Transcripts For BLOOMBERG Bloomberg Go 20160211

If you break down the markets, they are having a rough ride. Matt, when you look at the u. S. Dollar strengthening and oil prices plunging, it seems the only possible catalyst is opec, the ecb, and the fed working together. The block. Matt the looks like the market is trying to spank this out of those groups you just mentioned. 40 on s p futures. 3. 36 on dow futures. Japan closed hong kong was down big. In europe, we saw bigger moves. 40 in paris, down 4 . The dax down almost 3 . At one point it was almost down 4 . Look at eu banks. You knew we had to watch stocks jen earnings. Even though earnings grew, they missed estimates. That has been a big concern. European banks have been a concern after Deutsche Bank. Socgen down. Hsbc is down four and a half percent. Interesting story we will get to about the capitulation of hsbc to investment bankers. Freezee saying we will pay raises, then two weeks later say that is not a good idea. They will continue with plan to pay raises. I was going to show you the stoxx 600 and individual stocks, but i think the debt market is huge part of the story. Stephanie flagged portuguese debt earlier. It is a small market, but if you monitor, yourb world bond monitor, you can see the momentum index. There are big bars with the price action in the portuguese debt. It is up 80 basis points in yields. Most yields are collapsing around the world. Investors are selling off portuguese debt. That is interesting. You can click in to the graph to see the yield skyrocket. That is not the case everywhere else. Theu. K. Guilt is where biggest action is as far as a drop in yields. Most are falling. You can see it is down to 1. 25 . In the u. S. , we are looking at 1. 562. Yields in the u. K. Are much lower and they do not have the have, org up that we the rest of europe has. Incredible price action. Investors have been hiding in the yen. It has had its best year against the dollar since 1980 eight, even though japan is pushing to negative rates. Ou can only buy 111 for 1 opec is in talks with iran and russia has not been enough to drive the price up. 26. 35 per barrel. Stephanie given what is happening with oil prices, this is when we could cen p Companies Move into default territory. We are saying, there should be takeover targets, they cant be given their leverage. If you have one billion dollars worth of leverage, your costs are 300 billion dollars, and making 200 billion 2 million a year, it doesnt work. Yesterday, Goldman Sachs screened 33 different e ps and said these are the ones likely to make it out. Marathon was one of them. That is if we have oil at 20 a barrel through 28 teen. They did not screen at 25 a barrel. This is worrying. Stephanie with oil prices where they are, this the Smaller Companies look worthless as a takeover. You cant make money. Yen is one Place Investors are putting money. Gold is up, too. We have not been up a level like that since a year ago. Since back in march was the last time we held a 1200 level. Lets go to vonnie quinn. Vonnie the u. S. And russia are disagreeing over a truce in syria. The u. S. Wants the ceasefire to begin immediately. Regression is proposing march 1. The u. S. Believes moscow once enough time to crush rebel groups. The u. S. Senate voted to impose sanctions on north korea days after north korea launch a longrange rocket. People,s penalize companies, and businesses that help north koreas missile development. A standoff at a wildlife refuge in oregon is about to end with the last four occupiers turning themselves in today. Fbi closed in on the encampment, leading to a phone conversation between the supporters. The leader of the standoff has been arrested. You. thank we now have to get back to markets. So much news is out of the markets. We had janet yellen testify before the house. She said she is paying attention to the markets. Does that make you feel better or worse . Krishna she is paying attention to the markets, but not exclusively. She is hang attention to the labor markets, putting the fed in a tough spot. Theyre worried inflation might pick up because labor markets are getting tighter. Until you see some weakness on the labor front, she doesnt have too many things she can do in respect from backing off of the tightening path. Stephanie she did not give us any reason to feel confident. Without any catalyst, the response is the World Markets continue to drop. Is struggling. D it doesnt have many options. The markets want to lead. They want to be reassured. What can the fed say to do that . The underlying problem is they are running out of ammunition. Concerns are building. The fed is out of tricks. I wouldnt go that far. If the fed wanted to help the market they could either they dont want to because of inflation. It is about the labor market being tight. The Current Situation is the feds own creation. They could have stayed away from tightening in december and let the economy improve. They decided they were too committed to the phillips curve in a world that is deleveraging. The way it is turning out might end up eating one of their biggest policy mistakes since 2008. Stephanie matt miller loves this chart. Matt i have the sickest chart for fed watchers. An indicator that puts the taylor rule with Bloomberg Financial conditions index, showing where the bias should the. In 2009 we were way down. These are the different qes represented by the flags. We are climbing to a neutral bias. Almost to the level where this indicator shows the feds should be ready to raise rates. Krishna the case where the feds to raise rates in a normal environment was solid. Unemployment below 5 . It is not a normal environment. The world is dealing with deleveraging. That will take a while for that to play out. Until that happens, they have in an a stick of dynamite closed chamber. Clive you said if the fed wanted to help the markets, they would be able to do that. What would they be able to do . Krishna if they say they are off of the tightening path, i guarantee you anything i would say that markets will rally. When the markets started going down, the middle of 2014. Credit markets. It was the first time the fed started talking about tightening. Ever since then markets have been in a tizzy. Surprises move markets, but then the fed would have to deliver. What comes next . How do they loosen . This will be draghis problem next month or two promised the markets action, now he has to deliver. 25 basis points is a stick of dynamite . Krishna it is about regime change. It is the fed saying that we are now on a tightening path. The Global Economy wasnt ready. We are seeing the results. Clive the party backed up from that position . Krishna they have. The markets are discounting. The equity and credit markets, which were overweight risk going into this, are reacting more violently. David we have the advantage of knowing what janet yellen did say. She did not say she was taking rate hikes off the table, but suggested cuts. Think itlen i dont will be necessary to cut rates. With that said, Monetary Policy is not on a preset course. If it turned out that would be necessary, obviously the fo one c with to what is necessary to achieve the goals congress has assigned us. David all options are on the table is how i interpret that. . Rishna what can she do to constrain moving toward active Interest Rates is a problem in u. S. And europe. In europe, theyre going to put qe on the table . I doubt it. Should further easing the necessary . This runs out of control. There are no tools left. David we will talk about negative Interest Rates. Recently japan went negative. Is there any reason that they work . Krishna negative Interest Rates . They should . David that is not a question. Krishna if you look at the empirical evidence if negative rates have supported growth come in the evidence is there. It is probably thought as overwhelming as we would like. That if you dont take rates to negative territory in places where you start with zero, you have no shot of getting the economy going again. That itt guaranteed will lower five economic growth, but it is worth trying because the cost is modest. The cost, in realistic terms, is about thinking systems and banking stocks being hurt. That is why janet yellen is being careful not talking about negative rates. Stephanie look at what it has done to European Banks. They are saying lets get back to basics in a lending business, what money can you make in a negative rate environment . Krishna you can make money, but you have to have the infrastructure. That will take time to develop. Clive something very interesting about zero lower they and. The lower band is not zero. Central banks can push past that a little. First of all, you put pressures on banks. You are in uncharted territory, so you are adding to the mood of pessimism. Then the markets realize, there is a lower bound. We dont know where it is, and we know it is in zero. There is an asymmetry here. You cannot press into negative intotory the way you can positive territory because you turn the world upside down with negative Interest Rate. Think of the political salience. To get paid. Going borrowers will be paid to borrow. Stephanie the markets are not a good thing. We arent getting regulation, monetary, or fiscal policy changes. Krishna memani, the ceo of oppenheimer funds, and clive crook. We will be covering Janet Yellens second day on capitol hill. Chill testify on Monetary Policy before the Senate Banking committee at 10 00 a. M. Eastern. Much global volatility and negative Interest Rates are weighing on their Balance Sheet. Vonnie heres your latest Bloomberg Business flash. Stopping local governments from taxing the internet. The measure is expected to be approved today. They will have to phase taxes out by the summer of 2020. Tesla is rising in premarket trading. They forecast global deliveries will rise 8 this year. Investors are concerned tesla cannot make cars fast enough. Twitter added no new users in the fourth quarter. Quarter thatst missed estimates. They are down 35 . There is a question if Ceo Jack Dorsey can turn the company around. Stephanie we are going to europe where socgen reported earnings the interim deputy ceo take a look. The weight of our product in a fixed income market. It is fair to say that in the frequent part of the year, the product has been lower. It links to the instability of the market environment. What is the latest exposure of the decision to oil and commodities . If they take the oil and gas industry, we represent 3 of a total exposure of the group label. 