Transcripts For BLOOMBERG Bloomberg Surveillance 20150108

[church bells] [church bells] [church bells] the bells go back as late as 1681 as the bells toll across paris, france. Hans nichols gives us perspective this morning from a different part of paris. This is an Ongoing Investigation with two men at large the 18yearold turned himself in over night. Where are we right now in finding these two killers . [applause] good morning, there are local reports im outside the offices of charliehebdo. In the northeast of france there are reports that the two remaining outstanding suspects the two brothers that they have been spotted at a gas station in the northeast of france close to the belgian border. Overnight, theyre pictures were released of there has been a nationwide manhunt and this is still very much a search that is ongoing. At the same time, there is a search on a cultural level for answers that perhaps that there might not be easy solutions for this. How does france heal and out as france integrate its population and how do they move on from this . That is the conversation that is occurring with alarming velocity in paris. As i look at our coverage this morning and the ramifications within europe and across the United States and indeed around the world, ive got to go back to the idea that one of these men at large has a record that goes back 10 years including three years roughly of incarceration. They knew who these guys were, didnt they . [applause] they knew the younger one. In 2005, he was arrested for trying to funnel jihadists from france to iraq. He did time in present and was let out and authorities apparently were monitoring him. He was under surveillance but apparently not close enough. Interesting to note that in 2005, the time of his initial arrest, his lawyer described him as a young by drift nondevout muslim who delivered pizza and smoked hashish, not someone who would be interested in waging jihad. Something happened between then and now. The questions that authorities are asking is how did these two french born brothers become radicalized . How did they become militarized . You look at the clip of what they accomplished a few meters away from me, a remarkable military efficiency, the spread with which the bullets were delivered. These may have been men that have formal training but the question is where. You also spoke of the broader question across france of what to do next. What have we heard from the head of the National Front . She called for a National Referendum to reintroduce the death penalty. France is at the beginning of what will be a long and potentially painful debate of how they respond to both homegrown terrorism and assimilation with their Muslim Population and what they do to move on from that and the importance of respecting and keeping free speech alive. There is quite a bit of cheering going on behind me. Afc is reporting that the satirical magazine will put out an issue next week. Stay with us to give us perspective josh wright joins us from bloomberg economics. We will talk to him about the jobs report and the market moves and the euro breaking through 18 but all of that pushed aside by this international relations. Richard haas is the president of the council on Foreign Relations and has blown up is scheduled to be with us this morning and honor to have you here. As you spoke to your team at the council on Foreign Relations, youre an initial thoughts as we grapple with day two of this event . This is a sign of the new reality. It is not a 9 11 scale type of thing but what we saw here and the Boston Marathon and in australia its retail terrorism. Its not isis coming across the borders. It is inspiration across the internet. Its for all societies, not just france. You just described this young man on anchored. For all societies, how do we stay true to who we are and open democratic societies but at the same time take the necessary steps to be vigilant. . There are many comments across all media and people are thinking about this. Noah feldman is a law professor at harvard. He compares isis with al qaeda and their brand of terrorism. Isis is different from al qaeda but they played to the same sympathies among Muslim Populations around the world . Yes, you think of a group of ice is not so much as a group or organization which has central muslim which has a centralized commandandcontrol but it inspires and radicalize us. There was a message the other day and one of their videos saying dont come to syria, dont come to iraq, stay at home. Thats where you can do more good and thats why it is worrisome. We cannot really describe what happened yesterday as a wakeup call for france. This comes at the tail end of a decades long question of how best to integrate their sizable Muslim Population from north africa. What do they need to do . Theyve been having a National Conversation i long time, what has changed . It goes back to algeria and it gets at the psychological part of french society. In france you become a frenchman and the people who would define themselves and terms of not a french man or woman is politically and psychologically a challenge to the ideal of the modern nation and society. There is much more that france and europe can do to integrate in terms of society but there is also limits. Some of it will come down to community, self policing delegitimizing certain behavior. You can come to america and retain to what you brought with you. You can come to france as long as you do something a french way, will that change . Yes but coming up with the goldilocks compromise, what is enough individualism and holding onto your traditions but sufficient integration and coming up with the medium will be difficult. You will not come up with something that will work with everybody. Beyond france, its a dangerous moment for europe because you have advanced radicalization while you got a White Working Class mainly that feels disenfranchised and uncoupled with the economy running slowly. What should the response of the leadership be . Youve already got rightwing parties that are growing everywhere, not just in france but germany and so forth. They will connect to the latest story about European Economic growth. You got to get growth going and have these economies get going. And you got to find ways to integrate. Growth is one of the dimensions. Its necessary but not sufficient. How do we do that is given ottawa, sydney and paris . Had we not limit Civil Liberties . How do we not limit Civil Liberties . The word dilemma is being bandied about. Its usually overused but this is a dilemma. There is no perfect answer. In this country we have the debate about nsa collecting data. Whats the balance between collecting