we are joined by vonnie quinn and erik schatzker, who is sitting in with us this week. . looking forward to your advice for not just the financial markets, but who is going to win the stanley cup this year? erik: i thought it was going to be montreal, but they have had a rough ride lately. more.ill break my heart vonnie: tom keene -- michael: tom keene is the number one fan. let's get to bloomberg first word news. i do not know if you have a hockey update, but vonnie quinn has the news. .onnie: we have in iraq update -- we have an iraq update. ramadi has been "fully liberated " from islamic state. reporting to the ap. that would be a major victory for the government over the militants. the capital was overrun by islamic state last may. since then, they repelled several attempts to retake ramadi by iraq he forces. blamed onhs are being freakish weather events during christmas weekend. almost 1500 homes were damaged or destroyed. garland,st hit was texas, as a tornado swept through, killing 11 people. a twister with wind of 200 miles hit that town. flooding in that town is

vonnie quinn, erik schatzker, and michael mckee. t tony crescenzi has to say. ♪ erik: welcome back to "bloomberg surveillance." volatility, thy name is forex today. all of these currencies have been up and down a bit, except for the ruble. was annese offshore yuan interesting story. it had been up -- down by 5% earlier. it has lost all of that and come down below where it started on the day. so big emergence is between onshore and offshore yuan. the ruble is being hammered by declining oil prices. coming up in a few minutes david, ioomberg ." will see you at nine, but you have a wall street chief with you. we do. we will also talk with john about the presidential election and the risks he sees going into 2016. we will talk about apple, a bumpy ride toward the end of 2015. one analyst thinks he knows what is coming up in 2016. jimwe are joined by rickert's, who will talk about the u.s. economy, the fed, and how to invest in water. erik: i will see you in a couple of hours. watch "bloomberg ," at 7:00 on bloomberg television. v

i'm vonnie quinn along with erik schatzker. we are looking at sunny london. a few hours later in the morning. michael: those are phrases that don't usually go together. erik: i see clouds building. is the still with us global strategist. holding down the fort for us as everybody tries to make their way back. it wasn't the best year for strategists. despite the fact that most everything was on the radar including the fed interest rate increase. do you anticipate for 2016? difficulty fore currency strategists is going to be the big moves are going to be what the chinese do or don't do. in terms of how much they did shape their currency. brexit will be a big downside risk for sterling. how will you go to wait the risks? the outlook for the euro dollar exchange rate, the big ones don't look to be that exciting in the sense that the dollar is probably going to rise. michael: i was just going to say, the story of the year was supposed to be the fed raises rates and the dollar goes up. benefits both sides of the atlantic, that's not happening. you've got to remember

quinn, along with michael mckee and erik schatzker .inished with the job cuts. since the crisis began in 2008, banks have eliminated jobs. 50,000 came in the fourth quarter of this year. deutsche bank will get rid of 26,000 jobs by 2018. goldman sachs getting it right on 10-year treasury yields. it is sticking with the forecast for 2016. the 10-year will hit 3% in 2016. it has not been that high in 2 years. will have an annual advance for the first time in five years. they are up 4%. 2016 my to better. el niÑo has cut the content in sugarcane in brazil. it has hurt costs in india and thailand. that gets us to our single best chart. michael: what single best chart could we choose other than tom keene's chart of the year, the bloomberg commodity index. we will spend it to the future it toward the future. the orange line is the bloomberg commodity index. tom has been following the commodity index. they track each other. last couplein the of months. we have seen a big downturn in oil prices that has not then matched by a drop in the commodi

david: that was gary hammond are talking to erik schatzker -- gary heminger talking to erik schatzker butly in accelerating in terms of decline. all three major averages are indeed lowered. the nasdaq -- down by 2%. the biggest drop we've seen in quite some time. we don't have a chart of the vix, but the vix has been .piking it's a bit of a curious reaction we are seeing here today. we have these too may news events. mario draghi expanded quantitative easing in terms of duration but not in terms of size, disappointing investors to whom he signaled he was going to expand the program inside. that was one major news event. the other, jenny yelling -- yellen speaking before congress remarkschanging her from what she said yesterday in a speech before the economic club of washington. waseems as though draghi the main focus for investors, and of course his comments have not changed throughout the day but we've seen the direction of stocks changed to some degree throughout the day. if you look at the dow, onan intraday basis, we've only seen the declines accelerate. if you look at right aroun

