Islamic state. Soldiers have captured a in ramadi complex that has been held by Islamic State since may. Minister, since 08, has made a landmark apology for korean women, for forcing them to be sex slaves during world war ii. Japan also agreed to establish an 8 million fund to compensate victims. A series of tornadoes near dallas has killed 11 people, one miles perup to 200 hour. Flooding in the midwest is blamed for at least 13 deaths. Missouris government missouris governor has declared a state of emergency. Day, powered by 2400 journalists. A look at what is going on with s p futures this morning, as well as the other major averages. We are seeing a decline. We have seen this correlation recently between stocks in the United States and oil prices. Oil prices have been trading lower. Decline. Eing a 2. 5 as we begin to get headlines from saudi arabia regarding the 2016 budget, the country is coming out and saying its revenue this year just became the headline. 608 billion real versus the 715 billion forecast. As expected because of the loyal because of the oil price being lower, it is taking in less revenue. We are seeing this feedback to what is going on with stocks. Also this morning, iran is talking about its high priority, increasing oil exports. That increased supply is also having a negative effect. I want to look at gasoline prices as well. We have seen retail gasoline fall below two dollars a gallon for only the second time this year. Right now it looks like it is above two dollars once again. If you were out driving this weekend, you probably noticed we are seeing low Retail Prices at the pump. I want to bring it back to stocks and talk about globally what we are seeing in the stock market because not only do you have oil prices falling, the shanghai composite is declining quite sharply, with Industrial Production falling in china. That is having an effect also. Ipos also having an effect there. We are seeing a feedback loop to down. An stocks between oil and china, it looks like a little bit of a negative tone to start the day. David thanks very much. Fedex is facing tough criticism on social media after failing to deliver packages by christmas due to Severe Weather across parts of the country, or so they say. Fedexfail is trending today. Ed, explain to us how big a problem this is for fedex potentially. Are goingle of things on. We saw in 2013 that there was sort of this shortterm reputational hit that ups took when it was unable to deliver parcels, and that ended up spilling into some preparation into 2014, and it ended up being too much preparation. There were people in the facilities sitting idle. So you get that shortterm response to make sure that it never happens again. The second thing that can happen is what happened with ups in 2013. They spent a lot more money than people working over the holidays. We do not have the dimensions those much extra other kinds of things that fedex is going to be looking at, to wrap their hands around this to make sure it does not happen again during such a critical shopping season. David do we have a sense over whether this is related to the dramatic increase in purchasing online, particularly with amazon . Ed a couple of things happened. You have companies promising Free Shipping, and they have to make up that consumer demand that is flowing through the retail channel with how much capacity the shipping company is going to have. You have to worry about how much of that influence is going to show up, how much the shipping company will be able to deliver. The second piece is, december is typically not a great month for air travel. Things are a little warmer this year than usual. Typically at this time of year, you are going to start running into delays. Put those two things together, the shortterm surge into what could be bad weather, and that is a delicate balance that becomes very noticeable because everything you are geared towards getting packages delivered by december 25 would not be as noticeable at any other time of year. Even if fedex does have these logistical problems, fedex seems to be there only game in town when it comes to air, that next day delivery. If retailers are unhappy about this, can they go somewhere else . Ed ups has a large air network. Ups is the largest Package Delivery company, if you look at everything from their air plus the ground operations. Is differentiated as a larger air operation. That is the place where you would see a larger trade office. Brendan i have a will of thumb trust anyones promises after december 21. Shannon you were looking back when year. I want to take it back four years because you go back and include that problem. The problems that ups had a couple of years ago. Ups is green, fedex is white. Obviously fedex has outperformed. This is adjusted for percentage changes, so it accounts for the percentage change we have seen in each stock over the last four years. Fedex is the outperform her. An more or less has been on upward trajectory since it had those issues. Ou just heard the discussion it did not see any sort of longterm effect necessarily from the issues at the holidays a couple of years ago. That said, it is still underperforming fedex in terms of stock performance. Brendan do companies in general have a change have a handle on changing Consumer Needs . Ed what it looks like in the last couple of years, in terms of the amount slowing to the channel last year ups did seem to get a handle on it different a couple of things. They had extra people in different locations. They also set up mobile villages , sort of pop up sorting centers, using some of the inipment and personnel trailers. They ended up having too much capacity less year and they did not seem to be able to match that shortterm demand from the consumers given what their facilities were. Enoughdid not quite had people did not quite have enough to do. So this year they kept the same number of temporary employees as last year at ups. As far as we know right now, it looks like there seem that it looked like the