tv Bloomberg Markets Bloomberg December 24, 2015 12:00pm-1:31pm EST
from bloomberg world headquarters in new york, good afternoon. here is what we are watching at this hour. the grinch making an appearance on wall street this christmas eve, stocks snapping a 3-d -- a three day winning streak. we will count you down to the close. it is a final countdown for retailers. just a few hours left in the most critical shopping season of the year. we will look at the biggest winners and losers. the newt ready to toast year, a look at what we can expect from the food and beverage industry. pricesw commodity provide support or will a stronger dollar way on profits? let's go to the markets desk for the latest. picture.mixed
there must be like for people trading today. : after the past three days of gains, we are drifting sideways. on the flatline for the s&p 500. the dow jones paring losses, if you can say that. this could be a session high for the nasdaq and volume is down. the s&p is seeing about half the volume today against its 20 day moving average. dive into my bloomberg and look at volume by sector on the s&p. day is against the 20 moving average. the s&p is down by 50% in terms of volume. that's usually 900 million shares. down by about
55%. the biggest drop is over consumer staples. across the board, basically no one is trading. alix: we have been talking about the correlation between stocks and oil. but we are not seeing that filter through as much in the markets. >> not so much today. crude pushing for four days in a row of gains. this is its longest winning streak over the past several months. back in april, this is its best week in four months. looking at natural gas, take a look at this chart right here. recovered above the two
dollar mark which we had fallen $1.99.nd now we are at natural gas is a by two days in a row on weather forecasts that say january may be colder than normal parts of the u.s. because they rely on natural gas. it was 72 degrees when i was at the house this morning. let's check in on the first work news with mark crumpton at the news desk. mark: belgian authorities are trying -- are charging a ninth suspect in the paris attack. the man had been in touch with the cousin of the suspected ringleader. authorities in brussels staged a series of raids in the neighborhood where some of the gunman lived. the attacks in paris last month killed 130 people. holdingnt forces are onto a key district in afghanistan after two airstrikes overnight.
troops are fighting the taliban and in the southern province of helmand. syria's government is willing to join talks aimed at ending that countries and bloody civil war. the foreign minister issued a statement meeting with his chinese counterpart in beijing. negotiations resume next month in virginia. the death toll is now at least nine and a destructive storm that swept across the midwest. dozens have been injured. intornadoes touched down mississippi, wrecking homes and tossing cars into the year. the storm took two lives in tennessee. the high winds and rain extended into arkansas, killing one person there. tornadoes were also spotted in indiana. global news 24 hours a day
-- just not a huge amount of retail with the rally. net outflows for the first three years 2014, they start pouring money back in when you have these 30% years. a lot of people view it charitably and say you want a contrarian skepticism toward the market. that has been the case for a while. ourie: a reminder to listeners you are listening to
bloomberg advantage. it seems like there is retail money out there. is this money it just wasn't put to work? it is coming from every type of saving. having to pay home heating fuel -- it has 70 degrees weather and you don't have the high bills to heat your home's this year and energy andwer price one thing no one ever talks ourt is how fuel-efficient and welanes and factory have gone through this where businesses can choose which fuel they want building bye entire
the flick of a switch. being these moneys were generated, but unfortunately, much of it has not been seen going into the retail sector and the like. they are not spending on things, they are spending on services. rather than go out and buy some gym equipment, you will go to a gym and have a membership and do those types of things. we talk about the benefit of these lower energy prices and look at the performances and its energy companies, particularly near drug gas and i wonder if we are seeing that pain in the economy, particularly those based in the south.
you are seeing the economic impact anywhere from oklahoma. the dakotas are getting crushed wavese they rolled the big of gas and energy drilling. very low unemployment they had, maybe down to 3.2%. then all of the sudden oil plunges and you are reading stories about these pockets of extremely high unemployment, , houseseaving the areas and homes still in the market. it happens in texas and other regions also. some of the worst performers this year have been energy companies.
