After the u. S. Accused north korea the does the deaf devastating attack. Experts at anyone in a basement could be behind the attack. The United Nations denouncing the attack on sony as the Security Council held its firstever meeting on human rights in north korea. Greek Prime Minister samaras failed to get lawmakers back to back, his only for president , huge because he only has one more chance. The vote earlier today in athens, the candidate fell short of the 200 ballots. Third and final book next monday. Parchment would be dissolved. There would be in early general election. Cars, the latest automaker to issue a nationwide tacall because of faultyt aka airbags. Iesaffects 140,000 bmw 3 ser from 20042006. No problems from the vehicles have been reported. The federal government has been pushing companies to recall older cars with airbags made by takata. To atave been linked least five deaths. This is unbelievable. An allout brawl at the end of last nights miami beach bowl. It was miami beach brawl. And his players ran onto the field to celebrate a game ending to seal the 5545 doubleovertime win over Brigham Young university. Thanks quickly degenerated with layers punching and grabbing one another. Numerous players from both schools, even some Team Officials, got into the action. Both institutions later released statements expressing regret. There was a major misconduct unbelievable. The real miracle was said that memphis was there at all. Look at the swing like i just took. The haymaker. Those are our top headlines. It is a brawlfree data check. A lot of the equity markets in this hour coming futures up even more, 10 year yield doesnt do much the last couple of days. The euro bears watching, weaker this morning. On to the second screen. Near 18,000. The twoyear yield is my headline, 70 . Point 70 . Lets go to the monitors. Somewhat obscure. Chinese currency, heres their appreciation, 24 since 2005. Strength, managed by further strength. Heres a little bit of pullback. Yuan weaker. It is nice to see actual market volatility and a currency that had been pegged. Theabenomics. Oil and russia, they continue to dominate, but quietly. Use equities advanced yesterday. It was a critical day. A breakout in the twoyear yield. Robert michaels global chief morganent officer at jp and has a zillionyears the yields. Speaking of haymakers and brawls, the attention has to be on janet yellen and what shes is going to do in the coming year. As long as they keep Interest Rates at zero, they can get rid of quantitative easing and yields are going to stay low. You can only keep money in cash earning nothing for so long. As soon as she begins to normalize the fed funds rate, that is a game changer. Are you implying what is going on in the fed would we dont see them as theyre pulling jerseys overheads, pulling off helmets . I wonder what happens with a raise rates for the first time in nine years . Was all of your study, do you have at your point on the twoyear yield where things change . 90 . Ey change at. 70 were area to me looks to be the where clock 1 , where things change 1 , were things change. Right. Will get it they will be patient. The definition of patient varies. Thank you so much. I cant imagine how busy you must be. It has been a great year. Also kind of a beating. You will get a break im sure. Well talk about that later in the hour. What does the dow at 18,000 men for the mergers and acquisition business . A lot of deals involve a little bit of equity, which is where theres a lot of equity floating around. The equity markets have been volatile. In the middle of october, things were really on fire. Then there is a little dip. There is the malaise decades ago. Then up we go. What a breakout it has been. This is the real flesh and adjusted dow. What a wonderful decade. Bob, when you look back at the m a over this last year, a lot of Companies Getting rid of assets that did not make sense. One of the stories that has not been to talked about too much is the device should your activity, especially big, big corporate. This guy can pay me a lot more. Was at an auction this last week where it made perfect strategic sense, pay twice with the next guy could pay it was still a good deal for him as a body could do with it. It is part of this overall move synergy . Ft arm says to theyburton is one said there was a two lane dollars in synergy. That was an astronomical amount. Just broadly speaking, do you see real synergy with these types of deals . Certainly, a cost savings is obvious. You have two groups and you can combine but 2 billion . That is part of it, but it is not really just cost synergies. There are other things you can do. This Little Company was 600, but there will never be a press release about it. Art of this business was a crucial plan and a location in south america. There are lots of things that go on in terms of broader synergies, not just cost. I want to get back to the brawl at the fed. Everybody has a favorite indicator. You been looking at nominal wage growth. When you look like over what janet yellen talked about for the last several years and she is looked at very as measures of strength in the economy, wage growth has been very important to her. Now as they have dialed down qe, it is interesting that you havent seen which growth, you have seen unemployment come down and this growth in the underemployment. She suddenly shifted away from wage growth. As we look at normalizing rates and raising the fed funds target rate him and there is a lot of speculation that she may not be able to do it until 2016, how can you raise rates if inflation is potentially zero . Away from shifted wage inflation. I think it is quite low. That is evidence recovery isnt as robust as some of the headline data. I feel like were looking anywhere we can for which growth, for anecdotal evidence. Again, you have to look at what drives the fed. I think it is important to her what that tells me, she is impatient to get rid of these unconventional tools. It rid of qe is a registry policy, start putting some yield to the front end of the curve. See