Will join us on macys earnings. Jon futures negative, down by 48 points. Europe come after two days of gains, weve rolled over a little bit with the dax off by. 8 . You at italian banks specifically. Bottom sachs calls the after a day of losses. Euro. Nger in the face of a lot of slide in the treasury market, 10 year is in focus today. Yields still lower, down by a basis point. That call on the yield. Does not look so outlandish today. We will talk a lot about the dollar today. Geetha ranganathan breaks down disneys disappointing earnings. How the yen is affecting toyotas bottom line. Guy johnson has goldman is latest call on the dollar. Ahead to theooks vote on Dilma Rousseff. Plummetingisney premarket. It posted secondquarter results that missed analyst estimates. ,e welcome Geetha Ranganathan live from princeton. Lets talk about the shortfall and reaction here. Obviously, they missed both topline and bottomline. Most of their media peers had reported better results. What happened there, we saw some mixed results. At thestrong Growth Studio division. The shortfall was on the tv side. Issuesan any fundamental , it was a lot of noise, affected by some timing issues. The timing of certain College Football playoff games that happened last quarter as opposed to this quarter. That curtailed tv ratings and address. And add growth. Theres been a lot of hyperfocus on that segment, which caused the stock to fall. Amanda espn was hit hard by that shipping said shifting schedule. The top line, that has been a focus. Will it ultimately be that tb division that people are watching for structural changes in the ad market . Under tv segment has been intense scrutiny, especially after the media selloff which happened last summer. After espn came out with slightly negative outlook, it has been an area of hyperfocus. The underlying thesis for the stock and for the sector are intact. We have seen a rebound in add growth across most of disneys peers. Add growth was fairly decent at espn and abc as well. , what most investors were fearing was whether there was going to be this dramatic my drastic breakdown that dramatic, drastic breakdown of the tv bundle. We will see some erosion of subscribers, but it will be more slow, nothing dramatic or anything that changes that longterm story. Amanda Geetha Ranganathan from princeton. Still ahead, lots more on disney. Watching the stock at the open. Rich greenfield has a sell rating. Amanda hes been dead right on that stock. Jon toyota expecting to see first profit drop in five years. For an Exchange Markets matter. Craig trudell joins us live from tokyo. Yen giveth and the yen taketh away. You had ¥2. 3 trillion in profit, the are expecting that to drop for march. Llion you see expectation forprofit to take a hit from currency. You want to talk about operating income, they see ¥900 billion impact from changes in forex rates. We are talking about a massive change in how they see operating profit for the upcoming year. This is after several years in which you saw huge booms from yen, including a year in which they had ¥900 billion in their favor. You see this swing back of the pendulum to the yen working against the company. Jon we have had three straight years of record annual profit in this company. Read on how to get a the Underlying Company and what is happening with sales. Craig sales are fairly steady. Year, north of 10 million sales. During the First Quarter of this year, toyota took a hit from a production shutdown in japan related to an explosion at a steel supplier. Not sound like much, but when you make 40 of your cars and trucks here in japan, that is a big deal. It will be interesting to watch Going Forward how much of a bite they feel from the earthquakes last month. That may have an impact as to whether they can stay ahead of volkswagen for the full year. They just slipped behind whole swag and. Kind of volkswagen. Have these disruptions to deal with here at home. Jon Craig Trudell staying late for us in tokyo. One big question, has the dollar bottomed . Predict the dollar would advance 15 over the next two years. The capital of the Foreign Exchange market, the city of london. Guy johnson, a call from goldman. Difficult is the word, maybe . Latest trade is less interesting than it may appear at first. The market is still expecting the dollar to strengthen from here. Expectation the market pots expectation misreadings the fed. Weve heard from bill gross saying the market may be getting the fed wrong at the moment. Is saying by gold because Central Banks are out there trying to debase the currency. Maybe we should be buying gold. Goldman sachs not quite so convinced about whats happening with the dollar. They will be interesting to see how this one is going to turn out. Youve got paul singer going after gold and the others saying the dollar has a run. It comes down to a debate over the fed. If the Federal Reserve goes above Market Expectations when the market is not ready for it. Guy the market in no way is position for the fed to do anything in june. The fed can talk until its blue in the face about june being a life meeting. They are unlikely to do anything that is going to upset the market. There is a circular argument going on right now. Maybe it is the fed listening to the market rather than the market listening to the fed. Johnson, you and i can talk until we are blue in the face. Is finally here, the senate in brazil expected to vote on Dilma Rousseffs impeachment. Julia leite joins us live from sao paulo. It is going to happen today. Give us a sense of what will take place. Julia the senate is about to start in about an hour. 60 or 80 senators are expected to speak, they all have 15 minutes each. Be a long day in the senate. We are expecting them to start voting after 7 00 a. M. Some lawmakers have said it could go until 10 00 p. M. , some have