Transcripts For BLOOMBERG In The Loop With Betty Liu 20141209

His part, says that he is in no rush and that there is a danger in raising Interest Rates too soon. That is adding to the global selloff led by a plunge in chinese shares. The government taken collateral rules for shortterm loans. Since november 21. The price of oil rebounded slightly today. West texas intermediate climbed above the 60 a barrel market. Arabia inoined saudi cutting prices for asian customers. Asian buyers stop a controversial report on cia torture methods is set to be released today by Senate Democrats did it will include that the cia used extreme and terrorism extreme interrogation methods for terrorism suspects. Someone that it may make the United States target for retaliation. And the hackers who broke into sony movie studios are telling listed you interview. The the movie is set to open christmas day. The hackers have released personal data on thousands of people who work for sony in retaliation fo. What a way to get publicity for the movie. Stocks are falling around the world. Joining us is stocks editor mike reagan. Is this more about the header about china and Global Growth more about the fed were about china and Global Growth . The shanghai composite, more than 5 , worse than 2000 and. They said is always in the back of peoples minds. Even back on friday after the jobs report, adjusting reaction in the markets. If you look back you think of the market is up on good job news and good news is good news again. Wasnt it weird . The Immediate Reaction was down. It was indecisive. Even throughout the day, the s p raised its gain twice through the day and then didnt follow through on monday. Is good news good news again or bad news heart investors confused are investors confused about how they really feel about the fed . We will know for sure if the considerable time language will stay or if it is temporary. It is a very tricky thing right now. The u. S. Economy is doing well. Global economies are decoupling, not doing so well. To extend the places of the thinking a lot of people are wondering. It is interesting, the timing of all of this. Fed may consider removing this language. Withu think it has to do the fact that we saw the storm jobs report on friday or is regulation among people who are looking to next week and the fed meeting and saying hey, maybe this might be a time absolutely the jobs data makes you rethink the statement and that we need the considerable time phrase and it is not just the jobs data. A lot of the Economic Data recently has been pretty good. Even regular gdp data has beaten estimates to quarters in a row. A lot of ice on the fed next week a lot of ice on the fed next week. Thank you so much. Our eyes on the markets i know you will be. Congress pushes a funding bill by a thursday deadline amid infighting and the hearing in about 90 minutes over the Affordable Care act as well. The senate will be releasing a controversial report on the cias Harsh Interrogation Tactics after 9 11. Peter cook has more on a really busy day in d. C. Lets start with the cia report. This is a report five years in the making that a lot of people in washington did not want to see come out. This is a report to together by senator dianne feinstein, chairman of the Senate Intelligence committee, along with other democrats. They have been pushing for its release, finally doing so, we understand, later on this morning. President bush called for it not to be released. On the part of critics is that it is going to detail aspects of what the cia did that could incite violence abroad. Diplomats ande vice members overseas exposed to the mets and Service Numbers overseas to violence. Feinstein says that it is about transparency and that if we expose what happened it wont happen again. Mike rogers, her counterpart in the house, suggest that it should not be coming out. When you have four liters saint they believe it will insight right foreign leaders saying it will incite violence, cause huge problems, maybe even stop our cooperation as we move forward with the United States, our own Intelligence Community assessing that this could incite violence and that is a good indicator that we should release the report. The white house came out in support of releasing the report. Senator feinstein is making it public. We will wait to see what the following is after that. Mentioned about the funding bill, you have the thursday deadline. What is the latest on the front of a Government Shutdown . Some potholestill to get past before we can say we are all clear in terms of a shutdown. The final spending bill is a work in progress. There are details being ironed out between republicans and democrats. Know that john boehner will go behind closed doors with House Republicans this morning to update and on where things stand and what is in the bill. Fund theot fully department of Homeland Security and that his punishment for president obama for his immigration executive action. The reality is that this is not a done deal. There is a chance they could do an extension to give more time to negotiate a final details. Nobody wants to see a shutdown. The mood in washington is we want to get out of town but they are not there yet. There is always the opportunity for disaster. About here again, peter. Is third thing on the agenda something that is happening in about 90 minutes, the obamacare hearing. House republicans will grill this obamacare advisor, john gruber, jonathan gruber, the guy who called American Voters stupid. The now infamous jonathan gruber, who was an adviser to the administration when they developed the Health Care Law. They were using this advisory massachusetts and he has made very frank comments about American Voters and the process of the entire legislation, and he is going to have to answer some questions about those comments in front of the House Oversight committee today. Expect them to be grilled. He will be sidebyside with marilyn tavener, the head of medicare and medicaid. The administration is not thrilled about that. We will also hear from someone who has benefited from the Health Care Law at this hearing. This is House Republicans taking another big whack at the healthcare law before the and of the year. Peter cook, washington correspondent, setting us up for the day in d. C. Onetimers gets the spending bill passed, republican senator with good news. According to a Bloomberg Politics poll, the Republican Party is enjoying a high in popularity, with 25 of americans saying they hold a favorable view of the party, compared with 47 saying they have an unfavorable view. Joining us is the Bloomberg Politics White House Correspondent Margaret Talev and i guess they would take that as better than what they had before, right . It is a sign of the times when it is cost resolution that you cause for celebration that your fiveyear peak is below 50 . They are doing better than the Democratic Party. How much better . The Democratic Party sank in a purple to roughly about the same amount, eight points. Difference right now but the republicans have the edge and momentum working with them and that gives them a little bit of an edge going into the new governing year, when they take over both chambers of congress. But doesnt give