Holding a sign that says je suis charlie and the words all is forgiven about it. Wrong material on the bloomberg commodity index, the index now at its lowest level since 2002. Meanwhile, the world bank has cut its forecast for Global Economic growth once again this time, saying they see 3. 4 growth for 2015. World Bank Economists say the Global Economy is being pulled up by the u. S. , but that is not enough. Oil is extending its losing streak. Prices fell for a fourth straight day, down almost 2 . West texas intermediate trading for a little more than 45 a barrel. Wti briefly traded higher than brent crude yesterday for the first time in a year and a half. Uae and kuwait both predict this will last until the second half of this year. Government reports it is likely to show that u. S. Oil stock prices rose last week. House republicans are taking aim at president obamas immigration policy today. Lawmakers will vote on an amendment to bill funding Homeland Security. House Speaker John Boehner says the vote really is not about immigration itself. We are voting to block the president s overreach. His executive overreach, which i believe is beyond his constitutional duty and frankly violates the constitution itself. The senate is likely to reject that approach. It would force congress to pass a Homeland Security bill without any immigration measure. Pizza hut is raising the stakes in a fight for your dining dollars. It is adding who wrote this . It is adding glutenfree pizza to the menu i know, the words do not make sense. You will be able to order cheese only and Pepperoni Pizza with glutenfree crust. It is estimated that 2 gazil lion americans have celiac disease, disorder that makes it possible to make everybody at home happy because one person needs this damn diet, and the other person needs the other damn diet amen to that. Is anybody at your house glutenfree . No. We try to eat less bread, but that is a weight loss thing. The glutenfree i really think this is about weight loss, any deal is if you are really interested in avoiding things that cause weight dont eat pizza right. 2 of the population is actually celiac and has this legitimate and balance. Americans are interested in being glutenfree because it is the latest bad indicting. When you go the latest fad in dieting. When you go out oh, yeah, restaurants all around our rolling out glutenfree mnenus. I went to a place in michigan, and they had burgers and there were three dollars more. This stuff is complicated, it is full of science, so we will blab on to anything we think will make us healthier, but it is probably right some of the suspicion but everybody is not chronically overweight every deadly something happened with copper. We are cutting into time with jon ferro and glutenfree beer in london. Equities, bonds, currencies, commodities. Futures have improved from where they were two hours ago. It is now ugly now negative 6 days away from the ecb momentous decision. Oil cannot get a bit, yes, it is not a 44 dollar handle, but 45. 56 on american oil gets your attention. The vicks above average, 24. 56, euro yen shows weaker euro, stronger stronger yen and the ruble back above six he six dollars with important russian headlines about three hours ago about 66 with important russian headlines about three hours ago. This is inflation adjusted copper back to when no one was glutenfree. China boom again the headline when we go to prechina, we go back to 1989. We are looking at demand as well. Everything has been driven by the price of oil. That is a supply issue. When we pick out what is happening in the underlying commodities in the commodity index, i would say right about here is where Family Friends in argentina had problems maintaining the phone line because the copper kept being stolen. Richard sharma joining us and Jeffrey Currie of Goldman Sachs to make you smarter on commodities in your wallet as well. He headline this morning is the same but different than the past few days. A flight to quality today is tangible. Crist for whalen joins us this morning as we look at the big banks, Jpmorgan Christopher whalen joins us this morning as we look at the big banks, jpmorgan, interesting markets. Right now, Jonathan Ferro is in london. Are you glutenfree in london this morning . Tom, i am italian, what do you think . [laughter] very good. I think these are different markets than the last few days. Why is today different than tuesday or monday or last wednesday . It is still a commodity led a selloff, but it is being led by copper and not oil. What you see in copper in the mornings is it falls out of bed, and a narrative does not fit with copper. This is a story that developed off the back of the World Bank Report that slashed global bank forecast. Chinas, global demand, u. K. Time falling out of bed. When you and is although series of headlines about 3 00 a. M. From russia, from their finance minister, from the head of her bank do those russian headlines affect the market . I am not so sure about that, tom. I do not think so. This was a big one led by copper, and following the thing we have seen develop over the last month, a flashing light in the commodity market, similar in the bond market as well. That was very much a continuation of the theme we have seen allthe whole of last year. Record low yields in japan treasury yields struck into a may 2013 low. Pretty much said the bond bears are capitulating, tom. Jon, i want to talk politics in europe. This is an interview with mario draghi and a european newspaper that dropped 4 00 our time this morning, the European Central big was founded in the tradition of the bundesbank, this is what he is saying to the newspaper, but there is a huge difference between because the European Central bank is not for one country but for 19 countries. That is, so to say, the message that a few in germany need to understand. If this mario draghi dropping the mic . Is that what happened . It is mario draghi ready for a fight. You saw him almost sort of given a green light to the unlimited bond price plan. He has got another fight on january 22, and his Council Members that stood around him, he is saying the germans into understanding ecb as a paneuropean mandate full stop i understand there will be germans reminding him that yes, there are 19 countries, but germany makes up about 1 3 of euro zone gdp. Jon this sound like a much more punchy mario draghi than we have heard before. The ecb does monitor policy for 19 countries not one, and the publication was printed in, it does feel like he is laying the groundwork. Is there anything in there that is going to tie his hands to open up the spigot next thursday . It does not seem so. He gives his opinion, so it is not over yet, but he has pretty much rubberstamped the program. I say go back to the press conference in december, the ecb. Mario draghi used the word illegal, he said it would be illegal if the ecb did not follow their mandate, inflation below 2 , we had the story, they are nowhere near it. Jon ferro, thank you so much from london. Greatly appreciate your attendance as we look at the markets. Chris whalen joins us. It is a new volatility. Is it a good volatility or a harmful volatility . Where you sit looking at the banks and finance, which way does it cut . 