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tv   Market Makers  Bloomberg  December 24, 2014 10:00am-12:01pm EST

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>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and step numeral. -- stephanie ruhle. >> see you in court. another setback for the one-time wall street start. because overnight is not fast enough, we do last minute christmas shopping and test out amazon's new one-hour delivery service. does it work? seth rogen and james franco win. at one chaintive
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tells us why he decided to screen the film. ."lcome to "market makers where have you been? i am reporting the news. we are in for eric and stephanie . it takes three of us. can we get a wider shot here? bob avery with us as well. bob is the editor at large for bloomberg news. what a cool title. >> you have not been captured yet. like a fugitive. >> we start this morning with the bulletin. the top business stories of the morning. the biggest investor headed to the court -- blue crest capital is suing whitney's hedge fund after it refused to return request investment.
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-- blue crest's investment. the suit was filed in bermuda. the over ceo indicted in south r ceo indicted in south korea. the maximum penalty is a two-year prison term or fine of $18,000. sony pictures will release the interview and 300 theaters tomorrow. that includes dozens of alamo draft house theaters and the plots in atlanta. 100 theaters will get the film next week. so far, none of the major chains -- former president george h w bush is in a hospital in houston. he was admitted as a precaution after experiencing shortness of breath. bush is the oldest living former u.s. president.
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born three months before jimmy carter. >> also still alive. -- mac salesaga maxwith us by telephone -- is with us by telephone. >> i don't work as hard as bob avery. he always outshines me. >> he is the editor at large. let's talk about this court case being in bermuda. seems to be a concern for the meredith whitney cap. they wanted to fight it out in new york city. >> that's right. they have a whole array of things they're disagreeing about. the nature of where they filed the suit is one of them. as far as i can tell, their attitude is like they agreed -- if they were going to get into a fight, they resulted here in new york.
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we agreed if we get into a fight, we resulted in new york. they filed in bermuda and that is the beginning of it. with michaele deal platt? he's a billionaire. then he gives meredith whitney $50 million. its budget dust to a hedge fund like blue crest. now he wants to take it back. what do we know about him? >> he is a fascinating guy. one of the most important british hedge fund managers. not an everyday name here in america by john paulson. achael platt is considered real visionary when it comes to london hedge funds. he has had his own interesting issues this year. the woman who runs systematic trading for blue crest is leaving his firm and spinning out.
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their scale is totally different. they manage billions of dollars. he clearly must have believed and meredith last year when she launched her fund. meredith was a star analysts on wall street. i call.e that city everyone cites the citi call. >> she was at a firm called oppenheimer. here fund managers admired work. you're definitely right to bring up the meeting call. she said famously there would be a municipal default. that did not happen. >> can we bring up the quote from business week from two years ago? have a dispute, let's
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agree to resulted in san francisco. us she had lost money during the crisis despite making the right call. wonder, do we take celebrity analysts to seriously? seriously? >> she gave an interview to my good friend nick summers at business week. she said she lost hundreds of thousands of dollars on lehman brothers. to be fair, when i step back and think about what this says about wall street culture, not only does the cult of analysts come to mind, but the issue of women on wall street. there are not that many well-known women who run major hedge funds. there are almost no women at the top of the banks. , a lot of people were rooting for her and wanted to see this hedge fund succeed.
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that is not what has happened. fund has, her hedge lost millions of dollars, lost top executives and now this lawsuit. >> is this an existential crisis for her? is it over if she loses plat's money? >> she's the kind of person i could imagine who could end up as a congresswoman. an incredibly potent force. if this wereocked the last anybody heard of her. of a victim a bit of expectations? analyst, made the call on citigroup, promising double-digit returns in an era when double-digit returns, you have to deal with black market to do wit that. >> or do nothing. >> whereby an etf and let a
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monkey throw a dart at which etf you will get. victimhe is a of those high expectations. >> maybe it will be for the whole hedge fund industry itself. you guys are laughing but that is something i have been thinking about myself. the whole idea of the hedge fund seems a bit silly. you invest in these indices and do better than a majority of hedge funds. as long as you are in the mood to use that data set and be sympathetic, you can also say that over the past year hedge funds have done terribly, tons have been closing, averaging 2% returns. it's been a hard year for everybody. on the other hand, she is doing worse than that average.
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their only making 2%, she has lost 11%. >> i disagree on one thing. i don't think a lot of people are rooting for her. a lot of people are rooting against her. she is a target, an attractive has gotten awho lot of publicity for being right and sometimes being -- >> one time being right. >> one time being very right. >> we don't know if any other times when she has been on the money. >> do you think people are rooting for her? >> i agree with you. i think people are rooting against her. >> bloomberg businessweek put her on the cover. that is part of it. it is hard to become a media figure and retain your credit. >> we have to let max go. he's clutching a warm mug and has chestnut roasting on an open fire for sure.
