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tv   Bloomberg Surveillance  Bloomberg  December 19, 2014 6:00am-8:01am EST

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they say enough as maintaining russian sanctions. and it's the watch that ticks on ticking. it. y to survive good morning, everyone. this is "bloomberg surveillance" and we're live from our world headquarters in friday. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] i'm tom keene. brendan greeley and scarlet fu. she's here. she nowled not be here. >> trouper. >> we'll see how long that lasts. >> there's extra honey on the desk. >> you sound like me. >> i do sound like you. >> terrible. >> global stocks resume. asian stocks closed higher. here in the u.s., the s&p 500 headed for its best week in two months the index is coming off its two-day rally in two months. futures did pair their gains but still indicate that stocks will
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open higher. oil prices rebounding from the lowest close levels from more than five and a half years. west texas trading under $55 a barrel. crude is up as well. saudi arabia's oil minister said it would be impossible for opec to curve. >> an olive branch. he is floating the idea of scaling back sanctions on ukraine. the consider that it's gesture that russia is making that what we are waiting for. there is no reason to enact any new sanctions. they will allow us to start deescalating the situation. >> but british prime minister david cameron says russia has to change its behavior in ukraine before there's any talk of backing off the sanctions.
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twitter has started to sell advertising in russia. it's trying to boost ref phew outside the u.s. among the first customers, a wire mls operator. more than a half million mustangs and g.t. calls are being recalled. airbags are t ka lamed. >> super saturday. the last day of christmas is expected to beat black friday and sales for the first time ever. shoppers may spend $10 gazelle on tomorrow.
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>> it's called panic friday which is much more honest. >> yeah. >> i can't wait for start your shopping wednesday. i'll be there as well. >> that's the day that you go. >> you can always find a parking spot. nobody is as lazy as you were. >> futures up five, continuing the rally we've seen the last few days. 10-year yield somewhat to normalcy. euro weaker. nymex. is that a bid? we've reached stability. i would say no. we are just sort of there. >> 55 is where we saw. >> one opinion. 16.81. inproved vix lower. two-year bid goes lower. there's the russian equity market which is just a number to
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most of us watching. let's watch the chart. bring it to the terminal. white line is the equity market from 2012 in russia in rubles. it's great. >> not so bad. >> here it is converted into u.s. dollars. and here's that currency devaluation or depreciation. one indicator of what -- we go beyond oil, beyond the ruble. >> no, the question is how many foreign investors are still in a russian stock market? >> probably not. >> yeah, that's the problem for foreign companies and this is the logic the government has used to talk about its own deficits. as long as it's still valued in rubles, it's still fine. >> putin looking at the white line on the screen. that means crisis over or so it seems. yen weakness. a stronger russian ruble. and there is that market that we just looked at. and it's down 44% since the
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fourth of july. down 33% since thanksgiving. the crisis of oil in ukraine has given out to all out financial crisis. jeveden this has seen this efore. can the russian banks make it to monday morning? >> yeah, but obviously the russian banking system is under enormous pressure because we don't even know how much they will have to raise interest rates. they've already been raised considerably. the economy's going to be very weak next year. there's probably a lot more bad news to come in the banks. >> matt o'neal in "the washington post" wrote a terrific summary yesterday and he had one key idea. they've got x billion in foreign reserves but they can only use so much of that. you can't use all your reserves, can you? >> well, we think that's a little bit overdone. we think they've got more usable reserves than a lot of people think out there. we think they've got $300
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billion they've got to use on reserves the official number to the end of november, they've used system of that up in december. some of that residual is unusable. it's in what they call a national welfare fund. but we think they've got $300 billion if they need to spend it and that makes it a less dangerous situation than it's been in other countries in the past. >> which historical parallel is most apt? it's 1988. no, it's 2002 in bri zal. which historical parallel are you looking for? >> we probably caused this because we talked about historical power line. i think it's 1994 in mexico because the russian ruble has fallen more in this year than the mexico peso did. you had a fixed peg that blew
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up. is that decline in the mexican peso led to a very, ver deep recession in 1995? that's what we're going to have in russia in 2015. >> even as vladimir putin admitted, he's not as diversified as it should be. >> you use the technical word to combine in with your fundamental economics of finance which is cathartic. have you seen car that is rightic moves in any of these things that signal bottom? >> yeah. this is a good buying opportunity. the point that we've made is you've seen a very formula sell-off in currency across the year since oil prices began to fall. you've seen very little in the way of monetary policy responses from any country that wasn't going to raise rates anyway. and oil prices, eventually at this level, are stimulus for the global economy so we feel if the
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thing is containable here and of course as the financial linkages and the potential -- you know, credit squeezes is so hard to get at. within the market behavior and the benefit of low oil prices suggest that maybe the worst is coming to an end. >> but still are still discussing about the possibility of capital control. and i want to bring up the mac monitor once again. tom, did you just change it? >> yeah. keep talking. >> we were showing you how ruble terms are doing just fine. and the dollar terms, it's a disaster. what would be a significant exodus of foreign dollars? is there a lot of money there? because they could impose limits on foreign investor outflows. >> we do not expect capital controls. we just think it's going to be very difficult to do that. they will be really hard to take off. >> isn't high interest rate a
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capital control? russia is 20%. >> which is what they try to keep money in there. there's two element offense the capital capitol story. one is foreign money that's in there. you would trap it in there with certain amounts of capital controls as happened in malaysia in 1988. the other point is to stop locals converting rubles into dollars. that is something that we don't think that's going to happen but that is something that's going to be trigger point. >> there's going to be a lot of speculation. >> here's 30 days of oil and i challenge anybody to tell me that oil's climbed a bill. i mean, we're down here. and here's the worst. and we're sort of at the worst again. >> i'm going to explain to everybody why tom keene is really happy right now. sometimes he gets to talk about the movements and then they get brutal and finally today, we get
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the cathartic. >> i don't know. we're just sort of there. i mean, scarlett -- jeff, is oil on a bid? >> we think it's probably ottoming out here. >> i hear the same language. >> i understand that. >> take you back to late november. >> clearly, if oil is going go to $40 and the ruble is going to 100, we haven't seen the end of this crisis by any means. we're not expecting that to happen. the contours of the global economy do not tell you oil prices should be at $60. part of it is the supply. and look at how what oil has done since the opec meeting since thanksgiving day. didn't seem like every day, there's some opec head of oil says we're going to keep on and see what happens. saudi arabia. >> a lot of oil in the world becomes uneconomic to dig out of
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the ground. >> we're all -- i'm going to be reading on cuba this morning. and nick byrnes will be with us on the 7:00 hour. do we have a job? this is cool. >> this is great. thank producers! >> within this, jeff, are you into the week going who's not going to get to monday morning? does venezuela get to monday morning? >> i think so. i think that's really, really overdoing it. >> ok. fine. >> clearly, venezuela, before we went on the air, if venezuela can't make. at $115, it's going to be a lot harder at $60. they're facing a growing financial crisis the risk of default is not zero by any means. and therefore, it depends on where oil prices level at. >> all right. coming up, the ruble falls. we're going to look at who turns out to be naked.
