We saw this selloff after the yellen remarks. It really began after she was done speaking. At the same time, she did not say anything particularly different than what she has been saying. She emphasized her confidence in the strength of the u. S. Economy. A rateugh to stand increase. There is a data dependent clause, but nonetheless staying steady. We are seeing stocks fall to the lowest in the session. Look at the s p 500 for more of a snapshot of what we have seen. It is pretty steady throughout the day. Much has changed. When she stopped speaking was really when the drop started to accelerate. Take a look at what is suffering the most. I want to point out energy and what we are seeing in particular today. Down 3. 3 the county for the biggest percentage decline here, though it is a broadbased decline. With energy down that much, oil is the other big story of the day. Oil prices were lower even before she spoke. After, the losses began she got weekly inventory numbers, which showed unexpected bills in the oil inventory. Seasonally adjusted and out the highest for this time of year since 1930. In the seen a huge build Oil Inventories and dropping below 40 per barrel, we have now bounced back below a little bit. Betty utilities are lower. Julie were seeing natural gas down, coal, and railroads today. To point out the single mover down 14. 5 . The company said it was selling two glass. Analysterg intelligence commenting it got a lower price per megawatt then perhaps the market would like. That helped to contribute to the stock. I want to get a check on the headlines. Mark richt and has more from the news desk. Including more on this shooting. Police are responding to reports of an active shooter at a social Services Facility. Rich lawhead said there are reports and no arrests have been made. Early reports indicate there are 123 suspects. Are being set up in the area and some are being seen wheeled away on gurneys. Others walk away quickly on authorities. Police are working to secure the scene east of los angeles. United states Led Coalition pounding Islamic State group targets. The Coalition Says the aircraft conducted 6 15 airstrikes in two locations inside iraq. Civilian residents have asked science signs of reopen before the end of 2016, where two thirds of the paris attacks victims were killed. Theident obama has visited site this week. Each has brought a white rose to honor those who died in the attacks. They are expected to authorize the sortings. A vote taking place afterwards. The attorney general in illinois wants a federal investigation that would wind the controversy after the Fatal Shooting of a black teenager by an officer last year. Yesterday, the mayor fired Police Superintendent garry mccarthy. Video officials, withheld of the killing, and install stalled reinvestigation. You can get more on these and other breaking stories 24 hours a day at the new bloomberg. Com. I am Mark Crumpton. Betty thank you so much. Ellens speechny before the club in washington today. She says the case of future rate hikes will be data dependent. Plan to proceed in some mechanical way. The act for path to the shortterm rate will follow and will depend entirely on how incoming data influences our assessment of the outlook. Betty lets dissect our her words a lit a bit more with tom here in new york with us and carl riccadonna. Tom, let me start with you. She really did not say, go off script and say anything different. Whitey think the markets reacted negatively to her remarks . Tom maybe the reality is possibly setting in. Draw hard to basically conclusions for anyone days market moves. I do not think the chairwoman has said anything different today than what she has been saying for the past several weeks. A rate hike is coming. That we sort of hear from her, the more to me its sort of grows to be a near certainty that we will see this lift off. The bigger question at this point is what will the case the. We think we will see four hikes this year. Carl, would you agree she did not say anything different . A lot of news stories. Oil flirting with 40 per barrel and whatnot. We want to narrow in on her impact. Lets look at how it responded and it did not respond and he did not move a bit. A lot of positions are looking for janet yellen to further the ball down the field. Room to potentially cause the fed to delay and she also indicated through deductions, she basically signaled she is willing to go. The first rate increase will and the rebound of inflation. She went on to say, as i previously noted, i basically expect that to concur to occur. She is in favor of a december move. Remark whereis one she talks about, if you wait too long, they might then have to speed up. To delay the start of policy normalization for too long. We would likely end up having to tighten policy relatively abruptly. Over shooting both of our goals. I hate to turn this into the most boring segment on bloomberg, the but the ,eality is nothing said today there was nothing in anything she said today that was at all surprising. Is all part and parcel of the process of gearing up this eventuality of a rate hike. Gearing up for the conversation on pay spirit everything today was consistent with everything we heard. I think most people are growing up with