Transcripts For BLOOMBERG Bloomberg Go 20151130

Cooperation, and not by human suffering but by human progress, a world that is safer and more prosperous and more secure and more free than the one that we inherited. Lets get to work. Thank you very much. [applause] francine that was president barack obama, speaking where leaders are gathering to try to thrash out an agreement for Climate Change. President obama warning of submerged cities if no action is made on Climate Change. We understand the u. S. Will not sign a legally binding agreement. He also talked about the future generation. Starting friday, surveillance will be broadcasting live from for thehe top 21 cop 21 talks in paris. the u. S. Jobs report may lead the fed to raise them. China may be finally getting the respect it has wanted. Showdown in paris. Global leaders meet to resolve their differences and come up with a deal on Climate Change. But the conference itself is a security nightmare. Bricks and clicks beat bricks over the weekend. David welcome to bloomber blg. Im david westin. Stephanie how was security . ; it was perfectly fine. I went to the parade on thursday. One of the most extraordinary things i have ever seen, one of the most destroyed very people at bloomberg is with us this morning. My former colleague from Deutsche Bank, Carl Riccadonna. Welcome. Thanks for joining us. Carl the distinguished guest . Stephanie you. I am sure you want to be focused on cyber monday, clicking, clicking. Here is vonnie quinn with bloomberg news. Than 100 40 leaders will try to reach the First Comprehensive deal to curb greenhouse gases. Obamaping and president met in paris. There are still some sticking points per one of them, how much support industrial nations will give poorer countries to cut their emissions. Pollution in beijing is off the charts today. Some pollution readings in the Chinese Capital have reached 17 times the levels considered safe by the world health organization. And the university of chicago has canceled classes today after receiving an anonymous threat. The fbi warns an online message threatens an armed attack. Federal and local authorities are trying to figure out who is responsible. You can get more on these and other breaking stories 24 hours a day at the new bloomberg. Com. Here is matt miller. Matt u. S. Futures up across the board. The real story i think is over in europe this morning. Take a look at european stocks through the indexes gaining across the board. Not a huge gain on the ftse, but a huge gain in germany on the dax. 1. 0576. Right now at the pound slipped for a moment, under 1. 50. These are back to april lows, so were seeing expectation of mario draghi expanding qe along with the u. S. Fed raising rates, shifting the bounds of power even more in favor of the dollar. German automakers are doing very well in german trade this expect cause they because investors expect the weaker euro to help daimler, boats wagon, and bmw sell more cars. David we are following several big stories with coverage all over the world. We are joined by hans nichols in paris at the Climate Change inference, Jonathan Ferro london, and Carl Riccadonna in new york. , lets start with you in new york. There is a lot of talk about security. And you give us specifics of what the scene is like in terms of security . Hans in paris central, it is somewhat of a ghost town. There are so many roadshow off, police barricades. 300 potential protesters have been arrested under the new Police Powers that Francois Hollande asked for. The criticism from the protesters is they want to criticize what is happening from the Climate Change, and the Emergency Powers of the government are restricting their ability to do so. There are 10,000 officers in the entire zone. We had president obama setting the stage, visit the bataclan where the attacks took place a couple of weeks ago. I was just down there. There were a violent clashes last night between protesters and government officials that is much calmer now. You see a city trying to heal. It is almost back to normal, but for the roses, the flowers, and the memorial to the fallen. Stephanie now lets take you to london, where david mentioned it is a big week in central bank. The ecb is expected to wrap up stimulus, while the fed will be looking closely at jobs data, out this friday. We will hear from the one and only man who coined the term, i will do whatever it takes, mario draghi. And janet yellen will speak this week. Does mario draghi have any room at this point to back down . Jon he had the opportunity to back down two weeks ago, but he reemphasize the need to do more by saying we need to get inflation back toward target as quickly as possible. Going into thursday, we expect one of three things. The consensus now is they go to. 3 . The prospect of increasing the monthly Asset Purchase Program to 700 billion euros billion euros every month, and then expanding the program it was a risk. He goes into thursday not doing enough, considering how much the market has priced in. Stephanie but if the goal is to buy European Assets when the economy is in a fragile state, how does buying assets change things . We have not seen the underlying improvement in any substantial way in years. Jon we have not, but i will say the credit channel has improved. The fx channel, you have seen will taketic this a slow time to play out. You see it immediately and sovereign bond curves, on the periphery in spain and italy. For the smes the credit conditions, that will take time to improve. He wants to see more of that. I would say give it time. Remember that the ecb is about three or four years by the federal reserve. They only started doing qe back in march. To see the channel really improve and then see the economy improve off the back of that, it will take some years. David Carl Riccadonna, it sounds like it is almost inevitable that mario draghi will further increase the easing. What does that say about what the fed is likely to do . We seem to be taking two very divergent paths. Carl this is a rare divergence in Monetary Policy among the most important Central Banks in the world. We have a fed rate hike pretty much baked into the cake for next week. Ecb easing this week. That tells us they will not only be divergence in Monetary Policy, but also in Exchange Rates. We are very likely going to see parity in the eurodollar Exchange Rate near term. This is because the economies are on two very different tracks as well. We have a u. S. Economy that is good but not great, and a european economy that continues to struggle. Stephanie talked about a lot of channels through which the ecb would impact the european economy. Is thet important Exchange Rate. A cheaper euro will be a big stimulus to european exporters, and the exporter engine is important. David how much of this is baked into the marketplace . How much is the fx marketplace already anticipating this . Jon a lot of it. We are headed for the first the worst month for the euro since march. There is a current account surplus in europe. That is fundamental demand for the currency. Where this is really playing out is a yield differential. If you compare the u. S. Twoyear to the german twoyear, the spread has been widening. It is one of the main reasons you have seen eurodollar trade lower. Going forward, the biggest resist the biggest risk is the federal reserve. Yellen came out in the spring and slapped it back down again. We are at the point now where the feds pain threshold for the currency in the december meeting will be interesting. Guidance in the fx london, they keep talking about a dovish hike. I wonder if they will deliver that. Stephanie what happens to u. S. Corporates if we get more week information out of europe, strong jobs numbers out of the u. S. , and that means a stronger dollar. That is not necessarily good for u. S. Companies, especially for those operations abroad. Then what happens . Carl that is true, but nonetheless that is going to be the reality for the u. S. Economy over the next couple of years. Doingnie the economy is so well, youre through with the u. S. Dollar year round. Carl this is going to be the new reality, possibly the best medicine for europe is the fact that not only mario draghi will ease policy, but janet yellen is going to tighten policy. It will not be a dramatic tightening. I think it will be a dovish hike. She is going to raise rates in december. But the fed is going to signal a lower pathos rate increases over the next couple of years. Right now they are telling you four to five rate hikes over the next two years. Next wednesday we will see two to three rate hikes per year. So a much slower fed. They will be easing at the same time they are hiking. That is the dovish hike. Stephanie my question to you, david i do not think we have ever had jon ferro. Wasnt he great . We really like having you on bloomberg. When we come back, volatility is back in vogue. In china, markets also awaiting a decision. We are heading to hong kong next for global go. Stephanie vonnie welcome back to bloomberg. In brazil, jailed billionaire Andre Estevez posts atned all of his his investment bank. He will be in jail indefinitely. s leaders are emergency are in emergency talks to sell aspects and sell estevezs controlling stake. It wills Largest Investment Bank is leading leaving its bonus unchanged from last year. That bucks the trend of its european rival Deutsche Bank, which is preparing to cut bonuses. Some beer brands may be sold to help clear the way for the merger of the two biggest rumors. Ab inbev has agreed to buy bank to buy seb miller. Two brands may be sold, peroni and grolsch. David in todays global go, we had to hong kong where investors are seeing a second day of price swings. Bloombergs enda curran joins us now. Lets start with two questions. Is this a done deal in terms of including the yuan . Number two, why do we care . What does it really matter . Enda good morning. All the indications are that it is a done deal to some extent. It has already been a has already it been recommended to the executive board. Maybe we willn is have some connections. We will find later. While it is an important victory for china to begin with, it will embolden the reformers within china, those people trying to open up the economy in the financial markets. They will use it as a tool in after a to push very difficult year. Do not forget, with the swings in the stock market they had this summer, the change of and yet rate regime, the imf by green lighting the you want is almost saying that this is part of the bigger challenge. Sorry, we lost your microphone for a moment or two. But there are reports that perhaps the central bank of china has been intervening with the offshore you want to bring it toward the on share. Is this something that will be included . Enda the central bank has been intervening consistently since the august 11 Exchange Rate change when ed valued you want when it did valued the yuan wanten it d valued the you. The big unknown is what they will do Going Forward. The the decision is out of way, will that be a green light for the central bank to allow the currency to weaken, and of course that will be held to exporters on a Political Base within china. The have been playing by rules. That is a sort of uncertainty Going Forward. David there has been a fair amount of a volatility. Any connection between the yuan and the sdr and bringing some stability, increased stability in the equity markets . The selloff on friday sold off by 5 . That was a reminder of how fragile sentiment is both in china and on the china story. The economy continues to be in the relatively slowly. The government has partly measures to the rarest of intervention, but that big selloff in price goes to show you the downward pressure is still there, the downward pressure on currency also still exists. Enda curran from hong kong, thank you for joining us. Stephanie i have to talk shopping because when david was talking hong kong, i was busy holiday and ordering as shopping continues today with cyber monday, black friday. Brickandmortar sales were down 11 from last year, according to the National Retail federation. The big question is, can cyber can cyber monday sell retailers . Thank you for doing that. Dont forget walmart. After thanksgiving, i do not know what it is. Carl riccadonna was in Southern Illinois then. I am going to defend retail for a moment. You know i am a retail enthusiast. Brick and mortar was down on friday, but overall where the numbers up . I wasr five years ago, not doing any Online Shopping, and now you have me a little bit of brickandmortar, a lot of Online Shopping. One could argue it is all going in the right direction. Context, there is a perception that, oh, my god, nobody goes to stores anymore. As we talked about on friday ,hen i was in the stores 4. 