Transcripts For BLOOMBERG Bloomberg Surveillance 20141217

Development. We see how it breaks apart from the oil price movement. Meanwhile, apple has had enough of the rubles wild swing. S stopped online sales of its products in russia while it reviews pricing. Russia plans to pump the same amount of Oil Next Year as it did in this year. West texas intermediate has been down as much as 2 and has been trading a little under 55 and barrel. Versus theecutives board at American Apparel, the struggling retailer that targets teenagers. The company has fired founder dov charney for misconduct. More than 30 executives want the board to reconsider. They say charney should be around to help the next ceo because he is what makes this thing kick. Charney violated American Apparels sexualharassment policy and missed used company funds. Charney calls the accusations baseless. Hackers are warning sony not to show the movie the interview. Threatdio is taking the seriously. He company has canceled the new York Premiere and have told theaters they are allowed to pull the film from theaters. The hackers have been linked to north korea. The world needs more hockey. We got it last night. The longest shootout in nhl scored, floridas nick in the 20th round to give the panthers of florida a 21 win over the overage can ove chkins of washington. Scarlet looked at every round. Ovechkin scored in the fourth round but missed in the 20th, which led to the panthers winning. Do you like the idea of a shoot out . Of course. Missed . I cant believe it . You just learned who he is. Lets get a data check. Equities, bonds, currencies, commodities. Interesting data check thanks to all of our Bloomberg Television news Team Worldwide who helped us when yesterdays fireworks, the equity markets rebounded, euro a bit weaker, crude oil is fragile i mean that, fragile at 55. 15. Is way above the average at 20, the ruble is weaker this morning but nothing like we saw yesterday. Janet yellen a spiking of near 80, and brent crude under 60 as well. This is what janet yellen is looking at. There is a sad day for the folks watching in moscow. He read is low, low twoyear tolds, and we will talk harbor a corcoran in the 7 00 hour about the American Experience american spirit getting better. The game with janet yellen has always been what indicator is she watching, and there is what she is looking so she has a detailed passport on what she is looking at with labor. Pushing for war to expand enough focus on certain elements. We will look at that in the hour. Henry meyer giving us the pulse in moscow. This as Vladimir Putin as a challenging day. The front and Center Financial issue is the infinite for the Russian Central Bank that has been reaffirmed, and mr. Meyer joins us from our Bloomberg News studios in moscow. Henry, when i look at the news flow, it is all muckity mucks talking. What is having on the ground in moscow this morning . Jump in the ruble after the finance ministry issued a statement saying it believed the currency was undervalued and has 7 billion ready to support it, and the ruble is continuing to fall, not at the same pace as yesterday, but we are still looking for answers here, and we are waiting to see whether president putin is going to act decisively to try and stop it. Thatnry, i read reports people are buying imported and luxury goods before the price goes even farther up. Is that what you are seeing . There he much so. Very much so. That has already been apparent. This has accelerated over the last couple of days. People know that the price of imported goods will be going up substantially after the new year , but there are already reports, for example, that foreignmade cars are now impossible to buy. The dealers are no longer getting supplies. Henry, we have heard about a lot of russians converting rubles to hard currency. To what extent are russians aware of the scope of the crisis . I think russians are very much aware of the scope of the crisis. Even though state television has been trying to play it down, people know what is going on, and they are really very concerned. Awaiting asically storm to happen next year. Nothing has really gotten so bad yet, but they are expecting it to. Henry meyer, thank you so much from moscow. Mr. Meyer will join us in our next hour as well. It is called ruble tuesday, this wednesday has brought a measured calm. Russian institutions to say all the right things will stop we say we need intelligent conversation. Robert sinche joins us from pierpoint, Ian Shepherdson from pantheon, im thrilled to have both of you here this morning. Leader inche as a academics, and i suggest we switch to a capital flow analysis. What is the capital flow analysis right now of russia . The critical thing in any emerging market crisis is when the domestics lose confidence in their own currency. International flows are important, but what really matters is when domestics lose confidence, you start to see that capital moving out. That is clearly taking place. Domestics in russia do not want to hold rubles. They are trying to get hard currency, hard goods, anything but hold onto the currency, and that is when the crisis unfolds. Prichards nailed this one he talked about flows coming out against reserves. What is the run rate against russian reserves . How quickly are based ending . How quickly are they spending . They have not been spending a lot. They have a little over 400 billion left, and that can go pretty quickly if the domestics really want to float the money out. What are they going to do with the reserves . Intervention is fine. They have things talked about is using the reserves to help the corporate sector pay off the dollar debts. The whole back story was the Big Oil Company doing a sidecar deal with putin and the Central Banks trying to be yellenlike. One more problem with the economy up to the discretion of Vladimir Putin. Currencies are not completely liquid. Some tied up in Infrastructure Investment funds it is not just sitting in a piggy bank. Largeknow they have holdings in u. S. Treasuries, they are liquid. This is a good use of reserves. To help your corporate sectors stay solvent. We kind of forget that china, over 10 years ago now i think, used about 50 billion of their reserves to shore up their banking system, so this is why you have reserves. Reserves are there for a rainy day, for helping your economy get through transitions, and i think this is something that you probably want to see, that the corporate sector needs to maintain solvent and pay their dollar debts. Bring in ian shepherd see. To what extent is janet yellen and the rest of the fomc paying attention to russia and the ruble and what the central bank is doing there . What are they folding in here . They are looking at what could be the worst Case Scenario for the u. S. If things get worse for russia and other emerging markets as well. Weaknesses. Serious this is a very domesticallyfocused economy, and the labor market is the key to yellen and the rest of the fed false up a will have a detailed discussion about how bad can things get in russia. It will not fundamentally change did u. S. Full faith and credit move yesterday . We got to a 205, waiting for a Gary Shilling 199. I observed on the bloomberg terminal u. S. Markets adjusting. You have got to put it somewhere, and such a panic atmosphere, treasuries are always beneficiary. If you say that with a british accent, it works better. It works better than when you say stochastic. This movement we saw in emerging market currencies yesterday, it was sort of undifferentiated. Do you see this as a blip of panic or is something really happening here . The fed is likely to be moving to a policy normalization. Generally the big deficit as in em country, the fed raises its rates, but the more you rely on oil like columbia, and then venezuela, the worst to get scum and that russia of course has oil and politics, so there are a few different practices. Chart time with bob sinche. Here is the ruble at 55. Omg, it is