tv Bloomberg Markets Bloomberg December 15, 2015 10:00am-11:31am EST
>> from bloomberg world headquarters in new york, good morning. here is what we are watching. the fed begins its anticipated tuesday meeting that is expected to end with the first rate hike in almost a decade. what it could mean for the markets and economy. then the republican presidential debate candidates gather in las vegas for their fifth debate. we will tell you how it could reshape the race for the white house. and we will talk with the chairman of product -- prada. how they are dealing with the weakest market for luxury goods in six years. overseas whatle the u.s., we're seeing a nice rally half-an-hour into the trading session. the latest on the rebound. >> really in the past half hour
or so, we are seeing 1% or so of arise. bullish.wes started are even going higher than that. the s&p 500 is up by 1.3%. the dow up by 1.1%. the nasdaq is similar up by 1.3%. they are seeing their best two day rally since late october. this happened yesterday when higher oil prices pushed the markets positive in the last 45 minutes of trade. let's check the health of the s&p's 10 sectors. this is the imap function. pretty much all sectors except one are trading higher. telecoms flipped into the negative but only marginally. energy is up by about 2.4%. financial is not far behind at
1.8%. health care up by 1.7%. betty: interesting how we are tracking oil prices. >> talk about equities, you have to talk about oil. they are right now near a session high, slightly off of what we saw in the past half hour after seeing a fair bit of volatility. barrelushed above $37 a at about 5:30 a.m. or so. then give it up into the open. we're pretty much at near session highs. investors rescuing one note out of citigroup, saying oil could fall to the high 20's. crude is seeing its best to day rally in three weeks -- two day rally in three weeks. this has not been seen since 2009 but looking at oil stocks, let's check out exxon and
chevron writing the tailwind. they are leading the dow higher, but not only that cls a outperforming exxon with a price --get and gas isat said, natural not feeling the love that oil is seeing. another day down 3.2%. lower on warm winter weather. the fifth day in a row it has been in lost mode and at its lowest since 2001. betty: thank you so much. i want to check in on the first word news. vonnie quinn has more. vonnie: saudi arabia announced its leading a 34 nation islamic
alliance against the team is in. it includes pakistan, turkey, and egypt. u.s. secretary of state john kerry is meeting in moscow with russian president vladimir putin and other officials. coordinating attacks against the islamic state is on the agenda. defense secretary ash carter is in turkey, looking for new ways the u.s. coalition can strengthen its fight against islamic state militants in iraq and syria. they're urging them to better control their border with syria to help control the group. reviewing raising interest rates for the first time since 2006. investors see an almost 80% probability of an increase. coverage starts tomorrow at 1:00 p.m. eastern. at 2:00 p.m. followed by secretary janet yellen's conference at 2:30 p.m. more on that meeting shortly. deniedimore, a judge has
motions for a mistrial and change of venues as a jury deliberates in the trial of a baltimore police officer charged in the death of freddie gray. gray suffered a serious spinal injury while being taken to jail. city officials worry if the officer is acquitted, riots could breakout. britain's tradition of exploration, he wrote a russian rocket headed for the international space station. peak will be the first person to represent the european space agency on the orbiting lab. he will spend six months in space. that's a look at our first word news right now. more on these and other breaking stories 24 hours a day at bloomberg.com. betty: thank you so much, vonnie quinn there at the news desk. rate hike.ated
federal policymakers have been warned about moving prematurely. in a worlde that where air is inevitable, -- inevitable, it is better to make easy to reverse errors than difficult to reverse ones. i believe raising the rate runs the risk of easily reversible rates by subsequently raising rates whereas a decision to raise rates, if it proves to have been the wrong decision, is a much more difficult decision to correct. betty: that is something larry summers has been saying for quite some time. has this been going on way too long? this is a little asset management firm with over $77 billion and assets. latest 2016the outlook report released just this morning, so we have pine bridges chief economist to
discuss. when you agree with larry summers that if you at least delay, if you kept it going on for longer, that is less of a risk than if you raise rates now? >> it is easy to talk about it the way larry summers dollars. you only know an error once you have committed it. better for markets to have clear guidance into the future and businesses to plan around interest-rate expectations and i tv andhe volatility with the distortions of price mechanism and interest rate mechanisms is what's holding things back right now. betty: we need to move on, right? >> we need to liberate financial markets again and make sure interest rates represent something for businesses and investors and not something the fed plays with in order to try to stimulate growth and inflation which has not worked around the world. betty: is that what you are talking about when you say the dark side of qe?
