Transcripts For BLOOMBERG In The Loop With Betty Liu 20141208

Now urging investors to be cautious. Merkel agreed to by an antibiotic maker for a . 4 billion in cash. Take your cash elsewhere and go, or pay a fee. The wall street journal says jpmorgan, citigroup, and others, the new regulations make certain types of deposits impossible. Among the clients that are infected, hedge Fund Companies and smaller banks. Fate thisl learn its week in that record 17 million team. Former colleagues could get up to 20 years in jail. Of cambridgeuchess are in town. Arriving yesterday for a threeday visit. A basketball game. Has towilliam also washington today to meet with president obama. In the meantime, mcdonalds as well. 2. 2 percent. A decline of 1. 7 , so this is worse than it that it here at Olivia Sterns is at the breaking news desk with more. , orheir breadandbutter should i say their bun and big mac. A decline of 1. 9 . In europe, the numbers are also worse than expectations. Mcdonalds also saying it thinks , thaturthquarter results will wipe away between seven and. 10 of earnings overall global sales falling more than estimated at mcdonalds, more than 2. 2 . In the broader trend, mcdonalds has been struggling against casual read shots such as chipotle. They are rolling out the spice lattes, but so far, it looks like it is not doing the check. Apparently, it is not, although i like there Pumpkin Spice coffees. All right. We will go through more of those numbers. A 37 premiume, to queue this. For more on the news, we are joined by Bloomberg News managing editor jeff mccracken. Of course we end the year with another egg farm a deal. Exactly. It is interesting. This falls into the Infectious Diseases category. This push to be looking into, there are these you need newnow drugs to combat the virus is in the bacteria. That is right. Explain more about how it fits into the strategy. Merck has its way as well with a tried to affect these diseases. Hewitt plugs right into that. Q this was one of the companies we had talked about for a long time. Has it on the lookout for people have anticipated it as well. They had very much been in the realm of companies on the list. Thank you. Another big deal and merck is at it again. Last 10, congress is facing a thursday deadline to finalize a spending bill and avoid another Government Shutdown like we had last year. It looks like cooler heads will a done but it is not deal. Peter cook is with the latest. I will explain the key role they play in all of this, but thursday is the deadline to get the spending done. Lawmakers head for home. The department of Homeland Security getting special treatment here, only getting funding into early 2015. That is part of the punishment for president obama for immigration executive action. Do not know is what other goodies might be inside the legislation that democrats might object to. We already know there are about 70 of the policy riders on the table. Here are some of the riders to watch today to see if they make the final cut. Preventing the official Wildlife Service from putting the on the endangered list. Barring the department of transportation from imposing trucker rules right away. Nancy pelosi warning on friday that she and her fellow democrats will not be able to support it. It is important that the republicans not be frivolous once again about shutting down the government. But they know in order to have a bill passed, you have to have all the votes. If they want ours, we cannot support what they are doing on the bill. Nancy losey has more leverage on the fight and she usually does. Number of House Republicans will not vote for the bill because they do not think it is tough enough responding to the president S Immigration action. They want this bill specifically to block the effort here in the end, that did not happen. Democrats would get it over the finish line. Coming up, we speak with republican tom cole. This hour,shaking billionaire warren buffett. He is the second richest person in the world. Berkshire is up 27 this year. He has dropped from being the worlds richest man. There are 17 shopping days left until christmas. Is the Holiday Shopping season shaping up so far . Blackrock ceo larry think said the numbers may not be telling the full story. More on us now with what was said about the american consumer. I wanted to give everybody a taste of how larry looked at the economy and the markets. If you want to know what is he passed it to the eyes of the consumer. Does the consumer believe he can afford to start consuming . Does his own checks, talks to retail ceos, and heres what he said. From all the conversation i with ceos about believe this is entirely wrong, just that data. Traffic was marginally better, not a half of a percent lower. You say the consumer is stronger than the data suggests. Were witnessing oil because of technology. It is transforming because of behavior. We do not need to rush and go out thursday or friday of a buy things cheaply. We can buy things cheaply every day. Know that the internet is becoming bigger and bigger. Technology is changing human behavior. Were using past traditions to judge or make projections about current behavior. We are wrong, totally wrong. Anecdote aboutin a colleague of his from blackrock. He did all of his christmas using wifi the airplane. Wifi on the airplane, we will talk about that. You have been paying attention. What you think not just on the consumer or retail, but how that affects his views on the market . Upside. Is bond yields still at 2. 5 for the 10 year treasury. Think the, i probability is slightly higher than 15 and we will have bond yields there, but the equity returns will start moderating. 20 risk that gdp will grow faster than he expects because the consumer will start feeling as though he can consume, and in that scenario, to 3 . Uld be 2. 