Transcripts For BLOOMBERG Market Makers 20150116

Off. The state of the consumer. The Consumer Confidence index is out now. The state of the consumer is strong. How the consumer is feeling. The university of michigan Consumer Confidence reading coming in at the highest level in 11 years in january. We know what has been fueling these numbers, lower gasoline prices and more job gains. People are feeling more confident that preliminary reading of Consumer Sentiment at 98. 2 the highest since january of 2004. The reading today is better than economists had projected. We are looking at the expectations index. It shows not just how consumers are feeling right now but how they expect the economy to do and how they expect their own personal finance to do. That number coming in ahead of estimates at 91. 6. This is in line with some of these other Economic Indicators that weve gotten recently. This would seem to be a positive sign. Thank you so much. The top business stories of the morning trading has not opened yet. The latest pending news futures indicated the stock would open down around 85 . The firm was hit hard but a big move by a big move in the swiss franc. They may not be able to meet capital requirements. The firms largest retail currency trading brokerage here in the United States we have not seen inflation this small in six years. The big reason, Falling Energy prices. If you factor out food and fuel costs, the cpi was unchanged. Plunging oil prices are taking their full on workers in the history there workers in the industry. Cutting 9000 jobs. 7 of their workforce. Taking their toll on workers in the industry. The stars of this years super bowl halftime show youtube is putting on their own and extravagance. The ringleader of the food and study group epic mealtime will host youtubes program during the halftime of the super bowl. Music from some of the Biggest Online stars and some big super bowl ads. If youtube is successful here if they crush it, this is going to rock the advertising world like we have not seen. Its like the super bowl of advertisements. Think about how much time is spent, how much money to pull in the biggest possible artists. If that thing gets sidelined for some v eating 17 pizzas while jumping over a cariners Goldman Sachs reported one of the biggest drops in fixed income trading last quarter and return on equity of just 11 . A clips of what the future will be like if the ceo is wrong and business does not pick up. Harvey shorts is doing his best to calm investors right now. We will keep it nice and edgy. Chief Market Strategist at jefferies his beard is out of control today look at that thing. Luxurious. It is the trend. We are following ben bernanke. Im into it. Does it surprise you that the fixed income trading numbers were no better and in some cases worse than what we saw from jpmorgan, citigroup and bank of america . We all expected equities up but we got worse than expected. The pain we saw in the credit markets over the past quarter. Is this something we think will recover . This is 14 straight quarters if i was running one of the weaker funds why not back it up . We have had the secular challenges. There are certain cyclical impacts. We need the cycle to pick up. Everyone has been hoping for volatility. In much smaller part of the business versus the overall franchise. The buy side comment hedge funds, your clients have had their share of troubles. Look at the average macro fund last year. There used to be a time when if the buy side did that come to the sell side could do well. This low rate environment looks bright environment has taken its toll on the u. S. Markets and the ficc businesses. We see the swiss go to 75 basis points, its not clear to me that there will be an exciting fixed income trade to do. The Central Banks are trying to tell you to go away from fixed income. Dont buy the riskfree asset or at we will buy it and go take risks. The people who listened big money. Made money. I think that idea is still very much in play and the playbook that worked very well here in the u. S. Is a playbook that will work out pretty well in japan and europe. Is this symptomatically . Will we see it with Morgan Stanley . Im hearing rumors of layoffs in fixed income. Is this happening this quickly . We are not sink or business happen in branch offices. It is that time of year. It is not based on the quarter but based on a tough year we have had in the outlook for the year ahead. The golden staff are up 3 yearoveryear. Goldman sachs staff are up 3 yearoveryear. Are they adding traders or bankers or backoffice . Better question about the layoff. Whether what were seeing here is symptomatically of what many have been protecting for some time. The acquisition of ficc. Adequate ties equitization of ficc. They say that trend is happening. You are seeing fixed income go that way. There has been a significantly higher proportion of trading done electronically and a lot more by side buy sider are participating. S if they are in control to a degree of the flow why not spread . What you are single electronic are more of the commoditized products. Things that are more standardized. There is less spread and more profit. Where there is a wider spread you are seeing that optoelectronic. When you see a spike like we saw in october, people want to talk to someone on the phone. You can just eliminate the traders. You have to have high touch along with low touch. The companies with the biggest electronic rating a lot of these spreads have lightened up a lot. Customers are pretty upset with where i. T. Spreads are. They go to trade 5 million or 10 million of their bonds and its craziness. They want it both ways. We are on the other side. We see it in the broker markets and the Risk Management side of the equation. The ability to take a lot of risk is not there and its Balance Sheets are constrained. That is changing the profile of the market which also slows down trading. We are talking about trading slowdowns as opposed to anything else. Thats where the big office bread have lightened out because of what electronic trading. That is more of a problem from a revenuegenerating standpoint. I remove back in 19 and the mother world was great of the fixed income markets were blowing up i remember back in 199719 that the98, the fixed income markets were blowing up. Its a story i like to think back on because it was a time when the equity market rallied 30 . It felt like the end of the world in fixed income. We made it through it and came back and it was a lot of defaults that came through the system as the dollar strengthened. Dollar strengthening moves are always high volatility moves. People borrow a lot of dollars. When you go to lever, you lever in dollars and when the strikes dollar strengthens, you have to pay back a lot of dollars. Lets give you the opportunity to look at the camera and say i told you so. The last time you joined us, you called for this volatility. You made me stand here and say embrace the volatility. Trade the volatility. It will be a different environment. We have seen that strong dollar world develop. It will take on an even more