>> what we are saying is the side effects. some of the side effects are volatile currency markets. another side effect is misallocation of capital in energy. part of what we see in the energy sector is the result of easy money and artificially inflated commodity prices which incentivize companies to go into the market and held and drill everywhere -- build and drill everywhere. now we are seeing the dark side. betty: is this going to correct this? is it too late? >> i think it will be good in the long term. but the question we'll is have is if you are in something that could be a bubble, do you deflate early or do you let it run? the last time we had a situation like this with housing and the u.s., we let it run. thought we could not identify problems and we know what the end result was. i believe raising rates now will
prevent a greater financial crisis on the road -- down the road. betty: where are we in the bubble? we have seen quite a big bubble burst and commodities. >> that was absolutely a bubble. we are in bubbles all around the world in commodities. those of the easy ones to identify. if you look at the tech sector, that is also bubble territory if you look at valuations of a number of tech companies. betty: the newer tech companies. because the older ones are ok. >> i think gradually raising interest rate is something considered normal and there are lots of academic ways of identifying it. getting back to something normal is what i think the fed is trying to do. betty: you are saying the fed is also the culprit to the volatility, it has been helpful in some ways for asset prices also to blame as well. that is something stephen roach said.
beyondfed has gone well what they needed to in and inflation targeting mindset and that they reading ground for asset bubbles and all too frequent crises. betty: how does the fed step away and make themselves less of a problem going forward? >> i think by taking monetary policy back to something that most economists would say is neutral. and see how the economy reacts. i think it will be bumpy. we will have to pay a price for normalization but long-term stability is at stake. i think central banks around the world are obsessed with the deflation risk. there is no deflation anywhere if you look at it. asset prices are rising. the example i only say is if you look at sweden, an economy growing at 4%, the fastest growth in the developed world,
disney is feeling the force if you don't mind me pushing the pond. did-- pun. it could open and l.a. on monday but goldman sachs is having influence as well. analysts raising their eps guidance on the stock and saying the movie will bring it nearly $2 billion in global box office revenue. that is up from their earlier call from $1.5 billion in revenue. another stock making a move is visa jumping by more than 2.5%. this after being added to the conviction by list at goldman sachs. after market share gains it signed preferred sponsorship deals with other companies including costco as well as usaa . twitter shares is next. down by 3.9%. this is as ever core cut its price targets for the stock, citing soft traffic trends in
november. it's target is now set at a low level of just $22 per share. coach shares are moving higher, 4%. a secondfter getting analyst recommendation in just the past two days. outperforming with a $38 price target estimated. breaking news, i want to get to a press conference being held in l.a.. there have been credible threats to l.a. public schools and they have been closed. let's listen on this press conference. up, so weust setting -- we will be monitoring this press conference. i think they are now starting. as was mentioned earlier, the school district received a safety threat that we are in the process of validating.
we are determining what, if any validity at has. .e take all threats seriously nothing is more important to us than the safety of our kids, especially those coming to and from school that have not been notified of the safety threat. we are doing everything we can to ensure we conduct a thorough investigation and we will work with the school district as well as the fbi to ensure the public is informed. this is steve zimmer, he is president of the board of education. how about we stand up. >> good morning. my name is steve cymer.
i am president of the school board of the los angeles unified school district. i would like to speak, if i could, directly to families and employees. and antaking this action abundance of caution to make in l.a.t every child unified school district and every employee is absolutely safe. parents,, we asked families -- we asked parents and not sentif you have them to school, please don't. if you have already been dropped off, we will have families meet their children at the reunion schools.all one of the very clear -- i want to be very clear.
we need the cooperation of the whole of loss angeles today. we need families and neighbors to work together with our schools and with our employees to make sure our kids are safe. we need employers to show the flexibility that a situation like this demands. we ask you to show the maximum possible flexibility with your primarilywho are mothers, fathers, and guardians today in this situation. at our school sites, we have asked administrators and plant managers to report. we are asking for teachers and other support personnel to stay home today. once again, i want to re-at the
entire board of education, our -- i want to reiterate the entire board of education, the actions we are taking today are swift and they are appropriate given the situation that we are patien we ask for the ce and support and cooperation of the city. the safety of our children is important. the only thing more important -- we are acting in regards to that city this morning. ouruld like to introduce deputy superintendent for operations, dr. melendez they santa anna. who will make an announcement in spanish. >> can we ask a couple questions before you do that?
us more about the nature of the threat and why you feel this is so serious? day,think later in the after they continue the withtigation and vetting the fbi, we will make a statement but not at this time. >> was a broad threat? school, orot to one three schools, it was many. not specifically identifying. but there were many schools. that's the reason i took the action that i did. >> you called it an electronic threat. >> it was a message. >> will all the buses returned to the yards this morning? >> there was not a threat made to buses. the reason they were returned is because we are not picking up students.