terrible. Here is the drama yesterday morning. Thanks for watching worldwide. Bob sinche, here is what we call disillusion. Is that the central bank acting . I mean, it looks completely manipulated before we get a stronger ruble here. Why does that happen . I think that is the central bank becoming involved. There were signs of liquidity and trading in the ruble was being cut back, so speculators could not participate. Apple leaving as well. Right. I think the market went through this crisis, and part of what we saw yesterday is on the big interestrate hike and the appreciation of the ruble it never got back down to about 60 in the morning, i think that is why a lot of domestics and maybe corporations said when he dollars, then they went out and started biting dollars, and that is when the top side. The central bank has a role to play here, reserves, and Economic Leadership has a role. Just to put a fine point is a menu said earlier, this right here, what the central bank is doing, is not a smart move of reserves. It should go to the corporates. They need to establish some sense of calm initially come in if they can do that by spending 5 billion, find, but when you think on a more mediumterm basis, what you want to do is keep your corporate sector flowing because as i said, they can not import a lot of goods anymore for stopping after stay domestically. In the next block, i will use the word stochastic three times. Output request of the day this morning does Silicon Valley have a culture problem . We will speak with Barbara Corcoran, now an entrepreneur, leading shark tank. Does Silicon Valley have a culture problem . Tweet us bsurveillance. All quiet here at bloomberg surveillance. We welcome all of you. Brendan greeley and scarlet fu with us. Futures up 11 and a lot of the rest of the market looking ok. It is temporary. Who knows what will happen in the next 10 minutes ago our guest host of the hour, Robert Sinche of amherst pierpoint and Ian Shepherdson of from pantheon. We are approaching a Monetary Policy cropping point. There is a tradeoff involved where there is a cost of tightening Monetary Policy and a cost of doing nothing. Ian shepherdson, you included this chart that showed a cost of doing nothing, not tightening, and a cost of tightening. Where are we in this curve . Thee are getting close to crossing point. We may already be there. The problem is you do not always know for sure until you are there. Actually now it may cost less in terms of the inning to raise rates than it would cost to do nothing which is the risk of future inflation picking up. No one is talking about rising inflation in the u. S. , but the labor market is tightening and we do not know what might happen in the future. You have to read that even if they raise rates a bit, which they will, but even if they did, it will take another year or 18 months to affect the economy, and during that period, the labor market is only going to get tighter because growth is excelled rating and wages are beginning to start growth is accelerating and wages are beginning to move higher. If you dont act when you get to the crossing point, those curves or the risk of not doing anything can get bigger very thosey because as you hit very low levels of unemployment, we are getting not too far away from that, wages can move very fast, and typically u. S. Wage growth goes from 2 to 4 where the fed always panics and about two years, which is not very long. The evidence of waste tightening is still in the anecdotal phase, being pulled out sentence by sentence out of the beige book. One of the problems that america has been stagnating wages. Couldnt we handle a little bit of Wage Inflation right now . Absolutely. We are running at 2 , the fed would be very happy if we can get to 3 or 3. 25 and a stay there. But it always goes from 2 to 4 , and they start getting worried. The measure the fed refers but the markets do not look at so much is now beginning to pick up and wage growth, and that report in the private sector is now nearly 3 . Why do you think there is a bias to looking at out bridge Hourly Earnings . Outt is familiar, it comes in the payroll report when everybody is geared to look the labor data, but it gets completely ignored. Bob, you were laughing. It is a terrible number. It is like a bee dow, a terrible number everybody watches. Is a mixed shift going on, so if youre adding workers with lower wages like the retail industry, that brings down average Hourly Earnings, yet people want to look at that on a yearoveryear basis and say that is the rate of change of wages, and it is a combination of wage changes, employment changes it is just a horrible measure of wage gains. What is the real number . I would say really there is by market. Some markets where there is International Competition running as zero, others where it is up at 4 , 5 , 10 . We will continue this discussion this fed day. Our next hour, this is an important conversation. There was just enough volatility on deany to have curnutt and of macro risk advisors. We will talk with the latest gray hairs will set stay with us. It is bloomberg surveillance. Good morning worldwide. Bloomberg surveillance this morning live from new york city. We welcome you particularly in Continental Europe and watching in russia. Oil breaking under 55 west texas intermediate. That gets your attention. Time for a morning mustread. This came out yesterday afternoon late. Quoting of the institute of international finance, linking oil to the soap opera in russia. Robert sinche with us, from amherst pierpoint, and ian shipments in and Ian Shepherdson from pantheon. We need to keep in mind from the russian perspective is although the price of oil is down, the russian price of oil is not down that much. Their revenues in ruble is going to continue to come in. That is the good news. The bad news is you cannot get much with those rubles anymore. Destined ise their desperation that they need to revenue up, oil, natural gas, that that problem will go away . They do need the money, some of the more wild fierce is western europe in terms of natural gas are overdone because they really, really need the money. Doing analysis of capital flows. Doesnt it all come down to what we all think is going on at Vladimir Putins head . It does. He is bad, but i cannot think he is crazy, and there has to be some elements of rationality in the coming policy in russia sooner or later, but it is too late. He has had a long time to diversify the economy, to make it more accountable and transparent, and he has not done either of these things. It is still a crony, oilbased economy. He is not crazy, but he is proud, and that is a hard problem to get over. It means some of your options are caught off are cut off. He can cut off the sanctions overnight, but i do not think he will do that. He has lost his economic credibility, some of his credibility is based on nationalism in boosting the russian nationalism is a big deal for him, and it is a problem to walk away from that. Window we see the collapse of the russian economy . Gdp next year will drop by 6 , 8 , so the clock is ticking on that one already. I have got a philosophical question. Ab sinche i, there is brilliant in this tweet. Are we all keynesian in foxholes . In a foxhole. Whether he is keynesian or not it is government to the rescue. It is government to the rescue, but it is not clear that they have the resources to do everything they need to do, so you pick and choose which battles you are going to fight. I do not think we will see a lot of fiscal stimulus in russia right now. I think what they will do is try to stabilize the financial system. What do we do during a financial crisis . The first thing we did with use our resources to stabilize. Bob sinche, Ian Shepherdson with us, soon the Central Banks. Twitter question of the day does Silicon Valley have a culture problem . Barbara corcoran will be joining us in the next hour to discuss. Make the best entertainment part of your holidays. Catch