chris: this many rally is not going to change. he of the five worst performing stocks on the s&p this year and they remain the worst performing stocks. is that in will say addition to employment and things like that, there's a huge as itof capital spending pertains to broader s&p 500 earnings, this is the wildcard in determining how that story breaks. , butxpect a dividend arguably just as big a problem is these companies spend a ton of money, not just any energy space, on plans and upgrades without that, you have a problem for earnings and you see it spread through the larger s&p. performer on the
year was chesapeake energy and that jumps out at you as the poster child for 70 percent year-over-year decline, which is amazing. what are the banks thinking of for next year. >> it is a fascinating question. it is largely a function of the bonds and the big question was would bet contaminate banks? banks were having problems with revenue and there's not a ton of evidence of junk-bond inventory the way they might have 10 years did not take an organic hit on those holdings. we have an economic situation becoming a finance situation the way junk-bond could potentially be. i think a big trade and the banks is long
corresponding with a tightening federal reserve. historically, that has only worked for the first couple of months. i think we should end the year on a positive note and have a look at some of the stocks that didn't really well this year. chris: all of the gains are focused in this, the late 1990's, you are talking about service-based companies that represent huge chunks of the discretionary economy. this is basically what people spend their money on. it is not unpredictable. i think it is possible to not see it as sickness in the market some people sell it as.
s.a.p. capital advisor agreed to pay $10 million to end a lawsuit by by at shareholders to claim they lost money because the fund engaged in insider trading. fedex plans to run christmas day deliveries in some markets to complete shipments after severe weather caused delays in the run-up to the holidays. customer counters at fedex stations will be open for pickup. ups says their deliveries have been on time for much of the weekend expect that to continue. that is your business flash update. with less than an hour left to go in the trading day, let's go to the markets desk for a check on the leaders and laggards in the past week. want to dive into my bloomberg terminal. rr function.m i got this from the past week
and you can see all of this green, most of them are energy stocks. eight of the top 10 biggest gainers are in energy. southwestern energy being the biggest leader, up 30%. flipside, the worst performing stocks are a hodgepodge. down byney company is 5.5% despite pulling in a billion dollars in global revenue from its latest movie, "the force awakens." chipotle 11% becausel down of all of the e. coli scares. you probably will be the only thing flying higher for christmas -- airline stocks are flying higher. and delta are up on the order of 1.6 and 1.7%.
the reason is higher looking rates and crowded airports. been fallinghad earlier this month on fear of a ticket rising more over high capacity. the oil giants are lower, perhaps a bit of profit taking. exxon mobil is down by two thirds, off their intraday lows as we head into the last hour of trading. alix: what a warm holiday season it is. i even ran this morning and a tank top. fun for us but not for retailers. this chart measures laguardia airport weather in new york city. i'm going to zoom into this chart so you can see how hot it is. this blue line is what we are
experiencing. that's way above anything we have seen in the last four years. the strategic resource group managing director and joins me now. that chart must scare a lot of retailers. we are also seeing the advance of plywood put up because of the heat you referenced. but the rationalization of .etail alix: does that mean the brick and mortar mash-up? >> and less capable retailers will be closing stores. we will have a retail renaissance for the better run retail like macy's and nordstrom's.
alix: what is standing out for you this holiday season and which will have the hardest time in 2016? 2016 ishe big short for chipotle. it is what the late, great don campbell called being pot aveeno. kmart doing a lot of great things. customer counts are way down. the ones that are winning are waiting on leadership. they have great leadership at home depot, but the irony is its almost like walmart and target
forgot to put christmas on the calendar. goingt advertised more into christmas and reeves. the way they merchandised stores was really insufficient. fashion year was really disappointing. --hion style uncharacteristically warm weather made it a tough year. tougher later in the year, tougher back half of the decade, greater next decade. alix: christmas holiday sales are rising a bit compared to last year, it looks ugly. christmas to is
retailers and how much will have to make up for that warmer weather as well as people just buying differently? christmas is going to be critical. .t should be the best of times salesthis is same-store and you can see how far we are down from 2014. that is not pretty. guest: 14, we had the impairment of the west coast stock strike and the polar vortex, it should have been a great 2015. johnson redbook, declining sales and customer counts going into the fiscal year end. the canadian dollar has fallen 16% against the dollar. but does that do for international buyers and what retailers are hurt most by that? guest: retailers that are hurt
most are international retailers. ourcompany that bought family company which is our third-largest retailer and ultimately, what we are seeing with the strong dollar is, as you reported earlier, the collapse of commodities. that means i paying -- fewer high-paying jobs and layoffs and less disposable income. it is a cycle spiraling down and will take some time to stabilize. 99x: if i'm paying a dollar -- $1.99 for gasoline, i'm spending more at walmart and target. guest: that's a good argument you are making. consumers are paying high prices and nine of the 10 -- everything from health care to insurance, food, etc.