security and individual liberties . What rights should individuals have . There is no perfect answer. This is the debate we are going to have to have an the debate the European Society will have to have heard where do you draw the lines . Hans nichols, stay with us and he will stay with us through bloomberg surveillance this morning. We have much to talk about on the American Economy and a good job economy but we will continue our Coverage Later with willis sparks from the Eurasia Group and we will say to him about these real intent of the risks. We continue our covers from paris and from the World Headquarters in new york city this is bloomberg surveillance. Good morning, everyone. With me is scarlet fu and Brendan Greeley but hans nichols is in paris. Away from paris, we come upon tomorrows jobs report. We needed just right. We need josh wright. What did we learn from the minutes yesterday from the fed . We learn the fed is going to stick with the plan that janet yellen laid out in the press conference in december. She said they are not going to raise rates until april at the earliest. A lot of those messages were reinforced. Can they do that or our markets tell them what to do . The fed is still reacting to the taper tantrum of 2013. Everything about this is designed to be methodical. The markets are not methodical but they are trying to get them to be. Please, you are killing me. The events are overtaking the fed gas prices among them. Oil falling is good for the consumers but below 50, it starts to signal something terrible for the economy. The fed sees the risk as balance between the doubt between the downside. They are hedging their bets. This will have an effect on the American Economy eventually. Its still an american domestic and driven consumption. I dont mean to interrupt but the only place that does more on the other hand that the council on Foreign Relations is the Federal Reserve. When tom says i dont mean to interrupt, it means i am going to interrupt. With all due respect i want to talk about the minutes there was a hint that they wanted to offer more qualitative guidance. How is it that seven years on this conversation on what forward got it should mean that we still dont know what it should be . Its change of because the fed has to respond to the current conditions. They talked about how they need to be reasonably confident that inflation will get back to where they want, 2 . How do we not know how to do Forward Guidance . How do we still not know how this should work in principle . One of the major moves is to be more transparent in providing greater clarity. What the fed has learned is its not that easy to be transparent. The reality is that monitoring policy lags and the economy changes and they cannot paint themselves into a corner. The economy grew at a 5 in the Third Quarter and there may be a theory that the u. S. Economy is overheated. There is a potential for that to happen. This is the fastest growth we have seen since 2003. On a 12 month average basis this is the passive job growth we have seen since 2006. This is your book. We are here. We are but you almost have to feel for the fed. They only had it if they only had a domestic purview but they would put on the brakes. They see how slowly its growing but they say we cannot afford these rates. Janet yellen is americas cheap development economist. We have a fed meeting coming up and we got to get mario draghi first. Is the fed reacting off of him but also these events in paris of the last two days . Also much paris but the oil prices. Stanley fischer is the international fed chief and he is looking at these things and the fed is trying to balance what josh is talking about with the reality that we are only 1 5 of the global economy. Stanley fischer said we need to be aware of the rest of the world economies. They are concerned about the policy actions abroad. While the major risks was whether or not Foreign Policymakers would deliver. Richard haass comes in and says the rest of the world you just like the show because you get to interrupt. This is about a larger responsibility for america. Excuse me for interrupting, we have a huge responsibility for the rest of the world that we are not only operating as a domestic economy and getting that right, the calculations have become more complex. Raise your hand like a fiveyearold coming up in the next hour, we will continue our conversation on investment in finance. Lizzy saunders will group will join us on this. Dow futures are up 152, this is bloomberg surveillance. Good morning, bloomberg surveillance. Hans nichols is in paris and we will go to him in a minute. We have a number of thoughts over the last 36 hours, many morning must reads mine is from the new york times. Brandon, i thought you were great on this yesterday, the backandforth of reducing to these kind of people . It truly is a vulgar magazine. I looked at the caricatures and they have been caricatured in ways we cannot talk about on air but it has been the comedians, the journalists on the edge who we have to defend. They are on the edge of saying deeply offensive things to everyone that we may not agree with. Those are the ones we have to defend. Richard haas, it you got wide experience on the council of Foreign Relations and network with other governments. This is the raging battle of the moment do we adapt to these people or is at full steam ahead with the risks involved . Someone say you have to it tapped but you dont have to we have to adapt but not go out of your way to offend but free speech is just that its free speech and people will say you cannot pull back. Even if you say we will not do stuff like this, where you draw the line . You cannot get into the game of self censoring. Do your esteemed editors a veto an article . In the back of peoples minds, its not a degree of selfcensorship. I was in the back of a room and richard hass had a get up on stage with qaddafi of libya. You could feel it in the room and outside with Massive Police coverage of a park avenue. That was a difficult moment with a lot of angry people. We had it with him and on a dinner job and so forth. When you give that we had it with him and mahmoud emma done a job mahmoud ahmadinejad. We have an update the french sitting sus shooting suspect is headed back to paris. It would appear that they have been apprehended for the shooting suspects are said to be headed back to paris. The youngest one already turned himself in late last night. We will be back on bloomberg surveillance. Good morning, everyone, we continue our coverage on everything going on in france but there are other topics this morning. Dangerously cold air is hitting much of the United States with wind chills driving single digit temperatures even lower. Across the midwest, the wind chill sent the temperatures to 20 degrees. Almost 500 thousand city schoolchildren and chicago state home. Many schools in chicago and around the nation are expected to stay closed today. Sam suns operating profit is topping analyst estimates. It is relying on a 40yearold memory chip unit for memory growth. Demand for semiconductors and a falling yuan boosted their fourthquarter results for the cost of a Television Ad for this your super bowl is hitting a new record selling for up to 4. 