tv Bloomberg Markets Bloomberg December 17, 2015 12:00pm-2:01pm EST
>> from bloomberg world headquarters, i'm scarlet fu. >> i am alix steel. here is what we're watching. martin shkreli is arrested on security fraud charges. he is accused of running a shell game after his hedge fund lost money. a pressors will hold conference soon. we will bring you the latest. >> now that the federal reserve has ended the 0% interest europe, what happens next? maderry think said the fed the right decision but he thinks economic headwind is ahead. he tells us why he is not expecting 2016 to be a banner year for stocks. >> we want to check in on today's activity, let's head over to the markets desk julie hyman has the latest. welcome back. after the rally that we saw on
the rate increase, we are getting some of that back. we are, we keep giving more and more of it back and we see stocks falling more and more. been leading to decline, now down by 1%. , ok.of this is we are over the hump of the first rate increase. now what? the bloomberg terminal, a lot of this has to do with commodities today. it is a broad selloff. a lot of green here. energy is doing poorly. and financials as investors take a look at what the increase could mean. in terms of commodities, crude oil is extending lower once again. bus in seen it drive the terms of equities over the past week or so. that seems to be happening once again as it falls by 2%.
trading near a multiyear low. increaseas though rate or no rate increase, that is not going away. we are seeing something similar in the metals market? julie: yes, because we are seeing the dollar go up. gold is down 2.3%. they are trading at a five-year low. we are seeing miners take a hit as well. anything today seems to be low. all of them are declining. let's look at the dollar. versus this in particular. we are seeing 1080 five. slightly lower in the euro. just in the past couple of hours. strategistsa lot come out and say that they think the dollar will continue to strengthen versus the euro. not just in the next couple of months throughout 2016. alix: thank you so much.
awesome to get you back. scarlet: let's check in on the first word news. earning greeley has that. with thewe start out u.s., u.k. and france. they're going after the islamic state money. they are cutting off sources of funds to the terrorists. they are asking them to cut out the middlemen. vladimir putin held the annual news conference this morning. tosaid that russia is ready work with whoever is elected to the next presidency. the president, we first have to understand who that might be. be, we are it might prepared and we want to develop relations with the united states. and during the last visits of the secretary of state, in my opinion, i think it is shown that the american side is prepared to move forward to their issues together.
brendan: after the three hour conference, vladimir putin called donald trump an absolute front runner in the race and a bright and talented person. the white house says that president obama will sign a budget deal even though he is opposed to the provisions. for $1 trillion in u.s. spending along with hundreds of millions in tax cuts. negotiators also agreed to let -- to list the four decade ban on exporting oil. to central indiana school districts cancel classes today after school officials received threats. school officials in houston, are beefing up security after receiving threats. but school will go on as scheduled in those counties. that is that look at the first word news. you can get more on these and other stories at the new bloomberg.com. i have brendan greeley. scarlet: thank you so much.
oftin shkreli, the ceo of --g from suitable -- pharmaceutical has been arrested. he is suspected of stealing from his old company to pay off debt. alix: federal prosecutors will be unsealing his indictment in brooklyn in just a few minutes. you are looking at a live shot. we will take that when it darts. for now, we want to get insight from keri geiger who help to also drewstory and armstrong. joining us from london. what can we expect to hear. keri: they're going to outline the charges. they're going to go step-by-step and go through what he did. and he crafted this web of lies -- withit with federal several hedge funds he was funding. he like to his investors about several things.
including their worth, how much money they had, whether they were compliant with regulations. he also took money from a firm he founded in 2011, another pharmaceutical firm, and he took that to pay off some of these hedge fund investors that were basically suing him or trying to get their money back from huge losses. drew armstrong, i want to bring you in. this has nothing to do with -- pharmaceuticals or how he runs that company or the price increase? it has nothing to do with ing, but that is why he has become known over the past months. everything from the price increase to buying a rap album. and fighting with his critics on twitter and read it -- and r
eddit. i don't think we will know if they moved it now because of the notoriety he was building? that is a question that is probably on knowable arian -- probably unknowable. famousrobably the most face in the drug industry as a result of some of these events of the last few months. he has been criticized and vilified by just about every --let under the sun arian under the sun. scarlet: we have headlines right now that the fcc is being -- is charging him with fraud. they are talking about him committing fraud when he was working at -- as a hedge fund manager. he made material misrepresentation to investors among other widespread misconduct.
the corporate secretary is also being charged with aiding and abetting this allegedly brought. alix: what can we expect the response to be? keri: we haven't gotten a response. as of yet. we have responses from some of the companies that he has founded and has majority ownership in. are reallyrges narrowing down, as well as taking money from a company that he didn't have permission to, recently he was paying off unrelated debt. alix: i should point out that part of his journey has been -- share televised prices have been halted today. you come inside my terminal, you can see a chart of that share price. turingot just about
pharmaceuticals, it also is having an impact on other companies. he is the majority shareholder in this company. scarlet: we did tell you a little bit of trading, in premarket trading. there wasn't a whole lifetime for that to take place but it was when the headline crossed. he shares crossed 52%. it has since been halted from trading so we don't know what it would be if it were trading regular hours. alix: what is the protocol for this? who runshave a ceo these probably traded companies, how do they function? how are they going to keep going? drew: a great question and to be honest, i don't think there is a tremendous amount of precedent. these are big companies. these companies, in many ways, our martin shkreli. he has hired a number of people but when he took over callow , it was in the process of
shutting down. they were selling the office chairs. we're going to take you right now to oakland where the attorney general robert capers is going to announce the and ceiling the indictment against him. let's listen in. ok. good afternoon. happy holidays to all. think you for being here today. my name is robert capers. is a specialw agent in charge of the criminal division of the new york field office of the fbi. and the director of enforcement for the securities exchange commission. today, this office and the fbi are announcing the arrest this morning of martin shkreli and -- and the unsealing of the
indictment charges him with securities fraud and wire fraud conspiracy. me will's arrest announce the following, a civil complaint against martin shkreli. part of the parallel proceeding. the defendant is charged in all seven counts of the indictment. orchestrating three interrelated -- two of them were hedge funds that he managed. and the third was a publicly traded company that he found it at at one point, controlled as the chief executive officer. , isdefendant, evan grateful an outside counsel to him and is charged with one count of wire fraud conspiracy for his role. it is alleged in the indictment that martin shkreli ran a
heme. scre to yourook to the board left, he started out with a hedge fund in 2009. he took approximately $3 million from eight investors based upon lies that he told them about his prior performance as a portfolio manager and the amounts of assets and the oversight of the fund i independent auditors. $3 million hehe got through a series of bad traits, he didn't tell you investors he lost the money. instead he started a new hedge in 2011.h he founded here again, he lied to the investors in the same way. he concealed from them his prior performance and the fact that he
had lost $3 million based upon bad traits. the amount of money under funds traveled -- under funds and other things. through those lies, the defendant was able to get approximately 5 million additional dollars in investments from 13 investors. all the while, he continued to by tellingestors them their investments were performing well and that they were getting handsome returns. here is where the ponzi scheme similarity begins. ms and beney from health care to pay off the debts that he incurred. why did he do that? he did that to conceal the lies that he told the capital theirors, namely that investments were doing well. and that they were getting handsome returns. because he used that money from ms and be health care to pay off
the bad debts as far as the guide trades, he also used money for msmb healthcare retraction. lied to them. he lied to the investors. about how the investments were ofng and in the instance msmb healthcare, he lied to them about what he was actually doing. while, he promised his investors that they were receiving exceptional returns. retrophin, the company who took public. he took some money from msmb healthcare into retrophin to get that company started. that company went public and did very well. but because he lied to msmb
healthcare and capital, about the exceptional performance on the investments, he found himself at a crossroads. and have toclean admit that he lied and lost money and have the lies discovered or continue the lies and somehow pay the investors the returns on the investments. in the past, he made the wrong choice. he lied. this time, he did it on the back of retrophin and use company , tosel, evan greebel deceive. why did he do that? so that the two defendants, martin shkreli and evan greebel could use retrophin as a personal piggy bank to pay back shareholders who had repeatedly demanded the initial investment back and the returns on the investments that they were told they would receive.