5 equity returns would be greater. We look forward to that interview. Much more ahead, thinking about shopping. The only thing being sold, we will be back. Shopping. Congress is scrambling to finalize a spending bill before the thursday deadline or reach a repeat of last years his Government Shutdown. Leaders are added to unveil the legislators today and conservative republican opposition, that democrats come is the one wildcard that could stand in the way. Extending the hand of friendship once again to the speaker to say we are getting ready to cooperate, there are some of those things we cannot 218 votes, there is no conversation. If she doesnt, we have leverage over those riders. Pelosi. Is nancy is republican tom cole who sits on the house and budget committee. Do you think ted cruz, who we are talking about, the face of the opposition, will be able to succeed . , no, it is in on this bill much different. There is quite a bit of change on a yeartoyear basis as opposed to a continuing resolution. Supportll be bipartisan for this and bipartisan opposition. Some democrats are concerned about some of the authorization or funding for syrian off ration operations. Goals, youthe budget know, they would prefer to spend less. Quiet bipartisan. The democrats control the United States senate. We still have to get this through a senate. You believe you will need democrats in order to get the spending bill through . I do not think we need them. A lot of them will vote for it because they would rather vote for parts of the bill. This is a compromise arrived at with democratic senate. Democratic concerns at the table. Startmocratic president has to sign it. But at the end of the day, i believed this would be bipartisan. I think we get the 218 votes, but that would not get your president ial signature. How many republicans will oppose this . I would not consider them to sessions. It is not exclusively a republican bill. We would probably be able to get to almost everyone you needed. Since democrats have at least half the leverage, nearly two thirds, we will not be able to get every objective we would like to achieve. Is it will be bipartisan. Ok. But how many do you think will oppose the bill . Less i do not know. The bill not has not been seen by the members. At the end of the day, there will be ample votes there from both sides of the aisle. Not quite the drama one might expect. Will meet the deadline on thursday to pass the bill. I am confident we will by thursday. There is a time you need to give to to look at the some look at something this massive. But we will be out of here by thursday the 11th. What if by chance, this does not get past. What does that mean for john boehner and the Republican Leadership . H amend this embarrassment for all concerned, democrats and republicans. This has to be signed by a democratic president. Play aas if they do not role in the process, bringing votes to the table in reaching a final agreement, it is simply not correct. From both houses to both sides of the aisle, we could not get it done and because of that, we will get it done. All of this lastminute, we have to have leverage to get these votes. Really . Democratic senators to bargain with. That is most of the leverage we need. Jobs report came out on friday and it was stellar. Isre saying, this blockbuster and ive never been so excited to see this jobs report. Then you get statements from the Republican Leadership continuing anday it is not good enough the economy is not growing enough along, but the more the republicans criticize a jobs report or a jobs from as do they start to look like the grinch . Has been the slowest recovery in modern american history. It has taken a long time. You are right we have 10 terrific months here. That is good news. You have to give most of the credit to the American People and not to the government. The reality is, this has not exactly been an administration that is friends with the oil and gas industry, though they take a lot of credit for what people in the private sector have done. Infrastructure, i think we have an opportunity early in the next congress to do a lot more in that area. Things, but the Housing Market is not back where you would like it to be. Better, but not bad. You need to give the American People and the American Private sector credit, not the government. We will leave it there. Thank you for joining us this morning. Much more ahead, another dubious milestone for oil. A fiveyear low again. That may make this ceo the biggest loser. You are watching in the loop live on Bloomberg Television. I am betty liu. Hackers working through the highspeed network began leaking data to the sony internet. A Hacking Group linked to north korea is expected. In terms of numbers of cities, and the ofs largest market outside the United States. At cvs blackout on dish network, that did not last long. A multiyear deal hours after programming was pulled from the Satellite Network friday night. They also agreed to end the after this feature allows viewers to skip commercials. In timein time for the footballe this weekend. Bloomberg television is on the markets. Olivia sterns has more. Futures are in focus this morning. The price of Oil Continues to plunge. Trading at a fiveyear low right now after a decision last month to maintain the outlook despite growing supplies. To cut theiranks price forecast. A look at how you may be able to make money. Lets start with you. How low can we go. Cuthe decision not to supply and market share and now. The new story is just accelerating at this point. We are seeing shortterm speculators trading against longterm speculators as crude oil is down so much from its high. Ook at the inflows it is a sign to us that longerterm traders are looking to buy and hold down here versus shortterm speculators in the market. A lot of questions about the motivations and whether theyre trying put the shale producers out of business. Do you have a sense of when supply will be . Geek . Peak . Is difficult side to determine. If we look at the futures curve, we are right now seeing oversupply. We look at the relationship and right now, business as usual. All right. I want to bring you in here. With all that in mind, how would you trade oil right now . No technical basis right now. We are in no mans land. The market is really trading more on fear than anything else. What i am looking for is. Hortterm trade based on the market moving two or three percent, we want to sell at 6790. Not is short term and it is based on technicals were fundamentals. It is almost like the perfect this correctly. 6375 downside and 6590 to the upside. About two dollars and . 