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we will take a quick break. >> the fixed income market as we head into 2015. should you be putting your money into treasuries or a monkey run etf? >> taking a cue from horowitz. why are some many of the big banks getting into the venture capital game? stay with us on this christmas eve edition of "market makers." ♪
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>> welcome back to "market makers." a pleasure being here for you on this christmas eve. the number one question for fixed income investors right now , when will the fed raise rates? that is always the number one question for them. asking this question more often -- he is in philly this morning with -- what is on your head? >> reindeer antlers.
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we can talk about something serious with antlers on my head? >> look at you. >> i think we can. >> i actually have to take this off my great dane this morning. in alln ask you seriousness with those antlers on your head, when you think the fed will raise rates. i'm so sick of asking that question that it improves my experience looking at u.s. one of santa's 12 reindeer. -- looking at you as one of santa's 12 reindeer. >> is not so much necessarily , but morest likely about which way the risks are skewed. if you look at the global inflation outlook and janet yellen was really already
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playing defense upon this point. look at the global inflation outlook, 30 of 46 countries in the world that have inflation targets are missing their inflation target. i have a chart that shows a couple of major -- a couple of major regions. it is hard for the fed to institute policy tightening when inflation is below target, possibly even falling. >> europe is way below, japan as well. they are doing -- japan is doing its best to try to reverse that trend. oil is not helping in any of these regions. >> no, it's not. the fed considers core inflation or court deflation much more so than changes in energy prices. at the very least, what this will do is prevent companies like fedex or ups or airlines from raising their prices
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aggressively as they can benefit from greater margins. oil prices staying low, having fallen does have some impact on core inflation. it makes it very hard for the fed to start raising rates. let us once again pause to admire the majesty of your headgear. he's wearing this because he has had a baby. i don't know if it's a philadelphia tradition, but congratulations to you. there is always this discrepancy between what janet yellen says she is watching and what people really believe she is actually watching. what are you guys watching? >> i think the fes labor market condition index is a really great thing to watch. it's a little harder to calibrate it to many of the other indicators out there.
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we took this index back to what we deemed the time of full employment. we look at the increases and decreases and estimated that by denver 2015. this index will have recovered all the ground a lost. -- september 2015. >> this index is what we are looking at right now. you see a cyclicality to it. then it plans out and gets weird. what is happening there? >> there are a lot of different components, 19 components of this labor market conditions index. frame,out that time nonfarm payroll growth was stable. into thisures that go labor market conditions index were offsetting the improvement. things like stagnant wage growth
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, the participation rate, all ran into this lender and flatlined. it is increasing, doing so relatively stable. we should recover all lost ground by september of next year. >> let's talk about one of the consequences of the fed policy. fixed income markets, junk bonds. we have seen a lot of volatility in junk bonds in 2014. what about 2015? stems fromtility energy prices we had a great first half of the year. in august and september when energy prices started leaking wider, that high-yield sector had a bit of challenge. there is some value in high-yield. some of the etf's and whatnot that have been net sellers of high-yield bonds over the last 6-8 weeks had to sell the good
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along with the bad. we think performance in that sector is going to be really decent. the place we are really excited about in 2015 as the municipal markets. >> wow. we should have had mary on to talk about this. are we going to see $150 billion in the faults? unlikely.ems that would require every major u.s. city defaulting. >> thank you so much for joining us. congratulations on the little girl. looking forward to using you back here in new york. -- seeing you back in new york. >> you want to discover whether a print guy can actually read? if you can't wait for overnight delivery, how about one hour?
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amazon has no problem. julie hyman decided to test it out. low-tech drones. boom. ♪
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>> last-minute shoppers rejoice. if you are at the office, you may not be completely out of luck. julie hyman is here. she is a procrastinator's dream. manhattan and in are in amazon prime customer and have a device onto which you have uploaded the amazon i'm now -- amazon prime now at. -- cap. app.
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i was live on surveillance this morning. >> look at my christmas sweater. >> that we received in just one hour. it was more like 35 minutes. miller got an ana doll from frozen. that arrived in 30 minutes. for this and9 or they have a recommended tip for five or six dollars. >> he sometimes rides the bus or sometimes the subway. are you eating m&ms right now? >> green and red m&ms. >> it is free for prime
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customers. >> this works like the drone delivery. the rollout is delivery straight to the tv studio. it feels a bit like a publicity stunt. >> it just so happens that it's in manhattan, delivering two major media organizations. it will be something that amazon eventually rolls out. >> amazon wants to do this and eventually. olivia has been talking about the final mile story for your now. does for a year now. everyone must do this last hour delivery. had actual drones they will put on top of ups -- >> a real warehouse any real price. >is a miracle. -- it's a miracle. >> let's keep in mind, the other
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thing about amazon that is , they don'tnique mind spending a lot of money to do stuff. >> are they breaking even on this? >> amazon doesn't release a lot of numbers on anything. we don't know how much it's going to cost. >> would you expect them to be breaking even on this? >> that is not the goal. you get it in a plain brown bag. it just has this sticker on it. it could be a grocery bag, what you get your drugs in. >> back in the day, when drugs arrived. like a triple x videotape delivery. comes in a nondescript brown people back.
