Bloomberg best. Hello, i am scarlet fu. Welcome to bloomberg best. A weekly look at the most important Business News from around the world. Heres a look back at the top headlines. Just announced, highyield credit fund lucent is shutting down. He is going to return the 900 million they got under management. Just last week we heard about the distressed fund, stone lion, we heard about 3rd avenue, the mutual fund putting the gates up. What is going on in the highyield market . I will start. This is something a lot of folks have predicted for a few years now. You have more of a retail base in high yield than you used to. Flows are more volatile. And so you have some price volatility and liquidity that you did not have illiquidity that you did not have an prior cycles. The volvo role and doddfrank have affected the highyield. Are we mistaken when we blame this on the vocal rule or doddfrank . When you buy high, you are committed to selling low. That will play out again and again and again. I think the volga role has something to do with it. Every problem is accentuated because you do not have people fitting as aggressively as you had. I do not know much about this business but i know, if you are using highly illiquid assets and redemption, it is not going to work. It seems to me they had a pretty good run, made about 50 compounded and now they give it all back. Earlier today, the federal open Market Committee decided to raise the target range for the federal funds rate by one quarter percentage point, bringing it to one quarter to one half percent. This action marks the end of an extraordinary sevenyear period during which the federal funds rate was held near zero, to support the recovery of the economy from the worst financial crisis and recession since the great depression. I think she nailed it. It was like, it was not too hot, not too cold, right down the center. Just right. It was a well scripted conference. I think she nailed every answer very well. I think some people can interpret a little dovish. I think she was right where she should be, and what she gave the market is clarity. The opportunity they missed in september while the markets were so unsettled, because we had no clarity on their actions. In this case, they really expressed exactly what they are looking for, how they are looking for it, their forecast going forward. She is going to say, we are datadependent on the course but she gave such great clarity that i think the marketplace can be calm and can understand, looking at numbers, how the fed will operate. President Vladimir Putin at his annual news conference. He started to talk about the downing of the russian plane by turkey. He has touched on oil and the need to have geopolitics aside, the most important thing from the press conference is his handling of a pledge he made at last years press conference, where he said russias recession will last two years. That means he has one more year to pull the country out of recession. Today, he said that forecast was based on Higher Oil Prices and 50 a barrel is simply too optimistic. He also talked about Monetary Policy. There are plenty of people in russia saying the key rate above 10 is way too high. He said no, russias main problem this year, unlike the rest of the world it is inflation, and it is only appropriate for rates to come down when that problem has been addressed. Kind of creating a little bit of wiggle room for himself, preparing russians for the idea that because of low oil prices this recession could extend into 2017 although he did say that the worst was behind the country and the forecast is that the economy will rise a little less than 1 next year. Pharmas bad boy, martin , a former Hedge Fund Manager was arrested on fraud charges. This indictment unsealed today. What did we learn about what is alleged he had done . This is not related to the price hikes. The great irony of the story is this has nothing to do with what he is famous for, jacking up the price of lifesaving drugs under some of the companies that he runs. It is essentially a web of lies and deceit. Prosecutors are alleging on how he managed a group of hedge funds, that he was running a few years ago and basically lying to investors as straight up security fraud. Lying to investors on simple things like, did they have an auditor, which of course they are required to do, how much money the hedge fund had, what the returns were. You have this product in the eastern district. The sec also releasing an indictment. Often in these cases, the sec will do a parallel civil complaint. Their case is interesting because as it usually happens when you have fraud charges against a Public Company, some of his companies are public and some are private. The ones that he has worked for and founded. You cannot be a ceo of a Public Company and have been convicted of securities fraud under the sec rural. That does change the dynamic and i think people are looking to see how that will shift some of the companies he is working with. It puts their future into question. Scarlet coming up, level reaction to the feds rate increase. Scarlet welcome back to bloomberg best. The federal reserves decision to boost Interest Rates raises a host of questions. Fed discussion on Bloomberg Television kicked off with a pointed reaction from bill gross. Bill gross janet yellen today in the press conference, to me, suggested a rather hawkish stance. She is definitely thoroughly not modern millie, or thoroughly modern janet. She reflects a fed model that emphasizes transitory as opposed to structural factors, and continues to suggest short legs in Monetary Policy. I think the fed basically is living in an old age as opposed to a new age, reflective of high leverage, globalization, factors in terms of demographics that are pushing down inflation. She refuses to acknowledge it. I want Michael