tv Bloomberg Markets Bloomberg March 7, 2016 12:00pm-2:01pm EST
scarlet: i am scarlet fu. stocks trying to extend a three-week rally, but are things really getting better? asked to doas been more but is holding out for concessions in the migrant crisis. and china dismisses conclusions it will have a hard landing in the economy. but is it willing to do what it needs to to live up to it? first, we want to head to the markets desk where julie hyman has been tracking the moves from risky assets in china. china saying it will push ahead on focusing on growth. julie: even though it also gave a range for its gdp forecast. there was tom old in the markets
, but now the lead has been taken by commodities again. we are seeing a rally in oil prices. triggered things that this is u.s. averages. all of them higher. not huge gains, but some. if you look at the bloomberg commodities, you will see what i am saying. it is a mixed nature in the s&p. on the screen. energy and materials are the best performing groups. tech continuing to drag. wti,u look at brent and brent trading above $40 for the first time since december. wti the highest of this year. investors appear to be optimistic about these meetings between russia and opec nations about a production freeze. and the baker hughes fell to its
lowest since 2009. so some optimism about a potential drop in supply. and there are the technicals. a lot of traders have said that put on thehas bottom. oil stocks are rallying. exxon mobil, chevron, conoco interbreeding to the gains. other materials stocks doing well. dupont has been rising. the european chemical maker is considering a counter bid to dow chemicals. but when you look at commodities, the outlier seems to be iron ore. that was more of an optimistic reaction to the chinese commentary. here is the one year chart. you see the jump of 19%, which is the biggest one-day gain. also contributing where the
mining stocks. they are doing well across of globe. those that mind iron ore or anything steel related. and vale participating in the rally. scarlet: let's check with the bloomberg's first word news. mark crumpton has more. mark: president obama ordered flags flown at half staff in memory of nancy reagan. buildingsts federal as a mark of respect for mrs. reagan. she died sunday at her home in las vegas -- in los angeles. she was 94. vice president joe biden has ewed to eliminate the
vil that is daesh. >> we have to squeeze the heart so that they do not continue to pump poison into the world. that is what we do with our coalition to it we are making it harder for them to maneuver. we are cutting off their lifelines, oil revenues, and finances. the united states has carried out 1800 airstrikes against the islamic state since october. navy seals say things are so tight they have to share combat weapons. have complained that when they come home from deployment, their rifles are given to those shipping out. north korea is making more threats against the united states and south korea. such threats have been commonplace since kim jong-un took power.
but they tend to spike when stage ofn and seoul their annual defensive springtime wargames, which began today. pyong-yang says those are rehearsals for an invasion. global news 24 hours a day, powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton. scarlet: thank you. u.s. stocks are trying to extend their two-month highs. my next guest does not think things are as good as the last few weeks have implied. withierney joins us now more. but we should be more new ones. not as good as things may have implied, but not as higher as the losses suggest. huge taile thought
risks in part of the market. some of those have been mitigated. oil being one. we will not go to $20 oil input for countries in recession. scarlet:'s cap week -- so have we seen a bottom? jim: it is certainly not going down to $20. scarlet: the new market consensus is that it will be uneven but will probably end up nowhere. a lothere will be movement but we end up where we started. you agree? jim: it is slow growth. so those companies with their theyotors and drivers, will create their own value. that will be the opportunity. scarlet: what thing you do notice is that the expectations of inflation. bloomberg, in the expectows what investors
inflation to look like. currently at 1.5%. the average hourly earnings component was basically the weak link. do you think inflation is vigorous? jim: the risk is inflation could be higher. whether it is search pricing at , jets tickets, tuition -- they are all moving higher. inflations that if moves up and oil goes back to $50 or $60, there will be inflation in the market that is not being reflected. scarlet: what kind of pricing power do manufacturing companies have? jim: manufacturing is tougher. food is tougher. time when minimum wages are going up and you will have higher hourly wages. everyone will have to start pushing up prices.