savings from gas is very important, but that is being more than offset in some of the areas. some jobs in areas like mining and agriculture paid more than a slightly minimum-wage job. such a pleasure. as retailers brace for the next year, it should eat really ugly. record year for m and day. telecom and media companies played a big role. will the trend continue in the new year? ♪
news with mark crumpton at the news desk. more toaq is sending fight islamic state in ramadi. the reinforcements are securing neighborhoods that have been recaptured from the militants. this is the third day of the government offensive to retake the city. islamic state seized the capital last may. police in aging tightens security around popular tourist areas today as embassies issued warnings of threats against westerners. the american, french, and british embassies said they received information against possible threats against westerners on and around christmas day. citizens are urged to be vigilant. airportlis-st. paul police are out in full force to ensure safe travel after mass protests led to disruptions. lives matters demonstrators blocked access to one terminal and shut down the mall of america. at least a dozen people were
arrested. in l.a., they spray-painted names of police shooting victims on the road. nine people were arrested. it is a busy time in the nation's skies. 38 millionpect about passengers, an increase of 3% from last year. global news 24 hours a day powered by our journalists in 150 news euros around the world, i'm mark crumpton. alix: 2015 is a record year for m&a, hitting $4.2 trillion. telecom and media made up half of that. thisare we going to see year? alex sherman joins me know. what are some of the big deals that could get done next year question mark alix: i've got 53. i'm a reporter -- these are my
best guesses. based on the reporting i've done throughout the year, i will start with what i think is the most obvious, which is lions .ate and starz we have reported on this for an entire year. these companies almost came together in december of 2014 and it didn't happen. it did not happen for basically tax reasons that dictate it's john malone,al for who owns a piece of both companies, to wait so that starz which domiciled in canada is where lions gate is domiciled for tax purposes. i would not be surprised if that deal happens quite early. what kind of premiums are we going to see? bloomberge inside the
terminal, the premiums for telecom were heavy compared to the industry average. was 30 1%he sector and media was low. that deal might get done, but are people going to pay up? alex: probably not. i know we only have a little bit of time. i think yelp might get acquired. want to sell but maybe it will merge instead of sell outright. i would not be surprised if maximum got sold. one big deal that might happen is paypal might be acquired. that is what carl icahn suggested. a year after the split, that becomes a tax free transaction.
cory: you are watching bloomberg television and listening to bloomberg radio. my guest joins us now with an interesting look at something that may have slipped under the radar. congress, in changing the rules of how they are going to sell oil off shore and to other countries, changing the rules round solar.
this changes things dramatically for solar companies. guest: it does. thank you for having me. it is to really important things. it 30% of the cost delivered to the system and that makes it quite a bit cheaper and more economical. cory: not the planets and stars solar system. guest: absolutely. capital hates uncertainty. it allows more capital to get comfortable and they estimated extra $40 billion coming into the space due to that. vonnie: that will obviously push
certain stocks higher. like the mean indices they comeks, will back a little bit question mark we saw great run-up and then just stagnation. overall, it helps the market. but we see is the manufacturer , that's ae inverters worldwide market. you want to look to the installers and developers like solar city and sun edison. their expertise allows them to capitalize on the growth in the u.s. market more so than the manufacturers. tax and ifme how the whereks for solar city the homeowner does not own the system on their rooftop.
