limited at companies like exxon and bp that have a bigger ability to dial back that capex.ariety of reasons, we think that there is an ability right now for somebody like and bp to look to their -- like a bp and exxon to hold on to their dividend. betty: it has been more than 12 months. let's see how much longer, how much longer are we talking? sarah: i think people were expecting a v-shaped recovery. in,le thought the worst was i think right now, the question is how much longer are we going to see an oversight i was demand going to look like. betty: get you just do the math? sarah: you can, but the matthew exchanging. -- but the math just keeps changing. onshore production has not come down much because the efficiencies have been much better than rate drops so you have onshore production that is down only a half million barrels in the u.s. i think you will start to see that market bounce, but you are looking at a supply of 95.9 leanne barrels a day -- 95.9 million barrels a day. betty: it looks like it is pushing it toward the end of the year. sarah: if you see it's faster

capex would be very low.at level, dividends must he in question. 45, we can see a place where if overcreases by 5, 10 bucks the next couple years, you can start to see them coping. potentially could see the dividend being kept, if they choose to be stringent on capex. and it's not a panic situation. guy: have you been surprised that the sell off in high-yield energy and europe has mirrored what has happened in the united states? are they comparable. >> they are not in some ways but they are in others. the question is about liquidity. the smaller players have a limited number of projects. a greate, -- discovery at the time. they are using proceeds from the jubilee field to find a second irrelevant called 10 development. it is a one-shot plan. if you do not have the proceeds from the first of element to fund the second, you suddenly have to take a lot more borrowing out. and that, it's a sort of fundamental change that can hit credit profiles. 65 last year, so they are protected. they always have masses of liqu

they are spending more than a long time on capex. investors have been asking for a long time -- bank of america does a survey about how they want companies to use cash. to a long time, they wanted prop up share prices and do buybacks. there's or april 2015, a distinct shift where they said we want companies to put money into. i think that is a big deal. alix: thank you very much. china hopes to set the record straight in dominoes. talked to the vice president about a possible valuation of the yuan. alix: bill gates, were in buffett and jeff bezos have made a combined $20 billion so far in 2016. -- lost a combined $20 billion so far in 2016. alix: coming up, john kasich joins "with all due respect" at 5:00 eastern time. let's get to mark crumpton with first word news this afternoon. police say a suicide car bomber rammed the gates of a restaurant near a beach in a capital of mogadishu. gunman then fought their way into the building. early reports indicate three people were killed. the attackers may have taken hostages inside the resta

buybacks are close to their peak, while capex is 20, 20 5% higher than the last peak.f you look at dividends, 70% higher than the last peak. buybacks are catching up. you could make the argument buybacks, relative to the others -- alix: you take a look at some companies that have specifically issued debt to fund buybacks, like apple and the biogenic, you can see that the stock sold off after the announcement. you see what happens to the start -- in particular, biogenic, that blue line. investors don't want the association. binky: two or three points we make. it is important to remember we are talking about the equity market and the equity markets tended to price things in quickly. by back announcements on average are associated with outperformance and that is a very quick outperformance. and then there is a separation where overtime there is a whole set of firms that will basically get a associated with the buybacks. you mentioned some companies .hat are high-growth companies not necessarily associated with outperformance of the buybacks. alix: great stuff. such a plea

. >> we think there is a pent-up capex need. manus: from tech or generally?a lot of the computers are getting old. they have held back on suspending. capex spending. factoriesking about and machinery. it cannot be held back much longer. manus: that doesn't necessarily translate into jobs. you can create uber with a fleet of people on contracts with no huge industrial base. to theot translated traditional model. that is why we think we are in groundhog day. >> but you get more productivity by investing in technology. caroline: they are spending up to or .5 billion dollars, into ai and virtual reality. waves of people within their offices. buying actual hardware, it is people looking at the future and what for jewel reality can contribute. their spending is phenomenal. the next billion people in india and asia, getting on the internet. argument. the same when computers ended up on desks, we were worried people be put out of jobs. the same thing will happen here. new jobs will be created. anna: thank you very much. the latest on facebook. up next, deutsche bank.

