Italy france, and spain fell. European stocks hit a sevenyear high. The euro is at its weakest against the dollar. In greece, the antitrust area party shows theres a sixpoint lead over the new Democracy Party. They have vowed to abandon austerity measures. Lees hutchinson is in talks to buyo o2 from telefonica. A deal would create the largest mobilephone carrier. Turning to the nfl. Looking for the culprit in the case of the deflated footballs. It is not tom brady, that is what brady says. He professed his innocence yesterday. I feel like i always play within the rules. I would never do anything to break the rules. I respect the league and everything they are doing. His coach says he was shocked to hear that the balls had been under inflated. Shocked. I go with troy a man. He says it is impossible for a ball to have been deflated and a quarter bar and the quarterback not know about it. You have a great lineup of guest. I will hand it back to you. We do. The irrational exuberance. Robert schiller with us. We can talk about the housing industry. That does not work. Lets talk about the new edition of your classic irrational exuberance. How irrationally exuberant are the people of dollavos . We have a lot of talk of any quality among the people i talked to. The strong advantage point is the 1 . The 1 is almost back to where was in the 1930s. Do you agree . That sounds right. There is a youshaped there is a ushaped curve. In the 20s or so that, or even earlier, the highest 1 was in 1930 1913. It bottomed out and now it is going up. It is back up to the 20s. You have a lot of common ground. The schiller area is how we behave. How we react to things. What will be the behavior of the people . I do not think many people understand what happened. They will be told, they have been told that the ecb is doing what the u. S. Did. Everybody in europe knows the u. S. Has had a better recovery. It has a recovery. It is plausible that a rational person would assume this is good news. It translates to Interest Rates, even mortgages in the u. S. Lower, but it translates to the currency market. All the people of europe will no weaker euro against weaker eurowill know will know against the dollar. They are not american. They do not have the idiocy we have back to the revolution or before, back to the colonial days, new world optimism i would suggest is lesser or not there in germany and other parts of europe. That is an interesting question. I have heard that said. I am thinking of the first stock market crash. 1720 it was in europe. It you can read up on it. It was a huge bubble and a huge burst. Back then, there was nothing happening in the u. S. Virtually nothing. We had a conference on the 1720 crash. Yell students put on a play dal students yale students put on a play. You put a play on with economics . They did a play which was written in 1720. It was the story of the boom, the bubble. Lets get back to economics. We saw a lot of history yesterday being made. What are the ramifications for janet yellen when europe catches up with all of the games we have played. If this strengthens the economy, the weaker euro well offset some of the advantages. You provide a great leadership. Can bob shiller say america has reached escape velocity . Click s gave velocity . We are doing better. These are gut feelings. We had a peak in the start market in the stock market and then we had a recession and another peak. These are seven years apart. Recessions are coming around and they do not get predicted in advance. We do not have the art of predicting recessions before some kind of leading indicators turned down. This is not a prediction. It is always there. After we have been in a boom for so long, i get more anxious. Thank you. He has thatat yale university, robert shiller. The news changes the conversation. Coming up, Daniel Yergin on the family of saudi arabia. This is bloomberg surveillance. Good morning, everyone. Bloomberg surveillance from davos. They need the snow for the ski industry. Some of the dynamics we are seeing this year. This is an important interview. You know the important contribution of recent years. We could talk oil, we could talk to the dakotas. It is pushed aside for king abdullah. I want to take it back. I have been upset at media coverage. This is much richer. Chevron showed up and paying him money for expiration rights. There may be oil on the east side. You move on. There is the burgeoning middle east with qaddafi. Constant has been a family. To get through faisal to abdullah and beyond, why has there been such consistent the . Different tribes he married into abdullahs family was a rival tribe. After he conquered them, he married one of the ladies from there. That is how the kingdom was united. People have been predicting the british ambassadors. It is unclear how they can survive. Lets bring it forward to today. There is the new canaan, a new crown prince, and beyond that, there is it mystery. Do you have confidence they can maintain stability beyond the king and the crown prince . There is an agreement within the family on how they proceed. They knew he was in firm. They will be looking towards the next generation. Are they the moderate producer . The other swing producer is this country called the United States. Can i rip up the script . How many victory laps . Do you feel like yes, i got it right . It is hard. Here, i remember people say you do not believe in peak oil. Not really. We have seen peak oil. It has been followed by a glut. New areas open up and new technology. U. S. Oil production is up 80 . For our viewers in the middle east, in 1986, the price came down and went flat. Do you predict that again . There are analogies there. It is a different circumstance because the u. S. Is so flexible. The kind of prices where we are now would not sustain production over any period of time. The canadian tar sands are a different dynamic. Where is the politically correct Surveillance Police . Canada is going to add about five hundred thousand barrels a day to the world market because it is in motion. A new investment will slow down, but canada is one of the sources of growth. Canada has grown one million barrels. You move on to a whole series of books that say read history or you do not know the present. From the past, what can you bring forward for americans to say dont panic about the plunge and the whale . This is the first time in the last 80 years we have seen a surge of oil come into the market. Every time you have weak prices youre talking about the middle east and back in 1931, when oil went to . 