breakt: whether it is even or not, how are these flawed in reflecting what is happening? there are two different environments. where someone has pricing power and is using it. and where someone does not use it, we have inflation. the consumer is getting more purchasing power of discretionary things. scarlet: so when it comes to companies you like, how would you look at: od -- look at quality and growth? jim: is a company is not growing their based business, if they are just relying on share buyback, that is a tough place to be. -- let: we hear how continuing --
m&a toxpect more of this continue? jim: you will see more on the m&a side the next couple of years. synergies,et revenue that you definitely get cost ones. a gets companies a couple year window where they can grow earnings. the question is do you want to play the game and how hard will you play it? i would rather find companies with organic growth. like health care, technology, financial. you look at charles schwab. billion in net8 assets in january. january was terrible for the stock market, but their clients brought in $8 billion of new capital. scarlet: what about the interest rate environment? jim: if rates go up modestly, schwab could double their
earnings power the next two or three years with just 100 basis points of rate increases. and we have already done 25. three more increases and you raise their earnings prospects. if oil goes up, there would be pressure on inflation. you see the correlation between oil prices and equities ending soon? jim: there was a point in time in which they were completely correlated because of their fear we were going into a global recession. now that there will not be further pressure on banks, stocks and oil will do their own things. that trade breaks down. scarlet: jim tierney, thank you for joining us. chief investment officer at a.b. scarlet: european leaders are
see with apple. almost an opposing call. analysts are cutting their price $27.t to one dollar at the same time, the note is positive. he says apple's demand should be at the low end of guidance, which is unit sales. but that despite this, the likelihood for strong growth in the iphone seven cycle makes the risk reward around apple attractive. that is from pacific crest. be their readers seems to negative and shares are down around 1.7%. we are also looking at shares of chipotle. credits we's raising the price target -- credits we's -- credit squeeze -- conflicting note
credit suisse says that it has been stepping up promotional efforts. and netflix. itg out with a note on that company. the analysts are making comments that domestic streaming subscribers will not grow as much of this year as analysts all. he is looking at a number of 4.4 million versus 4.8 million which is the consensus estimate. he is looking at dreaming and also dvd, making that extrapolation. scarlet: did you spend your weekend watching "house of cards"? two.: i did, but only scarlet: no spoilers. turning to europe, leaders have turned their attention to the ongoing refugee crisis. they are gathering in brussels
following a second meeting with turkish officials. prime minister alexis tsipras says the eu must share the burden. wasne of our principles sharing responsibility, burden, and solidarity. scarlet: covering the summit is ryan chilcote who joins us from brussels. what have we learned about how europe. this refugee crisis? -- about how europe will solve this refugee crisis? turkey will do it quite a bit. the prime minister arrived, beginning talks with the dutch prime minister and the german chancellor. ofsaid despite the criticism his country -- and there are protesters just outside the eu building here -- they are prepared to stem the flow of refugees from turkey to greece, but are prepared to take refugees who have already made
their word to the eu back to greece. to re-preacher it -- to repatriate them. but they want to make sure no other people get on the boats and make that perilous journey. they do have requests. they do not want criticism of is crackdown of what turkey doing in syria. they want 3 billion euros more in 2018 then the 3 billion they have already been promised. and they want turkish citizens to be able to travel to the eu withoutas this june travel visas, which they cannot do now. will have dinner. the ae is more or less on board with this. but then all 28 countries get to say what they think. scarlet: that is where it gets complicated. all of the refugees are headed to greece. but the crisis goes deeper than this for the country, doesn't
it? ryan: it does. the greeks have the situation of being the port of call for many refugees from turkey. in addition, greece has its own poblems that the date -- re-date the refugee problem. greece has problems getting more of the financial assistance it counts on. it is called the quartet. the imf is part of that. it has been saying greece has not been doing enough to cut pensions. now there is pressure from germany and the rest of the eu to say that the imf should be on board. one finance minister says he thinks progress will be made on that front. >> the funny thing in the eu is when you have your back against the wall, a solution is usually found. we all know we need to get this third program going.
we need to get the first evaluation through. and the imf is a key player. on my part, much like the dutch imf hasermans, the always been a key player in this and we want them involved. aan: it would appear that quartet mission will be in athens as early as of this week. that kicks off the process of greece getting access to the 60 billion euros they are still waiting to get. if you look at the two-year bond, you can see yields falling. of theflects some investor optimism that greece on the back of the summit and on the back of warming relations will get more financial assistance that it was not clear they would get one week ago. scarlet: thank you. ryan chilcote reporting live for us in brussels. much more coming up on "bloomberg markets."
scarlet: this is "bloomberg markets." i am scarlet fu. while the sec has taken a renewed interest in the etf industry, it turns out it was their idea the first place. that is in the current edition of bloomberg markets. it was adapted from a book. joining us now is eric balchunas . give us the back story. the idea for the etf came from the sec as a possible solution to black monday in 1987? eric: isn't that wild? it was the largest one day crash. this was a big deal. the sec spent four months a 840 page report.
basically, the futures market became too reliant on institutional investors. sent that into individual stocks. people were basket trading. stepped in and said what if we could have basket trading and it could be a product? intermediarye an product for people to do arbitrage and to create a liquidity buffer between the stocks in new york, which are regulated, and futures in chicago, which were not. we suggest an alternative approach be examined. that is the initial stretch -- sketch of what would become the etf's. dependency on the
futures market and have something between that and individual stocks. the futures market is being used so much by big institutions it was called portfolio insurance. so if stocks went down, they would short futures. scarlet: the guys at the american stock exchange took this kernel of an ideal into something bigger. what did they do? eric: they go to john bogle of here.recess get out he says i do not want people trading my staff. he is anti-trading. -- he thought it would drive up costs. that was a good thing, because it got them thinking out of the box. a jew on nate most -- of they experience. most's when you trade receipt, you do not need to move the goods back
and forth. not do thaty do we with s&p 500 stocks? that elevated the filing two more than the sec's sketch. scarlet: but it took them five years to approve this. eric: because it did not, under the 33 act. it came under the 40 act. this is the strictest law it could approve. this means the sec is signing off on it. of internalt debate. at the end of the day, this was a good thing. even though amex just wanted to generate volume, the 40 act made asset gatherer. so the four year wait was worth it. scarlet: one thing forgotten is that when this launched, it did not do with a lot of success. eric: the first day was great.
