Transcripts For BLOOMBERG Bloomberg Go 20160324

The pound by jude 1 40 1 the pound of buys you 1. 41. Pimm Officials Say there was a second suspect involved in the attack on the brussels subway. The suspect accompanied the suicide bomber to the mall back to the maalbeek subway station. He may still be alive. North korea claims that has made progress developing ballistic melissa those. Kim jonguns regime has said they completed a solid fuel rocket engine. A new Bloomberg Politics poll shows republicans are not rallying behind france to stop not rallying behind to stop donald trump. Global news, 24 hours a day, powered by our journalists and news bureaus around the world. John jon reforms to fix the global economy. Chinese equities, down the most in two weeks. Shawna china, we have heard a lot from the premier and pboc governor. What is the message from authorities in china . We have heard a lot from the top folks in the government here. The message is clear and consistent that they can get that 6. 5 stay above goal they have set for this year and as part of the fiveyear plan. Theave been hearing that at Congress Earlier this month and again at this conference of top leaders. The question is, how are they going to do that with the plan unprofitable staterun industries . It is a tough question. Heard, from his press conference, that they can do both. They can balance the economyuring to fix the to make it more modern and key people employed and keep growth above their target. it wont give you a much of a reed in on what is happening with the general economy. We have looked at the early indicators for the data from march. Some surveybased things of companies and other indexes suggest there is a stabilization, but it is not good levels. We will get our first look at the official data on the first of april, when the government will have its manufacturing pmi. That is forecast to be below 50 for eight months. There is a lot of downward pressure folks have to deal with. A clear and consistent message from the authorities in china. The dollar rising again today. Bullard mademes comments about a potential rate hike in april. Outlook is may be lower. It looks like labor markets are improving. The market may not agree with james bullard. Drew, welcome to the program and to the program. Policymakers are confident they can contain inflation. What does that mean for Financial Stability . They keep delaying. The natural thing to take away from that is were going to be behind the curve. This is a challenge the fed is facing. I dont think they are rising to the challenge that well. What is the point of talking about an april rate hike when you could have gone two weeks ago. You could have gotten everyone into that mode. Why didnt you just go then . Maybe four months from now, you have to go. Maybe you should have been going for years ago. The guidance they are giving and how they change it around over short periods of time is troubling. Striking is he was trying to keep the april meeting alive and how fragmented the meeting looks like. We have had a series of fed president say i do not like the dots, with a say on the market. What do you take away after you have heard that . Were changing their forecasts are dramatically, the dots would had no meeting. Thereason they dont like dots is because they show them to be inconsistent. They would be better off sticking with a forecast. The dots moving around a lot should not be moving at all. Nothing happens and ask weeks that changes the structural view of the u. S. Economy. Jon we can debate with the fed will do. What is the best guide for the Federal Reserve. There is a strong desire to move rates higher. The timing comes into question. In my opinion, it would be better for the fed to be higher. Jon the reason they are fighting with rates is because they are fighting in the fx markets. We have shared the view in the past. It is nice to see other people coming along. We dont want financial conditions to tighten. If i pull up imf oh, we can the japanese have one point, they have come down to our levels. Dont worry about the dollar. It is not having a negative effect on inflation. We want inflation to rise. See a rollover. What are your Inflation Forecasts . You have the total pc there. If you look at what components of the core accelerating, what is howt to think about sticky are the accelerations . Tend to areas that accelerate . In this case, they are. Inflation coming down at this point is a bad thing. It doesnt matter if you have 2 inflation or 3 inflation. A low number so you can plan. The core pce is on its way out. Fed happy with this chart . If you look at it this way, unemployment is going the other direction. Many people made that point about the march meeting. Both are targets for yearend. Jon a month ago, no one would have come on the show and said the fed should be raising rates. Coming up, George Osborne wanes weighs in on a possible brexit. 41. Pound the buying you 1. Pimm funds among those considering an investment in yum brands. That is according to people familiar with the matter. Theyre considering a sale of a 20 holding. Yum brands owns kfc, pizza hut, and taco bell. The descendents of John Rockefeller have dumped the holdings that made the familys fortune. They have sold exxon mobil stock and plans to get rid of all. Il fuel that is your Bloomberg Business flash. George osborne testifying before the select committee on brexit. Us. Johnson joins a fiveday losing streak. It had more to do with retail cells. This is the number from february. The cable snapping back on the results of bad data. Talking more about what has happened with the u. K. Budget. He will get on and talk about the briggs it the brexit shortly. Jon even the price that is the amountn cable, of protection people are seeking, it seems to be getting more and more expensive. Guy this is the spike we have coming through the retail sales number. Talked about the derivative trade off of this yesterday and what is happening. I want to bring you something else, which is what is happening and what has happened over the last two years. This is going to be interesting. The Options Market, quite a lot of downside for sterling as we head into the referendum on brexit. 14 out of the last 15 aprils have been positive. The pound has rallied against the dollar. Maybe we are starting to get to extended positioning. Next few days, into april, whether or not some of those may be extended trades and start to get reversed. Jon you mentioned how much they are seeking the downside projection dust downside protection. Matt on nick this from guy. The amount of puts compared to the amount of spreads being bought on the pound, guys showed a one or two year look. Negative since the beginning of 2007. More puts being bought then pound. N the i wonder how much the Options Market can tell us since we have been so negative for so long. People, as we went into the financial crisis, were saying one of the big things we were going to see weaken up is the sterling. We have a big depreciation of the british pound versus the u. S. Dollar. Maybe the Options Market has signaled what has been a direction. I have put a circle here. This is one i moved. Johnson is the question i have ,or you, the bank of england what does that mean for inflation . You will generate more inflation. We were just talking about other. If there were to be a brexit, there would be a lot of corrections to take place in the current account. Thank you for joining this program. Just so you know, i get paid in dollars now. Yahoo could be heading for a board shakeup. Details next star board is taking aim at yahoo s board. They have been a harsh critic of the company. We are joined by erik schatzker. What is different about it this morning . Erik this will be the final step and a fight star board has been waging against yahoo for more than a year and a half. You cannot go more nuclear than try to waste the whole board, which is what star board is going to do. It has been putting these steps in place, hoping yahoo would cave in, give star board representation on the board, a lot of say in management decisions, even listen to their recommendations. Star board wants to do what it did with the unprecedented sleeping out of the existing board and a replacement with a new board of directors. Jon shouldnt you put a little more skin in the game . Less than 1 of the company. Erik this is the question for activists. Starboard has a 1. 7 stake. Jeff smith, the ceo starboard, does notodern activism require you to have five or 10 . The point is to bring the other shareholders with you. That is how a proxy fight works. The shareholders own the company. Whatever eric and i talk company, it is about extracting value. The reason i want to pull up alibaba and yahoo , Alan Hallowell has come out and lowered his price target for alibaba. Citi put out a note on alibaba and said for every 10 ms. In alibaba, you should move. Dollar they are worth together and separately far more than yahoo s core business. Fastore business is a melting ice cube. Expect. S that is less than half of what yahoo generated four years ago. Not only is revenues shrinking, but the margins are compressing at a dramatic rate. Sell the business now, get rid of current management. Far better to be off. Investors will do better recognizing the real value and alibaba than watching the company melts underneath what they accuse Marissa Mayer of, namely mismanagement. Jon thank you very much. Next up, stocks on the move. Lets get you up to speed with what is happening in the markets. Futures are softer, down by 10 points in the s p 500. In the red on the ftse 100 ls of doy 1. . Asset for you. S cable breaks a fourday losing streak. The pound climbs. A stronger pound. As the dollar parts, crude drops down by teufel percentage points. That is what is happening. To dig into some of the calls that matter to investors now. , the chief Investment Officer is telling investors to overweight global and that u. S. Stocks. The u. S. Is also reducing its february call too high year dealt to high year debt. You can see we have gone from a month. 