9 it will be what we will have to live with. About a week ago, the chinese announced another big Infrastructure Program because obviously this notion that they were going to rebalance and shift to a consumer focus, it is not happening at all. I did a piece for natural interest on this you did a piece for natural interest but not for us . Well, nobody has ever asked. [laughter] thank you. What have we got . All of the stuff about mario draghi, i think it is form over substance. Even if he acts i do not think anything will happen. What the central bankers have reuven is that they are done. The whole notion of zero rates, 2 inflation, how do we even talk about this . The history of our finance if we have a great distortion renault which we all agree we do do we have any optimism of a stable path for bill dudley mario draghi, those guys over in japan, do you have any optimism of stability to come out of this . I think they are ignoring lombard street. We have kept rates too low for too long, and what yellen has done innocently i think is create a liquidity trap was up everybody is waiting for rates to rise they are not investing or spending, so income gdp is slowly contracting. I love what you say there, the part of the liquidity trap the real economy come everyone refocuses on banks, banks, banks, but jamie dimon and Brian Moynihan have to focus on a real economy that is not there. You focus on our piece the other day, the chart with the bank reserve, fast as part of the Bank Balance Sheet is the reserves at the fed. If they could make a loan with a 6 or 7 coupon, they would. Brendan greeley, very good on nailing that piece we saw on reserves. After we get done with chris whalen, we will meet adam posen of the Peterson Institute. Jeff currie of Goldman Sachs on that bombshell oil note, adam posen will join is in the 7 00 hour. Stay tuned for chris whalen on jpmorgan. From new york city this morning, this is bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. I am tom keene. Olivia sterns and written in greeley. Futures improves 6. They were worse an hour and a half ago. Bloombergs Francine Lacqua spoke with pershings bill ackman, taking his victory lap it seems over to europe. He talked about anything from tesla to market volatility. Francine, what is your top takeaway . Olivia, we talked about the environment after the great 2014 he had. In 2015, will he be able to replicate these trend we saw . He says it is difficult to predict, the environment is right to do some great deals. We asked about volatility for stop some investors a it is difficult to sift through volatility. He said that is actually a bonus. I do think it is a favorable environment for what we do. Despite the volatility . Volatility is a good thing. If you are a longterm investor and you do not have margin leverage, then volatility is a positive. So we talked about 2015, and he has a very nice problem. He says my main problem is i have 4 billion to 6 billion to spend, five to find the right company to put my money there. Francine, when hes become it is often a market moving phenomenon. I heard you talk to you about tesco, a british retailer. This is the Third Largest retailer in the world even Warren Buffett has a stake. What did he have to say on tesco . This was surprising. He came on and said that Pershing Square does not get enough attention here in europe because investors do not know what it is. He came to do a bit of a pr exercise because he thinks his stock is undervalued. I asked him, olivia, why not come after a big company here in europe because if you are bill ackman, you are probably one of the bestknown activists in the u. S. , a little less known here in europe. If you have a big deal, the networks will stop he said he did look at tesco in the last six month, but retail has not been his strong point. He says he has been burned before. He says it was something that he was not that keen on, but the share price moved on it, so maybe investors think he might come back to it. There is a touch of futility here, and that is always good to see with bill ackman. You see has bang up year, and you compare and contrast that with mr. Paulson, who i believe was down some 30 or so. What did bill ackman say about the battles yeartoyear of making and not losing money . He was actually quite humble. Of coarse was keeping the cards close to his chest for 2015, but he said this is a great environment to be in just because of the international landscape. The funding that he is seeing is actually quite easy because of what Central Banks have been doing, sans terms of the economy, he is very bullish on the u. S. Economy, tom, and he is bullish on his model of funding. All right, francine, we will leave it there. Francine lacqua joining us there with her conversation with bill ackman. We want to hear your thoughts come out twitter question of the day is market volatility good for the big banks . Obviously there is a good lot of trading. We want to hear your thoughts. Tweet us that is todays company news. Tweet us bsurveillance. This is bloomberg surveillance. My answer is used to be. Possibly the Research Report of the year. It is a young year so far. Without question our most important interview of the day Jeffrey Currie he is with Goldman Sachs, his team changed the early the oil markets earlier this week. Dr. Currie will join us. Looking forward to that on oil and for that matter on copper. Good morning from new york city. This is bloomberg surveillance. I am tom keene. With me Olivia Sterns and Brendan Greeley. What do you have . Might come from jamie barlett, writing in the Financial Times this morning, writing i just think as it is really interesting. It gets to everything going on gets to how a hasthtag on twitter was shared 80,000 times. If you are dick costolo you have a lot of problems on twitter. What are you doing cooperating with the u. S. Government how are you surveilling things, how do you get jihadis off of western social media . I actually asked of them this. They came in for an editorial meeting five years ago, and i asked to them that question for some i said what do you do when what you do becomes a way of releasing press releases for really bad people, and they said well, we are really there for our whole community. If this was world war ii, you would shut down twitter in germany. We need to draw a distinction between propaganda and cyberattacks. Cyberattacks are very difficult to carry out. You need a lot of understanding knowledge propaganda is more dangerous. We kill the jihadis with drones, but they live on. This is and more all a lucky this is Anwar Alawlaki that you are talking about. It should be a goal of the western governments to shut them down online. You can get rid of the stuff online if you want to. That is true chris. I really think it is hard to we are very good come of the u. S. Government is very good at countering real attacks. We are very bad at the dealing with propaganda precisely because the exact same mechanisms that you would use to shut this down for the exact same measures if you have an ip address you can shut them down. Breaking news this morning, libya, the breaking news is that yemen al qaeda is saying they have something to do with terrorist right, they are claiming the other breaking news is we have photos, the sadness of burying people. Does anybody have a handle on what the next step is . What is the next it to do . I thought was interesting when al qaeda in yemen claims response ability because there has been a while and the connections that the New York Times traced fell very loose and that felt to me like al qaeda in yemen going ok yeah that was us. This is very difficult with people becoming in spite of their own, working on their own, looking to the propaganda of people like Anwar Alawlaki this is not even what we had five or six years ago but look, this is on the arabian peninsula. If the saudis want to do it, they could. They are funding these people. The strand of islam that is the saudi kingdom all right. I am so glad you brought this up. This idea of propaganda versus the alternatives. I mean, propaganda is propaganda, so what, but the other outcomes are really ugly. Countries have ways of shutting down propaganda. China is really focused on shutting down messages that it does not like and it is really bad at doing it for longer than five minutes. You are advocating the United States become more like china no i am saying china has done it and really worked hard at it and has not done a particularly well. I think this stuff is hard to do. At the same time, opposition Democratic Forces come i thinking of russia also using the western social networks to advance the ideals of the United States, it is sort of a doubleedged sword. Headlines out of ukraine which just percolate here. We have not talked in the last couple of days about ukraine turning, and this is the ruble weekends and the headlines the ruble weakens and the headlines of the finance manager. Almost like they are setting themselves up for an s p rates cut. I am not protecting that but they are managing the story right now. Interesting stuff. Coming up, tom keenes thoughts on Keira Knightleys dress of the golden. And we get a preview with chris whalen. Flight to quality. The yen and a full big figure, a 1. 