it is the last trading day of the year. will expire breaks tonight. effect.you the economic warren buffett is increasing bets on transportation. gold probably closing out its first annual loss since 2000, down 29%. investors are less bullish on the safe haven economy as the u.s. economy finds strength. it is the biggest slump in three decades. gold is down, as was the number of public company 20% aslower by more than compared to other years. me now. alesci is with a few massive takeover stakeout

-- u.s. airways-american. what other ones are in your mind? >> this was the year of the big deal. who could forget verizon buying the entire stake .ack from vodafone that was an enormous deal. it helped deal volume spike up a little bit. at the end of the day, the number of deals we have seen is relatively flat compared to last year. the total number was abysmal, quite dismal for bankers and lawyers on the street. they will have to look ahead to 2014 to see if there are opportunities to bump the number up. a lot of private equity firms are waiting this out, trying to make a big splash in 2014.

>> you mentioned verizon. most of the big deals were in tack or telecom. >> that is right. we might see a few more going on. this is a mature industry. there are some big deals we could see going forward. mobile outu have t- there that is still a target. we might see softbank make a run for that. they are the majority owner of sprint, so they will have to consolidate to capitalize on that business model. that is one deal we are watching. front,smallest deal johnson & johnson is trying to sell a division, and we could get that announcement as soon as today or the end of next week. asgoing forward, as far

banking, you said there were disappointed lawyers and investment banking team members. which team won the most business? >> goldman is winning on the account basis, involved in over 230 deals. andrgan, bank of america morgan stanley are all in the same realm, in second place. these are spread across the street, but investment bankers credibility and power because a lot of trading operations are being scaled back and are probably not as profitable this year as they have been in the past. they are looking to get a bigger deal pie.hat bonus >> cristina alesci, thank you. cristina alesci there was some

of the biggest deals of 2013. shaking this hour, the oracle of omaha, warren buffett, swapping stock in phillips 66 to take control of the oil pipeline business, betting that they will benefit as the u.s. drilling room -- boom continues. pipelines through mid-american and jewish -- energy. up.suite shakeups were it is a long list. microsoft, and gm, jcpenney, groupon. matt miller is here. your number one pick for the transition that stuck out in your mind? >> the one that stuck out the

most is one that has not happened yet. microsoft ceo steve ballmer has said he will step down by august of next year. he wants to have a replacement and leave. there have been a number of names bandied about. >> alan mulally. >> there is really only one name, right? i cover cars closely, and alan mulally is someone with whom i spend a lot of time because of that, and he has been touted as the number one pick for microsoft. >> culturally, it is a good fit. >> he is from seattle. steve ballmer actually wrote a piece about him in "time magazine" in 2009 saying that he could run any company. alan molly is a turnaround came, and that is what -- alan mulally king,urnaround came, --

and that is what they need right now. say, it is really hard for big companies to be innovative. ibm.ok at this with ge and gm names and in-house superstar to take over the position. named. there has been she is a superstar. a science and engineering major. >> and she started there when she was 18, right? -- as anarted in intern when she was 18. she knows what she is doing in the world of business, the world of engineering, and she has been

pick.kerson's favorite this is different than microsoft . here is a guy that came into a company and did everything right. they released 20 new models. the quality improved. i have come out of bankruptcy with the help of others including at whitaker. it has been an amazing turnaround story, and he is now they to name mary barra queen of that successful car company. >> you and i were talking yesterday, and there is ceo stepswhen you're down, and your stock goes up. >> to be fair, blackstone was s, butto invest into croc when a ceo steps down and a major investor says they will put in serious cash, you have to think they are connected.

>> he is going to stay in the position until april. >> he will have been there for larger years. he came on -- four years. he came on board in march, 2010. he has done a lot to expand the offer, what crocs has to let's face it, they do not have anything to offer besides crocs. >> the bag -- the big bet is on asia. it seems like other regions of the word -- world had yet to buy them. >> i have yet to buy them. i am going to jump into a cab and pick myself up a pair. >> i will not hold you back. thank you, matt miller. it is the last trading day of 2013.

the s&p 500 gain of 29% was a big surprise. even the closest strategists got it wrong. julie hyman is with me now. closest strategists? >> somebody who you are talking to later in the show, tobias levkovich, with citigroup. 1615 for the end of this year. he was off by more than 200 points because right now we are going into the last day of 1841. gina martin adams, who remained , wasr throughout the year at 1390, the lowest. the median was 1555. where we are now is 18% higher. how do we get here? how do we defy these predictions?

you have a number of things that have gone right. most recently, the fed said they are going to begin to taper and the market shrugged it off. at the beginning of the year, with a lotas viewed of trepidation. it might have a negative effect, but it has not happened yet. you had some progress made in the form of budget talks. the trajectory of the economy is getting better. all of that is better than estimated. also, the market is just reacting better than many strategists thought. >> if that is the year in the review, what is being forecast for the new year? >> tobias levkovich just raised his target for this year to 1975, but if you look at the median, he is not far off, which

is that 1950. a lookingptimistic for a 14% gain. the consensus seems to be we will not see the same magnitude 2013,ns that we saw in and there are still a lot of questions and uncertainty about how the economic recovery is going to progress about the fed and its exit, about washington. there are outstanding questions that could create bumps in the road. >> julie hyman, thank you. , more on the stock market with the most accurate strategists this year. chief u.s. equity strategist tobias levkovich says there are more games to come. -- gains to come. netflix is testing a new

strategy. jason -- justin bieber film. we will give you statistics that will determine if it will be a flop or a it was modeled to be copied. screen,ill see on your it is already 2014 in some parts of the world. you are seeing a live shot of sydney. stay "in the loop." we are back in two a few minutes. ♪

