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tv   Bloomberg Bottom Line  Bloomberg  March 23, 2015 2:00pm-3:01pm EDT

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mark: from bloomberg world headquarters in new york, i'm mark crumpton and this is "autumn wine" -- the intersection of business and economics with a main street perspective. to our viewers in the united states and those of you joining us from around the world welcome. we have full coverage of the stocks and stories making headlines on this monday. we have the latest on the investigation into the collapse of the honeybee population. our chief washington correspondent, peter cook, has
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details on senator ted cruz and his decision to run for president in 2016. and hans nichols is in berlin as the greek prime minister meets with the german chancellor. first let's hit you to the top stories we are following at this hour. shares of previously owned homes came up short for the second month in a row. they were again below and annual sales rate of 5 million homes will stop the real estate industry is struggling because of higher prices and a lack of inventory. we heard from the federal reserve ice chairman, stanley fischer, speaking in new york. he said raising interest rates from near zero will likely be warranted before the end of the year and subsequent increases probably won't be uniform or predictable. >> the interest rate is expected to lift off before the end of this year as the normalization
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of monetary policy gets underway. the extra gary monetary policy accommodation the fed has undertaken in response to the crisis has contributed importantly to the economic recovery. while the economic recovery has taken longer than we expected. mark: the president of the cleveland fed says an interest rate hike in june remains a possibility. she told bloomberg the fed's removal of the word patient from its statement means june is a viable option but said nothing has been decided. >> we are not on any preset path. this is the new way of doing policy. we are data dependent and we will set the appropriate level of interest rates which is what the economy can support and what we should be setting it at. mark: last week, fed chair janet yellen says next month is
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unlikely for a rate hike budget and should not be ruled out. texas senator ted cruz is the first of the major republican contenders to announce he is running for president. he spoke at virginia upon liberty university, the college founded by the late jerry falwell. he said his mission is about reigniting the promise of america. ted cruz was elected in 2012 with the help of the tea party. a person familiar with the matter says his wife has taken an unpaid leave of absence from goldman sachs. she is a managing director there. secretary of state john kerry says negotiators have not reached the finish line in the talks on iran but that a deal on a country's nuclear program is achievable. talks resume this week in the switzerland. in an interview with the huffington post, president obama said there was still a major sticking point. >> what's going to have an impact is it ran -- are they
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prepared to prove to the world they are not developing a nuclear weapon and can we verify that in an intrusive and consistent way? mark: as part of any deal, iran wants europe and the west to end sanctions immediately. the u.s. is said to be opposed to that. in yemen, shiite rebels have seized the country's third-largest city. the rebel leader has accused the president of collaborating with al qaeda and the united states. the united nations has called for a halt to the fighting. it's considered a blow to the counterterrorism campaign. that's a look at the top stories we are following on this monday. let's begin with the crisis in greece. the prime minister is meeting with german chancellor angela merkel. it is their second meeting in five days as greece slips closer
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to bankruptcy. hans nichols joins us from berlin. what is the latest? hans: the latest as we have two leaders trying to sweep any differences under the table. if you think about three issues they are talking about, one is the overall bailout package will stop the greek from esters making all the right signs telegraphing he is willing to make reforms and even to agreements that he said the previous government supported. that is something -- on the immediate liquidity crisis neither side says they're going to get much out of the meeting to advance the issue. he says he's not looking to pay for salaries or pensions at the end of this month and angela merkel says i'm just one of 18 or 19 eurogroup companies. i don't have any say to open the
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liquidity gates on my own. perhaps the third issue as to whether there should be any german reparations both sides are dancing around it. mrs. merkel's sticking with the government line. this is a historical matter that has been litigated in the case is closed. take those three issues and it's really the question about nazi era reparations that is the disagreement. they are tripping over each other to show they are united and have had productive talks. it's moving in the right direction at least for the germans and the greeks. they are going to head into dinner now and we will see how much more comes out of that. mark: standby for just a moment. i'm going to bring in the chief euro economist for bloomberg
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intelligence. this is the greek prime minister's first visit to germany's into became the prime minister. is this really about strengthening relations between the two countries? >> i think it's more about solving the immediate liquidity crisis. the unexpected event has been the downturn in tax receipts. they have a problem they did not anticipate at the beginning of the year. the big moment is probably the next payment to the imf. mark: how much pressure does angela merkel face as to whether not greece can unlock a payment? is she willing to give greece any room to maneuver? >> i think she is under a lot of rusher but she's also under pressure to keep the show of the euro area on the road. it's not something she wants to see happen.