you probably need $60 to meet the dividends and capex.panies are still not going to grow because they cut capex? >> the ceo of chevron told us three or four weeks ago in an interview in california, i sat down and looked him in the eye. he said never going to cut the dividend. do you think there will be companies that do? >> i think this year you've got a chance of some companies cutting the dividend. i think what you're going to see is that companies are going to try to struggle through 2016 with the use of the balance sheet. so increasing debt this year, increasing disposal this is year. clearly if, you get oil prices staying at 30, $40 per barrel, the dividends are unsustainable. any ceo that cuts the dividend is likely to be out of a job. >> yeah. there you go. a tough world right there. thank you very much. appreciate it. >> all right. let's get to seema for a market flash. >> we're tracking the selloff all three major averages are now at session lows. this as oil prices continue to dip lower. i want to focus on the oil services names

happened with today with saudi arabia saying they thisnot hold back on capex year, and china saying dieselour-month low, we are seeing a downtick now. s&p now down about 7% year to date. health sector the using the imap function. eight out of 10 sectors are now in the red. earlier it was just telecommunications. really no surprise, energy is the biggest laggard down, down by 2.75%. financials also done 1%. taking a look at energy stocks, the oil majors, crude oil is down near session lows, down by 4.8%. as i mentioned about saudi arabia, when word came out about that maintenance of capex spending, we definitely saw that plunge in the oil price. looking at the oil majors right now, we are seeing they are down or the most part, the most since wednesday, chesapeake energy down the most by 9.5%. those obviously also leverage natural gas, which is down. gold is back as a safe haven? gold as you would expect, and u.s. treasuries are seeing an uptick. gold up by 1% now. taking a look at the u.s. 10-year, the yield is falling 1.5%, now down to about 2.2%. scarlet: thank you. alix: let's get a chec

at a big manufacturer yesterday and we heard that this is was up and she would be spending more on capex. scarlet: what is the trucking market telling you about the consumer? a good portion of your business is related to the consumer economy. bradley: the consumer and retail is healthy. in our last mile division, we are the largest logistic providers or heavy goods going into people's homes, delivering refrigerators, stoves, home appliances, electronics. business is booming. where there are pockets of good strength in the economy -- everything is related to e-commerce or technology. you had $6.5 billion worth of deals last year, you scaled up pretty quickly. what are the expansion plans for 2016? bradley: roughly a billion dollars of organic growth. the focus is very internal, focusing on growing these 35,000 customers that we have great relationships with, serving them better, cross-selling all the different services that we have leading positions in. next year, we will think about coming back to acquisitions, but this year is really organic. scarlet: talk about the driver shortage we s

the amount of companies including oil companies which have been paying dividends have not cut capex as much as they could have are all basing a lot of their bets on $60 oil. if we stay lower for longer, that will change the shape of the industry, change the shape of credit. francine: is there also a concern that we are putting so little investment now at these levels that then the price shoots up in six, seven, maybe eight months to $60 or $70. that chokes the recovery. antonin: we are calling for a weaker first half and a stronger second half. $60 or $70, back to like the movies, we are not talking about 100%. can oil re-stabilized to 45 because the positioning is so short? yes. do we think that above 50 -- yes, as well. thank you so much to he stays with us and we will talk more about his main concerns for the next 12 months and how he plays it on the markets. stay with "the pulse," plenty co obamap, including campaigns for his legacy. we break down his state of the union. oil touches 30 before rebounding. and we discuss what is next for crude and what the former neco ceo. some pictu

