tv Bloomberg Surveillance Bloomberg December 2, 2014 6:00am-8:01am EST
for asia? after cyber monday, bow tie tuesday. this is bloomberg "surveillance," live from new york. bow tie tuesday, december 2. i'm tom keene starting a new retail trend. scarlet fu thinks i am an idiot. brendan greeley. a lot of news. >> russia may be falling into its first recession since 2009. according to the economy minister, russia's gdp may fall by a full percentage point in 2015. feeling the impact of the 30% drop in oil prices. sanctions of really fighting ukraine have heartbeat economy. leading the ruble to weaken against the dollar. vladimir putin in turkey. getting into european pressure and scrapping a proposed laxity
pipeline -- black sea pipeline. directd have been a more route to europe. the eu rejected because it would have reduced ukraine's leverage against russia. >> oil rally did not last long. down,exas intermediate falling for the fifth time in six days after a 4% gain yesterday. european benchmark rent is also down. president obama says he will work to ease tensions. give police body cameras and promises that will be tighter oversight on how much military equipment police forces can buy. of rioting in ferguson, missouri. the president met with civil rights leaders at the white house. the americanart of family does not feel like it is being treated fairly, that is a
problem for all of us. it is not just a problem for some. it is not just a problem for a particular community or demographic. >> u.s. attorney general eric holder says the justice department plans to take steps racial profiling. >> maybe shoppers have outgrown cyber monday, it rose 8% .esterday analysts say you should not be surprised. it keeps starting earlier and earlier. amazon was offering deals a week for black friday. let's do a data check. equities, bonds, currencies, commodities. was boring, is not anymore. futures up fractionally. euro fractionally weaker. crude giving it up in the last hour, 68.10 off the news out of
russia. weaker.9, yen gold up near 1200. two year yield is turning -- is churning at 0.5%. something of note. japanese versus south korea. here's the asian financial crisis. a weaker south korean won. korea does better. here's the weak yen manufactured by mr. abe. we are back to where we were. new won strength last night. a knock on effect away from the major pairs. >> i am interested in these. cultural site between korea and japan. j-pop band., a korean pop and japanese pop.
of au see the churn managed currency. south korean won. we'll addressed rozelle and our second hour. brazil in ourss second hour. monday it a stabilizing day. away from a russian recession headline. oil a point of instability. jeff dennis of ups, well-timed speaking to him. the russian ruble a point of instability. jeff dennis is something. what does it signal to see in about the evaluation -- dev aluation? the collapse in oil prices. it is the impact of the sanctions imposed by the west on
russia. the impact it is having on the economy. it surprised the russians how severe the impact has been. there may be a recession next year. this is contributing to the weaker ruble. there is capital flight. >> help me with kremlinology. i'm curious about the decision to cancel the south stream pipeline. somethingconcession, vladimir putin has not been keen to make. >> i suspect it is more linked to the sanctions than to the pipeline. the sanctions are hurting the russian economy. much more so than the government expected. i think they are looking for easing of sanctions. >> they are looking for easing of sanctions. on the cover of the "ft." this shows percentage change. steve at johns hopkins, this is a long chart.
this shows the tension. >> you wonder how much further this will decline. dollar strength against the ruble. say theet would rapidity of this and the overview of the sanctions. >> we have been asking for two months when will putin crack? i think we might have seen it. centralarket wants the bank to raise interest rates and defend the currency. nobody really trusts whether there will be controls are not. the markets are pushing russians to respond. >> here is the "ft." we are finally there. >> perhaps. >> there are some capital controls. you cannot get out more than $10,000 of russian banks. >> equity investors thinking about going into a cheap russian market. are they going to walk in and
find they cannot get their capital out? it is a risk. until people know the risk is gone they are going to be wary. >> russia has not done enough to .iversify its economy other countries have been moved. what can a country like russia ?earned from mexico you need to see a buildup of manufacturing to some extent. oil has been a big winner for so long. build up their markets for manufacturing products, increase the quality. they have 400 million people sitting on their doorstep in europe. mexico has benefited enormously from the closeness to the u.s. has to that mean putin make more concessions in order to move in that direction? >> i think he is looking for the easing of sanctions. i think that will -- >> do you think that will occur? be surprised.
a lot of the europeans are comfortable -- and a lot of the europeans are uncomfortable with sanctions. >> let's segue to retail. joins us. >> she does not call it cyber .onday or bow tie tuesday are you exhausted from the media frenzy? how did we get here to such statement analysis? >> the intensity and the notion that all profit comes in this magical weekend, black friday, and as a result there is .crutiny of it >> will there be profit or are they giving it away at the revenue line? >> that is a worry timmy, the flight to the bottom. you talk about a week before thanksgiving, it was a month before thanksgiving.
doesn't concerns of -- those are the concerns. >> i got an e-mail from a fan, the woman on retail with the red hair, who dresses her? >> i have a mixture of everything. thrift shop. commes de garcons. this is a gift from a colleague. you are getting the full tom keene treatment this morning. question number one is why is everyone as so stupid. question number two is what are you wearing. >> save me. >> the shipping debacle through everyone for a loop. particularly ups, fedex, and amazon. there is an idea that everybody is pushing off the pressures of
gifts until the last minute. >> people have been shopping online pretty consistently. it is not just cyber monday or bow tie tuesday. >> small business saturday. >> people have been doing that. it has become every day. cyber week, cyber every day. the other thing is, it was as much the retailers who are pushing we will get it to you in two days. the distribution companies were not part of that. now they have said we are not going to get messed up anymore. >> they put their foot down and said do not push that idea. >> one takeaway was the 25% discounting has become 40% discounting. where does that end? was looking in one of our department stores the other day. this was the week before thanksgiving. i saw something 50% off. the woman said there is another
20% off. money?how do you make she said we are still making money at 50% and 20%. you are a professional and you still thought victim -- you still fall victim. >> all around the store it was 25% off, there was 50% and then 20%. how could you miss that? >> geoff dennis. you bought some clothing. >> i should have. a guest yesterday it on with a suit that was 35 years old. >> this is six months old. >> you did not ask me where i got my clothing from. >> we have a lot more coming up on bloomberg "surveillance." bow tie tuesday. one side effect of the oil plunge, oil service companies are getting whacked. one company that will survive, which are on unstable footing.
