Transcripts For BLOOMBERG Bloomberg Markets 20151130

Markets. Here in the u. S. , unchanged this morning. Now we are steadily moving lower and lower. If you want to take a look in my terminal, the bloomberg chart here, i have the dow intraday. You can see we took another leg lower and we are coming down lower now at noon as well. It looks like all the pressure is on u. S. Stocks as the european stocks slow at the close. Scarlet within the dow industrials, what is driving the measures lower . Matt we are on retail sales because of black friday and cyber monday. The biggest loser, for example, is nike. Nike is the biggest loser on the doubt. There has been in a lot of talk about discounting today. Piper jaffray is concerned about discounting. Under armour. People are concerned about discounting at lululemon. Maybe that is the reason you see the weight on walmart and nike. Watson did say that cyber monday sales would be of 18 across the board. Disney is also a big weight. We are here friday . Scarlet i was not here friday. Matt you were smart enough to take off. It proves what we already knew about yes ken subscribers. Epsn subscribers. They are weak. Losing 7 million, that prompts continued concerns about cord cutting could be sought disney fall and it continues to step down today. Im assuming you have every kind pn you could possibly subscribe to. Scarlet every possibility come every which way. Matt you are not the concern. Scarlet were singlehandedly supporting espn and disney. Laurie keller has more from the news desk. Laura thanks so much for the focus may be Climate Change, but todays paris conference is also giving readers a chance to let against the islamic state. The race is on to convert promises into success against terrorism on the battlefield. The European Union and turkey to sloweed on a deal the flow of refugees to europe. Turkey says it will increase Border Control from and in return, the eu will contribute 3 billion to help refugees. It will restart negotiations on turkeys bid to become a member of the eu. Pope francis met with muslims in a mosque in the wartorn capital of the Central African republic. The pontiff visited six children in the hospital. Violence between muslims and christians has escalated in the two years since muslim rebels overthrew the countrys christian president. It is his final stop on the threeish in africa trip. In the u. S. , the university of chicago campus called off classes after receiving an anonymous threat. Back to you. We have some news. Scarlet as you are looking there, christine lagarde, managing director of the imf, speaking right now. They have approved adding the chinese yuan to the reserve currency basket. Lets listen in to madame lagarde. Garde the imf also decided based on the actual International Use and trading of the renminbi that it meets the conditions for being determined a freely usable currency. This is the second criterion. The first one is based on trade. The second is the freely usable currency. This determination, which has been made today, will become 1, 2016, in october order to allow for the institutions, the central banks, and all users to prepare for the new basket of currencies, which moves from 4 currencies to 5 currencies. Renminbis inclusion is clearly an important milestone in a journey that has begun months if not years ago. A journey which is a transition towards more marketdriven principle of the macroeconomic framework of china. It is a milestone in a journey , indeed cometinue and include certainly more reforms that will add to the existing reforms that have been decided by the chinese authorities in the last few months. It is also a journey for the institution. Very hard in the last 2 months. We have tried to cooperate as with theossible chinese authorities, with authorities around the world ,rom which our users of sdrs data collectors, and this journey will continue, because we will continue to monitor that complianceons and from all authorities of all five currencies actually satisfy those criteria. We also believe that in addition to being a milestone in a journey, it is also going to right asn the special this currency of currencies, because the basketball now currencies five the u. S. Dollar, the euro, the yen, the british pound, and the renminbi. And it will clearly better represent the International Community based on those 2 criterion of trade and the freely usable currency. Takeof that, i will happily some of your questions, and i would simply for those of you who care to remember initials rather than words, just coin the renminbi as inclusion in the sdr as a clear indication of the reforms that have been implemented and will continue to be implemented, and is a clear stronger representation of the Global Economy in terms of our special rights. Thank you. Madame lagarde, a couple of questions. Thank you, madam. Im a reporter with China Business network. My question is, would you elaborate more on how it would mean for the renminbi and its liberalization reform . Also, what is the waiting for the r d in the sdr basket, and what is your application as the waiting may change as the renminbi delivers more in the future . Scarlet and you have been listening to christine lagarde, managing director of the imf, at her press conference in washington. The imf financing that it has added the renminbi to the reserve currency basket called special drawing rights. Analysts say this is of huge importance in terms of recognition, and politically questionable whether there will be a mature impact for investors. Be discussing this further on in the program, but for now, i want to bring in denny blanchflower, a professor of economics at dartmouth college, a former member of the Monetary Policy community at the bank of england, and he joins us from hanover, new hampshire. Lets start first on the chinese yuan drawing special drawing rights. This was not expected not unexpected. Yet it is important and symbolic for many reasons. Tell us why it should matter for investors. Im not sure at this point it really does matter for investors. It is clearly an important political move and it will take a while for it to actually be lamented could i think be implemented. Acceptance ofan economic reality. China has become more important in world trade. There really are five major currencies in the world. I think it is a bigger political move that economic move. We will see. I think it is an acceptance of the importance of china in the world. The acceptance of economic and political reality is what i would call it, rather than an Immediate Impact on markets. Danny, you are just looking at the market reaction, the chinese yuan, the trading there. This is the Dollar Strengthening and the chinese yuan weakening. Move in termsle of the percent change from a day earlier. We are all expecting that. What it does mean is that chinas currency and the Economic Reforms plans are under bigger scrutiny than ever. What does this mean for how the Chinese Central Bank communicates its intentions and plans to the Investment Community . Will beopefully, it rather clearer than it has been in the past and will push rather more credible Economic Data and credible statements of where it is going. The International Community now says you are part of the International Basket of currencies, but you have better shape up on telling us what you intend to do, and open up, if youd like, so the world can understand. Especially at the moment, where it certainly appears that china is slowing. The extent to which it is slowing, we will see. But that certainly is what it appears in the data, and we have seen today Oil Prices Falling like matt, presumably because of a fall in chinese demand. The credibility of what is going on in china is important. The central bank to can indicate what it is doing, but also to come clean exactly of what is going on in the chinese economy. China is usually important now. Scarlet lets talk more about other central banks. Huge week this week. You have australia and india announcing decisions tonight. Then you have pulling and canada on wednesday. Of course, culminating with the city on thursday. Of all these different culminating with the ecb on thursday could of all these different central banks, which has the potential to spice the most surprise the most . Danny golly. Well, in a sense, the ecb is the big one. People are expecting an additional stimulus of 60 billion euros a month. Maybe we will see more than that, maybe we will see a bigger move to negative, not least because inflation is still surprising to the downside. Ecb