tv Bloomberg Go Bloomberg January 12, 2016 7:00am-10:01am EST
bloombergs union -- crunched the numbers to find out how we are really doing. stephanie: welcome. you are watching "bloomberg ." it is tuesday morning here in new york city. i am stephanie ruhle. david: we are talking about markets. and we have our colleague -- guy: it is always about markets. whenes not matter president obama is speaking. it is always about markets. matt, it is always good to have you. we start with first word with
vonnie quinn. vonnie: a suicide bomber attacks istanbul's tourist district today. reports, to media there were victims from germany, peru, south korea, and norway. president erdogan says a suicide bomber of syrian origin may be responsible. the u.s. house is expected to vote today to punish north korea for its latest nuclear test. lawmakers say it needs to build weapons. a panel of expert says is a sting united nations sanctions on north korea are not being enforced. president obama goes to capitol hill tonight for his final state of the union address. the speech will not include many specific proposals. the president is expected to talk about themes the presidential candidates can use during their campaigns. day,l news 24 hours a powered by our 2400 journalists
in more than 150 news bureaus. julie: if you were watching the markets through the day yesterday with the volatile session, they eked out again -- they eat out a gain. eked out a gain. china stepped up defense of its currency, so that is something we have seen sort of guide the trading. if you look at european stocks, we're seeing similar strength there for similar reasons as people are looking to china. you're seeing all the major averages in europe rally. automakers are doing particularly well after an industry group forecast there will be an acceleration in chinese sales. that is something to watch as well. in asia, we saw the shanghai composite up not by much but by .2it here, point to put --
of 1%. something we have been watching longer-term are the relative market caps of japan and china. take a look at my bloomberg terminal we have the graphic of the two. you have the japanese market cap, which has remained little changed. even as we have seen these wild swings in china, at one point you saw this gap twice that are chinese market cap is near the peak of $10 trillion. it was double the market cap of japan. now the gap is narrowing once again, china about 1.2 times the market cap of japan. that is something to watch. finally, a check on oil prices. we have been watching it so closely. we are getting industry stockpiles later today and we will be getting them from government tomorrow. oil little changed, down .1 of 1%. we heard from bp that it plans 4000 upstream jobs, production jobs, by the end of this year. yet another casualty of what is going on in the oil industry.
it is a crude reality, excuse the pun. what is the price of crude? the other is what happens with the chinese currency overnight. up, sparking a record surge in the hong kong money market rates. kongcurran is in hong live, and it is great to have you with us on the program as always. aggressive push to closes gap between the onshore and offshore rate is becoming increasingly important to why is that? enda: good morning, jonathan. there are two things going on. china's central bank on the one hand set a fair message to speculators who were trying to push down the yuan in the offshore market that we are going to take you on and you are not going to push down where -- beyond where we wanted. on the other hand, effectively the onshore, which is tightly
controlled, and the offshore, which is relatively free -- they are required to bring those yuanher with bringing the there. they are spending money to bring the two exchange rates closer together. all of this comes to the cost being there, rundown in the process. today, the cost of you on funding in hong kong spiked -- uan funding in hong kong spiked. a cost ofre is drawing down the reserves. there is also a cost in terms of market upheaval. effective borrowing rate for the is 67%.shore this is a cost in terms of the markets. enda: that is right, and the central bank does have a key role in financial stability. however, i would say it is not an especially liquid or deep
term that is used. there is an impact on those companies who do use it for genuine funding purposes, and it is getting cut up by what the pboc is trying to do. by all accounts, the pboc officials are saying to the market, if you try and speculate, shut down the yuan, it is a ridiculous move. they are going to take all the speculators. there is no sign the central bank will step back from that intervention, anytime, or at least until the onshore and offshore are closer together. us understandp the relationship change per japan is now just 16% behind china in market cap after being 50% in june. ,nda: japan in some respects sentiment is improving on their outlook. if youon is not too bad
strip away the impact of falling oil prices. it did not have the recession everyone thought it did have last year. japanl, sentiment on while obviously not great, there are signs of improving and this year the economy could be better than relative previous years. it explains the shift in the economics there. jon: thank you very much. matt renfro, i want to bring in your thoughts on this. should they be trying to close that gap in the way they have been? and can they be successful? matt: who knows about the latter, but on the former, absolutely. the chinese will do everything stability, create and they should. the markets are responding to that and want to feed that effort. stephanie: last week it was a reverse response. the circuit breakers only aggravated the situation. matt: progress does not go in a
straight line, ever. stephanie: matt winkler is the most optimistic person ever. jon: when you see the situation, when you see the situation trying to protect the currency, the market pushes against you. the more you step in, the more the market will push against you. could that be the outcome of all of this? matt: we do not know enough. having said that, we are talking about the second largest economy in the world, and i would not underestimated. jon: matt winkler -- he is optimistic. stephanie: you do not feel just how optimistic. david: we want to turn to oil. announceduts at bp today, coming as oil continues its slide for a seventh day. crude in new york -- a was 31.38, something like that. vince piazza joins us. what do you make of bp's announcement?
vince: it is consistent with what we have heard throughout the energy complex in 2015. the energy sector is attempting to recalibrate its internal cost , due to the significant drop in price since the peak in 2014. it will likely continue into 2016, given that we will continue to see at least throughout the first half of 2016, given these wide imbalances. when you return to the fundamentals, especially here in the u.s., in crude inventories that are roughly 30% above the five-year average. if you think about last year from january through april, we added another 100 million barrels of inventory, of crude inventory. once again, wide imbalances. we need to see that demand uplift to tighten these
balances. it seems throughout the first half of 2016. very difficult sledding ahead overall. stephanie: i guess fundamentally we need that, but i need a lot of things. what signal is there in the market that makes you believe that will happen? the monthly decline is atrocious. vince: things to look out for -- the signpost. what we knew to see from the efp's. the efp's coming to 2016, less 2015. relative to high-yield spreads are making it difficult for them to finance their programs. cuts. we will see down in 2016 relative 2015, roughly 25% to 30%. the industry is in a state of flux. it will be a challenge to repeat the output growth of 2015. these are things you need to look out for when you think about tightening balances, the rollover in production that we
saw late in 2015 relative to the april high. we should continue to see that into 2016. you still need that demand uplift to kick in. we are not seeing it and it probably will not be the case for the first half of 2016 as well. the comparison is made to the 1980's and the job losses in the oil industry. there were some 20,000 in texas alone. disastrous for many of these companies. numbers are out this morning from bp. . remember that morning we were trading in the mid 50's, and the reality was the low for longer was 60's, 70's. we are in the 30's now. do they have to adjust again? will: the industry continue to evaluate its internal cost structure. it is difficult to survive, and what the industry has done well in 2015 is bring that cost structure down, seek cost
concessions from its services efficienciesng higher. it will be difficult in 2016 to replicate what we saw in 2015, so it is likely to see even more reductions in staffing and internal cost structures. david: i want to go back to the conversation we had about china. how much of this oil prices due to the uncertainty about china? do we get to a clearing price of we do not know what is going to china. vince: are things becoming incrementally better or worse? it seems as though china has been the driver of demand growth -- and especially since the last decade. that will be increasingly challenging. oil supply is headed to the markets that offer the incremental growth, and we saw
that throughout the course the last few years. china's growth has slowed. the barrels have to go somewhere . that is what is causing this very large imbalance, this secular output growth colliding against this challenging demand outlook. julie: if you take a look at what is going on with stockpiles, we will get the stockpile numbers later today. abouthave been talking consistently, we are running about 100 million barrels above where we typically do on stock was that on stockpiles. it is a calculus that makes sense if you look at it in that term. jon: julie hyman, thank you very much. matt winkler has been with us for the next hour, of course. coming up, today's top trending bloomberg news story is next. .e are 2:15 away
at $7 billion. backers are china's largest insurance company. values increased competition in china and is looking to expand. good's earnings are a example of why the alumina maker is splitting in two later this year. .ales fell 18% the company has been hurt by falling aluminum prices. there's growing demand for alcoa's aircraft and auto parts. a cola expects era space rise 9%. david: it is time for a look at the most read numbered news this morning. five -- four of them are about the yuan and equities, but the fifth is about turkey. jon: a very sobering story, a suicide blast expect -- a suicide blast suspected. 10 people dead, 15 more injured.