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surprisingly nike. wearing less than what you might it might have been. nike has a problem. we're going to talk about it after the break. this is "bloomberg surveillance" . ♪
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>> good morning, everyone. "bloomberg surveillance." to canada. john chen in the 10 a.m. hour. scarlet fu will have all of the earnings here. chen on the future of the blackberry. good morning. it's "bloomberg surveillance." scarlet fu and brendan greeley with me. brendan looks at the shoe business. >> nike and adidas. they sell the same things. numbers one and two in their market for sports apparel. i spent all summer looking at how they market. i missed the one thing that is
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making a huge difference in performance. and that is their exposure to international markets in particular, exposure to russia. so let's take a look at where they're actually selling. karen, can you pull that up? a tale of two sneaker makers? nike luckily is actually earning most of its money in dollars which is really good news. >> so it's protectsed? >> it's relatively protected it's got 4% exposure to central and eastern europe. adidas has got 80% of its revenues outside of its home market. adidas has a bigger problem right now. when i visited adidas this summer, they had this huge display of the marketing push they were pushing for towards teenagers in russia. and they're selling the same thing, roughly, they're constantly following each other in product design, trading back and forth. adidas unluckily just happens to be based in germany. it's got different exposures than nike. >> but they had planned to open
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up 100 new net stores in russia this year but that plan has obviously changed. >> and adidas plans to own its own stores in russia. adidas is bigger in nike in russia but nike has been gaining shares in russia. and nike has just a tick of earnings warnings about the earnings of that. >> it says it seems to be getting a near term slowdown it and has to keep an eye on russia. what is that code for, jeff? >> i mean, it depends on how big their sales are in russia compared to the rest of the world. and i don't know that. i don't cover the company. but i want to make the point that we think the emerging markets are going to grow about 4.5% next year. >> which is double everybody else. >> not what it used to be. not as exciting as what it used to be. unless this turns into a global financial crisis which i don't think it's going to do, you have
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to keep this in perspective. central europe, yes. exports to russia to be a little bit of a hit there to growth. so i wouldn't go overboard on this one. and also just see how much of a battle out of these consumer facing companies are making in russia. >> when fifa announced the world cup was going to be held in russia, they were still excited. >> is it still on? >> england loses every four years like clock work. that was just for you. >> well, we lose twice. first of all, they won't let us stage the world cup anymore even though we've got the world's best stadium. and we always lose on the field anyhow. >> all the sponsors were really excited. you've got emirates. you've got adidas. >> there's no -- can i just say, scott, you sound like lauren mccall. >> no, i sound like you. >> can i show what irene did? we have a fan this morning watching. she tweeted this in from
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philadelphia. look at that. >> small in stature, big on bow ties. >> look at that. >> thank you. >> we appreciate it. >> one ear cocked because he's listening on radio. >> futures up six. dow futures up 51. brendan, it's a healing market as we go into the weekend, but, i mean, oil, 5.59. >> we started talking in early november. maybe all the work is done. people are just looking forward to the holiday parties and that has turned out not to be true at all. it is a busy news month. >> december is being the best month for emerging markets on average of any month of the year. this has been a disaster so far. it's getting better in the last two days. and 20 years ago, we had another disastrous december which is my parallel with you. so typically, you get year in rallies. but starting now, we've got two
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very strong two days. >> we're going to find out. coming up, michael holland joins us as a guest host on television and he's the chairman of holland and company. this is "bloomberg surveillance" on bloomberg television streaming on your tablet, your phone and at bloomberg.com and streaming to a dog in philly. ♪
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>> good morning, everyone. futures up five. dow futures up 48. the ruble stronger. here's brendan greeley. >> so, i picked this up from peter writing in "bloomberg news" this morning.
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it's a beautiful future that starts and looks at a massive number of bridges. if you lined up all the structurally deficit bridges in the country end to end, they would stretch from boston to miami. and the feature really walks through just how hard it is not just to find the money to spend on infrastructure but politically to get it spent. the issue is not just coming up with it. it's convincing people that this is a worthwhile task. it seems like a no-brainer. you borrow money cheaply and you spend on stuff that you're going to need no matter what. >> it unfortunately bangs up against the political environment in the u.s. i'm no expert on this but obviously at last, real lack on desire to spend any money at all on the political spectrum. and it's not how you think prevents this. it creates jobs too. >> to get are the airport to the
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city center, it's usually a breeze in places like china. and then you come to u.s. and you arrive at j.f.k. tell us what that's like. >> i'm not sure china's your best comparison. >> well, beijing. >> yeah. i've lived in the u.s. for 25 years, so i'm used to it. your first welcome so to speak is to sit on the van wick for half an hour and takes you an hour and a half to get to town in london, we have the wonderful heathrow express in 20 minutes. yeah, and nothing's changed in 25 years. > that's the amazing part.
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>> even things like from boston to new york. what is it? 200 miles? if that was in tokyo, you would do it in an hour and a half. >> that's led by the local politics. there's some real argument about who repairs the lines. >> we have a correction from the control room. you can, in fact, take a train from j.f.k. to penn station. >> yes, you can. but through -- you've got to go through -- >> until you repair the track, change the tracks and take the curves out of the tracks, you can't go fast enough. the train goes fast enough. the tracks don't. i'm not an expert. >> no, no, no, you are because you have to travel this way. you've become an expert. >> this is one point in the u.s. where there's a real divergence. and people here, who don't know how pad things are. >> yep.