15 of a aboutich fits right in that 3 range of where it is trading in. A profit of two dollars 15 cents, if you have your calculator out. Scotland actually make a profit of more than 2100 at 2150 per contract. Have got you, do you have a longerterm view on oil . I really would get into the marketplace, when we see the bottom fall out, about 60 per barrel, that is when you will see capitulation here. The guest just said you are seeing all these inflows, meaning longerterm players are buying up and we are really looking at that. To get in below 60 year and that is where i hold for quite a time. Thank you so much. We will leave it there. Againl be on the markets in 30 minutes. Betty, back to you. Lets thank you. The price of oil is weighing heavily on the highestpaid oil executive. He has lost well over 100 million. It is now fallen by nearly a half. It is become one of the worst performers on the s p peer the stock is down as much as 67 during the last five months. Here with me now to take a closer look at the compensation numbers is laura. Still worth a lot of money. He is. Almost 6 million and 21 million of that is cash, which is pretty high. Might want to hold cash the way the oil is going. The compensation has fallen, what other pressures . The analysts they have been a landg to says that Drilling Company in the u. S. , they face a lot of pressure. The decline in a price of oil has a major effect on the stock price. Pace fell by about 46 million. , chevron, allxon those ceos is combined, they only fell 24 million. Sincelly took a big hit the summer. Why is that . A lot of the pay is in stocks. He also has about 42 million in equity. Immediate ands some of that is overtime. You could value the potential pay to receive. Tying pay to performance . You dont perform, with correctly think so. It is interesting because weve never passed on it since we started in 2009. Never liked it. They getat the way paid, for ending unemployment degroot up employment agreement. Anyone close to 4 million just for changing the employment agreement. You can see where shareholders might get riled up about that. Thank you so much. Joining us from bloomberg. Much more, blog bloomberg inw economist and weighs on the debate over consumption. Concerns about china, why they are way overblown. Plus, wifi on an airplane. Bringompany is working to the internet to the friendly skies and they have an amazing announcement coming up. Stay in the loop. Were watching Global Leader of entertainment, just announcing a new partnership is to provide Digital Content and wifi on board planes. Joining us exclusively is the ceo of global entertainment. Great to see this Morning Bright and early in l. A. Legal puts wifi on airplanes internationally. Do big question is, why airplanes not already have wifi . Why are they not already retro theirthere. Wrath aircrafts . You have to look at this globally. Most airlines people fly in today have some form of wifi on , or byprovided by us other competitors. If you look globally, this is a brandnew Technology Starting to spread. We estimate the total global to receive inflight wifi, only between five and 10 of the market is penetrated today. This is brandnew and it is just getting rolling. Tell me about this deal. Why just a trial run at this moment . Exciting deal for a couple of reasons. One is because it is air france, a major global carrier. But equally so because it is a partnership with a Major Telecom divider. And we areave a deal working together to provide Internet Connectivity to air france. Things is todo trial. Ith a a number ofd for months and make sure everyone is happy with it and hope lee go to a much wider role on air france. The upfrontause cost is so much that airplanes, air carriers do not just do this automatically . How much does it cost . When you are making modifications to aircrafts, there are safety concerns. Things arefferent done to test the system. Our system is flying on 600 airplanes around the world today. Airlines are basically comes to hear it we are confident this will roll out Going Forward. To justuch does it cost retrofit one airplane, medium bodied . Depends from carrier to carrier. Range 200 prices can to 300,000 but that price range is abroad. Classaction i imagine it could end up being quite a bit of money. Is, we wereestion just with cruise ship ceo and carnival and the caribbean, both of those guys told me, we will to be wifips enabled. Any type of potential between the airlines and the cruise lines industries . That is a great question. Passengers tong be connected everywhere they go is insatiable. This is rolling out everywhere. Cruise lines are a big deal. Media content. If you look at our company, 65 today is providing media content to cruise lines to use on the ships. Partnerships between Companies Like ours and various cruise lines are likely to expand Going Forward. On the cruise lines, you are able to stream video. Netflix or to watch other types of entertainment. Why cant you do that . It is difficult on cruise lines. Remember that what youre doing is basically sharing our stream of yourwith over 100 fellow passengers essentially. Getting that much bandwidth to the aircraft is difficult. It is difficult to stream netflix and that stuff today. Going forward with some of the newer technologies on the it will be possible in a year or two. Getting back to the air france deal, who is really putting the upfront cost on this . Partnership and it orangeaunchy investing. This is a model we would like to work with them and other potential Telecom Providers to roll out not just to air france but other carriers around the world. Dave, thank you for joining us. The ceo of global legal entertainment. Here is a look at other top tech stories on bloomberg radar. The former apple executive has been sentenced to a year in prison. He pleaded guilty. Aosecutors say he gave forecast and other information to apple forecasters. Mark zuckerberg has met with the head of the China Internet regulator according to a Chinese Government website. He met with officials when he was on a recent trip to the u. S. Facebook has been blocked by chinese censors since 2009. The latest hunger games movie topped the box office for the Third Straight weekend. The u. S. On dollars in and will face more competition in the coming weeks, when several , only on the latest bloomberg west. Much more ahead. Alexander a rumored asking price of 35 million. We will hear from one of