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bag.own paper it is only available to media outlets. that is my take. we will be right back with more christmas eve fun. ♪
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>> live from bloomberg headquarters in new york, this is "market makers." >> welcome to "market makers." >> we are in today for erik schatzker and stephanie ruhle. 26 years ago today, stephanie's mom and pop got a holiday treat. stephanie was born. it's not just venture capitalists were making money in tech startups. pre-ipo investors are just as likely to include goldman and barclays.
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goleman has been the most active over the past four years investing in over 80 companies like facebook and dropbox. that does not mean the banks are early investors. half of them came in the final series rounds of funding. cory johnson, what is the banker presence out there? >> i think it's a much more focused effort. it's not always early investment. sometimes it is. goldman sachs has been there from the early days and all kinds of levels. a very different animal. we have these companies staying private for so much longer than com bubble. dot in a rounds being done
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really good size. game?se skin is in this >> that is a great question. in the case of goldman and others, you've got everyone. it's being driven by the client growthnts some kind of the returns that they can't find in the capital market. the banks are raising their hands saying you want to get on these big private deals? we are going to have allocation of uber. we are going to have allocation of dropbox. it is also some of the bank's capital as well. you are telling me that the theire is getting into
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business. what did the vp firms think about this? >> in the case of the mezzanine -- inmthe bc the case of a mezzanine round, the last round before the ipo, investment bank having some skin firms love that. the bank who may participate in that ipo is going to be trying to guide them towards the best possible outcome for that ipo. >> are these guys getting together? sachs, banker, there is from new york city hanging out with jews who would never ever wear a tie in san francisco
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hanging out with dudes who would never ever wear a tie in tech i san francisco? >> so much hate for ties on the west coast. i just started wearing a tie. it's breaking my heart. are they socializing a lot more? sanow you hang out at francisco giant games. >> i try to make sure the economy in san francisco is alive and flush. the bankers have always been a big part of the technology seen here in silicon valley. increasingly in san francisco as technology moves to be more
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urban and suburban. what is different is in this era , we have new york bankers and york banks well represented. that werefirms , thoseted in technology firms are all gone. been acquired by bigger banks or have disappeared. the young technology firms are either being all in with the new york banks backing them or they are scrambling around try to come up with venture capital money. there are winners and losers out here. not the kind of infrastructure of finance that once characterized technology out here when the deals were smaller. >> who is benefiting the most? >> all of us former print journalists who turned into tv guys. >> amen to you.
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and merry christmas. fundamentally, it's going to be those investors who are making the deals. the big-money investors who have the private accounts and goldman -- will push the returns over the edge. >> brandon wants to know about the company's. -- the companies. i was being facetious with my journalist call, but one of the things you see as these young focused on marketing pr to get those valuations up. this is not necessarily new this year. we see groupon on the screen. with any that came out
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$25 billion private valuation. at less than out half that. they were trying to milk this world of young journalists and blogs wanting the big scoop. it led to a big ipo and that the --iders of that company companies selling insider shares before the deal ever went out as an ipo, enriching themselves and the companies. i wonder what we will see what xiaomish -- the valuation this week is surprising. they raised $1 billion at a $45 putting it inion, an amazing and unique world. that is how much people are
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chasing the yield curve. a place where individual investors who got money are at great risk. >> why is it ok for cory johnson wear no no tie -- to tie? >> this is not the beach. get yourself a tie. cory johnson, you have a merry christmas. we spent months talking about russia, ukraine, syria and iraq. we want to tell you about a global hotspot you may have missed. libya. stay with us here on "market makers." ♪
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>> it was nearly four years ago that the us-led coalition overthrew muammar gaddafi's government in libya. of the country has descended into anarchy. wide areas are out of the
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control of the central government. it may emerge as a key geopolitical hotspot in 2015. we bring in a former state department official who is now with the middle east institute. thank you for joining us on christmas eve. let me ask you about a very serious and santos subject. -- sad a subject. subject. is this the same thing happening in libya? >> president obama himself said that we should have paid more attention to the aftereffects of overthrowing qadhafi. we were overreacting to what when we in iraq overthrew the saddam hussein regime and dismantled the army and dismantled the party and other institutions. in libya, we assumed that an army and other editions of
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government would emerge after the overthrow of muammar gaddafi. he dismantled what little he found when he came to power. he took the view that government was the problem, not the answer. thattually carried out kind of reaganesque doctrine. there were no institutions there to keep the country going after he left. >> i'm struck by the contrast between tunisia and libya. tunisia just had relatively free and fair democratic elections. what went right in tunisia that went wrong in libya? >> it does come down to the importance of the institutions. tunisia, like egypt, had a rich set of institutions going into the last four years. tunisia and egypt where the so-called arab spring first began. tunisia had good balanced
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institutions and it's on middle-class. unlike egypt, the military overwhelmed the other institutions. tunisia has managed this transition so far on much better than other countries in the region. the problem into asia is that they face -- in tunisia is they face tough economic circumstances. >> what are the hot spots and how would they impact your opinion as states -- europe and the united states? >> europe with its vast mediterranean coastline, a huge state geographically, look at the map and see that it is gigantic and extends down into the african continent. potentially, it is extremely helpful for the economic development and prosperity of western europe, helping to
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reduce the dependence upon other energynd supplies. can be important for the arab region and africa and the whole mediterranean basin. right now, it is a strategic liability because it is the same geographic locations that mean that libya can be a source for the spread of terrorism, the export of weapons, migrants coming across the mediterranean to what winston churchill famously called the underbelly of europe. position --graphic libya's geographic position and resources that can be used for bad purposes make an importance to the international community. >> can you give us a sense of who is in control of what right now in libya?