2 3 is with investment grade. Current oil price of manageableit will be and our global bank equities will be in the same order of last year, 25 basis points. Is it a french issue . The European Banks today are trading lower than u. S. Banks, for example. If you take the decision, we are in the up range. The lower multiple for European Banks is valuing to the Central Bank Policy which will maintain a low Interest Rate for a long time and will impact the return of our banking activity in europe. Down and things slow are only getting slower. We will freeze pay. Two weeks later, im not saying there has been an employee revolt, but employees dont like that and the freeze has been lifted. What is going on in the banks if business is flowing and they cannot make money, and cannot pay. Suddenly employees are in charge . Krishna employees are not in charge, but retaining talent is something that every company has to be with. You pay what the market bears. Stephanie is the market realistic . Come tohave to have a jesus moment . If you arent making money, why should you get paid . The banks areces trading at, isnt that the larger problem . People are worried. They dont see the answers coming. The were Interest Rates are not the answer for the banks. That is what theyre waiting for when draghi next speaks. To readjust toe the European Banks Balance Sheets. At the same time they have to downturn the markets. They may be skeptical about the book value. Stephanie which is why they wanted to freeze their pay. David they are caught in it. Clive there are two dimensions. One of the speakers was saying the Regulatory Environment is shifting. One of the speakers from london made that point. There is some certainty about that. Ae Deutsche Bank is particular question about a very important stabilizing innovation that regulators stressed. People are now having second thoughts if that was a good idea. A lot of things are moving to give people cause for concern. There is no clear leadership to get the industry out of this mess. Having said that, i think valuations in European Banks in in general,banks have increased tremendously. While you relations have improved. While the probability is lower, i think leaving them for dead would not be justified. Stephanie you can buy all of the Deutsche Bank shares you want. David youre both staying with us. Think you. Be in trouble. The secondlargest economy may see losses in its banks four times that of the last u. S. Banking crisis. That is next on bloomberg. Stephanie this is like a misery montage. Stephanie you are watching bloomberg. Still with us is clive crook and Krishna Memani. We were talking about Deutsche Bank. It is selfinflicted. First was the bank of portugal with their bail in at the end of the year that created concern. Went Deutsche Bank had losses, they effectively put the cocoa Coupon Payment in question. They control over the timing. They didnt have to do that. I dont know what they were thinking. , we can stillsaid pay our bills. You createat is all a financial crisis. A bank like socgen has to say they can pay their coupon. None of this was required or needed. Stephanie dont go anywhere. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voice mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Make your business phone mobile with voice mobility. Comcast business. Built for business. Watchingu are bloomberg. Looking at oilre prices continue to drop, not just affecting oil market, but affecting corporations around the world. Markets continue to slide. The dollar continues to strengthen. We heard from janet yellen and. Ere what she has not done what are investors doing . If you take a look at the futures market, s p down. Nasdaq down. It had been led by European Banks. It doesnt seem like any sector is safe right now. Still it does, oppenheimer funds, Krishna Memani. We are going to get to you and your morning mustread. Says it isth korea afterg a line of trucks it was pulling back on them manufacturing of. States will curb a from power plants. California, new york, and washington say they will press ahead. Aree are too few there two fewer candidates. Fiorinaristie and carly both dropped out. Both of them finished in the back of the pack in the New Hampshire primary. Im vonnie quinn. David tom, we had been looking for some glimmer of hope. You have a must read is usually cautious and gloomy, came out from an optimistic must read that we are finally clearing the system. We are celebrating a clutch of distress sellers having to liquidate month after month. This is the exact reversal of what happened during the commodity boom. Market routeck worth celebrating. Have suche centralbank distortion. Maybe it is balancing out. Krishna it may balance itself out, but in the middle of all of this, it may cause the u. S. Economy, which is the only economy that is actually growing at a decent pace, to slow down to a much slower level. That would be helpful. Tom clive, you are an expert. There is no aggregate demand, market are in massive turmoil. Morning, these other nations arent essentially going after the United States, are strong dollar. Clive these things are all about confidence. When you are in a worried mood with the way the markets are right now, news that is ambiguous is interpreted in a bad way. Classic case falling price of oil. That is good for some people and bad for others. We are tearing are here out. Stephanie unless the Mario Draghis of the world are saying, i will do whatever it takes, nothing is good enough . Say that withnnot credibility. How many times can you say, i will do whatever it takes, when there is nothing left to do . I think that is overstating that. There is some truth. If the fed comes out in says they will not be tightening policy, you will definitely see a turnaround in the market, and that in turn, will probably be supportive of the u. S. Economy. Buthave a momentary boost, it is diminishing returns. Clive if they announce negative rates, that would be a surprise because the bar not expecting it. Krishna i dont think they have to do negative rates. They just have to say that they will not be tightening policy. Very different. Clive what does that by them . That buys them like a week. Krishna that is not true. Because of what they did over the last 5, 6, 7 years, the u. S. Economy is growing at 2. 5 . It is a whole lot better than zero. They did actually deliver, but by the middle of 2014, as in labor markets tightened, they started believing in the phillips curve which it much. Thed you talked about increasing between the haves and the havenots. Krishna said earlier, janet yellen is looking at the labor markets. Maybe they are not hurting. Tom that goes to one of the thees that we heard from sweden Central Banks all he said is that i am focused on sweden, i am focused on sweden, i am focused on sweden. Why is janet yellen any different . Were asking them to take a monetary view. Stephanie that is why she is stuck in a quagmire. Last summer, Christine Lagarde says, help me, help me, help me. And janet yellen says, that is not my job. Tom that is true. Christine lagarde is looking for janet yellen to solve the financial challenges. Krishna the fed is the largest central bank in the world. If you look at the position of the dollar, she has special responsibility at the risk bank does not. If she ignores it, the dollar will depreciate and that will lead to a slower economy. Tom can i be rude . And oppenheimer funds, with your Massive International deal, how do you adapt to unicredit trading for a martini price, or a Deutsche Bank . If you have a three to fiveyear view, some of these financial stocks are extraordinarily a good value. You should be looking to buy them. Stephanie you have to let matt miller and here. Matt it shows in white, the stock 600 banks index. The chart is normalized, but you can see we are trading at the European Banks are trading at half at what they were last year. Question is do you buy quality u. S. , or fishing internationally for the beleaguered who have been dragged out . Krishna i think you can do both. The right thing to do and a global bank and current environment is to spread your bets, and buying some European Banks and buying some european and buying some u. S. Banks makes a lot of sense. Stephanie we are going to talk twitter. Company down 35 . 92. 4er reporting a loss of 92. 4 million. Expected to miss analysts forecasts. This is such an important story that our own Bloomberg Contributor has woken up 4 00 a. M. California time. Walk us through this. What is happening in the house of dorsey . Happened is that jack has tried to lay out a path to do with the biggest single problem this company has. The problem is this stagnation and decline in the key metric for the company which is this monthly active user around 3 million. The company has been able to get around this stagnation. This is not the First Quarter that growth has flattened out. It is been happening for some time. They got around it by creating by increasing a trail user. Masked the decline of users. Until you reenergize user growth, youre stuck. Stephanie is jack in the Current Management Team the right group to do it . If that is the key metric, anecdotally, i took a look at how often they tweeted themselves. Night,lly, super bowl which they did. Can come only word i up with this shameful. It is embarrassing that the company does not embrace its own product. That is one of the point dorsey was making on the call last when twitter is live, you can see you should see all of the it would have been great if jack drafted one original tweet during the super bowl, but he didnt. What are the chances that twitter is becoming yahoo . [laughter] paul the chances are very high. The inability to grow the with a veryes you profitable asset. Twitter could cut costs materially and actually produce a significant money and grow revenues better than 30 yearoveryear. Number growing the court of users, that is a terrible business for them to be in. That is just managing a declining asset. Can what they announced last night change that . It is not clear that they can. It is catching holes that should have been patched years ago. Tom hall, great speaking with you. They said twitter is the most important social media. Isnt that very valuable to google to be associated with something that important . All absolutely. This is one of the things that supported the stock. Google has looked at this company multiple times, and there really isnt clear that anything has changed. Kedrosky, Krishna Memani and tom keene, thank you. For me, it blows my mind that the board barely tweets. Dont you think they should on super bowl night . David next on bloomberg , even luxury consumers are pulling back on purchases. Discounts toeep entice consumers to shop . That is all next on bloomberg. Stephanie welcome back. You