Transcripts For BLOOMBERG In The Loop With Betty Liu 20150116

Increases financial uncertainty. What it clearly does do is add additional volatility. My conclusion would be increasing volatility and that will be with us for a while. Asian and european stocks are down or indicate u. S. Stocks will open lower as well. The sixth straight day of decline. Bond yields and set record lows in japan, germany, italy and five of the euro area nations. The west tenure is only 1. 73 . Cheap oil and u. S. Growth are not the solution to Global Economic woes. Christine lagarde spoke yesterday to washington. The question we have at the moment is should Lower Oil Prices and a stronger economy in the United States make us more upbeat about the prospect for the Global Economy . Most likely, the answer is no. One risk according to Christine Lagarde, that the fed could disrupt Financial Stability by raising Interest Rates. She did not get even get a heads up or know about the s p policy change ahead of the time. Not in the loop. The price of oil up as much as 3 this morning. It was down five yesterday. Still trading at 47 and change a barrel. Nonopec Oil Producers cutting 9000 jobs 7 of the workforce. Europe is on a work day after possible terrorist attacks in belgium. Police arrested more than a dozen suspects in overnight raids after a shootout left to suspects dead and another in custody. Elgin authorities and say some of the suspects had just returned from syria. Police arrested 10 people in france overnight who they said may be linked to last weeks terrorist attack. A group of investors says the General Motors ceo and other gm executives misled them about those recalls. They filed a slew claiming g. M. Sued claiming g. M. Misled investors about issues related to faulty ignition switches. It has been a rough week for the big bang spirit with bank of america, city, jpmorgan and wells fargo posting a combined 12 decline in fourthquarter profits. Revenue from fixed income trading decline for the fifth time in six quarters. I have to be honest with you. I wondered yesterday whether Goldman Sachs would not be five the trend on wall street. Goldman is supposed to be staffed by the smartest guys on the streets. So many of the top talent are still considered the smartest guys in the room. Did they anticipate of the decline in fixed income trading activity . The answer is a resounding no. Im asking myself this morning because we exchanged a few words, what the fix . Goldman sachs trading fixed income trading revenue was only 1. 22 billion dollars in the most recent quarter. Less than half of what jpmorgan reported on an adjusted basis. Down 19 if you compare that with the rest of the street. Only bank of america was worse. We are not coming wells fargo because they do not have a meaningfully sized trading operation. Here is the thing that perplexes me. All of these banks have a different explanation for why fixed income trading revenue was down. Which suggests that there is something there is Something Else going on here. This is a secular problem, you will. This has to do with what they call the acquisition of fixed. The fixed income trading business from a volume trading business to a spread driven business want to clarify what it stands for . Fixed income commodities and currencies. Not everyone knows that. It is fantastic. In the case of rates, Interest Rate products, things like sovereign debt and shorterterm Government Debt bank of america cited as a positive citigroup as a negative. Mortgages both bank of america and Goldman Sachs said it was a drag on revenue. Credit the area where they saw the most similarity. Bank of America Jpmorgan and Goldman Sachs saying credit was a problem. Then it gets murkier. Macroeconomic environment was the problem for citigroup. Goldman sachs says difficult marketmaking conditions were the problem. This is the issue. Quarter after quarter after quarter, each of these banks comes up with an excuse for why trading revenue is not beating or exceeding expectations. The story keeps changing. Perplexes investors. They are not sure what to expect. One of the reasons you see Goldman Sachs trading down this money. Premarket down 10 . Jpmorgan down 12 . Citigroup down 13 . Is a they need to get right sized. They are still hiring. Bank of america is still lacking. Thank you so much for that. Eric will be back with us at 10 00. Home depot, the board elected a ceo as chairman as well effective a very second. He will succeed frank blake who will retire from the home depot board as chairman. Lets get back to the fallout from the swiss currency. To Brokerage Firms and say they have gone bust after suffering losses on the franc. The shockwaves may spread. National Australia Bank says i would be astonished if we did not see more casualties. This was a 180 degree about turned by the s pnb. Lets go to hans nichols in zurich. As i have predicted, the reaction has been rough around the world. I wonder how it is in the heart of switzerland. You are still theyre not going inside the shops to spend. Things got a lot more expensive. I just bought an espresso from a wellknown seattlebased coffee chain and it cost me more than five dollars. Here are the two questions dominating the conversation. How much more how to more losses are we going to see on fixed exposures from the Big Companies . How much more are they going to stick. What happens to the swiss economy . There were some predictions that you are going to go back into a recession. With that, i will throw it back to you. I will not be able to hear your followup because i believe i have lost contact with new york. Very well done. As nichols tossing it back to us as we lose the connection. He will go back and get another espresso for five dollars. I feel like it costs five dollars here in new york as well. Will a big mac be . The swiss franc really shot up and a big mac cost over 17 in zurich. We will send hans over to mcdonalds. His previous home washington president obama and David Cameron sit down to plot the way forward on Cyber Security issues. Cameron is pushing for help in getting usbased companies such as facebook and google to do more to stop extremists. Phil mattingly joins us now from the north lawn. Is there a specific economic issue these leaders are trying to hammer out . Its mostly trade. That is what you will hear a lot today. Trade agreement that is ongoing negotiations ongoing between the u. S. And eu right now. David cameron and obama pressing hard while dealing with serious the mystic push back on that. They will try to show a united front, a rooted push. Maybe this visit would have ended yesterday after a meeting with Christine Lagarde if cameron had his way. She called the uks Economic Leadership eloquent and convincing. You could cut that up and turned that into a campaign ad and run it all over the place back in britain. Hes having a good week already. There is also always some political history when a world leader visits the white house. His visit comes at a crucial time for him back home. How does president obama handle that situation . It is interesting. Theres two different versions of that. The weight him and cameron would like the president