>> good morning. bloomberg "surveillance." he's from connecticut. richard blumenthal "in the loop" at the 9:00 a.m. hour. interesting to see what the senator has to say on a number of issues. bloomberg "surveillance," a quiet morning and then rush out with a headline. ruble. on the move. wti $67.99.tilt, oil producers, drillers, oil
service companies are calculating their cost. investors are trying to parse good companies that are on sale and those on shaky footing. bank of america merrill lynch analyst says he expects a shakeout but not right away. >> you might get consolidation. some companies going out of business. all of that is going to lead to a slower rate of growth. the thing that is -- nothing is going to change tomorrow. for the next six months, investment is baked in. 2 years out we might see a shortfall. it will take a little bit of time before that investment comes on. >> he says it will take a little bit of time. investors are placing bets on writing. peak in june, the biggest decliners in the s&p 500 are oil services company's. if you look at the percentage 41%. down 55%, 54%, >> the one company that is not
in that group is being taken out. >> that is the other thing going forward, more consolidation. one metric is the debt levels. might be ato ebitda way to discover how healthy or unhealthy some companies are. >> do we say ebitda this early in the morning? >> it is bow tie tuesday. depreciation and amortization, you get ebitda, people toss it around at cartel parties. -- at coctail parties. >> this helps you determine how many years of ebitda would be necessary to pay back the debt. 2 or close to 3 is alarming. >> can we draw a distinction between companies that are focused on fracking in the american west and the companies that are doing offshore in brazil.
metric is ony the the balance sheet rather than the income statement, leverage. >> something you have to look at. when it comes to the american west, certain areas are more costly than others. shale, people cannot decide whether it is expensive. it is fairly established so that is not that expensive. parts of oklahoma that have not been explored enough to lure efficiencies. >> the people rooting for the cleveland browns. hich off dennis -- w those patches of america do you own property? >> none. take us tonnis, emerging markets. we saw travails of commodity producers in brazil. do you see this expanding worldwide? >> php and rio tinto doing work outside iron ore.
>> you see pressure on the mining sector because of what is going on and china in terms of reduction of demand. the markets are incredibly efficient at pricing all of this in. already saying, that is what their job is, that oil prices are $70 a barrel. what happens if oil starts to rebound and goes to $85 long-term? >> i got it makes the news. >> we know the long-term oil price is above this level. oil's probably got to go down painer $20 to inflict on these companies. the market has priced at in. >> market has priced in $40 oil? we are today. >> the signal is we are going to sit on this until some thing happens. there is no indication that we will get it back up to $80 or $100. >> i agree.
what you have got to assume is in june,5 for brent three things have happened. you've lost the premium in the price because of concerns over supply, isis, etc. in demand. it dip you've seen a big increase in supply from the u.s. and saudi arabia and other markets. low prices will eliminate some of that increase in supply. $70?s. oil profitable at it will naturally stabilize. >> geoff dennis with us from ubs. wendy liebmann out of retail america. in our next hour, the president of scarlet fu's cornell university. she does library fees, he's here to collect it. skorton will be here. our twitter question of the day, is the class of 2015 better off
>> good morning. from new york city, this is bloomberg "surveillance." markets are quiet. had ahanged when russia negative gdp statistic. i will pick it up. a brilliant morning must read from kit juckes of socgen. some scarlet fu demands we do, avoid hysteria. the gospel according to kit. "reading anything into how asian
markets behave on monday us nogs either gives information about the rest of the day or unhelpful information." we face wheneality we come in at 3:00 a.m. we look at asian markets, thinly traded, yesterday, hysteria. geoff dennis, you have lived other shops.nd you've got to be suspect about the early morning read. would respond to what the u.s. is doing. you get a better read on what the world is looking like tuesday, wednesday, thursday, and friday in asia because they are responding to the u.s. on monday it is reacting to its own news. the drop in hong kong-china shares yesterday was driven by a smallness on -- small miss on protests.gns on the
that was over blown. >> we are addicted to the news. sunday evening at 7:00 p.m., australian opens. else ishink everybody going to be stupid about it so you make a move early. i'm surprised how imperfect the information is about the u.s. and european markets in japan. despite all the global flow of information -- >> it is not there. >> there's more linkage between what the u.s. is doing and what asia will do then what agent will do with respect to the u.s.. if you have a series of market can see thisou morning we had downmarket yesterday and futures are up. the agently is not which breaks the circle. >> funny you say that. when i worked in hong kong we would be tearing out our hair.
stocks fell, even though we know that u.s. stocks will rebound. why can't people discount the one-day reaction? >> i do not have an answer to that. asia is small compared to the u.s.. it will be nice if they reacted to fundamentals. they very often do not. >> geoff dennis with us for the hour. along with wendy liebmann. we will talk about the brittle shopping season. is it bow tie tuesday, a race to the bottom. we discussed on "surveillance." ♪
>> good morning. bloomberg "surveillance." our twitter question, thank you for your responses. in the education of america, is the class of 2015 better off in the class of 2014 on a job economy. maybe a little bit. no charge for this transaction @bsurveillance on twitter. we need your answer on the state of employment. headlines. >> for russia, its first recession since 2008 is on the horizon according to the deputy economy minister. rush's gdp could fall by a full
percentage point. the 30%the impact of plunge in oil prices. sanctions over ukraine have heart the economy. ruble weakening 26% against the dollar in the last three months. another recall for general motors because of a headlight problem. 316,000 vehicles are affected. gm's 79th in north america this year. a record 30.4 million cars and trucks. bill cosby stepping down from the board of trustees at temple university. the latest fallout after a barrage of sexual assault allegations. cosby says the move is "in the best interest of the university and its students." been a trustee since 1982. >> another conversation on retail. out by black friday.
scarlet fu and brendan greeley are worn out by cyber monday. wsl strategic, retail. exactly what happens now, december 2, to the final map -- mad dash on december 21. >> a slow couple of weeks. the last week for christmas, people realize what they have not done. they will come out and shop. >> how do they manage inventories? everyone shops for two weeks, then it goes dead. what do they do with blue jeans? > they have to keep the store stocked. they are eager to get anybody in their. there are a lot of people who will come out. it will not be a frenzy. retailers have gotten better at this since the recession. the challenge of managing
inventory. this year, we are shifting to a new world of retail. you can see it in the protracted length of the season because of digital. all of that is changing the way retailers are going to have to manage. >> how is the drop in gas prices affecting the way they believe shoppers will shop? believe it isers putting another $20 in somebody's pocket. every day prices have gone up, like food prices. unless they are looking at the macro view, they are missing that. they are still subscribing to the old model of looking at retail forces when they should be adapting to something. >> absolutely. >> geoff dennis was giving us a macro look at his inbox. frustrated by advertisements. just as retailers are competing on sales, they are competing for your attention.