16 handle. There is fear out there expressed with a stronger against a good morning everyone. Bloomberg surveillance. About 1 3 of to publics mexican restaurants have stopped serving pork. They are running low on port after they suspended suppliers for violating chipotle standards. The issues are connected to have the pigs are treated. To pulley requires a suppliers to raise the animals inhumane conditions with access to outdoors rather than in pens. They are still serving glut4nen. And a smart phone in india that runs its own software and not the search giants android operating system. The samsung has a 3g capability in a liquid crystal display. Samsung is the Worlds Largest maker of smartphones. And a russian billionaire is ready to cash in as his 80 state of the Brooklyn Nets heads to market. The nets franchise is called another picasso that could bring in a price above and beyond the record of 2 billion the former microsoft ceo Steve Ballmer pay for the los angeles licorice. Bruce ratner owns the remaining 20 of the nuts and of the nets, and Bloomberg View had a great thing to say interesting, look for that it Bloomberg View. I did some reporting yesterday, i went over to 57th street and madison avenue here in new york city and wandered over to chanel looking for Keira Knightleys dress. This is over Keira Knightleys dress. Bridget foley has come to miss nightly miss knightlys defense, au contraire, you negative tweeters, what in the world is wrong with a laura Laura Ingalls wilder jane austen Virginia Colony reference, especially in the hands of a design master Karl Lagerfeld . Three layers of friend at the bottom, she is a stunning woman, but she is pregnant, so she was looking for zoning a little bit risque, and with all due respect to bridget foley, i think she is 100 wrong. My take on this is that what were looking at is haute couture come in next season we will see Olivia Sterns wearing a much smaller ruffle. Im guessing, libya, and chanel, that dress will clock in at 12,000. I am guessing, olivia at chanel, that dress will clock in at 12,000 dollars. Has dressed women at the golden globes, why do you have to show that amount of cleavage at the awards ceremony . I am sorry, i am objecting to the french. That is the empire waist, am i pronouncing that right . J. Lo, that is all i had to say. You actually watched it . Oh yeah. Christopher whalen watching the golden globes. Definitely. Thumbs down on kiera unfortunately. There you go, 21, i am losing every morning. Womens wear daily as well. Lets move on to something more important. When Betsy Graseck wondered onto the set last week, she suggested major banks would be religious in cutting costs. Layouts and rationalizations could be part layoffs and rationalizations could be part of the plan. Chris for whalen suggests Christopher Whalen suggests betsy is right the key problem. For the Banking Industry as it is difficult to generate revenue. You have regulation, a lack of demand for credit is it a function of nominal gdp, or the summing unique . Of course it is, credit creation. What we look for at the jpmorgan orne in that we will see here Jpmorgan Earnings that we will see here in a few minutes, what are you looking for the story from mr. Dimon . Trading, obviously, most of the banks have already warned on trading j. P. Increased provisions for losses. Last quarter dramatically, they have come off of a basically 0 number. I want to see if that is still going up. Mortgage, is production risen at all in this quarter, same as wells fargo revenue, could be nominal gdp, 2 3 , 4 that can be difficult for people to wrap their head around the stock markets or near record highs, and consumers are spending and thus borrowing. How could it be so difficult to generate revenue in that environment . We are in any sort in its ordinary environment zero rates are driving stock prices for stop we all know it. Same thing with the central bankers. They keep saying well, if we do more of what we have been doing for the last five years, things will get better. I think that is wrong. I think we have to look at different approaches toward essentially a deflationary trap at that the entire world is in copper what it does copper tell you . Thats chart you were looking at those two peaks in demand were driven by Government Spending in china, not by a real economy. I wants to talk about bank health really quickly. Do you buy the feds methodology on stress tests . No you do not eat an economist for stress testing you do not need a narrative. That tells you they start from a very bad beginning point. Which of the major pangs we you go banks you will go i am sweating . Bank of america. They have not addressed basic issues they have not changed leadership that is too vague. Brian moynihan and the entire Management Team has done everything they can in terms of expensive production, but i have not address issues like getting loan files in order so they can sell them. Cover of the New York Times today, wall street chipping away at doddfrank rules. What has doddfrank done . Taken away their own account trading, volker rule. It is a water balloon use scurries the balloon, it will go somewhere else. Robert at nyu was looking at contributions, a Systemic Risk of large institutions, they have Jp Morgan Chase at top, then bank of america. Jpmorgan is a large overthecounter Derivatives Market with a bank attached. That is how you should look at it. That is our quote of the day. The oped last week about the breakup of the big banks i mean, it is nice cocktail conversation, but there is no validity to it, is there . Over time, that is exact we what will not be a germanic breakout a dramatic breakup over five years they will have to shed assets. Utility banking with partnership . In part. They are trying to use capital. The best performer in the top five is u. S. Bancorp by far. What is your return on equity hurdle . Usb as well as a double digits. Major banks they are still single digits. If you do real risk i done adjusted returns, tom, they are negative. Coming up, Ernest Hemingway said you get to spend more money. Private jets, rich people are spending as much money we are going to take a look at our single test chart who is spending money rich people or middleclass . That is pimm fox. We need a citation. This is bloomberg surveillance. This is bloomberg surveillance. I and tom came. With me Olivia Sterns and Brendan Greeley. We have a wonderful single best chart on the two americas. Retailed a coming out in 8 30, so we are looking at who is buying one. This is for morgan stanley, and they are looking at the ratio rich people to middleclass basically, who is spending what so we have a dip in the last quarter of last year on discretionary spending. This is not personal aircraft , it is also fancy spending. Personal aircraft as with National Accounts, National Accounts actually take aircraft expenditures out because they are such a big chunk of money. That is true here as well with discretionary spending. The purchase of personal aircraft has a huge effect on that. What we are seeing is the top income point is possible for 40 of consumer spending, responding to stock prices. Olivia you and i go in the same fancy stores, what are you seeing . With