5arget on thursday, billion dollars is spent online. The majority of business is still in brickandMortar Stores. It is obviously a big shift. Stephanie s overall shopping up . I was in j. Crew in georgetown on friday. It was packed, you could not even get inside the door. Shannon i think we will get some better indications today from the National Retail federation. The trend seems to be, spending is up. We do not know what happened saturday and sunday, which are big retailbased, too. We have to include today, monday, cyber monday, when another 3 billion is expected to be spent. ,nother thing to look forward people started shopping a lot earlier this year. Stephanie why, because the deal started earlier . Shannon because the deal started earlier. We look at black friday, saturday, sunday. 1. 8 billion was spent in brick and Mortar Stores on things giving day. Online shopping on things giving day was up 18 compared to last year. The Holiday Season has been stretched out. It has been stretched earlier. Retailers say that is great for us. More people in the store, coming back, looking for deals. David how important are these numbers for the overall economy, over the course of the year . Carl Consumer Spending without a doubt is the critical driver for the economy right now. If consumers shut down, the economy is going to significantly downshift as well. We have to pay close attention. What i have learned over the years watching these numbers is that the black friday numbers and the anecdotes of door busters and whatnot have very little correlation with the actual spending results for the quarter. So if we look at economic fundamentals, we are coming off a month of strong job gains and we have a strong jobs report on friday, then that tells you the economy is doing just fine and therefore the Holiday Shopping numbers should be fine as well. Shannon a little bit of the question will be, the consumer has money, so where they will where will they spend it . Will they spend it on j. Crew, apple watches . On thanksgiving, the line for the apple watch was around the store. Apparel was 40 off at target, but nobody was touching it. They imported it into ireland, and it was huge. We shopped on grafton street in thanksgiving, and they had big sales. Stephanie when i was growing up, there were big sales after christmas. When i think about Holiday Shopping back then, it was just december 25 december 20 six. Has Holiday Shopping got significantly bigger for retailers . Years ago, it was buying your holiday necessities. Now it is more than that. Are trying to stretch that. This is the first year they are stretching it out. Last year they tried to stretch it out, but retail sales were up around 3 . It was not huge or amazing, this year they are stretching it out. Walmart, they started offering cyber deals on monday. They started offering holiday deals november 1. Point,t year, to your sales were ok, but that goes back to it can only work if you have the consumer there with money to spend. David my understanding is there is a shift toward mobile. Of onlinene third sales were from mobile. So if you are a retailer and you have an app and your site is kind of clunky, see you. Stephanie a lot of could not handle the traffic. Niemann market Neiman Marcus was jammed up all weekend long. Shannon amazon was slow for amazon. Real quick on amazon, we are talking about retail sales are up 3 . Amazons black friday was up 21 . They were up 28 on thanksgiving. That is the type of growth we are seeing online. Mass, do you have something . Guru at bloomberg was talking about sdn, and internet retail etf. This is sdn in white. It is up 25 in the last 12 months. It includes some internet and nonretail stocks. Facebook has been trying to break into retail but is not really there yet. This is srt, the spider straight up retail play. You can see the split in the trends between the is two etfs. Stephanie matt miller, i love it when you give us the trends. Shannon pettypiece, Carl Riccadonna. We will have much more on retail ahead. We will be talking air pollution in beijing. Sure, tv has evolved over the years. Its gotten squarer. Brighter. Bigger. Its gotten thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. Stephanie look at that. Our Nations Capital is looking fantastic this morning. They are anticipating a decision from the imf on whether it will yuan in its reserve basket. Its a great day to be here. David it is an lets start with the first word. Vonnie the suspect in the planned parenthood shooting makes his First Court Appearance today. Robert deere will appear by video. Three people were killed and two wounded. About no moreent baby parts. Witnesses said the gunman was opposed to abortion. The European Union and turkey have agreed on a deal to slow the flood of refugees to europe. Turkey will enforce its border controls of the eu will give the turks or than 3 billion to help refugees. It will also restart negotiations of turkey to be a member of the European Union. Japan is ending its twoyear hiatus on hunting for wales. An International Court said the not be of wha couldl justified in the japanese fleet will takees more than 300 wales. The country considers the hunting of whales to be part of its traditional lifestyle. You can get more at bloomberg. Com. Stephanie i have an opinion on hunting whales. Lets bring in tom keene from london. Im guessing your mustread must have to do with Climate Change and the conference in paris. Thats what you are in europe or it what you focus on . On a lookt to focus back at to what the scientists have said and the policymakers are trying to deal with. There are many smart people who have look to the actual science pro and con and the nuances. Is from theon university of manchester in the United Kingdom paper ise items of his this is an exceptionally thoughtful analysis from a few years ago. Whats important is though policymakers have to listen to the scientists as we become a little more aware of the general warming we are seeing. That itt strikes me sounds like two degrees centigrade is not that much but it could have farreaching effects. Of the percentage population would be affected but it would radically change their lives. Tom right, everyone talked about miami and the ability of miami and the higher water. Weight will be near 1 degree centigrade increase at some point, halfway to that number. What Kevin Anderson is saying is the actual science is a much higher number than that. Stephanie what is the principle take away . Is it to reduce the amount of energy we consume . Know the thingt that we can see our take away other than weve got a lot of people in paris trying to not do a copenhagen. Stephanie what does that mean . Tom we blew up a number of years ago in copenhagen with disappointment. The goal is to come out of paris more organized and with more of a plan forward centered upon china and the United States. Tell as far as you can going into these talks, is this a supplyside issue or demandside issue or both . Have nailed it. Talk toer is when you scientists, they are not looking at the supply or demand. They are looking at where we are now. These are the ramifications and you have to bring el nino into it but the bottom line is the science and the chemistry of Global Warming trumps all of the economic analysis. Online is i think the science and chemistry are just not things the global population is focused on enough and they need to be given the severity of the situation. Tom yeah, there is no question not ahere has to be postapocalyptic thing like in the movies but the public once them to show them. Maybe a melting greenland gets the debate going. I cannot say enough about the work on the on coal. Whatever your view on Global Warming, the work on beyond coal is absolutely riveting. I cannot say enough about the graphical presentation of our reality with coal right now. Whatever you believe, its most informative. Stephanie i dont want to get any for christmas. David we will continue our discussion about the climate talks in paris. President obama spoke earlier the unitedg about states. I have come your personally as the leader of the Worlds Largest economy and the to saylargest emitter that the United States of america not only recognizes our ,ole in creating this problem we embrace our responsibility to do something about it. David we are joined by carolyn hyde. Talk about this conference throughout the program but lets talk about president obama. What does he want out of this . What is it mean for the United States . This is about his legacy. Its fascinating that he says we of the United States recognize our role when we all know that many republicans in the United States do not believe humanity has anything to do with the Climate Change. Also tried to send a message that he has the power to do something. Moment we finally determine we will save our planet. Its the fact that our nations sherry sense of urgency about this challenge and a growing realization that it is within our power to do something about it. Within his power but is it . We see him turning to the a Nash International agenda while he pushes the domestic agenda aside while he fights with republicans who have not been working with his agenda and hes trying to say that the u. S. Can cut emissions by 2620 8 by 2030. A win for him is to show that the United States is leading from the front as the second they aremitter but also working with the biggest emitter which is now china. Stephanie tom keene, do you believe president obama has the power to make this change . Buts saying it in a speech what can president obama really do . He has made a lot of claims. Tom i think there has been a lot of preplanning for this. The number one message out of copenhagen was to get the dirty work done early. Thats what the United States and every other nation out of 190 have done. The president comes into the paris talks with everything pretty much planned out. Away from that, hes got to bring the message back and he clearly does not want to come back with a discussion with congress about a treaty. That will be avoided at all costs. There is a number of things they can do wrapped around a fiveyear plan that could help. I would focus on David Cameron of United Kingdom. He has been front and center on trying to get out to a fiveyear timeline where we can get something done. I would tell you that the absolute important thing of today is that beijing was basically shut down because of smog. You wonder if the chinese planned that. Stephanie the irony. Tom the images out of beijing this morning say all. David we will show those shortly. As a generalobama plan to address this issue, im not sure he has prepared the American People for what will be required of us. Tom i think