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>> there are two competing governments, if you will. elected last summer that has international recognition that is located in eastern libya. nominalecond one in the capital of tripoli that is supported by strong militias from the coastal city and tripoli. there are competitive forces in withthe west and the east claimants to domination of libya. we have an unusual case where the government that has international legitimacy is located outside of the capital. the government that controls the ground through its militias is in tripoli. >> a lot going on there.
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thank you so much for filling us in. detroitg up, turning into an electric brand. this is "market makers." ♪
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>> made in detroit. the mantra of kid rock and a main selling point or the luxury goods maker. the make high-end watches, bicycles and a shoe polish. julie hyman talk to the ceo about what it takes to turn it a gritty city into a branding win. >> i'm not sure kid rock is what they're going for. we will get to that. >> did you just call them a luxury bland? >> that just happened. >> i did not mean to do that.
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spoke to the ceo about how the holiday shopping season is going so far. >> sales have been fantastic, very exciting. our business today is driven by our watches. chicago, ares in store in l.a., minneapolis, d.c. , new york and detroit. watches have been phenomenally successful. >> how much of a threat to watches are smart watches? when people come along and interferes a new product, that has repercussions across the market. we are very excited to see them come into the market. some people will want to wear watches. a lot of people will. bringing more attention to the brand that we have and to the
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quality and the value that we bring to the market with our watches, people will buy it continue to buy in copious amounts. >> you hope. one of the selling points is it is a us-based company, based in detroit. a detroit-based company that is also billing itself as a luxury company. how do you reconcile those two things? detroit, which has not been known as a home of luxury. >> we combine several assets. withcing a modern watch very clean and simple design, beautifully crafted, crafted in the united states. the quality that goes into the products, we do everything we can in detroit. we assemble our watches in detroit. the idea is to create a watch that appeals to a very broad spectrum of customers.
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today, if you are out there and , have a a gift card ola.com and you will see the combination of makes us ans exciting, compelling product. >> you do the assembly in detroit. various components, some of which are manufactured in the u.s., some of which are manufactured elsewhere. is taiwan.se places as i w how important is it to you that you eventually bring even more of it and make as much as you can? >> we are trying to bring that capability back into the united states. our watches all caps with component parts. we bring those components into detroit where we assemble the
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actual movement and the watch. we just brought back a small factory from taiwan into our downtown detroit store, our midtown detroit store. we will start making dials in that factory. we introduced the dial making capability in our store. you will see >> those styles being manufactured. >>why is that important for you all? >> we see no reason why cannot be done. we have an incredible amount of people totally dedicated in detroit. just 250 people in detroit. a really important part of this copy going forward. are the limiting factors on bringing the production and manufacturing to the u.s.? it is a question of expertise or price? -- withy a question of
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a swiss company that we are affiliated with as a partner of ours, we have the technical ability, the training, all the equipment. by finding the people in detroit , we have incredible quality coming out of our products coming out of detroit. we train these people and we -- we have only been in the trade for 18 months. these are people who are dedicated to making the quality product and are building careers for us. it is working and it can be done in a very efficient and effective way. >> of course, you might be wondering where they got the name shinola. it was a brand before, back in the 1940's when that expression
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came -- it was a shoe polish. they were looking for nostalgic -- a nostalgic name. >> they branched out from shoe polish into watches. a natural progression. >> not quite sure how they got there. >> what is the market for wristwatches these days? they look at their phones. been some waning in the market for watches. i asked him about what smart watches will mean. that is a potential threat to the industry. >> thank you very much. marketking -- i'm in the because they do look cool. detroit and i love
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brandon and bob. such a pleasure. merry christmas. ♪
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>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> the studio will release the interview tomorrow in a few hundred independent theaters. i'm sure they will all be sold out. >> got to have some heavy security in place. will talkl analyst about what could drive a rebound for oil in 2015. out a loty to shell of money. >> welcome to "market makers."