>> in d.c., 55 tax breaks will expire today. there is a chance congress will restore the brakes retroactively in january, but there is no guarantee. bell andined by steve phil mattingly.

ail mattingly, how big of deal are these breaks for u.s. companies? >> sometimes they are overlooked because everyone assumes the taxs will reenact breaks retroactively, but they inter, and you will see it how companies lobby. look at what is on the table. the research and development tax credit, something intel, bristol-myers squibb -- they really care about this. it matters immensely. corning cares about infrastructure. you have tax credits for hiring veterans. these are things companies lobby hard for. what is also interesting, bottom-line perspective, companies cannot assume tax breaks that have not happened, so while we can assume they have

not been enacted, it matters to earnings because companies can bookook of this, so you -- this, so you will not see a bottom-line impact. >> which are the oddballs that stick out? >> there is a depreciation break for racing horses. you could tip your cap to seven minority leader mitch mcconnell -- senate minority leader mitch mcconnell. you also have teachers that are reimbursed for out-of-pocket supplies. there are a bunch you could pull out that make you scratch your head. there is also a core group that is important as well. >> stay with me. we will bring in steve bell from the bipartisan policy center. steve, you said real texan form seems unlikely -- tax reform

seems unlikely until 2015. why is that? >> i think the fact that there is so much controversy over taxes already makes it almost impossible. if people are afraid to vote for a minor change in veterans retirement, why would they vote in an election year for major changes in social security, or tax reform? it does not make sense. if you go on the hill, they say runninge, they will be for reelection, and tax reform am not be on the voter's mind. heard phil mattingly talk about some of these oddball tax breaks. i understanders more, but also hollywood studios -- how much do the special interests slow down the process? it isy do a fair amount,

what you normally want to do is reenact those 55, or 50 of them every year, but we do not, waiting a year or two and do it retroactively. it is important to solar, wind, those kind of industries especially. >> phil mattingly, go ahead. >> steve, when you look at these issues of reenacting the tax extenders, both chairman of the tax writing committee said they wanted to push this off because they wanted to tax reform. you made the salient point that tax reform is not looking like it is going anywhere anytime soon. does that mean we have months before they address any of the stuff retroactively? >> i think so. i think we will go until the end of 2014. we will then reenact these two years retroactively.

we have done that before. it is a mess. corporate accountants hate it, but given the state of congress right now, that is probably what will happen. >> steve, out of curiosity, going forward, what will be the next biggest fight? is it about food stamps, something else? unemployment insurance, the extended benefits that have expired will be the number one fight. number two will be the expiration of food stamps. i think people should prepare for a little less melodrama this year. we will not have a fiscal cliff. we still have to fight about the debt ceiling, but i think that will go relatively smoothly, and we have a budget in place. if you look at that and say there is a chance for immigration reform to get on the calendar, or another item to get

on the calendar, fundamentally, less drama. >> you mentioned the debt ceiling. governmentke the shut down off the table, to still have the debt ceiling, the white house is still very clear, no negotiation. ryan, john weiner, they are clear they need something. -- the speaker of the house john weiner has said -- they need something. >> he has said they will not be whipsawed. i think this time you might see , -- who is very close to him, get off the minimal things until after the election.

>> the wildcard, we know this year was the most in efficient congress ever. i heard you say is going to be less contentious. it do you think that tone is changing or are there other factors at play? >> because of the affordable thatact, i do not think tone will change. it will be fighting about that. not havel, you will the tea party faction of the republican party, nor the very progressive left of the democratic party controlling the agenda, frankly. i think you are going to see the possibility of immigration reform, the possibility of energy reform. >> steve bell, thank you for your time. our white house correspondent, phil mattingly joining us from ddc. when we come back, more "in the

loop." ♪

>> first. bloomberg. >> you are watching "in the loop ," live on bloomberg television and streaming on your phone, tablet, and on bloomberg.com. i am deirdre bolton. betty liu is off today. hour.26 minutes past the bloomberg is on the markets. you can see a slightly higher open for the s&p, the dow, and the nasdaq on this last trading day of the year. we will bring you more on the markets again in 30 minutes. your top headlines -- netflix is testing a new price model to curb account sharing. the plan will be offered to some new customers, and they will be charging the number of people

that could use the account. monthly charging will range from $6.99, to $11.99. a train carrying crude oil caught fire after derailing in north dakota yesterday afternoon. a berkshire hathaway rachel ray operates the train. -- a were no injuries berkshire hathaway rachel ray operates the train. there were no injuries. tebow is joining espn as a college football analyst. nfl thist of the season after being cut by the jets and the patriots. he says he is not given up on playing quarterback again in the nfl. for was not the best year d.c.. when the government was not shutting itself down, or a --