treated one million shares. but after the hype was gone, it traded down. later, a treated less than the global index trades today. but they got some people out there guerrilla marketing. then you had early investors. what really helped was the 1990's. 1995, that stock market kicked in, everyone started buying, and they never looked back. balchunasric balchunas. thank you. but sure to check out his new book. we will be back with more. ♪
a class-action lawsuit stemming waterlint, michigan has been filed against governor snyder. trial, andjury unspecified damages. mexico's president has direct,making any until now. in greek opinion yet don't -- worknieto says he will with whoever is president of the united states, but trump's comments about the country has complicated relations between the u.s. and mexico. florida previously required the majority of jurors recommend death sentences. in january, the u.s. supreme court ruled the law
unconstitutional. the new law prohibits members from imposing death penalty if it is not recommended. peyton manning is calling it quits. a month after he led denver to the super championship, the hall of famer will officially end his 18 year career in a press conference within the next half hour. manning won to super bowl -- two super bowl's and was named most valuable player five times. global news 24 hours a day, powered by are 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. scarlet, back to you. scarlet: we have some breaking news. brent oil has climbed above $40 per barrel. that is a session high. that is the highest level going all the way back to december. in fact, you can compare it to where it to what was on january and $.10, a remarkable
recovery. what is the backdrop? toor producers have met start of production freeze. this is as china pursues more growth. we will keep an eye on brent. speaking of china, the country rejected -- the premier said the first role wilule will be development. he acknowledged difficult times ahead. going into the nbc over the weekend, we were hoping for clarity around beijing's priorities. it would appear that growth is the top priority, particularly at the expense of -- the gdp
target between 6% and 7% is the since 1995. inflation is currently tracking at one point 5%. most significantly, the widening of the fiscal deficit, as well as the expansion of the base suggests that beijing is deleveraging in order to prop up short-term growth. all of this giving some cause for concern. a bloomberg economist saying as long as sister decorate continues, while growth is slowing, that is billing, and structural forms are put off, they may meet their gdp goal by the end of the year. , anlet: earlier thi toda economist and the head of bloomberg intelligence spoke on bloomberg.
a i do think that they did pretty good job communiques went through they wit what they discuss. you think of the range of 6.5%-7% gdp. it is a healthy clip, but gives them some balance, which gives them credibility. they put forward both fiscal and monetary stimulus outlines, with the standpoint of thre 3% deficit. they also talked about a number of other more specific areas, uch as, housing, which is quite critical to the economy, where they are introducing measures to get rid of the glut and housing supply. >> can they really chuckled they are taking measures to get rid of the glut, but they are headed
in one direction, down. >> it depends. if you look at the broad market, across 70 cities in china, at a little more than half of those cities are still marginally declining. the tier one cities -- beijing, shanghai -- are just rocketing .p but they are try to do with measures, such as reducing taxes, reducing down payment, as well as doing some other specific at a little more measures is to broaden out the housing market price gain which would support the homebuilders. >> i want to bring you in here. i'm adjusted indy credit crisis. they basically borrowed to have growth. there is a limit to how much are we you can do to gain growth. >> yes.
you also have to look at the demographics of china. a 40% urban, 60% rural economy. it has transition to 60% urban, 40% rural. shifting 20% of china's population from rural to urban requires a lot of construction. it also requires management of where that construction is. we get areas where there has been under building. i don't think we have ever seen anything like this kind of shifts take place over 10 years in the history of the world. scarlet: that was the chief rdq economics.lread the question is how realistic is china's growth forecast.
asked for a reaction. the 6.5%-7%ay, number is just not plausible. i'm sure they are going to report that. they have always reported that they achieve whatever target they set out. tothink a number far closer 4% is realistic. 6.5%-7% is not. they will continue to kick the can down the road on debt, as they have learned from other countries around the world, until they cannot take it anymore. bright, assume you are 4%, how will we know that jack aware will be see that discrepancy? >> you will not see it in the official data. they will report the 6.5%-7% number. you will see it in weaker economic activity and other numbers that are independent --
weakness in electricity consumption, rail freight, airline passengers, a consumption of a variety of products like iron ore and steel. >> what do you think? >> i think the numbers are already lower than advertised. no one really -- knows. it could be in the 4%-5% growth. we are going to continue seeing the slowing. china has misallocated almost every resource started with political power. they need to reallocate how they are doing in the economy and move towards co greater reliance is on consumption. ,hen they began to have this they get scared that the gdp numbers are going to go down. they are addicted to this
stimulus. it is like a sugar high, and they need to constantly get it. the deal the chinese has made with the chinese people is if you support us and stay out of politics, we will deliver economic growth. they have one style of economy, and need to transition to another, but they can't do it. >> what you are saying is pretty powerful. what i understand you are saying is they really can't be economic reform in china without political reform. >> i believe that is my core message. i say over and over. economic reform is political perform. at the end of the day, what china needs to do is empower people to do other things -- consume, feel comfortable about their future -- if they continue structure,op-down people at the bottom will not step up, they will not be able to demand their rights whether