0 in just Goldman Sachs is telling clients to show shares of gold fields. Trading saying they are and unjustified valuation after recent gains. They also cut their price target rand per share. Issues with a mind hands its valuation. Tesla was downgraded to a sell as well. They face significant execution and valuation risk even as sales and profits are expected to surge this year. Add from leavy, teslas price target is 155. That is 111 times their estimate or the 2016 estimate. Lets get a check of the headlines. Pimm john kerry says brussels attacks underscore the need to fight in syria it may lead to peace talks. He is meeting with Vladimir Putin and the countrys foreign minister. The tribunal is preparing to announce the verdict in the war a man accused of ordering a massacre in 1995, that left more than 8000 muslim men and boys dead. We are more than halfway through the nomination race. Hillary clinton has entered as a favorite. Politics poll shows her with a lead in democrats. Global news, 24 hours a day, powered by our journalists and news bureaus. Jon tom keene, just in time for our morning mustread. Tom here is the classic levine sa. A view from the top. Success is not about developing new, good drugs, but financial engineering, you can see how that might lead to accounting problems. He comes back to us. 30 billionet debt number. Jon here we are sitting at 2016. A company like valley co a company like valeant. I dont think the model is dead. The ability to do a creative transaction using low Interest Rate priced debt is a good model for share her for shareholder creation. You arere of what buying if you are valiant bank , for the product to be efficacious and be priced in inay that is Cost Effective a system that is putting value and pressure on making everything Cost Effective. Is notw for valiant necessary that they used m a, they used it in a way that rated value through the individual points out. Tom described the distinction between synergy or strategic combination and the idea of a roll up. How many of these can we do before the year end . Call tom lee. We need to do something. The concept of the roll up is one that has synergies to it. Theoretically. The theory is that by creating more scale, you can reduce the cost of manufacturing or distributing a product. Ability torove the distribute it more broadly to a Bigger Customer base. Those things create value and can provide synergies. Doing is throwing things together on the theory that someone is going to pay more because you are in your, without the hard work that goes into the integrations, without a strong, fundamental support for what you are doing, that is when you run into trouble. Matt when someone decides to look the hind the curtain. Billion dollars in debt. All of a sudden, someone looks behind the curtain and their equity is only worth 9 billion. You can see the default risk. Equityblem, when you are price, you are three times your Market Capital debt. Of 5. 5ow, default risk percent off. The price increase was coming because of the scarcity of the products competition. The only therapy that was being used, or because they were able to run it through their special pharmacy business. Those two pillars have crumbled. What you are left with is something that does not support the capital structure you are talking about. Matt those two pieces of strategy are what i am talking about when i say behind the curtain. Jon the amount of companies that rush to get deals done, so many people would say 25 basis point rate hike does not matter. Matter is a blowout in high heels sprint. That matters. Quit you saw a couple of things happening. You are anics, if Investment Grade credit and you can buy at one and a half percent. Tended to be at relatively high prices for the companies. It is the base business for a lot of strategics doesnt have a lot of growth. They are looking for ways to do something to improve their topline growth rate. In the case of 2015, it was an attractive set of economics. The math added up on the m a side. For financial buyers, the high matter. Rket does the cost of high yield going up over the course of the last three to six months has hopefully dampened the price we have to pay for companies we want to buy. The cost of borrowing is higher. The amount of debt that you can borrow is lower as a ratio to of the company. Prices have to come down. Has the calculus of what you do daytoday changed because of a dampened value for janet yellen, a reduced and global nominal gdp and have you brought your horizon and a little . There are large players where the theory of the case, the base rate is lower. It is unrealistic to expect the rate of return. Generate low digit returns, that will be better than the alternative and we can do that in great scale. That works and plays an Important Role for Pension Funds and other investors. There are a number of firms toing what we need to do generate a 20 return has changed and over time, we have to look harder to find the right deal. We cant put as much as money to work and we have to work to improve the fundamentals of the company. Much more involvement in the operational side of the business. The industry has both sets of players in it and they play an Important Role. Jon which a set of players wins . Many of the investors, if you look at Pension Funds, in the u. S. And other parts of the world, the need to do better the may can in the Public Markets is a sharp need. Otherwise, taxpayer will pick up this in normans. If you look at states that have hundreds of billions, trillions of dollars of liability, these are offbalancesheet liabilities to our governments. Real issue and something we cannot leave the next generation or two with. Asset classes can provide higher rates of return. Perhaps you take more risk, but it is a risk that pays off. Matt i am looking at the m a. St sectors for oil and gas, pharmaceuticals, telecoms are up there. I have graft pharmaceuticals as we were talking about valeant. The deals have been so huge. I have oil and gas here. I wonder if youre are going to see this line pick up due to the underlying prices. Those purchases are not without risk. Thedont have to have Operational Excellence that you may have to have in other companies. The catch is the last thing you said. When the price comes back area we have had a couple of times when people have caught that falling knife only to see it slipped through with blood draining out of their hands. I am not smart enough to know that answer. I would say the nature of the risks, particularly macro risks being such a part of the equation, is one that makes this a game for better people than me. Jon we were talking about starboard. Starboard nominating nine directors to yahoo s board. Yahoo has refused to embrace the need for change. Scott, your view on activism. Here is starboard with less than 1 of a company, nominating nine people to the board. Ridiculous. On wall street, it is kind of okay. Why is it ok in the u. S. . Nominating for investor that has done a lot of research on the company, i dont think any of us have any problem with. Starboard, bear companies. One has to align what youre objectives are. If you look back over the last couple of years, particularly pressure to sell, if it has turned out to be a good thing or not such a good thing because over time, the owners have done way well with the business. Everything is situation by situation. Normansnder and in amount of work, who is willing to go public and suggest to other sale holders, they will still have to vote and be a majority vote that winds. Jon scott and tom. More of bloomberg. Futures a little softer here. Deep in the red. About 1. 5 by next hour, robbie reed, Global Asset Managers year joins us on bloomberg. Here is your Bloomberg Business flash. Inexpensive oil has been slow to deliver a boost to Economic Growth. The benefits may not materialize until demand picks up and Central Banks move away from Interest Rates that are close to zero. Energygest clean developer is facing a possible default. Sun edison has posted the release of its annual report twice. If it is not filed, it could be a technical default of 1. 4 billion worth of loans. Their debt has doubled in the past year to almost 12 billion. The french videogame maker you ubisoft has found a way to vivendi. Ubisoft has come out with the division and assassins creed. The public face of lehman before the firm went under. He did not speak out until after the collapse. Waiting until now to publish a memoir. Has read it. What is the story . Reasons she wanted to write this, she feels her life is a cautionary tale. Street a classic wall personality, an athlete, a gymnast. Addicted to achieving, making the next deal. How long ago was that . Erik lehman brothers, before it collapsed, was in deep trouble. A ticking time bomb. I had the opportunity to talk to erin back then. She was the cfo. There were lots of questions raised at the time whether she was qualified to be the ceo because she was an investment banker. Roof perhaps blazed the trail. It did not work out for erin. The timing was unfortunate. Erik you could look at her as a lamb led to the slaughter. She was on the job a few weeks when the rumors circulated that lehman might go under. She describes having to deliver the first earnings and she was not even that familiar with what was going on and she was getting pushed and encouraged to all sides to convey to everybody. She temporarily managed to bolster confidence. The next quarter, the company had a huge lost and then she left and disappeared. In the story, she was concerned about being the only street banks. Wall has it had a lasting effect . Momentdescribes this where as though we crews got pushed out of morgan stanley. She has this foreshadowing, am i going to be next . It makes it a little harder to push this argument that women should be given these positions when there are so few of them. Jon eyes should introduce erik schatzker, i just could not resist. Erik starboard is notifying yahoo and its shareholders that it plans to nominate directors, nine new people to sit on yahoo s board. Victorious, were this is very hostile. Every single current director would be swept out of office and no longer serve shareholders. This is a Company Owned by shareholders. Shareholders will have the last word on this subject at the annual meeting in june. Starboard has a lot to say. All, it is unfortunate this action is necessary. We have requested an opportunity to work with the company and to work constructively with the board of directors. Furthermore, we cannot envision a scenario where the shareholders would entrust the Current Management Team and aard with exit eating turnaround plan giving the years of failed attempts under the current leadership. s stock tells the story of this board and management. Much, perhaps at the front of mind, what it was able to achieve at darden. Thatn is the company takingrd succeeded in over by sweeping out that slate of directors back in 2014. If we look at that chart, how