the leading contemporary art galleries. And they were not the only ones trying to make the sales. We will hear from one of the uber brokers. Chris levitz will be joining us in a moment. International modern art fair attracted people to yard fair this last weekend. The real estate brokers. If you can afford paintings, you can probably afford nice walls to hang them on. Handles luxury homes in miami and new york and is back in new york. I know you still do business here. Absolutely. You have to keep it going in both cities. I know how busy you are. , what it was like. The parties and people and celebrities, it was wild. It was there but not the focal point. The real estate was huge. I did amazing deals. Hotspotwo units, the right now. Place to be. Test right on south each. Separated. Ondo an amazing deal, 5000 square feet for 10 million. Those are hot properties. What are other hotspots millionaires and billionaires are trying to get into . Oneveryone is trying to get beach in south beach. That is the central part of miami. You can go north downtown, but between fifth and street, down that come is desirable, but that is the crux of it right there. Lets how much did you sell . We have 10 million, 3 million, 4 million, about 60 million in miami. On the weekend, i sold an apartment in palm beach. Was four. Week. Busy and successful are you selling them at full price . Absolutely. Everything is at full price. I look at these buildings and at one hotel i know is starting to sell, and others, and theyre all beautiful. What differentiates one from the other . Architect,out the people want the luxury, they want the best of the best area when you look at the beach, there are only a few properties you are at that level area have one hotel close to that, and then you go north week to fr seasons. There are not many options available. It is not. It is not. Nine or 10 Quality Properties and the rest are subpar. There are really not many options. They . Buyer, who are everyone faces around the world, but it is mostly new yorkers, that was really the a draw this week. The properties, they were all you new yorkers. All new yorkers. They are buying different neighborhoods. The biggest people buying high ticket items are new yorkers. Possibility we are heading to a bubble in miami . There is very little product available. This weekend, tell me how you strategized and how you made sure you stood out, aside from being fantastic . Thank you. We had a major presence in the lounge, the only company there,. We are a lifestyle brand, not just selling real estate. A luxury lifestyle. All right great to see you and thank you for stopping by. I love your show. And speaking of, 4. 16 pounds. We will tell you how much that sold for. Plus, uber faces challenges across the world. Now banned in new delhi. That is coming up. Todays number is how much the winning bidder paid for a four pound white truffle. The bidder was to strive described as a food and wine lover. Says famously,se the largest white truffle ever found was 2. 5 pounds. Now you know. The hour, andt Bloomberg Television is on the markets. Equity futures taken down over chinans of growth in slowing down in china. Imports are also contracting. Were on the markets again in 30 minutes. Plus, more ahead. A chief economist weighs in on china and says do not be worried, we should actually be worried about europe. Much more on the wealthy investors who flocked to miami. We got an inside look at the show from an art collector. And starbucks is serving up the new generation of ultra dreamy him high and ruth bruise. Brews. Welcome back. Were 30 minutes away from the opening bell. Futures indicate stocks open lower at the open. The s p and the dow set new marks on friday. Stocks have not been this high in china for the past three years. The First Time Since 2011. The Largest Company soared more than 4 , rising for the 12th straight day. Merck taking aim at the socalled superbug. The drugmaker plans to buy an antibiotic maker 8. 4 billion in cash. Having to fight this drugresistant bacteria. Thanks telling the biggest customers your cash is trash so you need to pay us to keep it. Making some deposits less profitable. Citigroup, and others, free for some customers, and those include hedge funds or insurers and smaller banks. And wells fargo on friday closed with a market cap of more than 285 billion, which beat the record set by citigroup in 2001. Wells fargos largest shareholder. Coming up, we will hear from their ceo at 10 00 a. M. Ease and time. We are under 30 minutes away from the start of trade. Lets count you down with the top 10 headlines. Good to have you. But start with number 10, with warren buffett. First, he was falling a little down the right. Now he is going back up. Berkshire hathaway reaching a record high. Thus proving Value Investing over the longterm pace better than monopoly. That is true. It is getting broken up so we feel very concerned for carlos slim. He has just recently teamed up with uber. He has got a slice of that. We will see. But who will mc bill gates . Do i say, speaking of monopoly . No, i dont. Warren buffett has yet to deploy the tens of liens of dollars on his Balance Sheet here he is doing pretty well so far. Billion, ot 60 number nine, i love this story. Members of the ioc have voted to change the process of selecting hosts, opening the way for a country right countrywide bids. For the 2020 olympics, they have only received two is to host the games. It has gotten way too expensive. This feels sane and smart and measured. When you see what happened, there is never a good story there except for a city that already has infrastructure. Athensa catastrophe for and was about before rio, but fine in london. Right. There will not be a lot replacing. I got a russian tracksuit and now ive are deeply. Awkward. But think about how well the world cup went in brazil. It was put over multiple cities. One thing that worries me is brazil spread itself then. This is what we need to be watching. The futures, as they started to spread the bid to your point, i was way back when in atlanta for the olympic, and he did not do any wanderers wonders. Ok, speaking about prices, we have to move on. Number eight, the internet moniker. I love this story, copycat made almost 100 million. Last two years of products, including bestselling books and a film. That is more than gwyneth paltrow. 