where does that lead? at what point do we ignore everything? >> it is a big issue. shoppers at this time of the year really have a list. on storeseping an eye and products they care about, and price points they care about. they are keeping those. they had their own personal algorithm. they are trying to make it easy for themselves. retailers barrage them. understand that what is in the interest of every individual retailer, giving you information, actually hurts retailers in the aggregate. they are in it for themselves. it is a capitalist economy. they figure if they send you one more you might react. they're trying to stay in front of you. >> my algorithm is, i am trying to get rid of the ugly bowties. >> go shopping.
>> how much buying on impulse is there. >> tom does not go in post shopping. >> remember, here we are in .anhattan there are people who feel they have to shop for young kids, grandchildren. they are doing some of that shopping. it is really painful. which is why people shop on amazon. it takes the struggle out. >> why is the peril so week this season? weak thisapparel so season? >> people are putting their money towards technology. >> people have been dying flatscreen televisions for the last four years. jennifer aniston on the cover of "harper's bazaar." it is this pick. it is full of stuff for scarlet fu. >> you are looking for stuff for
yourself? >> you mean an examination of oil prices? >> how can you say there is nothing new? >> look at what is there. how many new dresses does she need? >> 5 or 6. years ago.from two >> if there is something i do not have in my wardrobe. >> second floor at bergdorf's looks tired. >> every retailer with fashion looks tired. >> you've been talking about discounts earlier and shoppers not making the purchase in the expectation of a greater discount later. what an economist call that deflation? >> yes. it has been going on for many years. you never buy anything in this country unless it is on sale. sales used to be twice a year now they are permanent.
in terms of declining price pressure, it has been there for a long time. it does not look like overall deflation because food prices have been going up. there are offsets. >> "wall street journal" here is geoff dennis talking about the deflation. the deflation that is out there. wendy, the inflation away from cheaper gasoline prices seen in medical costs. it sums up to a little bit of a spending increase on bills we need to pay. that's why we are tight. >> that is what holidays look like. .hings are better in general from a shopper perspective they are feeling a little better than they did last year. they will buy a little bit. they are not breaking the bank at all anymore. >> you said it macro and jeff raise his hand. ask people what the
inflation rate is of everything that they buy every day, tickets, food, clothing, gas, health care, they are going to say 2%. people sense prices are going up . either to the supermarket and you cannot remember what it was last time. the inflation in certain parts of the economy is significant. it is offset by weaker apparel l prices. i do not think anyone feels that going up. net are not it is a nice idea to think it is deflationary but there are huge offsets. >> do you look at the distinction between the expectations of deflationary behavior and actual deflation? >> of course. the problem for deflation, people postpone purchases
because they think it is going to be cheaper down the road. >> do you see this behavior? is it like the united kingdom in the 1930's. >> maybe with apparel. postponing?e > i've heard lots of anecdotal things. people say i wait to buy the desk chair until black friday. >> who is getting it right and merchandising? which designer and which store? >> you asked me all the time. hardly anybody. unless they are a tech retailer. people are selling accessories for tech, headphones. actually, even people selling coffeemakers. i am stunned at what people are spending their money on on the holidays. >> it is not apparel. >> we get a huge response when she is on. >> wendy liebmann.
>> good morning. bloomberg "surveillance." i'm tom keene. brendan greeley with us. all his children are healthy this morning. that is a good thing. given point, one of my children is not healthy. >> he has 4 children. >> single best chart. >> the global implications of a slowdown in china. the country's appetite for australian iron ore or brazilian oil is a shadow of its former self. white line, australia is the most dependent on china. more than a third of australia's total exports go to china. brazil is the yellow line. it has seen the biggest drop off in demand from china. they used to send 20% of exports, now is 12%.
south korea and japan, purple and red. at the very bottom, the u.s. and germany, blue and green. u.s. exports dipping slightly. germany seeing a pickup, ever so slightly. the economist says some of the data is worrying. industrial production and inflation-adjusted gdp. >> geoff dennis of ubs. is the party over? >> i don't think so. it is just slowing down. it is heading for sub 7% growth next year, 6.5% -- >> what is it mean for commodities? >> you've seen the impact already. saudi arabia telling north dakota what to do, those are issues. >> absolutely. the impact from china on commodities is the impact on iron ore prices and base metals as opposed to oil.
china accounts for less of the global consumption of oil than it does of iron ore. ubs,u had a jewel at jonathan anderson. brilliant work on china. do you or anybody else know how much copper china has? >> no. there is a level of opaqueness. >> speaking of opacity, you are predicting a soft landing. the other thing we have no clue about his leverage at the local level. banks and products being financed. >> we feel the economy is still growing. it is slowing down. it cannot keep growing at 10% forever. because inflation is low, there's plenty of room for the central bank and the government through fiscal spending to support the economy. issues,e structural shadow banking and corporate debt, worries about a banking system, a need to restructure
away from investment into consumer spending. they have the tools to do that and the freedom because inflation is so low. y aboutve to ask wend the chinese consumer. they have been driving luxury sales but they have slowed down. does that carry onto 2015? said and the broader implications, yes. where is the growth coming from? >> cannot count on mr. and mrs. wong anymore. >> it is not just luxury in china. wages are up. u.s. wages years ago, they are now at 20%. that will aid a shift towards consumption. from the focusay on the short-term data of for the next five to 10 years you will see an increase in consumer spending as part of the chinese gdp. the biggest consumer story in
the world, period. even if it is volatile. >> let's get to photos. >> back in st. louis. students stage a die in at wash u. >> that is what they call it? >> they are lying on the ground as it outlined in chalk. a nationwide protest calling for students to walk out. >> washington university at st. louis. >> amazing footage of the st. louis rams. >> with their hands up. >> it was stunning. a reminder that sports are an important part of politics. everybody's least favorite airport la guardia opened 75 years ago. the problem with that photo is that people are using public transport. that does not happen. >> it does exist but it is terrible. >> it is quantifiably the worst airport. our global audience,
there is something about enjoying a bite to eat at the marine terminal at laguardia. it has gone from world's worst worst to just world's worst. >> you will have to quantify that. number one photo, we are looking gino smithth -- throwing a pass against the miami dolphins. won, the stadium was empty. tickets were resold for $10. >> this is a monday night football game. that is less than the price of a movie ticket. >> half of what was being offered to bills fans to shovel out the stadium. --you cannot fully immediat you cannot fool the american
owes $14.21 to skorton. is probably worth $500, the library fine. >> scarlet fu in 2009. >> baby scarlet. >> i look like i am 12 years old. >> graduating from cornell university. mr. skorton will join us, david skorton, president of cornell here he takes over the smithsonian institution and a number of months. our twitter question of the day, is the class of 2015 better off than the class of 2014 in getting a job?