them, margaret, a mandate . I would be real careful with that word. For republicans there are red flags to look at. Seeis that what you historically with republicans is americans who took the survey said that they think republicans are more antagonistic than the democrats and they think republicans are aggressionted by towards president obama is more motivated by his belief system. That is one red flag to look for. The other is that when you look ahead towards 2016, the Republican Party has approval of voters but individual republicans, it is not as clear. Theyre not doing as high in terms of their popularity and most americans dont know Republican Leaders individually as well. , andat is interesting certainly among the candidates for 2016, there hasnt really been one big standout like the democrats have with hillary clinton, right . Margaret, that one area where obama is benefiting from this, the voters say that they believe obama acted on his beliefs. Anything else complement terry to the president couple nunnery compli to the president mentary . Not good news for president obama. His favorability is at a fiveyear low. Maybe the one Silver Lining amid all the bad news about how voters are perceiving him on immigration, negatively, foreign policy, negatively, health care, still negatively, is that there is an uptick in terms of how people think he is handling the economy. Significant rise just over the summer or last spring. It comes a little too late for the Democratic Party. It with a nice for them to have this is before the election, perhaps, but president obama is getting more credit on the economy. Thank you so much, Margaret Talev on the latest bloomberg poll results. Moving and shaking this hour, royalty, the british and american kind. The duke and duchess of cambridge met with top royalty last night were talking about queen bey and jayz. And kate were watching an nba game not just any. They also met king james, lebron cavaliersse cleveland played the Brooklyn Nets could this did not stop lebron from nixing in mixing a political statement about the eric garnered. He wore a tshirt that said i cant breathe has protests went on outside the barclays and appeare barclays and appeared we will tell you which industries are the hottest and what oil could possibly do to spoil the party. Plus, a warning from amazon to u. S. Regulators lighten up when it comes to drones. We have been keeping a close eye on the markets this morning. They have been tumbling all across the world. Stocks in general have enjoyed it will run over the last you aars, raking in returns from 10 . But we are not likely to see that continue into 2015. In an exclusive interview with Erik Schatzker, his outlook for the markets. My forecast is that equities will go up 10 a year. Interest rates will continue to be suppressed. Ultimately, equity returns will be somewhat muted. You will not have that disparity of 2. 5 bond returns and 10 equities. I would have framed it the question was 2 to 2. 5, and the equity markets are of 6 to 8, prior to be probably high probability. But i believe there is a 20 risk that the economy does better and rates will 10 year rates will touch 2. 5 to three, in that range. You look in the eyes of the consumer when will the consumer start feeling that they . Ant afford to consume one thing i am a little bit certain from all the conversations i have had ceos from retailing, the retailing number that came out this past week they believe was entirely wrong, just bad data. I have heard that foot traffic was marginally better, and retail sales was much better you think the consumer is stronger than the data would suggest. No different than what we are witnessing with oil, transformation because of technology. Technology is transforming consumer behavior. Because of the internet, we dont need to rush and go out on thursday and friday on the weekend to buy things cheaply could we can buy things cheaply every day. All the retailers know that the internet is becoming bigger and bigger and bigger. I was talking to one of partners who lives in San Francisco who came out to that he, and he told me paid for wifi on the airplane and did all his christmas shopping. The buying patterns are changing. This is what is fantastic about how technology is changing the world. We are using past traditions as a means to assess the economy, and it is entirely wrong. I sense i sense quite a bit of optimism. Yeah, i am optimistic because what is the big surprise for me, despite my optimism, is that corporate profits have been keeping pace. We have not seen a gigantic pes. Se in we went from a very cheap equity market. Despite this dramatic increase value to, we are fair modestly above fair value. We are not at the levels we saw in 2000. You had true bubbles. Hair chester joins me now with more on his exclusive interview with blackrock Erik Schatzker joins me now with more on his exclusive interview with blackrock Ceo Larry Fink. He seems somewhat optimistic, but certainly some challenges. Larry is concerned about bond market liquidity. You have heard this from some Institutional Investors who worry that if there is a selloff, a bigger selloff, lets say, than what we saw in october, we would see more of what we saw in october, forced selling on the part of hedge funds who might be loaded up on certain credit trades, and a difficulty getting out of those trades. That, larry says, is his number one concern, number one risk going forward. He shares the concern we heard from other people, discussing in detail the blackrock outlook released this morning, about geopolitics, that there are zerosum outcomes in places like ukraine or the middle east. Blackrock says i guess one of the things that struck me in his Investment Outlook is the challenge of hedging. The idea that stocks and bonds are as closely correlated now as they have been in a long time. If we see a selloff in the stock market, were likely to see a selloff in the bond market where do you go . The idea that you have to invest in five times as much bunds as stocks to hedge against the selloff in the market. Ofwe will have much more your interview with blackrock Ceo Larry Fink today on market makers. We will be back in two minutes. You are watching in the loop live on bloomberg television. I am betty liu. Profits will plunge of the British Grocery chain tesco. Shares fell to the lowest level in almost 15 years. Tesco is trying to turn around its business after disclosing that profits were overstated. One of the worst investments for Warren Buffett over the last several years bmw production chief of take over next year. He will succeed norbert right offer. He has let bmw to record sales and earnings since becoming ceo in 2007. Amazon is trying to avoid the grinch that almost stole christmas last year. Remember that . It is taking more control of its by doing workm that was previously done by ups and fedex. Last year the rush prevented some customers from getting their packet is a time and they faulted ups for that. Bloomberg television is on the markets. Equity futures are the were following the extended drop we in asia, ledrnight by chinese shares on the plunge in shanghai. That flowed into europe, which fell over 1. 