100 million. I hope she is investing. This run will not last. Is the rum would pay me 100 million. Question was a waitress before this. She was a waitress. Correction, grumpy the cat was never a waitress. The cat is not in fact grumpy. That is hardhitting news. The other part of this story that is hilarious is there is actually a person who is in internet cap agent who took on grumpy as a client and the career took off. Number seven, more pain at mcdonalds. The company reporting just about an hour ago, global sales down 2. 2 is much worse than estimated. It has been tough for mcdonalds and the ceo. And i know youre an x or. I see you flipping burgers and making fries. Aaa. Cannot compete with theyre trying to do everything but they have not come up with a big hit like taco bells doritos logo tacos. They do not seem to be grappling with the change their actually dealing with here they are talking about maybe making production more efficient and increasing marketing costs. That will not do it. They are selling the wrong thing. It is hard for the company to recognize a problem that fundamental. Make the wrong name that not want to you anymore. Amazing to see in the last 30 years, fast food is a bad word right now. Fast casual, it is unicorns and rainbows. And not grumpy cat spirit and number six, uber is in the headlines again. This is after a government ban its services because of a case a couple of years ago. A passenger accused and uber driver of rate. Uber ceo responded saying what happened over the weekend in new delhi is horrific. We will do everything we can to bring the perpetrator to justice. He have to say that. This is a tragic sense there it i have never been a big fan of uber or , but the whole thing smells that. Click to close down the service. He also said they are blacklisted from all future operations. As bad as the act is, it feels a little like taking it neatly advantage of a monopoly. The driver in question had already been accused of rape for a couple of years ago, not through uber. So maybe there was something wrong with bloombergs brown checks. But this was a city where there was a gang rape on a public bus years ago. Ubers issue. Right. This is a tragic circumstance in india as well. They actually do background checks, which is a lot more than what other service is in india do. Much more ahead here in our countdown to the opening bell continues with a deep dive into starbucks. Is the company in danger of becoming the mcdonalds of coffee . A look at starbuckss new strategy is next. We continue to countdown to the opening bell. About halfway through. Number five. T it is starbucks. Coffee lovers is reserve the first ever, serving up a new generation of ultra premium highend brews. That store is the first of 100 highend cafes to open globally in the next five years. It is not cheap. Six dollars and . 50. Now is the with this technomic Vice President and global food and beverage trend watcher. Also a trendsetter. Starbucks is trying to establish. His trend this is more of a branding effort rather than something that will drive a lot of incremental sales. Really establish, especially with this right now, the 16,000 square foot tasting room, establish a flagship store, where they can educate consumers and showcase what they are able to do with higher and coffee brews. Yes. As i was reading it in our bloomberg story, a great quote from one of the smaller competitors, these coffee chains, they said, starbucks is like the mcdonalds of coffee. That is a bad phrase. What they are looting to is starbucks is the 800 pound gorilla of the coffeeshop category, of the coffeehouse category. Youlisten, i think when look at starbucks, they consider the local coffee shops and local coffeehouses to be viable competition. To some degree, the rollout and the expansion of this is sort of their way of competing with a lot of the local coffeehouses in a way that traditional starbucks perhaps does not right now. You have got a lot of starbucks on almost every corner. Local coffee aficionados go to a lot of local places. This is starbuckss attempt to woo back some of the consumers. Right, but that is not a big market. It is a lot of money to pour into a market that is quite small. Yes, listen, you know, in industry where growth, whatever you think of the economic recovery, starbucks, if it was still growing above average, you have to look forward to how you will differentiate your brand. This is a great move by them to preemptively move into the higher end. They have had this ran for a couple of years now. It is just a way to continue to rebrand and reelevate and reeducate your customer about how great starbucks is and how much they know about coffee. How about starbucks actually figure out how to improve their Customer Service . Areow there buries this high energy and they do a lot of training and yes, the coffee is good, but every time i walk in, the line is like a milelong. Why not improve the Customer Experience that way . Way. Think that is a great starbucks has almost 200 items on their menu now. When you talk about the number of beverages and sandwiches and scones and smoothies, it makes for a longer areas. Is a second track in terms of their strategy. They talked about different Payment Options to get it going. I look at this more as the next generation of branding for them. One track is to improve the experience in their current stores, and this elevates their rant and positions them for the next 10 years. Time, you have got mcdonalds and Dunkin Donuts and others going more upscale with their coffee. How much has they eaten away from the starbucks market share . Lissa, the breakfast part right now is very competitive. ,aco bell entering the market mcdonalds, and the ones you mentioned. Holds a premium position and it does very well with millenials. They view millenials to some degree as the future of the brand, about 40 of their visits are from people under fort under 34 years old. They do a much better job with those consumers relative to mcdonalds or more traditional fast food lovers. As they continue to brand themselves, this type of tasting house they are establishing really appeals to the millenials and younger consumers and continues to build a bridge for them. All