5 million highlighting the continued appeal of tvs mostwatched event. An executive at mdc says 95 of the spots for the game are already spoken for. Nbc. Im not over the fact that the clydesdale horses are gone. You are the grumpy old guy who watches the super bowl for the game. Max mcgee in the end zone, super bowl one. They will never make a Super Bowl Ad like the pets. Com ads. U. S. Futures right now are showing some robusta gains of 8 10 of 1 . There was a five day to klein at the end of last year into early this year which is the longest losing streak for the s p 500. There was a five day loss at the end of the year. There were factors like the European Central bank. The s p 500 index lost in the decliners were mainly energyrelated companies but there were some gainers. Healthcare stocks posted gains during that five day decline. They rose 4 10 of 1 and Consumer Staples rose as well. I was thunderstruck at the wall disney chart and how it is it has not gone down. You talk about disney world. Richard hoss is with us. H aass. This speaks to a diversified economy. If you are driving and you want to take your family to disney world, suddenly it is cheaper to do so. They said it was a good sign of a strong economy. One group that did really well was reits, Real Estate Investment trusts. If you look at many of them they all gained at least 4 . Rbc Capital Markets said these reits are linked to the movement and the tenure and the steadily improving economy and growth. We switched to things working out pretty well. Alan greenspan was adamant that a good stock market of the foundation of confidence, do you agree . Things look good at home. The interesting thing about the reits a lot of them are commercial instead of residential. That is a testament to the u. S. Consumer and is about spending being stimulated by the lower oil prices. Rbc says that Boston Properties is the top pick for the year and they were a big gainer since december 29. People were positioning themselves or what they felt would be some of the advancers in 2015 even with global turmoil. As analysts come on the show, we have been noticing that nobodys algorithms work anymore. Ever since the drop in oil that did not happen in the way it predicted or understood, its an interesting time to be an economist. Its a great time to be an economist. Where in transition. It could be National Politics or the International Economy so those are playing out. The reits look like a fixed income because they are dividendbased stocks. Many people thought rates would go higher last where at is not a good time to buy reits. Part of our optimism is we look at the tragedy in paris, lets go to scarlets sweater. This is a tory burch sweater. You know your products. This is a tory burch sweater and the husbands company just blew up . They do a business and it did not work and they cleared it out. Creative destruction. Thats the fundamental difference and america. I am still struggling with the line that its fun to be an economist. You talk to World Leaders all over, are they jealous . When president obama last went overseas it had been rough for him with a lot of unhappiness with Foreign Policy and suddenly, he can have swagger because of the American Economy. No one else is competing. Even all the spying and surveillance seems to be paying off because we are helping with this investigation in france. If you had gone to berlin one year ago, you wouldve had your ear bent on surveillance. Richard haass, has a bold prediction. Times have changed with these tragedies. Hans nichols is on the scene in paris and we will go to him at the top of the hour. The terror attack highlights the growing tensions toward muslims in europe. We will discuss the growth in the global Muslim Population after the break and whether america does it better. This is bloomberg surveillance. Good morning, everyone. Its garlic through has scarlet fu has a something important the tragedy in paris follows killings in ottawa in sydney and one question people are asking to what extent are the changing democratics increasing tension between western cities and their muslim communities. We focused on the Muslim Population in todays best chart. And 2010 23. 4 percent of the global population was muslim and its projected to increase to 26. 4 by 2030. The projection is based on current popular population trends. It is a huge leap from 20 in 1990. We have Richard Haass president of the council on Foreign Relations. The u. S. Population is currently 8 10 of 1 and is projected to increase by 2030. Does america integrate immigrants better than western europe . What is different about how we do it . The short answer is we do because immigration is such a fundamental part of america. We are a nation of immigrants. That is the dynamic that is made the United States. We also used to be a melting pot. I prefer mixing pot. We dont have america onesizefitsall. We embrace the fact that people will keep their distinctive traditions and religions and cultural traditions or whatever. Its easier to come here and you dont feel the same pressure to assimilate in the same way. United states is a more accommodating country. And france, italy used to the rise of conservative islam. There is that and there is tremendous opportunity. You can still make it in america. Look look at the sick significance of american success. We are still the most open country in the world. For all of our problems with immigration reform, we are still letting and more than 3 billion people per year into this society from overseas. Can we quantify how much immigrants contribute to the economy . They contribute tremendously. We have business entrepreneurs and the spill over a of having the background of so many immigrants. It could be you or your predecessors and that affects our thinking about who we are. We are giving new perspectives today on the reaction to what we observed in paris yesterday. Its a very thoughtful and emotional essay on the american distinction. You talked about the way you become integrated in france as you become french and its hard for the french to change that because that is a long secular tradition