guest: typically, these installers partner with firms like deutsche bank and those monetize the tax credit. one of these financial players system and the tax credits will accrue. for the homeowner or business, the offer can be simply pay less for your power. the owner of the business is not forced to deal with the tax credit. i like to be forced to deal with the tax credits. because they can monetize the tax credits, you can charge the businesses or the homeowner less. they do accrue to the consumer
ultimately. one reason the solar companies cannot benefit is because they don't have taxes. they don't have taxes because they don't make money. quarter after quarter of widening losses are really jaw-dropping. inst: that's always interesting argument. particularly with the itc, do you grow quickly at a loss to gain market share, looking forward to later profits as the should youtures or be going to profitability? i will leave that to the public markets but i think there's a market going for getting a land grab. there are operating losses. what about profits?
it seems to be so volatile. it down substantially. are they like the airlines in that vein and that they are volatile performers? one important point to make about losing money and making it up in sales is that solar continues to get cheaper every year. this technology decreasing cost curve that has led to decreasing costs year-over-year. the other thing worth noting is there are relatively volatile stocks in the solar has been a lot of innovation around private
debt facilities that take advantage of the consistent cash flows. i'm concerned about some of these deals that promise 30 years of consistent payment when the homeowner is usually only in the house for seven years. depending on the subsequent homeowner and subsequent homeowner to sign on for this program and make those payments. bonds assumed the 99 percent of the payers and that system will continue to pay. guest: there is a little bit of we don't know. one of the interesting things about that yield code is capital has been picky. homeowners have five goes
above 700. investment-grade commercials so while it does seem as though it's a high repayment rate, capital has been very picky. it allows capital to move beyond the high investment grade, but if you look at the data, people continue to lose power and if it is cheaper than the utility, they will buy it. vonnie: with oil prices and natural gas prices hitting rock bottom, not that they could not go further lower, is that making solar stocks less attractive? there's not a lot of fungibility between oil and solar. relevant.s is what we have seen is the natural gas plant renewables.
alix: you are watching bloomberg. i'm alix steel agnes is your global business report. as 2015 comes to a close, one of the top voices on oil says people should be paying attention to iran in the coming year. $983 millionth a write-down. and apple is planning on taking its payment service global. let's start with the oil outlook for 2016. the eye a chess vice-chairman explains what he thinks people should be looking out for in the coming year. guest: sanctions will be lifted on iran in january to help the president in the parliamentary elections. that is the next big shoe to market.the oil
is it half a million barrels a day or a million barrels a day? that is what i would be watching. bnp paribas is writing down some of the goodwill related to what units. france's against bank is setting aside more capital for the italian corporate union -- corporate unit. they reiterated their plan to pay 45% of their profit in s.vidend japan's central bank announced it would not expand its main stimulus target. mistake, japan is heading in the right direction with wages in the labor market continuing to show improvement. i think a virtuous circle has finally begun in the stock market will follow the meaningful improvement of the economy.
with the effort the government is making, i'm not worried about what the market does. apple pay is hoping to grow into europe. it has had a sluggish start since debuting a year ago. for a bloomberg quick take, where we provide context and background in the interest britain leave the european union? a bloomberg poll showed 43% of economists said a british departure from the european union is the biggest threat to the u.k. economy. the referendum vote could come as soon as the middle of next year. pathsrits want to follow similar to norway and switzerland, which are outside the eu. in order to stay, britain want some changes -- power to withhold payments from migrants, exemptions from eu laws, and the ability to opt out of vertical
integration. a long history of keeping its independence from continental europe -- continental union. have been instances of britain asserting its independence. britain fromsm cap adopting the euro when it was launched in 1999. some say the u.k. has enough clout on its own, a permanent beat on the -- permanent seat on the council and could negotiate better treaties without being held back by eu protectionist. on the flipside side, it could have a disastrous effect on the economy. the heart of the issue is epitomized by the syrian refugee crisis. the german chancellor has made clear the right of freedom of movement in the eu is
unassailable. that is your global business report. for more stories, visit bloomberg.com. doolittleo abigail live at the nasdaq where she's looking at american airlines. : american airlines is what of the top performers here at the nasdaq considering crude oil is having its best week in four months. this comes in the context of a difficult 2015. more recently weighing on the stock, some are thinking that this is changing, especially if the decline in crude continues. the stock could fly higher by 20%. turning to a true worst isformer here at the nasdaq the chipmaker down 60% this
