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tv   Bloomberg Go  Bloomberg  April 4, 2016 7:00am-10:01am EDT

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new revenue and what will be its biggest economic shakeup ever. a new report is rocking leaders of countries from russia to argentina over allegations they used shell companies to hide wealth. welcome to bloomberg go. we are here in world headquarters for opening day for major league baseball. good luck new york yankees. i'm stephanie ruhle here with david westin and jonathan ferro. david: stephanie is back. stephanie: thank you. almost as important as opening day for the yankees. david: absolutely. we're also joined by nick collis, good have you here. jon: stephanie missed fed chair janet yellen because she was on vacation. this time with bernanke, that is
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coming up on thursday. david: historic. share -- thiset market check. let's get you up to speed. futures now higher this morning. s&p 500 futures up about the exploits. now futures up 33. a rally in the -- a rally in europe. switch at the board to much longer dollar story on most of the crosses this morning. dollar yen inching higher. euro sterling, brexit spread, we will talk about that in about 10 minutes. at inches away from that 80 pence level on friday. treasury yields up a basis point at 1.78%. let's get over to vonnie quinn for first world news. -- first word news. vonnie: more flights scheduled to leave the brussels airport a day after it reopened. only three flights the parted yesterday. flight schedule to the u.s. and
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africa today. because of the damage caused by the attack, the airport can handle less than 20% of its normal passenger load. investigators in europe say least what two members of the terrorist cell to the paris and brussels attacks are still at large. officials tell the journal that he of the suspects have been involved in previous islamic state plots. security services are on alert trying to prevent another attack. a new report says world leaders have used companies to hide their wealth. a group of investigative journalists, at least $2 billion in transactions involved people and companies linked to vladimir putin. they say information comes from files from a law firm in panama. the head of a major russian state owned bank dismissed allegations as nonsense. >> nobody said mr. putin was involved. that is not his name registered anywhere. putin.ople who know mr.
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what is wrong about this? vonnie: last week the kremlin accused the journalists of preparing an attack on putin. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i'm vonnie quinn. david: brent crude is trading near a four-week low. after saudi arabia's deputy crown prince said the kingdom will freeze out only if iran follows suit. , proposal by -- a proposal speculative czar betting the rally is over. theirfunds are boosting bearish wagers for the first time in eight weeks. pick for you.n a tell us about what you say is going on. nick: energy had a pretty good first quarter at performing the s&p. it is still a pretty contrary and bet both for the commodity and for the stocks so we still like it will be volatile. stephanie: does it not feel that
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way because of all of those who have been invested? if you own it from any point last year you are underwater. nick: a wrenching first quarter. you are still going to live with a lot of volatility, both headline and fundamental. we still think it is searching for a bottom and the equities are a place to be. jon: the obvious equities are the energy producers. we are seeing more consolidation this morning. what are your thoughts? the worrys an area -- with airlines as we will use the savings to cut costs by for market share. so far that has been modestly the case. and adjusting group. we think energy is a better play that some of the transports that is not treated so well. stephanie: don't airlines have their energy costs hedged? how long before those hedges come off and they can actually start to appreciate low oil prices? over the last few months they said, we have had hedges locked
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in we don't get the benefit. threehedges will work out to nine months. half a fiscal year before you see the benefits. in the interim we worry about price affects a lower-cost relating into gains for market share in price cutting. onma go, i a go -- just put airlines here and annual deals in. orange you can see the deal count. it has come up substantially over the last two years or so. in white you see the volume. as far as the money goes the price has come up even more substantially. it looks like more people are paying more money to do more deals. what you think about that? nick: it makes a lot of sense. an industry that for the better part of 50 years has never earned its cost of capital over a cycle. always hope for consolidation finally beginning to happen. david: even with the virgin america deal, it really is very much smaller than the big guys.
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nick: it is. i remove it looking at the airlines back in the 80's and 90's and it was still a screwed up industry back then. finally perhaps getting healthy. jon: in terms of consolidation and expanding abroad, how big is headwind to -- the be able to invest in the places like europe where easyjet is recently on the uptick? is a market for domestic layers or can these players really make inroads into europe and beyond? nick: it is difficult to make inroads outside of your home market. pretty much for any airline around the world are you airlines and auto companies are two things companies tend to like to have at least one or two of in their home state. you will always feel protectionism as you try to expand. stephanie: you also like technology. one of the rubs has been how overvalued the whole sector is. nick: overvaluation has been a
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huge deal on the private equity side. in accord is running around and were lately getting smaller and smaller in terms of the heard. at the same time you have some good value in large-cap technology. for example looking at apple, microsoft, big names considered slow tech have pretty good runs because valuation has perceived to be not as onerous as some of the unicorns or smaller names. david: with the exception of facebook -- if you look over the last few months a lot of those big ones did not do so well. nick: that's right. a group that only in the last couple of weeks of the quarter began to catch a tailwind. we are thinking that continues into q2. the big issue is a lack of growth anywhere else in the global economy. if you need to run a growth portfolio you need to be in tech. flat.his is gone flat anyone along the banks is covering their eyes refusing to look at the bond market. is that trend set to
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continue? nick: to bital you see the yield curve as the economy matures and goes in the later stages of growth. i think it does. stephanie: people cover their eyes invested in banks. many have said financials look cheaper and cheaper. do they if you consider return on equity? at the are alook 7%for the big banks, 5%, 6%, . not enough to cover the cost of capital. that is a gating factor. we would love to love the group but in terms of shareholder -- stephanie: why would you love to love the group? nick: it signals the early stage of a recovery. a group we would see our clients want to own and various points in the past two years. disappointed over and over. stephanie: over history banks looked different. they were able to invest in different things and take on so much more. it is a new world. nick: for better or worse it is a whole new world.
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low oro ease are the hallmark -- 's. ore david: don't we look forward to restructuring? this is going to look very different two to three years from now. nick: it is to a degree. a lot of regulatory hurdles. for example, the very large banks. in any other market or sector the activists would be all over those names but because of regulation they are not. jon: nick colas, thank you for joining us. brexit, we will talk with the british ambassador to the u.s., sir kim darroch. ♪
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vonnie: you're watching bloomberg go. consolidation in the airline business. alaska and has agreed to buy virgin america. the price, $2.6 billion. $4 deal is valued at about billion. a40 7% premium to virgin america's price. says it has 276,000 reservations for its new model 3. musk says the average model three will cost about $42,000 with options. apple's latest attempt to crack india's smartphone market is running into roadblocks. apple wants to become the first company allowed to sell use phones in india.
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executors say it would jeopardize indian phone makers and make a farce out of the government's made in india program. jon: time now for global go. we are looking at the british pound. a tough start to the year for the currency. the past months of been the most volatile since june. the sterling accelerating its drop after the date was set for a referendum on britain's mentorship of the european union . who better to discuss brexit with then an exclusive interview? we're joined now by sir kim darroch, new british ambassador to the united states. his first visit to new york. a warm welcome. this was meant to be a decision, an opportunity for generation that did not get their say to have their say now. it has become very contentious with the government really taking a side on this. nick: first of all -- sir kim: first of all, thank you for the welcome. it is great to be in new york.
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more than 40 years since we joined the eu. since that referendum in 1975. absolutely right to give the british people a chance to take a view. it european union has changed a lot since 1975. it was always going to be a lively debate. that is what is happening. another 80 days to go until the 23rd of june and there will be a lot more debate and controversy around this. david: take an american through the process in britain. we see polls coming out that say it is roughly evenly divided. are those polls reliable? when will people really make up their minds? sir kim: the polls will not be massively reliable in the case of 2015 british elections. you could be justified in having a question mark over them. they are pretty much 50-50 at the moment. the difference between the telephone poles and online polls was interesting but inexplicable.
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with 80 odd days to go, they can move quite a lot between now and then. i'm not sure you can read much into them at the moment. stephanie: what does the bloomberg tell us? matt: i have the polls here. in green, you can see votes to remain in the eurozone in red. boats to leave. -- votes to leave. magenta linethe which is staying minas leaves. we have come above zero. in white we have charted the pound because that movement has had a lot to do with the polls. it seems polls can drive the pound movement to some extent. david: what in your view will determine this for the british people? it sounds like it is more, it is awful if we leave rather than it is great if we stay. sir kim: there are reasons on both sides of that question.
