It is small. If you look at the major averages, we are seeing a small change. In fact, we are giving up the gains out of the gate this morning so the dow has turned negative. Its a little bit of a pause after the big selloff yesterday. You look at the option of this morning, its clear when you look at the imap there is an equal amount of red and green. Health care is higher in eli lilly cut its forecast and introduced new drugs. Consumer stables are up and financials are little changed in energy and utility shares and materials are falling. Commodities are a part of the equation. A can of commodities, lets check on oil which had a wild ride yesterday. Today it is trading lower. We talked about how unusual it is we would see that ratcheting up a tension between iran and saudi arabia and oil with an lower. Ample testament to how the supply is out there in the market that you would see that kind of phenomenon. Betty the Dollar Strength is not helping. Julie the dollar has been on a winning streak. Ifsaw it benefit yesterday there was money flowing out of risky assets. This is the euro versus the dollar. That has been the longer term trend as we have seen more stimulus in europe. Checking on gold prices, gold carded big yesterday on the same safety trade and its happening again today but in a more muted fashion betty thank you so much. Lets get a check on the bloomberg first word news. Thank you so much. Republicans are warning they will challenge president obamas latest move on gun control. The administration will require expanded background checks for guns sold from dealers. The plan is aimed at dealers who were not required to do background checks. President obama will talk about gun control and we will bring of the remarks at 11 40 a. M. Eastern. Bernie sanders will join us today on Bloomberg Television to discuss his steppedup attack on wall street. He says the two big to fail banks wield too much power. He is promising to break them up if elected. Thisll ask him about that afternoon at 5 00 p. M. Eastern. Oil and gas regulators taking steps after a series of earthquakes last week. Some injection well operators must reduce wastewater disposal volumes. Many of the oklahoma earth earthquakes take fracking is involved in heavy rain led to record flooding out west. The water is receding and most of the missouri rivers are receding. The swollen waters are flowing south and officials will try to manage the overflow it levies. Global news 20 for hours a date powered by 2400 journalists around the world. Betty thank you so much. Started with the plunder yesterday in chinese stocks plungingted with a yesterday in chinese stocks. Should american investors be concerned . If you go back to 1928, yesterdays drop only came in as the sixth worst start since 19 32. Joining me from philadelphias jeremy siegel, the professor at the Wharton School at the university of pennsylvania. He has been a longterm ball on stocks. Ull on stocks. Do you really believe we can get to the dow at 2000 given what we saw yesterday . Yeah, it was a rocky start. The first day is not a good bellwether for the rest of the year. There is a lot of pessimism out there. 810 k we could get an increase. It might put is at 19,000. First, the fed is not going to be as aggressive on Interest Rates. I look for oneto increases at most. I think earnings will resume their upward course after taking , germanic wallop last year down around seven dollars from 2013. The combination of a less stabilization, earnings, will bring money back into the equity markets. Betty didnt you say for lester , that the fair0 value was 2000 . We are 200 points below that. What makes you think we could hit your target for this year . Certainly, i was disappointed. Mystery why. G an 810 ooking for increase in earnings last year. Instead, we got a 7 earnings decline. By the way, that was the worst shortfall of earnings that we have ever had outside of a recession. We got walloped by oil going all the way down, the strength of the dollar cost is five or six dollars on the s p 500. Given that we were flat on the drop00 index despite a 6 in operating earnings, it was not a terrible performance. That is why i missed my target. The potential good news is it Oil Stabilizes and the debt in the dollar stabilizes, we can resume in her den we saw in the earnings of 8 outside the oil sector. I think that was a less aggressive fed that will bring us back. Were about one year or so behind on what i had thought a year ago but i dont think this market is over. Betty even if we stabilize, we would be stabilizing oil at the new lows. We would be stabilizing the dollar at these new highs. The fundamental dynamics that are dragging down earnings particularly for the Energy Sector are not going to change much. From 100orget, going down to 30, that brings us downward. If we stay at 35, the downward component will stay the same. Then we can look at the growth in health care and Consumer Discretionary and all the other sectors that had good growth last year. We will not at the downdraft from the material sector and the Energy Sector and will get that growth again on earnings. I am looking for in earnings increase of about 8 this year with stable Interest Rates. I think the bull market can resume. Betty speaking about Interest Rates, Brendan Greeley interviewed the cleveland fed president who is a Voting Member this year. She talked about inflation and Interest Rates also talked about china. I want to play part of that interview for you. We built in a weakening path for china. I dont see that as a significant risk but its certainly a risk. Theill look at that but actual direct trade channel but the u. S. And china is not that large. Will it have a direct effect on the u. S. Economy . I dont see is a significant risk. Betty do you agree . First of all, i know loretto well. She was Research Director at the Philadelphia Federal Reserve and taught at the Wharton School. She is a wise woman. For the u. S. , it has to do with commodity demands and oil demand. Motors has its best a sales in china. I disagree with her that it would not have any affect. I dont know what slow down she has builtin but i do not think increases that 4. He blood penciling in i think we will have a slowdown andhe u. S. Economy inflation will not hit their target of 2 . I think we are only going to have one or two increases and i think thats bullish for the stock market. They she is at 10. 