tv Whatd You Miss Bloomberg February 16, 2016 4:00pm-5:01pm EST
alix: u.s. stocks closing at session highs, the best two-day gain. opec and non-opec members work together to freeze output. will it work? us forldman sachs joins his take on oil. alix: we begin with our market minutes. what a day, what a rally. the s&p closing around the highs. the best two-banged date rally day rally since august.
is this a dead cat bounce? joe: a lot of these gains came in the futures market. it looked like we might give it around 80, but going out at the highs of the day, strong all-around. apple having its best day in a month. of s&p stocks up 3% today. , but banksed apple and retail did well. the guys who got beat hard last week had a rebound. the third straight 200-point move. we are in a time of lots of volatility. alix: chesapeake was up huge, was upt-mcmoran, wynn huge. these guys have huge short interest.
and freeport-mcmoran at 20%. rally, take it with a grain of salt. joe: interesting to watch those casino stocks. people wondering if there are signs of a bottom there. something else to look at is risingnterest rates across the board, increase in yield in the two-year and 10-year. last week, it was 1.55 last week its lows, so that is quite a snapback. the currency market, if you look at dollar-yen, the yen as a safe dollar-yenstill close to its lows, so even with the snap back, we have not seen too much reversal yet and
the japanese yen. alix: also looking at some of the commodities, some interesting things about oil, rumors over the weekend. in the morning, we heard there was going to be a freeze in production between russia, saudi venezuela,ar, and but they could not hold on to those gains in cap sliding. brent got hammered hard, down over 3%. the bti off just over 1%. off just over 1%. rally,up and thought, oh, really? a quick check of gold. it softened a little bit come and you are talking about a safe haven. we saw that reverse as well. interesting, china came
back into the market today. the rally we have seen in gold, is it too much and prices are too high? it is interesting that the pause in the rally happen when china came back. joe: finally a bit of a breather there. alix: those are your market minutes, and now i want to take a look at something that caught our eye, the oil forward curve for oil. lineis brent, that green is what the market is pricing the oil to be from 2016 all the way to 2023, and today it has repriced two dollars higher across the curve. that tells me the market is now expecting slightly higher prices over the next 10 years. outsche bank pointed this and said that even if that freeze in oil production does not mean anything today, if you
can freeze iranian production and make the market know it will not be adding barrels in the future, that will have an impact on how markets are viewed and how oil is viewed because there could be a deficit next year versus a surplus due to that. joe: the overall outlook a bit of a shift. we have been talking about the ongoing relationship between oil and the stock market and the seeming correlation. here is a chart going back through yesterday of s&p futures versus oil, and you can see like many days we have been here that they track each other up until 1:00 today. stocks started taking off and oil never rebounded. that is a sharp diversions. they are basically trading in lockstep up to that point, but today they managed to separate, so that is something interesting to watch. it would be interesting to see if at some point we started tuesday oil not just track
stocks. alix: that is deftly huge. joe: it was a sharp diversions. -- alix: that was definitely huge. joe: it was eight sharp divergence. alix: jeff, you and i were talking before we got on the air. you said that if opec cut now that it would not make a difference in the market. explain what you mean. jeff: barring a significant demand shock. thinking about this market in terms of the past and why opec can and this he ate a cut has to do with the new oil order, which is the short-cycle le, the timea when you commit capital and get shrankion has considerably. around one-year,
two-year. alix: that's what were looking at, days to production in the permian basin, just a little over 100. if you think about making a production cut, these producers can get oil online and 80 days. it takes 60 days to sale eight ship from saudi arabia to the united states, so they are almost equipment. joe: as soon as we see pricing power, they turn the spigots back on. one of the bullish arguments that people may today is they arabia ande, saudi russia freezing production on its own is not going to change the equation at all, but historically speaking, and we saw this in the late 1990's, a decision like this could set the stage for further action down
the line, something more severe, but based on this chart and your reasoning, does that logic still hold? how deep would it have to be to make a difference? terms of today's announcement, from our estimates russia was already producing the highest it will produce this year, and that still leads to substantial year over year growth for 2016, so there is no deviation from our outlook. about saudink arabia, they were at 10.2, so are a lot of producers are now sitting on their highs when they made these announcements, so the net impact going forward is minimal at best. i think the real wild card what happens with iran. i want to go back to the point, the only time a real production cut made sense is if we saw a large the man shock, so large that it took you off the supply rve associated with
shale, but we do not see that in the cards. 1998 andng back to 1999, just because they cut production did not mean that prices rally. this is a complicated chart. the yellow line and the blue line are the first production cups in 1998, and then prices continued going down. there was not that huge relief rally and it did not trough, even the to-your ford prices did not move at all. it took many more months for us to hit that bottom and have a sustained rally. jeff:, the analogy to 1998 is a good when because it gives you an idea why it's a difficult to balance the market today. one thing saudi arabia did in 1998 is they kick the production like they did in the previous cycle. why? they anticipated strong economic growth that now evolved into the asian financial crisis, so you had a huge surplus that they not only had to take out of production they brought online, but they had the rebalance the