aggressive form this year. We have gone away from our traditional storyline. Atv professional. A tv professional. Thank you so much for joining us. We will be back in a moment. We will be talking about the big move out of the Swiss Central Bank. More losses reported in just the last hour. If you cant beat them, join them. We are back with david servos. The shocker out of switzerland. Take us back. Where when where were you when you heard this news . I will go up and looked at my blackberry and thought this is very strange. A lot of markets had not moved that much. Everything was risk assets i look down my ticker screen and i saw the swiss franc at. 8 something. I realized at 4 00 a. M. The Swiss National bank made this unbelievable announcement. Tom keene had a great interview with jim oneill on the subject. Jim was my first boss back in london in the early 1990s. Really going back to old School Central banking. This is an old school move the people who trade currencies would remember and embrace. It is not a normal trade environment at all. Nothing like what we have seen its like trading in belarus or some other Banana Republic to see 30 move in one day. This is considered a major currency. Everybody still busy figuring out where the bodies are. Barclays lost tens of millions of dollars earlier today. Interactive brokers said it several of its clients collectively lost more than 120 million. A currency broker overseas, his customers lost to her 50 million. 250 million. Any idea what the losses there were some banks until enough to sell some options they should not have. The european banks and swiss banks in particular. Anyone who was a decent risk manager would have said never tell set never sell this. Its a well contain storyline. There will be a few guys who got caught. I dont think this will be a systemic problem. The borrowing is different. The hungarian market, mortgage market. By and large, we are not good to see a huge macroeconomic fallout. There will be some winners and losers. It wont be something that creates systemic risk. The really important thing is that the central bank just embraced negative Interest Rates for the first time. Its exciting. They said this bounce sheet expansion thing the swiss had the largest Balance Sheet of any other country in the world. They had a key milley did so much stuff in order to defend this a key milley did in order to defend this accumulated so much stuff in order to defend this. They said enough is enough. I cant do this trade anymore. I know they said there is this other risk but he will do it. God bless them. We could have done negative rates. The frb in new york freaked out on the money funds and a lot of other things and backed away from it. What freaks me out is a country as small as switzerland was not that big of a presence in the Global Markets could have this much of an impact. Isnt that concerning . Their banks are big. Trillions of dollars in Balance Sheets. Its an important trading currency. Youre right. Its half the size of the u. K. Or the german economy. You think the sell side knows how to handle this volatility . How many years have you been in the market . Since the early 1990s with jim oneill. If we look at the maturity of trading desks and the talent that has gone to the buy side do they know how to trade this volatility . These boys have not seen anything like this. Youre absolutely right. Every firm should be spending a lot of time with the Risk Management professionals. If that 3 number has a disproportionate number of Risk Management i would not be surprised how does that affect the way you do business . Like the revaluation of the swiss franc is no longer considered a tale of event. How do you run your business . Everybody will have different bar limits now. Value at risk. Break it down. Its a way that the Risk Management departments keep a constraint on how much money there traders can lose on any given day. When you widen that distribution, the probability of a loss on any given day starts to go up. You see more Balance Sheet contraction which is a fairly negative thing for asset prices. We have seen some of that reaction. Doesnt that lead to panic moves . If people could have sat back and written it out in 2008, it would have been better for them. Mark to market is one of the dumbest things we have ever done in the financial markets. You wait until the end and you get paid any d you pay people when you get back. Pink people on their mark to market is so silly. Y shock the market . Why didnt they take a cue from bernanke or yellen . They wanted to starve you and me and ill post next week in davos next week. They gave up on the euro. We believed in the euro. We are out. I dont know what the greek elections are going to be but im not buying anymore euros. Thank you, my friend. David zervos. The no hater hat. We are translating the playbook to german. Coming up, think your company has paid paternity leave . The United States trails most of the developed world. Nasdaq goes dark. Why the longtime opponent of dark pools now offering to run them. You are watching market makers. A lot of light is being shed on tarp pools this week. Nasdaq approached several big banks about running their dark pools. That is a big shift from the exchanges previous stance that said dark pools hurt the markets. Ubs was spending 14 suspended by the sec for breaking its own rules on dark pools. Can client trust them anymore . It is not really fair to put the question to you because i know how you will respond. Which do you find more galling, what we learned about what ubs was doing, or the notion that an exchange as stephanie says. I think there is a process of a normalization of deviance that we have all gone through over the last five years. Some of this stuff sadly, we expect. The exchanges and nasdaq is taking an interesting aboutface. Four years for years they have gone to the sec, funded Academic Research that shows too much dark trading is bad because markets perform better when there is more lit trading better for price discovery, a better investor experience. Now they are deciding that apparently dark pool trading is not so bad and they want to run a few themselves. There is a credibility issue there. Who is calling them to task . On this aboutface . How can they look among with a straight face him and say now we are going to get into the business. Who can call them out . Hopefully, the sec. There is a role for dark pools. They have always had an Important Role in the trading experience because frankly institutions need mechanisms to move larger pieces of stock, and that needs to be preserved. However, over the past few years, dark pools have been perverted. It is not just ubs barclays which is being investigated by the attorney general and perhaps others. The average trade size is 170 shares which is exactly the same as on the lit exchanges. This is quite interesting. It tells you the same players the same unwanted intermediaries in some cases, on the exchanges and dark holes. Pools. This is due to a report from the wall street journal, and we have to give them credit for breaking the story what does