are watching bloomberg. Tim assad join us talking regulation and Global Markets. Vonnie the worlds secondbiggest Mining Company saw a plunge and Commodity Prices. If the 51 . They could cut their dividends by as much as half. Hsbc has canceled a pay freeze two weeks after it was in post. The bank listened to feedback and decided to have to find another way to save the money. The hiring freeze has stayed in place. David markets are selling off around the world, futures are down into the red in new york. For a look at european markets, caroline joins us from london. Oline it is a beautiful brutal day in europe. Euros. Fell 300 it is the banks feeling the pain at the moment. The, spanish, greeks peripheral countries in the eye of the storm. Not a day to have your profit coming in below under analysts estimates. The clouds keep on growing. Money going into the havens. World bonds are on the terminal. You can check out what is happening, german, 10 year yields. Trading atr story, the lowest on record. Sell at aanaging to record low. Keep an eye when the central bank does not do anything. Stockstill fall in sweden. David the global slowdown is hurting luxury retail. Companies like her mays are seeing hermes are slowing growth. You have a unique viewpoint and to the global consumer. What is your business tell you is going on oblique . Is very contracted. Everyone is talking about china. It is heading to a new nominal Business Model. , some countries in europe, you can see the consumers spending more. Are your sales in china rising, and how fast . We had been struggling over the past three years. That, i think everyone under that there has been a double impact. Private consumers have been spending less. We feel that is getting back to normal. Going to what is happen this year because things do not look good . Type of consumers are not necessarily sensitive to the stock market. Then why were you struggling over the last three years . It was because the end of the gifting. You have private consumers coming back to normal. There issue is that not a lot a change in the way business works. We have talked to a lot of luxury retailers who feel they are hitting a solid place in china. So you think you bottomed out in china . Yes. Tougher for the Business Model. You have 60 million new households entering the middle millionery year 16 new households entering the middle class every year. It is a new Business Model. The potential is there. The potential is huge. We have to address it in new ways. We have launched a new campaign. We need to appeal to consumers. Stephanie matt miller, now that we are in a scenario with all tehry, the habs are haves are quickly becoming the have not. Cannot they can afford wine and alcohol. [laughter] this charts womens handbag inflation. Pink, and inpi in personu have the womens inflation. It is much higher so they have more pricing power. Regardless of the stock route we month,en over the last it seems like people are still willing to shell out for luxury goods. Brandnie hermes is a that many people say are bulletproof. They have been maniacal about their production numbers. If they die down, what does that mean for the overall luxury t . Rket is mar chris tourists are not buying in the United States anymore. Digitallyvery smart and very strong and Companies Like countries like japan. Downside, on the upside, there is a lot of money that people are spending, are byy more likely to hire higher end. You need to give much more content to the product. You bring your knowhow and except an appeal to consumers. I am talking about the campaign because it is very important. The way you need to address the people now is for their own private needs. The rest of the world is rather healthy. If you think chinese consumers, they are buying a lot as well. They are going through this transition but there is no end the possible hard landing. We are back to a new Business Model. This new Business Model challenges us. It is not going to be easy. We are convinced the potential is there. Stephanie regionally, where . When you say the potential is there, we are looking at Global Markets, and there are no bright spots. We are booming in the u. S. Africa is a rising star. We keep saying it is a small consonants, but it is a big part of our business. David that is encouraging. Thank you. Next, china might be in trouble. The secondlargest economy may see losses four times as high as a u. S. Banking system. That is next on bloomberg ,. Stephanie you are watching bloomberg. Are watching the markets, keeping an eye as the selloff continues around the world. Futures down. S p down. And nasdaq. We are seeing European Banks lead the charge and oil continue to drop. The u. S. Dollar strengthens. Looking for a bright spot, a catalyst to turn things around. We have not seen it yet. At the top of the next hour, i will be sitting down with tim assad talking regulation in a volatile market. , thank you for joining us. Saysanie janet yellen plunging stock prices pose an issue to the economy. It is another global selloff. The u. S. And europe agree on oversight derivatives. Speaking to the head of the ftc. Impact ofok at the developing economies and what that ended the and what that can do to the u. S. Stephanie welcome to the 8 00 a. M. Hour of bloomberg. Im stephanie ruhle. David and im david weston. Delighted to have you. We are going to start with first word. I mean, lets go to matt miller. Big your party. First off, check out u. S. Futures, down 35 . Butave been a little lower, we are near the lows of the session right now. Kongroblem started in hong , but bled into europe. The European Banks are such a worry. Click of a european indexes. Check out the european indexes. These are big losses. The reason is the banks. Analysts estimates. French banks if we can pull up the shares, they are down 11 11 , 12 . Deutsche bank shares down as well. The stoxx 600 has come crashing down almost 30 year to date. In big loss there. I want to quickly point out on my bloomberg right now, check out my bloomberg, i got u. K. Debt levels at a record low. Yieldingure debt is 1. 23 . I have not been able to find a lower yield than that. Just getting absolutely crushed. Heck out the s p since the rate hike in december, how far have we come . ,ooks like we are down 11 , so not so bad. You dont see the strength you we weree because assuming divergent Monetary Policy. In january, everybody thought the dollar was going up. They have lost out. A little down 1 , but so interesting. Check out oil and gold these commodities have been moving the markets. Oil has been moving the markets and gold is a place where people are hiding. Year,out the u. S. 10 yielding less than 1 1. 6 . Where riskoff his big today. Lets jump to vonnie quinn. Nato is sending three ships to cope with the surge of refugees heading to your. More than 400 people have died trying to sail from turkey to greece. Nato wants to crack down on smugglers. One International Group says refugees are entering at a rate of 2000 per day. In just a few hours, the standoff at a wildlife refuge in organ may be over. The occupiers say they will turn themselves in today. They closed in on the encashment last night. Standoffr of the jailed leader has been arrested. Democratic president ial Bernie Sanders said his campaign had a recordbreaking day of fundraising after winning the New Hampshire primary. His campaign took in a little more than 7 million in 24 hours. Hillary clinton is picking up a key endorsement. Day. L is 20 for hours a im vonnie quinn. Stephanie in just two hours, janet yellen will testify befores a senate committee. Greeley isrendan there. What did you take away and what does janet yellen need to deliver today . Brendan i was pleasantly surprised by the sophistication of some of the members of congress and what they asked janet yellen. Were asking on the interest of excess reserves. It is how they manipulate the Interest Rate right now that is relatively new. It may prevent them if they ever need this tool from moving into negative Interest Rates. There is a lot of backandforth. Janet yellen said, you are congress, you tell me. Is ai looking for today little more elaboration. One thing she said in her prepared remarks yesterday, which is answering the question, does terminal in the markets affect the economy . Take a listen. Financial conditions in the u. S. Have become less supportive of growth. With declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar. These developments, if they prove persistent, could weigh on the outlook for Economic Activity in the labor market. Although declines in longerterm rates and will prices provide some offset. Brendan what i took away from that is the answer is, yes, lower equity prices mean less of a wealth affect and higher borrowing costs with some people with lower Credit Ratings may not be able to gain access to financial conditions. Thanks. I want to talk about what all of this down in washington means to you and your business and your investment decisions. The overall position of Monetary Policy and the u. S. Continues to be monetary. Markets have sold off over the past several months. If you think about the emerging markets and the effect of what janet yellen said, i would say verying markets are facing significant headwinds different from the fed. The fed was very relevant for asset prices. Since then, we have had a series of negative shocks with china, Commodity Prices going down. Those are much more important issues right now for emerging markets. Important is the strength of the u. S. Dollar . That is a very good point. It has been operating through the e. M. Complex because Interest Rates are already close to zero aired the strength of the dollar the strength of the dollar has not been good for e. M. And a context which growth. Ynamics we have seen a recession in the manufacturing space from around the world, which is pretty much the story of emerging markets. The strong dollar is not supportive of that. Alexis, we are focused on janet yellen. In your world, does anyone care te . In the world of tech, we are so focused on being costefficient companies. , bute this stuff going on great businesses are formed in good times and bad. The message is to keep our head down and keep running an efficient business. We still want to go into work and create value. Stephanie if you are an emerging market company, i dont know if that is the case. Alexis there is a negative world full of fact. You have emergingmarket companies that have borrowed in dollars and are trying to do now that the dollar is so expensive and to reduce their debt costs. Is that a dynamic you are looking at. Absolutely. The way to link all that is is struggling is through