy pelosi really illustrated her political aptitude in the sense of how she was able to orchestrate not one, not only becoming the likely new speaker of the house, but two, bridging the gap between progressives and centrists, a theme that will follow the 2020 congressional cycle ahead. that also said, the president has had a long relationship with the senate majority leader chuck schumer, given the new york geography. all of this comes at a time in which the president faces a much different political forecast and the moving parts of all of these political dominoes are also want a collision course with the mueller investigation and the the democrats

have their progressive base with legacy acted upon in this new congress. and as we look ahead to the new congress, what are the priorities you hear from your sources, especially on the democratic side in the house? one of the concerns we hear from democratic strategists, we heard this earlier on the balance of power show, the democrats overplay their hand. they do not choose wisely in terms of what they decide to prioritize. kevin: that is such a good point. remember when republicans were andaigning to get back control congress? they said repeal and replace obamacare. in terms to be a tough road ahead. that is one and a stone that exists as a political policy problem on both sides of the aisle. to your point directly, there is this tension right now of folks in the democratic party who want to see the president impeached, as well as other democrats who

are saying, let's not overplay our hands. look no further than what will be happening with the president's tax returns and whether or not committees will ultimately decide to one, work across the aisle with republican counterparts to get some type of how is he threshold, implicate her's accomplished, or if they will immediately use their subpoena power. aey will have to try and find balance. that becomes very difficult. in terms of bipartisan areas, pharmaceutical companies are something we hear about, infrastructure, and some legislations as well. carol: we will see. from cirilli, joining us washington. let's get a check on your headlines. >> carol, thank you. president trump will bring in the new year in washington. he has canceled his plans to travel to florida because of the government shutdown. last week, the president canceled a trip to his private

mar-a-lago club in palm beach, where he normally spends the holidays and any winter weekend. top house democrats want all evidence relating to the deaths in borderldren protection custody preserved. a guatemalan boy died in a new mexico holland -- hospital. officials are saying he had the flu. both deaths are now under investigation. incoming committee chairs are saying they want to access medical records, lots of health and welfare checks, and surveillance videos from the holding facility event processing centers. the german government is in talks with various countries to improve the transparency of foreign financing. the efforts are intended to prevent the funding of extremist facilities. governments have been saying it has been cooperating with kuwait since last year. the foreign ministry also reportedly is asking audi arabia, qatar, and other nations ofreport plan financing

facilities in germany. in indonesia, bad weather and the massive ash column are hindering efforts to assess whether a panic corruption could trigger another deadly tsunami. more than 425 people died last week due to the tsunami. more than 40,000. -- 3000 were injured in that search continues. day, onews, 24 hours a air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. taylor: bloomberg intelligence analysts have been doing some crystal ball gazing for us. today, we are looking at asia's financial sector. we expect that there could be a more limited transmission to several key asian banking markets, including china, japan, and australia. >> we think the chinese outlook

is improving on the sales front. the strategies will continue to grow mainly thanks to the expansion and margin. the reason for that is that this is shifting towards more protectionist policies, such as -- and medical insurance. >> [inaudible] refinancing has --, it is really tough right now. [inaudible] in china, we think the investment environment is still challenging, ok? the retreat in would be-- use challenging, but at same time, the allocation in the medium to long run is still focused more on long-duration assets. >> some companies have done that

a long time ago, and also they have been reducing their equities exposure. that is a good thing. when the equity environments remain challenging and disruptive. taylor: check out our bloomberg intelligence for more predictions for the new year. i want to get a check on today's market action. we are seeing some more gains accelerate as we near the close, and that's in just about an hour from now, 4:00, i will get it right. the dow of more than 200 points, the s&p 500 starting to lead the dow, up more than 1%. tech is very interesting, leading the gains -- we have seen this over the past few days. tech is really the driver to the upside and the leader to the downside, so i am sure traders are feeling a little bit more confident that the market is intact and some of the riskier sectors do start to lead to the

upside. come into my terminal, because i want to take a look at volume, off 19% earlier. was offning, volume about 17%, so we are seeing that. energy getting the most volume as crude is a little bit higher and the dollar, of worse, was lower. trading day.t let's look at some of the individual stocks that are moving. we are talking about the consumer and where we stand. the consumer on wednesday, strong data came out from mastercard. up more than 7% as they set holiday online sales were up 10% year over year. then we had weaker consumer confidence come out on thursday. some companies were saying, like the confidence board, that the consumer was weaker than expected. all the retailers are getting the bit today. kohl's and some discount retailers like dollar general up 7%, 8% as the consumer looks very healthy.

take a look at this -- this has never gone negative for the year, so for those of you think the consumer and retail sector has more shakeout to go, you are in for a ride. retail up 13% for the year. let's take a look. it is a rainy new york. it does not look too good outside. it's better here in the studio. from new york, this is bloomberg. ♪ . ♪

jason: you are listening to and watching bloomberg businessweek here on a christmas friday afternoon, heading toward the new year. and what a year it has been for industrials, carol. carol: i wish i had a nickel for every time we had talked about general electric specifically. i would not be here, i would be on an island somewhere. our guest from bloomberg

intelligence is here, great to see you. you have followed this so closely, and what a story it has been. ge, let's start there. comes out of the dow in 2018 and here we are, talking about this company, this bellwether, this icon in a way that we have never really talked about it or. what happened? >> well, there were a number of missteps. operationally it was power and they were too optimistic. they did not downsize, the world changed in terms of what kind of power equipment people are buying. then all sorts of unexpected liability, problems in the missed theou almost good things that are happening because these things are overshadowing a great aviation and health care business. they had made that

acquisition, would it be a different story in terms of general electric or not? >> the problem would have been less, but the pieces of asinesses are not doing badly as the gas business. siemens and mitsubishi had the same problems. they got on it quicker. has a better geographic mix, but ge was late to the party and there are some theories on why. one of which is, there was a running race for who was going to be next ceo, one of the guys was in power and we want to get the best results we can -- a number of things. jason: let's look ahead to 19 for ge and then week -- 2019 for ge and broaden the discussion a bit. what does the new ceo, replacing flannery after 14 months in the have the investor confidence he needs to do what he needs to do to get this company back on track?

best,is considered the probably, arguably one of the top industrial managers. at first i thought they put him on the boards to give some credibility, a really good operating guy. he does have the good will, but the impatience is so powerful that it is interesting -- he has kept things close to his chest while he is figuring out what he is going to be doing and every time he speaks, it goes down. i think people want something now. i think he is giving us a few things, but he has to keep feeding frenzy a little bit. jason: carol is skeptical. carol: i always think about the harvard business school case study and what they will be doing with general electric. for so long, ge was the largest market cap company out there. in today'snt we are world when it comes to ge, but i am wondering where things went wrong. we used to respect their management and diversity, we this was a company for

widows and orphans because of the dividends, but i feel like it is not one misstep, but several missteps in terms of ge's history. and what is the ge of the future, because there is still so much to unwind? karen: ultimately, we know they are selling everything but three businesses. carol: and that cash flow has helped support the dividend in the past. is interestingit the health care rumor came out again about a week ago. part of the plan is to ipo at least part of health care and give the rest, take a cut and give the rest, spin the rest out. behought that timeline would pushed out. there were rumors that was going to be pushed forward. that is a really good cash flow generator and he is going to have to balance -- where is he going to get the money? what will end up happening, he will probably sell 15% or 20%, like siemens did. that was a good deal and that

stock really took off. we know they are selling transportation, and the issue is, they have to sell parts of power too and get that smaller and more manageable. one of the good moves he made, he isolated the problem. 60% of power, 25% of ge. he's got a lot of work to do on that. then there are issues in the finance up, and it is primarily a cash problem. let's talk about other industrials, because they have gotten a little beaten up. is 2019 a better year? are there buying opportunities, given the leg down the have taken? karen: the stoxx, that really deep cyclicals are down, multi-industrials are down 20% still. aat is really anticipating big hit to earnings. i personally think it is a strong reaction to what the outlook looks like, although there are more risks than opportunities in 2019 for the first time in a numbers of years