Mckee to jump in with his sophistication, but i have got to ask you that key question. Which way will the spread differential play out . Is full faith and credit going to make higher yields or do we see carnage in the highyield market . I think we have reached a point of stasis in the highyield market. For the most part it is a function of retail, and retail confidence. Certainly it has been shaken of the past few days and months as highyield prices have gone down by 5 , 10 , 15 . That is not a confidenceinducing type of and fullest but i think at the moment with high yields where they are, 500 to 600 basis point spread over treasury, they reflect a value that can hold its own with a moment. I think treasuries are attractive but they cannot be that attractive if janet yellen continues to insist that Monetary Policy operates with short legs, and inflation gets back to 2 . Where is she in terms of what is happening in japan . Where is she in terms of Commodity Prices on a global basis, on the influence of Monetary Policy on the continent of europe . To make, she is an oldfashioned central banker and she needs to modernize her and her staffs thinking. Do you buy the idea of for four rate increases next year or is that wildly off the mark . I do not, and it is significantly dependent, in Janet Yellens view, on inflation. She insists that even if Oil Stabilizes at the current prices, inflation will go back up and there is a certain mathematical equivalent to that. Commodity prices into need to go down as reflective of deflation, a Global Economy that basically is not doing well. To emphasize only the u. S. Economy, which is only growing at 2 , is not really reflective of reality. I think next year, it is not going to be a one and done type of move as reflected by the press conference and her attitude and philosophy, but to the extent that we have two and weight, i think this is probably what we are going to see because she will be waiting on inflation hitting 2 for a long, long time. Which camp are you in, coming in or going out of this event . It was about time, or no, the timing is all wrong . I think she is all right with the timing. The september stumble looks like it was potentially a big mistake. We are off and i think the Market Reaction around the world this morning tells you that the markets are delighted with the way she has handled it. I think it is a massive vote of confidence in the fed. I think the markets are voting at the prices and they are saying, she is doing ok. Lets just put up some of the volatility metrics we have, measuring the volatility within the bond market. Stocks volatility dropping by 15 . All plummeting. The question is of course, for the bond market, the volatility in the bond market, is bill gross right . Concerneden is overly about inflation. Not thes just no issue. It is about looking through the windscreen or looking in the rearview mirror. I know when you look at the inflation prints it looks like it is not an issue. We see headlines, we all know because of base fx that that headline rate will move up substantially. We know the core inflation is rising. In the u. S. It is at target. If you might want to be the opposite of bill gross, what are they doing with Interest Rates at just a quarter to a half a percent . They should be moving quicker. He is on one side of the argument and there is a spectrum. You would expect that. The feds job is to go down the middle, and it seems to me that most markets with the exception of the treasury market, she is going more at the right speed. We got some more clarity but as we look ahead to 2016, there is still uncertainty as to when they are going to hike again and the asian markets, and implications there. And the greek mythology, a tragedy is a hero who destroys himself. I think the fed is about to do that because they kept Interest Rates next 2047 years next to zero for seven years. Up until today, it had never existed before, such a long period of next 20 Interest Rates. Rates. To zero interest in fact, they never existed before. Now, they increased rates a quarter of a percent exactly at the time the Global Economy is weakening. In 2012, 2011, they could have raised rates because the Global Economy was expanding. Commodity prices were going up. Global treasury was going up. China was booming. And now everything is going down wherever you look. Exports are down. What does it tell you . Demand is weak. They are increasing Interest Rates at precisely the wrong moment. I am against monetary policies anyway, but if you use them, you should use them wisely. The problem with this institution, the federal reserve, is that the plan is worth it, but the wrong plan is the problem, and the fed is on the wrong plan. If it is not the fed, what is the game changer in your eyes . It is obvious, before someone said this is an extraordinary error. It is extraordinary in the sense that central bankers have manipulated its Interest Rates lower, and the market does not believe it entirely because if you look at the lower credit, lower credit has raised in price significantly. Junk bonds and Interest Rates are up substantially. That, the fed cannot control. Number two, the asset markets are weakening already substantially. If you look at the arts market, the bond market, the highyield market, the physical stock in the u. S. On friday, there were 570 new 12month lows on the New York Stock Exchange and even yesterday, as the s p rose 30 points or close to 30 points, there were four times more declining issues than rising issues in terms of new lows. And so the market, inside the market is not healthy at all. All the emerging markets are way down. The Global Economy, as i said, is slowing down meaningfully. This is the time miss yellen is increasing Interest Rates. It is a tragedy. It is a complete joke. Scarlet you are watching bloomberg best. Lets look at back at some more important business stories, starting with mixed Economic Growth in europe. Earlier we had eurozone p rmb i data to 53. 