the credit channel. Lead toonditions misallocation of capital. Credit has been flowing to emerging markets to the corporate sector that has led to capacity and many different places. That is the story of oil and the u. S. That is pretty much the story in china. Credit conditions are starting to tighten everywhere. That is not good for emerging markets. David brendan, thank you for your help in washington. You are going to be staying with us. Coming up, the chairman of the Trading Agency joins us to join us about the agreement under israel. That is coming up next on bloomberg. Earnings will rise 2 in the u. S. Will continue to have any kind. Says thatge company it will reduce profits by 4 . Expedia shares are soaring. Earnings will grow by as much as 45 this year. Twocompany is integrating applications. China is making a pitch for what could be one of the biggest ipos ever. China has proposed a deal listing for saudi arabias aramco. In return, chinese funds will make large investments in aramco. No one is commenting. Stephanie . Stephanie u. S. And european regulators have reached an the 553 agreement on trillion derivatives market. Masted joinsmothy me from washington. Alleviate that fear . Tim i think Market Participants can clear transactions and transact on either side of the atlantic with confidence. What we agreed to yesterday is how we will move forward. We agreed to harmonize our regulations and agreed to basically the steps that each of us will take to bring those rules closer together. It is very good for the Global Market. Stephanie you mentioned confidence. But the market has right now is massive fear. Do youregulate feel we need more regulation now because there is concern that in panic times, derivative can stress the market even more. Do we have the right regulation in place . Coming out of the financial crisis, we are putting that in place. What we saw out of the crisis is that you could have excessive risk come up. The leaders of the g 20 nations agreed to take various steps, and that is what we have done. In the u. S. We have put those rules into place. We now have Capital Requirements on swap dealers, margin requirements, putting more transactions into Central Clearinghouses, which was yesterdays agreement was about. There is still more work to do, but i think the system is much more resilient today. If this system does get stressed massively, especially as it relates European Bank, do you not think we will be in a situation that we will point to things like Credit Derivatives and not cause them weapons of mass destruction . Again, that is why we put in this Regulatory Reform framework. Margin requirements, Capital Requirements, requirements for Central Clearing so we can monitor and mitigate the risk. In the financial crisis, the problem was, you had large Financial Institutions that engaged in a lot of swap transactions with other large Financial Institutions. No one really knew anything about what the exposures were. It was like this messy, spiderweb of interconnections that no one could see. We brought that out of the shadows and put a lot of these transactions into Central Clearinghouses. Again, we can monitor that risk and reduce the risk in part. The keeping on that now is to make sure the clearinghouses are strong and resilient, which was yesterdays agreement was all about. Yesterday, ceo Morgan Stanley says people forget the power of derivatives and the pressure it can put on stocks. You are not concerned about that pressure . You think it is normal Market Action . Tim i dont make predictions about stock prices. My job is to regulate this market so that we have Greater Transparency and greater Risk Mitigation and also to ensure the stability of the Financial System overall. Sorry, go ahead. Stephanie do you think that regulatory body a safe and in place . If we are facing panicked markets, are we going to look back several months ago and said, if only we had the funding we could a protected the system more . Morewe have a much resilient system today. We have seen a lot of volatility and a lot markets. We often see that. The framework we put in place today though gives us much higher capital standards and banks. We have capital and margin standards with dealers. We brought this whole market out of the shadows so we can see where the risk is. In a lot of surveillance. I would love to have a bigger budget so we could do more surveillance. Both on the wrist side and the market side. We need to be doing more. Tim, create a safer marketplace especially in times of volatile markets. Thanks so much for joining us. Massad. Grantl be talking to adam about his latest book. David welcome back to bloomberg. We have been talking about the markets all morning long. That brings up questions of leaders of major corporations. Why do some people need to be created at these times is to s . That is what adam grant is addressing in his book. Welcome, it is good to have you on bloomberg. Your book is a matter of corporate leadership. What makes great leadership at a company . Stephanie because we needed right now. The most important thing a leader can do is challenge assumptions and bring assenting opinions to the table, and not say, good morning. Stephanie that get you write to right to ray dalio. Radel you says he wants people to fight. Pimco was embroiled with infighting. Adam i dont think fighting is the point. It is for people to speak up with minority opinions. Instead of firing the person, he replies and says, i am sorry to let you down. Committee to investigate the situation. Stephanie alexis, you are a cofounder of a company. When the markets are horrific, how difficult is it for a founder to get real, get honest, moves . E big alexis we have an advantage as a privately held company. For the public ones, i cant imagine. It is easy to talk about being a nonconformist leader, but when you have to go into that Earnings Call every quarter, how do you reconcile the two. At the end of the day, you are still working for the shareholders. Atm when you are looking the nonconformist when the market is very poor, they are standing for values and principles they believe in. That is the time you have to be clearer than ever. Stephanie when you listen to all this, these beautiful management principle ideas, in your world, do they matter . Adam, i would be interested to hear your views and apply these concepts. In the emerging world, the story over the emerging markets is about faster growth. That has not been there for a number of years. Could you share some of your thinking applied to that challenge in emerging markets. Adam i could, and i will. One of the most important things a politician can do is willing to be wrong. There is so much pressure to be consistent and say, this is who i am. People are not happy with flip floppers. Say, ility to misunderstood with the market was going and did not have a good read on the economy, and i am going to shift my understanding, we need to see a lot more of. Alexis, you can bet your company during a time of stress and turmoil. How did you do it . A couple of forces kind of came together and i was so grateful when me and my cofounder came back to reddit. There is an advantage that cofounders have when shaking things up. Possibleink it is a saying for a nonfounder to come in . Siliconen you look at valley startups, when you try to change the cultural values, even if you change them and a good direction, startups are likely to fail because people have a harder time adjusting to working. Founders blueprint the dog with the lampshade on. Yahoo and facebook have much higher revenue. Where do you guys fit on this r d . You have a lot a project you want to accomplish . A lot of it is low hanging fruit. Has one million monthly accesses. Havef the advantages we with steve, he is a product builder. We are going after easy improvements in design. Matter of getting programmers to ship. Back, we when we come are going deep on tech. Stick around. David you are watching heremberg. We are with the rented cofounder and black Senior Investment strategist in emerging markets. Of the to get a check markets. Blackrock Senior Investment strategist in emerging markets. Matt a recovery in the european markets in the last half hour. S p futures 30 right now. Dow jones 257. Banks,ake a look at u. S. How they are trading in premarket. European banks are the real problem over there. U. S. Banks down here as well. Not to the same extent. Jpmorgan down 2. 5 . Bank of america down 3 . A similar loss at wells fargo and citibank. Amazon come interesting story today because they announced a 5 billion buyback. Shares are still down. Every Industry Group will tried trade down. Amazon not unscathed by that. Came out with a Production Target between 80 and 90 thousa nd. Tesla is up 4. 1 in the premarket. Let me give you the initial jobless claims. 269,000. The survey was for 280,000. Doing a little bit better than the survey. I used the ego go function to follow economic release news. You can also follow commodity release news there as well. A very useful function, it shows us the job claims number, which is not very different from the forecast any week for the last couple of years. 269,000 compared to the survey for 280,000. Trip advisor up 4 . A number of analysts coming out and sing expedia is a by here is a buy here. The u. S. Pushing russia to reach a ceasefire in syria. The u. S. Wants the ceasefire immediately, russia saying march 1. The u. S. Is in moscow just want enough time for forces to crush moderate rebel groups. Underway in iran to mark the anniversary of its islamic revolution. 