manufacturing a crisis, there was the affordable care act and a lot to fight about. drama --away from the we gathered leaders of industry and asked them what advice they would give to lawmakers in the new year. i am not an expert on relationships, but if you spend all the time in the relationship talking about the status of your relationship, the relationship is doomed. they would be better off having a cream soda, go to a movie together. if they could ramp down the warfare, that would help a lot. >> when i think about washington, what i think about his leadership, or unfortunately, a lack thereof. leaders bring people together with different views, find common ground, and create compromise. when i look at washington, that appears to be missing. leadership that says it is not

my way or the highway, but a collective way. people that have elected them, want them to accomplish something and work with the president and solve the issues that deal with the budget crisis and our deficits so that our own people have confidence in the way the government works, and so that internationally our respect is returned. >> what is most important is to have a stable and predictable budget outlook. the every awol crisis -- two month crisis approach as a negative impact on the economy. advice, findece of the common areas where you can all agree on, and agree on them. ahead tothat is a look the new year from ddc. ddc.troit -- from

to detroit, ford looks to take the top spot. matt miller is here. we spoke about alan mulally. he is a big part of the ford turnaround. what is the most exciting thing about the new year? 50.he new f1 we are hearing it will be debuting at an auto show in a few weeks. it is supposed to be a revolutionary design with an aluminum body, which is amazing for pickup trucks in america, which are traditionally made of steel, so it will shave a few hundred pounds off of the weight, and it will lower production by almost 10% if they have to change over the manufacturing of these trucks, but it will be amazing. it is basically the corvette of 2014.

>> i am surprised that we had sales up. they are the strongest automaker for four straight years. >> basically, what alan mulally has done has increased the sales proposition for ford in america. he sold off all the other brands they were concentrated on -- land rover, jaguar, even brands like mercury. >> streamline, streamline, streamline. >> all of their power is going into ford. another thing is a new idea for american carmakers, sell cars. it is not all about trucks and suvs. >> for you it is. diffusion, for example, has become a massively popular car.

it looks like a baby aston martin. they have sold 290,000 of them so far this year. the other thing they have done well is sell these hybrid vehicles that get 40 miles per gallon. that has been a sticking point and a challenge because they had .o raise their miles per gallon they have done very well with that as taken the lead away from toyota. >> the fact that he has turned the company around is a big part he has been tipped, parlor game lies, to take over at microsoft. >> that is right. >> thank you. firstford oversaw the assembly line, and one century later, ford is the leader in production, able to assemble a vehicle in less than a day. we went to the production floor to see how it is done. take a look.

♪ we are one of the most flexible assembly plants around. we can build five different kinds of cars. we are producing 605 cars per 10 hour shift. we are a three-through operation, working 120 plus hours a week. we have five unique buildings. we have the stamping, where it starts off. of steel go into a blank airline and their shift to josh -- shipped to our body shop. from there, we send it over to the paint shop.

from the paint shop, it comes over to the final assembly building. we have a battery install operation that is very unique. we install the battery in the back compartment of the car. the marriage point is where it all comes together. thehave the body shell and powertrain underneath. you marriage the two together and it is almost a completed car. right here, we are where the cars go before the delivery for .inal inspection from start-to-finish, it is approximately 20 hours. from this deal, from the stamping, all the way to the finish and rolling off of the final product. unless we come back,

today goes nuts, the dow will end the year at a record high. ibm is an exception. we will tell you what he experts are saying about the strategy at big blue. --ew fleet of private jets we will take you inside to show you what makes these planes perfect for the elite. or might not might be retiring from music, but it might be time for him to retire from the movies. his latest release, a box office flop. statistics, coming up. ♪

>> most dow components this year finished higher, but ibm was an exception despite boosting its dividend and adding nearly $20 billion to its buyback plan. .ulie hyman is with me

what went wrong? >> well, investors did not get the revenue growth they were and any kind of turnaround from the ceo who took the reins in 2012. if you look at the worst- performing stock, the average 16%.f was up all the way down the line, ibm is down 2.7%, even worse than caterpillar. what you see is that ibm has had six straight quarters of declining revenue, and you see to downge from down .6% .5%. -- down 5.1%. they have resorted to cutting costs, so the earnings-per-share growth has kept pace, and warren

buffett, who remains the largest shareholder, pointed out that fact, that they will have record earnings, but nonetheless that is not enough for a lot of other investors. the company has been cutting costs and jobs. gains, asset sales -- those are other ways they have been able to juice the bottom lines, but the top line is not seen the same growth because of the struggles of hardware. the company get 17% of its revenue from its hardware unit. that is an area where they are seeing some struggle. they are trying to rely, more and more, like other technology companies, on cloud services. they did make revenue of $1 billion in that unit. it is the first time it has disclosed that number, but it is being outpaced by competitors like oracle and amazon, who

remains leaders in that segment. romani willnnie have to embark on something more dramatic. >> and ibm is more of a consulting company than a hardware company. that is worth noting. private jets are going high tech, and the machines themselves are almost as cutting-edge as the people who ride in them. we went to silicon valley and saw firsthand how they like to get around. is taking to the private friendly skies. jet suite is in expansion mode. fueled by high money and high- tech planes. is it cutting-edge? >> most of these airplanes on the ramp did not have anything like this. >> they sunk millions into a new