retail sales coming out, what are you seeing . I am still shocked that the methodology works of raising your prices and raising demand. They are going gangbusters. Robert burke has been buoyant on this with robert burke associates, and it is an interesting luxury moment. Pulled a chart back up again. You can see right where the gangbusters end. You have the wealth effect from the s p 500 going up and the gangbusters at the end of last year. Chris whalen, what do you see in new york city . We travel a lot. You see a lot of empty storefronts in midtown manhattan. It is not the luxury stores, though, the basic red and butter stores. Down the street from our office, the last of the big art stores, they are all gone. This goes back to what is happening in malls right now. The internets, moves back into central cities, killing the suburban malls. Lets go to photos. Victims of the Charlie Hebdo attacks use eulogized in jerusalem. Four killed in the attack, he placed a medal on each of their caskets and console their relatives. In jerusalem, thousands mourn before jewish victims who died when a gunman opened fire in a supermarket in paris. The morning relatives of the victims toward her close as a symbolic act and said prayers. Number two photo, terry knight gives a native american blessing to Colorado Governor John Hickenlooper during his inauguration ceremony at the State Capitol in denver. John hickenlooper began his second term as colorado governor for stuff to get an 18minute speech outlining unemployment and economic goals. It takes the president 18 minutes just to think people to show up. I disappointed john hickenlooper, he came into a bar and just wanted to play pool, and we all looked and he saw that we knew who he was, and he went oh, god journalists. I interrupted his pool game. I bet you do not night him with a feather. Lawmakers walking out in protest before the policy address of hong kongs chief executive. The first speech to the Hong Kong Legislature since the end of the prodemocracy protests in the city false of his address gave stern warnings against the challenging of beijing authority. He also discussed reform and affordable housing. Powerful image, those yellow umbrellas. We had this conversation on Bloomberg Radio, and our guest from hong kong was adamant they are permanent changes in hong kong. Coming up next, we will discover why the internet is not the answer. Our next guest says the web has left people worse off. This is bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. In our next hour, if conversation with adam posen of the Peterson Institute, 14 hours of material to power through with mr. Posen. We will do that in a 7 00 hour with Bloomberg Radio and Bloomberg Television worldwide. We need to get to top headlines. Here is Olivia Sterns. Apple and ericsson in dueling lawsuits. The companies are fighting over the prices of wireless technology, patents used by the makers of the iphone and ipad. Erickson wants royalty rates. Stockholmbased erickson has asked a court in texas to decide if the fees are fair. Go pro shares are plunging as apple gets a patent for a Remote Control camera system. Go pro fell 12 in new york yesterday, the steepest decline since august. Investors expressed concern that the patent will make items similar to go pros offerings. And too exhausted americans are hours away from achieving what was once thought impossible. They are free climbing el capitan 3000 foot wall at Yosemite National park in california. Tammy caldwell and your dance and are using ropes but only to save them from death, not to aid in their ascent up the rock formation. The climbers could reach the top tonight. That is truly impressive. Amazing. Sleeping on the rock face. The internet is the great democratize or and opportunity provider, disrupting industries, making Global Markets interconnected. You cannot apply for a job without the internet. North america is on top of the world with Internet Usage was up 87. 7 north america, 42 per 3 is the world average. Our next guest think this is a really bad thing. Andrew keen is the author of the internet is not the answer. Andrew, your book reminds me of a lot of what economists have been saying is indoor plumbing very important innovation, the internet eh, not so much. It is an important innovation. It is the problem post up i wish it was democratizing, i wish it was creating jobs but the reverse is true, it is compounding our biggest problems. It is compounding inequality compounding unemployment, and it is greeting this egg economy where we have been packaged up as a product. This feels more in sorrow than in anger. This is something craig has says about craig list, about craigs list that he loves what he does but is deeply sorry about newspapers, for example. We were promised a so much, and in many ways it is wonderful. I am not suggesting we should shut it down or should not use it, but all of that promise now is disappointing. The promise is not been realized. It is a failed revolution as the moment. At the moment, it is not. Your chapter, the catastrophe of london, there is so much we are overloaded with a digital disruption. You studied at berkeley with one of my heroes, his book, the new world disorder was profound 20 years ago. How do we get ourselves to an andrew keen world . What we have got to do is rethink the internet. At the moment, we think of it in terms of right. We need to think of it in terms of responsibility. Why dont we get the kids to use it less or read the books you and i have read and get a little discipline tom, you sound like a dinosaur. [laughter] no we are living it. Dinosaur meaning what . Meaning that is completely out of touch, tom. He said on plug all the computers, and my point is that is not going to do any good because all of the kids have smart phones in their pockets. They could be reading dickens on the internet. That is nothing wrong with that. Just make sure that dickens is being paid. The problem is we are not producing any dickens because they cannot pay their bills. Why do you say facebook is a bad thing . Mark zuckerberg is trying to bring the internet to the unplugged and billions of people, trying to bring the internet to leroux parts of the world. He is trying to make facebook work, but im sorry, you were asking a question that summarizes the hypocrisy of what is going on. Zuckerberg is a brilliant businessman, but he is 90 business of improving the world. He is 30 years old. I agree. I find intolerable. I have no problem with Silicon Valley as a business. When they say it is good for world peace, that starts to its ch me a bit. You go to factory and state street in downtown rochester, i know what is exactly what is there. Instagram in some indirect way destroyed kodak. The innovation you are talking about you will always have innovation, you will always have a kodak, the problem is kodak employees 145,000 people. When instagram was acquired by facebook for one billion people it employed 35. That is the problem. Now they employee tens of thousands of jobs. Amazon created 6000 jobs in europe. 