5 at many of the major indexes. As we get into the opening bell in about an hour. We are on the markets again in 30 minutes. If you are watching this show and i know you have the last few weeks, the strong jobs numbers will come as no surprise. Business leaders up and telling us about their need to hire more workers. We are doing a great job of hiring people. We have a lot of openings, and these are not seasonal holiday kinds of openings. These are permanent jobs where we need these people day in and day out. We have seen the labor market tighten and we are able to find quality people were the team. Gist. T the just the ceo of Manpower Group joins us from milwaukee. You released your employment report get you asked whether employers feel good about the job market. What do they tell you . They feel good about the job market in the u. S. This is the highest reading we have seen in over seven years. It is indicating growing optimism amongst employers in the u. S. It is very positive. Lets parse this out. Who is strongest and who is weakest . Anything to do with consumer buying strength is starting to see a pickup. Things like leisure and hospitality, the Retail Sector and the followon from the wholesale, transportation and logistics, moving goods around the country, these are sectors that are showing increasing levels of optimism. We are looking at a chart where thehic here, weakest im surprised by this. I am not surprised by education and health resources, particularly health care, given obamacare. But information services, white is that the weakest . It is weakest compared to where it has been, but overtime this is a area where employers have been very strong. It is also an area that has seen a lot of strength over the last two to three years. It shows a little bit less strength but it is still coming from a relative position still pretty strong. Mining . Out i saw a marked decrease in mining. Ofyou see some aspects mining coming down but that is a sector that did very well over the past year. It is something where into the First Quarter it is looking to be a little bit weaker but overall it is quite healthy. This is a recent development but it accelerated in the last few weeks, oil prices declining to the fiveyear lows. Some people say it is a 100 tax cut for americans. 400,000 jobs have been created in the last several years because of the oil boom. Ancillary jobs have been created because of the oil boom. Now we come to an oil crash. What happens to all those jobs . The jobs within the sector could be somewhat effective although we still have a lot of strength of their. Overall, the fact that the prices are coming down means that consumers will have more money in their pockets and they will be spending more. Importantly, i also think this could have an impact in countries outside the u. S. If europe sees it in combination with a weakening euro, their ability to purchase and maybe kickstart their economies a little bit more should also have a beneficial impact for jobs growth overall in europe certainly but also in the u. S. But on oil specifically, when do you start to see some sort of effect from the Falling Oil Prices . Is there a sixmonth lag or threemonth lag from the drop in oil prices . There is probably some lag, but employers today are very sophisticated in terms of how they view the acquisition and strategies that they have for their workforces, so they react very quickly. If you remember, betty, how celljob numbers phil during the recession right at the onset there was a very sudden drop. Supply and change applies to the acquisition and disposal or the reduction of workforces, rather. It is very Quick Reaction time. I would expect that within three months we will see things have changed. On a final note, wage pressure. That seems to be the big mystery in the jobs market. When are we going to see . Ubstantial wage pressure it is not as if it has been missing but it certainly hasnt been out there is much. We have to be clear that the job market is a bifurcated job market. That arecertain skills in demand and have been and have seen aboveaverage wages in. But a lot wage inflation. But a large portion of the jobs were comes from there is slack in the market and you have not seen much weight inflation there. Running 2 on an annual basis is below three plus percent that we would consider normal wage inflation. Having said that, the Competitive Pressures of transparency around where we are based in how wages are increasing verses were other countries are means that there is some external downward pressure on prices that produces producers of goods and services in the u. S. Not living in isolation. We will continue to see reasonably muted increase in wages as we go into 2015 and probably will be on that. That leads to the other topic we have been talking about, when the fed is going to raise Interest Rates. Thank you so much for joining us. Manpowergroup on the job market, live from the walkie. Live from milwaukee. Chinese investors are snapping up another trophy property in new york. Will the demand continue to spread not just here in the big apple, but all over the country . And one casualty, the drop in gas prices it actually is tesla. Shares of elon musks company taking a hit on concerns that consumer enthusiasm will dampen for his luxury electric cars could still a great ride, though. In the kind of deal that is becoming more and more common in new york, the bank of china agreed to by a Manhattan Office tower that is not even finished yet. Thes under construction by j. P. Morgan Asset Management unit and will be sold for 600 million. That is a rendering of the building. This is after chinese investors bought into the world of the story hotel and the iconic jim building on fifth avenue waldorfastoria hotel and the iconic gm building on fifth avenue. Who do we asked but new York Real Estate developer steven witkoff, founder of the witkoff group, which controls property not just in new york but in florida and london as well. Great to see you this morning. Bank of china, this deal is a little bit different than what we have heard with waldorf and gm. How so . There is presumably going to be a user. They have expanding their headquarters, correct . Right. But i see it as a cheap deal for them. In a market where Construction Costs are escalating every single day, it fell to me like an intelligent deal from their standpoint. Good value for them. How are they able to get that . I hear that real estate prices are soaring here. They are soaring, but it is still a Vacant Office building. Conceptingan began this deal, it was a question of whether they would make it on spec. They are in the business of selling so it made sense. There is another angle to this story. People may not realize this but the bank of china is financing a lot of property deals around the city and are expanding their business. That is why they are adding on people in their offices. Part of the reason is that lots of chinese money is flowing in to the United States. Tremendous. The capital flows from china are huge. The one chase Manhattan Plaza deal. Deal. Ldorf it is l. A. , it is here, it is San Francisco. Bank of china has been active since before all of those exactly. Before that. They were active years and years ago. Chinese investors who are paying for these deals, are they smart deals . Do they look like good value . The chinese cost of capital is probably below where the 10 year treasuries trading at today. It actually looks like theyre getting every time they get a deal north of a 2 return, it is accretive. There is the residual upside in their estimation, and i think there is in new york city because it is a Pretty Amazing place. The other trend we have been reading about that is fascinating is the shared workspace trend. The Company Subject to a big Forbes Magazine article, valued at 1. 