thought we would see rising inflation. Half the member countries are still in deflation. We are still seeing very tight fiscal policies. Always they, the size and the scale of what has gone on in the ecb is very important. It is interesting in some sense that the central bank we are talking about here, there was no real expectation there is no real expectation they will be thinking about raising rates at the fed. This is, if you like, qe wars from Interest Rate wars. Everybody tried to get there Interest Rates down against the dollar and the fed is proposing to help everybody out by helping the u. K. And economy by raising stresses in the currency. Interesting days. Scarlet interesting days, and the following week, we will have the Federal Reserve as well. One thing that mark carney, the governor of the bank of england, has highlighted as a concern is the property market. If you look at the mortgage lending chart, it basically measures market is on Investment Properties 50 deaths accounted for most of the growth in market is since 2008. What kind of new measures is the boe likely to take to slow down this kind of growth . Danny it appears there will be sunday from the Financial Policy Committee rather than the Monetary Policy committee to get some restrictions on growing house prices in the south. I think it illustrates actually that house pricetoearnings ratios are really growing in the south of england, but one size doesnt really fit all, because house prices arent growing outside of the south. This is a problem. You perhaps can fix it through financial policies, but what we have seen is really relevant to the ecb, too, relied on Monetary Policy. The danger is that what is right for germany isnt right for and in thegreece, u. K. Come what is right for london and the southeast is not right for northern ireland, where house prices are 40 below where they were at the start of the recession. I think we will see a chance to try to impact a chance to try to impact house prices, but the problem is that one size the impact in the south of england and doesnt actually work in the north. Scarlet one size doesnt fit all across the euro zone or in the u. K. As well. Danny blanchflower, thank you so much. I surf economics at dartmouth. Professor of economics at dartmouth. We will have lightbank coverage of the ecbs interestrate decisions on thursday. Danny also giving us reaction to the imfs announcement that it has a put adding the chinese currency, you want, to the reserve currency basket. Christine lagarde giving the announcement just 14 minutes ago. Much more coming up on Bloomberg Markets. As the Federal Reserve gets ready to raise Interest Rates, bond dealers are predicting a major drop in treasury debt supplies could what does this mean for longterm yields . The Holiday Shopping frenzy continues online in what is expected to be another record cyber monday. The traffic has one retail giant stumbling and it could put a major dent in sales. In order for the megamerger between sab miller to go through a couple of beer brands need to be cut loose. Scarlet welcome back to Bloomberg Markets. I am scarlet fu. Matt miller has a check on individual movers. Matt i think i will start with fitbit. Does that sound ok to you . It was raised to overweight at barclays. It was also raised at bank move bank of america. Barclays saying it is a valuation, saying that current valuations are too compelling to ignore. ,ith todays gain in fitbit pretty substantial, were looking at 30 times future earnings. I would say pretty strong valuation, depending on where you look. Lululemon is another one that got analyst action today in the other direction, cut to an underperform over at sbr. They are lowering the price target on lululemon 242 dollars from 55. Shares are reacting 5. 5 . That is because of concerns about high Clearance Levels and difficulty expanding internationally. The Clearance Levels are also concerned at under armour. Piper jaffray saying that under armour is heavily discounting, and that seems to be concern across the board for not only clothing retailers, but we are also looking at concerns that automakers are discounting quite a lot. Tomorrow we will get auto sales out and we should have a record november, 17. 7 million the lowest forecast. That is still a record. That is because they are discounting as much as 6 , some of them even more. Terms have been growing longer and coming out with more incentives. Matt making it easier for you to buy a car, part of the reason they are selling more and more cars. Maybe this could be a problem for lulu and under armour as well. Scarlet matt with the individual movers in todays session. There was a big drop in treasury supply come up to 26 , according to bond dealer estimates. It is one more recently that the fed can end the registry policy without causing a drop in borrowing costs. Oining me is Lisa Abramowicz why does this matter to investors . Sa first of all, when you talk about the fed raising rates, you get a lot of concern that all of a sudden yields will start surging upwards and we will lose all our money and the fixed income that we are saving life for when we retire when we are 98. We start wondering, what are we going to do, etc. . The shows how complicated equation really is, and how the factors at play are multifaceted good we just had the chinese yuan accepted as a reserve currency. China has been trying to devalue the yuan by selling treasuries. That has been pressure that would push yields up. On the flipside, less supply coming, particularly in the long end of the curve, the longest dated bonds. That would keep the lid on the potential yield. I would argue it would keep the yield even more with yields plunging or potentially falling more than people expect. Expectedwas this an consequence of what people are seeing . Wall street analysts have been steadily ratcheting back expectations for how high the yields might go. Now the forecast is for the 10year treasury yields not to breach 3 by the end of next year. People have been pulling back expectations. Surprise would be if the lack of supply actually doesnt have the same effect, because selling pressure, whether coming from china or potentially domestically, outweighs that. At the same time, you have the widest gap between the german bonds in nine year. Scarlet just pointed out talking about the european Lisa Abramowicz, thank you very much. Still ahead on Bloomberg Markets, online sales are crushing brickandmortar sales this year. What does that mean for cyber monday . Scarlet welcome back to Bloomberg Markets. The Holiday Shopping frenzy continues in what is expected to be a record cyber monday could targets website has already crashed from heavy web traffic. Stone fromis brad San Francisco. What are the numbers you are hearing for estimates with cyber monday . Well, lets put it this way a lot of people are goofing off today. On track for about 3 billion in sales today come up about 15 from last year. This has been a season of inflection points, turning point in retail. The number that jumped out at me are half shopping business coming through mobile smartphones and tablets. The reason this is important is it favors players like amazon and ebay. People dont visit a lot of websites on their mobile phones and their tablets. They want to visit one app. It is good for those company, probably a challenge for the physical retailers and malls. Exactly, especially where you require people to try things on as well. What are you hearing in terms of the shift to more experiences buying and services buying . How does that affect a company like amazon, which is still pedals physical goods . Brad what are people looking for now . Theyre looking for selection, they are looking for convenience. That is why amazon is putting so much emphasis on next day and sameday delivery. The physical retailers who have not put an emphasis on the convenience aspect nordstrom was tacked this weekend. They do a good job with the customer touch. For some other company, it is a big challenge. Scarlet brad stone, i was noticing going to the stores on monday, it was totally empty compared to what i expected or i should say on sunday. People talk about black friday being won today it extends to the weekend. Cyber monday, you could argue, is cyber holiday for the rest of the month, really. Brad one lesson of the Holiday Season is the window shopping has expanded. People are shopping before thanksgiving, and as we saw last year, the shopping craze continues until christmas. Scarlet brad stone, thank you so much. We have