this say to you about dark pools themselves the market, and the Market Structure in which both of these entities have to operate . There is a dynamic that big banks want to internalize trades. It is expensive to trade on the exchanges, relatively expensive. Matching their own buyers and sell orders. If a bank has a opportunity to board overflow and incentivize highspeed work Makers Market makers, that means their orders that trade in their pools do not need to be routed out and incur the expense of an exchange. They want to do this, however the regulatory regimes that take care of dark pools are not the same as exchanges, and that is not quite fair. How can ubs be caught illicitly offering preferred share access to their outlets . Quite frankly, that occurs in many dark pools. That is ok . No, it is not. The best scenario Going Forward is we have to find a way to not also profile orders. Everyone wants to touch the retail order. You just threw me off my game completely. Alpha profile. That should be like a new dating website. Sorry. The retail order is desirable david i want to be on the other side. I want to be on the other side of small predictable, institutional algo orders. I dont want to be on the other side of a 2000share i need to sell now order. If you are a market maker, you dont want to buy at . 50 if it will be at or dissent within 30 seconds. They provide a service to the market they want to avoid adverse selection. So what has happened in the marketplace we have gotten to a place where segmenting customers, here is the retail customers that are cherry picked and treated by highspeed engines, institutionals swing around in a pinwheel, highspeed are dominating the exchanges and this does not make for a robust Market Structure. I want to see everyone on the same rules without tiers interacting together in the same pools. It seems like all of these dark pools have been waiting for all of this scrutiny, especially goldman, so it surprises me that nasdaq would finally get into the game when all the people that are in it are sitting in their desks. They smelled blood. They know there are shoes to drop. They know it is an increasingly risky proposition to run a dark pool if you are a big bank. The name dark pool conjures up images. If you are an investor and you have the choice of walking on a lit street or down a dark alley one is more desirable. If you are going to walk down a dark alley, there better be a dam good benefit of doing so. 170 shares does not cut it. The process has been perverted. What is the incentive for nasdaq to want to be in this business . Last time we checked in on dark pools, it appear they were becoming less profitable. Longer the businesses were becoming less profitable or the sell side running them. It is, but the nasdaq engine has scale. I will give them credit or perhaps in a more robust than it was a few years ago. Certainly, there is a problem with fragmentation in the market. Every dark pool has different technology. They are not sharing the same plot warm, it nasdaq were to get into business for running dark holes or other banks, it would be good for the market . It may not be bad. There are some benefits to it. The problem is they have to get past the credibility issues. Nasdaq has proposed the flash order in 2009, knowing it was that the market. If you were talking to the ceo of nasdaq, what would you tell him . That is a tough one. I would encourage him to keep on the path that they have embarked on in recent years, which is one toward increased transparency. Its good for the markets. Invest in the technology. The sec has been pushing it and make sure all the Market Centers are becoming more robust. If nasdaq is doing this, its good for the markets, its transparent. There is still a place for dark pools still needs to be a place to transact sides, but it needs to be done in a better mechanism and it is done now. Iex is valuable to the marketplace. Veru is unable to the marketplace. Vertu is valuable to the marketplace. There is a role for intermediation in the marketplace. Quite frankly, not every highspeed player is them. Great perspective, thank you. Always a pleasure to have you on. When we return, hankering for a trip to havana . Traveling restrictions have been eased. What that means for you. As of today, some americans will have time traveling to and doing business in cuba. Americans can bring home as much as 100 in cigars and liquor, but many other restrictions remain. We are covering the story. Lets talk about who else can go. You by virtue of your passport have been able to go. Being a brit, its not a problem. The category of people that are allowed to go down there have not changed. What is different are the athletes, humanitarian workers cannot go without speaking approval seeking approval from the state department. You have to prove that youre going down for educational, informational purposes, whatever it is. That it is operating more on an honor system. How is that supposed to work . The threat of being asked difficult questions when you return will probably work to prevent people from taking advantage too much. It is going to be open to interpretation. If you say you are going down to look at a private is this that will be beneficial to cuban people, you can head down. Or visit a family member. If nobody is checking. [inaudible] it depends on congress. These changes in the regulations will probably see a lot more americans go down. On the other end, it will be interesting to see if the cuban authorities can deal with the influx of tourists. We were trying to get a hotel next week. That will be a concern to the authorities. It is not like they will suddenly allow any individual cuban to take money from an american for a private business so it will be interesting to see how they react to the changes. That has been going on already. People that have wanted to go to cuba have been able to do so by getting on a plane in mexico jamaica, having a stamp in your passport. You leave yourself open to a sizable fine. How realistic is that . It depends on the administration. Some in the past have been more strict than that. Over the past few years people have not been worrying about it too much. You will be able to go through Domestic Airlines and they will be offering some flights in the future. How are you getting there . We are going through panama. You can also go through canada mexico. Is there a census . Can you go to other places in the caribbean . If you are a canadian, some of the cheapest trips are to the beaches in cuba. We will be spending a day there, a beautiful part of the island by all accounts. Interested to see the beaches and the tourism industry. The reports of people who have been there recently suggest that the country is still living in the proverbial dark age. That is one of the struggles as a journalist. Most of the reporting is done from havana. We are trying to get out to the eastern parts of the country where there is an undeveloped way of life. It will be interesting to see how quickly that change takes place. We are seeing this all over the world. Parts of countries that are isolated