a mind that december 16 seems like a done deal. What could derail a potential rate hike . Let me be clear on this. I think it would take such an outsized move relative to consensus for the fed to actually be spoofed by this. A flat or evenke a negative number at this point. That is not being dramatic for effect or one more point to what i think instead, lets get a number slightly less than consensus. Say i dont think that does anything to the odds for december. I think what it does is help shape debate for the pace. Tom is agree with what saying. It would have to be extremely weak on the order of 25 to 50,000 on payrolls and , inconsistentck with what we saw from adp, though adp had a big miss last month. There were nuances in her speech that i think are worth noting so this wont be the most warning segment as tom hinted bo ring segment as tom hinted. She is expecting more of the same. Still low inflation. I saw this a sluggish and soft economy. It looked like a dovish commentary. Strong dollar as a problem and sluggish International Growth in all of these factors led me to believe she is not looking for things to get better. There will not be much followthrough. Tom hinted or suggested he is looking for four rate hikes next year. I think we get one in december and two next year if we are , a veryd probably three slow moving fed because the outlook for the economy is not particularly impressive. I mean look, i am sympathetic to those general ideas. Here is what we know what will happen. Im about to highlight is technical and not even fundamental. Headline inflation will get to 1. 5 early in the year. It is based on base effects alone. Lets just assume for a second end crew gets to 50 by the of next year, which i think is a reasonable estimate. It may even be super light and for the sake of argument, lets use 50 as an estimate. True,eans if that comes you will have 1. 5 earlier in the year and 2 i the middle of the year and 2. 5 inflation by the end of the year. The Unemployment Rate will continue to move slower. We have done quite a bit of work on this. We estimated going takes 75,000 75,000 jobs to keep it steady. Here is what happens on the path to the Unemployment Rate. By the end of the year, you are at 4 . You basically have the Unemployment Rate well below, and two, inflation will now be well above the target and that is above the headline. I think it is really easy to make the case for a minimum of four hikes. What i would argue is as the year progresses and these realities come to be, we could actually be talking about the fed accelerating. Despite what you might think about the backdrop. Betty i get that. More technical view versus looking at the macro picture. Tom . We have got to wrap but go ahead. One quick point. The inflation idea, the Unemployment Rate is a totally a fundamental one. Effects alone will get you higher inflation and that was the point. , thank youporcelli so much. And thank you as well, carl riccadonna. Go to break, we are monitoring the breaking news an active shooter in california. I want to get to market Mark Crumpton with an update. Mark multiple people were shot policet a centerpiece of searching for up to three gunmen according to authorities. Several Law Enforcement agencies converged on that scene. About 60 miles from los angeles. Reports thatitial as many as 20 people were wounded in the attack. There has been no claim of responsibility. Some were seen being wheeled away on gurneys and others their handskly with up. There have been reports in los perhaps a hostage situation had ensued following the shooting. Police are searching for an active shooter, perhaps three shooters in california. There are reports of fatalities at this hour. We do not know how many. We will continue to follow this story. Market day continues in just a moment. Betty good afternoon. Carl icahn has been calling to break up aig but he may not get his way this time. According to a record a report that icon has a slim chance because of how the company has performed since he took over last year. Icon is not a guy to give up easily. There is more on this. But is what is Credit Suisse argument here . The stock performed pretty well, like 9 and then another 5 since icon started knocking at their door. What that also means is since icon came around, they announced a lot of news reports. Last week, they were looking at sales, and so investors are happy they are moving at a faster pace. People do not necessarily see him shifting the entire company up. Are there even any other ceo candidates out there . I say icon corey carl icahn got his way . A great question. You need to have somebody there who will understand the business has been there forever. The business is not generating enough value. A couple of candidates. Externally, that is the tough part. If someone came in from outside and then became a board number a board member and ceo, the concern is that they would not know the company well enough. Right. They do not know the intricacies. How hard would it be for ought ichanr cory icon carl theyre . Person also ceo is the trouble here. Betty thank you so much for joining us on this. Break, we are monitoring more of the breaking news on the active shooter in california. Mark crumpton has up it has an