-- number of years. carol: more risks than opportunities? karen: cement markets will be $45, that hit at a number of industrials pretty badly the last time it broke $50. the commodity prices are down 15% to 20%. the mining business is exceptionally strong right now. material costs, are they going to be able to raise prices like they did this year to offset the tariff impact? not in this environment. i keep reminding everybody, i can't wait to hear from earnings. i want to hear from the ceo. i do want to hear from the ceos in terms of what they are saying further customers, in terms of growing revenues and earnings for the rest of the year, what kind of visibility they've got. what do you want to hear and what are you looking out for? karen: we will get a lot of our initial 2019's, right?

people will start out conservatively, but i think you will see eps growth across the board. carol: because people are conservative and careful and will manage their investors, or they are worried about the outlook? they don't cut right away because they are trying to buy some time, if they are running a little under. i think they will talk cautiously about some of this unknown, like the terrorists. -- like the tariffs. they were able to absorb some of those because of the price like civility this year. look at global growth, we are still growing and will grow over 2%. it is not like we are going into a recession. i think the one thing where there are risks, you look at regional theater lies. ours is way high, almost 60. the rest of the world is around

50, 51. that is almost close to not growing anymore, and europe is not going down in a big dissent, and china is slowing. carol: 56% lower this year. jason: unbelievable. always good to catch up with you, senior industrials analyst at bloomberg intelligence. coming up next, we will shift from ge and industrials to a little bit of week. carol: -- a little bit of weed. carol: an industry we have talked about a lot this year and are seeing grow and avenues, consumer or medical-based. is oneand medical interesting aspect there. you're listening to bloomberg businessweek on bloomberg radio and tv. ♪ ek on bloomberg radio and tv. ♪

ferroan: i'm jonathan with 30 minutes dedicated fixed income. leverages building up. , yields are at multi-year lows. jonathan: the curve to some extent already. to some extent already.

jason: you are listening to and watching "bloomberg businessweek

" here on bloomberg radio and bloomberg television. i'm jason kelly alongside carol massar. just back from taking a selfie. carol: we are multitasking all the time. we are on radio and tv and on my phone. jason: so much to get into. we are going to catch up with some of our fixed income, economic bonds friends. we're going to talk cannabis later. are they not friends? carol: they are friends. jason: you are in a friday mood. you were thinking a little ahead , i believe, to the end of the show, where we are mixing some cocktails. carol: can i just tell you what is kind of cool? it is bottled cocktails for new year's. twist off the top, it is all there. jason: get your shaker, get your glass. carol: talk about disruption. jason: disrupting the new year's eve market. carol: we've got stocks pretty much at their highs of the

session. we definitely have a bit of a rally. green it is indeed a nice day after a lot of volatility early in the week. let's get a check on your business headlines right now. uma: thank you very much. i am uma pemmaraju with your business flash. a u.s. cannabis retailer is planning to launch a hostile takeover for producer aphiria. they value the canadian marijuana grower at more than $2 billion. that is a 46% premium over a theory is closing price. up for its biggest push yet into the vegan market. the world's biggest food company plans to launch the incredible burger under its garden gourmet label. they are trying to find foods which resonate with younger, healthier consumers. fewer americans signed contracts

to buy homes as higher prices continued to squeeze one be homebuyers out of the market. the index dipping 0.7% last month to 101.4. that is a quick look at your business flash update. taylor? taylor: let's get a check on where the markets are. we are accelerating those gains. 3:00 p.m.,yesterday, we went from negative to positive. we are up about 1% on the dow. that tech heavy stocks leading the gains to the upside and losses to the downside. really interesting that tech continues to be the breakout performer. it does give a lot of confidence to the market. take a look at what else is leading. in yen is the best currency

2018. you are seeing a little bit of a slowdown today. yen is a traditional safe haven. overall, yen is pretty strong. from new york, this is bloomberg. carol: we are caught up on markets. this is a special edition of "bloomberg businessweek" on bloomberg radio and bloomberg tv from new york city. carol massar along with jason kelly. we want to bring in our bond and fixed income team to talk about the fed. let's bring in alex. she covers money markets and rates. and elena, our senior u.s. economist for bloomberg economics. interest rate swaps and options. by traders ands investors are being reduced in terms of what they expect from the fed. what are you hearing and seeing? futures, no hike,.

they are doing nothing. jason: > for the whole year? >> for the whole year. now you are starting to see the prospect of a cut for 2020 being priced in. i think the market has gotten ahead of itself. i spoke with john briggs today and he was saying this is a little bit premature. what i was hearing last week is a lot of funds closed their books after the fed meeting. they made their money or lost their money and that is it. part of the other reason i remain dubious about this move is that it seems to be following equities. when you get a recovery is when i've seen the fed funds contracts moving. i'm requesting it -- questioning it a little bit. i think we need to wait until 2019. carol: how many days to go? >> exactly. it is too soon.

if you take equities out of the equation, the economy has been strong. the data has been good. , they are saying every meeting is live. this is another thing the markets have to think about. they have to account for that. jason: elena, i want you to come in and pick up on what alex was talking about in terms of live meetings, a different tone that we are getting as we go into aggressive a fairly 2018. how is your team looking at it? >> i think it is too early to call it quits. i think they will continue hiking and the pace could be different, but a lot will depend on the pace of inflation next year. the fed seems to be totally

disregarding the movements in the markets, for now at least. the labor market is doing just great. a lot will depend on how inflation evolves. if we get it right and we forecast inflation to accelerate next year, we think the fed might continue to hike rates. fact that the markets don't expect any rate hikes is not a problem for the fed. if they need to boost market expectations, they can easily do so by launching communication campaign like a few weeks ahead of the meeting. >> they've done that before. we saw it in 2017 with janet yellen before the march meeting. you saw the communication ramp-up. so it is possible. yieldlistening to real and we were talking about

balance sheet is the reason equities are so unstable. it is not. they are not going to hit those maximum caps in the runoff. reserves have been shrinking since 2014. we've seen equities make record highs. we have to get away from the narrative that the balance sheet is making equities unstable. interest rate hikes are having the bigger impact here. this has been something you and i have talked about in terms of investors now have an option. they can take on cash investments. they can make something off of them in comparison to the equity markets. why would you not do it in a time of volatility when the news flow out of washington is inconsistent and nonstop? if you are worried, this is what you do. >> there's a lot of risk to equities. we have a piece coming from my colleague saying we have to wait

until the beginning of next year to set resolutions for the market. trade is still an issue. we have a government shutdown. we have a lot of issues, not to mention rising debt costs. carol: can i ask you how much of the market -- i'm looking at the 10 year right now. we are below that 3% mark which we never thought we would go back below. how much are investors doing the fed's work in terms of lowering rates? >> i don't know if you can look at the 10 year. what i'm looking at, the one-year-five-year is inverted. you can get more on a one-year bill than a five-year. carol: that is good to know. we've got the jobs report coming up. >> we expect a very good payrolls reporting. we think we go back above