much more Bloomberg Markets coming up after this. Scarlet from bloomberg World Headquarters in new york, welcome back to Bloomberg Markets. I am scarlet fu. Laura keller has more from the news desk. Laura the focus today in paris may be on a Climate Change conference, but with World Leaders there, it is also a chance to discuss the fight against the islamic state. French president francois pledges ofs won support from russian president Vladimir Putin and the u. S. Promises on to convert into success against terrorism on the battlefield. The European Union and a tricky have agreed on a deal to slow the flight of refugees to give up. Turkey says it will increase Border Control and in return, the eu has agreed to give the it willfugees and restart negotiations on the bid to become a member of the you could democratic president ial frontrunner Hillary Clinton will campaign with Warren Buffett next month in the billionaires hometown of omaha, nebraska. Supportand mrs. Clinton tax a in the wealthiest americans are not paying their fair share. Kobe bryant is calling it a career. The lakers star will retire at the end of this season. You will leave with five 17 allstar game appearances, and the number three spot on the nations alltime scoring list. The news of his departure is sending ticket Prices Higher on the secondary market. Homeket in los angeles finale in april will set you back more than 500. That is a look at bloombergs news. Right now you can get more on these and other breaking stories 24 hours a day at the all new bloomberg. Com. From the bloomberg first word desk, i am laura keller. Scarlet thank you so much, laura. Morgan stanley is planning a significant reduction in fixed income. Invest in bank a sob on trading revenue plunged more than 40 in the third quarter. With what this means is Michael Moore. Asknow that Deutsche Bank been reactive on that front, as has credit suisse. But this is significant because the other u. S. Banks have not done this yet. Michael; a lot of the banks have cut over the last few years, study amount, and there were some big cuts in the 2009 and 2010. This is the next wave of the cuts. Based on a view of a more the fixedurn income has been coming down over the last few years. Morgan stanley, the executives have said we think it is going to come back. The question is how much will it come back . Will it be the heyday of 2006, 2007 . Scarlet Ceo James Gorman is consistent in the messaging. Give us a sense of how much the fixed income business at Morgan Stanley has shrunk since gorman took over. Michael less than half the size in terms of revenue and the capital, and that is a big key part of it. Even with higher revenues immediately after the crisis, the returns werent there because new capital will require so much more capital in the business, so they are entering to get the returns up, they say they are more focused on the returns than the overall revenue, which is a different picture than what you had before the crisis. The capital in the business is less than half what it was a few years ago. It has been a study shrinking of that business. You are seeing in the job cuts as well. Scarlet 20 extent you see something similar from j. P. Morgan, Goldman Sachs, citigroup, bank of america . Michael goldman has been saying consistently they are holding on and hope to be the one that takes chair when others pulled back. Jpmorgan is the biggest fixedincome trader and the perhaps feel a little less pressure than we are seeing today. You might start to see some of the other players go back a little bit. Citigroup is bigger than bank of america. Business the returns are pretty challenge right now. Him at Michael Moore thank you so much, breaking the news that Morgan Stanley is looking not shut down, sorry planning fixed income cuts of 25 in the next two weeks. Of md advisers told Erik Schatzker and david west and why he thinks a bear market in commodities is not over yet. Et al. Have in your major bull market in commodities that ended in 2011. Five years into the current bear market. This is going back to the 1800s. Secondly, what i do is a measure of the 10year range of trade in commodities and i found that bull market ending in the 10year range is 10 . Repeat at 12 . Meet peak at 12 . Or how you look at commodities, there is no reason to believe that the longterm bear market whatever nfl. Erik which is to say that over time, commodities will go lower. That is my job, to give my clients in for the rallies, but on the longterm basis, dont worry about missing the next bull market at this point. Scarlet while the slump in energy metal prices persist, u. S. Stocks will be in a bit of a low. Joining us to talk about what is ahead for equities is oliver renick. I want to piggyback off what milton was talking about earlier with commodities. To what extent are commodities going to determine the direction of equities in 2016 . The forecast for equities are very much dependent on what the Global Outlook is for metals and oil. Oliver absolutely. If india his bare call is correct, if indeed his bare call is correct, it is not ideal. Clearly it has not been enough to derail the bull market we have seen. I think you can take 2 positions on this. The first position, a little more salient given the past performance we have had, is that in the course of the past year, the 2 major downturns we had come october of last are, august and september of this year, were tied to the Global Growth concerns. You can write that off. No coincidence that the downturns of 7 , 12 , came on the back of the valuation of the chinese currency, and the idea that if growth is slowing on the world, it means weaker demand. The other argument one can make is that you have to keep in mind that there is a world of stocks not tied to the fate of developing economies. Scarlet all caps notably. Oliver of course, and those have been doing well recently. With stocks that are not tied to the same fate, we see the breadth start to deteriorate a little bit in the s p, that makes people wonder. You have to keep in mind that this has something this is something that has the potential to jolt the market but it is something that can derail the stronger bola case that relies on the good u. S. Economy and the Innovative Companies that have been waning in the u. S. Stock markets. I dont think so. Of jolting thems market, people question how much trading can get done between now and christmas. You will have compressed activity and anyone everyone takes off for the holidays. I think it is important to look at volatility because even though we are pushing the new highs and getting close to the 2100 level, breaking into the new high area, things start to get a little bit iffy in the around we see the vix 16. Given that we are that high in , 13, 14, whenet we are pushing 2100. Reallyek will be important and be more of an interesting end of the year than we have seen in the bull market hit the big event of the fed, and this week we have the ecb. If you look at both of these events, the market seem to be sure about what happens. Scarlet what is the percent odds about the cut in the deposit rate, for instance . Oliver all the economists we surveyed say they will put more stimulus on the table. If that doesnt happen, things might get weird. You have the same thing going with the fed. 75 chance that the fed is going to go. Certainly you could reduce volatility, and i think the fact that we see the vix not high by any means, but elevated relative to where we usually are, makes you think that if one of these things doesnt quite go as expected, we could get a little bit of a rocky ride at the end of the year. I dont think the pieces are quite in place as they were the past couple years to say, all right, it will be an easy couple months. Scarlet in terms of Something Like market breadth, you were talking about how narrow it is. If you look inside the bloomberg terminal come this is the chart that you came up with. Facebook, amazon, netflix, versus the s p 500, the diversions does not necessarily indicate a healthy market. Oliver that is one of the things that people are concerned about. This is sort of an issue that gets put to the forefront of the selloff, or you have a lot of people in the same sorts of stocks, and that is not good for Fund Managers as they try to pick something up. At the same time, you could point out that these are the pinnacle of Good Companies that are doing innovative work, that are rewarding shareholders. There is that side of it as well. If you go into the end of the year, the big sort of events that