5 billion. Im still trying to wrap my head around it. Small businesses by membership and share secretary a coffee or copy machine and that is the future of the workplace. Could have been one of my great mistakes because i met these guys before they really are getting going. Oh, you did . They are sharp guys. But it actually makes sense. They put together people in the tech business predominantly and part of their operation is mining opportunities of people who take space with them. It made some sense, they are expanding in miami and all these other cities. My question is how viable are these tenants . Sou hear about these new app and companies being funded at whatever price but how viable are they in time to 10 years . That is the big issue and you will that if you put a lot of them together it doesnt crash at the same time. None of them have real credit industries being built, but that is the thesis you diversify enough. Be respectful, but you put a bunch of junk together and you get a triplea credit. Tech is, particularly in new york, the second largest generator tech jobs out there because of the former mayors initiative, which has been amazing for new york city. Like there is this trend not only of shared workspaces but shared living as well. Can you imagine that will be the next step for a company like we were . Absolutely. They were talking about that several years ago. How does that play out with Companies Like avalon or companies that do Something Like this . The jury is out whether they will be able to break into that sort of sector. They are talking about it just because they wanted to expand a model. Im not sure how well that works. Why . Hole microinto the apartment issue on whether that sells in new york city or not. It may work, it may not work. Im not sure that it does. Were pretty crammed in new york. We are used to living in small spaces. Great to see you. Steven witkoff of the witkoff group. Speaking of the sharing economy, uber might eventually be everybodys substitute for cars. We are staying on the markets this morning. Were counting you down to the opening bell. Another day, another lawsuit for uber. This time it is in portland, oregon. The city filed a lawsuit against sharing company for operating its service immediately and asking it to ceaseanddesist its operation there. It joins Rio De Janeiro and a deli where officials moved to lock dehli, where officials have moved to block uber. I am joined by a professor at the Nyu Stern School of business. Great to see you. It is notrify like you are looking for regulation around companies. Youre just saying that there needs to be the right kind of regulation. Otherwise it is going to prevent them from growing. Absolutely. The regulations we have had for hotels and taxis, they were built for the sharing economy in which we hailed yellow cabs. Dedicated real estate. Analog companies, you might call them. The way of sharing was analog as well. We have digital platforms and you are with the person who is providing the service and the prison demanding the service. Person demanding the service. That entity the responsibility that we used to call on the government for. Uber and airbnb should be asked to step up and provide some of the protection and some of the screening that we need but why . If you think about the purpose of regulation in a capitalist society, it is to to stepmarket failure, in surgically and correct the markets when they are not operating also to protect consumers, though. Absolutely. There are some forms of protection that happened naturally when a platform like uber or lyft or a platform like a airbnb provide good customer service, good customer experience. They will protect customers up to a point. What the government needs to do is say, well, here are situations the number of wheelchairaccessible cars, uber sidecar, the fire safety guidelines with airbnb nine making sure airbnb is not hosting brothels in new york city. That is something that the government should be involved in whether or not it is airbnb. It sort of happens to be whether some small fraction of people using it forb are that the same way they might use hotels or craigslist. That is outside the purview of what i think we need the government for that. We need the government to sort of step up when something goes wrong. It is more about daytoday stuff that we might have needed the taxi and Limousine Commission to screen drivers how do we know that uber is going to do a good job screening drivers . You have seen the controversy. Women have talked about this. Use all the terrible case in india where women feel like they are vulnerable because the background checks are not strict enough. Under more uber control and standardized background checks . I think the right solution is one where the government sets guidelines and the platform implements them. They may not have been it seems clear from the situation in india that there was insufficient driver screening their. And there were other Technological Solutions that are possible. If you go off route, if you turn off your gps, some sort of Fraud Protection like you have your credit card could be triggered and you have a solution like. But more broadly, we need the government to figure what you need to do and we need platforms to be enforcing that. This is the kind of partnership that i see as the longterm regulatory solution. We have seen Something Like that set up in california for the ride sharing companies. That is seeing how that plays for how good test case this regulatory and there isnt a whole lot of ignition right now on these companies. As we are discussing the future framework for regulating these companies, this is where you will the red line hold the red line for that. Really appreciate it. Heard that you took uber here. U . D our car service fail yo drive forf people who the card services, when it is raining the prices go up. The professor at nyu Student School of business on uber. We have breaking news Abercrombie Fitch, the ceo is stepping down. Scarlet fu has more. Michael jeffries is stepping down. It takes place immediately, with effect immediately, and share prices are rallying as a result. Abercrombie fitch shares up 7. 7 on the news. Arthur martinez will be the interim ceo as the Company Looks for a new replacement for michael jeffries. Fitch in the early part he did well with the company. As time on he also recorded a lot of controversy. Three separate classaction discrimination lawsuits that were settled on concerns that the company fit a certain image that excluded anyone who wasnt white. You had other issues regarding the fact that he had not responded well to the advent of fast fashion forever 21, h m. The company is struggling a little bit to find its target audience as teenagers have ditched Abercrombie Fitch and American Eagle and sales dropped off as a result. The share prices up by 8. 