200,000 in terms of overall payrolls. we expect a decline. carol: our survey is looking for 180,000. >> we are a little above consensus on that. we think we have potential on how many people we can pull from the sidelines. we expect a decent reading on earnings as well. carol: interesting stuff and certainly going to give us a lot to watch out for. yelena and alex. we do want to get a check on some of your headlines. we will get back to the markets in a moment and talk about marijuana later on. this is bloomberg. uma: carol, thank you. as the government shutdown continues, it is more lights out for lots of government offices. the fallout affecting everything from environmental protection agency to smithsonian

institution. nearly 14,000 employees will be furloughed at midnight. the smithsonian is saying unless the shutdown ends, all museums, research centers, and the will be closed. the federal communications commission is saying after january 2, it will no longer be accepting consumer complaints. a boat carrying more than 300 migrants rescued at sea has arrived in spain. the vote rescued the migrants in waters near libya last week, but the vessel had to travel to spain. italy and other countries reportedly refused help. the syrian army says kurdish militias have and it over the control of a town. dispatched hundreds of armored cars and tanks to the surrounding area. they've downplayed syria's advances, saying intelligence

reports don't reflect a confirmed presence inside the town. thousands taking to the streets of sudan, calling for the president to step aside. protests began across much of sudan last week. shortages, but later against the president himself. he's been in power since the 1989 military coup that he led. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. pemmaraju. this is bloomberg. let's go to taylor riggs. taylor: it is all about u.s. stocks. they do remain higher as we head towards the close. we've taken a dip in the last few minutes. mike is our editor for bloomberg markets live blog. on the dow, we were up 200 points, now only 50. it has been a wild week. >> it sure is.

who knows where we will close from here? i think it is somewhat of a positive that we are swinging, but not as wildly as we were. no 800, 900 point swings. i still think there's a lot of year and trading going on. a lot of position readjustments that make it hard to get a concrete signal about what any of this means. the one sort of encouraging has gonethe market strong into the closed the last couple days. taylor: is that smart money? >> the smart money index sort of just compares the level of the dow at the end of the day to the first half hour of trading. it has been a remarkable story all year. christmas eve on monday was the lowest since 1990. it shows you how week the closes

have been all year. it is hard to say exactly what that is. a lot of people interpret it as institutional money, the so-called smart money, bailing out at the close. true,t sure that is 100% but that is the way it is interpreted. taylor: and the fundamentals this week haven't changed. i wonder how much of this is technically driven. you were talking about shifting positions. you've been looking a lot at the rsi. how much of that is a boost of confidence? the pension rebalancing story might be the match that like the flame, but other strategies see that market from the and probably pile in and say this is the bottom. it was fascinating to see the market turnaround almost on a dime when we got close to that

20% drop from the bear market. a lot of people had stopped in place. if it gets that bad, it is probably not going to get much worse. s&p, like to retest those lows. it wouldn't be surprising to see it do it again. taylor: come here quickly into my terminal. we are looking at a 10 day fall. the last time we had a 37 range was in february. that was sort of when the markets had hit a low. otherwise, back to august 2015. >> the stocks take the stairs up and the elevators down. comparisonteresting

going back to 2015. that is when china aggressively devalued its currency. was startingen oil to fall out of bed aggressively. it had a major impact on risk sentiment. much worry this time, but clearly that correlation with oil is increasing. taylor: oil, the worst performer in the s&p 500 today. we will have more. this is bloomberg. ♪

carol: this is a special edition of "bloomberg businessweek." we want to talk about some news. late yesterday we talked about an offer for aphiria with a $2 billion offer. hostile offer. in the that marijuana industry has been in the news a lot this year. a rejecting that bid. saying it was undervalued.

they did catch up with alix steel earlier. let's listen to that conversation. >> there's been a lot of interest in combining businesses. february, when the memo was rescinded, canadian licensed producers were unable to acquire u.s. companies. there's a lot of interest in combining companies. this is one way to do it. company make based a bid for a licensed producer. we think this is a great opportunity. we are putting the idea out there for shareholders. >> how much would you be willing to up your bid? >> i don't know yet. there's always an opportunity to negotiate. there's two numbers in consideration, the valuation of our stock and the valuation of their stock.

we will see how those are considered. >> what was the trigger for this? part of the wheaton why aphria could become attractive to you is because there were short-sellers in the market saying it was a shell company and that destroy the equity price. how much of your bid was relation to that? >> that was an element. the cannabis markets over the last two months has made all cannabis stocks a bit more attractive. at the same time, our company started trading after a reverse takeover, and while the entire market dropped, our stock has more than doubled. we felt like there was a nice cap between values that we could try to do. >> how much shareholders to support do you have right now? >> i can't say for sure.

in our statement we mentioned 10% to begin with. there, weews gets out will find out for sure. it has been probably 12 hours. what it goes more hostile, does that mean for the integration of these companies? , it is not sore much about the assets. it is about the talent. jason: that was peter talking .arlier today really, the bigger opportunity according to investors and according to lots of smarter professionals out there is the medical side. one of the real friends of our show joining us here. happy early new year to you. put this in some context. obviouslyrijuana has

sort of been the leading indicator. recreational following behind. how do you see this developing? legalical marijuana is now in 29 states. we think others will follow along. and recreational in about nine states. growing market. the medical community has seen more uses. it has been around for thousands of years but is only now being tested in more controlled trials. basically, used for pain, cancer, nausea, inflammatory bowel disease, nor logical diseases. we are seeing more potential uses and benefits. we always worry about the potential for abuse. but definitely medical marijuana seems to be growing and effective in many areas.

bloomberg news had a great story earlier this year about the global medical pot market could be worth more than from $8ion by 2025 billion in 2017. specifically, i remember you and i discussing this, as a replacement for something like opioids. they didn't see necessarily the addiction problems that we have with opioids. i wonder about the pushback from the traditional pharmaceutical industry. >> i'm sure there will be some pushback, but there's no question, states that have legal recreational marijuana seem to have lower opioid use and abuse. there may be an overlap. we worry about some dependence, but opioid dependence is far worse and has more consequences of overdose and death. effective. can be

we are just learning to use it more. but you have to go through a course. not every physician can prescribe it. as more physicians get familiar, use will probably go up. jason: tell us the single biggest trend you see going into 2019 from a medical perspective. >> certainly medical marijuana is one. we are looking at crisper and genetic engineering. scary stories out of china with some designer babies. celiac, we're going to talk about. i think we are diagnosing more. hopefully in the coming year we will be talking about new diagnostic techniques, treatment techniques, and really screening people for more disease. screening for breast cancer, screen cancer -- skin cancer, celiac. we do have more tests now.

we have more techniques and the goal is to pick up more disease and treat earlier. carol: for early detection, that is a great thing. look forward to those conversations. always great to be with you. happy new year. more ahead here on "bloomberg businessweek ." i'm jason kelly alongside carol massar and this is bloomberg. ♪

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provide strong support, relieve pressure and optimize airflow to keep you cool. hello bed of my dreams. order online. we'll build it box it and ship it to your door for you to enjoy. sleep on it for up to one hundred nights and love it or you'll get a full refund. returns are free and easy. i love my leesa. today is going to be great! find out why so many people love the leesa mattress. then try it in your own home or at any west elm store. order now and save big. for a limited time, get $150 off - and free shipping too. just go to buyleesa.com today. you need this bed. uma: hello, everybody. facing a deadline, tesla is adding big names to its board of directors. catherine wilson thompson and larry ellison.