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>> and again, it's a form of stimulus for next year. look at the economic data yesterday. we go back to a 2%. >> or if the politicians are willing to spend it. a lot more to cover. coming up, what is the market in 2015. our twitter question of the day by the way, as we head into super saturday. are you shopping on super saturday? tom is. brendan is waiting until december 24. tweet us on the "surveillance." ♪
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>> good morning, everyone. "bloomberg surveillance." i'm tom keene. brendan greeley here with us with this morning's headlines. >> the global stock rally picks up where it left off. asian index higher. the s&p 500 is headed for its best week in two months. the s&p climbed 4.a% in the last two sessions. bill ackman is facing new allegations this morning of insider trading. he made about $2.5 billion from his ininvestment in botox maker al began. -- aler began.
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>> and steven corps bare of "the colbert report" ended his nine-year run. he brought down the curtain on his kind of real, but not real pundit. he told his audience that things have come full circle. >> another bush governor is running for the white house. people on tv are defending torture. we -- [laughter] are sending troops into iraq. when this show began, i promised you a revolution. and i have delivered. because technically, one revolution is 360 degrees right back to where we were. [laughter] >> the show's finale included a star-studded sing-along, jon stewart, randy newman, bill clinton, george lucas, brian koran son and many others. that's real read like tom keene's mythical last dinner.
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those are all the people who would come. >> it would be a different group. >> colbert will replace david letterman as the host of cbs's the "late show." those are your top headlines. >> isn't he supposed to be stephen colbert again? colbert was just a personality. >> i don't know. here we turn to europe. ere was european and trans-atlantic unanimity until today. e.u. arrived yesterday. i will quote him. i prefer to position myself in a crisis exit hypothesis. hans nichols joins us from berlin. hans, what does that mean? >> it's a quote from "star trek," clearly. no, look, the french economy is more tied up. there's weapon ships. there's helicopter transports. they're looking for ways to get off of this conflict.
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and the difference between him and merkel, it's quite cute. merkel is saying really the only way we can lift these sanctions is if the situation on the ground changes. that is troops move out of crimea, not just iran. and what hollande is saying if russia promises a few things, maybe we will lift a few sanctions. the sanctions run out in july so if you don't get unanimity, francois hollande's position wins out. >> does this come as a real urprise yesterday? >> they were supposed to have this debate to wind down the sanctions in march. so lan bringing this up in cember
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>> there's a bloomberg headline of a showing in the airport. why are we talking about sanctions if i'm seeing war headlines out of ukraine? >> because hollande and emember, he had that airport meeting with putin. hollande thinks putin has the power and maybe willing to pull back some of those rebel forces if he has operational command and control over them. this is hollande really trying to open the door for putin to have an off ramp to this situation. it may be a fool's errand but this is hollande really trying to make it possible even though as you mentioned, fighting on the ground is still very real. >> brendan, five killed, seven wounded in the last 24 hours. this is surreal. >> i'm mystified. never a dull moment with
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francois hollande. >> it's a revolution. we're back where we started. >> yes. >> the collapse in oil behind all of this. it's time to reset the outlook on emerging markets. geoffrey dennis is here and one of your themes for 2015 is the focus on reform over cyclicality at least in asia. that means you're pro china and india and anti-korea and taiwan, right? >> correct, correct. the real elephants in the room at the moment is the relative lack of growth. growth is going to have 4.5% next year. we've been used to almost 8% growth at times. and therefore, structure reform, it's a bull market. people want structure reform to improve growth. and we happen to think as the chinese economy continues going through its soft landing process, probably going to grow less than 7%. the essence from a macro point
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of view is to switch the growth towards consumer spending. india suffered a dramatic lack of growth which it is pushing reforms through and that is cause the growth rate to pick up. >> and it's a theme for 2015. what about central bank easing? you've got more stimulus, certainly, from places like europe and japan. but is that enough to make up for the fed pulling back? >> traditionally, when the fed raises rates, especially if that's accompanied by a stronger gellar, that tends to be challenging for emerging markets. so we are assuming you get a headwind from the feds as they start to raise rates next year. but yes, you're right. including in the e.m. easing monetary policy because one of the themes here is falling inflation around the world. so we think they're going to be raising rates.
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>> maybe russian rates are falling. >> manila did a great survey looking at emerging market economies and this is not 1998. they've been spending some time repairing their balance sheets. they're in a much better position than they were before. >> that's absolutely right. the debt levels are much better. the current account balances are lower. the fiscal side is better. the quality of overall policy is better. but most important of all in my opinion is nearly every emerging market has a floating currency so if pressure build, the currencies go down gradually. what you had in the late 1990's was fixed pegs that was there one day and gone the next. that is much more disruptive. so we think overall, much, muff better fundamentals in than in the late 1990's. >> cut to the chase. are you like load the boat on e.m. stocks? >> no, because it's going to be a challenging year because of the fed, because of the growth
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challenges. we argued an early look at 2015 about six weeks ago when markets were higher. high single-digit returns from here, maybe a bit more than that. depends on what earnings growth is going to be. we would rather be somewhat constructive than bare risch at this >> the president being more constructive on cuba looking to normalize relations with island nation. would cuba be considered a frontier market if and when companies are allowed to do business? >> first of all, you need an equity market. you don't have an equity market, you have no concept, designation at all. so to start speculating as to what this could mean for cuba's potential as a place to invest is way, way too early. but yeah. it would be a very exciting development because it could be a powerful economy, of course, coming from a very, very low
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base. >> all right. we have much more to come with geoffrey dennis, including chinese exports are rising but writes it going? not necessarily europe anymore. we'll show you today's single best chart. this is "bloomberg surveillance." tom, brendan and i will be right back. ♪
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>> good morning, everyone. russian ruble is stronger but many other features of the russian crisis still with us, including weak equity. we say good morning from new york city. scarlet fu has a single best charts. >> yep. and i'm going to try to do it in your voice as well. how many times have we used the wordy verget? it's a real buzzword for 2014. we showed you the divergence in chinese exports. the yellow line is the value and the blue line shows the chinese goods shipped to eurozone. you can see on the far right, exports to the u.s. continue rising. exports to the eurozone turned south. why is it? they are benefiting from lower oil prices. with the euro weakening,
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geoffrey dennis, european -- the europeans look at chinese imports and they see it as more expensive. >> but it's also a level issue and that is the economies in europe for being weaker than we really had anticipated at the start of the year. if you go back to the beginning of this year, you are in a situation where you had the hit to the u.s. economy from the dreadful weather in the first quarter. and then later on, you had weaker european growth so u.s. is the best house in the neighborhood right now. >> how rare is this wordy ver generals? it's like disruptive and we've moved on to divergent. >> i think the degree of difference between the u.s. -- h performance and what is unprecedented.