fleet of aircraft with cutting- edge glass cockpits. fight a -- fly a lear jet, and it was nothing compared to this. all of the aspects are shown to you on the screen. it will show you which doors are open, your hydraulic pressure, your oxygen pressure and your accumulated pressure. it will also show you what the fuel is doing at that exact moment. >> i think the insides were designed by bmw. of zap those led a funding round and joined the board. i think having as much technology that can help with the safety and the experience is

really important. are focused on unique problems in the private jet industry and special perks. >> for someone like me, i cannot i get wi-ut wi-fi, so fi installed on all of the planes. >> what are the business problems you hope to avoid? >> well, if you look at the private air industry in general, it is usually a lot of really big planes, and the average number of people flying is somewhere between one and a half passengers, half which is kind of like the equivalent of taking a winnebago to the supermarket. >> in an industry that typically goes big, they are going small with a focus on tack and customer service. >> customer service makes a huge difference. company culture makes a huge

difference. i naturally gravitate toward companies that care about those things. back, way to put your money in the new year. the most accurate strategist on this year's s&p 500 level will be joining us. it has been a record year for hollywood, but the new justin believe"ove -- movie " is not part of it. ♪

>> new york city is one of the cities around the world known for its annual new year's eve celebration. the event in times square is a massive tactical operation. brown.joined by paul about securing such a large area for a big event? well, the police department,

since 9/11 in particular, basically sanitizes the area. in, it stops traffic ,rom going in, checks for bombs like you would in a presidential visit. it takes out mailboxes where you might leave a bomb, etc.. it is a tried-and-true process and have been doing perfected over the last decade, though each year, when there is a new event, like these bombings in russia, they put that on the radar to make sure there is no possibility of that happening in new york. say lockingn you down the area, what does that mean in terms of manpower? >> the police department does not disclose the exact number,

but i can tell you all the 1200 new recruits that just graduated from the police academy will be assigned to times square and the vicinity that night. there are thousands of personnel involved, and that includes counterterrorism personnel, people looking for any kind of device. it also has detection equipment that detects radioactive .aterial chemical and biological weapons -- detection equipment for that as well. it is a safe area. >> what is the biggest thing to challenge when you prepare a city such as new york? well, the possibility that there are so many targets, he

well you are focused -- while you are focusing on times square, you have to protect the rest of the city. in the police department we would go through drills that would create other problems that might arise in the same evening, and you sometimes have common lawlessness, celebratory gunfire in some neighborhoods that we focus on year after year to keep that down as well. you cannot let the one event blind you to other possibilities throughout the city, and that is probably the biggest challenge. >> well noted. paul browne, former deputy commander -- commissioner for public communication for the nypd. your netflix accounts with others in your house might be coming to an end. ♪

>> it has been a record year for

u.s. stock prices and for hollywood. big releases are helping domestic box office receipts close out the year at a record. unbelieving came out on christmas day, justin bieber's second film, >> "in the loop" with betty liu will be right back. film, "believe." this was his second documentary. what made the movie not do as well as the first one? a they claimed to be theatrical version of what beyoncé did with her album dropped. they opened on fewer screens overall and they did not put a huge marketing blitz behind the movie. that is very different from what 2011.ed in >> is this a new business model?

you cannot make the case of ticket sales flopped. flop. ticket sales did it was the worst debut of a concert documentary in recent years. of course, it did not cost a lot of money to make. neverst movie, "never say " took in $30 million on opening weekend and was released on 3100 screens. two years ago, he was a different character. he was not being photographed exiting brothels in brazil and urinating into buckets. >> maybe you can get rid of that stuff if you're demographic is demographic. >> to distribute or says they are marketing straight to his fans and they did not need this , so they aredriven still confident. talking to others in the

they say they made a big mistake by not marketing the movie. album, which is at least at the same time, did not do well either. >> on twitter, hack cannot understand if he is retiring or not. >> he said he is not sure either. it is an attention grab. he is a 19-year-old who has the mindset of a 13-year-old. >> scarlet fu, thank you. "surveillance" anchor and hollywood expert. it is time for bloomberg television on the market. are sethow your futures up for the last trading day of the year. we have stocks closing out a record year. the dow up .6%.

the s&p 500, 29%. ♪

>> 30 minutes to the opening bell -- this is "in the loop" with betty liu. the countdown begins right now. >> welcome back. ."u are "in the loop here is what we are working on. 55 tax breaks are set to expire at midnight tonight. an extension of provisions will cost $54 billion next year, but they might be retroactively approved. warren buffett is boosting his bet in energy transportation, investing in phillips 66 stock. customers uparging

to $11.99 to use their accounts on up to four screens. breaking news. the case schiller housing index has just been released. you have the october figures more or less in line, ever so slightly higher than what was expected for this month of october. data. is the raw ever so slightly higher for the month on month composite, one percent versus .9%. before the data came out, futures were indicating a higher open, and that is where they stand now. higherslightly uptake for the s&p 500 futures. keep in mind, we are on the last trading day of 2013. you had a record day for u.s. stocks. the dow is poised to go higher

