Led by the minors, down by 1. 5 per dollaryen, what a move on friday. The biggest move since october of 2014. We erased some of those gains, down. 6 of 1 . And yields are creeping higher. The 10year now up ahead of the Federal Reserve decision. Carol watching the markets and some specific names, lets head to matt miller with some stocks to keep an eye on. Matt first off, some energy names. We have energy down or oil, i should say, coming down off a fivemonth high. As a result, a lot of these Energy Companies are down as well. We are still looking for earnings for most of them. Conoco is out tomorrow. Murphy and marathon are coming out next week. We already had schlumberger, to sixell to a five month high on friday. A lot of these companies are coming off good runs, starting the day down across the board. The same is true in europe. Oil stocks down, but also the commodities of stocks the minors are down. The underlying Commodity Prices are falling as well. You will see php we have had an incredible run in the shares. Anglo american is up 150 this off it is, so coming still not bad if you invest at the beginning of the year when all of the analysts were telling you not to do that. Daimler and volkswagen are falling as well, and volkswagen had a great run, but daimler and volkswagen together have had a rough year. Volkswagen is down 20 year today, that year to date. Obviously the Diesel Scandal that has started to engulf other companies, daimler including itself in a voluntary recall less weight. It is also talking with the u. S. Justice department or helping the u. S. Justice department to investigate possible diesel in missions errors diesel emissions errors over here. Fiat chrysler as well was mentioned by a german minister on friday as one they are continuing to investigate for email ands problems. For emissions problems. It is taking a hit now. It took a hit then. Just a tremendous bloomberg report today on japans stock market. The boj, a top 10 holder in about 90 of the nikkei 225. It is well known what they own in the Government Bond market. It is wellknown what they owned in the etf market. But to break it down, are we expecting governor kuroda return up the idea of matt i did not know that before i read this story on my bloomberg on my mobile phone this morning when i woke up hearing in amazing story. I have looked into one of the etfs here, the fast retailing etf. You can see the third entry here , Master Trust Bank of japan. You can click on the graph on the side and see the bank of. Apans holdings overtime they now own 12. 5 of this etf. If you look at all of the nikkei 225 stocks, the bank of japan is a top 10 holder in 90 i am not sure how well known that was. Are a topee they three older in psalm stocks, top five holder in a lot of them. But 90 of the nikkei 225 companies. As far as the etf, it is a bigger share. They own half the markets of japanese etfs. The etf market in japan, not quite as big as that here, but they own more of the rest of the market from this graphic. Down, to allit equities in japan, they own about 1. 6 of the total equity market. But that is still a pretty sizable chunk. Jon matt miller, thank you very much. John micklethwait joins us around the table. Price distortion is one thing. The solution for one problem seems to be the source potentially for another. Where do you start when you break down those numbers . John it is sort of state capitalism from a new direction. Governments used to own vast arrays of companies. Privatize on the one hand. Others are thought to have strategic direction. This is not strategic direction. It is just buying them and ending up with it. It is a new version of the bank of japan. David the 1. 6 may issue because its concentrated. There is a fairly large position. To go back to jonathans point about the shareholder meeting, that is a serious point. You expect shareholders to exert some influence on the company. Factor. Nership is a big if you own the shares in something, in the end you have to have some degree of voice of what is happening. That is not really the aim of the bank of japan. That is taking you back into charted territory. What happens . Do people call on the bank of japan to intervene . Are they expected to behave differently to what shareholders do, etc. , etc. . What does it say when it feels like officials are doing everything they can to shore up everything in the economy, and yet they are still having trouble . John that is the other story. They kept on doing this stuff, and it is the thing it is the same theme we have discussed before. Politicians are not doing enough. That the regulation we all looked for. There is not the same degree of opening up that would have pushed the japanese market through. Ofis back to the same sort deals that we are seeing in europe. Big story this morning, saudi arabia. Totwo hours, we are expected see the sweeping reforms moving away from oil. We have heard a fair amount of this in your interview with the gevity crown prince. Give us a preview. Over the past three or four weeks, they have now announced that the king approves of the plan. The plan is for 2030. By then, saudi arabia, the biggest oil economy in the world, to move that into one where where oil is right in the center. It a privateg company, giving bits of it in the market, putting inside that putting it inside a Sovereign Wealth Fund. It means redirecting many of the subsidies, trying to bring trying to do something and this is where it gets sensitive and this is where we will see exactly what they will do. Trying to do more to liberalize saudi arabia to attract Foreign Investors in. All of those things are huge, but it is a dramatic change, and whether they succeed or not we will wait and see. Right now confirming largely some of the bloomberg reporting that has already happened, the ipos for remco, the ipo less than 5 . The evaluation has not concluded yet. My question to you, if we were talking about china, would we be skeptical . Looking at the government from last year, the fact that two thirds of the whole country are employed by is this too little, too late . John it could be. There is some ground for hope, but not all of them great ones. One of them is they now know, they all understand that something has to change. Second, there does seem to have been extraordinary waste. , it they talk about money is on a level unknown. Normally you are used to hearing whenever a western politician will cut and says i are known to be rubbish. The other fact, this is still a monarchy. The king wants something and his son wants something. There is a bill of there is the ability to push things through in a slightly chinese way. There are difficulties with the matt i have just quickly graphed on the bloomberg terminal saudi arabias unemployment rate. The information only goes to 2015. Europe. Uld be high for i am thinking about the other half. How many of the 90 of people that are not unemployed are working in jobs, and how many of them just count as employed because they are on state oil payrolls and they get money and they are tribal and living on the land and not really working . John a huge amount, and you have a huge number who are underemployed. Who are not women allowed to hold jobs. There is a vast reservoir of people who may feel discontented, who may feel angry. One of the big issues here is that those of the people at the moment they are pushing subsidies toward. What happens if they take away those subsidies, which is the rational economic thing to do . At the same time, they do not give them the kind of representation. Jon part of carol part of the plan is that there is also going to be social change. For women having greater rights there, does that jeopardize the economic aspect of this plan . John making saudi arabia more liberal based in the long term will bring in more investment. This huge gleaming thing carol it is empty, isnt it . If yout is empty because work at Goldman Sachs or morgan stanley, you do not necessarily want to go there her. In the shortterm, it brings the reformers absolutely into conflict with some of the more conservative elements of the religious establishment. That is the deal that the saudi monarchy has struck. Some say over the religious side in exchange for supporting them. At some point, those things come into conflict. David we are calling john micklethwait, our editor in chief. Thank you for being here. With someine hyde first word news now. Caroline president obama has made it official. He is sending more u. S. Troops to syria to fight islamic state. The president spoke after visiting a trade fair in germany. The breada a small of Operations Forces are already on the ground in syria, and spread of small Operations Forces are already on the ground in syria. I have approved an additional 250 u. S. Personnel, including special forces, in syria to keep up this momentum. Caroline they would be training local troops. Two gop president ial candidates, cruz haveh and ted agreed to campaign in certain states and avoid others to try to stop the nomination of donald trump. Latestorth koreas attempt to display its military might. The regime says it has successfully test fired a missile from a submarine. That would make it harder to find out from outsiders when north korea is doing before it launches. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am Caroline Hyde. Jon coming up, the president weighs in. Obama says if you want to trade deal, get in the back of the queue. Carol this is bloomberg. The coceo of Deutsche Bank and four Bank Employees have been acquitted in a fraud trial. The charges were linked to the claps of the media empire to the collapse of the media empire. Trader. Being sued by a the trial is taking place in paris. The trader emailed a 1400 spreadsheet listing all of hsbcs transactions back in 2010. He is demanding money in compensation. Bank export import this week, airbus will deliver its first airplanes built in alabama. Buyers could that is your Bloomberg Business flash. Obama spoke this morning in germany to announce his approval of the point 250 more special forces to syria, a part of his plan to keep up the momentum in the United States fight against islamic state. Our guest joins us now from berlin. For anyone who thinks this is a largely ceremonial tour of europe, does this tell you otherwise . This tells you otherwise to a point, and also his message. He has made it very clear that he wants europe the european union, which by now is 28 countries, to stand together. He repeated that message today in his speech at this Big Industrial fair in hanover, and he also made it clear before when he was speaking with chancellor Angela Merkel of is, sure,he message the u. S. Can stand up and send 250 extra special forces to syria, but europe also has to stand up and stand together. Members you mentioned could become 27. At this point refugees, immigrants, the crisis that has emerged over the last several years is at the forefront of those conversations. What did he have to say about germanys role in all of that . He was verily if use of that he was very if you save he was very if you save with Angela Merkel. Turkey a solution with to the syrian refugee crisis, obama stood up and basically said she is doing the right thing, she is on the right side of history, praised her moral stance in general, and stuck up for her on this very divisive issue in europe. So that was a very clear stand there. Basic Building Block of the European Alliance has been nato. The president has been concerned about whether countries are stepping up on their commitments there. What is being listened to by our nato colleagues . It has been a longrunning issue that the u. S. Feels that the burden sharing in europe is not big enough. Germany it is interesting because germany just this year merkel to steper up its defense spending not in a huge way, but it is an increase. He, alongside merkel yesterday, pointed out that europe is not doing enough, in his opinion, on this matter, in terms of defense spending as a share of gdp. So it is a sore point that has not been resolved. Jon thank you very much for joining this program. New bankrolls are being proposed in the United States that could have a big impact. We talk about that on bloomberg. Jon this is bloomberg. About those go hours away from the open in new york. Futures here in the u. S. , soft. Dow futures down by 31 points. Germany, the e for unexpectedly weakening. The dax a little bit lower on the session as well. Push up the board just very quickly. Through the other asset classes, yields down by two basis points. 