update. Sceneagencies are on the of the multiple shooting in california. Shootinge reports the took place at a social Services Center. Up to threer gunmen. The Law Enforcement agencies converged on the scene and triage units were set up on the area. Police are working to secure the scene in the england region east of los angeles. Live pictures there courtesy of k Abc Television in los angeles. Reports of fatalities according to k abc. We do not know how many are in we will continue to follow this story and bring you more developments. We will be right back. Betty were monitoring those events very closely happening right now in california, and active shooter at large. I want to get back to lark two Mark Crumpton. Mark lawenforcement agencies are on the scene of that shooting in california. There were reports it took lace at a social Services Center. Now, we are hearing from authorities that perhaps one may be as many as three gunmen are being sought. Several have been wounded bc in losto kay a angeles. Located about 60 miles east of los angeles. Police have set up a center. We will follow development and give you more. Julie hyman with todays options inside. Dan, theining me is manager at kk am financial. He is joining me from the cboe in chicago. It has been an interesting session. We had janet yellen speaking. Though, as you heard a couple of segments ago, she did not say anything substantially different than what she had been saying, we have seen stocks go lower. I am curious for your market perspective on that. Dan i think you have got other moving parts and what youre seeing is the anticipation for tomorrowss announcement from the ecb. I think that is taking center stage. The magnitude of what might be initiated moving forward, as far as rates and deposits, the duration of the liquidity position, and the amount of liquidity provisions as well. Markets are taking that into account. Maybe if they hedge a little bit , the market has been thinking that is why youre seeing a selloff this afternoon. I know your trade today has to do with small caps interestingly here. The iw m is what we are talking about here. Why are we looking at that . From a seasonal standpoint, the small caps typically outperform the larger caps into january. Given the fact that if you believe the market will continue to rise after we make it through so many news items, we do see the seasonal rally, typically 70 of the time, markets are up, you do see these outperform. Im looking from a technical standpoint, poised to break the 200 day moving average, we can see a push back toward the highs we saw in the middle of the summer around the 26 level. At 121, 126, january spread. T gives you a nice upside it defines your risk on the downside if for some reason the market cannot make it there. I am curious about the timing of this particular trade. Also ahead of the ecb and ahead of the jobs report, the iw m has underperformed the larger caps this year. If you look at the sp y for example. Will it outperform also on the news we are expecting to get from the two events . There is a lot of uncertainty. If you step away from shortterm aspects of what we are dealing with, if the market continues to trend higher like it historically has, we have seen small caps outperform large caps. I think here, given the position where it is currently breaking above november highs, it could catch fire and further strengthen the market. Julie thank you. I appreciate it. Betty . Thank you, julie. I want to get back to Mark Crumpton with more on the shooting in california. Mark thank you. Initially, reports of as many as the socialounded at Services Facility in San Bernardino, california. A live picture there in los angeles. Authorities have sealed off the area around the social Services Center and have also set up a triage unit outside the scene of authorities area looking for one and possibly three active shooters in San Bernardino. There are reports of as many as 20 people wounded. KAbc Television in los angeles is reporting there have been fatalities. You see the triage units on the ground in the area. Police are searching cars in the the whiteshooting and house meantime saying president obama has been briefed on the situation. Thisll continue to follow story as developments warrant and bring me more information bring you more information. We will be right back. Betty live from bloomberg World Headquarters here in manhattan, you are watching Bloomberg Markets. We want to check in with Mark Crumpton and more on the latest on the shooting in california. Mark . Ok . Mark we have been running around so much trying to cover this, i have unplugged my microphone. Pardon me. Police are searching for between one and three gunmen. Several Law Enforcement agencies converged on the scene in San Bernardino. Triage centers were being set up at the inland center. Some people were seen being wheeled away on gurneys while others walked quickly from a building with their hands in the air. They were searched by police before being reunited with loved ones. We are getting word from the white house that president obama has been briefed on the shooting counterterrorism adviser. San bernardino is about 60 miles east of los angeles to stop stay with bloomberg television. We will bring you more details on this shooting as soon as we get them. Says iftomic agency iran worked on said iran worked on developing Nuclear Weapons in the past, but it did not go past planning and basic component x era mets. Most of the work was done before 2003 with some activities continuing up to 2009. Nears oilas it ran production when economic sanctions are lifted. 