market relative to the demand loss. they have a similar situation now. you have significant increases and opec production driven by iraq and iran, plus you have the huge surplus that was generated by the shale players. you may not have a demand crisis, but you have two sources of surplus like you did then that means the type of production cut needed would be very large to rebalance this market. again, the fact of the new world order is the fast-cycle nature of shale and makes price rally self-defeating. joe: so today's news in the final analysis doesn't change anything? jeff: no. they will keeps on pumping at extremely high levels. alix: what about iran. deutsche bank was talking about the fact that if you could freeze iran at some level, that would give the forward market some kind of clarity that there would not be another 2 million barrels of oil a day for the
next years. could that help the market stabilize? jeff: if you're talking about 300,000 barrels a day of year over year growth, that's not enough to do it on its own, because in terms of looking at saudi arabia adding well over 200, iraq adding over 200. in fact, if you add up opec less iran, they're adding north of 500,000 barrels a day alone. iran is not going to change this balance. what needs to happen is the non-opec players have to cut enough supply, which by the way and even more important point is that when you look at the company announcements through this earnings season, they are consistent with a large enough reduction cut to rebalance this market by the fourth quarter of this year. that is the more reassuring part of this market, not what opec is doing.
let's get back to what's going on locally as opposed to globally. on locally are severe problems with congestion of oil surplus and places like cushing, oklahoma. one thing that happened last year when we tested the lows is that you blew out the spreads between spot prices in the ford prices -- and the ford prices, an indication that you are bumping up against capacity constraints. live and how high the inventory levels are in the u.s., there is a high probability that that cash price collapses and goes on to expiration. when you look at these markets and go back to late 2008, 2009, and you are in a high inventory surplus, when you go to expiration, look for prices converging down as opposed to up. alix: we will be talking about that in the next segment. jeff is sticking with his. is it time to short gold? that call is coming up next.
>> let's get the first word news this afternoon. the supreme court is honoring the life and service of justice antonin scalia by draping his chair and bench. inonin scalia join the court 1986 and was the longest-serving justice. a newsnt obama will hold conference, his first since announcing that he will nominate a replacement. thetime, prosecutors say head on train crash in germany
was caused by human error by the train dispatcher, 11 people died and scores injured when two commuter trains slammed into each other. former french president, nicholas sarkozy, charged with illegal campaign financing. involves thetion invoice system between his party and the company that allegedly concealed on authorized overspending. been fined more than $400,000 in that case. cbs and drew 25 million viewers for the grammy awards, fewer than last year's edition, the smallest since 2009. on the positive side, the network said it's all access live streaming rose since last year. taylor swift 13 grammy awards, including album of the year for 1989, the first solo artist to win that twice. global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton.
alix: let's get over to julie hyman looking at the 13 f filing from berkshire hathaway. >> we are getting all these filings out a little while ago. as you pointed out before the break, berkshire hathaway has a , onetake in kinder morgan point 19%, but it is causing up pop in shares in the after hours. other changes by berkshire, eliminating the stake in chicago bridge and iron, also raising the stake in deer. also cutting a stake in at&t and westpac, among other actions at berkshire. management is no longer showing stakes in schlumberger, nrg, and southwest. it is sort of a mixed bag in terms of reactions from these 13
after filings, depending on the managers and the individual stocks and whether they are momentum stocks or not. too, the disclaimer i like offer is that they are snapshots of a point in time of the particular managers holdings of a particular stock. in the case of berkshire, you can bet that it will be a long-term holding. that tends to be his style, but that is not true for every manager who files. alix: excellent point. thank you. "what'd you miss?" is it time to short gold? jeff is head of commodities research at goldman sachs and makes the case in his latest note. it is kind of counterintuitive. what is behind your thought? jeff: nothing to fear but fear itself. what has been driving markets over the last 2-3 weeks has been fear, fear over it negative and restraints, fear over what is happening in china, fear over what is happening in oil. if you look at the facts,
whether or not these events are systemic, it is difficult to make the argument. if we begin with negative interest rates, there are two channels, one through european banks, but it can't given the fact that the emergency funding facilities provide enough capital to keep liquidity relatively high, even against high capitalization. what about the u.s. potential going into recession and forcing the fed to considered negative rates? again, unlikely. betweenomists estimate 15% and 20% of a recession. that is low on a historical basis. what is driving that view? a strong labor market, 231,000 jobs created each month against 85,000,even around keeping unemployment stable. you would have to see a large contraction to create slack in the labor market. if you don't get that slack, you have to stick with your view of
rising interest rates and lower gold prices. joe: is this call about gold so much as it is saying things aren't that bad? jeff: given the correlation between gold and the 10-year it is saying that. i always like to emphasize that gold is the barometer of fear. the currencyll it of last resort. you have to be throwing in the towel even on the u.s. dollar to be long on gold. why? gold has a negative kerry and the dollar still has a positive carry. joe: more people think it is possible. at some point in the future, that could be the case for u.s. dollar as well. jeff: that is what is driving the upward pressure and is consistent with what is going on with other measures of volatility and uncertainty.