and do not all the capital. Thank you very much. I am interested but i am a canadian. You are a north american. The u. S. Is back of the pack when it comes to Maternity Leave. Stay with us. Welcome back to market makers. I am stephanie ruhle. When it comes to Maternity Leave, the United States is just not delivering. Many new mothers are shocked to find that legally protected paid leave is rare in the u. S. With the u. S. Behind the rest of the world, it is on the cover of the new bloomberg is this week. I am a mother of three. Luckily i have worked at to organizations that have treated new mothers so well. That is not the case across the country. Unless you work for a company that offers it or are in one of three states, paid Maternity Leave does not exist in the u. S. We are only one of two countries that do not offer it. He other is papua new guinea. What is the rationale behind it . Only 12 of workers in the u. S. Even have access to paid family leave whatsoever. When you have two thirds of women with children under six who work, this is a real problem for them. Who foots the bill for it . I understand the rationale, but if i ran a Small Business and i had six employees and there were three who were pregnant, that could put me out of shop. Thats true, and that is part of the pushback, historically for Something Like this. When california passed a bill, there was a huge outcry among businesses. However, studies have shown since then, it is a payroll tax on the employees and not the businesses. They have to pay for it by finding people to take care of their children when they go back . In california, the employees are taxed, out of your paycheck. The businesses are not. They found that 91 of businesses found it works out well for them that way. What country is the best . If you are talking about the most leave in general, sweden offers 16 months to mothers and fathers for every child. If you have three kids are they just unproductive with people between the age of 25 and 45 . That is a problem for women in sweden. On average they take a year off when they have a kid. No matter what, when you are gone for a year, youre sort of behind everyone else. Even though sweden is very into gender equality, women say they know that their careers take a longer time to achieve that men. 16 months is a long time. I love girls, i am one. If you are going to be out of the workforce for 16 months doesnt it make sense that your colleagues in the building would make it further along . Dont cry for me, argentina, sorry. We do not have it at all unless you offer it, and there are problems on both sides. There has to be a middle ground that people are pushing for now. Theyre just has not been movement in washington on this. Where is the middle ground, what is an example of a country that has found the right balance . I think a good one is canada. You said that one up. I did not know the answer. Canada is interesting because they have tweaked their policy over the years. They used to offer six months and now they offer one year. You are not forced to take it, but it is paid through their unemployment insurance. It is something that seems to work out for them. So for the most part you make a lot less money while on Maternity Leave and you would if you stayed on her job, so there is a disincentive. To your point about staying in the work force. You are getting about half of your paycheck, but when the Median Income is 53,000, getting have is better than none. Congratulations, great story. Cover of bloomberg businessweek. You can look at it online and you can buy it on newsstands. Right now we have to go to the newsroom where scarlet fu has some breaking news. This is from bloomberg news. Fxcm is in talks to raise 200 million from jefferies according to people familiar. Shares have not resumed trading, still halted from trading pending an announcement. We have learned according to people familiar, that it will get 200 million in a rescue from jeffries. We know they have suffered significant losses because of the decision to decouple from the euro. They were in discussions with regulators and now bloomberg is learning it is in talks with jeffries for a 200 million rescue. Just for context, fxcm was trading at 17 at the end of last week. This morning in premarket trading, as low as one dollar or nine cents. We will keep 1. 49. We will keep our eyes on this. This is how jeffries roles. You remember they were at the door when i trading was having their problems. That is their jam. It is good to have cash. It is good to be worn buffet nelson calls or bill ackman. That is the point. Hold Something Back until an opportunity like this comes up. Or, the notorious b. I. G. Mo money mo problems. Would you wear this . What is googles vision for glass . Sales are being put on hold. The special relationship ticks on terror. President obama meets with british Prime Minister David Cameron. The Swiss Central Bank just made sure of that, a different davos this year. Welcome to the second hour of market makers. Im stephanie ruhle. Im erik schatzker. The largest u. S. Retail Foreign Exchange brokerage is looking for a bailout. Fxcm is in talks to raise 200 Million Dollars from jeffries according to people with knowledge of the situation. Fxcm was hit hard by the big move the historic moving the swiss franc. The firm says clients owed 201 5 million on their accounts and fxcm may not be able to meet capital requirements. A disappointing Fourth Quarter for Goldman Sachs. Trading revenue fell to the lowest in almost a decade. Earnings in the quarter dropped 7 . In response, goldman is paying employees a small share of revenue. A top official overseeing the troubled launch of obamacare is stepping down. She will be replaced by a former Top Executive at the unitedhealth group. They have crunched the numbers and its official. Venture capitalists invested more than 40 billion in startups last year, the most and the. Com boom in 2000, 60 more than in 2013. Megadeals were huge. Uber had two rounds of financing, each bringing in more than a billion dollars. Now to the fallout out of yesterdays shocker from switzerland. The Central Bank Decision to drop the cap on the swiss franc may put trading houses across the world completely out of business. One of them is the biggest retail forex brokerage in the u. S. , fxcm which is facing insolvency. Swiss citizens are curious. This move could drive the nation into recession. Our International Correspondent hans nichols is in zurich today. What is going on over there . Good afternoon, two main stories driving the conversation. One, what is the banks exposure . We heard Deutsche Bank had a pretty big exposure. The larger question here is what this will do to the economy. [inaudible] all throughout the day you have had warnings [inaudible] im going to interrupt you we cannot hear you well. It sounds like the senomyx of losses from the Swiss Central Bank decision. We will try to pick it up later in the hour. He is in zurich reporting on the fallout from that shocking come historic decision by the Swiss National bank. Something that we are about to get into but we are going to