could change not just stocks but markets overall, the fact that you have fewer stocks contributing to the rally and fewer stocks adding to the larger gains, it makes it difficult for Fund Managers. For a long time they have been pointing to the Interest Rate decision as an opportunity to move into a market where you can differentiate from other managers. We have not really seen that. Historically in terms of what happens with dispersion with stocks, there is no real consensus than nothing to play historically and say that if you are a fund manager, this rate hike will make the stocks go in different directions. You dont really see that so much. The fact that there is more people and fewer stocks is not great news overall, but still solid companies. Scarlet crowded trade, in other words. Oliver renick, thank you so much. Coming up in the next 20 minutes, entrees to bess is behind bars. He has resigned from all of his post at the investment bank. Can the firm get back on track . Companies like amazon the reason why . The chinese yuan got a big boost from the imf. We will tell you what this means for the currency and the global market. Scarlet you are watching bloomberg. I am scarlet fu. Heres what we are watching right now. In imported milestone for chinas yuan after the imf approved adding it to the reserve currency basket. What is the Global Impact of this decision . In order for the megamerger between sab miller and and death to go through, a few beer brands need to be kaluz. And cyber need to be cut loose. And cyber monday continues growing get what amazon is the leader in this space. Lets start with china. The imf has approved chinas request that the yuan be considered a reserve currency. The fund added that the yuan would have a 10. 92 weighting in the basket. Christine lagarde explained the Global Impact of this decision. Lagarde it will clearly better represent the International Community based on those criterion of trade and freely usable currencies. A pair of beer brands could be sold so that the biggest brewers could merge. Peroni andill put grolsch on the selling block. Ev is buying sab miller and divesting this brands could relieve antitrust concerns. Ibm is reporting that sales and the weekend after thanksgiving saw a jump for the same time last year. The ceo of wayfarer said that amazon is the leader online. Is obviouslyazon the leading online retailer, and i think that if you look across major categories of merchandise, they are the leader. Home furniture, decor, housewares, home improvement. We are the leader there. It is a very specific spot, 12 of total retail. The vast majority, the other 88, amazon is the big winner. Scarlet a jailed billionaire is stepping down from his position at the largest independent bank. Andre esteves was arrested last week in a corruption scandal. Btg pactual is in talks to acquire esteves scheduling state. Time for the quick take where we provide context on big issues. Todays topic is Climate Change. World leaders are meeting in paris with the goal of reaching the first truly global deal to curb Greenhouse Gases. More than 170 nations come forward with commitments to limit. Youll emissions limit fossil fuel emissions. The deal is on track to be the hottest on record of rapid industrialization, meaning the world is likely unlikely to meet the goals of reducing temperature gains to two degrees celsius. The backdrop is that the kiddo protocol is not effective because it did not included china and india, that the kyoto protocol is not effective because it did not include china and india. The private sector has been making strides to reduce Greenhouse Gas emissions. Companies and homeowners have been installing solar panels using energyefficient lighting and taking advantage of improved technologies. The cost of Renewable Energy has fallen. Rising Consumer Awareness and political pressure provide momentum for global deal. Even with mounting data showing the effects of Climate Change, there is still an army of Global Warmings Global Warming skeptics. Scientists are warning of irreversible damage if emissions dont come down. Policymakers must decide who will pay for the push to cleaner energy and how quickly to replace fossil fuels with renewable technologies. That is the bloomberg quick take. Scarlet thank you so much, david gora. For more stories, visit bloomberg. Com, bloomberg. Com quicktake. Lets go to abigail, who is reporting live from the nasdaq could you were looking at two of the biggest laggards for the month of november. Starting with qualcomm. Abigail qualcomm is down 19 for the month of november, one of the worst performers at the nasdaq. The stock was hit earlier this on weak fiscal guidance and concerns over royalties in china. More recently, shares were hit on news that south korea said qualcomm was violating trade law. It is on track for its worst. Onth since april 2002 another laggard, priceline could the stock is down 13 this month. It declined earlier in november fourthquarter outlook and was recently on the tourism attacks. Paris terror some investors may think that priceline is more vulnerable than other travelrelated stocks. It is on pace for its worst month since may 2012. Scarlet and david. Scarlet thank you so much, abigail doolittle. I will pick it up from here. Coming up on Bloomberg Markets , we talked about amazon and cyber monday, and the success is no oneday wonder. We will explore the strategy that is driving their dominance. Starts with Free Shipping. Scarlet welcome back to Bloomberg Markets. That is a live shot of San Francisco on cyber monday, where a lot of ecommerce is taking place as people try to get the best deals for the Holiday Season. Breaking news. Ipc holdings is said to explore a sale of the company. This is the electricity transmission company, and this is according to people familiar with the matter. It is based in michigan. They are working with Financial Advisors to look for potential buyers. Shares rose more than 6 today, given the Company Market value of 5. 5 billion. One thing to note is that the talks are at an early stage and it may not lead to a sale. Did nottatives for itc immediately respond to requests for comment, but as you can see, shares surging on the headline must 13 . Fork friday was a letdown brickandmortar retailers, with instore sales falling by double digits. While expectations for cyber monday a pretty high, some websites are starting to keep up with the traffic. Amazon keeps on selling and smiling. Dave clark was positively beaming this morning. Dave we had one great day and black and i looking for a record day today. It to exceed last years cyber monday and be our biggest day ever. Dominance inons ecommerce was not built in a day. Shelley is here to tell us how it is playing the long game, and it involves prime, the program it is so secretive about. Y amazon prime, all they really care about. Scarlet what is it about amazon prime people dont understand . Shelly amazon is more like costco these days than walmart. They charge customers 99 a month to have amazon prime, but then amazon gets all this information about you and they know what you are shopping for, when you watch him become and they continue to reel u. N. And they dont have to spend some much on acquiring new customers. Scarlet the thing about customers is they are extremely loyal. Shelly exactly. Amazon prime members spent 1200 a year, versus nonprime members, 600 you. Scarlet does it make money for them . Shelly that is a good question. Amazon is super secretive. They dont say how many high members they have to they have estimates of 400 million and growing. They dont talk about whether or not they make a profit off of these members. Knowing amazon, probably not. They are very secretive with those numbers. Scarlet point is that . Why is that . Shelly i think it is their secret sauce to maybe these members are more valuable to them. They spent more often. They dont have to lower prices just to get them. Theyre are keeping a close to the vest. Amazon also, manufactured a shopping holiday short time ago called prime day. Reminded me of alibaba single day, something they invented. It was a huge success. Shelly there were some issues with it. People complained that it was an internet garage sale, that they were selling things people didnt really want to buy. It showed that 3 million or so people joined just because of the prime day. They are doing the same thing now with black friday and cyber monday. If you show up for amazon prime, we will give you early access to deals and give you Free Shipping and you will get things faster and you might get a better deal. Longows that amazons real and game is to get as many people as possible to sign up for crime. Scarlet heres the other thing stuffzon prime ships you very quickly, a lot of essentials like toilet paper or if you need something for your kid. As we know, the consumers shifting their patterns as well and is spending more on experiences, services and how does amazon prime fit into that and capitalize on that . Shelly that is a good question could they are spending a lot on content. Member, you prime get free streaming, photo uploads, things like that. They are doing hot food delivery they are testing. Theyre thinking, how can i add the incremental thing to make it worthwhile for some to sign up for amazon prime . Scarlet 99 come that is what everyone thinks about it thank you so much. Banjo of bloomberg gadfly. Still ahead, we will hear from the ceo of Fidelity National Information Services that he is fresh off of his acquisition of sun guard. 