90 of the american public, tom, disagrees with you. What kind of jobs . We have made a bargain with amazon. We get wonderful service, great prices, great products, and they are essentially exploiting labor. They are going back to the early 19th century. What one of you want to work in the Distribution Center . No. This conversation makes me think that technology seems to centralize economic and social activity. That is what we are seeing. We do not have to have disaggregated printers anymore we can do it online. We do not have to go down the store down the street and support that business, we can do it online. Some store that is thousands of miles away and fedex brings us the package, right . All right, andrew keen, thank you very much. I am with you, by the way, we forget the reformation was long and brutal. Anyway, olivia. We are moments away from jpmorgans earnings. I want to bring in chris whalen from the kroll bond rating agency. A derivative house with a derivative market with a bank attached, what are you looking for from the report . Down revenues, up earnings. There is no momentum in these businesses. Cost cutting, going back to toms earlier point, they have been doing this for years. We have hit bone, in other words have we . There is not a lot of cutting they can do. How many bodies are going to go on global wall street in the next year . You will see thousands of layoffs. Maybe quietly, but they will be there. Investment baking, you will weed out everyone who is not making money. I do not agree, i strongly agree with chris in some sectors but it is much diminished from where it was. Everybody walk by a branch bank today and see how many people are inside it. Commercial banks. If you are talking about a community banker, there will be somebody there you can talk to who will make a decision. Youre talking about a large bank the regulators have diluted the banks, there is no one to talk to. Credit unions are growing. Credit unions are growing but on a very unstable business model. Chris whalen, thank you very much with kroll. Jpmorgan four minutes away. How about a forex report a huge deal that bears careful watching as russia does whatever he can to defend the ruble. Dollar yen, flight to quality at 116. 97. Jeff currie of Goldman Sachs and adam posen, all that next bloomberg surveillance on bloomberg surveillance. All that next on bloomberg surveillance. Good morning. This is bloomberg surveillance. Jpmorgan earnings out. We will have that in a moment. Meanwhile, the flight to quality continues. Copper plunges. Olivia sterns with our earnings in a moment. And commodities collapsed. The breakout nations may break into as the mayor emerging debt. We have our first look at Major Bank Earnings worldwide for the spring season. Olivia, just to begin, our 1 billion legal costs at j. P. Morgan. Jpmorgan saying they saw 990 million legal cost. The takeaway is this is a big miss for fortress diamond dimon. Its a significant miss. We were expecting to see a decline in trading. We know its been a tough trading environment, and particularly because they sold off the commodities unit, but this is worse than we even expected to stop than we expected. Cauthen, i know weve been discussing these numbers, but what are your takeaways . It looks like the earnings are lower than expected. The revenue actually looks slightly light. But what we would want to see is cba and dba takeaway. I think the Investment Bank was better. Im looking for their trading revenue. Its a bit of a mess of Jpmorgan Earnings. Usually, its more organized. At the basic idea is that in all the banks, there was a real mystery for pros like you this time around, isnt there . The Investment Banking is where you have the volatility. You tend to have the most unpredictable earnings, and you have a lower multiple in that business, and as why you tend to get surprises one way or another. It has been a funny year for the banks. We saw this spike in volatility in the Fourth Quarter across assets. You might think volatility is an opportunity, but clearly we saw it hurting jpmorgan sciquest the stock down hurting jpmorgan. The stop is now hurting. Greg volatility volatility creates opportunity, but what is not good is the spikes. We saw these mini spikes in december and those can be bad, just because they can cost profit hits. 990 Million Dollars in legal costs, does that put a cap on liability, or give us some certainty . The biggest thing across all the banks that you will see is to try to take as much expense as you they can and put it into 2014. We heard a lot of reports in the Fourth Quarter, settlement coming. We are still waiting for some to come. But i think the banks in general are going to try to take it in the quarter. The great thing is that you can still look at the next several weeks and put it into 2014 and get that. Mr. Jamie dimon it really goes to what we heard the other day. Our business continues to demonstrate strong momentum and expense discipline. We talk a lot about what is happening with wall street and heads being cut there. 242,000 employees. Right and i think we are still seeing some downsizing in the fixed income trading business. But we are also seeing improved efficiencies as we go to think like mobile. Do you agree with chris whalen and other reports in american banker that they are beginning to cut into bone . It seems like for people i have seen like for people in jpmorgan branches in the last order. Four people in jpmorgan branches in the last quarter. Why is that . They will have some people there. They will have some people to help you make certain decisions, but things like making it a positive i can do that on my phone now. And its a question making a deposit, i can do that on my phone now. And is a question of how many are slaving into the night. And as trading those more electronic goes more electronic, you need fewer people taking care of the inks. We will look at Bloomberg Intelligence through the next week as we see the Major Bank Earnings. We are thrilled to bring you want that this morning. Adam posen the president at Peterson Institute for economic which barely describes his resume and his service with the bank of england. I want to distill the market volatility into what you are seeing in the International Economics world. Not specifically russia or specifically venezuela or whatever nation we want to talk about, how tenuous is the linkage between this greater Market Reaction and what our economies will do you hope will do . Thanks for having me on. The banks around the world have a fundamentally unprofitable model. Weve seen this growing into the crisis, that is why they have speculated that much. Everything else is not dependable. There is a shakeup in the banking system, and that means a lot of lending to small businesses. The second thing is that the bricks are being the spareribs. They are the leftovers. Instead you got to start tearing the emerging markets. Tweeiring the emerging markets. The third thing i would stress about a global piece of taking this on is that there is a disconnect on some of the volatility. Not the prices come but the volatility has been a has been spiking excessively. That is where you are starting to see that overregulation is having an effect. It may be worth it for the sake of long storm longterm stability, but it is showing up every day. I would like to see them do this in the markets. How do you break them up . I think the single biggest thing is governance. My colleague from Peterson Institute is now the chief economic adviser to modi in india. He did a great thing couple of years ago in that you show that youve got this clear split between the places that are respecting property rights. If you are russia or venezuela and you have a commodity boom you can hide thats in, but not forever. If you are net to go, even if oil prices go down, you can survive. You have the confidence of the april imf meetings . Mediocre can go a long way. Weve got a 117. 