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there are strong, positive arguments for staying in. the top line is the prime minister believes we are stronger, safer, and better off inside the european union. there is no question there are risks to leaving. the chancellor and governor have said this is the biggest single to disability in the future. there are possible reasons to stay -- risk to stability in the future. there are possible reasons to stay. stephanie: what you believe? sir kim: i'm in favor of staying. i was investor of the eu for five years. -- i was an ambassador of the eu for five years. jon: you look at it from both sides. the steel issue at the epicenter , the many political issues left may turn around and say we
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are better off out because we could do something about what is happening in china. some of the dumping of steel. you believe in that at all? sir kim: i believe we are much stronger in terms of trade negotiations, in terms of forming international trade deals and in terms of protecting ourselves against dumping, if we are part of a single market for hundred 50 million people. marketre cloud -- single of 450 million people. much more cloud. david: you're the keep her of the so-called special thetionship -- you are keeper of the so-called special relationship. but when happen to that relationship if you actually left the eu? sir kim: coined by winston churchill 70 years ago last month. a good moment to bring it up. a very strong and genuinely special relationship across a range of areas including security, trade and investment,
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and culture. i just spent the weekend here in brooklyn. they sold at footie seven performances. huge success -- sold out 47 performances. huge success. as the prime minister said, he feels that we would be potentially less influential in the world if we are not part of the european union. stephanie: you mention trade. business really matters. happens, what will things look like in terms of free trade between england and the united states? happens, andrexit that is not the plan, the plan is that we stay, that the british people vote on the 23rd of june to remain in the european union. that triggers article 50 of the european union, treaties and a two your process in which you have to negotiate the terms of exit and presumably whatever
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other rodange rent -- whatever other arrangements in terms of trade deals around the world. that is a period of uncertainty and risks. jon: no recent to say they would not be able to get the kind of deals they want, is there? sir kim: a matter of speculation. i think you have to consider the clout we have is a member of a single market of war hundred 50 million people and 28 countries. stephanie: thank you so much for joining us. i wish i was in brooklyn seeing that. i was not. sir kim darroch. his first visit in his new official role. thank you so much. saudi arabia facing pressure from local oil prices, coming up with an ambitious plan to change its entire economy. those details and more, next. take a look at shares of tesla. you know matt miller loves
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talking motors. setting up for a strong open after preorders. model 3 electric 276,000 preorders by saturday night. can elon musk produce these vehicles and time? you're watching bloomberg go. ♪
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jon: let's get you up to speed on what's happening in markets. futures this morning here in the u.s. firm or. outperformance in europe after three weeks of losses. backs up over 100 points. some notable underperformance for the telecoms. switch of the board in the fx market. .ollar yen yields pre-much unchanged. the tenure up 1.77%.
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let's go to matt miller for some of the big calls on wall street. matt: one of the most read stories on the terminal. best currencies have the month of gain in years. goldman sachs says asian currencies will resume the klein as further easing in japan and china are likely to push the yen and yuan to their weakest levels since 2008. asian currencies are on investor radar. i want to you -- i want to move to europe. -- $13.50 apiece. expect favorable rulings on nuclear fuel taxes and says related earnings could be re-rated after the ipo of a new company. rolls-royce in the red but now well-off session lows after
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falling more than 2%. credit suisse downgraded the stock to an underperform essentially saying sell the shares. short-term pressures in its defense aerospace unit. the analyst sees a 20% pullback over the next year and a caveat, this is the engine maker, not the carmaker. the car brand is owned by bmw. stephanie: the ceo of rolls-royce in response to tesla set we made the first rudderless cars, the rolls-royce, chauffeurs -- the first driverless cars, the rolls-royce. chauffeurs. david: now we turn to saudi arabia. in an exclusive interview we learned about a big economic shakedown in the history -- the based in history of the saudi kingdom. they plan to raise more than $100 billion in new revenue. we are joined on the phone by allah shaheen for more on the story. i understand you were in the room. give us a sense of how they will raise this $100 billion?
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>> contemplating several measures to raise an extra $100 billion in normal revenue by 2020. a big part of that will come by the restructuring of subsidies which started at the end of 2015. this will eventually save or add in about $30 billion by 2020. the a t will bring in about $10 billion by the same time. they are thinking of a program they said will be similar to the u.s. green card system he thinks could bring in profitnd income of about $10 billion. they also have a plan to allow employers who want to hire foreign workers exceeding their official quota to do that by paying fees. that will bring about $10 billion in addition to other measures such as syntax on sugary drinks.
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a measure they did not discuss with us but the total would be more than $100 billion. more than tripling current nonoil revenue. jon: alaa shahine, thank you for joining us. also planning to tap the international debt markets. what i have not heard is where they are diplomatically with iran. that is the big shift from the leadership as well, not just economically but politically. david: a huge rivalry, as you know. jon: look out for hit on bloomberg. packed program, we are with a week of trade data, durable goods orders and four fed chairs in the same room. ♪
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x1 makes it easy to find what blows you away. call or go onliand switch to x1. only with xfinity. great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. john: good day to you from london. some sterling strength of this morning with euro-sterling down
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by 1/3 of 1%. is joining us as well as tom keene. let's get some first would news. more than 200 reported refugees arrived in turkey from greece as part of the european union plan to limit the number of migrations to europe. they will be sent back unless they qualify for asylum. plans to restore train service in the northeastern u.s. after a train crash south of philadelphia. 30 people on the train or injured. is back on the offensive trying to make up ground before tomorrow's wisconsin primary. he says the u.s. is heading for a massive recession. he says john k sick should drop
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out of the race -- a john kasich should drop out of the race. global news 24 hours a day -- what's the morning must-read? tom: it came at 11:00 last night. you woke up to this. let's bring it up -- this is absolutely stunning. $2 billion in transactions involving people and companies with ties not only to vladimir putin but everyone out that everyone else out there. just the minutia of what we are seeing. hours, the two
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french president mentioned it china dragged into it involves something we can barely get our hands around. david: there are two things that strike me about it. size, a leadssive and .5 million records have an access involving hundreds of world leaders. the other thing is the pedigree of the information that comes from a reputable group of international journalists. journalistsputable including a german newspaper. this is not wikileaks. tom: it's very different. a lot of this is legal stuff. and not all in illegal panama is used by high net worth individuals forced -- for a
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state planning. yeah, but. stephanie: is it simply hate the game and not the player? david: the player knew what he was up to. million loan for a panamanian company to a cyprus thatny and they assigned for one dollar to another company and then assigned it to another company for another dollar. in england, the version of this is guernsey. how is it perceived? john out this thisof is not about vladimir putin. it's about 11.5 million files from the fourth-largest offshore firm. if you are trying to conceal
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your wealth, that's not illegal but your issue is you are looking at a law firm you are with and how much protection they have. this is a huge security breach and it could be a massive issue for the rest of the year. you look at this come a lot of international banks are implicated in moving these funds around. wait until the authorities get into this. stephanie: other banks take it on the chin yo but when you are a regular bank, this is your business line. tom: i look at this as it unfolds and i think the important thing is it is completely different than wikileaks. there will be a lot of people dragged into this but out of it will come 20 or 30 unique stories that are very embarrassing. david: we have just begun this story. please stick around. , a looke for econ recon
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at the week ahead for key economic data. we had the jobs report last week so what about that? postmortem of the jobs report, the payroll gain was better than folks were anticipating. what we talked about was total hours worked in the economy needed to bounce back. we only got about half of the recovery from the decline we saw in february. at first glance, it looks like a strong jobs report for when you get into the details, less encouraging. the hours worked quarterly with gdp growth -- we only see a partial recovery there. this continues to contribute to the story that first-quarter gdp will be another disappointment after the fourth quarter was below 2% and the first quarter looks to be in the vicinity of 1%. that's a big problem.
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the second takeaway is that we are not adding an income growth to support consumer spending. that's critical to the future outlook. we need to see consumer spending and gauging a larger degree and we only saw a mild ounce back last friday. the income numbers are not quite there. evidence was in the motor vehicle numbers. john: i'm excited about yellen volume ii. what do you expect to come out from her meeting? stephanie: that's like dion say, lady gaga and diana ross altogether. >> it will be one for the history books but i out it will move markets. it's great to see the perspective of these 4 consecutive fed chairs talking about history and the future and changes to monetary policy.
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i highly doubt they will move the markets. tom: we associate the word measured with greenspan. did that work, stating a policy in doing this or coming down measured? >> i think that was part of the problem in the greenspan/ bernanke e transition when we inflated the housing market. that's not all the fed's fault. david: the fed has the regulatory a thir authority buty were part of the problem. >> but measured in the current environment, it's definitely the
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prescription that we have an economy just chugging along. it's not an outright recession but it's a growth recession with did -- which is sustained growth below trend in that appears what we are experiencing. david sat down with alan greenspan and bernanke you just wrote a book. it easier to speak your mind as paul volcker. does this put janet yellen in the hot seat westmark >> she may be the most quiet one at that meeting. her remarks of the most potential to move the markets. i expect her predecessors will be more vocal. david: do you want to show us something, matt? matt: i have isn manufacturing and nonmanufacturing. thatan see from this chart they have been coming closer and closer together and manufacturing has been a huge problem.