23 suspects have been arrested and charged with smuggling thousands of migrants into europe. Simultaneous Police Operations were held in greece, austria, sweden and written. They gang may have earned nearly 11 million by smuggling around 100 migrants per day since operations started in 2013. Vice President Biden will deliver an address to ukraines parliament next week. He will also meet with the ukrainian president. The trip comes as the United States tries to focus on resolving the situation in eastern ukraine, even as World Leaders have turned their attention to fighting Islamic State. You can get more on these and other breaking stories 24 hours a day at the new bloomberg. Com. Im Mark Crumpton. Back to you. So much. Ank you lets look at how the markets are trading. We are kind of stabilizing at the end of the session. Abigail stocks have been after the comments by janet yellen. Yahoo , when resorts, and qualcomm are down year today but to date, the stocks are up on a down,at the nasdaq is perhaps setting up for a yearend rally. Resorts, the when stock is down for the third day in a row. Resorts,look at wynn the stock is down for a third day in a row. Looking at are turnaround, but probably too early to say. Qualcomm, another beatendown stock as they enter into a patent agreement in china. The first piece of good news for this company for a long time. They have suffered from fears of royalty payments in china, but another case of it being too early to know. Up on a reportre the board is considering big changes at the company, selling the major internet does this and perhaps reevaluating whether to spin out there alibaba stake. The ceo is under pressure to do something, especially when you look at earnings and revenues, which are down from 2012 when she took the helm. The stock, however, is up 130 . Rewarding on the promise of change but it is too early to know how far that will go into 2016. Betty thank you so much. I want ton yahoo , bring in the Senior Analyst at Pivotal Research who has a recommendation on yahoo shares and joins us from portland, oregon. How much weight do you put on these reports that yahoo may sell off its core business . I put weight on the fact that someone conveyed to reuters that they are considering it. Whether they are actually considering it is another matter. It is hard to know. Betty it is hard to know until we know. An amounthink theres of spin and counters been here. The board needs to be seen as considering this matter. Theres an activist that would have no problem from the board. Betty do you think it is a good idea . Ryan i think there would be more value realized if they were to sell at that hold it within the company. Betty why is that . Why cant yahoo go it the way it is . Hard toirst off, it is imagine it going much worse. It is possible know what else could do much better with it, but it is also likely there could be a proverbial dumb buyer who would pay for it. In that sense, you could see real extra value. Who could by yahoo . There are reports that iac may be interested. Brian there is a wide range of potential buyers for a given price. Some of the more obvious strategic buyers a lot of people would think of, those with experience in Digital Advertising might be the least likely. It is possible they would show up at a certain price, but i point to abs buying conversion not a wellwas followed transaction, but it is illustrative where you have a business that a lot of marketing related activities and assets and wanted to better monetize it through Digital Advertising. Verizon arguably did the same thing with aol. That highlights that there is a wide range of buyers that are not as obvious as we might think. Pennye might pay a pretty for this unique asset. You think ao nonobvious buyer is going to be more likely than an obvious buyer . Brian when i say nonobvious, i mean not the Media Companies that we know. They have assets in marketing related activities and could use a sales force and publisher relationship. A new businessd off of this platform. Lets go back to the good old days of Scott Thompson running yahoo . He was going to build an ecommerce business. Thats an illustration of doing Something Different with the user base where there could be more value than playing in the Digital Advertising business. There has been a lot of criticism of Marissa Mayer and much of it justified given where the businesses today. Here thate a chart shows how the stock has done since she took over, and it is up considerably since when she first took the helm. That, in fact, it has more than doubled since she came on board. Should all the blame of yahoo be laid on her . Goan all the credit should to jerry yang. This is all about alibaba. The core yahoo business has only gone down in value. You could argue that with a risk, theres more of that defeat will be stolen from the jaws of victory, but it is possible to realize the value that was