some of the American People are on board. I see the heated differences of opinion on how the United States of america should proceed on what is clearly Global Warming. There is no debate about that part its what do we do . It . E get out in front of we need to see some of the ramifications before we actually act area thats typically what a democracy does. Stephanie thank you so much for joining us this morning. Tom keene is in london and caroline hide from paris. Before we go, i want you to take it quick look at the video, air pollution reaching amazing levels in beijing yesterday. Authorities issued an orange level alert for smog and thats the secondhighest alert possible. This is on the same day the Chinese Government said it has met pollution reduction targets for the year. Chenos says never believe anything you hear from the Chinese Government. Take a look at that. That is drastic. You have to wonder what the Economic Impact in beijing is. Will that shut down businesses . David it also has political impact for the chinese president. We come back, we are moving on and talking amazon. Will they see another record shopping weekend . We will check out the latest delivery drone video. Stay with us. Vonnie welcome back. The imf executive board is expected to approve the chinese request that the yuan be considered a reserve currency. The board meets in washington today in the imf staff is recommended the u. N. Be added to the special basket that means countries can use the you want to meet the balance of payments. Automakers are on the verge of breaking sales records in the u. S. But they are leaving nothing to chance. Theyre introducing rebates and other deals so they can grab market share from each other. Automakers spent 6 more on incentives this month than they did last year. Adele set aer record for music sales in the u. S. She sold 3. 4 million copies of her latest album. They did not stream the album online. David its cyber monday. Stephanie its like the biggest holiday ever. David its another big day for Holiday Shopping. Ibm is predicting cyber monday sales will be up over 18 . This than to speak to amazon in joining us is the companys Senior Vice President of worldwide operations, dave clark. We have heard a lot of numbers about amazon today. You know the numbers so give us a sense. Good morning and thanks for being with us today. Incredibly excited about today and we are in the middle of a season of deals. We had one great day on black friday and we are looking for a record day today. We expect to day to exceed last years cyber monday in beer biggest day ever. I spend a lot of time talking to brickandmortar retailers and walmart is after you and spending billions on their online operations in hiring thousands of people in silicon valley. If they can meet you on price and the want delivery and meet you on delivery, what do you feel you have over a big retail brickandmortar giant like walmart or macys our target . We have always been in a competitive environment. What you see today around the world is over 100 Fulfillment Centers. The infrastructure has been built over 20 years dedicated to ecommerce and dedicated to faster tooducts customers and using more selection and millions of items available, millions of deals every five minutes and faster delivery by being closer. We now have three sameday delivery metropolitan areas in the u. S. There is one hour delivery in over 20 cities around the u. S. We think this infrastructure is hard to replicate. We think the selection we can provide an cost structure allows us to give get great prices to customer and its hard to beat. Is it hard to replicate . If you can build it with Fulfillment Centers, is there more behind it . Is it a matter of time . Walmarttake macys and to build up the infrastructure . Is there something more to it . Think that what our competitors are doing our delivery ander increasing selection and lowering prices were customers. History is shown that as we continue to innovate that for customers, customers keep coming back. They keep joining our prime program which has been it incredibly successful. It will be our best day ever this year and we are excited of what we give to customers and customers are responding well. Stephanie talk to us about the ultimate center. I dont see too many humans. Help us understand the amount of robots you have versus the amount of people. Macys has 106 he 6000 employees. As 106,000 employees. Our focus is about combining software with automation through robotics and Human Performance and product available. There are about 30,000 robotics and 13me in Service Fulfillment centers in the u. S. We have almost 200,000 employees in our network in the u. S. We continue to focus on automation in our Fulfillment Centers or the drone service. We continue to focus on automation for Cost Reduction in speed improvement for delivery. We are excited about the results. I have been hearing you guys have had trouble hiring. Is becoming difficult to find warehouse workers when you have unemployment hovering around 5 . 100,000ve hired over different employees in this Holiday Season, bringing it to almost 200,000 employees in the u. S. The hiring has been going well we have a great group of people lined up to do great work for customers. To pay them more with the Competitive Labor market . We have a great pay and whicht package at amazon is great for seasonal associates. They have great benefits including our latest maternity benefits. David tell us about the future at amazon. What about sameday delivery . Is amazon doing that . Think if the future of amazon, its amazon today. Wes about fast delivery and have same day in 16 metropolitan areas and one hour delivery in over 20. We continue to focus on that. We are doing it through our own Delivery Program with things like our flex program which allows people to be their own boss and deliver where they want in the hours they want to work and they are great money and we are doing automation programs like the drone program. Tosoon as we get legislation support that, we will be able to integrate that. How big will that business be . Every kid on the internet are watching drone videos. It seems like the best free advertising ever. How impactful to the business do you see it becoming . I think its going to be incredible. When you think about the drive for same day and instant gratification of delivery, the ability to get people in a realtime automated way through these drones, i think it will be huge. I think its very real. I think its going to be a big part of our business. In the meantime, we will continue to have ultrafast delivery and do it with a great group of people day in and day out. To mynie if you deliver door, a mini drone, my kids will of you. Thank you joining us. We will be right back with more bloomberg. Stephanie welcome back. ,he espn decline in subscribers down 7 million the past two years. This sent the stock tumbling at the end of last week. They have a big week ahead in college football. To bring in paul sweeney. But theyrs are down are down from the seventh level of heaven. Espn can do no wrong until recently. Thats right, espn is by far the most profitable Cable Network out there charging upwards of six dollars per subscriber per month with premium advertising rates for life sports. Issue that the Company First highlighted last summer when they said they were starting to lose subscribers. This is real money in terms of affiliate feeds and advertisers. David they say we are developing new things and new revenues. Its the rough math and 6. 5 times 12 months times how many subscribers. That thrill money. Thats all profit. The affiliate fees are all prophets of thats an issue that caused disney to lower their operating Profit Guidance over the summer. Not only does the but the whole media sector overall it affected. Stephanie we are having a Big College Football weekend, wont that come back up quickly . It will come right back. The affiliate fees will not come back. Can they drive their Digital Business . Stephanie do not bet against espn. We will be back. Stephanie president obama warns of villages swamped by the ocean if the world cannot agree on Climate Change. Retail in real estate the big struggle for investors to put money for malls. Dunkin donuts is playing catchup. It has fallen behind starbucks when it comes to mobile ordering and payments. We will ask the Dunkin Donuts ceo what their next move is. David welcome to the second hour of bloomberg. Stephanie heres jason kelly. Welcome. One of the additives is we get instant bloomberg messages all morning long. I already got a complaint for my own husband, congratulations, Washington Redskins with a huge win yesterday. Im sorry we did not cover that news. We begin with paris and president obama calling the Climate Change conference a turning point. The president said this is the moment when we finally decide to save the planet. He said the u. S. Played a role in creating the problem and now the country wants to do something about it. More than 140 Global Leaders are in paris. Pollution in beijing is off the charts today. Some pollution readings in the Chinese Capital averaged 17 times the level considered safe by the world health organization. An anonymous threat has led the university of chicago to cancel classes today. School says the fbi warns that an online message threatened an armed attack in federal and local of the resort trying to figure out who is responsible. You can get more in these and other breaking stories at the new bloomberg. Com. Take a look at futures u. S. Equity futures are up across the board to kick off the week. We are seeing real gai, 38 points for the dow jones. The real story is not in equities. Its in currencies. We are thinking about what mario draghi will do this week as far as expanding his Bond Buying Program and we heard from the bank of england about how they are comfortable with rates as low as they are and we are planning on raising rates in the u. S. Euroll get 1. 05 on the and 1. 50 on the pound and we were below that earlier this morning. You can see an interesting chart that shows dollareuro volatility over the last five years. The volatilities is in blue climbing. We are at a level we have not really seen sense 2011 as the price of the euro continues to come down because of this action. And thehow you wirp chance of the u. S. Federal reserve raising Interest Rate continues to climb and we are at 76 as measured by futures. A very interesting story in currencies. It even overshadows the Ohio State Buckeyes win, for me, over michigan but not quite. 