talk about greece first. One week before an election that could determine the future of the eurozone. The series of party is poised for victory in greece. They have demanded a bailout package. If creditors refuse the new government in greece, the euro could drop. Economists however, think that result is unlikely. They see an 80 chance that greece stays with the euro, even if server is a wins. More than half think that they will get some debt relief. The chief Investment Officer economists see an 80 chance that greece stays with the euro. What do you think . I would agree. Why, because in reality it is a lot harder to run a government than it is to criticize the government . Absolutely. It is one thing to give populist rhetoric in order to give an election but its another thing to call the bluff of the eurozone and being aggressive in the negotiations. Also, there are consistent polls in greece that show 75 of the people want to remain in the eurozone. They do not trust their leaders to print a new currency and manage the countrys economy. So why would they let series of . Welcome to politics. The economy has been in recession for six years. Of course, that is no laughing matter. No, they are frustrated. They are looking to get 32 of the vote. The first party will get an extra 50 seats in parliament so they are on the verge of a potential majority in the Greek Parliament which would put more pressure on them. If there is a coalition more pressure to do what . To followup on populist measures. People would give them a stronger mandate. If there is a Coalition Government because they fall short of the coalition, that may give them an elegant way to say, we have to be in coalition with the center party, so we need to be less aggressive with the troika and reach a solution that keeps them in the eurozone. If they win, what is the immediate fallout . I think he will go on a road show of european capitals and will reiterate the mandate that his people have given him which is, debt relief from the official creditors of greece. Breathing room. And a haircut to the debt. Two days ago, the finnish Prime Minister preempted the decision by saying finland had no room to compromise. Finland has a recession and there is a populist party and they feel that we should not be bailing out the southern europeans. Beyond the debt relief he is also looking at increasing the minimum wage, looking to increase benefits, looking to can you increase the minimum wage on Small Businesses in greece that are doing little to no business, barely surviving as is . Not really. Secondly, there is a fiscal gap of 2 billion. The troika once to reduce benefits, they want pension adjustments, vat unification, which would hurt consumers. There is a big gap between troika and the greeks, so there is a potential for a standoff. Greece is not exactly a big exporter, nothing like germany or france or italy, but does the revaluation of the euro since we have seen him the beginning of the year, exacerbated by yesterdays decision out of switzerland help change the view inside greece of the value of the euro to the country . Yes, i think you mean the devaluation of the euro against the dollar. I only chose not to use that because some may argue mario draghi, for example that that is not what they are trying to do. I would say, their number one industry is tourism. If you think about american tourists they love going to italy and greece. It will be much cheaper for them to do so the summer. Cheaper than switzerland. Much cheaper. Switzerland is a problem. The softer euro and Lower Oil Prices is probably a strong benefit to the whole eurozone economy, including greece, and that is one of the few positives on europe at the moment. What will happen to the hedge fund community, to investors . I think there are probably some macro hedge funds that have suffered in the past few days. I do not have any data or anything like that. But i do not think i think there are hedge funds that were short a lot of Swiss Companies for particular reasons. I think the currency move was probably a lucky break for them because we have seen some big drops in swiss ventures and corporate, but its nothing on a big scale for financials. Not a really big event. You are in the business of looking for distressed debt opportunities. Date currency adjustments like the ruble, swiss franc, even the euro, a significant move, extremely important because this can hurt Company Margins and a lot of companies have dollar or euro denominated debt. In russia, 120 billion in eurodenominated debt that these to be revalue this year. We could see some insolvencies. Certainly in the case of switzerland, a very big negative for swiss corporate. You can see that in share prices. You are in the business of running distressed assets. We have talked a lot about the fact that at least in europe there have not been as many distressed opportunities as some predicted two years ago. Where are you finding happy hunting . One is greece. We discussed the greek bank equities were maybe priced to perfection, too much good news. The growth had only just begun. Actually, it began last quarter. Today, greek securities are pricing in a 30 probability of greece exiting the eurozone. It seems very high to me, doubledigit yields on greek government bonds, doubledigit yields if you do not believe the greece will not exit the euro you can make a lot of money. I was bearish all of 2014. You would be down 50 on equities, maybe 30 . Obviously, the tail risk is now more tangible. You need to be thickskinned and be willing to live through that election period. Some people in europe will find him an interesting character. For the last three years distressed investors have talked about all the great opportunities. If one had been investing for the last two years and now they are down 20 to 40 , i cannot imagine Hedge Fund Investors liking it very much. I would say european distressed markets are being relatively underwhelmed in the past several years. Selectively, people have done some Good Investments but it has been difficult. We have had an on and off the session so distressed investing needs restructuring and there has not been that many. It needs an economy moving in the right direction so asset values go up. Its been challenging. That is reflected in returns. Nice to see you. Great to have you on. When we return, have you got your google glass . You better rush out now. What is next for the computerized eyewear. It is friday, your book day. Have a look. This gentleman graduated from rocks very high school in 1951. He is a billionaire, that is all we are being told. We await your thoughts. If you are just joining us, we want to bring you back those headlines of a currency Brokerage House fxcm. The Swiss National bank and unexpected historical move effectively revalue the swiss franc against the euro, removing a cap on the value of the swiss franc. The swiss franc promptly rose 20 against the euro and there has been all kinds of followed since then. There has been all kinds of followed since then, fxcm is just one of them. Scarlet fu has more. We saw fxcm lose almost 90 of its value