it may help manufacturing, manufacturing capex. jeremy, good to see you. happy new year to you, jeremy. at european stocks. we are roughly 15 minutes away from the end of the first trading day of the new year and headed to what could be the worst ever first day of the year for european equities. the dax is down by 4.5%. it has not fallen that much since the end of august. that was when china devalued the yuan. it's all about china today. ♪ mark: "bloomberg markets welcome back to -- welcome back to "bloomberg markets" live from london, the euro being close. betty, we are seeing red right across our screens, art we? crude selling off at a clip. now it's is time for the biggest business stores. manufacturing took a big hit, selling off at the fastest pace in six years. by stronging hurt growth around the world. meanwhile, spending on construction unexpectedly fell in the u.s. private residential building was up, but public construction more than offset that game, falling more than 1%. and the 51-year-old chairwoman of dreyfus commodities is pregnant with twi

stronger and people are spending more money and consumers are spending more money and there is more capex and earnings will be better so i thought a rising interest rate environment is good for the market. if you look at 2004-2000 six when they raised rates, the market was going up so it's not necessarily a bad thing. >> what have you got to say about that? >> that's a great example. we have had zero interest rate policy since 2008. it's 2016 so you are talking about missing their opportunity to tighten in 2014. the economic data has peaked in the earnings have rolled over. dollar is in part of this equation can betty: how would they have miss their tightening cycle if inflation is still low? had consumert pricey flirtation -- consumer price inflation. we have had as set inflation. the fed kept trying to put more liquidity in the system. they kept doing the same thing over and over again expecting different results. they did not get that. betty: that's the definition of insanity. expected a different result and did not get up but we will have inflation this year. the losses over the past

talking just before about the fact that, in my view, the high cost of oil producers have cut all the capexbut they need to start reducing their existing supply, pulling guys off oil rigs, shutting down the big machinery in the tar sands, etc. i personally haven't seen that yet, and that would be something that would be the final leg. francine: this is often political. you have a fight to gain market share, opec trying to gain market share from shell, but the saudi-iran standoff too. david: that is the one to focus on. it's a happy coincidence for the fed, but if you look at their real targets, a could be argued that the deep offshore stuff, now iran, at the forefront of their mind. there is a lot of geopolitics going on, and to some extent that will trump any economic decisions about production. david: at least the iranians will bring their production online. that's a big uncertainty. throughout these negotiations, they are standing there saying -- we will do whatever we want. nobody you how much that was. -- nobody knew how much that was. you've got the iranians coming in, but that doesn'

capex orders are down 6% from the peak a year ago. freight volume is down 7%. exports are down 12%.nventories to sales are adding october -- >> are you suggesting we are going to, for the first time in history, import a recession? >> i don't know. imported, we are in a flat global commitment everything is interrelated. we are now in a huge deflation as a result of this massive credit bubble we had. let me give two numbers i think are really important. central banks had $2 trillion on balance sheets about two decades ago. it's $21 trillion now. not chump change. this caused an enormous expansion of credit and financial valuation bubble. secondly, that resulted in debt in the world going from $40 trillion mid '90s to $225 trillion today. we are at peak debt. there is no more credit that can be shoved into the system. there has been massive overshechlt in everything, mining, energy, heavy industry, transportation. you name it. ship building. >> how long have you been negative? what's the point of reference? can the equity markets, because we've known a lot of these things in the past,

can capex cuts be enough to cover its dividend? it's going to be huge.eryone will be a credit analyst tomorrow. something i will be looking at tomorrow -- q4 u.s. gdp is out at 8:30 p.m. numbers from that came way down in terms of expectations. -- i meant a.m. a cold 30 a.m. jpmorgan says it could be a zero, after that horrible business number people are talking about could we have negative growth in qf4. everyone will be picking that apart. scarlet: and the bank of japan makes its policy decision. haruhiko kuroda will be speaking to the public at 1:30 p.m. he has a history of surprising the markets. but analysts expect using, they do not expect to be move tomorrow. alix: and the question is what they will say about things like oil prices, inflation, the slowdown -- that will be interesting. that's all for "what'd you miss?" ♪ john: i'm john heilemann. mark: and i'm mark halperin. and with all due respect there is a new sweater in town. hello again from our bloomberg politics studio. four days until the iowa caucuses. and there is a new early state pull