erik schatzker rejoins us live. here with us too. ,hat was your big take away hunter is not in love with the deal but he is prepared to go hostile. yes, he dropped some hints about going hostile. he feels the deal needs to be friendly. that is why he thinks a proxy fight needs to be required. we are starting to get a sense of why bill ackman is involved. started a proxy fight to put hunter harrison in place of the ceo. he may be able to orchestrate a proxy fight, but we also heard that hunter harrison that bill ackman's presence will be key to explain to norfolk southern shareholders the next offer. valuel have a contingent attached to it. which hunter said it could be confusing. david: he went straight to it. that sweetening the deal, he doesn't want to put more cash in it, but he will put a collar on it. ed: i have sat on a lot of bill ackman conference calls and he can go on a lot. so he can explain in great detail why it would be beneficial. it would have the effect of freezing the value that the bid would be an

all you have to do cash erik schatzker is -- erik schatzker's favorite thing, numbers dancing around.u go along. stephanie: do you have a view on the drug pricing scandal? you have drug companies doing more research than anyone and they are under scrutiny because of pricing. sam: i only get involved in one clinical trial myself in a particular investment we made. it was horrible experience. stephanie: why? sam: there was no certainty. wake up every morning, another three weeks, three years, you do not know what happens and how do you plan or allocate capital? i think the r&d site is an enormous challenge and if you do not pay the companies, then they're going to eliminate rmb. valeant is an example of somebody saying, i will show you what we can do if we do not do r&d. they produce extraordinary numbers because they are not spending it on r&d. that is my perspective, short-term view. five, this is a bit of a theme. let's look at the temperature today in new york, 51 degrees and one in chicago as well, unseasonably warm. saysational association it the arctic is warming fastest and temp

betty: thank you for breaking master it, erik schatzker. breaking thefor story, erik schatzker.ing up next. ♪ betty: lock them back to "bloomberg market." volkswagen has hired ken feinberg who handled the ignition switch settlement to design its response to the diesel administration -- ignition scandal. down with have to sit the company and begin the task of billion a being the scope of dileanating does -- the task and scope of this program. >> has volkswagen given you any sense of how big your checkbook will be? >> no. no, but the company has given me a sense that it wants to do right by its customers. and that means there will be probably a menu of options available to customers designed to maintain loyalty and support for the company. >> what sorts of things will be on that menu as you go into this? >> well, you have to come up with fixes. the regulators know epa and the california state regulators and state ag's, they know what has to be done from a public perspective. of course, we have to be aware of that. what in addition, what legal consideration it will take to voluntar

erik schatzker sat down with the canadian pacific co -- ceo before the latest objection.down would love to with norfolk southern. at this point, they refused to sit down and talk to us. i think the next 10 days will bring a lot of action. : how so? -- erik talk: now it is time to turkey. they will have to talk to us or we will have to take a taxi. if they refuse to engage in the conversation you want to have, if the ceo does not talk to you, what does that mean for your tactic? their: they have done polling, we have done our polling. i think they are a of a view that if they're going to wait us out, we will wait a long time. can we find tune offer? there is wiggle room or it but then we have to go to the shareholder, leave them out of the process, and see what the shareholder says. very you raise two important points. let's deal with them one by one. hunter: sure. erik: there's not a lot of room. how much is there? hunter: it's very limited. weare very close to where think -- look, we are not in love with this deal. we cannot lose sight of who we are representing here, an

erik schatzker still uses one. erik schatzker and some other canadian.e picking up. this is where john chen is getting his money, this is what he is been banking on. that has been the plan. it is not huge, only $4 billion company. it has to get back from somewhere and software is where it is going to be. stocks are lower around the world today. euphoria from that that decision seems to be fading. i want to focus on what a u.s. rate rise means for currencies. we discussed this in our morning meeting. like theseems divergence between u.s. policy and other central bank policies around the world should send the dollar higher. and the euro lower. is that a slamdunk? brad: it will remain a slamdunk as we move into the new year. the fed delivered with their interest rate hike. got that out of the way. the ecb gave us an interest rate cut some the first time we've had a divergence in a long time. differentials will continue to drive that trade. you could have your occasional shakeout related to risk on, risk off and positioning. the market forces are in place fo