in the premarket, halted from regular trading, and remains so, but bloomberg reported that they are in discussions with jefferies about getting a 200 million rescue, a cash infusion. Jeffries is owned by leucadia and i have on my screen the intraday trading of leucadia. Higher down by. 4 . That is when the news crossed that we reported that fxcm was in talks with jeffries. That has not been confirmed by the company and we have not heard from them yet. Still halted from trading but this is the latest. Of course, not the only brokerage that has been hit hard by the decision. Other brokerages have seen their shares drop as well, some looking to make acquisitions, saying this would be an opportune time. Thank you for that. Goodbye glass. Google is halting sales of the 1500 gadget and moving the project to a separate unit. The wearable never gain traction with consumers but google is hoping business will be a better target market. Here to talk more about the glass image problem is a man that has no image problem our editor at large cory johnson. I have always thought these were pretty geeky. You know a thing or two about geeky glasses, and how to make them look good. Let me finish. You saw this coming, another image problem joke with the google glass. Exciting idea, a lot of people back in investment. Kleiner perkins, google, Andreessen Horowitz creating a fund together or an Investment Syndicate to fund the company that would do something with google glass. But you are right, as of yet, it has yet to take off. To be clear, google says the project is graduating that its moving from production to a different Business Unit that will do Something Else with it in the future. We shall see. There are some fundamental problems with google glass. We can talk about promise, the ability to gather information and see things around you, get navigation, monitor workflows. It does a lot of neat things like that. The problem for consumer use is you look like a dweeb wearing the glasses and nobody wanted to say that to those people wearing it. Even Sarah Jessica parker can look like a dweeb. Remind us of the word that has been brought into this common use lexicon to describe someone that wears google class glass. First of all, you have to be sure not to mumble because you are. Because it is clear that you are saying glasshole. There was a woman who wore it in public at a restaurant and then wrote about the injustice that she received. You have too much time on your hands and san francisco. Certainly i do. There are some intriguing business uses for this. The notion of wearables, wherever they are worn, is a huge idea because of the power that semiconductors can carry with them. The desire for Companies Like intel to sell chips into things other than vcs. They can take the power from a pentium and put it into something as small as your finger. Grocery stores could put these things on the arms of hackers to monitor their productivity. I have talked to companies that have used things like google glass in companies so that people looking at shells can identify and pick and choose the right stuff. There are intriguing uses but the notion of people sitting in cafes will be wearing glass to enhance their conversations may be a little farfetched. If google succeeds in transforming glass from an unsuccessful Consumer Product to a more successful enterprise product, something that companies use, what would they use it for . It is all of those things were a worker, moment by moment the experience of their job to mike and the enhanced with information. If you think of what is happening on the cutting edge of cars with navigation, Warning Systems that let you know what is in front and behind you at all times, the idea that you can gather all the context instantly and access it is powerful and conceivable given the power of computing in the cloud, given the great volume of information starting to come off the electrical internet of things, sensors. There is a lot more information about to come into the world. Something like glass or a headsup display i have used them when im snowboarding telling me where i am on the mountain, how fast im going, perhaps where my friends are on the mountain so i can be aware of whats going on that is really cool stuff but from the enterprise, having more knowledgeable workers, or taking worker that dont know much and giving them knowledge instantly starts to change the dynamic of who you hire in what they do. It changes a few things but the creation of data alone is not enough. You have to design analytical tools to turn the data into something valuable. That is ultimately where a lot of these things will have great success. Higher asps because they will have more leverage that they can give to an organization. I have been covering technology for decades now. I continue to be amazed at the little niches that are created to fix little problems and those businesses continue to grow. Certainly, the notion of something that will make people more aware is something that will be part of that. Glass may have been at the bleeding edge, not the cutting edge. Thank you so much for joining us. Have a great weekend. Im guessing there will be lots of snowboarding. With his google glass and that selfie stick ic him with constantly. I want to hit him with it. President Obama Meeting with Prime Minister David Cameron meeting in the wake of those horrific european attacks. Coming up, they are talking about terrorism at the white house today. President Obama Meeting with british Prime Minister David Cameron. It is friday, so it is time to play the yearbook game. He is a billionaire, graduated from Roxbury Middle School in boston in 1951. Tweet us your answer. Welcome back to market makers. Im stephanie ruhle. European markets just closed. Scarlet fu has a wrapup from the newsroom. It was an up day with the exception of the swiss market. Take a look at the stoxx 600 which ended with gains of 1. 1 . The six market index continued its declines of 6 after dropping 9 yesterday. Or the week it has lost 13 . The dax moving higher as well. The rates in the fx market yesterday reacted to the snb decision by pricing in a large qe from the European Central bank. You are seeing that with continued weakness in the euro. Now at 1. 