it is not good, the situation in turkey right now. you do not need me to say that right now, matt winkler. matt: what is so troubling is that turkey was an economic star for the past 10 years, and suddenly that is gone. when you see something like this, it gives you a lot of pause to wonder, what is really happening inside this country? it has been one of the few bright spots in the middle east consistently over the 21st century, and even that part of the story is now unraveling. jon: talk to me about what is happening politically in turkey. everyone knows about the tension between the president and the central bank. but what about the rest of the government itself? matt: the government unfortunately is becoming increasingly fragmented, because the economy itself is fragmented. erdogan sword because the economy was just getting stronger through the first a kid
of the 21st century. suddenly, that is not happening. so you have political tension exacerbated by this economic distress. then when you have terrorism or whatever we are seeing now unfold, that only makes it worse. ,avid: across the wire president erdogan said that it was an attacker. we do not know if that is true or not. he was the strong man, and how quickly that has turned around. matt: and precisely because when you look at the currency market, the debt market, the equity market, just about every asset class in turkey has just come apart. that is a trend that has not abated. david: i want to turn to my choice, which is this amazing acquisition by a chinese billionaire -- this is a great , but -- for $3.5 billion legendary entertainment, which created "jurassic" and they also
have the "dark knight" trilogy. he is building a huge -- i wonder if this is not part of the capital outflows we are seeing. about where does he want to keep his money? does he want to keep it dollar-denominated? what is even more remarkable about chinese billionaires -- how many we have never heard of, and how many of them go missing. is missing asia chinese billionaires. i do not get that story still. i have to share myphanie: billionaire story. it is not all negative. hisrt murdoch announcing engagement to the one and only -- i am going to say the original supermodel -- make jogger -- mick jagger's former love, jerry hall. murdoch, 84, jerry hall,
a young 59. some may think sumner redstone had all those women in his life and he did not marry them. congratulations, rupert murdoch. david: i hope they will be happy. i have never said that rupert murdoch reminded me of mick jagger. stephanie: but in his own universe, he is a rock star. jon: to give the story some credibility for the bloomberg audience, this is the number six story on the bloomberg terminal. david: he is a legitimate capitalist, after all. we are all about chronicling the story of capitalists. stephanie: you have to say both jerry and rupert are powerful and influential. we have to talk about alabama last night. colleague former graham lanigan is watching. theama continues, defeating
clemson tigers. the championship game last night , one of the highlights, a 63 yard reception in the fourth quarter by tight end oj howard. howard broke down the left sideline. check this out -- running down the end zone -- he scored a touchdown. this was the fifth national championship for the head coach. you should have seen this guy covered in gatorade when this was over. i am going to say, i waited to my family room at 12:30 at night, and there was a nine-year-old and six-year-old passed out. that is what you call your barnburner. that is a great game. stephanie: we are going to be back with an exclusive interview with the airbus ceo. ♪
airbus beat boeing in plain sales for 2015. the biggest issue for the year ahead is not demand, but ramping up production. guy johnson and spoke exclusively with the airbus ceo. guy, i hope you're doing well. first question, production is the problem, not the man? guy: -- not demand? guy: yes. they are trying to ramp up there a350, which is trying to compete with the dreamliner. their supply constrained, that is supply constrained rather than demand restraint. there are clouds gathering on the horizon. 2/5 of the demand coming comes from asia. is not bregier worried. i am relaxed because i
do not see the signs, but the global economy regarding airbus transportation is going down. it is not just china or southeast asia. we can see six persons air traffic growth in 2015. jon: what they are watching carefully as well is the situation in the gulf, some of the biggest customers ever in qatar are there. stephanie: that is our own guy johnson in paris. want to feel bullish? 63% of analysts covering airbus have it as a buy. ♪
state of the union, first we hear from vonnie quinn. vonnie: authorities in istanbul calling it a suicide bomb attack. a bomb exploded in the city's tourist section killing 10. 15 were wounded. victims include visitors from germany, peru, south korea and norway. says a bombergan of syrian origin may be responsible. trump's lead growing in new hampshire, according to a poll from monmouth university, trump wins 32% of likely voters in the republican party. ted cruz and john kasich are tied at 14% each. hillary clinton proposed a tax hike on the wealthy that would lead to the highest rates in 30 years. americansarge on making more than $5 million a year. that group would pay as much as 44% in federal income tax.
global news 24 hours a day powered by 2400 journalists around the world. jon: thank you. time for the morning must-read with tom keene in london. what are you reading? tom: looking at gold. note that wasch extraordinary at hsbc. this is the coordination with gold up even while oil comes down. asia, the demand rests on the state of the gold market resting on countries like china. hsbc reaffirms their forecast for this year of average gold 05. this is an
outlier call, the ideaa of gold leaving a bear market. stephanie: gold hit a two-month high and fell off a cliff. tom: that is a short-term view. looking at a long-term view. going back 4, 5 and six years. i talked to matt winkler about this, the trend down in goals with people seeing gold dipping below $1000. it's interesting to see a house push against that. >> i'm curious about the structural arguments for gold accumulation. we think about gold as a flight to safety. there are hedge issues for a country like china against the u.s. dollar. is more a flight to uncertainty and a reflection of society. if you are concerned about central banks losing the
confidence of investors, you might see gold top here. i'm not sure the long-term trend is that, i think just the opposite -- central banks will figure out a way to manage what they are doing in asia and everywhere else. deflationary environment is likely to continue its slide. noteworthy of is the research we have seen in the last couple days is the way we are extending out again our view of what central banks will do. carl weinberg of high frequency economics came out this morning and to use his words, recanted on his research note of three weeks ago. he said i was flat out wrong and the answer is disinflation. jon: what could be the defining theme of 2016, i do not want to get out a crystal ball -- this is,
important, you are allowed to have a crystal ball. ,on: my point is that 2016 central banks are not going to deliver the way people thought they would in 2015, 14, 13. you see that at anchor japan, look at the bid on the yen. when we are risk off and china is slowing down, you see strength in the yen. you expect the bank of japan to be pushing back. as i go through research notes, you hear nothing about that they same way you did the previous 2 years. 2016 could be the year when central banks say maybe not this time. in terms of a flight to quality, matt was saying a trade to uncertainty. the dollar had a monster run since 2011. gold versus the dollar, it is not like gold is safety anymore. jon: that is the point tom brings up, in the last couple weeks, finally a balance of uncertainty and people actually
bought gold. gold went higher. is understandable what we have seen in china in particular. on this very program, there was an interview with the american ceo of toyota. he said the outlook for us, just like the interview with airbus, is really good. in other words, global industry is chugging along. whether it is headquartered in japan, europe or the u.s. that is bearish for gold actually. as long as industry keeps making more and more stuff and people keep buying it, that is not a flight to uncertainty. in: just as we look at gold the james steel note, i would focus on the shock and awe of walking into our london news bureau and seeing a 30 handle on oil. i can't convey the shock of the descent ofsent -- of
oil. david: last time we saw it was 31 -- it's flirting with $30. matt: there's another side of this. the last time we were in this situation, it was the 1990's. what, averaging $20 or something like that through much of the decade. that was a good period. people forget that. stephanie: a good period for tom keene, he was in the nightclubs. tk, we leave you in london. time to close up shop. now we've got turned to matt winkler's bloomberg view column. we love it it. check it out on bloomberg.com. the focus is the performance of the u.s. economy under president obama. i will quote mr. winkler, "when president obama was elected in the u.s. economy
was shrieking at a rate unmatched since world war ii. in the seven years between then and his final state of the union, investors have enjoyed stellar results from the rapidly expanding obama economy and central bank intervention." david: a little of that. and: the state always helps they contributed to this. the real story is that if anyone told you seven years ago that the american economy and in particular american companies would outperform their global peers in 2015 by a considerable margin, in fact, do so better than at any time in the 21st century. that would have been laughable. stephanie: well, why, the analysts who say momentum is out of the market. now that we are looking at fundamentals, companies are not doing so well. look at earnings third quarter of last year. matt: that is misleading. if you think about what jim
cress said yesterday to you, toyota is the largest carmaker in the world, guess what market they are excited about? at american industry today, 10 of the world's largest companies in the world, 10 out of 10,are american. you have to go back decades to find something comparable to that. that does not happen by accident. it happens because there's a lot of activity. the three most important industries that have outperformed in the past seven years, consumer discretionary companies. finance.y and all of those things are pillars of an economy that is doing well. governor carney came to the u.k. and his timing was amazing. we were talking before he came under mervyn king, they were voting for more qe at the bank of england.
it was the right time where things started to go higher and turned out right. how much is luck a factor in the obama economy? where the into things market was bottoming out three months later and shall was taking off. the balance sheet of the federal reserve double, out. -- output doubled. 2 factors he had nothing to do with. matt: i will be the first to say better lucky than smart. having said that, you make your own luck. let's go back to the first year of the obama administration. 2 things were signature achievements of the administration. autothe rescue of the u.s. industry, controversial at the time and turned out to be a good investment when you look where we are today. last year, american automobile sales were at a record. the second was the stress tests. getting the financial system in
order. at the time, april 2009, people were very skeptical. in the financial industry in particular about stress tests. once they were imposed and they succeeded, confidence in the american financial system began in you saw the rally american stocks. it began at the bottom in march 2009 and has continued ever since. david: you want to show us something about unemployment? if you look at another marker of progress in the economy, you see the jobless rate is something that the administration is planning to as a source of pride. you see the previous comparable cut in the jobless rate in 1989 and ecb cut in half with hot since 2009 as we recover from the recession and financial crisis. david: you are the optimist, stephanie said. stephanie: of all the guests --
david: our editor-in-chief. some might say, terrific, a great track record for eight years but we did not build for the future. we did not take care of infrastructure and the first stimulus bill was inefficient.. we did not take care of long-term entitlement. looking forward we have bought a lot of trouble for the next 10 or 15 years. matt: all of that is true. a couple things have happened in the past seven years that have put the united states economy and a very good position to take advantage of things you are talking about like infrastructure. one, the budget deficit declined from 10.1% to 2.4%> that is the biggest favorable reversal in at least 50 years. we have never seen a favorable reversal like that for the budget deficit. if you recall in 2009, 2010, topic ofat was a big concern. that is one big obstacle removed from the table.
the second thing is the unemployment rate is 5%. it did come down from 10.1%. it is going to come down even more. people are going back to work. finally, interest rates are very low. these are the best rates in a generation or two for people to borrow. if you want to build bridges and tunnels and that sort of stuff, this is as good a time as ever. you had somebody on earlier this morning, at imposing talking about now is as good a time as any to invest in infrastructure, that is what governments should. that is a growing consensus around the world. stephanie: just a good -- joe stigla said the same thing. these companies, we are not spend and create big jobs. the jobs are being created as low-wage jobs. some say it is giving us a false
sense of security. there are plenty of carpenters who would love to be part of the tappan zee bridge construction initiated by the governor of new york. stephanie: and there are taxpayers who do not want to vote for that. matt: he knows that he's doing the right thing and that is not an isolated example. you are likely to see more of that in days to come. that is a very important investment that everybody, business included, is going to appreciate. jon:'s infrastructure is the thing you talk about, people look to germany and say why aren't you borrowing when the tenure is at 57 basis points? you do need to invest in infrastructure. it is a global is you. matt: everybody needs to get from here to there. whatever means they take. this is increasingly a topic of focused concern in the developed world. it is not going to go away.