alix: your call for the next 6-9 months for gold? 1100.three months is joe: i want to go back to the oil discussion. tom lee talked about the extreme contango being shown in the oil market right now. basically it was the idea of how much of a discount front oil is compared to futures. during the crisis, it got extreme. they were talking about super contango and you could bite by buying gold. he pointed out the spread between now and the future is getting close to areas we have seen in the past when gold is typically bottomed within a few months. how do you see -- the 1998 and 1999 example, you look at contango as
a percentage of price level, then you're pretty much of their. the 2008 and 2009 was different. extreme amount of contango because it was a credit crisis. you couldn't get the credit to put the barrel into storage and do the arbitrage. in the current environment, and we saw this last week when wti reach new lows, that's bread was far beyond the cash and carry arbitrage, which is telling you capacity constraints. alix: we actually have that chart. it shows a one-month and two-month difference. if it blows up to much, there is no storage. jeff: exactly. we were heading that direction before the announcement of a potential russia-opec cooperation, and the market rallied. expirationloser to and coming days, i would tend to think we go back to that type of deep contango.
i do want to caution and bring us back to the oil -- the market has praised in our view of a trend was market with lots of volatility. why? we have record longs on a spec it of bases, record shorts on a spec it of bases, and record options positions, all indications of a market that could see the teens and spike back up again. the question on the macro side is will anybody be surprise when the market trades in the teens. i think not. we show the picture, the diversions between the s&p and oil prices. i think the oil is now beating its own drum. alix: good stuff. great to have you. t-mobile has been cutting into subscriber numbers of its rivals, but at what cost? we will dig into the numbers of the three wireless carriers. ♪
alix: "what'd you miss?" the rise of t-mobile comes at a cost. the stock rose 45% last year, low-cost plans to lure customers away from rivals. let's see what the numbers say about this business strategy in today's the numbers don't lie. to give you an idea of the size difference between t-mobile and its rivals, here are the top companies broken down by retail subscribers, including data. you can see significantly less than at&t and horizon. the gap is shrinking. losingd blue keeps on market share, where as t-mobile in pink heaps gaining it, as well as sprint.
battle to line up these customers is crushing the margins. margins has the worst in the business, well below its rivals. you can also see the price wars reflected in cash flow and capital expenditures. t-mobile's aggressive plans launched in 2003, reversal, going cap ex as cash flows negative. free cash flow is critical to t-mobile. speaking of spending cash, one of the biggest events this spring will be the federal auction for airwaves. t-mobile's cfo says this auction will be a game changer. estimating $8 billion for the bid for these airwaves to improve service quality. t-mobilee watching closely when it reports earnings on wednesday morning before the bell. we will be right back. ♪
>> let's get to first word news. guidanceoming out with concerning the donation of blood and the zika virus. people who have been to aries with zika should not donate blood for four weeks. they are prioritizing the development of a blood screening test. islamic state facing a major budget crunch and struggling to meet expenses, slashing salaries and asking residents to plate utility bills and black-market dollars. and otherairstrikes measures have eliminated millions of dollars from their finances. the suspect charged in the oklahoma parade crash will face more charges, a dozen more
against the woman accused of driving her car into a parade. that except food stamps may have to start stocking healthy foods to keep for customers. that is according to new federal rules unveiled today intended to make sure access to better food. alix: thank you. a quick recap on how markets closed. it was a strong rally throughout the day. it closed right around the highs of the session. you pointed out that end of don weaker oil prices, but retail, banks, leading the way for stocks. joe: apple having its best day in the long -- in a long time.