all the hottest handpicked titles on the winter watchlist, only with xfinity from comcast. Good morning, everyone. With markets churning this morning, this is bloomberg surveillance. Lets get to our tap headlines. Here is scarlet fu. Layouts coming to seaworld. The orlandobased park operator will shut about 300 positions. Seaworld has its latest fourthquarter dividend and has a buy back up to 15 Million Dollars in shares before the and of the year. Regulators plan to slap fruit with the 105 million fine, company in trouble for billing customers with unwanted services. Sprint is the latest big carrier to enter the cross hairs of regulators for socalled cramming. At t agreed to pay the same amount in october. Nasa rover on mars finds methane, a possible piece of evidence of life on the red planet. Andound it twice in 2013 2014. Nasa says the findings does not reveal whether mars ever harbored life but does point to a chemically active modern planet and stable conditions for life on agent mars. I saw methane on a glass hidden in a case. In a bookcase. The federal open Market Committee is always is in full. This year, secret santa gave a janet yellen a russian crisis. Robert sinche and Ian Shepherdson are certain they will ignore russia. Ian shepherdson with pantheon economics. It is a ritual nod, but it will not mean anything. It will be a focus on Domestic Labor market, how fast it will tighten next year and what it means for wage, which is the feds number one discussion. Why are we having this discussion with however many nonfarm payrolls per month . Last six or nine months, we are now running at a trend of about 250, 275, and started to general right early signs of weight starting to generate early signs of wage pressure. The fed is still split. We have got a very wide dispersion of views across the fomc table. Some of the people are very oldfashioned. Signare super dovish, no of any change, so not clear how it is going to shake out. Sinche, we have been talking about Hourly Earnings and how we are certain to see some pressure upwards, but during the recovery, the company got really good at using Computer Software to manage hours in the week so they can keep wages down overall. That is just another form of wage negotiation, isnt it . Certainly public policy, Health Care Costs as you go above 30 hours plays a big role in this, but more and more people who are working two parttime jobs where theyre than one fulltime job, you do not know what extent that might be having an impact on the increasing reported employment also. Ian, do you want to jump in . The number of parttimers is shrinking, but we still have. 5 Million People working threeime we still have point 5 Million People working parttime that want to work fulltime. They change language and drop considerable time, and that is a phrase everyone is looking for. Fed pay moret the attention to the beige book, which anecdotally shows there is plenty of reason for optimism about the labor market . It is difficult in a country with 300 Million People. If we were talking about luxembourg, maybe you would not see it when you walk around the streets and walk around the stores. There is a dollar chart here. Bob, we will drag you into an economic discussion. Sinche as this tattooed on his left arm under his elbow. Goingis a dollar policy back, actually a weaker dollar dollar,but there is the the big green circle, do we have a new, nascent, strong dollar . What we have is a less weak dollar. Of record lowoff levels in 2011, 2012, record low levels that were not consistent with fundamentals, so when we get some sense of normalization of fed policy, i. E. They are not a spending their Balance Sheet anymore, and we begin to see very accommodative policy elsewhere, and this slight to dollar isnt that the signal of a fed that has got to get out of front of the debate rather than wait . Problemnk so, but the is that they always way too long. A way to long to tighten and a tight and too far, they wait too long to ease come in thi, and ao far. Far. And they ease too will we always have the world currency . As long as i am alive. It is your problem. [laughter] talk about the currency, currency wars, losing its presence as the World Reserve currency, it is times like this when he finally was the worlds reserve currency, and clearly it is the dollar once again. Other currencies are not ready to take on that role. There are big tectonic shifts going on a global economics. U. S. Strengthening, china cooling down, russia caught in between, certainly getting fluxed by the drop in oil prices will stop at the world have a responsibility, en, to export the growth to the rest of the world, its strength . If we go to 3. 5 , then it will happen. It is not a question of a policy decision it will happen automatically. We are the only place buying anywhere right now. Sinche, in this chair a few weeks ago talking about a euro at parity with the u. S. Dollar. Will a currency war bring us one ever weaker euro as that dollar strengthens . Why is the euro always as strong as it is . It goes back to these capital flows. Europe continues to enjoy a current account surplus they just do not import a lot. They are not spenders. It is difficult to push that currency down, but i think now we are starting to see the forces will push the euro lower, and that is part of the adjustment process. When you say europe does not justt a plus, they are not spenders, we are talking about germany, right . Broadly we are talking about europe because we have seen weak demand, greece, italy, spain, even france weakening up now, concepcion just is not growing. An interesting chart we have, if you look at chinese x fours to the u. S. And the eurozone, they generally have tracked each other up until about the last. Year. Tonas export have continued grow up, next was in europe have rolled over. They are not getting the demand in europe that we need for the rest of the world. Scarlet, rolling over, not a headline amount, but 54. 85. The payoff where is for retailers to go our single best chart is next. This is bloomberg surveillance. We are on Bloomberg Television, streaming on your tablet, your smartphone, and bloomberg. Com. Good morning, everyone. Bloomberg surveillance. It is a fed day. Look to Bloomberg Television for coverage through the day and of course this afternoon. Our single best chart right now, janet yellen, if you are watching, pay attention. How much will they mention gas prices or oil prices in the liberations today . In the deliberations today . Our single best chart courtesy of our guest house, ian shepherd dson. Ian, for those who are waiting for the great gas lift off, it is coming, but how long will it take . It takes a surprisingly long time. Typically it takes three months, four months, five months before spending adjusts. Gas prices still dropping as we speak, so we are looking at the sole benefit, not today and out in the Holiday Season which will be ok we will see it in the First Quarter and into the spring of next year, so we will get a push that lasts quite a while. Will that give us a spring push for housing . Probably. The improving labor market i think is the key. Why did we get this so wrong because i feel like we had six conversations at this desk that said low gas prices, better holiday sales . To an extent. Gas prices started to fall in september, so the initial decline is pushing up sales, but the big bush tends to come the big push tends to come later. Consumer confidence you have seen the last reports a latway. 