that?d he do he perpetrated the fraud in a number of ways. he backdated documents to create investments that didn't exist. they then entered into settlement rules with some of the defrauded investment and paid them using retrophin assets. that they hid from the board of directors and from outside auditors. theseuditors discovered settlement agreement and told the defendant's that they were the two -- raud, scarlet: we are having technical difficulty. that was the attorney general of new york speaking about the charges against martin shkreli, the notorious ceo of turing pharmaceuticals. alix: he used the word ponzi scheme. keri geiger is joining us now.
i guess the question is, what could happen to him? keri: he could go to jail. securities fraud, wire fraud, pere can be up to 10 years account. some of the insider trading k's is that we have seen, they are similar charges. he has more than one of those against him. what plan hisdea legal team has or what they have decided to do. i wouldn't be decided -- i wouldn't be surprised if the didn't go to court, given his public persona, it will be an interesting thing to see unwind. one other factoid is that they could seize the infamous -- the bought for $2 million earlier this month. i'm sure people will be watching that carefully. scarlet: we have the video backup. >> attorneys, who may be
committing similar crimes or doing so. if it is not clear. here is the message. , the fbi, tireless the partners in sec and our efforts to uncover your schemes, no matter how sophisticated or how long it takes, we will bring you to justice. -- i would like to thank our partners at the fbi leading the investigation and the sec for their" operation and assistance. i would also like to thank those who worked the case. alexander smith, david kessler and brian morse. listeningou have been to the united states attorney general who has been unveiling the charges against martin shkreli who has been charged with fraud. he has been speaking in brooklyn.
let's go over to drew armstrong, joining us from london. you have been listening to these charges. what are your thoughts? what is the linkage to the pharmaceutical industry? this is very specific to martin shkreli. one of the conclusions that we have come to is that we have been talking to companies raising drug prices for the last year or so and this doesn't have anything to do with that. and frankly it won't change many practices in the industry. but what happened at turing pharmaceuticals is a different matter. whether that company continues to exist with him for a little bit is another matter. i like to point out that this is the first time that he has heard these type of allegations. there was a civil litigation against him and retrophin. he has said there is nothing there, he has promised to countersue.
he has denied all of the accusations against him. they have been made against -- they have been made by private entities before. give martin's tatian at the way he conducts himself, essentially to go to war with just about anybody who criticizes him, if you read an interview that was published yesterday, he threatens violence against one of the members of the wu-tang clan were criticizing him. and he says he has had guns pointed at him. it is wonderful reading. if it isct that anything like how he is acted in the past, it seems like he is always itching for a fight. that is incredibly bad timing for that article to be published today. thank you to drew armstrong and keri geiger as well. alix: just three days after apple got hit by a trifecta of
cuts, a company has announced an executive reshuffling. jeff williams is now stepping into the role of chief operating officer. alix: what do these changes mean? is brad stone. brad, what do you make of the timing of the change? brad: it is a little bit of end of year housekeeping. the pressk is said in release, he is codifying some responsibilities. described as often tim cook. he has basically been the coo all along. the guy who gets things done. they have worked together for many years, first at ibm in 1990's. i interviewed jeff williams last year.
he said that tim asked him to stop by. and steve jobs had just come back and they convinced him to join. we saw how important he was to the company last year. go ahead. to ask, willnted he be tim cook successor? ,im was known as the mastermind is that the same role that we can expect him to play? look, he has gotten a lot done. they put him in charge of the apple watch product after it had been underway and he got it out the door. he clearly has a record of operational excellence. it is fair to say that if tim cook retire tomorrow, which he won't, it would be jeff williams. they have a lot of talent. alix: apple has faced a lot of
criticism recently over apple's inability to grow the iphone business. what can jeff williams do to help them? what is his qualification? brad: the ability to execute on new product lines. the one thing we are not talking cerutti -- johny srouji. these processors are going to end up powering a line of products and it really is apple's key advantage. the control of the entire product cycle from the microchip all the way to the finished product. scarlet: thank you so much for putting this into perspective. jeff williams named the new coo. brad calls it a little bit of housekeeping.