have they done since then . They have done well. On the day they won the proxy fight, their shares were trading in the mid 40s. If yahoo shareholders want an idea of what might happen if starboard were to prevail, that is the example starboard would report to. Jon thank you for joining the program. More bloomberg next. Jon welcome back. About 90 minutes from the markets opening. Futures in the u. S. , a little softer. The ftse 100 in the red. Dax, back through 10,000 points. More bloomberg , next. Oh, hi micky dolenz of the monkees here, getting ready to host the flower power cruise. announcer were taking the love generation to the high seas and reliving the 60s. Well celebrate that unbelievable era with the music that made it so special. Therell be over 40 Live Performances featuring eric burdon the animals, micky dolenz, the monkees lead singer and cruise host, the 5th dimension, the lovin spoonful, rare earth, spencer davis, three dog night, and many more imagine enjoying all that great music on the fabulous celebrity summit, leaving Fort Lauderdale and making ports of call in jamaica and the bahamas. Youll be back in the days of bellbottoms, peace signs, and so much more, with special theme parties and 20 funfilled celebrity interactive events. Cabins are filling up fast, so come on, relive the era you remember so well. The flower power cruise, february 27th, 2017. Let your freak flag fly. Dont miss the grooviest trip at sea. Jonathan breaking moments ago. Star board hires nine directors to its board. Ine fed officials putting april an april rate hike on the table. On investors about liquid positions. A warm welcome to bloomberg p Ryan Jonathan ferro. Global Asset Management ceo, 854 billion in assets. In just aboutng 30 minutes, first of all, lets get up to speed on the markets this morning. Futures, where are we . 80 on the dow jones. Off. Tse 100 well down through 137 points at 1. 4 negative this morning. Cable at 14121. The euro at 11151. Year just retracing down by a basis point and wti at 3890. Vonnie turkey centralbank leaving the rate at 7. 5 . , below for terror the 238. Taiwan cut its Interest Rate this morning. An update on the news with pimm fox. Police searching for two suspects in this weeks roaming in brussels. Cameras carrying a large bag just before an explosion in the subway. May still be alive. There is also a manhunt for one of the three suspects seen an airport video. Multiple, a report of operations taking place in brussels today. Police detained a man and searched his automobile. President obama and the chinese will discuss in washington dc at the end of the month or north korea may be the focus of the talks because earlier this year, kim jonguns regime conducted another nuclear test. Race Hillary Clinton entered as a favorite, in a virtual tie with Bernie Sanders among democratic voters. A lead among democrats by more than a two two to one margin. They say sanders would do more to help the middleclass and rain and wall street. Global news 24 hours a day powered by more the 150 news bureaus around the world. I am pimm fox. Vonnie thank you. Global stocks moving in tandem with crude prices. With a global view, possibly the largest shareholder in many stocks out there including ones in the news this morning. This morning saying the dollar p january 20. Would you agree . Collects the u. S. Market is. Till very strong a really nice lift in the First Quarter after mid february or so. We think the u. S. Market has a good amount of room to go on the equity markets. Europe has more to go as well. Think people are taking a bit of a pause here. Stronger dollar is part of it and that has an impact on commodity prices. 17 times forward earnings is what the s p 500 is trading at here and i cannot wreck and that with the amount of pessimism i hear. Is it over . We do nothing so. We actually think the u. S. Strong and more robust than we give them credit for. We think we will see in the second half of the year a bit of a rate hike in june, so we dont see a dramatic increase in rates overall. Jonathan can you afford to be in cash . It is tough at the moment like this. We see the dips as a buying opportunity at this point. If you think you will have a bump or some dips, it has been a volatile market. We use that as a buying opportunity to buy stocks we think are undervalued. Better opportunity in terms of taking advantage of some things as well. Broader u. S. Market, you seem to be speaking very broadly. Management saying it is not really a bowl or a bear. For would be the catalyst us to see what you say we will see . We need to continue to see continued employment gains. Fed will look at that as well. We think manufacturing will pick up a bit. Maybe there is a recession. Those are the kinds of factors we are looking at. Matt i want to look at valuations. We have got a chart here. Rob, you say the market is not overvalued. We are not even back to the mean. The blue line. What other factors are you looking at when you try to figure out where we should see s p priceearnings values . And not the most important measure of whether or not we are undervalued . Collects graphs are important and useful. What are those peoples other options . There are not a lot of other options. Certainly, emerging markets are not the answer. In part it is consumer confidence, manufacturing, demand, consumer spending. In the room different factors and jobs overall to we think people are coming into the workforce who have not come in before. A wide range of factors we looked at. E think earnings will pick up a wide range of factors. Overall, there are fundamental strengths to the economy are we think there is a rock a lot of room for the equities to go. Centralbank stimulus. I say used to because in europe, it has not. What you make of the dynamic and how it is changed . It is tough. , it is getting clear and our own fed is watching, the Central Banks ability to actually stimulate with the tools is definitely more muted and more difficult. That is puzzling and i think negative rates in several markets now is confounding people about what does that mean and where is that going. One thing is clear. In europe, there is more easing and more efforts by the ecb. We think that will be a positive impact. I presume youre talking about european equities come going further and further into negative territory. Europe, whatn countries specifically and are you avoiding certain areas . France,rmany and southern europe, we are some of the peripheral countries, we are more cautious overall. We look less that countries than we do a different sectors. We like industrials and consumer discretionary. Ooking for the best values we tend to focus on 25 years, not three months and six months and the like. We think overall, it may be about a one point percent gdp. We think this will play out over the next two to five years. European banks, Deutsche Bank in germany or Credit Suisse right now. Horizon,five year time is that enough to turn things around at a fraction of the value . I think it is a good question and depends on their ability to raise capital. It is tough for the european banks right now and it will be. I think they are impacted not only by what is going on in europe but what is happening globally. That is a big part of it as well. They have got to chop another 2000 jobs because they found what they do not like. That says to me a lot of it is out of their hands. Is a lot of it out of their hands and their at the mercy of what happens be on europe in Global Markets . I do nothing there at the mercy of anyone. They have the ability to do a lot of things. They have tough choices. I do not know if i want to comment so much on them specifically but every bank, every institution has its own risk appetite, its own idea about where things are. Liquid credit is something they have been focused on today. It may be the right view or it may not be are they have the ability and power to make those decisions. In terms of cost cutting, it may be obvious for them to help roe, are only their which i think is understandable. Almost everyou in country in the world or are there definite areas you are out of and day away from . We are very broad and most of what we do is active management. We also do passive management. You tend to be in a lot more company. We invest even more broadly about 40 in fixed income, 40 in equities, particularly real assets. Infrastructure, private equity, we are always looking for value in the different country sectors we are in. We look to avoid parents some markets we are particularly concerned about. For example, brazil and south africa and maybe turn the. That is a general statement. We always think there are specific values and opportunities and everyone one of those countries. Jonathan we will get more after the break. Rob is sticking with us. Next up, finding unique opportunities in alternative assets. Away from the open here, future stocks negative in europe, deep in the red. Wti at 2 at 3896. Pimm value has launched a battle to remove the entire board netanyahu and put in its own directors. The report says yahoos board and manager have oil to live up to promises. Melissa mayer heston the promising to turn around the company. Kkr in a Chinese Sovereign Wealth Fund are among those considering a China Business according to people familiar with the matter. Considering the sale of a 20 holding valued at about 10 billion. Owns kfc, pizza hut, and taco bell. Soft has come up with an unwelcome approach. The company have told him to back off. Ub soft has come out with blockbuster games such as assassins creed. That is your business flash. Global asseta management, 860 billion in Asset Management. Largecompany when you have got this much cash to put to work, do you have to go beyond the market, and look for real hard assets . Do but our breadandbutter is the fun market where we are really a powerhouse. Proud, five years in a row, based on a threeyear return, youent start winning it year after year. , target datesets funds, a real leader as well. , our Products Distribution platform for u. S. Mutual funds, and absolute powerhouse. Is a reall funds focus. We have got about 150 billion in alternatives. A lot of that focuses on real assets and we think there is real assets to that. We do equity as well as the debt component, real estate or about the Third Largest real estate manager in the world. Agriculture, the largest in the world. Energy, infrastructure, as well as private equity we like to own real assets and we have been doing it for decades. Helped ourt really clients. Vonnie dont you have to be a little bullish Global Growth to invest in real estate and wonder . Lumber . Rob our investment horizon is very often 10 plus years. Maybe 20 plus years. Many times, investors are in it with us for nine or 10 more years. It is less about the moment of what is going on in the economy, and more about how have those Asset Classes performed in the past, so what is the value . 