2 00 p. M. Eastern time. York,t it is 1 00 in new and 3 00 in hong kong. Welcome to Bloomberg Markets. From bloomberg World Headquarters in new york, good afternoon, i am scarlet fu. Chinas yuan has finally been raised to reserve currency status. For af leaders gathering Climate Change summit in paris. Can any progress being made . Less on research and development than most companies but still gets plenty of bang for its buck. First, we want to head over to the markets desk where matt miller has been checking up on everything. Quiet trading on friday. Has that started to pick up . Matt we still have some pretty lowvolume but we are Holding Onto Gains for november but just barely. Take a look at the indexes behind me, down across the board. We welcome you changed, now moving down about one third of 1 . If you take a look at the bloomberg terminal, i pulled up , whichnal factors menu you can do with any index or commodity. It basically gives you a grade going across. You have the years up and down, you have the months. This is the average over the past 10 years. A gain of. 06 . We are still doing better than that with a gain of. 3 . November is not a bad month. In the last 10 years, six positive months in november. Scarlet oil prices certainly a focus, getting back their gains. All the commodities come interesting today. You are seeing gains this afternoon. They are coming off a little bit, but for the month this is crude it is down more than 8 . Nymex crude is down 10. 4 . The worst month we have had for oil since back in march. People in iran saying over the weekend that opec will not be cutting supplies, contrary to what the saudis said last week. Ityou look at currencies, also explain what is going on, so much Dollar Strength against the euro, pound. Here is the euro right now trading down to 1. 0561. The euro has lost 4 over the past month. Bets that the fed will raise rates in the december meeting and that mario draghi will expand qe at the end of the week on thursday. He will tell us what he will do. This is driving investors out of euros and into dollars. Scarlet investors placing 100 odds of a basis cut. Historically, when he pulled up this bazooka, he surprises the market. Scarlet thank you, matt miller. We want to check in on our first word news. Laura keller has the latest. Says climateobama change is the defining challenge of our century. In paris at the Climate Change summit. Paris, isk, here in to turn these achievements into an enduring framework for human progress. Solution, but a longterm strategy that gives the world confidence in a low carbon future. Laura the president signed an agreement which would be a rejection of the terrorist attacks in paris. On thent obama also met sidelines with russian president Vladimir Putin. Obama urged mr. Putin to decrease tensions with turkey after the shootdown of a russian jet by turkish forces. Russia will restrict imports of turkish foods in the doubles as part of a package of new sanctions. The ban could be deferred for several weeks to allow the russian firms to buy new suppliers and current price rises. Russia previously banned food imports from the eu and u. S. Over the recent ukraine crisis. World leaders gathering for talks to limit carbon emissions. Is world richest man leading a group of platypus about to come clean energy. Bill gates is joining jack ma and 20 other investors to set up a new fund next year. On these andore other breaking stories 24 hours a day at the new bloomberg. Com. Back to you. Scarlet thank you. Will now be alongside the dollar, euro, and pound, in the International Monetary fund reserve currency. Christine lagarde said the new basket will be an improvement. It will clearly better represent the International Community, based on those two criterion of trade and freely usable currency. Scarlet here to talk about what this means for the Global Economy, what it means for the peoples bank of china, is sebastien galy, from Deutsche Bank. We knew this was coming, not a surprise that the imf decided to. Xpand to include the yuan some are saying that china bent sgr. Ules to become a it is not typical to invest your foreign currency into something that is not only floating, but again, these are unusual circumstances. What you see is the imf adapting to it. This is a small part of the financial system. Perhaps it should be larger. When you are seeing is part of the integration into the chinese economy into the world one. Scarlet the aussie and the looney are not included in the sgr, and now the yuan is. Does this mean that they will allow other currencies to be part of the sgr . This is a question from many Money Managers. Many want to mine in the basket. The basket is only used by a few countries. And Financial Institution such as the world bank. Or of aadly, it is signal for the rest of the management space. Currently, we know about those in allocated reserves. That is about 1 in renminbi as of 2014. Scarlet how do those Companies Use the sgr . If you have it on your basket, you need to revalue your currency versus that basket. It is a bit of a complicated thing to do, but if you work for the imf or world bank, at the end of the month, the value of the different assets in fixed income will have fluctuated along the month. What you need is to rebalance at the end of the month. Adjust theso do is duration, the maturity of the bond. Those have very through the year. Therefore, there are two adjustments. The fixed income element matters more. Know why this is important for the peoples bank of china and for the central bankers, it means recognition, acknowledgment. Why isnt so important for the imf to include the yuan into the sgr . Bethey are trying to representative of the world, getting geopolitical equilibrium. You can see there is been a push to get china into the system. The imf is very public but it is also happening in other areas. A process of integration should be welcome. Scarlet lets talk about the cost. What kind of costs might china expect to pay for inclusion in the sgr . It is a point of view. It has to essentially reveal information regarding the composition of the reserves. How much you reserve in every currency. China has decided to start revealing parts of its holdings in different currencies. Over the next few years, they will be revealing them completely. As you become clear to the rest of the world, everyone gains clarity regarding how you manage things. Then statistics become fully credible and clear. There is a huge gain for china and the rest of the world, lower need to hold foreign reserves, all things equal. It also forces market pressure in china. Scarlet that sounds like benefits. Does it cost the country anything, does it have to ease up on some of its plans . Are under more pressure from the rest of the world as you become a floating currency, as you are real more on what youre doing. As you do, you become like the u. S. , australia, canada scarlet hostage to market forces. Hostage to the fact that we are in a unified world. Scarlet lets talk about transparency. What does this mean for how the Community Speaks to investors and what this means for economic reform . It tells you clearly, would you call the forces for reform in china, are on the upswing. You can see that sgr is part of a package of reform on the currency side, which is not independent of the domestic Monetary Policy. You are seeing over the next few years a transformation of china into something more akin to an advanced economy, in the sense that it is managing its currency in a more modern way. Scarlet Goldman Sachs listed