that is on margins and capex and trading higher today with a tune of 3.5%. ocado has been sold so heavily because of concerns about increasing competition. from amazon so maybe that's a bounce back after the heavy losses. >> you also have to wonder at what point do they start to see the gains from lower commodity prices too. but good news today. >> shell is edging closer to a $51 billion to deal to buy bg group after sources at the dutch oil giant told the financial times investors are ready to back the merger. shell also ran successful stress tests that the deal would prove profitable even with a average crude price of $50 barrel for the next two years. we have seen royal dutch shell come out several times trying to reassure investors they can with stand the crude prices. executives stepping up their discussions trying to prove to them that they can sustain even at $50 barrel. but you have to wonder with crude getting closer to $30 barrel how long this position holds and whether or not investor who is are set to vote at the end of the month whether they'll

that being at&t for example and capex in their network and you're not talking about going free cash flowive any time soon. yesterday on the call you wouldn't answer when that date will be so how can people be confident that you will actually continue on the path you're describing? >> first and foremost, we had $6 billion in liquidity at the end of the quarter including $2.2 billion in cash. we have a new instrument that we did our first one that generated $1.1 billion and now we're going to do it on a monthly or quarterly basis. we're establishing a network. 3 to $5 billion. so if you add all that we have sufficient money to pay all the bonds that are coming due in the next 24 months. so we feel very good about our liquidity. as it relates to investing we're making the right investment as you can see by the chart and everything published our network is performing at best levels ever. we have more awards in the history of sprint. it's faster than at&t and verizon and t-mobile and we have a lot more spectrum so as we den densify our network you'll see something others will not have. the be

another way to say it is you build the building with capex and heat it and cool it the with the opex.o coffee, gasoline, kerosene for jet fuel, there are commodities that have a positive output but they have to be focused on the consumer in china not the manufacturing sector. >> one last question to return to oil which is the eye of the storm for many people. at no point have you mentioned the saudis in this, very often the conversation with analysts resolves around when do the saudis cave. you have not mentioned that. is that bhau it's necause it isy to happen? >> one of the new tenants of the new oil order going back to last october, october two years ago, is they'll changed the competitive landscape of the market so you cannot operate a cartel anymore. so the strategy that opec pursued was being forced upon them by the new market that shale creates. the fast cycle nature of shale means they can bring production on if prices pop back up. opec is base load production. shale oil is the marginal production that balances the market. >> the view was the saudis would pump more and more an

commodity where is the supply is so overwhelming because of cheap material being found in the surge of capexst decade. we don't think it will go up any time soon and i mean not in the rest of the decade but for the other industrial metals the supply demand balances are fragile. they have not seen the overwhelming supply response. >> there is a prevailing view that at some point during the middle of the year and the end of the year people are going to wake up and realize the supply and demand economics don't workout and oil prices will rise again. what's going to cause that. >> usually m&a activity is the best indicator that the market has bottomed. we actually expect there is a big surge in m&a activity on the oil side of the business. we have high yield companies coming off their hedges in the u.s. we have another government look at predetermining the basis of reserve base lending and we have companies with a lot of cash ready to poise and buy. >> do you have names of good targets. >> i'm not allowed to do that. >> thank you for joining us this morning on a friday. we'll hear more of your o

. >> how about some of the current trends like dividend or capex trends as well? as i understand they're moving more toward digital. >> absolutely. what is important is not only about emotions and sentiment but also about numbers. the luxury industry is extremely sound financially so the financial me tricks are extremely good. many companies are net cash and no debt and the pay out ratio is between 30 and 50% which is quite low. the dividend yield creeped up to above 2% which is not a lot but comparing that we are in zero interest rate environment, that is a welcome thing. you get paid while you wait. we had short-term head winds. we had a very sad event in paris. probably a bit of an impact on certain companies. probably also in line and was actually not a bad number and going more into digital. >> thank you. >> good to talk to you. thank you. >> following the broader market lower despite reporting a 48% jump. they're now focussing on rail equipment after selling it's energy unit to ge next year. they're slashing jobs in the next year. last may ge said it planned