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we have not recovered from the recession. what does this mean to you? reason that this gap should get closer together? is this just a new normal? >> it's very rare that we see such a divergence between the factory sector and the nonmanufacturing service or. tends to be that wide, the service sector slows down materially and that's what we have seen over the last apple of months. it raises real questions for the overall health of the economy. i keep harping on 2% growth. ism surveys are very closely correlated. what is the potential for a lousy first quarter? does it affect the second quarter. ? >> that was a great question for
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the fourth quarter because it did carry through to the first quarter. it's relevant for current quarter activity. it's going to be consumer spending that propels the economy this year. growth,ve slow economic you don't have income growth to support the spending. tom: are we at 5.4%? >> a little below that but savings has been backing up and there is a lack of confidence and animal spirits. there is some sense of hoarding cash. david took a week off in panama. i don't know what that was about. david: let's get back to the data. tomorrow, we've got trade balance and ism numbers. isthe nonmanufacturing ism probably the most important indicator because it's been in a sharp slowdown and we need to see but serving to turn the corner yet.
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the consensus is looking for a slight upturn and i don't think we have seen the bottom yet. it might not fall tomorrow but perhaps over the next couple of months. th.ncine david: what about trade balance? >> this is evidence of week global demand and consumer spending weighing on the import story. with the february data, it's chinese new year and that tends to wreak havoc on the trade data. david: just like the weather. carl weinberg was adamant about the drop in trade. it's about a sharp drop-off in world trade. : there has been a shift in global income and global trade. there is a big uncertainty
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over the chinese economic act 70 and how well they are performing and their trade flows in and out of china. until we have a firmer read on the pace of economic activity in china there will be uncertainty. we see this recovery in the manufacturing ism friday. by domesticen demand? this mixedwith picture from the entire data set, when will we get clarity? when you look at hedge fund performance in the first quarter, it might look like the worst first quarter ever even though the s&p 500 has moved up slightly. they could be down to-3% and people are desperate to say give me a clear picture. is there a sign we will start going in one direction or
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another? >> globally, there is all kinds of strange black swans fluttering in the distance. like last summer with a chinese devaluation. act 70, we domestic need to see -- activity, we need to see that holds up into the second quarter. we need to see evidence that household income is recovering. if that's not happening, there will still be a lot of uncertainty about the outlook. if the income growth is there, we should have a firm view of the consumption kicking in. hiring into well-paying jobs, thank you so much. the ncaa tournament is down to the final two, find out who's
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leading in our own tournament brackets, that's next. ♪
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up, the head of merrill lynch investment office right here on "bloomberg . area unemployment rate has fallen to its lowest rate since 2011. it dropped to 10.3% which is a
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huge divide. 4.3% as the german unemployment rate. in london, five former traders at barclays have treated -- have pleaded not guilty that they rigged to libor. it's a third tribal in the u.k. of bankers and brokers charged with minute billing rates. takeoyota lexus wants to the dealmaking out of buying a car. it will launch a no haggle price experiment with 11 u.s. dealers. it's part of a plan to attract younger briars. a significant number of lexus dealers are unwilling to go along. stephanie: the final showdown of march madness takes place tonight in houston where the villanova wildcats will take on the north carolina tar heels. this means it is also a big fort for bloomberg brackets
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a cause. it's our way to follow the tournament. 40 titans will take their best shot at filling out the perfect march madness bracket it each have donated $10,000 with the total pot going to the victors charity of choice. tonight it's a showdown. bill is the current leader. this could be a huge victory for his charity of choice. with 139 and needs charity tory for his take on the grand prize. we will have that big winner tomorrow when you can follow our action on our website, bracket. great cause and great fun so check it out. on with the business of march madness, the ncaa tournament and -- guest knows this
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business better than anyone. he lost the business of college sports as we know it today when he was at img and now heads an investment firm. >> great to be here. stephanie: this is the first time we have seen march madness on cable, how is it doing? >> they have a tough matchup with a lot of low outs in a play over easter but turner is innovative and creative and have the game on tbs and you can also watch local announcers on other channels so that's pretty cool. stephanie: we talk about digital, how has that been? >> it's off the charts and you can look at it in multiple ways. you have a bleacher report and to watch your team or the host broadcast on turner. stephanie: more advertising opportunities? >> a better way to the neck with a consumer and a better experience for the fans. stephanie: there are more people
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that love march madness but we have to turn to golf. the next is the masters. tiger woods said he is not playing you got young superstars , can jordin spieth pull in the crowd the tiger woods once good? >> tiger woods is an icon. jordan is a special athlete. him and rickie fowler and jason day, the pga tour is well-positioned for future growth. there is a guy named michael jordan. there was a guy named lebron james a came after. golf is in a similar transition. today is the opening day of major league baseball. baseball has gone down in terms of support. >> they have had challenges. the average tv median age is 54 and the nba is 41 and they have made adjustments. they are embracing social media. they had a snap chat day in
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spring training that was successful and the have young stars. commissioner a new who knows they have to do things differently to broaden and promote the games. the game is in good financial condition but they have to change the demographics and use social media. stephanie: how confident are you that they can get that on? does get that done? >> they have to work on it. they will have to promote the game but they haven't good product and i have great young stars and i'm sure they will make progress. stephanie: what do you think will happen tonight? >> villanova and north carolina are two great brands. i will have to go for the wildcats because i'm from the northeast. stephanie: for a villanova, what does this mean for them? the amount of kids dying to go there goes up. what does it mean for a school like that that you don't normally see in the finals? >> it is special because they
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are from a basketball only conference in their playing different conference. it changes things in terms of academics and admissions. tuite anderson is a unc guy but i would love to see villanova win. thank you for joining us. little off the charts with matt miller. ♪
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you listen to goldman sachs, it's time to sell asian currency right now. matt: it's really an emerging markets call. let's take a look at what emerging markets stocks have
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done. and of january, analysts got very bullish on emerging market stocks. i have that chart of the emerging market index. in white, it had come down and really got hammered along with stocks in europe. in january. all equity markets got hit hard. emerging markets stocks have ramped back up. david: a number of people on the program have said it's time to buy. matt: it has been a good consensus call. they ran up through their 200 day moving average. they are bumping up again. people believe in this. i have not wrapped my head around technical analysis but the more people that i into it, the more the market calls it true.
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i wanted to talk about currencies. the goldman sachs call is on currency. there is a chart of the momentum in emerging market currencies. you can see that it is strong, up 6.3% in march. this is emerging market equities that have been strong and the to magnify each other. they correlate closely. if you are a u.s. investor and buying these stocks would dollars, when the currency gets stronger, so do your stock values. david: thank you very much, coming up, the head of merrill lynch chief investment office. ♪
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economice biggest shakeup of saudi arabia and they are trying to offset the oil prices. alaska air to buy divergent
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america for $4 billion. it is the biggest of leaks for the global elite. world leaders hidden wealth use of shell companies in the air of the tax haven that may be over. of the tax haven that may be over. welcome to the second hour of "bloomberg . welcome back again. stephanie: good to be back. here with us is chris wolf, head of merrill lynch investment office. we are about 90 minutes away from the open. futures are a little bit higher this morning. dow futures are up 23. a rally in europe.
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a stronger dollar is the story. some sterling strength which is a novelty. as much as one percentage point early this morning and now we are up about 1/3 of 1%. a new report says that leaders used shell companies to hide their wealth from 143 countries. a group of investigative journalist obtained millions of documents from panamanian banks that create shell companies. they linked vladimir putin as well as other leaders of other countries. they say the allegations are nonsense. >> nobody said vladimir putin was involved. know vladimiro
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putin have certain offshore businesses. what's wrong about this? shell companies can be legal but can also be used to hide wealth. in iran, wave of suicide bombings has killed several dozen people. six soldiers were killed in a security check point. another attack killed 14 people in a restaurant popular with shiite militia fighters in saudi arabia is planning the biggest economic shakeup since it was founded. they outline the measures in an interview with bloomberg news. they want to speed up subsidy costs and impose more taxes with an aim at raising $100 million -- $100 trillion by 2020. stephanie: lower growth in the u.s. is caused a two speed
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economy to emerge with a strong consumer but a weak industrial sector. growth in 2015. adapt tod investors this new normal market environment? long-term investors are saying things like shape and i will buy and hold. it has been brutal for hedge funds. >> that's absolutely right. you are looking for three things. you're looking for revenue growth that is centered around the u.s. consumer. you see companies translating that revenue growth from high margins into cash flows and dividends. as you look for the value around the world, we have seen people concentrate to buy the index. we want to look more broadly globally. a lowou are dealing with growth environment, we want to look more broadly than stocks and bonds. there are opportunities beyond hedge funds in places like private equities to generate increments of income.