1 i retreats by. 9 of retreats by. 9 of 1 . A big pop on friday, a bit of a 111 point 13. The big market moves of the last week or so. Matt all of this is very global, jon. Let me start off with a couple of stocks that had great rallies this year. Caterpillar sticking higher again this morning after Goldman Sachs upgraded both names. Now in neutral, that they were cautious, citing a recovery in china and mining fencing. Morgan stanley, in what i think mining spending. Morgan stanley says the recent jump in china commodities prices has stunned world markets. Seeing jobs in steel, iron ore, copper, even garlic. The chinese obviously had speculated a lot of equities markets and real estate, and now they are going into commodities. Southwestern is taking a breather, but take a look at what the stock has done since march 1, more than doubling in price. Today cal and cut its pricing to market reform, sending shares lower back to the fivemonth high from what they close out on friday. Cowen had an incredible run. Taking a look next at spanish giant santander. Jpmorgan says the shares are undervalued and traded just 7. 6 times 2018 earnings. Morgan is warning that investors should keep European Bank exposure low. A lot of global calls in the market this morning. David time to take a look at the top trending stories on the bloomberg terminal. You can look at this yourself. We are listing several of them up there by now. One that struck my fancy in the United States we have these regulations that are motivated for the best of reasons and have these unintended consequences. Tomorrow the fdic is supposed to vote on this new set of regulation they say you cannot collect your bonuses if you are a banker for a full five years. Up they cause people to base pay. And secondly it will make it difficult to recruit people from other banks per that is not the s intention at all. Jon what do we get . David this goes the other way. Carol coming up, it is a big week for economic events. Do not forget we have the fed meeting we will talk about that on bloomberg. [ soft music ] e. T. Phone home. When you find something you love, you can never get enough of it. Change the way you experience tv with xfinity x1. Show show me more like this. S. Show me previously watched. Whats recommended for me. X1 makes it easy to find what blows you away. Call or go online and switch to x1. Only with xfinity. Carol welcome. I am carol massar hard. Lets get a check on markets. A busy week for investors. Down across the board after two weeks of gains for stocks over the past couple of weeks. The nikkei is down, and a big week for the bank of japan. They are meeting expected asset prices. As for the currency trade, you can take a look at the yen. We saw the yen take a hit on friday. And if you take a look at crude oil, trading lower with more supply on the market. All right, lets get to the first word news with Caroline Hyde. President obama is pitching American Business in germany. He spoke alongside Angela Merkel. So here in the u. S. , we are proud to showcase americas commitment to innovation. You will see pioneering Countries Companies changing the way we live, work and learn. So this is another chance for me to tell everyone to come here and by made in america. [applause] said thatsident also Companies Looking to create jobs should set up in the u. S. The Obama Administration will decide in the next few weeks whether to release part of the secret chapter from the investigation into the 9 11 attacks. That is according to bob graham who was the cochair of the investigating committee. It will shut light on possible saudi connections. And the brussels subway station hit by a suicide bomber has reopened. Trains began rolling in this morning. Therwhile, the attackers o target, the brussels airport, still is not up to capacity. Global news 24 hours a day, powered by our 2400 journalists in 150 news bureaus around the world. I am Caroline Hyde. Jonathan thank you. Breaking news with matt miller. Matt yes, i am looking at the terminal right now. We are seeing headlines come across let me get in here, for one second good net is going to buy Tribune Publishing for 12. 25 a share. There is some and the day news to kick off your monday morning. Give it has a ticker here. For 12. 25 atribune share. It said tribune has refused to begin construction of talks so it could be a hostile takeover. The offer is a 62 premium to tribune shares before the april 22 close. So far, that is all the information we have. So it is looking to put a premium on the shares, 12. 25 is the deal. Jonathan a busy matt miller keeping us on top of the story. Back to politics where president obama weighed in on a potential breakxit. That the saturday u. K. Would not be able to negotiate something with United States fast or than the eu. We wouldnt abandon our efforts to create a trade deal with the european single market, it could be five years from now or 10 years from now before we were in we were actually able to get something done. Francine lacqua joins us now. The headlights came into the News Conference and over the weekend, that one line seems to have poured gasoline over the whole thing. Thecine co this is done by finance minister of france and germany. Ce minister of there is a sense that president barack obama is extremely passionate about this. His premise is that world growth of the eu, Everyone Needs a stronger, unified europe. He was in hanover to hours ago speaking next to Angela Merkel talking about the unity that the eu has and has had, it has only been beneficial for the rest of the world. Although it may not always feel like that in europe. I wanted to bring up a morning mustread that we picked out. First of all, this came out a few days ago and it was a brilliant piece. Guys,ks about it and says dont do this. But the full premise of this opinion piece is that he says Boris Johnson over the past couple of days, the fact that he talks about barack obama opinion, it gives us a glimpse of what happens if we do brexit. It could be pretty ugly. Jonathan it is worth pointing to that he used that quote get the argument over the churchill that was removed. That is also something that president obama addressed and dismissed. The other part that i find fascinating is that it pushes back in that the president will be gone in Nine Months Ended doesnt matter what he says. Is that an argument that is resonating . Francine he is very popular and he is considered a thinker. He is considered a progressive the most european president that has been around for the last 1015 years. The points that Winston Churchill it was brilliant. Borisk obama slams down johnson by saying he had to remove that because it was too crowded that he has it in his personal space in the white house. But what we learned in the last couple of days was the fact that Boris Johnson slamming the u. S. President just meant that he looks more like a hardliner, rightwing american, which will backfire in the u. K. Jonathan thank you so much. A lot of people said it would take it while nothing happens with congress anyway. David that is why would he said was right. He has had the experience. Look at the way our congress works. Carol yes, everything takes a wild. It is time for the econ recon. Carl riccadonna is going to take us through this. We have the gdp coming out this week and you have dated today . Carl yes, we start with new home sales. We should have some rebound but the focus is on the developments into this week. We get the last data point ahead of the statement which will be verbal goods on march. The reason we focus on that is because a lot of these surveys are showing some improvement in the sector so there are hints of green but we have yet to see it in the hard data, data like Industrial Production or factory orders. Carol but you and i have this conversation all the time. We are a service led economy. Carl the Manufacturing Sector is very important. It is tied into manufacturing, we should not get rid of that. Later in the week we have the fed statement on wednesday afternoon. I would say even more important than the fed at this point, because the fed meeting is at this point this is a dead meeting, there is no chance of any major rate action so the challenge for policymakers is to refine the language so that june doesnt slip off the table entirely. The june probability is already entirely low. Carol 19 . Carl if it was higher they could acknowledge economic weakness but given the probability for june, and if they want to have multiple rate hikes, they cant talk the economy down too much. David and what we really care about is whether the economy is growing. And that is the gdp. We have numbers out of atlanta and new york char contradictory. Carl slightly contradictory because we have atlanta fed saying. 3 and new york is. 8 but both is under 1 . Those numbers are on thursday and then we get the incoming spending numbers, which are part of the gdp, on friday. The point being, if the economy is growing below point percent, it will be very challenging to hit the target of 2. 2 . You have to really accelerate. David the trendline is not in a good direction. Carl we have been decelerating for three consecutive quarters. So if there is the issue with q1 gdp. Carol weve seen this story before. Carl the fed is inclined to look beyond this, this residual seasonality of this, which is a statistical fluke. They need to look beyond that and see signs of growth. That is why two of the april indicators will take on some significance. The have Consumer Confidence which is an april number. And the chicago pmi coming up. Jonathan i am very confused as to what the fed is going to do for the rest of this year. Carl the fed is very focused on multiple rate increases. Which means that either june or july, you get to crowded around the election and delivering a second rate increase by yearend. So they want to maintain the option nowadays for the two great hikes and that means they cant pop down the economy too much. Carol carl riccadonna, thank you so much. David more breaking news. Jonathan matt we reported last week that this was going to valeant. Baseds a dublin, Ireland Company that makes baby strollers and formula. Hurray go has named its own ceo as ceo. This has been a problem, the naming of for the stock. If you take a look at the shares, last week, the wall street journal reported and we matched a story that joe would lead to go to valeant and shares tanked. So now they have named a new ceo and come out with earningspershare and sales that are in line with estimates. Billionsales of 1. 3 dollars. We were looking for 1. 