we need top headlines. >> scarlet fu. a for apple. shares down more than 3% for $1 of 22.5 market cap loss elite dollars. shares of the ipad under pressure. thestock has gained 44%, 15th biggest gainer in the nasdaq 100. more fallout from the hands up, do not shoot gesture by the st. louis rams team. notpresentative said he did apologize. rams -- the hill staffer who made critical comments about president obama's daughters on
social media has resigned. elizabeth lauten posted remarks malia obama,nd telling the first daughters to "try showing a little class" and like you deserve respect and not a spot at a bar." >> good lord. india grew last year. in brazil, the economy is set to expand 1%. below all other emerging markets except russia. geoff dennis from ubs. history of comparing india and china. is that over? quite the contrary. you should compare and yet with china. one of the interesting things about our forecast is by 2016 they are growing at the same rate, 6.5 percent. china continues to slow down and india, partly because of the reforms mr. modi is putting in
place, will see growth accelerate to six by 5%. >> in one of the measures where they have diverged, gdp, brazil 18.5%, brazil at 31.5%. >> it is a long-term story. one of the key parts of our report. we think it is the size of the government sector in brazil, which absorbs a huge amount of resources of the economy. if you have the government so big in terms of employment, pension costs, and wage growth, a crowd out private investment. real interest rates are too high, that keeps investment down. that is what we think slows the economy. you need to fix that to get personal growing. investment-gdp ratio, like india's, that would be nice to aspire to. you simply need higher than 18 point 5%. >> in india there seems to be confidence that reforms will
happen. >> they're happening as we speak. you have got to run the country as well and it takes time. india, having gone from 9% growth to 5% growth is going to rebound. one of the best stories and emerging markets. the equity market is expensive but we will think it is a market investors should be looking at for the long-term. >> in terms of positioning, brazil comes out ahead because india is over and -- overowned. >> it is. negative news flow in india. people will pull out. in terms of the long term, we back brazil is an inferior for equity investors that india. >> we thank you. wendy liebmann with us as well as geoff dennis of ubs. ngrex report was bori until two hours ago. ruble continues the devaluation.
stabilize, oil finds a bid, and how will the new new of oil affect your america? prosperous, japan struggles. and this may and/or july, where will the job before the newly minted college graduate? good morning, everyone. this is "bloomberg surveillance." we are live from our world headquarters in new york, tuesday, december 2. i am tom keene, joining me scarlet fu and brendan greeley as well. here is scarlet. x russia feeling the impact of the plunging oil prices and the conflict in ukraine. russia may fall into its first recession since 2009's ear. the world's biggest energy exporter is russia and oil prices have tumbled 30%, plus sanctions over the fighting in ukraine have hurt the economy as well. all of this has led to the ruble weakening over the last three months. meanwhile, russian president vladimir putin is in turkey where he has given to european
pressure and scrapped a proposed pipeline that insures the pipeline from russia through ukraine will remain vital links to europe for years. of the pipeline would have been a more direct work to -- route to europe but the eu rejected because it would have decreased leverage against russia. >> and speaking of oil, that rally was actually just a stutter step. west texas intermediate is down fondly fifth time in six days after a 4% gain yesterday, the biggest rally in more than two years. brent is also down. in the u.s., president obama says he will work to ease tensions between police and african-americans, at the same time he wants to give police a body cameras and promises there will be tighter oversight of how much military equipment local police forces can get in the wake of last week's writing in ferguson, missouri. >> when any part of the american family does not feel like it is being treated fairly, that is a
problem for all of us. it is not just a problem for some. it is not just a problem for a particular community or a particular demographic. >> meanwhile, u.s. attorney general eric holder says the justice department plans to take steps aimed at ending racial programming -- racial profiling by federal law enforcement. shoppinget and holiday rose 8%, less than half the growth of a year ago. analysts say that should not be a surprise. this holiday season keeps starting earlier. amazon and other retailers offering online deals a week before black friday. those are your top headlines this morning. it is a "surveillance" promise with normal retail stories. tuesday?bout bowtie >> bowtie tuesday is here. equities, bonds, currencies, commodities. oil shows a pullback in the last two hours, russia negative gdp,
and we see a ruble devaluation. there is a good enough data check for this tuesday. we greet december with plunging commodities led by oil. the headline is saudi arabia taking on north dakota. the reality is the new neutral is a more nuanced new mediocre. richard clarida is one of america's greatest economists at columbia, now head of global strategy at pimco. up to not just about oil our eyeballs. give us an update on this new neutral, this new mediocre, the demand that is out there. this is not enough demand. >> exactly, and they are related. the new mediocre says the economy is growing sluggishly. new neutral is a prediction that says in a mediocre world, policy rates are going to be lower for longer, and once banks start the hike like the set or bank of england, it will do it slowly and be much below what we saw
before the crisis. >> all politicians including krugman -- paul krugman says we need stimulus to make that demand go. is there any substance there to a need for global or united states? >> we are getting stimulus from very accommodative monetary policy. my friend paul krugman would say we need another big round of fiscal stimulus, and i do not see that happening . for better or worse, monetary policy is the only game in town right now. >> general rule of morning television, if you refer to someone as "my friend," you are about to disagree with them. >> true also in politics. . >> true on both counts. >> people talk like things are going to be normal again, what you are saying with the new neutral is that is not going to happen. >> what we are saying is that a taylor rule may work but with a lower neutral interest rate, if
you will, if lower average policy. before the crisis, the fed got the funds rate to 5.25. it may not even get to 4%, so it is going to be much lower. >> the real rate is zero. >> the real rate is negative. we think it will get between zero and 1% real. >> as we for an interest rates, doesto -- to what extent it undertake necessary fiscal reform? >> it is a windfall for countries that are oil importers and hurts the exporters. i do not think it delays the fiscal reform all that much. it buys some time, both for countries that need reform and not. that would be my take. >> economics, we need to speak laureate -- professor engle would talk about
our predictability of markets. richard clarinet, from another world from the phd from cornell, do you have any greater confidence that we know what we are doing right now? has engle talked about addressing volatility interest? over have learned a lot the last 30 years and we have also learned what we do not know. what we are trying to figure out is what a global economy looks like with insufficient demand, as he pointed out, and this accommodated unconventional policies. we don't all know what the endgame is. x our next guest has a killer bowtie on. isabsolutely, david skorton here come outgoing president at cornell university. the class of 2015 will be looking for jobs for the first time. are they graduating into a better job market, david? justings are improving, like everything of the american economy, but i have to say perhaps the session only --