to talk about him today and when the president actually will. The way David Cameron would like the president to talk about him today and the way the president actually will. The president has a Good Relationship with the good prime primus to. They went to a basketball game and do cookouts and stuff like that. The intriguing part is the president s top Campaign Advisers from 2008 and 2012 are deeply you meshed in the u. K. Primates the race right now. David cameron is being advised by the president 2012 campaign advisor. The other is being advised by the close senior adviser. A lot of intrigue when it comes to that. A lot of issues the president has to deal with. A lot about Cyber Security, cyber wargames. Explain this. This is the most interesting part. Because of what happened with sony and what happened in paris counterterrorism and Cyber Security are jumping to the top of the agenda. Top amongst these, they have agreed upon a cyber wargames demonstration. They are going to play out what a catastrophic cyber attack would look like throughout the Financial System. The Security Services will be very closely tied into this. It will be really interesting to see how that all plays out. Something may have been trying to do for a while. Thank you very much. Coming up, Consumer Electronics stores are shortcircuiting. What is happening with best buy and radioshack. Mark is reeling from that move by the Swiss Central Bank of perspective from a very important guest. Jim oneill joins us next. Investors are pulling the plug on radioshack. The stock fell more than 35 yesterday on news the company is preparing for a bank to filing. It may sell its stores to sprint. Radioshack was not alone in its misery. Best buy shares posted doubledigit drop after issuing a dismal warning for the first half of the year. Are these two Electronics Retailers trying to tell us something . I want to bring in craig johnson, founder and president of Customer Growth partners. And julie hyman who covers retailers. You and i have been talking about this for a long time youre radioshack in a much more dire situation that best buy. You kept wanting them to change the name to the drone zone. I think they are beyond hope at this point in terms of avoiding they have not tried anything at all. What have they done . They are a brand whose time has come and gone. Rooted deeply back in the 1980s. They took a big bet on cellular and it has not relate handout. Has not really panned out. Sprint may pick up a few of the units. But not 4000. I was looking back at the history of the company. Radioshack was owned by tandy corporation, one of these early pc manufacturers. At one time, the stuff radioshack sold was really cutting edge. It did sell the first personal computers. Back when used cassettes. It was an early seller of mobile phones at a time when you still had the big chunky products. These look so obsolete now but at the time, they came out and these were hot, cuttingedge products. The time has passed for this kind of stuff. There are a couple of issues. Its commodity products that you can buy online easily. Most of the stuff sells at places like walmart. You can go and by not just these very specific things but Everything Else as well. The two trends that have killed it. Radioshack, we are saying its dead. I have always said they should change their name to the drone zone and sell remotecontrolled vehicles. They bet big on flying helicopters. Now they are getting into the drone stuff. What about best buy . Two stories that are near and dear to my heart. Ive noticed they just dont have the topoftheline products anymore. Best buy is the same thing. You dont even find midlevel audio components there. What can they do to change their business . Audio they have not expended the category. Audio systems have been a nice rebound. The headphones and the sound you have to have external sound. That has been a strong category. The true specialists that go for a place like richfield crutchfield. Best buy overall on a bit of a rebound. This is the first time we have any kind of excitement in the category. It began earlier last year with the iphone 6 and that was still a strong product through the holiday. Flatpanel tvs have had the best year with the four k product coming in. They are in a bit of a rebound. Their cost structure is still high. You dont need these 40,000 squarefoot stores anymore. I have always thought the staff could be improved a bit. The used to call it the geek squad. Now, they dont know very much about their products. A problem across retail to find a good people who are qualified to talk about the product. They are probably not just over stored. Theyre too big in the stores they have. Maybe you might see some shrinking of the footprint to some extent. Best buy did warn for the first half of the year but this is after its holiday results were relatively good. I have talked to some folks who said there might they might be a bit overcautious. I would not be at all surprised if they had Forward Guidance this time. I love both of these stores. Craig johnson, thank you very much. Julie hyman. I will see you later. Stay with us on in the loop. We talk about blackberry, taking a dive after denying a bogus takeover report. You are watching in the loop. On the World Wide Web on bloomberg. Com. Im matt miller, in four betty liu this morning. Investors pounded blackberry shares after the company denied it helped take over talks with samsung. Blackberry rose 30 a day earlier on reports it was an takeover discussions. Tonight that report it denied that report. You wont be able to buy google glass for a while. Suspending consumer sales. It is back to the drawing board to design improved devices. It will function as a separate unit. Fourthquarter profit fell more than 7 at Goldman Sachs. Same story we have heard from several other big banks. Revenue from fixed income trading fell again. Goldmans earnings did beat estimates. At least it is managing the street. Markets are still reacting to the Swiss National Bank Decision to remove the cap on its currency. The surprise move sent the swiss franc soaring joining us now is jim oneill. Thank you so much for joining us this morning. You did not see this coming. Even Christine Lagarde did not see this coming. What do you think of this surprise . It is quite a drama. With my new i think i am right in saying the move is probably the single largest ever move of a liquid currency since Exchange Rates started. There must be one of two guys one or two guys excited about how much money they made. There must be an enormous amount of blood out there. For lots of corporations in switzerland and elsewhere. This is a huge development. Im trying to think it through. As a personal investor, the swiss policies would have appeared to have a negative view of the ecb situation. One wonders if that means they have any inside knowledge or a very strong view of the ecb or the have come to the conclusion that the eu cannot survive. To take the risk of such a staggering 30 rise of their currency in such an openly exposed country to the borders of germany and italy is staggering. Im talking to a lot of friends of mine to try to get them to stop i cannot see how it can stay here for very long. I saw a note this morning entitled cuckoo clock deflation. There actually made in germany. The swiss only make watches and pocketknives. There wont be many swiss watches made in the future. I can imagine swatch would be interesting to interview. He must be one of many finding it difficult to speak today. Very angry about this. As are a lot of other exporters. I talked to drugmakers yesterday who dont seem to mind because they are based on over the world. One of the things this negative Interest Rate this 0. 