it was to students at schools, nothing more than that. at school students, yes. >> dimension details regarding mentioned-- you details regarding backpacks, can you elaborate? >> know i can't. the chief after he has met with city police and the fbi, he will be making further statements on why i made the decision i made. >> are you able to say whether these were elementary schools, high schools. >> i cannot take a chance. all schools, i have asked them to be searched today by the appropriate people. people are not necessarily teachers or support people. ourhere is a problem -- chief of police working with the
city police and working with the sheriff, to develop a plan. we have six districts to work systematically through every one of those schools. some are very large schools, some are schools with three and four rooms to them. but i want every school, every early education center, every adult school, i want them merched and a report made to and to the board of education that it is safe. numbers arrive early before 7 a.m., are all caps is then being evacuated? >> they have been told to go home. what about children at school, are you telling their parents to come pick them up? >> yes. the board president reviewed that they have been asked to meet at a certain gate. the principal to be there, the plant manager to be there, no
child to be left alone. we are makingold, every effort to see that we get the notification to parents as soon as possible, but i am not taking the chance of bringing children anyplace into any part of the building until i know it is safe. >> can you clarify that this is all students, teachers, staff, all personnel, everyone involved? >> yes in the campuses. that is what i have done. >> can you give us a little context? i know you can't go into the specific threat but a little context for parents at home. how many threats did the school district get, how rare is this? >> we get threats all the time. >> why is this one in particular a concern. i was just wondering why this
one got the response. circumstances in the neighboring san bernardino, what has happened in the nation, i think what happened internationally. i, as superintendent, will not take the chance with the life of a student. threats, wedividual do evacuate to schools, we do lockdown schools, etc. we do not really students until we notify parents. what we are doing today is no different than what we always do, except we are doing this in a mass way. >> i know it's early but for people who are watching, i know an update will come but where do we stand for tomorrow? >> i have no comment, i will release a statement before the end of the day. >> i want to introduce you to
monica garcia. she will translate for us. [speaking spanish] you are just listening there to the l.a. school superintendent there who was talking about some of the details of what transpired this morning to prompt the closure of all l.a. public schools. i want to get to vonnie quinn who has more. vonnie: all schools in los angeles are closed due to what the superintendent called a credible terror threat. he made the decision after receiving an electronic threat. he called it a rare threat, he says he gets threats pretty often but in relation to what events have occurred in recent months, he called it a rare threat and decided to close the
unified school district. it is the second-biggest school district in the country. we also heard from the board president, saying all of los angeles is being asked corporate -- asked to cooperate. all in attendance, parents are being asked to bring them home. police say they are in the process of validating the threat . we will keep you updated. betty: she will keep track of that situation in l.a.. now overseas, volatility across asia and latin america has been a mainstay. low oil prices, plunging oil prices, political instability, and the prospect of higher interest rates back home. that looms over the market. in the founder global realties, a estate firm with some of the busiest retail areas around the
world like mexico, france, london, and asia. of is also a former retailer ashley stewart. do you still know how retail works, i know you are investing in a lot of real estate. are you spooked by what is going on? >> i wouldn't say that i am spooked. i would say the most important thing that any ceo is today is cognizant of all moving parts. anytime you can get thrown for a loop. more of what is frustrating is the amount of variables. you just started to allude to, low oil prices, who will be the winners and losers. countries like russia and brazil, nigeria. more of the beneficiaries are in
india or the united states, maybe it will help retail spending. betty: for in asia with refiners. >> you look at political instability, even in the news we heard, the threat of terrorism. technologies,, there are so many moving parts. it is changing the game in terms of who will be the winners and losers. you have to wake up each day and revisit the macroeconomic perspective. betty: where do you smell the opportunity? you are always looking at opportunities. there will be winners, either winners because things are on their side or winning opportunities because of values. as an example, from the perspective of a country, you look at political systems. one system that seems to be going better in terms of pro-business might be argentina. one just took over as president had a huge shift for the
country. hadfirst time they have pro-business, economic development focused presidency in many decades. betty: for you in argentina? >> no. betty: but are you planning a trip there? >> for darn sure. first, you look at the reit side. west coast company called kr c a company thate has been hurting in terms of stock prices but they happen to be in silicon valley and a lot of tech abated markets doing well. another example. betty: betty: that's like a dislocation and values. -- dislocation in values. >> i am already a shareholder. secondly, good strong companies that are investing like blackstone or fortress that have