shell cut back on a lot of capex. that needs to happen here to a greater extent than it has.ntil then we don't know what chevron is doing. >> start seeing flow from the energy sector. >> can't buy these stocks. >> the dividend may be safe today. the dividend might not be safe three or four weeks from now if oil goes back even lower and sticks around in the 20s. >> what if you can earn a 3% dividend from a company that's actually growing revenue and you can and those are the stocks that are working in this market. why would you be fighting for a 5% dividend. >> i'll give you a bigger one. bhp. they got 11% yield. that's crazy. >> that may be a story going forward. they have been hanging on to them and it's not a good thing like that. and when it's time to buy assets buy them. it does depend on where oil grows. there are a lot of stocks in the energy space. they have been talking about the dividends. bp comes to mind. >> give me your best name in the space. >> a refiner. a refiner and pipeline like marathon petroleum or kinder morgan. i don't want to be tied to which way oil is

it was positive and above 50 and better than we saw before but they did suggest that spending capex andnergy were going to start eating away. was that something we need to start worrying about? >> it can be a problem. the number we got from the fed yesterday was a disaster but that is indicative of problems in the fracking area and the petrol system so i think we're here. there's an outside chance that you may be seeing a real reversal in oil. we'll give it a couple of more days and if that's the case then we may get a rally from our oversold conditions. that could take us into february and see where we go from there. >> this is a political season that we're entering into. looking at iowa, looking at new hampshire. anything investors should be thinking about and how that tends to effect the markets or not in a year like this? >> what you're seeing here is in the early stages, things like drug pricing and major areas that could come under on a full sense of how any of the candidates would handle the entire economy i don't think they have given us enough quite yet. so i would watch item b

some analysts say they hold their buy rating because for one sake shell maintained it's guidance on capex plans and key here for the dividend. but a lot of uncertainty as we get closer to the voet coming up at the end of the month. shell hopes to complete that mega merger in the coming weeks. so a lot of anticipation. shell and bg both in the red. and decide whether they can justify the purchase price they pay for bg. the critical question is have they now stripped out enough cost. for all the $200 billion in capacity cuts in the last year i read that the 75 biggest oil companies are still going to spend $650 billion annually locating and extracting fossil fuels. does that make sense in the new world where the saudis are not the balance in the oil pricing? it's going to trade like a commodity rather than a monopoly oil price. it's a question we'll be asking here certainly and i'll be posing the question to the ceo as well coming up on the show. >> all right. we look forward to that. still coming up here on street signs, hit music maker william also joining us live right after this short b

citi came out with a note saying it's missing $4.5 billion from its capex targets for 2016 if it wants to pay out a stable dividend. this might be the big story. maybe it's not just many of the miners like bhp but also the likes of shale. they haven't cut their dividend in 40 years. >> but many are saying they're going to continue with the dividend pay out or will be t last thing they will cut if they can get away with it and you have to wonder, are they just going to be squeezed out now? given the price of oil? because suddenly also it's an issue of whether it becomes cheaper for them to be able to import oil from africa or whatever that they import at really cheap prices as opposed to producing at home themselves. >> and you would think that defaults would continue to rise. we've seen some of them but the big wave maybe that's the big story. >> that's it for the show. >> yeah come back in and visit us after you become two. after you morph. so carolyn thank you for this week and we'll see you in a couple of months then. >> yeah. >> that's it for the show as carolyn says. >> worldwide