75 this was will charge you to hold your money, he thinks over time that has to work out. Much like sanctions on a country , it is a midterm view you have to take care. I was talking before we started it is so interesting because from my experience, it is usually the people that dont have lots of market risk and the best place to benefit from events like this. Given the carnage, many hedge funds for those with week to week or even monthtomonth market risk cannot be involved in any of this now. For experienced wealthy individuals or other institutions, i think this is a huge opportunity. I can imagine two years from today, the swiss bank will be anywhere near this level. We have breaking news. Scarlet fu has cpi . On a monthtomonth basis, Consumer Prices dropped. 4 . This is a pretty steep decline because of the drop in fuel prices. There was no change in Consumer Prices in december from a month ago. Slightly worse than what analysts had been looking for. When you add the headline numbers, stripping out food and fuel prices, it is 1. 6 . The trend for cpi is critical because they have said they need to be reasonably confident that inflation will eventually rise toward the 2 target be get that before they begin left off. 1. 6 on a yearoveryear basis when you back out food and fuel. In the loop jim, let me ask you quickly come in opinion on centralbank credibility at this point. For so long, the Swiss National bank have been saying it will stick to its guns here. Two days before this move, it assured investors it was going to hold fast. To do an aboutface has to get a lot of people very unhappy and destroy some trust. That is true. In the context of the past few years, the financial participants will think like that. Those of us who have been around for a few decades these are the things that happen in life. Go back to the day of the european monetary system, many Central Banks always told us they would never change until the minute they change them. I often regard those as the real fun days when you were trying to bet on the timing of the belgian franc or the swedish currency. The style in which this happened is interesting. A professor who has Close Relationships to the ecb leadership said they should change it and three days later they do. It is part of what makes it such a dangerous place. A dangerous place for those who flirt with it. The 10 year yield dipped below 7. 1 . It has recovered a bit here. I want to ask you about the risk of trout it crowded trades. Were investors and the market getting too complacent . Of course that is another i have to have a slight admission. I had a tiny personal bet. I dont know the speed in which it moved yesterday suggested it was a crowded trade. Part of what markets are. What one wishes to think considering that, if you were trading currencies now how would you trade the euro ahead of the ecb meeting . Because of this swiss development, the markets will spend most of the next few days debating just how dramatic the ecbs qe is likely to be. I would not be surprised if you had some people starting to genuinely fear that greece might be the beginnings of the end of the whole thing. Which i personally think is unlikely but it would not be surprising to me if the market started to raise the probability of that. Which has to mean further euro weakness. Thank you so much. Jim oneill, a Bloomberg View columnist. Scarlet fu, we appreciate your time as well. Coming up, we will hear from the republican guardsman in hershey, pennsylvania. Republican congressman in hershey, pennsylvania. From hershey to havana, the details on the planned trip and how the Obama Administration is making that trip and travel to cuba easier starting today. Welcome back to in the loop. Lets get back to the breaking news desk where scarlet fu is keeping an eye on stocks for us. We are continuing to see the fallout from the Swiss National banks decision yesterday. The biggest retail for Exchange Brokerage tumbling in the free market, losing almost 90 of its value. Client experienced newbie losses following the snb decisions and they all the brokerage money. Leading to questions on whether the firm can survive. The Interactive Brokers down in sympathy to an extent with this idea that everyone being short the swiss franc left a lot of people owning money. G cap is a ticker there, another falling in the free market. Goldman sachs reported results early this morning. The lowest annual trading revenue since 2005. That stock is down 1. 7 . Citigroup had a mix. Morgan stanley reports earnings on tuesday after the long weekend. Investors anticipating some gloomy news from that firm. We will keep an eye on everything. President Obamas Administration begins making it easier for some americans to travel to and do business with cuba. Companies in specific industries will be permitted to export certain products and Raw Materials to cuba u. S. Banks will be allowed to open correspondent accounts in cuba and airlines will be able to provide service to cuba without specific license. The travel ban is not lifted entirely. Many republicans in congress including marco rubio are vocally opposed to these changes. Willem marx has been looking into the restrictions and will be going to cuba on monday. Lucky you. Everyone cant go to cuba. You have to at least lie or be a journalist. The same categories still stand. People like athletes and performers and humanitarian workers and journalists are allowed to travel down there. The difference is you no longer have to go to the u. S. Government to seek permission. It is an honor system. You could say im going there for educational purposes even if you just want to drink rum and smoke cigars. Educate yourself about Consumer Products. One of the struggles when these governments have to enforce this. You had to submit paperwork and prove what you are doing intimate you will spend. Prove how much you will spend. There used to be a limit. The people who are most opposed to normalizing relationships with cuba are cubans. Cubanamericans. Their families have missed out on opportunities in cuba. They have left that younger members have grown up with their parents talking smack about the castros. They have had that attitude throughout their life. Businesses will benefit greatly from this. You will see local banks and parts of the country will now be able to operate with cuban systems. What about companies here who want to be business there . Although cubans dont have any money. What would you do . As of today, you could now invest in private businesses that the u. S. Government deem beneficial to the cuban people. There is little