tim cook is tim cook. this is the right time to do things that you don't want to create a lot of waves. we are going to move on and talk about the markets. equities are selling off. fed raiseter the rates for the first time in 3500 days. america said the risk assets were so oversold that they were due for a bounce. this is the global breadth indicator. banc of america went on to say, this bounce will not last. and you can look at today, case in point. there are selling risk into 2016. scarlet: things can be oversold for a long time. if you look at global liquidity. this is something that bank of america pointed out, it is now
shrinking. it has come way down and bank of america says it is unambiguous tightening as qe has ended and real rates rose. cash is outperforming stocks and bonds for the first time since 1990 and it is against this backdrop that the federal reserve is raising interest rates. alix: at the same time, you have the credit markets seizing up. a lot of companies were borrowing money for cheap. theas been a cross up for market but what happens if this goes away? you are looking at the high-yield index versus the s&p, you can see that we might see a rolling over more of stocks. you are taking some profits in the short term, it does bounce in stocks. scarlet: there is a distinct bull market stocks. if you look at the ratio of u.s. stocks to the s&p 500 or global banks, both have dipped lower
and as the lines go down, it indicates that banks are underperforming their indexes. so according to bank of america, this hints at quantitative failure. this is what we're seeing today, you have overall profits falling. corporate profits are falling i-4 points to 7% year on year and that can proceed u.s. payrolls. will we see weakening in the labor market? that point to something more dramatic in the economy. scarlet: coming up, we are waiting a statement from the president. we will bring you that as soon as it happens. ♪
hawaii. we are waiting his comments and they should be coming any minute now alix: from bloomberg world headquarters, i am alix steel. scarlet: i am scarlet fu and let's turn to brendan greeley. start with vladimir and was escalating his confrontation with turkey. the russian president said relations with the turkish government are beyond repair after russia's shot -- after turkey shut them a fighter plane. has its most advanced antiaircraft system in syria. the judge in the freddy gray trial will meet with prosecutors and attorneys for officer william quarter to discuss a possible retrial after a mistrial was called. in baltimore, protesters demonstrated peacefully after the decision. carter secretary ash use a personal e-mail to use
professional business and he has stopped doing it because he believes it was a mistake and hillary clinton has been criticized for using her personal e-mail account while secretary of state. the numbers of prisoners at guantanamo bay could reportedly be cut to 90 by the end of next month. the obama administration plans to transfer 17 lower-level detainees out of the country which would be the most transfers in a month since 2007. president obama hopes to close the prison before leaving office. that's a look at our first word news. you can get more on bloomberg.com. thank you so much. betting against french company casino saying the supermarket operators using financial engineering to cover a failing business. he called in a regulator to intervene. he talked about that call. >> casino is a secret hiding in plain sight. when you first glance of the
financial statements, it looks pretty normal. a mild amount of debt and a boring company. when you really dig in and we dug in for a number of weeks, you find there is a huge afference between what, as shareholder you own, and what owe. the math is pretty simple once you cover this. it's about seven euro share that you are left with. >> take us through how big a company this is relative to other companies in france. >> casino has a lot of operations internationally as well. in total, it's got about 15,000 stores globally. in international stores are brazil and other parts of latin america as well as thailand and vietnam. wherere french business it originated, that business, when you look at it, and this is where the financial engineering
comes in, the cash flow from that business seems to be down somewhat over the past couple of years. in reality, we believe -- in this case we have spoken with the company several times. when did you participate to the company? just yesterday, their statement said they cut their debt and it seems like it would look desperate if they knew you were coming. >> yeah, it was interesting timing. , is usualoke to them for us and we did not say we are muddy waters. stephanie: how long ago? >> we have been talking to them for the past three or four weeks. what happened the other day was pretty interesting. casino is set up like a highly leveraged hedge fund. it has this holding company on top of it where the controlling shareholder, the chairman, owns
much all of his stock in casino. that's a little over half of their market cap. he has borrowed a lot of money against that stock. he has to pledge the stock. ubs did the math recently when it out a note and said if the casino share price hits 46, that company rallies which is public , that company rally has zero value. the day before casino came out and announced this deleveraging 45.99casino closed at which effectively made rally zero and would have wiped out its controlling shareholder had that translated into rally stock price. when you look at why they announce it at that time, it could have been that. i think the important thing to look at is the deleveraging. it's not really deleveraging.
it's actually bailing out the chairman. explain to us what you can see that the markets are not seeing. how can you susan other people don't? >> the accounting is really complex. the information is all out there but you have to go to numerous sources. when you do that, what you find is that, as a shareholder of casino, you only own less than 50% of the cash flow that you see in the financial statements. what you oh 90% of the debt. alix: that was the muddy waters directive can the stock is getting hammered, off by 11%. a new financial landscape is upon us. scarlet: one of the sectors seeing the most cash inflows over the past month's financials. they have surged in anticipation of the federal reserve interest
rate increase. is the head of u.s. equity strategies at j.p. morgan bank. thank you for joining us. you say a change in market leadership is warranted now that we have begun this tightening cycle? what part of this is already priced in? >> that's an interesting question. it's not just about the current rate the took place yesterday but more broadly about the cycle. years, itast several was one of the biggest momentum ands at the macro level that has had significant impact on equities are you are seeing these winning stocks in winning sectors continually to win and losers continue to lose. we are basically thinking that it has come to a level where it is quite stressed and valuation is extreme in terms of momentum outperforming, crowded positioning. we think there is an increasing risk of some sort of reversal.
alix: part of that extends to energy which you are now overweight. there is a value play there because they have been beaten up we still don't have stabilization in the oil price. are you calling a bottom and oil? our view is that by the end of 2016, we see energy as a relative outperform or from the current depressed levels. when i think about the energy cycle come i think about it in three phases. financing is the first which these companies got finance from distressed fund private equities and now we are in phase two which is refinancing so these covenants are getting refinanced and eventually, we will have some degree of bankruptcies and consolidation and we expect that 3 story.re of a q2-q second half of next year, energy will be the issue in scarlet: what about the path of this performance? that suggests in the first c half.
>> there are more defensive energy plays. even services company but the key is to focus on companies that have better asset quality makes them better balance sheets and better break evens. companies that can sustain that one run it -- that won't run it to catch issues. scarlet: you're also downgrading health care. is it a defensive stock? >> it has many different segments so it's hard to generalize. health care in general is trading at higher valuation which is a concern in this part of the cycle. it's not just for health care but the other expensive sectors like consumer discretionary. keep in mind that this is an election year coming up and a not changepress will the fundamentals in the health space, it will not help. you might see health care run ato some sailing in terms of
multiple and that's where i like health care is a long-term trend. short-term, medium-term, the risk reward will not be attractive to alix: you are spiteg for the vix to and we are at the low right now. what does this look like next year. >> where calling for structurally higher volatility going forward. also more tail risk events. one of the reasons is a rate cycle kicking in and historically higher rates have meant higher volatility around central-bank policy. is coupled with that but across asset classes is quite poor. a simple measure of market depth, the capacity of the market to absorb a shock is quite limited. that could result in abrupt moves. scarlet: that higher level of tail risk in 2017 and higher volatility but you still like the banks and energy companies
being changed. scarlet: astrazeneca's buying a potential blockbuster medicine for blood cancer. alix: vladimir putin is speaking at his annual news conference in moscow and says investors are once again interested in russia. see a net inflow of capital which is also very positive. experts say that as well. this means that investors are aware of the real situation in our economy becoming interested again in working with us. scarlet: they knew argentina government is allowing free trading of the a soap can the president is scrapping -- free trading of the peso is happening.