4 billion. Theyre putting out the eps forecast that is far less. Is likely going to still have real problems. Whole ingged one getting a new ceo in there. Jonathan another company to futures stayet negative, lets get the scoreboard. S p 500 futures down marginally what in europe, we stay lower. The ftse is down by 44 points. Matt i am here in the green room. Coming up, Harvey Spevak. I am a Caroline Hyde in london. This is a bloomberg is as flash. New rules for bank pay in the u. K. The plans require four years to collect base pay and recruiters say that if the rules get approved, senior banks will end up getting larger salaries with smaller bonuses. A new report says American Department stores need to shut down hundreds of sites. These studies says that is the way stores can regain productivity they had a decade ago. This is according to the wall street journal. Retailers have been hurt by discounters. And beyonce has given a big boost to title. They were well behind when it comes tos as drivers she released her new album after a saturday special and it doesnt hurt that she is a part owner. This is the latest imitation of how superstars are gaining more control over how and where they get played. And that is a Bloomberg Business flash. Carol thank you. It is time for off the charts. Mario draghi signaled that the European Bank is going on hold as officials we do see how stimulus measures played out. That cause may hand janet yellen the chance to raise Interest Rates. How does that work russian Mark Matt Miller will walk us through it. A function. P e is we havent used in a long time. This is very interesting. I pulled up this morning and noticed that futures are predicting a 0 chance of a rate hike this week. A 0 that seems very low, considering the fact that they are predicting a 2 chance of a cut. That doesnt make sense. But the market has its audit these and this is one of them. If you take a look at the dollar and the euro, this is what the story is about. This chart is normalized from december 1 and it shows the trade weighted euro in white and the trade weighted dollar in blue, i should have switched the colors. In any case, the dollar has weakened since december 1 as the euro has gained, relative to each other. So one of Janet Yellens main concerns is that the dollar is getting too strong. And while the europeans dont mind having a weaker euro, we dont want to see movements that are rapid. Right . So if the European Central bank is on hold, this means that the gap between the currencies is not so much and it makes it easier for janet yellen if she wants to ramp up rates . Matt thats right. And the economists in our story is saying the Third Quarter is more likely but you might see it in the Second Quarter where futures are predicting a 0 chance of that. Let me show you one other chart. Moving from the fed to the global Central Banks and what the effects have been. They are weakening or ease in a or easing with Monetary Policy and even though the fed raise rates once, they would say they have eased, really. The worldee here is index, so equities, and in blue, the bloomberg commodity index. We have all seen this but since oil came down and brought markets down with it, all of us got a little bit easier. But the bank of japan, the ecb, ede fed that has boost equities and tuesday commodities. We call this the fed plunge protection team. Carol this is exactly what federal bankers are hoping to do. With the volatility we saw last summer, they are seeing support. Matt thats right. It is a different discussion but the rich get richer. The middle class dwindles. Carol we will leave that to the president ial candidates. Matt bloomberg has a great chart story showing how the wealthy, through this kind of action, have grown their wealth and the middle class has twiddled. Bloomberg did a story on it on bloomberg. Com. Iracy for he,consp like i am carol great. Isid quickly set up what coming up next. Rich people and president ial candidates. We talk about Hillary Clinton. We will take a look next. David this is bloomberg. Ted cruz and john kasich may be getting together in an effort to stop dividing the antitrust vote but is it too little too late . Megan murphy joins us now. Tell us what is going on with this attempt . This is a lastditch effort and it is all about indiana, holding the primary on may 3 and has a crucial 57 delegates in play. It is a winner take all basis. Is is a market shift, particularly from the ted cruz campaign. They had started to portray john kasich as an outlier and what theyre doing now is making an agreement where john kasich will withdraw from indiana and he will be allowed to focus on new mexico and oregon, giving ted cruz a clear shot at disrupting donald trump in indiana. David is there any chance of voters will rebel . You know, it is difficult to see how this will play out because it fits into the donald trump narrative of saying, it is a raked contest. Not only am i having delegates stolen from me in how they are rewarded but now you are explicitly telling people how to vote. In indiana, we see donald trump having a lead but if john kasich withdraws, it becomes much narrower. Whether or not the voters will buy this it was announced at 10 00 p. M. On a sunday night. It is interesting stuff and it shows the desperation of the stop trump vote. Carol with five northeast primaries tomorrow, isnt this too little too late . Why didnt they do this earlier . The republican establishment will be asking why they didnt do a lot of things earlier. It is coming late in the day and donald trump looks to have a good day tomorrow in the northeast primaries. A better day than many would have expected. Look, with the forces are trying to show is that when the band together and have a specific target and run specific advertising, they can make it difference, as in wisconsin. But show how strange this is, last week, ted cruz was running ads against john kasich in indiana. They are certainly trying to get their ducks in a row late in the day. David the other big story is charles koch coming out and not ruling out the possibility of backing Hillary Clinton. Lets play that interview. As far as the growth of government and the increase in spending, it was two point five times under bush than clinton. So is it better that clinton could be better than a bush . Its possible. You couldnt see your selfsupporting Hillary Clinton . We would have to believe her actions would be different than her rhetoric. David i found this remarkable. Charles koch is not ruling out the possibility of backing Hillary Clinton. Absolutely remarkable. This is a man whose political operation has been to spend as much as 900 million backing republican candidates up and down the state and National Elections this year. This shows how people like him are so baffled by the rhetoric that weve seen by themes in this election, Donald Trumps ban on muslims entering the thetry or immigration or middle east or ted cruz advocating for a hail of bombs in an effort to fight isis or how destabilizing this has been for members of the money players. It is a remarkable turn of events that he would say he is considering backing her. David is it any indication of the difficulty that donald trump would have unifying the Republican Party . I think any of the candidates, with the exception of john kasich, would have trouble unifying. Ted cruz and donald trump are extremes of the party. David thank you. That was megan murphy. Carol this gets more anded crue extremes of the party. David thank you. That was megan murphy. Carol this gets more and more interesting. David the plot thickens. Jonathan coming up, talking to companies in the fitness sector. We are one hour and 34 minutes away from the open. Futurist anegative. On april 29, the bull market will be the longest of history in the s p 500. Jonathan read all about it. Proposes to buy tribune. We will have the latest. David oil is retreating from a fivemonth high. Investors wait Monetary Policy decisions from the u. S. And japan later this week. Carol and a mirage . Saudi unveiling a blueprint of aramco exceeds 2 trillion. David welcome. I am david westin here with Jonathan Ferro and carol massar. I am a big fan. Carol wonderful to be sitting next to you. In this hour we will preview the feds meeting this week but the only economist to believe the fed will not raise rates until 2017. We also have the ceo of equinox, Harvey Spevak jonathan . Apple reports earnings tomorrow. Get later in the week we u. S. Gdp numbers. First, a check ahead of the open. 90 minutes away and futures stay negative. The s p 500 futures are negative three. In europe after two straight weeks of gains, we start on the back foot. Business confidence came in on the session a little bit weaker than expected for the previous months. Lets switch up the board. Stronger this monday up about. 3 . Yields have pushed that lower with a basis point. At 43. 44. By. 7 lets get back to stocks. Matt yes, lets take a look at crude forces being down. This take a look at what crude is doing. The only one of these four that has reported earnings already and schlumberger is at a sixmonth high itself. Crude was at a five month high on friday but it is coming off of the highs and as a result, you see numbers that have yet to report earnings are still down. Conical phillips is out tomorrow, marathon oil out next week. Watch this space. Because if you get any lesson from schlumberger, it they go down and then come back up. Errigo. Look at p they have named erickson as the apa is retiring. Valeant is up on that news. It is good that they have a ceo but they missed on their outlook for earnings, bigtime. Off by more than one dollar a share. They also missed on firstquarter earnings and on firstquarter sales. So this 17 billion baby Goods Company is in a little bit of trouble today. And the merger that we talked about earlier gannett made an unsolicited bid for the Tribune Publishing. 815s a deal valued at Million Dollars, 12. 25 a share. The friday over closing prices, they are trading near that but it is a hostile bid. We will bring you more on that throughout bloomberg. Lets go to vonnie quinn. Oops willore u. S. Tr head to syria to help fight the islamic state. Obama made the announcement after visiting germany. A small number of American Special Operation Forces are already on the ground in syria and their expertise has been critical as Global Forces have driven them out of key areas. Given the success, i have approved the deployment of 250 u. S. Personnel in syria in special forces to keep up the momentum. Vonnie he says the u. S. Forces will not be leading the fight, they will be training. Donald trumps competitors are teaming up. Ted cruz and john kasich have agreed to compete insurgency and avoid others to stop dividing the antitrump vote. That could bolster trumps criticism of the nominating process. He tweeted out a oneword response desperation o. Hasbrussels subway station reopened. 60 people were killed on march 22 when a bomb exploded. The attackers other target, the brussels airport, is still not up to capacity. Global news 24 hours a day, powered by our 2400 journalists in 150 news bureaus around the world. I am vonnie quinn. Jonathan we have a bloomberg exclusive. We have analyzed the bank of japan it is a top 10 holder clusive. We have analyzed the bank of japan it is a top 10 holder in 90 of the nikkei, critics are already wary of the bank and the impact on the japanese bond market. The bojs growing influence in stocks is resulting in valuations. Meanwhile, proponents argue these purchases are providing a muchneeded boost to investor confidence. Joining us now is Michael Purves is. The exit strategy is you allowed them to mature and they roll off the Balance Sheet. How do we see this Monetary Policy experiment . Michael they can always sell the stocks down the old down the road. I think it raises a lot of important conceptual questions. What the role is in a broader scheme of things. It is important to point out that if you look at the bank of japan Balance Sheet, relative to the gdp, it is 75 . Ours is 25 . So what the japanese have effectively done in terms of magnitude and the spectrum of assets and they even have private equity on the books, very small but as a symbol of it isthey are able to go, extraordinary. So is the bar gets set higher and higher, quantitatively and qualitatively, it allows the ecb and the fed to go in that direction. They are blazing the past. Carol the nikkei, looking at it from december is down from 13 . So all of these moves, including the bank of japan buying equities, it has not helped. I they going to get into trouble . Michael there are two questions. The first is if you look at the nikkei relative to the yen, it is take for take. Earlier ifbout this you look at the nico the nikkei ratio, it is in line with the dollaryen ratio. They are in a healthy set of economic markets with the backdrop to be a will to do that. And about rolling off bonds, our fed does not roll off bonds. Theyre not winding it down. Jonathan at this point, looking at with the doj is doing, it is not stimulating acid prices. And the rate of change has not changed at all. With a long dollar yen, has that changed . Whole rally, we get to the efficacy of all of the maneuvers and i think the bank of japan is at the forefront of whether this efficacy issue is going to be a real problem. We touched on corporate reform in japan. Will it drive governance issues and certainly not be an activist . That is what is needed. Carol lets talk about what is going on in the u. S. Markets and what is driving stocks. Earnings. We are in the thick of earnings season. Oil and the dollar let me ask you about the impact of a fluctuations we are seeing in the currency markets . We see ceos talk about that. Michael i did a quick analysis of where the dollar has moved to over the last 18 months and where it is forecasted last year, you can guesstimate that basically, the dollar is a third of the total miss last year. Estimates for last year were starting off at 124 and ended up at 111. And the dollar, by my calculation, was a third of that. So this year is different. The dollar has weakened and analysts have not caught up with that. I think there is a nice buffer in earnings this year. My rough math is that for every percentage point the dollar weakens, it might be . 