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but it is unusual. and what i feel as an economist is that what's happening in the rest of the world with the dollar rising strongly on markets will chip away at the u.s. growth story as well. it has to. gradually, because, you know, u.s. are going folks port less to europe. european products -- sorry, u.s. products in europe are going to get more expensive. this can't go on forever. >> we've decoupled into a disruptive divergence. [laughter] what a great week for photos. >> eric has been doing yeoman's work pulling together a year's worth of photos and he pulled a horrifying one that we missed earlier this year. this is what it looks like. this is a firing squad in somalia. -- somalia. they were convicted of murdering a nurse and they were members of
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the militia. this is being carried out by the government such as it is. >> this is example punishment? >> yes. number two photo. thalse what you think it is. this is grijalva from malaysia airlines flights 17. burning in a field in ukraine. it was on its way from amsterdam to thailand. it was shot down. >> commercial airliner has shot down and what has changed? >> i mean, the sanctions -- >> more sanctions. >> this goes back to the debate of more sanctions. >> it gave europe more background on sanctions. crash. fter the this is relatives and friends gathered. every one of those candles represent a victim. and next, you are looking at the thousands of people running away from bulls in pampalone ya. eight people were gored of the bulls.
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scarlet, were you gored this year? >> why do people go to it? >> ok. scarlet doesn't wear red. >> 42% of the runners are from america. [laughter] >> he went to -- the guy in the lower right went to bucknell. the guy in the upper right here i think is some colombia -- >> they check for your scarf on the way. you have to present your passport and your scarf. >> bring the photo of the girl in the upper right corner is my daughter from richmond. >> all right. [laughter] >> dad, we're going to see the bulls. yes! >> all right. let's move on from the bulls to something ultra luxe. we are going to speak to a company that is part of the most expensive watches. that is coming up next on "surveillance" and there they are. tom, you have one of those? >> no. can't afford it. ♪
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>> good morning, everyone. "bloomberg surveillance." i'm tom keene, with me, scarlet fu and brendan greeley. futures are up four. let's get some friday top headlines. >> fired american aeasterly c.e.o. with a private equity firm. he's working on a bid to reacquire the retailer. >> i do all my christmas
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shopping at american apparel! >> he was fired earlier this week amid allegations of misconduct including violating the sexual harassment policy. facebook has a big problem. it's not as cool as it used to be. at least among teenagers. a new study found that fewer of them were using facebook this year. the internal revenue service says that it may take longer to get your tax return this year. the i.r.s. commissioner says that's the agency is underfunded and short staff and will need more time to process returns as a result. and those are your top headline. >> failure is the worst outcome for any business and right behind it is total and complete and unadulterated success. how do you manage an iconic world brand and how do you resist the endless call for expansion in brand and product illusion? it takes a family with total focus on quality and a set of
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values that each and every day is rewarded at fine jewelers and auction houses in watch jewelers, the ultimate gift of golf. larry is the president of their shop in new york city. what is the new for your company as you try to not be chanel and louis vuitton? >> the family nature of the business and the limited production is always going to keep the exclusivity. that is going to be what drives the company. >> is your constraint the workers and the labors? >> yes. >> where do all the watch makers come from? >> they come from around the world. we have a real u.n. of staff. but the reality is it takes so long to train them. and the 1970's, almost ruined the watch industry with the quarts revolution. >> they face their own armageddon years ago? >> absolutely. stayed the course and it worked out reasonably well. >> you covered the history. let's go over the watches.
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because we're holding one in our hands. >> i feel like a monkey. i'm trying to figure out how to put it on. i can't get it to clasp. >> the prices range from $13,000 to $2.8 million per wristwatch. the average price is about $45,000. it takes one no two years to manufacture this watch. and right now, you're looking to target what? 28-35 year olds? >> we're trying get a new generation to let's say get exposed to watches. and, you know, you don't need a watch to tell a time anymore. there's so many ways to tell a time but it's wearable art and when we expose people to the beauty of the watch and the internal workings, that's where we can make some headway. >> any luck on getting that watch on? >> no. i'm just looking at it. i've always been fascinated by the iconic ads from patek.
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>> this is great. part of what you have to do when you're selling these is talk people into understanding that this is an investment, not a purchase. how do you do that? >> we don't talk about them as investments. they're more heirloom pieces but we've had very good luck in auctions. and that's changed the whole makeup of our customers. but what's really noticeable and you have a great watch to talk about is the internal worksings have always been what drives people to a eck phillip. -- patek phillip. >> my message is this would look really good in the ice rink this weekend. >> scott, no way. >> this is a beautiful watch. i'm a little older than your target demographic. but if i do something for my children, it would be to put them through college and then a watch. >> how do you afford the grandmaster chime edition?
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this one took eight years to make. there's only six available to make and there are 50 potential buyers. >> who buys is? is this like the heads of state? >> it's not always the heads of state. it's very technical people. it's people who have a very large collection. and just like any collector, it's an iconic piece. >> do you think of baby george this christmastime? > baby george can take the $35,400 men's watch. >> that's right. >> how do you withstand all the competition of watches and yet you want to go for younger demographic. you've got to get them to write a big check. >> these people are looking long term. we don't have people that are looking for a trendy type of product. they're sophisticated, hopefully elegant and they're made to be worn for 50, 100 years and passed down.