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i'm trish regan. >> think god you have joined me. >> because apparently you were not allowed to be alone. [laughter] >> you have come to babysit me. fabbio, thank you for joining us. taking some time out on this christmas eve morning. we appreciate it. >> if you want to do shopping, we have a great segment coming up. >> it gives me a good opportunity to show the lining in my jacket. can you zoom in? there is a little christmas foxhunting jacket. >> nice, nice. >> the top, global business stories. we are two hours away from the
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closing bell on this abbreviated trading day. fewer americans filed for unemployment benefits. crude is resuming it slide. the dollar weekend from a five y ear high. coca-cola is making some major crosscutting moves. it plans to cut as many as 2000 jobs in the coming week. there is your christmas present. it also canceled its christmas party. coca-cola announced its $3 billion cost-cutting party -- october.an in uber's ceo indicted in south korea. they were charged with flouting local transportation laws.
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i'm sure he will not show up. the maximum penalty is two years in the slammer or $18,000. the $18,000. for steps president of takata down, effective today. he is leaving his post as the troubled manufacturer deals with a recall crisis. the airbag seven links to five deaths and triggered the recall -- airbags have been linked to five deaths and triggered the recall of 5 million. fedex and ups say deliveries are running smoothly. they missed deadlines last year. the shipping companies hired more temporary workers and benefited from largely favorable
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weather this year. in the sonyt twist saga. they will release "the interview." that reverses an earlier decision. alamo draft house is one of the chains that fought to show the film. i want to bring in the chief ran officer. -- brand officer. tell me, what when into some of the negotiations surrounding getting this film into your theaters? >> good morning. broader network of independent and art-house rallied over the weekend. we have been talking to sony all along. it was really the work of the network of independents that banded together. we released a petition on monday
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morning saying we would show it. we got the support of 500 programmers. we posted an open letter saying exhibitors big five would not screen the film, we would. sony called us. they called us on monday night and asked if we were serious. that led headfirst into negotiations about screening the in over 300 theaters across the u.s. tomorrow. >> there is one in younger's. -- yonkers. andw "gone girl" there drank many beers and ate some real buttered popcorn. are people really scared of north korea? scared ofe people are north korea and south korea, but not so much where we have our theaters.
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i don't think there is much of a threat in yonkers. we have been working very closely with law enforcement officials across the country. they have come to our theaters, they have walked through. we think we are going to be fine. we have been in dialogue with the fbi with regard to the cyber attack. we are pretty confident. hading by the sales we have , people are coming to see this film. they are also coming to see "the hobbit," "the night at the museum." are you hiring any extra security? what is the liability that you have here? >> we have not brought in next her security. security.a
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there will be a presence of local law enforcement, but we don't anticipate anything serious taking place. you are looking at 300 theaters across the u.s.. this is not isolated to our alamo draft house. people are taking the threats very seriously. >> are you personally going to go? >> i am actually based in los angeles. i am going to a screening tomorrow at the egyptian theatre on hollywood boulevard as part of the american cinematheque. why are not some of the bigger chains following what you are doing and getting behind the release? they are simply scared and concerned about liability issues? >> think it was twofold.
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the situation has changed a lot. they made their decision early last week. you very much had a snowball effect. the statement was made referencing september 11. they made the: december 16. after that, the theaters started to folic dominoes. -- fall like dominoes. concern that if they were screening the film, it would have negative implications they wereher films showing in their chain. for us, it was a question of civil liberties and freedom of expression. we did not want a precedent to be set. we are remember the horrible batman massacre in aurora, colorado. they had no warning. they had no information before
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hand that any such thing can possibly happen. there is a loss of going on. the judge has permitted the lawsuit to continue. in your case, you have got something resembling advanced warning, although not described as credible. you know the lawsuit is written should something go wrong. it could be an idiot with a flash bang grenade causing a stampede to the exit and people getting scared. which they will be nervous. how do you handle that from an insurance perspective? are you worried about it? been taking guidance from our legal counsel at the highest level of the company, as have most of the theaters surrounding us in supporting us. we don't anticipate any negative consequences.
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guarantee there will be fun and phraseology and waving a flag's at the theaters. we don't anticipate any flash bang grenades. thiswould love to go to film. i'm flying sadly to spain tonight. i'm sure you are sold out anyway. the theater in yonkers is always sold out. have you seen the movie? >> i have not seen the film. everyone else in the chain has seen it. we screened it as part of a festival just over a week ago and a played phenomenally well. it is a film we believe in. we believe in what we stand for. fabiano, ifsh and you want to come to the theater, we will gladly open the door for you. >> thank you very much. >> is either one of you been? >> i've heard it is a whole
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different paradigm. >> it is a totally different thing. out an down, you fill order form, and they bring you food and beer and ice cream the whole time. >> that is the way the movies should be, right? should beion studios like that, what you think? you have a strict note to telephone -- cell phone, no talking policy. >> thank you so much. by the way, remember last week on president obama talked about the film in his news conference -- decided to have the state mount an all-out assault on a movie studio because of a satirical movie starring seth rogen and james flacco. >> here is how james franco responded.