presented to them at the time of showing up. Betty think you so much for joining us. A Senior Analyst who covers yahoo lets get an update on the mass shooting california. Mark crumpton has more. Mark it is the second time in less than a week that there has been a mass shooting in the United States. Attiple people wounded today a Southern California social Services Center. Police are looking for one, perhaps as many as three gunmen. On twitteraying there are reports of 20 victims. A station in los angeles saying as many as 20 people wounded at the shooting at a social Services Center in San Bernardino, california. K abc reporting there appears to have been a hostage situation people were seen fleeing the building. They did so with their hands in the air as they responded to police commands. There you see the live picture uptriage units have been set in the surrounding area. That facility serves individuals with Developmental Disabilities in riverside and San Bernardino counties. Been the second time in less than a week. There was a deadly shooting in colorado springs, colorado, just days ago. The 57yearold suspect. Dentified as richard dear this happened at the planned parenthood clinic. Three people killed. We are getting word from the white house that president obama has been briefed. We will continue to follow the story and bring you more developments as soon as we get them. Market day with betty liu continues in just a moment. Betty good afternoon and welcome back to Bloomberg Markets. Lets get an update on the reported mass shooting in california. Lets go to Mark Crumpton at the news desk with more. Mark there are unconfirmed reports of the teletubbies following the mass shooting today in San Bernardino, california. Live television providing pictures. Ais is happening at a center portable he for people with development told disabilities. Several Law Enforcement agencies are on the hunt for one, possibly as many as three shooters. According to those who were interviewed, men, perhaps one, perhaps three walked inside this Regional Center and opened fire. Triageare setting up units in the area. Traffic stops taking place as police cut for the suspect. The suspect. Some people were seen wheeled away on gurneys. Some walked away from the building with their hands in the air. Many asreports say as 20 people were wounded. Back to you. Betty we will be back to you with more updates on this developing story. Now, lets turn back to the markets and investment. Harvard may be the worlds Richest University but its peers are quickly catching up. Last five years, the Schools Endowment Fund has not been generating the kind of returns as schools like princeton or you. One alum is looking to change all of that. Mike mcdonald, the education reporter for bloomberg in boston joins us. There is now a turnaround plan at harvard . Alum ofs not an harvard, nor am i. You are probably referring to bill ackman, and the event where people were trying to help him think through ideas for turning around the endowment. He has a tshirt on his wall that says yale sucks. So this guy is very competitive. Harvard was one of the bestperforming University Endowments for years and changed the way universities manage their money. And for the last five years, they have sucked. They brought in stephen and promoted him and hes going to turn this around. Holdingart of that is may be what youd call a small town hall or meeting with alums to ask their opinions and views. But first off, what happened . Why were they doing so badly in the last five years . Mike if you could point to one thing, after the credit crisis, had a lot of difficulty and pulled back from private equity and venture capital. It turned out that was the best time to be investing. , theselook, princeton other guys kept at it this has weighed on their performance as some of those at best vintage years have been delivering these great returns. Did have significant problems with not having enough liquidity in their portfolio, so they did what they needed to do and now they are ready to go back at it and try to match yale and princeton again. Betty so what is his turnaround plan . Mike he says he is revamping the decisionmaking process. He has a doctorate and statistics and a lot of intellectual energy. The way theyng make decisions about their investments and is going out and working his network really hard. Hes meeting with a lot of people and having town halls. We are not invited to those town halls, by the way. Hes getting together with these people. A lot of them he has investments with, but they are looking for who is the up and coming new manager . Looking for those opportunities and looking to build out that portfolio again and let that lead to better returns. Betty thank you so much. Mike mcdonald. For more on investing, this time how hedge funds are doing. I want to bring in Catherine Byrne we had the news yesterday about returning outside money and all the woes with everyone. Or a lot of this driven by the billions of dollars that have left these hedge funds. Catherine thats right. Especially funds that have lost money for two years running and investors say thats enough, im out of here. Betty how much has been pulled out of these funds . A lot,ne there is still but as far as