they have. You cannot drop that overnight. Its also something you wont drop overnight. You see these battles of the wearing of headscarves and the teaching of the french language which is essential. We have been much more open and more accommodating of the differences. This is a very sensitive question was the undertone of what we have observed with these three events in what was observed in france with fascism . When someone talks about fascism, does that filter into what we are observing now . The danger in these societies is how you react enough but not too much. You will see it in some of the debate in france, germany, and britain. You have to be careful that reactions to the things we have does not paint everybody. You cannot become hard antiimmigrant aura. Certain kinds of National Security. Do you have confidence that the leadership in place now in various nations can adapt to what we saw yesterday . I think its a fair question. For europe, it is dangerous. Its against the backdrop of no economic growth, we are beginning to see the rise of far right parties. I think this is important. One way to look at the far right parties and the word i have been using is entrepreneurial parties. We cannot just look at them as extremists. They are tapping into something that is very real that had not been picked up on by the major parties. Its the lack of upward mobility. Its the diminishing economic prospects. Growth does not cure everything but its an economic lubricant. There was also the American Dream and a sense of upward mobility. Its tough when you have a 1 annual gdp. We have wonderful photos sent in from france. Yesterday was shock and horror around europe her there was no outpouring of support. This is in lyons, france gathered to pay respects to the people lost yesterday. In republic square in harris around 15,000 people gathered to hold upje suis charlie signs. There were people gathered all over but also in front of the Brandenburg Gate in berlin. Thats an important photo. You saw it all over the web and at these protests, these signs that read je suis charlie which means i am charlie. This is the number one photo from trafalgar square. They are holding up pens to show the power of the cartoonists. This is in london where David Cameron and Angela Merkel were discussing the future of immigration and the european union. It seems to hearken back to 1968. Its another world in paris from the tensions of 1968, this is completely different. This is the new fault line insert in European Society. Great photos. We will take a look at this in the next block, we are talking about the rise of populist parties on the right all over europe. Its almost every country you can mention and we will take a look at that next. This is bloomberg surveillance. Good morning, everyone. There is green on the screen but we are focused on international relations. Willis sparks will join us from Eurasia Group with their topics this year and front and center of the risks facing the republic of france this morning. A flurry of price cuts investors may wonder whether the oil selloff has gone too far. It is Holding Gains after rising more than 1 yesterday. West texas intermediateary is selling slightly higher. There are no clear signs that oils freefall will end any time soon. Price cuts and promotion is paying off 14 mobile and signed up twice as many new customers in 2014. It exceeded its own forecast for subscriber growth. T mobile added a four point nine net u. S. Users in 2014. Cadillac is slashing prices on its midsize sedan because sales of the new design have been sluggish. Prices have been reduced by 2000 dollars. It made 2200 worth of option standard on its luxury models. Those are your top headlines rightwing populists around europe are seizing their moment after the attacks in paris. The leader of the Freedom Party in the netherlands asked his own Prime Minister when will western government leaders get the message that it is war. That was the same word that the head of the National Front in paris used. She wrote on twitter this morning what will this do for those parties . The unfortunate reality is it will help these parties. When people are afraid, they retreat into those kind of nationalistic appeals. We have to be careful and they have to be careful it does not become selffulfilling. You use words like war, you start overreacting and having collective punishment or treatment and then a become selffulfilling because you simply increase the alienation and the lack of integration in the society so they are playing with fire. If you can bring up that map, this is something that is happening all over europe. If you look at the european parliamentary elections, they can tell you a lot about what is happening in europe. You have these populist movements everywhere. Its tempting to think of them as Fringe Groups but it is legitimate democratic expression. You look at groups like this and they have a national tens. These groups are now in double figures and they could potentially become governing coalitions. We dont remember the history that leads us to this moment. Simon shamus is one of the best chroniclers of the french revolution this kind of caricature has a rich tradition in europe. Which is not reassuring because there was a friction between protestants and catholicism in the 30 year war. You were in strassburg which was on the border of france and germany and has been german or french about 14 times. Ever since the 30 years war. There is a protestant history there and they themselves have struggled over the centuries to integrate with french society. It is a highly centralized state. It speaks to the large Unemployment Rate and the different polarization in france. Just north of that border in germany is the one place where the germans cook really well. These trends are european wide and they cross borders. The politics have shifted. It used to be the Leftwing Party is where the beneficiaries of hard times were because they came up with a blueprint of reform and critique present systems. These days, the rightwing parties arent benefiting, what changed . So much of the european establishment was left behind and we are now seeing the reaction. You see the same thing in our country as far as polarization. In difficult economic times, we see a lack of real wage increases and much more energy on the left in the Democratic Party and on the right. Why is our tea party different from the party in france, the National Front . There is some overlap but there is some significant distinctions. When economies dont seem to be working and when institutions are not seen as being responsive, you get a growing movement to the ends of the political parties. You dont have