31 . Since when . September. If you live in new jersey, it is below two dollars. They are paying you to take the gasoline. [laughter] bob sinche, early on, people were blaming it on the stronger dollar, but it is a lot more than that days days more than that these days. It is supply. Over the summer, people were scratching their heads why are oil prices holding up . We know there are takers with oil all over the place, and then when the adjustments start, it goes very quickly. More quickly much than actual supply and demand, so it will actually take time to bring supply down and to bring stabilizing prices on a fundamental basis. We have a supply of photos. We begins with this extravaganza. Our Bloomberg Photo editor, i hope you are ready to think back, that is the seminal event of this year, so many things have happened this year, that is tires burning in kiev. Independence square riots. Exactly. Back then this feels like six years ago, they were talking victory in a covert Vikto Yanukovich was still the president. The number two photo, Palestinian Refugees in syria way to receive food distributed by the u. N. Civilians, four hundred 50 parcels of food were delivered. This was a brief ceasefire between syria and the rebels. It is amazing how little we talk about syria now. It is. Once you reach the point of no we stop talking about it, but it is still important. Shout out to syria deeply. Of the conglomeration stories. Just news, aggregate news. Isnumber one photo this the stadium in sochi, remember that . His Vladimir Putin was that international zenith, when foreign leaders were still willing to talk to him. This is the Opening Ceremony, but all did not go as planned, someone lost his job and probably his life. That is the photo of the year, that is metaphor made real right there. That is the absolute peak of russia, when that light did not come on, it all started to go down. That was picketts charge for Vladimir Putin. For those of you, by the way, who were not watching at the time, they were supposed to be five rings at the Opening Ceremony and one was supposed and one failed to open full stop it was a catastrophe, a little snowflake that failed to become a ring. A harbinger of things to come. The ruble than was roughly 33. A harbinger of the winter stability. Very good. 50 . Is that a word even . I dont think it is. I like how i am asked to you because you are british and that means you have a greater command of english than i do. The ruble is down 80 since the olympics . They did everything he wanted to do and now there are a lot of antibuildings in sochi. Coming up, some ceos have had it bad this year. This is bloomberg surveillance. On Bloomberg Television, streaming on your tablet, your smartphone, and bloomberg. Com. Good morning, everyone. Bloomberg surveillance. Stability in the markets this morning. A nice tweet just came in saying why arent you talking about ukraine . Without question, push aside by russia, but you the ukraine story continues. We will monitor that for sure. The other top headlines the yearend bonus for citigroups businesses has been unchanged even though revenue has been sliding. Traders will be spared the full potential of this years market bunk Oil Investment anchors will get bonus boosts of 2 to 3 from a of its jump in revenue. A Record Number of people will travel this Holiday Season according to aaa. The Organization Says almost 99 Million People will travel at least 50 miles between december 23rd and january 4, up from 95 million a year ago. About 89 point five people will drive come up more than 4 from last year. Lower gas prices. A fast food crisis building in japan. Mcdonalds is running out of french fries. No medium, no large, no supersize fries. The colbert is labor strikes at u. S. Ports the coal print the culprit is labor strikes at u. S. Ports. It will take four weeks instead of two weeks. Fine, whatever. Just to travel 50 miles is to travel . When i walk between where i live and whole foods, that is 50 miles. Yeah, right. Back and forth and back and forth. What are we doing here . I am doing an intro. Excuse me, i am going to clear my throat, look at the screen, and say something. Apparel, the place where dov charney used to do what he wanted, but a time where he had been demoted from ceo to consultant, American Apparel finally let dov charney go yesterday. Sydney finkelstein is the associate dean of dartmouths tuck school of business will suck you keep a list of the worst ceos of every year. Dov charney is number one . Actually, he hit number two this year, and i guess it is welldeserved for all sorts of reasons. Personal activities, stock price down 80 well, his personal act of these are well documented. What did he do wrong at the company . At the cup and a, you have an entrepreneur that actually deserves a lot of credit for building a very successful, thriving business, and then he kind of decided to be mr. Micromanager, which you know a lot of founders have a lot of difficulty making that transition. Then he had virtually every store manager call him directly oneonone, and you can just manage an organization that way. At one point they had a warehousing problem and he slept on a mattress in the warehouse with a walkietalkie on his chest to fix any problem. That is not ceo behavior. It is not something we teach at the talk school tuck school. A lowesrsonal pickett was ok, it was when things went downhill that it was an issue. A smallerwhen you are company, micromanagement is not a terrible thing. It is when you cross the line and you have to grow and you have to have management talent around you. He had a revolving door, some really capable people were coming in and lasted a matter of months usually. Executives at American Apparel have appealed to bring him back because he is inseparable from the brand, his personal brand of sleaze is tied into American Apparels appeal. So i think that is ok. We put him on the cover of Bloomberg Businessweek as the fall of the sleaze king. A lot of companys have this transition where one person with a vision creates a something and then cannot turn it into something larger and enduring. How do you overcome that . Bill gates did pretty well. Steve jobs did pretty bad and then he did pretty well. What you need to do . You have to be willing to give up a little bit of control. Mark zuckerberg. Delegates control to someone who knew what she was doing. With samberg with sandberg, and that is a smart choice was a delegation requires trust and self confidence was up if you do not trust the people that are working for you, you do not have a chance. You have to let it go. And you have to be selfconfident to let it go. That is the paradox. Name another ceo on this list. Does twitter need to let dick costolo go . Twitter i have mixed feelings. It is a company that is not filled its potential. They have the facebook comparison and time again against that. Dick costolo was supposed to sandberg. Sheryl what did he fail to do . This is another story where the revolving door at the top, a lot of top managers coming and going, changing the strategy it is very interesting. Entrepreneurial companies talk about the pivot full top in Silicon Valley, that is the first principle. Pivot means you switch strategy. When you have gone public, what was a, 30 billion, that is a pretty hard thing to beat. Company that did it right under armour. Under armour had an unbelievable year. It started in apparel, still big in apparel, but what they have done is expanded to footwear, international, and a big focus on women. Go ahead, please. It is a marylandbased company full stop that is all i had to say. I interviewed mr. Plank at length, and he did not go to tuck. What do you tell fancy pants mba people about the best practices of a guy that started a business off his grandmothers couch . Tuck school and Business Schools that teach entrepreneurship, actually a little of that, and we will have case studies on him and teach our students about him. He has expanded the market, and he has done and a very effective way. He has someone to challenge them, which is amazing. How does the performance of the stock prices and the performance of the ceo i notice in your best lists, and each instance you cited how the stock has done. You cannot be a successful ceo and less you have the numbers to back you up, so it is hard to imagine a really great ceo that cannot make the company work, so there is a natural connection. Then you have to go further because not every