2 in the premarket. Much more ahead. Hackers disrupting the advertising world. Why Companies Feel like they are being robbed. 6. 3 billion is how much computer hacking costs advertisers a year. Computers are being operated remotely by hackers, coming from ws of digital vie video ads. Retailers and copies are paying for ads that are never seen by anybody, or they are seen by fewer people than the advertisers are paying for. And yes, it is costing them billions. 56 minutes at the hour, which means bloomberg televisions on the markets. Equity futures are lower, sparked by the selloff overseas, which in turn was sparked by some concerns in the u. S. That the party may be over. The fed is about to raise Interest Rates next year. We are on the markets again in 30 minutes. Fresh off of its fight with amazon, hachette is turning to twitter to sell books online. Social National Social media kill the bookstore will social media kill the bookstore . Welcome back. 30 minutes from the opening bell. At the will be lower Federal Reserve policymakers debating what might be a significant shift. Debating whether to drop their promise to hold Interest Rates low for a considerable time. Dennis lockhart says he wants to keep the current language. There is a danger of raising rates to soon. Theres a global selloff and china leading the way. The biggest drop since 2009. After chinas government tightened collateral rules for shortterm loans. Affecting how futures are trading in the u. S. Futures indicate stocks will be lower at the open. Oil prices rebounding. West texas intermediate dropped below 63 a barrel before bouncing back. Inq has joined saudi arabia cutting prices. A change at the top of Abercrombie Fitch. Michael jeffries is retiring and the board is looking for a ceo. Struggling has been with teenagers changing tastes. Shares down 20 this year. 30 minutes away from the start of trading. The top 10 headlines before the bell. Scarlet fu is joining me. Number 10. If you thought you had to be a brainiac or an athlete to get a scholarship, it turns out you can be a video gamer. A good one. Is being a minecraft expert can get you into college, my kids are a shoo in. I think it is great. Back in the day when kids would get an trouble for too many video games. You do not have to be a great athlete. I am all for scholarships. New crop of Extracurricular Activities were gradeschool kids. Therelk about your son, are going to be classes devoted to how you can increase your score. That is what kids are going to be doing after school. Theres a little bit of education in a game like minecraft. Maybe a little. But come on. These guys are making so much money. This was not around when i was in college. I would have gotten mario kart scholarships. Marya was my thing. Or tetris. Scarlet fu, you are dating yourself. Uber in the headlines. Being sued in portland for launching operations. The city has filed a lawsuit against the company. In violation of rules and regulations and asking the company to cease and desist operations. Thet is like with uber, image of being death by 1000 cuts. That is what it feels like. A bad week for uber. In new delhi, kicked out in the netherlands and and and thailand. Portland is not only suing the company, they are going to sue drivers, too. They are not going to sue passengers. Passengers can get into an uber car. Drivers face fines. They will take themselves out of the running. It is almost like every other day there is a new uber controversy. Which company is most hated . Microsoft must be loving uber. Their customers seem to me into it their customers seem immune to it. Is a good service. It is convenient. We use it. Speaking about controversy, number eight. Facebooks Ceo Mark Zuckerberg under fire. Remember when he spoke mandarin. It was very impressive. At a q a in beijing when he went to visit. Has hosted some chinese officials at Silicon Valley headquarters. Including an internet czar. Him withas snapped of a photo of a book by chinese president xi jinping. Bloggers are on fire, saying he is kowtowing to the chinese government, which banned facebook. He has been on a roll. Then he has this book. Im giving it out to my employees at a time when facebook is being blocked. There are plenty of other great books. This book is a collection of speeches given by xi jinping. This is not exactly a fantastic read. It will put me to bed. Having his employees read it so he can understand chinese capitalism with socialist characteristics. Pandering. Number seven, amazon. No stranger to controversy. Told u. S. Regulators it has begun testing deliveries by unmanned aircraft, drones, in other companies. Urging the faa to allow drones to be tested. They want to escape any kind of. Nafu this Holiday Season they are going to take control of delivery from ups and fedex. Delivering presence on december 26 and 27. Forcing parents to explain what happened with santa claus. Saying if you do not allow us to fly drones, we will take money elsewhere. Amazon wants drones to test amazon wants to test drones near seattle. The u. S. Has offered places, amazon does not like them. We want you in such areas. We do not want you around commercial airplanes. I took out the screens in my window so i could open them and get the drones. drone toiting for a deliver my pizza. Ive seen several drones, nobody believes me. In new york . In the hamptons or elsewhere. Did it just buys in front of you and look at you . Yes, im being surveyed. Staying with amazon. It is among the Tech Companies in addition to apple refusing to release federal data on the diversity of their workforce. Google, yahoo , linkedin are among companies that have made records public. It is strange that apple and amazon going to telley us . If you are white or an asian male, you are doing ok. Everyone else is underrepresented. I understand not being the first, you cannot be any worse than google. It is an industrywide problem. It is not just us. Everyone has to work on this. It is bizarre that they would keep it under wraps. If they had released the report, it would not have made much headlines. It is a bigger headline now that they have refused to release any of that. Making you wonder what they are hiding. Unless they are using the time in between to make their workforce more diverse. You are talking about a really fast turnaround. It moves the needle too much. Our countdown continues with the look at hachette. Trying to bypass amazon. They are using twitter. His social media the new bookstore . We continue to count down to the opening bell. It is time for our run through of more stories. Twitter no, it is not. Number five is oil prices. Crude oil prices rebounding from the fiveyear low. Some houses have come out with a call, like Morgan Stanley saying we may see a bottom. Does it feel that way . Is it a rebound or a stabilization before we see the next leg lower . Andres took a deep dive european stocks tumbled. You did not have much of a move in oil prices. It did not participate with this risk off selloff. I do not think investors are willing yet to buy in to this. It is before you do not want to catch a falling knife situation. Is production going to slow down that much . The oil drillers have made clear they will continue drilling. What has changed that would have caused anyone to want to buy oil . Some are saying we might head or 40. 