the growth. You have to have a nominal gdp. Youve also got to have the National Conversation about how to allocate that growth. Into the society. Do Rightwing Party is put forth a credible economic agenda . Thats a loaded question. Its loaded question thursday. We face a different set of issues. The kind of immigrants that are in our country are totally different in terms of cultural economic challenges and what they bring as a society. The agendas of the rightwing parties are not sophisticated on economics. It is populist. If we did not have these issues things would be fine. It is really oldfashioned nationalism. Its not serious and would not work. This is never been picked up by the main parties so they are left with this. Thank you so much, gentle man. Gentleman. How about a forex report . It is really interesting i am not going to link the tragedy of paris to the euro. Nevertheless, the euro is giving way. It has never been weaker. Would also have the ruble. We will be back on bloomberg surveillance. This is bloomberg surveillance. Two suspected terrorists are at large one is in custody as france mourns. Should you look for further stock market gains . Good morning, everyone. This is bloomberg surveillance. Im tom keene. Joining me, scarlet fu and Brendan Greeley. One of the suspects is in custody in france and the other two have been spotted. The men have been seen in northern france. They are armed and dangerous. The gunmen killed 12 people at the offices of the satirical magazine Charlie Hebdo. Today, it is the entire republic that was tacked. Attacked. It is the ideal of peace and justice that france carries on everywhere on the international scene. It is a day of mourning in france. Throughout the country last night, people filled city squares and prizes to honor the deceased. Equity markets are up around the world. Minutes from the Federal Reserve are easing concerns that Interest Rates may be raised prematurely. Futures indicate u. S. Stocks will be higher at the open. Oil may have found a bid. West texas intermediate is trading for under 49 per barrel. Brent crude is selling at 51 per barrel. There are no clear signs that the free fall will end. It has been called the coldest weather in the United States. A blast of arctic air has sent temperatures plunging in the midwest, south, and on the east coast. The windchill factor in the morning meeting was off the charts. It is cold out there, as far south as alabama. Millions of school kids have an unscheduled vacation or they will be going to bloomberg surveillance. The bank of england maintains. No real news there. The headline is the currency market. Eurodollar, 1. 17. Brendan greeley and i can almost afford harrys. [laughter] we are getting there. We begin our coverage. We thank all of you for our coverage comments on our coverage yesterday. It has been a tragic 24 hours. Liz ann sonderss chief investment strategist at Charles Schwab. Willis you took your masters at po. Tell us of your time in paris and how this paris is different from what you knew. Knew. I lived in a neighborhood it was a north african neighborhood. I dont know how purses changed very much. Paris has changed very much. France has long had the longest Muslim Population. A lot of it is related to algeria and the civil war and the immigration out. It is a slightly older story in france than elsewhere in the world europe. Is there a difference in the polarization in the community of paris the new york or San Francisco than new york or San Francisco . It feels more like an enclave in those parts of paris. I do think the difference is that it does feel like an enclave in those parts of paris. They are less the part of french society. I want to bring up some numbers. Right now, in the first round elections Marine Le Pen would win in the elections. Hollande has the Lowest Popularity ratings since world war ii. It is a very weak government right now. When you immigrate to france, you have to become french. What does that mean . You have to assimilate to a culture that is completely secular. You mentioned the headscarf controversy. America is continually absorbing other cultures and those become part of the larger american culture. We see that to some extent in france, but not like you do in this country. Immigration is the identity of our country. Liz ann sonders of Charles Schwab with us. You have been a leader of the optimism of america, what we do better. Do our institutions have to adjust to the slowdown in europe . We talk about being a very open society but to some degree, we have a very closed economy. That is not to say that is what is happening in the rest of the world does not affect us, it just affects us less. Janet yellen does not have to adjust to public deflation in europe . 40 of core inflation in the United States is housing related. The fed also plays its attention to headline inflation. Can i mentioned that the owners equivalent rent is centered on the island of manhattan . [laughter] i live on a different island. You are talking about consumption in the American Economy. So many economies are trying to adapt to consumption. The germans. China. We like to buy stuff. It is not always our gift but right now it is. Lets go to paris to hans nichols. The headlines are confusing. What have you learned . In the last hour, we have greater clarity on the mosque attack outside of le mans. We dont know if it was in retaliation. We know that for bang grenades four grenades were thrown into the courtyard. There was an incident in the south of paris this morning. Two Police Officers people were shot, one Police Officer she has passed away. We dont know if that was related to the incident yesterday inside the satirical magazine and outside the satirical magazine. Two individuals were cited in northern france sighted in northern france resembling the two brothers. That is where the focus is right now. Tell us about the newspapers. There is a remarkable degree of solidarity among the french press. It is a little rainy out here. There is very much a sense all throughout paris, you see signs in nearly every shot. Shop. Je suis charlie. I am charlie. The velocity which wtih this has turned political is incredible with this has turned political is incredible. We will bring you all of that detail, including the effect on the economy and the markets right here on bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. There is terrific green on the screen. Oil recovers. I would note europe is down. My morning mustread. In the atlantic. He makes a link between what we have seen in paris and north korea with the terrorism. That captures the debate beautifully. Willis sparks with us from Eurasia Group. The shift from hard