good management or skill to take advantage of value. you see blackstone stock, the lowest 27 and 45 somewhere in the summertime. -- the low of 27 and 45 somewhere in the summertime. betty: yeah but why would it hit so low if they have these properties? >> they have boatloads of capital, they have john gray, steve schwarzman, companies like that are going to be able to take avenge of opportunities. the market tends to throw the baby out with the bathwater so that is creating opportunities for folks that are cognizant of it and the ability to take advantage of market dislocation. will the fed raising interest rates make a difference to you? >> i think you hit it on the to the realg back
estate perspective, it is probably the most talked about thing in the real estate industry. but it has been that way for at least a decade. history, and i voice a student of history and try to apply it to investment pieces and try to alleviate investor concerns through showing that. ratesionally, interest have been effectively low from about 1970 four about 37 years from their -- for about 37 years from there. betty: rates are pretty low. >> you look at 1968, you had a long. of interest rates -- inflation is a factor of demand. so far, we have seen so many years of lack of demand either because of tough business or because technology has created such efficiencies in the
marketplace that has driven down cost. is to your conversation relax, we will see interest rates rise but they will not be at the high level we may have seen in the most recent past. just because the fed increases interest rates by small amounts doesn't mean the market will shift and have a ripple effect of higher cap rates. we can talk about this in a later segment because there is a quality and people are understanding of late the value of good quality real estate and applying value to that beyond the interest rate. betty: just hang on, we will be back to talk about more about this but i want get back -- want to get back to vonnie quinn on the l.a. public school closure. all schools in the vast
los angeles unified school district have been closed due to a terrorist threat. police are investigating which came by electronic means. they say that they are closing schools out of what they call an abundance of caution. police will be searching the schools. the district is the second largest in the nation, there are 640,000 students and kindergartners in k-12. buses are there bringing students home right now. other news, the nuclear watchdog of the u.n. is ending their investigation of iran's nuclear program. it came from the board of the atomic international agency. they decided that iran did experiments but did not try to build a weapon. toy move iran closer sanctions relief. entered the has
republican debate with his biggest lead yet. a new poll has from at 38% support among registered republicans and independents. ted cruz a second. marco rubio and ben carson each have 10%. the amount of demand for coverage under obamacare. today is the deadline to enroll for coverage that takes effect january 1. it has temporarily overwhelmed the government's ability to enroll them so cities like dallas, denver, and las vegas are lacking when it comes to people signing up. former subway pitchman jared fogel has filed an appeal in the case that has sent him to prison for more than 15 years. traveling guilty for to engage in sexual conduct with a minor and possession of child pornography. the second court of appeals in chicago will hear his appeal. that's a look at our first word
news. you can get more on these and other stories at the new bloomberg.com. i'm vonnie quinn. betty: thank you so much. let's get back to real estate and investing. if you are looking for the most pricey streets, look no further than new york. almost 50% higher in the top spot than in hong kong. we are still one of the most expensive cities in the world. joe, who has ah lot of property on 5th avenue and some of the most expensive shopping district in chicago. also joining me is real estate ,ntrepreneur, the founder chairman, and ceo of the people's corporation who develop luxury, commercial, and residential properties in many different cities. and of course here in new york. you are deeply in politics and contemplating a run for mayor in our great city.
that's where i want to start with both of you. you are listening to what vonnie quinn was saying. this is a big action on part of the l.a. school district to completely shut down based on what we know of, at least one bomb threat. that affect you guys? you want tourists to come to new york and people say new york will be a big target. >> the world is a big target. we're seeing terrorism around the world. nobody is immune. it is the number one pressing issue facing our society. how do we create safe environments. new york city is the safest city in america. it is very safe. nowink people more often will look at if they travel or where they live, they will look at places that have a plan or program to protect us. , i have beenis
talking about this on your show for several years, it is a class of civilizations and what i call an octagon of hate. there are so many countries and continents effected -- affected. even what we heard today about the school system, you have to stop and think about the sick mental thought pattern that goes on in the mind of somebody that wants to target young children. but from an economic perspective, our country is a disproportionate beneficiary, mostly because of our geography. we are so much further in a distance from where a lot of it is coming from. whether it's boko haram or the sunni, isis fighters. they have more access to europe. betty: but you are worried about
them coming here. they are likely going to target new york. are i'm sure there already but from an economic and investment point of view, the way investors look at it, at least the high net worth and institutional investors are always looking to raise capital from, we are considered the best of the worst in new york and san francisco and miami. even filtering down to our 18 inr cities, could be austui or denver. even australia, the distance they are, being a target. but we are still considered the best quality location. i think the message we have to put out, our governments have to put out, is we will be vigilant not just in a battle but in terms of protecting our kids and our school system that we see today. >> i think the point is that america is preventing a lot of these attacks.