10 a barrel equal into a gas station, they gave you a free chicken to try to get business. Every time it stabilizes. The u. S. Is now the swing producer. What is big oil . How do they adapt to this . Theyre looking at their budgets and one company is 25 , another is 10 . Others are slower. Going into 2016 you will see a further recalibration. The people who will have to adjust quickly. There seems to be about a 30 budget cut today. The work of Daniel Yergin is the idea of the highyield market. Everyone leveraged up. Do you have a concern about the workout . When we look at our numbers it is about a quarter of a trillion dollars. A lot of highyield and there will be a lot of people saying there are opportunities, who has dead. People are hedged through this year, but producers will have problems. We are down to 64. It is not clear for russia. How link is the price of oil to mr. Putins future . s budget is over 40 from oil. The Budget Expenditures are in rubles, so the dollars come in here. This puts a lot of pressure. Russia is going into a sharp recession. Does he micromanage the oil business . I think hed pays close attention. People say he is like the ceo. Thank you, your comments on saudi arabia. Our twitter question of the day does the u. S. Have the proper and right relationship with saudi arabia . We need to hear from you on that. A beautiful friday. I am coming home tomorrow. It is bloomberg surveillance. Good morning. Our guest host for that hour, leslie picker. Tom keene is sharing with in davos. My morning must read comes from stephen carter. He writes fans should care because it matters whether the champions cheat areas fans should also care because it seems the nfl left integrity on a private jet somewhere. This is what everyone has been talking about. It seems to be hitting a nerve because people feel this is something the patriots have done before. Are we chasing it down because the headlines right themselves or does it have with the patriots . I was looking for information and when you google patriots the word that shows up next is cheating. No one likes a dominant team, except that teams supporters and they have been caught before. This is not new. It fits a narrative we have. Professor carter writes they find ideas in the rulebook that no one figures out and they have broken the roles, and destroy the evidence, when the the thing i think people love about football is it is a democratizing thing to watch. They are more talented and capable. When you hear stories like this, it throws the balls in the air. These things write themselves. Aaron rodgers likes to over inflate footballs. He admits to paying someone off to tamper with footballs. This is a thing that happens. Is it the patriot that everyone loves to hate. Look as look at what has happened in the nfl in the past months. Ray rice and the video of him clocking his wife, which is beyond inexcusable. There is a sense the nfl is taking integrity to lightly. There is criticism that they are not being forward enough about Health Information with all of the concussions. It is a health risk. When you hit men for a living that is your job, you have to wonder what happened to your brain and your moral compass when that is your daily gig. Please do not compare deflating footballs to savagely beating a human being. If you think these are comparable, you take football too seriously. I feel these things get inflated in a different way than he is implying. It is hard to see how the nfl is jumping on this. I have to show it. Really . Really, daily news . That is their bread and butter. We are just getting started. We are going to go back to tom keene in davos. He is going to be joined by the president of the Peterson Institute for technology. Good morning. Lets get to our top headlines. Cmn is descending into chaos now that yemen is descending into chaos. Tribal leaders say they will not take orders from the capital. The resignation deepens the turmoil there for al qaeda to expand operations. Starbucks said net income increased as new food and holiday drinks boosted customer traffic and sales. They posted earnings in line with estimates. Starbucks named Kevin Johnson as its next chief operating officer. Cutbacks coming at dreamworks. They will go from three to two films a year. They are trying to improve the quality and profitability of its pictures. It will report expenses of at least 450 million for the restructured. Those are your top headlines. Tom, what is your top headline . After two perfect days of weather, we finally got some snow. We need to warm things up with adam pozen. He is taking over as president of the Peterson Institute. It seems like a good time to meet with you. Every camera every microphone is in front of you and you say forget about the gloom, optimism should rain. Should reign. The u. S. Is on a solid growth path. China did a solid growth path no matter how much they fiddle with the numbers. Japan was on the upside. People were disappointed. Most emerging markets have firm policies. The world is not just about europe, even though we are in davos. There is almost a j curve effect. The initial reaction is good news for bmw and the rest. Where is the gloom for germany . They had some things they were selling directly to the chinese. Even if china continues to grow they are going to buy. What is the distinction between what they say and the pozen optimism . Axle is focused on europe because that is where he served. He knows the whole world, but he is choosing to emphasize structural problems in europe. Any of those people you mentioned the real burden is they think unless portugal and greece become as competitive to switzerland and germany, nothing new will happen. Greece may need a fullscale transformation. Italy can grow even without complete transformation. Janet yellens world changed. We do not have a ruben dollar yet. Think