company that has problems with their stock price, the ceo is responsible because it could be an industry change, something out of their control. And this case, or in every one of these cases, you contracted directly to the ceo. Ft named hime executive of the year. Tim cook had and maybe have som one of the toughest jobs in the world, following the legendary steve jobs, and he has done pretty well. Look at what is going on with the company. It will not be easy to come up with the next new, new, new thing. How would you grade janet yellen . She is doing all the right moves in terms of presence and can indicating what she believes in. Thank you so much, sydney thing ill sign joining us from tuck school of business. A sydney finkelstein joining us from tuck school of business. Improved russian ruble this brazil going the other way for us of stay with us. We have another hour of bloomberg surveillance. This is bloomberg surveillance. Trying to find a bid with hope and audacity. To shore up the verbal the ruble with a bit of instability. Sell the ruble, and lets buy a condo in new york. Barbara corcorans phone is ringing off the hook. We are live from our headquarters in new york. Its wednesday, december 17. Im tom keene and with me scarlet fu and brendan greeley. Quest earlier in the day, the russian currency strengthen commanding a 17 date route that shaved 20 off of its value. It has fallen back to about 66. The Russian Finance Ministry began selling for and foreigncurrency today in an attempt to shore up the ruble. , everything we have been talking about is on stabilization of the ruble. We see how it breaks away from the oil price movement. This point to certain calculations and market participants. Click meanwhile, apple has had meanwhile hackable meanwhile, apple has had enough of the ruble swing. West texas intermediate is down as much as 2 , currently trading at just under 55 barrel. Brent oil is selling for less than 60. It is executives versus of the board at American Apparel. The struggling retailer that targets teenagers, the Company Board has fired the attorney due to misconduct. Has than 30 executives fired dov charney due to misconduct. One than 30 executives disagree and say that is what makes this thing take. Hackers have invoked 9 11 in wanting sony not to show the interview. In the studio is taken and seriously. Have also pulled it from theaters. Its a comedy about a tv show recorded recruited to kill the north korean leader. At the end of the game is a shootout. The panthers took a 21 win over the washington capitals. The previous record was 50 rounds of the shootout. 15nthers six goals rounds of the shootout. The panthers six goals for the tiebreaker. I love the shootout. It is exciting. Alaskan missed a big one in the 20th round. Exhausted. They look like they are drunk on skates. Good times. Let me do a good data check. Much better than yesterday. Futures rebound. The euro is weaker. Crude oil is a little fragile. That bears watching. 54. 87 from 55 earlier this morning for west texas intermediate. West and the ruble is around 66. But the currency collapse has put the president Vladimir Putin on the defensive. Hans nichols joins us from berlin. Henry, i want to start with you. Useda seems to have emergency measures to stop the ruble. It seems to be working right now. Holdill hold putin will a press, samara. One of the expecting him tuesday . Able take a very combative stance he will take a very combative stance and say that russia is defending its interests. But of course, ordinary russians are looking for reinsurance reassurance and there is a moment of dread the moment. I dont know whether putin will be able to achieve that. Hans nichols, German Companies have always been worried about their exposure to the russian market. What companies in germany are most scared right now . Now, you would have to put adidas, and siemens in that market. That basket. But its not all bad. The companies mostly in frankfurt, which banks have exposure to russian bonds . Inn they did these scenarios october, they never included a collapse of oil and a class of euro. But the a big question, luxury auto space, porsche sales for example in russia, up 55 last. Lexus sales of 63 . Atgives you an indication russians are taking their rubles and parking them in luxury items. And henry, i want to bring you in here as well, because when we talk about the level of panic on the street, there was a rush to move the money out of rubles into hard currency. Today withlled down the ruble stabilizing, or does that continue . Down to somemed extent. But hans is absolutely right. Buy expensiveh to consumer goods and there are reports that foreign made cars are now in shortage. You cant actually get them anymore. Continue, because price rises are expected to hit as early as the new year as people are rushing to do that. Tohans, is mr. Miracle going is miss merkel going to speak to mr. Putin . Maybe. Yesterday, she seemed to tone down her rhetoric. Tomorrow, she will head to the eu for a summit. Ahead ofhat, that, she has been clear, no new sanctions to come out of brussels tomorrow. Myers putting his rubles into . I think he is buying a very expensive motorcycle. We should have the henry meyer index. I like that. Thank you both. We really appreciate your coverage. We need to look at america. All of this doom and gloom about russia, forget it. Barbara corcoran has spent a multifaceted career gauging the halls of america. In the trenches, which makes very different and very special. She joins us this morning. What would you do with Vladimir Putin unsharp tank . On shark tank . I would fire him right away. I would just say, get out of here. He doesnt have a longterm strategy, does he . Analysts. S are i would just say committed out of here. I would just say, get out of here. Theres a problem with all of the youngest son working with today, which is they cannot get finance. Once they get a good start and they are running, they just cannot get their hands on the money. We are seeing bank loans come from Smaller Banks and not larger banks. The larger banks, forget about it. Dont even apply. Its like a joke. They have the programs out there, but you cannot get your hands on the money. What do you say to them when you say, pass the salt and for . The salt and pepper . Stephen leicht complaining about it, kickstarter has replaced all that. Evendinner though im complaining about it, i would say, can starter has replaced all that. Enjoy your dinner. You can actually get your hands on the money from the population of police. And how much money is flowing , thethe lending trees kickstarters . Class is amazing to me the kinds of businesses that are getting money from that it is amazing to me the kinds of businesses that are getting money from that. I know a guy that started a be company. He annoyed me. He could barely talk. He did not even dress for the occasion. I was watching his video and i said, he will never get the money to raise these these. Bees. Liketes something 800,000. And you know what you get for that . You get a jar of honey. West will there be venture will there be richer capitalists in this endeavor . That is adjacent a sophisticated question. We have Retail Investors looking at Startup Companies acting like venture capitalists. So many people are throwing money at things they know nothing about. And let me tell you, they are all going to lose their money. It is a fashionable thing to talk about being an Angel Investor. Forget about it. They dont know how to do their Due Diligence . They dont know. How much money are you seeing in this suitcase . You mean my career as real estate . I had one 80mission paid in cash, thousand dollars. That happened one time. We will be back. Our guest host, Barbara Corcoran, she sort of out of real estate. She is in the tank, but the Global Crisis is the gift that keeps on giving. Rubles need to be converted into a twobedroom on the east river. I want to talk about what i observe in new york, which is not