private business in cuba. You will have to be cooperating in order to invest in cuba with the authorities there. You could buy cars from cubans. I know you would like to. For those who dont know they have a pristine collection of 1950s cars because they stop importing cars at that point and they are all still driving those like they are trapped in time. There will be a lot of new products coming in. Things like telecoms will be an opportunity for American Telecom firms to invest in Consumer Products down there. You will be able to send down the new iphones. Cubans will suddenly have an opportunity to have expensive phones given their daily salaries. They will have the opportunity to buy cell phones from the u. S. And 800 iphone. Along calculation. The look on the trip. Good luck on the trip. Hopefully this does something to improve the lives of people on both sides of the border. Coming up, we head had to the gop retreat in hershey pennsylvania for a oneonone with Jason Chaffetz. His strategies for 2015 i had iahead. Congressional republicans wrap up their joint retreat in hershey, pennsylvania. Gop leaders say the closeddoor talks helped set their legislative agenda for 2015 but divisions over big issues like immigration remain unresolved. Peter cook is standing by in hershey with the new chairman of the House Oversight committee, utahs Jason Chaffetz. Thank you very much. Im joined by chairman chaffetz was interrupted the retreat to join us. We get a sense from Speaker Boehner and leader mcconnell this has been an opportunity to set the agenda. I cant imagine republicans are all on the same page. It is a big family. We get together with the senate and have some lively debate and tackle a lot of different topics. There are a lot of bodies. What about the debate over immigration . You were in on that. Big divisions. There is so much we have to do there. It was a lively, the most lively discussion were members and stood up. There was a good consensus that Border Security is imperative. We have to get that right. It is the gateway to open up our ability to fix Legal Immigration and tackle the other parts of immigration. Do you think those steps could be taken this year . Is this something republicans are prepared to tackle on a stepbystep basis . We have to. We were elected to put on our big boy pants and get some thanks done. Some things done. We have to tackle difficult things. We cant keep putting this. Legal immigration in this country is broken. If we are going to say we have the mental mantle, we have to post meaningful immigration reforms. Some halfway legal status . Im not in favor of amnesty. We have locked down that border and get that entryexit program in place. There are a lot of things we can do that will help fix Legal Immigration. I dont believe in just granting amnesty. What the president did is wrong and the house dealt with it. Theres been a lot of questions about whether or not this strategy does you put the Homeland Security funding in the crossfire. Is that the right thing to do . Thats where the appropriations go in order to fix this problem. We helped put more people on the border and we get more resources in certain areas to help tackle this. We will have to talk about Homeland Security because they are the ones that have the Border Patrol and other assets. The official watchdog for House Republicans over president obama being in the executive branch. How will you approach this differently than chairman issa . He had a rough relationship with the white house. We will build on the success a lot of investigations from the irs and others we will continue on. Im a different person. I have the greatest respect for darrell issa but i will approach the media differently. I have a great relationship with elijah cummings. I took him down i would up to his district in baltimore. You will keep the pressure on this president. Of course. We have a constitutional duty to make sure we are the check and balance on the executive branch. You were a big supporter of mitt romney. He has made this dentist to win the water for 2016. We are hearing skepticism now. Dipped his toes in the water for 2016. He will lead to get out there and explain what he would do differently. Republicans desperately want to win the white house. Mitt romney does something he is well known. He has proven he is right on the issues. A lot of buyers remorse from the public that what obamas does what barack obama does and says is different. He can raise the money to beat hillary clinton. Will he tell the rnc tonight he is enforce in for sure . You will make it known he is seriously thinking about it. Thank you for joining us. The latest here from hershey. That was our chief washington correspondent, peter cook speaking with congressman Jason Chaffetz of utah. John kerry brings the french people a big hug after missing last weeks demonstration. Highest ranking u. S. Official to visit france since the terrorist attack in paris. Welcome back to in the loop. We are about 30 minutes away from the opening bell. Keeping an eye on markets here. You see futures, equity futures down across the board. If they decline today the sixth day in a row. Bonds have gone crazy as well. Yields are coming down across the board. We are seeing new alltime lows on yields. Seven European Countries and the u. S. Tenure 10 year. The latest from Goldman Sachs. We will dive deeper into their numbers. Welcome back. We are 30 minutes away from the opening bell. I am matt miller, in for betty liu on this friday. Futures indicate stocks will open lower. Consumer prices fell the most in six years. Thanks to plunging energy costs. More fallout from the decision by the Swiss Central Bank. Ubs says clients will be attracted to the u. S. Dollar after switzerland abolished the cap on the swiss franc. The biggest retail currency broker in the u. S. Is in big trouble. Fxcm says clients are owed money on their accounts pretty stocks got hit hard in premarket trading, expected to be down about 90 . The cfo to the central bank move increases financial uncertainty. It adds to volatility where we already had volatility. My conclusion would be increase in volatility, and that probably will be with us for a file. The swiss franc has been down. Yesterday it was a little bit of a balance the problem revenue from fixed income trading drops for the fifth time in six quarters. Goldman relies on trading more than the other biggest banks in the u. S. A crackdown on suspected terrorists. Police arrested a dozen suspects last night in belgium. Secretary of state john kerry is finally in paris, where he paid his respects to victims of the terror attacks. He says he was there to share a big hug with the city, and the Obama Administration was criticized for not sending any highlevel representatives to last sunday possible memorial rally. We are under 30 minutes to the start of trading, counting you down to the open with top 10 headlines hitting the radar before the bell today. Julie hyman today and Joe Weisenthal join me. Lets kick it off with number 10, blackberry shares coming back a little bit . They are getting crushed today after rising 30 the day before that. The company denied a report in