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maybe not from her voters but the euro area, heads of state to give in a little bit there to avoid any potential catastrophe. mark: a greek government spokesman said they won't take any recessionary measures that could further hurt the struggling economy. if it holds firm to that campaign pledge of holding back austerity measures, won't germany object and would negotiations unravel? hans: yes and that's why you hear the greek prime minister saying something different to an international audience and something different to a domestic audience. the question is what is recessionary. economists could debate on this the eu can debate on this, but the bottom line is if there is not significant and sufficient changes with greece following through with their commitments
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the previous government made on what this bailout program is and what the current government almost ratified and came close to saying they are going to make similar reforms and that february 20 meeting, if they don't do that, they are not owing to get disbursement from the ecb on any collateral issues or new money from the european union. remember, there's $7.2 billion waiting in funds there. they have to show tangible project -- tangible progress before the money can be dispersed. we have a nice rest conference with two leaders making nice in a public way, but until there are concrete proposals from the greek side on what they are doing to implement the agreement, there will be no disbursement of aid. that's fine for this week, but in april, you're going to have a cash crunch and some big payments due and there will be a liquidity crisis both for the government and potentially for the banks. mark: mario draghi weight and again today, saying he can't
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endorse further support for greece until he's convinced the prime ministers likely to meet the conditions of the bailout. is there enough time to restore what he called the policy dialogue between athens and the representatives from the european commission and the international monetary fund? hans: the time question depends on how long you think greece and last of four they need a bailout from what we used to call the trike a. i know we are focused on this press conference, but in some ways, mario draghi's comments were more impactful and more meaningful. he was quite harsh talking about challenging this notion that the ecb is blackmailing greece, noting there's some 104 billion euros in outstanding loans to greece and in some ways mario draghi is assuming the bad cop role and angela
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merkel may assume the good cop role. there's so much more that has to play out and we have some anymore other meetings. symbolically, it's a nice press conference, but said -- -- but we haven't really got a lot out of it. mark: substantively, what does the troika need to hear from greece this week so that those further bailout lands can be extended? >> they are still waiting for a concrete list of reforms. you may remember when they agreed to this extension, they would propose a vague list and more details by the end of april. the problem is the greeks don't have this luxury of waiting. they've already provided a list a couple of weeks ago in the good news is they have until april 13, which is more than two weeks away.
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the europeans are famous for last-minute and late-night negotiations. mark: david powell joining us from london and hans nichols in berlin. thank you so much. up next, ted cruz tosses his hat into the 2016 u.s. presidential race will stop we will bring in our chief washington correspondent, peter cook, with analysis. ♪
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mark: welcome back. let's get you to some of the stories we are following. the fate of radioshack made -- may be decided at a bankruptcy auction today. standard general has teamed up with sprint and has proposed saving 1700 radioshack shows -- radio stack -- radioshack stores. the back rooms the judge will make that decision. vivendi has rejected an activist
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investor's call to spin off its music business. it was suggested vivendi spin off universal music. vivendi says it will examine another proposal to raise the dividend. that's a look at the top stories we are following on this monday. coming up, alan bjerga has the latest study on honeybee deaths. a roundtable discussion as march madness hits the sweet 16. and the retail winners and losers from the west coast port dispute. ted cruz is in. the freshman senator from texas launched his bid for president with a speech at liberty university. he's the first candidate to jump into the 2016 presidential race but won't be the last. peter cook has more on the announcement and how he shakes up the race.