4213 . David that was rough. Stephanie it was a double loss for tom brady this weekend. Sorry. David they were a better team saturday. Stephanie we are following all of whats going on regards to the climate talks in paris. We heard from president obama now lets bring in hans nichols who is focused on security concerns following the recent terror attacks in paris and Caroline Hyde is looking at the intricacies of the meetings and what could be accomplished. Hundreds were arrested last night after protests turned violent. Our activists beginning to heat Police Warnings . They dont have much choice. In addition to the more than 300 arrested last night, several dozen are under house arrest today. This is a city that is very much on lockdown. Walking around, you get a sense of how heavy the Police Presence is. For the past couple of weeks, i have been here three times and the Police Presence today seems higher than ever. There are barricades up everywhere you can imagine and roads are blocked off, over 10,000 Additional Police officers are on the streets throughout the entire region. I was just downtown and there it is quiet where the writing took place last night. Bat that is returning to normalcy but there areaclan police just about everywhere. They are checking people and it is a city on guard. They are doing some heavy lifting. Protests ive been planned for months and months leading up to this. Do you have any sense of how protestsd the active will be because of the heightened security . They had been completely cut off. The police here have used a state of emergency. They have used the Police Powers meant to combat potential terror attacks and say we cannot take risks and they are using the Police Powers to conduct searches which are preemptive and its causing a lot of concern about what it means for civil rights and what it means for the right to protest here. They clearly are using those expanded powers and making sure nothing goes askew. Stephanie with all of this added security, its paid for by the french government . What they talked about a couple of weeks ago was adding an additional 600 Million Euros to their budget. That will run afoul of the brussels role but brussels has kind of given the green light. They said spend what you need to a security and dont worry about the stability, securities more important. David this meeting will go on for several days. Do we have any sense of further demonstrations planned . No further demonstrations planned but the original goal was to have them book and the conference. They would have something at the beginning and the end. Whether they are able to do any sort of demonstration, things to apply for permits and when they apply for those permits, they simply have not been granted. Has been some officially sanctioned protests. I have been to dozens of these events. This feels like a g20 where everything has been exponentially increased. Security checks are everywhere. There is very little free movement. The one thing that is free or perhaps is the metro. It was free yesterday in a three today. David thank you very much. As the leaders meet next two weeks, immense pressure has been put on this summit to come up with a plan. Caroline hyde is joining us from paris. What specifically do we think will come out of these meetings . They have already done a lot of the work, the heavy lifting. The pledges have been signed up and histories in the making today. The reason there is police and the ground is more than 140 liters. Its the biggest ever we have seen in one day in one place. The chinese leader is here and the u. S. Leader and india and all of them coming together. They have signed up for how Many Missions they will be cutting in 2020. China wants to cut 65 . Brazil and mexico, the emerging markets are working with the developed markets to help cut down on emissions. There are some challenges. There,ie if they are all of these World Leaders coming together, during this time, a massive expense and they are just restating what they have already done . It sounds like an awful lot of pomp and circumstance in a time of crisis when we need action. The irony is not lost on many. Polluted the world by flying here. There is a lot of pomp and circumstance. Its meant to be momentum. Its meant to be catalyzing the difficult negotiations going to go on for the next two weeks. There are still 50 compromises to be made within the Draft Agreement between the developed markets and the developing markets. They will have 100 billion to help pay for this clean energy. The World Leaders are coming in on the front end. This goes on for another 810 days. And thel all leave climate negotiators are going to have to get to work. Llande planned to get these guys out of here but they had come in at the end rather than the beginning. Stephanie when do they go to work . There areobama said things that could be washed away. As far on issues villages that are not close to the citys and countries that have the budget that make a difference. Take action to comes to these countries . Places like the United States, places like england and france are not necessarily making that a top priority, they cant. To thetake me forward communique. The heavy lifting is typically done before they sit down. What will that say before these desperate besides these overall numbers . Is easy to agree to a number. How are we going to get there . Its going to outline the individual agreements by the 95 interval cut individual countries and how they will numbersto live by these and how they will measure it Going Forward and how to ensure re are Climate Change pledges in future years. The target is for two degrees centigrade higher so there is more work to be done. The legality of the agreement is in question. You outlined why countries are not doing enough. Were talking about submerged cities. We are talking about 4000 Chinese People dying per day. That shocks me. Thats because of air pollution. I think something is happening in beijing. The drive from china will help this come to fruition. Beijingony, stephanie is on orange alert which is second highest alert in terms of pollution and most of the city is shut down. Thank you for joining us. Caroline will be with us all week. You are leaving tomorrow for paris . Im headed out tonight. David now i have more confidence. Stephanie ifdef i going to get done. Doneody else who got it this weekend, he did not win the game but holy cow, he won this play. The new york giants oh del beckham junior does it again. This unbelievable onehanded for a touchdown in a game against the Washington Redskins. David thats not it. Stephanie my family was there to witness it. Thats not it. It, my husband said he felt like this was going to be the worst moment of his life. At least the redskins are in first place in the nfc east after beating the giants. Youve got to say the gloves that where met dennis that that man wears, he wears nike gloves. He had a cast two years ago. Thats pure valet. David this is a perfect day for you because you get to win the game. Stephanie and i did not have to go to the game. Up next, aig responding to pressure from the one and only activist himself, carl icahn and what the Company Might do. We will be back bloomberg. You are watching. Vonnie welcome back. Ibm says online sales were up 25 over the weekend and it predicts cyber monday sales will rise more than 18 . Nike Running Shoes and hoverboards and new star wars merchandise are most popular. The worlds Largest Investment Bank is leaving its bonuses not change from last year. That bucks the trend of their european rivals at Deutsche Bank which could cut bonuses. The new product type of delivery drones which has a range of 15 miles and is designed to release packages. You may not see this in action for some time. Amazon faces a number of regulatory challenges. Give aie i just want to quick correction buried we said data showed nfr that sales fell that that was data from 2014. The National Retail federation is reporting this past weekend, nearly 100 Million People said they shopped in stores and more than 103 million shopped online. Some business go away from brickandmortar, all of it is going up which is positive for retailers. David that would be good for the economy. Today we are looking at aig. It has been pressured by carl icahn to boost its returns. He said last week that aig ceo Peter Hancock has failed to lay out any alternative Strategic Plan with the potential to unlock value for shareholders. Consideringpany is the sale of blocks of his Life Insurance policy. Lets bring in jeff mccracken. Is this a response to carl icahn . He said i want you to break up. He said you need to break up into three companies, a moorish gige guarantor, property like business, and get rid of debt propertycasualty business and Life Insurance. They want to sell us some of the Life Insurance assets. That would not necessarily be all business, it could be just contract. Other Insurance Companies have been doing this already. Allstate has done this. A couple of others are out there looking to do this. They take that money and they put that into other businesses. They want totly, emphasize higher return but why would somebody buy it . Than they can just sit on the premiums. To buy these assets and they collect the premiums and then they pay out at the end. They pay it back to these owners of the contracts. Is there a sense this will be enough to satisfy carl icahn . Probably not but he has a way of getting into different companies. He did aig and then a week later he was in xerox. People forget when things dont go his way. Literally, every week he has something new. Stephanie he forgets, its Christmas Season and those copy machines are useful at holiday parties could people photocopy their face. Thank you so much. We will be right back. David welcome back. We have been talking about cyber monday and retail sales and malls are expecting more sales. Welcome good to have you. Its easy for us to think that online is going up, it must be hurting brickandMortar Stores. What are you seeing in the marketplace . As far as brickandmortar, they need to optimize their space and be very effective about their tactics and strategy. Traditional brick and mortar and retail will come together. David are there some places doing better or worse . What about shopping malls . Main street and shopping malls are two Different Things because they offer different experiences to the consumer. In the Shopping Center, you bring together a Larger Community of retailers and services and it becomes an essential point of meeting and community. In the urban environment, it is impacted by different effects you of urban. N and they bring different experiences to the consumer. David are you seeing softening in the Real Estate Market for retail . In certain segments. We see a lot of strength in the urban centers. We see a lot of strength in the toptier malls and lifestyle centers. We see softening in the b and c Shopping Centers. There is shrinking of some brickandmortar portfolios. We see there will be continued pressure on vacancy and rents particularly in the lower Quality Shopping Center products. David what about large versus small . Is there a differentiation in terms of the Real Estate Market . Yes, and they offer Different Things to the consumers and real estate investors. There was a large shakeout in of recession years of 2008 the big box retailers and it had a big impact on Community Centers and power centers. Certain tenants went out of business. In those centers, the space have been optimized and reduced and cut up and divided and offered two different tenets. Tenants. Up, dobeyond cutting it you see different use of the space . We hear stories about the experience of retail. There are spa and Cooking Centers in stores. S one category is fitness. There is expansion there. If you look at some of the Life Time Fitness centers being built with 24 hour fitness or equinox and soul cycle and other concepts are expanding and Shopping Centers. We also see some Community Uses and Shopping Centers. And at the medical segment the expanding a version care centers. There is a lot of expansion throughout the national marketplace. David urgent care moving into malls . Spaces and Shopping Center spaces and moving into urban street locations. There are freestanding locations as well. Its pretty varied. David essentially, a nonretail use of what is traditionally been retail. Yes, but it is servicing a consumer looking for an ondemand service. It is retail and away. David whats the most creative thing you have seen done question mark the most creative thing is chloe. Thats a system thats been integrated into best buy. Its a cool concept. David thank you so much, great to have you with us. Dunkin brands is next. David welcome back to bloomberg. Jason kelly is still with us. Stephanie my instant bloomberg is on fire. I am getting so much pushback about these Climate Change meetings. Viewers are saying they are important. And say the pop circumstance and huge expense and no action. You have real work to do over there. I will do my best. The focus may be on Climate Change for the paris conference but there will be leaders there to discuss the fight against the islamic state. Francois hollande want support u. S. Vladimir putin and the the races on to convert those promises into success against terrorism on the battlefield. The suspect in the planned parenthood shootings in Colorado Springs makes his first appearance in court today. He will appear by video in three people were killed and 12 wounded in the attack friday. He made a comment about no more parts. Witnesses told planned parenthood the gun man was opposed to abortion. Pro basketball, kobe bryant is hanging it up. He will retire at the end of the season. Its his 20th season in the nba and he has 15 championships and played on 17 allstar games. His last three seasons ended early because of injuries. You can get more and these and other breaking stories at the new bloomberg. Com. Look at futures, up across the board and the trend is higher as we get closer to the opening bell. Its an hour away. Take a look at some of the commodities this morning. Oil is interesting because getting close to finishing its worst month since july. Its up a little bit right now. Iran had some comments over the weekend about opec not cutting the supply. That goes contrary to what we heard from the saudis last week. We will see if the opec meeting this week. Gold is also finishing its worst month since july. With a little bit of a jump this morning. We still offer the entire month of november. Currencies, there is a lot of dollars strength especially against the euro. The pound dropped below 1. 