right, david. The Vice President joining us on starbucks. Much more ahead, why banks are telling customers no thanks, goodbye, when it comes to cash deposits. And oil plunges. What is really happening in italy. Plenty of questions for jim oneill. Welcome back. Olivia sterns and rendon joined me this morning. Ok. Lets continue with number four. Another m a from the big pharma world. Tocking up on antibiotics the stock up over 30 right now. New antibiotics are being used to help drugresistant bacteria. Antibiotics are germs and winning the war against them, you are trying to essentially develop the drugs just to sit on a shelf. We have an arsenal of resistance. I particularly like this company. Where do you think they discover , maintural material drugs . In turkey, where noahs ark is said to have come, this is an antibiotic company doing and natural exploration. Sending down thousands of feet into underwater case. Of the things were watching is big pharma not spending money on its own r d. The other half of this is that youre not being the spending going on. Hopefully, some of that money will now go. Number three, banks are selling telling some of their biggest clients to take the money elsewhere. The wall street journal says j. P. Morgan and citigroup and others are telling clients that new regulations are making certain types of deposits possible for certain types of depositors, they need to have backup to certain percentages of reserves. The hedge fund you might expect, you havent you have to actually have reserves and you cannot afford it. They want to the money to be around the economy. It could stoke visibility in the markets they can see markets. The banks themselves have been waiting about, when the fed decided to start charging the positives well worth the charge you money, they claim there is no way to make a living. What you are starting to see is them doing it again in their own deposits. Exactly. They would not be complaining as much if banks were loaning money clackually lending area lending. Number two, this story will not die. This may have started in a hotel in bangkok according to a person familiar with the matter. , a link tohackers north korea. Were all good stories begin. They are hiding in plain sight. The problems we had with cyber wars is one of attribution. If a missile goes up in the air, you know where it is came where it came from. With this, you really do not know. This is something the u. S. Is working on. How do you figure out how to retaliate if you cannot determine where it came from and you cannot improve your case . Russia are good at launching these attacks. In the meantime, it has given free publicity. Made it under saturday night live, james franco and seth rogen. On themberg television markets, lets get a check at where futures have settled ahead of the open. Lower. Futures are however, we are at our record high. The top story in the opening bell is asked. Is next. Welcome back, lets get back to bringing you the most important stories you need to know before the bell. Brendan greeley joins me this morning. Story is oil. Its trading at a fiveyear low. Opec declared they will maintain their output even though prices at the pump have been cut. Do some believe the bottom is near and oil . Understand how they reached that forecast. It was called roughly in the forecast of the Second Quarter of 2015. Imports and exports contracted. If chinas slowing down, where is the demand going to come from . Opec did not do anything to supply. The concern now is that u. S. Produces of shale gas were will go out of business as the prices of crude drops below the two dollars. It takes a long time for the response to move on from this. Every new day, we learn something new about economics because nobody is prepared for cheap oil. Thats true. Stocks are starting to type this morning so lets talk about oil and the Global Economy with jim oneill. After u. S. Employment data, we set them of the former pimco ceo Mohamed Elerian and how he and he stressed how it creates a gap of the rest of the world. Really interesting for wall street because it raises not just the policy issue in the u. S. But it increases the divergence between the u. S. On one hand that is healing quickly and japan in europe on the other hand. We will see major movements in the currency market. This will be interesting to see how wall street digests this number. Creating the divergence, lets get reaction from another Bloomberg View columnist and former chairman of Goldman Sachs Asset Management, jim oneill. He joins us on the phone from london. Agree with Mohamed Elerian that the jobs data and the u. S. Economic numbers are all creating this big divergence where the u. S. Is on one side and the rest of the world is at an extreme on the other . Its quite nice to hear Mohamed Elerian sanding cheery. Sounding cheery. I dont agree fully with that. I think he is right relative to europe and japan. Importantbviously an connotation for relative economic policies and one of the reasons why u. S. Bond yields probably trade so well despite u. S. Data is because of europe and japan. Where i disagree is with respect to the rest of the world. Even though china is socalled slowing, its 7 growth this add twice with the u. S. Is adding to global gdp. India is picking up. I think a lot of people still dont really seem to get how the contributions to global gdp is changing. The other interesting thing is i often love it when market signals agree with the way i look at things and yet the market consensus chatter is different. Weeks,he past week or the chinese stock market is one of the strongest in the world. Despite the data that came out overnight. The import softness . That was surprising. Im not sure how consistent that but if thatr things was accompanied by further evidence of slowing in the domestic data over the next few days, that would raise issues about the cyclical momentum of china. Even out of seven, the last numbers we see are above seven but at seven, it is contributing twice to the global gdp as the u. S. And everyone is bullish on the u. S. And everyone is bearish about china which seems ridiculous. There you go. Two of the out performers on the leading indicator list are indonesia and india. Are we learning that govern nantz matters . Reale learning that actual plans