15,ind even if it is 5, 10,t has an uncorrelated impact particularly at a time when the markets are anemic. David was actually on our board. Ford is really responsible this decades ago and we are thankful for what he did. Jonathan as long as you have a long enough time horizon, you should be ok. Decades ago, sometimes the market never recovers. You look at major cities across the world. One of the biggest investors in the world, i know in london there is so much discussion about that weird what is your view . Rob you have to distinguish between residential and commercial. We do equity as well as lending. There is a different component to those markets. Markets, certain london, vancouver, hong kong, we have a deep bench of great research. Many have been there for 20 years or more. City by city, market by market. We look at all kinds of different factors. We just moved to different markets and we look to find the value. Vonnie we talk about real estate for a long time, wonder lumber, what is the new idea . Think one emerging Asset Classes has become very big for us and will become big globally, agriculture. Owning farmland and vineyards in all kinds of things around the world. It is something that frankly i think level investors, Asset Management firms, still one point 5 overall of agricultural the leader are again there. There is still so much to go on the marketplace. Thee is the yield on vineyards or other agricultural investments, and then there is the longterm property appreciation as well. We think that will continue to grow. We think others will follow. Vonnie stay with us. Thank you so very much. Exposing the markets and liquidity exposures. Vonnie the ceo of Credit Suisse is saying he was blindsided. Francine lacqua spoke exclusively with the ceo of Credit Suisse, and says he is being cautious going forward. Have a listen. Really,e confident, but this is a dislocated economy and market. My natural caution makes me say lets wait for a moment after that. Are the troubles at Credit Suisse exposing the overall markets liquidity. Risis . Lisa is here with more the overall market liquidity talks crisis, are there where we are seeing liquidity problems . Amazing was a pretty revelation from a couple of points. We have known they have had a portfolio trying to sell off earlier this year, later in the the positionsied he was talking about accumulated from 2012 two 2000 15 and he did not realize the magnitude of upse positions when he came with the secondbiggest lender out there, when he raised more than 6 billion of debt. He was not aware of this. It is kind of amazing. Noticedt squeeze, we theyre trying to downsize, trying to get rid of their debt, they are trying to do it at a difficult time. They moved the market against them as they try to market the portfolio earlier in the year. Toalso shows that banks used be able to hold onto securities for a longer time and earn income and use this for trading. Is a highlyis intelligent person im not questioning his intelligence. A lot of people are questioning the timing. Where the markets doing this before they start to do it . Isnt that a bit of a mistake . They try to market it earlier and did sell a lot of securities last year. They have been selling. There is a question out there, at the end of last year, securitizations of leveraged loans, the lower of these securities got absolutely crushed at the end of last year and there was speculation they were selling a lot of their holdings. Was Credit Suisse among them . I do not know for sure but you can speculate that they were. The fed president yesterday did say the market shows expectations, if it were violent, the treasury market, we would have to worry. Jonathan the confusion continues. Up next on the program, breaking news on the u. S. Economy. Thank you very much. Oh, hi micky dolenz of the monkees here, getting ready to host the flower power cruise. announcer were taking the love generation to the high seas and reliving the 60s. Well celebrate that unbelievable era with the music that made it so special. Therell be over 40 Live Performances featuring eric burdon the animals, micky dolenz, the monkees lead singer and cruise host, the 5th dimension, the lovin spoonful, rare earth, spencer davis, three dog night, and many more imagine enjoying all that great music on the fabulous celebrity summit, leaving Fort Lauderdale and making ports of call in jamaica and the bahamas. Youll be back in the days of bellbottoms, peace signs, and so much more, with special theme parties and 20 funfilled celebrity interactive events. Cabins are filling up fast, so come on, relive the era you remember so well. The flower power cruise, february 27th, 2017. Let your freak flag fly. Dont miss the grooviest trip at sea. Jonathan lets get you up to spd on the markets. Some important data in the u. S. Up by 81 points down by half percent. Can we switch of the board and look at the market . Breaking the losing streak at 2146 and 10 year yields three much unchanged. I want to toss it to matt miller with breaking data. Matt right now, were looking at 265 house and, better than 269,000 that bloomberg economists had surveyed, a survey has shown. Continuing claims that 2. 17 9 million, was with the survey showed. Initial jobless claims are doing better on the weekly number and the continuing claims number. 2. 8 . A drop of ofwere looking for a drop 30 , not great news but not as bad as it could have been. Transportation, which we like to look at, airline orders are big and move the needle, you see a drop of 1 . It is a bit of a disappointment there. All, the initial jobless claims number, i do not think anyone would have expected it to be much better or much worse. We are already floating at lowes that has not been seen in jon ferros lifetime. He is never seen initial topless games this low. The durable good markets is one of the markets are paying attention to lately. We were expecting almost unchanged. It is not good news for the market. A little bit of weakness that as you say, pretty volatile numbers. Jonathan ryan joins us by phone to help the strength down. Durable goods disappointing. Are you going to be looking at the bloomberg tomorrow and you should be on holiday looking for that gdp number number . Yesterday the durable goods numbers were not good by any measure. The key we like to look at is nondefense capital goods orders. That is the leading indicator of Capital Expenditures. 18 and core shipments were down 11. The prior months as well, that is the other thing that gets miss. Orders, a pretty sizable division on capital goods shipments. When youre looking at the i am getting a 7 annualized decline quarter on quarter versus the q4 average. A weak business spending environment. It is a reason we have had below trend gdp forecast for the year, inventoryweek with levels where they were, and you can see the business inventory sales ratio is pretty elevated. You have that coupled with the fact that Global Demand is slowing and you have high dollar , andter export orders business spending in general. We two combined means mean we should get it slow and weak. This something the fed might look past as a one month or two month trend due to a stronger dollar and that would not stop them from having a pause live meeting . Look past this as a one or two month trend because the environment spending has been bad for some time now. This has been going on for well over six months. Have not had for orders growing positively year a nearterm since january of 2015. Year of Capital Expenditures basically declining i year on year basis. Jonathan cohen the gdp number i know you are looking at tomorrow, the breakdown of corporate profits, talk about how significant that will the. That is very important now. Growth had week topline coupled with strong hiring. The problem is that weighs on corporate trough it marches because companies are hiring a lot but not getting a lot of productivity out of that. They are not seeing the output gain hiring. The markets will get pressed. Downts have been trending lately. You can see a negative rating. It is another area as well. The dollar stabilizes. Mean a slowdown in hiring at some point. thank you so much. Later on this morning, we will get the Market Services pmi. Now for some analysts action. Were not seeing that much. Matt i would like to give global wall street some calls and see what is actionable today. Lets look at the u. S. Ocean open starting at wells fargo. Shares are down after ubs initiated coverage with the self. I would like to point out the cell ratings. Smacked downt ubs a price target of 45 apiece. That creditthere appears to be at greater risk than the Company Passes reputation would suggest anythings it is unlikely wells would be able to maintain flat fee revenue. There are down about 8. 