also wants the company to closely monitor elon musk's social media activity, including any tweet or posts that are material to tesla. the deadline to buy sears out of bankruptcy is a short time from now. sears wants someone to buy 500 of its stores and kenmore appliance brand. sears holdings will close 80 onres in late march of 2019 top of the other locations expected to close by february. businesses interested in buying cap until 4:00 eastern time today to announce their intentions. there appears to be a $4.6 billion proposal that has yet to formalize. the bloomberg dollar spot index has fallen to a seven year low. concerns that the partial u.s. government shutdown will extend

into next year. slipped against most of its peers after the announcement that no votes are set for today. that is your business flash update for the moment. taylor, back to you. taylor: in one of his first major challenges as goldman sachs ceo, david solomon will have to wrestle with the fallout from the scandal. last month, solomon spoke with bloomberg's erik schatzker in singapore. he discussed the role that former bank employees play in the scandal. it is obviously distressing to see former goldman sachs employees went so blatantly around our policies and so blatantly broke the law. we take the whole matter seriously and we continue to work with the authorities as they investigate. >> two of the people involved have been named by the justice

department. tim leistner, who pleaded guilty, and andrea valid, who is said to have known about the scheme. they were goldman partners in the investment bank that you ran for 12 years. these are your guys. how does that make you feel? the investigation is ongoing. i feel horrible about the fact that people who worked at goldman sachs would go around our policies and break the law. unacceptable. there's not a lot more that i can say other than we continue to cooperate with the authorities. >> as i would expect. there might be a couple other things you can say. i'll try. if you can't, i get that. your clients, your shareholders, and your employees want to be certain that neither you, lloyd

blankfein, nor any members of your senior management team had any reason to suspect illegality or any breaches of compliance practices. can you offer those assurances unequivocally? >> we take compliance and control at our firm extremely seriously. we've been around for 150 years. , thee control the firm velocity and volume of transactions, is of huge importance to us. taylor: that was an exclusive interview with goldman sachs ceo david solomon. i want to get a check on the markets. we've turned negative on the dow and s&p. lower, came in points,ow up almost 200 now we turn lower again. some of that is in my terminal. we are taking a look at the index.

you are seeing a record on an inter-day basis. yesterday we were 1662. today we are 1775. it is getting a little bit harder. this is bloomberg. carol: we are back on bloomberg businessweek. carol massar along with jason kelly. got to talk about this story. kind of a melding of the sports and media world. yankees have been talking with amazon about buying disney's share in the yes network. the "wall street journal coming out today and piling onto this. saying the team is speaking with sinclair broadcasting. let's get it straight and find out where we are. in britain harrison. there's a fair amount of company news as we wind down 2019. where are we now? >> as you know, disney is selling the yes network, or at

least its stake in it. i will catch you up. along with 21 other regional sports networks. .his was part of their deal these regional sports networks came over in that deal. they agreed with the justice department they were going to sell them. some of these companies have also been involved in the auction for all 22 sports networks, including sinclair. sinclair was going to buy tribune media and got blocked in that deal. they are looking for something else to buy now. it makes sense that they would be looking at the yes network. the yankees have the option to buy back the stake. that was a deal they made with fox a long time ago. carol: why would they want to? >> that is a good question.

part of it is as you look out over the next few years of how sports media is changing, things are going to streaming and a direct relationship with the consumer. back in the day, it made sense to sell your sports rights and make the most money you could from the assets. now it is starting to make sense for them to own the content, own the relationship with the customer, and sell things on top of that. you've had a number of really interesting and important jobs here at bloomberg. looking across the media world, the telecom world, you and i go back a long ways. you have seen this sort of collision of all of these inital traditional and now the sports world, the valuations have come to a place that i think very few people might have

expected. that may be why you have all these different players. >> i think that is true. lately there's been a little bit of a bloom off the rose. they have proven to be vulnerable in competition with netflix and snapchat. espn, theking about subscribers. >> and the nfl, we've seen the ratings fall off. there was a time when we thought sports was the one thing everyone wanted to watch live. on-demand- of not able. turns out that is maybe not the case. the valuations have come off a little bit. carol: what is interesting about this story is the media companies and the tech companies are all trying to jockey for position.

we talk about the importance of content. i feel like any story when it comes to content, amazon or netflix is one of the potential buyers. >> netflix has stayed away from live sports. they've had some documentaries, but they are staying away from live. facebook, you've seen them in the mix. been: but it hasn't knockout success so far. they've had technical issues. they made some people very grumpy in terms of the quality and whatnot. it is not a slamdunk. >> it is not. it is early days. people aren't really used to watching sports this way. but we all kind of know it is the future. any timeline or anything on this in terms of getting this done? have to wrap this

whole process up pretty soon with the regional sports networks in general. this is one of the things they have to do. carol: certainly going to be fascinating. i love watching what is going on in terms of the content. thank you so much. he is managing editor for company news and the americas here at bloomberg news. we also want to get a check on the markets. because wech that are seeing a rally. right now it is time for a check on your first word news. this is bloomberg. uma: carol, thank you. i am uma pemmaraju. the fallout continues in egypt after a bomb exploded and strikes a bus filled with tourists. two people have been killed with another 12 injured. this is the first attack in

egypt targeting tourists in almost two years. all this happening at a time when the tourism industry has shown signs of recovery. some federal workers will begin to feel the pain of a partial u.s. government shutdown. the first reduced paychecks are going out to employees who worked on the first day of that or who began their furlough that day. if there is no resolution, all workers affected by the closure will miss their next paycheck on january 11. the mexican president is reacting cautiously to a threat by president trump to close the border. the president weeding today, we build a wall or close the southern border. obrador responding, we always seek a good relationship with the united states. the nation's oldest world war ii veteran has died.

richard overton was also believed to be the oldest living man in the united states. he had been hospitalized with pneumonia before being released on christmas eve. the texas governor calling him an american icon and a texas legend. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i moment, roger. this is bloomberg. oil has been on a roller coaster ride this week along with equities. for more insight and what is ahead, i want to bring in bloomberg's managing editor for commodities. we want to get to 2019, but we have to look at the quarter that was. if you come into my terminal here, it was a bad quarter. we are on pace for our worst quarter since 2014.

what were the key drivers? >> it has been a stunning turnaround. we had oil prices at a four-year high in october and then the bottom fell out of the market. as always happens with the oil market, it is a confluence of events. first was the u.s. offering waivers to the iran sanctions. everyone was expecting strong and stiff punishment. what they got was something less than that. there are a lot of concerns about what it would do to the price of oil. then you continue to see the equities weakness. we started to see brent and equities trading in this bad romance symbiotic relationship where one was pulling the other down. you've talked about the iran sanctions. that brings us to a broader discussion of supply. we do see some agreements about a supply cut.

is that enough? have we seen enough supply cuts? >> if you ask the opec members and russia, there's plenty of supply cuts. the russians have been very turbulencee extreme in the first few days of the week. saying everyone should calm down. this is just a year and selling. i think for the first half of the year it will be interesting to see what happens as a result of those cuts. this is agreement is six months long. they may go in before six months. as you are looking out for the rest of 2019, you need to look at the second half of the year. based on our reporting, we see a lot of issues that have clogged the permian. we see those issues start to ease off. that is when a lot more pipelines come on. it makes things a lot more

efficient. it could mean the price comes down. taylor: there are two sides to every equation. the other side is demand. there have been concerns about slowing global growth and emerging markets. how much of the equation also needs to be focused on the demand side? >> you've seen the oil majors and larger oil producing nations talk about demand, about the idea of peak demand. there's a lot of concerns certainly has a macroeconomic question, about what happens in china and india going forward. numbersen some of the from the automobile sales perspectives in china. then you have the dawning of the electric vehicle and whether that becomes a major player. exxon, are they ok at 45? >> the majors are always going

to be better off than the ones who are smaller. any kind of big vertically integrated company like exxon has a natural hedge. low, they can get more money out of refining. i wouldn't worry too much about exxon. we will see what happens in 2019 for them. taylor: that was bloomberg tina davis on all things oil. this is bloomberg. ♪

jason: you are listening to and watching "bloomberg businessweek ." i'm jason kelly alongside carol massar. what a week and what a day in the markets. i'm looking at my bloomberg terminal. a roller coaster of sorts. carol: we had a rally underway and we are pretty much holding onto our gains, but then it started to get after 2:00. we saw the equity markets pull

down. we are not seeing an incredible amount of selling, but we're not holding onto the gains we had earlier. jason: light volume, i should say. ofs penultimate trading day 2018. what a year it has been. michael sheldon, a friend of the show, joining us here. he made his way down to our new york city studios. great to see you. let's take a breath. what do we make of the market this week, and let's talk about the year. >> this week, along with the last few months, has been a whirlwind for the markets. the markets seemed to us very oversold. if you look at the technical oficators, the percent stocks trading below the moving average, the market seems like it was pushed to one side.