40 on earnings of a pickup. Which could mean that if the dollar were to weaken another 6 from here, it would stay there and yearoveryear Earnings Growth could go from 6 up to 10 . David you have put your finger on a key distinction. On predictions and estimations. Yearoveryear actuals. Is there have been a fair number if you go yearoveryear, it is not as pretty as a picture. So the weaker dollar is not helping u. S. Earnings so far. Michael know, this is more prospectively. Carol what is your expectation for the dollar . It doesnt look like the fed will do much this year but who knows . Michael two things have happened with the dollar that is important. Versus what the fed has articulated in march, which is as important as qad when it came out. Almost more impact because it has taken on a new structure. Is my interpretation of how the fed is looking at it and therefore, if it is a dollar, it has to have a global framework in developing Monetary Policy. That is huge. And to the extent at the fed is data dependent, they will be dependent on foreign data. That is the first factor. What im very focused on is that the dollar has been teeing off of the spread over the last 12 months. If you overlay that sead on the 10 year with the dollareuro and that spread has blown out to multidecade highs. And my question really is, with the german so low, how much can that spread low out from here . Yellen,without janet the dollareuro has some cap on it. And the dollaryen as well. Jonathan everything you have just described, does the fed have a Monetary Policy . Carol a trouble mandate or a quadruple mandate . Central he market is and is the enormous amount of data that the fed is dependent on, lets put it that way. For sure. Carol all right, we will leave it on that note. Michael purvis, thank you so much. A global strategist. Alk aboutming up, we t ipos, it has been a slow year so far. But we do have the first tech ipo. Vonnie this is the latest Bloomberg Business flash. There may be an ipo for the record books when saudi arabia sells a piece of aramco, the company will be valued at more than 2 trillion. These audis plan to sell off company will be valued at more than 2 trillion. These audis plan to sell off less than 5 of aramco. Maybe we should call this investor the tokyo rail. One of the biggest shareholders in all of japans Largest Companies the bank of japan. Loomer crunch the numbers and found the Central Banks Exchange Rate make it a top 10 shareholder in 90 . Critics say that could distort valuations and also undermined efforts to improve corporate governance. And airbus may have a new ally to finance the sale of its airplanes. The u. S. Exportimport bank. According to the wall street journal, the alabama built planes were sold overseas, buyers could cap the bank for help. Carol thank you. Gannett is proposing to buy Tribune Publishing for 12. 25 a share. The allcash proposal provides tribune shareholders with a 62 premium. We have other headlines. Tribune is also saying that they did get this unsolicited proposal. They are now engaged in a thorough review of the offer. , weing us to talk about it finally have something going on. Talk about this. Is this out of the blue . Not necessarily, mostly because what is going on in the industry. Last year was the biggest number of deals in the newspaper industry since the recession. And basically, what is happening here is that people are trying to buy some time until they have to figure out what to do on the digital side. And so to keep growing, they are snapping up assets. They bought the media group last year. So it is really not surprising. But it does seem like they are a little frustrated that tribune is not engaging in discussions. Gannett sent a letter to tribunes board in april and they put the letter in the release today and it says look, we are frustrated over the continued refusal to begin these discussions. So maybe tribune is dragging their feet . They have been inquisitive and they did recently had a california paper deal get blocked by the department of justice so it seems like yes, they have thinking to do. David the keyword you said to me was newspaper company. These are not media companies. They have split them into the print and broadcast side. These are print folks. We saw that break up going over the years. Gannett spun off the Digital Companies into a new branch. That ended up being the Journal Communications group that gannett bought. We have seen a lot of puzzle pieces moving and then coming back together to create streamlined newspaper companies. David gannett has been an inquisitive company, buying up a lot small and regional papers. A have had a pattern of crosscutting. They have. That is where they try to drive the shareholder value. It is the acquisitions that seem to be the strategy. Matt i just noticed on and they go, a great function on the bloomberg, it can to use so much i put it on the timeseries tab and click on the just media deals and the media deal count has stayed relatively level over the last five years, it only takes here because it is q2 and we are not done with q2. 2014, media deals got very expensive. A little bit more into those of 15 but they have come down substantially. I wonder why this is . We have seen a reality check over the past few years that digital is around to stay. And so i think that has injected urgency and the willingness to pay more of a premium for the companies. A lot of the deal activity has been around the idea that we cant grow, there is too much pricing pressure on the typical advertising business so what do we do . We trim expenses and snap up other assets to have more Pricing Power and find a gross, topline and bottom line. Carol lets talk about secure works because they begin trading as a Public Health company on friday. Remember, this was the first tech ipo in a year, it has been dismal. The slowest since the recession. This was the first one to go out. It has been dead. We have had Smaller Health care deals. Startedure Works Trading friday. They are priced below the range, they downsize the deal. They only sold 8 million shares and on the first day of trading, literally traded flat. Priced at 14 a share and closed at 14 a share. So Pricing Power on the investor side. David what does this send to the Tech Companies who might like to go . It is a spinoff from dell so it is a little bit different when you think about a unicorn company. There is a bit of a gap. It isnt hugely highgrowth and it is losing a lot of money and it is in a Security Industry that is having pressure. Its not a huge disruptor. But, it doesnt send a message that investors are willing to buy into deals, which they were not willing to do in january so the window is opening but there isnt so much excitement that they will get a huge premium. Carol investors being discriminating, go figure. Jonathan up next, crude retreats from a fivemonth high. Brent is trading just below 45 a barrel. Jonathan crude is lower for the first time in five days. Retreating from a fivemonth high. Extended gains for the third, consecutive week. Philip, thisw is is not just about a weaker dollar. Fundamentals are in play. Saudi arabia is boosting the potential from one field to maintain, despite the pivot away from crude. Is forink that there main drivers that are holding up this Little Market and we will continue to play, going forward. What it will do is hold oil under a new trading range. Think this is the new level here. You did mention saudi arabia, they are coming up with a plan here to be an oil economy, that tells us that they are able to look out further and see that. If you look at u. S. Oil production, last week we were at a. 9 8 Million Barrels and we have dropped down to 8. 9 5 billion barrels. It shows you that our production levels are coming down. Iran has been boosting production. I think they will get to the number four spot, overtaking china. Once they get to that level than they are willing to cooperate and you will see the oil minister, not the oil chief, coming up to the meetings here. He plays a more active role on whether or not there will be any kind of cut or hold in production. And the last thing here, i look at the labor strike that we saw in kuwait and we will see those kinds of developments continue to happen as oil races climb higher. There will be more people who are trying to negotiate or get some of the money back that they lost. Jonathan heres a question. Actually fastforward to june, what is more important . The fed or the opec meeting . Ima Firm Believer that i dont think they will raise rates in june. I think there are too many problems and too much uncertainty with the global economy. The longer you wait, the she was going to drop, whether it is or greaseving resurfacing or a whole number of different issues. I really think that the fed will hold off and i think that december is the only rate hike this year. Jonathan thank you very much. Carol we are taking a break and coming up, we preview the fed meeting. The only economists to say they will not raise rates until 2017. 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 we are one hour away from the opening bell in new york city. Lets get a check of the markets. U. S. Futures are lower. Futures stay negative come off by 50 points on the dow, s p 60 points. In europe, the dax retreating once again,. 20. 25 . Switch up the board very quickly. Weakness across the board. Below 1. 11, down point. 1 for a stronger euro, a stronger japanese yen. Yields match that. A little lower in the u. S. Down by two basis points, 1. 87 . That relationship between crude and treasury yields still much intact. Crude retreating by. 6 . 43. 45. Those are the market moves. Lets go to vonnie quinn. It is north koreas latest attempt to display its military might. Kim jongun owns regime says they have successfully fired a test missile from a summary. Missilesty to fire from submarines would make it harder for outsiders to find out what north korea is doing before it launches. The Obama Administration will decide in the next few weeks whether to release part of the secret chapter from the investigation into the 9 11 attacks. This is according to bob graham who is cochair of the investigating committee. The documents may shed light on possible saudi connections to the attackers. More problems for pro Football Player johnny manziel. There are reports that a grand jury in dallas has indicted him for assaulting his former girlfriend. He is a former firstround pick who has been a bust in the nfl. The browns cut him after two years p last week, he was dropped by his agent. 