we have a very strong counterintelligence and antiterrorism effort that has borne considerable fruit while we have had some tragedies. they have not been anywhere near the scale of the tragedies we have seen elsewhere. since 9/11, our country has reacted. the reality is while inconvenient for these kids to have to go home and school today betterfornia, it is far than any kind of catastrophic event. i think an ounce of prevention a ton of 802 or -- -- cure. betty: such a big reaction to something like this, but i don't want to stray too far from what i was going to have you on for which is the real estate markets. were just talking about how commercial real estate prices are getting so high, higher than
anywhere else in the world but on the residential side, they are also getting high. you know a lot about this. vacancy rates are at some record nine-year highs because people are getting pushed out of the city because it's not affordable. >> what's happening is you are seeing the cost of rent escalating so much that there is no discount to ownership. there was at one point a discount to ownership. also a lack of confidence in the for-sale market. people ran to rentals as a safe haven and many people could not qualify. as a result of what happened in our financial crisis. now we have people that are buying but we are not seeing because of such a limited inventory on the for sale side, for condos and so on, mainly condos in new york city. there's a lot of preconstruction sales and those sales have not gone to record yet. down, itocity of years
is more active of a market than what we are seeing because of these transactions that are happening due to pre-sales. i think we're going to see a slowdown and we are seeing somewhat of a slowdown from a tremendous velocity on the for sale side. but the rentals will pull back a bit. they are at a point where we were before in the last market cycle when we were near peaking. that is probably where we are right now. he commented on the residential side and i will talk about the commercial side. i will go even further around the country. seattle, portland, chicago, etc., you talk about the 18 to 24 hour cities in america, it is right now utopia and what i mean by that is you are still not peaking in terms of where the rent is compared to where the peaks were a
tremendous demand and growth typically driven by entrepreneurial society and technology. betty: but this is commercial. a result of the voracious appetite of technology companies to grow which is a result of the capital coming out of the eventual capital -- venture capital community. betty: but is that sustainable? we won't decide that, as crazy as that is sounding, it will be decided by the financial markets. as long as people are going goo goo over the private valuations of a company like uber or a public company like google, and say they want to own the next company and as long as the money is flowing to young people, i think it will be a plus with those funny valuations that i often say with ace book and google isfacebook and
sometimes confederate capital. boatloads,d it in they have that capital in terms of stock prices. good for them to start companies, grow companies, and by companies. that is converging with the fact that we happen to be in the last seven years the most entrepreneurial society we have seen in america and so long creating new business, excitement, and demand for office space not just in new york. betty: before we go, i'm kind of curious. that economy is what is creating. you talked about this as well with the haves and have-nots with the income inequality. i only bring this up because i don't know if you know, warren buffett today will be stumping for hillary clinton. he wants to talk about the buffet rule and let's help middle-class americans.
i'm curious about you as businessmen, what do you make of that? , what do you think? don: i know warren buffett and have spent time with him and he's had the great opportunity to create a lot of his will through capital gains. but i think he is right that there needs to be a greater balance of economic opportunity. i don't see it as much of an income inequality as an inequality of opportunity. we have public school systems failing our young people and not preparing them for upward mobility. our businesses, for the most part other than the technology sector are pretty much confined. they are almost restricted for lack of a better phrase, to those who have been in this business for a long time like our business for that matter. joe: the haves and have-nots have changed.
people look at financial executives as the haves. i think people underestimate how much the technology industry has changed to those are. look at how many billionaires are out there in the 20's, 30's, and 40's with wealth created by technology. i've said it so many times, the trick to getting that ripple down is training. the game changed in terms of the industries that are accessible and the skill sets that are needed from americans to be able to supply to those industries and where i would be focusing if i was one of these presidential candidates is how i am going to train the middle american who is maybe out of work from a basic abc job to be able to qualify for those positions in technology to be able to grow and move up the economic ladder. betty: thank you so much, great to see you. joe is the founder and chair of equities. don peebles, chairman of the
♪ betty: welcome back. i want to head to europe with mark barton, seeing european stocks. we are headed for the best rally here since we hit 10 we close. mark: -- 10 we close. after a decline, the stoxx 600 is up by two points, 7.5%. appetite for risk propelling shares higher and m&a propelling shares higher.