1. Of 52. 8. Forecast lets go to hans nichols in berlin for some analysis. What sort of reaction are we seeing to these figures . We are not seeing a huge reaction in part because the figures are basically in line with expectations. We see the Service Number coming in at 54. It is modest, tepid, monotonous growth. About ago it was at 51. 3. Overall, we will have a sub 2 growth in germany for the year. That is the best numbers we might get in the quarter eurozone but we have disappointing numbers at a france. We are ending the year similarly to how we started it. Growth but not really growth. It is so low you can barely proceed it. Hans says, we have growth but it is not explosive. That is probably asking for too much within the eurozone. Will the stimulus measure the latest batch . Mario draghi definitely believes they will, and a slight caution to accelerate the program in early december. I think it is fair to say yes, it will be, but it will be slow growth. People have got to come to the terms that we have been through one of the deepest recessions since the first world war. Argue the most we have seen in many generations. It is going to take time to recover. Scarlet frontpage news in hong kong, alibaba is buying this sunday morning post for 266 million. Following in the footsteps of jeff bezos. Asia company news editor peter elster joins us from tokyo. Why would an Ecommerce Company like alibaba want to buy into old media . Alibaba has an interesting explanation for this deal. They said they see an opportunity to combine their Digital Assets and digital reach with the assets of the scmp, and they think they will be able to make something out of it. They see a good opportunity. It is a good opportunity, they say, but certainly there are political and financial risks. The deal was for 266 million. This is not a big deal financially for alibaba. They have about 15 billion in acquisition so far this year. They bought their way into online video, brick and Mortar Retail stores. Politically it is more sensitive. Scmp is the highest row file english language newspaper in Greater China so there are risks on both sides. If it is now critical of the chinese government, that could create blowback for alibaba outside of china, and conversely, if the scmp is very easy on the government, it there could be blowback for alibaba. You have made two offers for norfolk southern, both have been rejected. Where do things stand . Little progress has been made. I think we made some breakthrough with the shareholders and i think our polling says that they are very interested in the transaction. We would love to sit down with norfolk southern. They at this point still refuse to sit down and talk with us, but i think the next 10 days is going to bring a lot of action. How so . I think we are getting to the end of the process, which is talking. They are going to have to talk to us or we are going to have to take another taxi. If they refuse to engage in the conversation that you want to have, if jim squires does not get on the phone with you, the ceo of norfolk southern, what is that other tactic . We have done our polling, they have done their polling. I think they are of the view that if they are waiting as out, they will wait a long time. Scarlet argentina has just today scrapped currency controls. That seems rather abrupt. Talk us through what needs to happen for the next couple of months for this to be a success. I am an impressed and pleasantly surprised by the quality of the policy measures they have announced. There are three things they need to do, they need to devalue the currency. The question is, do they have enough reserves to handle the bond demand that will likely occur . They seem to be showing up and have generated enough reserve at this point to help. More importantly, they need to do something with those accounts, and i am also optimistic. One of the first countries in the world with a new film open to the public. Nothing quite brings out the film. Ike a star wars it reunites the heroes from the original trilogy for the first time in 32 years. This midnight screening, the question is, what do the fans think . Everything i expected and much more. It was amazing. I could not rave about it more. I am very much looking forward to the next one. It was great. We waited like 30 years for this. 7000 sessions of the force 7000 sessions of the force awakens scheduled opening week in australia. When it originally opened, some analysts questioned there wisdom. The hype is increasingly starting to reflect. Scarlet when bloomberg best returns, we will look at the weeks best interviews. First, some of the weeks best images captured by bloomberg photographers. Scarlet welcome back. The legendary real estate mogul, a former u. S. Treasury secretary and president ial candidate from the republic of china. A few of the business and political leaders who spoke with bloomberg tv this week. Lets listen in on the interesting conversations. The world bank is one of the biggest funders and green projects. Does this change anything for you . Absolutely. The ambition was scaled up. Now we are not just shooting for two degrees celsius, we are shooting for as much as 1. 5 degrees celsius. We have to get much more serious everywhere we work about finding low carbon solutions. Our investments in Renewable Energy have to go up. We have to find new ways to make deals around hydroelectric power, so i think they will be powerful Economic Investment opportunities for the private sector. All over the world, you see Companies Moving in that direction. Tom what do you need to get to the next step . To be less optimistic, do you need crises like in beijing to drive the conversation fo