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so you can't design something that's super trendy. and then we don't try to. >> i like that you can wear it in the shower. >> larry, thank you. i can never own one because i just failed the test. i didn't figure out how to put it on. we have an event that we would like to talk about coming up this weekend. the most important event of september. it is scarlet fu's birthday on sunday. and we have a surprise for her. >> happy birthday and merry christmas, mama. happy birthday, mama. i love you. and maybe i can take you to the rangers game and merry christmas, mama. [laughter] >> and this was put together not by me,s but by the entire staff here. >> oh, my god. thank you. thank you so much, guys. this is great. thank you. >> go home. look at your flowers. recover. recover. >> you took these out of the plaza hotel. >> i took them at the urn downstairs. >> thank you, guys.
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>> we found their one moment -- >> it was a multi-producer effort. >> thank you. >> larry, thank you so much. be sure you get all the watches out. >> i've got one. >> i have one now and i'm not about to give it up. >> i've got my hamilton here. i will put it back on because i know how the clasp works. >> michael holland will join us on why you went to cash a week ago and missed that titanic move in the equity market. futures up six. dow futures up 44. in the foreign exchange market, the news, without question, the russian ruble, 59 down from 60. that mask some other great tension. inside baseball. the yen juan goes to new yen strength. this shows the tension in asia as wrapped around the news flow that we see from russia so there's the yen. that's a little obscure. we always do that on friday >> and for anybody who's keeping
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track. there's half a million dollars worth of watch on set right now. >> timepieces. >> oh, i'm sorry. i have a watch. this is a timepiece. >> we'll be right back on "bloomberg surveillance." ♪ >> the ruble is ever stronger as
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russian banks face financial ruse in -- ruin. blackberry reports. good morning, everyone. is "bloomberg surveillance or go --." brendan greeley and scarlet fu are joining me. >> that global rally resume today. asian stocks closed higher as european indexes started in the green. the index is coming off its best today rally in three years. he s&p rose 15% the last two sessions. futures of pair gains but stocks will open higher this morning. oil prices are rebounding from the lowest closing levels in
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five and a half years. brent crude is up to, right around $60 a barrel. saudi arabia's oil minister said it would be difficult if not impossible for opec to curb production. france, heanch from is floated the idea of dialing back sanctions against russia. that puts him at odds with the u.s., britain, and germany. i consider it is a gesture that russia is making that while we are waiting for it, there is no reason to an act new sanctions. they will allow us to start the escalating the situation. cameron says russia has to change its behavior in ukraine before there is any talk of backing off on sanctions. twitter has started to sell advertising in russia.
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it's trying to boost revenue outside the united states. russia's largest lender is its first customer. ford is expanding the recall to repair faulty driver-side airbags. half a million mustangs and gt cars are being recalled. the con airbags have exploded. takata airbags explode. this saturday, we know it you will be doing it. it may be bigger than black friday. super saturday is the saturday before christmas. keep score.k it will be black friday for the first time ever. those are your top headlines this morning. this is a quick data check before we get to the blackberry news. crude is doing a little bit better in the last 20 minutes.
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you have got your blackberry outlook. >> in terms of the bottom line, blackberry reported adjusted earnings up one cent per share. prediction was a loss of five cents. $793 million in revenue, that is estimate. like almost says that it castains a's long position. are they being captain business by the canadian government? >> i think it's an extraordinary act of honesty by john chen. they had to look at what they had left. they were a security company. they have already been the best encrypted security that they can maintain. that is worth something. other companies don't know how
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to do that. >> i don't know if sony will buy them. stillr headline, it does target sustaining adjustable earnings over the next year. company thatbe the you want to be, be the company you are. they are a security company and they figured it out. >> go to cash. this is been a hat trick of reasons. michael holland pushes the gloom aside it speaks of resiliency of american cash flow. blackberry reports, apple enters 2015 as a near blue-chip. patek philippe absolutely. it is 12 times earnings. it does not get price like that. five years ago, when we talked about it, we talked how ludicrously cheap, it is now moving closer to blue-chip valuation. is 16.son and johnson
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apple is 12. >> i own both stocks. i sold a little johnson & johnson yesterday. johnson is a spectacular company. i've owned it most of my life. it's not even a close call. apple is a more exciting company. >> what do you do in a week like this. there was a great chapter written a million years ago. go to florida. getaway. did you go watch bruins hockey? >> i love that part of that book. gainswere no capital taxes than it. he sold her thing and got in a boating want to florida. we all have some capital gains taxes if you care about that,
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which i do, you don't go to cash on a whim. craziness like we've seen the last several weeks in terms of volatility, it's time to maybe take a little bit off the table. that's all i did yesterday. >> if you have no capital gains, you have no capital gains taxes. usually december is a quiet month. every now and then you get a catastrophe. >> that was 20 years ago. >> is this a catastrophe december? >> i don't think so. i disagree a little bit. over the years, some of the most blatant pyrotechnics have occurred in my professional life in december, including in the last week. the volatility is incredible and nobody is around. >> i put this chart out on
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bloomberg radio. chart horrific name that of a chart that hasn't worn down. it's jpmorgan a. what crisis? >> that's a big question. they've had to set aside billions of dollars to address these legal concerns. with all of these legal liabilities? impliednk jamie dimon that we are near the end. the extortion is almost over. >> the extortion? yes. i think they've been piñata is for the regulators and politicians for six years. it's beginning to get a little bit played out. >> it's been interesting watching the justice department approach this. this has worked out for everyone if you don't go to trial. it's a win for the bank because they don't have to bleed everything out and it's a win of
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the regulator because they can say they got a lot of money. >> jamie dimon wants to get this behind him. he wants to go back to doing business. he doesn't want to tell eric schneiderman how much money he's willing to give up. is done in of this russia? should we be exposed -- concerned about exposure? >> janet yellen says the banks are very well stress tested and it's not an issue. it's not just russia. it's russia as a relates to energy and highly -- high yield bonds. the rally of the last two days is telling us that the market believes that the russia russia index is less. >> are you buying? >> basf just canceled its deal. smartest best investors i have known have been
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making billions of dollars in russia. i see some people saying it's too early to go into russia. i think stock traders will look at it. >> it's down 50% since labor day. >> when it's two to three times earnings, it's time to make money. >> one of the things we are learning is this is not 1998. is not spreading. investors are looking at emerging markets and they convinced -- distinguish what's done country by country to make them not russia. >> you are wise behind your years. that is absolutely right. if you can get just the headline from the last several crises we've had, this is not a crisis right now. that's what the market has been saying the last two days. >> vladimir putin is still a big risk in 2015.