reuters that samsung would offer to buy it. Blackberry said the report was groundless. Samsung also denied it. So it was a bogus report . How did they get it so wrong . I think people talk about the blackberry denials being a little lawyerly not meaning they were not approached. They did not specifically deny that. Who knows . There are numerous false hopes for blackberry. Speaking of false hopes, my favorite thing about the story was the guy who told bloomberg, blackberry gets offers all the time. This reuters story cannot be true because investors would never accept an offer that low a 37 premium to where the stock is currently trading. I do not know that blackberry investors are in a position to be super choosy. I would not think so either, but john chen certainly does. The company is branching out into software as a service, as cliche as that is. And the new blackberry is kind of cool. I will lend you mind. Number nine is a hightech conspiracy settlement. Apple and google agreed to a 415 million outofcourt payment in a case accusing them and other Tech Companies of secretly agreeing not to poach each others staff. This is an old story being dredged up again. It is outrageous, the idea that if you are an employee and you do not notice that your bosses are secretly conspiring behind your back to us as press to suppress your wages. I think it works out to about 64,000 per employee. That is a lot of lost wages that this courts finding that resulted from these decisions. With all of these goals not to do evil, Silicon Valley seems to fall short of that market a lot. All the time. I think they have a specific definition in their mind of what evil is, so maybe at one point maybe it is pollution, maybe it is something influencing the government. But they have this view that anything that they do, since it is innovative, will also be correct. Number eight, greek banks two have requested loans from greeks central bank. They are likely struggling without those. Out the bank says it needs the funds immediately. I dont know, joe is our resident they are having the election a week from sunday. There is the suspicion that their far left party will win, and that seems farfetched. They are saying preemptively before the election they want to open up the option to access emergency funding, if there is some sort of big panic. There have been a lot of withdrawals since the speculation about the election began. There have been 7 billion euros net withdrawals from greek banks. So considering it is a relatively small country, that is kind of a lot. This is a good time to have access to a lifeline if it comes to that. Maybe the politicians that had all their money in swiss angst will go back and buy in swiss banks will go back and buy currency. Listen in. Despite the boost from oil prices, and despite a stronger u. S. Growth we see the Global Recovery continuing to face a very strong headwinds. She is very sober there isnt she . Her body language, her face, everything she is trying to send a very serious message. Well, as serious as you can with that incredible tan. What is up with that boehnerlike tan . If you are in the u. S. , the perspective is that the economy is booming. There is no good sign anywhere in europe. She does not have complete global perspective. The s p does not even call her up when they are going to cancel their euro cap. She sort of criticized it, too, that he did not handle it better. Number six is gm, the company and the ceo, mary barra a new lawsuit by shareholders that she assured the sec that the automaker had adequate internal control, when actually the automaker was about to announce sweeping recalls and faulting and faulty ignitions wishes and faulty ignition switches. You have to expect loads of lawsuits to come. Obviously they will continue. These shareholder lawsuit are kind of a dime a dozen. Every company has them when something bad happens. They rarely go anywhere. You wonder if this one might. What we have seen against gm does seem to be i am not an attorney but it seems i am not a doctor, but g. M. Tends to get the benefit of the doubt from government organizations and courts. It is a giant yurok receipt. Mary barra claims to not have known that it is a giant bureaucracy. It is a giant bureaucracy. Mary barra claims not to have known anything about it. The story does not seem to be going away. We will take a quick break. When we come back, big banks have been begging for volatility , if not the kind that they got last quarter. Bill cohan brings us the good, the bad, and the ugly. We continue to count down from the opening bell. We are now halfway through. It is time for deep dive number five. Goldman sachs the entire Investment Bank earnings story this season with earnings from all the majors coming out this week. If not disappointing to wall street estimates, at least disappointing to us in our hearts. This morning as Goldman Sachs turned profits declined by 7 , weakened for the fifth time in six months. With me now is william cohan, bloomberg contributing editor and a former banker himself. Thanks for joining us. Always nice to be here. It is looking like a trend like a structural problem with wall street profits declining due to trading losses or a slowdown in trading revenue. This is the big question on going on wall street, between is this a cyclical decline since 2008 or a secular decline . A fundamental change. Michael moore, bloombergs own had an interesting chart that he put out today. You are not talking about the filmmaker . No, i am talking about our very own excellent, skinny wall street reporter. A fellow duke grad. He put out a chart about the conversation at wall street about Goldman Sachs, and the percentage ratio before the crisis and since the crisis. 40 45 50 paid out every year is now looking like 35 in the last few years. That is what it looks like in 2014 as well. So obviously banker pay and trader pay is coming down, which is probably a change, more or less a permanent change. That is a good thing because that means these firms have become a little bit more shareholder friendly. Goldman sachs is still hiring, but some analysts are saying these trading units need the rightsizing. They need to fire people still. Markets are cyclical. Once upon the time once upon a time the traders were preeminent on wall street. Now it is the bankers. These things come and go. The traders will find a trade that will be extremely lucrative, so you need them both. That is the genius of Goldman Sachs. It is heavily focused on both areas because you never know which business is going to be strong at a particular time. With oil going down the tubes in the Fourth Quarter without people expecting it, traders get hurt. But they are going to rebound. There is no question. You need both groups. It is a very different management problem. You have to pay people less but you cannot lop them off because youre going to need them. We will take a quick break here from you, bill. We have breaking news, december Construction Data coming out. Scarlet fu has numbers. We got the drop for the number of december for the month of december. 1 of 1 following a gain of 1. 