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a little name fun. [laughter] >> it was funny. i don't know if he was thinking about football quarterbacks, but did you see that? it kind of cracked me up when i was watching and then twitter lit up. i don't know if this one is going to be as good, but have you seen "pineapple express"? set right get off the now and go home and watch "an apple express." it is fantastic, but it only got 68% on run tomatoes. i hope this film is half as good as "pineapple express." i'm looking forward to seeing it. the guy who plays them is very funny as well. lots more to come. we will talk about activism and
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shareholder activism. some of the biggest companies in the world are targets this year. why are investors starting to go after such huge targets? why not? money. >> if you don't have your plans, we have a few ideas to kick around for you. you better be willing to open up your wallet. ♪
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> the biggest story of the year might be the collapse of global oil prices. now that opec has refused to cut production, few are expecting a quick rebound. let's see which had mayberry had mayberryat c thinks. >> thanks for having me. >> if anything would be a catalyst for rising oil prices, what would it be?
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i can't think of anything reasonable. there has been a lot of doom and gloom on the market in the oil prices. see more risk to the upside than the downside from current levels. we are one geopolitical incident away from normalizing back for the margin of cost of production. on the supply-demand equilibrium, we see it equalizing out to the second half of 2015. , we areupply side seeing supply come down. just yesterday, we saw iraq take down their budget for 2015. the supply will be rolling over. >> are you going to see enough demand? you are looking at what could be a pretty bad global slowdown.
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europe and asia are not going to need as much oil. is it going to do so quickly enough? >> i think so. when you look at 2015, just this week we saw gdp at 5% in the u.s.. that does not reflect the drop off in oil prices that we have seen. it will provide a tale one for .he global economy -- tailwind for the global economy. i think it will normalize over the course of next year. >> the shocks we have had over the previous years have tended to be on the supply side to the negative. been a leader,s
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but the reality is we have seen a structural change in how much oil is coming up. the kind of headwinds that a sustained increase in oil prices would be facing our intents. there is still more supply. the elasticity of the supply curve has increased immensely as oil comes back online, as fracking comes back online, libyan oil, nigerian oil. -- to do ae to suit substantial increase seems to be pretty unlikely that you're going to overcome that wall of supply. we are seeing a structural change in the market.
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essentially rendering the cartel meaningless. the pressure out of the oil market. we are in the process of resetting the high-cost producers. they will be the ones that are worked out of the market. there is a general misunderstanding that the u.s. is included in that. i think we are in a better competitive position than we were in the 1980's. structureith our cost and the cost to capital. iswhat is incredible to me that no one saw this one coming. when you think back to june and the levels we were at in june and you could have said, saudi arabia is going to get a little annoyed that the shale industry has become so successful and could dethrone them. increasearabia did not
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production. prices fell and then they refused to cut production. what the question is at the top of the mind, we are in an and game. game. end saudi arabia can crush everyone if they want to play that way. will they be able to shut down u.s. fracking? will we see sustained structural reductions in the u.s. possibility to produce? -- u.s.'sess up ability to produce? >> they do have a lower development cost than we have here in the u.s., but when you factor in --
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>> by a lot. -- you know, the other thing we see, which a lot of people leave out of this auation, is everything from 450 horsepower corvette to an 8000 pound pickup truck is getting 30 miles per gallon and most regular cars are getting more that you can buy new on the market right now. you just know really need oil the same way you did as far as the consumer is concerned. houston and dallas and these oil-based economies are preparing for oil being at a lower demand going forward. >> the industry is preparing to whether a long-term downturn.