37 years ago today. Cruiseship passengers back on dry land. They weathered a Violent Storm at sea. Royal caribbean says for passengers were slightly injured four passengers were slightly injured. David lets get now to the morning meeting. Geraldo rodriguez is still with us. The emerging markets have a Significant Impact on the u. S. Economy, particularly china. Janet yellen said yesterday that as is always the case, the outcome is uncertain. Posing risks to economic growth. Can you talk about one specific aspect . The u. S. Dollar denominated debt, how big is that . Gerardo it is a big problem. In china come in brazil and turkey. In china, in brazil and turkey. It is related to the recent phenomenon weve seen in economic prices. Most foreign debt has been associated with the mining and energy. The nonfinancial corporate sector, that has used the easy Credit Conditions that have dominated the environment after the financial crisis to actually increase investment. That has led to overcapacity and that overcapacity is one of the ,lements driving prices especially in oil markets, down. David it all ties back to oil . Absolutely. The connector of all these is the credit challenge. Why is it that with low oil prices that should benefit the consumer we are having all these destruction of value in markets . The only way to understand that is through the misallocation of capital that the easy financial conditions have created. In the u. S. And the commodity sectors in china are creating these decent thisn or he inflationary pressures. Inflationary pressures. David the emerging markets still to be watched. Stephanie im watching twitter. Shares in the red as the tech giant reported fourthquarter earnings that Beat Estimates but revealed its user growth has stalled. Firstquarter sales will fall short. Alexis o haney and is with us. Alexis is with us. We have to break this down. Twitter losing their monthly active users. Why cant they turn this around . I was listening to the show earlier. Adams attitude about nonconformist leaders i think jack dorsey is a good example of that. They have a company that has down ad by their users path of that is probably not healthy for the company longterm. Jack has come in and absolutely realizes this service is way too hard to use and very opaque for ordinary people. Create aing to turnaround in terms of how the product appears to the user. Right now is not the time to expect a lot of user growth. The interesting thing to me about twitter, revenues are still growing healthily. That is a super impressive thing. Until twitter becomes a product that is easy to use, it is not going to grow. Stephanie you are trying to eat twitters lunch. What mistakes are they making where you are trying to gain ground and beat them . Even today, our monthly active users is about 10 million, which is almost double twitter. David that is amazing. We have a significant audience worldwide that are using red in spite of very clear and obvious product needs. Dit. Ead on native mobile come half of our users consume reddit through mobile. Very intimidating and disorganized, frankly. Im an old guy. David its amazing to think about reddit being double the users of twitter. Twitter is still worth 10 billion. There is this fascinating piece in the times today where he speculates twitter should become a nonprofit like wikipedia. Which i do not agree with. I think that is extreme. Twitter is like a National Treasure that is hard to define as a business. That is kind of a problem for the company. It is all fine and good to talk about original thinking and nonconformity and big ideas. I learned the hard way, when you lead, you dont want to lead by too much. If you lose all your troops, youre out there by yourself getting shot at. There has to be some balance here between the nonconformist big idea on one hand and occasion on the other. Adam on twitter, one of the big questions, is their revenue beyond ads . Are there other models . Diversifying on that is something they will see consideration of. Add revenue is the one place yahoo will make it happen and they continue not to do that. What do they have to do . Oh, my god. How much time do we have . Stephanie if we are about leadership or turning it around, ken Marissa Mayer turn the ship around can Marissa Mayer turn the ship around . Twitter is not losing users and neither is yahoo yahoo has one billion users. How can yahoo have one billion users and be viewed so unfavorably . It is not growing, it is not perceived as innovative. There is no excitement around what it is doing. Anissa mayer has taken attitude of a lot of incremental changes and i dont know whether it is possible to have a catalytic event that changes perception about yahoo yahoo how to save stephanie that is your jam, leadership perception. When Marissa Mayer says we have complicated morale issues, that is a problem. David they need a lot of work inside his companys big if you are assigned to go inside yahoo m aware would you start they need a lot of work inside these companies. What are you going to do about all these threats . David somebody is out there doing that to you. It is like a red team approach. Stephanie did you do that when you came back . Steve has done a great job through butlked what are our biggest needs right now . We stepped away for a while and it came back to discovery. There are communities on reddit for everyone. Whether youre into the broncos for cars. We do a terrible job of making that obvious. David were letting other people know that its even there, like me. There are ongoing discussions on reddit, but i dont know where they are. Stephanie if yahoo has to have a kill the company exercise, does ibm . No, i dont think so. The interesting thing about ibm to me, this is a big point about Enterprise Technology. Look at how Enterprise Technology has been transformed by a book company. The number one Enterprise Software in the world is amazon web services. Ibm did not see that coming. They could have done it. I dont think they are anywhere near death at all. Ibm is still a super solid save choice in many situations. But they are still too much the safe choice. They have to take risks, too. Maybe adams message about taking big risks applies to almost all these companies. David if twitter needs to move forward, does google buy it . That could be one path. David does it make sense . It is hard for those acquisitions to go well. I am biased. I think it is going to be a big feet to try to bring back the swagger of twitter. Facebook did this with instagram. Theres something we can learn from that. Yes. When acquisitions go well, it is because they say keep doing you. K at youtube buying Google Google buying youtube back in the day. Whatsapp. Facebook has had a good record for this. Google first bought youtube come everyone said google will never figure out video. Look at where we are today. Stephanie theres a lot of cats dancing and youtube videos. When that happened, i said to myself, there goes reddit. It may have had to go through big changes, but it did not get killed by a big old media company. That is true. What they also realize, unlike the facebook and google examples come ultimately, read it was best served being independent ddit is best served being independent again. David thank you always great to have a. Thank you. Always great to have you. We are talking about the real estate that space. That is coming up next on bloomberg. Matt we are about to talk about real estate. Speciallittle tech go edition of battle of the charts. Today, i will be cory johnson beat cory johnson. To congress is about from taxing access to the internet. Seven states now impose Internet Access taxes. Shares of tesla rising in the premarket. Musk says global deliveries will rise this year. Rebellion puts an end to a pay freeze. They canceled the pay freeze less than two weeks after imposing it. The ceo says the bank listened to be back and applied and is trying to find other ways to save money. Welcome ken want to ceo. Son mccain anderson there are pains in the private equity space. Allisle, blackstone, apollo reporting lowerthanexpected profit and none of it make sense because when you talk to investors, they are saying its all about having Patient Capital. It is the holy grail. That is exactly what they have and clearly they are suppling. Suffering. What needs to be done . We are a private company. I have to give props to a private Company Versus a public entity. It is Patient Capital. When you are representing lps than it is a lot easier represent shareholders. It may be a bit of a misnomer to say private equity firms have Patient Capital. A lot of funds by definition, you do have Patient Capital and that is what we have. Private equity by definition, you are looking at longerterm potential opportunity. Stephanie your money really is locked up . Correct. Stephanie what are you doing in this environment . This is a buying opportunity. What we continue to focus on is sectors that have strong demographics that are operationally intensive and hired highly fragment. What we do is in the Student Housing and medical office spaces. We need to be recession resistant. To buy opportunity without competing because of that operational intensity. Have 100 people focused on these sectors and we have an Asset Management capability so when we go to buy, we are not competing against the blackstones and kkrs of the world. We are seeing huge knees prevent driven by capital folks huge opportunities driven by capital folks. On the real estate side, we to continue strength weve seen continued strength. Because an opportunity is not driven by fundamentals of the asset class, but driven by capital flows. China and others play into that, but we are looking and seeing huge opportunities on the debt side. David how sensitive is europe to what janet yelling is doing right now . Janet yellen is doing right now . Interest rates dont really impact what we do. Our the perspective of pricing is based upon where Interest Rates are today. As Interest Rates move up, our pricing changes. We put longterm debt in place that we are not subject to any nearterm we never have a gun to our head from a Capital Markets perspective. Stephanie seeing that lending is getting more and more difficult for banks, banks are only ending up in worse shape, does that mean anything to you today . If banks can end up lending even less, will you end up lending more . It is a huge opportunity for us. The roles the banks are subject the banks areles subject to today present enough a partner for other people in the space. Present an opportunity for other people in the space. Stephanie things have gone significantly worse for banks. Are you changing your strategy or doubling down seeing that they are a bit more crippled . We build our business organically. Debt team twoa years ago to take advantage of an opportunity when it presented itself. We did not know if that would be six months or five years. We are seeing that opportunity today. David what about Real Estate Investment firms . Are there opportunities to buy their debt . There are opportunities there and opportunities from hedge funds. They have to sell what is liquid. At present an opportunity. Stephanie does that mean hedge funds are in pain . Theyre getting margin calls from banks, they are having to mark down their portfolios. Have you gotten calls from people saying please buy my stock now . Yes. Stephanie yes . In the last week. Tell us more. Help us understand this even more. We want to put into context how bad the pain is. We got a call two weeks ago that said we are under pressure, we need to sell. Within three days, we committed to that transaction. Seven days later, we got a call from the same seller. The pendulum swings too far both ways. Emotion iscase where driving the markets and you have