00 yen this morning. There is a flight to quality going on right now. That is ok. It is going to hurt some people. And i agreed is not a good sign when you see the bundeswehr the blue and the bund where it is. With like to see growth. The hope for the u. S. At least that we are seeing Growth Without a housing bubble. Sustained Growth Without a housing bubble is exciting development. The fund is in negative territory. We are waiting for mario draghi to announce qe next week. That is what we expect. What do you achieve if you already have negative yield on the fiveyear . You are pushing on a string. It is not just the negative level, but the spreads already for obvious reasons are compressed. It achieves two things. It tells you, first in the future, the ecb is not going to take a hammer and slammed down the economy anytime it except, which is a worry weve had in the past. We saw it in japan in the 1990s. There was a big shift where they said they would not kill off any inflation as it is sustained. And the other thing is keeping europe on the ground. Mario draghi was saying that ecb does Monetary Policy for 19 countries, not one. Next he is going on the roadshow to germany. This is not an accident. The economics editor they have been one of the voices in germany that has been talking since to the germans. They dont want to hear it. How big of a revolution is this for the bundesbank . Back to world war ii. With it is not, though, thats the thing. Ok, why . Correct it has all been a it has all been a fabrication pressed forward over the past couple of years. If you go back to the bundesbank, i wrote about this 20 years ago, they raise their inflation target in response to the First Oil Shock in the 1980s. They smooth things out. Its only since the euro came along and they were making sure the greeks dont rip them off that they started behaving this way. Outside williams with Bloomberg Intelligence, thank you for going over earnings with us. Allison williams with Bloomberg Intelligence, thank you for going over earnings with us. Good morning, everyone. Adam posens president of the Peterson Institute. He has been most vocal on our misunderstanding the estranged linkages of our financial system, our Central Banks, and how they leak into the real economy. Never more important than this morning with a massive flight to quality. The yen bidding a strong yen 20 116. And russia is eating on the edge of a true banking and financial crisis. Everybodys bank bank drop the druggie, mario draghi mario draghi, yellen, yellen. You have to focus on productivity growth. Youre right, we are confusing things. A lot of the flight to quality is people converging on reality. It is being driven by excessive fear, excessive risk aversion but nothing like what we saw in 2008 and 2009. Focus on the real economy. Focus on a china that has only slowed a little. Focus on the u. S. That is growing without have a housing bubble. People should not get too whacked out. The virgins is all the word. Divergence is all the word. Do you have something to keep you away from the three and four standard deviation moves away . Went into, yes, but three and four, no. One and two, yes, but three and four, no. If the u. S. Focuses too much on growth and centralbank policies and every thing else in the rich world, then the dollar shoots up. And if the dollar shoots up a lot, then you get a breakdown in trade talks and certain sectors of the u. S. Economy. To me, that is a one started one standard deviation move. I worry about the forecast. We talk about currency wars and currency as a weapon. We could see parity in the euro. Is that the solution for Global Leaders . I think so. There are always different ways of slicing the world. Where rich clarida and william bottom are right is William Boutin are right is that it can work, but only for smaller countries. If you are switzerland, it can make a huge difference. For the euro, they can try it, but it wont work. Adam posen, discussing Central Banks. Coming up, Jeffrey Currie on the new world order. Stay with us. Good morning, everyone. Green on the screen on oil. That itself is a surprise. Lets get to our top headlines this morning. A branch of al qaeda says it was behind last weeks deadly attack of the Charlie Hebdo offices in paris. The leader of a branch in yemen claimed responsibility and says the room the attack was in response to the cartoons depicting the prophet mohammed. People lined up at Charlie Hebdo to see a car a cartoon showing the prophet mohammed saying all is forgiven. Lawmakers are working to build funding Homeland Security. It was due to the president s executive order that temporarily prevents 4 Million Immigrants from being deported. John boehner says it is not about immigration, but overreach by the president. Annual menu addition at some restaurants this month, the latest to embrace the avoidance of gluten. Obviously, many people have celiac but that is not what pizza is responding to. I think it is the cheese on the peace and the bread. We want to understand there is a very serious nature to this gluten debate. At almost, they will be gluten free hors doeuvres this year. At doorposts daxos at davos, there will be gluten free hors doeuvres this year. A rare honor, the book breakout nations was blurred by one tom keene blurbed by one tom keene. It will sneak up on you. I dont know what that means. Is a book and it is sneaking up on time. It is great. And it is way out front in what we are seeing in emerging markets. One of the things we are seeing is that politics can leave markets. The rally in india, cannot become a trend . What we have seen is when a new leader comes to far, the first year is always good for the stock market. Its because they hope the new leader will do something different. The secondary is divergence. Where the leaders fail, we see a faltering of the rally. What we have seen in both india and china in the last year is really attempts to make changes in governance. Which of those do you take most seriously . I think that is a bit easier for india, sibley because its base is much lower. India is a relatively poor countries simply because its base is much lower. India is a relatively poor country. And china has stacked on debt. No other emerging market has stacked on as much debt as china in the last few years. Im glad you mentioned the debt, because we do hear a lot of fear mongering about the Banking Sector in china. Is there an achilles heel we should be worried about . Some banks in india have a lot of nonperforming loans, so their ability to lend as much work trained. But in chinas case, the debt is far more serious than what india has seen in the last five or seven years. China is building up that debt with a very big fiscal situation at the Central Government and Huge National savings, which neither of which india has. Im not sure if that is a fair comparison. The comparisons between india and china are often misleading. Having said that what it shows us is that the crisis or the Major Economic slowdown is offered by the massive private sector debt. Who gets crushed by copper collapsing as we have seen a last 48 hours . I think all of the commodity producing countries are taking a big hit. The russian economy such a contract. You have these emerging markets all rising. You are way out in front of this. How will they respond to this new oil and new commodity order . Their budgets are still building in and they will always be at 70 or 80 per barrel. We will see a lot of pain in the next three to five years. One problem in media in india is corruption. Is there a prayer of doing anything about it . It is not that it will go away with a magic wand, but these are in emerging markets across the world. From nigeria to the philippines, and it doesnt stop the risk that you have in emerging markets. Surely, oil at 45 per barrel is a stimulus. There is a lot of celebration about the fall in the price of oil. Is this all about supply or demand . Look at the chinese demand for oil, what happened to it. It was running up to 7 to 8 per year, and now it is down to just 1 . Ruchir sharma keep writing. Is market volatility good for the big banks . It doesnt look like it for jb jb met for jamie dimon and jpmorgan. Good morning, everyone. It is truly a busy day starting with the market. Futures deteriorating a little bit in the last 20 minutes. We dont even know where to begin with top headlines. What are you starting with . Im going with scary news for house Speaker John Boehner. Police say a bartender plotted to poison him. It was hurt at the pub after a lawmaker was told he was the devil. He served drinks to the speaker on numerous occasions. He is now under indictment. That is scary. I should not take light of it. Prodemocracy