7 on economy this year that what is your forecast . She is at. 7 . 7 2. 7 . S at 2 or 2. 5 . Er to betty how do you get to in Earnings Growth of 8 based on those numbers . 5 last yearad 22. And outside of oil, we had an 8 earnings increase. Europe is looking a little bit better this year. We dont need a speed up. We need those headwinds that forced down materials, energy, and the export sectors to disappear. Its not necessarily a rebound and i think we can get the 8 increase in earnings. Go, youefore we mentioned how you dont think we will go 4 increases, maybe to it the most, when do you expect those rate increases to happen . Think it depends on whats happening on the economy. We will not get it from the january meeting but the march meeting will be a big debate. Be as significant as december and there will be a healthy debate on that. I think we will see some slowing numbers and lower inflation that will catch their eye. Very early call without a lot of data. I dont think they will really increase in march either. Betty professor, good to talk to you jeremy siegel, from the Wharton School of business. We were speaking about that and they are stabilizing as china moves to support its own market and we will look at what is next for Oil Following the biggest the iranost on record and expressing regret over the attack on the Saudi Embassy in tehran. We will get more insight on the tension between the countries and what that means for the u. S. From a former u. S. Ambassador to nato. Those stories and much more ahead on Bloomberg Television. Betty good morning and welcome back. Lets go back to julie hyman. I know youre looking at the gunmakers the president will be speaking about expanding gun laws mark. At about 11 5 a. M. He will be talking about that and some of the gunmakers are going up including smith wesson. There is this perception that the gunmakers will benefit from a gun buying surge ahead of any increased button gun buying regulations but smith wesson raise their forecast at the close yesterday saying the fiscal thirdquarter earnings . 3940 onell be cents on the upper end had been . 29. The selling more so there inventories are lower than i want to take this opportunity to look at a longerterm chart of gun buying. These are kept by the bureau of Economic Analysis going back to 1999. Its a pretty straight upward line. We had a dip in 20082009 and since then, we have seen an increasing amount of gun sales in the United States. Another group we are watching his solar. It was downgraded by Goldman Sachs with one exception which is first solar. It was upgraded, its the preferred stocks, raised to a buy from neutral in a price target is 100. Goldman says the company has a best in Class Balance sheet and a catalyst could be the Company Coming out with earnings that beat analyst estimates and it should add capacity. Oppenheimer is raising his price target on the stock so double positive for solar today. We looked at yesterday that was bouncing back from a negative 2015 but higher today. Its up nearly 4 . Oprah results may come in better than initially proed says it go results make an better than initially feared. There has been some is on the street about the Company Sales growth. If you look at the bloomberg terminal, we got sales growth going back to the beginning of 2013 and it was explosive. You were talking about double digit growth at one time, 50 growth. Now that has diminished and the dotted line is the projected growth by analysts. They are looking for a slowing but the question is how will it be versus projections . Its been an interesting story. Betty high flying in the early days which was not that long ago. Julie and now there is a question of competition. Betty its hard in hardware. Thank you so much. Ahead, as you just a quick programming reminder president obama will make gun control a bigger issue in one outline his plan later this morning and we will bring you those remarks in the next hour at 1140 a. M. Eastern on Bloomberg Television, radio, and bloomberg. Com. Betty welcome back. It is time for the Bloomberg Business . . Next the capital says shutting down its 1. 