a lot of volatility. Some intelligent people and others are subject to that. Stephanie it is the ideal time to be private. Al, you will be back with us. Anderson. Ceo at kayne chartt, we are talking wars. Matt miller and cory johnson faceoff in a very special tech go. Alexis will be weighing in. Our guest judge. David welcome back to bloomberg. Time for tech go, a battle of the charts. Johnson and matt miller. Alexis likes good competition. Cory, we will let you start things off. Terminal,he bloomberg you can map out a lot of data, including how many vehicles tesla made. Number of production 17,000 cars. The more you make, the more efficient you should be when you later over that of Gross Margins for the company, you see this thing some the growth margins are getting worse. The more cars they make, the worst their Gross Margins are. It demonstrates visually how bad they arent producing the things they are kind to produce. David he is layering his charts. Subtle move by the visitor. Matt i think tesla is very good at producing the thing they are producing. My chart shows something similar. White is tesla share scrap in september and blue is false wagon volkswagen. Underperformed volkswagen since that time. People are talking that 70 billion of liability on volkswagens Balance Sheet. If you look at the fiveyear view, believers and tesla have really profited. The stock is up 700 . Musk, believed in elon you were a winner. Stephanie without a doubt, matt sorry, cory. I was one of those folks in that been very happy. I am biased. David my vote doesnt even count. Stephanie a vote of confidence. David i would have voted with corey. the data proves the trouble the company is having. That will show up. Stephanie alexis is biased. We are biased. Thank you. Matt is not going anywhere. Stick around. David we are 30 minutes from the opening bell. Welcome to bloomberg. Bloomberg stock supporter joe cle joins us now. Matt im going to kick it off and show you futures right now, down across the board. 270 five on Dow Jones Futures. 32 on s p futures. We have come off the lows a little bit, but not too much. After hong kong came down and europe opened with stock jens , the market cratered. Take a look at the yeartodate picture. Far haveup and say how we fallen so far in 2016. The s p is down only 10 . I thought i would see a 12 or 13 there. The dow is off 1510 points. A sizable drop since 2015. Take a look at 10 year that. A yield of 1. 59. 10 year debt. Investors are really buying debt, looking to hide in the perceived safety of government bonds. Gold and oil come another story of where investors are hiding, what theyre getting out of. Oil down another 3 today. Futures up right now 41 at 1236. Check out my terminal as far as oil is concerned. This is not a dance that you learn in mexico, it is what happens when the threemonth futures are worth more than the current contracts are right now. We are up to levels that we have not seen since the beginning of 2015. Really getting back to a fiveyear level. 3. 75 seeing thre losses. Stock jen put out a number that missed street estimates and it is down 12 . Deutsche bank off 6. 5 . Nato is rushing three warships to cope with more than 400 people have died trying to sell from turkey to greece. It a once to crack down on record are entering europe at a rate of 2000 predicted refugees are entering europe at a rate of 2000 per day. The recent capture of u. S. Sailors in iran sanders enjoys his best fundraising day yet. More than 7 million donated yesterday after the New Hampshire primary victory. In the Congressional Black Caucus is suspected to endorse hillary clinton. Stephanie it is time now for the three stories that matter most to markets now. One, markets plunging around the world as investors lose faith in central bank possibility to support the Global Economy. Earlier today, the Swedish Central Bank cut its Interest Rate further below zero. We are talking negative Interest Rate territory. Janet yellen will again testify on capitol hill a day after she failed to inspire markets. How important is this to you. Are a private business, but if we do fall into a recession, what will happen . Alexis that is the key question and that really revolves around china. Im not in the camp that believes we are headed into recession. We always prepare our business for that. My business personally profits from volatility. When there is fear, thats when there is opportunity. We are looking for arbitrage opportunities and things that make sense in this market. We built our entire business around would i deem to be recession resistant asset classes. Personally, not hoping for any returns to 2008. There are huge implications for everybody. I do not believe the perception and reality are the same. David at what point does the perception become the reality . You can drive us up into recession. Al there is no doubt that this can become a selffulfilling prophecy. I dont think we are headed there. There is consternation, there is some fear. I dont sense panic. We are still in a correction phase. I think this will play out and be fine. I may be in the minority there, but i dont think we are headed back to a 2008 type crisis at all. Stephanie how troublesome is it for banks . Al it is a certainly troublesome for banks. The reality of looking at bank prices, ive always said it is virtually impossible at this point in time to assess the banks Balance Sheet because you have no insight into the derivative. There is further cause for concern from another European Bank this morning. Shares of frances secondlargest bank plunging after posting earnings that dropped 35 . The bank facing headwinds from record low Interest Rates and volatility with revenue falling by 31 . What struck you about this announcement . Joe this is the latest bank to get hit with these negative outpourings. A poorinsurance with Earnings Report today. Something is going terribly wrong there. Sizesee a bank of socgen with Earnings Report that poor, that makes you worried about that company and the entire Financial Sector and what are investors seeing . Are these banks exposed to poor energy loans . When the worry sets in, people had to sell button. Hit the sell button. Stephanie when you have socgen saying really, we can pay our bills, isnt that a panic moment . It certainly is. It is something you dont want to be forced to say. I do believe banks are in a stronger position now than in 10 years ago. I believe we will weather the storm. Perception can become reality. I will be the first to say it is virtually impossible to assess a. Anks Balance Sheet you can a few to derivative exposure that will not show up in a 10k or annual report. A china contagion can spread quite quickly to other banks. People would believe at this point there are not these big massive nearly derivatives. Be would think they would cleared out at this point. Another reason why people are feeling concerned the wellknown Hedge Fund Manager warning that chinas Banking System may see losses more than four times those by u. S. Banks in the subprime crisis. It chinese banks lose 10 of assets because of nonperforming loans, the 3. 5 trillion in equity will vanish. He bet against mortgages back in 2007. We are even making a comparison to the disaster we saw in subprime, isnt it worrisome . Comeere is no doubt anybody who thought chinas trajectory would be straight up for ever got it wrong. I dont think any intelligent person thought that. China is going through a wrench rent in a retrenchment. That has repercussions around the globe. That over time, china will figure it out. China has a lot of levers to pull. That is not to assess kyles position or where he may be playing this crisis. I dont believe i believe china still has a lot of levers to pull. Come ifinas total debt you look at all loans outstanding to corporations and homes, it is a massive number. If you look at it in percentage terms, how much lending has 2006, they were growing their outstanding loans at 35 . When gdp also warranted that. , sayhat gdp has come down we are around 6 total loans outstanding, growth is about 7 . ,hey are shrinking the growth putting their foot on the brake a little bit here. The important point there is the crossover. If you are growing more than you are borrowing, you are ok. If you are borrowing more than you are growing, you have a problem. Matt they are lending to grow. They are trying to do that again. Kyle bass flag something people are concerned about. David the have a lot of reserves. Stephanie they do, but they are headed one direction. Those are the stories that matter to markets now. Much more ahead on bloomberg. An exclusive interview with fred thompson. The ceo of mylan and whole foods. Matt we are down across the board. S p futures 30, Dow Jones Futures 260. Twitter coming out with user growth or lack thereof. That concerns investors as a result, the stock is down five 5. 75 . ,pending news that people like it is still there. Corporations are still spending on infrastructure. Cisco up 6 . Mylan is down today big after it said it will buy a swedish drugmaker for 7. 2 billion. That pulls it down 13 in the premarket. As investors well look for a place to put their money. Gold is one of those places people perceive to be safe. Expedia putting up some big gains in the premarket. Analysts with notes of thing they like this company after it came up with a 2060 now look that said 2016 outlook that said they will grow 13 . I want to welcome to the ameritrade ceo Td Ameritrade ceo fred tomczyk. Severe stress in Global Markets today all around the world. Coming at one of the most volatile year starts on record. What are those Retail Investors doing with these markets . Fred theres no question that people are being more cautious right now. When the fed starts to remove the stimulus, you will see volatility. We are seeing that. They are trading a lot, but margin loans are down, cash balances are up. Theyre rotating from what we would consider the Growth Stocks back into dividend paying stocks. Stephanie if more and more investors go into cash, that has to be a problem. You need action, you need trading to get paid. Fred trading will go mostly with volatility. Vix. Oes depend on the they should a volatility, you are seeing it again today, it is moving. Theres lots of this. What we worry about from a trading perspective, a market that goes down and just dies. Stephanie as an institutional investor, i get that. One would think that individuals at home watching their facebook and google shares are simple and pulling out of the market and hiding. Fred most of our clients are still in. Our Investor Movement index is still middleoftheroad. The have rotated to more defensive type of