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>> he is the black swan or the black bear. >> would you buy the cuba fund it? you know it's going to be airlines and hotels and united cigars. the sick, mastercard. it's probably trading at a premium this morning. it probably makes no sense. ever than popped two days ago. i thought about it. there are the ways to make money in cuba. is going toolland open a ford dealership in havana. >> are you shopping on super saturday? ♪ tweet us.
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>> good morning, everyone "bloomberg surveillance." here's a scarlet fu. >> there are eight trading days left this quarter for the big money center banks. the moneymen -- damage may have already be done. host,l holland our guest is this a sign of pain to come? are goingital markets to be a non-bright spot for people reporting for the next several days. people like wells fargo who are
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less reliant, they will look better. >> that was a nice way of putting it. there is a 45% drop in equities trading. morgan has warned it will drop in trade revenue. citigroup says 5%. that's a pretty big drop. >> goldman sachs could come out new numbers because they are leaning in the right direction. it's a tough quarter overall. i think any surprise will be the downside and not the upside. >> we've been watching politically the appeal of elizabeth warren's message. what does that mean to you think in terms of political risk for the banks that the climate will change and there's going to be more sediment behind regulation? >> part of the base is still riled after the financial
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are the gift that keeps on giving. there's a portion of the republican party that is against the big banks, too big to fail. most of us are weary of this. we understand that there has been extortion going on. and say youcitibank bought those crummy people, but you os a lot of money. the headline is not working as well as it used to. i think the worst may be over. think will be interesting to watch the democratic party next year. they are surprised at how resonant that messages been. >> i want to talk to about metlife. do investors attach a discount to its edition? >> i think they have a good argument. they may be able to persuade some people. i don't think we have seen a market, but there should be.
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there isn't yet. >> michael holland is bullish on the banks. michael holland is our guest host for the hour. our twitter question, tomorrow is the last saturday before christmas. it's called super saturday. it's called panic saturday in the u tape -- u.k. tom is definitely shopping. >> ♪ starting.
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>> good morning, everyone. "bloomberg surveillance." it is friday. here other top headlines. steep cost for a military engagement. the wars have cost the united states a combined $1.6 trillion. that is according to a new research analysis. the assessment is the first update for costs since 2011. bill ackman is facing
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allegations of insider trading. he made $2.5 billion from his investment in the botox maker. he is being accused in a federal complaint by a shareholder. he says they are reviewing the matter. hackers who broke into sony probably spent months collecting passwords and mapping the network before they launched the virus that wiped out data and crashed the system in 10 minutes. research.cording to they ran simulations on a copy of the virus that struck sony. they declined to say where it got the malware. mention thatt to they were way out front on the analysis of the cost of these wars. years ago. on international relations, the press,eagan gets
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but george herbert walker bush -- it is good to speak to necklace burns. he was the ambassador for president bush long ago. it's wonderful to have you with us, ambassador. what is the back story for mr. putin. his banks are broke. what are you monitoring? >> he's increasingly isolated. you can see the run on the ruble. new sanctions ordered by the congress and signed by the president and new eu sanctions, the message is he may have destabilizeea and eastern europe, he can't get away with it. price is going to continue to rise as long as his forces are
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in eastern ukraine and they are. the price is an exit from ukraine? how you begin the diplomacy? >> we don't have all the obamage because president and angela merkel military use off the table. that was the right decision. ourinstruments available economic and financial. sanctions and political isolation, i think he has been surprised by the depth of the sanctions and by their like. he figured that his longtime relationship with europe would convince the europeans not to do anything it. was theback, it shootdown of the malaysian airliner in july that turned european public opinion against them and that led to the eu sanctions. >> he scented very confident yesterday when he spoke to the nation, almost dismissive. take a listen. you can be sure of is
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that we will overcome this difficult. we will find a way out of this difficult situation. we will be stronger in the international arena and the global economy. >> what would erode his approval rating and when it does happen, how does he respond? >> that is classic prudent, that clap -- clip you showed. he is defiant. when the ruble has slid like it did this week, you are going to see that 80% approval rating come down. we have seen that before in the last 10 or 15 years. it is linked to the russian middle class and how people are feeling about their pocket looks and their livelihoods. it's not going to be a pretty picture for russians as these sanctions begin to bite area >> he is a proud man. is her anyway out of this for him that allows them to save face? >> he is vain. he is proud, he is also quite
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rational. it's been a test of wills all along. it can we mount pressure against him, leverage in the form of economic sanctions to make him understand this is not just episodic. these are going to last. the deal here at some point in 2015 could possibly be that he agrees to remove forces from eastern ukraine and agrees to let the ukrainian government exert effective control over those big cities in eastern ukraine. let's see if he does that. he has not been willing to do that to date. the sanctions may need to be increased in severity in the coming months. days, ambassador burns on cuba. >> you praised the president for his moves and opening up cuba. you make lear this is not a validation for the castro regime. >> the castro regime is brutal
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and their human rights violators. it gives the united states the an ambassador to speak to the cuban people. we haven't had that platform in 55 years. policy off a cold war dwight d. eisenhower was if you isolate castro, it will vanish. that did not work. president obama did the right thing. if your policy over half a century has not been successful, you might try something else. >> very quickly, this capitalism, are foreign policy? do the hyatt hotels become our state department? >> it's a big part of it. engagement, u.s. business going over there is going to change cuba for the better inch of the cuban people that are form of capitalism is better than socialism. >> nicholas burns, thank you so
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much. thank you for joining us this morning on russia and cuba. we handicap the contenders for the 2016 election. ♪ we will discuss next. ♪
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>> this is "bloomberg surveillance." i am brendan greeley. let's look at headlines. the fired american apparel ceo is working on acquiring the retailer. that is according to somebody familiar with the matter. he was fired earlier this week. the irs says it may take longer to get your tax return this year. that is because the agency is underfunded and shortstaffed. they will need more time to part -- rss returns. the likelihood of an audit on an individual return will drop below 1%. a big problem for facebook, teenagers don't think it's quite as cool as it used to be. that fewer shows