central park west. Over on 3rd avenue, and a third avenues of america, there is a lot of foreign money going into modest properties. That will increase with the crisis in russia. And the money that is going in makes no sense. People are throwing money into properties that dont deserve it, but they are parking money. They are parking money, but the behavior is not the stereotype of an oligarch or an oligarchs daughter or son x millionething for dollars and it may,. There is Something Else going on. There is a belief particularly in new york city that if you put your money here, you will make money eventually and there is no rush to make a return. That is why these prices being paid, especially for small Investment Properties make no sense. Are you saying top of the market . Not even the top of the market. What are you saying . Are you saying new york city is overpriced right now . Collected definitely. Shes such a realtor. You are asking at a point in time when there is so much money coming in, why would it stop . Is coming from so many different places. Every new product is selling out. Why would you worry . You put five realtors in shark tank, how would you chew them up . I would probably cut down what they were saying just like you are cutting government im saying, in half, and asked them to come back with more reasonable numbers. When you do that and the best practices in starting a real estate entrepreneur business, what does bar corcoran do . I dont know what you are asking me. Realtors,ing you, for when they start out. Oh, i get it. You have to have a long list of friends that gives you a long running start. Thats all it does. But within six months, all of that fades. What everything is based on todays great service. I look at the entrepreneurial spirit, particularly in new york city, and youve got a running start with family and friends. When you make the jump to a real business much you go narrow . Do you go abroad . Do you have to specialize . More brokers go to big too fast because they want to be on a highend, but that is where the competition is the greatest. You have to go as broad as you can forever, so you can get enough deals going. Barbara corcoran on Smart Knowledge on real estate. Coming up, wilbur ross was betty liu this morning. With betty liu this morning. Market heal markets advance. A better tone than what we saw yesterday. Lets to our top headlines. Many americans remember kim with a as a tyrant fetish for starting his people. But the new leader is decidedly more charitable. Earlier today, its a tribute on the third anniversary of his death. Newsstands for the occasion. And. Leader bashar assad found message. Ngratulatory are you finding it a packed . I know. Continue. Sprint, which is the number three u. S. Mobilephone provider is the latest carrier to enter the crosshairs of regulators for what has been called cramming. And a nasa rover on mars finds nothing, a possible piece of evidence of life on the planet. 14, the2013 and early findings do not reveal whether they mars ever harbored life, but there is a chemical for ancient life. A chemically active market yesterday. Of jump onht days losses. How about the vixie . The question of the fear laden vix . Ow about the mi ladenestion of the fear numbers. How much funded you have yesterday away from the battle of losing money . Its fun to look at. Across currents, the cross Asset Classes are everywhere you look. What if you are talking to a pro, sophisticated audience right now. What was the distinction yesterday . The ruble was the distinction yesterday. You have a currency for a Nuclear Armed nation that is in freefall. When you step back and take a look at the policy remedies available, raising rates is that for growth. And it didnt even work. Is currency volatility good for retail, good first chelators, good for currency hedgers . Speculators. For there is an opportunity to make money. At the same time, when you see is destabilizing part of the financial system, its never good for confidence. Harbor corcoran, you keep telling us we are making it too complicated. A bona fide expert on what happen yesterday. Do you have a simple question for him . Even what tot approach. I have a give one. What is your iq . I wouldnt know my iq. I bet it is at least 160. I want to move south. We dont just have a weak ruble, but a strong dollar. Russia is not the only emerging market economy was a problem right now. Moving down to brazil. Its important to step back and think about the strong dollar and its implications broadly. If you think about the growth aspects that come from the emerging markets that come as a result of better u. S. Economic data, they are not pretty. It threatens to destabilize portions woolly look at yesterday, we see what mr. Curran it is talking about. It spells opportunity. Between europe and the united to haveso far it seems pressed in quantitative easing. Wont that take away the potency of the actual announcement once mario draghi does announce . I would think so. Even italy is below 2 . Ask, when mario draghi tries to convince his colleagues in the ecb to buy these on, they are buying them at extremely high prices. Number one, it is those ecb to loss. Number two, it takes away the impetus for growth coming from from buying them. What is the option . If qe effect are limited, what will they hope for . It is a limited set of options. Maybe it is to metal along model along. Along. E is the great distortion that we are talking about every day, does that distort your matthew world echoed your matthew world . We look at 2005, 2006, when we look at 2005, 2006, a barrel of oil is a houseuse was was in 2005, 2006. Is leverage and system and assumptions that are made over a long. Of time over a long time that are coming undone right now. How do you break down emerging markets . Do you distinguish between Oil Exporters and importers . It. Hat is one way to do if you look at a vulnerable come country like turkey geopolitically, it has done pretty well because it is an exporter. Is an importer. And nigeria has to both import and it worked. If a very slippery slope also a very slippery slope. It goes both ways. And, we willker have you Barbara Corcoran, we will have you, too dark about nigeria tomorrow. Please dont do that. But i want to have children with the guy. They would be very smart. [laughter] he is baseless right now. That . Whatyou follow can i possibly ask you . I have an idea for shark tank. Correct thank you so much for joining us. Thank you so much for joining us. Tweet as. We want to hear from you. Let good morning, everyone. A better market today. Oil broke down to 54. 37. Oil dropping right now. That will theyre careful watching into the end of the hour. It into the headlines. The gloves are off at American Apparel. At one point in one corner you have foundered dov charney. For survival,d more than 30 executives who in a letter obtained by Bloomberg News said that the board should reconsider. Makerrman Sporting Goods has named Popstar Rihanna is woman creative director. She will oversee the womens collection starting in january. Earlier this week, it was revealed that they were engaging forract potential buyers interest. And mcdonalds is running out of french fries. Only small sizes are available for the time being. No medium, no large, no super size. According to a japanese newspaper, just over half of the Monthly Average volume will likely be imported to the asian nation. Those are your top headlines. Oil on the move. Prime minister cameron out with headlines, pretty tough language on sanctions. Rather if you cant off the bloomberg terminal grab that if you can offer the bloomberg terminal. People around the world are wondering where the money went. They were taken in by a website secureinvestment. Com, which by the way, should have been their first clue. Tolem marx follow the trail texas to latvia to cyprus. He uncovered the scam enjoys us now. The people who got taken in by this, it was not just grandma with some cash under her