if there's going to be an emerging consensus for it, you could not have a better time to do it. the economic fundamentals with either disinflation or deflation, no inflation, now's the time to borrow and spend on transportation, rail, etc. jules, you have the trade weighted u.s. dollar. the red line is the beginning of various administrations. diphave a post recession and recovery in the trade weighted dollar. contrast that with the decline in the trade weighted dollar under the prior administration. id: i want talk politics. we have a state of the union -- iss, i suspe what suspect that some of what you have written, president obama is
copying right now to put in his address. hillary clinton, if she's the nominee, me too, is that her campaign? matt: she served with president obama as one of his most important appointees. i would be surprised if she did in thebrace obamanomics presidential race should she be the candidate of the democratic party. stephanie: you think there is a chance she will not be? matt: there is a very good chance she will be and i would be surprised if she did not embrace what has been achieved in the obama economy. david: we will talk about her 4% surcharge on rich people later. matt winkler is going to stay with us. do not miss coverage of the state of the union address at 9:00 p.m. eastern. plus, a sneak preview of the issues in the next hour from jason furman, chair of the council of economic advisers on bloomberg . ♪
vonnie: welcome back to bloomberg . 2 chinese companies among those bidding for general electric's home appliances business, according to people with knowledge of the matter. hireedea group and tingdao have submitted bids. agreed to sell its unit to electrolux, that fell apart because of antitrust charges. new models expected to fall short. porsche is owned by volkswagen and is critical to vw's attempts to move past the emissions scandal. snapchat catching up to facebook
when it comes to video. snapchat delivering more than seven ilion video clips a day. that competes with the amount watch on facebook, 15 times as many users. in a fund-raising round last year, snapchat was rounded at $16 billion. stephanie: i want to do single stock focus. apple, which has been getting a after analystlyst trimming estimates as we get back to fundamentals. they are waking up and saying i eed to make sure i did my homework instead of saying go long and strong. piper jaffray saying they love this stock, calling it a top pick for 2016 despite lowering iphone estimates. analystshink about the who have trimmed back and the impact because of how big it is, how much it is weighted in the index, when you see apple take a
leg down it has a huge impact. year: apple had its worst last year since the financial crisis. let's put that into perspective, the only down your since the financial crisis. that is pretty bad. david: after going up a long time. julie: of course. but for apple it is not a good year when it goes down because it has been going up for so many years. that is the perspective. it has been a winner for so long and when it is a loser, people are not used to it. apple is bouncing back a little bit. if you take a look at my bloomberg terminal, this encapsulates the past five years of the stock. i guess you would go back a little further, apple, you cannot really look at it like you look at other companies. here is 2015, in december it fell 11%. decembers tend to be weak for the company. perhaps because it is in between its refresh cycles.
you would think at a time when it would be getting iphone sales that the stock would be going up. that has not been what has been happening for the company. piper jaffray coming out and other companies coming out recently, bank of america reiterating a buy. andstrong i found a man china somehow. it is seeing that while some other analysts are saying the opposite. stephanie: if you put in perspective where apple falls in the portfolio of many investors, it is still considered a winner if you compare energy stocks. this could be a moment where you saw a lot of investors sell into the end of 2015. they are looking at the market and saying i am selling because in a month i think the overall market is going down, then i'm going to reload the ship. if you talk to investor after investor, people like iphone's. jon: there are investors that are not in apple. one reason, it is one of the most well researched stocks on the planet. stephanie: there's no edge to be had.
jon for: that reason, there is no edge to be had. any uncertainty, it is china. when matt winkler talks about the strength of u.s. consumers and discretionary, the uncertainty is china. story, if my support is down as a retail investor in china, do i want to spend $600 on a microphone -- on an iphone? up next, hillary clinton unveiled a tax plan in iowa. details on her fair share surcharge is next. ahead of the open, 90 minutes away, futures higher in the u.s.. s&p futures up 15 and dow positive 126. in europe, dax up 2.4% and ftse up 99 points this morning. ♪
david: this is bloomberg . at a campaign rally in waterloo, iowa, hillary clinton called for a 4% surcharge on americans making more than $5 million annually.this is the first of several proposals aimed at ensuring the wealthy pay a higher effective tax rate than the middle class. editor in chief matt winkler is with us. is this tax policy or politics? matt: it is both. it is deftly politics. the inequality gap is larger than it has ever been. therefore there is an economic justification for addressing that. it is a very smart politics. by one of theed most successful billionaires on the planet, warren buffett. he would endorse this policy. is not going to
correct the inequality in this country. but it gets you somewhere better than where we are today. david: i think it is $15 billion a year. in an economy our size -- matt: it is not chump change. stephanie: better than nothing. matt: it is symbolically important for her in the democratic party. stephanie: when you look at this, do you think this is noise? david brings up a great point, this is not a significant amount of money. jon: something i said last week, if jimmy buffett wants to send the treasury a check, he can. stephanie: i love the usa, glad to be here. matt winkler, bloomberg editor and chief, thank you. more bloomberg when we come back. ♪ we live in a pick and choose world.
choose, choose, choose. but at bedtime? ...why settle for this? enter sleep number, and the lowest prices of the season. sleepiq technology tells you how well you slept and what adjustments you can make. you like the bed soft. he's more hardcore. so your sleep goes from good to great to wow! only at a sleep number store... find the lowest prices of the season, going on now. save $600 on the #1 rated i8 bed. know better sleep with sleep number. >> the real market makers, oil and china. as long as they are hurting, u.s. stocks will keep feeling the pain. the crisis for central bankers, trying to get interest rates to
rise. health stocks on the critical list. biotech taking a beating. industry conference this week may set the tone for the rest of the year. welcome to the second hour of bloomberg , i am david westman. stephanie: and stephanie ruhle. rro. us is jon fe a message for warren buffett. a personalt have message. we are having a serious conversation about how to reduce the inequality gap. billionaires take the line that we need to make a difference. they can make a difference in a simple way, can't they? david: they can. stephanie: pretty sure he said show me the money. thank you.
german chancellor angela merkel prompting quick action to expel refugees who commit crimes. merkel is responding to political fallout from new year's eve sexual salt blamed on refugees. germany took in more than one million refugees last year. news corp. chairman rupert murdoch is it engaged to a former supermodel. the longtime partner of mick jagger of the rolling stones. they got engaged over the weekend in los angeles where they attended the golden globe awards. global news 24 hours a day powered by 2400 journalists around the world. let's go to julie hyman on the markets. julie: u.s. futures rising to highs of the early session, indicating a higher open on some optimism may be we past concerns about china. if you take a look at europe, strong buying there as well.
all of those averages also rising about to their highs of the session. we did see the chinese making some moves to shore up the yuan overnight. if you look at the commodity market across the board, we've seen crude oil turnaround. still a very low level. brent moving a little below 30 earlier this morning. copper, palladium and platinum still under pressure. palladium at a 5 year low and copper at a 6 year low, barclays cut its forecast. copper is a metal exposed to chinese demand, most industrial metals are. gold prices, take a look. in the beginning part of the year, gold proved to be a refuge for investors as we saw a selloff in stocks, we started to see strength in gold. that started to melt away and we ,re seeing a leg lower in gold down 1%. if you look at the year-to-date
chart, strength the beginning of the year and a bit of a fade i n -- fade in that. up in early days of 2016. speaking of currencies and the chinese currency, the dollar strengthening versus it a a percent.enth of that is what has been driving a lot of the trade around the world. david: thank you. revival ofeiling a the lincoln continental to take on luxury carmakers. matt miller is in detroit at the north american auto show and is joined by ford's ceo mark fields. matt: thank you. mark fields with me. we are in front of the continental. i did a piece and i set it is not john f. kennedy's commented, it -- continental, it may be better. the door handles are the most amazing part. talk about the heritage. mark: the heritage is
epitomizing what lincoln stands for. there reinterpreting it for 21st century. it shows where we are taking the brand, quiet luxury. luxury with an elegance and effortless power and a serenity that is unlike any other luxury brand. matt: talk about the volumes you expect. it is going to be a big seller in china. lincoln has a great brand there. here it has got to do something to take the brand to another level, another luxury level. for: this is the flagship the brand. in the luxury industry these days there are more crossovers and suvs, the large sedan really defines the luxury brand for many automakers. for us from a volume standpoint, we have not talked about volumes. in the u.s., the large sedan market is about 20% of the luxury market. it is large and we will sell as many as consumers will want. matt: you already have double-digit margins in the u.s.