targets to soft targets is in focus. Whether you are a cyber attack or a masked gunman. The Charlie Hebdo offices were clearly a very soft target but they have been attacked before. They did publish a prophet mohammed cartoon. That has created trouble elsewhere. A lot of people around the world dont live in democracies and think that if our media produces something, it comes from our government. It is an official american voice our japanese voice and they dont understand that the governments themselves are not putting out this message because they dont understand the concept of freedom of expression in the same way. What does it mean the journalism executives are agents of change for Foreign Policy . As Communications Open up around the world lets hope that people across the muslim world are seeing those and are beginning to understand this distinction a little bit better. Charlie hebdo is not concerned out of the palace. Barack obama did not approve the interview before sony released it. I get the sense that media organizations are not prepared to be combatants for free speech. We also dont yet know that this is now part of our job. We will have to think about tweeting anything. People will make assumptions about what that means. The headlines that were being held up from paris. Le figaro and Charlie Hebdo have never agreed on anything in the history of the world. But they will defend freedom of speech across the board. Coming up we will have much more. In the loop with betty liu. Good morning, everyone. Bloomberg surveillance. We have terrific markets. We are still focused on paris. Here is scarlet fu with the top headlines. The Chinese Government sony said time is needed to make changes on the playstation 4. Looking into the hedge fund pas ties to payday lending. The inquiry is in its early stages. One of the suspects in yesterdays massacre is in custody. The two other suspects were reportedly spotted in northern france. Earlier today, a shooting in the south of paris took the life of a female Police Officer. It is not necessarily linked to the shooting yesterday. The Eurasia Group identify the politics the friction among eu states is worsening and far right political groups are developing momentum. Willis, you guys were out front on all of this. What does yesterdays attack do with this . The external pressure is the smaller part of the risk. If you go back to 2009 or the beginning of the eurozone crisis in 2011, there was political unity in response to the economic crisis. Everyone cooperated. The sense of crisis has lifted and the problems are not yet solved and the risks we see in 2015 is that the work is going to remain unfinished because germany is the dominant voice in europe. France is a very weak player. The british are not playing a large role. The referendum on leaving the eu is part of that. You have a strong germany, a week france, and an absent britain, creating an obstacle to Forward Movement and reform. There is new pressure in spain. Basically, what we are talking about is Unfinished Business that is likely to remain unfinished. The political unity in response to this issue is gone. With the greek elections coming up does what happened yesterday change the tone of that . Does it change the way people think of their inclusion in europe . Hard to say. The right extreme in greece is a party called golden dawn. When an attack like this happens, a party of the extreme right is empowered. It will be interesting to see how that plays into the volatile mix in europe. The growth has been amazing and these parties all over europe in the last couple of years. 2010 they had almost nothing and now they are looking Like Coalition partners. With these parties, there is always a little bit of antieu sentiment and antiimmigrant sentiment. I have been tried to figure out how to disentangle those relationships. Part of the anxiety people feel relates to the Free Movement of citizens inside europe. Those people are free to cross borders. Our clients are no longer asking when turkey is going to join the european union. All these people have freedom of movement through the area and that is creating a lot of anxiety and is affecting politics. That is what Angela Merkel was in england to discuss before the attacks happened. Liz ann sonders, how does what happened yesterday change investing in europe . Or does it all right on mario draghi . Ride on mario draghi . Qe is not the elixir that cures what ails europe. That has to come with structural reform. I dont think it necessarily helps the deflationary problem they are dealing with. I do think the effect is likely to be felt in the financial markets, much like it was in the United States. We dont have an optimistic outlook on europe. We could be getting closer to the bottom. I just want to bring in something beautiful and moving i read yesterday. Four cartoonists were targeted and killed yesterday. Emily blake is a cartoonist for the new yorker. The theology of a cartoonist. Maybe, but as we have heard these are clashes it is a clash of civilizations and there is no other way to put it. We will be talking about this. We want to thank willis sparks for joining us. We are monitoring the headlines out of france. There was a new shooting in the south of the city that may or may not be connected with the shootings yesterday. We want to bring you some other news. According to the wall street journal 700 million was routed to the janus fund. Samsungs operating profit topped analyst estimates. They are relying on a 40yearold memory chip unit. Galaxy smartphones are eclipsed by apple and xaomi. You know it is cold when you are actually in the water. Staggeringly cold winter air spilled into the upper midwest from canada. It felt like 40 in duluth. Those are your top headlines. Liz ann sonders of Charles Schwab is with us. To quote sir John Templeton lets get to this bull market. Bull markets are born on pessimism. They die in euphoria. This is a bull market. It is a distortion sir john would never have experienced. I love it experienced. I love it. He never saw this market. He never saw this great distortion. What do you do with this market . I have highlighted that i think we are in that third phase. You do go through more mature phase, where you have more bouts of volatility more frequency of pullback. This time, it is coincident with an imminent path toward the initial rate hike. There are lots of reasons, many crises. I think we are in an environment similar to the late 1990s. I think that is the environment we are in. It is going to mean a continued battle between shortterm sentiment and longterm sentiment. That is a great distinction. You could take a downturn and continue to move forward. So