great britain is pushing for reform david cameron wants changes before a referendum on membership promised by the end of 2017 for the eu it >> i will be getting the best deal for great britain. this government was the first to cut the eu budget. it was the first to veto a treaty come of the first to bring back substantial powers to britain, we have a great record europe and we will get a good deal for the british people. drugmakerritish astrazeneca is buying a potential blockbuster medicine for cancer. it agree to take a 55% stake in biotech company a startup - acerta. time for bloomberg where we provide context and background on issues of interest. today's topic is the u.s. federal reserve pingback from the greatest monetary stimulus in its history but ending the zero rate era that lasted seven
years is not going to be easy. the is the situation -- fomc said the new target range for the federal reserve rate at 1% to 05%. they also forecast a rate of one point 375% of the end of next year. the fed has carefully monitored signs like inflation and the help of the jobs market in order to the best time for a rate increase. the decision did not come as much of a surprise to the market. and november, jenna yellen told congress that the liftoff in december was a live possibility. what challenges lie ahead? banks have more than $1.6 trillion per at the fed as reserves. the central bank plans to raise the interest rate it plays on those deposits and that will reduce the incentive for banks to make loans elsewhere at a lower rate. as for other non-bank institutions like a money market funds, the fed will also borrow from them at a high rate through
the form of overnight loans known as reverse repos. who is warning that it may be too early for a rate increase? the international monetary fund warned that a premature rate increase could derail a recovery. critics cite what happened of a european central bank raised rates in 2011 and has been blamed sense for slowing the recovery in europe. some are critical of the feds untested reserve repo approach my former sbic sheila bair who says this could make turbulence worse. that is today's quick take it scarlet: thank you so much. this has been your global business report. for more stories, visit bloomberg.com. go to abigail doolittle lies from the nasdaq where she is taking a look at micron. they may be trying to call the bottom of the stock and micron shares been down about 60%.
jpmorgan has upgraded the stock to overweight saying value in sentiment made suggest a downside is limited and it offers a compelling entry point. the new price target of $18 suggests the stock may trade higher by more than 20%. way of another chipmaker that was upgraded, qualcomm was taken to an overrated jpmorgan and the analyst says that shares art evaluationbear case values in the stock is conservatively worth $65. the stock is down significantly and lots of issues were made so maybe that's why it's down today. shares are cheap, they traded a 35% discount and that may suggest the upside could happen in 2016. scarlet: thank you so much. uping -- >> the economy is decelerating. it is not going to be as fast as we want. scarlet: that was larry fink who
scarlet: we are moments away from a statement from the president is in mclean, virginia at the national counterterrorist center and we will bring you that live when it happens. alix: welcome back to bloomberg markets. scarlet: now that the fed has ended the zero interest rates, investors are coming up with a new plan for next year. 's managing for $7 trillion in assets and erik schatzker got to speak with larry fink on everything from the fed to china to the recession.
what was the most compelling part of the conversation? erik: what matters most now is not that the fed raised rates yesterday but how fast and how far it will raise rates over the next year. , isou look at the dot plot suggest we will be at 175% by the end of next year. if you ask larry fink, he has a different perspective. quitehink she will be slow in raising rates going forward and 2016. erik: why? >> my view is that the economy is decelerating. it is not going to be as fast as we want and we will be lucky to see a 2% economy in the first part of next year. lucky to see 2% growth -- he does not think we'll see a recession. the only way we could end up in recession is if china really falls apart and he thinks that's a low probability. alix: he echoes what the market has been saying.
it is much more bush then the fat. did he talk about the expected volatility? erik: he thinks clarity is the most important part of the janet yellen message and that will help tamp down volatility. she has effectively laid out a glide path toward tighter monetary policy. fastimpossible to know how or how far or when the fed will make its next move. if they are in line with expectations she said yesterday, things should be relatively stable. might not be relatively stable is the market. we have seen relief but what is his take on that? erik: his take on the high-yield market is that the carnage is mostly contained in energy and accounts for rock simile 30% of the high-yield market. outside energy, there is trouble for retailers but he does not think there will be a wave of corporate defaults outside those industries.
if you are a retiree like so many of the blackrock customers and you are prepared to hold your high-yield bonds to maturity, you should be fine. that's because absent a wave of , thelts, the bonds principal be repaired and you'll walk away and be able to decide what you want to do with that money. alix: in the high-yield market, they are trading at it will return basis like we are in a recession. erik: take the energy a way that does not look like that. alix: what did he say about recession? erik: he thinks we are in a below trend growth. ask them what normal looks like and he will say we know -- we will know it when we see it. of growthft period and he sees that for the next several years. if there's going to base a prize will not be from china, it's from europe. i would not say he feels as
bullish for the european economy and european risk assets as he might have felt for the u.s. economy three or four years ago but i hear something similar. if there's going to be a surprise and the upside, it will come from europe. don't look for it in the u.s. economy and certainly not in emerging markets. scarlet: the ecb also remains very accommodated. thank you so much for that great interview. you can find an interview on bloomberg.com. in the markets, you are seeing the dow around the lows of the session, down by about 177 pence. we were talking about the dot plot versus market expectation and that is playing out today. yesterday people felt it was a dovish rate hike but people are feeling it's more hawkish today scarlet: there are concerns about how long the equity rally
can last as the fed begins tightening. liftoff happened yesterday so we are beginning normalization. this is a chart you are excited about. ratio of the s&p 500. there is a disconnect beat profits declining and interest rates starting to rise. that has not happened and 50 years of there is question about whether valuations have to come down because the fed has begun raising. alix: there are opportunities summer but you have to picture solvency how it winds up playing out. what i look at is the buyback space. we were talking about what happens in the high-yield junk bond market. it might only have to do with but youut you want -- have companies that funded by and we are seeing them rollover. see the goldman sachs index focuses on buybacks giving up some of its gains. what wilson the stocks and the
markets if buybacks cannot support themselves question mark scarlet: that is an issue and also dividends. that is been a big concern for the energy companies because they have been dedicated about conserving their cash or dividends. not necessarily oil companies by commodity companies will cut and cut theirs assets and selloff underperforming parts of their business, they are not rewarded by shareholders. yes, some companies have done that. scarlet: we are awaiting the president to speak in mclean, virginia the national counterterrorism center. we will bring his comments live when he appears. ♪
the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. house. i wanted to be of the national counterterrorism center because this is the hub of where so many of our experts and efforts come together. i want to thank our director of national intelligence, jim ctcper, as well as in
and all vince rasmussen of you for welcoming us here today. nick along with cia director brennan and fbi director komi provide a threat profile. they updated us on the investigation into the san bernadino attacks. i reiterated that the investigation will continue to have the full support of the federal government and that we should leave no stone unturned in determining why and how these terrorists carried out that tragedy. the secretary of homeland security johnson updated us on the measures we are taking here at home to increase awareness and stay vigilant and enhance the safety of the traveling public especially with so many americans traveling during the holidays. the terrorist attacks in paris and san bernadino, i know that a lot of americans were anxious and that's understandable and natural what matters most to all of us are
our friends and families and communities and their safety. true of folks inside government as well as outside government. here is what i want every american to know -- since 9/11, we have taken extra ordinary steps to strengthen our borders,security, our our, our airports, our aviation security including enhanced watch lists and screenings. we have got much better thanks in part to the people in this large, preventing complex attacks like 9/11. moreover and i think everybody here will agree, we have the very best intelligence, counterterrorism, homeland security, and law enforcement professionals in the world. our folks are the best. across our government, these dedicated professionals including here at nctc are
relentless. 24 hours per day, 365 days a year. at the operation center here, people from across our government work literally shoulder to shoulder going over the latest information and analyzing it and integrating it and connecting the dots. they are sharing information and pushing it out across the federal government and, just as importantly, to our state and local partners. in other words, what you see here today is one strong united team. professionals have a remarkable record of success. of course, when terrorists pull off a despicable act like what happened and san bernadino, it tears at our hearts. result toiffens a learn whatever lessons we can and make any improvements that are needed.