it is social security, health, environmental protection, or anything else. >> given that that structure is not changing, what is your outlook? >> i think that china will bumble forward. there will be relatively low growth historically. that will put a lot of pressure on china's leaders. they will continue to try the top-down reforms. this is my guess. at the end of the day, there will be a big choice. i think chinese leaders are nationalistic and spar enough that at the end of the day, like leaders in korea and taiwan, they will have to open up politically. scarlet: that was the head of and the senior fellow from event to council on bloomberg earlier today. coming up, the latest news from the european union refugee summit. if you cannot beat them, join
this is reiterating the idea oft the fundamental can up one its rating. another boost to the nasdaq is ntel, right behind gilead. intel is likely going to supply apple with the modem stock for its new iphone. it is important to remember that he gave a modest side to the fourth quarter. more selling's could be ahead for intel. now more bloomberg markets. ♪ scarlet: you are watching bloomberg. i'm scarlet fu. this is your global business report. here is what we are watching. china wants consumers to spend more. it is giving them a tax cut, american-style. what else can be done when the
meets this week? the london stock exchange is feeling the love. let's start in china. the government is bolding growcting its economy will 6% annually for the next five years. to help live up to that promise, it is taking a page out of the u.s. tax code. it is thinking of revamping its tax system. it wants to shift its economy away from a reliance on inves consumption.sting income tax refunds would put more money into the pockets of consumers. meanwhile, chinese regulators are stepping up their scrutiny of home loans. they will impose new rules on the practice of taking out loans
for down payments. there is concerned that home prices in some big cities are rising too fast. in hong kong, the cells of home plunging.f homes is home prices are down 10% from in september, leading buyers to think they can get cheaper homes if they simply hold out. almost three quarters of economists interviewed think ecb chief -- expectations are high for the ecb to do something again. >> he set the bar high, and he better deliver. he knows that he better at least meet market expectations.
suggesting not 10 basis points, 20 basis points. scarlet: the refugee crisis has prompted an emergency summit among european union members. turkey is fishing on fresh concessions to house more asylum-seekers on their soil. thousands of migrants are camped out in greece, desperate to cross into macedonia. relocatereed to 100,000 refugees arriving in italy and greece. the fight over the cell for -- sale for the london stock exchange could soon get nasty. there may be a bidding war. pictures would gain the biggest equity exchange and a profitable index.
it is time for our quick take. bankss topic, zombie stocking europe. lenders that are swamped in debt, they exist in name only. europe has been dealing with zombie banks since the financial crisis. ground zero is now italy where the government develops a plan to release soured loans. , banks in10-2012 spain, portugal, and italy threatened to pull down the government. they needed tell outs. bailouts. this idea of zombie banks first cropped up in the 1980's.
it was made in reference to the loans crisis,d even though u.s. institutions were wiped out, regulators would not shut them down, all in hopes that a market rebound would save them. then, you jump to japan after the real estate bust. you had troubled banks propping up zombie banks. in the u.s., during the financial crisis, shortly after, we saw how things were record to strength tests whether they were healthy. that is your global business report. for more stories, visit bloomberg.com or bloomberg.com/quicktake. jp morgan hops to crush its tech competition with the new website. ♪
♪ this is bloomberg markets. i'm scarlet fu. jp morgan, the best way to fight silicon valley may replicate it. it will be unveiling its new and improved website on wednesday. you recently visited this new jp morgan office. i know you have been to google's office as well. compare and contrast. >> it is pretty cool. it is a huge space. it has the trappings of a modern starter. you have the foosball table, billiards. scarlet: people are casually dressed? >> not so much. it was not the guys in the hoodies, flip-flops. it was an interesting mix of the start of culture -- they are
much more relaxed, used to a lot of perks -- mixed with the big bank culture. scarlet: what exactly are they working on? are they working on the website? >> it is the first time they revamped it took them 18 months. the mobile app, that is updated constantly. every time you turn your iphone on, and you have to update, it means these people are conditioned on constant updates. are they ease-of-use -- going to offer different services? >> part of the fiction license and this is the idea that people want to do a limited number of things on their bank apps. they don't want to do crazy things like find a date or get a
ride. it is inherently conservative. they just want to make it easier and intuitive to use. they don't want to give their customers any reasons to look at other startups popping up. scarlet: is it meant to be any more interactive? it is pretty simple. you are not looking to get any jp morganrmation from or any other bank. mediare is a social aspect. they're giving you a constant stream of stories. of it is jpome morgan propaganda, but a mixture of stuff. the idea is to give you a sense that you are more intimately linked into your financial institution, and your sense of money and finances. money should not be a scary thing. scarlet: it is meant to engender some loyalty to your financial institution. b, they arech hu
working on the retail presence. >> yes. they are working on mobile apps, things like ai, machine learning. there is a lot of tech going on in the background. the site that i visited is really largely for the retail. users on 33 million the website. the more more they get to -- they provide services like instant chat, and things like that, the more more they replace an tellers. you can use automated channels, instead of going to the branch. scarlet: you don't really see them taking over the corner spot anymore on your street.