5 year to date. I want to move now to Airlines United an american, the subject of calls this morning. Uniteds down. You can see the premarket after the shares were downgraded. Saying they were no longer advising their clients to advise this stuff. Head with headland earnings, one of the biggest costs along with fuel. While united got cut, american is getting an upgrade to outperform. Byy still see the stock as a over an american but are cutting at 55 to 65. You can see right here trading at 4170. Still a ways off. They are cutting their price target. A negative sentiment on the airlines this morning. Now, it meeting where we hear what key banks are looking at today and telling their employees and investors. Ack rockets focusing on female could shape the markets on the days ahead. Highlighting the risk on a rotation that began in early february. The global chief investment strategist joins us from london. Thank you so much for spending time with us. Why do you think we can see the rotation here continue . Thank you. It has been a significant move back up to risk assets over the last few weeks. Concerns around the overriding of risks. We think this could go on further. Valuations. The Market Driving equities side. They look attractive. In some cases, still cheap. We the value sector itself trading at a significant discount to longterm norms. The second factor is positioning. We have seen short value and short commodities. If youre just starting to see something flow back into the sector, the last is fundamentals which just started to turn. Having gone through time where Recession Risk is really earlier the data is coming through to support that. Matt the safe haven trade, it has been years. Lists analysts have continue to expected to rise. Do you think there is a cell here . Quite long and, there is a lot of demand for yield out there globally. The risk return looks pretty unattractive. We think there is a much more attractive place to be in the market, treasuries, within fixed income, definitely credit,at areas like ig the risk return characteristics look really compelling. We are looking into equities here. A reallyequities have significant further upside here in the u. S. And internationally here in matt one of the albums has been the price of oil. Oil surprised the market with how far and fast if so, how long it theyd there. Do you see the turnaround or does it has to change for your thesis to change . Classy look at the fact they have been driving the risk ination, certainly declines fear around oil has been a part of that. Other factors have been in play as well. Declining concerns around china and european banks in particular have supported the rally. You need to see oil price stabilization. We think oil prices is more likely to be a stabilization rather than a key driver. We get better stabilization on the economy, i think that in itself should be enough to bring some stability to the oil market here at matt we need to see stabilization there are one other risks are there to your call with long equities . We think there are a couple of key risks investors should be focused on. The first thing we talked about was chinese evaluation. That risk has fallen significantly. Yet seen the gap between the onshore and offshore currency come right back in. The shortterm risk of the current evaluation china seems to be coming back. Headlands have not gone away. Th is something i think investors need to keep an eye on going forward. It is new and increasingly coming into focus, inflation. Fed move last week effectively saying they would tolerate higher inflation in the shortterm, i think investors should be watching closely for any signs of Inflation Expectations picking up, that core inflation is picking up and would be very important. And that the fed is falling behind the curve. Matt and we do watch very closely. ,hank you so much, Richard Black rock passes global chief investment strategist. Up next, breaking this morning, a yahoo shape up and more trouble for Marissa Mayer spirit star board nominating nine directors. Matt breaking news on yahoo star board pushing on a board shape up shakeup and getting nine seats. The International Monetary fund says oil has been slow to deliver a boost to Economic Growth. May not materialize until he demand picks up and Central Banks move away from Interest Rates that are close to zero. The descendents of John D Rockefeller made the familys fortune. Stock, plans to get rid of all other fossil fuel investments. What ited out exxon for calls morally reprehensible conduct. Exxon says there is no surprise the family sold the stock since they are already funding a conspiracy against us. The world passes biggest Clean Energy Developer facing a possible default. Edison postponed the release release twice. If it does not file by mark march 30, a could be in a tactical default of 1. 4 billion in loans. The debt more than doubled last year to almost 12 billion. Yahoo is under fire again. Activist stakeholder star board price the end cut the companys entire board. Elected a 1 stake in yahoo according to bloomberg data. Paul sweeney is with us in new york. The rest of the bloomberg people, cory johnson, bloomberg editor at large, joins us from San Francisco to get a look at the implications of the announcement. I have been talking about this for 90 minutes now can left and 1 of the company, yet they are nominating nine to the board. Walk us through it. Cory yahoo has been a disaster for shareholders. Any former employee or executive was of the company, they see all the potential and do not see the performance. Lost so much money in the holding, i think they look at what is going on with the company, and in particular, starboard has been very involved in trying to talk to the company at about things they can do. Virtually no experience in the media business. Yahoo may not have enough advice on the financial side. I think star board looked at that and said, throw out the baby with the bathwater. We will leave this thing because someone has got to. Vonnie this is just the first step. Paul seen it, Bloomberg Intelligence head of research. The stock has been going up ever since. Is enough for the activists to be on the board . Work to be a lot of done here. I think most investors are looking at the company as an asset play. We have the most valuable asset, here and thereke is no plan for a tax efficient monetization of those assets. What you do with the core business . Assetspany talked about that stand on their own or potentially selling. A lot of asset value there. What activists investors are frustrated at is the lack of urgency of the Management Team board. About what has happened with melissa mark Marissa Mayer. Has anyone been on tumbler lately . It is the same fence facebook went on instagram. It was like a terrible decision to buy tumbler at the same time. The other thing they have done, the Financial Performance as pointed out in the letter, has in dismal. Fortunes. Aying maybe 100 million for less than a year working at the company. Now patrolling the streets of manhattan on yahoo s dime. The otherand look at thing. The letter from star board. It reaches conversation hiring practices, the company has maybe even gotten worse during Marissa Mayers tenure. Warren buffett always said, to take a visit with a poor reputation it is the of the business that survives. We see that happening with yahoo . I think the chances are extraordinarily high. You have an unhappy base, the people involved in the company look at the pay package been paid to meyer, look at executives, and i think the desire for change is great. Star board offering a plan because yahoo isnt. Jonathan they went into the business and tried to turn around. I think yahoo ss business is a business that cannot be turnaround. Fair argument can be made that yahoo has missed the big changes, the seismic changes on the internet. Google owned search, social, facebook, and esther ramones facial they have missed the move to mobile one could argue it is a situation even former us a meyer that is the on fixing here. Here,oure looking at they bought it primarily for the advertising technology. A lot of interest in the operating business. Including their advertising technology, or it may be a private equity firm that recognizes there are 800 million, a lot of cash that can support debt. Vonnie yahoo lost all of its premarket gains and it is now down. Cory johnson, you always get away with everything. Paul sweeney with us. Thank you. Coming up, Lisa Abramowicz is with a spear she will go headtohead with matt miller in battle of the charts next. \ vonnie today, battle of the charts. Lisa abramowicz is taking on matt miller. Forwill start things off us. Matt we have been battling for an hour now. Has to shower matt you, i will bring the substance. I want to show a chart that shows Corporate Bond yields on a growing number of ions in europe are basically trading effectively with negative yields. Maturing at 2018. Dip down below zero. About 18 billion of corporate debt, now trading on the yield of ecb. Matt it is a very interesting look in the rearview mirror. What i want to show you is something on which you could make money. My easter chart, basically leave the bacon, leave the ham. About the bacon run. 15 or 17 . Lisa he said as he unbuttoned his jacket. Matt they can is up 33 . This is just year to date. Ham went along for the ride for a while. Will not be spending any more money on your easter brunch tomorrow. Ut if you have bacon, you will the question is for longerterm. In all seriousness as an investor, is the bull run for bacon over . Is it time to maybe invest in wholesale ham . Jonathan where can we find the charts . Our whole library, my chart is number 685, lee says is number 683, or you can type in matt miller charts and you can see the whole library. Vonnie very difficult. Matt happy easter by the way. Lisa unprecedented times in credit markets around the world. Im going with lisa appeared we have to go to the control room. Richard morris is standing by. Mr. Matt miller, toone. Twoone. Crude on track for its first weekly decline since last month to what it means to the distress oil and gas sector. Stock expandbal their losses. Futures point to a lower open. More headaches for Credit Suisse. Investors are asking what was the bank caught off guard. Yahoo s shakes of board. They refuse to embrace the need for change. Jonathan we are about 35 minutes from the opening bell. Im jonathan ferro. David and stephanie are off today but we have the bases loaded. Matt miller on markets, tim joining me. Is Lisa Abramowicz. Before we get to the open, lets get you up to speed on where markets are trading. Features here in the u. S. A little bit soft. The futures down undo six points on the dow. 500, futures and 14. At 14. Dax, back below 10,000 points. I would to get to the fx market quickly. Stronger dollar the story. It was up against every single currency. Cable breaking the trend. Yields coming back a little bit, down by two basis points. In the last week as the dollar has topped dropped, crude has dropped. Down by 2. 