in the meantime, what the world is not always see are the successes. those terrorist plots that have been prevented. that's how it should be. this work often times demands secrecy but as americans, we should not forget how good these patriots are. over the years, they have taken countless terrorists off the battlefield. ,hey have disrupted plots thwarted attacks, saved american lives. involvedbody who was in our counterterrorism efforts, i want to say thank you and the american people thank you. i want to repeat what my team just told me. at this moment, her intelligence and counterterrorism professionals do not have any specific and credible information about an attack on the homeland. that said, we have to be vigilant. as i indicated my address to the nation last week, we're in a new
phase of terrorism including lone actors in small groups of terrorists like those in san bernardino. oftene they are smaller, self initiating and self motivating, they are harder to detect. that makes it harder to prevent. we. as the involved, so do we are constantly adapting and constantly improving, upping our game and getting better. today, the mission to protect our homeland goes on on the main fronts. first, we are going after terrorists over there where they plot and plan and spew their propaganda. as i described the pentagon, we are hitting isl harder than ever in syria and iraq and taking out their leaders, our partners on the ground are fighting to push isl back and they have been losing territory. her special operations forces are hard at work.
i we took out thesl leader in libya and somalia so we are sending a message. if you target americans, you will have no safe haven. we will find you and we will defend our nation. , as always, we work to protect americans overseas including our military bases in service members. secretary john kerry updated us on security at our embassies and their diplomatic posts. second, we continue to do everything in our power to prevent terrorists from getting into the united states. we are doing more with countries around the world including our european partners to prevent the flow of foreign terrorist fires -- fighters in places like syria and iraq and back into our country. we are implementing additional layers of security for visitors who come here under the visa waiver program and we are with congress to make further improvements. any refugee coming to the united
states, some of them victims of terrorism themselves, will continue to get the most intensive scrutiny of any arrival. they go through up to two years including biometric screening and the review i ordered into the fiancee visa program under which the female terrorist in san bernadino came here is ongoing. third, we are stepping up our efforts to prevent attacks at home. isi said, the nctc constantly sharing information with their state and local partners across the country. more than 100 joint terrorism task forces are the action arm state, fight, federal, and local experts working together to disrupt threats. at the state level, fusion cells are receiving tips and pushing information out to local law enforcement. just yesterday, the department of homeland security updated its
alert system to make sure americans are getting the most timely and useful information. trying tos like isl radicalize people to violence especially online, part of arming today focus and how we can continue to strengthen our partnership between law enforcement in the high-tech leaders, communities, faith leaders, and citizens. we've got to keep on building of trust and cooperation that helps communities inoculate themselves from the kind of propaganda thatisl is spewing out, preventing their loved ones, especially young people, from succumbing to terrorist ideologies in the first place. our greatestof weapons against terrorism is our own strength and resilience as a people. that means staying vigilant. if you see something suspicious, say something to law enforcement. it also means staying united as one american family.
, remembering that our greatest allies in this fight are each other, americans of all faiths and all backgrounds. when american stand together, nothing can beat us. most of all, we cannot give in to fear or change it we live our lives because that is what terrorists want. that's the only leverage they have. they cannot defeat us on the battlefield. changey can lead us to in ways that would undermine what this country is all about. that is what we have to guard against. we have to remind ourselves that when we stay true to our values, nothing can beat us. anyone trying to harm americans needs to know that we are strong and we are resilient, that we will not be terrorized. we have failed over much greater threats than this. we will prevail again.