what happens. A theres only so far she is going to be able to go unless there is more robust you say recovery does that mean a recession is in our future . Well, that is an interesting point because at the end of fed tightening, you know youre at the end because they burst whatever bubble is out there and that leads to a big deflationary episode. I think were in a more interesting dynamic. We are just starting the process of normalizing rates or we will, they think, by the middle of next year. The interesting thing to us is the amount of tension liabilities that have to be diffused. I think that is what you see in this week. As we head into yearend, Pension Funds that are looking to do risk are selling some of the equities, line long dead, long Government Debt buying long debt, long Government Debt. That is scheming things low. Are you excited . So excited. Coming up, the chart of the decade. He says he is one of that expense absolutely every thing we should have been looking at since 2003, coming up after the break. This is bloomberg surveillance. Bloombergrning, surveillance. He runs, he dashes. Makers. , market looking at the markets, continuing, futures up fractionally. I think we can do it. Scarlet fu is out, out, out. Ms. Pickereley and with us this morning. The chart of the decade. Deutsche bank chief economist. We showed you his chart last week showing how wrong the market been predicting. This time, we will look at the last 10 years of how wrong forecasters have been on the 10 year yield. Were looking at the dotted lines are the forecast stop the yellow line is the actual yield. Bob michaels, so wrong, for so long. It just doesnt seem fair, does it . I think everyone comes into the year optimistic. There is going to be some growth. Theres going to be some inflationary pressure. Seems to be there action too much expectation of that and things moderate. Theres been a lot of deleveraging that is gone on over the last three years. Are the models wrong or is the world different . I think the world is a bit different. Certainly, the models dont account for quantitative use, zero Interest Rate policy on a coordinated global scale were talking about. To me, that is the interesting thing coming into next year some is the fed has dialed away qe, but were going to see the bank of japan dial it up and were going to see the ecb pursue it. Bring the chart of again. The Major Research on this is out of vanderbilt diversity and the university of massachusetts. Everybody knows this on the street. The row question is, why do we still listen to guys like rob Michael Bob Michaels . I get asked this all the time. And the answer is, the answer is the human condition. We need people to frame it for us where we are in economics, finance and investment. It also seems like one thing we had not anticipated is the were looking at longterm economics, but that is not driving us. Lets not forget, that chart being wrong is good for people like me in the bond market. That means theres this constant buying of debt. I talked earlier about Pension Funds are being forced in. That is not going to end in the next year or two, that is going to go for the next 10 to 15 years. We have this savings glut globally that is pouring into the front end of the markets. Your Central Banks squeezing out everyone from the front end of the markets. It is not only a flight to fight quality assets, in the last five years we are watched high yield dropped from 20 down to 5 and it is just south of 7 today. It is more demand for bonds. I think that has more to do with deleveraging. It is more about the savings glut demographics and those kinds of things. What about the fed havent we priced into bonds . Is the market not expecting for 2015 . I think people are expecting the fed to be fairly sanguine, which is, you know, to normalize a very careful pace. There were expectations it would not start until the later half of this year. And people forgot that when yellen first talked about considerable period of time, she itix months after the puts us in april. Rizzoli, she indicated again recently, she indicated it again. That makes or deals go. Do you have a window or youre working as hard as you can get you think the window is going to close sometime next year . I dont think so. It is more about capital availability. Rate is not that important. It is important, but it translates into the premium, the multiple that will be paid. Multiples have been very high. If rates were to spike, it would make a difference. As an gradual increase so your experience is the rate of change of the yield move is more important in a critical feature, going to get the money . Thats right. The money is unbelievably wonderful. There are oceans. Oceans of capital. Endless buckets. , are yousek disappointed in the Field Analysis that has been wrong for so long . I dont know. It is very hard to see inset are right in front of your face. Write a whole oil revolution. Your berdych about five years ago . Like the whole oil revolution. Who predicted that five years ago . Is very hard. You do your best and it comes out when it comes out. What happened with you two . Leslie withtching our ties. Did you not get the memo . I wore a tie, is that not enough for you . I called this morning. Day. N jose sharks that is a really cool chart. It is a great chart. Thank you so much. In our next hour, a window into the u. S. Economy for next year, the mystery of what will consumption do next year. Our twitter question speaks of consumption. Are you done with your Holiday Shopping . We havent started. Are you so done with your Holiday Shopping . We say good morning, it is bloomberg surveillance. Good morning, bloomberg surveillance. For scarletr is in fu. Renting greeley with us as well. Looking at the u. S. Markets, down near 18,000. We have to look abroad as well. How about a morning mustread on russia . I was a smart morning note. Former finance minister believes gartman in bold caps off says, dont either ruble. Robert michael with us. Im looking at news on the bloomberg terminal from 6 00 this morning. There is a