swaplks about an asset with germany. a 22.8 billion euro deal. it would exchange the animal health division but burrowing consumer health assets. i want to show you volkswagen. interesting card data out of europe today. rose.agen's car sales big beneath the surface, what do you see. you see the market share of volkswagen changing the most since the emissions scandal since september down 2.3%. u.k. inflationg showing an increase of .1% in the month of november. essentially skirting around us euro for the better part of a month. we are a long way away from the 2% target. how you miss me when
we get to the battle of the charts. mark barton in london for us and he will be back for the european close for a look at how u.s. markets are closing. abigail doolittle has the latest from the nasdaq. we are gaining a lot on oilabig abigail: we are seeing a nice moreery. shares are up than 1% on the composite index. back above its 200 day moving average reporting below that level. sometimes a bearish signal probably the observation at this point is the movement around that level of support continuing, we are likely to see big volatility i had her have striven by the fed./ \] howard stern has signed a new five-year contract with sirius xm which was largely expected so
it doesn't mean numbers are expected to go up what it does move a downside risk of shares so we may see this stock continue to go up. it had a nice year to date. betty: thank you. abigail doolittle at the nasdaq. could you soon see your favorite nfl teams playing on google or apple? that story up ahead. ♪
♪ back to bloomberg television. the nfl is auctioning off aoadcast rights to inflate thursday night football game in january and companies including google and apple could hear radically win exclusive rights to show those games. the league is far from convinced the internet is ready to handle the live streaming on a scale of pro football with tens of millions of people. josh burstein wrote the story and joins us.
how likely is it we could see an apple or google bid for these rights? >> is not sure that we will see that this year, the nfl is wary about whether a full season of thursday night games would be doable. i think we will see some streaming rights, and this deal but it is unclear if that will be to a tech company or cbs or whoever would get the television rights and also the rights to stream on its own website. betty: clearly they are toying with this idea and we saw yahoo! stream one of those games. the one held in london, how did that do. that was absolutely an experiment with something potentially broader. i think it did well, there were not any major technical problems. betty: how many people streamed? >> i think they said 3 million people concurrently, that was how many people were watching at the same time.
near theot anywhere total audience of like a sunday television game. betty: which is what, 30 million people? >> i think the numbers do get that high. but you would have a technical problem on a different scale if you looked to give exclusive rights to games that people want to watch. the yahoo! game was picked intentionally for its low interest. betty: as sad as that sounds. what do the technologists say? can we or not? josh: the nfl said it was an open question. i spoke to their tech knowledge he arm and they do a lot of streaming of sports. certainly couldn't do it week in and week out. there are a bunch of different stops along the line.
called content delivery networks. they take a signal from the nfl out to like verizon or whoever gives you your signals. they said they could get there but they are not sure what their limits are yet. betty: it sounds like they want to get to that point. they queue so much. our bloomberg technology writer and on another note your keeping our eye -- thank you so much we are hearing about this in los angeles. threatble terrorist called into an alley school board member early this morning prompted the closing of the schools. we will keep an eye on that developing situation. ♪
betty: from bloomberg world headquarters in new york, here is what we are watching at this hour. the fed begins a two-day meeting that is expected to end with the first interest rate hike in nearly a decade. turmoil in the high-yield debt market. billionaire warren buffett is making a rare move, going on a presidential stump. he will be at a public rally for hillary clinton. we are 90 minutes into the trading session so far. we are hanging on to this rally. we have the latest. >> it has been tracking what oil has been doing over the past few days and weeks. looking at the markets, they are near session highs and might be at session highs right now.
we saw them jumped out of the gate at the open and the first meet -- first few minutes of trading. this is the best two-day rally we are seeing since late october. the most, bys up about 1.2%. it is important to note that the markets are still on track for the worst december since 2002. the fed starts its two-day meeting on whether it will raise interest rates, so let's check out the latest probability of that happening. this is the w.a.r. p function -- wirp function. 78% if the chance the feds will raise rates by at least 25 basis points. they will have that announcement and we will carry that. as equities rise, treasuries are falling for the second day in a row. yield on the u.s. 10 year is now
up by five basis points, to a level of two and 27%. -- 2.27%. in more than five years since may of 2010. betty: moving from the fed to energy, i know if you stocks are on the move. >> before i get to that, i want to take a look at the price of crude. it is the best two-day rally in the past three weeks as the u.s. considers new news lifting its export ban. is up by more than 1%. you can see how volatile it continues to be. around 5:30 a.m., we saw one peak and then it lost almost all of its gains only to peak higher.
we are out -- off the session highs at 1.1%. skewing onee negative piece of news from citigroup. toorts say oil could fall the high 20's or so, but that would be later one next year. -- exxon and chevron leading the dow higher. 3.3% and chevron up 2.8%. a price target of $84. natural gas is still sliding down for its fifth day in the row -- fifth day in a row. betty: thank you so much.