what surprised you the most when he visited the office and talked to guys who work there? one of the things going to perks.s is the uber they have this row of snacks and soda. of course, you have to pay for them with your chase credit card. scarlet: it keeps it all in the system. up in the next hour of bloomberg markets, we will hear from barclays chief u.s. economist, ahead of thursday's meeting and the fed decision. we are also awaiting comments from stanley fischer. ♪
good monday afternoon. here is what we are watching this hour, the case of the u.s. heading into recession as the job market stay strong. prices go desert. a building spree. pandora trying to put itself up for sale. the music service has a new strategy to take on competitors, but will it fall on deaf ears? some breaking news, headlines from the fed vice chairman speaking now. mike mckee joins me with the headlines. mike: he is speaking with the national association of economics. some economic talk and a little bit of monetary policy woven into it.
we don't know what is going to happen to productivity. it keeps interest rates low over the long term. in the long run he probably will be, but it is taking longer than they thought to get into it. the qe and other fed tools bring into it. they would rather have interest rates up then have to do some complicated monetary policy. text released in washington by the fed. hyman's bring in julie checking in at markets desk. what moves do you see?
julie: people are still just going through them. this is not something we have an instantaneous reaction, unless they said something earth shattering. higher year yield moving today, reflecting higher expectations for a rate increase this year and potentially higher inflation. no deviation so far. a prized most by? i have to think the fact that u.s. unemployment or the u.s. labor market is in the vicinity of employment. >> there really isn't anything surprising in here and very little to do with current monetary policy in the context of the lengthy speech about his career, but he does bring back some of the ideas that we are learning as we go along, the old rules don't apply anymore. how the phillips curve, the model that everybody predicted as unemployment went down, we would see in for an
that hasn't happened. we may beginning to see the first strength of inflation. it left a lot to be desired. the vice chair of the federal reserve. >> i went to bring in our guest, the chief u.s. economist at barclays. are just hearing what mike mckee was telling us about stanley fischer's comments. put that into context for us, what did stan fisher say to give us any indication what the central bank will do? >> his view is consistent that the fed has more hikes coming in. the data will allow the fed to be opportunistic here.
things have stabilized a little bit. comment say inflation is generally around the corner and starting to pick up. certainly consistent with at least two hikes this year and not three in terms of what stan will do what you will see is an upgrade to the language in the statement in march. they may even choose to classify the balance of risk. that would open the door for a move in either april or june. >> we also have some headlines. what did we learn? >> she has been active in saying the fed should not move quickly. the fed should work to protect the game it hasn't made.
shouldn't take the strength in the labor markets that san fisher is talking about. .hey may not continue slowing growth in china is having an effect on markets everywhere, particularly to commodities. even though we are seeing resource utilization improve as the unemployment rate goes down, the effects are going to be lower than in the past. making the case for the fed not to move quickly in raising rates. she was urging the fed not to even begin the tightening cycle. fromu heard the remarks stan fisher. which is likely to be more whennent, more influential the fed meets later this month? famine nobody is really more influential than stan.
he has had a long career and the stature that nobody else had. we can't raise rates too fast in the u.s., given what is happening globally, given the fact that other central banks are likely to ease. she is really arguing more about pace. my guess is she will win out. many others on the committee are expressing the same view. stan is thinking three through four hikes is reasonable. >> how much of that is priced into asset prices right now? look at the futures markets, they may be looking at one hike on average for the rest of the year. risk to the downside of the baseline expectation and a june december hike -- june december
hiking cycle. risks are globally and what that would mean for the outlook and u.s.. fed comes up, the with new forecast. we don't get a forecast until we see the numbers next week. needle movednk the >> not on the economic data front. solidta has been fairly leading into that segment, that inflation was probably better than we thought. economic growth is looking moderate.
shifting the. chart out. the median may have looked at four hikes this year. we don't think they will move in march. they could leave the charts seen three hikes is reasonable. the markets are closer to one. >> stan fisher alluded to something, the economic data is good enough that it would be raising rates. concern about what is happening in the markets. if you don't think the markets -- an impact >> the reaction we have been seeing, it has easily been set back. no promises from fisher. she does bring up that reference. >> julie hyman, you have been tracking what kind some moves we have been seeing.
>> a very little move to the upside. already they were on an upward trajectory. the dow in particular has been the out performer today. i have been watching a couple of individual stocks, because they are halted pending news. $6.8 billion and the companies have been thwarted by d.c. regulators until now. are they abandoning it? are they going forward and making those changes? we will find out hopefully quite shortly. of them are halted pending some kind of news. rising, going into the pepco shares, which are halted as well. they have not performed as well because some pessimism about this deal getting done.
stuff, julie hyman. treasuries are selling off with the two year yield moving up to 90 basis points. they are a little bit surprised about what the oil prices have had on -- about the effect oil prices have had. >> declining oil prices have been good for the consumer. >> stan fisher speaking right now. let's listen in. >> thank you for that kind introduction.
it is an honor to receive this lifetime achievement award for economic policy. to follow in the footsteps. it is enhanced by a model citizen, a model public servant, and a giant in every sense among central bankers. one thinks of many things on an occasion such as this one. my mind goes back first to growing up in a school town. and to the surprise and delight -- >> that is stan fisher speaking right now. there are some observations he makes about the economy folded into it.