stocks. What signs do you look for to say the Retail Investor is now signaling that maybe this is the bottom . Maybe they are getting more encouraged to come here. We have a very big book. We can break our Customer Base equal active in the market people who are active in the market and trade right away. Futures are up 50 yearoveryear. You are seeing a lot of activity there. This people will go in and take a contrarian stance and by on the dips and look for value in the market. The longterm investor, we try to get them stay the course. Move into more conservative assets, might move into fixed income or cash. David existing customers are coming back into the market. Are you gaining new customers . Fred that is hard to say right now. When new customers come in, the best indication we would have would be the Investor Movement index. A way to measure what people are actually doing. In january, our net client base, they are not buyers. They were moving to more defensive positions. We are still getting lots of new accounts. In these markets, our Retail Business does very well in terms of gathering assets. Who will step in and take the contrarian view . It seems Institutional Investors are not doing it yet. What is the lag time between institutional and retail . If blackrock is not going long, i cannot imagine mom and pop in ohio are. Fred that is true. This market has to catch itself. Stephanie how is it going to . What is the catalyst . Fred you will get the Warren Buffetts of the world who will come in and say there is good value in the market right now. Deep value longterm thinkers will be the first ones to come in, i believe. Oliver td stock is down 30 . Not any worse or better than its peers. What is going on with the financial space right now . A concern with the beating the entire space has taken . Fred theres definitely a pullback. The Online Brokers are the most sensitive to this. What is happening with the Interest Rates. October, wember or were looking at an environment three fede was two or fund increases in 2016. The yield curve was supposedly ening, trading at 220 at the tenure point. This morning, 150. Expectations of another fed funds increased this year has gone away. As a result, you will see the interest sensitive stocks coming down. Oliver theres obviously the Interest Rate story. With Deutsche Bank coming out last week, you are seeing investors move away from that with credit default swaps. Is there more to it from a fundamental perspective . Fred we have not seen that in the u. S. Come up but there is a panic starting to set in on the European Banks. Someone trading 30 of book value. You are seeing some fear in the market with respect to European Banks. That has not translated to the u. S. Banks from what i can tell at this point. David fred tomczyk, great to have you with us. Andr, the ceos of mylan whole foods will be with us on bloomberg. Stephanie you are watching bloomberg. We have breaking news for you out of europe. Christine lagarde is being unchallenged for a new imf term. The nomination deadline has crossed. There will not be a challenger. Given where markets are, no one wants that job. Im not a cynic, so i say that is an important story. E turned back to fred tomczyk and never own bloomberg news. Eporter oliver the explosion of vrable advisors. Many have made the case that in less volatile market times, we recently dont need an advisor. Robo advisorss get bigger and better and more sophisticated . Fred i think they are still a pretty small segment. They do satisfy a niche in the market. Most people come when youre talking about their money, they still want to have a human interaction. We have learned something from the robos. Media,alytics, social mobile computing and Cloud Computing is changing every business. Robos are an example of that. We have to start to leverage those new technologies in our and perhaps meet the best combination between the digital experience, personal experience. Wealthie a private client, somebody who has accumulated a lot of wealth has a lot of complicated needs. We are talking about massmarket and that is who you serve. Mass andserve a lot of affluent clients. Who mayto a millennial be saving for a home or those types of things, they wonill tun to a robo because they are used to that technology. Size account is a 100,000 closer to the average sized account is 25,000. I was closer to 100,000. Oliver are you looking for more acquisitions . Fred we will always be on the look for anything that makes financial sense. Weve had a pretty strong organic Growth Strategy for the last five years. For us, it has to be worth it. We are always on the lookout. Bloombergrewith a news report that trade king might be available to be sold. Fred i wont comment right now. Stephanie we stay pretty quiet on those things. Are you changing your strategy . We are in a bear market. Things look cheaper or worse . Things definitely look worse. It is a tougher market, no question. The Interest Rate market causes you to reflect. Which is continuing to be the leader in the trading gatheringeve been in the last year, 62 billion. We are trying to grow our investment product revenue. Weve grown it at close to 20 for the last five years. We have to scale it up and make bigger investments. Margins pretty high, pretty consistent again with the rest of the market. With margins as high as they are, is that sustainable . Is there a point where that starts to work against you at all . Fred i dont think so. God knows when Interest Rates will rise. Margins could go through 50 . Job as a ceo is to grow and to continue investor growth, not to drive it to 60 . Oliver td is one of those stocks in growth and value stephanie we have to take a break. Back. Ranted we will be a stick around. We will be back. Stephanie you are watching bloomberg. We are moments away from the opening bell. Red. Es across the board we are 30 seconds away, but oil is what i want to point out. 26. Hovering around one of the markets keeping markets depressed right now. I hear the bell ringing. There you have it, crude on the screen, we are watching these markets open. It has been a Global Market selloff, that doesnt seem to be changing. We will follow markets throughout the morning. Welcome the ceo of mylan. Heather, the news right now from alan is your plan to acquire Swedish Company called meta. The price was pretty high. 92 premium. Why did you pay that much . Heather i was just listening to the segment immediately preceding this. A couple of great points were made. If you have a fundamentally good company and you can take advantage of the market chaos by , that is great value pretty significant. And the of the scale Value Proposition of what it will deliver in the longer term. Longtermen building shareholder value, building a great company, you cannot do that quarter by quarter. You cannot Pay Attention to daily price fluctuations. Matter orthat a cost because you think you can get more revenue . A couple ofve set things but we have cost synergies. Slashing about just headcount. It is more about what we can do skiller and having the in size to compete globally across all markets. Scale and size. Bids and theytwo said no. Some big family holders have 30 . What changed . Their stock has been way up and has come way down and now you guys have put them back at levels theyve never seen before. What changed with this deal . Said, not only did we in 2014 make a proposal, but weve been partners with meta around epipen. Weve had a longstanding relationship. We thought it made strategic sense in 2014 to build infrastructure in europe and around overthecounter. Timing is timing. They obviously were not interested in selling at that time. Since then, we acquired avid apd. You look at the macro environment, the Health Care Industry is changing, the evolution over the last couple of years has been to the begin. The need to have size and scale and have a very good cost structure and Global Supply chain. The shareholders realized that meta could have a much stronger growth trajectory complementry with another platform and they chose mylan. You brought up epipen. One thing people may have missed was you guys had a bit of an earnings miss yesterday. You guys have had problems on price with epipen. That will continue into this year. What is going on there . Insurers are saying we will not let you take price increases anymore . Heather a couple of dynamics. We did not have a miss. Look at our q4 in 2015, we had 28 growth topline yearoveryear. Weve continued to deliver doubledigit growth. It is not from a price increase perspective, it is the reimbursement perspective. We said we would be very proactive at maintaining market share in a multiepinephrine marketplace. We had a player who had a complete recall. When you enter contracts and you are not anticipating something before, never happened it is unprecedented to withdraw an entire product off the market. As our multiyear payor contracts that are along many product lines. We have seen huge volume growth and our market share has continued to grow given the fact that there is reduced competition. Your prior year, but from the quarter, there was a miss against analyst estimates. Just to be precise. Heather we typically dont measure against analysts. David does this take you out of the market now . Heather absolutely not. David you still in the market to make more acquisitions . Heather yes. Not only do we still have a good financial profile, when you look , we are stilltio very, very attractive amongst our peers. We have a lot of Financial Flexibility to put to work, whether thats in m a, share buybacks. We see this as a great entry point for our stock. When you experience these market dynamics, theres a lot of opportunities to get real value out of it. Stephanie assuming this deal goes through, what happens . What the job cuts look like . If you look back at our transactions, theyve been more strategic, complementry. Weve never been about cost cutting from a slashing employee transaction. You are building longerterm and building, memory assets. Bringing complementry assets in. 16 emerging countries we havent been in before. It gives us Critical Mass around european infrastructure. We are now in the gx and rx space. As we look at our ability to take our Global Supply chain and our cost of goods and structure which we believe is second to none and now apply that to the meta product portfolio, we see tremendous opportunities. Its around cost of goods and doing more with the product together. Say this when you could be a good entry point in terms of the stock and are going to step out of your category completely because of headlines ant and what theyve done to the brand . Heather all of that noise