i want to was again thank all of you at nctc and everyone of your home agencies across our entire government for yorkshire terrier service. asant every american to know you go about the holidays and travel and gather with family and the kids up in their presence, as you ring in the new year, that you've got dedicated patriots working around the clock across the country to protect us all, often times they are doing so by sector fighting holidays and their own time with families. but they care about this deeply and they are the best in the world. for that, we are very grateful.thank you, everybody. happy holidays. [applause] you have been listening to the president speaking at the national counterterrorism center
the president giving a statement on national security saying the united states is gotten better homeland security and he said there is no credible threat right now. he understands the state of anxiety following the attacks in san bernadino and in paris before that. he says the u.s. is in a new age of terror threats. alix: it seemed like he wanted to reassure americans and we got your back and don't change your lives. he wants to reassure everyone as we go into the holiday season. scarlet: back to the markets because the fed finally raised interest rates after a decade and testing the economy's ability stand on its own two feet alix: what's next for the fed? joining us now is john riding. he served as an economic adviser to the bank of england. what did you make of the reaction we saw yesterday? it appeared it was a dovish hike but today it feels like the market relation -- reaction is
hawkish >> i don't think it was a dovish hike because the fed barely changed the forecast and barely changed their median path for the appropriate fed funds rate. into 2018.te move the market reacted yesterday because the fed finally moved and the fatah segment signaling the economy is strong enough to take this. i think that is true. we had a very good run up yesterday and now we are getting some move back in the other direction. markets do what they do day to day and neither economics nor the fed can have much sense to say about those movements. as long as they are not extraordinary scarlet: it was relief we got this left off and the federal reserve has two mandates, maximum employment and controlling inflation. not would argue they have
fulfilled either of those mandates but it is farther along in jobs than inflation what does this mean for the second interest rate or third interest rate increase? down closen is only to zero because of oil prices. the fed cannot control oil prices. we are finding more hydrocarbons in the u.s.. opec is not cutting back and that supply forces prices down and that's why inflation is close to zero. over the nest couple of months, by the time we get to the january cpi, we will see an inflation rate in that report for about 1.5% in two months. if we look at the core measures of inflation, the fed's preferred measure which is medical prices at one point percent, cobra cpi is it percent. inflation is not so far from the fed's target. inflation is half a point lower than the fed's
target, the fed needs to do something about that. that is something monetary policy cannot deliver on. we would have been lucky in the 1970's to be within two percentage points of preferred inflation alix: you said the market reaction is neither here nor there when it comes to the fed. if you look at what the markets are expecting and the dot plots, there is a divergence. >> i think it's the market, not the fed, that will be on the wrong side of this. there was a little clue in janet yellin's question and answer. she just started to talk about herself and it was like a cushion in interest rates in case rings star to go south in the economy and the fed can respond in a more conventional manner. we have had seven years of zero rates.
i saw some headlines yesterday that the year of cheap money is over. scarlet: we still have cheap money. >> we have incredibly cheap money. going toward normalizing that is not tightening policy. it's simple making policy less easy. it sounds like semantics but is not. the thing that will challenge pointd's gradual quarter moves cycle is the unemployment to comepossibly going down unless the job rate slows. that surgeone participation, the recovery is been going up for six years or more and we have not seen people come back to labor force yet. janetdon't see that, yellin is more ambiguous on
that. researchers seem to be pointing it to being mostly demographics and structural. i think we will see the unemployment rate fall down 2.5% to the middle of next year. scarlet: it seems like the fed's dashboard was pretty huge for the first increase. for the second or third one, does the dashboard expand more? does the fed narrow its purview to a few limited metrics? the laborhboard was market for the most part and it was looking at other factors that might show hidden unemployment. as we get to where the fed feels more comfortable about that like the traditional unemployment rate becoming a sufficient statistic from the fed
perspective for looking at the labor market, i don't think we get an expanded dashboard because that confuses the message. there is a law of inertia in management policy. it took forever for the fed to begin to taper the purchases and they delayed it off of a bad employment report. once they got moving, the moves became fairly regular, $10 billion per meeting. it took a lot to move off from zero in the dashboard was informing us and now we have moved off from zero and the communication has to become more simple. there is still talk about gradual and data dependence and data may not be gradual alix: thank you very much for joining us. scarlet: let's go to our markets desk with julie hyman. whenever the market is selling off in general you've got your eye and individual names? julie: steelmakers are lower
downgradedche bank u.s. steel and ak steel on the further negative outlook for steel prices. both of those stocks are falling , u.s. still in particular and deutsche bank commented these companies are relatively highly leveraged. that would be another black mark against them in this environment. they are being downgraded to a csell. and analyst: lumbar liquidators. goldman sachs says to sell that stock today. they say the company could recover. it has been falling over the longer term amidst allegations about its products. said it is poised for recovery but that is priced into the stock. the shares are down 11% today. interest as a percentage of flow at 40% of its shares sold short. it's a very high level.
this is the stock price and the declines. when goldman sachs says the recovery is priced in, does not look like it that is about a 35% bounce from the lows we saw earlier this year in those shares. that's what they are referring to is that a recovery is priced in. you would not know it by glancing at that chart. scarlet: there is a lots of king being felt, thank you so much. alix: still i had, real estate announced air be in change the multifamily property business that will its new efforts to work with landlord prove him wrong? ♪
a few headaches for landlords across the country but now it's aiming to get on their good side. scarlet: air b&b was to form partnerships with multifamily units where landlord will get a cut of income. let's go to bloomberg radio where carol massar has the details. carol: thank you so much. this is the bloomberg advantage. we want to talk more about air b&b. a real estate reporter has written a story how they are making amends with a bunch of you is landlords. tell us what is going on. >> they are reaching out to some of the largest landlords including the largest publicly traded landlords. they are basically trying to re-conciliate and say we would like to work with you. your tenants are renting out your units and making money and you are concerned to let's work this out. carol: that includes folks like assam's l.
-- like sam zell. let's listen to what he had to say. >> air b&b has interfaced with all the multifamily companies and for sure has approached others. i don't think the overall scale of air b&b will change the multifamily business. carol: it's interesting to hear him say that. air b&b has certainly disrupted and change the way people stay in other properties in rent out space. need to be worried or will this be a collaboration? >> right now, it is early to tell. while, air bnp was seen as a disruptor in the hotel industry. it seemed like an obvious comparison.
