David go irish. Go. Hanie there you a little housekeeping on tv. Lets go to vonnie quinn with first word news. Ted cruz has taken a doubledigit lead in iowa, where the first Republican Caucus will be held february 1. A poll says that he leads donald to 21 . 31 to 21 . In the area of voters without a College Degree. A statement out today indicates that this is not a final conclusion of investigators in a downed crash in a downed plane. Concern that the crash was caused by terrorism led to the evacuation of thousands of tourists from egypt. And 18 nations will try to speed up the pace of Emissions Reductions under the new Climate Change deal. They have developed International Carbon markets. Among those taking part, the u. S. , germany and japan. China lands to create the Worlds LargestCarbon Market by 2017. More on these and other breaking stories on a four hours today at the new bloomberg. Com. Ramy inocencio has more on the markets. Ramy u. S. Futures are mixed. The dow as what at one point was as high as 75 points, but now it is into the negative. This is after we saw markets close at their lowest levels last friday since september 28. The s p fell. You remember then, 4 less weight, which was its worst week in a month. Of course, so much of that had to do with the route and oil we have been about for the past week, the past month, the past year. Lets look at nymex crude. It is falling again, now pretty much at session lows. Its seventh day in a row of declines. This is the longest losing streak since 2014. Reasons, irann says it will boost exports, the deputy mom oil minister saying there is no chance of delaying an increase once sanctions are lifted. Opec is saying the overslept by the oversupply will continue. Falling at also lowest lows, down at its intraday level since 2002 year to date it is down 34 , and we are on track for a second decline. There is a monday merger to talk about in consumer goods. Newell rubbermaid and jarden say they will combine. Shareholders are going to own about 55 of the new company. Jarden holders will get 21 in cash. That company will be called newell brands. And on the downside, there is a meltdown that i need to talk to you for we get back to you in junk bonds. We saw their worst fall in four years. To the lowestil level since 2013. It did fall 2 friday. The barclays falling also, in levels not hit since 2009. Overall, s p stocks are down 2. 3 . Stephanie but if you think about these highyield etfs, these have been criticized for months. What are you doing putting a structure on top of it that is offering premier liquidity . We have got to talk about the selloff and what it has caused, the kind of impact on several funds, just announced. Its fund has liquidated entire portfolio. They plan to return the night hundred Million Dollars they have got under management. Just last week we heard about the distressed fund. On inmen, what is going the highyield market . I will start. This is some a lot of folks have predicted for something a few years now. You have more of a retail basin highyield than you used to. , and soe more volatile you have some price volatility and a liquidity that you did not have in prior cycles when you had more bank and broker involvement in trading. So the volcker rule and doddfrank have affected the highyield market, and we will see more of this. My guess is that energy and mining were a part of this as well because those sectors have been under pressure. Stephanie over the last few years they were high heaven yield specific funds that were bears. They said there are too many ,ssets in this asset class watching a high yield of around 6 . It should be at 9 . Out,got short, got carried then went long and now they are screwed yet again. Are we overstating things when we claim this on the vocal ruled and doddfrank . Nobody wants to buy bad market bad bonds in a good margaret were a bad market. In a good market or a bad market. I think the volcker rule has something to do with it. I would not underestimate that. Every problem is accentuated because you do not have people bidding as aggressively as you had. But i do not know much about this business three that i know if you are using highly illiquid assets, and offering daily redemption, that is not going to work out. It may take five years, it may take five minutes, but it is not going to work out. It seems to me they had a pretty good run and made 15 compounded for five years, and now they get back. They give it all david how big is this problem . That it isggests is limited to those who do not have liquidity and longterm company committed longterm Company Commitment sprint doesnt stop after that . Powerful point i had to add more drama to this thing . This is pretty limited. We will look at things in terms of the scope, in terms of the housing market. I think Warren Buffett said you want to create a real problem in the United States, hit the housing market. This is not that we have a sustained until of low Interest Rates, and i think you have the fulcrum rule, which is government driven. They accentuated the problem or created it. You have people reaching for yield. People will over time go to get it. We get rates to go to a more normalized level, we allow rates to rise. The market itself is not big enough. We are thinking in terms of 20072008. I agree with jimmy. Jimmy well done. Rates are still at 2. 