erik schatzker sat down for an exclusive interview with larry fink this morning to talk about a wideange of things. you asked about the likelihood of a recession on the heels of that? people have said we are going to be in recession and the u.s. economy will be in recession and in rubenstein case, he said 18 months from now. clearly a recession outlook would not justify a 25 basis point rate hike by the fed or the clyde passing the fed laid out yesterday, which would take us to something like 1.25 on the fed funds target 12 months from now. so i asked larry fink what does he think the risk of a recession in this economy really is? larry: the only chance of a real recession is if china's leaders miscalculate their needs and china slows down the more china, with their needs of reinforcing their economy, devalue their currency more rapidly than we all expect. that would cause more disinflation worldwide and cause a higher probability of some form of recession. volkswagen says it is naming can find berg to resolve the diesel claims. this is a guy with a lot of experience in circumstances

in an exclusive interview with erik schatzker, he sat down with canadian specific -- canadian pacific harrison on bloomberg. >> we are not in love with the deal. things can go wrong with that spirit we cannot lose sight of who we are representing here. and that -- that is the shareholders. brendan: he called the new offer grossly inadequate. samsung is revealing to the supreme court a $399 million judgment at the look of apple iphones. courtst time the supreme heard cases on the patent, it was the late 1800s. a more always get business news at bloomberg.com. south african rand is on the last weekendmbling rally today. change in less than a week for finance minister. joining us from san francisco with more is president and chief investment officer axel merk. it sounds like the issue has always been trust in the -- instincts.nce axel: we do not know where the country will be 10 years from now. changing your finance mr. twice in a week, three finance ministers in a week, it is not exactly helpful. if one of the things we are hearing from the national congress is they are hesitant to say

stephanie: i am stephanie will we are joined by erik schatzker. erik: and christine, good morning.tim coleman. welcome. we will be talking about puerto rico, energy, but we have lots to get to, including a new update from vonnie quinn. vonnie: thank you. president obama issued a challenge to the world and the u.s. senate in the fight to slow global warming. at the u and climate conference, mr. obama said parts of any deal to limit the house gases should be legally binding. some senateuffle republicans. germany's cabinet approved fightg 1200 troops to against islamic states. parliament is excited to get the ok by friday. -- they will be used in support roles and not combat. the corporal was convicted of killing a filipina woman last year after discovering she was transgendered. he was sentenced from six years to 12 years in prison. you can get more on these and other stories at the new bloomberg.com. i am vonnie quinn. markets now and we have matt miller. matt: thank you. take a look at the index is up across the board. s&p 500 with aff gain of more than 56 points on the dow jones.

he said it erik schatzker that he thought a proxy fight was inevitable -- said to erik schatzker thatfight was inevitable. stephanie: tom, you were talking about the year you just had in 2015. tom: greatest amount of deal volume, ipo's were down significantly. if you look at the numbers of ipo's, it was the fewest numbers in a decade. similar with tech. not unique, it followed the overall market and investors focused on improving their own portfolio. when i look at the tech deals that were done and the market deals, you think of a square, fitbit, go daddy, these great companies, they are doing really well. each of those companies is treating 40% up in the aftermarket or greater. i don't think a message from this year is we will not see these unicorns able to go public in 2016, investors were focused on something different. will they couldn't their attention to adding to their portfolio and if so, there will be the ability for companies to go public. is not investors saying they will not buy a deal, they are not being offered. if they could get into uber, they would. there were 20 ipo'

erik schatzker knows better than i do from moving energy around. around 7%. as to do with its concerned that the canadian pacific takeover is not a good idea. erik: well, yes, i think officially rejecting the takeover proposal from cp has something to do with that. plus, what some shareholders might find underwhelming promises from the ceo about the cost-cutting that norfolk southern can do on its own in 2016 and 2017. breaking news for you out of brazil -- president dilma rousseff is defending herself from the initiation of impeachment proceedings. she says she did not commit a crime. she says she does not secret accounts in switzerland and that she is not misused public accounts. this is in response to specific allegations from some of her fellow lawmakers and other brazilians. rick reader at black rock a man who oversees $700 billion in bonds and fixed income investments, he is active around the world. he has investments in brazil and is constantly looking at latin america. brazil point can you say has bottomed? is there further to go from here? rick: there