>> it is not a specific here is where we are in the economy and here's where the fed is. cut out justou before he got to the joke, the professor goes back to the london school of economics and says, what is the test you give these days? a say here it is, he says this is the same test i wrote 50 years ago. they say all the answers have changed. the economy have -- economy has changed a lot. they are trying to figure it out as it goes along. >> a chief u.s. economist at barclays is still with us. likely to expand as they are to contract. tell us what you have learned in terms of what you are -- in terms of what maneuverability central banks have.
>> we do think the natural rate of interest has fallen. even though the natural interest rate has been at zero, we have not been able to generate strong growth or pressures. probably not as accommodative as we all thought. it means balance sheets are likely needing to be larger as central banks strive to do more. we are learning the outcome of this global recession is a low growth environment where interest rates are likely to be low. we hit zero again more frequently and need to use unconventional policies. it may be conventional overtime. economist of barclays, thank you so much for joining us. firstl mckee, thank you -- thank you for the headlines. s&p, and the nasdaq
scarlet: a monumental day for iron ore after policymakers signaled their willingness to support economic growth. now i look at what is happening in the minerals market. >> china is the biggest market for iron ore and also has implications for steel. effect inen a ripple iron ore and throughout the market. this big one day game of 19%.
just how unusual it is. basically the big huge change, going back to 2009. in addition to the fundamental supply and demand issues, i want to point out the short interest in iron ore as well. iron ore prices are in blue. there will be something of a short squeeze going on. it is interesting that that part of the equation here -- all of this is having implications for the mining stocks. we're looking at cliffs natural resources and the steelmakers have been gaining on the day.
this has been the market story. >> comes on the heels of this mess anticipated commentary from chinese officials. for more on the historic jump, i would bring in bloomberg's head of global research of metal and mining. me iron ored to traits in singapore and china but not in the u.s.. >> you can find it on shooters -- on futures. it is way to play companies. >> i think what we saw today, what is very confusing is the copper was actually down today. camee chinese government out and said we are going to spend $1 trillion, copper would be -- what happens because iron ore is so plentiful, we know iron ore
is going to enter the market. we are really going to cut things and things are going to be really bad. we are not going to change much of anything. this is the good time of year when they build up. all of a sudden the market was terribly short, you have this scored -- the shortest squeeze of the century. -- to what extent does this rally have legs? >> nobody believes in this. this will be short. very short-lived. one of the things we started to see is a lot of capacity, we are seeing a lot of work out there. the ones that are working need iron ore, so they came to the marketplace.
they can absorb it, that is the >>ber one question for you you noted cover prices are moving as much as iron or how sensitive is iron or two other commodities, whether it is copper gold or oil? strange step.ry that is pure china. when you are moving in different directions, you have to sit back and wonder is it the real fundamental change? copper has been doing better. >> how is liquid iron ore trading? >> unbelievable. it is terrible. all these little traders woke up. the stock market plunging. we were off to the races. >> this great ball of money moving through china.
we have some breaking news. julie hyman has her headlines for us. exelon whereand halting news. now it looks like they are not abandoning the merger attempt. making several different concessions to try to make a $6.8 billion acquisition of pepco happen. one among them sane pepco would not pay a dividend under certain conditions.
it looks like exelon will provide a customer base rate credit. they proposed three approaches to hook desk three approaches for benefit loss. delaware, maryland, and new jersey. these are among the concessions they are making to try to get approval from the commission for this deal. the shares are still halted, they haven't opened up as these headlines continue to come out. these were made in filing. and the next eight it to watch is april 7 or asking the commission to make a decision by then. not abandoning the steel, trying to make it happen. the latest on breaking news. high -- ultra low prices lead to a quick revaluation. it has led to a rally in junk lines.
where is this migration leading investors? a bloomberg reporter has been examining this and wrote a column on this. >> when it comes to high-yield or junk bonds, there is this tendency to look at the headline figures. we see a rebound in high-yield debt. look at the benchmark bond indexes and everything is great. people forget to drill down into the actual composition of those indexes. closely, you can see they are actually getting even chunkier. we have had all these downgrades in the energy and in the middle mining sector. those have led to a big change in the composition. triple b rated stuff, moving down to triple see, which is the -- which is one notch above default. how many companies have been downgraded in the high-yield space versus 34 upgrades. >> you can see quite a trend up
there. the question is whether or not we are at a turning point in the credit cycle. a lot of people have been debating this. a lot of people think if the credit cycle does turn it will not look like reviews credit cycles. it could be more drawn out. it could be shallower. certainly energy and mining leads away. >> at the forefront of it. tracy'se you can read column on bloomberg.com. upll ahead, pandora pumping the volume against competitors. i will tell you how the struggling internet radio company plans to go off the charts.