for the year. for 2013.0 is up 29% this hour,shaking heisman trophy winner tim tebow got a new job talking about college football for the soon to be launched sec network, providing analysis for the self eastern conference. he gets to travel to a different campus everyllege week, but it does not preclude them from pursuing opportunities in the nfl. if he wants to keep playing, he has to find a team that will take him on. he was cut from the new england patriots in august. staying at the intersection of jobs and football, yesterday was black monday. following the game, a lot of

coaches found out if they had a job or not. five nfl coaches were fired. problemsins coach had with the quarterback that were well documented. the tampa bay buccaneers coach was also let go. leslie frazier of the minnesota vikings was also let go. other coaches are not off the hook, but so far today no other firings have been announced. berkshire hathaway has announced it will be swapping $1.4 billion in phillips 66 shares for full ownership of the pipeline business. it comes amid a drilling boom in the u.s.. cristina alesci is with me now. what is funny, the last trading week of the year, we thought it you are busy. but what is the warren buffett strategy here? >> he is betting on moving stuff

around, oil and gas with increased production that all analysts are looking forward to. at the end of the day, it is a toll roads that, basically charging customers to move oil and gas around, and for this company it makes an additive mode --es the company oil move faster to the pipeline so as pipelines reach their capacity, they are looking for ways to boost productivity. this fits nicely with two other bets, one in pipelines, and another in railroads. >> part of this is a bet that u.s. join will continue, so i assume you expect to see more deals like this in the new year. >> even though oil and gas is pretty quiet this year, we did see a few deals, and it was one of the industries that saw a relatively healthy amount of

looking, but people are to see more activity precisely because of what you said, production will continue. there are no signs of stopping on that front, so you have to move it around, and this is a way to do it. let's not forget infrastructure investment will be huge. it is capital intensive, and i have seen estimates that the amount of infrastructure investment is going to skyrocket. 205 billionve said dollars in capital is really up theto bulk infrastructure. >> a lot of people will be looking to get in on those kind of investments. cristina alesci joining me there. when we come back, stocks on a tear for the year. the most accurate strategist on this year's levels, tobias levkovich, will be here. in witht with the old, the new -- find out what changes

industry leaders are expecting in 2014. ♪

>> you might be already at your desk, but parts of the world are already partying, as you are looking at a live shot of sydney. they are celebrating 2014. they are already one hour into the new year. beautiful fireworks. i thought you might want to see that.

in new york, still a little bit more than 12 hours to go. speaking of the new year, and looking at this record one for u.s. stocks, very few strategist called record levels, but our next guest was the closest. tobias levkovich. yesterday, he bumped up his target, saying we could see 1975 for the s&p 500 in 2014. an optimistic call. congratulations on being the closest on wall street with your estimate for this year. why do you think we can even go higher? a lot of people think the market is over-valued. >> i do not think it is over- valued, but the bigger issue will be the nice smooth 12 months without the volatility. there will be a bumpier ride that could scare off investors and i think that will be good. my biggest concern is not

valuation, but sentiment. >> do you mean there is complacency and investors are getting lazy? >> it is beyond complacency. our panic-euphoria model is in euphoria. obviously, stocks tanked because of the credit crisis and money dried up. it was panic. >> that is the difference. you got there in 2008. despite the fact that credit was breaking down, people were saying back then that housing is a problem, subprime is a problem, but china is fine, and that got them into a euphoric mentality. tend to getan carried away. and right now, they are getting a bit carried away everything there is a backup in the first half of 2014, but overall earnings carry you through year-

end. asdo you see any sectors being particularly stronger than others? i am thinking about the tech sector, they have tons of cash on the balance sheet. >> technical spending is likely to be up 20% based on what companies are telling us. we do not project what they do. tech is up 13% on planned capital spending. companies bych tech products, so they do not buy heavy-duty trucks. that is not what they need, so we were expecting to do well as recipients of their own capital spending. youith that in mind, how do see the economy, and therefore stock performance, based on what i call the sharing economy? what does it mean that fewer goods, in theory, need to be

purchased? we have been talking about the auto sector -- what if there are zip cars, ways to share goods that cannot require me to buy hard goods? >> i will not get into the specifics of an individual company, but the idea of even sharing cars, it is an urban well to newll play yorkers. >> you will say that i am living in a bubble. go ahead. >> you are in manhattan, and i people say they do not have a drivers license and there is shock. if you think about the rest of the country, 70% of americans do not live in big, urban centers. so, we have to be careful. the average age of cars is pretty safe. >> you are telling me to get out and drive around. i do have a drivers license.