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demand up toseeing 20 million barrels per day in the u.s.. a lot of that is driven by refinery capacity. we continue to be a net supplier of petroleum products to the world. the efficiencies are offset by miles driven. it seems like consumers have a short memory. we are still driving our suvs. >> i like the big trucks, too. thanks for joining us. >> more "market makers" next. ♪
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>> coming up, we are going to
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talk about activist managers targeting the biggest companies in the world. you know a couple of these guys. they are making some decent money and growing some sweet yards. some sweet, sweet beards. >> we will talk about that. ♪ ♪
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make the best entertainment part of your holidays. catch all the hottest handpicked titles on the winter watchlist, only with xfinity from comcast. >> this is "market makers," with erik schatzker and stephanie ruhle. >> i'm trish regan. >> i'm matt miller. we are in today for stephanie and erik. we'll so brought a special cohost. he is a professor at columbia business school. it is a pleasure to have you with us. >> happy to be here. why would you say yes to
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spending an hour with us on christmas eve? >> specifically to see that lining of your coat. >> i'm not even wearing any pants. what a year it has been for activist. are they creating value for shareholders? thanetter to talk about it fabio. are they creating long-term value for shareholders? they are definitely giving themselves big enough pops to get out. larry think even talked about it being short-term. -- fink even talked about it being short-term. they did a long-term study and companies do have inefficiencies in the distribution and the activists have with cold, this
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passion and interest been able to get involved and on average you get about a 6% increase in the performance of companies that have had activists involved versus not. going forward, it is a little less clear. the company feels like it is a huge drain and all energy they might have been employing on the future and the focus is then shifted to having to deal with the headache of the activist. >> if they have been putting the headache into growing it, they would not have anything to latch onto. how do you create a short-term pop that is not already priced in? you can only cut fat that is there. >> i trish was interviewing dick parsons and i looked at a
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history of carl icahn's activism. he was activist in aol, time warner. they used all of their resources to fight carl. i saw the same thing happen this year with ebay. energyed all of their and possibly money to say carl is wrong and we should not spin off paypal, bad strategy, never going to happen. than 10 months later, they do exactly what he suggested in the first place. >> think about apple and the buyback. tim cook eventually came through on that side. different funds do things different ways. bill ackman has a subtle, shock and on display sometimes if he needs it. you see others in the middle.
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it one of two ways. >> is it right to be so public? you mentioned bill ackman. do you have to make it to this public? >> you don't. , youactivist hedge funds look at some of the recent deals that have been done quietly, behind the scenes. or can be the hero mr. ceo we can do this the ugly way. shareholders are better off doing at the different way. they are better off having spun off paypal from ebay. we can do this one of two ways is a very powerful argument that more and more people are listening to. obviously, everybody in the world to new would be better off spinning off paypal.
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>> we have been saying that forever. growthenerating so much of the rest of the business is not. it was pretty obvious to much of the street. you are also seeing apple, we talked about apple, you are talking about companies that the old corporate raiders could mess around with, but you could could get anywhere to the upper echelons. it is now i have my army and i'm ready to go to war now. it changes the dynamic. isng forwards, the question -- and this is an important question -- what have we done? did anyone get fired in the paypal spinoff? not really. a dividend from apple.
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this is balance sheet and corporate structure activism. , theseun, it is happy guys are sitting on a horde of cash. that is all good. the next phase, what happens when the activist says, we are going to sell this division to the chinese are we are going to shut this down? then it gets ugly. >> does it? it alreadyrgue that has been ugly in some ways because companies are more focus on the financial engineering than investing in capital and did people to grow their business. that, i wouldf say that ultimately it is good for the overall economy for companies to be running as efficiently as they can. harvard endowment, callister's pension fund, do they want to get involved in the ugly business of shutting down plans? you have a lot of institutional investors that may not like it.
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right now, it is easy. there is no blue horseshoe loves anaconda steel. >> if you are last-minute shopper -- >> i did all of my shopping on sunday. i felt very responsible. >> if you want my ideas on what to get, we have you covered. stay tuned. ♪
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>> the countdown is on for anyone who has not finished their christmas shopping. procrastinators have a couple of hours left. some ideas on last-minute luxury items for anyone left on your list. give it to us. >> i finished all of my christmas shopping. i went to bloomingdale's across the street.
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the streets and stores are still packed. if you are looking for the perfect gift, i spoke to bloomingdale's head of personal shopping and she told me cashmere is topping people's list. look at this fancy item. nothing beats waking up christmas morning and finding a cashmere robe under the christmas tree. especially a cashmere robe with david your men bracelets -- yurman bracelets. >> the kids don't where david yurman bracelets? >> cashmere roads are pretty amazing. don't you need to get it to somebody special? >> i need to get a few gifts. it is not an older person.
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luscious put it that way. -- let's just put it that way. or perfumee candles gift sets. >> sounds of his or her all gifts for the ladies. montclair and canada goose outerwear doing well. the problem with this one is that the sizes you want are not always there. >> this sounds like things for ladies. what about the dudes? >> beats headwear. headphones. anyone who does not have beats headphones already? i will get you some for christmas. i will give you the ones off of my desk. >> it was crowded. >> it was. i asked them if last-minute shopper spend more and they said, yes.
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the problem with the last-minute shopper is they need a gift, so they will throw money at the problem to make it grow away -- go away. savio, have you finished your christmas shopping? >> i am short in a rising market. goes,e of the guys who yes, i will take it, can you wrap it now? those are candles? >> jo malone. >> it is owned by estee lauder. >> i think it is a european company. andt was in london thing only in london and trendy to bring it back on wall street. >> these are luxury items. these are people looking to spend serious dough for the holidays. isn't it the best? >> doing your job and finding stuff at the same time.