what's new here is that it's now being recognize that it is a disruptor in the apartment industry as well. some local officials say it's having an effect of raising rents in certain cities like new york where if i can rent out my room, i can take a rent increase in the landlord can pass it on to me. people say that's an effective way to do it people don't own properties are becoming landlords of places they don't own and letting anyone into units and landlords feel they don't have much control of what goes on their property. the fact that it is an apartment interesting issue is a new thing. air bmb is trying to be proactive on that. carol: you said it's early on but the regulatory environment doesn't always keep pace with the changes. insight as to who is in a stronger position? -- theink air bmb landlords were spoken to realize that air b&b is here and here to
stay and how do we work with it. air bnp is very popular because you don't have to own property to make money off of renting those people of make a lot of money. >> there are some cottage industries that have cropped up. i think there was a study done by air bnp that suggests the average amount somebody might make per year is about $5,000 but there are some people that make $350,000. it's not insignificant and that's not going away. it remains to be seen how gets hashed out. apartment landlords will probably demand a revenue cut of the fees from renting. are the expectations about what the relationship will be between the landlords and air b&b? they would get a percentage? opening up their books a little bit. does that potentially change the
business model air b&b and the potential of it to be highly profitable? municipalities, like philadelphia, it just made it legal but they are taxing it. you can rent out your unit and do it 100% above board but it will be limits on it. imagine that there is an effort to do that around the country and make that more standard. last question, these talks are preliminary. we will have to be tracking this one? >> definitely, the apartment industry said there are three and one's owners want to know who staying there and they want a say. they were probably be some revenue cut and address any kind of liability. carol: it's definitely a big
step for air b&b to reach out to >> and for the landlords having this discussion. carol: thank you for being with us. scarlet: thank you so much. i stayed at an air b&b but i did not stay at apartment. alix: it was the same with me and they had a custodian. scarlet: it's not necessarily sharing. oil prices ahead, keep sliding away and goldman sachs is another warning about lower prices and we will have the analysis. ♪
word news with brendan greeley. thank you. president obama to mclean, virginia to meet with the national counterterrorism center. he says the u.s. is in a new age of dealing with terrorist threats. >> since 9/11, we have taken extra in her steps to strengthen our homeland security. our borders, airports, our airports, our aviation security including enhanced watch lists and we got much better thanks in part to the people in this room for preventing large-scale attacks like 9/11. brendan: he said there is no specific threat against the u.s. at this time. central indiana school districts cancel classes because threats were made against the school but school systems in miami are beefing up security after terror threat simply so making sweeps of school buildings but classes will go on
in those cities. chicago mayor rahm emanuel is taught new federal investigators in the probe of the city's police. the justice department is investing possible civil rights violations after the release of a video showing the shooting of a black teenager by white officers. the officer has been charged with first-degree murder new hampshire has scheduled the first presidential primary for february 9. it have been widely expected given the lack of pressure from other states.new hampshire state law requires its primary seven days ahead of any other contest in iowa will hold the first caucus. you can get more undies these and other stories 24 hours per day at the new bloomberg.com. scarlet: thank you so much. something under the radar this energyhe ceo c ofheneer has been pushed out he is this into a liquefied natural gas company. soon, it will be the first company to export natural gas in the u.s..
he wanted to expand and grow the business. alix: he has had no trouble convincing investors to change strategy but this time was different. he was up against carl icahn who is now the largest shareholder of the company. in an exclusive interview, i spoke with him about how his relationship was with carl icahn. >> i have only spoken to carl twice on the phone. i have never met him so i don't really know what he thinks. the limits of the conversation was that he wanted to have two representatives on the board. anybody who had invested a billion dollars in the company was entitled to do that. i had no issue with it i recommended to the board that we accept him and within a couple of weeks, we accepted his two nominees as directors of the company. that's the extent of my conversations and interface with him. alix: the board went of your
strategy in september? >> in september, there was no inclination at all from the board that we were going to change direction alix: carl icahn issued a release saying that you sold a great deal of stock which made it easier for you to be for the fences making it a win-win but not necessarily for the shareholders. what does that mean and what is your response? >> i don't want to respond to that. there is no reason for personal attacks. there is no reason for personal implications. had the good of the company at my heart for longtime. there were times when things were difficult and i could have been done something else. i don't think after 19 years i have to prove that i am trying to do the best thing possible for the company.
company, it'sst a my baby and i want the best for the company. i want to stay dispassionate of what the strategy is. i understand of the strategy is different than what i wanted to pursue, the company probably needs a change. responding to allegations that i would do something that is not to the benefit of the company. you can catch the full exclusive interview today at 4:00 p.m. eastern. he's trying to work out what he's going to do next. scarlet: he's one of the cofounders. alix: a lot of the shale pioneers no longer have their jobs. it's a huge shift in how to run these companies. oil and trading debt
oil is trading at its lowest price could get worse. goldman sachs said there were warning signs as to two dollars per oil alix: could happen. ait joins us now from new york. you have goldman sachs talking about operational stress now needed to get oil to $20 because of the financial stress was not enough to shake out supply. what you think about that estimate? it it'sver the prices, not sustainable. it's a logical to expect that $20 will stay here for any length of time. oil ande we need $60 will eventually get that but it will be painful. half of the company should not be in this business because the business model at $100 oil which is not likely to happen.
drill, baby,ing drill and doing more of and thought there would always be demand. they thought the market would be glad to take it and bring prices higher. that came to be screeching halt 1.5 years ago all of a sudden we went from $90 to $60 in a short time. we are at $50 per barrel oil and most of the companies were trading at a 52-week low and they were just lower. when will we see safety five dollar oil? >> unfortunately, we could see the oil price much sooner if some of these companies would get out of business. they are basically creating artificially high volume. still exceeds demand and when supply exceeds demand than a commodity, the price goes down. and that's exactly what has happened. production cuts have to come
from the u.s. 100% i agree and we have seen the shakeout in the high-yield market finally starting to filter through these companies. goldman sachs says it's really the investment-grade companies that make up 85% of u.s. production that need to be hit and that is not happened yet. do you agree and when does that start? >> i totally disagree. these are the same people that also predicted $200 oil in 2008. that did not happen. they could be right and have oil prices stay at $20. it is really meaningless. alix: the chart we are looking at shows oil production by the credit rating of the company, it seems that bbb is responsible for the bulk of u.s. production. oil companies who have a
market cap of $100 million or cutting capital spending but it's a question of how much. they will all cut something. phillips cut capital spending three times in one year because they know you are facing $37 oil but you have a cost structure that needs $80 oil can you have to meet them halfway. the only thing is to bring your cost down. they have to reduce operations. when you do that, production goes down and the market balances. scarlet: what about dividends? -- placedced a rating companies on review. is there dividend at risk? absolutely, $40 oil, no
company is earning enough money to cover capital spending and dividends. marathon cut, chesapeake cut but they waited too long. they should have cut the dividend to the years ago. most of the companies we cover do not have enough money to cover dividend and cash flow. even the largest oil company's are borrowing money as we speak to fund their dividends. that cannot go on forever. something has to happen. a company like chevron and son had an increase in dividends -- and acts on an increase in dividends i know they will not cut but something else will get hit. when that happens, production will pull back. alix: thank you so much. will be right back
scarlet: welcome back to bloomberg markets. let's go over to the markets desk and a julie hyman. it's sort of mixed bag in terms of the reasons why the let's start with 3-d systems. this stock is volatile but it's rising today. to a buy was upgraded from equal weight and the company is restructuring to in significantly reap -- improve its profitability and the shares --
3-d systems has been gaining today with a dramatic increase in profitability over the past few years due to strategic moves by a previous ceo. let's see what those shares are doing it looks like we are seeing a gain of nearly 9% in those 3-d systems shares. navistar is up nearly 5% today. aheade out with earnings of what analysts had been anticipating. sales were down by 17%. the ceo said there is more room to cut costs. the recovery in the shares today is also notable because it fell sharply earlier in the month after morgan stanley downgraded it and concerns about its cash position.it seems as if this new today was reassuring to investors. going into the holidays, we heard from fedex in terms of its profit.