. >> capex, dividends, and projects.ere do they see oil going. >> microsoft on thursday. >> i think that's going to be okay. i think the trajectory for microsoft continues to move higher. they have done a phenomenal job transitioning the story away from what they were into more of a cloud software type of -- >> the next ten points higher or lower for microsoft? >> higher. >> i don't have a position in the stock, so i'll punt on that. can i bring up one name, though, i think you skipped over? >> yeah. >> big mac row naro name, boein. if you see good orders -- >> didn't we get a look into boeing late last week? >> 747 news? >> yeah, cargo driven story. >> but the problem with -- it is not just a pure cargo. it is more a comparative thing about the 747 versus the 777 which is also -- has a freight aversion selling very nicely. so that's more specific to the 747, but, you know, there is always concern about emerging market. that's where growth from boeing comes from. any guidance they give is key. >> how about this one, amer

capex cuts about 15% this year in europe are really going to hurt the big oil companies. listen. >> we remain on the same level as last year. cuts between 15% and 20%. that is going to affect deeply our future. long-term cycle, the production, if you want to -- of course you have to cut. that is what is industry is doing. ryan: it is not just about iran.g into it is about buying iranian crude. it is what they are discussing with the iranians. the greeks got in on the act last week. obviously the italians looking to follow suit. manus: iran is looking to re-enter the national market. the fellow oil rich nation, libya, they are slipping away. ryan: that is right, ma us in. people surprised, surprising everyone by establishing peace and producing than they are now. i was speaking with the head of their national oil company. they are on the verge of becoming a failed state. they lost 60 billion he reckons o their civil war and they are going after infrastructure and exploiting the differences between the two sides in the civil war in the west and the east. have a listen. redu

amount of money we are spending all of a sudden -- 75% in drilling, capex in this nation that is a huge it was everybody cut back, and, also, become very, very efficient in operations, and we have seen that continental every company very, very fetch with are operations drilling operations n anyway a huge change companies know what to do to ride it out we are speeg display and demand correct faster declines with horizontal wells than anybody predicted these two supply and demand are coming back together but the saudis put a 1.8 million baerldz of new oil out last year, the end of 2014. and so that is what we've been fighting against is about two million barrel oversupply in the country, and -- the world. but that is only 2%. so that is fast correcting as we go forward now. >> saw theedize the saudis in p to run shale out of business make a point in the market hang on to market share now that that process is working through and as you point out, a l a lot of rigs taken off line decline in production hit the market, what happens to prices now over the next year over the next two years over

when you go from a capex economy, building infrastructure, to an economy where you have consumers drive your economy, that is a long transition. affectnot monitor or consumer discretionary spending. you can't affect it the way you can affect government spending. this transition is difficult. on the specific question of china's economy and whether it's a market-based economy, clearly this is a question that the market is dealing with. there have been signs that china wants to have an open, free economy, an open, free marketplace. guy: european markets are just opening. we will be back to the panel in davos. first, let's get the open with caroline hyde. caroline: we are about five seconds away. we just can't catch a break. risk aversion once again crawling into the market. we saw asia moved from green to the red. wiped off 11%y from the european stoxx 600 so far this year. more than one trillion euros. we are looking a little more optimistic than futures are singling. cac 40 just trying to claw back from those losses we saw yesterday. clearly, we're also at the back and call up what is ha

francine: when will telecom capex spending come back? in accounts for about 25% of your sales. business in north america is a piece of that, but we sell services and buildings as well. while we have seen in the last three quarters is the devastation in north america, when 4g was covering u.s. soil. now it is much more inter-capacity, which means more software. there's more stabilization and it will grow. tom: 30 seconds. is jeff bezos your friend or your enemy? think all clouds in the future will be connected to our networks. i think that all cloud computing will build a network that will be programmable with all clouds in order to give superior services to consumers. i think any cloud will be extremely important. tom: you can come out anytime. i love how you don't have any talking points. hans vestberg is a ceo talks to us. thank you so much. coming up later today, a special edition of bloomberg "markets." stay with us from london and new york. ♪ ♪ bend me shape me, any way you want me as long as you love me, it's alright bend me shape me, any way you want me you've got the po