we were overdue for a rally. you also have seasonal effect and the possible santa claus rally. the market just seemed ready for some sort of bounce. carol: ready for some sort of bounce, but should it be bouncing even higher from where we are? >> the economy and the markets don't always move together. 2018 should have been a better year for the markets. you had 3% gdp growth. the economy was doing its part. the stock market ran into trouble. 2019, marketto psychology has changed dramatically. if you look at the performance of the markets, investors seem to be pricing in the likelihood of a recession. from our perspective, we look at economic indicators. we don't see a recession at this point. it looks like a fairly small chance. the economy and the markets are

based on things like sales, gdp, profits, so on. right now, most of those point to moderate gdp growth next year of maybe 2.5%. carol: why has the treasury market come in so much. earlier, sheoned is focusing on the shorter end of the yield curve. i look at a 10 year note. we are well below 3%. who do you believe? isn't the treasury market, the equity market? the bond market is sort of a different story than the stock market. there was a massive amount of treasury short futures recently. hedge funds were betting that interest rates would rise. as interest rates started to peak a little bit,

interest rates started to come down a little bit, some of those investors started to recover. that had something to do with it. oil prices are falling. copper prices are falling. inflationary expectations are also falling. then i think there's the expectation -- back in october, the fed said they were far from neutral. now they are starting to say they are closer to neutral. that has also had an impact. does the trade that we've seen in commodities prices, oil in particular -- is it an economic story? we are trying to figure it out. what does it tell you? is going to take time to figure that out. initially it seemed like an oversupply problem. the u.s. was putting sanctions against iran.

several countries were excluded from that. saudi arabia and russia announced they would cut about 1.3 million barrels per day. that should have helped support oil prices. i think some of the drop in oil prices -- part of it is the anxiety and uncertainty around the world. when does all that uncertainty actually become a reality, not just nervousness over the markets? there are something that are going to go wrong in the economy. we have seen earnings expectations and growth expectations reigned in. >> that is going to take some time. 2019, we arento unlikely to have a recession. the most important factors to watch are fed policy and trade wars with china. we are starting to have a little movement between the two sides.

more recently, china cut the rates of terrace for autos. announced they would accept a delegation from the united states. it is moving in the right direction. policy, that is really important. i think they are worried the fed is going to raise rates too much. inflationng is that in the economy is coming down. there's some signs of weakness in the economy. the fed can afford to take a break. assess what the economy looks like. if they can do that, we have a little positive movement on trade. we think that could put a floor under the market. jason: michael sheldon, executive director and chief

investment officer in westport, connecticut. thanks for making your way down to our studios in new york. want to take a look at what is happening in the markets and also take a peek at the most read stories on the bloomberg. one not surprisingly catching my ,ye, pimco piles into a bond paying the world's highest interest rate. click bait on the bloomberg. yes, i'm reading from the story. at one point, reached a staggering 74%. jason: 59% right now. that is one to watch. carol: 2.7 billion, pimco. they are definitely in. theory, $60 billion pension frenzy led to that big stock rebound. we are going to talk more about that with peggy collins.

going back to one of the things michael was talking about before, jay powell. carol: that is going to be a story. seems like the president has backed off a little bit. certainly something we are going to be watching in terms of what happens and whether or not there's more criticism. jason: we have backed off of the positive here in the u.s. markets. the nasdaq even turning down. we are to get into those numbers as we get closer and closer. just minutes away from the close. carol: we're up for the week on the s&p and the dow. we will have closing numbers for you in just a moment, and a look at the movers and shakers, and then we got holiday cocktails made easy. ♪ amazon prime video is now on xfinity x1.

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that's how xfinity makes tv... simple. easy. awesome. >> let's take a look at the markets. we are seconds before the

closing bell in new york. closelyluctuating between gains and losses. we will have to see how this settles out. it looks at the dow is closing in red. that's after two straight gain days. -- gain days. that's the story of the day. .08%.ut the tech center has continued to outperform, which is a key indicator that we may be at a bottom. that is when the confidence starts to come in when you see perform. let's take a look at where we are. somehow, we are managing in with the losses. over the last few days, and it has been a bumpy ride. christmas eve gotthard, and we

came back wednesday and thursday and were trying to claw out from gains. today has been a choppy session. that means there has been volatility. i want to walk you through what it has been like when we take a look at the vix. a 37,ruary, the vix had when the americans bottomed out originally for the year. it was a summer of low volatility and q4 happened. we are much higher on the vix, up to a 28 or so which is not bad. when we hit the 30 handle, that is when the markets get nervous. i want to take a look at in foil oil andation -- inflation. jay powell is giving a speech on january 4. oil is falling. our inflation outlook is falling as well. it has been a race to a bottom since october. terminal.ome into my

look and what this means for the fed. it means we might not see any more rate hikes in 2019. this is bloomberg. ♪ caroline: we are definitely caught up on markets. -- we're definitely caught up on markets. let's bring in mike regan. let's talk about the market overall because it has been such an interesting week. a lot of selling on monday, rally on wednesday and here we are finishing the mixed trade. we are up substantially for the week overall on the equity averages. mike: in the first weekly gain of the month. it has been an awful month. a little of a weak close. . i think this is a semblance of normalcy we are seeing again rather than these violent swings

up and down after pretty much stomach turning for anyone on the long or short term. jason: as you guys start to take stock, as it were, of the year there is one more trading day to go. we sent you often said come back with something smart. [laughter] tell us something smart about the markets. for 2018hink the theme is that cash has finally come a real asset class. and when i talk about cash, i think about the short end of the treasury market, which can be bought inoney -- money market mutual funds. afterre yielding 2.4% yielding almost nothing. you can see the 10 patient fund managers to say i could get 2.4% and sleep well at night, and i don't have to worry about it.

year-end when you want to detach yourself and write the year and the letter. a lot of people will sleep easy knowing they are getting 2.4%. i don't know how long that lasts. it's a compelling value perhaps. carol: as a fund manager, if we didn't have volatility in the markets, which you be playing it safe? would you do that because you can get paid for cash? ,ike: if the market was booming you would stay long and was for the best, but it's the volatility that makes that cash more attractive. when the one-month bill, three-month bill is yielding more than the dividend yield on it's valuable. talk to us about some names.

i think you identified four that have gone up. mike: i'm sick of talking about everything this month. jason: yes, let's get happy mike. mike: my favorite stocks to look at in volatility times -- everyone was mad at the flash boys, the high-frequency traders. one of them is a public company, financial, andue high volatility, high-volume is the best you can get for a stock like this. whenever there's a correction like this, every time i have looked, the stock is a mirror image of the s&p 500. since the market peaked in september, it's down about 15%. virtu is almost a mirror image. volatility is good for these guys. we all have to wait until earnings perceptions as well. if your trading a gazillion

times a day, even if you are only winning on a small amount of your trades, this is good. this is up 41%. it has been a volatile year all around. that volume especially, since the peak in september, about 8.3 billion shares of trading per day. that is almost 2 billion above the average. this gives you an idea of how frenzied the trading has been. jason: starbucks. mike: starbucks is an interesting story. jason: they're making a mark. -- him work. give us some names. rare stocks these higher than it was at the markets record in september.