8 . Lets get you up to speed on the world of news. Brussels, belgium news media reports of Police Operation is underway. Not much information about it. Police reportedly detained a man asserts his automobile. Authorities are trying to find a session second suspect. He was seen on Surveillance Video carrying a large suitcase. European Union Officials are in brussels trying to come up with a response to the recent wave of terrorist attacks. Process foreign minister is healing cooperation with United States on the civil war in the area. He is meeting with u. S. Secretary of state john kerry. They are trying to find ways to turn a shaky truce into peace talks aimed at ending the fiveyear long civil war. Kerry is meeting with Vladimir Putin. It was just like dancing with the stars, sort of. A state dinner at buenos aires. President obama was watching the entertainment of one of the dancers coaxed him onto the dance floor. He gave the tank of his best shot. The president s wife got out there too. Global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. Im pimm fox. Jonathan thank you. Storiese for the three that matter to markets right here right now. Dollar extending its gains to the fifth day against the euro. The bullish tone from Federal Reserve officials supporting a surging greenback over the last week. St. Louis fed president jim bullard said he could come as early as next month. You could argue about global risk in gdp Growth Outlook is maybe a little bit lower. But you get another strong report and it looks like labor markets are moving. You can probably make the case for moving in april. Jonathan lisa, april, a live meeting . Is the market buying that . Lisa i think the market has been a limit shaken by the incredible dovish tone of the fed last week and the rebellious statements out of other fed officials seems to suggest perhaps they were not that comfortable with the dovishness and they are more inclined to raise rates sooner. Jonathan a lot of people are saying what lisa just said. An excessivelybe dovish statement, dovish news conference. Other people say this is an incredibly fragmented reserve. I think people are not clear the market is going. I think there is nervousness each what you go. I think it is nervousness generally that causes the fragmentation of the various governors. Lisa one thing that cannot be overstated is what a Strong Influence the dollar and the volatility in the dollar have on all markets. You think about oil. They climbing on declining on the dollar strength. Its getting harder and harder to figure out the wins of the market given the internet can give us the interconnectedness of some of the market. Jonathan if you look at whats happening in oil in the dollar. Tim connected all the way through. Jonathan the chinese currency drop into a oneweek low against the dollar after the central bank weakens its daily fix by the most since january. Most warning is by far the the biggest single risk for the economy. Tim, looking at whats happening in the chinese currency, they are saying commerce sees. China, centralbank commodities, all stabilized. The dollar point seen to be the central of this whole you and of course universe. Tim i think probably what is happening is you look at what the chinese buy. They sell to us of the strong dollar has an impact. We do not by a lot from them so where does it really have a big impact . Shipping, coal, things like that. It becomes more expensive for them to purchase those items. I want to get in with the spread. I was just talking with richard turnover at blackrock. He is constructive on equities globally. I acted what some of the risks were to that call, this risk on rotation will continue. You mentioned the evaluation of the yuan is one of the major risks longerterm. He says nearterm he does not see it as a huge risk. He pointed to the fact the spread is in reduced. The onshoreoffshore spread to almost nothing. The chinese have done a pretty good job in the last two months and really quelling any fears it will go for a big evaluation. Devaluation. Lisa there has been increasing talks about a possible this gushing or agreement among central bankers a developed nations in china to talk about lets reduce the volatility. Lets not create shots in the currency. Central banks have a vested interest not to disrupt. Jonathan what is your take on china at the moment . Things have changed so much in a month. We are sitting here saying the fed probably should have hiked based on the data. I cannot of found a Single Person that thought that six weeks ago. If you want china as a change in the last three months . Tim the question is really what is going on in china . Is a growing, is a data some lowlevel like 5 . I think my bigger question is what is actually happening . You see the enzi cities they have built. Malls that have fake signs and things like this. The question is, is there a real china . Is the real growth . Jonathan the official data says everything is great. I expect the data to say that. Tim we have a lot of business over there. I think you have to be on the ground and see things. I dont think you get them through the reports. Their official reports. Lisa how concerned are you about the leverage both of the Banking System in china as well as the companies . Not the bestably aspect question for the following reason i am very concerned about it but nobody else seems to be concerned. They feel like china will print currency if there is an issue is where the debt is. Nobody seems to think that will actually happen, the companies will be allowed to fail in that way. I think there is an issue with leverage with the companys. I dont think that is what most people are. Ethics is not just what is happening in stocks and bonds, but with for have for what is happening in commodities. Crude is slipping. A sharper u. S. Inventory build. Gold downslope onemonth low. Iron ore testing 50 all over again. The commodity rout, that rock has a stabilized to where you can take a breather in the about the fundamentals of some these companies . Tim nobody knows the answer to that question. You the you can look at them out of oil in storage or what is happening in china. Nobody has a clue. Everybody in this business is is looking at, lets pick the price of oil, it was 30, 40, now its going back down. Every day people are making longterm judgments. We do a lot of restructuring and oil and gas. We are working on a deal. At 30 everybody says there is no hope so lets do the following deal. Then it starts the trend up to 40 and everybody is like its on its way to 80. Maybe we shouldnt do a restructure. Everything will be ok. These are all based on kicks in a trading market. Jonathan is thats why its so hard to get deals done in the industry . Tim its not hard because prices have stay down. 40 most of them are not able to sustain 40 oil. Lots of dealsoing in announcing deals and we will continue to announce deals. Beyond there, and 40 seems to be a cap, you can see people start to do something. Thatg said that, a company used to be at 130 oil prices, those are still only calls on the companies. Even if they still call zombie companies. From a cash flow perspective is they continue to pay interest, it doesnt mean they can grow. I think our deals will continue to get done because even at those ranges it doesnt help the company longterm. Jonathan lisa, we talked about the crude route and whether its a symptom or a cause of what is happening in highyield and how highyield spreads blew out. The misallocation of capital. When youre at 100, thats a great deal. For everyone that says that highyield is just an oil problem, is the misallocation of capital more widespread beyond just oil and Gas Companies . Lisa absolutely. We saw troubles recently. Pharmaceutical companies, one of the biggest beneficiaries, they borrowed quite a bit. There will be more companies and run into trouble like the retail sector. There is one question with the oil prices. If oil does go down, another big variable and markets is the sovereign wealth funds going back to selling quite a bit of their holdings, that has been a massive dynamic of the market. Earlier this year it rattled a lot of markets. People are trying to figure out when they left to sell more. Jonathan they are the stories that matter to markets. 20 minutes until the market opens here in nyc. You can get her column on gdafgo. Rg, tim will be sticking with us. The latest on start or dominating nominating nine directors to god whos board to joyahoos board. Pimm orders for durable goods fell in february. Is that there decline in four months. S dropped. Booking sluggish Economic Growth overseas has Led International customers to come back on their orders. He were americans filed for Unemployment Benefits last week. 6000 twolaims are up 265,000. Anything less than three 2000 is a sign of a strong labor market. 300,000 is a sign of a strong labor market. The u. S. District judge will get an update from the companys attorneys today. Volkswagen has admitted it intentionally cheated on emissions tests and put polluting vehicles on the road. That is your latest Bloomberg Business flash. Jonathan thank you very much. I want to get you up to speed on some of the movers globally. Beginning the Credit Suisse. The stock down in zurich this morning by 4. 36 . The strategy update yesterday, five months since the last one. 1. 7 billion swiss francs and cost savings. Management unaware of some of the positions in the liquid assets. The confusion continues. The stock is lower. Oh lost a lost throughout the morning. Essentially trading like a penny stock in the last couple of months. Copper lower, crude lower, iron and 50. Premarket, here we are pretty much dead flash. Despite start work coming out saying we want the board gone. What is that going to mean for yahoo . They dont know premarket. Flat heading into the open. I want to cross over the matt miller for some of the big calls on wall street today. Matt calls that may matter to you know. How to start with telsa. Cut to a seel at standard poors. They face significant execution and valuation risks. This is even as sales and profits are expected to surge this year. Price target at times its earning estimates in 2015. About half of what the bloomberg estimate ratio is right now. We are looking at about 215. From electric to gas, range resources is making a big comeback this year. 54 down in 2015. One of the worst performers in the s p 500. 2016 is a different story with the stock of 27 this year. Its following today after barclays got their shares underweight, essentially saying sell. The analysts cite cost structure challenges and balance sheets. We all know what is happening to players in the Energy Industry right now. I want to talk about players in the tobacco industry. Got cute of altria in bank of america. They say do not buy the shares. They are not advising investors by the shares. Tobc you cann bo get a great primer on alrtria. Our analysts have looked at it and found its growth will be driven by marlborough and copenhagen sales in the u. S. It would get a big boom if Marijuana Legalization goes through on a larger scale. Its already in place to capitalize on the possibilities. Its got some problems when considering legislation. Here in new york they are considering a ban on smokeless tobacco. That would be a huge problem for copenhagen sales. Jonathan i want to go back to one of the charts. Credit suisse. Tim is alongside me. Its down 4. 