it said profit beat analyst estimates and growth in e-commerce has been resulting in record holiday shipments so far this season. that's not surprising. we have been seeing record shipments every year because of the increase in e-commerce every year. the question is how they are handling it looks like this year, it is handling it relatively well. we are not yet hearing about any big bumps in the road. there is still time before christmas for people to not get their packages on time. alix: didn't that happen to years ago? you had to wait and it did not work out. high priority to avoid that kind of stuff. alix: we will get a deeper look into fedex. scarlet: shares of fedex or higher today after the shipping company reported earnings that topped animal -- analyst estimates. weekly don't our live numbers segment. you can see that when it comes to the results for the full year, analysts are looking for
fedex to make a most $50 billion in revenue for the fiscal year. that is the performer, the yellow line at the top. that has been growing the fastest thanks to its acquisition of genco which is a logistics provider as well as online purchases. look for a year and a bump in his delivery is because fedex has seen record shipments so far this season. it's not over yet but it's looking pretty good. it's growing at a double-digit pace and has been choppy but retail sales.l the ground businesses giving fedex most of bank for its buck. margins may have paid. point betweenigh the third and fourth quarter of 2014. you can see the decline since then because e-commerce boosted demand for less profitable
business. fedex is trying to expand overseas and rely less on the u.s. you can see how the u.s. dominates revenue, 72% of the pie versus 28% for international. fedex proposes an act division of tnt which would be a windfall for european business. just since 213, they have brought back 40 million shares in some investors viewed that as an economic bellwether. certainly some positives to be found in the latest results. alix: thank you so much. another bellwether company is honeywell. the chairman and ceo appeared on bloomberg this morning and he is predicting a sluggish economy for 2016 us as profits for his aerospace company will be strong. >> i think next year is another slow growth environment. as i said earlier, the only time i have been wrong over the last
six years when i said this is the kind of environment we will be in is when i was bullish at the beginning of this year. sticking with saying be conservative, slow growth and that's the way we plan. erik: you are delivering for your shareholders by containing costs. it's slow growth the next three years. >> more than containing costs, the way i describe it is we will support growth wherever we can find it. we do very well in high-growth regions. we have a new molecule that has taken over the world. it's non-ozone depleting. defense will start doing better. we've got some great investments in our performance materials and technologies business and will support growth anywhere we can. at the same time, we will be cautious on sales. that makes you conservative on the cost side. at the same time, we do a lot of
seed planting. whether it's investing in new geography or products or the press is work we do that allows us to be successful today. if you look at the difference between our performance for a and three session, we had to do a lot of that seed planting before the recession so we had to do it so we had to pile money back into new physics and process work. we are reaping the benefit of that now and still doing the seed planting for the next five years. david: i think we have something about your company. to show the ceo how they have performed over the last five years. you have outperformed the s&p 500 and the industrials sector index by 38% including all dividends being reinvested. if you are looking to boost revenue where other people will be having troubles, do you maybe
by the guys and these underperforming indexes? >> as you know, we are proud of that performance and we will not stop. one thing that still frustrates me is that the pe rating is lower than my peers but we will keep outperforming and get their. when it comes to acquisitions, we have spent $5.5 billion this year on deals. we have done about 130 transactions. we're always looking at opportunities and we are a good free cash flow generator and we have a good balance sheet erik: the $10 billion target form&a was 2014? >> it was not really a target. it was a way of being able to convey value in the cash that we generate. if we just attend billion dollars in deals, this is what it would help us with. we have always said in that five
years that we had to 5-30 $5 billion of capacity. we have a lot of room. overall, honeywell made about $20 billion in revenue from the u.s. last year. it's somewhat insulated from the international events. you would think that perhaps the dollar swing is not as significant as other companies for him. scarlet: in terms of share price, i was thinking how they performed because industrials have been under pressure. , january,end of 2008 2009, honeywell has out the s&p 500. they have both done very well. -- 215% increase. the s&p 500 has been 105%. most of that stems from the
scarlet: the fellow reserve came through with a straight increase yesterday. liftoff has happened but what will happen next? wilbur ross gave us his take on the increase in the future of the economy. >> i think our actions are very important. first of all, i think this rate increase should have been done long ago. i think they fiddled far too basisith it because 25 points in and of itself is not a very big deal. if that's really the only under the of the economy, we don't have a lot going for us anyway. i think the real key is the glide path and she has indicated
that there will be a further set of increases. the target rate is now something 3/8 by year end and that's the right direction. tom: would you predict within your experience the dollar strength will be upon us and the dollar strength will be your friend? >> i think dollar strength should logically flow from this particularly since the ecb is continuing in the opposite direction of more quantitative easing. so are the japanese and i believe is likely so will be the chinese. chances are that the u.s. dollar will be stronger. that in and of itself will complicate the efforts of these other countries to lower their
rates because you will have the -- strong american borrowers if they feel they can get a cheaper rate in europe or elsewhere, they will go and do it. demandgoing to increase for funds there. it will be an arbitrage between those markets and this one. tom: i am thunderstruck out every major house has a single digit vision for next year and beyond. do you share that caution? >> single digit for market performance? tom: yes. >> i do think the rate of growth will not be very dramatic. i think the bigger feature of , the absolute upside, is probably going to be volatility. as a function of regulatory activities, everybody has withdrawn some capital usually
40% or 50% from the trading desk. both fixed income and equity securities are likely to be much more volatile than they have been historically. onx: that was wilbur ross bloomberg surveillance earlier today. interesting that he talked about how the feds dashboard will get smaller now that we are looking at a second or third increase. go through a lot of different numbers to find the right time to hike. up next hour, the farm a bad way martin shkreli is -- big pharma's batboy martin shkreli -- bad weight martin shkreli has been arrested on fraud charges. ♪
from bloomberg has headquarters in new york, good afternoon. here is what we are watching this hour -- so much for the fed rally -- u.s. stocks falling for the first time in three days as investors turned their attention to weakness and commodities. beenad boy of pharma has arrested. now charged with securities fraud. -- barbie will be lonely at as disney's princesses find a home at hasbro. we have a look at the $500 million battle in the ball business. first, let's had to the markets desk where julie hyman has the latest. we have this selloff going on today and it has abated to some extent. major averages up off the lows but still seeing a significant