yesterday you said that 2016 is going to be better than the record year 2015. is that the case? mark: from an industry standpoint, last year was a record. we think 2016 could look a lot like 2015, could be some growth. when you look at the health of the consumer, they are still relatively healthy when you look at last week's employment report, wage growth is occurring, low interest rates and low energy costs provide consumers more spending power. year and the next couple years could be good for the auto industry. matt: are you concerned about the stock market in china, it has been rough. we've had the worst start ever to a year in the u.s. on the s&p and dow jones average. are you concerned about that for the u.s.? k: we are always on the alert for things that impacts consumer confidence. there could be some impact with the stock market. we are seeing limited
transmission between the volatility and the facts of what is happening in the economy. matt: as an automotive ceo, you can call it that. let me ask about interest rates. a study from the new york fed said they will drive up costs for dealers to hold inventory on the lot. they will drive up consumer costs for financing. are you concerned about with the fed is going to do this year? mark: let's put it into perspective, the reason the fed is increasing interest rate is because the economy is doing well. that is good for the auto industry. as long as the increases are gradual, we think that will be appropriate to keep the market momentum. if it is larger, then we will have to take a strong look. if it is gradual, it is a sign of the health of the economy. matt: ford has been strong this year. are you willing to give up volume for margins? mark: we are running the company to maximize margins and provide
a good return for shareholders. running after market share is not something that we will do. we want appropriate margins while growing our business. matt: what is the reason that he shares do not seem to move? you have record years, you have innovative products, winning market share and yet the stock does not move up. why? mark i: cannot figure out the sentiment guys out there. things that on the create value and the company and that is focusing on growth, we are delivering that. focusing on returns, we are growing our returns. focusing on improving the risk profile of the company of the we've done that with our balance sheet and pensions. finally, reward shareholders. if you look at the yield on our dividends right now, it is healthy. where going to continue to focus on this things. at newou're looking revenue streams per yesterday a lot of talk out of forward about
ridesharing, ownership ,tructures, payment systems country news -- concierge services. how do you envision ford in 10 years? mark: we are transforming from an auto business to an auto and mobility company. looking at mobility services, a natural extension of our business. it is enabled by a lot of technology now available to us. our approach is focused on the core business, love what we do in terms of designing and developing and marketing great and trucks and electrified vehicles. at the same time, look at the mobility services. they are less capital intensive. they could be less cyclical and provide some good margins. ask about detroit. we've heard a lot about the revitalization and i had seen a lot of revitalization. you think?
it seems like there are a lot of young creative people moving back to detroit. challenges, the educational system and getting families. what do you think about detroit? .ark: it has momentum when i traveled 405 years ago globally, people would tell me, tell me what is going on in detroit and they would have a furrowed brow. now they tell me, hey, tell me what is going on in detroit. it is on a great path with a terrific mayor and city council working together with the private sector to make progress. matt: mark fields, thank you for your time. david, jon, back to you. jon: more from matt miller through the morning. bloomberg , to the markets. what a couple weeks we have had in 2016. 20ures up, s&p futures up
and dow futures of 165 points. if you wake up this morning you want to know 2 things, the price of crude and the bti, -- crude and wti. a 30 handle early this morning. dollar-yuan, stable. antable fix at the pboc but aggressive move in the offshore yuan market. just to make me feel poor, ca 144.24, the lowest since may 2010. more on the markets next. great for you to go to london. stephanie: that was not two things. ♪
vonnie: welcome back to bloomberg . starbucks does not appear bothered by market turmoil in china. it plans on speeding up expansion there. starbucks plans on adding september. stores by the coffeehouse chain is bullish in the short and long-term. job cuts on the way at bp. the company will cut 4000 jobs by the end of the year. that will bring the number of bp's upstream jobs to fewer than 20,000. a slant in oil prices has cut revenues. a trial starting today focusing on the defective in missions which is made by general motors. opening statement in the civil case will be heard in manhattan court. an ago mcmahon says the flaw stopped airbags when he crashed. oklahoma man says the flaw
stopped air bags when he crashed. it is the first of six trials. david: china is stepping up, crude trades near a 12 year low. michael purvis, wheaton and company chief global strategist, take us through china and how it affects what is happening in the u.s.? tightl: we've seen a correlation with the chinese yuan, u.s. equities and global equities and with oil. the chinese currency is a better reflection than chinese equities of some issues in china. there are issues specifically ish china and their derivative impact in other markets as we saw yesterday with iran. -- with all that is negative for u.s. equities. it is a market sentiment issue. david: is it the level of the yuan or the uncertainty and
bouncing back-and-forth? michael: it is uncertainty. what is this saying, is the china hard landing coming back on the table in a real way? saw some indications it was starting to stabilize after we got through the ugly september period. again but irvicing think there's a bigger point which is that the markets have been very accustomed to big central banks like the fed or ecb coming in and firing bazookas in a scenario where it seems to be market friendly. we can debate the long-term implications of that but we are dealing with an enormously important economy which is global growth for several years. we are dealing with a central bank that is gripping around and trying to figure out how is it going to manage its respective issues. it is different than what we have been used to. that is why we are seeing more, the vix has been finding higher
lows against this. stephanie: as it relates to earnings, what kind of earnings? and a company that has china exposure michael:. you have a knock on effect through, what is best for china is probably bad for commodities. nd that is a significant part of the overall u.s. earning energy the materials and sector. that is part of the growth and another reason why oil has been treating at a very tight way with the yuan and emfx broadly. julie: i wanted to jump in on the vix which you just mentioned,. i was talking with an options trader yesterday looking at 2007-2 thousand 12, he said the spikes you saw averaged around 33. and they were coming back to a high volatility regime. he likened it to an earthquake. every earthquake that comes, you
have no way of knowing in advance if it is going to be the big one. you have to brace yourselves as though it is going to be the big one. even though we've seen the drop in stocks this year, it has not been the big one in terms of the vix. to protectk you have your self in that dramatic fashion? why haven't we seen more of an uptick in the vix? michael: a couple things have been happening with the u.s.ility surface for volatility. you are seeing higher lows, as you can see on your chart. if you look through what has been happening in the beginning of the year, the vix curve has been converted almost every day this year. that is different than the other vix spikes. you may not see the 35 or 40 prints on the vix like in 2011 but you are seeing higher floors for that and that is
underscoring and more dynamic sort of regime. : one other point, it is not about interest rates at all. treasury implied volatility is quite low and this is about other issues we've been talking about not to deal with develop markets and central banking. the developed market story into it, the story is the gaps in between. we have not had volatility until recently. we have central bank or after central bank account out and say things are going to be ok. i remember october 15 we had the big rally in treasuries over 18 months ago. bullard would come out the next day and say maybe qe4. doesn't exist anymore. the point you made earlier is critical. problems at the moment for central banks, china and low inflation. they do not know how to address either one. one is driven by commodity
prices. with the exception of buying crude futures, which i don't see them doing, all we have left is the currency impact. can they keep playing de fac to and targeting currency? michael: that is what they are going to have to do. u.s. yields are low and suppressed by what is happening in japan and the eurozone with qe programs. the economy orin u.s. monetary policy is expressed through currencies. does, whether you look at the pound or the chinese currency or the euro, it edges the fed into a more dovish position as we get into the hiking cycle. think any central banks should be buying crude futures. sopoint is they are concerned about headline inflation when so much of that obviously is the commodity market. michael: back to your discussion with stephanie about earnings. with a dollar, u.s. companies
being more relied upon overseas revenue, that limits their earnings. they could be making the same amount of money but it counts less. stephanie: if you are a public company, growth is your number one strategy to have your stock go up. you have saturated the u.s. markets and you have got to have international, what are you going to do? michael: absolutely, you have it whether you want it or not. what did we miss last year in the s&p 500, which finished flat, we had no earnings growth. earnings rose particularly with the fed in retreat, earnings growth is more prominent. if we don't get earnings growth, we do not see that coming, signs of that in this quarter and the next quarter, it is going to be more challenging for u.s. equities. david: the fed policy of the virgins actually put suppression on u.s. company earnings. sure. the dollaris the tightening mechanism right now. there's almost for chilling
dollars of corporate debt in emerging markets that is u.s. dollar denominated. as the fed titans here, the dollar is tough on the u.s. economy but it is a drag on emerging market economies through the higher interest rate burden. stephanie: a lot more to cover, michael purves needs to help you make money so you can afford the choice piece of real estate up for sale in l.a. the ultimate bachelor pad. i'm not sure if he is a bachelor , it comes with a hefty price tag. playboy enterprises has listed in losnic mansion angeles for north of two hundred million dollars. here's the catch. in order to buy the five acre mansion, you have to agree to let hugh hefner lived there for the rest of his life. but given young man how he spends his free time, i don't know. that guy takes care of himself. jon: i know a buyer.
jon: welcome back to bloomberg . policy including the bank of england governor mark of carney, the imf's christine lagarde and great britain's stanley fischer are gathering to discuss bolstering prices at a time of ultralow rates. caroline connan will join us to discuss her interview with the new central bank governor in france. caroline, do we have you?