many of our viewers cannot do that. We have to get over this disease. A lot of it has to do with the environment we have been in going back to 2010. Experience is colored and muscle memory is there because of the financial crisis. We are paranoid about making sure we dont get stuck in the next bubble, however you define that. The desire to flout pull out and panic happens at a much lower stand down. What do we do if we have that paranoia to invest . You have to go back to the tried and true diversification. Discipline around things like rebalancing. Rebalancing is a boring thing to talk about, but enforces it forces investors to buy low and sell high. As the classes that shrank become smaller in your portfolio left to their own devices, investors do not behave like that. When do you rebalance . It is called aggregation. It really depends on who you are as the investor, what your time horizon is. Come on. Every three months . Three hours . Is it a taxable account . And taxable account . Are you going to eat away benefits if you are rebalancing over to short a period of time . Are you going to be within typical normal volatility in the shortterm . You dont want to cause a lot of unnecessary transactions. It is a function of a number of different things. There is no one perfect answer. A great summary of the balances as you try to rebalance. Lets rebalance ourselves with a day to check. Data check. The price of oil is up. It is providing some support to the equity market. Equity futures are up. The 10 year yield is at an even 2 . The euro continues to weaken and ahead of the ecb announcement on january 22. This is bloomberg surveillance. When there is a terror attack abroad it is the job of the u. S. To say something. You see the kind of cowardly and evil attack that took place today i think it reinforces once again why it is so important to stand in solidarity with france. Joining us from washington is phil mattingly, our white house correspondent. The president left that presser to go furiously do something. What do we know about cooperations between governments in response . France is one of the u. S. s closest allies in europe. There have been issues post Edward Snowden but france has remained a close ally on the intelligence side. On the lawn forstmann, the fbi has agents already stationed in paris lawenforcement side, the fbi has agents already stationed in paris. There is a lot of action going on behind the scenes. The french are tapping into whatever the National Security agency has. They are going to tap into the fbi. They will use a lot of support Going Forward from the u. S. To apprehend the suspects and figure out what happened in the deeper planning or deeper plot. When you talk to people on the National Security side do you get a sense that there will be a shift on to america . When you talk to them it is always about the pendulum. When there is an attack you listen to hearings on capitol hill and all of a sudden, everybody wanted surveillance to go way up and everybody wanted as much funding for Homeland Security as possible. You have things like the Edward Snowden leaks they wanted to ratchet back the nsa capabilities and the programs. In europe, it was even bigger than what was going on. When you talk to u. S. Officials right now, there have been two things they have been pointing to over the last couple of months that has led to a start of the shift back toward the line of u. S. Intelligence capabilities. It was primarily the rise of the Islamic State and the rise of islam extremism in general. That pendulum is going to start swinging back toward reliance on the u. S. John kerry spoke eloquently in english and french following the tragedy. How does what happened affect his participation in and around talks with trying to come up with a new agreement . It will be really interesting to watch. How this impacts iran we need to get a better sense of what happened yesterday before you can say. Frances wrote in the Islamic State role in the Islamic State coalition they have been participating in the bombing missions. Frances involvement in the coalition has been crucial in bringing in other european nations. What impact that has on the coalition, there has been some concern that the impact of that coalition has started to lessen to a degree, as it has moved off the headlines. Im interested to see if this helps ramped things up or what john kerrys role is Going Forward here. Phil mattingly from washington. It is such a serious issue. What are we doing in miami or dallas or other cities when we react to these ad hoc single moments . France ratcheted their terror level up to the highest level. How does that change things here . How about this morning mustread. This is out of the mouths of babes. I thought that was pretty good. A little bit of levity in difficult times. Stay with us. This is bloomberg surveillance. Oil got a gain. Energy was upgraded over at mckenzie. Have we bottomed . We think we might be getting close to that bottom. We need supply growth to slow enough to allow demand to absorb the excess. You are saying that the nature of any commodity is that it has to overshoot the ford finds equilibrium. Before it finds equilibrium. You can overshoot by 10 to 30 . You have to be at that level long enough so that consumers and producers get that change in behavior. What is the nature of the demand we are seeing out of china for oil . We are seeing a bit of a slowdown driven by the nature of the economy being a bit slower, but china is also going from being a manufacturer economy to a Service Economy and that is a Less Energy Intensive economy. When you hear the media or the economic or the finance coverage of hydrocarbons or so in the last 12 weeks or so how do you respond to all of the ventilation about 50 down . We try to focus on those two things. Getting the market debt to balance does not mean you have to have production cuts, you just have to have production slows. You need demand to grow faster than supply. You dont need to have absolute numbers change. It is a flow analysis. It is rates of change. The market is always searching for the next equilibrium. It is in that flow analysis that tells us we are moving in the right direction to get the stock position to where we needed to be. The stock position does not have to be there on any given day. We know that ford is shuttering its plant that makes the automobiles we are seeing people park their previous is an drive their suvs. Once you have gone from a prius to an suv, you dont go to two suvs. We see the growth moderating keystone does matter moderating. Keystone does matter. Canada needs keystone more than the United States . Guess but the gulf coast refineries are also