50 for a moment this morning. Sticking to this trend or whats behind it, we will hear what key banks are looking at today. Bank of america joins us now. Lets preview what we expect. Thanks for joining us. The ecb gets together on wednesday and on thursday they come out with the release. What are you expecting . Then tell me what the surprise will be. In a strange way, you are expecting a surprise from mario draghi . Yes, we expect we will get a package meaning its not just one instrument that will be used. We should get action on both the qe at a slightly accelerated pace. Then there will be action on the conventional part which would be a further cut of the deficit rate. E we expect the continuation until september of 2017. On the deposit side, we expect with significant risks that could be a bit higher. We would like to discard the possibility of big, aggressive cuts into negative territory. This is kind of consensual. Hasar, mario draghi surprised to the upside. Is some news get on the way to provide liquidity to banks at a low cost. It would make sense for them to do that. A negotiable rate is bad news for banks. Can mario draghi only disappoint if the market expects him to surprise every time . If we expect a miracle every time, he cant possibly beat expectations. At is laying good the ground for the possibility of more action in the future. He can always give us an ironclad certainty. They are starting to sound a bit different on inflation. The definition of that is close to or below 2 and he can insist on how symmetrical this is which would start creating an impression that maybe the ecb would be ready to expect inflation to be a bit higher than the target for a while. Its not for immediate consumption. There is no change in the rhetoric. This but inp create any case, it is felt that it would help them respond to market fluctuations. My sense is that they should manage their positions down. Matt we see the movement in the currency market this morning and thank you so much. If you are in new york with the scum you might be having a morning cup of coffee. Its a perfect time to talk about the companies vying for your breakfast budget. From starbucks to mcdonalds to Dunkin Donuts, they are restrategizing. Is chairman of Dunkin Brands group and joins us from naples, florida. Welcome. My experience with Dunkin Donuts as you made a huge push on coffee several years ago that seems successful. It was a big upgrade but now you have some very stiff competitors coming at you. What is your strategy for getting back on top . We feel we are very much in top with coffee. We have been delighted with beverage sales for the last several years. We are reinforcing that today with the launch of our first break fromal pm 2 00 p. M. 6 00 p. M. Is 1. 99. Its 1. 50 below the price. Are giving our guests value and get them into our stores where they can relax and eat some of their holiday and enjoy themselves with wifi. Stephanie there are many who dont want to relax. There is an issue of operational excellence. When we look at what starbucks is done, through my app, i can order my coffee and be in the score and the in and out within minutes. Right now, it seems like dunki donuts is lagging in terms of going into the store. Youve got the baskinrobbins option and the donuts. Its an operational lapse, i want to say. Im not sure you are right on that one. We feel we have been a leader in terms of simplicity. We have been a leader in terms of personalization for years. You can get your coffee anywhere you want. You can have it anyway you want. We personalize it so we are working on the final stages of launching our on the go at which will enable you to save several favorites. It will enable you to press a button on your phone and in you go and you will get your product faster than ever before either at the front counter were you dont have speed to anyone, just use the phone, and go and pick it up or through the drivethrough. The on the go ordering is the architecture we see linking into delivery and we are expanding our delivery today in for extra cities and curbside. We feel we are a leader but we are a leader not only in the fact you get our menu all day, breakfast att just lunchtime, its all day, every day but you can get a personalized whether its your sandwich or your beverage. Stephanie thats a gift to me because i dont want anyone to know how many snickerdoodle doughnuts i will be ordering. I appreciate that i dont talk to anyone. You will be our silent guest. You mentioned the allday aspect. Tomany headlines and so much do about the mcdonalds offering their breakfast all day. Have you seen that rippled through with your core customers . What has been the net impact . I think there has been a little bit of a trial. I think our guests recognize you can get the same thing 6 00 a. M. In the morning and 10 00 p. M. At night at Dunkin Donuts. We have obviously got a combination of product you can describe as lunch or breakfast but you can get the same thing all day. Its part of our heritage, its part of our operational excellence. Going back to with stephanie was saying, we are proud of the fact that we are world class in speed. Where worldclass in terms of accuracy. All the operational initiatives we have will make that even better. We feelgood about it, good about the fact that mcdonalds in many ways made us highlight one of our strengths and it is been our strength for about 30 years. David you understand we are bullish on your company and your future. The markets dont seem to be picking up on that. I think your shares are flat or down but your competitors are up enormously. Why isnt the message getting through to the equity markets . If you go back about three months, you would find we were we were about 56 and people saw great future. We got our Earnings Guidance for the year and we had the consensus earnings for the quarter. It was all down to duncan u. S. The franchisee, sat down and we will focus on two main strategies. What is value which is why we have the one dollar 99 deal for the next four weeks. The second is technology. We are a leader in technology. We will continue to be a leader. The architecture of that Technology Future is something our franchisees are truly excited about. They are excited because not just delivering to the guests. It will help their unit economics. I think we will see a greater through point in our stores whether its the drivethrough or the front counter. I am excited about 2016. Stephanie how much does that cost . What do you spend on technology and do the engineers talk for you or is it a thirdparty vendor . That theya business sickly has pretty low headcount. We are very costeffective and we focus very much on franchise margins. We tend to use thirdparty vendors. Anticipate,re is to to pressure test everything we do. In portland, maine, where pressure testing our on the go ordering. We feel weve got it great Technology Future and great partners working with us. At the end of the day, if you focus on the guest and make sure you deliver for the guest with great products and Great Service and most of all great speed, i think you will find a result will be terrific for us and our main customers, our franchisees. Stephanie as long as the doughnut holes are no calories, you will be in good shape. Thank you for joining us. Thanks for your business. I believe i am eating and standing, there are no calories. About 10 of all the stuff we buy the season we will be returning to stores or shipping back. Tracking all of that is a Business Opportunity and adventure investors are taking note and we will dig into that and more bloomberg right here on. Stephanie one thing all shopping has in common is returns. There is a big business read behind all the stuff that goes back to retailers and is getting the attention of the adventure capital dollars. There is a Software Company that helps retailers tackle returns. The cofounder and ceo is with us. All of the shopping, lets returns, how do you play a role . The Technology Platform to process and manage and resell these goods on the secondary market. We are the technology the systems are using other storefront and their warehouses to tell them what to do with these goods in different conditions as they come back. We are the marketplaces that are selling it. Website and resell them outside as well as ebay and amazon and the different secondary market stephanie the idea for this reminds me of guilt and it will a lot an doohlala. What happens when this model gets communicated and the barriers of entry go down further . Those guys are websites that are specifically sourcing inventory to sell and websites. We are part of the entire logistics platform. All of the goods they come back to these retailers, they have to find a way to resell it will make it the easiest way possible by connecting into the different secondary market sites simultaneously. Stephanie in this tech universe, when we talk to new companies, they often say i raised all this money and we backers butc they dont talk profitability. When are you turning a profit . We have raised a lot of money recently come over 100 million. It doesnt mean we are making it yet. We have an infrastructure that can handle the returns from the biggest retailers. Some of them have up to 5 billion of returns per year. We are stephanie Building Infrastructure for the future. Stephanie wendy want to convert this to becoming profitable . If the bubble burst and suddenly you take a more critical eye at businesses like yours, how long before you think you can turn this infrastructure into a profitable business . We can turn it over night if we want to. We are investing for the future. If we see things change or we doing moreed to be profitability, we can do it overnight. Where targeting end of this year or early next year. Stephanie how much more returned to we see in the Online Shopping world versus brickandmortar westmark there has been a huge increase in Online Shopping. Its close to 50 more. Traditional retail will see that 8 of their goods returned. Online will see up to 15 returned. If you look at fashion, its even higher. It will be 3040 . Stephanie what percentage of those goods can still be sold at retail price or have to go discount . 