caroline: i don't think so -- you do? yes, i can hear you. ,tephanie: walk us through monetary policy makers are gathering in paris. what is the message, what are we going to learn? actually at is farewell symposium to the former who of france governor headed the bank of france for the last 12 years. he has been followed by friends villeroy derancois galhau. growth in europe is still lagging behind other countries in the world, including the u.s. . inflation remains very low. the last numbers for inflation in europe were at 0.2% here's i
asked the new bank of france if more stimulus from the ecb was possible. francois villeroy de galhau: inflation remains too low. we have been active and effective. active, look at our decisions of december the third last year. rates,eased interest still negative at -0.3, we extended asset purchase programs to march 17/ we said we would reinvest the principal. we have been very active. jon: thank you. ♪
havee: turkish authorities identified the man they say are responsible for a bombing in istanbul in a popular tourist area. the suicide bomber was a 28-year-old from syria. most of the victims are foreign. sergeant bowe bergdahl will be back in a military court in north carolina today, charged with desertion and misbehavior before the enemy. ahl must decide if his trial will be held before a jury or just a judge. the final state of the union for president obama. out manyot be laying specific proposals, expected to focus on themes democratic candidates can adopt. bloomberg will bring you the speech live tonight at 9:00 eastern. 2400urs a day powered by journalists around the world. julie? julie: futures reaching their
highs of the session. every time we look, they get another leg up as we've been talking about stability in the chinese currency. we've been seeing continued weakness in oil to some extent. it now too is bouncing in the past few moments. we will be getting weekly stockpile data later today and early tomorrow and that should affect the price of oil. natural gas, let's take a look. jeffrey cutting forecast for natural gas. interesting in the face of colder weather in the u.s. natural gas is pushing back by 2.5%. we've seen all this volatility, how will that affect the fed's growth projections for the full year? morgan stanley chief u.s. economist joins us for that morning meeting. projections for
yourself and the consensus of the market changed in terms of the fed given what we have seen in the early days of 2016? beforeave to go back to the early days of 2016. the fourth quarter gdp is not tracking very high. we have got it nearly flat for .he fourth quarter consensus forecast as more data comes in have been coming down. what that does is set a very slow ramp going into 2016 when you do your calculations for the kind of growth we can expect in 2016. we are starting off the year on such weak footing. that is bringing a lot of forecasters' expectations down. they are still above our expectations for growth in 2016, we think everything will move in our direction, including the fed . they will be facing a march meeting, a decision on rate hikes where we think they will be revising down there forecast
for growth and there forecast for inflation. having faced such a rocky start to this year, nothing seems to be supporting the argument for them to go again at the march meeting. julie: march aside, when you look to the rest of the year, your baseline scenario is a pause. and then increases at three of the meetings this year. is that changing? how bad would things have to get, what signals are you looking for that would change the outlook? ellen: we're sandwiched right between the fed expecting 4 rate hikes this year ending market pricing in about two. where right in between, expecting three this year. that is based on our expectation that the economy grows about 1.8%. so we hold up fairly well in the rising interest rate environment that we do not accelerate into the rising interest rate environment. it is a poor into note that the fed has tied further rate hikes
to inflation. in handnflation data cooperating and we do not think they get that until the second half of the year. that leads us to believe that the three rate hikes we expect fall later in the year rather than early in the year. to say say the risk further china devaluation in its currency and further movements in the other knock on effects of currencies that move with china, seems like there is an asymmetrical risk to the downside for china's currency. i would say there is an asymmetrical risk for how many rate hikes the fed will get in this year. julie: is the chinese currency what you are going to be watching? i know you are looking at the trade weighted dollar, which goes hand in hand with the idea of watching the yuan. is that going to be the key indicator? ellen: you hit the nail on the head. over the entire past year and a half or so, it has been the
trade weighted dollar. the fed has done the artful dance around it in terms of monetary policy. it goes back to inflation, core inflation is determined by movements in the trade weighted dollar. china influences that trade weighted dollar very heavily. back can tie a lot of this to china because that is where the volatility is and the uncertainty is. i think this is the year of china and em concerns and market volatility. that is going to weigh heavily on the dollar and influence the fed's policy. with morgan zentner stanley talking about the fed outlook. the fed, like everyone else right now, affected by the outlook for china. david: thank you. we are joined by tracy, executive editor for bloomberg news. we've been talking about the markets all program long. we talk about generally in the
streets, let's get into specifics. what are you looking at? tracy: feels like in 2016 you cannot start the day without china. i bring you the hong kong interbank lending rate, , whichse known as hibor soared this morning, it had a pronounced jump. it basically happened because the chinese government intervened and started buying offshore yuan. that is the jump on the screen. inna started buying renminbi the offshore market and that drove the interbank rate up. they're trying to converge the offshore and onshore rate. this is important because china is trying to get its currency in the international monetary fund basket so it is try to converge those two rates. in the meantime we have had a short squeeze for investors selling the renminbi in the hong kong market. that is a painful squeeze on the chart. jon: flush the bears out? tracy: you have to punish the
bears, right? last week, investors were betting on devaluation of the n.a some people were talking about a swiss style one-time devaluation. those people getting burned. stephanie: you know who else is getting burned? great u.s. companies with strong equities, some of the biggest out performers of 2015 are being in highlighted. mastec opens the the year, credit suisse asking should we look at the out and takes of 2015 profit? companies saying we killed it and we are getting killed the market dynamic is hurting them. investors are not focused on the nitty-gritty of china but the headline is saying things are bad, what am i going to do, sell my winners. tracy: we've seen a lot profit-taking for sure. it is fair to say it is a bit unfair that some strong u.s. companies are getting hit with
this knee-jerk reaction. china is thehand, great unknown. you never know what the chinese government is going to do. be unexpectedcan and it is tough for investors to think through the followthroughs of those sort of moves. stephanie: prompting many of them to get out of the market and said in cash because of the uncertainty. tracy: the thing investors hate the most is uncertainty. it out if you do not know what is going to happen. david: one other thing you are looking at today? tracy: let's look at hotel reits, real estate investment trusts come a a fund that buys up properties on which hotels are built. they have been getting clobbered over the past couple months. you can say over the past week it is probably the declining risk appetite that stephanie has pointed out. you can see some of the air was taken out of that market a few months back. that is probably to do with the fed raising interest rates, easy money coming to an end.
we have seen a lot of investors pulling money from yield place, reits, mlp's, high yield bonds, the sorts of things getting hammered. stephanie: reits getting cut across the board. jeffries, every sell side shop is cutting reits. was a everything that favorite of the past few years, the air is taken out of the tires. jon: joe weisenthal would be disappointed if you talk about the trade without talking about jolts. stephanie: i will never said joe is more intelligent than you on anything. he may be more well-versed, intelligent, i do not think so. we've got to take a quick break. tracy alloway, we will let you get back. someone covers markets. when we come back, the supreme court determining whether those who choose not to join unions
david: you are watching bloomberg of. the supreme court heard arguments in the case that may determine whether government workers that choose not to join unions will be union fees ity let's bring in michael, a lawyer who works at bloomberg. explain the case and why it could be so important. michael: the supreme court is considering whether to overturn a 40-year-old precedent. in 1877, the court -- 1977, the court ruled if a worker does not want to join a
union, they still have to pay an agency fee that covers collective bargaining and processing grievances, but not be political activities of the union. they would not pay the whole fee. teachers in california have challenged this. in the case that was her yesterday, it says it violates their first amendment rights to pay for activities by the union that they do not agree with. they don't agree with the way collective-bargaining works. david: this is a first amendment claim, you are infringing on my speech because you are requiring me to pay for someone to take a position i might not agree with. michael: we do not like things of what you are asking for in terms of disciplinary processes or how you want the government to spend and we should not have to pay to help you bargain that. david: this is public unions. michael: only public unions. david: first amendment governs government and not private individuals. the first amendment has
to do with what the government can do. it may have implications on the private sector, no one knows how the court is going to rule so we have to wait and see if it will have implicationss. david: normally we cannot tell where the court is going to come out. michael: the court was pretty clear, the five conservative justices were that they are not synthetic to the government's position and the union's position. , five justices signed onto a position that was a very critical of the 40-year-old case the plaintiff is seeking to overturn. david: what would be the practical applications for public unions? michael: very severe implications. they would lose a lot of money that they currently have now. they might lose a lot of members. if people don't have to pay the agency fee regardless of whether they joined, they may decide i'm not going to join the union at all and i don't want to pay. bargaining ond be
behalf of a lot of people who are not necessarily members and their political clout could become less. david: you know a lot about public education. what does it mean for teachers unions? michael: it means that a teacher's unions may have a lot fewer members, less money and political clout, which could affect how much influence they're going to have over policy. david: it might have ramifications for the presidential election. michael: it could. this has implications, teachers unions are among the strongest supporters of the democratic party. if they have less money to put into politics, it is not going to help the democrats. david: it would allow hillary clinton to come out strong on behalf of unions. michael: i expect just as you have seen criticism by hillary clinton saying the citizens united decision, she will criticize the supreme court on this if they go against teachers unions. david: thank you very much. to ourie: let's take you senior markets correspond, julie hyman taking a look at
pre-market movers. it is all about single stock toentum, we are going fundamentals. julie: looking at alcoa, whether this earnings season is going to be disappointing for investors. stock has been bouncing around. when it came out, it went up and then it went down. sales fell 18%. the company posted a net loss. excluding one-time items, it beat estimates. alcoa will be separating its aluminum business from the refined products business. the latter is more profitable for the company. apollo education, the private education provider. they said it was exploring options. dow jones is reporting that apollo global is said to be in talks with apollo education and could pay $1 billion for the company. raised itson
forecast after the close of trading, looking for 78 to 80 cents, that had been 75 to 80 c ents. they are now looking into pants that make you feel like you are naked. jon: thank you very much. stephanie, as you look at what has happened over christmas, you've got the last quarter and you have got what is coming. can you shift from lululemon to under armour? stephanie: take a look at nike. nike's ceo yesterday was named to the disney board. nike hit their highest point ever, december 23. 80% of the analysts covering nike have it as a buy. under armour got whacked yesterday, morgan stanley putting out a negative report that sent the stock down 10%. already seeing a comeback in the premarket, up 1.8% as sons trust -- suntrust is saying this is a long-term buy. 55% of analysts have it as a bu
y. people have been jacked up on athletic wear and sneakers. many have said these are momentum stocks, they are high. they are the quickest to get hit . maybe we're seeing a comeback. jon: adidas as well in europe is the same. you wonder what is going to happen. another sector was health care stocks. they are off to a bad start to the year, as is pretty much everything. from tiny biotechs to large-cap drugmakers, worst stock since 2001 as the biggest names gather for the jp morgan conference in san francisco. drew armstrong joins us. we think of health care as defensive. it has almost become momentum plays. if you go back to 2010, that is when obamacare was passed. coming out of a recession. you look at what happened with bioterror stocks and a rest of the market, they took off and went crazy.