we know, its the lowest inflows since 2009. Betty since the financial crisis. Net outflows then. For hedge funds, it has been a macro fund making the big headlines. Are they performing the worst . Guest the macro funds and some of the activist runs have been doing poorly. Bill ackman is down 20 , David Einhorn down 20 , so those are bad numbers. who are the winners . Katherine there are a number of passportt are up, like fund, millennium has pulled in 4 billion and are up about 9 or 10 . Some funds are doing well and benefiting from the funds that are doing poorly. Betty thank you so much. Catherine burton who covers the hedge fund industry. I want to get back to the mass shooting taking place in california. It is a developing story Mark Crumpton is on right now. A shooter or shooters went on a rampage today in san theardino, california, and second mass attack in the u. S. In less than a week. The shooting happened shortly before noon local time about 60 miles east of los angeles. It took place in your the inland Regional Center which serves people with development told disabilities. Law enforcement officials said on twitter that they have confirmed between one and three suspects and were responding to reports of 20 victims. We are getting word from the white house that president obama has been briefed on this shooting by his counterterrorism advisor. San bernardino located 60 miles east of los angeles. Here is an account from a husband whose wife was in the building when the shooting took place. Guy came in next to her office and i guess started shooting. A locked themselves in in her office. Floore seen bodies on the and she said the ambulances are taking people out. She was able to get out, but there are still people inside. Mark the search for the suspect or suspects continues. More Bloomberg Markets with eddie lu after the break. Mark im Mark Crumpton. We are following a developing story out of San Bernardino, california, where police say a shooter or shooters went on a rampage today in less than a week. The shooting happened shortly before noon local time, about 60 miles east of los angeles and took place near the inland Regional Center, which serves people with development disabilities. Law enforcement officials saying on twitter earlier that as many as 20 people were believed to have been wounded. Television in los angeles reporting there are fidelitys. Saying one,rities as possibly as me as three gunmen are being looked for at this hour in connection with that shooting. To follow thise developing story and bring you more information when we get it. You Mark Crumpton at the news desk. Lets go to julie hyman who has a check on the markets right before we closed. Looks like we have taken another leg lower. Looks like wee are going to close at the session lows. If you look at the s p 500, you see this trajectory betty was referring to, going lower and lower as the day progressed, making a little bit of a recovery before taking another leg lower. Janet yellens speech today happened right around this span of time. It was only when she finished speaking that stocks began to decline despite the fact she did not say anything significant. Look at my bloomberg terminal. It is a broadbased the klein with all the 10 Industry Groups decline a broad based with all 10 Industry Groups lower. Is another big thing we are watching as it fell at 1. 2 under 40 a daryle. Fell to under 40 a barrel. We are seeing brent here falling and large Cap Oil Stocks lower. Then i have been watching the transports were we have seen a bit of diversions. Air carriers are doing well with delta out with its first positive read on its passenger revenue per seat mile, thats one of the key measures for the airline industry. Its first positive rating in november since last november. Spirit wanting back from what has been a terrible performance. Also looking at the rail terriers. When i say there is a diversions in carriers, thats because these guys are down sharply. Csx is down out with some commentary saying it will be up. 3 because of coal shipments. Much, julie you so hyman at the markets desk. We want to give you some breaking news out of result. The economy there has been in turmoil. Brazil is nowof facing impeachment proceedings in Congress According to the lower house speaker. This process is going to take a wild but she is facing impeachment proceedings in congress in brazil. That is it for Bloomberg Markets. Scarlet we are moments away from the closing bell. Alix im alix steel. Joe weisenthal is off today. [closing bell ringing] scarlet yellens speech tipping her hand to a rate hike sooner rather than later. Mario draghi expected to announce additional stimulus. That decision comes tomorrow. Alix and how things are looking in a private equity sector. Were going to talk to a fund manager at kkr about being a woman in finance. , we are of course following the breaking news out of San Bernardino, california. Lets go to Mark Crumpton for the latest. Mark the Associated Press is reporting that the president and ceo of the Southern California center said the police focus is on a building that houses at least 25 employees as well as a library and conference center. The inland Regional Center
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