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the story we wrote, the things you did not want your portfolio, everybody wanted one thing. they want income. then there's all the other things that you don't have your portfolio that makes more sense. in the d, that income will come from robust businesses making real profits. one thing we are watching is a failure to translate. we have robust consumers that are not translating into the business sector and with policy that is robust. what is keeping it from translating into business? thehe one big thing is that stock market and the economy are not the same thing. on stock market depends industrial production growth and capital expenditures which have been week. as companies use more technology, it will be hard to
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see the absolute value of capital expenditures go up because technology is deflating every year. they will spend lower mousepad get good technology benefits. thebiggest feature of landscape or equity investors has been the high-margin story. a you are a ceo and you see low topline revenue growth number, you run your business for margin and let for ways to keep them high. oron't think it's unnatural out of school for investors to focus on where those high margins are and in a world of global growth, when consumers are not using credit to spend then to pay up for those high free cash flow stories. that's where you go when i think you stay with those kind of trades. you tell me where the dollar is and i can report on the market and everything counts. as an investor, you will buy a particular index. when does that write down? >> i think the beginning of it
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has come in the two speeches from the chair of the federal open market committee in the last two weeks. we have seen no hikes and then we have seen them be a bit more dovish. the biggest split in markets between rates in the u.s. and everywhere else is what created a lot of the volatility. it made it challenging for emerging markets and challenging for commodity exporters. that looks like it will come in a little bit. while everyone is lowering rates, the u.s. is unlikely to be on that path which means it does not pull the dollar up as much. could endhe 10 year up around 2% or a little lower and growth in the u.s. might be 1.7 which is a low and slow trajectory and that means the pressure created by different interest rates reduces and allows us to get back to be fundamental margin story and it should raise the value of investing outside the united to lowwith respect
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valuations we see on a book to price basis. stephanie: corporate earnings in the u.s. last year had compressed across the board. growtht we are in a low environment, where is the great opportunity going to be? where will we see a catalyst to turn things around for corporate? >> the catalyst you're looking for is already here which is the fact it interest rates will not move up a lot. also you are looking for flows to change. we have seen big flows into high yield over the last several months. we have not seen a lot of flows back into equities. fed will bring people back to the equity story because the low growth story will put pressure on interest rate side. i think that will make investors rebalance their allocations more toward equities. you have catalysts outside the united states. the new chinese five-year plan is coming up next couple of weeks with more details focused
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on corruption and pollution control. you've got a lot of discounts and emerging markets broadly speaking. it's time to be more focused on where the value is outside the u.s. if the rate story is not as strong as it used to be. david: low interest rates are good news if you are running a company. how will we solve the apostle of getting back to investing so we can increase productivity which is where growth will have to come from? >> i think there are two parts. let's start with where we are. we are in the mother of all refinancing markets. of corporate's running for margin has let us to places where if you are refinancing, you don't have a lot of topline growth, it led to a big wave of m&a. backs --ock i
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buybacks. >> you have reported well on that. part of this story is where is the confidence for investors to come back and allocate capital? that's more tricky. it's starting to happen in the jobs data like michigan confidence maintained a high level. i think it is a slow grind environment. i think it will be a slower grind were things build over time. cut costs fastt enough on the margin anymore. given what we have seen in the last couple of weeks with a little stabilization, a company will go after the growth on the stock exchange even more? >> our senses that the revenue line will be challenged this year. probably 3%-4% range.
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it will keep the focus on margins and will continue to see thee m&a story eve all. rates are low. you will be able to maintain that margin story. the risk around that which is something that jenna yellen got to is are the job growth numbers sustainable enough if you have that kind of environment or you start to do acquisition and cost-cutting? we might have some headwinds as we get into the middle of the summer around the jobs story. we need a couple of more strong reports to keep the trend of rates moving higher and confidence moving. what does portfolio construction look like? >> it looks like anti-concentration. many folks have ended up in a place where they have a few sectors that produce the most income in the u.s. and have ended up all of the u.s. and they don't like bonds and they
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end up with something that looks like stocks and a lot of cash. the opportunity to set in a world that is likely to have more volatility from central banks and have a more dice or -- diversified portfolio. you might want to focus on things you have not normally had like stocks that hollow momentum. more on the private lending side. generate income from multiple sources of those english like a portfolio that is more complex. it affords flexibility and afford some opportunity to rebalance in markets we think will chop their way through the remainder of this year. john: it's not an easy market. thank you so much. up, with recent airline mergers, alaska air will buy virgin america for two point $26 billion. positive across the
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board. ♪
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vonnie: this is your bloomberg business flash. five former traders at barclays have pleaded not guilty in london that they rigged libor interest rates. the trial is expected to begin this week and it's the third trial in the u.k. of bankers and brokers. has area unemployment rate unemployment has fallen to 10.3%. germany's employment rate is 4.3% while spain is over 20%. ticket sales for " batman versus
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superman" fell in its second week but it was still the best winner of the box office. it took in $52 million in the u.s. and canada. john: let me get you up to speed. morning are up about 11 points. the dax is up about 89 points. you will see significant underperformance in the telecom sequence. for what's thee big deal. alaska air will buy virgin america and and a deal valued at about $4 billion. this will be the latest deal in a wave of recent airline consolidations. jeff mccracken is joining us now.
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chris wolf is still with us. tell us how this came about. >> it started back in november. alaska airlines approached virgin america and offer. it was probably a good premium back down after a few weeks in conversations with the board, virgin airlines hired a boutique investment and could begin a process. the only person that showed up was jetblue. alaska air was willing to pay a pretty sweet premium. they almost doubled the price of the company before the story broke. from richard branson's perspective, virgin america was only going to get bigger. >> it has not worked out that well. worth $1.3 billion so we broke the deal a couple of weeks ago and they are paying $2.6 billion in cash. version was not doing that well.
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most of the time, airlines are always -- only available during distress. from their standpoint, the fact that you could get this incredible premium during a reasonably good time because of oil prices, it made sense to sell. howd: regulations limited much richard branson could own? >> the regulatory piece is always important. most of the airline traffic in the united states is controlled by the big 4. alaska is trying to break into that especially delta has been a big problem for alaska air lines, crowding them out of super areas. stephanie: what do we know about alaska airlines? >> they are not that well known on the east coast them then they get access to laguardia and jfk which is a big reason so they can become better known in the important areas for airlines. >> that's a big premium to pay for an airline. is that deal specific or is
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there the potential this is symptomatic of low rates and cheap money and we could see bigger premiums as the year goes by? >> i think it's about scarcity value. there are not a lot of other airlines to borrow -- to buy. people.d to the jetblue there was zero chance they would come back with this kind of premium. david: let's turn to not the big deal. the french telecom company .range has ended talks telecom shares have sunk this morning. the orange ceo took to twitter saying -- jardoland was the codename for the deal? >> i asked why this called apart and they said it's too french. the french government had a huge
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stake in orange. of bouygues wanted specific things in value in job guarantees that they could not get to a deal. they spent many months trying to get this deal together. this is not the first time they tried to dance. i would not be surprised if they try again in a year. they've got for big players in france and they want to get it down to three. stephanie: how difficult is regulation there? telecom is tricky at least in the u.s.. >> before you get to a deal, you have to come up with a bunch of deals on the side of what you will divest. to thewould have to sell other big players so they have to have agreements on what they would sell not just the core deal. john: the deal collapses in my
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all trade lower because they all need this deal. now they've got a price war and i've got this huge capex burden. how does that get solved? >> the other two were going up because they were going to get assets from this deal and you eliminate one player. the big assets will be sold up to the other two in that's why they are now falling. i would not be surprised if in 6-12 month that we will have talks i again. is that it the risk falls apart? >> it's all dead now. it could come back maybe later this year or next year. stephanie: bankers still get a. thank you so much. thank you so much for joining us, chris wolf.
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coming up, we are talking gold. it showed its best quarter in a few years. take a look at shares of apple. it's in the green after credit suisse add the stock to its u.s. focus list and raised its price target to $150. it close at its highest level of the year on friday. ♪
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gold futures are in the red after a strong jobs report that led to speculation that growth has continued.
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ira epstein joins me now from the cme in chicago. what a quarter we have just had, the biggest since 1986 with a sheet -- with a huge surge in gold. the investor in public mode back into etf's in gold. the bet was that commodities were back in favor. the problem with that is the fed is what is fickle. first we are going to get three or four interest rate hikes in the fed comes out last week and it says may be to interest rate hikes. it is not the inflation scenario. on the other hand, it is weakening the dollar. the gold market is looking at the combination of looking at the dollar and the market is getting a bid. if tolkien tell -- can hold about $1200 come you got a shot just because people are
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saying uncertainty about the dollar. we all talk about the dollar strength. if you take a look at the dollar, it is weak against currencies with the exception of the aussie dollar and the new zealand dollar and the canadian dollar. the otherl currencies, the dollar is breaking on them especially the euro which is recently in the low $1.14 level. this was not a dollar trade, it was a sentiment trade. will gold trade lower off the back of that? >> why would you want to press gold? everybody says the inflation targets are not going to be made. overnight, the bank of japan said their three-year target will not make their inflation. the u.s. is not making its inflation. gold is a two-sided edge, do you buy because of the currency or because of the inflation scenario?