in growth and higher indices. this year and the end of last year, they have been getting crushed. the jp morgan conference is the health care equivalent of ces or the detroit auto show, a dealmaking conference. people are pretty optimistic a lot of times when they come into this, they want to get excited. we looked at the first day of trading for the last 15 years of jp morgan. has not been this bad since 2001 and that was not a great time for the market as well. it has been tough at we talked to people on the ground and they are like this stinks. greatnie: is it not a time because things became so inflated? that is aeing in june record high in biotech names. it is just because things got so frothy, not about fundamentals. ago we werenths having the debate are we in a bubble, does there need to be some kind of correction? we have had one.
at the end of last year, september there was a big pullback in biotech stocks, drug pricing became a huge issue. we are at the start of this year and people are wondering what is 2016 going to look like? are we going to get back on a path to growth, nobody is sure and it does not look great stephanie:. stephanie: boom. thank you to drew armstrong. when we come back, jason furman, chairman of the council on economic advisers, joins us. a lot more to cover. ♪
stephanie: positive sentiment in the market as wti hits a high. president obama may be having more positive sentiment tonight in his final state of the union. expect? we jason furman, chairman of the u.s. council of economic advisers, joins us from the white house. what is in store? jason: what is in store is the 's optimistic vision
about the future of this country and what we need to do to achieve it. -- have a tail wind with we had a tail wind with 70 straight months of job growth, what can we do to raise wages and make the country stronger? jon: the price of crude this morning around $32 a barrel. the u.s. is one of the biggest crude producers in the world. how does the u.s. handle where crude is trading now? we see whatof why we have seen in oil markets, we have cut back our oil consumption in this country. that is good for climate and good for stability. we are still net and importer of oil and low prices are on net a good thing for the u.s. economy because of what it does for consumers. you see strong consumer spending of the last year. david: you paint an optimistic picture and i'm sure the president will tonight here it is not what we read every day in the paper. is their frustration in the
white house? why hasn't the white house been able to get the message out as effectively as you might like? in 2015 wherers the most optimistic that they have been any year for over a decade. that is because wages are rising the fastest they have in the recovery. the unemployment rate is filing at the fastest rate for 30 years and people are feeling that. there is a lot of turmoil going on in economies around the world here in the u.s. is one of the more successful economies because we have taken the right steps in our country. i understand as you look around the world the concerns. we are going to be talking about what we can do to address them and work with other countries as well. most people would look at the labor market and say there is nothing left for the fed to do, everything else is structural. that falls on your doorstep, what can you do about a structural complexity of the labor market given that the
participation rate is at multi-decade lows? jason: deeper dissipation rate for -- the participation rate for men has been falling for 10 years and for women for 15 years. a lot of the issue is said.ural, as you more flexible workplaces, paid leave, support for child care and creating jobs that people can get in areas like infrastructure, all of those address some of the structural problems that we have with labor force participation. stephanie: companies argue that if there were more business friendly policies and terms of manufacturing, there would be more job creation. do you need to see more of that to spur the economy and job growth? jason: let me give you one, the transpacific partnership. the president will be submitting that to congress this year. it has 18,000 tax cuts on american exporters. at a time when it can be hard to export because of growth in the rest of the world, we need this more than ever. the sooner congress does this, the better. that is something we should
agree on. david: that is a good example of something that may make sense and a lot of people thinks makes sense, i don't think that has gone through to the populace. and a lot of people think it is a job loser for americans. they could be wrong, but i am not sure that message has gone through. stephanie: i agree. jason: the president will continue putting that message across. we want to support more good jobs here in this country. things americahe can do best at, you need this agreement. you.jason furman, thank full coverage of the state of the union tonight from 9:00 p.m. eastern. equity futures at session highs this morning. 1.70%, $32 a barrel. ♪ we live in a pick and choose world.
green so i want to raise to that open so we can get an open -- so we can update. our colleagues from london with us. today is the opportunity for john farrell to deliver. sounds2 a barrel terrible. first game of the year potentially. lisa abramowicz is here as well she is going to join us through other next 10 minutes to discuss these markets. equity futures session highs. vonnie quinn has your news. vonnie: turkey says the suicide bomber behind a deadly attack today was a 28-year-old syrian. the explosion killed at least 15 people. most of those killed were german tourists. there is no claim of responsibility. turkey suffered two major blameds last year both on islamic state. bowe bergdahl will be back in a military court today charged
with desertion and misbehavior before the enemy for leaving his post in afghanistan. bergdahl has not entered a plea. president obama will deliver his seventh and final state of the union speech tonight. he is expected to emphasize democratic party themes without many specific proposals. bloomberg will bring you the speech tonight at 9:00 eastern. global news to four hours a day powered by 2400 journalists around the world. julie: we are seeing futures go to the highs of the session. now all of them up by around 1%. indeed it has coincided with a gain in oil prices. if you take a look at oil, the rebound we are seeing even in the face of the coming stockpiled data is notable here. now oil taking a dramatic light up now up 1.8%. futures and oil together on the
same chart just put a fine point on it. the movement we have been seeing together here. we have oil and yellow. futures and white. you see them going up pretty much in tandem. gone notlation has quite in tandem over the past couple of sessions that it is happening today. if you look at commodities as a group and what we have been seeing, the bloomberg commodity index. here is the year-to-date chart. switch today but it is down more than 4% for the year-to-date. consider that this is an index that has fallen every single year since 2010. that was the last year it was up . oil prices have fallen the last two years but as a group we have seen long-term commodity weakness. david: what are we, 27 minutes away from the open? three stories you need to know before the market gets underway. china stepping up defense at the u.n. buying the currency in hong
kong. the people's bank of china repeatedly intervened in the offshore market on tuesday according to people familiar with the matter. yuan rose.e the wti and the offshore yuan. lisa: this is sort of a conundrum. on the one hand it gives the markets confidence when china does come in and deploy its trillions of dollars of reserves . on the other hand those 3 trillion dollars of reserves will get diminished. how much firepower do they have? is this really going to give the market lasting confidence or is this just a break from some of the carnage we saw? david: they have gone through
$500 billion in the last six months. i wonder about the erratic nature of this. we cannot predict what they will do. a part from where it ends up as a level i'm concerned the markets do not know what to do. lisa: they are roiling their internal market area creating a liquidity problem for my markets. creating distortion that will not give confidence over the long term. to some of the wealthy chinese residents and citizens who have been trying to get their money out of there as quickly as possible, which is one of the main problems. jon: if you wanted to increase use of currency, that is not how that happens. the point you made at the beginning, a lot of people are coming onto this program and reflecting on the swiss national bank. letting it rip. are we approaching a point where they let it rip? lisa: no. the response from the
professionals is absolutely not. they are not comfortable doing that. we don't have a sense of how far it will rip. ss national bank was not facing a debt crisis. in china that is one of the big problems. david: there may be a parallel between what they are doing now. say, stop the capital outflows and it may cause more of a panic over long-term. lisa: right now, what can they do to bolster confidence? do you really think that is going to increase confidence right now? not in the short term. are they willing to take that turmoil? david: that is the $64,000, or yuan question. stephanie: i'm going to say it is way bigger than that. david: i am dating myself. oil is up after trading in a 12 year low. the department of energy
releases stockpile data tomorrow and supplies are expected to expand exacerbating an oil glut. oil slid more than 15% in previous sessions. this is what disturbed me about this. it is great that oil is coming up but i am not aware of any particular event that triggered this. i would like to have some news that said this is going to last. right now it seems that people are just trading. lisa: it seems like right now you're starting to see more dire predictions coming from wall street analysts. morgan stanley came out yesterday saying they see oil falling as low as $20 a barrel. you are starting to see the sort of dire projections coming out. are we seeing capitulation? if we stay at $32 a barrel we have not reached full capitulation yet. people will not have confidence they are coming in at the bottom quite yet. if you look at a chart of oil prices over the past couple of decades it went from this and
then back here and we're almost back down to where we used to be. so the level of where it should be looks like it could very well be at the $20, $30 a barrel. stephanie: i guess frustration is, sell side analysts, where were you when? when guys are calling for the end of the world, they were not saying anything with a wrecked what 100. it is nice to say the sky is anything when they were at 2100. it is nice to say the sky is falling. too late to sell, too soon to buy. lisa: when you have these predictions coming out that crude could fall $10 in the next few months, it does not give condition -- give conviction to an investor. when i try to come in and buy debt of energy-related companies they got their faces ripped off. stephanie: technically speaking -- oil does not look like it is
hitting $100 by june but i still love you. markets reopened in japan today after being closed from public holiday. the worst start to a year on record. lowest closing level in more than three months. this embraced the entire gate -- this he raced the entire gain from 2015. how do you find a positive? lisa: i guess when you hit a low there is more potential for up-and-down at this point. i were struck by a story in the terminal that i thought was interesting from bnp strategists -- we are seeing the country still is not seeing growth substantially. they are getting buffeted by the wind of china and all the turmoil in ag asian markets.