mattress. These were relatively sophisticated daytraders. How did this work . You did meet doctors and engineers who were taken in by a scam. Someone be googling for opportunities and somewhat hear about it from a friend. A were impressed by the returns that their friends were making. They were seeing the money being made on the website, but not getting it back. It was not even a ponzi scheme, but virtual returns as a quest not even sure what you would call it because it depends virtual returns. Im not even sure what you would call it because it depends on how much money was returned to them. With bernie madoff, you cannot get 12 forever. How was this supposed to work . The u. S. Dollar versus the euro and they claimed 1 daily games daily games, which is ludicrous. What was that just made up was that just made up . Completely made up. Essentially, these people were offered over a percent a day and they found that to be fantastic. And he thought, why not go for it . And they were showing an index that would move daily. They would send out daily reports. We made this much on the straight and is much on the straight. And those trades were real however being affected in hindsight. They were probably thing with the market was doing that day. No one cashed in along the way . Theeople they try to get money out and tour the last few months, it vanished in may, this website, and people were trying to get their money back and play around with the money they had made. They just came out with zero. The classic grist is, you can only cheat somebody who thought isis the classic grift that you can only cheat them but he who thinks hes cheating someone else. Some of these people out they were getting a really good deal. Is a pyramid scheme, and there will always be people at the bottom. Some who got in early got their money back. We will go to cyprus tomorrow and see what you found there. Thanks for coming in. Going to the fed, it looks like it is reporting results. Side, alsonue disappointing. The government said it assumes a modest net benefit from fuel and that it will update some fuel surcharges on december 23, effective february 3. We are continuing to monitor this, but we should mention that fedex also reaffirmed its fullyear profit to. Profit view. Is a pretty positive tone with the stock at 7. 2 . And there is a benefit of Share Repurchase is in the Second Quarter as well. Im scarlet fu here with tom keene and brendan greeley. Oil attempts to find a bid, a little shaky in the last few minutes. There is a single moscow mystery. Who are the wise men around Vladimir Putin . Or is the reality that he stands alone in crisis check out stephen in crisis . Stephen is at the council of Foreign Relations and is one of americas wise men on international relations. He is a former ambassador at large to the soviet union. When i look at this, i think we say, what will Vladimir Putin do today . What is your best guess as you kremlin guess . Doingl, hes got people telling him to do all kinds of things. In a crisis like this, the elite goes a little nuts. He has two camps of advisors, the liberal technocrats, the people with the nit phds. M. I. T. Phds. And then the types that have taken over state corporations and they are telling them something different. Can you suggest it is an independent central bank . Oh, not at all. These people operate very closely with the government. Their decision in the middle of the night yesterday was not taken independently. Of it was surely the results this kind of struggle between roughly two cap. Two camps. This is from a wellrecognized Eastern European writer. He writes, the only way to have these secure is to have these sanctions lifted. Is that anywhere even remotely likely to happen . The little hints we are getting is that the russians are unnerved by the sanctions being imposed on them and the financial consequences. Yesterday, the foreign minister said, you know, we are not talking about a real change in ukraine. We are not talking about federalization or autonomy for these eastern areas. May e in town that that may a change in the town that may involve some diplomacy. Many have learned to disbelieve what couldnt advisors say. Is there any way that Vladimir Putin can get out of Eastern Ukraine and still remain proud vladimir with a bare naked chest . Of guy withe kind the popularity ratings that would make it possible he is a kind of guy with the popularity ratings that would make it possible for him to do anything. But people will say, the west coast you around if he backed down. The west pushed you around if he backs down. For notces criticism going far enough when it comes to ukraine. Its a risk of him doing something more when it could antagonize the situation. Year long, ive been saying putin would not do anything crazy, and he keeps doing it. [laughter] i think a new move in these circumstances and the is unlikely. Him responsible for terrible consequences and inflame the situation. But you cannot rule it out. You are a senior fellow at cfr. That carries a certain responsibility. Mr. Cannon was the father of containment. Putinse contain mr. Aspirations. Containment buildup on our side of the line. That would focus on making sure ukraine succeeds. But the immediate consequences of the ruble crash are so great that people have to engage with the russians and try to figure out whether there is some new flexibility there, whether they are actually prepared to restrict retreat. Dr. , thank you so much. It was brilliant on the set of options this morning. I think it is brilliant that he thinks is possible that Vladimir Putin can even find a way to get out of ukraine. Can he blinked and still be Vladimir Putin . Maybe as possible. And what will he say in the News Conference tomorrow . The audience will be participating, but the rest of the world will be parsing it. We will be right back with Barbara Corcoran. X good morning, everyone. Breaking news here. A lot of breaking news yesterday. Wet is a fourday chart on west texas intermediate. , some states here is here, and then an abrupt move. We are not through lows, but all of a sudden, down 9. 5 this morning stop it bears watching. This morning. It bears watching. What and you never know and you never know what they are watching. We are just going to pop and pump and prompt. Prompt. And pronk and stabilizeng the ruble we have seen the ruble stabilize on speculation from the central bank. Withliu joins us more. You spoke to a rostral stuff he had some notable comments on russia. You spoke to wilbur ross. He had some notable comments on russia. A he said that russia is wildcard in the Global Economy and the global markets. I will just replay that back from several weeks ago. Economists and investors on our program said its net net going to be a positive for the rest and Global Economy . This is the last one moment that none of us saw that is now unfolding before our eyes. Wilbur ross is going to be joining us, as i mentioned. He is looking at distressed assets in and a eurobonds in greece. What is he looking at now . Where is he looking to put his billions of dollars . Publishing moments ago right on that theme of the oil yield debacle moving over to the rest of the bond market. Everyone is saying that yields could really junk. Jump. And the chart last night saying that like with we got used to the idea that sanctions are ineffectual, but did you have a real effect on the real russian economy. Why does putin continue to look at the u. S. As if it is weak . Why does he continue to think he can cement his leadership, that his next move is not to back off, but to increase his military operations along the border . What a lotof of the russian watchers are warning. We may be seeing this black swan moment unfold before our eyes. We are looking forward to more of wilbur rosss comment and other opportunity cc out there. A newly volatile and other opportunities he sees out there. A newly volatile world. Barbara corcoran is with us for the hour. We will get your thoughts on where to go for the hottest target as well as the state of entrepreneurship in the u. S. And it all of this global volatility. Coming up, our twitter question of the day. We will be answering it. Does Silicon Valley have a culture problem . Tweet us. Good morning, everyone. Im tom keene. 