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what i see now is the market is looking at an element that says gold is a good storage of value in this uncertainty and the sentiment is there to own the gold. john: thank you very much for joining us. $1220. trading at around focus and the fed in the next focus will be why the rate hike guide is not certain. a rally in europe with the dax up 10%. ♪
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david: stephanie: -- we are one hour from opening here in new york city.
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back and forth, how many hikes are going to get this year? what is your prediction? >> will our official view is that there are two hikes. one in december. it is all about risks to the downside. gdp growth, 1, 5, 7 is what we think. the yellen zone seen this leads talked about the downside and as we mentioned earlier, the huge split commenting on it acts like a cut -- i think of conditions globally with raising of interests for companies that issue debt. we think that that kind of gravity is going to keep a lot of pressure on race in the u.s. -- on rates in the u.s. had modest levels. the jobs report in june, the june hike goes off. other things coming down the road. have conventions. you have elections. a lot of things thrown in the mix, the fed won't move. geez, are they going to put
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their credibility on the line? will it be the data? we need to strong jobs reports to keep that coming. david: you gone out on a limb to say that it's one, not to. which month? lot depends ona the next two months of jobs data, really. april jobs data, may jobs data. if it is strong enough, june is on the table. economists are thinking that that is the just rectory. accelerated an't lot. with more folks coming in, lots of temporary service jobs on their, they don't have a lot of inflation associated with them. there isn't going to be a lot of wage inflation on there. myth is going to set the tone for the fed to take another talk -- another pause. >> given what we heard from
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janet yellen last week, i wondered whether the importance of the domestic banks was diminished somewhat. the yield curve stays anchored. are we going to see more of that? >> you might see the backend last week. you will see more of it. the risk, for example, let's say the jobs data is strong and the fed move's slow anticipating, oh lord, this is much stronger than we expected. inflation down the road. i think that there is a limit on the upside. interest rates around 2% this year. the upside limit will be governed by the global picture. the expectation seems to be rising. chris: a lot of it is anchored on hourly earnings. there needs to be 2.5, maybe a
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little bit more in terms of the next several months in order to start getting really concerned about the inflation story at this point. the consumer story is not being helped by incremental credit. it is just the wage growth story for now. stephanie: don't we need to factor that in when we look at the jobs number? month after month those are low-wage jobs. why does that give us confidence that the u.s. is doing so well? going on. things are back to 2008, a lot of those jobs were in the insurance industry. 60 5000, 70 $5,000 per year. -- 65,000 dollars, 70 $5,000 per year. -- total general income is $75,000. per year. that gets to the story of the
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lowest low, chugging along. if you want to see this job creation story kicking into inflation, you will see that average hourly earnings kicking in. at 4.5%in year-over-year wage inflation. this kind of job creation in the service sector has a much lower inflation role to it. >> in general there's excess capacity. what does that tell us about the workers? of the key signs from the report was the entrance for the unemployment rate picking up a little bit. i think that that is important. the big story about extra everything, strip malls, real estate, steel manufacturing, it's really hard to have a lot of inflation. you will get pockets of it but it seems there's more of a struggle and we need to get to a place weather is more scarcity. there are those scarcity
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elements but there is a lot of excess of construction. john: when you explain to someone at wages rise, that's hard to stomach for a lot of people. what i saw was more people coming to the jobs force and i wonder if that endorses the trajectory. things are happening that look better? chris: not getting in the way of anything that is happening in the jobs market. the story here is reasonably constructed. this is about a broadening of the market. 2002 to 2007, driving the bulk of the wage story. this is about broader participation. that's one of the keys. unemployment rates coming down, that works out to be a boost in confidence. that's part of the story about longer-term. stephanie: if so much of that broadening is in the service industry, with security that that and goes, why is
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net positive? if anything it gives us a mixed picture? total income has led to other things. access to credit, accessed autos and things where there may be a buildup in bubbles relative to the income being generated. the other piece of it, and my confident that i will have this job in six months, three months? you don't spend as much. it's hard to see a lot of consumption growth out of that. david: i just wonder if we have structurally redone the situation. we are basically permanently doing away with relatively high paid, high-value added jobs with low paid, low value added jobs. that's a really good
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question. there has been a structural change in the labor force and i think it has led to where we have seen that kind of excess capacity. i think a lot of the commentary is around the big picture items. education, corporate training, the longer-term solution. the place we are in for the next 12, 18, 24 months? john: thank you very much. to potentially becoming one. with a mandate. let's take you to the meeting at bankamerica, where we have the eye on the front-end rally that we have seen in rate. short-lived? or do you think it will last? >> we think the fed has been quite cautious with the speech last week. we do think that until we see a massive improvement in the data or something slightly different from the fed, we think the
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front-end will be supported. stephanie: where is the trade opportunity? interested in are from last week is the seasonal dynamic q2 treasury bill pay down. immediately to see a rich inning of bills to ois. -- we think we can see a richining of bills to ois. we penciled in 110 billion to downs.lion of net pay it's possible they could be larger depending on how treasury wants to handle other aspects of their financing. we think the potential for the bill to ois narrowing could be a good -- could be a bit greater. what will a rate hike due to the front-end? mark: through the end of this year it's priced for less than one hike. i think that if the fed begins
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to change their tune or if data is better than some were expecting, the front-end could be sold off to some extent. right now there is very subdued pricing at the front-end. less than 1% by the end of this year. only four hikes by the end of this decade. if we start to see something separate from the fred -- from the fed in data, it could back off. stephanie: how about supply heading into the summer and fall? we have penciled in a net increase of supply this year to $225 billion. we think we will likely start to see that in july timeframe. one of the reasons we think the treasury wants to ramp up bill supply is to make sure that there is sufficient supply ahead of the money reform. a big change for the front-end of the curve.
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some of that moving into government space, searching for a home. we want to make sure there is adequate supply to make that happen. stephanie: thank you, mark. after up, crude falling saudi arabia's deputy crown prince announced the kingdom would only drop production if iran does. that is next. tomorrow i will be sitting down exclusively with time river managing partner steve kunz, taking a big dive into fixed income markets. the fund was once one of the most awarded top returning funds , down 4% in 2015. where does he see the best opportunity going forward? ♪
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david: tomorrow we have something really special. francine lacqua will be interviewing christine lagarde. we will be previewing that on "bloomberg ." vonnie: you are watching "bloomberg ." tesla announced that it has 276,000 reservations for its new model electric car. elon musk says that the average model train will cost about $42,000 with options. lexus luxury division once to take dealmaking out of buying a car and in about a month they will bring a no haggle pricing experiment. it is part of the plan to attract a significant number of lexus dealers who are unwilling to go along.
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latest attempt to crack the smart phone market is running into roadblocks. the first company allowed to sell used phones you. a growing number of executives are opposed, saying that it make -- take apart the made in india program. john: brent trading just off the four-week low as the deputy crown prince said that he would only free oil output if they followed suit. in ender -- in an interview with bloomberg is said that it comes to a greater freeze production, but that they are ready and they will not reject any opportunity. joining us is our chief energy correspondent. the back ofness off this on friday. now it's a? . is this about waiting for the crude production to get back up to where they wanted to be? or is it holding hands for the production at all-time highs?
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>> we are seeing increases in production in iran going up. every country is trying to take andsition it ahead of this trying to increase production at the highest point possible for potential agreement for freeze to happen. the saudi's are clear. unless iran joins and freezes .roduction, they are not they are not likely to join the production freeze. there are not mere with that increase in production. it was that they have to stop at zero now? javier: i think of the iranians need to stop now.
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that way saudi arabia will join the pack. probably with some diplomatic language. the compromise will be reached. one of the arguments of those would be that a deal would happen as it was currently scheduled, announced to join in on the meeting. it's not likely for them to go if they have some suggestion or diplomatic language that they could it on the table, that they could make happy or say that they are the samebecause of time they say they are freezing also, giving room to maneuver for the two. making that diplomatic language will be critical to see an agreement. why would we believe that that diplomatic language would impact what they are going to do? that's a big question.
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if everyone is freezing at the regular production level and we can see production cuts, it's going to have a miniature founding of impact in the markets. remember, the saudi's proposed this as a perfect step in the process. it seems then that we are only talking about freeze on the table. the process implied is what really gave the market those wins in the rally for february and march. if we are not talking about , it's not going to be that important. looks like the markets responded immediately. i wonder if the larger story here is in the longer term prospects.