24 hours a day, powered by 2400 journalists in 115 years bureaus around the world, im vonnie quinn. Saudis seller p7 oil Company Valued at 2 trillion according to the crown prince. He saudis plan to sell off less the 5 of the run of company and look a be the largest public offering. Andrew carter is in dubai and joins us now. Await the we posthydrocarbon blueprint. What do you expect to be in it . Andrew this is the biggest economic shakeup since the kingdom was founded in 1932. They will get every area of the economy. They want to create this Sovereign Wealth Fund to drive investment in the nonoil sector. They will bring in all sorts of new levees and taxes. They want to get away from being highly dependent on oil. They are aiming to generate 100 million by 2020. 100 billion. What was so last year is the country was slowly building through these reserves. There is an urgency behind this plan. It is wideranging, sweeping. The full details we should be getting later this evening when they announce the fine print of what they are calling saudi vision 2030. John you mentioned urgency. We hear things will happen by 2020, 2030. What will happen over the next year . Andrew on the urgency, the imf last year said saudi arabia has five years left. Front that crown prince came in and open the book, they said hang on, we only have two years. The timeframe was much shorter than i thought. That is what is drawing driving insurgency. Sugary drinks,n energy drinks, luxury items, possible toll roads. One of the new nuggets of information we got today was that the military industry will also fall under this. They will review contracts, see if they can develop a local industry. That is key. Saudi arabia is one of the worlds biggest spenders on military spending. Mbs said i am one of the top spenders, but when i look at the quality of what i have, im nowhere near the top. That will be one of the new things. John thank you very much. We are awaiting the deputy crown prince to deliver the headlines. On thursday, we hear from the fomc. Western to the fed. The fed and the bank of japan announced the decision to weeks after that. We hear from the bank of england. Many economists are expecting policymakers will leave Interest Rates unchanged, including the next guest. He believes a june rate hike will be next year. Tell us what you do and dissipate for the fed. Caution. Y a game of what we have learned from the fed is there is a clear asymmetry of risks where if the economy starts to head south, hit a speed bump in the road, the fed needs to be on the cautious side because they dont have a lot of ammunition to be able to deal with a situation like that. They will be must much more cautious that may have been in the past. They have come to the realization. Rates will be on hold for quite some time and less we see significant rebound in Economic Growth and Financial Markets. Specific. E when you say cautious, you mean no rate hike. Absolutely. It means that they will be frozen out of hiking rates in the near term because growth wont be there and Financial Markets will hold them at bay. There are a number of global events that make them worried. They will keep things on hold. They will keep rates on hold. They will keep their rhetoric to a minimum in terms of talking about raising rates. They will talk about being patient and letting the data speak for itself. The feds audience, who is it . Is it investors . Is a global . If they can block out everybody else beyond the u. S. Borders, with a be raising rates based on economic on the metals . Fundamentals . Bricklin i am not sure they would. Their audience, if you ask yellen, it would be everybody. Everybody on the street, wall street, globally. I am not sure that is really the case. It seems to be Global Markets driving fed responses and ultimately having that impact on the man on the street. Nevertheless, the story is the same which is that they are worried about the outlook. They are not sure what is to come. It will communicate that wariness to the market wor riedness. How trapped as the Federal Reserve . Financial conditions of eased back to where they were in december. We could sit here and think that if the fed tries to pull the trigger in terms of communication, the market tightens up all over again and this is a vicious circle on or before the next year or so . Bricklin that is a bit of a catch 22. Was talking yellen about in her speech in march before the Economics Club of new york. Basically, she talked about the market during the easing for her. Expectations of fed rate hikes coming in, people coming more in line with what our view is which is the fed wont hike rates. Thinking that the financial conditions of eased. We have seen lower real yields, that the dollar has depreciated, and overall, as you mentioned, financial conditions are back to where they were at the end of last year. That means whatever changes in their forecast that they had from december to march are probably going to be closer to where they were in december than where they are in march. At the next meeting where they do their forecast. We are not there yet. We are still in april right now. They dont have any new forecast to present. They are still buying their time right now. There is no rush to do anything. That is the status quo for the fed which is wait until the data forces you to hike rates. Lets talk about the data, the german breakeven rate in the u. S. 10 year bond. They have ticked up noticeably in the last few days. As that an aberration or an indication of things to come . Yields remainall, extremely low. Certainly, we see the tenure selloff quite a bit. That is significant. That is roughly where we are right now. We see we have seen yields selloff quite a bit. That is not a trend shift. We still see a tremendous amount of demand for a 10 year yield and treasuries in general. We have maybe a minute or so. We talked about elections earlier. They are keeping people on our toes. You say we shouldnt overlook the impact of u. S. Election cycles. What, specifically . Bricklin what we are seeing right now is that there are a number of different outcomes possible on the republican ticket. Colluding and kasich to try to take the next couple of races, that is a significant development, trying to force the brokered convention. What it does for markets is just raise uncertainty. It is uncertain what Trump Presidency looks like. It is uncertain what any republican presidency looks like right now because the Republican Party is so fractured. On the democrat side, it is not clear they are going to maintain enough support to actually push through their agenda. What we are hearing from investors, a lot of concern about where we are going from here, what, in fact, we can count on, of policy getting through. The answer is probably a whole lot of not much. Thank you for joining us. John interesting couple of minutes. For anyone interested in the crude market and valeant. Likes probably, separately. I am sure that some of its products use petroleum. Valeant has confirmed that joe popout will be its new chairman and ceo. We have been watching the story for about a week. Valeant shares higher in the premarket. Getting those earnings crushed. Check out this. Cl one commodity gip. Look at oil. A huge spike. See thek at co one, you same thing. A big spike in oil. I am digging into the headlines and data. I dont know exactly why. Down at one we were point, 1. 5, 2 . Now, were up a third of a percent. The oil market moves. We know that is highly correlated to stocks. You will probably see stocks move. Those Oil Producer Stocks that were down and dragging down futures earlier may rise, as well. Lets go to todays morning meeting. We will get global. Bank of america is ahead of the europe economic deal. Moak joins us from london with his take on the ecbs decision last week and what the central bank will do next. Thank you for joining us. All, wesk you, first of havent talking all morning hold,how if the ecb is on that gives janet yellen a chance to do her thing and try to get rates back to normal in the u. S. Is the ecb on hold . I think the ecb has no intention to move for the next two months. Y will probably consider given the fact that most of what was announced in march has not been implemented. We are still waiting for the first the beginning of the dying of they are probably ok. From their point of view, what they want at the moment is the fed to hike. That would relieve the pressure on the euro. Militaryhelp conditions. The floor is yellens. Up for theere, it is fed to give the next signal. Matt one of the things i thought last week was watching mario draghi insist that the corporate climate hasnt been negatively affected by negative Interest Rates. Especially bank profits. We heard the same thing from the risk banks. Saying bank profits were doing fine despite negative Interest Rates. Do you see it that way . Are these guys defending are they preaching their own book . Quite we have been critical of Interest Rates, arguing against that for a number of months. What draghi said is that so far, given the data they have, they consider no damage has been done. What is also interesting is that it wasowledges that if taken further down or if the negative rates were to stay there for a long time, then the consequences could become negative. I think they are trying to strike a balance there. I think they the most honest way to look at things from the point of view, they have no intention of taking it further. If something really bad happens, they could do it. The bar for this is very high. Matt thank you so much. The head of develop euro economics. John up next on the program, the ceo of equinox into branching off into the Hotel Business and where they are investing. 45 minutes away from the open in new york. Crude reaches back into positive territory. Here at the hbe greenroom. After we saw a threemonth high, aprils numbers are out today at 10 00 a. M. Eastern. Fitness is big in the United States and big around the world. Jason kelly wrote a book on it. It is on the shelves today. Sweat equity. It dives deep into the fitness inspector and it is available at the local but bookstores on amazon. Joining us now is equinox ceo and jason kelly. Bought them a wireless are. I want to talk about growth in your industry. Where is it . It is all of the above. From our perspective, equinox, it is happening in fitness clubs, boutique fitness, you have another brand called blink which is a mask market early entry level play. That is going quickly, as well. How big is a industry overall and what is your market share . Harvey it is big. We are a private company so we dont talk in terms of market share. We are the leader and of skill luxury fitness from the equinox side and the boutique side from soul cycle and we are making Great Strides on the blank side, as well. One of the interesting things is this portfolio that you have that has those monthly memberships as well as the boutique experience. What are the differences in terms of the consumer, in terms of the user of those products . Harvey i think the consumer is very similar. We are speaking to the consumer in a different way. More from experience. Want a members fullservice lifestyle experience. The soul cycle writer want something more boutique that inspires them in a different way. I love being part of a class, whether it is yoga or spin. You can get more stuff online. Advice, you can have an device at home. How is that eating into your business . We dont see it is eating. We see it as parliamentary. We are inspiring community, inspiring experience. You talk about the experience economy and what has been going on in retail. You cant get that experience