tv In the Loop With Betty Liu Bloomberg February 27, 2015 8:00am-10:01am EST
opening bell. the clock is ticking for d .c. less than 24 hours to come together on a deal to avoid a security shutdown. republican congressman will hurd, a former cia officer, he rips into this debate. a white house that frank underwood built. third season of "house of cards" tonight. hollywood producer is going to weigh in. a look at our top stories. a 4-month extension of the greek bailout gets the ok. parliament approved the plan despite dissent from members of chancellor angela merkel's coalition. in ukraine, journalists spotted rebels pulling heavy weapons off the front lines. the first confirmation that they
are complying with the truce. the cease-fire was supposed to start 12 days ago. the white house is considering more sanctions on russian banks if rebels break the truce. president obama says the keystone pipeline would shortchange u.s. workers. the comments were his first since he vetoed the bill this week. obama says he favors new pipeline for american oil but noted keystone would be for canadian oil, bypassing the u.s. entirely. it looks like congress and the courts will be the new battlefield for net neutrality. republican lawmakers said are going to overturn rules adopted by the fcc, preventing companies to sell faster service to content providers. the sec -- the fcc chairman says rules guarantee web traffic is treated equally. commissioner wheeler: the internet is simply too important to be left without rules and
without a referendum the field. betty: the rules invoked include wireless internet service. apple inviting the media to an event on the morning of march 9. what could this be about? the tech world speculates it is going to be about the launch of the apple watch. do you want one? held at a san francisco theater. apple's first venture into wearable technology. tim cook says they would go on sale in april. those on your headlines. back to d.c. funding for the homeland security department set to run dry if the house and senate do not pass the same bill. republicans in both chambers are not on the same page. chief washington correspondent peter cook has the latest. this is ego against ego.
who is going to blink? peter: nobody is blinking. it is more like hitting the pause button. the house of representatives deciding to vote on a three-week extension of the current funding for the department of homeland security. it will give them more time john boehner told history of's to reconcile with senate republicans. trying to take another whack at the executive action. the senate is not teed up to vote, that could change. a lot of talk among republicans as to what the best strategy will be. looks like they will ever the shutdown tonight. get a three-week reprieve. right back at it in three weeks. betty: what's going on between john boehner and mitch mcconnell? they are not talking now? peter: one of the more fascinating things to learn when
john boehner revealed to house republicans that he and mitch mcconnell had not spoken for the last two weeks. they had differences ever this entire debate. it is really after republicans took control, some of those differences between the two leaders really playing out. john boehner was asked about it yesterday, the tension between he and his fellow republican leader mitch mcconnell. john boehner: we've had a very close working relationship. he has his challenges and i have mine. we have two different institutions that do not have the same body temperature every day. we tend to try to work to narrow the differences. sometimes there are differences. peter: john boehner went on to say the house is a lot more rambunctious than the senate. mitch mcconnell has to try and herd them around. tensions between the house republican leadership and the senate over how this has played
out with regard to the department of homeland security funding. we will see a positive action for three weeks. even that is not certain democrats are threatening to vote against it. that means john boehner needs to have as many republicans way to support it as possible. betty: we are trying to figure out what he meant by body temperature. that was a little weird. peter cook, a little too intimate. we continue this conversation in a few moments with will hurd former cia officer who serves on the homeland security committee. it is a tale of two retailers. jcpenney, shares fell 11% in after-hours trade after a loss in the holiday quarter. issuing a disappointing annual forecast. you had gap's quarterly profit that beat estimates and was helped by sales from old navy.
it gave the retail a healthy boost. julie hyman is here with more. what happened? julie: there were so many attended an in progress turnarounds in retail. these are two of them. on jcpenney we have a retailer that went disastrously wrong under ron johnson. we had mike ullman come back and stabilize.. we saw continued signs of stabilization in the fourth quarter with comparable sales up 4.4%. the company posted break even profit. analysts have been looking for more. in terms of the forecast for the full year, jcpenney says sales are going to be up 3% to 5%. it might be on the lower end of that. the company did a lot of discounting during the fourth quarter to get the traffic. it seems as though analysts are saying we really have to accelerate our growth. we want two-seamer growth from
you in order to not just get back to where you were pre- johnson but to get better. that seems to be the situation. betty: it was not that bad. julie: there were bright spots. sales were a bright spot. the company did improve gross margins to some extent. it is a question of how much is enough. looks like jcpenney's cash position is a little better. the free cash flow growth this year projected by the company is lower than anticipated. betty: art peck at gap, can we attribute earnings to him? julie: we can attribute stock action to art peck. he was an internal person, head of innovation at gap before the promotion. he has changed presidents of various brands. he fired the creative director.
they got rid of the creative director position but brought in a head of design and product development. she was previously at limited brands and helped create the pink brand at victoria's secret. betty: sounds like a very apple-ish title. julie: old navy continues to chug along gap needs to fix gap. betty: thank you; julie hyman. back to the markets. a big flashing red flag. i hate to ruin your morning investment firms from ubs to invesco are saying watch out. the stage may be set for another financial crisis. two things are convincing them.