protests during chinas Golden National holiday. Retail moved 14 in the Fourth Quarter. It is not nearly as nice as Keira Knightley stress. Dress. The asiapacific region delivered only low double digits. It is anecdotal. He spends a lot of time shopping. Russian billionaire mikhail broker of is ready to cash in. One calls the franchise another picasso. He paid about 220 Million Dollars for his share of the net in 2010. Ballmer did poker off it did pohkerov a really did favor. A really big favor. I got one for adam posen, the president of the Peterson Institute and was a policy maker for the bank of england. This sort of sneak by on christmas eve. Snuck by on christmas eve. Saying this firms using that profit in that manner not only have an impact on the economy but that they benefit themselves. We have monetary makers and policymakers saying, please, the rest of the economy, do something stuck with this has been the case for years. When i was back at do something. This is been the case for years. When i was back at the bank of england, you see this in the real sector. Especially when you see europe japan, sitting on which amounts of cash. We kept rates low and told her nothing would happen on the bond market. Why dont you do some with it . Of course many you can talk by back then dividends. But the question is commodity blue ghettos, they dont do anything with it either. But the question is, the people who get those, they dont do anything with it either. There are 600,000 women in japan who are now much more fully employed after age 30 then they used to be. That is a big thing that obsessive demographics that offsets the demographics in recent years. Fiscal policy, hes got a miss. There is still a lot of structural reform, particularly in agriculture left to go. What are the lessons from japan for mario draghi . Unfortunately, he is late to the lesson, which is when you get into this deflation spiral, its hard to get out. And second, you have to be open to making your commitment. Governor kuroda of the big in japan the bank of japan has said its not just visit when teasing that i might possibly use, but he has said we will keep it is not just this omc thing that i might possibly use, but he said we will keep buying until we get to our goal. I think japan is going to surprise on the upside in 2015, 2016. It will not be sustainable. There will be a tax increase. But theyre still getting export moves. They still stabilize the nation. Adam posen on the bank of japan. The data check is an important one. In the last hour, from 13 two negative seven and back down to 11. From 13 to negative seven and then back down to 11. With me are Olivia Sterns and Brendan Greeley. Mario draghi, the central banker does your dujour, was as blunt as hes ever been. He said he makes policies for 19 countries, not one. In case you were knocking paying attention, germany, that is you. Not paying attention, germany, that is you. It does seem like only talk about Monetary Policy in europe we are really talking about culture. What were talking about different visions for the economy. Germany has sold itself on the idea that cutting wages, saving a lot, this is the path of prosperity. And therefore, they put this moral twist on the fact that the irish, the spanish, the greeks did not follow that line. If you are ireland, you say hell, we had a bit of a boom in the 1990s. Stop beating us over the head and let the economy grow. There is a genuine conflict there, and mario is coming down on the right side finally. Next they are, listen, we did it. Everybody else, you do it. Yes, but the degree of reform is very different. The reform in 2003 through 2005 produced a lot of jobs in germany, but it was long overdue. It also means they are taking down wages bit by bit. In greece and italy and spain they are talking about 30 wage cuts in an environment where the rest of europe is not growing. That is a different story. You are staying you want germany to spend more. Ireland got itself out of its bailout and got his productivity back and is growing 3 or 4 now. An incredible recovery not through spending, but very harsh austerity. The average swallowed a very bitter pill. Yes, but it doesnt prove that is the cause of the austerity. What it proves is that the celtic tiger was not killed by the austerity. They would have been better off without it. And better Corporate Tax too. Yes, that helps. The markets the great distortion is real. Are you saying to get out and push . We have jeter better gdp and is probably as good as its going to get. I would like to see us hold off on a policy rise a little bit longer to see we can get more unemployed back into work. But this is normal monetary policies of you are making a judgment about the forecast. Correct give us the perspective of a governor president , a chair, which to be blunt and you could be give us the perspective of the pressure between david now has and reinhardt. Actually, the chair the pressure is between the Banking Committee and the house subcommittee. They have undergone an attack in recent years from the right instead of from the left. They have been under attack for being too powerful. This is the most Monetary Analysis ive seen in the last three months because it was all politics. It is not an independent institution. It is very closely fused to what politicians want. You say, normal monetary model normal Monetary Policy. Well, roughly speaking. My colleagues had a chart out there that shows new hires and wages. Weight growth is roughly where wage growth is roughly where it should be. They are getting back to normal. Allison williams our Bank Analysts just came on and she had a quote that said the financial legacy with the ratio of assets to gdp across Major Economies increasing after fourtime up to four times precrisis levels. What are the consequences . Correct not much. Fed normalization will be the y2k of 2015. Not much. Fed normalization will be the y2k of 2015. But she might also be right, so be careful. Good morning. Im Olivia Sterns here with tom keene and Brendan Greeley. We want to start with breaking news we are just getting out on tesco. S p has cut into a junk rating. It is the third biggest retailer in the world. We had an interview with bill ackman coming out of europe. They have really been struggling. Why do i care about tesco . Treks it is the third biggest retailer. It is the third biggest retailer. It is like walmart also it is a smaller footprint and it is all over. You walk along walk around in london and there is a tesco everywhere. And about fortress dimon, bad news. Profits falling by 6. 6 because of tough earnings. They also say they wrote off 990 million. A lot of analysts were affecting about 400 million or 500 million. They paid 23 million in fines which is a drop in the bucket, but they really want to have a clean 2015 and get these liabilities behind them. But i will be i will be fascinated to see where they are in 60 months. And a shrinking compensation pool by about 3. 