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>> she is just finding stuff for herself. if you were willing to spend $50,000 for new year's eve, we have some deals for you. stay with us for the most expensive things to do to bring in 2015. ♪
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>> welcome back. week left.a we are going to tell you about some of the priciest items. this comes to us from our friends a bloomberg rankings. number one thing you can do a new year's eve if you are loaded. this outrageous hotel in san francisco has a deal for
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$75,000. you have complete butler service. i guess waterbar is a place to go. i don't really know. i guess you get to keep the pearls. i guess you were going to adjourn fish and pain, but for $5,000, it better be amazing. >> how to the get to $75,000? get don't know how they there either. maybe you get to keep a pickup truck. [laughter] the hotel looks nice. would you do this? if i said, here is a million dollars. the same guys who were
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throwing rocks at the google buses will probably line the road from the hotel directly to waterbar to stone you as you go by. >> you are going to pay triple, quadruple what you would normally pay on new year's eve. >> cory johnson said waterbar has the best view of the bay bridge led light installation. >> it is dog friendly. what more could you ask for? >> we have the dana hotel in chicago. a bargain price of toys thousand dollars. of $20,000. >> nice. five-bedroom apartment. axis to the ski slopes. some club is thrown in there. know decimo. >> build your own bloody mary
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bar. >> that one makes sense to me. i want somebody else making my bloody mary for $21,000, especially if i'm hung over and about to hit the slopes at 8:00 in the morning. i might get tomato juice on my boca and are ski suit -- bogner ski suit. i would pay $21,000 not to go to that club. [laughter] >> you and your friends can head to live nightclub. you get bottle service. you get two bottles of champagne. let's be honest. couldn't they have thrown and enough for the 15 of you? >> i have had a magnum of vodka
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before. i don't remember getting home. i think that will work. >> excellent. we will take a quick break. wait. we have a little bit of time. >> i'm going to be in madrid for new year's. going to one of the clubs in madrid? >> there are probably clubs. they probably don't go out to well after new year's. it will be fun. what about you? myself back, flying from my brother's place in baltimore and going out for dinner. in general, those pricey dinners on valentine's day in new year's are the worst night to eat anywhere. >> it is total amateur night. go for sushi. you cannot screw it up. >> i'm going to take it easy in new hampshire. >> live free or die. >> absolutely. ♪
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>> it has been a fantastic two hours.
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thanks much for being a part of it this hour. you were going to go now and do your last minute shopping. i knew you would. >> you are going to stick with me for the next hour. we have a special edition of "street smart coming up on this .bbreviated trading day reports that sony may be trying to sell off its beatles catalog. plus all of this news about the release of "the interview." cracks i'm going to fly to spain tonight. i won't be able to watch it at the alamo theater, but maybe i get the north koreans and the airport to give me an illegally downloaded copy. >> fun times. >> to we do this still on christmas eve?
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why wouldn't we? we are on the markets. better luck. you try your luck, matt. sixth are rallying for a straight day. we have an hour to go before the end of close. we have a rising stock market. jobless claims and gdp continue to fuel the rally started by the fed. is matt brieray working on christmas eve. we have some solid markets. is this going to continue through the end of the year >> it will continue if everything goes as planned. the greek vote needs to go as
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expected. if all that goes well, the santa claus rally will continue. draghi has to form a coalition that will support his qe move. >> that is true. we will have more data out of opec. can the santa claus rally continue through the end of the year. there is not much on the horizon to stop it from continuing. >> the tax cuts are incentivizing. >> there are two sides to that coin. it is essentially a tax cut for consumers. how many jobs are affected by the price of oil. .ome offsetting dynamics .verall, probably a positive
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>> how are you encouraging investors to position themselves ahead of the greek election? i don't think they're getting enough coverage. potential tory has unravel what is otherwise a pretty positive story out of europe we are going to have the week, we couldt see some start of instability that we saw. how does the eu support a country that it is now potentially swearing off a starter measures and does not want to repay their bonds in full? how are they going to structure a sovereign bond purchase in the face of a member country that is basically not adhering to the plan? election and the ruling coalition's party does
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not get the candidate in, it has the potential to end badly. let's talk about fedexcup ups, they are the heroes of the shopping period. >> this is a pretty well-documented story. >> the move to cyber holiday sales is a benefit to the shipping companies. i like calls and call spreads. there is some cheap stuff out there. >> thank you so much for that. we are on the markets again in 30. ♪
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let's welcome, everyone. the most important hour of the session. the imminent threat to the close. extending the record before the holiday. six days of equities. oil resuming its slide heading toward the biggest annual decline since 2008. investors concerned even though stronger u.s. growth is coming and on the way it may not be enough in terms of a man's. we will have all of the angles covered and the catalog. we will be joined by

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