the recent plunge in oil and the big swing in the bond markets. there something more to it. not just with the swing but who is holding our bonds. i want to bring in our bond girl, lisa who wrote this. right when we are feeling good, markets are at record highs. lisa: one analysts are generally paranoid. what we are moving to is less of an active bubble scenario and more to concern about the fragility of markets with central banks embarking on unprecedented programs. you have a quarter of all central banks with negative yields. people are saying what is going to happen is not that yields are going to spike up some volatility that has been increasing in currency markets oil markets, treasury market will disrupt the fragile and
tenuous calm we've had and things will go haywire. like what we saw last year when treasury yields plunged. it was a dramatic move out of the blue. betty: it was sudden. one thing that is a worry as a result is who is holding our bonds. why do we care? lisa: good question. regulator stop system -- regulators thought the system would be safer if they pushed assets away from the big balance sheets and to investors. people think of investors who are not as leveraged as your classic investment bank, as being safer. this is uncharted territory. regulators do not have the same surveillance over investment firms, the big institutions
hedge funds, pension plans, mutual funds, etfs. there is no systematic way of understanding the risk that is building up in some of these firms. betty: we don't know how they're going to behave. lisa: ubs analysts say there's been a 65% increase more than $5 trillion of corporate bonds in foreign holdings at these mutual funds. institutional investors. we don't know how that's going to work out. presumably it is going to be safer. is it going to be less bad? we don't know. betty: a big unknown. thank you. lisa abramowicz of bloomberg news. the bear side, bond investors are a little darker. there are still some optimists. a much more positive view on the markets. who stole the show at the conservative political action conference? more on that next.
betty: here's a look at our top stories. congress hoping to buy time in the fight over funding the department of homeland security. republicans plan to vote on a bill that would fund the dhs for the next three weeks. stating off a shutdown set to begin tonight. the gop insists on tying a long-term spending plants to the reversal of president obama's immigration order. the net neutrality fight shifts to congress. republicans are going to try to overturn new rules. the regulations by companies like at&t for selling faster service to content providers. republicans gathering in suburban washington. day two of the conservative political action conference cpac. a new star, governor scott walker made a passionate case for a potential presidential
bid. here he is energizing the faithful. governor walker: here in america, there's a reason we celebrate the fourth of july and not april 15. in america, we celebrate our independence from the government, not dependence on it. betty: they have minted s tars at cpac. walker described busted unions, lower property taxes and restricting abortion. ibm says it will shift $4 billion of spending to strategic imperatives desk cloud computing, data analytics and mobile offering. ginny rometti says she wants sales to hit $4 billion over four years. ibm has fallen 4% since october. some nba stars remember the man who broke the color barrier.
earl lloyd became the first black nba player when he joined the washington capitals in 1950. he died yesterday at the age of 86. lloyd played nine seasons and was named to the basketball hall of fame. american express fighting to retain affluent clients amid stiff competition. adding new benefits for holders of its gold card. there's a catch. is increasing upfront fees. the new parks include double points for spending at u.s. restaurants and a personalized travel service. they already have the concierge service. as we mentioned, lawmakers are duking it out to finalize a funding deal before money for the department of homeland security runs out. a move that could result in 30,000 workers forurloughed. 85% will work without a paycheck until congress gets it together.
former undercover cia operative turned republican congressman will hurd of texas joins us. he served on the house homeland security committee. maybe you could get some intelligence for us. what is going to happen customer -- what is going to happen? what you think is the best case scenario? representative hurd: we're going to find dhs. the house is going to pass a short-term continuing resolution . where going to do that this morning. the senate is already working on being able to be prepared to pass that. we are going to pass a bill to make sure we can go to conference with senate colleagues so we can hammer out a solution that gets to the president's desk. betty: what will you vote for. will you vote for a clean bill? representative hurd: i will vote
for the three-week continuing resolution. it is funny that we are having this conversation about funding dhs still and the insistence on my democratic colleagues to cling on to some policies that a judge in south texas has said it is unlawful. the three weeks will give us additional time to see the work its way through the courts. we will see the court of appeals agree with the judge in brownsville. i think that is going to put pressure on our democratic colleagues. keeping supporting the president on some of the executive overreach is a nonstarter. betty: i don't know about you i've never heard a court act that quickly. three weeks is not buying you a lot of time. representative hurd: the court is going to signal what they're
going to do and we are going to figure out how long they stay is going to continue. the state may be in place for several months or even a year. that will open additional intelligence of what the judicial branch is thinking. we need to make sure funding for dhs does not run out. betty: three weeks is three weeks. we had a democrat on yesterday who said you cannot plan a national security agenda on a three basis. you know that more than anybody else. representative hurd: we have a lot of threats. the threats are getting more complicated and more. we need to make sure that we are prepared for these threats. that the border patrol as you know my district has 820 miles of the border. i have three border sectors, two major airports. dhs funding is very important to my district.