3 . Yesterdays news, i cannot overstate this, it was stunning. For management not to know the details of some of these positions in liquid assets. How widespread is that problem . Tim i have no idea. These are tens of thousands of employees in every one of these places. Had 1400isse employees. Now they have 50,000. A huge number of employees. I dont you manage something that big effectively and not have these kind of soap rises happen. Jonathan campbell be sticking with us. Brent crude, 40 a barrel. What does that mean for the already Distressed Oil and gas sector . Jonathan this is bloomberg. Crude below 40 a barrel this morning. Tim is with me. , 30. 69. Er at their kind of good news for your business. He gives you a busy man. Tim 30 is better than 40 for my business. We are very busy. We have a lot going on. What is amazing is the companies are wellmanaged companies. You sell purple tshirts and seller for wanted 30 oneday one day and the next day for 30 or 40, you are hurting. We work with phenomenal companies and smart people. Its not a Management Team that has caused this problem. Jonathan do you look up stream, downstream . Tim look for new business . All over those streams. It is everywhere. It is upstream and downstream, the services businesses. We are also in coal and metals and mining. Jonathan the general story that gets told, back of the envelope stuff, crude is down to 35 worth 38. When the direct of 45 or 50 it will come back online because they get financed. Why does this situation get any better from a price point of you . Point of view . Tim if you look at the price of oil from 18. 50, you will see a few spikes. The 1970s with opec. I think if a look at the fundamentals. There are about 300,000 people out of work right now in the United States. Most of those people are probably ready to come back to work. Its not like they went from doing something in oil and gas to retail. Its not that kind of a thing. I think they will come back in many of these wells are ready to be turned back on. Rigs reworked. It will require a lot of capital. There is not a lot of new money in this field. Its very hard for these companies to start drilling again because capital is hard to come by. Jonathan something im trying to get a grip on, people speak generally about this sector. 35 to 45 earlier, can completely change the deal in what it looks like. How much time do you spend with you look at these businesses in trying to create some kind of deal . Tim we look at the strip which gives you a sense of where you think its going over a lengthy. Of time period of time. There are a lot of highyield people that pile into this space last april. Prices were down. They were really smart and then they got slaughtered in august, september when prices without further. It is tough for people to feel comfortable and confident to go into this space. There are a lot of companies that could merge. They are both in trouble, but they could cut a lot of costs are met. Probably have a better cap x program. With that would come a better balance sheet. Jonathan matt miller . Matt i have used the ddis function. I have search for all emp companies globally. You can see a much debt is coming due. A quarter of a trillion dollars in 2019. We are coming up against a really huge walls. Does this pushed m a and emps . Is already on its way . Tim i dont idea to those dates. The companies of cash flow issues. Company have liquidity issues. Whereas 2007 we looked at me 14 and thought there was there was the next restructuring period, most of those got read many of them got hit with liquidity issues long before they get to the maturity. Matt that is almost exactly what wilbur ross said. Jonathan you are all in good company. Matt miller, thank you very much. Deep in the red both here and at n. Y. C. In europe. Up by 1. 52 . This is bloomberg. Hiim here to tell homeowners that are sixtytwo and older about a great way to live a better retirement. Its called a reverse mortgage. Call right now to receive your free dvd and booklet with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money. And more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today, youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home and heres the best part. You still own your home. Take control of your retirement today jonathan we are moments away from the opening bell, about 25 seconds away. That may get you up to speed where markets are trading. Ftse 100 trading much lower throughout this morning and the dax breaking back through 10,000 points, down by a around 1. 15 . You can hear the opening bell on wall street, lets switch the board and get you up to speed. Queue for equity, this seems to be the one place downhe bdi contracts by three and a half percent. Stronger dollar story throughout much of this morning with a weaker euro. Cable is bucking the trend after some betterthanexpected u. K. Trends, the pound breaking a fourday losing streak. Matt miller, to bring you into the conversation, lets get you up to speed on where we open. Matt lets take a look at the mind on this day before good friday, when most ple will be staying home, both equity markets will be closed and you see down arrows, but it will be on incredibly light volume. We see at the open, a drop of about or tenths of 1 , half a percent on the nasdaq and it is a risk off day because people are piling into treasuries. 10 year, you can see the yield coming down three basis points. Look can we look at my bloomberg terminal . This is a story i have been hearing julie tell, every day this week, the latest all human of the entire year. This function breaks down an index into Industry Groups and shows you the volume compared to the 20 day average and you can see everything with the exception of utilities is down. We have been seeing this every single day, this year. Expect to see it again for your weekend. The dollar index, lets go back to the scheduled programming. Dollar index is up, that is why you see movement in commodities prices. Downmentioned oil is off, under 40 a barrel. I want to talk about yahoo we have been discussing this a lot on the program. Yahoo has had nine directors voted to its board by starboard even though starboard only owns 0. 5 of the company. Finally, lets take a look at gold. Safe haven assets, people tend to get into gold. Today we are climbing up throughout the morning, not quite at breakeven. Lets go to Abigail Doolittle with the latest. As you mentioned, we do have the nasdaq opening lower. Two stocks trading higher on the open, including office depot and staples after a federal judges land the ftc for trying to elicit false information out of an amazon executive in ongoing trial in which the ftc is trying to block a proposed merger between these two companies. A merger uncertainty has wait on these stocks for the last those two years. And analyst believes this bodes well for the merger while a senior litigation analyst said that she thinks this does not help the ftcs case. With both stocks higher, it seems investors agree. Jonathan the most read story on bloomberg, for two straight days, Credit Suisse. Loss,ected firstquarter job cuts and now the admission that the bank was caught off guard by a buildup of a liquid position. Shares are down 4 . The wave of bad news follows quarter were banks not just in europe but on wall street as well. Joining us now is laura and Michael Moore joining us very rtly and around the desk, this news from credit, is it or is it a problem that exists in the u. S. As well . Laura i think people are looking mostly at them and they didsurprised that the ceo not know about this or says he did not know because in modern banking with all these controls, going tear managers all the time, to have someone not know at the top or even midlevel is what people are talking about and what worries them. Worried people are that this is just to excel accelerating job cuts. You were talking about how big these banks have gotten, downsizing, but when you look at the likes of them, are they cutting to the phone . Is that what is happening in europe . Tim i dont think so. Is hard are cutting, it to do, but what you are doing typically is keeping the best of your class in place and so if you over cut a little bit, you can always make that up through growth and letting others rise a little bit higher. I dont think the cuts are too big. Michael moore joining us from london. Are people still trying to digest what actually happened yesterday . Certainly raising some questions and you have the ceo talking about previously cutting since october and now saying he did not have the full picture in october, so this is maybe one reason why he decided to scale back more on the trading side. They are cutting assets even more and trying to get out of these distressed positions and out of these riskier businesses. Note the fact that they did have a complete handle on them is driving that decision. Jonathan i want to get the scale of this across. When we throughout those numbers , and i dont think how people understand how i dont think people understand how big those numbers are. Tim that is the point when you say cutting to the bone. Billionsalking about and billions, so does not like you are going from 200 billion down to 50 million or something. Those that run that firm all over, they risk every day. My group is all over risk, every day. The one thing you do in this business is make sure you understand your risk because that can kill you. You need to understand revenue and all other things but if you dont understand risk, it will wipe you out. Jonathan this speaks to a lot of risk management. At the at wall street moment, we have had city, jpmorgan say it was a rough order and will be pretty ugly. You hear the same thing from Deutsche Bank and Credit Suisse. Does two backorders really mean you have to cut that aggressively at that unit . Laura i think that is a good point because that is looking longerterm. They are looking at this quarter, how do they make it not look so bad but if you keep cutting, then in the next three quarters when your competitors have ramped up just a little bit and you havent, because you keep the good guys but if the good guys want to go because the environment is so bad and you cut to the bone, how do you get those guys back and win them . Tim everybody within a bank wants to win. Everybody wants to be the number one in that business. If you are having those issues, apparently you are not number one. You want to be there, so if you are cutting, hopefully the people that are being