perhaps especially in the worst of the recession, the value of a college education really shine through. i want to jump in on the education affect of what our colleague was just talking about. this discussion you have had in every thing you have been talking about since early this morning is applied math, metrics, economics, but there are healthy openings of political science, intercultural understanding, and so that need for a breath of education, especially in an unstable, economic environment, very, very important. >> no one even knows richard german is an expert on political and societal culture. >> good example. >> david skorton, as we look at the job market, the engineers and the hotel, who has got better prospects coming up? toeven i am not silly enough answer that question. let's just say they both have terrific prospects. i want to emphasize the liberal arts. liberal arts students also have
terrific prospects as we go forward, and what you have to prepare these days are what you are raw specs are with a college education -- what you are prospects are with a college education versus without. >> you have been in the trenches. it is a threat to society. i mean, it is really dangerous. >> a little knowledge is a dangerous thing, and certainly the most support and they to know about macro is how little we know about it. >> your colleague michael woodford at columbia is iconic on quadratic functions in math, but that only gets you so far. >> he is a classic on a miss. >> he needs to go in learned some tech classes and entrepreneur classes as well as top x we have a special treat for us. wendy leave and was with us for the previous hour. all of us in thunderstruck but unknowing about the death of
phillip hughes, a world-class cricket player in her australia here a few days ago. to havee are thrilled you. what does this mean for us today? >> a huge emotional event because cricket is still -- in australia, as in many of the old colonies, such a passionate sport. he was a young man, 25, the shining knight of cricket in australia and around the world, sort of like a mike trout if you will, in baseball, and it was an absolutely freak accident. the neck,it him in cut an artery, and he basically was brain-dead very quickly. isthe reach of the sport something on translate double to most americans. give us the state as you perceive it of australia's sport? >> it is booming and it is still a global sports sort of like
soccer, like football, unlike most of the american sports -- >> she really stuck it to us right there. >> sorry. i am a baseball fan. ask the growth is driven in part by shortening the gain. that is some thing that i think baseball needs to contemplate. >> i get it. that an american says you can play for five days and there can be a draw, how un-american is that? you for that.k good perspective on a horrific accident in australia. >> we have much more coming up on "surveillance." coming up, we discussed the state of the european central bank right here on "bloomberg surveillance" on television and radio. ♪
>> a continues. "bloomberg surveillance." good morning. there she is, the one clear day. the class of 2009 at cornell, that is young fu. >> i look like i am 12. >> you look like you are at least 14. >> scarlet fu. our twitter question of the day -- is the class of 2015 better off any class of 2014 in the job search? do that @bsurveillance.
scarlet fu out of cornell, what do you have? >> when we talk a lot higher at, the numbers are fairly daunting. harvard only takes 5.9%, stanford 5.1%. kevin carey of new america foundation says reaching a good college is not as hard as it seems. this is my morning must-read. the most elite college admissions stat is not be percentage of applications top schools except, it is the percentage of top students admitted to at least one top school. that number is not 5%. or 20% or even 50%. it is 80%. games-ish"s "hunger as the numbers would seem to suggest. herf someone has his or heart set on a particular school, it is very competitive, tough on the student, on the family, i think it is a variety of factors causing this.
one is that we were talking about earlier the big differential between one's outlook, economic outlook with a college education versus without. that is one thing. secondly is a big generation. a lot of students apply in, and realization that there is a difference in prospects depending on exactly where you go to school, and one of the great things about america is that there is a rod, broad range of college opportunities, over 4000 colleges, and every student does not have to go to the same kind of college. >> that may be the case, but students are still applying to 20 colleges every fall and winter as well. an opinion piece in the "new york times" claims harvard is unfair to asian americans. it has been a lot of discussion on that. what is your take on it? makedo not know what to about the details at harvard. i will to you that at court -- at cornell, and it is probably trick harvard as well, all categories of student
applications are up. at cornell annual applications have gone up something like 20,000 in the last several years, and less than 10 years at cornell, so we are seeing a lot of applicants from all over the place. i think people are being treated very fairly across the board at cornell. >> we will continue this discussion, no question about that. david skorton with us from cornell university. coming up on bloomberg television, peter cook in a conversation with richard blumenthal. stay with us and good morning. ♪
>> good morning, everyone. "bloomberg surveillance." futures are now green, dow up 46. russian ruble, a 53 handle, weaker russian ruble this morning. you wonder when that is front and center for mr. putin. let's get to our top headlines this morning. >> tough a for apple yesterday with shares closing down more than 3%. that translates into a market
cap loss of more than $22.5 billion. sales of apple's ipad under pressure as consumers hit stores this holiday season, but investors not need to panic yet. apple shares up 44% this year, the 15th biggest gain in the nasdaq 100. minnesota vikings star adrian peterson appealing his suspension. he was suspended last month for the rest of the season after he was accused of hitting his four-year-old son with a switch. the running back entered a no contest plea to a misdemeanor charge of reckless assault. speaking of football, how willful are the new york jets? a 16-13 loss to the visiting miami dolphins resold for just $15, the least expensive price ever at metlife stadium, which opened in 2010. meantime, an adult ticket to see $12.62le bosses 2" -- a piece. >> that was important research
done well. in the clarida is studio, head of global strategy for pimco. he has a macroeconomic model named after him. check it. in 2010, you wrote a survey of what economists had learned about central banking. waxy yeah, thank you for reading that. >> oh, i read it. it is highlighted right there! what have we learned now in another four years? >> wow. great question. central banks can get to and stay at zero for a very long time. 10 years ago, the zero balance was controversial -- now it is a fact of life. the second thing we have learned is that even though we have been a zero for very long, we still have a very mediocre global economy. the u.s. is probably the best student and a very mediocre class, but we are now in year six of recovery. ddp is well below potential, and most people -- gdp is well below
potential, and most people think the growth rate has declined. rates as zero for a long time and on a life the also far for that accommodative policy. rates at zero, we used to call them unconventional -- do we now call them super conventional? >> exactly. when i discussed this with students, i say you can look back in 20 years when it was a quaint time when people call this unconventional and it is now very common. >> i want to go to our morning must-read from today. i took a look at a speech yesterday given in berlin. she says one should be aware of showing activism, low inflation member states come ava when negative, are not in themselves a breach of the target. they can be necessary to restore lost competitiveness. it is important to have a german on the ecb board. the question we ask is three times a week here, when will the germans crack, when will that change? i analyze this is
that you have got angela merkel, who has multiple agenda, you have got the german people, and you have got the bundesbank, and best far mario draghi is trying to navigate -- >> i think he is never getting with history. read the thomas mayer quote. ask he compares central bankers to u.s. generals of the iraq war when it comes to an access strategy full zip he said they started with shock and all. one initial battle run into trouble when came time to withdrawal. is that we are seeing here you ? in theaw a hint of that taper tantrum. we will begin to see when the fed begins to normalize and we see a divergence between fed policy and the rest of the world. >> brendan, you nailed it with weber, the-- axel woman you just quoted, sabine -- >> sabine lautenschlager.