bill just push through Russian Parliament that depositow the federal Insurance Agency to ask a take a stake in a bank before goes through bankruptcy. Trust bank in moscow when under to the tune of half a billion. Do you and your firm expect more failures . Within russia . Yet, within russia. There has to be some. We look at the problems theyre facing with energy and a problem with the ruble, theres going to be some shakeout. Youre beginning to see policy response from everywhere. Certainly, from within russia. Theres also talk of the chinese extending an olive branch, giving credit. Can they do any response short of pulling out of ukraine . It seems like all of the actions are monetary measures, wont get it done. That is a pretty good point, but it is interesting that how credit and liquidity that come into the system can stabilize things. I would watch what the chinese do. How can they assist mr. Putin when there overnight rates are high double digits . What can the chinese due to bring the inner market rate down in the russian system . They can extend credit. Massive swap credit. You haveextend to step back and say, who does it and if it to see russia unravel . Is certainly wouldnt benefit the chinese. Be careful about extrapolating anything out that everything is in a death spiral in russia. I think you are seeing people step up. The chinese have an incentive. One thing that been driving awards for a long time, to be reserve currency. They are a chance to do this right now with russia. Yeah, i think they do. It is something theyre striving for. Theyve got their own problems. Theres been overinvestment a property, trying to rein in the shadow banking system, seeing growth slowdown. There china maintain 7 growth. Everything is not smooth sailing in china, either. Hasrofusek robert profusek, jones tasting a shift in business dealings in russia . It is been slow. A couple of years ago it was very, very active. It has been slow. Capital is not moving. Robert profusek with jones day and bob michael with us as well. , we mentioned, still stronger, 54. 18. It may be stronger for all the wrong reasons. Coming up, mergers and acquisitions in 2015. Stay with us, bloomberg surveillance. Good morning. Maybe we will see the intraday today. Leslie picker with me in for scarlet fu and Brendan Greeley is here with our top headlines. In new york, mayor bill de blasio was trying to mend fences with Police Officers who say he is fostered in a barman to let a shooting deaths of two officers over the weekend. Everyone across asideectrum to put protests, put aside demonstrations until these funerals are passed. Lets focus just on these families and what they have lost. I think that is the right way to try and build toward a more unified and decent city. The mayor is strong public opposition from the nypd. Officers turned their back on him in a week in News Conference in a police Union Official has said he has blood on his hands. Facebook shareholders are getting an early christmas present. Shares advanced 2 . That is the stoxx highest price since its 2012 ipo. Ceo Mark Zuckerberg billion dollar acquisition of instagram has paid off. Analysts at the photo sharing app is worth 35 billion dollars. Facebook has jumped 49 in 2014. One of rock musics most recognizable voices is silent. Reader singer joe caulker died yesterday in his home in colorado. Joe cocker. He scored his singles like being all right and you are so beautiful. He died of young cancer. He was 70 years old. The Mill Hill Club and cape cod, the chops were there. Forget about all the gyrations and speaks on saturday night live. I think my favorite thing was byebye blackbird. He traded it is something gorgeous. Joe cocker at 70 years old. Thert profusek, billing by 10 minute interval. Will billmr. Profusek by the syllable. His telephone refuses to stop ringing. Next are could, should, and will be a bang up job for mergers. What is different from this fruit frenzy from previous frenzies . The last frenzy, if you will, with the 20062007 private equity. It was a really strategic. This is different. It is fundamentally strategic. Ofre is a fair amount private equity, but not on a percentage basis. This is about capital redeployment and return on capital. To me as an amateur, the heller brayton Halliburton Hughes deal signaled something else. We see further collapse in oil. Our you going to be robert oil baron profusek . There is going to be a lot of shotgun weddings in the oil patch. No doubt about it. Could you write that down . Im not writing that down. That is the quote of the day. 2014other big theme from with these tax efficient transactions we saw, the inversion grace, some cashrich split offs with the buffet deal. What do you expect for 2015 and terms of doing things for tax efficiently . I number is the mayor has said she will dispose of her yahoo stake in alibaba in a tax efficient way. Do you expect this trend to continue . I only have one observation about the world right now, and it is capital efficiency. If you have two pieces, to businesses under one corporate umbrella and it is not traded perfectly because the market doesnt get separating them is better. The market should get a perfectly, but never does. The alibaba state, everybody is talking about it. It is not easy to spin off its stock as opposed to a business as a tax matter, but theres a lot of that. It goes back to capital allocation. When we talk about financing for these deals, were focused so far on the low rates but not just the rates, the liquidity is the terms, right . We have kind of gone to covenant zero in terms of the way the bond market is on this stuff, and with the highyield market getting rockier, but it is plentiful. My point. Cfo has tohat every act. Is there a desperation that the yield, damage is going to close and so from where you sit in strategy and advice on fixed income, you need to advise the cfo to get it going in q1 . I think there is some concern that this actually may be the year yields go up, despite the chart. There some pressure. Bob and i were talking about this earlier, when you loo