that is why am going to go to make sure we can continue the fight. i would ask my democratic colleagues the same question. they are holding up the long-term funding of dhs to clean onto the president's executive action. betty: this is a time when we had just heard about jihadi john, we know about brooklyn. are republicans going to pay the price for dragging the fight every funding? representative hurd: that is why we are going to make sure it gets funded today. there's a lot of threats in this world. you look at what isis is doing and the number of foreign fighters going into syria and iraq four times what it was in a place like afghanistan or iraq. it is something we need to make sure we are doing everything we can. betty: congressman will hurd of texas. back in two minutes on "in the loop."
make no mistake about it. they're out there. i guarantee it. welcome to the nascar xfinity series. betty: you are watching "in the loop." streaming on bloomberg.com. earlier i mentioned there was big warning signs we may be headed for another financial crisis. the s&p up almost 6% this month. the nasdaq rising. yet something is wrong with this picture. earnings for this quarter expected to slide 4.5%. 2.8% in the second quarter. what is going on? from boston chief market
strategist for wunderlich securities. art, sort this out. why are stocks at record highs when profits are going in the other direction? mr. hogan: a couple reasons. a pretty flat story. february has been pretty fabulous. dow up 6%. s&p up. first and foremost the strong dollar is acting as a magnet to global capital. you think about where am i getting capital appreciation. i'm investing in dollars and the dollars appreciate. the other piece of it what is the strongest growing economy in the developed world? that continues to be the u.s.
the u.s. continues to be the place to be in terms of equity investment. that will continue throughout the balance of this year. there are a lot of tell whence that have yet to catch on in terms of earnings estimates. betty: there are reasons why it is supportive of the u.s. market. the big question is how do we get another 6% or 7% growth in stocks? maybe the earnings estimates are just too dark? how do we get pe ratios to go up? they are already at high levels for the stock market. mr. hogan: trading at about 7.25 times this year and 15 point five times next year. you look at it in a world of
zero inflation, those multiples tend to be higher. when you rationalize what your alternatives are in fixed income markets and think about where multiple should beat wendy fed funds rate is at zero and inflation is 1.6% of the core pce level. it is historically high but rational for the low interest rate and low-inflation environment. what drives the markets? if you look at u.s. gdp and a sin that two thirds is consumption. you look at what talents consumption has this year. you have higher employment. you have to go back to 1997 to see this kind of jobs growth. wage growth on the private level for companies like walmart and other companies following suit. wage growth of 2.2% on a year-over-year basis. wages are increasing.
consumer confidence is the highest in 10 years. on a backdrop of lower energy prices. the benefits of lower energy prices have not been priced into earnings this year. the negative effects have. we've taken a cut to the s&p 500 this year that represents energy. what we have not seen is the good benefit we are going to see from lower energy prices as a tell into the consumer. betty: we have not seen that in earnings. back to earnings. normally what you want, i agree, wages are rising and unemployment is going up. that is good for multiples. a good scenario as the fed looks to raise interest rates. back to earnings, we are losing momentum going into the fed raising interest rates. i'm not sure that's a recipe for another rally in the market. mr. hogan: that is a concern
we've had since the fed cut the interest rates to zero. we have not seen an answer straight rise -- we have not seen in interest rate rise in nine years. do you think if we exited this year it is going to curtail economic growth? i think that is the way we look at it. whether it is june or september, i do not think we are going to have this fed be extreme. probably twice five basis points in june and perhaps another 25 towards the end of the year. we will realize some of the gains we are getting across the rest of the nine energy-related s&p 500. multiples look a little more attractive. betty: thank you for joining me. shedding some light. art hogan, chief market strategist at wunderlich
securities. more on the health of the u.s. economy. the morgan stanley chief economist will be joining me. here's a look at our top stories. a four-month extension of the greek bailout get the ok from german lawmakers. the measure passed despite dissent from angela merkel's coalition. even though the truth is -- even though the truce is taking hold in ukraine, a cash crunch. tightening capital control rules to stop the outflow. reporters spotted rebels hauling away heavy weapons. looks like congress and the courts will be the new battlefield in the net neutrality debate. republican lawmakers say they are going to ever turn the powers adopted by the sec. -- by the fcc. the fcc chairman says the rules guarantee web traffic is treated equally for all users.
chairman wheeler: the internet is the most powerful and pervasive platform on the planet. it is simply too important to the left of that rules and without a referee on the field. betty: the roles include wireless internet service. new rules aimed at making the world's biggest banks safer might make them smaller. telford -- tougher capital standards hitting home at hsbc and other giants. cutbacks at eworld bank of scotland, jp morgan and deutsche bank. the rules limit how much borrowed money banks can use to fund operations. the banks are looking at layoffs, sales of units and territorial pullback. day two of auditions for the republican put a call nomination at the conservative political action conference. among them chris christie.