we have a look at the political angle and the super saturday results that have come in. a look at the headline right now, certainly we are talking about the column. it got a lot of hits, taking the brett -- taken the best presidential candidate for markets. he talks a little bit about the impact of this year's presidential election on investors. gains and trade issues all available on bloomberg.com. i want to turn to mark crumpton for the headlines on bloomberg first word. mark: vice president biden is promising to wipe out the evil that is islamic state. he says the u.s. carried out 1800 air against islamic state since october. more than 571 thousand
republicans have already cast their ballots. the crucial primary is next week. florida is a closed primary, meaning only party members can vote in their -- vote in their primaries. such threats have become common place since kim jong-un took power after his father's death in 2011. they tend to spike when washington and seoul start their annual defense springtime wargames. pyongyang says the drills are rehearsals for an invasion. elizabeth garrett has died of: cancer. her death comes less than a year after becoming inaugurated as the first woman to lead the ivy league school. she was 52 years old. making it much cheaper to move food around the world. the united nations announced
today the world food bill dropped $9 billion from a previous estimate, that is a five year loan. country spent over $1 trillion importing food last year. peyton manning, the future hall of famer announcing his retirement at this hour. manning had an 18 year career. set most of the nfl's passing records and is a two-time super bowl champion, first with the indianapolis colts and just a month ago with the denver broncos. he is being praised by the team's general manager and a former nfl quarterback, john elway. he got emotional at times a few moments ago. peyton manning, announcing his retirement for the national football league. we will continue to follow this
story. powered by our 24 hundred journalists and more than 150 news bureaus around the world. back to you. scarlett: let's turn to pandora. with apple, toe youtube, and spotify. and intendsear plan to expand it from a single flowing business to a one-stop shop for all things music. lucas wrote this story from bloomberg news. pandora not going to combine with any other company, planning to stay independent. >> so far it is next. the initial response on earnings day. pandora is an interesting
position because it is a large audience. it has 81 million active users. that number has stopped growing in the last year and a half. the amount of time people are spending with pandora is only going up slightly. the company has to find a way to ensure that can grow at a rapid clip. >> to do it alone also raises in a lot of eyebrows. what kind of leverage does pandora have with the record labels? >> the leverage it has is twofold. it already has this popular product that says it has been working for us in this one area. the labels want pandora to offer pay service. selling everybody to be prescriptions rather than give music away for free.
>> what are the analysts saying about this? there is this new strategy that will stay independent. >> analysts see it as an asset with some value. the stock is so much lower than it has been. let sock was at 36, 37, 38. to 11.is closer lucas's column can be found on bloomberg.com on plant -- on pandora's planned independence. a follow-up to the breaking news about exelon and pepco. julie: stocks are trading once again. they will continue to try to negotiate with ec regulators over exelon's $6 billion
acquisition of exxon. they have proposed three different scenarios to try to satisfy the obligations of the public service commission here. there was some speculation that they would abandon this takeover attempt, given some of the requirements that the d.c. commission was asking for. of the concerns, was that rates for customers would be going higher. is going toe exxon provide a customer base rate credit of $40.6 million. the company is also saying in several different states it is going to wave a prohibition on pepco filing cases. like they are basically trying to satisfy the concerns over any kind of rate increase.
both of the stocks are moving higher. they have been under pressure on the concerns that the deal was not going to get done . >> it is a tough time for linkedin. hit bigk has gotten time, dropping as much as 43%. what is it like being the ceo of the company on its worst day ever? we had an exclusive sitdown interview with jeff weiner. she asked whether it was a fair reaction. a surprise, weas were not expecting that kind of response. when you look at the core elements of our business, they remain healthy. if you look at north american cells, store growth there has remained consistent. , still theates
fastest growing business we have at scale. post the launch of our havegined application, we seen an exhibition in engagement on both mobile and desktop. as tolysts went so far say we are sorry, we got it wrong. is there something they don't get? >> i think it is expectations. companies that it's been -- that experience hypergrowth, there is time to extrapolate those growth rates overlong period of time -- .ong periods of time there comes an inflection point where the expectations of analysts or investors start to outstrip the fundamentals of business. is how do companies execute through that. what linkedin is is being they were a fast growth company but instead you are a
slower growth company, more like a software as a service company. it is all relative, growing 30% and growing mid-20's, that is still healthy growth by virtually any standard. a rousing speech to employees saying linkedin is the same company it was before this happened. how does jeff weiner the person feel about this? not the ceo, but you. >> i'm not sure it stings. there was a surprise. you want to make sure you are there for the people that matter most. are we still able to create value for our customers? nothing has changed in that regard. scarlet: that was emily chang's linkedin ceo jeff weiner. new methods to track foreign ownership in the country's soaring real estate market. we are talking about cities like
affiliate, annce eye-popping valuation, $60 billion. the company is controlled by an alibaba cofounder -- cofounder. it runs china's biggest payment service in the largest money market fund. and german chemical maker is considering whether to make a counter offer for dupont. back in december dupont agreed to a merger. they are now working with advisors and banks on whether they should enter. that is your business flash update. julie hyman been checking in on some energy stocks. looking at energy stocks almost up to percent. >> the rise we are seeing it in oil is helping the group but helping a short squeeze. many of these stocks have been heavily shorted. now we are seeing them surge in value.
we have been talking about to buys company quest pepco. murphy, southwestern, chesapeake, continuing to move higher. issapeake -- chesapeake impressive in particular. the stock has doubled. cooperated into the investigation of a greeting by a cofounder and was receiving immunity for that, but it doesn't explain the magnitude of .he gain is a short trips? i'm short interest is the lines for status are the short interest. southwestern, 24%.