5 , historically closer to four. Now international now metals and mining are higher this year. But i agree it is nothing like the housing calamity. So Economic Growth is still positive. If the economy went into recession, then i would be a lot more concerned. Stephanie there are people shouting that the sky is falling. Last week we heard about 3rd avenue, seeing that there is a first crack in the system. Backlash from janet yellen this week . Heres what he specifically had to say about liquidity. I do not think it is a crisis. It is a change evolving in the market every day, and people are learning how to adjust her there will be a lot of winners and losers as a result of what is happening, but the most important point about this is the opportunity it is creating because dislocation in prices is exacerbated by what is going on. Certain securities, because of the illiquidity component, are getting super cheap. Do you agree with that . Right about the loser part. It goes back to my simple point. If you have a daily redemption you will have an issue, which is no matter how far that goes like any hundred Million Dollars fund . Stephanie how many external funds are you invested in . Are around 100, but we do not look at high yields. I look at highyield as an equity risk, so i would rather wait until they are really distressed. , andve real workouts investment creditors committees and that sort of thing. Were not close to that. Longonly,o highyield. Stephanie are you concerned investors,histicated simple because the fed was punishing favors. I have to get returns somewhere. Itdavid Lisa Abramowicz is joining us. Not be a crisis that is systemic, but there is a main question. Who is left the buy right now . Who wants to dive in . On friday you saw the price of the biggest jump on ats, a blackrock fund, plunge, the most since 2011. You could just see a tank right there preview can see that there was just nobody around who really wanted to make a bet on high bonds. This is a big concern when you are hearing about redemptions from an increasingly number of funds, and people are wondering, technical it may be a affair right now, but a technical event that goes on for long enough becomes fundamental. Underpinning the weakness you are seeing in junk bonds is energy. I want to look at an index of energy junk bonds, and you can see that the price is completely plummeting. The value has completely plummeted, and this is fundamental. This has to do with oil prices that seem to be in absolute freefall. Supply does not seem to be slowing down at all, even though demand clearly is tapering off. This is clearly underpinning some concerns, and this is fundamental. Oil prices are not turning around anytime soon. What does that mean for the Broader Market . Jimmy i do not think that is a terrible thing. Let oil go where it is supposed to go. It is good for most economies of the world. It might be helpful in some other serious terrorism issues. I do not think that is a terrible problem. Yournk it is very bad if business is based around it and you raise money at 4 . I think you will have a problem. If you bought those bonds, you will have a bigger problem. Junk bonds yielding 4. 5 i am too old. Stephanie no, you are too right. Jimmy for this moment, but i lost all that carry by not being in them two years earlier. Junk is synonymous with doubledigit return. Stephanie it is called junk for a reason. We have to take a quick break. When we come back, we will talk about central bank intervention. Maybe that is the root of all these problems. Jimmy and scott are staying with us. Next, next was up eight on restructured rbs. The ceo says why his that she is confident that his Investment Bank will turn a profit. Stephanie vonnie welcome back to bloomberg. According to a person to me with the matter, lowe, who supports dows decision to merge with dupont in the biggest deal ever in the chemical industry. It happened days before a standstill agreement between dow and the hedge fund. He says that loeb says liver is should not have a role in the company. A new York Hedge Fund was to meyer orrison Marissa Mayer at yahoo . David . David in todays global go, we focus on rbs, in an exclusive interview with ceo ross mcewan. The company will return to profit in four years. Ross we have another year, 2016. When i took over we were in 57 countries. We are going to be back to somewhere around 13 or 14 countries. Manus cranny joins us from london. Congratulations. Put the restructure plan in context for us. Manus when you look at rbs, you he wants to create a u. K. Bank bailed out by the u. K. Why not just get rid of it and be that u. K. Domestic bank that everybody is screaming for . He said we have strategic strength in debt capital markets. Corporate Investment Bank, the shape of that Investment Bank, is what he is really focused on. That is why he says it will take another couple of years to get there. Put this in context. If not for being president , 37 ceo that this is a is ahead of the game in terms of selling those assets. He says he can take his foot off the gas next year. Stephanie four years for a turnaround . Jimmy that would not work at sandler. Sometimes i think it makes things more complicated. I wish him well. Much mores a complicated problem than i realize, but four years is a long time. 70 go here is what he had to say. Such a good start in the last two years, taking so many assets off the books, they have recreated their Capital Position so quickly. We are in a position that we can go slower next year if that very we get we have a experienced team selling assets. We have sold russian assets, a lot of assets around the world this year. They are coming out of countries and trying to sell the business. I think we have them an amazing job. In the market slows down because there are a lot of others out Capital Position is such thou that we can go slower. My objective is to try to finish the job by the end of next year. But if we need to, we have a Capital Position now that allows us to be more passionate. Stephanie what is the Growth Strategy . Strategy willwth be what he does in the u. K. , which is in terms of lending to the small and medium enterprises. Moorish Mortgage Backed securities, that is hanging over that. They need to get the litigation issue off the table in 2016. You would like to shave the percent. No