he says hillary clinton's call for a higher minimum wage is not going to solve income inequality. governor christie: we need to fight the people who are trying to lift themselves up. mrs. clinton answers raise the minimum wage. i will tell you this, no parents are sitting around tonight saying if our child can get a higher minimum wage every one of our aspirations will be realized. [laughter] betty: today at cpac, jeb bush is in the spotlight. profits reaching cruising altitude at airbus. debt the -- the jet maker says profit rose last year, a record number of plane deliveries. the ceo explained how airbus balances orders and reductions. tom enders: we have more than 5000 single aisle aircraft in our backlog. we can ramp up
production. we always make sure our supply chain can follow. airbus has a pretty conservative record as far as that. betty: airbus will speed up production of the a320 planes because of increasing demand. llamas on the lam. 3 llamas that were visiting and arizona senior center had other ideas. two escaped. sheriff's deputies and camera crews gave chase. after an hour, the llama drama ended when they were lassoed. that is something you do not see every day. glad i saw this on a friday. your top headlines. weight watchers mrs. their profit target. question everything. frank and claire underwood are back and the stakes are higher as the streaming wars intensify.
betty: lessons in an hour until the start of trading. some breaking news. scarlet fu is looking at some of the action. the economic news we just got a few moments ago. scarlet: gdp in the fourth quarter. the u.s. economy grew at a somewhat slower pace than first reported. a 2.2% annualized rate is down from the initial read of 2.6%. personal consumption, spending, was pretty much on pace with what had been reported, 4.2% versus 4.3%. there will be one more revision. one focus for investors will be whether the nasdaq ends february
at key milestones. 5000 and then a new record high. the nasdaq is the best performer of the three u.s. indexes this year with a 5.3% gain, more than double the s&p and the dow. the nasdaq would need to gain more than 12 points, .25% to pass the high set in the height of the dot com bubble, it would need 61 points or 1.2%. we'll keep our eye out. two nasdaq stocks that could help. monster shares rising in the premarket. one company makes software that helps businesses analyze data. license revenue rose 43%. the company raised its full-year outlook. monster posted a gain of 10%. it is expanding its partnership with coca-cola.
weight watchers down after earnings-per-share came in with what analysts expected. betty: weight watchers losing some weight. thank you, scarlet fu. we bring you a message from america's favorite cutthroat washington couple. >> i'm starting to question all of it. what are we doing this? >> for this house. for the presidency. betty: oh yeah. "house of cards," a political thriller, is back today for its third season. the series is a crowning jewel of networks's growing content empire. netflix has spent more to become a real competitor to the likes of hbo in programming and hollywood at large. joining us now is john sloss
executive producer of several oscar-winning films. most recently, "boyhood." are you a little disappointed? john sloss: i'm a little disappointed. i'm recovering. i'm happy to be here. betty: patricia arquette won one oscar. john sloss: sheet won every award she was up for. betty: ok. speaking of the oscars. during the opening act, neil patrick harris was singing and then jack black comes on. he makes this funny commentary about the state of the movie industry. for those who missed it, let's play it. jet black: the industry is in flux. it's run by mucky mucks.
all we get are superheroes. superman bat man, sequel man, frequentprequel man. the only screens we are watching -- betty: screens in our jeans. we get the news that the ratings for the oscars were down 14%. what does this mean about hollywood? what you think? john sloss: i don't think it has to do with the entertainment quality of the presentation of the show. i think it had to do with the commercial appeal of the eight films nominated for best picture. i'm sad to say because i was a producer of one of them. quality was hot. -- high.
betty: the quality of the movies. john sloss: the commerciality might have been challenged. betty: getting back to what jack black was saying. it seems like there is confusion in hollywood. are the screens, meaning netflix , amazon, are they breaking hollywood? john sloss: it ultimately gets back to the creators and the content. there's been a drain towards episodic. whether it is traditional television, netflix or amazon. "house of cards" is a great example. the ability to tell a narrative story over 13 hours rather than two hours is appealing to some filmmakers who would have thought the ultimate aspiration, they used to think the ultimate aspiration was to do a theatrical movie. now it might be to do something that could be put on netflix on
a weekend so you could binge watch the 13 hours. betty: "boyhood" was almost three hours long. john sloss: two hours and 43 minutes. betty: at any point, did you guys ever think maybe we want to turn "boyhood" into something that is a series or netflix? did that ever come up? john sloss": the film was financed by amc a television network. the conversation was had about making it into a miniseries. the feeling was the specialness was to present it in a consecutive seating. if you binge watched, it would have the same effect. if you watched it week by week it would cut into the fact that you see this boy age in front of you over a two hour and 43
minute period. betty: i loved it. you had to leave a lot on the cutting room floor. might you use some of that? john sloss: we put a lot of it into the extras. if you go on itunes you will get a chance to see them. richard linklater is an a economic filmmaker. we shot three days a year every year. not a lot of fat in that. betty: great to see you. john sloss. could relations with cuba spark a rum trademark war? that story in a moment. ♪
they will vote on a three spending bill for homeland security. insisting on a long-term plan to block president obama's orders on immigration. democrats say they will not negotiate until homeland security is funded through september. no three-week extension. a good year for the cofounders of private equity firm carlyle group. according to filing the cofounders were paid a total of more than $800 million. 50 million dollars more. the bull market has allowed private equity firms to profit by selling stakes in companies they own. south koreans apparently believe you cannot go wrong investing in sex. shares of the kind of maker -- shares of the leading condom m aker soared after courts legalized lottery. up 30% in the last two days.
wow. those are your top stories. cuban officials meet in d.c. the focus will be on reestablishing diplomatic relations. for two of the world's largest rinks manufacturers, the normalization might reignite a trademark war that has simmered for more than 25 years. >> the sugarcane harvest and western cuba has changed little. even with the addition of some combine harvesters. after the revolution, factories that refined sugar were nationalized. so were distillers of rum. the drink is everywhere here, especially the government produced havana club. this is not the only rum with that name. you cannot buy it in america.