is you gotom line from conrad adenauer, the developing of that german experiment to what it is now. how much is the bundesbank living in the past, a fog from 40 years ago? characterize it somewhat differently. i think that there is a view in germany that hitting a low rate of inflation is the ultimate adjunctive -- objective. 17 members in the euro zone have different priorities on that's, so i think even the germans now would support policies that would get inflation in the euro zone -- >> and destroying all these per euro economies including puny switzerland? that is a joke. they are doing really well. distorting all of those? >> the challenge in europe is not primarily monetary. it is the fact that fiscal policy has not been sorted out. many countries are simple and not growing.
the level of gdp in italy now is the same as it was 13 years ago, salt milley it is about a growth agenda. germanywe get back to again. the reason we keep looking at the ecb is the germany will not consent to fiscal policy in europe. >> right now the ecb is in the buying certain aspects. i would expect in 2015 they will do their own version of quantitative easing, so it is taking more time than many people would like, but i think ecb will get there. >> a guest yesterday said where are the other nations not to gang up but to tell germany what to do. is there any likelihood that to the rest of europe will say to the bundesbank "enough"? have 18, you participating countries. we do know that some votes are not unanimous, so there is a range of opinion, but as i said, mario draghi is moving the ecb in the direction of quantitative easing i think next year. all right, oil continues its fall.
>> this is "bloomberg surveillance." i am scarlet fu here with tom keene and brendan greeley. top headlines this morning -- on the horizon for russia, its first recession since 2008 according to the country's deputy economy minister. russia's gdp could fall by almost a full percentage point in 2015. russia feeling the impact of a 30% plunge in oil prices and sanctions imposed over the fighting in ukraine have hurt its economy. the ruble has weakened 26% over the dollar in the last few months. closer to home, it appears shoppers have outgrown cyber monday for stop internet holiday shopping rose 8% yesterday, let's than half the growth rate of a year ago. analysts say that should not be a surprise because he held a season keeps starting earlier for stop amazon and other retailers were offering online deals a week before black friday. and a hill staffewho made a
cripple, is about president obama's daughters and a facebook post last week has stepped down. ten, no formerau commander cases director for stephen fincher of tennessee, posted derogatory comments about sasha and malia obama. she told the daughters to "try showing a little class." those are your top headlines this morning. >> this matters now to our new .uest host david skorton seniors at cornell, take on the challenge of running the world's museum, the smithsonian nation,ion, it is the then and now riven by a debate over immigration, this cultural aspect to the five or six is the them's that the muscle -- that the smithsonian has. heritagesort of human writ large. >> you mentioned cornell with a diverse population like every thing else. give us your thoughts on the
immigration debate as you move to washington. >> i am first generation american. my dad is from what is now belarus. this country except for native americans is a country completely of immigrants, all of us from somewhere else, so we need to keep our eye on the ball on immigration reform because it is the right thing to do and because economically it is the right thing to do. havel you what, we need to a more rapid pathway to citizenship for green cards, especially but not only for those who have advanced degrees in disciplines that we need the help in the american economy. we need to find a way to encourage and incentivize some students to go back to their country and to increase productivity based on things they have learned in the united states. i think we also need to think a lot about on document in young people who came to the united states for stop i am still in favor of something like a national dream act for that reason. the last thing is the way the world works now, and you have been talking about it all morning on "bloomberg surveillance," is that people move around the world conceptually and physically, and
we have got to find a way to do what colin powell said, and that is to have secure borders but open doors so that people can experience the different countries in the world instead of security. out of arizona, where this is a huge debate, very different than ithaca, new york, very different than washington, d.c., how do you respond to those just afraid of the foreigners taking our marginal jobs? considerations a but isn't that a consideration the world with or without immigration? >> do they speak dutch in your house? >> my dad lived in cuba for two years, so spanish with a cuban idiom, absolutely, so it is a multicultural world, and of course it is easy for us to sit here and talk about what we should be doing. border security of course is a huge, huge issue, but again i think about colin powell's statement. there is a very realistic man who says we can find a way to have secure borders and open doors and it is up to us to
figure out how to do it. >> what is your message to the seniors at cornell? what is the new message verses five and six years ago? >> same message -- number one, i want them to realize how grateful they ought to be to of had the privilege of having an education not just a cornell education but any college education. that is number one. number two, to realize that over the course of their working life, they will have many different jobs. perhaps people like me even different careers, so think about the brits that they have learned in college. and thirdly, think about each other in their communities, nonprofits, things were we do things for each other, that is the glue that keeps things together, especially in difficult economic times. >> very good. let's go back to scarlet. >> we are keeping an eye on futures especially as we await construction spending data in the lead up to the jobs report on friday. right now, futures higher by almost five points will stop the 10-year yield not changed by much, 2.23%, but we are seeing oil prices head back lower.