oilking of cars, what about ? women talking about berkshire hathaway and phillips 66, the happent u.s. join will and in theory, more money in energy. do you see that happening. -- do you see that happening? >> it is part of the reason we are long-term bullish, but one gasse factors is michelle -- the shell gas resolute -- revolution. we are competitive globally. this is a long-winded and long- term trend. it puts the u.s. in an impressive position. >> what about pushback from environmentalists? there is that when you talk about drilling, fracking. what are the risks to investing

in the sector? >> exploration companies are talking about a 7% increase in capital spending and we know we have to move this oil and gas from areas where they have already drilled, so you have this infrastructure explosion going on. it is a fair concern. is naturalriguing gas has gotten a lot of the environmental concerns reduced. the president in the state of the union address talked about alternatives and he brought up natural gas, recognizing it is impressive, recognizing the job benefits, and when you get to state and local levels, and you think about the dakotas, that is more of a state government issue and environmental protection industries are -- agencies are allowing it to develop at the state level. >> you have local journalist talking about poisoning well

water -- even if it is state-by- state, you will have pushback. -- >> inareas like areas like the dakotas and texas, they have not had that pushback. i will not defend the practice, i'm not that well versed on fracking, but many of the test sites were holes drilled a decade ago that do not have the same safety aspects to them today. again, i am not an investor -- i am not an expert, not taking a side. >> as an investor, restaurants, you are paying attention. you will stay with me. we'll continue the conversation, the outlook for 2014 with the strategist that was closest to the mark this year. we are back in a few minutes with more from tobias levkovich. also, hewlett-packard trying to reach a settlement with the government on a bribery investigation. the latest on the talks between the company and the justice department. we are back in just two.

♪

>> 3-d tv was supposed to be the new new thing, but it did not pan out, at least this year. sam grobart explains why. >> oh, do you want some of this cereal bar that i am eating? oh, wait, did that not happen for you in 3-d? right, because nobody is watching anything in 3-d. with the recent announcement from espn that they are pulling the plug on their 3-d channel, -- dead.w one d the television ministry had to

come up with a new industry -- new reason for us to buy new televisions. there can't card was going to be theirnd certainly -- trump card was going to be 3-d, and certainly we would line up, but there was not that much content available in 3-d, and these glassesr that were dork here than well, these. forthey are trying to push k televisions, and there's really no content available for them, and yes rlly cannot tell the difference. keep trying, television industry. keep trying. valley,ng in silicon here are our stories on our

"bloomberg west" radar. hewlett-packard is said to be in advanced talks with u.s. regulators to resolve investigations into acts of bribery in foreign countries. china mobile is expanding its 4g line-up. the wireless company will sell 13 handsets for its fourth- generation network. samsung and sony are among the vendors to be carried. u.s. regulators and apple facing off over 80-books. -- e-books. to be able to question tim cook and other apple executives. apple is arguing the monitor has been overstepping authorities by pressing for interviews with senior management. catch the latest in tech and media news every weekday at 1:00 p.m., and 6:00 p.m.) on bloomberg television on "bloomberg west."

stay with us on "in the loop." we're back with the opening bell in just a few moments. ♪

>> first. bloomberg. >> welcome back. you are "in the loop." i am deirdre bolton, in for betty liu. it is time for bloomberg television on the markets. you will see green on your screen. markets are indicating a higher open on this last trading day of the year. it has been a record year for u.s. stocks. the dow is up around 26%. the s&p 500 is up around 29%. we are a few minutes away from the open, and we want to bring you the top 10 trades you need to know about. me alongan is with

with deals reporter cristina alesci. i will start with number 10, amazon, the e-commerce giant, seeing action with citigroup onterating the by -- buy amazon said a strong fourth quarter and continued outperformance. >> number nine is uni-pixel. -- on thenged that news that the ceo would step down. >> number eight, ibm. they are poised for the first annual decline since the 2008 financial crisis. while ibm has boosted its dividend and added 20 billion dollars to its buyback plan, the stock remains the only decliner in the dollar this year. , thember seven, crocs shoemaker rising the most in four years yesterday. the ceo is retiring in april.

blackstone is investing in the company. has been trying to revive the business. >> maybe matt miller will help. i saw him online looking at crocs. number six, revlon, they say they will exit operations in china. they said in a regulatory filing the move will result in the elimination of around 1100 jobs. >> number five, a story i am watching closely, marvell technology. after kkr took a reported six percent stake in the company. he might engage in talks about extraordinary corporate transactions. number four, ford, expected to remain the best car brand in north america, widening its lead

over toyota. ford selling over 2.4 million vehicles this year. record sales of a few models -- fusion, escape, and fiesta. number three, hertz global holdings has held discussions about enhancing shareholder value. >> number two, netflix is testing new pricing on the number of people that can use the account. netflix is offering new customers plans that give access on as many as four screens. >> the number one stock to watch today, berkshire hathaway. buffett up inrren his bed on energy transportation. --y will swap around 4.5 $1.5 billion.

the opening bell will be coming your way. we will get you from new york to chicago, write to the cme with the chief market strategist i am looking forward to the closing bell on this last trading day. that is all we are really keeping an ion. it is all about 2014 and positioning. you will see movement and slight cleaning up from speculative traders. traders like to take advantage to the move can be faster and steeper than they really are. we are not -- expecting a whole lot. >> i know you guys are pretty short term down there. as you look into 2014, it seems like there is a consensus that we will continue to see gains next year. they will not be huge once.