>> due to the blockade it is not possible to be with the cuban product in the u.s. >> sergio is the export director of a joint venture founded in 1993 when the cuban state partnered with a french firm to sell the beverage overseas. >> was a risk for a french company to come to cuba? >> there was a risk. they knew the brand cannot be traded in the u.s. the brand is forbidden and 40% of the market. >> the french firm learned the embargo would not be the only barrier blocking their cuban made havana club from the u.s.. another rum distilled in puerto rico became available in american stores. >> that does not mean that people have the legal right to the brand. >> the company currently selling the brand is bacardi.
>> do you make a profit in the u.s.? >> it would be tiny. >> even tiny profits create a legal argument for bacardi. 500 cases in 5 states constitute a use of the brand. that trumps claims from the cuba n government. >> the competition is fierce. it becomes a question of defending what you own and have a right to. >> the right came from congress which backed bacardi with a 1998 law that the wto said violated american treaty obligations. as u.s. cuba preterite cools -- as u.s.-cuba rhetoric cools, the rum market might heat up. >> is now the moment to do something more aggressively? >> the company told us they will
simply start shipping their cuba n rum under a different name. in the meantime bacardi sales of havana club remain barely profitable. the value might be in keeping a rental rum-- a rival rum out of america's cocktails. >> open trademark battles in rum and cigars. brands worry about whether they will have the right in the u.s. if the embargo is lifted. betty: thank you so much for bringing us that report. we'll be back in two minutes. ♪
>> welcome back in the loop. we are 30 minutes from the opening bell. these are top stories and futures are lower on this friday, the last trading day of the month. of the economy was slower than previously reported. there is a four-month extension of the greek bailout program. the loan plan was approved today and passed. the truth is taking hold in war-torn ukraine. capital control is trying to stop and huge outflow. pro-russian rebels were hauling
away heavy weaponry. it looks like congress will be the new outfield in the net neutrality fight. republican lawmakers say they will overturn the powers adopted yesterday by the fcc. it prevents companies from selling after service area --. i>> the internet is the most powerful and pervasive platform on the planet. it is simply too important to be left without rules and without a referee on the field. >> the rules invoked by the sec include wireless internet nervous. -- service. republican presidential hopefuls are seeking george bush. chris christie made his case
yesterday. he said that hillary clinton's call for a higher minimum wage will not work. >> people have not had a wage increase in adjusted for inflation in 15 years and mrs. clinton's idea is to raise and wage. no parents are sitting around the kitchen table saying if our child can get a higher minimum wage, our aspirations will be realized and it's not happening. >> some say they will lockout when he takes the stage. those are your top headlines. we are under 30 minutes away from the start of trade. these are the top 10 headlines. olivia sterns and matt miller are joining me. good morning. get ready. number 10 samsung tries to grab market share. they are introducing new start
-- smartphones this weekend. it will have its own chip instead of qualcomm's. this could be a big opportunity or samsung. they want to compete with apple. samsung has had three quarters consecutively of falling earnings. i think what could be the bigger story besides a three sided screen phone is not using the qualcomm processor. >> the shocking thing to me is sam son used to own the globalstar's -- smartphone market. -- global smartphone market. xiaomi overtook samsung. i did not know their fortunes had fallen so far. it's a $200 billion company. it's not that it's a smaller
disadvantage. >> the apple watch is coming out march 9. >> who is excited? >> tim cook is wearing it in the shower i've heard. >> south korea's largest condom manufacture shares jump for a second session. >> it means that they make the biggest jumps in sales, not that they make the biggest condoms. >> they expect cheaters to do so with protection. it makes sense. >> adultery is still a crime punishable by death in a huge portion of the world. it is illegal here in the united states. apparently, this one kind of maker shares have gone up. i looked at other condom makers
and the shares have not been affected. trojan is the most popular brand in the united states. their shares have not gone up. lifestyle has not gone up. olivia had no idea what they were. this is just the south korean condom industry. >> it is reflective of no reality. this is just an excuse. >> the company that makes the morning after pill also got a wreath spike in the equity market. -- brief spike in the equity market. >> number three, china will tax games. this means those fund managers may need to charge their invest there's retroactive fees. is there any that you are an investor in china, is there a silver lining? >> at least there are some clear
rules about what it means to invest in china. >> there is no silver lining. >> they are verifying the rules of the game. >> china has given them temporary tax waivers. this is a system they can retroactively applied to your earnings. they are giving you no idea when it will be out. >> all along, there had been an understanding that would be some sort of capital gains tax imposed. it is not shocking to these investors. that was my reading. >> you are going to pay your money. >> the uncertainty is still amazing. >> it will make it easier to invest in the mainline equities. >> the largest hedge fund manager oversees $165 billion. they won't watch an artificial intelligence unit next to. they will create algorithms to