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teenagers use facebook this year. twitter's popularity is growing among teens. the same study found that teens find facebook less safe and less fun than other forms of social media. those your top headlines. holland says cash is king. they will reign in 2015. there is more to the next year story. mario is adamant that share buybacks are a good thing. what will change with the use of cash next year? the boards continue to increase dividends. , betweenash dividends the two it's not even close. i love cash dividends. companies have a lot of cash and they should do something with it. they should go buy something or
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do a big buybacks. howe is a great example of to surprise wall street with the use of cash. with interest rates being where they are have a gun to head by their boards and their shareholders? recapitalize and that creates cash. >> the growth in cash, if we own a business and the cash is growing, this is not a bad thing. we're the lighted. if it gets bigger we are even happier. it's nothing it, but it's nice to have the cash for when you want to do something, not if. there will eventually be a use for the cash. the idea that you have to do something with your cash because it's their is not a smart thing. cfo, if you can get cash at 1%, you've got to do
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it. >> we will talk about this later in the hour. forget about that. within the idea of where the markets are, you have to deploy money. where do you deploy it right now? which sector do you go, that's the value? it's gotten harder. in price.are up we talked just a few minutes ago about stocks like apple and even johnson & johnson. when you give yourself the history of the markets and look at where other things are priced, these things are quite reasonable in terms of price. stock market is attractive. begin your year as your immediate return on cash? x percent buyback? you are up the year 8% in equities. >> the key to what you were just saying is the two to 3% you get on stocks.
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people who have missed the market or were wanting to know what to do now, i sold a little bit of stock yesterday because i have been fully invested. we have talked about it for the last several years. things are getting a little bit goofy, so i took a little off the table. the two to 3% you get from stocks, that's 10 times earnings. and half yield at 12 are sent. >> you begin the year, this is so important. this is critical. you are in equities and you begin the year with 2, 4, 8% that you get as stocks go down. scarlet, let's get back to you. >> let's get you a day to check. we started fairly good, we have been paring our advances. there is no specific economic data on the calendar.
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we are looking at a higher open on this friday. the 10 year yield has very little yield -- change. there is some calm to end the week. things of stabilized at just under $55 a barrel. i am scarlet fu. brendan? >> it's been a long year for the president. barack obama is holding the end of the year press conference today. we hope it doesn't last for three hours. phil mattingly is here. the presidency is not over. >> what's been editing has been the last five weeks. he feels unshackled. he has been a window into his next two years. boths managed to take off parties. tick off both
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parties. is he going to go very far left? that's what republicans are nervous about. over the last five weeks, he has upset everybody. the china climate deal upset republicans. he was pushing a big trade deal that upset democrats. upsets -- cuba thing both parties. it's an interesting dynamic. >> 20 years ago, we call that triangulation. >> as they have struggled through the past six years, i don't the white house would grab onto that. they feel they have something going here. he had a terrible year. they feel they have some momentum going into the final two years. >> i have to ask you about cuba. nicholas burns praised the president for negotiating that in secrecy with the help of pope francis. a columnist writes that this may be the biggest winner.
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if the talent stream does open between the two countries, so will the right markets. add more global reach. did you see mlb lobbying? >> they were members of some of the business groups in havana. the point of this, imagine has tried to maintain some form of ties with cuba. there is the world baseball classic. they teams have played, played the baltimore orioles in baltimore a few years ago. the process of cuban players coming over has always been problematic. >> we are talking to an all big ten second baseman. >> third baseman and catcher. >> eyecatcher with ruined knees. -- a catcher with ruined
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knees. >> are you going to take your big ten experience and go to havana and open up a training camp or a scouting facility? >> the scanning facilities that major league baseball has our immense and a pipeline to the major leagues. how they try to expand in cuba is going to be interesting. how major league teams send their scouting operations down there, they will take advantage of this in a big way as soon as they possibly can. schools will be a pipeline. things of thefive president has been tackling in the last five weeks. climate, trade, du think he will be able to move forward with in the next year to mark --? >> climate. you have to look at everything. you have to look at this to the scope of the legacy. that's with the last two years or four. they don't have to worry about elections or their own party. is will the candidate
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likely try to separate themselves from this. they are in their own world right now. they are upsetting everybody. climate is the big issue. , the tradea pivot deal is central to that. primaryll be too real egg as he pushes over the next few years. >> is there anything we should expect from this administration in response to the north korean cyber attack? >> i think so. what we know is law enforcement is in the process of naming north korea as having a role in what happened. what i think will be interesting is the president will be asked about this. there is a debate on how the president comes out in terms this. does he call it terrorism? even more importantly, how does the u.s. responded? the debate, there are so me different dynamics of play. >> do you expect it in concrete?
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>> eventually, yes. usphil mattingly is joining in new york. ,ur twitter question of the day ♪
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>> he wanted to grow up being a
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mud hen. toledo,tingly is of ohio. we were talking baseball in cuba. this is mr. mattingly a few years ago. >> he is on the far left. get on radio, he has his mean face on. it's just exuding intimidation. >> the man in the middle is a legendary baseball coach. >> phil mattingly on his baseball career. we can also say this about betty liu. when betty liu talks about baseball, we all lean forward and listen. >> i can talk football. >> you are going to talk about uber today. there was no contest when you consider that they jacked up prices during the sydney hostage crisis. since then, we discovered it is trying to patent its surge pricing strategy.
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that's a new one. like themdidn't before, you are really going to hate them now. months, overeveral the course of the year, they have filed 13 applications to patent its rice surging technology. 10 of those patents have been rejected already. they say, this is valuable technology. and demand,upply when there is more demand and less supply, the prices are going to rise. he went to capture that to protect their business. >> it's disingenuous. they have been defending the strategy because it's basic microeconomics. can you patent basic microeconomics? >> no, you can't. that's why it's been rejected. they think they have a business case. they want to protect their business. i know everybody has written in them.