3 in november, which was the biggest increase since may of 2010. There is a give back as manufacturing slows down at the end of the year. In terms of impact on financial markets, we are not seem to bank much. We are not seeing too much. They are slightly lower and they continue to decline, about. 3 of 1 . We see low yields as well. Coming back here with bill cohan, i want to bring up between. You reach we did someone who pointed out that you read tweeted someone that wall street always seems to seize up with an event. I do not think it really seizes it just seems to shake out the weaker players, and it seems to me that is the job of markets. I completely agree with that. But you see the fallout. The swiss bank changes the currency in switzerland or does things that traders do not anticipate, or oil falls which they would not do for weeks and years ahead. That hits traders where they hurt. Goldman sachs in 1994, the firm almost went out of business. These things do happen. They are unanticipated events but that is the risk you take in this business. I think it is perfectly natural. It is the right thing to have happened. What we saw in 2008, there was huge wholesale mistakes made. The problem, of course, is that we bailed out the system rather than letting the weaker players shake it out. Exactly. But it is interesting, you still see this crowd mentality. Everybody was shorting the swiss because they were getting assurances from the smb that they were holding the cap. Just like we get assurances from janet yellen that they will not raise Interest Rates. The other important point to remember is that a lot of banks are still making a lot of money. Wells fargo has made 25 billion this year. Jpmorgan, 23 billion, the most ever. These banks are making a lot of money. This is still the golden age. Bill cohan, thank you very much, bloomberg contributing editor and author. Extremely successful and talented author, bill cohen. We are back bill cohan. We are back in two. Welcome back in the loop. Lets get you to the most important stories you need to know between the before the opening bell. Julie hyman, Joe Weisenthal joining me today. Lets get back to number four. Larry thinks more than triple what it gathered in the prior three months. I feel like that is even more than pimcos losses. It is not direct. I know it is not, but pimco lost that 30 billion in one month. It is probably not direct but clearly they are ascendant while one of the biggest Asset Managers continues months after bill gross left, and that has not stemmed the bleeding. Part of the problem is where the money is going at black rock. Part of his going that part of it is going into managing funds but some of it is going into etf funds, and that is not as much of a money maker. Especially after a really careful year for so it is not a problem for investors but it is a problem for blackrock. Why would you want to pay somebody for active management if it is not working out . That is the thinking of a lot of people these days. Number three, Tim Geithners firm is capitalizing on the commodities plunge. 1 billion has been set aside for deals in the mining industry. That is pretty cool not just the video but i love it when people put the money where their mouth is and when they buy when there is a lot on the streets. There is the view that the commodity collapse will lead to a lot of distressed assets and mines and assets that may be profitable may be Companies May be forced to sell profitable assets at cheap rates. Even before the current plunge in things like copper and oil which Mining Companies are not involved in even before that, there was consolidation and speculated upon con solid asian speculated upon consolidation in mining. So when tim geithner is not bailing out companies in distress, he is buying them on the private side. It seems like it is doing well. Number 2 oil advancing as the iea lowers forecast from supplies outside opec and says oil prices could recover. They are talking about people trying to get oil outside opec, halting work. That is exactly what opec, what the saudis kind of want. I do not know if the ie has the iea has a track record of predicting that. But we do not know where this is going to stabilize. But if there is a drop in nonopec supply assuming that the iea is right, opec would gain more market share. That is their bed. That is why they did not cut earlier because they thought that is there that that is their bet. That is why they did not cut earlier. One would think there is a little bit of fluidity to that. We are going to take a quick break as we get closer to the opening bell. Stay with us. Welcome back to in the loop. I want to get back to bringing you the most important story you need to know before the opening bell. Julie hyman and Joe Weisenthal are still with me. By the way, youre launching a website next month. Next week. Kind of. Our Bloomberg Business has been i have been seeing the promos. Shockwaves are number one caused by the swiss franc. They continued to ripple from new zealand to the u. S. The biggest currency rogue in the u. S. Is currently in big trouble. It will hurt capital standing. The stock is now halted at the open with news pending. I have it pulled up on my bloomberg screen so we will know as soon as they tell anyone. It has really been for me a fun deal because it is interesting. But it is not fun for them. It is great from our perspective. It is a tremendous story. We have seen two firms go bust. It will be interesting to see were the news is coming out of this. These kinds of events shake out the weaker players, dont they . That is what happens in the markets with following a herd mentality blindly. It is a slap in the face. People have known for a long time that this whole world of retail fx is a broad area. You get this situation where everyone is on the same side of a trade. In this case, very few people were along the swiss franc because of the cap. Then you have this shocker when the swiss franc surges, and people get wiped out. Fx, in general, it is a trillion dollar a day market. On the retail side there you hear the opening bell. He has been a tough week it has been a tough week for equities. It looks like we are unchanged at the open. If we do have a red arrow at the end of the day, it will be a sixth day of declines. I will check that again in a few seconds. I want to bring in Brian Jacobson from his offices in wisconsin. Go packers, brian. Thank you for joining us. How psyched are you . I am very excited, but sadly i will be on a plane for part of the game sunday. That is the way it goes. Wearing a cheese head on the plane i am sure will be acceptable on that day. So you have your doubts about u. S. Economic strengths as sure as you are about the strength of green bay. Why is that . I think that is one of the reasons why i am a little nervous about u. S. And world outlook. It is not that the u. S. Will dip into a recession, i am just concerned about the world bank coming out and increasing the 20 15th forecast to 3. 2 while they are downgrading everybody else. The United States is a bit of an island unto itself when it comes to growth, but we are still interconnected. Some of the global weakness is likely to spill over into the United States from our export picture. When you look at some of the data this morning we got the hourly wages coming out. The weekly wages portion of that only grew at around 1. 