sitting at home. It is additive, complementary, but not it it is not louisville we do in the studio. You see no pullback in any event . We are a highgrowth Company Going back to see 2000. We dont see any slowdown. One of the most interesting things you and i have talked about, and this comes across in more conceptual brand is this recession proof element to the business. You guys went into the Great Recession bracing yourself like everybody else. At worst. Ess was flat was that a surprise . It was a surprise, but not a shock. We talk about helping the new wealth. It is how people live their lives. When i got first involved in the late 90s, people talked about whether equinox was a fad business. This is how people lived. We talk about High Performance living. People today, as part of their daily routine, that is why we think we can get into the Hotel Business. People want to maintain that routine on the road. What about the Hotel Business . The hotel opens spring, 2018. Is that part of your Business Plan . It is immaterial part of our future Business Vision for the business. We have Six Development sites around the United States and big plans for a Hotel Concept come as well. Thank you very much. I cannot p also, jason kelly, new yorks bureau chief. Sweat equity, available at the next bookstores today. Coming up, jon ferro taking on matt miller and title of the charts. I have been looking forward to this all morning. The secondrket, longest one record. We will take a look. This is bloomberg go. David we have a colossal battle of the charts. I expect fisticuffs. Matt miller and our own Jonathan Ferro. I am up on this one. The Federal Reserve, it has been a big question. Next meeting, the date is ok in the labor market. Were having surprises on inflation data, as well. Heres the one condition to look for. Market condition. This is the white line. That is position on the dollar. The blue line, if it goes down, that means financial conditions are tightening. Spreads are widening and the dollar gets stronger. The last couple of months or so, the blue line starts to climb. That means financial conditions are easing. The dollar has gotten weaker. The real story here is that the. Ed wont react financial conditions of ease, because the fed is not reacting and are not tightening. The way you see that is the net shorts on the dollar. Net shorts speculate on hedge funds. They go all the way back to years. The point i want to make is that the market has got easier because the fed wont hike. Right now, the tail is wagging the dog and the dog is wagging the tale. If the fed comes out and tries to communicate they will hike, what you see will happen to financial conditions. They will roll over. At fascinating point we are in this market and what the chart shows use of the Federal Reserve is boxed in by the market taking a view they will do nothing. You think a quarterpoint hike by the fed would make financial conditions rollover . That that would be enough to stop the u. S. Economy . Already think that we are up against the clock. The market will react to a quarter point percentage base high. The hike. They will react if the outlook has changed. We have gone from four to two and a market that says one. If the fed comes up and says they will do more, it will adjust to the outlook for more rates, not just the one. Matt let it out and see if you think a quarter point would move the market. We are getting close. Friday is going to be a record. This bull market that we are in in white will overtake the 1950s bull market to become the second longest bull market in history. That is strong because in the 50s, they were up 370 . Right now, were only at 320 . It will be longer. It wont be as long as the march 2000, the 1990s bull market, but that wasnt a good ending. That was the first to a bubble. Merrill lynch is chief of estimate strategist says the bull market we are in now will be like the 1950s bull market than it fades away, rather bursting a bubble. You are voting format four matt . I am voting for jonathan. This is pertinent this week. The question of where the dollar is, how strong it is, it affects u. S. Earnings, everything. Unfortunately, were all listening to the fed. Futures predict a 0 chance the fed will move. It is not just about what they move or. For matt. Format it is hillarys birthday this week. We have a new way decide whose birthday is when. Interest. Coming up, peter boorish, chief strategist of our quad group will talk about crude and the market coming up. After tumbling more than 2 earlier this morning. A busy week for Central Banks. The fed announces its latest policy decisions on wednesday. Investors are watching for clues about possible june rate hikes. Apple is warning investors that its Quarterly Earnings tomorrow will get bad news about iphone sales. The question is how bad . Good morning everybody. About 30 minutes away from the opening bell. Lets kick it off with what is going on with the markets. Here is our scorecard. Future stay negative. S p 500 futures, negative four. Not big moves relative to what is happening in your. Germanpercent after Business Confidence comes in a little bit weaker than expected. Switch up the board. Throughout the session, the dollar weakness has been these the theme. Yen,onger euro, stronger south of that, down by. 6 ahead of the boj meeting. Yields a little lower in the u. S. At 1. 88 . A turnaround of the crude market in the last 40 minutes. A. 4 up. 4 . There is a move in the market to look at. The stories that matter to the markets now and for the rest of the week, joining us to break it down, peter boorish, she strategist and Founding Partner at tudor investment corporation. Were talking about oil. A big week for Central Banks and janet making a bit. U. S. Futures paring earlier losses after coming off 2 this morning. Saudi officials expected to announce the kingdoms plans at a News Conference this morning. Start with the crude moves. They happen rapidly. Those moves have moved slowly. Halliburton, we expect full earnings and we are not going to get them. Peter all of these markets, they are supply and durant the manager of an markets. If you tell me that demand is picking up or supply will be reduced, i would say there will be sustainable moving crude oil. We are back to where we were at the beginning of the year. Lets clap at the right party. In november, we were over 50. People are always looking at where things have come from, not necessarily where they have been. Crude is a supply and demand dynamic. There is political news to it. You have meetings. If you said to me are we more likely to go down then go up, we are in favor of it going down. Pewter, we have seen a fair runup in supply over the last few years. We are seeing show people come back out. Some of them under extreme distress. Doesnt that affect the supplydemand equation . If you look peter at marginal cost producers, saudi and iran, you get other countries that need to produce, as long as the economic incentive is there for them which is their marginal cost is far lower than the current price, they will continue to produce. This has been going on in commodity markets, but particularly oil for a generation. Once you step back and say wait a second, this morning, we are at 43. 5, and now were at 44, who cares . What really matters is where is it going to be over the next six months . Are regard to see a pickup and Economic Growth . That is the one question related to every central bank around the world. They are struggling with that. There is no visibility. Investors have to make decisions. What do you anticipate over the next six months . Peter we anticipate that prices are likely to be heading back toward the lower end of the range, if not making new lows because of the fact that there is the incentives for supply to continue to be produced. By the way, if i am a letter to these companies, even though i am losing, i lose more of the stop producing. I want them to produce. The supply keeps coming until we really see that taken off the market. That might be because some of these companies will have to withdraw from the market permanently. Number two this monday, Central Banks are set to dominate markets. The fed announces its latest polity policy decision on wednesday and the bank of japan meeting on thursday. Speaking of, we talked about this earlier. In addition to an unprecedented online program, it is quietly buying up huge bonds stakes in japanese currencies. Are that they are a top 10 owner of the nikkei to 25. I have to ask you, a lot of fed activity. I love the story from bloomberg. It shows the anchor the japan exposure to the japanese equity market and what it has done to prop up the equity market. What does that tell you . Peter it tells me one should be really concerned about the state of equity markets around the world. Peak is still 50 off its from the high of 1990. More money has probably in lost than people trying to pick a bottom in japan than in any other market over those years. The japanese go to negative Interest Rate and think that will weaken the end. Do . Is the market it turns around. The last time i was here, we talked about Central Banks having the notion of competitive devaluation of their currencies. Maybe they will go further negative. Lets throw a party that what they are saying is there is no demand in the economy. We are going to give away money. We are going to buy the stock. It still hasnt bounced . That tells you there are a lot of underlying issues in the market. I want to point out we dont expect anything from the fed in this meeting. The ecbs ugly said it is on hold. The market is showing you that they expect that the market expects moves out of japan. This is a oneweek risk reversal Erie Insurance against a falling yen, and in blue, one week one month risk reversals. Insurance against a falling yen for a month, or a week. This means investors are getting ready for a drop this week. Not as worried about a drop over the next month. That means they are expecting moves from the bank of japan to further weaken the yen. I think that economists are protecting the same thing. That the bank of japan will do something. Back to japan and its intervention in the markets. This is not just another player. This is, as some people say, the referee getting into the game. What is that due to the underlying functioning of the markets when the governor is a major player in the markets themselves . Peter it is not particularly healthy. One makes the assumption that they, perhaps, have more knowledge or insight than anyone else. They see the same information. Unlimited deep pockets, 30 are vertically theoretically. Peter correct, but they dont. If you are going to print more money there is always going to be leakage if you have International Fixed free Capital Markets across the globe. There is going to be if they take that money, that is fine. Someone is going to say do you want to buy my japanese stock . That is great. You can have it, i will invested elsewhere. To do that, they need to sell their yen and by the dollar and guess what, the fed doesnt like the fact that the dollar is getting stronger. They go in there and say we will lower our rates to lessen the dollar. It goes back into the cycle of competitive devaluation. Eventually, the markets, the investors, they run out of gas. That is the biggest concern. Are we at an Inflection Point after we have this rally . February 11, the world was coming to an end. Now, we are a few Percentage Points from alltime high. People are like, this is great. Steph curry got injured last night. Lastare all worried about nights game and what the effect is. The real players have to worry about the next again. If i am an investor, i am not worried about the rally that took place. I worried about where is the next 10 going . Micros go for macro to during the third story on the markets. Mergers and acquisitions in the media space. The net is making an unsolicited bid for the tribune for 850 million. 