15. The swiss franc giving back a little bit of the gains from yesterdays announcement but the overall direction is still for the swiss franc to be a safe haven for investors. Fxcm the biggest Foreign Exchange retail brokerage, continues to be halted from trading. They have not begun trading because of pending news. What we have heard is that it is in discussions with jefferies to get a 200 million cash infusion , a rescue basically. They send clients owed 225 million because of the announcement from the snb that left it in the lurch. Now it is in discussions with another bank about getting money. We know the jefferies does not trade on its own because it is owned by leucadia. Those shares are moving higher by. 4 . Nothing confirmed yet. This is just the latest report according to people familiar with the matter that jefferies is in discussions to give a 200 million rescue. Thank you. While european markets are closing, in washington, David Cameron is meeting with president obama. The terrorist attack in paris you would imagine, and this is the way it is, has to top their agenda. They will be holding a joint News Conference. White house correspondent Phil Mattingly is in washington. Lets start with you. These leaders will be taking questions from reporters. The focus will be on terrorism, i suspect. What angle do you think the press will drive most aggressively here . This will be the first Public Comments the president has made since the killings in paris. It will be interesting to get his perspective on his decision not to attend that 3 millionperson march in paris but also his general outlook on counterterrorism and National Security Going Forward. As you mentioned, a big topic between he and the Prime Minister and there is a lot of concern in the u. S. That the loan wall style of attack that we saw in paris not connected to any one group, is a major concern here. This is one of the first time we have had a secure a chance to talk to the president in this new year. The state of the union is on tuesday so im sure we would get a lot of the mystic policy as well. Another thing in addition to terrorism has to be the issue of cyber terrorism, not just terrorism itself. The president has been speaking about this on the way to the state of the union. What is he likely to say their . They have this entire press conference on cyber security. They have come to an agreement where they will hold a joint new york and london commercial Bank Financial institutions in both places, and both governments will have basically a cyber wargames where they will have a demonstration of what a cataclysmic cyber attack would belook like. This is something that they have been working on for couple of months now. They want to push forward the fact that both are still generally on repaired and generally underfunded to group to deal with Something Like this. Sony really should people up, but in the white house, it was the jpmorgan hack that got the National Security staff really concerned, specifically about what it can do to financial markets. That it is one of their focuses today. You mentioned domestic politics. Im curious what you think some of the questions will be put to the president in advance of the state of the union, what is the focus of your colleagues on that . Everyone is trying to figure out they have put on these three areas of potential compromise over and over again in the midterm elections. Corporate tax reform, spending on infrastructure and the possibility of moving in International Trade agreement. Everyone gets that. Those that have been there for the past x years. What are you, the president willing to put on the table in negotiations and make those things move . Compromise requires both sides giving him something and the president has not outline that yet. You also have to look at the funding of the Homeland Security department. House republicans moving forward with riders to cut back on the president s action related to immigration. Less chance on how the president will deal with that, depending on what the senate agrees on. Is that when people are focused on . I think they are focused on 2016 and the president obama. In the political world right now, the inevitable shift, which will happen every day between now and election day, more and more people will be focusing on that race and fewer focusing on washington, d. C. That has happened in a dramatic way in the last couple of weeks because of the way that jim was has come on strong, the possibility that mitt romney make it back in. He has a big speech tonight. Those two guys really have got us focused on that stuff. It is always important when the president has a press conference, and the state of the union is important, but right now, in the political world, a lot more heat on the republican side. Romney is making noises that he will run out he has not declared. No one has declared currently. He has been pretty upfront saying he is seriously considering running. Except when you interviewed him a few months ago when he said he was not. He has the right to change his mind. Stephanie knows all about changing her mind. We call her the old switcheroo. Thank you for that. Just a nickname i was looking for. Jeb bush i do not want to be the old or the ole. We will call you the young, hot, scintillating switcheroo. If you are out next week, please come in. We are trying to have a serious political conversation. We can talk about how beautiful you are. Lets do that for the rest of the segment. Mitt romney. Jeb bush showing strength thomas clearly changed his oculus. You want to be president. You do not run twice if you do not want to be president. I think he thought there would be a melee on the republican side. He might be able to get in very late. When bush came out so strong with so many donors and tablet contrarians, it made romney say this screws up my plan for how i could come in as a white knight savior later on. I have to get in on the game. His family wants him to run. Tag romney, his oldest and most political son, his wife who was against this, now says that he needs to run. Whether it is an illusion that there is broad support or not we spoke to his former Campaign Chairman and we asked him whether he would support the guy that he was the cochairman for in 2012. I am not silent yet but im not happy with the way that he has chosen to reenter president ial politics. I think his friends need to be honest about him about that. He would be a great president , but there is not a lot of good president or someone losing the election and then coming back for years later and becoming the nominee. Thomas dooley is the best example in our party. Did not work well. I think governor romney had two increasingly good years after losing the presidency. Now he has had one pretty bad week. That is a striking thing to hear. Not just a former campaign cochair, but a arch establishmentarian. That is what republicans have been saying behind closed weeks closeddoor the past few weeks. Almost like he is administering tough love to his friend, saying dont do this. If he gets behind anybody who would it be . Jeb bush. Vin is a great weathervane for the establishment, and they love jeb. As dust off any. There was a point in my life when i like Chris Christie too. I certainly did not love him after i saw his cowboy hug. I did not like the hug and that missed highfive. If you love the cowboys, buy a ticket and get a hot dog. John heilemann and Phil Mattingly. A must watch News Conference today. You can see the president s state of the union here on tuesday the 20th, coverage beginning at 8 00 p. M. Erik and i are flying out two doubles, switzerland this week and for the World Economic forum. Everyone who is anyone in the financial world will be there, including surveillance actor tam surveillance anchor tom keene. Are you ready to pay all of more money . For years i have done nothing in switzerland because everything is outrageously expensive. I tell people this bowtie it is about a hundred 50 here, but now it is about 200 there in zurich. The reality is this will be the most interesting. Those since january 2009 if not better. Because of the crisis we are in and what we see from the Swiss National bank. The euro printing a 1. 