week. they missed their first estimate, having what some called atrocious guidance. it could mark a bottom to credit suisse. his rise target of $22 suggests micron may move higher by more than 50% in this new year. 2015 was a banner year for m&a deals in the packaged food and beverage industry. one deal amounted to $117 billion for food and $182 billion for beverages. the most for both industries since 2002. what drove the pickup? joining us is our bloomberg
intelligence senior analyst, can shave. what was the biggest catalyst for this m&a? ken: they have two edition themselves for the evolving it's theportfolios -- need for natural foods and new channels. convenience stores are a channel they all want. better exposure to emerging markets, putting that strong dollar to work and buying assets outside the u.s. m&a has been a big driver of the food group this year. when i look that food and beverage versus the overall m&a space, we've seen $20 trillion worth of deals in food and beverages lagging quite a bit. do you expect them to play catch-up in 2016 or are we talked out? craft -- -- the
craft-heinz deal, a $55 billion forsaction set a bar investors and companies to try to aspire to. activity the increased by activists in this group are going to apply a lot of pressure. alix: the other theme we have week, cornan sell and sugar. commodity prices done to enable these deals to get done? ken: the favorable cost environment are low. that enables them to meet their cash flow but they have been
able to require -- to acquire more debt to enable acquisitions while simultaneously conduct a share buyback. with some of these key drivers in place and the outlook for you would think a lot of these drivers are going to make this a continued trend into 2016. alix: who is left to be bought? what are the biggest names out there? ken: there are a lot of companies involved right now undergoing restructuring like conagra. they announced a split of the company into two pieces. some of that was prompted by private equity interests. i think there is quite a number of niche companies tapping into
the evolving trends companies need to get more into. ofhink you'll see a lot small private companies be targeting 2016. alix: thank you so much. coming up, we will take you through the early markets closed today and we will talk about the high-yield market and the five charts you need to know heading into 2016. ♪
sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. alix: from bloomberg
headquarters in new york, good afternoon and happy christmas eve. you just heard the closing bell -- u.s. equity markets closing early on this christmas eve. days pretty much a mixed across the board. the nasdaq is an slightly positive territory. extremely thin volume trading. we want to head to the markets where we have more on the markets action and what was moving. ramy: merry christmas eve to you and mary christmas eve to all of you. i want to look at what the s&p 500 has done. up byhis week, we are nearly 3%. this is the first gain in the past three weeks. take it to the
plus side and interestingly, it's the 25th time it has flip-flopped between losses and gains. with oil led stocks higher wti having its best week since august. oil has lost about one third of its value, but all of this has helped the s&p get together to flip into positive territory. this is the seasonality heat map, lit up in red and green christmas colors. want to focus on this block right here. we are about .9% away from turning green. the last time we saw a larger 2002,han that was back in
when the december loss was about 6%. alix: what were some of the biggest sector movers we did see? the energy sector was the biggest gainer for the week. it rose by nearly 3%. one oak was the biggest gainer. transports,g was transports lying higher led by airline stocks. up 5.5%. db and callan saying it could be a good year for cheaper jet fuel.
biggest gainer after more people signed up for health care under the affordable health care act. alix: thank you very much. is our us for more bloomberg markets executive editor. what i find interesting is the volume is thin but you tend to see a reversal of positions that worked well in the last few weeks. the dollar,ing often bid and energy stocks rallying. tracy: there are all of these theories about why that is happening. tos about investors trying crystallize their losses before the end of the tax year. ,hat's always a fun counterintuitive reason for why this might be rallying. we have seen a rally this
week on the s&p, but the amount of stocks doing well is pretty well. if you look at the percentage of stocks above their 200 day moving average and their tracks from yesterday, it's about 32%. stock.y small amount of that's been the theme for the past year. tracy: people are always concerned about the health of the rally. google and also that have been the performers, but they are rolling over just a touch. you can see facebook not doing so well here. google coming off a bit and you ave --
alix: the destruction of the high-yield market has been one of the biggest stories ishares -- of this year. conventional wisdom has been this is confined to energy but the worry for 2016 is that it spreads to the investment-grade market. back with us is tracy alloway, bloomberg markets executive editor and are bloomberg news editor.