oil could go up just on our own capex coming down. you need the saudis to blink.firm the russian story. i would rather hear it from the saudis than the russians who need oil up. saudis have been very closed mouth. american electrical company and rick hamada. they don't do cell phone. they do everything else. they are a great read on the economy. we need more on the economy from technology. auto is down a little bit. is that peak? aircraft engine? it's exciting time. >> we got through a lot today. see you tonight. it was good working with you. when we come back, rbc on facebook. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ >>> good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber. simon hobbs is off today. a lot of things working for the moment, whether it's facebook results, oil higher on rumors about an opec meeting, even caterpillar guidance has the dow up 109 points. you can see 4.40% gain on crude. >> let's get to diana olick. >>> pending home

very much focused the capex decisions. >> i thought the verizon conference call, they're very good.ig with cbs in terms of the sponsorship. verizon has always been a big player. >> yeah. the question for verizon is given how often they talk about their streaming service. the one for the wireless phones. >> the skinny package. >> the skinny bundles. do they move even more deeply into programming. >> they made no secret of the fact on their call that if yahoo! were to actually put it up for sale, no interest. >> the guy from "shark tank" is a sharp businessman. he said this is a company to watch. >> verizon. >> i don't know if you watch "shark tank." >> i love "shark tank." >> a lot of girls watch it. verizon. t-mobile. verizon. >> up next, we've got stock trading with jim. we'll be right back. its intelligent drive is msystems...ng. paradigm-shifting. its technology-filled cabin...jaw-dropping. its performance...breathtaking. its self-parking...and self-braking...show-stopping. the all-new glc. mercedes-benz resets the bar for the luxury suv. starting at $38,950. so what about this?

varsity, the consumer, the consumer confidence, currencies and commodities and the final four cs are capexcapitulation, cam newton, central bankers and candidates, those are the 12 drivers, cam newton is a baker's dozen 13. china is the key. capital outflow, currency weakness, we've got to see a china turnaround to get the market moving. >> let's bring in another important c. anthony, what have you been watching and the fed yesterday that's relevant? >> i got the impression they pushed a pause button because the economy is sort of hitting a pothole in the fourth quarter and look for first quarter to be as strong, but not as strong as they wanted. i don't think they are going to do anything in march. with regard to following up on david, oil is very important. i recently did a studly looking at the relationship between oil prices when they are low, 20 or $30 and also above $100. 64% positive correlation when oil prices between 20 and 30. whatever happens to oil, happens to the stock market. negative relationship. >> if those panthers win, the super bowl indicator will be working in the mark

on the supply side we've got so much oversupply of oil, we know that the capex that went into the oillds and production, that's gone. no spending to be done on that and then the overlay of the companies that may go bankrupt, the overlay of the banks that loaned to the companies, the high yield debt that they floated. that's in a lot of investors pockets now and weighing heavily on the market. >> i've been cheering on for cheap gas, i love it when i buy it. >> eventually it's a huge positive, but at least a year and 18 months for them to settle out for that. to be positive. >> 1.82 by the way, for the national average for regular, i'll take it. big names, we're watching them for you. i'm going to start with general dynamics, less money coming in. the stock is down 2 bucks. know the a big loss. health insurer anthem reports lower profits and it's down $3 at 1.34. the same story with norfolk southern. they're shipping less coal, but the stock is up about a buck at 69. at&t, we've featured them a lot recently because they pay a solid dividend. they've signed up fewer wireless companies, t

so capex spending is definitely putting projects on hold because the price of oil isn't economical toback into the low 40s by middle part of the year. let's not say double and then go back to 60. but i think oil getting back into the 40s and holding throughout the -- ashley: so, in other words, saudi arabia strategy is to keep pumping at full tilting in analytical they can put smaller producers out of business or sadly shut them down. >> yeah. i was in the middle east all last week. ashley: what did they say. >> i gave a keynote speech and they said how low do prices have to go before the united states goes away? how do we kill you guys off? so it was basically how to get rid of you? so they even said the strategy is working. they're going to keep going on with market share protection versus concerned about the price. ashley: what about the other side of the equation? the demand. we know what's going on in china. >> it's not in great shape. we think by the end of the year the markets stabilize and i think the iranian oil has been factored into the price a little bit, so i don't think