the yen is strengthening in the region to make them not as competitive. they are failing to ignite their economy using these traditional monetary tools. owns 50%bank of japan of the etf market in japan right now. about one quarter of the government bond market. in the last couple of hours we talked about qe exhaustion. the central banks are reaching the limits of what they can actually do and the move in expectyen, i do not governor to step in again. does that resonate with you, that argument? lisa: at a certain point, what are they gaining? it is showing that it is being ineffective. how instructive is this to the ecb? to other central banks that are trying to ignite growth through programs that through japan do not seem to work in the long
run. david: whatever affects the u.s. is much more profound in japan. and so yen strengthens much of their economy is dependent on exports to china, they are -- jon: we spend a lot of time talking about dollar crosses when we should talk about yuan crosses. that is the real battle. the regional currency battle happening right now that is important. lisa: it shows the bind they are in and when you see their stock or get plumbing after everything they have done it does not -- stock market plummeting after everything they have done, it does not bode well. stephanie: we will take a quick break. thank you to lisa abramowicz. approaching premarket highs as oil rises from the lowest close in 12 years. i want to take a look at what is
bp's bottom line. home appliance business. the madea group and qingdao are each offering more than $3 billion. ge agreed to sell the unit to electrolux but antitrust concerns killed the deal. snapchat video is catching up to facebook. living more than 7 billion video clips a day. that rivals the number watched on facebook just 15 times as many users. julie: i want to check on some of the premarket movers. lululemon is getting a bump up of 9% after the company raised its earnings per share forecast saying it had a successful holiday season under the ceo. the company has been trying to turn around in the wake of a pants debacle a couple of years ago. we are looking at under armour bouncing back although it has been pairing that advance of 9/10 of 1%. the weakness the stock so
yesterday in the wake of a downgrade represents a long-term buying opportunity and some of the weather challenges the company has faced will be short-lived. burlington coat factory, who could be more reliant on whether and cold weather than burlington? shares are up 12% after the company said fourth-quarter comparable sales are little changed. the company gave a number excluding cold-weather categories. excluded -- stephanie: they sell coats. their business is coats. we will give it to them. julie: they give a number of up 4% excluding cold-weather category. stephanie: they do sell other clothes. analystsoks like are giving them a past saying the product mix has been improving. sticking with retail but not clothing, and is narrowing its evenngs per share forecast
this comes as cw post streaming services with netflix and hulu are about to expire. rich analyst is a media analyst -- rich greenfield is a media analyst. it's got me in reading predictions, they linked up. one of the things you talk about was a virtual cable channel that goes over the top. rich: there is no doubt media companies need to figure out how they develop their direct to consumer expertise. it is not easy for basic cable networks. mays possible that the cw opt to do it. one of the challenges they face is that they licensed all of their library content to netflix . just because the new stuff does not go to netbooks anymore come all of that old stuff is still going to netflix for many years. even if they launch direct to consumer it is not an easy consumer proposition to make. david: they have licensed heels
with cable providers in the various locations -- licensed deals with cable providers and very locations. rich: that is the problem all of these basic cable network space. it is easy for a channel like hbo to do hbo now. they have always been a premium service. whether you are talking espn or cw, all of these channels are getting paid by the cable companies, comcast and time warner cable. recently going to war directly with your distributors is a hard thing for all of these companies to do and something that does not seem economical. stephanie: isn't the goal to get the eyeballs? if the eyeballs from a cw type of viewer is in a smart phone or tablet, you should not be wasting your time with a tv. if you are seeing kids watch as many videos on snapchat as they do on facebook, which is five times the size, the answer is get yourself to a smart phone. rich: these companies know they
have to get to the phone. it is why netflix has been such a great stock. the valuation of snapchat is soaring in private markets. most of the media stocks have .ad a very rough last 12 months they don't have an easy way of navigating to these new devices. direct to consumer sounds like the answer. the reality is it is much harder to do because what happens when the cable companies say we are packaging you without these networks? stephanie: you're an analyst so you have to look at the bottom line. when we talk about private valuation of snapchat soaring, when do you start to say, how about making actual money? as it relates to disney, that is what disney does. as it relates to these new media platforms, eyeballs do not directly mean dollars. rich: facebook is now doing $4.5 billion of ad revenue a quarter. that is a number that 10 years ago did not exist.
these have become very large businesses out of nowhere in a short time. video ad dollars are beginning to flow to these platforms. with snapchat it is early but the amount of engagement and time spent is pretty tremendous. one out of five minutes every single -- one of every five mobile, with a facebook application. as the world goes more mobile facebook is a great place to be. david: a difficult transition to make. i used to work at abc and disney and we had a version of this with the affiliates when apple came along. the big broadcast outfits wanted to put programming on apple, itunes. there were negotiations back and forth but they work through it. stephanie: is there such a thing as negotiating with apple? david: with affiliates there is a lot of negotiating. rich: they went out with hbo now and it launched direct to consumer.
anyone watching bloomberg go can go out how they do not need cable or satellite or did they can subscribe for $15 a month. look what happened when game of thrones ended. people started to cancel. there was not a next big show. just a click button. calling up to cancel comcast is one of the world's most painful things. stephanie: call time warner. rich: canceling netflix or hbo now is a click of a button so it is really easy to cancel. on top of that you have the companiest that these are not used to dealing with consumers and marketing directly. it is a new skill. stephanie: it is a new revenue stream. exist before. these are dollars in the door that they did not have before. better than not having them at all and before you had that people were just stealing passwords from their parents.
young he is super said, you know it. david: it is incremental additions. go.s where you need to the other thing i want to talk virtual -- possible as i understand it it would be -- comcast says, i'm in the markets where i am, i would like to have my virtual service in another market geographically and i would like to offer you that over the internet. --h: if you look at sling right now sling tv you can sign up online and get espn home and garden, food network, directly oku box.a reok you can subscribe or just watch it on your phone. comcast -- hard to believe
comcast is not going to get into this business as well. they wanted to buy time warner to be more national. how could comcast be a national provider by launching a virtual and dpd. i think apple has grown frustrated with the rules and the way the media companies want that to work that i think it is inevitable that comcast does it. david: it really throws the cable world up the air. it has all been built around local regional monopolies and if you destroy that and you are all competing it is a different marketplace rich:. i don't think the consumer understands regional boundaries. they want to be able to access content on their phone anywhere. they do not know that time warner is new york city. jon: why does not someone just by netflix? rich: let's look at disney's acquisition history -- several $4 billion -- jon: the size should not be the
obstacle. rich: i think the question is, if you don't by netflix because it has gotten too large -- each of the partners of hulu would love to own all of hulu. it does not seem like anyone will sell their stake to let you consolidate. is, if thesetion companies -- the cable network is this is getting worse. this business which was the most attractive part of the media space is getting negative. the question is, what do you buy? points for s&p18 futures. more is next. ♪
it seems clear stephanie has long for this morning. cable, the fx boys 12423. cable, it makes me a poor poor man. i look for the moves in crude, moves in the chinese currency and tech stocks as well. -- sinceing over the the beginning of 2016, tech stocks have gone sold off somewhat indiscriminately. no one really cared what the story was for individual stocks. it was just kind of sell anything that could be sold and obviously amazon and netflix were among stocks that had great runs in 2015 so people took a breather. stephanie: it was not a fundamental reason why we saw selling was technical? individual worries about
individual companies like apple and twitter but otherwise sort of sell whatever you could. jon: let's get back to fundamentals. we have been hitting apple hard all morning. is not just about a momentum trade any turnaround, a genuine demand for the products they make and supply in china. there are reasons for a selloff in technology, are there not? shira: the last six weeks or so have been dominated by worries out of the asian suppliers that make parts for the iphone. the iphone is something like two thirds of apple's revenue. how apple goes is totally dependent on iphone sales. there are some signs that orders are getting skilled back for the iphones in coming months and we are starting to see wall street estimates come back to the point where iphone sales may actually decline in the coming months and that is something that has never happened year-over-year decline in iphone sales. david: isn't this something we have seen before?
case that they start cutting back on supply of the old iphone, people start worrying about apple until the new one comes out and everyone rushes to the store to buy them and i wonder if this is not just the same play we have seen before. shira: some of the story sound familiar. we are in what is called an s cycle for the iphone. these every other year apple makes tweaks rather than dramatic improvements to the latest model. we got the iphone six in september. this cycle is a was a period of anxiety because there is not huge demand for something that has been not remodeled but slightly improved and then when the iphone seven presumably comes out in september we could see this huge rush. the difference this time is that the iphone six, which was maybe the most anticipated release of the iphone ever, in 20 2015 -- into the 14, there was all this -- in 2014, there was pent-up
demand for large screen iphones. twitters no reason for to move. there was move about periscope -- there was news about periscope, an app that twitter owns. twitter will incorporate videos into the live twitter feed. twitter is having problems growing their user base, a problem that is not going away anytime soon so anything twitter does that shows they're concerned about that user growth problem, they are doing something to alleviate that problem, that since the stock either up or down. david: thank you for joining us. bloomberg's gadfly. we have to check-in with what is going on in the markets. coming up on four minutes into the trading day. julie: twitter did close at a record low yesterday and has
been falling without a specific catalyst. when you get a bump up it is par for the course. all three major averages are trading higher. indicated by futures as we were coming into today's session. we are getting underway in terms of earnings. we did hear from alcoa. 18%. fell one of these commodity related companies we talk so much about. shares are down more than 4% out after, if you take one-time items. earnings-per-share did beat estimates. the stock is trading lower. aluminum prices have been hit hard. we have been watching apple. let's look at how the stock is doing. we are seeing a bounceback of 1.8% and we have gotten more positive commentary on the stock on the likes of piper jaffray and bank of america, both of which are out with notes defending apple saying the long-term story does remain strong for apple.
ditto if we are talking about earnings. wells fargo will be out with its earnings on friday. he know from goldman sachs is upgrading the stock and saying wells fargo has the clearest path to meeting its earnings-per-share estimates for 2017. shares bouncing back 1.4%. we have been watching the correlation between oil and stocks. coming down off the highs for the session but still up about one half of 1%. we will see if it can sustain those gains as we get those inventory numbers later today and going into early tomorrow. stephanie: drug pricing has been a hot topic in the markets and campaign trail. we recently sat down with roos richards and he will -- with bruce richards and he was critical of one company. company we are doing our work on we do not particularly like.
pharmaceuticals. their model is acquisition, buy it up, jack it up. when you get a headache, you take motrin. sometimes for some that might upset your stomach so you -- they make a drug that combines both. no r and d. the compounds from both are the inputs to the drug horizon makes. that sells for a one-month prescription, $160. one competitor. add bill does motrin with pepcid and they have the monopoly on that because they have fda approval who grant monopolies on the drug as long as that patent has been in existence. they went out and bought the competitor's drug and a month after they bought the competitor's drug they put a zero on the end of each one of their drugs.