we are monitoring breaking news out of l.a.. we have more from the breaking news desk. it is developing, the nation's second-largest school district. it has been shut down because officials are calling a criminal terrorist -- a credible terrorist threat. in electronic threat that involved many schools. the district ordered the students in more than 900 schools to go or stay home. buses collected those already at school. >> it was not to one school, two or three, it was many. there were many schools, that is the reason they took the action that i did. the superintendent said he ordered the schools closed out of a abundance of caution after the san bernardino shooting. the lapd is looking into this
threat. donald trump hens into tonight residential -- presidential debate in las vegas. the newest poll shows him at 38% support. ted cruz is second at 15%. ben carson each at 12%. a jury and baltimore resumes deliberations in the case against the first officer on trial for the death of freddie gray. seriousgray suffered a spinal injury while it be -- being taken to jail. night,rs came out last thousands of guests filled three theaters are the premier of disney's star wars episode seven, the force awakens. that is a look at the first word news right now. you can get more on these 24 hours a day at bloomberg.com. betty: thank you.
i'm assuming we will be talking a lot about star wars in the next few weeks. wall street is having some flashbacks to 2007. route hasield debt made it hard to trade assets. month's turmoil a harbinger of things to come? is this lehman brothers all over again? i want to bring in michael moore who wrote a story about this, and the people you talked to that said no -- said nope. michael: the banks are less involved and not having them is kind of the crux of the crisis. it is certainly a big difference. if you go back and look at the assets, the mortgage assets that
banks have other balance sheet , they arehe crisis incomparable. betty: so give us those numbers. michael: what are called level , the most difficult to value, those total about $6 billion. that is less than 1% of their equity. if you go back to 2007, lehman brothers, they had level three assets and their mortgage business of about $25 billion. betty: what was their equity? michael: their equity was $20 billion. it is pretty dramatically whyerent for the banks and -- while banks have exposure and their investment for $40 -- portfolios, it is not the same
magnitude and you are not seeing as much in the repo market, there is not as much of corporate debt as there used to be, so that is -- that has lessened some of the for selling and volatility. betty: is there a scenario where any of these people you interview described where you could see something more fundamentally disturbing for the financial system? michael: what many saw as a potential risk is in corporate america, corporate america has been so reliant on the high-yield market defund these acquisitions and a lot of the growth that if that closes up, because of the volatility, and they are not able to issue as much high-yield debt, that could slow down the economy overall. rippleuld certainly have effects. this is just a few weeks at this point. or getsags on
sustainably worse, that could be a fear and if you see a larger fund, 3rd avenue was certainly a good sized one, but if you saw something larger have those kinds of issues, that would be much more of a concern because then you would worry about the credit lines the banks are offering. betty: thank you so much. that is a great debate right now, whether there is a liquidity crisis in the high-yield market. back on the fed, a great debate there, anticipation for the fed decision reaching that fever pitch. what does one of the top economic minds of this country think? larry summers sat down with our tom keene in dubai and gave his perspective. signals it given the sent, has no choice but to raise rates tomorrow. i would certainly recognize that this is all it much closer
-- muchhan it was closer question that i was in september when the economy was looking weaker. turmoil inwas more the financial markets. said, it is, in a world where ever is inevitable, it is much easier to make easily reversed errors than to make difficult to reverse errors. i believe a decision to delay rates runs risks that are easily reversed by subsequently raising rates, whereas a decision to raise rates, if it proves to of been the wrong decision is a much more difficult decision to correct. there are still substantial questions about the growth ofspect, about the prospect achieving the 2% inflation
target, about uncertainties in financial markets, with respect to the global economy and with respect to emerging markets. my instinct would have been to place less reliance on the phillips curve theory. therefore, to have waited until that welear evidence were in danger of significantly exceeding the 2% inflation target before acting. --s is something on which tom: reasonable people can disagree on this. citigroup is adamantly that -- he says the distinction is why raise rates if there is no financial instability? do you detect financial instability now when we look at the district -- the stress hedge funds shutting down and
high-yield spreads lighting up and as you said, the commodity markets in turmoil. are we near financial instability? >> i don't know, but in order to believe you should raise rates are stability reasons, you have to believe that there is a serious problem of overconfidence, of bubble formation and it seems to me that most of the possible levels are no longer -- plausible bubbles are no longer plausible. could've said there was a bubble in the high-yield market at some point, but you could not say that today. perhaps you could've said that about commodities, but you can't say that today. the notion of raising rates today as a prophylactic against financial instability seems quite odd. we are much more likely to have that come from under
confident in financial markets than problems that come from overconfidence. betty: that was tom keene talking with former treasury secretary larry summers. stay with bloomberg tomorrow for complete coverage of the that decision. we will bring you live coverage beginning at 1:00 p.m. eastern time. much more ahead on the markets, we look at why billionaire warren buffett is throwing his weight behind other clinton. -- behind hillary clinton. we will hear from volkswagen's chairman on how he plans to turn around the shrinking market share. why call come board is ignoring calls to split. ♪
betty: welcome back, we have breaking news right now. the west coast and we are following breaking news out of l.a.. a threat has shut down the nation's second-largest public school district. we have more from the news desk. vonnie: we're talking about what's being called a credible terrorist threat. is from thee have associated press, saying that a school board member received a threat electronically, e-mailed to the member. the school board member told the ap it appears to come from overseas. we did have a press conference given by some of the members of the school board, including the superintendent, who said the decision to close all my hundred schools in the district came
because it was a rare threat. he said they typically get requests and threats for the often, but this was a rare threat. he ordered all 640,000 students to go home or arrange for buses to take them home. they are taking the threat seriously and the lapd is investigating. we will keep you updated as the day progresses. another press conference is scheduled for 12:00 eastern. betty: thank you so much. we will continue to monitor that situation. i want to head to the markets. we are monitoring some of the big winners and losers today. >> we are only about an hour and a half or so into the market day, but first i want to go to bowling because their shares are rising higher today, up by nearly 1.9%.