it's a compelling growth story for starbucks. global sales of 3%. the stock is up 12% while the rest of the market has gone south. i'm thinking people are drinking more coffee with this volatility. jason: [laughter] trying to stay awake. carol: they need to rethink your their business model. they have been cutting back in some stores and open up a new megastore in new york. i think they have one outside of the u.s., and they are trying to refocus the business and maybe narrow down their focus to some extent. mike: it's a company that's pretty saturated in the market. we could use one in new jersey near my house, if they're listening. they are fine-tuning that business model and seeing where they can cut costs and boost margins. jason: one last name i wanted to mention, because we talked a lot about it. it was such a big deal. red hat. mike: that's one way to keep

your stock rising. red hat, great year for them, up 31% since september. up 40 some percent for the year. an anomaly with the takeover offer -- jason: it makes me wonder if we will are going to see more big m&a. cycle some late in the are often doing deals because it is the way to grow the company, make an acquisition if you will. out, general electric is your number one gainer in the s&p 500. to representative broughtat the year has and it is interesting. i think it is still down about 50% for the year. it's the number one gainer winding out the year. jason: he said with some of the

smartest people, former traders, journalists, they are all looking at this trying to make sense of its minute to minute. 2018, what's on the mood? aftera lot of caution this week. the general sense was that the selloff was exaggerated. it was a rational on the downside. likegood to see what looks , knock on wood, what could be a bottom. it's better to go out on a high note like this. jason: mike regan, always a high note with you. signature editor and lead blogger for the markets live blog. let's get a check on your headlines. >> jason, thank you. i have your bloomberg first word news. president trump will bring in the new year at the white house after canceling his new year's celebration at his private mar-a-lago state in palm beach. the president canceled a trip to

his christmas vacations in florida so he could be available for a possible meeting to resolve the crisis. japan says the south korean warship is launched its fire control radar onto a japanese warplane. the japanese defense ministry is releasing video footage that it says is proof of the alleged incident. it was recorded last friday in japan in the waters off of the northeast coast. minister sergey receives hoping to something from the u.s. after its upcoming withdrawal. lavrov is saying washington wants to shift the responsibility of fighting the islamic state to other partners who will remain on the ground. the world health organization's morning this week selection tie to protests in congo.

they hurt the positive efforts that has been underlying the fight against the ebola outbreak. cities in congo have been hit hard by the deadly virus. says health teams are unable to carry out critical fieldwork. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. pemmaraju, this is bloomberg. let's get more from taylor riggs. taylor: canadian marijuana redirect -- rejected an offer from green growth brand. the green growth brand ceo spoke to alix steel earlier today. ofthere has been a lot interesting combining businesses in this industry across the board. last february, with the recension, when the memo was

rescinded by the attorney general, canadian license producers were unable to acquire u.s. companies. there was a lot of interest in combining. companies across the border this is one way to do it. we think this is a great opportunity. decideely, we don't this, we are putting the idea out for shareholders. >> how much would you be willing to up your bid? >> i don't know yet. there's always an opportunity to negotiate. there are two numbers in consideration, the valuation of our stock and their stock. we will see over the coming weeks how those are considered. >> was the trigger for this? part of the reason why aphria was attractive because you had a report that they were two short-sellers saying it was a shell company which destroy the

equity price. how much of your bid was relation to that and the evaluation? >> i think that was an element. the overall contraction of the global markets in the last week, and the cannabis markets over the last teedo months, has made all cannabis stocks -- two months, has made all cannabis stocks attractive. while the entire canvas market dropped perhaps 30%, our stock has more than doubled. there was a nice gap between values and it was small enough that this was something we could do. >> how much shareholder support do you have right now? >> i can't say for sure. in a statement, we mentioned 10%. once the news gets out, we will find a for sure. it has been probably 12 hours, so i have not turn it updates from late. it goes hostile, what does

that mean for the integration of these two companies? >> the play here is not so much about the assets. it's about the talent embedded in each of these companies. taylor: that was the green growth brand ceo speaking with steel. i want you check in on how the markets closed. it was quite a volatile day. we ended up in the red on the dow and s&p. the dow was the worst performer off 3/10 of 1% after posting two days of good gains. most of the sectors are in the red. you had a few sectors in the s&p 500 in the green. a lot of those are the risky sectors. consumer discretionary, real estate, health care, financial. and the nasdaq as well. eking outut gains -- gains.

coming to my terminal, if there was bad news, this might be it. no new s&p 500 members have hit a 52 week high. on one hand, that could be bad news. on the other hand, and we are at this level a few years ago, that's was when the markets bottomed out. perhaps that's good news. from new york, this is bloomberg. ♪

jason: you're watching and listening to a special edition of bloomberg businessweek rock acid on bloomberg television and bloomberg radio. broadcasted on bloomberg television and bloomberg radio. carol has been meditating all afternoon. carol: what he is saying? believe in meditation big-time, and i feel like there has been a lot of research and worked on. what it does to help you focus,

what it does to help to deed stress yourself -- destress yourself. jason: we talk a lot about the world of fitness and wellness, and one of the most interesting intersections is when all of those efforts come together with science. chris is cofounder and chief technology officer of muse. he's here with us in our bloomberg studio in new york city. great to be with you. chris: likewise. jason: this is really cool. meditation is something so many people are interested in, you guys have taken into the next level on understanding how your brain is reacting and telling people. chris: absolutely. jason: how does this work? chris: it's simple. the brain is an electric organ. by putting sensors on a simple headband, we measure the brain's signals that your mind produces naturally. we can read it just from the surface of your skin. in some ways, it's like a sensitive voltmeter and picks up

the electric potential that your brain creates. jason: how did you come up with this? chris: i will give you the short version. i was working a lot and wearable computing and the precursor to augmented reality kind of thing. i was interested in how technology could be made more human centric. part of that was having brain centers understanding what state of mind you are in. imagine getting a phone call and you have a computer, could be your phone, and there's a decision to be made. sheila interrupt now or wait a moment because you are in the middle of something? tos is basic sensitivity what is happening and could be important if we don't want to live in a distracted -- continuously distracted way. carol: good luck with that. current environment, we live in a newsroom and there is constantly information and things coming in. we had to teach ourselves to focus on whatever we're dealing with at the moment.

the world is increasingly giving you things to be suspected -- distracted. chris: and it's hard if there is no sensitivity to what is really helping at times. carol: if it is monitoring your brain, if you're reading something, having an argument with someone, debating someone, having a general conversation, what kind of activity do we generally see? chris: that's a lot of things. carol: sorry. just curious about what pops up. chris: we think about the difference between the meditation state and the thinking states. about stepping out of the storytelling experience and into your celtic experience. we spent a lot of our days thinking. one of the reasons why meditation is so valuable, especially today, is we tend to get stuck everywhere we practice.

when we spend all of our time thinking, there's reasons why it creates a ton of stress for us. meditation is training your ability to step out of the thoughts, out of the story. it could be a cycle of thinking. and really step into a present moment experience like what is happening inside of you, around you, and it seems simple, but it's incredibly difficult to do it his all of the practice thinking yanks is back into the thought space. carol: i think about you coming off of television today, you did an hour, political show, and you took a moment to come to your desk. we had an hour before we came on. i felt like you took a moment where you were like, let me read a neck -- let me redirect. jason: i did it right in the middle of dinner. when i think about meditation, i also think about this idea that we have a little bit of a booming meditation industry.