$1670 today. stephanie: here with his response, horizon's ceo. this.e understand that is a nice theory but it not relate to how physicians practice medicine and treat patients. the first reality is the fact that less than 25% -- this is not changed in the last 30 years. physicians do not prescribe g.i. protective agent when they give them a prescription dose ibuprofen and we're not talking about over-the-counter dose of ibuprofen which is rarely .rescribed after three prescriptions most of those patients have stopped taken the g.i. protective agent. that unfortunately, given the
fact there are 40 million patients with our steel -- leads to 100,000 hospitalizations each year because physicians do not practice medicine the way he would hope they do. , if the patient gets hospitalized there could be hundreds of thousands of costs. the cost is cost-effective because that is how -- stephanie: cost-effective for home? what percentage of your sales come from government payers? timothy: probably in the five to six per -- 5% to 6% range. stephanie: if this is the right way to prescribe medicine, if these patients need these use ations, why do you small network of specialty pharmacies that have come under major criticism as they relate to valiant? timothy: we actually don't work
with a small network of pharmacies. over 10,000 pharmacies that have .rescribed agents we work with a small number, about two dozen or so pharmacies that help when a patient has their prescription -- we help get their medicine where over 90% of patients pay less than $10. it is an avenue to help manage care. it thate: why is medicare covers so little when you think about the patients that would use these drugs, their court medicare medicaid, elderly people. timothy: the average patient is in their 50's. a large population of these patients are in their 50's. also patients who are out age can-- the average
range from 18 all way up to the medicare population in the case of duexis, most of those patients are under 65. when you step back and look at how we have managed this medicine, pricing has been a small piece of the growth of our primary care business. over the last seven quarters, 189% -- the growth has been 189% in volume versus 16% price over that period. when you look at what has driven business it has been focused on volume growth. stephanie: raising your price tenfold, you are actually telling me that is not affecting the growth and profitability of your business? timothy: if you look at the price increase and what we have disclosed in our corporate filings each quarter with the sec, about 70% of that price is discounted back to access for patients. about 30% of that price increase float through and when you look at the growth with duexis and our other brands it has been
189% volume versus only 16% price. stephanie: help us understand what is the pricing going to look like for your new drugs in 2016. you recently have a gout drug. help us understand the pricing. timothy: we bought a gout drug we announced this morning. we updated guidance. we expect to close that transaction this week. we have no plans to take any near-term price increase with the medicine. our strategy is to continue to grow volume. we did take price increases on a few of our medicines earlier in the year. on average, about 7%. the net realized price was less than 4%. our sales and continued growth is driven by volume growth. stephanie: are you going to be cutting ties with any of those specialty pharmacies? you said you deal with many pharmacies.
lyndon care has been accused of contract violations. will you be cutting ties? timothy: we have no contracts or direct relationships with any pharmacies including linda care. less than 5% of our sales in the primary care of business. we have no direct relationship. they were a pharmacy that has a right to distribute a medicine their physician prescribed. stephanie: are the accusations simply wrong? timothy: when you look at research there are many biotech companies in many large pharmaceutical companies that are focused on doing research. in our case, we are focused on buying medicine where we can continue to drive volume of them , do the right thing to ensure that over 90% of patients pay less than $10 out-of-pocket. when we acquire medicine we are spending significant dollars to do a phase three trial in a rare neurological condition in children and about 4000
patients. we will have resulted in december of this year. that indication could be $500 million to $1 billion in annual sales. we are doing development we have assets we purchased to continue to develop. stephanie: it would be great to see you help all those children. that is horizon pharma ceo tim walbert. abigail doolittle has the latest on lululemon surging higher at the open. green you lot of that like so much including lululemon. shares are soaring after the company boosted the school guidance after the company offered a disappointing outlook on its earnings call in early december. "a company saying they had very successful holiday season o." that comment about gross margins is important. it suggests that the company's issues with inventories and
discounting maybe diminishing. it may be interesting to see how this newfound strength continues or does not in the new year. say the at jaffray stock has "room to run higher." jon: about 15 minutes into the session. the backs up by two points. next up on this program we head back to matt miller in detroit who speaks with g.m.'s executive vice president of global development, mark reuss. ♪
focusing on the defective ignition switches made by general motors. the civil case will be heard in manhattan. an oklahoma man says air backs stopped -- the defect stopped air backs from the point -- from deploying. the richest man in asia will become the first chinese person to control a hollywood film company. productions coproduced jurassic world. text-- a limited talk and for $100 a month. you must write at&t's television service or directv. that is your latest bloomberg business flash. jon: matt miller is in detroit with an exclusive interview from g.m.'s executive president of global development. matt: mark reuss here, very
exciting to talk to you. behind us,s product the acadia 700 pounds lighter. it gives you a notification if you leave your baby in the back. really high tech and that has been a focus. mark: we have an ad campaign that gets into the precision of the vehicle. the safety piece is core to the company. every summer you read about people who either forgot or left a child in the backseat of a car in crazy temperatures and there's heat strokes and all of those things that happen. -- this willher remind you to check that seat. part of our core dna of the our company to lead in safety. mark: you guys have been all over -- matt: you guys have been all over a tech. i.k to me about mobile
mark: mobile i's first and largest customers. we have a large carpark as you know. the piece of this that is really important is the relationship and partnership. we have crafted the ability to take all of the information through our carpark and a large amount of that ada into our cars and trucks and have the data that no one else can have in the world around the detailed roads and the things that enable a car to learn from that basis. the artificial intelligence we will be able to develop with the data on those camera systems and some of our other systems we have been gathering over a large road system like the united states, that data is priceless before the precision of autonomous vehicles will rely on that. matt: what about the lyft deal?
you will be able to provide cars and financing to so many drivers . do you think it is a challenge to uber? mark: i think it is a different way to look at this. that partnership with lyft well that was to get general motors vehicles into places that are not very strong from a market share standpoint. those are the places where lyft is strongest. new 200 milet our range affordable electric vehicle, we have designed that platform with mobility in mind with lyft. that road to autonomous and driverless taxi piece of it eliminates some of the biggest structural costs some of the mobility providers have. that growth of the business and that opportunity is really important for general motors but also for lyft. matt: i saw you doing the
presentation yesterday. as a car guy, how exciting is this a electric -- when you are talking about the small suv but it has a low center of gravity and it drives almost like a sports sedan. mark: the reason why i made that last friday we had our 80% calibration ride of the car with all of our engineers. that car, we had the bmw i three leaf, ride, the nissan all those cars on their. re. thing is so fun to drive. instant torque, no waiting for gear changes. it can drive with one pedal. if you are shifting in the low it has region to be able to stop the vehicle without pressing on the brake pedal. an incredible feature for in traffic. it is fun. matt: the bolt is super
exciting. so many new products. isn't -- a record year for auto sales. why isn't the stock price reacting positively to what seems like running on also wonders? -- on all cylinders? mark: i think it hasmark:. some of the china effects of that on a market volatility if nothing else, you can argue it is growing less fast or whatever that is. those are things we cannot really control. at the other hand, why would you ever invest in an auto company at the peak of the cycle in the sixth year of expansion when historically we have had five years on average and then we go through some sort of cycle? the difference here is that we are funding the future. in the past general motors and others would have invested in capacity for the hottest segment today, trucks and suvs, without
funding that future. funding that future for general motors means we are going to grow that business in general motors and not -- in nontraditional ways. i'm not sure the market caught up exactly with what we are doing here but it will. matt: buick is a huge brand in china. everyone is excited about the event you have your. here. i'm not sure the stock market is a great proxy for the economy in china. our: i think -- i met with chinese gm employees and joint venture people yesterday. they are looking at how the market is changing. if you look at tier one tier two cities, that is not where the growth is happening. i think it costs a lot of money to buy a license plate to get a vehicle unless it is in an ev vehicle. ,eople are buying vehicles there is demand but they cannot get it because they cannot get a
license plate for it unless it .s an nev vehicle if you look at the future and what is going to happen in some of the other cities, this will at a verytrification high way into the chinese market. that market is changing dramatically and rapidly. matt: great to get some time with you. mark reuss. back to you in new york. david: thanks matt. and thanks to mark reuss, joining that in detroit. now we will take a look at where the markets have opened in new york city. when we come back on number go. -- on bloomberg go. ♪
betty: from bloomberg world headquarters in new york, i'm betty liu. we are just one half hour into the trading session. stocks are rallying after european shares were up for the first time in five days. china took dramatic action to defend its currency. sparking a record surge in money market rates to deter speculators. why is a group of investors backing the controversial ousted ceo doug charney making a $300 million bid for american apparel? we will talk to the lead investor about why he thinks wrong. was we are about one half hour into the trading session. julie hyman has the latest on a market that is rebounding. julie: we will see if it can sustain itself. yesterday we had a l