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peter: just two years into his first term as a senator, he hopes to follow another freshman senators footsteps by winning the white house. like barack obama, he would be the first hispanic president, but he promises a very different direction for the country if he were to win the white house. he made the announcement official overnight on twitter and and in online video this morning and then took the stage at liberty university where he delivered a sermon like speech and talked about the struggles his emily overcame, his faith and his struggle and desire to reignite the faith in america. >> i believe in the power of millions of courageous conservatives lining up to reignite the promise of america. that is why today, i am announcing i am running for president of the united states. [applause]
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peter: he wants to prove himself as the most conservative in the field and made an appeal to the tea party. in a short time here in washington he has rubbed some republican leaders the wrong way and convinced them donors he is to conservative to win a general election. democrats welcome his entry into the election, they think he pushes the entire field to the right. it is not going to be easy in a crowded field, but he has been underestimated before. mark: what does senator cruz gain by jumping in first? peter: he gets the national spotlight for a few days. he also is on his way to new
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york and a big fundraiser in houston. maybe by jumping in early he might scare off some of the folks who may draw from the same conservative pace like my cup of the or rick santorum. they might reassess now that ted cruz is in. mark: up next, we will tell you what a new study says about an insecticide it has been blamed for killing honeybees and why it's a crucial issue for the nation's farmers. stay with us. ♪
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mark: the u.s. department of agriculture says bee pollination increases crop values by $15 billion year, affecting foods from africa -- foods from apricots to zucchini. so there are concerns over a widely used insecticide some
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scientists say may be killing honeybees. a new study may weaken those arguments. our bloomberg policy reporter joins us from washington. tell us about this study. >> for close to a decade, there's been a big mystery going on in pollination. honeybees have been dying at higher rates over the winter than they used to and people have been wondering why. as studies advanced and people look at particular closet that particular causes, there's been a focus on particular pesticides derived from nicotine. they became popular around the time the bees started to die. the university of maryland did a study over three years where they were feeding one of the common varieties of this chemical to honeybees to see whether or not it was killing them. their conclusion was this particular chemical was not killing the these when giving a regular dosages. you had to put a lot into the bees to get rid of them.
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the company that makes these is feeling pretty good about it. it takes a little better pressure off their product come about the folks in the environmental community say not so fast. mark: how are the bees doing and what happened to the concern from a few years ago? >> remember colony collapse disorder, which there were congressional hearings about stop it has still been around. we have seen death rates for these double over the past decade. but we -- what we have not seen is the complete collapse will stop the agricultural community has adjusted. it's more expensive because you need more pollinators, but they have made the economics work. nobody likes to see more bees dying, but agriculture has adjusted. mark: what about the scientific research? what are we learning now?
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>> this is where things like the maryland study come into play. you see more federal dollars going to pollinator research because there's a belief pollinators are quite important in a way that they had not before, when they were taken for granted. studies have led in the european union to ban these chemicals to see whether they help with the health. this particular study showed one chemical in one situation but there is a lot more research to do. mark: what is the significance of this study? >> while it points to one particular chemical not being the exact cause, you have concerns over to militant stress on the semi these -- on these honeybees. they are trucked across the country to pollinate alman crops. it remains a great scientific mystery and there's a consensus that a lot of causes, including pesticides are part of it. on the regular story front, companies like bear are not off
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the hook yet but it does point to a certain direction they will find favorable. mark: we are getting into planting season. what are the concerns growers are facing? >> pollination has always been a concern -- almonds in california are the biggest crop. we are seeing corey -- corn and soybeans up and down. at the same time come easy an increase in wheat and that is whether driven. you see more dryness in places like kansas and places like russia and ukraine which are big competitors will stop they are being concerned with wheat supply. the more we go into planting season, farmers are just starting to prepare their field and fruit and vegetable growers are just starting to see things out. mark: thank you.