trade based on historical data and statistical probabilities. the algal rhythm will learn -- algorithm will learn it. >> i was bummed out by that. i thought he was putting together a team to invest in the technology. now he is just trying to figure out another way to game the system. i guess that is his job and other hedge funds are doing that and it's kind of cool to guy who made watson is going to run this unit. >> i thought we were talking about new robot technology. i agree. it's all about gaming the system and putting them all out of jobs. wouldn't it be nice if the exchanges were trying to build artificial intelligence? >> i don't know. >> i think that would be nice here it i think they are trying to have a more sophisticated x
-- approach. >> i think that would not be nice. it would be nice if the exchanges would go back to human traders on the floor so we don't have these computer errors and you have a more trustworthy system. >> number six, there were no crashes during the -- president obama is making his first comments on the keystone pipeline since vetoing the bill. he was to focus on american infrastructure for american jobs for american producers. keystone is for american oil. it would bypass the united states. >> there is so much hyperbole it is not that significant of an infrastructure rather. we had kevin cramer on a surveillance this morning. the unemployment rate in north dakota is 2.8%. they are having a production
boom. why is it so critical? >> i agree. i think the president made strong points here. keystone is an issue i struggled with over the last few years. i think he is right. in my original problem, i thought people were objecting for environmental reasons. it's more environmentally sound bite shipping it by truck or boat. it is for canadian oil. if they are going to take around -- a way property rights for american citizens i've am ok with that. -- i'm not ok with that. you put the pipeline and it's up. >> they will put out their findings, the state department. west texas crude continues to widen. we will make sense of oil markets like she always does area will be back.
>> we continue to count to the opening bell. we are halfway through. it's time for our deep down. demand and lower prices west texas crude is $12 cheaper than europe. alix steel has a story on this gap. this is based on wti crude demand in the united states. that gap is widening. >> the speed with which it happened is a record. it widened by $7.5. it was a significant change in the market. it was the same. we are looking at supply and
shale production is at an all-time high. at the same time, surpluses are building rapidly. refiners are following by the right side -- wayside. you can see cushing is 130 million. refineries are in turnaround season. they are using less crude and that is adding to the supply here in the united states. >> how long will this last? >> people want to know the last barrel goes into cushing and they say they can't take it. the situation in europe is different. it is exposed to global supplies and opec lobby -. iraq is not exporting because of bad weather. that will change and we will get
oil out of libya and iraq. demand is picking up a little bit worldwide. we had a record high back in december. european refineries have a killer margin area when they have good margins, they produce as much product as possible. as long as their margins are good, they will continue to produce. however, we produce different things in the summer. at some point, they will stop producing product. that will happen in the short term. >> you mentioned tasks, what does this mean for the price? >> we had a map to show you. in most expensive gas is in california. they have a very high environmental tax. >> i like the map. >> you get the cheapest gas where you have access to u.s.
crude and you have refineries. you can see that down in texas and the midwest. on the east coast it's hit or miss. where will we get it? if we get it from the middle of the united states, it will be cheaper. >> is always high in california? >> that is due to tax. they import most of their oil from saudi arabia. there is nothing going in california. it's interesting to see how the pricing dynamic works at the pump. >> eventually what happens to oil prices? >> they are looking for u.s. crude to go alone $40 ace on these high storage bills. eventually, too much storage and not enough demand, the price will go lower. once the limited cushing are
tested, they will sink fast. in the meantime, refining stocks are loving their life. they get to basically by u.s. crude and sell it over in europe. they are taking advantage and profiting off it. as analysts think, that's a different story. >> thank you so much for sorting out the oil market. it's not too early. we are a bunch of nerds here. our banks about to get smaller? many are pulling back from new businesses. germany said yes to greece more on that coming up. ♪
>> let's get back to bring you the most important stories before the bell. matt miller and olivia sterns join me. number four shrinking ranks. the world over, banks are pulling back from businesses. jpmorgan and others are announcing steps to closing branches. janet yellen conceded that we are seeing that these charges are large and causing the firm's to spin off some of their enterprises to reduce their footprint. >> overall, wall street hiring has all in 4% in the last year and everybody is hiring in the back office, legal, cyber security to rein in the front office. >> i think you left off an important part with janet
yellen. she said that's what we want. this is the point of dodd-frank regulations. i think most of our viewers would rather the ranks -- banks grow. it is nice and you were seen it happen in british and swiss banks as well. it's not that we are losing a global edge. >> that is a great point. where were you 15 years ago to mark --? >> i was so much better looking. i wish i had a picture to flash up on the screen. i was about 20 pounds lighter. i was stronger. >> i was in atlanta working at this new firm. >> i was working on the frank for stock exchange. -- frederick stock exchange --
frankfurt stock exchange. >> the nasdaq has fought its way back to its 2008 record. >> kind of. we are back as far as the number of the index. the thing that i thought about immediately is when i started covering stocks in 2000, so many nasdaq ceos were telling me it doesn't matter what the prophets are. i do know what the ratio was back then, it was triple digits. now we are looking at ratios of 30. companies are making money when they were making 10% profit. >> greece and germany have approved an extension of greases loan program. they threw greece a lifeline.