i'm curious what the sentiment is down there. is exactly that. i will tell you what i do. i make an annual analysis of what i think will happen for the entire year. i think we will see low digit -- low double digits by the end of 2014. i do not believe the word bubble is being used for this particular move we have had since 2009. for this reason, we have been at 1500 in the s&p before. it was 13 years ago but we have been there. the new highs have happened from about 1995 to 2013. it is not bubble territory yet, even though we have tripled. it is not a bubble. plenty of room with the economy picking up's the. -- up speed. will get louder and louder. at some point, i expect a 10% correction.

expectedhe economy is to get stronger, i do not expect any bombs out of washington dc at all. yearnk we will have an up and it is justified. >> thank you. >> have a good year. >> thank you. you, too. call on trade to the the market, we bring back the chief u.s. strategist at city group. most accurate analyst this year. you have got to be out of that. seven percent up from here by the end of 2014. you also said we will see bumps along the way. what will be the main elements that cause those? >> it is always hard to figure it out. the shape of the yield curve tends to lead volatility for to you -- for two years.

about maybe the fed tightening faster, it could be that the economy is not as good as we thought and we do not get the earnings. peg whatays hard to specific drivers will be. >> what do you think about the fed. it surprised investors twice this year, once by continuing the program and the second time by handing or reducing the amount of support with the system. what do you see? >> you hate the term data dependent, but they will be if they see continued strength in the economy, they will remove strength and accommodation. we have to be careful when we talk about it. members would tell you even if you took from 75 billion down, it is still not tightening. markets will get nervous about it at times. we look like we are having a dovish new fed chairperson coming in.

articles.n the i think he would provide at least some comfort to investors who have seen him as kind of a macroeconomistul . i think that will also help janet yellen bring consensus. in general, the fed will be watching data and responding. >> we are talking bigger picture economy. something we talked about was the eventual effect sharing economy can have on stock markets. looking ateen capacity constraints. in a few industries, what have you found? >> this is one of the trends looking at as a thesis. three individual industries have been highlighted where he sees some capacity constraints. one is refining. and its performance in 2013. the second is airlines. they have not been expanding capacity as much as they

historically have. that has been good for profits. and insurance as well. of these groups have already seen out this year. we have already seen some capacity constraint. this is something i talked to onestors about who got airlines in particular but other industries as well. when you have some and that has been a driver of profit, and this goes for the entire market, how much further can some of the same elements continue to drive his this in the industry? -- oned on what is julie what julie is saying, what do you think e class we have to go through all three individually because they are unique. we have not built a refinery in this country in decades. it has been because of environmental protection and things like that. we are producing more and more oil. prohibits thely use of crude oil.

pretty wide for a while. it might take a couple of years before you address that, unless they change legislation, which will not happen overnight. in capital for insurance, there has not been a lot coming in. so far, we have not seen it. industry, unless we are suddenly getting a whole bunch of airlines starting up -- >> which is highly unlikely, especially if we see them having to combine to get themselves out of bankruptcy. >> i keep joking about this, but it is an industry where they might start charging you for the peanut and the use of the bathroom. >> the peanut is not far off the mark. for a lot of airline, you have to pay a baggage fee. we are not very far from that vision, unfortunately. >> there is a lot of pricing power in a very consolidated industry. for anybody planning vacations and looking at price differentials, it is pretty

significant. >> worth noting. we wish you a very happy travel in your new year. thank you for joining us. the chief u.s. equity strategist from citigroup. a quick rake, but when we come back, netflix experiments. a new pricing model that may make your prices go higher. more on that in a minute. hours from new15 year's eve, let's find out what is in store for the world industry leaders. ♪

>> ken burns is known for his multipart documentaries. they were staples on public tv for many years. these airings were big events and the definition of appointment television. he startedeads when talking about netflix. we asked him for his oughts when he stopped by here recently and

here is what he told us. ♪ >> micro -- my traditional platform has been distribution on pbs. it reaches the largest number of eyeballs. every kid in america had memorized the entire primetime schedule. we now know we have got hundreds of choices we cannot possibly memorize. thrilled with the access and the idea that i want to watch three or four episodes of house of cards and i want to be able to do that. it is terrific. we yielded to the fact that finally, the consumer is king. it is not the almighty network guy and the programmer. it is liberating for everyone. we have been convinced that it

works. everything is in flux. there is not really the model that sends us into the future with any real confidence the way we used to. we are now in a new area in which the middlemen read the liar -- lions share. too many middlemen are getting too much stuff cheaply. is going to make a deal and we get a large share because we are the most watched of the pbs shows. offset not completely the decline in the old hardcopy dvd sales represented. it suggests there is a coming struggle when the united artists get together, as they did early on in the old hollywood system and said, this is not working for us. what will happen? it will be an interesting turn of events when the folks say, this is not as good for us as good for the people who are not doing

anything and just messing send. has 40 million subscribers, one of the biggest business challenges is account sharing, finding ways for netflix to curb sharing while also providing viewers with more ways to watch content. paul sweeney is with me now. if you haveidea a e one family but four people watching, the same content from one account, that is what netflix considers changing? >> it is. one of the things netflix is trying to do is a stealth price increase. the are trying to maximize revenue per customer household. right now, it is one flat charge her household erie to the extent there are multiple users of netflix, they want to be able to charge and give the consumer a better service by allowing

multiple views of netflix in the household. they will have to pay for it. >> the last time next flick stride to change its pricing strategy, it was the difference between what you could download and the disks you got. it was a pr disaster. they had to come out and apologize. are goingised they down this road again. >> you are right it was a disaster two years ago. the company has recovered. they said they feel like they are part of the way back. what you are seeing is the company reacting conservatively and doing a small test to a limited number of users. for a tv unusual service, whether a cable or satellite company or online video company like netflix, to test their pricing from time to time. it off the bat.