capex. are there other areas you worry about?ediate effect of cuts and capital spending, we are seeing that in companies, in the state. there is a positive effect of lower prices for consumers, more driving activity, better car sales most likely because of that greater ability to spend on other things. i worry about the ripple effects of what is going on in the energy sector. one of them is, energy is a material part of the high-yield sector. high-yield issuance has gone up --matically and what happens high-yield bonds are held in mutual fund today in etf form. if you have weakness in one sector it tends to cost selling in every other high-yield sector because of yield of redemptions -- because of fear of redemptions. making it harder for companies that are leveraged to borrow and it will widen credit spreads. michael: robert kaplan. stephanie: that was michael mckee in his first interview with dallas that president and ceo robert kaplan. you can listen to more about interview on bloomberg radio. it will be on bloomberg.com in ju

of course, this has put major pressure on some shale companies and we are seeing cuts in capex spendingeping an eye on interest rates, 10-year falling seven basis points below $2% on the 10-year yield. as you can see, they're getting into safety and gold. and the current crop of presidential contenders and at issue, how to deal with isis. he's calling the rhetoric they've been using in regards to battling the islamic state wrong. we want to bring in former cia director and secretary robert gates. your new book "a passion for leadership" has been getting wide reviews, positive reviews and we want to talk to you about that as well. mr. secretary, thanks for being here. >> thank you very much. maria: can you characterize where we are in the world today when you look at what's going on in terms of isis, having gotten stronger? it's not a country, it's a network. in terms of what's happening in the middle east right now, the saudies versus iranians, north korea? what's your take away? >> i think that we've not faced as many different kinds of challenges simultaneously in a very long time as

we saw the lowest levels of capex we've ever seen.ts were the worst we've seen in the history of the survey. so fourth quarter was not another weak quarter. it was the weakest quarter we have ever seen in the survey. what's happening now is not the same thing as what's happened in the past. the hast tlast two years are si >> i'm interested in a different aspect of it which is the power of capital flows. capital flows out of the rnb are accelerating and it's not just foreign investors pulling the money out. it's not only the fed raising the rates and bringing the hedge funds out there's chinese money coming out too and some are scheduled to end this week. but all you have to do is take a look at the vancouver real estate market to know that mainland dhie thechinese are mo backward and there's a lot of money trying to get out. that could push china and the rest of asia down. corporations and emerging markets now have about a trillion dollars worth of corporate debt and denominated in dollars and euros, that's the stuff that created the

carpet lending today are you seeing lending mostly for businesses that want to invest in the business capex or are you seeing much of the less thaning, going toward m&a? >> so that is a big question. so if you small business and middle market is -- they are still borrowing credit very, very good, you know not doing you and i call bull market capital sxvpz big companies looks like exel expenditures disappointing because growth is slower ceos have an order book investors can say, they feel you know bullish they feel bullish in the porder book goes up m&a activity nothing long with that another form of economic activity could be good i think you will see companies spend more when they have more reason, i know, stronger. >> so we're sort of bumping along the bottom. >> i think we are growing we have had moderate growth for five years, i think a bret we to put it 12 million more people working i think 143 million people work, and so, you know, it was kind of disappointing not 3 1/2% still not terrible. and, you know, as unemployment comes down hopefully will be shared more widely across america.

we tracked capex dropping for a year and a half now in a very strong way.at what happened in the stock market. it was essentially households levering up to reinflate corporate balance sheets. that's not reform or reversing financial depression so some of the stuff is positive. a lot of it is negative. at the end of the day they have to learn to inject risk into defaults, bankruptcies, other things like that or they're not going to have a market system and they're not going to have true reform. >> maybe the west leland is kidding itself and thinking that china can change from an export driven economy to consumption driven economy overnight. in reality it's a decades, many decades long process and what china is going through now is just simply the normal exercise that one would go through in trying to completely change one's economy. >> i think that's exactly right. leaving aside whether they're doing it well or not and i don't think they're doing particularly well this is a long process. it's not something that can be done overnight. it's not helped that peo