does create headlines npr rhetoric. Fundamentally, when you look at Companies Like mylan that have been fundamental over eight years, weve continued to be very consistent in our philosophy of adding strategic couple mentoring growth complementry growth. We did not think it was you cannot cut your way to growth. David are the politics making things difficult . Publicans have jumped in, you have people who may not be the best a spokesman for the you have a political background and your family. Is it making things difficult for the industry this Election Year . Heather we have to do our job and educate and inform. Investors have to do their homework. You cannot paint one brush across an entire sector. A couple bad seeds made for a lot of headline stories and people get cautious and pull back. Tot is the real opportunity get back in and look at the Value Proposition. We have hundreds of products in the u. S. We still make pennies on the dose. This market is competitive. Way you build products the we have to really provide access to highquality affordable medicine and invest from r d and products to my believe at the end of the day, generics has been the backbone of our Health Care Sector and has supported many people the opportunity to have access to pharmaceuticals they would not have. We see that happening around the rest of the world and we see that volume growth continuing. Matt i was just looking around, for a Pharma Company is really cheap historically. This is the pharmaceuticals index. The red line is nine times. To only time weve gotten that level or below what was the financial crisis and slightly after that. Right now, trading at 14 times. Nine times is pretty cheap. Heather how timing is impeccable. When we went from being a u. S. Company to a Global Company was back in 2008. We see that as value opportunity. The multiple is definitely in line. That is the Value Proposition. Times is going to give a lot of longterm growth to our shareholders. Stephanie thank you so much. Of mylan. Eccia of vonnie lets see where stocks have opened for trading. I usually ask you for optimism. Matt you are definitely not going to get that. Im opening the s p index to see which companies are moving the most. Offs p down 1. 5 , the dow 153 253. , a civil pulled up mlv function that shows you the biggest losers and gainers. A simple function. These drags are the banks. Jpmorgan, bank of america, wells fargo, citibank. 3 5 . Se banks down dragging a point from the s p index. You see cisco, trip advisor, cisco saying corporate spending was pretty decent. Trip advisor and expedia doing very well after expedia said it had growth of 3545 . Gold prices are up. Take a look at oil. Crude has obviously been very tightly correlated to the stock this year. We are seeing that unchanged here. Right now, oil down at 2687 a barrel 26. 87 a barrel. Take a look at gold, we are seeing a different story. An uptrend here, 3. 5 . Seen gold above 1200 for about a year. We are hitting that level. Take a look quickly at the 10 year. People are hiding in gold and the 10 year. Heres the dollar. Take a look at the 10 year. People are hiding there. , downs a oneyear chart to a yield of 1. 62. Very significant moves in the market today. Does not look as gory as it did abigaile this Margaret Doolittle is live from the nasdaq. Abigail the nasdaq on the brink of a bear market but we have to Online Travel stocks soaring this morning. Offereder expedia growth for 2016 strongerthanexpected. Trip advisor put up the rare earnings be on betterthanexpected revenue. The case can be made that this is a somewhat broken chart or stock trading below the lows of the recent years. Expedia, the uptrend appears to remain intact as the stock should be bought according to rbc capital. Stephanie it is less gory here than in europe. Not a great way to start the day. We will have a continued great morning on bloomberg. The whole foods ceo joining us on his companys latest results. Matt welcome back to bloomberg. Tomorrow on the show, from argentina capital. Recentie na are costcutting moves helped boost results at whole foods. The company is rolling out smaller value focus to stores to attract more shoppers and offering mobile digital coupons to appeal to younger customers. Joining us from austin, texas is the whole foods coceo walter robb. It appears youve had a crystal ball. Changing strategies to attract a more massmarket customer. To us about that strategy and how its playing out at a time when people are trying to save. Walter we are doing both. We are investing in expanding Whole Foods Market in thoughtful ways and strategic ways at the same time we are launching 365 from a smaller more curated selection at lower price points. Stephanie the you run the risk of styles rift . It is not originally who whole foods was . Walter of course, there is always that risk with a second banner. It is the same company, same set of quality standards. It is just a fresh new format that will allow us to take those standards into markets and communities that Whole Foods Market would have never been able to go. Playanie whole foods is a , this new strategy is somewhat of a play to pull in these millennials. In placehe strategy before this year. As you look at the Global Markets and u. S. Economy come how do you see things . Walter the macro situation we can all see and look at the news this morning that there is clearly some headwinds and choppiness out there in the total markets. For whole foods, we are focused on a very particular part of that economy come of that economy, the grocery and food economy, which is close to 1 trillion in total value. Theres lots of Growth Opportunities on the help food side of things. Health food. You are samestore sales are down. Does that make it more difficult for you to pivot . Walter actually, the decrease in the margins is our pivot. We said over the next couple of years we will take the growth margins down quarter to quarter. In conjunction with our cost restructuring efforts. Pivot istegic continuing to launch new digital platforms and new ways of reaching our customers. Stephanie seeing that the consumer could have less disposable income, do we run the risk that these positive trends weve been seeing away from gmos, could we lose that . Walter i think peoples personal health and vitality trumps that. We team through many ups and we have seen through many ups and downs that people prioritize what they are eating at a higher level. It will shift from the amount of food in the home to out of the home this will continue unabated. These 365 stores, who are you hoping to take market share those . T those with walter you see the marketplace today. Theres a number of smaller store competitors out there that are taking doing a nice job serving customers with smaller stores. We dont see any reason why we can go participate in that part of the market as well. It will be unique, a combination of the best things we do along with the things weve learned from looking at the other competitors. It is an area we can grow into and reach more communities than we would be able to with our mothership. David as giants like kroger and prices are all about low , how much of a threat is that to you . The have a very big footprint. Walter we are a pretty good size, too. We will be north of 16 billion in sales with 450 stores. We are not playing in Junior Varsity ourselves. Weve been competing with these folks for a long time. We still think we offer the best instore Retail Experience for the customers think we are the best at it. Some of our competitors have even a knowledge that. Acknowledged that. I like our chances. Stephanie what is your biggest challenge today . Walter the marketplace is going through a tremendous shortterm adjustment. Everybody realizes this is the type of food that people want. You have a market that is overall growing. The challenge for the market is where the nonhealthy foodstuff is collapsing. The side of the market is growing robustly. Self st resetting our ourselves at a lower cost structure. Combining that with our instore customers to show our that should show up for our customers. To cutie will you have some of that special whole foods. Because we are tapping facing tougher Economic Times . Is that what you could look to cut back on . Walter are opportunities to do that are more on the structural side. We turned our company upside down looking for ways in which to lower our costs overall. Reengineering the way we do work in the store. His for us as opposed to going right at the things that are special to the customer expense. Those are opportunities for us. Weve never had a single to will like that across the company which allows us to match the labor with the sales. Things like that, Technology Investments or structural investments of those will be the places we will be making changes. Stephanie the produce department at whole foods is like a spa experience. David walter robb, thank you for joining us this money. We will look at todays show highlights, next. Stephanie we are back. You are watching bloomberg. We have to take a quick look at the Global Markets, which have been on a decline all morning long. Matt we are not seeing drops as near we serious as near as serious as we saw in europe. Was off 4. 5 . The dax was off nearly 4 . Citigroup down 5 apiece. Stocks also coming down as oil comes down its help here as exxon mobil and chevron are down 1 . Crude down a little bit more than that. Change awn to 26 and barrel. Cl1 is the chart i use. We see it coming back a little bit, but still trading at 27. 18. To me, the interesting stories are gold and treasuries. Investors are hiding in gold, we are back above that 1200 level. It looks like it is getting momentum and treasuries, we saw the yield down to 1. 53 and record lows in the u. K. David and the japanese yen. Matt that is really exciting. The new pull up the chart. Y currency. Trading at 11246. 111 even. Own to stephanie wait for china to open on monday. That is it for us on bloomberg. Betty welcome to bloomberg markets. From bloomberg World Headquarters in new york, good morning, im betty liu and here is what were watching. We are half an hour into the ring session and stocks are sharply lower joining those global selloff have seen the last 24 hours. The nasdaq is nearing a better market as investors piled into gold and government bonds as a safe haven. And the janet yellen room in front of the Senate Banking committee. She faces a two chins from after as, one day sometimes heated hearing you saw in the house yesterday. Claritavisor, richard will give us his insights on her comments and whether this selloff will sink us into recession as we just mentioned, fed chair janet yeen