they have until june to gnu payment plan in -- to get a new payment plan in place. >> she should probably put on a tie -- he should probably put in a tie. >> it is probably true. >> there have been so many midnight moments for greece. we are to have a total repeat of last week. >> i defer to a live the a on this. this is her expertise. >>'s been down to the wire each and every time. >> it has been to the wire every time there was an extension. >> at least there is a little bit of a truce. let's get a check and where futures have settled. s&p are slightly lower.
make no mistake about it. they're out there. i guarantee it. welcome to the nascar xfinity series. welcome back here and we are back to giving you the most important stories. matt miller and olivia sterns are with me. number one the threat of another crisis. analysts are sending alarm bells over the wild swings we've seen in the oil market. i thought oil was supposed to be good in the market. a lot of volatility in the on market as well. these firms say this could be another financial rices in the making. -- crisis in the making.
>> there is volatility in the bond market that makes people nervous. >> you're not going to get a bubble. a financial passes will come from a bursting bubble. it is possible. they talk about loose credit in low interest-rate. we are in that environment. i don't know if everybody feels that credit is loose. interest late -- rates have been abnormally low for a long time. european markets closed at your highs. why? >> in the meantime, yields are negative. look at debt. >> this morning, the seven-year note in germany was in negative territory for the first time. >> it makes us question our own existence. the market is set to open. >> maybe for bond investors.
we were just talking about nurerding out. we also had gdp numbers this morning. a little bit better on the top line. i want to bring in my guest from the morgan stanley. >> good morning. i think this is my first time on since my new title. i have been coming on here for 12 or 13 years. >> the pressure is on now. give us a take on whether we are about to see another financial crisis. we were just talking about negative yields in europe and low rates here it looks like the bond market is signaling something else.
>> this to be the fed's. financial stability has an a big conversation for some time. since last summer, when volatility started rising again, that stability argument or discussion has lessened. it has become harder to argue there is for seeing bubbles out there that we should be fighting by raising rates when there is more volatility. with what janet yellen is preparing us for, it's taking -- every meeting is for a rate hike. the risk premium goes back in. >> let me ask you about what the fed is trying to do. they want to bring on some level of inflation. historically, that is a goal of the you have deflationary
climates because of what is going on in oil. a good friend of mine argues that if the fred -- said it would raise interest is that possibility? >> i think the fed will air on the side of caution. you will hear about raising too early. >> aren't they already behind the curve? >> i would say no. we just haven't seen the kind of inflation pressures like accelerating wage growth. if this were moving back to the goal instead of moving further away, that would get them to raise rates as well. this is not affected is going to take a leap of faith and say let's raise rates and hopefully that will give confidence to the economy and get lending moving.
you run the risk of choking off an early economic extension. >> maybe walmart has just help the fed make its case. >> we have a state putting in minimum wage laws. >> on the other hand, you have a company like 3m that was to make $10 billion worth of acquisitions. they are in no rush to make other acquisitions as money is so cheap. don't you think raising interest rates would see people buying these assets? >> taking a leap of faith is not how the fed operates. when you raise interest rates, it is to slow the economy. this is a stronger economy.
we are in early expansion. we are not so strong that weekend deal with rapid problems. it makes it harder for the said to head for the exit. why choke up the early expansion. if you wait until later to raise rates, we can always play catch-up. we know how to do that well. >> view our way out ahead of the pack. you are looking at first quarter 2016. >> we are going to get asked if you're going to change your fed policy. by showing worry, they were wringing their hands. janet yellen followed that up with her testimony that implied she would take out patients
with the does not mean a rate hike. it doesn't mean anything other than they are data dependent. >> just because she says it doesn't mean the market will believe it. the you think from what you've seen that they believe that? >> weaves in the odds come down. it is now lower at a 30% chance of a rate hike in june. the fed wants there to be a probability price in any meeting going forward. they want a risk premium. that is how you introduce it back into the market. you spikes as and for seeing bubbles that might be out there. but we look at is the data. the fed is data dependent. we are looking for when it is going to take higher. will it be supported by stronger wage growth? if those things emerge earlier than we think, we would have to revisit our thoughts on the side
of being so far out. right now, if the data unfolds like we think, there will be no push for the fed to raise rates until next year. >> it is so great to have you. >> congratulations, that is really excellent. >> thank you for joining me. up next, i will sit down with the ceo of ethan allen interiors he has just rung the opening bell. we are a few moments into the session. stay "in the loop here." ♪
this comes after they disclose that changes were demanded to its capital model before the stress test takes place. they were degraded down to neutral. last your, they had to resubmit their capital plan after an error in calculations. in a case, come inside the bloomberg terminal. this is a 12 month chart of the stock. it is down about 2%. it has moved a lot but only down 2%. this yellow line is the 200 day moving average. this is a long time trend line. they are well below the average. that could be some pressure on the stock as we move forward. we will keep an eye on that. another stock is the biggest
drop in six months. the ceo will be leaving. his departure lessons credibility with invest in -- investors. >> thank you so much. pending home sales are about to come out at the top of the hour. home depot earnings showed that americans are loving their homes again. they are sprucing them up. they are buying things to him pro -- improve their homes. why are ethan allen interiors down 10%. one answer is it still in transition. in the midst of an overhaul and online and in stores, it will ca continue for another six months. the chairman and ceo of ethan out and joins us now.