especially tech enabled. i think about headspace, kong, and we could talk about all of the other apps. how do you figure into that and how are you taking advantage of the fact it feels like meditation is having a moment? chris: we go into it quite simply. in order to learn something sexually, it's important to have feedback. a you wanted to learn to ride bicycle, and didn't understand why you were falling over or losing your balance, it would be difficult to learn. the challenge you have with meditation training is that it is something hidden inside. it's difficult to critique what is happening. even though the instructions can be simple like let's focus on our breathing, the reality is that it is easy to slip from focusing on the sensation of your breathing to beginning to think about your breath. if you start to imagine the sensation of your breathing, that is thinking again.

it's so easy to fall into that trap. knows this because we are both into fitness. all yoga, and people of walks of industries and life have learned to use meditation to shelve things. that is an important skill to learn how to do. chris: the more we have going inside, the harder for it is to see that. carol: what about health care? we see the melding of health care technology, things like you are talking about and doing, so what are you hearing from the health care industry about what you're doing? chris: we are in a new era of health care. especially as it relates to how we use technology to provide something related to improving our health. as far as regulations are

concerned, we are in a transition zone. we are trying to regulate digital therapeutics. something that has a profound effect on your physiology, which is delivered through a game. carol: that would be interesting to watch. i think there is more and more work being done in this world. thank you so much for coming in here, chris aimone. he's the chief technology officer at muse. i'm carol massar with jason kelly. this is bloomberg. ♪

taylor: let's take a look at how markets closed, we had a volatile day. we closed in the red on the dow and s&p 500. the dow was the worst performer off 3/10 of 1%. again, but to get not quite getting it done. interestingly, some of the riskier sectors in the s&p 500 closed in the red like the discretionary, real estate, health care, and financials.

look at that having again for the third straight day. see some ofnt to those tech stocks trying to get to gain. an intraday chart of the s&p 500, we were higher around noon and higher into the close, but couldn't stay there. to my terminal, i want to talk about the wild swings we have been seeing. these are the up minus the down. today we were lower, but it has been very volatile since october. that's when we started to see the vix spike up. all of that is taking its toll on the market as we continue to see some of these violent swings in both directions. that was look at your markets. from new york, this is bloomberg.

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free shipping too. just go to buyleesa.com today. you need this bed. >> i'm uma pemmaraju with your business flash headlines. is giving the content chief officer a 50% salary hike in 2019. that moves him into the ranks of the highly -- hollywood highest paid movie moguls. he will get another $13.5 million in stock options. millionrgo will pay 575 to claim settlements overbank sales practices. they resolve the investigation on the lender practices from 2002 to 2017. bogusincludes opening

accounts, charging improper fees, and forcing insurance policies on auto lending customers. mark zuckerberg says the company has fundamentally altered its dna. and a post today, zuckerberg is noting the social media giant is focusing on preventing harm with all of its services. he causes his personal challenge to make sure people have control of their own information. he writes facebook spent billions of dollars on security each year and has 30,000 people working on safety. that's a quick a quick look at your business flash headlines. taylor: fewer americans signed november, and both higher mortgage rates and prices continue to squeeze would be buyers out of the market. for more, let's bring in the reporter on real estate. walk me through the numbers. it has been a series of weak housing data. acrosse was a decrease the country of about .7%.

there is this increase in inventory we see across the country. they could've gotten in these markets years ago, and now they are hitting all new macro environment filled with rising interest rates and things like that. taylor: i don't always love to politics into -- our conversation, but it is relevant. because of the government shutdown, we have had a delay of release of information. justina: yeah, yesterday, new home sales were supposed to come out. i have been talking with sources on another stories and they have told me we would like to get you november's data, but it's not out yet. taylor: a big conversation when we talk about real estate is always about rising rates. we were getting rising rates this year. next year seems to be in question. if you want to come into my terminal, we have a great chart

showing the negative correlation itween rates coming up and getting more expensive to borrow. that's when you see these home sales hitting a four your low. walking through the dynamics of when we can expect some of these rates ticking higher. we are at 4.5% now. justina: homeowners are getting into the market and deciding they are trying to buy, or just to rent. a lot of folks in the market are first time buyers. they have that advantage of maybe we will just were new the lease for another year or two and wait things out. taylor: we have to talk about amazon. they make their announcement into long island city. google is expanding into new york. how's that affecting new york? justina: a lot of folks have been watching where the migration will happen. rose a bit.have incomehe question of developing its footprint and

what will happen. taylor: i know we were so eagle to learn about where amazon was moving its headquarters because it does affect all things markets. york, this is bloomberg. jason: and you are watching and listening to bloomberg businessweek here in our new york studios. i'm alongside my partner carol massar. we're getting to the end of the week. almost the end of the year, so it's that time were rethink what happened this year. carol: just a few things. jason: a lot happened in the world of investing. a lot of times, we catch up with eddie collins to leaves all of our investing coverage in the u.s. and all of the big stories go through her. great to see you. peggy: great to see you to give -- great to see a too. tables is league

something every investment banker and wall street executive watches closely. goldman winning. peggy: in some ways, they have been ramping up and really trying to do a couple of things. court private equity firms, but be open to smaller deals. there is information saying some of the smaller deals are coming for two reasons. it's the bigger deals you are all chasing for and they fall apart. the family office world and the smaller pe terms have been doing more deals. there's this trend of direct deals taking off. the banks, including goldman, are realizing the -- there are different types of investors at their. carol: we talk to brian moynihan and he stressed focusing for

them on their firm to focus on some of the midmarket deals. there is so much to be done. don't often talk about it in the headlines, but we talk about the victim and they tilt up there. there is so much going on in the middle market space. peggy: that's right. one of the things to cover the , onehire hathaway meetings of the things you see in the western states like nebraska and omaha is that there are times of businesses, family-owned operations, manufacturing companies built over decades, and their founders are aging out, but they are profitable businesses. there are people scooping them up carol:. not just buffett. carol:it seems like a nexus strategy. they have to think about it. peggy: there are people scooping them up. not just buffett. it seems like an exit

strategy. they have to think about it. i get it. if you do a lot of deals, you bring in a lot for the firm. i think about somebody who wants to do deals, where they look at the table and say goldman, morgan, they are at the top. i will work with jpmorgan. does it make a difference and never guard? jason: that's a good one. carol: thank you very much. [laughter] does someone say goldman is at the top and i want to work with them when i look to do the deal? peggy: it matters to competitors, but it matters in terms of -- we have seen a finance overall in size and scale mattering more in terms of the deals you can offer people. say we are the biggest game in town and we can offer price.offer you the best look at these you

tables, some of the boutiques are creaking in their -- creeping in there. notable for who is not there, deutsche bank. carol: two shows nightly. jason: what do we make of these boutiques having a big say in all of these -- this in 2018? peggy: it's one of those things that private equity and m&a has picked up in 2018. were expecting a good 2019 for even bigger deals. i think people are trying to find places where they can make money. if you look at the asset management industry, the fees are going to the floor in terms of the ecfs and passive funds. people are looking to charge more for using it for revenue, and m&a is one of them. carol: i find it fascinating

that the family offices looking companies,ved, by and do those investments, they like returns i guess. -- they likee like the income that kicks off of that. a lot of people want to hold this longer. and behold thes businesses for 10 years, then you have to sell them. we like you so much that we will ask you to stick around. we will wrap up this day and this week and talk about cocktails, prepackaged cocktails. something to think about when it comes to the new year's. i said the only reason i'm here is for this next segment. here's headlines. pemmaraju with your bloomberg first word news. at the momentsays there are no actual negotiations underway to end the government shutdown. at theg to reporters

white house, he indicated he does not expect talks resume until democrats take control of the house on january 3. >> the smithsonian for example has been open all week. it will be closed after a new year's shutdown. it looks different under a republican administration. we will not be weaponizing the shutdown like the previous administration does. adds there is a consensus that everyone agrees the u.s. needs a steel barrier along the southern border. as the shutdown continues, it's more lights out for offices -- government offices. everything from the mi or mental protection agency -- environmental protection agency to the smithsonian. the smithsonian is saying unless the shutdown and's, all search centers and the beloved national zoo will be closed beginning january 2.