cut are people that contributed to that problem. That i wanted to point out the overhaul announced october was not what investors wanted to see and you can see that because shares are down 33 since then. If you go through analyst notes after the news, yesterday and that continues to roll in. You are seeing that the cuts that they have now are what they wanted to see in october. Maybe, and you are starting to see by ratings come in. Maybe analysts are coming in who did not cover this stock and now they will take a look at it and maybe recommend that investors buy it because maybe this is what they wanted to see the whole time. Jonathan Michael Moore, i will let you have the last word. Maybe they wanted more aggressive cuts but do they really want to hear the ceo turn around and say they did not know how these positions were . If it had justk been the strategy update, perhaps people may have focused on the job cuts and the capital reduction in that business and that has been seen as a positive because people have wanted that from the beginning. The fact that you have this other confusion, maybe casts a little bit of a cloud over what otherwise have been something that shareholders have wanted. Jonathan that confusion continues. To the bloomberg team, thank you very much. Be jtial thanks to partners industry. We are watching, star board pushing for a board shakeup at yahoo yahoo has just responded, saying they will review the proposed nominees. Next, the startup, big names are betting millions on. Matt later today, i speak with cadillacs president , thats coming up in the 10 00 hour. This is a Bloomberg Business flash. Considering an investment in yum brands China Business according to people familiar with the matter. Young ms. Consider the sale of a holding in its China Business. They own kfc, pizza hut and taco bell. China provided more than half of youngs revenue last year. The worlds biggest Clean Energy Developer is facing a possible default. They have postponed the release of last years annual report twice. If they do not file by march 30, they could be in technical default of 1. 4 billion in loans. The debt more than doubled last year to almost 12 billion. International Monetary Fund says inexpensive oil has delivered a boost to Economic Growth. The benefits may not materialize and phil demand picks up and Central Banks away from Interest Rates close to zero. That is the latest business flash. Jonathan big story in the world of tech, star board is taking aim at yahoos board. They nominated nine new directors to join the board. Yahoo in the last half hour saying it will review the nominees. Erik schatzker joins us to break it down. Takens a company that has the proposal seriously . Yahoo is taken some of the proposals seriously in the past, but his always been very slow going and star board has indicated that up until now, progress has not been made at a fast enough pace that it felt it had any choice but to try to sweep out the current board at yahoo and nominate its own directors which is what happened. That puts shareholders in a position where they have to make a choice. Unless something changes over the next to an half months, shareholders will have to decide whether to stick with the board and put Marissa Mayer in place and ultimately presided over the deterioration in yahoo share price, or go with something different. They have to decide for themselves whether what star board is offering is what is better than what they have already got. We can look at what star boards offering, nine directors with a andety of expertise companies ranging from Nbc Universal to cisco the tesla the charter communications. It has brought nine people om more than a list of 100 potential nominees and these people have some qualifications. I will highlight the former ceo of tribune who is involved with company and its restructuring and turnaround which is where yahoo is, right now. He is also the lead director and former chairman at sirius xm. He has some serious governance chops. Probably stands out among the nominees that star board has proposed for his experience both as a Senior Executive level and a high level in a corporate boardroom. Jonathan you raise an interesting point, whether star board is the right company to be doing what they are looking to do. Apample i am given is or asset play, what star board did was going to the company and turnaround a Business Model. Eric that is true, except there is a step that needs to be taken before, which is to bring new governance into play. A shareholder has to have confidence that the board of directors is going to make the decisions in favor of the owners of the company, namely the shareholders. You have to decide for yourself, do you feel as though the current board has made those decisions, do you have confident that they will make those decisions going forward, or will take thate responsibility more seriously and perhaps be prepared to take older steps . That is what star board would point to as a failing on the part of the yahoo board, is a reluctance to move with the toed and ferocity necessary take a fading tech company and turn it around which is only been done once in a history of Silicon Valley at apple. Matt intel was in memory until they saw a lot of competition from asia, then they turned to tim intel was never memory. Matt they reinvented the business. Let me show you that star board has done some good taking a small stake, going in and doing some corporate action. Eric pointed this out, they won their proxy battle here at 42 a share, and then boosted the stock to almost 66. Even taking a small stake and i know you are skeptical of companies that do this, less than 1 stake in yahoo and looks to put nine members on the board. Toy still have the ability move the share price which is, in the end, eric the likelihood of that transpiring at yahoo is limited and the reason is for from what you said before. Darden is an operational turnaround but the part of the company that needs to be turned around is very small relative to its total asset base. Matt they have one billion people using their browser. Jonathan investors should always have a say, but when you dont own 1 of the stock, should you be able to replace the whole board . A voteket is casting this morning on this proposition and saying, down 2 . Eric first of all, this was weeks in the making, and so that star board is launching a proxy to replace the entire board should come as no surprise to anybody who saw them do what they did at darden. Directorsplaced 150 at a total of almost 50 companies over the past 10 years. This is exactly how they operate, they call it value cap plan cap, do we see value in the company . Do we have a plan to turn it around for the value to be unlocked . If the plan does not go the way we want, do we have a path forward . The path forward is always the proxy fight and that is where we are. Jonathan i think they should just have a bit more skin in the game. An app called convoy is being touted as the uber for trucking and is being backed by some of the heaviest hitters in Silicon Valley. Joining us now, the ceo, daniel lewis, before we talk about the business, i just write off some big names at a time when a lot of people are looking at funding, essentially drying up in the future. Daniel i think we are going after a big idea. A lot of people you mentioned have built transformative businesses, themselves. We are going after one of the biggest Market Opportunities there is. Jonathan just in terms of the funding you are getting, what kind of valuation because people are talking about markets not being frothy in the public space, but in the private space. The kind of investing you are receiving. Get into will not specifics around valuation, but we have a very fair and attractive set of terms for this deal. We talk about uber eyes asian uberization so often, what makes you special in that sense . One of the biggest distinctions that i think you have to look for is, did the business exist already . Take in stuttgart take instacart. It is a great service, but before that, there was not really an intermediary between you and the grocery store. That service is not exist, so when you want to add a new Service Layer into a Business Model, you have to find a way to make money and squeeze a margin out of the system. Is a business where there has for years been middlemen between shippers and trucking companies. The Business Model for connecting the two sides already exist. The margin already exists. We are not trying to invent something new, we are taking an existing Business Model and making it run more efficiently so we can increase Service Levels and lower prices. Jonathan the freight business in europe is heavily regulated with the amount of time truckers can be driving. His regulation going to be an issue for your company is a galatian to be an issue for your company . Daniel i dont think so. We are working with established trucking companies. They already have an established business and are already working with middlemen. On hows of regulations long someone can drive, everyone will have to follow the same regulation at the end of the day. We are in a position to use technology. Jonathan thank you very much. Best of luck. Coming up, Bloomberg Markets with vonnie quinn. Stocks down aggressively in in openingn by 2 lower in the u. S. As well. We will be asking our first guest of the about that. Also a theme of the day, this socalled money market. Bunny market. Talking about equities and a range. We were also visiting the new York Auto Show with some great guest. Matt miller is bringing us the president of cadillac at general motors. That is all coming up at 10 50. Jonathan timeout final thoughts with matt miller and myself, next. Jonathan the head i head of the threeday weekend, matt miller has some good news for the bears. Matt jonathan Bloomberg Markets continues, next. Vonnie 10 00 in new york, from bloomberg world ted cruz headquarters in new york, i am vonnie quinn. Mark i mark barton, this is bloomberg television. We will take you from new york to london to berlin in the next hour. With 30 minutes of the trading session and stocks are falling for the Third Straight day. Streak ofck to hold a five weekly gains well the downturns negative on the year while the dow turns negative on the year. Gunning for yahoo , investors star board mean to shake up the struggling web company in a big way. Nominating 5 nine directors to god board, saying the company has been mismanaged. Lostinvestors finally their patients with the chief executive . Vonnie