12. 25 in cash for a tribune share. Premium. 16 this is in the publishing area. This is newspaper publishers. Not a big growth area. What does this attempted merger tell you . Peter i am not an expert, but what this says is if you dont have demand, you want to buy revenues and consolidate and lessen costs. It is not good for aggregate demand because you are going to have fewer people employed in that industry. There is a lot of disruptive activity taking place in the media cable space which we can get into. Does it Say Something that companies are willing to pull the lever and do deals . Ipo deals are slowly starting to pick up . Peter you are incentivized to do it because again, Interest Rates are so low. You look at the margin. Can i buy revenue had zero Interest Rates and borrow and take on more debt on my Balance Sheet or can i organically grow it . The incentives are there. Im not sure that is a positive incentive. My expectation is not likely. We have seen this has the next cycle takes place. Now, you have relative debt. You go forward on a lower Interest Rate environment. If a pickup, which they will further down than most people think. That wont be healthy. Peter, you said you like to look forward, not backward. In the media area, is there any place you see growth that would make it attractive for investing . Peter i dont know if i would do fine the syntax base, disruptive space, in that area, whether you would define that as media, per se, or if it all becomes stop. I am not sure it gets commoditized, media and its siloed, or one has to look at how it will be put together. I love the fact that my title is chief strategist. I have perfected the art at 4 00 at telling what everybody what to do a 2 00. It is fun and then and im always right, but it is not helpful. Addicting success in retrospect is the best way to succeed. Lets put these stories up there. On oil on the fed, you are concerned about the future. The next attempt or send down on the back of these markets and the runup since february. You dont seem confident about the underlying earnings of some of these companies and walking down the aisle. My question to you is how would you position for this market over the next couple of months . The next again, the one after that . Would position myself go back to google. That atto it seems Inflection Points, news comes out of nowhere. We look at the economic indicators. Earnings have been mildly weaker. Revenue you can massage earnings somewhat by being smart and judicious as far as Senior Management goes, but you cant massage is revenues without aggregate demand. All of that says looking forward , we expect to, as with oil, to go back more toward the lower end of that range. The issue is do we reach an escape velocity . Do we take off 2130 in the s p or do we go below 1800 . More money has been lost. Anticipating something happening in the market rather than being patient. Have no problem being patient. Often times, the best trait is to do nothing. Being not wrong is a good trade. Would i be short . Not quite yet. It is getting close. Those are three of the stories the markets are paying attention to. User borish will stick with and talk about a lot of other issues. For now, bloomberg first word news with vonnie quinn. Vonnie donald trump is firing back at an attempt to unify the antitrump vote in some of the remaining primaries. Trump says ted cruz and john kasich are colluding in a way that would be illegal in many industries. The two have agreed to compete in some primaries and back off in some others. The goal is to avoid splitting the antitrump vote. More u. S. Troops are joining the fight against the islamic state. President obama says to under 50 more americans will head to syria. They will be leading the fight. Troops will help train local forces. The resident the president also close called him more nations to join the air campaign against the islamic state. A local subway station hit by a suicide bomber has reopened. 16 people were killed march 22 when a bomb exploded. Meanwhile, the attackers other target, the brussels airport, is still not up to capacity. Global news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world, vonnie quinn. David a lot more ahead on bloomberg go including a look at apple earnings. The company has told us there is bad news. The question is, how bad . Jonathan ferro. Ahead of the open 14 minutes away. S pures off by 62 points, 500 futures negative eight. Earnings to discuss. A disappointing firstquarter Earnings Report this morning. Comparedloss in to the prophets in the same period last year joining us from washington, deprive reporter in here with us, peter borish. Peter, to start with you, to break down these earnings, is it one loss for one company or is it all year across the board uglier across the board . It was a fascinating quarter driven by one company which you dont see often. This is a unique company. It is a company that kkr has put not just its clients into that clients money into, but a billion dollars of its own money into this that is rare against equity firms among anthony equity firms pure they were able to do it because they have a massive Balance Sheet. This massive 1 billion of its own money exposes it more to gains but more to losses as we saw today. What is a timer on that investment . They can sit there and hold it for his long as they like and bill if they need to . We look at things quarter on quarter, youre on your, how are they looking at this investment . Itin they are looking at over the lifetime of their investment. They made this investment in 2007, nine years going. This was one of the biggest buyouts of the socalled buyout boom of 20052007. Lets take the Balance Sheets which was a billion dollars. Their cost on that was 1 billion. Right now, it is mark slightly below cost. Even after nine years, the Balance Sheet portion hasnt given them many gains. That said, they also put, in addition to a billion dollars of their own money, they put almost 3 billion of their funds money. That is their clients capital and some of their own capital. That is also covering just around cost. Nine years in, this deal isnt 3x gains those 2x or that many equity firms should four. I suspect if you asked them nine years ago, they would have not anticipated this result. Is this a oneoff or does it tell us something broadly about private equity . We have seen other equity firms that are struggling. All, 10 years, if you go up 7 , usually have a peoplesich is all the pension plans. If you have invested in private equity and are almost 10 years out and you are where where you work, you have a spread of where you think you should be versus where you are. That is applications. Implications. Private equity, because of the fact that private Public Markets havent done well, the potential for exits, the low cost of interest has given them the opportunity to do more private equity deals, but it is a concern because a disruptive aspect for a lot of these contact, as we just said, makes it more difficult to monetize those issues. Equity,al, private because they are less liquid, and they are not market to market. We love the fact we talk about starks everyday because, equitys today, private doesnt get that. They report their earnings and they are shocked. Year, down 35 over a guess what . Now, you have to go up 70 to get back to even. That is a good point peter brings up. Are they having trouble attracting clients money . They arent. Devin they are currently out raising their new flagship, north american buyout fund. It is doing fairly well. It is important to note that obviously, this is one deal of theirs that is struggling or not producing the gains. They have had other deals that even want to the recession, dollar general, for example. The hospital operator, that is producing that are producing 4x in the casen of dollar general. It is a mixed bucket. Kkr has to answer to potential clients about these individual deals. The fund that they are raising has not closed yet. You can imagine the ongoing discussions that are still happening. These potential clients are probably asking what is your plan for first data . What strategies do you have to implement in this company before you start exiting . You can certainly be sure that those questions are being asked right now. Thank you very much. Peter, you will stick with us. Coming up next on bloomberg go, look at stocks moving ahead of the open futures suggesting a slightly lower open on this monday. You are watching bloomberg go. Vonnie this is bloomberg go with the latest business flash. Apple comes out with earnings tomorrow. The results are expected to show how far iphone sales have fallen. In january, apple forecast said revenue would drop for the first time in more than a decade. The reason is a slowdown in iphone sales. Hedge Fund Investor Aurora Investment is returning 5. 4 billion in overseas to clients. A deal to take over the firm collapsed last week. It was started more than 28 years ago. In china, auto dealers are facing a shakeout as the industry depends on beijing for the annual auto show, a trade group that has three out of four chinese auto dealers lost money last year. The problem, a struggling economy. Carmakers are pushing too much in inventory into showrooms. That leads to consolidation. Plus, dealers may enter china. That is the latest latest Bloomberg Business flash. John matt miller was stocks to watch. Matt one of them that i watched closely, tesla. Goldman sachs this morning lifting their price target on tesla by 21 . 202, the tesla is already above that in the free market. Odds fromaid the 35 ,ssful to disruptive, 25 after a slew of orders for the model three. He still raise the shares with these limited valuations upside. Basically, his target is playing catchup. Tesla earnings are set for may 4. The week after next week. Netflix stays in the news after ubs reiterates it is lowering its price share target down six dollars. Ubs set netflix expectations for growth reset and rebuilding after a negative catalyst period. Shares fell 14 after they had their biggest weekly decline since last september. We actually saw on bloomberg this morning that the ceo, reed hastings, sold almost 30 Million Dollars worth of shares. I went through the charts with david and he pointed out he does it every four months. Every fourdoing that months. It is not a sign that he is all of a sudden bearish. He just wants tons of money. He just mix a lot of money. Lastly, check out gopro shares writing a threeday winning streak. Sitting at their highest level since midjanuary. Edging lower after Pacific Crest had its channel check indicating inventories, or inventory as john would say, is at an alltime high. The analyst Brad Erickson says we are skeptical that new Software Acquisitions can improve gopros core utility problem. They report next week on may 5. Vonnie the opening bell coming up on bloomberg go. We are about three minutes away. Stick around, everybody. This is bloomberg. Im Jonathan Ferro. Moments away from the opening bell. 20 seconds to be precise. Future stay negative. Down by 60 points. Lower. 7 10 on the deck. We have seenss from much of the morning. Yen down. Yields keep getting higher on treasuries. This is the story every single day where yield and crude goes vice versa. In 20 seconds into the open. Lets peel it apart. Lets go to matt miller. Matt this morning, when we saw a big drop in oil, we saw a huge drop in futures. Now we are seeing losses across the board in the cache in the cash market. A quarter of a percent on the s p 500. The remember, we are Still Holding close to 2016 highs here. Take a look at the individual movers. We had been talking about the valeant cargo story. Story. Ant perigo for the quarter, they did not make as much. For the full year, they are going to make much less than expecting. Shares getting clobbered today. Down 13 . Take a look at the hostile bid. A 13 premium. You can see, we are almost there and the cash trade. Wasnt expecting their invitation to come over for talks for even inviting themselves over. Tribune says now they are looking at it. Its 2016reaffirming view. First quarter missed. Options down six points in the early trade. There has been a decline in printer sales from xerox. Blueprints things anymore . Who prints things anymore tha . I never print stuff anymore at home. Seems to be a problem for xerox. People arent printing as much. At least people arent using new printers anymore. The stock is down 7 . David i do want to talk about equities. Earlier on we had a chief strategist who said why he is bullish on equities. It is a nice buffer in earnings this year. For every percentage point, the dollar weekends. Weakens. Llar growtheryear earnings could go from 6 to 210 . To 10 . 