5 billion hedge fund and returning money to investors. This comes amid the emergence of computerdriven trading strategies of index funds that are diminishing moneymaking opportunities. It returns over 18 as recently as 2013. According to data, it was up less than 1 in the first 11 months of last year. Carmakers have wrapped up what may be a recordsetting year in the u. S. December sales at gm, ford, and fee across the rose and not as much as expected. Ford was up 18 automakers are expected to be the annual sales record set 15 years ago. Samsung is showing off a supersmart refrigerator at the Las Vegas Consumer Electronics show. Thats a 21 inch screen your recipes and orders take out of you are too lazy to cook and you can see whats inside that opening the door even remotely with a phone app. Thats great while you are shopping. That is your Bloomberg Business flash update. Markets are stabilizing today after the pond yesterday. Earlier today, Martin Feldstein spoke openly about the state of the u. S. Economy and how successful central bankers have been in controlling asset bubbles. We know that they have been unsuccessful by driving Interest Rates down and pushing up asset prices. Last time, it was all about subprime and a whole bunch of other things. Subprime triggered the crisis but it was a mispricing of assets and were seeing it again. We are again seeing the gross mispricing tom you lived in the bottles t you lived through the bubbles. Wouldnt mr. Bernanke he said he used the tools in his toolkit. Absolutely. Would he argue that he saved us all . I agree that the fed policy was missed this but he would say i saved us all. Stephanie they did little to nothing for the overall economy. I dont think thats right. The overall economy came back because of the fed strategy of driving up equity prices, increasing household wealth. In 2013, net worth of households rose 10 trillion in 10 months with stock prices up to 2 and house prices of 40 . Butfed was very successful that laid the foundation for the risk we are facing now with lots of reaching for yield by investors and lenders. When they say thats the this pad to pay . Once, it screwed up got us in a situation where we hope we come out of it famously but you cannot bet on that. Stephanie if i am janet yellin and i look at the market yesterday and there is a 15 knocked hundred billion dollars worth of market cap off the face of the earth, what does that mean to janet yellin . Some would say we are back to a more normal market it is this a sign that she acted too early . The s p 500 at the end of last year before the drop the priceearnings ratio was 40 higher than its historic average. I guess its now 38 higher. Its moving back toward normal but still way out of line. I think you can say that about a whole bunch of asset classes. Which ones . Commercial real estate, longterm bonds, the spreads beat in highgrade and high risk bonds, emergingmarket debt. There is a general reaching. Thats just a view on low growth and low allocation . Im not saying a misallocation of capital. Youve got mispricing. If those prices adjust way, there will be a lot of substantial losses on the scale we started to see yesterday. If that happens, if there is a demand for it, doesnt that they take the prize . Its priced for todays Interest Rates. Atthe short rate will stay less than 50 basis points ever, i guess equities can be priced at this level. If short rates are going to come up and we get back to normal , withof real rates Percent Inflation and 2 short rate, we start seeing 4 nominal short rates, it does not make sense for bonds to be where they are. Will the market look ahead and make that adjustment quickly . Betty that was harvard economist Martin Feldstein speaking this morning. We are talking new york City Real Estate next. Liveive from work from bloomberg world for his, voonie quinn has more. The lady isit is the latest saudi arabia an ally to end diplomatic relations with iran. This follows the saudi break with iran prompted by attacks by protesters on saudi offices in iran and demonstrators were angered when the saudis exit executed. Officials from denmark, sweden, and germany will hold talks in brussels tomorrow concerned about new Border Control measures and at stopping refugees entering northern europe. Sweden induced all id checks and denmark tighten controls on its border with germany. The former south carolinas of us are charged with killing an unarmed black motorist is free on bail. A judge ruled yesterday that Michael Slater does not have to stay in jail until his murder trial in october. The Fatal Shooting in North Charleston was captured on video can deliberate acts caused more airline debts and accidental crashes last year. Thats the finding of an Aviation Industry company. People butled 161 hundred 74 people died into crashes that were preventable. Ande was the german plane the Russian Airliner that went down in egypt last october. News 24 hours a day powered by our 2400 journalists. Betty thank you so much. After 95 years in business, 10 billion in assets, there has been an ushering in of reit status. They will ring the closing bell in the New York Stock Exchange as forest city complete the sale of the Brooklyn Nets for the russian billionaire. Joining nows the man leading the transformation, the ceo of forest City Real Estate trust and with him is a key pirate in the development of the barclays center. Prominent property developer, marion dell martin. Thank you so much for joining me this morning. The first question is why did you decide now to become a reit . We have been going through a since 2012. Ange we decided we would focus our business in new york. Going to invest in our Balance Sheet and create Sustainable Capital structure and wanted to operate as efficiently as we could to maximize value for our shareholders and investors. In the transformative process, a reit was the logical ending after 95 years in business. In 1960 we became a public company. Distribute ourto dividends and allows us to get into indexes that other we werentthat before so gives a boost to our company and investors and allows us to operate were other Real Estate Companies operate on the same footing. Betty this is an interesting time when we have had certainly a pricing gap between the Public Market in the pri