rate hike in the u. K. In 2016. That is the second ceo in a matter of months that say that says our Business Plans go to higher rates. You may give a rate liftoff in the u. S. , but you are not making a big rate hikes. The you curveof the youku tou u stephanie lets take it back here. Regional banks, jimmy, have also suffered. They are forced to be under the same Regulatory Regime that the big banks are. They do not have the money or the resources. Will we see more m a there . Jimmy absolutely. I think you have a lot of momentum along the m a curve right now. The reality of it is banks need to get larger, so you need to really assess do i have the currency, the board, the wherewithal . Do i have targets to seriously make acquisitions . If the answer is yes, do so. If the answer is no, you should be thinking about what partner you should end up with. Conditions are ripe for a continuation and of furthering of real m a. Stephanie in 2016 you think we will see a lot of m a . Jimmy absolutely. Is my job to make sure that happens. You take a report card on what has happened already, has it been successful . If you look at those combined companies . 2008, looking at. He 100 yearlow you had come is trading less than a dollar at the time. The deals that are getting done now make a lot more sense. You see how buyers tend to react more positively not always the case, but there seems to be more of we are taking their currency. We are not just selling our company. So i think that the deals over the last three or four years are going to be proving to be very successful. That we will deals be involved with will be very successful. Stephanie scott, do you deal ever . Ess banks now than our bank waiting is lower than it was five ago five years ago or six years ago. People are having trouble seeing how banks are really going to make a lot of money. We are lower than we were a few years ago. David im happy to say youre not going anywhere. In the next hour we will look at them exclusive interview that Erik Schatzker has with Hunter Harrison of Canadian Pacific railroad. Stephanie welcome back to bloomberg , i have said this before, we need a commercial camera. It gets good here. Jimmy dunn is here as well as scott malpass. We have to cover the news but before we do, we have to take a quick snapshot of oil. It fell below 35 a barrel. Said it would reach 100 by the end of the year and that is not happening. It is down 2. 5 today. Iran reiterated its pledge to boost crude exports. If iran is boosting exports and saudi arabia is boosting, we have a supply problem and a storage problem. Storage problems will rise in 2016 unless we get a demand to balance this out. David you have a bunch of countries who want the money and they will pump as much as they can. Vonnie Hillary Clinton has solidified her lead over Bernie Sanders in iowa. According to a new poll, the Democratic Frontrunner has a lead over Bernie Sanders. , the pollber survey measured the impact if joe biden had decided to run. Tobrazil, protesters took the streets to protest against the president. Allegations of corruption and brazil is in the worst recession in more than 20 years. And in the eastern philippines, thousands have fled their homes because of a powerful typhoon. 13 foot seang surges and schools are closed and flights are suspended. You can get more on these and other stories 24 hours a day at bloomberg. Com. Keenenie normally, tom gives us the morning mustread but he is in dubai today. So jimmy has given us his morning mustread. Dick parsons and the oppose it crisis in the banking industry. I cant believe that. We picked a quote. The record pace of disappearance of 63yearold bank ceos may be revealing the industry is on the brink of a talent crisis. How this plays out remains to be seen. Is so antithe banking industry. If bankers are wildly overpaid, and those you have the jobs dont want to be in them, where is the disconnect . About banks talk being overpaid, there are strong about Investment Bankers not commercial bankers. But i think what he is really getting to or what i like to think he is getting to is that you dont have the great training programs. Differenthave so many significant banks. He dont have them investing like they used to. That is a that natural thing. As consolidation, due to regulations, ranks have to get bigger. Little banks cannot exist. If they are privates they can go indefinitely. But if they are Public Companies and need to show a reasonable return to investors, it is difficult for small banks to come up with a Business Plan to make that makes sense. Stephanie doesnt tickle back to compensation . If you look at the banking industry, people dont want to stay at those banks anymore. Almost every possible takeout at the morgan has Left Organization and gone to the buy side. Scott i jimmy i would argue that those are in a better position to get his job. I dont think the conversation is that they can of an issue. I really dont. There is a good covers there is good conversation good compensation to do the job. Times, we always look at that with m a. The reality is that people tend to have their own board and groups and there is a way to find another ceo. Cap go to bank b that eight a premium to their existing shareholders and there is a good chance that the ceo is at least as qualified as whoever was going to take it anyway. So i dont think that is such bad succession planning. It is convenient for that. I think that is a natural way. We have too many banks in this country. We do. And all of the regulation has not been too big to fail, rather, too small to survive. David the good news is that you are working on that problem. Jimmy im trying. Youre trying. Scott just to reinforce something that jimmy was saying i was on the Security Side of where the best corporate lenders in the country. Jimmy i would find it hard to find the