on, and youot hold don't have nymex crude at $67.89. euro weakening, the europeans preferring a weaker currency as they try to stimulate the economy. this is "bloomberg surveillance." i am scarlet fu here with tom keene and brendan greeley. decision to sit tight on oil production. it is a day or two the producers permian, andns, eagle ford shale's of the american west. we can go lower -- the saudi's are saying can you. matthew philip's in charge of oil production at "bloomberg businessweek." matt, can they go lower? >> some can, some can't. you have a lot of investment out there parts of kansas and oklahoma, already on profitable. when you get into the $65 range, that brings into play large parts of the balkan and some
people's minds, parts of west texas. a lot of this has to do with how hedged these companies are, a lot of these are small companies and some have hedged themselves into next year, so they are ok, but a lot have not, they cannot afford to. pull up ame i want to chart that you publish an "busineswsweek" that shows where planned expenditures are. what we are looking at, that bottom blue line in the u.s. is offshore, steadily declining. alaska, looking pretty flat. then we have this huge bump, but it is not start to go down for another couple of years. a lot of these investments are based in already. ask exactly. that money has been invested, that has been paid for. what we have seen is/investments for 2015 and 2016. slow up in going to
terms of overall production until midway through next year, so we're going to keep probably on this path of growth for the next couple quarters, which means prices could go lower, and that is going to fuel, make this problem even worse. >> yeah, slashing investments, also reducing spending. analysts at ubs assess perhaps transocean's next. this cash conservation will be a big theme for investors trying to determine who is going to win and lose. >> right. a lot of these companies are funded by high yield debt. their balance sheets are not very healthy. they depend purely on -- flow. these are a lot of small companies that are the backbone of the shale boom where a lot of the majors 15 years ago pulled out, went in search of more extreme oil, and that left some of the companies in the u.s. to really drive this maybe five years or six years ago.
the cash flow drive up for these companies is they will not be able to hack it, and we will see whether some of them fail or if these assets are picked up on the cheap. >> looking at majors in the larger companies, there have been wild claims that they can get as low as 50. is that a reasonable claim? for some of them yes. harold hamm, who is the dean of the balkan, the head of resources, he says he go to $50 if not lower, and some of the sweetest parts of the balkan he says are around for a five dollars. we will find out, but what is interesting about continental's if they are not hedged, they are out there on a limb, he thinks this is a temporary thing, the prices are going to go back up, so we will find out. >> richer claritin, i want to here, put on your pimco hat for a moment and advise clients -- richard clarida, i want to bring you in
here, put on your pimco hat and advise clients. >> it goes back to last week in the opec decision that essentially opec, the saudi's are willing to let the will price fall and stay there. they have learned their lessons from prior decades. i agree that in terms of the oil outlook, the recovery in the balkan will -- in the bakken will continue. the recovery is in capital spending, could take a hit, and obviously our exports to other countries that are impacted, so the decline in oil prices is clearly in a positive for the u.s. and for oil importers, but the arithmetic is not as favorable as the headline number because of these other effects. do ust phillips in d.c., a favor, put in a call to vladimir putin and let us know what his plans are. >> no problem. ask coming back on "bloomberg surveillance," we will continue intersection of
with tomlet fu here keene and brendan greeley. we bring in betty liu, host of "in the loop." you spoke with sting. he spoke, he didn't sing. >> no, he did a thing to me. what is that? >> what did you talk about? stopped by our studios yesterday. look, i grew up with the police, right, this is a rock legend who has had a very long career. he is 63 years old in fact and just started a new project called the last ship he has put together the last five years, this broadway show that he debuted earlier in the fall, and it has not really done all that well. >> and he stepped in as well. >> last week he had to come in and step in and say he was going to be joining the cast comments as then they have made over $1 million in ticket sales because of that, which begs the question -- why didn't he do that in the
first place? we talked about that and the music industry because so much has changed since the 1980's. there was no itunes, no pandora, so i asked him a little bit of what he thought of this new age of music. >> the model is changing, obviously. i do not think the model we have at the moment is necessarily the one that is going to be there in five years or 10 years. we need something that is a little more equitable form musicians. i think musicians need to be paid for their work. it is fine for me. >> that is great to hear. >> i have to admit i have stolen sting's music. my first record was a scratchy recording. inyou know they used to land montréal as new groups and would get into canada is he or without visas. montréal, gond in round lake ontario, buffalo, rochester, syracuse, than they would go down to ithaca at cornell and play before they would go to new york.
one night after three guys from england, they had a guy named something likeor that, but he is so right about the lack of competition now and copyright protection. it has evaporated. >> it has. for him he has made his money -- he is worth about $300 million, so yes made his money for sub this is really an intellectual discussion for him right now. >> not really -- one of the things we have learned is what pays is performance, and he is learning that himself with this. it was not doing well if he was not performing personally. he had to show up to all the show. skorton, the idea here of copyright protection is vaporizing in a digital world. >> it is interesting that you brought that up, and by the way, thanks for that little tutorial about the pathway of musicians. >> no, really, i unloaded phil collins. in a station wagon, i kid you not. >> just like the viewing
audience. >> i got drunk at a bar with what's his name. >> this is so much fun. >> what about the copyright thing? word innnot get a edgewise at "bloomberg surveillance." you always learn something at "bloomberg surveillance." >> thanks for getting me fired up about this. gordon nailed it. >> we will be right back on "bloomberg surveillance." of course the whole interview with sing. ♪
>> good morning, everyone. "bloomberg surveillance." i am tom keene on this tuesday. brendan greeley and scarlet fu decided to show up as well. here is scarlet fu. >> yet another recall for general motors because of a headlight program. -- this time because of a headlight problem. northcall is gm's 79th in america this year believe it or not. the company has recalled a record 30.4 million cars and trucks. unbelievable. meantime, bill cosby stepping down from the board of trustees templealma mater university. it is the latest followed after
the barrage of sexual assault allegations against the comedian. the move is in the best interest of the university and its students. he had been a trustee since 1982. and the university of virginia's precedents as the investigation into sexual misconduct will become a priority, even if the school's reputation has to become second. that is according to the "wall street journal." view bas grappling with allegations of a 2012 gang rape at a fraternity house with many accusing the school of trying to downplay the allegations. >> this is front and center. >> this has been on front pages everything will day. we have david skorton, president of cornell university, of course with a very active greek life. there's a lot of cars of the best schools try to take this on themselves. at the same time, so will not equipped to deal with the allocation of a felony sex crime. >> if something crosses the line into a criminal justice system, we always tell people who are
victims, survivors of this, that they can go to crystal justice system as well. most universities and colleges have something like the campus code of conduct or internal campus policy, which we also pursue on our own. it should be on the front page every day. it is a nightmare and something we need to face. i want to say what terry sullivan is doing at uva, she is taking it very seriously and let the chips fall where they may and terms of repetition of any of our schools. we have to deal with this. >> what is the impact that cornell? have there been protests and citizens? >> there have been, and i welcome them. we need to have zero tolerance for this. since i have the full floor on this, it is not just a matter of alcohol, it- of is a matter of consent, it is someone being forced to have a sexual encounter without consent, and we need to focus on that, not just focus on alcohol . >> good point.