really interested. Skip york, thank you so much for joining us. We will be right back with much more. Our hearts are with the staff of Charlie Hebdo tonight. Not many people go into comedy because it is an act of courage. Those guys at hedbo had it and they were killed for their cartoons. The game for the cartoonists. They came for the cartoonists. Emily green is with bloomberg view. She wrote about Charlie Hebdo two years ago. Emily, i want to start with you. Why did they come for the cartoonists . In france, there is a grand tradition of provocation. Charlie hebdo was founded in 1970 by a group of journalists this is the older class of cartoonists that were part of the revolution in 1968. There are was effectively how do i say it . Full good at times. It was bawdy and buffoonish in ways. They call themselves irresponsible, right . Their relationship with france and the government was complicated. The government of france criticized them openly two years ago. The fact of the matter is that there is freedom of speech in this country and it was considered after the danish cartoonist in 2006. Right. Freedom house. Excuse me. This is an interesting point we are at right now. Is that a critical point . A Tipping Point . What kind of moment is this in your work . Globally in terms of the number of journalists killed in the single incident, this is the second worst attack we have seen in over 20 years. It is a Tipping Point globally. For france, it is a Tipping Point as well. After the danish cartoon crisis almost a decade ago, this is another crucial point. We see people rallying together to try to defend free speech around europe. What we have seen in terms of the outpouring of support for Charlie Hebdo is quite unusual. Butts look back over the last 10 years. Freedom house is the best mark we have for how freedom of the press is moving. Do we have a sense that there is selfcensorship going on . That newspapers are pulling coverage back . We have seen trends over the last decade of a decline in press freedoms globally and this has affected europe, somewhat surprisingly, maybe. We have seen the impact of the economic crisis on europe and the impact from instances like the danish cartoons and the growing selfcensorship in certain european countries. I am fascinated by the simple question could Charlie Hebdo exist in america . I read the onion piece yesterday. Do you believe Charlie Hebdo could exist in america . I believe it could. I think it comes from a different tradition but because of the tradition of identity politics in france, they have more freedom of speech laws there. It is illegal to incite racial hatred in the name of the law. For instance, the comedian he has been banned legally from performing any performance that has incited racial hatred against jews. Charlie hebdo, the blasphemous printing of lewd representations of the prophet mohammed, they are legal there, but it comes in a climate where certain other representations are not. The cartoons were inflammatory and invoked rage, but they also got attention. We have seen a lot of cartoonists that have responded. It has been all over twitter. You have a masked gunman shooting someone down. There are scenes from the vigil. Two pencils taking the place of the 20 hours. Charlie hebdo named because it is linked to charlie brown. How do you respond to news institutions that choose to not run these cartoons . Think on a matter of principle that other News Organizations should publish these out of solidarity but on a more practical level, i can understand that News Organizations choose not to. Many News Organizations have staff that need to be protected. It could lead to people being killed. It is understandable. It is interesting just help older Charlie Hebdo is folder vulgar Charlie Hebdo is in all respects. The most folder vulgar are the ones that end up being protected by freedom of speech laws. They are a distinctive type of organization because they are a satirical newspaper, but they should enjoy protections. Satire, comedy, and cartoons are an essential part of free speech. We described them as provocative, offensive vulgar. There is a long, rich tradition. They were also in financial trouble as well in the 1990s. To what extent was the vulgarity commercially driven . I dont think it was terribly commercially driven. It has seen difficulty in the past decade like any News Organization financially. It is important to recognize that it is relatively a fringe publication. There is something beautiful about the fact that the former Prime Minister has asked it to be centered in the past and now everyone is saying je suis charlie. It was a terrific article yesterday. Freedom house. We all make a run decisions about what you say or do. This is the decision we took this morning. Je suis charlie. Lets move on to the agenda. The quiet leader was on the scene in about 12 minutes. President hollande showed up. It will be fascinating on what the leader of france will do over the next three months. And every french leader. Marine le pens showed up and she had things to say. Nicolas sarkozy spoke up. France in the french. The book to read on how to get to the culture in place. My agenda is the ecb and the culture of deflation. We have a real economic problem going in europe that europe possibly to europes leaders can catch their breath, they will have to address. You have the u. S. Economy where everything seems to be going ok. The lead up to the jobs report on friday. Liz ann sonders how critical is the jobs report . I think a path of continued strong job growth will continue the path to tightening in the middle of the year. I think it is more about that they want to start the process now. They want to put bullets back in their gun for future use in the events that we have problems. They are not turning a problem blind eye to deflation. Keep your powder try, as well. Liz ann sonders think you so much. Our thanks. Bloomberg surveillance on radio continues. In the loop is up next. Good morning. You are in the loop. We begin with an update on yesterdays shooting in paris. Two suspects are still on the run. An accomplice gave himself up to police last night. Authorities have released photos of the two brothers suspected in the attack on the magazine office. They have been spotted in northern france. Police warned that they are armed and dangerous. A policewoman was shot and killed earlier today in paris and it is not clear whether that is linked to yesterdays attack. France is taking the day to mourn the 12 People Killed in the attack. There was a moment of silence throughout the nation. Francois hollande called the shooting and asked an act of extreme barbarity. Today, it was the entire republic