the third straight session that the dow has moved 200 points or more, so this is not some era of stability. this still seems like a volatile, uncalm market. devon energy, the name of the game is cutting, cutting cap 25%. 70%, workforce by , andtock moving slightly selling some portions of its , an energysets company fighting to stay alive in the u.s.. another energy stock is kinder morgan, berkshire to hathaway a stake in the company, that stock rising. within the market today, we saw
some commodity names like freeport-mcmoran. it got wrecked over the last few weeks, so it is interesting to find the winners in the day, short covering, something else going on? "what'd you miss?" recessionility of a within 12 months is 62% if you look at the bonds spread and the s&p 500 combined, 13% if you look at the yield curve. recession indicators are all over the place. joining us, joseph, who says to 30%rgan says a 25% within 12 months, and a 60% probability within two years. joe: what indicators do you look
at to gauge recession possibilities. you read offs upfront or the financial market signals, and we do worry about the feedback loop between those. that's probably the big source of concern, but by separating the you get a sense of what signals are on the macro economy at this point. at this point, risks are elevated, particularly business sentiment quite weak, issues around corporate profitability being a real concern over the past year. this is what has risen those probabilities from a macroeconomic position. above 50% andhing the next 12 months, which is where the financial market indicators are suggesting. joe: what are the economic signals to you that say just the opposite? i think you do have issues
that are concerning. i mentioned this is sentiment and corporate profits, but labor markets -- certainly there's nothing coming out of the labor market data that is giving you any real concern. claims data not showing a sign of a break. payroll reports of been good. retail sales reports last week were an encouraging sign, auto sales holding up, and ip this weekend. most people like us are looking for a solid reading on ip and manufacturing, so no sign of break in that respect. when you look across those indicators, it does not feel like that we are in that type of recession mode. after theecovery crisis, it was a strange recovery, the timing was unusual. for example, the housing market, often early leader of the recovery, took a very long time before it started to rebound.
does this give you pause in terms of being able to tell when we go back down what aries will lead and which ones will lag? that is a point in general. this does have a lot of unique features. the recovery itself has unique features. this was a balance sheet recession, which tend to be longer and take longer to get out of. in that regard, there are some people suggesting this expansion could go on a bit further. one of the arguments you could make it simply that one of the things that is a big -- for traders, that is one thing that drives profitability down. we are nowhere near that. the fed still has his foot pretty much flat on the accelerator. a little bit, but we are revving the engine strong from a monetary policy perspective, and if anything we are now talking about pushing that out a little bit, so this
is not a situation where you typically see a red putting the brakes on, driving the economy into recession, so a number of things to make us unique. alix: part of the question i keep hearing about is what is up with the yield curve? it feels like everybody has a interpretation. you can see this model of the you canh spread, and see how much it has flattened. the front end is pretty much zero at one month. how do you interpret something like this? exactly what is was referring to, which a fed that is largely going very gradually come on hold according to us, at least until june, and this will keep the front end pretty low for quite some time, so tradition you you would get a fed that is putting the brakes on and starting to tip the front end up and tip the yield curve
into an inverted curve, which would then be your traditional signal for a recession. we will be a long ways coming before we get to that point with a fed that is going as gradually as this. i heard the yield can't invert. you have the two-year in yield under 1% or because rates are near zero, you can't have an inverted yield curve, so the fact that we are not inverted is a false hope at this point? gettingave to start creative in thinking about what could be the triggers for the next recession. i think if you're talking about the next 12 months, you are not going to get that traditional inverted yield curve where the front end is kind of moving up because the fed simply will not be moving here. what else could it be? it comes back to the prophet story that has us worried. u.s. corporate profits down about 12% in 2015. if you take out some of the bp
stuff and special factors, it still down 7%. those are ugly numbers. you begin to wonder whether corporate stem cells will get scared and pull back and that becomes a precursor to the next recession. that is not our call, but something we worry about. joe: one of the arguments going back to real economic fundamentals, what of the arguments optimist make is that the u.s. has never experienced a recession driven by weakness overseas, that it goes the other direction. when the u.s. goes into recession, that historically has had an effect overseas, but not the other way around. world'slipside, the more global, economies integrated, does that necessarily hold to you? do take comfort in that? oryza that that -- or is it that was the case for a while, but there's no reason for to hold? idea thattowards the
the world is integrated, emerging markets where there is weakness right now, not just china, but china is a big player in this weakness, you know, they have gone from roughly 25% of the global economy, maybe about 10-15 years ago, to now 40% of the global economy, so they can do some real damage, and we have seen them do real damage here. and which the nature monetary policy is to verging around the world. that is a unique situation we are in to the extent the fed is going to gradually start raising rates here in a world where the ecb looks to be moving further into negative interest rates, bank of japan moving further into negative interest rates. these are some real extreme tensions that are going to be working to the global economy, and i think the way that feeds back onto the u.s. come at you can ignore that. it has been a real drag over the past year and i think it will be a dragon a source of stress and raise those recession probabilities. alix: joseph, thank you very much. j.p. morgan.