6 . To me that is not consistent with a full 3. 2 to 3. 5 growth for 2015. Bryant, julie here. We got retail sales data this week that was disappointing. A lot of economists shrugged it off. Is that another warning sign for you . Night really not really. The retail sales were week but they were not subject to a lot of revision and variation. Not only is the weak Economic Data delayed, it is subject to revisions. That is why i am focused on the earnings that are being reported by the company. Sales are still growing around 1. 5 to 2 per annum, so it is not great, gangbusters growth, but it is decent. Too many people are perhaps anchoring their expectations based off the q2 and q3 trading numbers. That will not continue into the first half of 2015. Who knows . May be swiss tourists will clean that out. What do you think about the Swiss Central Bank and the ramifications . Are we going to see anything beyond retail traders see that Retail Retail agencies going bust . Some investors might be surprised to learn how Foreign Exchange trading, how popular it is among its noninvestors. It seems to be a growth area for a lot of firms that might be changing with the surprise move. What it really highlights is the danger of relying on Central Banks pledges to pay their currencies when it is not banked by something that is not backed by Something Like an institutional commitment to it. Just because they pledge they will do it, those are subject to having the road having the rug pulled out from underneath you. I think it was a mistake, but they have to live with the consequences. In light of all the financial markets, the volatility we are seeing, your questions about weaker growth, where is your assessment for the fed. I think they will try to still meet peoples expectations. One of the key lessons from the Swiss National bank episode is that really Monetary Policy is most effective when it is a surprise. I do not think the bank really wants to surprise anybody i do not think the fed wants to surprise anybody with what they do, and if they do have a surprise, it will be a positive surprise, not something as scary as what the Swiss National bank did. For 2015 it will be a reasonable expectation when the fed raises measures traits, but i think there is a risk to the upside for the economy that the fed might postpone that or decide that instead of raising it by 25 basis points, they will do something fancier and do it by 12. 5 basis points. They are targeting a window for the target and the specific number for the federal funds rate. Thank you very much. I will see you throughout the day, obviously. We sit very near each other. You do not sit on the floor with me. I know, its very sad. Hopefully you will be able to move. Launching a new website next week. Stay with us. Volatility and the Digital Currency threatens to undermine visibility of mainstream use. Welcome back to in the loop. Matt miller in for betty liu. We are 30 minutes we are eight minutes into the trading day. Markets correspondent scarlet fu is looking at this in perspective. We have to start with fxcm, halted from trading pending some news. How do you survive if your share price tumbles 85 to 90 . A big question mark there. Some big brokerage getting some big brokerages getting caught up in the storm. I thought this was an interesting line. It discussed taking advantage of taking strategic opportunities that will result from the National Bank decision. Perhaps looking at acquisitions like fxcm or brokers of new dealings with why does everybody have to say taking advantage of strategic opportunities . Someone has to get paid for writing that stuff up. One of the cool things i saw today is that a lot of swiss exporters their shares have been kicking but here in the United States because of the dollar effect. Swiss trading, they are tumbling. Certainly a bad day for swatch, and it continues to be. Bring up one that is domestically focused, netflix. To clarify, the swiss make more than just watches. They also make chocolate and cement. And drugs. Recent user surveys found that customers are spending more time on netflix than hbo go, and 62 of subscribers are willing to take a price increase versus 30 in the last survey. That is some Pricing Power for netflix in this fairly modest inflationary environment. Scarlet, thank you very much. I want to give you a look at our top 10 stories on the bloomberg west radar. The European Union says amazons text you would luxembourg may be illegal. The arrangement may have allowed amazon pay its taxes for at least a decade. Amazon says it received no special treatment. The Mobile Division intel has reported an operating loss for 2014, and some suspected that would erase the prophets of all but two companies on the Philadelphia Stock Exchange semiconductor index. Intel plans to reduce costs of the mobile unit by folding it into its pc chip division. Amid all the headlines, plunging oil prices, and the value of the ruble, there is one that you might have missed. Bitcoin has been getting obliterated. The price of the Digital Currency collapse below 200 and this one, 58 plunge last year mated one of the biggest money losers in 2013. I guess the biggest currency loser. Still with us is Joe Weisenthal, managing editor of bloomberg markets. I mentioned before the break, barry silver, working on this Bitcoin Investment trust. He is hard at work right now. I am not surprised he is sticking with it. The most common thing you hear is from investors who are not long on bitcoin as a currency but as a technology, who strongly believe that the technology underpinning bitcoin will be a big part of the Financial System in the future. That thesis has not changed. They do not care so much about the day to day or month to month movements in the currency itself, but they still believe in the technology. I understand that. Tim draper, who won first u. S. Marshals auction to sell bitcoin no matter how much he believes in the technology, if you are 30 million worth of bitcoin and all of a sudden worth only 10 million or 5 million, it has to bum you out. It does not help business much either. Nobody wanted to lose a lot of money and the more, the decline in price in bitcoin is worrisome because of their losses, but also because it would seem to represent a lack of interest in growing the sort of bitcoin economy. You would think if there were a lot of transactions going on that if more people wanted to transact with bitcoin, that would firm up the price. It says something disturbing about how the market is unfolding. All through 2014 we heard the announcement that dish would accept bitcoin, that expedia would accept the coin. Obviously overstock. Com would take anything anyone could give them. Was there anything to that, or was that a fad . Any Company Announcing that they would accept it coin was essentially guaranteeing, press related. I have not heard as much of that lately. Bitcoin is not as hot in the news as it was a year ago. And even with the companies that accept