the idea here is stealth price increase. users will see through it. >> yes. i think users will see through it. trying here, netflix is to provide a flexible pricing grid depending upon how many netflix users you have with in a particular home. created forue being the user experience, allowing multiple views of a netflix account with in a home. to the extent you have a family with three or four users, you now have the flexibility to and themultaneously programs that you want. you can pay for or choose not to pay for it. >> thank you as always. paul is joining me there from bloomberg industries head of north american research. when we come back, we prepare to ring in the new year. industry leaders from around the world telling us what they think

will happen. another city in china is cracking down on its car population. it may curb car production and sales. view onyou the inside what experts are telling us. ♪

>> time now for global outlook. china is doubling down on air pollution and traffic congestion. officials announcing today they will begin restricting the car population next year, only 100,000 or rather 10,000 new license plates will be issued in 2014. the eurozone has a new member -- to become -- lot -- lot via to -- caps off a two decade long journey to join the currency.

protesters are issuing in the new year in the ukraine in hopes of reviving opposition against the current president. demonstrations, which began earlier this month, have since lost momentum and drew people away from the rally. we are a day away, hours, from the end of the year. businesses preparing for new changes and challenges. we asked leaders from around the world what is in store for them in the new year. >> people should not get excessively enthusiastic. generally, they should be more optimistic. trend of 2014 will be more of the slow painful same of 2013. >> one big thing is the question of the united states and what sort of role america will play internationally. >> i hope the united states has the big moment in 2014, that we

are viewed as ea and strong and firm and credible. >> 2014 will continue to be a very positive year for the market. even more so for the economy. will be,ggest story what does the individual investor daily echo do they continue to hold fixed income? >> investors will be maintaining current posture, optimism, with a good out of caution. >> we think energy on a global basis will be very interesting for us. we think that will continue to be of interest. with uncertainty and health care, that creates opportunities for us. >> before you celebrate the new year, join me this afternoon. me.will be cohosting with we will talk about everything from china to the dollar to gold to bitcoin.

that is 2:00 p.m. eastern time. we are back in just a minute with "on the markets." ♪

♪ is 56 minutes past the hour and that means it is time for bloomberg television on the markets. 30 minutes into the trading day, we want to get you caught up and show you what they are doing. you can see on your screen there, all higher across the

board. it has been a record-breaking year for u.s. stocks. the dow is up 26% so far. the s&p 500 up around nine percent. we will put futures in social -- in focus right now and will take you out to chicago. lincoln is with me now with his luck. he is managing director at green square capital. so kind of you to organize your thoughts. valuation and volatility and vectors. let's start first with valuation. a lot of people say u.s. stocks have gotten so high, there is no good money left to make. what is your take? >> probably not in terms of equity valuations in the u.s. and europe and market. fully valued in the u.s.. probably undervalued in emerging markets, though you have to be of which in the choice emerging markets. >> any good advice as to which

one investors should focus on? >> yes. we have organized it, focusing positivehose with equity, those who have switched to more domestically organized and demand basis. europe,ich have ties to europe is really the story we like in terms of leaving the equity markets next year. we think there is a symbiotic relationship, great relationships on import and export with europe. >> is that also impart with how much support we have seen here, whether the ecb? region's time? >> a huge part of the equation, it has moved down 25 basis points in the second half of the year by the ecb. the much more sympathetic monetary policy europe and japan gets ahead of the u.s. in terms of interest from investors

looking for tailwinds in the equity market. >> clearly, you think there are opportunities for investors in the new year. you mentioned volatility. how much pain will the average investor have to put up with? >> volatility is the theme across all the major asset classes. six income and commodities. we are at historic lows across all three. more recently, we are in the lowest 20th percentile of volatility across all of the asset classes. we expect with the movement by the u.s. central bank, the end of paper and things of that nature, that you will see an uptick in volatility really driven by interest rate differentials around the world, affecting foreign exchange and therefore affecting people's expected returns across all three asset classes that have been sitting at historic lows. checkactually a reality

trade. we have been way too babysat by central banks and we think the emergence of investing adolescence is a story for 2014. >> quickly, and vectors, what are you seeing? a call on the size and scope of returns next year. we think they will be muted and that is not a surprise to equity investors. we think the downside is potentially exaggerated and commodity experts may see the first price rise in three years. that would be welcome news for anybody in the commodities stage. >> bank as always. glad to have you with us. happy new year. joining us there, we are on the markets again in 30 minutes. market makers starts now. ♪

♪ >> live from bloomberg headquarters in new york, this is market makers. new yeart in, the celebrations already underway in asia. we look forward to a 2000 -- to as 2013 endsds with a bang. >> after the teen sutra -- mojo, andlost his online retirement announcement, and a flop