1 3 will go about back to retail and then another 1 3 will go to discounts and they end up in discounts and another1 3 gets thrown out. Stephanie how much can this online boom hurt these big retailers . On the one hand, it is more returns they have to deal with. There are more returns that are in better conditions on the other hand. They can bring back more to stocking to be more efficient at processing them. You can have a centralized return facility for online. However, if you are brickandmortar, gets more complicated. Now youre selling goods online and getting returned in the stores have to figure out what to do with them. Stephanie is january or biggest month . It is for goods coming back. About 24 of all returns that happened throughout the year will happen around the 30 days around christmas. Stephanie what is the number one thing that gets returned . Its typically clothing. The wrong size or people will buy two or three of the same item to see which size fits. Stephanie there you go, thank you so much for joining me. He is the cofounder and ceo of optoro and is a saint albans bulldog. Check out our bloomberg billionaire list. Hisbillion or renounced posts after he was jailed indefinitely. He was the chairman and ceo until last wednesday when he was arrested amid the largest corruption probe in brazil. Next, we will take a look at whats trending in the bloomberg terminal. Stick around, weve got more to cover on this cyber monday. David welcome back. Its time for bloomberg trends where we take a look at what you are reading most. Jason kelly is with us. Mostis is number 1 read, these are my people in new york city jpmorgan is said to leave bonus pull for traders, bankers unchanged. Its not surprising if you know any bloomberg clients. Stephanie of course it is. Whats interesting is if you go into the story a little bit, there is a great quote. Flat is the new up. Aboutnie if you think things we have heard from credits we sort Deutsche Bank bank, suisse or joy to they say bonuses will be down significantly. Jpmorgan to say they will be flat as another example of how some of the bigger banks will be able to pull more talent. Numbers will the be flat, they say they will be flat across the board but not necessarily everyone. We have not entered into a new environment where the as get paid and then junior kids but b will not be big traders. Bankers will get paid this year and they should because they have had a huge year. Have access tou walk in to the cafeteria does not mean you should get paid six figures. David youve got to be worried because they can walk across the street and get other jobs. Stephanie they will always get paid at places like that but they will just not advertise especially to their shareholders. The hour is up but jason is going to paris. We will be back with more on this cyber monday. David welcome back. We are less than 30 minutes from the opening bell. Im david westin. Stephanie i is stephanie ruhle. Guess susan the house . It is erik schatzker. Erik the ceo of them be advisors is here milton. He ran mutual funds at oppenheimer and was a partner of the hedge fund pioneer. Good to have you with us. Before we get to the conversation, how about a little news with vonnie quinn . Vonnie World Leaders are trying to get on the same page about Global Warming. About 150 other countries are in paris for a climate conference. Any deal should include eight for them. That idea was backed by the president of china. Conditions in his countrys capital show the need for change. The pollution alert is up in beijing. A reading of a poisonous substance in the citys eric is five times higher than a safe level. The turkish leader says his company will not apologize for downing the russian warplanes y. The body of the pilot was sent to russia. The body died when turkey shot down the russian plane. Thepope visited a mosque in wartorn capital of Central African republic. Religious violence has excavated since muslim rebels took over the countrys years ago. You can get these stories and more toy for hours a day at the new bloomberg. Com. From the news desk, i am vonnie quinn. Matt kicking off with microsoft. You can see the stock is up more than 1 in the premarket after Raymond James moved into to a strong buy from a market five. It is up to full spots because that Raymond James thinks it is going to win against all of its competitors. Let us move on to lululemon. Underperformed that fdr. It lowered the price type target to 42 from 55. They are saying there much higher Clearance Levels and had been expected. There was also a shift to making lululemon womens products into mens products and that will be difficult as well as well as difficult internationalization. At barclays, they say the current valuation is too compelling to ignore. They continue to raise their outlook to 1. 77 billion in revenue for this year. That is a big boost by barclays. Finally, if you look at my bloomberg here, ive got one interesting from gadfly this morning. That is for ari. Valuations that this is far too compelling to ignore, but i think it means it may slightly different way. For our readers training at 28 times forward earnings. That makes it more than double any of its luxury competitors like bmw or mercedes. A bigger valuation the product or ms or any Luxury Companies that Sergio Marchionne wants to be compared to could i did i. Ay. Id it in red by the w erik is that candy apple red . Matt they have an italian name for the red. Matt, thank you. It is time for the five stories that matter to markets now. Milton, this is where we will begin. Where did all the treasuries go . This is a question that you and others may be asking before long. The issuance of notes and bonds is going to tumble by 26 in 2016 to the lowest level in eight years. Here is why. On the one hand, there is a striking budget deficits of the government to not have to issue bonds to finance the money it does not have. And the treasury is issuing more tbills since investors like banks want to hold ultra safe shortterm liquidity requirements. Heres what i would like to know. Im looking at this picture and think to myself wow, janet yellen is getting some cover from of all people the treasury department. She is looking toward december 16 and the decision to raise Interest Rate. The shrink of treasury debt should put a limit on the deals. Milton when the fed was first put together, it was a private Company Owned by the commercial banks. Over the last decade, it has now become part of the treasury. Its no longer the commercial banks books. The fact that the government is going to stop borrowing and a short term is very good for the short term since it will provide lower rates. In the long term, it is terrible. Negative. Y, very. Of otherhink organizations that did it in the 20072008 timeframe and it did not do well. Stephanie german counterparts reached a nineyear hard. Do their german counterparts and reached and then your hive. Nineyearis the most since 2006 on a closing basis. Notes have climbed 22 basis points and the biggest monthly gain since december 2009. Ready . You were overwhelmed and confused by too many numbers in history. Guess what . We have the guy who can break this now better than anybody. What does this mean . Milton the fed does not lead. The fed always follows. For the fedeasier because they look at what the market is doing and then follows it by raising rates. There is no real market because the fed has really monopolized the shortterm market. Farm yields are going down and our yields are going flat and growing slightly. Milton if we could bring the spread chart back up again and look at u. S. Twoyear versus the german twoyear, if you are able to isolate out the currency risk, it has been a great trade . Erik go along germany and short treasuries could how much of the future is priced into this . We know the fed is raising shortterm Interest Rates and we know that the germans, or at least the europeans were accurately, are going to do quantitative easing more than they have already did most of that is reflected in the spread. Milton i think it is entirely likely that shortterm rates the United States will be rising. I do not think the rates in europe can go much lower. We are going to be tightening rather than easing. Done thehe easing has rates in the market. We areber 3 expected here from the imf later n willon whether the yua join a basket of currencies. Inwill be a major move beijing. But fears of a slowdown in china, the timing is critical. Imf is at risk to be bending over backwards to china. Fromng at it historically, the wto trying to bring an end, is this part of a larger trend of bringing china into the full of International Economics . Milton china was a back order country a few years ago. It is unheard of in the history of the world to theyre going from a nondeveloped country to a developed country. The currency deserves to be recognized. I think its inevitable that it happens. David should it put some constraints on china and what it does with the yuan . Be careful what you wish for. Milton the fact is that they are a World Economy can affect economies that the world. They deserve to have a currency recognize. Its really simple. Its whats going to happen. Stephanie corporate defaults in emerging economies have hit a high as 2009 and are up 40 from last year. S p says emergingmarket companies are defaulting more than their u. S. Peers. That is not a surprise. There are some signs that tensions with lenders are grown too awful. The institute of International Fil finance says there is debt for next year. Are these companies busting us to carry that the . When emerging economies are suffering, their carpets are doing worse. Higherye y the ild, but how about things really . Milton you have to look at the underlying cause of this. The fact that Central Banks that the world allowed companies to raise debt. Companies to borrow money. This is a canary in the coal mine. Emerging economies show defaults in the corporate markets. It will carry over to the United States inevitably because we over pa borrow. Some of these companies would be better if they do not borrow and dollars. Alton pundits believe that weaker dollar would happen a couple years ago and has not happened. Erik he is number five goodbye, bill gross. Pimcos fund is reeling from grosss departure, the new chief Investment Officer is killing it. He is doing it in a quieter way. The income fund is up 3. 6 year to date. Its up 9 over five years. That is better than 99 of his peers. Inis because of his fund october had a first month of net close in more than two years. It is amazing how important reputation is an tradition. Dan is not the named bill gross. Bill carries a lot of weight. David he is not a brand. Bill gross is a brand. Erik should timko try to turn him into the next bill gross . Milton in mutual funds and hedge funds, is a manager that counts not the strategy that counts. If it is outperforming 99 of its competitors, it is managed well. You have to hand it to the manager. Erik something is working. We will continue our conversation with milton berg. Those are the five stories that matter to markets now. Stephanie send us your suggestions for mr. Berg. Or ann send us a tweet instant bloomberg on your terminal. This man knows a lot. This is the one day you do not have to pay for research. You can actually asking questions life. , what is moving up and down and free market trading. Stay with us. Vonnie welcome back to bloomberg. I am vonnie quinn. A pair of beer brands could be sold to the rolled biggest brew. Sab miller will put perrone on the block. This to brands could use the antitrust concerns of regulators. Strong factory in Southern California has turned out its last play. Workers turned out the last plane for kotter. Most of the plant will be closed by the end of the. It employed 2200 people. And can the supercomputer that one jeopardy for the Business Trends . A 14 watson forecasts rise in sales today on cyber monday. He should know. That is the latest Bloomberg Business flash. Matt take a look at futures up across the board. S p many contracts up 2. 