about how much the dollar came down and how much things have gone back. You have lost a lot of ground against the yen. It is above parity. Chinese currency has been stable since the dollar. You cannot believe the food cost. Can i stop the show to say a bowl of soup is 22 . I am not kidding. You study this for decades. We need to do it better. Do you see any impediment to us in the future . Things get messed up and we fix it. For all of the things we look at, it is amazing how unbalanced. There is an issue in our health care system. We would be better off if we were not throwing away a 10th of gdp away on wasteful health care. Kids in the less welldoing schools are getting hurt. With greece or italy, that is not everything. Let me bring it back to what we saw in the ecb. We will buy negative Interest Rate bonds. That is not in the books i studied. What does it signal that a bank will manipulate, purchase, or hold a bond that is priced so high, the yield is negative. There is still too much fear in risk aversion. Private investors are stuck in their flight to government paper that it is up to the central bank to offset that. It is true in europe. No one wants to invest. This is an overreaction. The central bank has to offset it. Business as usual. We keep it going. This phrase that i do not like a structural reform. What is it . Whatever wish list the people who are the creditors have at a given time. It is the fantasy. It would be nice to fire everyone in france the way we fire everyone in the u. S. It will not happen. They have cultural economics in france. It is different than the United States and germany. They survive. They used to say scientists could not understand how the butterfly how the butterfly flies. Somehow, it is still there. I would like to see france improved. I would like to see the labor market make more sense. That does not mean that just because they are not the u. S. Terrible things will happen. This was a decade ago. Should we have another plaza accord. Stop worrying about the gyrations of the market. Everything compensates and adjust out. As we go along, 20 Currency Pairs move. That is the optimism. I appreciate you remembering one of the classics. Look at what is happening with the swiss franc. A crazy appreciation. It is an overshoot for any evaluation. It involved a future appreciation against the dollar. You are right. You have to look past the whole thing and try to stick to fundamentals and hope it comes out in the end. With the pozen optimism, you are alone on this. There are not many people out there with you. I am terrible about equities. It is a clear implication that i am less worried that a lot of people. I am less worried than bob about overvalued stocks. Geopolitical risk is exaggerated. I do not mean that there are not terrible things happening, but the impact on market tends to be passing. We need to get back to something gloomier. Adam pozenosen. Does the u. S. Have the right to proctor the correct relationship with saudi arabia . From the World EconomicForum Meetings stay with us. It is bloomberg surveillance. This is bloomberg surveillance. It is time for the single best chart. We call these Kitchen Table issues. That is how we refer to what people worry about. It comes from gallup. The answer is a tie. When asked to name the biggest financial concerns, health care and low wages. Colby smith is our chart manager. Look at the lines on the bottom. Those are taxes, stock market, Interest Rate. That is what we talk about every day and that is what americans do not care about. Janet yellen is worried about spooking the markets and going mainstream. My thought from looking at this, those are the thing people worry about every day. When you pay your taxes, it is once a year. Every day americans put their money in the stock market and leave it there. It is so far down. Economic models think about investing in the future, but the way most people work, all of these things then need to be paid on a monthly basis. Leslie you cover ipos. Does the worry their match at what you are seeing . Did the entrepreneurs think this is boomtime . Boomtime, for sure. It is a trade people can you can look at an ipo and outperform the market. Wages are a real issue. Especially in Silicon Valley with, where you have to attract the talent. They have to protect the downside. Wages are so high, they were caught trying to keep them low. That is amazing. Silicon valley and tom brady why did you let us down . We are going to discuss the hour. We have a correction yesterday. I mistakenly said the soccer club arsenal is moaned by iraq. It is not. Time for the top photos. What do you think this is . This is a batteryoperated drone carrying 6. 5 pounds of meth. It crashed in tijuana, mexico. 6. 5 pounds of meth sell out of the sky. It was unable to support the weight of the packages. At least 150 drug smuggling attempts have been made from mexico to the u. S. Since 2012. I have talked to entrepreneurs i always think about the submarines. Number two, a beautiful photo from the arctic. A flipped over iceberg was spotted in antarctica. It revealed a deep blue color rarely seen a nice. I cannot beat the drum, but i like this one. President obama was interviewed by three youtube personalities. They are taking a selfie. The interviews were streamed live yesterday. They discussed topics including cuba, Police Brutality and the video has over 650,000 views on youtube. We giggle about this but they can do a thing we cannot. What . Pull in 650,000 people . Yes. There is that way they speak that people do not find in us. Clearly the president is trying to reach a younger audience. This is the same strategy disney is using with the star wars movies. Coming up, we are heading to a conversation. This is bloomberg surveillance. Lets get to our top headlines. Tmobile will offer deals on new sweetheart phones on new smartphones to people with bad or no credit. They will not charge interest. They previously made the deals to people with good credit. J. P. Morgan chase and Goldman Sachs getting more cash in bonuses. Jamie dimon received 7. 4 million as a cash reward. His total pay was unchanged at 20 million. Staying with the topic of executive pay, tim cook rece