alix: coming up on bloomberg television, them a credit card the joke candidate bernie sanders joins all due respect of harvick are eastern. don't miss that interview. i am alix steel. it is time for the bloomberg business flash. buffett's berkshire hathaway disclosing $400 million stake in pipeline operator kinder morgan. held 25 million shares as of december 31 according to a regulatory filing today from the company. kinder morgan shares rising in
late trading. china's holding of u.s. treasuries fell to a 10-month low. a report shows china had $1.25 trillion in bonds of a notes, and bills in december, down more than $18 billion per month earlier and little change from a year earlier. in puerto rico have approved a last-minute bill to restructure the heavily indebted public power company. the $9l seeks to reduce billion debt as well as diversify energy resources. bondholders have threatened to go to court if the bill was not approved by today's deadline. that is your bloomberg business flash. "what'd you miss?" america trying to recover from an 8% drop after the company reported a massive $5.6 billion loss this morning. the company is commodity -- cutting commodities to focus on consumer facing resources. with american's ceo spoke
bloomberg earlier today about the massive overhaul. >> we have gone back to the core businesses we think we have got competitive advantage in. diamonds, platinum, and leadership positions in copper. andave drawn the line identified those assets, and there are some good assets for sale that will help us reset the ballot sheet and create a very different group for the future, so i think we are ahead of the curve. i think we needed to do that the last couple of years and i think we are there. we have made the tough calls and made significant improvements across the operations, 20 seven improvement in productivity, 27% reduction in costs to let massive reductions in capital. we are making the right calls and setting the business up for success. the price a sense of discovery going to the negotiations you are having right now. walk me through the timeline that you expect on the ski assets and w -- those key
assets and when they will get done. thee have been doing up work setting up the process for the last four months. we have a short list, i think it is six bidders, bidders coming in as we speak. in the next two weeks, we will pinally in those down -- those down in terms of those would like to do business with. i'd expect to be a result something there. , and some other assets, we've had a lot of interest. thelready have advisers, so next 2-3 month's actively talking to people who are putting numbers on the table to buy the assets. we've had a lot of interest on those assets. we also have short list on our .outh african coal efforts i would expect 10 assets to be
done somewhere around the half year. , once youat is done get through that half-year, do expect improvements? moody'spends on how looks at it. we forecast that downgrade and flagged it in december. we are disappointed that they did not take into account that we have bids on the table. that is the way it is. the fact that we will have some of those under our belt by the half-year and demonstrate continuing performance improvement on a cost-based, i think that will be the case, but you would have to ask moody's. >> ok, but you see a year from now -- you see this business and a much better position. you see the credit rating materially improved. this is a year-long process you are going through. i'm just trying to get back to the idea of the timeline. >> i don't think it is even a year.