5 points. It is up from where they were an hour ago. Dow jones many contracts up about 25 points are now. We are looking at games there. As welle games and oil for today. Oil is said to have its worst month since july. You can see west texas intermediate crude right now is 42. 34 a barrel. Inis still down 10 november. This will be the fourth month in a row that oil averages under 50 a barrel. Take a look at currencies. I think the story of the morning as we all get ready for Mario Draghis whatever it takes on thursday and the chances that the fed raises rates are set at 76 on a. You will see more money moving into dollars and out of the euro. The bank of england saying that it is comfortable with Interest Rates at the low level that they are right now. The pound slipped below 1. 50. 1. 5028. W we are at cyber monday in. Full swing. Next with thehere companys strategy this season. Stephanie welcome back. Youre watching bloomberg. More than 121 Million People are expected to shop online on cyber monday are to the National Retail federation. Joining us now is the ceo and cofounder of wayfarer. All 121 Million People will be shopping on wayfarer today. Niraj thats our goal. Stephanie how big is cyber monday . Put it in context of the rest of the year. Niraj cyber monday historically has been our biggest day of the. Black friday is a big day and it really stood out this year. It takes a lot more sure. Cyber monday has always been our biggest day and i expect the share will be as well. Stephanie taking share from whom . We talked to the Senior Vice President of merchandising from amazon and it seems like amazon dominates every category they are in. Niraj i think amazon is the leading online retailer. Look across the major categories of general merchandise, they are the leader. We focus on the home. Housewares, homeimprovement we are the leader there. Its a very specific spot 12 of total retail. Vast majority of the over other 80 is amazon the big winner. David how they can you growth . . Niraj at home and brickandmortar, it is super fragmented. You have home depot and lowes and walmart and target could you have regional furniture stores. You boutique independent shops. That share shifts online. You have seen this acceleration of the shift toward online. What is happening is that it comes up for grabs because the brickandmortar shops are not keeping that share by march. He saw a Third Quarter last quarter when we did 600 Million Dollars in sales and our direct business grew 91 . We are taking that share. Stephanie how much of an advantage do you have . I was at Restoration Hardware and has so much real estate and some of the most extensive places. You do not have to spend that kind of money. Niraj we are far better off putting that investment backing in a huge selection of affordable goods and providing the delivery and logistics with Free Shipping to the customer rather than putting it into brickandmortar costs. David your business is up. Niraj significantly. David there are some people out there who have questions. Stephanies that down with Whitney Tilson recently. Yet heard his name before. You have heard his name before. He raise questions about your products from china. I want to get your response to it. They have to do two things. It had to immediately suspend sales of composite what products, mostly furniture, practically from china. The have to Start Testing those products like i did. They have to test hundreds if not thousands of products. Ive only tested three so far, but testing is ongoing. Secondly, they need to hire a chief Compliance Officer and need to establish a rigorous and yes expensive testing and Compliance Program like home depot or lowes does. David the floor is yours. Niraj theres no question that he is very bearish on our business. He is openly shorted and tried to drive the stock down. If you look at his shorts at google, netflix, and tesla, these are companies that are disruptive and doing things in a nontraditional way. The comparisons to the traditional model do not uphold where they sit. We have a huge commitment to customer safety and product safety. We have done a good job at that. Think mr. Tilson is trying to find anything he can hang it his coat on. Erik can we adjust the two specific points you raised . The one that you should test your products independently and the second that you should have a chief Compliance Officer. Again, i do not think mr. Tilson is focused on consumer safety per se. I think he is focused on the stock price and tried to get down below where he posted the shorted if you look at the safety standpoint, we do far more than retailers generally do. We work with 7000 suppliers who in turn are the experts at sourcing products. They are the ones who are the big suppliers to walmart and lowes and target and macys. We are not directly sourcing out of the chinese factories where you run a much higher risk, which is where a lot of retailers due to cut their costs. We actually work with these folks were u. S. Suppliers. I think we are in a good position. Stephanie we have to let you get back to work. Sha. H. You will be back with bloomberg. David welcome back to bloomberg. We are joined by milton berg. Talk about your Investment Strategy and i will start by asking about commodities to it is clear that that we are in a bear market. What are you investors thinking about . Year olde had a 12 market that ended in 2011. Weve not had a bear market and commodities that lasted less than 13 years going back to 1800. And five years to think that is absolutely ridiculous. I measured the 10 year rate of change in commodities and found changes arerket above 10 and we peaked at about 12 . With a 10 year average annual rate of change was 3 . We are currently plus 3 . The matter how you look at commodities, theres no reason to believe that the longterm bear market is nearing end it all. Erik over time, commodities will go get lower. They may rally. Milton its my job to get my clients in before the rallies. Longterm basis, do not worry about missing the next bull market at this point. David you want to take us to the bloomberg . Matt he mentioned this index continuous commodity index. Because back to 1995. It goes back to 1995. 2004 levels. Ack to milton i checked commodities at an replacement adjusted basis. Inflationadjusted basis. Another third to go, which means another 25 on the downside. David how much of this is generated by oversupply . Milton is been generated by Central Banks. Central banks have been lowering rates because they thought it would create inflation. Lowering the rates allows producers to produce and borrow on copper and zinc and 10 and so on. Stephanie it does not get demand up . Milton it does not compensate for the supply it decreases. It deflates the longterm inflation and 2011. When gold top, many great Hedge Fund Managers were into gold. They cannot understand how old could go down goal to go down when the fed is easy. Ing. Same thing with the oil commodities. Marginal producers were able to produce because they were able to borrow. Stephanie we need to talk equities. You believe we are already in a bear market. Milton if you especially look at the picture, the bear market began early on this year. Made a newdex that high worldwide in october and november was the mdx. The s p made its peak in may. The dax made its peak in april. The shanghai made its peak in june. The number of new highs in the on500 made its peak may 17. Importantly, if we try to margin that, this is not predicting it as descriptive. Every time a bull market peaks, it t peaks with a high margin debt. In march 2000 . In july 2007was and this is april 2015. This is not predicting we are in a bear market. This is telling you describing where we are are at. They topped in april and may and june and so on. Is this market going to be as severe as previous bear markets . Milton you cannot predict what will cause a bear market. You cannot protect what the dislocations will be. You cannot predict which companies will a corrupted was likely, the risk is in government rather than incorporations. They are balanced generally than they were in 2007. Government Balance Sheets are far worse than they were. Erik when you talk about indices globally, but talking about a bear market, youre talking about u. S. Equities are Global Equities . Milton Global Equities. Erik even though the europeans continued quantitative easing . Easing antitative you have to have faith in quantitative easing. You arent playing during around with the measurement of money, but they are doing nothing but the real economies at all. Erik im not saying im a believer or a disbeliever. The expanse that we had here if it is replicated there, if the money was printed by the central bank, a largely found its way into risk like equities. Milton let me give you an example. If you look at broader indices, it is twice four. Historically, you never had an instance where the market performed well in the next 515 years where the price integration has been this high. At two pointjects 2 annualized return and stocks of the next 10 years. It will not be a smooth 2. 2 rise. There will be sharp declines in short rallies as well. Theres no reason to believe that stocks will do well. You may argue that we will not get the 10 returns and the future, but i think there are many problems that ha are ahead. Erik will we see a market decline . Milton every member market bear market begins with ipos declining. It is now 60 . Looking at the picture dispassionately, it looks like we are in the early stages of the longterm bear market. David what does that say to investors . You do not like investors or commodities. Investors aretail told to always buy stocks because thats always in the longterm. That is not true. If you purchased boxer average prices, it will return 10 on average over a longterm. An averageare not prices. They are at above average prices. If you purchase stock at above average prices, you lose money. Stocks above average pricing, you will not end the 10 parameter. As far as hedge funds and investors who could trade, i think the next trade should be to the downside. Realize that we had an interesting phenomenon this year. You had a major decline in august. It was not a bear market. The market was down 14 on the highest volume in use. Theres something in our business called the one in krakow everyone remembers the of 29 . Crash in march it declined in the biggest day in history. Stephanie they wouldve seen the crack. Milton its a taste of what will happen in this bear market. Stephanie it is the holiday so you need to give us some optimism here. Anything you like, anything ,. Milton i happen to like cash at the moment. , you will beash able to buy these things cheap. Just like cyber monday, if they help cash for the last six months, they can get whatever they want at a cheaper price. If you are an investor, keep your money in cash. You can buy bonds at lower prices. Stephanie in six weeks or six months . Milton i do not try to project the exact timing. I just say went to get in and and nows nott the time. Erik would you trade currencies in the meantime . Milton the clear place to belong is in the dollar. This is at the early stage of a deflationary. Period. Talk ive heard milton about how investors do not know how to