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the prices can get outrageous. i took one, i hope i don't get in trouble, i couldn't get a car. herest me $300 to go from to new jersey. that is unreal. now you've got consumers saying this is price gouging. because ofg gouged this demand. there should be some regulation on this. faces problems from all corner of the world. taiwan has declared them illegal. >> i took it six times yesterday. i think it's fabulous. i think the surge pricing is totally fair. stupid, you go up a level in car. last night, i went back and forth over a lost item.
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i think it's phenomenal. >> i have been cranky about their approach to regulation, if the surge pricing takes in i take the long island railroad to get home. >> is that a knock on me? in portland, they just suspended operations as well. they had to comply with regulations. huber --uber investors going to join us at 8:00. ♪
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>> what a december? who do we talked to? gideon rose. the subscription to "foreign affairs." he will be with us on monday. we have a little bit to talk about. we will do that at 6:00 on monday morning. >> that's what you get your kids? >> and they throw it right back at me. >> blackberry is starting to generate cash again. today said it had positive cash flow of $43
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million in the third quarter. they posted a profit of a penny a share. analysts were expecting a loss of five cents. ford is recalling more airbags. the number of mustang and judy cars is 500-2000. the recall is being requested by the national highway traffic safety association. 20 million vehicles a been recalled worldwide. comedy central loses stephen colbert after nine years on "the colbert report. " he brought down the curtain last night. he told his audience at things have come full circle. isanother bush the governor running for the white house. people on tv are defending torture. iraq. sending troops into when the show began, i promised
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you a revolution and i have delivered. degreeslution is 360 right back to where we began. >> the finale included a sing-along. a lot of others, next year he will replace david letterman as the host of "the late show" on cbs. i remember randomly catching the white house press club dinner. i had nothing else better to do on a saturday evening. i watched it on c-span alone. i did not know you were allowed to do that, what he did. it was amazing. ask what did he do? >> the beauty of the satire, it was knife edge. i couldn't believe what he was saying in front of the president
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to the president and he did it in a way that allowed the president to not admit that he was getting angry. truth beingseen spoken to power. it was amazing. biggerroom is a much than you think, and you could hear a pin drop. >> i've been told by people that in the room it was not funny, but on tv it plays very well. >> it was very awkward. one of the great moments of nerd prom. we've got a perfect guest. this is a setup. generations of shattered. many of all ages run from the stock market. 12% plusas returned, over the years. i am never owning stocks again. michael holland will bring up a chart. this goes back to the gloom of a number of years ago. 1981? i am971 to
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never owning stocks again. that was the mood then and that's the mood now. >> i started my career in 1971. >> that's why i did it for you. >> you weren't even born. you learn so much in bear markets. you learn so much of what we are all talking about is human emotion and psychology. it has a lot to do with fear and greed and other things. at the end of the day, the battle for survival is key. >> there is a change. they are seeing change at schwab. there is a kindle of enthusiasm. it's happening in china over the last six months. retail investors have been out for years.
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she wasn't even born. >> what would you say to somebody right now who just started her career in 2008 and has only known this recession and this long run at recovery? what lessons does she need to know about other things sicken happened? people who came into the business in 2008 have only seen a rising market. with awful headlines. this is the easiest bull market of my career, going back to 1971. by far. the central banks have said we are going to support and increase financial asset prices. this is only first mantras ever given. the fed writes the market letter. the fed told us what the market was going to do in 2008 in they have done it. they were followed by the rank
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of japan and the bank of china and the european central bank. >> are you looking for more stimulus to tighten local funding rules by raising the bar and collateral as the government did? is this to mutually expensive -- exclusive? >> they will continue to do them. the wrong thing is to bet against them being successful. china,invested in overall a very good experience. all of the bad stuff you here, i've experienced it. the government is totalitarian. they do it they say they are going to do. they are reforming at the same tired -- time. absolutely. what is it going to take for an institutional investor the form of buttress inside china? they will be following long
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after the retail investors. i think it's possible -- i'm not predicting anything -- it's possible we are at the very beginning for the overall china bit as a grow a little major bull market. it may be the most attractive market in the world right now. >> even with gains of 46%? to the agenda. we are talking about stories shape of the day. >> i am talking about cuba over the weekend. i've got to get a lot smarter on that. what a week at his been. about they enough wonk blog in the washington post. i do what they do with their bank. it's front and center. to find out about
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what is on the books in chinese banks as well. what kind of debt is there that we don't know about? my agenda is i am going to look at sony's release of "annie." the new one with jamie foxx. mcardlered the andrea annie. it was released on document sharing sites. i don't pick it will affect the box office take. >>,, you have to have over to radio. agenda, shopping a. is the last saturday before christmas. jewelry stores see big business on super saturday. for all the procrastinators, all guys. >> i don't know what you're talking about or why you are looking me. >> you wait until christmas eve to go shopping. >> it so much more convenient.
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>> we asked you if you are shopping on super saturday. ask no, it's just a social event. >> good answer. >> time on that is running out. >> absolute not. dayuld rather spend the figuring out how to make money rather than spend it. did you write that? >> take a day off. >> i will be roaming the malls like a rabid warrior in a post-apocalyptic movie. that's very descriptive. that sounds like me. will be shopping for close on monday. hydrate and make sure you're well rested. >> make sure you are wearing comfortable shoes. >> that sounds like a hockey mom. >> what you want for christmas? >> peace on earth. good friends. >> i can go with that.
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michael holland, thank you so much for joining us. happy holidays to you. liu is loop" with betty up next. have a great weekend, everybody.
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>> good morning. friday, december 19. live from bloomberg world headquarters. eli "in the loop." what a market rally yesterday. an incredible 400 plus point run
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by the dow thanks to the fed. -- his 2015om target for the s&p is a gain of over 15%. news in tech and media. uber looks to patent the surge pricing, some critics call it price gouging. more countries including taiwan are suspending uber. all over that and much more with three venture capitalists. gary vaynerchuk joining us, alan patricof, and david hirsch. they will be with us. here's a lot

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