murphy is still relatively high. then you see what the stocks have done. the color matches the short interest. in other words all of them have seen surges recently as we have seen the short interest continue to climb. as stocks tick higher people obviously had to come in and cover those. that is one of the factors. them a thank you so much for that perspective on the scene of energy stocks. canada, we are going to look at the housing market. that housing agency is looking for new methods to support ownership as real estate prices soar in cities like toronto and vancouver. documents,o internal housing agencies may consider tapping laundry that money laundering police units. joining us with some background on this story is pamela ritchie, anchor for bloomberg tv canada.
give us a background check on the aim of these measures. remember.ee things to -- >> things to remember. a stable political environment, some people don't mind parking their cash in a country like canada. outflows from china, increasingly so, seeming to make canada a place to be a recipient for that. of the massive price surges we have seen in vancouver and is mildly annoying to first-time homebuyers who cannot get into the market because prices are so high. perhaps from a policy perspective and why the housing agency is looking into different ways to collect data, should there be a policy response? money flowingt of
in, what happens when that money and theyly with drawn can't sell for the prices they paid for. is there a government response that needs to come into that? on the more detail specific types of measures being considered. >> going through endless different documents. e-mails, briefing notes, other documents she obtained. they are looking at everything from drivers licenses to electronic records to take a look, it shows that a different government agencies have been tapped. ne of them is canada's version of the irs. also taking a look at money laundering. also various different land registries. they also painfully make sure they define a foreign investor.
anyone is allowed to buy an investment property. it is just getting a handle on how this all fits together. you talk about canada, it is not one monolithic market. toronton vancouver and are climbing a lot faster than montreal. >> i will give you the latest numbers on that. particular in vancouver. home,ngle-family detached the price rising 27% from february of last year. people saving to get into that market and then watching these houses slip right out of your range. also the number one property being sold. >> that is incredible. joining us from toronto. coming up on bloomberg markets. relevant, and what is on the upside now if it is not opec?
is opec still relevant? able to push prices under $40 per -- under $40 per barrel. group on what leads the market to the upside now if it is not opec. >> opec is added to the supply. we see how weak the production might be. we are in the first big experiment, first experiment of the shale era to see how shale is going to respond. it has been far more response -- far more robust than this market share venture.
eventually we will see u.s. production falling. and then the next episode of what the rebound will be. >> let's also painted picture of u.s. supply. i hadn't realized how much u.s. accounted for the supply. you came prepared with us. supply shows is u.s. comes close to what saudi arabia had back in 2012. this is remarkable to me. >> it is remarkable on a slight you didn't use. if you add up a lot of things like crude oil or natural gas liquids. the u.s. is producing 14.8 billion barrels per day -- 14.8 million barrels per day. rallyhave seen the recent attributed to a conversation of a opec freeze.
rhetoric that seems to have enough power to support the market? >> it depends on what you mean by rhetoric. they take back with another hand. there was a great interview. talk about aan freeze, but he also said we are going to provide our clients with whatever they want. week, they had an incredible press release saying it was time for them to start reinvesting and building toward capacity. those are the words around whatever a freeze may be. a freeze means we satisfy the production and have no intention. >> oil prices rallying 10% this week on absolutely nothing. what is going on? >> the short term is going to be very volatile. thatxpectations have been
the market has bottomed. we think it had. a report saying this is the bottom. the reason we said that is this is global refinery demand for crude with maintenance going down. april should be the weakest month of the year. was that way last year but last year oil prices are starting to rally and march. aprilnd up going through and may. the seasonality may not play out and we may see the real be hot him that real bottom behind us. -- may see the real bottom behind us. does opec think it has bottomed? is saudi arabia actively try to get the price of oil up? >> it is very hard to say. the words are fairly ambiguous from the kingdom. there may be a a lot of reasons
why they don't want to cooperate with russia, they have nothing to do with oil. they have to do with the unfolding of a plan to replace president assad in syria. we don't know the rate to which gop politics is more predominant than oil markets. >> meaning if they go to putin and say if you pull back in syria we will pull back on production. >> you said that, i didn't, but that is what one interpretation could lead to. head of commodities research at citigroup. later today, our grexit resurfacing. he will be joining joe lies in -- joe weisenthal and myself on what did you miss? shakeup earnings after the bell. will investors lose their appetites? a preview up ahead. and a quick check of markets as we head to break.
highs at 5%, all has to do with china as the government lowers its growth forecast. if you come inside the bloomberg, i will show you what is going on in equity markets. you have the major indexes carrying some of their advances. the dow up by 3/10 of 1%, the s&p 500, little change at the moment at a 1999. the nasdaq down at 131%. central bank making its decision later this weekend. we are looking ahead to the bank of japan, the federal reserve, and think of england as well.
carol: from bloomberg world headquarters in new york, good afternoon. here is what we're watching this hour. oil is amassing 5% today as players prepared to discuss a production phrase but at some point, the rally also looks like last spring, and that will did not turn out well. ,he valeant ceo is back to work including making calls to select analysts. why the recent chain of events is troubling many in the markets. we will speak to one analyst. a closer look at the booming industry of etf's. concernsagency has trading products are not as safe as once thought. let's head to the markets desk where julie hyman has the latest.