30 at some point, opec needs to act. It has got to stabilize. They are waiting for u. S. Companies to act first. They are playing chicken. We will see what that does to the jobs market. Dakotas,ularly in the oklahoma. Impacted by a low prices, tesla motors. In thehave dropped 4 past seven trading days. Disappointing november sales also said the decline. If you have low gas prices, gas prices around my area are 2. 50, why am i going to buy an electric car . Are you in the market for an electric car . Tesla, howe buying a sensitive are you two small changes in gas prices . This is more about conspicuous environmental luxury consumption. There is an episode of curb your enthusiasm. Larry david says when he sees another prius driver, they nod at each other and say yeah, we are environmentalists. The issues that drive people to buy electric cars are not going away because gasoline is dipping. For the nissan leaf or the chevy volt. That is more of an issue there is the worry of whether elon musks vision of a massmarket electric car will pan out. Number three. Lousy 2000 14 getting worst. Posting a 27 yeartodate loss after a 3. 1 decline in november. For the last several weeks, weve been talking about hedge fund who close. Particularly macro driven hedge funds, currency funds and Commodity Funds because of the plunge in oil prices. Regulation and this economic environment is not profitable. People are thinking i can go in and do much better without thinking twice. Paulsons next hit come from . Is he a onehit wonder . It was a big onehit, to be fair. Colin the subprime calling the subprime mortgage crisis is huge. The downside is everyone looks at you and says wheres your next hit . Everyone focuses on. All the losses he bet big on gold. Gold has come up. We continue our countdown. We will be back in two minutes. 15 minutes away from the opening bell. We continue our countdown to the opening bell. Number two is twitter. Is it the new best way to sell books . Publisher hachette, fresh off its tiff with amazon, will start selling a limited number of button. With a buy should amazon be shaking in its boots . With me as bloomberg contributing editor on all things technology. Is this a good idea . Absolutely. Many people would be baffled that it was not happening already. There is some kind of merchandising happening directly between authors and their buyers. This has been happening at the fringes. This is the first where you can button toitter buy allow an offer to sell directly to readers. It makes sense and it sounds interesting. Are you able to see twitter on ae the next amazon massive scale . I kind of am. I go back through history. Back in the mid1990s, they said people are never going to buy books on the internet. Never doas people will this over mobile. Now we are having the same conversation about simple media social media. People will buy things anyway you cannot them with a supplier. It is like drugs. If you facilitate it, it happens. Im not making that analogy. But the notion that if you give people the means to do it they will make a purchase. I think it will turn out well. The only thing im puzzled about is that twitter has not been quicker to do it with my publishers sooner. It is strange given that christmas is coming up. Why havent they . Twitter directly. There is another company byolved that is backed Kleiner Perkins sitting in the middle of this transaction and facilitating it. There is another Company Involved in for filament. End whereas a back you can make the purchase but they are not ready to handle the transaction. There is your issue. Nothat is why amazon might be that worried. They are the ones that handle the filament. They handled the shipping and orders. Bezos saying it is interesting but they are never going to catch up . That might be his initial reaction. To remember, peoples relationship as book readers is not with amazon. It is with the writers. They do not follow amazon on twitter. They follow the writers. The danger is that amazon not forgotten, but less important. The real relationship is with the writer. I can only become stronger and their relationship with amazon weaker. Amazon is always willing to undercut the competition. Company, theyone charge eight 5 commission, . 25 per book. Get on board with buying on the internet. They are all going to do that if they get a better price. I think so. If you simply make it easier and give them a sense of spontaneity, we saw this with flash sales. It felt like there was something happening. Oh, i need to act immediately. We will see the same thing with twitter. There is urgency when an author offers for sale, in the next 20 minutes you get a signed copy of my book. People are not going to look as closely at price. You gave me an idea of how to sell my book on twitter. I love it. A final note, what about facebook . Facebook has tried the buy button. Why isnt it catching on . I think it is behavioral. Like socialt feel networks are the places they make purchases. It is a behavioral change happening. We will look back two years from now and be baffled at how baffled we were. It is going to be happening quickly. Great to see you. Bloomberg contributing editor on all things technology. Bloomberg television is on the markets. Futures have settled. A ugly day in the market led by a fall in chinese shares. Our top story in the opening bell is next. Welcome back to in the loop. Bringing you the most important stories before the bell. Scarlet fu and felix are joining us. Number one, fed officials keeping their pledge to Interest Rates low for a considerable time ahead of next weeks meeting. That phrase might be banned from policy meetings. Ofthis comes on the heels the november jobs report. It is clear that we have low inflation and robust jobs economy. It is. You always hear that the fed should not be moving on any one piece of data. It is coordinated with Everything Else weve seen, retail Sales Numbers have been good, housing numbers at least they are not taking another dive. Inflation is still low. You know, it counterbalances a little. Which fed official do you listen to . Stanley fischer . Obviously janet yellen. Dudleyoes what echoes what yellen says. Interesting to see how the markets were so confused after friday. Report everyones trying to secondguess what a fed is going to do. Joining us with more from what we can expect from the fed is chief Investment Officer from Credit Suisse private bank. Do you think they are going to drop their language . Theres a possibility. The data has been strong and the fed has been telegraphing that they want to renormalize policy. They want to do it at a measured pace so they do not do anything to hurt the global acceleration weve seen. Yes. However, they do not want to hurt the global acceleration. At some point you start to see some wage crash. Are they going to look like they are behind the curve if they dont do something . One thing the fed watches is the court personal Consumption Expenditure and the five year forward inflation rate. Neither of those are in a big