we will have met to movement by the half year, and our debt will be less than $10 billion by the full year, by the end of 2016. we have not missed a target in two and a half years despite seeing a 40% reduction in commodity prices. we have increased our production despite closures and restructuring by 10%, productivity up 27%. there aren't many people who can talk those sorts of numbers in the last two years. alix: that was anglo american ceo. marketup, despite global turmoil, the ceo of airbus and his company has never been so healthy. his comments from the singapore airshow, next. ♪
alix: i am alix steel. "what'd you miss?" ceo spoke with bloomberg about his outlook. >> we saw some revised numbers for 2015, where is this coming from and how are the conditions changing? ,> at the beginning of the year there was some contracts which had conditions which were lifted, so we decided to include them in the backlog. that is good news. >> how is 2016 looking for you? on ourink we are firm position. it means that we will continue
to work on the backlog of aircraft. >> were seeing some of the low-cost carriers in this world -- what he is saying? alix: we want to interrupt that to get right to president obama. u.s. president barack obama now wrapping up his two-day summit on u.s. soil between u.s. and members of the association of southeast asian nations. that's take a listen. obama: -- to advance prosperity and dignity. for decades, the united states has been a proud partner, and this summit has built on the unprecedented cooperation we forged. rit working together on
behalf of mutual interests and mutual respect added our work over the past two days. i especially want to thank my theow leaders from countries for their commitment and the progress we have made together. one of my main messages over the past two days has been the commitment of the united states to asean and its people. that commitment will remain strong and enduring. with our strategic partnership, we have a framework to guide our ties for decades to come. we agreed to a number of key principles, including that seaen will continue to be essential to peace and progress in the asia-pacific. an speaks with a clear unified voice, it can advance opportunity and human dignity, not only for the people across the region, but for people across the asia-pacific and around the world. the strongd that
voice allowed us to make progress on multiple fronts. first, we agreed to do more together to encourage the entrepreneurship and innovation at the heart of modern competitive economies. we had an excellent discussion with a number of this is leaders who reiterated the recipe for attracting trade and investment. rule of law, transparency, reduction of intellectual property, efficient customs, modern infrastructure, e-commerce and the free flow of smallation, support for and medium-size businesses, and perhaps most importantly, investment in people. toestment in strong schools educate and train the next generation. around the table, there was widespread recognition that this is the path these countries need to continue on. as they do, they will create more opportunities for trade and investment between the u.s. and those countries. i of firm to support for the
community and pledge that the united states will continue to be a partner in their efforts to integrate it economies and reducing barriers to trade and investment. i am also announcing a new connect,e, u.s.-asean hubs across the region to coordinate engagement and connect entrepreneurs, businesses, and investors with each other. we are doing more to help aspiring innovators in the region learn english. i reiterated that the transpacific partnership, which includes four asean members, can cooperation and set rules for trade across the pacific. we have launched a new effort to help all asean countries understand the key elements of tpp and the reforms that could be to them joining. security,th regard to the united states and asean are
reaffirming our strong commitment to a regional order where international rules and norms and the rights of all nations, large and small, are upheld. we discussed the need for tangible steps in the south china sea to lower tensions, including a hold to further reclamation, new construction, and militarization of disputed areas. freedom of navigation must be upheld and lawful commerce should not be impeded. i reiterated that the united states will continue to fly, sale, and operate wherever international law allows, and we will support the right of all do the same. we will continue to help our allies and partners strengthen their maritime capabilities and we discussed how any disputes between claimants in the region must the result easily through legal means, such as the , which the parties are obligated to respect and
abide by. third, i made it clear that the united states will continue to stand with those across southeast asia working to advance rule of law, good governance, accountable institutions, and the universal human rights of all people. we continue to encourage a return to civilian rule in thailand. we will sustain our engagement with the people of myanmar as a new president is selected and they work to implement the cease-fire agreement and move ahead with reconciliation. across the region, we stand with litizens in civil s society. no one, including those in political opposition, should ever be detained or imprisoned simply for speaking their mind. it only stymies progress, only makes it harder for countries to truly thrive and prosper. finally, the united states and doing more to do with transnational challenges
together. i offered assistance to help asean countries to leverage interpol data to curb the inflow of foreign fighters. that helping to develop countries adapt to and mitigate the impacts of climate , enabling them to lead to new affordable energy. we are launching a new competition, and innovation challenge to encourage students to develop new solutions to boost agriculture. we are moving ahead with our global security agenda to help prevent future epidemics, and i pledged additional assistance to horror of combat the human trafficking. to sum up, i believe this summit has put the u.s.-asean partnership that will carry us to greater heights in the decades ahead. foreign-policy rebounds to the asia-pacific,
including southeast asia, will continue to be a foreign policy purdy of my presidency. mayok for the first time in , and becoming the first u.s. president to visit laos when it hosts the east asia summit in september. i am confident that whoever the next president may be will build on the foundation we have laid, is strong,re sustained, bipartisan support for american engagement in the asia-pacific region. and through our young southeast asian leaders initiative, our investment in young people and their business success in civil society and grassroots leaders, i believe it will further bind us together in the spirit of partnership and friendship for many years to come. with that, let me take a few questions, and i will start with the associated press. where is darlene? darlene: my question is about the supreme court. president obama:
darlene: my question is about the supreme court. president obama: i am shocked. [laughter] darlene: what recourse do you have if the senate blocks your supreme court nominee? what qualities are important to you and his diversity one of them? obama: i want to reiterate my condolences to the scalia family. hadice scalia and i different political orientations . there is no doubt that he