6 peter, you are not quite as bullish on equity markets . That is correct. Tell me why. I liked to watch it, but when look at the volatility of the currency market is nothing. You could have bought the highend euro, so below over the last six years. Than the lastless six months. It is going to take more than that. We are already at the higher end of the historical range in the s p 500. I dont think there is a direct transmittal mechanism from the dollar to Earnings Growth. In fact, the dollar has weakened in a lot of these earnings. They all use it as an excuse. Oh, the dollar was strong. Our job is to disprove a lot of these wives tales. Is it fact, or is it fiction . Betty they have to figure it out. Itbut our job is to figure out. A lot of what is being said is fiction. It is not fact. You are justifying, earnings are lower, but it is because of the dollar. Then you look back and say wait a second, the dollar have not been there. Curve. It is the j jon this used to happen to europe. The strategist would come on and the ceourope would turn around and say we are hedged, not a big deal. How Much Research to you have to do to see who will benefit or who wont . The more research you do, the better it is. You have to look and see where the demand is coming from for your individual product or company. Is it domestic . Of companies, it is spread throughout the world. But dollar volatility is relatively low, which will not make the difference. As i want to make a difference in terms of Company Policy . 115 versus is at 110, no, it is not. Look,ve to step back and is there aggregate demand increasing around the world . That will drive equity rises. We dont the aggregate increases. David you liked bonds overall. You like bonds overall. The most dangerous bond market in history, sovereigns. Because of the structure of the bond market, a slight uptick could lose a lot of money. In my entire career, more money has been lost in people trying to buy Interest Rates in japan. Low 1. 5, belowo 50 basis points. We have had a huge rally in u. S. Inwhat he a huge rally u. S. Equities. Markets can go a lot further than people think. If you ask me and said, is it more likely that bonds in the u. S. Will have a 150 versus a 2. 25 . Of course. Fedould go to 210 if the decides to do something. Puts a surprise announcement on wednesday. It is a lot of money and took up from a trading perspective, but from an investment perspective, it is not in equity markets right now. We had this genius in the basement, michael, sitting down there [laughter] he sends these emails. I have been getting them i think he went to japan. This was in his notes this morning showing the 10 year es of the four majors u. S. , u. K. , britain, and japan. Back in 2000, we were looking for convergence, but not the way we have seen it happened. We wanted the japanese economies to recover and we have seen everyone converged down, which is a problem. What shocks me is back then you were getting more than 3 on japanese bonds. Fors even working bloomberg, but i dont remember 8 on u. S. 10 years. It is amazing we have often first down here. It is amazing that we have converged down here. Those are also nominal, right . Not adjusted for inflation. Betty what are the longerterm implications of that . As i keep saying, Global Demand is slow. Think about centralbank policy and i keep going back to this, how do you solve the debt problem by issuing more death . More debt . That is what inflation is. We have to go through this cycle you can postpone it. We dont have the political will. Monetary policy is defense. Fiscal policy is offense. Anybody want to get involved in our Washington Office offense and team right now . [laughter] i dont think so. Analysts warn investors about the iphone. Nine minutes into the session. Europe goes. Re off a quarter of 1 . I am matt miller. Coming up, we will hear from neil scheer at 12 30 p. M. Eastern. Today publisher has offered to buy tribune. Price, 118 million the price, 118 million in cash. The Chicago Tribune and los angeles times. Theill be an ideal for record books when saudi arabia sells a piece of aramco. It will be guided at more than 2 trillion u. S. Dollars. Saudis plan hired former perak go ceo balance has hired the former ceo of perrigo. That was part of a broader includinghat included lets get to some of the movers with matt miller. Anand analysts , upgraded at Goldman Sachs, race to natural and it is no longer a cell. Analyst saying china is recovering. We have seen a huge spike in commodities. Goldman raising its price target to 24 from 13. After looking at data and retail, analysts recommending buying kors. An uptickr the for the handbag category. Coach. Ked kors and april gross gaming revenue. Tracking to 15 yearoveryear. Rights and a note cuts april estimates 16 . That is a problem for these casinos. It is time to go down to Abigail Doolittle at the nasdaq. Looking at a couple of Tech Companies. Abigail we are looking at a couple of Tech Companies. One really moving is gopro. After inventory for gopro are at an alltime high. It he thinks the First Quarter sales will be significantly lower than what they are looking for. The stock is off. Bullish before the 50 day moving average. Apple, stock is trading down. Investors will be closely watching iphone sales after the Company Offered a forecast for negative growth racket march. Looks i 50 Million Units is a line in the sand. It could be perceived as a positive. Over the last week or so, sellers have pushed apple back down into a range suggesting there could be volatility ahead for the shares of apple. Thank you. What to insight of expect from apples earnings, lets turn to john butler. John, apple already warned it will be that in terms of revenue. We will see the first decline in decades. How bad will it be . John it is hard to say. The most important thing for apple is the next thing ahead for the next product cycle. A tockve a kick year and year. The last thing we had was the was a yearwhich ago. It was the first large screen iphone to hit the market. It pulled a of demand forward. Tock year. K year sales were stolen from that prior hardware upgrade. The we have and unusually weak set up, i think. What can they do in terms of the product upgrade . For them toough turn in their good iphones and buy another one . Good question. They are talking about a dual camera system with potentially a telephoto lens. How know who knows . Majore talking about a screen upgrade, which i think will be important. For apple, what i am watching, what are they doing on the Services Side . Is beginningside to end. The emphasis is shifting toward software and services. Apple has a great brand name to leverage. What are they going to do their . I will be listening very closely to the rhetoric as to how they are doing with services and what plans will be on the table. David as you look at a Company Might apple, and terrific company. Is it looking backward or forward . You have been talking about it all the time. Is there a forward to look forward to, or are they moving backwards. I will say both. You can be a great company, which apple is. But it doesnt mean you are necessarily a great equity to own from a price appreciation point of view. The thing about technology is that as you move down the cycle, marginal changes get smaller, so it is more difficult to get people to change their behavior. The next cycle, it cant be a little better, or a little cheaper. It either needs to be a lot better, or a lot cheaper. The likelihood of that happening where we are in the cycle is very low. So, apple is a great company. Doesnt look liked it is a great stock right here. Are we going to test the lows after earnings. Perhaps. But i dont think it breaks down. It is such a key indicate of the market. ,f you look back historically in 1985, the largest spread ever between the top weighted stock in the second we could stock was ibm. Apple last year was a protein that area 1985 was not a great time to be buying ibm. That is when apple and microsoft were coming out. Technology description. Technology disruption. They are starting to leverage the brand name to go into new Services Like apple music, apple pay. Car . apple they have not done a lot with itunes. They could do a lot more with icloud when you think about it. The Storage Space is huge. They have the name to really leverage that. We will see. Stay tuned. Indeed. Are my kidss generation not buying that. It is all about this disruption. Apple could buy them. Every tech investor, facebook, google, they will want to buy them at some point, probably not. Are thanks to Bloomberg Intelligence john butler. Our thanks to Bloomberg Intelligence john butler. Mark barton is joining us today to tell us what is coming up. We are going to talk to the senior equities strategist at wells fargo. His forecast for the s p 500 at the end of the year is between 2000 and 2100. I will ask him about it we are coming back down for the range. A big interview with the man charged with banking supervision. We will talk about the negative impact of negative Interest Rates. Beyonce onill go all me after she released her album eliminate. You better stay tuned for that. Up next, we will take a look on what is on the agenda and a busy week ahead with earnings and Central Banks coming out. Jon bloomberg. This is this is bloomberg. Im Jonathan Ferro. We are close to the lows. Theme dollar has been the throughout the morning. It is a stronger euro and a stronger japanese yen. On the agenda, the u. S. Economy in the way of new home sales. That is coming your way at 10 00 a. M. The april. M. , we get manufacturing survey. David if thats worn enough, tomorrow, we are going to get u. S. Durable goods. On wednesday, policymakers will leave rates unchanged. Thursday, we get the initial reading for u. S. First quarter gdp. Big week. Carol not just for the central bankers. Jon earnings continue with the biggest name in tech. Apple, twitter, ebay due out tomorrow april 26, followed by facebook, amazon, and linkedin. He will be on this program tomorrow to break down the numbers. Look out for them as well. There will be a busy day for tech. Tomorrow, we are going to have nfl commissioner we will have the nfl commissioner coming up. Sports the biggest surprises in the world. Jon and they keep coming to london as well. Carol the we went to giants game coming up. A great way to start my week. Jon carol just to come back tomorrow. From us, thank you very much. We will be back tomorrow. We are looking for to a big week for Central Banks. Bloomberg markets continues on uber television. Betty im betty liu. Mark and i mark barton. This is bloomberg markets. Betty we kick off the hour with new phone sales data from mark. Ons is another piece of data how the Housing Market is going down, or is it hot . Julie hyman has more than his desk. Getting a 1 decline. Higherget a revision than the prior month of 519,000. That is part of the reason of the month over month decline. This is the third monthly decline we are seeing in new home sales. It is the weakest pace of the man on the west coast. Weakest place
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