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as they have said now, it's going to become less and less dependent on oil for their economy. if that happens they will have less and less incentive to keep things up right. you are absolutely right. when the market reacted to discuss the freeze, i think the big important news for the interview was that he tell that they were mitigating, with lower prices for ever. prices weregh oil not in the interest of saudi arabia. creating more alternatives. reading between the lines and the comments that they make in term,terview, in the long what saudi arabia indicated was lower for longer for sure. so much timend speaking to your contacts, this story breaks, the politics of
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this -- cafe cuts from this year, last year, as people speaking less about the fundamentals of the oil market? the news has obviously been having a big impact. , still despites the production cuts that we have seen, the investment that we , the factannounced that we have been living with relatively low-end prices for a year and a half. the market remains oversupplied. supply is running well above the demand for the future. berries.mentals are you see why the oil prices are beginning to take a step back and we are falling below the $20 per barrel mark. david: thanks are a much, how the air. devastating my son, postponing
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the yankees home opener. coming up next, vonnie quinn takes on matt miller in the battle of the charts. ♪
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stephanie: you are watching one of the." reasons we are excited to be back is that vonnie quinn is taking on matt miller in the battle of the charts. i am absolutely terrified. i wore my basketball shoes to get some advantage. i almost brought a mouth guard. it's final for tonight, so there is a final for twist. southern university, helping to put this together. north carolina, revenue wise, $21 million for the department of education. paying out the total percentage of what it pays its players. 3% to 2%.
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if it was you would be talking .hat paying the players that's the amount of money that north carolina makes from its players. i'm just saying that that's what the numbers show. $10 million from the department of education. in terms of the percentage of , it'st pays its players really interesting. the title is prove it? should they be paid? should they not be paid? i don't believe that you paid basketball in the shoes. it's a great issue that i haven't spent a lot of time thinking about. i haven't made up my mind. other people haven't really come to a conclusive result yet. that is the question of -- have we really recovered from the great recession?
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i got a couple of charts there in one. the right one is the total working age population. 40% ofow we have about the total working age population. basically anyone over 16 is still not working. that could include people who recovered. anyone in the country over 16. you can see that it's recovered a bit from the great recession, but not really. what i find more disturbing, and i'm sure you spent a lot of time thinking about this as well, is how many americans are on food stamps. the u.s. poverty rate is almost identical to this. it has not come down. you still have 45 million americans on food stamps. if we had had this incredible recovery and you look at these other market indicators that looks like we have recovered,
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why are so many millions of americans still on food stamps and still living in poverty? david: we talk of a social welfare in europe and then you look at this, people don't appreciate the extent to which americans are dependent on the government. roughly the population of spain? it's a real reality check is to people -- as to why people are wondering quite bernie sanders and donald trump are doing so well. the economy, the headline numbers might be doing ok, but i'm not doing ok at all. that's why i'm going far left or far right. all of those americans who are no longer part of the labor force and there are no signs that they will make themselves back in. the number has gotten massive since the crisis. john: voting time? vonnie,ot my vote, based on the footwear. love the nba.
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i love the shoes. i love vonnie. i love college. i've got to go with matt. david: i'm really sorry, vonnie. i got to go with matt to. when they come out against north carolina on the final four? stephanie: there you go. vonnie: hillary clark. stephanie: deserving. i'm still -- vonnie: i'm so pleased for you. matt miller, vonnie quinn, thank you so much. nearup on this program, month lows after the interview .ith a deputy crown prince next checking in on the markets just 30 minutes away from the open. ♪
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prince tells bloomberg that they will freeze out if a rack follow suit. alaska air buying virgin america
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or $2.6 billion. the latest in a wave of consolidation in the airline industry. joining us for the hour, mike, with a little over $13 billion in asset-management. counting you down to the market open, 30 minutes away here in new york. a warm welcome. i'm here alongside david and stephanie. stephanie: also with us, one of to point out want dressed for today. michael singer, you turned it out. that is like joker meets wall street and i'm going to tell you, i really like it. john: i feel i need to go and get another suit. full screen up. futures positive against the
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open. four points on the dow. the s&p 500 futures, open europe, the rally continues. 55 points higher on frankfurt, germany, 4/10 of 1%. switching off the board quickly, down overnight as well, the dollar yen tracking towards that's 20 14, may 2014 the euro sterling,71 -- euro there it is, 36-72. of 1%.ain by 2/10 saudi arabia has got a lot to do with that. for now let's cross over to vonnie quinn. world leaders, criminals, celebrities, with hiding their wealth. one of them said to be vladimir putin. an investigative journalist involving people and companies linked to the russian president. implicated inn
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any wrongdoing. the report is based on documents from a panamanian law firm. more than 200 refugees arrived in turkey today from greece. it is part of their plan to limit the amount of migration to europe. refugees reaching greece from be sent backot unless they qualify for asylum. hillary clinton and bernie sanders, once again sniping at each other. sanders says that clinton should be getting nervous after she , holding their primary tomorrow. by 2400 journalists and 150 news bureaus around the world. stephanie? time for the stories that matter most to markets. oil. brent crude, with a month month low. swinging toe -- history for the latest call on
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agent currencies. to cover.ones brent crude trading near a four-week low after the saudi arabia crown prince said in a bloomberg interview that the kingdom of only freeze output if iran follows suit, putting in doubt this death of a proposed deal between major producers. what do you make of this? mike: it's a political and economic issue. in 2014 they went after the popularly elected government in yemen. what started as adult. josh started a battle. they defended their sovereignty. this was a neighboring nation that came in in 2015. there has been strife there. couple that with iran coming off the sanction, the opportunity to sell more oil. i find it hard to believe that these two nations can come together and reach of -- a compromise to cut production and oil.
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they can't come together to do business at all? even if iran gets it up to the table and sings can buy off without a record hike? there's a lot of reserves in the u.s. and i'm not sure how much it could affect things. nonetheless, i'm not sure. gcc, theyprince, the are sending their children to battle in yemen. this was much more serious than we believe. i'm not sure. it's hard to see what the incentive is from either side. if the price is higher, why do we care? on the saudi arabian side they will not be dependent on oil going forward. they are even more than rivals on that part of the world. who will be dominant in that region? mike: i have a hard time, even
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if it's in their economic best interests, to see them getting together. especially if they start to increase oil production. john: i sense from you that you think it's want to escalate. do you? mike: i'm not a political strategist. john: you has spent time there. mike: i think it's going to take time. there was a popularly elected government. just camethe saudi's in last spring. i don't see a resolution so quickly. i think that that can create real challenges. david: are the saudi's being militarily effective?'s hard to i think it was the right first bolster come in and to their sovereign borders. this is right in their backyard.
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mike, maybe you don't need to understand the dollar at all? clinging to history despite their worst quarter and more than three years. previous cycles suggest that there are more gains to come according to a trade weighted fed index. after the timing cycle begins, the dollar bounces off. is this cycle any different? having taken a few steps back? mike: i'm with the hedge funds on this. this will ultimately be a call for janet yellen. it's diverged with europe. we have tightened a bit. will there be another rate hike? unclear, no one knows. a weaker dollar is of course good for the emerging world. european banks for the u.s., u.s. exporters.
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i have real, real questions and i would be bearish on the dollar. why short the hedge funds? that possibly have the worst start to the year. there's no doubt that it was an auspicious start to the year for global equity. global macros are a really good start to the year. stephanie: and got blown out of the water last year. have you met fortress? a little bit, i suppose. but i can tell you -- stronger start this year. why not go back to the dollar? it's not really from the bloomberg, per se, but if you look at history the big dollar runs have lasted longer. back in the early 1980's, when paul volker took over the fed, that was a rally that led to the
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plasma accord. and out in the open plasma accord. rubin, that was 81 months. now you have had the divergence play, that led to a 57 month rally. you mentioned hedge funds bearish. a lot of people think there might have been a wink wink, nudge nudge accord at the meeting. her dovishness that she was playing along. maybe that's the end of the bull run for the dollar. the end of divergence. at least historically the runs have been longer. that's all i got. you can access this chart if you have the bloomberg. a lot of people will want to. this is a hot chart. back to you. -- thelet's turn to this third story that matters to mark
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right now. goldman sachs selling agent currencies after seven years. further selling is likely to push the yuan and again to their weakest level since 2008, which has implications for emerging-market currencies. it strikes me, but talk about you want first. people have been betting on the devaluation for some time. the pboc is jumping in with both feet. particularlyhn: with the offshore market. it has had everything to do with what's happening on the other side of the trade, boosting currencies. my question to you at this point would be -- looking at where we , with jakee yen peavy yields at all-time lows, the yen is just stronger and stronger. it lookslobal macro like things have gotten much more complex than a few years
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ago. i think it's a fair point macros and as good think there will be opportunities there. japan could possibly be a good trade there. elsewhere in korea as well. stephanie: what kind of time horizon do you need? mike: global macro results come in quarterly. stephanie: there's the rub. what you just laid out was an impossible scenario. a long-term view. what can they do? they don't really have the choice. they can get locked up capital with investors long-term, but
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it's not necessarily so easy. bit of a conundrum. mike: there you go. much more ahead on "bloomberg ." virgin america, you know why. we will have more on the deal to buy later in the hour. ♪
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vonnie: this is your latest bloomberg business flash. alaska air competing with the biggest tires in the united states to buy bird -- to buy virgin america. $6 billion in
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the takeover would expand the footprint of alaska and give them more takeoff and landing plots at airports in new york and washington. they pled not guilty to charges of libor. the trial is scheduled to begin this week. the third trial in the u.k. of bankers. commercial drone flights over populated areas according to the associated press. recommendations coming into the small drumsasses of the commercial operators could fly over people. that is today's bloomberg business flash. john: i just wanted to give you some of the movers in europe, three weeks of losses with a day of gains. stripping the index back a little bit, london, down 1.9%. a seventh day losing streak.