the federal communications commission is saying after january 2 it will no longer be able to accept consumer complaints. the german government is in talks with various countries to improve the transparency of [indiscernible] the effort is intended to prevent the funding of extremist facilities. a government spokesman said they .re cooperating with kuwait in indonesia, bad weather and a massive ash column are hampering efforts to assess whether a volcanic eruption could trigger another tsunami. disaster agency says more than 420 five people died in last weekend's tsunami. more than 40,000 others have been displaced. the search for victims continues. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am uma pemmaraju. this is bloomberg.

taylor: thanks, uma. it's been a volatile ride for the financial markets this year. november -- is not the dot-com bubble burst of 2000, it's not what i first came to the u.s.. i was coming out of graduate school in 1987. this is a market correction we are going through. this is well within our wheelhouse of what we can handle. >> is it a healthy shakeout, this correction, contraction of multiples in the broader market and what we have seen happen in tech stocks in the last few days? >> if you step back from what is going on, we are in a tightening process around the world by the u.s.. three and forming rate increases probably this year. that has consequences.

the ability of the monetary authority giving shrinking balance sheets gives them limitations of what they can do, and we have political turmoil. it's not surprising that the markets have been anxious. stocks, a credible -- an incredible run-up in valuation. it's not surprising some of it is being taken off of the table. >> the debate is reflected in the volatility we see over a number of the things you just itemized. the sustainability of u.s. growth for example, rate increases, and the magnitude of rate increases, the implications of the standoff that the administration is undertaking with china for example. arounde any consistency that debate? as far as what you hear from clients? i think the most important

thing to take away is that there is a lot going on. every morning you get up and there is a strong news flow from overnight. you're brexit, political risks, protectionism, anti-immigration. >> it's a much longer list. >> before you get to china and what is going on in the middle east and the sanctions in russia, and the war in syria, before you get to north korea and others, it's a lot for investors. when investors are confronted with that against the backdrop ofthe one hand of one hand -- on the one hand with corporate credit [indiscernible] clearly issues around triple the credit. it's not surprising. this is what markets do in the deal with uncertainty. they get action.

in the short-term, they get it very wrong, and in the long-term, the market is always right. taylor: that was an exclusive interview with the morgan stanley ceo in november. let's get a final check on how markets have closed. the nasdaq in tech stocks finally managing to get again. very0-year is down to a key 271. we are off about four basis points. this is bloomberg. ♪

carol: after the turbulence of this week, it was a crazy week. we thought this was the way to wrap up on this friday. we want to talk about cocktails. new year's is just around the corner. jason: it's always timely. carol: it is always timely. let's welcome the director of spirits mythology.

mixology. tell us about what you are going to do for us and talk to us about cocktails around the holiday season. i have the hustle and bustle of something that might be fun, worthwhile, and easy for people cocktails.tched you could put a bottle in the refrigerator lasting a month. imagine coming home and you don't have to make everything from scratch the way you do when you see a bartender make it at a fancy cocktail bar. you can have a prevents cocktail a gift ofrigerator or your own badge cocktail that you offer. they are easy to do and fun. specificd you have ones? >> i thought i would serve some cocktails.

brooklandistillery in and this first cocktail is gin-based. called dorothy parker gin. carol: what a great name. swanky.as have age in convenient to you or that you love. a little orange look your and sweet loose --sweet vermouth. jason: this was amazing by the way. >> and you can play with ratios. carol: that's simple to make. when somebody is making a mixed drink, there are too many parts. it gets too complicated. >> there's one key to best cocktails that you can store. and i will pass this your way. all the drinks that we are making today --

carol: you garnished with an olive? >> this is a red cherry. it gives a round sweetness to the drink. the studio, our new multimedia studio, we are taking care of it, but don't light a match. this is pretty heavenly. >> it's easy. the key is, i ported out, and it took minutes to make. great flasks or glassware. carol: what is it that is so yummy? >> the vermouth would add velvety to the cocktail -- velvetieness to the cocktail. carol: i was saying that my mom used to love them and got sick of them and a stopped drinking them. jason: i love me a manhattan. a manhattan at the oyster bar is a quintessential new york

experience. our colleague, kevin cirilli, just send me and i am saying can i call in? colin and we will send you drinks down in washington. you need them in washington. carol: this one is called the midnight manhattan. >> these are all new year's eve themed. the next is midnight manhattan. manhattan variation. i put a whisk of orange peel over the top. you can garnish however you prefer. cherry, a brandy cherry, i like the aromatic of citrus. it's like a goof. it's like aromatherapy and it puts you at ease for a cocktail that is honestly pretty boozy. our variation is ragtime ride whiskey with-- rie sweet vermouth and a little demerara sugar.

that's the way to take the roundness of a cocktail and explore different types of sugars. they all impart different flavors, and often different textures as well. jason: that tastes so good. carol: what is the sugar used? >> i use demerara sugar. the sugar we are most used with -- used to is refined sugar. sugarsyou think about definitely changing in terms of even baking. there's a variety of sugars you can play with. allen: there are pineapple sugars, mint sugars, and they all have different flavors. i like demerol or sugar as it has a long elasticity and sugar as itemerara has a long elasticity and velvety consistent miss --consistency. this finally is midnight run.

carol: this is why i got my economics degree. [laughter] allen: me too. carol: everyone has a markets story. allen: this is why i got an english degree. i'm not quite seeing it. [laughter] is one of my favorites. a little more complexity. this is what we call a split based cocktail. something trendy. we're using two different types of spirits. ragtime rie and an infused aged rum. we're using authentic grenadine if you have time to take a little sample of my homemade grenadine. i say with every ounce of

politeness, there's one product i don't like to use, artificial grenadine. it's made from pomegranate juice. grenadine should have a flavor of pomegranate. is homemade grenadine they give start sweetness, not just sugary sweetness to the drink. jason: where can we get these things or do we need to make them ourselves? allen: you can make the drinks yourselves. if you need ingredients, obviously i make these products in new york, but find what is best in your store. i'm having a dinner party for new year's eve. instead of making cocktails, i will have two bottles of batched cocktails in the refrigerator. carol: tell the kids not to touch the bottles. just saying. can i ask you, peggy, your favorite? >> i think i like the midnight manhattan. jason: i'm with peggy. it's an investment team thing.

carol: i'm enjoying a buffet of drinks. thank you so much. you made our day and week. good luck and happy new year. allen: happy new year to you all. >> it shows you can be creative. jason: i'm envisioning a spring cocktail segment. carol: i'm envisioning a weekly cocktail segments. allen, thank you so much. cofounder of the new york to stilling company. he made a batch of what today? allen: i've been drinking manhattan since lunchtime. [laughter] carol: a pleasure. peggy collins, thank you so much for getting us there so many of the stories here on the bloomberg. what a week, jason kelly. jason: we will be back here on monday on tv and radio. join us for the last trading day of the year.

carol: it has been an interesting week and we will take you through the last day of 2018. this is bloomberg. ♪

>> i'm selina wang in san francisco in for emily wang. hour, up in the next after a tumultuous year, tesla named two new board members to keep elon musk in check. will it work? plus, the future of social credit. and. looking back to the biggest