system seemed to work ok. Shannon there was a story in the wall street journal last week about building up its own network and not wanting to be dependent on the thirdparty shippers. Areou think fedex, ups they worried about losing amazon . About amazon saying i cannot depend on you . Lets play a little bit that we have from an Amazon Official talking about exactly what shannon just described. We are doing it in two ways. We are doing it through our own delivery program, our amazon plus program, which allows people to be their own boss, work the hours that they want. And we are doing and automation program. As soon as legislation supports it, we will be able to integrate it. That was dave clark, Senior Vice President for amazon. Ed, back to you. Ed one of the things we have seen over the last several years have gones and fedex from the kind of service for consumers that might be used every now and again say just at this time of year when you have to deliver a certain type of shipping product to something people use yearround in their ordering of paper tells on amazon prime or Something Like that. They have to realize it has been a big boost to their business. Also that growing dependence goes to what those large customers might be trying to take on in terms of taking that business inhouse. David we are waiting for these numbers from mastercard advisors. We are at a bit of a disadvantage. We do not have Stephanie Ruhle with us, the most enthusiastic follower. She is getting a welldeserved break. Shannon if stephanie is watching today, she will be disappointed because i will use a little bit of the weather excuse. It finally got cold in the midwest, so somebody wants to finally buy a sweater or a coat. My family in michigan was certainly wearing sweaters on christmas. So is there so there is a little bit of a boost. That is great for the Apparel Companies because they have been struggling the past six months because the weather has been warmer. Mens apparel is expected to have done poorly. Brendan why the disparity . Shannon no real innovation in mens apparel. This is traditionally the difficulty with mens clothing, that there is always the problem that you cannot convince men that they need to buy something new every year. Shannon every now and then you get those innovations in mens apparel, a slightly different cut of genes, cut of tide. Shift away from a shift toward wanting to spend more on experiences. Was way upbusiness on christmas day, people eating out on christmas. Travel in november, it is one of the best years for travel. Experience rather than stuff. Luxury watches did really bad, another thing you can maybe blame on men. Highend jewelry. Tier retail isid expected to do really well. We are going to get some hard data on the numbers coming up sometime this morning on what sales actually were over the holiday season. Nerombergs ed duffin walking us through fedex. Thank you. Not that much movement, but we will take a look at it next on bloomberg. Vonnie welcome back to bloomberg. Iran is putting pressure on the price of oil. Boosting exports after sanctions on the country are lifted. Brent crude is poised to end 2015 with the lowest annual average price in 11 years. , 850 7 million has been pulled out from the u. S. Exchange rate backed by everything from metals to green. The value of those funds is down 26 . Raw materials have drops to a 16year low. Another milestone for the new star wars movie. It grossed more than 1 billion worldwide in 12 days. That is topping every movie. It even surprised disney executives, who bought the franchise from george lucas in 2012. Brendan now we going to head to global go, where we look at international stories. Saudi arabia is unveiling details of its 2015 budget. Correspondent is looking at numbers this morning. What is the actual number . , ahad projected a deficit hard number to swallow what does the actual number look like that was real this morning . Actualave not gotten the percentage deficit number yet. What we do have is the total percent, roughly 100 million. Some economists estimated it would be a bit higher than that, 100 million is a huge deficit for saudi arabia, which surpluses,nning surpluses that have allowed in amassing of large reserves. Spendn how long can they down the reserves . You cannot sit on your reserves forever. Riad absolutely. If you spend at that sort of rate, the imf estimated that the less unless saudi arabia takes steps, able be five years before they have eaten up their reserves. Issuing they have room to do that. The debt to gdp was the lowest in the world in 2014. It is suspected to go up about 16 of gdp this year, and it will rise rapidly unless they do something. That is what people are expecting to hear from this budget. What are they going to do . Are they going to cut spending . There have been hints that they might take some measures to do that, but they have to balance that against their own needs in terms of growth. They had to keep growth going. A problem with youth unemployment already, and they cannot afford to cut back spending to the point where the growth is too low or even shrinks. Are the options as a practical matter as we wait to learn the details . Spending,astructure social programs . What levers can they pull or push . Of the key things people are watching out for is subsidies on fuel. Subsidies have already been cut on fuel, and saudi arabia, some people are expecting it to do the same, or at least to maybe not remove them completely, but these are huge burden on the saudi budget, which has saudi arabia, a sizable population. Now that oil prices are low, it seems like an opportune moment to take this measure that the imf has recommended. Other measures could be, on the infrastructure side, they could delay some infrastructure projects. The expectation is they will stick to the big ones, like the riyadh metro system. Other measures would be privatization. There is some discussion whether they should privatize some ports. There is a variety of things they can do, and the question