>> it is something that will not go away. >> it is something that has been going on for a long time that we are tragically just now starting to pay attention to. >> we go from the uva issue to the monday and what are you doing friday night. how do you parse the distinction between really serious charges and realities from the normal swirl of ithaca, new york in february? >> both of these things contributive a problem with the campus climate, and that is the basic issue. does every student feel that he or she is safe on campus, safe and all the things that go along with the campus, and unfortunately the answer is no, not everyday does feel safe, which means the whole community -- college leaders, students, faculty, staff, the surrounding community -- have to take this seriously. this has been going on for a long time. it is time we do some the about and a more serious way and we are all trying to do that. we need to do better. >> let's transition with richard
clarida, and his experience at columbia university, also economics. we see it on the geopolitics of this 2014. this morning, the ruble waivers to new devaluation, oil plunged over the last three days or five days, iron ore part of it as well. with it all, a relatively resilient america. we touched on that earlier in the hour. in 2015, can america with its oceans protecting it and maybe its heritage remain isolated from the ups and downs of the global economy? this is your wheelhouse. as a bufferns act as an image protecting us? >> to a certain extent, but we are a mobile world, so development in russia and asia show up in our interest rates and stock prices. slownk within a range of a and global economy, the u.s. can decouple. if you get another global downturn, it is very hard to see the u.s. decoupling. it is a matter of degree than
yes or no. agree that there is a new globalization out there part of this buffering? >> oh, sure. a lot of the washington consensus before the crisis is under serious re-examination. you see that in rich as well is emerging economies. >> it is a great chance to have office hours with a great economist. it is wonderful to see you here, rich. i'm particularly worried about the united states' investment in innovation and research. one thing bother me if the possibility of another continuing resolution in congress. i am hoping there will be put all will across the board to have not only the spending bill so that we can see some increment -- i want to know if you still believe in the condition of monetary policy, that funding on research in this country is one of our big ways forward in terms of increasing the gdp. oh, absolutely. you're talking to someone who
went to a land grant college, university illinois, so it is very much in my bones. as demonstrated in empirical and historical research, that is coming that has been giving the u.s. and edge in terms of standard of living. i think the case that a stronger and stronger. >> how did we get here? how did we get anti-science budget? i remember being in first grade -- i will lose my mic if i stand up to quickly, lined up like ducks in first grade, and they put the pink drops in and said you would not get polio, and there would be mothers in tears, and that came from science. that came from government funding. >> i think it is a little more complicated than that. i do not think people are necessarily anti-science. real revenue issues and congress has tough decisions to make, but i do think people lose the contact -- lose the connection between the investment made where it may not be obvious what the spinoff will be, and the eventual economic benefit. if you think a lot of the industries that we think about
today as sole central to our economy and you go back 20 years, 30 years, 40 years, it is not a linear path. you cannot predict well, this discovery will lead to this, but in the aggregate, it is preventable. >> it is a gamble at the time. >> yes, that is right. >> invested by the federal government to research and develop -- where do we pour that? we see a lot of money go to the nih. there are fats and where this money should go. what is a good way to allocate this money? >> it might surprise you to hear me say that the model has worked very well in the u.s., to have a pretty wide touch in terms of allocation, and it really to provide the research funding either through grants or other supports at the university level. i get nervous when there is too much micromanaging a particular topics exactly for the point that was raised a moment ago. so broad areas, how agriculture, technology, but i think the model that works best for basic
research is to really have that done at more the laboratory university level. >> also think about what we have been talking about this morning a "bloomberg surveillance" -- life in medicine has told me not all of our problems will be solved by science alone, so it is important that we push for funding of social science, humanities -- you have to have understanding of world events to understand our global economy. >> what is the number one goalie want to do at the smithsonian? you are going down there, everyone knows it is a hugely political job you're taking on. >> fend off olivia pope. that wasr had a job not political from working in my old man's shoe store -- [laughter] my number one goal is to continue the kind of leadership that brought the smithsonian to be a national treasure. i can do no better than to continue what has been going on for generations, and that is my goal. >> fred savage will be unveiling memorabilia from "the wonder
years" at the smithsonian. >> the musical talent around this table. >> howdy you know that? >> i am on top of everything. we will talk but our musical abilities later on. let's get to our twitter question of the day because it is jobs week. is the class of 2015 better off than the class of 2014? depends on the major. my be a little better this year. alright, that depends on what type of class, working, upper, or first. i retire as a class act. of wisconsinrsity madison class 2014. jobs are easy to find. the right job is hard to find. bingo. >> your best commencement convocation address ever, cornell, keith olbermann issued the minted in stone. >> and brings tears to my eyes.
morning. anying it, we set down for exclusive interview with the singer and songwriter and soon to be broadway star. he is starring in his new broadway show. here is a look at our top stories this morning. russia may face it searched -- first recession since 2009. one fullay fall percentage point next year. plunging oil prices and economic sanctions over the fighting a ukraine. given's president has into european pressure and scrapped a proposed black sea oil pipeline. it would've let russia send oil to western europe while bypassing ukraine. the eu objected because it would've reduced ukraine's leverage. histoanenergy