14 moments ago. Last year, the overarching theme of davos was income inequality. You think the swiss move will have a bigger impact . The Swiss National bank will be there. Can you imagine how much you there will be there heat there will be . There is a wonderful article today about financial disruption and all of that is great, but the real story is what we witnessed in the last 48 hours. By the end of the week, the focus may shift to Something Else, thats when possible but coming in on wednesday, as everyone arrives, thursday evening, that is what they will be talking about. You have euroswiss at. 98 right now, and if that does not change, there will be no other topic. I guarantee if we get a 1. 13 eur o, everyone there will be glued to their cell phone. Larry think of blackrock will be there. It is possible the former president of the Swiss National bank will be there as well. Can you imagine the conversation taking place on the sidelines . While they are drinking 50 glasses of scotch . That is the social part but away from that is a desperation like we saw before the lehman collapse in 2009. Without making a joke about it, we go in ready to completely rip up the script big on they somewhat markets do. I have never heard you say that. I am very excited to go with you and you, and im thrilled that you will be joining us bloomberg coverage all week long at the World Economic forum. You dont want to miss it. Opec secretarygeneral carlyles David Rubenstein steve schwarzman, and harvard resident drew faust. And a whole lot more. Stay with us. You are watching bloomberg television. Welcome back to market makers. As we look at the week we just had, asked income trading across the board is down. At the beginning of the show we were here talking about are we going to see a follow, all were going to see these banks and other businesses . It is too premature to say that but already we are breaking the Deutsche Bank has let go of their credit sales force in chicago and san francisco. Six people. That is basically your entire sales force in those regions. If you think about it, there are a lot of customers out there but banks have to make a shift in be nimble. When you have your fixed income businesses, especially credit which is an expensive business to be in down for all of these quarters, you have to do something about it. What do guys that are left go let go to do . They try to go places like lazard and jefferies. If youre going to go to a boutique firm, you have to be a rainmaker. You cannot be sitting there saying i have a new issue for you. The implication that deutsche is not getting enough business they will take those same clients and cover them out of new york. Banks will have to shift the way they do business because there is simply not enough revenue anymore. Times they are a changing. We are playing the yearbook game. We are looking at a billionaire that graduated from Roxbury Memorial High School in boston in 1951. We will give you the answer on the other side of the commercial break. In the meantime, make your guess. Tweet us. Its been so long since we play the yearbook game, but here he is. A billionaire who graduated from Roxbury Memorial High School in boston, the class of i 251. This one really stumped us. 1951, graduated high school, that is a pretty old guy. He is, in fact, a pretty old guy. Lets show you the winner. The answer is Sheldon Adelson. Would you believe it . I would not have guessed Sheldon Adelson for all the tea in china. Who guessed it . Preisendanz. I hope you are with us next week. We may not be playing the yearbook game, but we will be playing the game, can you find is in davos . We will be there all day for the Martin Luther king holiday. We will be breaking out our ski boots and parka is in switzerland. An amazing lineup. You will see us live, as well as tom keene. If you get up early in the morning, you can see Francine Lacqua and guy johnson also. 20 minutes from now, president obama and Prime Minister David Cameron will meet and you will see live coverage here on bloomberg. John heilemann will be back as well as Phil Mattingly. Have a great weekend. In the meantime, 56 minutes past the hour, bloomberg is going on the market. A volatile into a volatile week. The dow ending a fiveday losing streak. The treasury also giving back some of their gains. The 10 year dipped below 1. 7 . The matter what happens with oil, the dollar strengthens. Eurodollar getting to 1. 14. Joining me is jerod woodward senior derivative partner. I was looking at a couple of notes and people noted that options dont expire. So whatever happens today in trading is meaningless. You can either have an effect where options expiration can be healed to the fire or it can be a dampening move. Either you have a really big or small move, depending on whats happening in the underlying indexes. Given that we see gains of. 4 in the s p 500, would you take solace from this, that we have ended the decline, or is volatility still rising . For the short term, this move may be over, but the outlook for the rest of the year, we have been calling for higher volatility in the market. I think that outlook has borne some truth so far. We have a lot of confusing data. You mentioned the retail number which looked horrible, but you were digging through it to suggest it was not so bad after all. It has been confusing to a lot of investors. Retail sales were a big disappointment but i noticed, if you look at the revisions that happened in the different categories in sales, the areas that see the smallest revisions in subsequent releases were actually positive. I think it is hard to filter out all the noise, but underneath there are some positive signs if you know where to look. We know there are a lot of events coming up in the next couple of days. You have the ecb with their policy meeting and decision on thursday. On the 25th we have degree collections. Then on the 28th, the fomc meeting. Ahead of that, you have a trade on the s p 500 etf. The trade is to potentially by buy put options as part of the spread. We are buying the 1. 99 put options, selling the 1. 94 puts. There are two things that people should keep in mind when they are thinking about hedging portfolios. The biggest one of them is to use spreads to reduce risk and to be trading tactically, not just systematically, and always on mode. Especially given what we saw and heard this week. Tags for joining us this morning. We are back on the markets in a couple of minutes. Money clip is next. Welcome to money clip. I am olivia sterns. President obama and british Prime Minister David Cameron are holding a joint News Conference at the white house. Trade, cyber security, terrorism are going to be on the agenda. Schedules are time is 12 20 eastern time. We will have live coverage. In the meantime, in bank, treading revenue at coleman sacks dropped to the lowest level since 2005. Goldman sachs