6 . More to come. Lebron james and Cleveland Cavaliers maybe on a sixgame losing streak but that did not stop the owners from telling betty liu all is well in cleveland. How can they be so sure . They are 1920 now, so a disappointing season. Not the kind of season they wanted having lebron james come back to the cavaliers, which was a huge feet by the owner feat by the owner. He didnt play last night, but it did not help their season anymore. He did play last night, but it did not help their season anymore. Getting lebron back was a Pivotal Moment when suddenly he goes from being an interesting detroit billionaire to being a billionaire that everyone knows who he is. I asked him what it was like to bring lebron back to the cap the cavaliers. He said this like a marriage that ended. Its hard to imagine a person could have such an effect on a single city. When lebron left the cavaliers, the bayou of the team actually went down by about 20 . There was a monetary impact on gilbert, not just the fact that he felt like cleveland was losing it son its prodigy. In any case that was a little more about this relationship. But he says hes confident that lebron is here to stay. This is bloomberg surveillance on radio and tv. We are back in just a moment. Good morning, everyone. Bloomberg surveillance, and im tom keene. We have a busy morning. Starting with go pro shares, plunging on the news that apple has acquired a patent on a camera. It is its steepest decline since august. Go pro was trading at more than twice its ipo priced at 20 a share. And this sounds a little worrisome. Its six person crew of the International Space station had to lock it up. The Russian Space agency says no one is in danger. Mission control officials in houston are analyzing the situation. And after woody allen is developing a company. He will write and direct a halfhour series. Amazon launched the studios in 2010 as an expansion of its streaming service. I dont know very much about this, but it is a twisted announcement. We will see how this goes. He famously rest of his work and is incredibly prolific. What does he do with a halfhour series . It is really worth watching in the next 24 months. There are 351 days left in 2015. But we may arguably have the Research Report in hand. Jeffrey curry and his team at Goldman Sachs has given us a bombshell, a Research Note on the new world order. I can assume they are playing off of kissingers world order. The core of their thesis, that will will stay lower for longer as american oil deals with the new new, and that is, the speed of capital in an capital out or capital deployment. Dr. Currie, good to have you with us. Did you ever think you would have such impact . You are a boring professor in chicago, and you go over to goldman and truly move markets two days ago. The key here is the observation that when you look at shale, it has fundamentally changed this market, it is is that the leadtime between when you put money in the ground and when you get production has collapsed from three years to four years down to 30 days. On the flipside, when you take the investment out of the market, the production comes down very sharply. This has pushed capital to either margin. I am certain your note was read in riyadh. How will the oil nations adapt to the new world Oil World Order . The key there was a loss of market power. It is like producing paperclips. Opec if they took oil off the market today and made prices go up, capital would redeploy these assets. I want to get to something before Brendan Greeley johnson. You look at 35 by fourth of july. Stephen short says there is the possibility of 32. Could we overshoot your target on the downside . Absolutely. Where we captivated that number is it it was the level where the bottom core going to default. You can always overshoot as the process goes into adjustment. We were talking about how there are new swing producers. The u. K. Is issuing licenses as well for fracking. Where will we see other potential fracking areas, in poland, the u. K. . Are they going to wait to see how this shakes out, or will they be producers as well . There is a learning by doing process here. It takes time to understand the geology. You go back to the u. S. , back to the garnett the barnett shale. There was an educational process that takes place. In the u. K. , pulling, china, or even argentina, it will take time. Every day has fallen since its peak in june. Will demand for oil 90 million 90 Million Barrels per day, it looks like a 2 discrepancy. How does a 2 glut cause a 50 drop in price . There are two components. One is the story we are talking about right now, and you can see that with the forward curve with the forward curved going like this. But the other is repricing back in. That is due to cost deflation, which has been significant, and a shift in the project them away from deep water and oil fence to shale. And oilsands to shale. Adam posen has a question. But it is a great report and it is a great report and i dont know enough. Do they have to leapfrog in technology and get more specialized . Or are they just shut out . And what does this mean for Green Technology . Is we have a supply in the u. S. That bobs up and down so quickly in response to crisis prices does that incentivize Green Technology elsewhere . Lets start with the integrated question will stop the thing the integrated question. The thing Going Forward is they have the conservative strong Balance Sheet, but not the good assets. They still have deepwater and oilsands, the higher cost assets. The Balance Sheet in the u. S. That are more important are these technologies. These innovative technologies. We need to see these good assets get into the hand of the stronger. Newspeak to the bakers at you speak to the bankers i Goldman Sachs. Do you presume rationalizations, combinations, and indeed bankruptcies . Obviously, bankruptcy is the very last in terms of the different options available. But one of the key point is there are still there is still a lot of optimism in this industry. Youve got to reduce expectations command and we think transactions can happen. How does this change your european forecast . We are all expecting mario draghi to open up qe in europe. How does that change your forecast for the price of oil . Not substantially. Gold is the only commodity that really performs to the qe measures directly. Indirectly, it has to stimulate growth, create demand, and then you can impact oil. However, when we look at oil demand in europe, because it is so efficient, the impact is likely to be very negligible. This is not just a capital analysis game. This is a poker game. And some of the guys at this table, the Oil Ministers of the uae, kuwait, and saudi arabia what language we look for from them to indicate their minds have been changed . Will you look from them to indicate their minds have been changed . I dont think you can change their minds. Unlike anytime other in history, if they cut capital today, it will go into supply in places like the u. S. In the old days, when you cut capex you knew that the supply could not come back for a year or two. That is the big difference. Jeffrey currie, thank you so much. He comes to us from zurich. It underscores what research can do. You were so excited about the Research Note that you almost knocked over your microphone. These are the two biggest market moving notes in the economy in the commodities space. Time now for our twitter question. Is market volatility good for the banks . A lot of people are trained, but are they making money . Our first answer is that it could be very profitable. The second is that it is not particularly good. Our third answer, since big bank profits are socialites, any profit is good for banks. Are socialized, any profit is good for banks. With our we beyond the banking crisis . We are beyond the crisis, but escape velocity is not what it used to be. We greatly appreciate it. Futures have deteriorated. You look away from the screen and the world changes. Futures are 13. Stay tuned all day to bloomberg business. Good morning. Good morning, it is wednesday, january 14. Were live from bloomberg headquarters. You are in the loop. I am betty liu. We are nine minutes away from the opening bell and i have a packed show for you. Retail sales are out at 8 30 a. M. The reality that lower gas prices is getting americans to spend. We will find out. Scott will be joining us and also with us is a former ceos even newman. Plus shopping for an nba team . The russian owner of the Brooklyn Nets wants you to call them. So worth a lot of money. I sat down with the owner of the Cleveland Cavaliers. What is it like having lebron james back on the team and how did they exactly make up this summer . An exclusive look at the complicated relationship. And we have breaking news just a moment ago. I want to get to our chief markets for