acceleration. That gives the fed a bit of wiggle room. What has the markets concerned is if they dropped a ansiderable time, it is it replay of 2004. They dropped the language in may and started hiking rates in june. The fed might need to signal the markets for far longer before they move. In 2004 it was a different story to the Global Economy. U. S. To the of the Global Economy are more interlinked and they were 10 years ago. We need to be treated like kids. The fed is so paternal. The fed is the global central bank. To the point of oil prices declining, we have seen Oil Stabilizer little. Of damagee a lot to Energy Companies while providing a boost to consumer. Is there reason to believe it might be in under estimated risk for banks. Oppenheimer and barclays saying it is an underappreciated risk. The risk goes to the credit markets. The Energy Sector has become about 14 of the most of the highyield indexes. It was 5 in 2000. In terms ofg lift the composition of the index. Telecom, media, and tech were close to that for there was a plunge. Telecom, media, and Technology Issuers madefive up a really big portion of the segment. The Energy Sector is broader in terms of distribution. When you become that they in an index when you become that is cause index, there for caution. Did you read bill gross letter cryptic. Also bizarre. A i want to pull out quote, i suspect future generations will be asking current policymakers the same now askat many of us about public smoking or discrimination against gays. Future policymakers have a big task. The Global Financial crisis we went through in 2008 has been reverberating. Specifically, in europe. I cannot comment on someone elses thought process. The idea that the fed is behind the curve. Behaviorhe feds bad the bond market is not telling you the fed is behind the curve. The u. S. Treasury 10 year is about 2. 21 this morning. The bond market would be doing the heavy lifting for the fed and you have a 10 year treasury at 3. 25 if they were concerned that the bond market was we are not there yet. We do not think the fed is behind the curve. The fed has been acting prudently. They saw that there was an opportunity to get out of quantitative easing. They wound down that operation in an orderly fashion. We do not think they are behind the curve. We were talking about what cheap oil is doing to teslas price. What about the rest of Oil Manufacturing in the u. S. . Cheap oil does a couple things. Automobile manufacturing, some of the big suvs and pickup trucks become more economical to buy with gasoline below three dollars a gallon. 2. 50 on aards national level. Certainly not in new york. Jersey. Ttys new. I am from new jersey as well it certainly means consumers will have more in their pockets. It takes a while for consumers to realize gasoline prices are down and they have the potential to stay there. Consumers like to see things materialize for a while before they feel comfortable making a purchase. Put the about 100 billion in consumer pockets of the next months. The decline in oil prices is a meaningful lift. There are a number of countries that are able to get out of the gas subsidy. Like india. Its a boon for the world economy. Im focused on the fed. Globalconsider it a central bank . Is that really the role of the fed . Look, the fed has a very Important Role in the world. I dont think it necessarily is better or worse or higher or lower than any other central bank. I think the fed certainly is watched very closely. And theand the boe National Bank of australia have prominent roles. This. King oil to does Falling Oil Prices helped or hurt the fed . If the consumer starts to spend more, it gives the fed comfort that the u. S. Economy can continue to do pretty well and they have an opportunity to renormalize Interest Rates. One of many things that the fed looks at. Thank you for joining us. Suisse chief Investment Officer. Thank you to scarlet fu for joining me. Ahead. A lot more including the house hearing on obamacare. Just getting underway. That is a live shot. This time on the chopping block, farmer obamacare advisor jonathan gruber. And why he called American Voters stupid. Snapchat hired the banker who led the alibaba ipo. What this will mean for the app. Stay in the loop. This is happening now. A house panel is grilling batman, former a house panel is grilling that man, former obamacare advisor jonathan gruber. He was quoted on the stupidity of American Voters. The latest attempt to criticize the Obama Administration insists is working. Darrell issa is grilling gruber. Back. Cook, lets step explain exactly who john gruber is and why he is so important. We know more about john gruber. Republicans hope this hearing allows americans to hear more. What they are hoping to do is not only to challenge don gruber and comments he has made, they want to take aim at the law itself. Is the m. I. T. Professor who was an adviser to the administration and to democrats in developing the Affordable Care act. The reason we are focused on him is because of comments hes made in public about the law. Comments like this when that was just played in the hearing room. He spoke at a university of conference. Lack of transparency is a political advantage. Call it the stupidity of the American Voter or whatever. Basically that was really critical to getting things passed. Republicans are hoping to show there was a lack of transparency. Not just from gruber, but from democrats in terms of getting this past. They say not only is the law a problem for the country, the way it was passed is a problem. We will hear from the head of medicare and medicaid, marilyn tanner. We will hear a democratic witness who has benefited from the health, care law, a d. C. Resident. What about obamacare and how it is doing . A second open Enrollment Period is underway. How is it doing . We will hear from republicans that the law itself has been a total disaster and a threat to the u. S. Economy. Democrats will insist it is working pretty well, as intended. A couple of numbers as to what is happening. Stands at 6. 7ent million. Below the 7 million target identified by the Obama Administration for this year. Their target for next year is 9. 1 million. One other number, the number of uninsured is 13. 4 . It was about 17 before the law kicked in. Downoal of bringing that has been achieved. Total u. S. Health care costs are rising at the slowest pace in 50 years. Themuch of that is due to Health Care Law versus the economy, that is a matter of debate among economists. One thing that is not a matter of debate is that this lot remains politically tuxes. Playfully toxic. Politically toxic. 