the yuan as one of the greatest risks facing emergingmarket assets next year. What is the level of market pressure china to weaken the currency . It is difficult to judge. You have two markets in china. What has been happening is a devaluing of values. It is difficult to know where the pressure is. The fact that you have translated back into the sdr means that they will get more foreign flows, as it becomes more accepted in the international system. That means upward movement has been significantly reduced. Go to theets European Central bank, coming up with its policy decision. Mario draghi has always promised something big. When he promises, he tends to over deliver. Record oftrong track doing at least with the market wants. What you expect on thursday . We expect him to cut by 10 basis points, and also to increase 10 billion the amount of qe they do every month. You have to put that into perspective of the fact that there is also a longterm Lending Facility for banks. Fairly powerful combination. They are trying to be more positive than what the market expects. That is with the Central Market did we does. Right now it is driving expectations, which means it has to deliver more than what the market is hoping for. Data has been shown that the european economy is doing better, a little more resilient than some thought. Is more easing necessary . Inflation target point of view, it might be. If you look at the Economic Data, it is pretty good. If you look from a german point of view, it may not be necessary in the sense that consumption is doing well. Is it a good insurance cut . It is probably necessary. They may need to reverse some of their using in the future, but we are not at that phase yet. Be verytill seeing them bearish and ecb taking advantage of that. Things are progressing nicely in europe, the same way they did in the u. S. Defendant its job and we had an economic recovery. Scarlet sebastian gauley, thank you very much. Hour, up in the next half traders are facing a bit of a dollar dilemma. How they are changing the playbook because of a stronger greenback. And with climate talks underway in paris, ceos are pushing for Global Leaders to reach a deal. For a handful of them, it could mean an increase in pay. On the busiest shopping day of the year, we speak to the ceo of wayfarer and how they are managing the influx of traffic. Torlet welcome back Bloomberg Markets. It is time for the Bloomberg Business flash, a look at the biggest stories in the news right now. Morgan stanley is said to be planning a massive fixed income job cuts which could affect 25 of personal globally. They say the cuts could come within the next two weeks. Bond trading revenue fell more than 40 in the third quarter. The worlds Biggest Pension Fund is the latest to fall victim to the summer stock route of 2015. The government pension and Investment Fund posted its worst quarterly loss since 2008 with 64 billion lost from the japanese managers investors index. A spokesman for target says the website is not down after some users were greeted with a message telling them to please hold tight. A potential computer outage on the biggest day for online sales. Target says they continue to process thousands of orders with traffic hitting a record for that retailer. You can get more Business News at bloomberg. Com. Markets desk. E matt miller has a check on company and retail movers. Matt mostly on analyst action. To marketagle cut perform over at oppenheimer from outperform. Price target now at 17. Still trading under that. Atulemon cut to underperform fdr. They say there is to make clear is going on, more than it expected. Also getting a readings change, overweight now at barclays. They were also raised a bank of america a couple weeks ago. Barclays says the valuations are too compelling to ignore. That is a direct quotation. Ta, some alter ul womens beauty products. Toy has been cut underweight. Coming down as well, even though j. P. Morgan raised its price target. Scarlet thank you, matt miller. Still ahead, history has shown the dollar rally comes in advance of the tight in. So what opportunities should investors take advantage of before the december meeting . Scarlet the dollar is trading near its highest level since 2004. The dxy is of more than 3 . With the stronger dollar, Money Managers are seeing opportunities in crowded trades like energy. Carol massar and cory johnson are with me with more. You have Consumer Staples and discretionary. You are listening to bloomberg radio. I am carol massar alongside cory johnson. As a couple of names that he likes that are posting doubledigit losses. We will get an idea of why he thinks they are a buy. Nice to have you here on the radio. This market environment, how do you see it . An earlier guest was concerned about Earnings Growth, growth overall, investors doing with a lot of different issues. How do you see at 42016 . To do of the best way with Earnings Growth is to invest in this phase deceleration is already priced in. Going into 2016, the energy sector, and a lot of people have been too early calling a bottom, and certainly a lot of bad news has been priced in for some time. Earnings growth and deceleration is an old story at this week. There is still a risk reward trade to consider but there is still some opportunity there. I would agree, Earnings Growth is still a problem. It is slowing. In terms of a broad market perspective. Be morees us want to stock pickers than stock index investors. You say Earnings Growth is growing, and that is kind. Earnings are shrinking even more so. That is right, but the energy, in any of the year, would have been considered very positive. When you factor in the energy take away from those overall a more, it has made for problematic period. Third Quarter Results were a great example. How itbeen so overdone, was priced in, you saw a dramatic rally in october when the news came. Revenues are not robust. One of the way to defend against that is to invest in specific fact, thereer, in is that opportunity, as opposed to the macro index. There were a couple of names that you like that caught my attention. Enterprise products. Down 29 so far this year. You also like proctor and gamble, down 17 . What is your thinking here, is it that they are so beaten down, you like their Business Models . We have owned enterprise all year. We have owned it as it has gone down, and we like it even more now. We have added to our holdings in it. We are extremely optimistic at this level. 45 consecutive dividend increases quarter over quarter. Hundreds of millions of dollars being bought at these prices. The reality is, the space sold off and enterprise became an easy need to sell in response to what was happening across the index. Great distributional coverage, growth. We really like enterprise. But we will be patient. Proctor and gamble, we can done by the name after until after it big selloff. We just think it was a case where they were overdone on the Dollar Strength being a headwind for the stock. Longerterm, very compelling. Great dividend growth. A lot of management things going on. Strong brand, reorganizing, and we love that name. Enterprise products, a company in natural gas liquids, with so much demand on the consumer side and business side of things, and the production it has come down, you would think that the company would be doing well, but we have had four straight quarters of falling profits. Is natural gasce liquids, that refining pc talk about this such a small percentage of the business. Margins have grown. It represents a lever Going Forward but where the stock price has sold off is in response to this Oil Correlation , which we think is unfair, especially with their model, feeh is barely very sensitive. They are geographically muchsified and they are more geared toward the natural gas story than the crude oil story as far as infrastructure buildup. Burtis emerging markets is one that you like. In the 99th percentile. Beating most of its peers. Quickly, why this fund . Bottomup emergingmarket stockpicking is what we love. Bottom names at great prices. David, thank you. Back over to you, scarlet. Scarlet thank you. We have more coming up on Bloomberg Markets. Making green by going green. The ceos who are cashing in by cutting carbon emissions. Sure, tv has evolved over the years. Its gotten squarer. Brighter. Bigger. Its gotten thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. From bloomberg rolled headquarters in new york, welcome back to Bloomberg Markets. We have some headlines in the first word news. Iraqi Officials Say