by real people to make changes have an economic effect . I think thats an important point. If you reflect back over the year when summoning people seemed to be so concerned about socalled emerging markets, its interesting if you look at how markets of some countries have performed. The ones where there appear to be improvements in governments and with it some reasonable signs of positive economic are being rewarded and indonesia and india are two of the biggest. Is a really important recognition for both of those nations but it should be a sign to the other countries that of not had reforms like brazil. To ask you about a recent article you wrote on italy and wondering why such a wonderful country struggles perpetually to succeed for you wrote that you presumed germany would do whatever it could to protect italy from the kind of blowup that hit greece in 2010. Now you are starting to wonder. Do you think it is fair to say the narrative is simply that germany refuses to back u. S. Style quantitative easing or is there a real argument that you yieldshing on when bond are low that pushing that much further lower will not do much and pushing the euro further lower will not do much given the fact that a week yen did not help japan . There is valid issues about the limitations of qe and the euro declining. It should not let the ecb off the hook. Its interesting to see mario phrase illegal about the ecb not reaching its inflation levels. I have been discussing this a lot with some fellow researchers. The germans go on and on about how illegal qe may be but they signed up to an almost dominated as to why the ecb has an inflation target of below 2 . They need to do things to respect that. Dismissing any unconventional forms of quantitative easing is not good enough. Let me bring it back to the u. S. Following the data on friday, both Mohamed Elerian and alan krueger said it looks like the fed is going to raise their Interest Rates starting in the summer of 2015. What do you say . Well, its always so tempting to think that. I have leanings that way but, of course, we are in a world where the Inflationary Pressure still seems to be so modest. You guys chat about oil. At the margin that is about pressure and we have a very dovish fed led by janet yellen. I am not convinced thats the path. The numbers shift things more that way. Thank you so much. Thank you guys. Still to come, the search for multimillion dollar art and we will hear what collectors were looking for a last years art basel fair. We will talk about the overall market. That is next. Names like jim chanos and steve and Leonardo Dicaprio anddiddy were in attendance at last years art basel with 3 million worth of art. Do collectors add to the record to 3 billion of art sold during the auction season . President now is the of the pace gallery who made its way back from miami for us having just sold works by renowned artists David Hockney and nigel cooke and cannot snow line. Great to see you. Are you recovered . Barely. A lot of coffee. It sounds like a great time and very busy and youre working it the whole time. Did you sell everything you had on offer . We did pretty much pride there are a few things we did not sell but the first day sells most of the booth. You close for restocking overnight. Hang and selln you again. How would you describe this year versus prior years . This year was interesting because there was a lot of serious collectors. You have two kinds of collectors in the world. You got new collectors who are very eager, sometimes overly ambitious and you have serious collectors who have a different agenda. They seem to be winning the day this time. It is sort of cyclical. What is different about their strategy . For quite a few years, a lot of the auction houses and galleries have been after new collectors from emerging markets. Because they want high prices . They get over exuberant. To last in a short. Of time. Time. Shorteriod of another issue is the artists who are rising and established artists are not reaching the prices they need to reach. Kenneth nolan is very famous in the 60s and 70s. I think there is a consensus that artist is coming back. We broughtfour works from him. You find new buyers are looking to buy the are too collected or it are they looking to buy to sell it eventually . There are a lot of speculators. That has been very successful for them for a while. There is a problem with speculating on art. It is easier to buy and sell. To buy then sell. At the price levels we see, everybody wants to note that the art is a solid investment. That it will rise in value. Right, but there are collectors who cannot part with their art and there are collectors who can. That is the difference. What are some of the big successes you had over the week . Had aninstance, we artist we brought in named nigel cooke who is younger and english and was very hot and successful 10 years ago being reevaluated now. Whichwas a huge interest had gone quiet for a little while. That was very gratifying. You felt good to sell his art . Another artist in the 60s was the same story, lucas sumaris. A great reevaluation by the museums and critics on the collectors respond. You are very renowned in this industry. Do you also get satisfaction because you take some artists under your wing and you see their artwork eventually becomes popular . I am taking think them under my wing and take the credit. Thats completely fair. Ultimately, no one can really control and artists market. There are so many people involved. It is a good, complex equation. Critics or the museums or the collectors, it does not really happened. Yes, im happy to take the credit. What about your gallery versus christies or sub of these or sothebys. . The art fairs are designed to compete with the auction houses. They have an event, a moment when it is do or die and you have to buy. Opportunity to have that kind of moment when everyone would come. More importantly, in the galleries, it works like this there is an Art Exhibition and an artist gives us 15 works of art and we hang them on the wall and resell it. The back room is a place where people can get in when they know somebody or they were really connected. The art fair is a back room for everybody. That has changed the art business very substantially. How much to the serious art