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and then to french telecom companies. industry, stock down by 5.88%. absolutely down by 15% on the session. european movers have crossed over to the big ones coming in from the analysts this morning. matt: do you mean orange? john: but i would say it like orange.ench accent] ,att: i'm going to take a look speaking of orange, at cares of added to thehey focus list and the price target of $150. analysts there say that the market is underestimating the growth potential in their services union.
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a very interesting idea. shares are moving up in the premarket. it was a huge waiting for apple going a long way. no longer saying to buy the shares. declining sales for handguns and the weakest in the past decade. well below the average. we can grab this on the bloomberg. this is a criminal background check. the analysts there is talking about it, you can see the decline in two of the past three months. lastly, one of our personal favorites here is down 35% in the premarket this morning after reports that there are plans to file for bankruptcy. call not really. some are completely dropping in coverage of the stock altogether. rating, they are
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probably going to disappear. it's only worth $.29 in the premarket. , but start to the year michael singer says the right strategies can still earn investors big bang for their buck. he sharing his secret, next. ♪
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you are watching "go ." you are watching a gray, dark, and cold new york city. which is why the new york theirs are postponing
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first home opener. a dark day in gotham, but a bright day on "go." michael singer is with us to talk about one of my favorite subjects, hedge funds. it's been a rough few months. it's following below three dollar trillion for the first time in two years, on track to outpace newmont is for the first time since 2008. it's not pretty, but it's getting better. it was an inauspicious year. 2015, the broader indices were up a point, hedge funds down a point. we are calling hedge funds a strategy, but it's not a rapper., it's a what is a hedge fund? it's a fee structure. a way not to be a mutual fund. to be able to invest more flexibly. thinking about an equity long short and flavored to shore.
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r. du jou these strategies can have a bit of a tough time. let's take a look at this. commonly held hedge funds year today down over 10%. namesct that the happier of equity long shorts are not having a great year. of february it was really dicey. you had equity long shorts on average down 8%. brutal. one quarter of equity long shorts were down double digits. that's the worst start i've seen in my career in hedge. but that's not the whole story. there were more strategies. smart allocators will first choose a's and decide where they want to go and pick the best managers. in a year like this if you invested in merger arbitrage, global macro, or managed futures, you will be making -- you would be making money.
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you have to be smart about the space and then do the work and pick the best manager. you could make money in an equity long short. withoutigh net exposure much short site, you would be losing money. if you did the work and focused on managers that knew how to short, that had an epiphany in their career where they were rocked and they could generate on the short side to protect, those with a macro perspective? they could have the view on markets and change their net exposure based on where they believe the markets were. they wouldn't mind the fix spiking over 20, so that they could pick stocks well. plus sector specialists. people with real expertise to give you a different type of exposure. i think that if you said you pick a great stock picker you are well off in if you
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don't, you're in trouble. if you take the world of hedge funds, how many are that good at this? i know it has negotiated down. but the two and 20 negotiation started two years ago. stephanie gothen me, i got so many nasty grams in my e-mail from friends i was giving up back then. the truth is that fees have now cleared 1.5 and 20. south of that, your question is that. david: what portion? mike: in the 1990's the industry was much smaller. there were only 10. stephanie: the performance was a heck of a lot better than what's out there today. mike: somewhere and some you didn't know about so well. we had a maturing industry. the problem is that there were
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more than 8000 hedge funds. in any industry when you have that many businesses, of the 8000 how many are really relevant? maybe 1000? less?ly of that, the great ones. probably in the hundreds. the promise of hedge is that the lawns will go up and the shorts will go down. value buys the long and expensive things on the short side. in a ripping market, in a good, strong, bull market they should underperform the stronger indus -- longer industries. then it depends on the strategy. if it is a directional strategy or whether it is absolute return. like certain systematic trading strategies. at 2008.
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industry down 30% to 40%. hedge down 17% to over the long-term compounding money with a diversity of strategies. with global trading in the macro has a bit of each in the portfolio. together you should have a well blended portfolio making you money in all markets. make money and all markets? viewers like the sound of that. matt, listen. tesla motors? matt: i think it's one of the most exciting stories in company news. tesla, up 5% in the premarket, model orders for 276,000 three's. the deposit goes with each order. over one quarter of $1 billion in three days with these
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preorders. take a look at what tesla investors have made in the past five years. this chart shows you that tesla stock is up 732% in five years. this is the s&p. this is general motors. annual return up 53%, better than drunken miller. that's serious. stephanie: people who love tesla, love them. john: the opening is next on "bloomberg go." ♪
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david: stephanie ruhle here, michael singer still with us. also joining us is the all hands on deck bloomberg gadfly
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.olumnist lisa abramowicz. futures are flat going into the open. dow futures are down as we hear the opening bell, up 4/10 of 1%. telecom sector in europe so far. europe ticketing and in the last few minutes or so, 100 1139. very close to a low. euro dollar, 14 again. storing around the 80 pence level. yields unchanged, 7% change on the 10 year with renewed weakness. copper down for a seventh day. crude is down to. get across to matt miller for the first couple of minutes of trading? red, opening up in the europe was red and green this morning. could see some turnaround year, s&p unchanged in the
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nasdaq. 1/10 of 1%. taking a look at oil, after getting absolutely crushed on friday. it was down 4% on the end of trade on friday. . off again today, 6.65. it has been up again today. pressure is definitely to the downside as the saudi's say that they can pump as much as they want if you do. gold has been interesting to watch. stocks crossed in january, gold up 20%. it was in its own kind of all market. really winningn far more than the underlying commodity. it has finally hit a ceiling and hasn't moved much in the last few weeks. as far as the big stocks to watch, i told you about the
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upgrade on apple. it got a price target boost to $150 from $140. apple is one to watch this morning. the takeover of virgin america for a $4 million deal including debt. weighing on air shares. 5%. the claim -- the premium was massive for virgin america. michael singer is still with us. also with us, lisa abramowicz. we talked about it earlier. first quarter for hedge funds across the board really tough. it was challenging in terms of monetary policy. and will not low rate volatility. >> it's difficult for hedge
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funds to operate in these zero interest rates environments. many of them look to earn a return over the risk-free rates. when it trades at zero, it's challenging. 20finally saw the vicks over and then some crushes. we've had movement in the index. crude has challenges that affect surnames in different ways. u want to pick those that go up in the session. a lot of investors were looking from flexibility for let -- were hedge funds with
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greater flexibility with hedge funds adopting higher liquidity strategies. more than the long-term investments, the locked up strategies in the past year. forwardhink that going hedge funds are going to lengthen these again and potentially make it more difficult for investors to withdraw cash? >> set on think so. -- lisa: because they don't have the ability? mike: the great travesty is not that they didn't put up absolute terms, but they failed in their promise to investors. they put up the gates, which put up black mark on the industry. the industry learned from that. in europe they expect monthly liquidity. assets in europe that
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require daily or liquid vonnie: i the same time demand liquidity. it is not much up here. >> the hedge funds not generate scherzer returns. not judge market does welfare it could be merger at the point of he re-strategy. look for the returns at trouble markets. . hope we could bring strategies to the retail investor.
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it's not really an alternative strategy. that is the issue of an asset liability account and that is the job of the hedge fund manager to manage your assets and your liabilities so you can meet redemptions. there is paper that was high-yielding paper. credit markets are not liquid. some strategies should not be wrapped in the cool funds. -- mutual funds. so is manage futures. you have to be smart and the regular stuff to have the right set of rules. their strict rules in place to make sure you can deliver on the liquidity. go back tont to what stephanie said. even 1.5 in 20, you have a basic return of 3% or 4% before you get to 4%. be a pretty decent number in this market of low deals. allocators investors today
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want value and they work long and hard at fees and fees have been compressed. we offer day one share class at half that price. not quite 300 or 400 basis points. ae fee is closer to one and half. having said that, it's a good thing. institutional investors and the credits we survey said ity maintained to increase or maintain it, that's a good thing. more asset should come and we would want the state of michigan to invest in a hedge fund. with the is the fault investor in the hedge fund, the allocation capital, with a misconception? there is a fault with them investor. absolutely not true.