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coming up, march madness hype. we will look at how the tournament is measuring up as teams vie for college basketball's just price. stay with us. "bottom line" continues in just a moment. ♪
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merck: welcome back to the second half-hour of open bottom line" -- of "bottom line" on bloomberg television. i'm mark crumpton. let's check the price of crude oil and the close of floor trading here in new york city. you see on your screen crude finishing the day of 1.8% at 47.39. starbucks has backed away from the first stage of its controversial effort to spur discussion on race relations. employees will no longer right words "great together" -- "race
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together on cups. the company will still hold employee forums and commit to adding stores in urban communities. one of the iconic brands in baseball has been sold. the finnish company and their sports i thought we slugger, the bat maker. the price tag, $70 million, all cash. they own a number of sporting goods brands, including wilson. turning to march madness, now down to the sweet 16 in a number -- in a pair of number two teams that lost on sunday. wichita beat kansas the first meeting between the two schools in 25 years. wichita state next depomed, notre dame. -- next opponent, notre dame. the spartans will play oklahoma in the regional semi finals. we brought together a group of titan from the world of business and finance to take their best
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shot in our bloomberg bracket. each of the participant has generously donated $10,000, with the pot going to the victors charity of choice. in first place with 87 point, john donahoe, ceo of ebay. tie for second place jimmy dunn cofounder of center o'neill, and bruce richards -- cofounder of standard o'neill, and bruce richards. 16 teams are still standing. they help to pull off their season-long goal of getting to college basketball final four. joining me are edwin williams and paul sweeney. gentlemen, thank you so much. evan, is the tournament living up to the hype? evan: i think so, for sure. you have some of your bigger schools duke, ucla, and others
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that were not expected to go this far that have advanced. the basketball has been compelling. mark: paul kentucky, number one seed, has it been a rating favor for the networks? paul: it has been big. they are up about 6% year-over-year just this week and this is good for cbs and the owner networks that are carrying it. there are some turnaround games as eben said, and some other games as well. mark: do we have a cinderella yet? eben: i guess wichita state is a small school, but they have been here before. it's good to gonzaga here, but they've been good all year. your standard and aroma is ucla -- standard cinderella is ucla. but it's not quite comfortable to consider ucla a cinderella in
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that regard. you could say the same about michigan date. it's a team that has been here constantly in the past decade or so. and they are a cinderella in the traditional ends right now, but it so weird to think of the spartans as a cinderella-type team. mark: paul, what is the impact of this year's tournament here: paul: -- with this year's tournament? paul: the impact is more than ever before. you think about the nfl, the ncaa, all of the sports right we are seeing those rates go through the roof every year. every time they come up for negotiation they go through the roof, and that's because sports is one of the few sources of programming that gets a lot of life viewers and that means they can sell a lot of advertising. eben: if the third most defensive in sports behind the super bowl and the nfl conference championships.
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mark: you can watch it later if you want people want to be around other folks and it very throw of sports. eben: exactly. as paul said, it's exciting in a way that tv shows really are not anymore. it am thing that people can only consume live because they will hear about it elsewhere if they don't. mark: and if you dvr it and look at it later, people will fly vast -- past the commercials. is that why the networks asked for so much money because it's live and it might be the only time that they see them? paul: that's right, and people do not binge watch sports. nielsen does try to capture but at the end of the day, the life view for advertisers is the -- live view for the advertisers is the best. more: -- mark: are there any
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coaches right now who are making names for themselves among some of the unknowns? with her the mike krzyzewskis the tom rizzos. there are some newcomers to the scene. eben: this is a chance to boost their value. stakes were high for coaches. right now and the sweet fixed-income of there are not too many coaches that people have not four. chris mac and xavier -- chris mac is a beer, might be only one. -- chris xavier might be only one. mark: we are hearing about a suspension of the blackout policy for 2015. what is the significance of that, first of all, if there is not a sellout eddie idiom that the game will not be -- a sellout at a stadium that the game will not be shown locally are housing and is this? -- shown locally how significant