a suicide bombing in baghdad targets year at muslim taking part in an annual pilgrimage. Nine were killed and 21 were wounded. Four soldiers are among the dead. To youngi court found jewish man guilty of murdering a palestinian teenager last year. The case led to a sevenweek or in the gaza strip. The defendants confessed saying they were avenging the killings of three used by hamas militants. In years,rst time israeli Prime Minister Benjamin Netanyahu and Palestinian Authority president Mahmoud Abbas shakes hands for the first time with her mold watching. Clear whether they had agreed to meet or whether they brought together on the sidelines of the Climate Change summit. The European Union and turkey have agreed on a deal for refugees. Turkey will increase its Border Controls and in return the eu will give them more than 3 billion to help the refugees. It will also restart negotiations on them becoming a member of the eu. You can get more on these and other breaking stories 24 hours a day at the new bloomberg. Com. Thank you. The uns Climate Change conference is underway in paris. Vladimir putin has taken the opportunity to discuss the crisis in syria. Parisichols is in for the talks. What did putin say . Did not meeted he with his counterpart from turkey, president erdogan. That was not a surprise, but it was interesting that he said that he did not meet with him. He says there also needs to be a political solution to syria. In some ways, he will increase pressure on nato, make it clear that he is not going to necessarily become a part of a fully formed coalition unless everyone is on the page. That could be reading too much into it but that is him talking about a political solution, and that usually means Bashar Alassad in power in syria. He also said he wanted a Climate Change agreement to be legally binding, which could be very difficult for barack obama to and then in paris taken back to the u. S. Congress, where they have made it clear that they do not want anything to be legally binding. Pledgedways, russia has that they want to come back down to 70 of the carbon output in 1990, but that does not taken effect the collapse of the postsoviet economy. It is a lot easier for russia to reach those numbers because of the collapse of the economy they had. Note, there is a headline that president obama will meet tomorrow with president erdogan of turkey. That comes from one of the advisors from the president. The backdrop off this summit with the terror attacks. I know there is a lot of protest taking plates on the streets of paris. Combine that with what youre hearing from the conference. We have this global Climate Change initiative, which is serious, and all parties are taking it seriously. Bill gates and other entrepreneurs are pledging 7 billion. Then we have some sideline conversations about syria, ukraine. Those, in some ways, are also taking a lot of energy. Mr. Obama met with his counterpart from india, also met with mr. Prudent. Some speculation on whether the meeting would take place. It looks like they had a brief conversation. The syria conversation will get serious tonight. Barack obama will be having dinner with french president hollande. Last night when he arrived, he went straight to the bataclan theater, were most of those killed in the pair attacks were. Paris attacks were. This is a city with 10,000 Additional Police officers. There are army troops patrolling the streets. I was here a couple days after november 13. Significantly Higher Police presence here. Lockdown, a city that is not operating at its normal pace. Scarlet thank you. Dozens of the worlds Biggest Companies are urged World Leaders to reach a climate deal in paris, even as they vow to cut their own environmental impact. But only a handful are willing to put ceo pay on the line. Anders melin is with us now. We are talking about sustainability metrics. What kinds of Companies Practice them, versus which pay a lot of lip service but do not do a whole lot . Data, ing at the europe, this is prevalent among some of the Biggest Companies, including insurance giants alley statoilotal in france, in norway, and you deliver. Some of the biggest firms sign up for this and take it seriously. We did not see the same trends in the u. S. They are further in between over here. Scarlet talk about the metrics that they use. It is a swath of sustainability metrics that are lumped together in a program, which many have in place. It can include things like cutting carbon emissions, decreased water use, better generation among workers. It could be a lot of different things. Scarlet are they effective . Into it tooeading much, with the ceos tend to achieve, we spoke to experts, and they say if you want to drive change in an organization, it has to come from the top. That ultimately ends in the board room. To setwant to make sure the tone for executives and make sure it stays on top of mind for them, it is important to have these things. Scarlet there is a chart that highlights that there is no mention of sustainability in pay plans for most companies, climate leaders as well as those pledging to do more but not necessarily having it show up in the numbers. Oil and Gas Companies not very high on the list either. Havelot of companies programs were they address things like environmental sustainability and say that we are making strides to do this, like walmart and at t. They have some pretty rigorous programs in place, but they are not tied to the ceos pay. Any ruling inere place that says they need to do this for fiduciary reasons . Companies in the u. S. Are required to report material things. What that is is kind of arbitrary, but there are no laws in place here. In europe, there are more. Igorous laws in place the eu is catching up to this as well. This is something that could drive the increase of this. Scarlet so that can be a best practice for u. S. Companies. You have spoken to investors about tying compensation metrics. What have you heard . Essentially, what measure is paid attention to is really important for companies. If they are material to the companys longterm security,lity, like sustaining energy sources, would be huge for companies. If it is material to the company, it is only logical that it is tied to their paper land. Scarlet can you highlight any executives here in the u. S. That are doing a lot on carbon emissions, any good examples . The ceo of elko has part of his annual pay tied to emissions. Ingenuity and klaus kleinfeld. Not expect that, because theyre are such a big commodities company. It is really important that you have companies in those spaces we did not expect to see this. Let them lead the way. Scarlet anders melin, thank you for joining us. Coming up in the next 20 minutes, cyber monday sales are already up 18 this year. One Company Looking forward to record sales is wayfair. We will hear about his companys advantage over amazon. Apple spends a small percentage of its revenue on r d compared to its peers, so where are they spending its money . We will take you inside the 9. 1 some guard sunguard deal. Scarlet welcome back to Bloomberg Markets. Time now with the Bloomberg Business flash. Electricity network itc is it to be exploring sale options according to people with knowledge of the matter. They also say talks are still evolving and may not lead to a gille. To a deal. More than 10 . That gives the company a market value of about 5. 5 billion. Puerto ricos governor says the island has done decide whether to skip 354 million in bond payments due tomorrow. He says they are still in negotiations with creditors. The u. S. Senate Judiciary Committee will be holding a hearing tomorrow on the fiscal problems. The Federal Reserve voted today to give of the lending tool they used to rescue aig and bear stearns in the financial crisis. This comes after lawmakers restricted their power to prop up ailing firms. The fed will now only be able to save up to five feeling entities at a time and will prevent them from bailing out a single company. You can always get more on that and other Business News on bloomberg. Com. Lets go to the markets desk where Mark Matt Miller has been monitoring the latest. Matt it looks like markets are leveling out. Major averages took a big letdown. They are now coming bacl. The s p and the dow are down. 1 . If you look at the bloomberg, i have the imap function pulled up. You can see what is winning and losing. After this big retail weekend, you see Consumer Discretionary and Consumer Staples down among the losers here. The big defensive plays are the winners. Energy, telecom. Energy is putting on the biggest gains. If you look at the energy producers, you can see we have this bounds in oil. Some of those companies that play in the oil patch rising, 2. 