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90's, old days in the these are the people who did hedge -- rich people and endowments. over time, it has become an institutional investor. if you are the cia and michigan, you are real problems that today. 6040 does not work anymore. there's no yield to be found. we are living in a yield start world and they are counting on that yield to pull part of the portfolio. you could invest in long only equity. you need to find differentiated alternative strategies. you might want to invest in health care royalties. you might want to invest in global macro. they need help to fill that funding gap and hedge and
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private equity do have a role there. if hedge funds are really for hedged returns, they don't necessarily have a place in the portfolio either. a bogey ofking at 7%-8%. is there possibly a smaller pool of investors out there to even go to hedge funds and the aig's that are cutting might be more the norm? michael: the facts of the facts. 87% of investors are maintaining or increasing. in february, it tells month. that's a tough month. again, put together by .iversified fund could have they can generate a four handle for you, but these are managed futures. arbitrage ander
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strategies that blend together and you can find that seven. you can work your way to a point a month, which is what they need. where are they going to find yield? invest in health care royalties. find differentiated uncorrelated strategies that are correlated to markets. makes it together and find that right blend. david: that is michael singer. thank you so much for joining us today. thank you as well, lisa abramowicz. by gan access gadfly gadf in your bloomberg. fivea air looking to version air in a merger of $4 billion. that is next. ♪
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david: i am david westin and i'm here in our green roof. u.s.ll be sitting with secretary of state john kerry. that is 11:00 p.m. eastern time. you won't want to miss it. vonnie: this is your latest bloomberg business flash. attempt at anond stockhe second u.s. exchange operator is more than its latest attempt. ever and trading software stopped its opening . ox includes such popular sites lik and are fully
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activated by ads. california governor jerry brown will sign a bill today that will gradually raise the state's minimum wage until it reaches $15 an hour by 2022. it will be the highest state minimum wage in the nation. republicans and business group says it could cost thousands of jobs. that is the latest bloomberg business flash. jonathan: equities across the board down around the 10th of 1%. let us go to abigail doolittle for some of the movers from the nasdaq cou. abigail: tesla shares are trading higher once again after the model three. 273,000e receiving reservations for the electric vehicle, more than double what the company was expecting.
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numbers here hoping to explain but stocks big turnaround on the year. one stock trading lower today is facebook after deutsche bank says he thinks shares could trade down into the first quarter company report. the company could miss just slightly. this is really a tactical call. long-term, sandler likes facebook and has a buy rating and a $114 price target share. david: alaska air will by richard branson's virgin america at a deal valued at $4 billion. this will be the biggest deal in mergers. airplane did they make him an offer they cannot refuse? >> it's not so much that he was looking to sell, although let's be clear. virgin america was not doing all that well. doingirlines are
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reasonably well because of fuel prices, but it's not like they were knocking it out of the park. alaska air shows up around thanksgiving with a really nice offer. they hire after court and run a process. thatue is the only one shows up and in the end, alaska airlines gets it. they had a much better offer. jonathan: this company is number five in the market. 80% of the u.s. market right here, right now. what does this company mean for the other four? jeff: it would impact delta. they've been pushing it out of new york and making harder to get spots in d.c., new york, and l.a., and i think that's what alaska made the run for virgin. virgin has great brand cachet. you can say a lot about virgin, but there's a lot to say with virgin cachet. stephanie: why was it not more successful here? probably because 80% of
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the market is controlled by the big four. they controlled most of what you can do here. eighthre the seventh or airline and a market basically controlled by four. david: not all acquisitions have gone smoothly here. what about unions between the two and also the fleet? jeff: this is one of those few airline deals where it's not done any distress situation. or a is no bankruptcy labor contract forcing the seller into a bleak area. reasonably well. virgin was giving alaska areas they had not access to. this deal should work in the union situation should be just fine here. jonathan: what would it take for them to become number four, number three, number two? how much work do they have to do or is it saying to delta, you can't squeeze us anymore? jeff: it's largely about
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securing their spot number five. jetblue was around 6 billion something and they are clearly the number five player behind the ones i've mentioned. i think delta is the biggest at thirtysomething billion. this is more about securing their spot and getting access to the areas that matter. a lot of people around here have not flown alaska airlines unless they are flying to alaska or some other place. i've never been an honor myself and now they have access to jeff jk, laguardia, and else. where. stephanie: jeff mccracken, thank you. a stunning turnaround betting big on banks and commodities during this year's rout. the fund is beating -- get your head around this -- 99% of its competitors. for more, suzanne walker barton joins us. is this a stroke of genius or good luck?
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andifically commodities emerging markets had such a great run in the last month and most funds and insurance companies got killed. >> and they did get killed. the folks at loomis are saying this is not just a stroke of luck. they have been betting big on these particular sectors. last year was very painful for them. mentioned, these bonds that they invested in last year have come a long way and they're paying off dividends now. they are betting that we are not going to see a global recession and we are not going to see a slowdown as hard as people were thinking that it would be. they do think that there is more room left for recovery in the commodities market and amongst financial bonds. david: take us through their strategy going forward. they going to stay with commodities and financials. that is a strategy?
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susanne: they think they are not going to see a great global slowdown. there is a lot more upside to these particular bonds. the u.s. economy is doing well. the ecb will be doing more corporate buying. they will be buying corporate bonds and that is going to push up the prices of the investments that they have already made. they do see a lot of upside in these particular sectors going forward. they are saying do not rule them out. their number one this quarter, last quarter, and they are here to say. tay. jonathan: thank you very much for joining this program. coming up, it is "bloomberg markets" with betty liu and mark barton. about 10 up in just minutes, we are going to get a slew of economic numbers. also the labor commission's index, which interestingly enough has actually in the last month shown that things are getting worse in the labor market.
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in fact, it correlates very closely to economic cycles. if we see another bad number there, might actually be signaling a possible slowdown or recession here in the u.s.? it has been a very good indicator on recession. we will have kevin logan help break down those numbers for us. we are going around the world on all the stories that have been happening -- everything from the panama papers to the rift between the imf and greece. what else is new on that front? and much more ahead. we have got a lot coming up, and mark barton is back. our version of battle of the charts comes back. stephanie: i've not seen you in a long, long time. great to see you, betty liu. we have another quick programming note. do not miss this exclusive interview with imf managing director christine lagarde at 4:30 a.m. eastern, 9:30 a.m.
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london tomorrow on bloomberg television and radio. you do not want to miss that. what we have got next on "bloomberg ," final thoughts on what to watch this week. you are watching bloomberg television. ♪
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jonathan: this is "bloomberg ." here's your scorecard right now. the s&p 500 and the dow trading a little bit lower, down by a 10th of 1%. the week ahead that is pretty exciting. the dax up by 410. anddollar yen trading lower a stronger japanese yen once again. euro sterling pulls away from the 80 pence level. the u.s. 10 year at 1.78%. crude is going with it at $37 a barrel, up 7/10 of 1%. a big week again ahead. stephanie: even though we are
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seeing the market move volumes are pretty light because there is so much ahead. the latest reading on the ifn nonmanufacturing index is going to be out tomorrow. the fed will release the money minutes of the march omc meeting wednesday. john is so exciting for this. not even we've finished. we've got this amazing fed panel. you have fed chair janet yellen joining that she ,en bernanke, alan greenspan and this is the super bowl for you. jonathan: do you know the cherry on the top? mario draghi will be speaking on the same day. stephanie: it's going to be hot. david: maybe you can skype i n. that will do it for "bloomberg ." withrow, i will sit down u.s. secretary of state john
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kerry. what do you want me to ask them? stephanie: who is he going to vote for? david: i think it's going to be hillary clinton. stephanie: you think that, but some people are feeling the bern. know fund manager i said out a statement saying he was supporting sanders, but it was an april fools' day. jonathan: leak seems to be the theme of the weekend. data breaches and leaks. david: that does it for "bloomberg ." thank you very much for joining us. we will see you all tomorrow. ♪
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betty: it is 10:00 a.m. in new york and 3:00 p.m. in hong kong. from bloomberg world headquarters in your, i am betty liu. mark: and in london, i am mark barton. ons is "bloomberg markets"
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bloomberg television. ♪ betty: we are going to take you from new york to london to athens in the next hour. here's what we are watching. we are half an hour into the trading session, the start of the week in new york, and stocks are fluctuating at the highest levels of the year. in europe, stocks are rising for the first time in three days that confidence in the strengthening u.s. economy will help global growth. mark: a new report rocking global leaders from russia to argentina over allegations they used shell companies to hide billions of dollars. what is the chief executive of russia's dtd group telling bloomberg concerning the reports about vladimir putin's involvement. landing the arabia biggest economic shakeup since the founding of the kingdom.


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