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is this? paul: the majority of the nfl franchise is they see the contract. i think more of a public relations on the part of the team and the league. mark: is this a good move for the team? sometimes they cannot get a sellout and the only way people will watch it if they go to the bars and want some weeks and watch on tv. eben: as paul said camesa 40-year-old room that really was not even coming into play too much. i think there were two last year in the entire schedule. there are ways teams can work to avoid the blackout. they can buy back to get -- they can buy back to get, distribute them to charities. i don't think it affects things too much. mark: then honestly, why does it take so long? paul: for most of the nfl or just was not that big
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an issue. the nfl got a lot bigger issues to deal with than the blackout rules. and quite friendly, they've got a great relationship with their networks. everyone is paying billions of dollars to the nfl for their rights. it's been a great relationship. this is something they had to tidy up. markus: thanks so much. -- mark: thanks so much. who's going to win the tournament? kentucky ecco -- kentucky? eben: i'm going to go all the way. mark: some retailers are reeling while others are seeing a silver lining. that story a little bit later when bottom line on bloomberg television continues. ♪
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mark: it is time for today's latin america report. columbia plans to sell one billion of its longest dated dollar bonds abroad as soon as today, that is, according to a
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person familiar with the matter. the south america nation already has 1.5 -- has one billion outstanding. that is your latin america report for this monday. up next, oil prices have fallen dramatically month. we will tell you why saudi arabia's opec governor is predicting the future of oil. ♪
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>> was started in crimea a year ago is playing out now in eastern ukraine, but the outcome is far less certain. this is utter destruction. i've been in demolition site war zone, i'm not never seen anything quite like it. we go to the frontlines to find
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out what comes next and what it might be for you. mark: president obama is a national harbor, maryland at this hour delivering the keynote address at the 2015 select usa investment summit hosted by the department of commerce. we will monitor the event for you and bring you headline. ted cruz is in the 2016 presidential race. the republican senator from texas became the first major candidate to formally announced he's running. he launched his campaign at liberty university in lynchburg, virginia. ted cruz: instead of a president that boycotts prime minister netanyahu imagining a president who stands unapologetically with the nation of israel.
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mark: senator cruz has been outspoken in his opposition to obamacare and once spoke against it on the senate floor for 21 hours. german chancellor angela merkel reached out to prime minister alexis tsipras on his first visit to berlin since taking office, saying his country belongs in europe and she wanted economy to succeed. chancellor merkel, who gave the primary stray red carpet reception at the chancellery still the client to make any offers of financial aid on behalf of germany, saying those decisions are for the governments of all of greece's 18 partners in the euro area to make. she said she's seeking to build trust with prime minister secrets -- tsipras. coming up at 2:55 p.m., scarlet fu with vizio tech stock warchest -- with the details on the tech stock or chest. and then lee kuan yew's
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relationship with china and the united states. retailers are still feeling the pinch, with headaches from delayed costs and shipments are lingering. julie hyman is here to explain why it is so expensive for retailers. julie: the delays are continuing. the longer the shipments of various goods and products are delayed, the more expensive it can be to these retailers. we are still talking about 20 ships offshore california that have not been able to come into port because there is so much merchandise that is act up, and even further offshore there are more coming into port slowly because they know there is a backup. if you have merchandise sitting at the port at this time, you actually have to pay a fine above a number of -- a certain number of days if it is sitting there. also, you will have to mark down some of this merchandise to clear it out. and then there are potential warehousing costs if you are storing it anywhere for longer
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than you otherwise might. it's is something retailers talked about on their earnings calls that it was an ongoing weight on their members. mark: is anyone benefiting? julie: we can actually see the off price retailers benefit from this. if you are a traditional retailer and waiting for a shipment of merchandise and it only comes a month or two late you can determine how much you will be able to sell in-store and then sell the rest to some of these off-price retailers, talking about tjx, or ross, for example. the ceo of tjx actually refer to this in her earnings call. she said it does tend to be her friend -- our friend, but it could be some pretty incredible deals. it could be a better selection of merchandise at better prices than typically it is. one thing that apartment stores will not do, tjx can pack up the
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merchandise and put it on the shelves next thing. that is not something you will see macy's do, for example. it has more flexibly when it comes to buying the merchandise. mark: julie hyman, thank you. let's look at the commodities market. we begin with oil. saudi arabia's opec governor made a statement about the future of oil prices. alix steel jointly with more. what other saudi's saying? alix: basically, we heard from the saudi's over the weekend that oil is unlikely to rebound to higher process -- prices anytime soon because of the ramp-up in production. the interesting part of the question to me is whether they want $100 oil prices. some analysts would answer that and say, no. they are concerned that it would eat into demand, and not only that, highroller prizes would then finance high cost producers