a 20%s being fueled by rise in its dividend payouts, as well as a boost in the giant stock i back plan. they raise that plan to $14 billion from $12 billion. the plan turns out to still have $5 billion in. is nearlyng power just 9 million not -- $9 billion. investors are looking positively on that. disney shares are seeing early benefits from what could end up being $2 billion in global box office revenue. stock is up 3.4% right now according to analysts at goldman sachs. disney shares have actually gained on optimism for the film after the premiere in l.a. which happened last night. the set is also holding onto gains earlier today -- the set is also holding onto gains from earlier today.
share gainss market in the u.s. as well as long-term growth potential in its china market by the end of 2016. going thego to 3m, other way, shares not doing as --l and treating down 4.7% and trading down 4.7%. sales just 1% this year, they said the strong dollar will reduce sales by one percent to 3%. betty: warren buffett is throwing his power behind hillary clinton. the billionaire has long resisted the call to throw his massive power -- behind anyone campaign, but tomorrow he will be front of her at a campaign rally -- campaign rally for the democratic front-runner. we are joined now live from seattle. know it is interesting, we warren buffett has commented
often on politics but he is now actually backing a candidate. >> it is really interesting how he has stepped up his involvement. -- just a fewhe days after president obama was reelected, buffett did an interview where he said he wanted to see former secretary of state hillary clinton in the white house in 2016. he said that pretty frequently in media appearances, but will we are starting to see as we go buffettmary season is is stepping up his involvement. to eventso be doing for the candidate in omaha, tomorrow. first is a fundraiser, then he will follow that with a rare appearance at a political rally. what exactly is he -- do we know what he is going to talk about as he is campaigning with
her? >> the issue tomorrow is going to be -- one main issue is going to be tax fairness. we know that buffett believes the wealthiest people in the society should terri -- pay their fair share of taxes. that clintonhing definitely supports, so they will be speaking about that. -- also be speaking about economic policy. betty: run us through the numbers. he has not really given a lot, but we do have some numbers in your story of what he gave in 2012 and to whom. >> in the 2012 election cycle, he gave both president obama and secretary of state hillary clinton, as well as other democratic causes, he's spread his money around a lot, but he doubt heo any sort of
has resisted since 2010, giving unrestrained giving that we have seen from other wealthy individuals in our society. since then, last year, he gave about $100,000 to the democratic candidate for nebraska governor. the breast that is not have contribution limits, so he was allowed to write it check while staying within the rules for hard money. so far, for the clinton $2700gn, he has given which is what an individual can give for a primary bid. $25,000 to a super pac that was basically paving the way for her candidacy. betty: clearly he is on the same page with the clinton when it comes to protecting the middle , but hed lowering taxes is different than her when it comes to corporations. their philosophies are kind of set apart.
>> that is an interesting point, the one item that i brought up -- whatory was the clinton has been saying about corporate inversions, when a company does a transaction with a firm had another country to basically moved to a lower tax jurisdiction, whether it's a lower rate. buffett did a deal last year when burger king but tim hortons that was largely seen as an inversion. two sides, essentially, thank you so much. still ahead on bloomberg television, all eyes are on the fed. weevil be here to break down the stakes, much more ahead. ♪
betty: we are moments away from the european close. mark barton in london for us. mark: the losses over the past five days have been extinguished. the stock up by 2.8% after a five-day decline. have been talking about black swan events in 2016. share is going to be discussed. blue book market, european close, it is up next. ♪
as we wrap up the tray. mark: european stocks jumping after five days of bosses at the fed starts their today policy meeting. the european close starts right now. betty: we are going to take you from new york to london and berlin in the next half hour, but kick things off, mark, on a pretty big rally. mark: european stocks rebounding from the 10 week low. after risk return, the fed kicks off the today policy meeting. all 19 industry groups rising today of the stoxx 600, led that oil. 600 is record, the stoxx