55 americans do not approve of the way the president is handling health care. The Affordable Care act at its lowest mark since they started surveying. This is a politically toxic law. The hearing is going to be very partisan. It remains to be seen if it has any real bearings on the future of the Health Care Law. Peter cook, chief washington correspondent. Still ahead, abercrombie ceo Mike Jeffries is out after more than 2 decades. We look back at the retailers struggles. Markets are open. 13 minutes into trading. A big selloff. . W down 157, s p down 1 led by china and concerns about possible political turmoil in greece. We may be seeing equities in the red. We will be back. Top technology stories. A warning from hackers who broke into sonys network. They are telling sony not to show the interview, about kim jongun. They call the movie an act of war. Advertisers may not be getting their moneys worth. Computers operated by hackers account for almost one fourth of digital and id use. A result of that, retailers are paying for ads that are never seen by humans. A quarter of those are never seen by real people. Hired a star banker from Credit Suisse. Imran khan was the advisor on the alibaba ipo. Khan will be chief Strategy Officer for snapchat. Spoke with usan about growing demand overseas for Tech Companies. Investors globally are excited about technological opportunities. Volume game. Companies like google and facebook have a lot of users. A lot of users come from emerging markets. Investors are looking for companies that have high emergingmarket exposures. Valued at 10 billion. It has just started generating revenue. Catch the latest in Technology Every weekday at 1 00 and six accord p. M. Eastern time on bloomberg west. This morning, Abercrombie Fitch Founder Michael jeffries is stepping down as ceo, effective immediately. The retailer has struggled to is a target of activist investor engaged capital. Julie hyman is joining us. The stock goes up 7 . Yeah. The company has been struggling for a while. The teenage retailers in general have. Has been a highprofile case faced with different things. First, the logos abercrombie became known to, teenagers are not into it anymore. It has competition from forever 21, h m, fast fashion brands are cheaper and cooler in the eyes of teenagers. The traditional customer of abercrombie has aged out of it. They are not being replaced by younger teenagers that are coming up. Engaged capital came in and push for changes. Shareholder but it has been a vocal shareholder. Abercrombie has made some changes to its management structure. For example, theres a new chief operating officer. There are 4 independent directors appointed to the board that were put forward by engaged capital. There is a new brand president leading abercrombie and houston brands and hollister brands. It looked like the wheels have been put in motion for jeffries to leave. Why leave now, less than a month until christmas . The timing, according to many im speaking to come is unusual. Trying to get to why they wouldnt wait until after the holidays. You never know what the internal dialogue was or is. Mike jeffries is a very strange ceo. Very quirky. Hes quirky. He has been controversial. Interview he did with salon. Com in 2006 where he talked about that he only wanted to looking people to shop at the stores, only skinny people. Those comments flared up again last year and cost controversy again and caused controversy again. Comments, if your brand is successful you can withstand that better than if your brand is weaker. There have been reports that his his partner,at is has a lot of influence at the company. Companyhas staffed the with people hes close with. It will be interesting to see what happens, what the next shoe to drop will be. If you are making money and you are rich and you say we are things and you do weird things, you are an eccentric genius. Once you start losing, you are just weird. Youre not quite as teflon as you were. We should make clear that jeffries is stepping aside without a replacement. Another question about timing. Has hirede has set it an executive search firm to find his replacement. The idea that he would retire or was pushed out without someone to succeed him immediately is a little curious. Much, julie so hyman. Our senior markets correspondent on abercrombie. The stock is rising 7 amid a selloff in stocks. That is it for today on in the loop. Tomorrow, the founder of the Lifestyle Group thrillist. We talk about privacy concerns. Lyft to sonyer to being hacked. The shift in the online media world as the new republic staff jumps ship. The rising demand for dissertation centers. Is 56 past the hour. Bloomberg is on the markets. 30 minutes into the start of the u. S. Trading day. Lets show you where u. S. Stocks are trading. A selloff underway globally. Equities in the red and that continues as the selloff circles the globe and comes to our shores. The s p 500 is off 19 points. The dow is losing 158 points. The nasdaq off by more than 1 246 to 4691. Theghais index is down most since 2009. The government acting to curb risky debt. One reason u. S. Stocks are under pressure. Nymex crude oil is stabilizing. A different look for crude oil given the slack we have seen. Trading at 53. 17. The yen is rallying. For more on the move out of commodities, risky asset like emergingmarket currencies, we are joined by mike regan. This is a pretty big drop. In a period where weve seen nothing but up. A gradual grind higher closing records last week. It started in asia when china said they are Clearing Agency would no longer accept the debt of local government financing vehicles. Change bank anything that is not aaa. Spooking a lot of people. One of the big issues with the u. S. , we were decoupling from the rest of the global economies. The u. S. Economy strengthening and other economies weakening. How much we can decouple has been a question. Theres a push and pull concept. The shanghai composite off more than 5 . Ki your in europe, greeces benchmark index is down 10 . The biggest drop since 1987. Guy nailed it and said now is the time to start worrying about greece. The Prime Minister basically nominated a new head of state. The concern is that is going to push up the Parliament Elections and possibly put in a government that is going to again push back against the eus demands for austerity as part of its bailout package. Questions about greece. Throws all that into question. Theres also talk that the drop theeserve may considerable time language from its statement next week. Is that causing jitters in equities . It is something somebody has one eye on. Jobs data one friday with a strong number, the market ended the day higher. Good newsear whether is good news or good news means the fed is going to tighten sooner. Most people brought forward their projections for Interest Rate increases. What are they looking at as a consensus . Most people still except middle of the year. A lot of people, ive heard some people say maybe even the First Quarter. Towards the beginning of the year. It is a big question mark. I mentioned oil prices have stabilized. What are you hearing about where Oil Prices Bottom . Is this it . There have been bets. People believing we did see a bottom. Last week, hedge funds extended their long pressure to oil. Energy Company Insiders stocked up on stocks. The etf was really strong. A lot of people betting that the bottom is near. U. S. Stocksan, editor telling us about the selloff in u. S. Equities. Down. 9 on the s p 500. We will be back on the markets in 30 minutes. Market makers is next. Live from bloomberg headquarters in new york, this is market makers. With Erik Schatzker and tephanie ruhle. A global selloff. After chinese shares sink the most since 2009. Divergence. According to black rock, that should be a must. We hear from larry think. M a is b. Fivepointr or