shown some kind of ripple effect in investment-grade. tracy: i would say destruction of the high-yield market still exists. we have had carnage and and it's a matter of degree. thehat point, investment-grade market is a big deal. the bonds issued by companies have strong talent sheets under kind of safe. note, we have seen continued outflows and specifically, we got $3.5 billion coming out of investment-grade outflow -- outflows. definitely something to watch for next year. many we have seen so companies use all of this debt to fund buybacks.
the buyback index versus the s&p. tracked eachuch other net for net since august. what happens of companies can stock?k as much guest: companies have issued about $2 trillion worth of buybacks. that is really what underpinned the rally. one investor even called the bungee cord of the market. seeing companies that do buybacks trailed the market. alix: does that mean investors are more interested in the balance sheet? they are definitely looking for more healthy balance sheets. cash and maybe they will do more capital spending and whether investors
are willing to reward companies that do that more. tracy: we have seen investors reward companies over the past four or five years for paying back their shareholders. that has started to turn and people are looking at the quality of balance sheets. with those outflow figures, whether the market will be there to support the share buybacks investors have gotten used to. the big question is how much worse is it going to get? fallen angels and rising stars -- there companies with triple with negative watch and negative outlook. that means there are more companies at risk. is quite large.
tracy: i think that's good in the 3rd avenue credit we found. that thatn distress was ill liquid, the problem is managers that invest in higher yields an investment grade bonds that suddenly get downgraded and surprise, surprise, you go from being a credit specialist to being a distressed debt manager. it called contagion. have peopleou forced to sell what they have to, not what they want to. that can cause more trickle-down. guest: investors are looking for quality and looking for growth. that's why you see companies do a lot of them and they. change there will be a in what you're looking for from public companies. alix: you are also looking at
the ted spread. why is it significant? trekkies -- tracy: back in 2008, the trade -- the ted spread blew out and is now blowing out to a smaller degree. it's basically the difference between where the u.s. government can borrow over three months versus where banks can borrow, so libor. spreadu start to see the blowout like that, it's normally a sign of banking stress in the financial system. what has happened is libor has gone up. the cost of banks borrowing from each other has gone up which is natural because the fred has -- the fed has raised interest rates. not and hasield has stayed really low.
that's an indication of how much the financial system is changed. we have all this post crisis regulatory reform that encourages investors to hold on to long-term safe asset -- long-term safe assets. blow out theing to ted spread again. alix: does that rivers next year? tracy: the government has been avoiding that because there's the whole debt ceiling issue. t-bill issuance has come down. from a financial institution side, on the demand side, that's going to remain strong. do you feel the rebound and energy stocks is recovering? has there been a sea change so investors say it outweighs fundamentals? hard to say we will
see a huge reversal. oil speculators, there are forecast to reach $20 a barrel, but what is happening is mainly short covering. energy was a very popular short all year. to closebeing forced out those positions and the vast majority of the biggest gainers were energy names and some of the more as high as 20% short interest. this week, they led the gains on the s&p 500. alix: oil is not the only thing on our minds. cattle prices have seen a huge surge. what happened? tracy: let it not be said we don't bring you the interesting market moves. specialaken ace interests in this because i'm
going for steak tonight. we have seen cattle price futures jump -- i think it's their biggest ever winning streak since that index started back in 1991. that's a combination of the very unusual weather and some current movements. alix: thank you very much for being here. happy christmas, everybody. coming up, the charts you need to know about oil. ♪
suggesting a still solid labor market approaching that new year. dropped below the median forecast that called for 270,000. run christmas day deliveries to help complete shipments after severe weather caused delays in the run-up to the holiday. fedex counters will be open so customers can pick up shipments. their deliveries have been on time for much of the weekend expect that to continue. deliveryi is delaying of their passenger jet for a year. they say it won't be ready until mid-2018. jet debuted last month and they say technical issues must be resolved. apple pay is hoping to grow in asia and europe. the service lets consumers pay with an app and has had a
sluggish start in the u.s. since its debut more than a year ago. it will be introduced in hong kong, china, singapore and spain. a slight decrease for pay for bob iger. he saw his reported compensation to $44.9 million. his cash bonus shrank by $410,000 and the value of his pension declined due to an accounting change. he is among the highest-paid executives in the u.s. the cleveland cavaliers visit the golden state warriors on christmas day. hot ticket item. the marquee matchup between two of the game's biggest stars -- the average tickets is $517. no tickets -- don't despair, you
can watch it on television. that is your business flash update. of the biggest stories of 2015 with prices sinking 30%. the four charts every investor should be looking at heading into 2016. the first one has to be inventory. it's sitting around 3 billion barrels. bank of america thinks that could jump in 2016. will demand and supply get shut in enough and will demand be able to avoid the peak storage situation? that leads us to the question of production. you want to watch non-opec oil production. think of things like mexico, brazil, russia and canada.