bitcoin, is not they are taking some of their cash or holding bitcoin. They were recycling that back into dollars. I think there is a lot about pr more than anything. So what needs to happen to save bitcoin . What event do we need to see to bring it back in the spotlight . It is a tricky thing. The bitcoin enthusiasts do not want to admit it, but there is a clear use case for bitcoin in illegal activities. Because of the relative anonymity. It is hard for governments to block it obviously the illegal black markets are a compelling place to use bitcoin. There needs to be some application of bitcoin in the real world, where it makes sense for evers people to say i would rather pay for this in bitcoin then with a credit card or whatever. That has not happened yet. It will be interesting to see how that shakes out. Although they are stuck in my wallet and i cannot remember my password. Joe weisenthal from bloomberg markets. Thank you very much. We will take a quick rate. Still ahead, the latest oil giant to announce massive layoffs. How many jobs are at stake . I will tell you next on in the loop. And we are keeping our eye on the swiss currency fall out. Stock halted after falling 90 in premarket on news of spending. We will bring it to you as soon as it comes out. As oil prices tumbled, so do oil related jobs. The latest m the latest example, slumber j is cutting 9000 jobs of its workforce. The Company Expects its customers to spend less oil, less money as Oil Prices Continue to plunge. The layoffs are being seen across the industry with suncor shell, and we are joined by david wesley from euston. From houston. He has been speaking with workers recently laid off. How console are that . How use to this are they . You can certainly have that when you have dropping of rings and hiring of new rigs so you can put workers often bring them back on. So you have more temporary type workers. But this is beyond the actual workers out in the field. This is going to the scientists working in the lab, the physicists. You basically have the industry double over the last decade, so in that span you have a lot of new people come on. So you have a lot of people that are into the back office and the i. T. Department, but also out in the field as well. So a lot of people, 9000 is a big number. Do you expect to hear numbers like this continuing . It is hard to tell. We have heard that there is a chance it could the a couple stages it could be a couple stages of layoffs because you do not know where prices are going to settle. When you have no certainty on where the prices will be, your customers cannot make plans. You are kind of making plans on a quarter as they said on their Earnings Call 45 minutes ago you are making shortterm plans. You may cut 1000 here and make another thousand cut down the road. You have to plan for the year but in shortterm bites. The iea said nonopec countries were going to produce less going forward, but then prices would bounce back. At that point, maybe schlumberger is going to rehire. Did they say anything on the call about the possibility of later in the year bringing workers back . They did not say that and they would not even really give much of a full year of guidance on anything. They can only give a firstquarter guidance roughly what to expect. Even that is a little hesitant. It is hard to know whether these workers would come back. I think they are trying to take a cautious approach and not get so up and down up and down quickly. They are trying to take a level steady road here. Even as times get better, you want to approach this cautiously. It is different than what they have done in the past cycles where they have reacted quickly both up and down. David, thank you for joining us. David wesley joining us from houston. That does it for in the loop. We are off on monday but back on tuesday with a focus on the motor city not me, but betty liu an interview with the center at detroits revivals center dan gilbert. Plus restructuring expert harry wilson, who served on president obamas Auto Industry task force. Have a great weekend. It is 56 past the hour, and Bloomberg Television is on the markets. We are 30 minutes past the start of the u. S. Trading day after an interesting week. It looks like we were going to head for the first gain in six days, but alas, the dow jones has turned they get is and is now down 22 points. It is recovering a bit. The yield got to as low as 1. 6966 percent. No matter what happens, the dollar continues to strengthen. The euro now at a 1. 15 handle. We want to talk about what is on the calendar. In the following week, more volatility, more excitement coming up. The European Central bank hold it centralbank meeting on january 22, in mean in which mario draghi is expected to announce. Then the fun is not over. The following wednesday, the fomc meets. They will not raise Interest Rates most likely at this meeting, but they will give guidance on what is to come. The biggest or this week is the Swiss National bank as it caps its currency against the euro. Joining us on etf friday is eric allen soon us. We have to start with currencies. Is there an etf that tracts that tracts currencies at the swiss banks . There is, and he has been around since 2006. It works a little like gld. It buys swiss francs, u. S. Dollars, and stores them in an account. I see i say every etf has its day in the sun. Yesterday was its day in the sun. This thing has been around eight years per that was its biggest day and all those eight years, by four fold. Both volume and return. The next best day was 4 the next best day in its history. It was a monumental day for this particular etf. It is the currency etf, that, like we were talking earlier, is used more by retail. They do not need to go through etfs. What about etfs that track the stock market . Everyone is looking at the market index, but it dropped the biggest yesterday in 29 years. Anybody sitting at home who has an International Fund or a swiss fund you are up. Do you have one . I dont have one. A lot of people and people own this one. What is fascinating about this is the currency effect in international investing. This its etf was down 2 in the year prior to yesterday. The currency effect was hurting it until yesterday, but it was so strong, this thing rallied up 4 . It is all confusing, but for the most part the currency and the strong dollar has hurt international investing. Yesterday was the exception. But the fundamentals remain the same, meaning the strong franc will hurt the companys opportunities. But for the most part it showcases the currency effect is a big deal. Our senior etf analyst, thank you so much. Market makers is up next. Live from bloomberg headquarters in new york, this is market makers. On the wrong side of the trade. Big bank profits get hammered. Going over to the dark side. Nasdaq has fought for years. Now, it may start running them. Banks for havana . The new rules on cuban travel. The doors are hardly wideopen. Happy friday. Im erik schatzker. Im stephanie ruhle. Happy friday if you are looking to a big weekend. Not if youre on the wrong side of the swiss trade or a ceo for a big bank. But you get the next two days