he is live from the extent exchange traded i know you have -- he is live from the stock exchange. to investors need to be patient and wait and see whether your overall is going to work? can you see some of their money? >> it is good to be with you. we really are celebrating our next dimension. we are a two-year young company. i have participated in many reinventions. we are bringing back manufacturing to north america. we are renovating 300 of our design centers. we are changing our offerings to be more stylish and more fashionable. great quality. i think this requires some
disruption. keep in mind, we have operating martians -- margins at the highest level in the industry. this is despite all the changes we are making. we are pleased to be here at the new york stock exchange. we are celebrating the next phase of ethan allen interiors . >> i have some of your furniture. you aren't in the midst of the transition. you are not in the early stages. you have to wonder if the stock is reflecting a dissatisfaction among investors so far. >> it is a question of expectations. i am more interested in making sure we do all of the right wing's area -- things. we will do the things we need to do. i am not focused on the stock.
it will take care of itself. we have great offerings and great wally and great designers. i think those are the more important things to do. i have thought of the long-term rather the short-term area --. x i know you have read -- >> i know you have. given the strength of the dollar this that make you rethink your international expansion plans? >> not really. a few weeks back i was in china. we opened the 75th ethan now in in china. we opened a second one in dubai.
we are opening in a number of different places. our biggest market is still north america. we have 200 design centers. we are relocating them and renovating them here in international is in poor, our biggest -- important, our biggest market is north america. >> two thirds of your products are made in north america. as you are in the middle of this transition and reinvesting in the business, how many more jobs will you create? >> we added more people in manufacturing, that is not an easy thing to do. it is a major challenge to manufacture in the united states. we have a great history of making products here. we have great craftspeople. we have invested in their machinery equipment,
technology. we will continue to add people. the important part is retaining people in the united states area --. >> are you looking at raising wages? >> i was in vermont and that is the northeast kingdom. i talked to everybody over there. workers asked me, are our jobs safe? on one hand, we can't give you a raise because we could make these products cheaper elsewhere. give them a raise. given based on performance. people who produce and work hard, we are giving them raises across the country. >> that is good to know. thank you so much for joining us. he is the chairman and ceo of ethan allen interiors he is live at the new york stock exchange.
erik schatzker spent the weekend athens. bring this for us. >> i am heartbroken. i am f in greece for four days in the protests don't break out until i leave. when it demonstrates is all isn't necessarily well in greece. it's true that they have negotiated an agreement with the eurozone last friday.
they proposed an ambitious list of reforms submitted to them. they approved and so did the ecb and the imf. the german parliament also approved this list of reforms. that means the greek government is almost at the point in which they are in the clear for the next four months. they get this extension. in greece, there are some on the far left who feel that the current government are selling them down the river. they do this by negotiating and being right with this -- pragmatists. for his part, he said the reason the europeans are negotiating is because they don't want him to fail or it is not in his best interest to fail. >> we struggled very hard
through long hours of discussions. we have an agreement that extends our loan with our partners and institutions. i find it hard to imagine that europe is going to allow us. >> he has no choice but to talk a confident game. we have much more coming in market makers this morning. >> thank you so much. that does it for today. on monday, hillary clinton is setting up shop in oakland. we will talk with bruce ratner. he will join us as our guest host. also joining us is low body. have a great weekend. we will see you then.
points shy of the 5000. treasuries trend higher. it turns out that he be -- gdp rose 2.2%. it is etf friday. we are looking at the first etf managed. the double line total return had a good start. success is not guaranteed. here to ask line -- explain is our analyst. it sounds like you can do anything. >> it is very free. it can go into any debt up to 25% emerging market. it is a term to say we can make
shifts. if the interstate starts to rise, we can fluctuate. the selling point is the fed might hike rates. let's give an active hand to navigate those waters. that is the case that the etf makes. >> let's be and give this opportunity to more investors. you think pimco. >> in the actively managing bases, pimco has been very successful. it used to be run by bill gross. this is a more formidable competitor. just because gross isn't running it, it is up 2%. the new of gross fund is up 0%. they were hit hard in november and october.
they had 55 paces points. they have already established 2.5 billion. >> the other challengers are the old guard. >> vanguard is an unstoppable force. if you look at their bond market, they charge .08%. that is six times cheaper. it gives you access to 16,000 bonds. if you invested 10,000, that would equal 2000 bonds for dollar. it is the best deal and that's why it's the largest bond etf in the world area --. >> it is not actively managed to --. >> if rates,, it will get hit art. you see edge your projects come out. this is a new thing.
>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. erik: not so penny wise. shares of jcpenney are getting hammered today. the department store chain lost money over christmas and the forecast is disappointing. how much patience do investors have left? stephanie: time is running out on capitol hill. republicans have until midnight to passes any bill or the department of homeland security will have to start shutting down. erik: up in smoke -- smokers can't wait to get cuba's