betty: erik schatzker here with me who interviewed the bank'ceo's.big risk and also the opportunities. hear theirresting to varied opinions. investors want to know if they will make money next year. many run businesses and that is why they have to look globally. it will be tough for banks like jpmorgan, in europe where growth is still just beginning. here for example for a bank like wells fargo, u.s. economic , it is more of the same. very difficult to generate revenue growth. with that extraordinary monetary stimulus, would that be even tougher this year? years out, if the economy begins to get his momentum up, the yield curve will stephen and these banks on the basis of lending alone will make more money. there is no guarantee that will be the case in 2016. betty: in the meantime, they are trying to boost their bottom lines. if you look, banks around the world have eliminated 600,000 jobs. they are not eliminating them at the same pace. anticipates 2000 more job cuts. that is fractional for citigroup. they are down jobs since the crisis. some banks

's managing for $7 trillion in assets and erik schatzker got to speak with larry fink on everything fromed to china to the recession. what was the most compelling part of the conversation? erik: what matters most now is not that the fed raised rates yesterday but how fast and how far it will raise rates over the next year. , isou look at the dot plot suggest we will be at 175% by the end of next year. if you ask larry fink, he has a different perspective. quitehink she will be slow in raising rates going forward and 2016. erik: why? >> my view is that the economy is decelerating. it is not going to be as fast as we want and we will be lucky to see a 2% economy in the first part of next year. lucky to see 2% growth -- he does not think we'll see a recession. the only way we could end up in recession is if china really falls apart and he thinks that's a low probability. alix: he echoes what the market has been saying. it is much more bush then the fat. did he talk about the expected volatility? erik: he thinks clarity is the most important part of the janet yellen message and that will hel

stephanie: joined back by our co-anchor erik schatzker. yesterday.orida it is good to be back.m more than mark weeden, the global head of blackrock's business, the world's largest etf manager you could call the king of etf's. your highness. : a pleasure to be here. erik: we have a lot to talk about before we get to the subject of junk bonds and etf's. vonnie quinn. pagee: getting on the same against terrorism, saudi arabia announced today it is leading islamic military alliance despite terrorism. turkey and egypt. today, with moscow coordinating attacks against the islamic state and is on the agenda. bound for the international state -- space station. he will be the first in britain to represent the state -- the space station on the european lab. donald trump heading into a debate tonight against rivals. ofmp is backed by 38% republicans and independents who lean that way. debate at 9:00he eastern and bloomberg will bring you a preview. watch "with all due respect" live. these and other breaking stories 24 hours a day at bloomberg.com. >> u.s. futures are hitting session highs,

erik schatzker joins us and alessio de longis.e peterson institute for international economics. i want to take you to london where jonathan ferro is. love looking at this. the euro was stronger versus the u.s. dollar. people were disappointed. we got cuts, we got the extension, we didn't get the expansion. we need to add in market technical because we saw a rally leading into this in the u.s. dollar. a lot of that is profit taking and we have to take that out because the expectations around mario draghi are no different from the expectations we often see from the fomc and they often disappoint. we have to factor in the trading happening, not necessarily the long-term impact. jonathan: we also have to factor in the ecb's credibility. remember mario draghi guided these markets to expect something big. he told us to look at three things on the asset purchase program. the size, competition, and duration. they've extended the duration and competition. but on the size, the monthly rate, they did nothing. for the market, that's a big dis

erik schatzker spoke with the ceo last week. it is time to talk turkey.ng to have to take another tactic. >> if they refuse to engage in -- in the conversation that you want to have, what is the other tactic? our think that we have done polling and they have done their polling. i think they're of the view that if they are waiting is out, they are going to wait a long time. can we fine-tune the offer? there is a little bit of wiggle room. but then the point is that we have to go to the shareholders and leave them out of the process. >> you raise two important points. the amount of room left to improve the offer, there isn't a ton of room. how much is there? >> very limited. we are very close to where we think -- we are not in love with this deal. sight of who we are representing here. and that is the canadian pacific shareholders. >> because you are already giving norfolk southern 47% of the company. right? >> yes. so there will be a point that we are approaching where effectively we have to say, that is all there is. and if they don't want to accept the o