is how far they go this year. They could probably do it gradually in order not to thank you very much for joining us from riyadh today. Up next, the outlook from cease with on Top Travel Companies on bloomberg. David welcome back. You are watching bloomberg. In the best of go interview, stephanie and i spoke with ceos of travel Companies Including delta, southwest, and priceline. Com. I think the u. S. Economy is really strong and continues to be strong. Mexico is doing well. The caribbean, Central America is doing well for us. Parts of south america are ok, but brazil, venezuela are not doing so well. Eastern europe is not doing so well. Russia, because of the sanctions, the middle east, because of political and social unrest. Japan is in its 20th year of economic status, if you will. Its currency is weak, and its economy is not doing well. China is holding its own. It is really a different picture in every country. I think the important point you just made his currency. The currency issue is an important issue for every Consumer Company in the u. S. That sells overseas. The strong dollar does create real currency headwinds, and in fact, if you look at our unit revenue performance in the third quarter, much of our unit result decrement was as fuel rolloff charges and the effect on currency. Most multinational colorations most multinational corporations will have currency headwinds in the u. S. For a pretty long time. It looks like the dollar will be the reserve currency in the world for a long while. We have a lot of foreigners traveling in the United States, not nearly to the degree they have in the past, primarily because of the strong dollar. This will pass, but that is todays reality. A lot of americans overseas are taking advantage of the dollar, going to europe, heading to south america, even heading into asia. That is a clear trend of the business. Of our capacity today is in international markets. At this point it is all directionally south, the caribbean, mexico, Central America. In terms of our future route expansion, that will be our biggest opportunity. Ofwill still have plenty opportunities to add new routes within the 48 states, but it is pretty much connecting states that we already serve and adding additional frequencies. It is important but will not take away from our domestic focus. David Shannon Pettypiece, coming back to the United States you said more you said people are spending more on restaurants. Are they spending more on air . Shannon december was the biggest month for travel spending on record in it goes back to experience, people wanted to spend money on memories rather than stuff. Consumers are spending big on travel. It is becoming an increasing budget item for them, and one thing we did not hear most of them talk about is oil. And the profits they are making off of this. As airfares come down, consumers will see more opportunity there. Maybe it is a Good Opportunity to take that trip. David is good for the bottom line because they do not have to pay as much for fuel. There is the question of whether or not the Business Cycle is tied into Airline Profits as well. We are never completely certain whether that bond is broken. Am coming back to this in the meantime, shannon is going to stick around. We are going to move south to puerto rico new years eve. It may not be a day of celebration in that territory. The country faces billions in bond payments on january 1. Welcome back to bloomberg. You are looking at london where markets are closing for observation of boxing day which is actually on saturday. Brendan looks pretty nice. We are here with Shannon Pettypiece. Looking at boxing day and all the other things bought. First, news with vonnie quinn. Areie in iraq, forces claiming a major victory. To cap recaptured the main government complex over the city of ramadi. Defense secretary ash carter criticized the iraqi forces, saying they had no will to fight. 2020ank of japan says the Tokyo Olympics will boost the japanese economy by almost 250 billion. They say Construction Spending will expand gdp by up to three tens of a percentage point over a secure period. And in chicago, another Police Shooting has raised russians about the citys use of lethal force. Authorities video showed an officer shooting a black student 16 times. Shannon wanted to look at some of the individual stocks we are watching today. Over the past year, they are up almost 80 . Shares of this company, pep boys agreed to a 974 billion remember, carl icahn had made a bid for the company. It is possible that a new bid may come. Icons last bid. We will see if he does come up with a higher bid. Shares not trading at the premarket, but you will be watching it. Another stock to watch is valeant that has been under such scrutiny. Its ceo, Michael Pearson, has been hospitalized for severe pneumonia. Hospital in new jersey said he has been discharged, but was still hospitalized elsewhere. Pearson is 56 years old and analysts say that any uncertainty surrounding leadership ishis so critical that can make investors nervous. We have been talking about oil declining. We are watching oil stocks as well. The direction of oil and stocks have been tied together and we are seeing the big Cap Oil Stocks under early pressure. Exxon mobil and chevron already declining along with prices. Have been talking a lot about what happens with the currency and with the strong dollar and what it might mean for exporters. I learned today, there was a that wasun across written by paul hannon entitled currencies have a stronghold on exports. A shift in the dynamics is impacting a wiki has local currency. Eak local currency. This piece says, in terms of exports, people are incorporating many more goods from overseas to begin with in their goods. ,t actually blocks the fourth so a stronger dollar does not hurt u. S. Exporters as much. The exporters in europe and latin america. Brendan this was an interesting pick. New, new trait theory. We are fighting so many things are a consequence of the supply chains. More and more