3 . Cean up Diamond Offshore of 1 . Guggenheim securities raised in the stocks today. Investors telling us to look at the energy patch right now. Fort now a target transocean, 17 from guggenheim. Oil bounced this morning but has since pair of those gains. You can see these mounds of games. Now to about unchanged. 41. 72 a barrel for west texas intermediate. This is the fourth month in a row that the vti will be averaging less than 50 a barrel. The worst month since july. Here you can see all of november, down 10. 5 . Oil has had a rough time as the dollar has gained strength against any number of a basket of currencies. Dxy. 1. 05. S at all of these commodities have had a rough month. Scarlet may be more weakness for all coming up in the coming months. Thank you. When it comes to retail, is it clicks over bricks . Predicts cyber monday sales will be up 18 from last year. Niraj shah, ceo of wayfair talked about his companys strong sales day. Cyber monday has been our biggest day of the year. Black friday is a big day, this year really stood out, taking a lot more share, but cyber monday has always been our biggest day. I expect more again this year. Earlier in the show, we spoke to the Vice President of merchandising from amazon, and it seems like they dominate every category they are in. Obviously, the leading online retailer. If you look at major retailers, they are the leader. We focus on home. Furniture, dakar, home improvement. We are the leader there. About 12 of total retail. In the vast majority of the others, amazon is the leader. Who are you taking business from, and how big can you grow . If you look at home in brickandmortar, it is super fragmented. You have the National Retailers , target, youlowes have boutique independent shops, and as customers go online, what youre seeing on black friday, you are seeing this acceleration to a shift online. The brickandmortar folks are not keeping that share by and large. Amazon is the winner in most categories. In home, as you saw last quarter, we are starting to take that share. Stephanie i was in Restoration Hardware this week and they have some of the most real estate and some expensive pieces. You dont have to spend that money. We are better off putting that investment back into having a huge selection of affordable goods, keeping the price point affordable, and doing a great job with visual merchandising online, and then providing Free Shipping to the customer, rather than putting it into the brickandmortar cost. David you are bullish on your future. There are some people that have some questions. With someone down recently, who has raised questions about some of your products from china. Listen to what he had to say. Wayfair has to immediately suspend sales of all composite wood products, mostly furniture, particularly any source from china, and they have to Start Testing those products, like i did, but they have to test hundreds if not thousands. I have only tested three so far but it is ongoing. Secondly, they need to hire a chief Compliance Officer and needs to establish a rigorous and expensive testing compliance program, just like home depot. There is no question, mr. Tilson is very bearish on our business, openly shorted it come has done everything he has done two short the stock. Heyou look at the way that sure to google, tesla, netflix, these are companies that are being disrupted, and the comparisons to the traditional model do not always uphold where they sit. We have a commitment to product safety. We have done a great job with that. We continue to do that, but i think mr. Tilson is trying to hang anything he can coat his hanks coat onto anything that it will hang on. Lets take his argument, that you should have a Compliance Officer and you should be testing. I think he is more focused on the stock price and getting it down below where he opened his short. We do look at what we do, more than one general retailers do. Who,rk with 7000 suppliers in turn, are the experts in sourcing products. They are the big suppliers to walmart, home depot, target, macys, all of these folks. We are not directly sourcing out of the chinese factories where you have a much higher risk, which is what other retailers due to cut their first cost. We work with the u. S. A priors. I think we are in a good position. Scarlet that was the wayfair ceo niraj shah. Coming up, steve jobs said in 1998, innovation has nothing to do with how many r d dollars you have. Does the Company Still abide by that . Scarlet welcome back to Bloomberg Markets. Apple has doubled its r d spending since 2013 but it still uses the smallest portion of revenue on its department compared with other large tech companies. This year, apple spent only 3. 5 of its 33 million of revenue on research and development. For a company so focused on innovation, why so little investment . Mark, tell us more about this 3. 5 percent of revenue. How much of an outlier is apple compared with its peers . Mark in technology, conventional wisdom is that you should be spending a huge chunk of your budget on r d. Many of the other Big Tech Companies do that. R d. E spends 15 on facebook is 21 . Apple is 3. 5 . That is a huge outlier. The caveat being, when you generate as much revenue as go in ahe percentages different direction. 1. 8 billion is not a huge chunk when you think the 233 billion it generated in revenue in the last year. Scarlet you address my next question, the amount it spends in r d. If that is the case, what are they spending the money on . We know the revenue number keeps on getting bigger. What do they spend on . Mark relatively, not a whole lot. If you look in the 200 billion in cash and equivalents, the company is just printing money. Now it has been paying out some dividend the last several years. Budget, notr d spending a whole lot. In many ways, it does not need to. Apple is such a behemoth, it can go to all of these other suppliers that are spending all their money on r d, all these companies in asia and around the world, who create these breakthroughs in technology, and they try to sell them to apple, the biggest have Customer Base in the industry. They want to get the latest technology into the latest iphone. Apple benefits in that way without having to spend money on r d in many cases. Scarlet so it is getting pitched these innovations from it suppliers. Doesnt it make them vulnerable to their suppliers . Ofk there are a lot suppliers out there but only one apple. They could just go to the next supplier down the road in shenzhen and get some new technological breakthrough that samsung and the others would happily take, but apple, because they have such a huge Customer Base, can go and do that. When you go back to the absolute number of 8. 1 billion spent in fiscal 2015, that is an increase from your year before, so they are spending more, although a small percentage overall. For the amount it does spend on r d, where is it going, on actual hit products, new iterations of products, or untested products, like the apple car . Mark the apple car spending, that would presumably go into r d. The latest development in the last year was the apple watch, which was grouped into r d for a while, until the product came to fruition. Probably the biggest priority for them in terms of r d spending is onchip development. This is not an area where apple has been invested in. In the last few years, they have hired tons of people with expertise from qualcomm, intel, these other chip companies, to develop some of the most advanced mobile processors on the market. , for example, with the new ipad pro, which has a superfast chip in it. That was a result of his r d spending. It can reduce its reliance on Companies Like Samsung Electronics as well. Mark, thank you. Much more coming up, including the Fidelity National Information Services. Welcome to Bloomberg Markets. From World Headquarters in new ura. , i am david g chinas currency reserve status. What it means for china in the dollar. Good news for jp morgan bankers, the tool will remain unchanged from a year ago. Find out why flat may be the new up when it comes to bonuses. M black friday for traditional stores. How has cyber monday helped or hurt struggling retailers . First, lets go to matt miller. Matt good afternoon. We are seeing in markets down across the board, but the indexes have come back considerably from a drop lower around lunchtime