value go. I know you do not like it when my charts have axes over the peaks and valleys. At 1061. Ee gold it is the worst month that we have had since april for gold. How much lower does it go . As the fed raises rates, we know that goal does not pay interest. Its between 700 or 800 an ounce. We actually recommend gold stocks today because gold made a new low and silver did not. Cold stocks did not make a new low. They held their august love. We think there is beverage of them. The next shortterm will be on the upside. We look at gold and silver and the moves are between 15 and 25 . We are recommending on a shortterm basis. Matt so gold on the shortterm. Milton look at the gtx. Can you bring that up . Stephanie i love it when we dig into the terminal. Milton this is the senior gold stocks. They did not make a new low along with gold. The stocks held up. These are the divergences you look for when you try to get into a market. We actually recommend the gtx. Matt recommended from milton byrd. Good job, matt. You found something you like. Milton byrd, im glad to say you are with us. Att let us take a look where the markets are. Here are the major indexes right now. Very little change on the s p and the dow jones. The little change in nasdaq. Let us call it unchanged across the board. If we look at the s p and i will use the imap function to see what stocks are moving up or industries are moving up or down, we have an even split here. Health care, Consumer Discretionary are moving down. Its interesting after black friday and on cyber monday. The gainers are energy and i. T. And utilities and materials. That is also interesting as the dollar gains a lot of strength. You see those winners and losers. Take a look to the big retail names. There is not a lot of big movement there either. We see a and macys actually coming down. Macys is now down a full percent now. Best buy is moving up. You have a couple of analyst over the last week or two that have said best buy is undervalued and that this is a stock to get in on. You have seen that on the morning meeting twice in the last week or take a look at amazon. We heard from the National Retail federation that more people are shopping online been brickandMortar Stores. Amazon putting up a little bit of a gain. Finally a stock that i followed closely ford because im looking at the auto industry. A lot of news out today as executives are on Conference Calls with investors talking about the deal with the uaw. Paid will go wages up 1. 5 percent. They will have to take a 600 million charge to deal with getting that on track through. You can see the ford stock falling 2 10 of 1 right now at 14 50. Let us go to Abigail Doolittle who has the latest on lululemon. Abigail lululemon shares are dropping significantly after fdr cut its rating from underperform to market perform. Susan anderson says that Gross Margins are likely to weaken for a number of reasons including inventories. They showed significantly higher clearance values then online. This suggests the stock to drop 20 from fridays close. Considering the stock has a 29 short interest, there are probably some investors out there today who are pleased with this call. Stephanie thank you so much. Abigail doolittle joining us from the nasdaq. I have to talk to you about a stock that we have been following could shares of that weked her to have been following today. Shares of Aberdeen Asset management have fallen 19 billion in their fun for the fiscal fourth quarter. On a conference call, the ceo said that 2016 could be difficult if oil stays at such low prices. We spoke with martin just a couple weeks ago and he addressed the ongoing redemption. He made it clear that his company was not for sale. Take a look. It is been a tough two years. We have seen outflows from the funds in the last two years. We have seen them selling bigtime equities. It has been too tough years for aberdeen. Slight change in sentiment. We are seeing quite a bit of interest from u. S. Institutions in emerging markets now, which is the first that we have seen for two years. Stephanie i want to point out that while the stock is down today, if he remembered on martin was with us, he was backing his company and his shares were up 2 that money. That means martin needs to join us again. We need to take a quick commercial break. Do not forget that milton byrd is with us. Send what you want to know for this guy. It is a very rare treat to have them on set. Funds up next, can hedge bounce back after this very junkie year . We will ask if Money Managers are to blame. Around, youre watching a monday morning edition of bloomberg. Vonnie what him back to bloomberg. I vonnie quinn. A historic decision is expected by the International Monetary fund. The board is likely to approve benas request that the yuan considered a reserve currency. The staff has recommended that used to balance payment needs. Recorders are making sales, but are trying to grab market share from one another. Automakers spend 6 more on incentives this month compared to last year. More than ever, Holiday Shoppers would rather be online than in line. A trade group says this years instore sales on thanks giving and black friday fell 10 . Adobe show that Internet Sales were 14 higher than last you. That is our latest Bloomberg Business flash. Erik it is time for the value proposition. This is where we try to stick a little controversy by asking what we hope are provocative questions. Today, since our guest host works with a of super successful Hedge Fund Managers, but also Hedge Fund Managers have had a tough run on balance, losing 3 or fivehe past years. What would you rather own for the next five years hf rx , the average return of all hedge funds, or the s p 500 . Milton if you are bearish on the s p 500, you will want to own hedge funds. You have to understand. In a down market, they dont make money. Built on there premise that you can reduce risk and increase returns, which does not work that way. All the great Hedge Fund Managers i work with that have had great performance for 30 years, they did by taking big bets, not by hedging and being a friend to take a bet. By having a big short bet and a long bet rather than a couple decisions here and there. They will outperform in the market goes down and underperform when the market goes up an. Stephanie doesnt the lousy performance this year prove the point that all they have been in the last five years is momentum players . The market went in one direction and they are long. Milton there are managers that are exceptional. There are a handful of managers that are exceptional. These are the guys you want investing. The problem is they dont take your money anymore. That is the problem. Class, hedge funds will have mediocre returns that cannot change. They made a bet in 2008 with Protege Partners that the s p would outperform over the next 10 years. That is an obvious simple bet because it was bullish on the market. Hedge funds will definitely underperform. The best hedge fund in history was run by party made off. Bernie madoff. A good friend of mine who is smarter than i will ever be says there are five reasons that if hedge funds outperform why they will outperform. One is luck. Estimatingr bes the risk at taking could 3 fraud. Number four, cheating. Number five, they are better than the average. Milton in any profession, there will be a handful of people who are geniuses. Those are the guys you want investing. Michael steiner gave hedge funds a big name. He is a genius. Everyone puts the title of the hedge fund on in his investment portfolio. Stephanie then who is to blame . People who put a shingle outside of your door or professional investors and endowments who have given money to these . Milton special allocators of the one to blame because they dont understand the markets. Stephanie they understand how to do the hedge fund boondoggle. Milton i blame the allocators. Erik of the next 10 people to start hedge funds, how many will truly go . Milton you want to avoid people who come out of Brokerage Firms. People who are Brokerage Firms and leave to start a hedge fund, while they are the firm, they had order flow information and insight information that they could only get once they put out their own shingles. You want to get someone who works for a Mutual Fund Company with Market Analysis and stock analysis. He starts going on his own and works hard to make money for the client. If you start out with goldman sachs, it generally doesnt work. There are exceptions. Generally, thats not the case. Stephanie i know you do not want to say any names, but if there is one strategy Going Forward that you think will be the winner, what will it be . Milton flexibility. Stephanie that some flex style drift. Milton you want to go where the money is made. Ive seen many managers in one year make money in the bond market and another year make money in gold. The next year they make money in real estate stocks. Stephanie how can anyone person have that many good ideas and be that adaptable . Can you beusly, how that skilled and nimble . Milton 2 manager fees go to hire the best analysts. Thats what they should do. Stephanie thats why love you. I love when you come on, milton berg. Erik that was terrific. Milton berg is with us for a few more minutes. Right now, a look at todays highlights on the show on bloomberg. David welcome back. Now for todays top moments in todays as heard. Leader ina technology. We will continue to be a leader in technology. I think the architecture of that Technology Future is something that franchises are truly excited about. Fasterfocus is about delivery, increasing selection, and lowering prices for customers for customers keep coming back in joining our prime program, which is successful. Handlingus on retailers. Traditional brickandmortar will see a person of the goods returned. Online will see up to 15 return. If youre looking at fashion, it is even higher. Fashion will get 30 or 40 more returns. On the other hand, there are returns and better conditions. Andcap a lot more in stock you can be more efficient and stocking the. If you held in cash for the last six months, they can buy at a much cheaper price. If you are an investor, keep your money in cash and buy gold at low prices and stock at low prices and buy bonds at low prices. Stephanie do you mean like six weeks or six months . Milton i do not try to project the exact timing. I tried to say went to get in and went to get out. Stephanie earlier we were talking about the 19 billion closed from avenue. It is really pulled out of emerging markets. They are pulling money from emerging markets funds, with aberdeen being one of the largest out there. As a trend that i love that milton mentioned. It is styled her. What is your final thought of the day . Milton i think governments and consumers and people should not borrow if they cant borrow coul th. The problems we have been having will be causing problems in the future. Stephanie that does it for us. We will see you tomorrow on bloomberg. Betty it is 10 00 in new york and 11 00 p. M. In hong kong. Welcome to bloomberg markets. Betty from bloomberg world headquarters, good morning. Im betty liu and here is what we are watching at this hour. Its a big week for the economy. The ecb likely to lower Interest Rates with the jobs report on friday. It may lead the fed to raise next month. Opec will decide whether to let Oil Prices Keep sinking. Plus, it is bonus bonanza on wall street. Particularly at jpmorgan. While other banks are cutting their bonus pools, jpmorgan says as 2014. E the same clerks are growing faster than bricks. The Online Shopping boom is expected to continue on cyber monday. Getting all of your shopping in early perhaps. Thee a half an hour into trading session. We have also got breaking on