4154 per barrel. Features at. 54. 41 per barrel. Traders will be spared the full slump well Investment Bankers will get bonus boosts of 2 to 3 . Theffs at the world as Company Reels from criticism over treatment of animals. Shuthemepark operator will about 300 positions. The world has postponed its fourthquarter dividend and also plans a buyback of up to 59 in shares before the and of the year. A Record Number of people will travel this Holiday Season. That is, according to aaa. Million people will travel at least 50 miles between december 20 third and january 4. That is up 5 million from a year ago. About 89. 5 Million People will drive come up more than 4 from last year. Corcoran does not just play a play an Angel Investor on television. She took a multimillion dollar Real Estate Company from nothing. Around america and you have good news. What is your leading indicator . There is one indicator that no one has access to accept real estate brokers, and i have trusted it my entire life to tell me what would happen in six months. When he goes from eight people to 10 people having open houses, you know the market value will go up by 20 . It never fails. Just count the heads coming in on sunday. Where around the country are we looking at good news . Just about everywhere. It particularly good news lately is the bottom end of the market has not really recovered. And yet, all around the country with virtually no exceptions, firsttime buyers are back in the market. No one noticed a are missing were missing, but they are backed by storm. What about the institutional investors, who are so instrumental in driving up prices and getting rid of inventory . Them, nly needed they are hardly a player now. This is a market for people who want a home for themselves, and that is a more stable market in my mind. In the last month, the numbers of firsttime buyers are up most of do you get a sense they are interested in buying the imagery out there . Or do they want their own americas greenhouse house . Everybody likes a new car. Nobody has slept there yet. Everybody wants a new house. It depends on the market. What is the rookie mistake people make at open houses . And 180ple in new york, people will walk through your house. The homeowner stays home. Secondly, they dont change the light pulse to 100 watt light bulbs. Listen to this, a tip you can use. 100 watt light bulbs. And none of those green ones. People pickd reason out any home they ever by his light. And people underestimate the power of the lightbulb in house that is depressingly dark. I also read some are you should be baking cookies. Know, that takes a whole hour and you actually have to do it. Just put a little vanilla on the oven door and it smells like the house has just had a big pile of cookies. When we sold my west condo in boston, we staged everything for two weeks. We hung the pictures slightly down to make the walls look larger, and changed for hunters. Did it work and we changed furniture. People judging your living room sized by the size of your carpet. Class we didnt do that. You could have made more money. Show things with fake furniture, do people like that . I dont like it. Go i dont like it. But the worst is the fake view from the window. Lets switch to what you are doing right now, which is entrepreneurship. This is the project syndicate, and it talks about Silicon Valleys culture. Socrates in Silicon Valley, according to lucy marcus, who is the ceo of market venture consultant marcus venture consulting. She says this. Is there a Silicon Valley broke culture . Bro the problem youve got is a arnott talking the soaking valley language, which is about profit. The problem youve got is they are not talking the Silicon Valley language, which is about profit. Quest of a model . Are they looking to Silicon Valley as a model . End, its not about that. Its about how much hassle you have. Hustle youch have. Say leaderspeople are increasingly out of step with the public expectation of ethical behavior. Of uber and the backlash against him. What did a leader who tells you like it is and everybody is going to follow them. Collect who do you admire most in a corporate leader . Who do you admire most in a corporate leader . Myself. [laughter] that is the truth. I look at the spirit of what youve brought to new york city, and the huge success of the television program. And there are a lot of people out there that say, i cannot ofe the traditional path another time and place. There is a certain desperation about my own path right now. Where is that in five years . I think what we have right now is a bellwether change about what people want to do with their lives it comes to employment. The best thing to happen is when people start thinking about inventing a business around themselves. It is great for america, for job growth, for everybody. And i dont even know if financing the question. How do you fail . How do you teach if youre going to be in entrepreneur, how do you teach failure . Clef you get your parents to get out of the way and stop protecting the kids from falling on their heads will stop you get your parents out of the way and stop protecting the kids from falling on their heads. The twitter question of the day, we asked if Silicon Valley has a culture problem. Mentiont answer, it did that given a lot to the culture base. The opportunities lost dont negate this. Is a smart answer. Second answer, yes, they do. Make,l the millions they why not rock a womans studies class . The act like little boys. But they are boys, what do you expect . Ica class on the campus i eat a class on the campus at google. Answer,he next absolutely. The next thing Silicon Valley needs is to disrupt bigtime. You think so . Fedex has mixed earnings. We need to remind everyone that this is an america that is resilient. , brendan greeley, but ive heard in the last day, it will be. Most of urgent. Thatt is a divergence everyone is talking about. Between Barbara Corcoran and what everyone else is doing. Forge theirnt to own path. They are trying to figure out how to create their own value. Is that happening in germany . No, that is the worst thing you can do culturally in germany is start your own business. Why is that . I had a friend who started his own business and his whole family was desperately worried about him. It happens here, too. Overprotective parents. Punching, lets do that. Listed at tomorrow on surveillance. Lets do that tomorrow on surveillance. Attention,gets my and. 54. 57 and brent crude under 59. Poundedhave been so over the last three months, you wonder if it continues. Or if this is another letdown in the continual spiral lower. Bloomberg surveillance on radio continues. In the loop on Bloomberg Televisions next. And we have the announcement at 2 00 p. M. Today, the consensus of economists surveyed is that they will drop. A shootout. Janet yellen versus everyone else. We will be back. We are alive from headquarters. We are in the loop. Several hours from a muchanticipated fed statement out at 2 00 tim eastern time. Will they set the stage for a rate hike next year . To Major Business leaders in the u. S. Will be joining me on the fat, but also on the growing russian crisis. Is this the black swan event that was hiding in plain sight all your long . Billionaire investor will wilbur ross and on peoples gives me their take less debate wilbur ross and don peebles. On facebook, announcing he is exploring a president ial run, jeb bush. Another wild ride for the ruble. The russian currency gained more than a percent before falling back a day after the central bank intervened by raising interest rates. Russias finance ministry jumped in and they bought google. Google is down 52 so far this year