most of it will be the u.s. some costs will continue to add to the oil supply. one of the biggest risks according to goldman sachs is european distillate inventory. refiners have avoided peak storage because they have been making products like crazy and that created an oversupply in terms of distillates, the kind of fuel you can use in cars. bill. has seen a strong look at this spite. if storage winds up hitting its , refiners won't want to make a lot of product and will be using as much crude and that will bleed into more of a supply glut into the oil market. if floating storage needs to be incentivize, you might see brent
fall further to make that economical, and that is a key risk. market is art is shame. shows a short contrast around a record high here. this shows that market sentiment is pessimistic. , youind of positive news could see a short squeeze in oil. with oil, we want to hear from the ihs vice chairman because he spoke earlier today and explained his concerns with it ran and the oil market next year. -- with iran and the oil market next year. iran, thelooks like sanctions will be lifted as early as january to help the president and the parliamentary
elections. that is the next big shoe to drop -- is it half a million barrels a day? that is what i would be watching. phd's that follow this at ihs, do they have a price point where the market clears? : not specifically. the way we look at it is what is the balance between supply and demand? , which is this year coming to an end, has been much stronger than last year. are driving more miles than ever before and the number of sports utility and light trucks people are buying is about 60% of the new vehicles. at the same time, we see this big cut in investment.
>> the question that seems to be asked is will the saudi's be paid in 16? all indications are they will stick with where they are now because for them to cut is for them to say we will cut to make room for a ran to put more into the market and their message has been consistently that we will cut if others are going to cut. -- onetwo things happen of those things cut, which is less likely or the market struggles back into the balance tom was talking about. >> how much more pain can that economy take? how well positioned are they
going into next year to deliver the oil policies they seem to want? daniel: their reserves are very large. compare that to nigeria which had about $2 billion in it sovereign wealth fund. have the staying power and it puts pressure on them and you can see there have been increasing expenditures domestically and they are funding a war in yemen now. oil has been something -- we have seen it come back and the spread has come in. trading more expensive than cushing this morning? daniel: that's fascinating for me. six days ago, president obama signed a bill that lifted the ban on crude oil exports after
many decades. part of the reason and psychologically it's a major reason. there's still storage available in the united states and i think that's a reason that it is down. that was the ihs vice chairman on bloomberg surveillance today. that wraps it up for bloomberg markets on this christmas eve. have a happy, healthy, safe holiday season. ♪
emily: he is the provocateur behind some of the big ideas of our time. a creator of a sort of pop science. an unofficial, but incredibly influential set of laws that govern human behavior. between five "new york times" bestsellers and two decades at "the new yorker," malcolm gladwell has inspired, inflamed, and perplexed the most critical of readers. joining me on "studio 1.0," author, journalist, and thought-provoker, malcolm gladwell. thank you so much for being here, it's really great to have you. in your latest book, "david and goliath," your argument is disadvantages can become advantages and create opportunities.