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and saudi arabia is a very low-cost producer. shale, other areas, particularly in opec, need highroller prices to me cash. mark: what does it say about overall demand? alix: demand will grow about one million barrels per day over the next 15 years to 100 million barrels of oil per day. they attribute the strength to emerging markets and saying that the world actually need $40 trillion of oil invest in the next two decades in order to keep supply growing to meet the demand. what i've read from other sources is that it's a very optimistic feeling toward oil price demand because again, we have alternative energy that could be a switchover from oil if it stays expensive. mark: what are we seeing from yemen? alix: quite a lot. oil and gas exports made up 90%
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of total revenues and around two thirds of the government revenue. they only produce about 130,000 barrels per oil a day last year but it's very significant for the country itself. saudi arabia and other gulf countries could take the security situation very seriously. we heard that saudi arabia and goal partners will take necessary steps to ensure stability in the region. mark: street smart, what is coming up? alix: we have a fantastic foreign-exchange panel for you. we will be talking with the head of global strategy at nomura as well as the street -- the senior goldman fx strategist. we will talk about the euro calls, why they see it going up and went. it will be a fantastic view hours. if i can say so myself. shameless plug.
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mark: it'll be a fantastic two hours. they with us. -- they with us. -- stay with us. ♪
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mark: the nasdaq is above 5000 and within spitting distance of matching its bubble era record. blue-chip is fueling his advance to the milestone and above. scarlet fu shows us how the sector's of cash and earnings prospects differentiates them from the rest of the aging bull market. should this be raging bull or aging bull? scarlet: aging bull in a lot of people's minds, because they see as expensive can -- relative to japan. big tech names are compelling for a bunch of reasons. darting with their strong balance sheet -- starting with their strong balance sheets. my first chart is from blackrock in february. what it shows is the tech stocks in the s&p 500 have the lowest ratio of net debt to market cap, -3%. far left. you can see everyone of has a
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positive ratio. health care is the least levered sector with a ratio of 2%. and he goes on we have to utilities and 78%. by the way, we excluded financial companies here. the fact that the attack is the least levered is for a couple of reasons. the first is because of capital return to shareholders through buybacks and dividends. also they are more shielded from high interest rates when the fed will begin to eventually interest -- raise interest rates. we don't know when that will happen, but at some point they are headed in that direction. mark: the companies, they are not always cash -- they are sitting on all of this cash. but we are not talking about the facebooks and such. scarlet: although facebook is up there. the tech names still pack a powerful punch. apple, cisco, google, and microsoft, these four names are all mature tech names, three of
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which were around when the nasdaq hit its records the first time around. only google had yet invented. together, they had more than $360 billion in cash reserves as of february. that is equivalent to almost one fourth of the total corporate cash holdings in the u.s. tech companies also have historically low payout ratios, so there is room for them to in food -- increase their payout ratios as well. mark: the start of a earnings and the impact that the strong dollar might have on multinationals like intel, which cut it forecast. scarlet: and those strong dollar is one reason why. it is still stronger relative to other sectors in the global done and that global demand dynamic. whether you are looking at topline, bottom line, or both. this is our next chart here. on the far left, more than two thirds of tech companies, the yellow bar beat earnings-per-share estimate compared to everyone else. the majority also talked sales
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estimates, the second set of bars. and when you look at the third set of bars, the company that beat on the top and bottom line 48% of tech companies versus just over a quarter of everyone else. mark: scarlet, thanks so much. get the latest headlines at the top of the hour on bloomberg radio and streaming on your tablet and on that doesn't for this edition of "bottom line" on bloomberg television -- that does it for this edition of "bottom line" on bloomberg television. i will see you on tuesday. ♪
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alix: welcome to the most important hour of the session. 60 minutes until the closing bell. i am alix steel. this is "street smart." we are seeing the dollar weakened while oil rises. the german chancellor, angela merkel welcoming greases prime minister. -- greece's prime minister. "street smart" starts now. ♪ alix: here are the top stories that you are watching ahead of the closing bell.


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