what are the conversations before you get to miami . What are you bringing . People are constantly calling. Art advisors are calling and asking send us a list of everything that will be available. That is something we have to deal with. We should tell people or spring a surprise. I am week about that sort of thing. I tend to spill it. My father calls and says what have you done . At this point, you kind of have to spill it but we have a rule that we try not to sell anything until the fair itself. You might talk about it. You better get there in the first half an hour, you might say. Thank you for joining us. We will be back in two minutes. Six years after the rest of bernie made off, his inner circle will be sentenced this week in the multimillion dollar ponzi scheme. Tell me more about these five people and how closely they worked with bernie made off . These are the people who did a lot of the dirty work of running a multibilliondollar ponzi scheme. They include his former head of operations, couple of computer programmers, the head of the Asset Management unit and these are the people who created the fake paper trail. They misled trade confirmations, statements to clients that were completely made up, false filings to regulatory agencies because it turns out that thatng a huge ponzi scheme ultimately defraud to investors of 17 billion takes a lot of paperwork. These are the people who did it. Why did it take so long . Justice is slow. This case was significant because this was the first trial where you had the jury and the evidence presented in miggy learned about how this thing works. This the first trial that happened that was tied to the they tried these defendants together. The trial took five or six months. It was one of. The longest whitecollar trials anyone can remember since they were sentenced in march, they had been fighting. Guilty in march and are fighting about when the sentencing would occur which is what is happening this week. Their lawyers were arguing about how much money they would have to forfeit as part of their conviction. Some of that is still going on. We will at least finally know how much time they will be spending in prison. Up to 20 years . That is the longest one and it ranges 14 years and eight and those are some very big numbers. They are long sentences for whitecollar cases and there is controversy because there are people who say they will sentence someone for doing this for 20 years, what will you do to a murderer . Have you how can you make the relative seriousness of the crime . Part of the reason is this case was so sensational. It generated so much attention. Thank you so mys. There will be more on this story. That does it for today on in the loop. We will head north from miami tomorrow to new york. How was the Real Estate Market holding up in the big apple . We are also going to dig deeper intouber and what to the stumbles mean for its preparation to go public thats tomorrow at 8 00 a. M. Eastern. It is 56 minutes past the hour which means Bloomberg Television is on the markets. I am Olivia Sterns and we are 30 minutes into the trading day. Equity benchmark indexes are trading a little bit lower and the nasdaq is in positive territory and the nasdaq and dow jones are slightly lower. I thought the dow would finally had 18,000 today but we are at 17,935. The s p 500 is trading at 2073. Another big move in the markets is what is happening in russia today. Is strengthening slightly today on speculation that the Russian Central Bank will move to tighten rates and good hike their rates by as much as 2. 5 in an attempt to stem the slide of the ruble. Lets show you what is happening to the dollar. Its touching a twoyear high against the euro this morning. Stronger versus other baskets of currency on news overnight coming out of china showing an unexpected decline in chinese imports. Lets show you what is happening to the price of oil. It continues to fall today. 2 today is down by alone, trading at 64. 42 per barrel. The market continues to search for a bottom. For more on way you should be investing, and joined by kevin carron. Good morning. Thank you for joining us. 18h the dow approaching house and even if its a reversal, do you think equities are fairly valued of these levels . Yes, i think the markets are fairly valued but i still see conditions in place for growth in the economy and ultimately down the line continued movement upward in the market. Does not really throw me off a relatively bullish case for equities. What is your reaction to the jobs numbers friday . Rethink yourg you bets on when the fed will most to raise rates . Not really, when i look at that number, his surprise on the upside. It was a strong number. We have added Something Like two point 7 million jobs yearoveryear in the private sector which is more than the 2. 3 we were expecting. You are movingat towards a situation where the fed will need to tighten quickly. There is still a fairly large output gap and when you look of the underlying inflation rate, you are stuck at 1. 5 despite an awful lot of monetary accommodation. I think the fetid benchley will move i think the fed will eventually move but the path Going Forward will be whats important. I dont see the conditions in place at the moment for a real sharp upward revision in Interest Rates. Logic, theg to your fed will move in the latter half of next year. What sectors do you like . Much focused on places where we can see some growth and very good Balance Sheets of that would include the Consumer Sector which is gotten relatively cheap. We look at health care we are finding good places to put money to work there. Technology looks relatively good and as the energy thing plays out even though the autumn may not be in, theres an interesting Value Proposition surfacing during this route we are seeing in the oil price. We will leave it there and thank you so much. Great to see you. We will be on the markets again 30 minutes but Market Makers is coming up next. Live from bloomberg headquarters in new york, this is Market Makers. Evere most idle u. S. Bank is not on wall street. You will hear from the ceo of wells fargo. Revolutionary, he led a revolt event at against actively managed funds. We will speak to david booth. Pictureperfect is a great way to see art basel in miami. Makersmarket