said the night. Some have said midnight. Amanda it does appear there will be a majority voting to oust her. Shes made comments that she would fight anything like that. If she goes, the Vice President will move in and the trial will begin. Julia they need 41 senators to approve. The newspaper tallies are all around 15 one 51. The Vice President with staff and for up to 180 days while the senate tries her. She is fighting it. There is a Supreme Court injunction trying to stop the proceedings today. Getting trying to avoid nominate disney shares are dropping in the premarket after the disappointing numbers after the bell yesterday. Coming up, we get a top analyst who had a sell rating on this one. Stay with us. Jon shaping up to be a bit of aesop session globally in equity markets. Some deal breakers. Matt i will mainly give you the stocks to watch here. Staples and odp in the u. S. Finally had their 6. 3 billion merger officially canceled after a federal judge ruled against the deal on pricing concerns. The combined companies would have a monopolistic control on paper and ink prices. People still go to staples and office depot to buy that stuff . I thought everybody ordered it online. Maybe i was wrong. Office depot down 35 . Staples down 14 . Both of them have already gotten crushed over the last year. In white. D white. m down with odp a deal in europe that has fallen apart. Hutchison and o2. The commission has ruled against the merger of these. O2 is the mobilephone group owned by telefonica. Will consider taking legal action to reverse that. This adds to a number of deals that have fallen apart. 9 of the deals we track have fallen apart. 300 billion worth of deals. Jon we got a wrap reference reference from matt miller, who does not know who dre is. Apper. He is a r Amanda Disney disappointing. The company is currently trading down in the premarket. We are looking for two likely open sharply lower today. To likely open sharply lower today. Rich, youve been negative on disney. You are not surprised by this. That weve been a believer destiny be story is amazing. Rallied indisney has recent weeks is the incredible string of box office success. Ive never seen anything like it in the history of the movie business. Which is the worst place you want to make money because it is so unpredictable. Rich it is not repeatable. Nobody should be investing purely on the belief that movie success is sustainable. 50 of disney comes from its Cable Network division. The sell rating was premised from the beginning on the belief de on people the side to cut the cord or never subscribed to the multibundle multi channel bundle. Greenfield,t rich the history of disney. Where there calls have been on each stock. Here is rich greenfield trading on disney. You see the run all the way up, then you put a hold on. This is a good history. Youve been a good indicator to say where the stock is going to go. Where next . What do you want to see from the company . Out our sell on disney, but we downgraded all the traditional media stocks. It started with names like discovery and viacom in the summer of 2014. It ended a few months ago with downgrading fox from buy to neutral. The fundamental challenge all of these Companies Face is a Cable Network business, the basic Cable Network business really faces meaningful headwind. That price value equation relative to netflix we would rather your watchers buy netflix. That is the stock to be putting money into. That is where the price value is getting more compelling. The cable business suffering, espn and normally a bright spot. Is there a parts story here . Doubt, disney no was willing to pursue a breakup of the company, separating into two pieces. I dont think they will ever do that. Think about cap city abc back in 1995. Were to separate out abc and espn from disney, that would be interesting. Theme parks has been a great performer for disney. Attendance was down, a real surprised markets yesterday. Theop of that, youve got Cable Network business that is challenged and the studio has been amazing. I dont think investors will just pay for the studio. The pipeline of whats coming through the movie business, the theme parks rich and shanghai. Disney is hosting an analyst ting for investors we would have someone from our team be there, that is for sure. Amanda rich greenfield. At a time when the Hedge Fund Industry has sing the biggest best seen in the biggest outflows, we have one trader that stands up with consistent success. Jon to our viewers worldwide, good day from new york city. Good day to the city of london. Looking now. Better fog. Ago, it was all is that not gloomy . Amanda that is a bright day for london. The market is gloomy, though. Time for bloomberg trends. Pic. I have a a Hedge Fund Manager in hong kong, we keep hearing about the death of the Hedge Fund Industry. This is one guy who is doing welcome a return 6 this year, his average return is 15 annualized. It, by thedoesnt other side of the trade. We hear about everyone getting in on the same side of the trade. Takes the other side of asianade, especially in moves. Buying bonds and Chinese Companies that everyone things are headed for trouble and he has really done well. Amanda theres lots of outflows elsewhere, so i guess they want to go somewhere. That he is buying noble, buying derivatives, betting on noble. Materials will continue headed for a slump and he thinks they could see a real revival. Materials are doing well today. Toyota jon this is why people talk about dollaryen so much. Record annual profit, three straight years of record annual profit for toyota. On the way up, the record profit growth, you never hear from the corporate execs it is about the end. About the yen. Matt that depends on who you are talking to. When you talk to mary barra, you yen. About a jon this is bloomberg. Good day from the heart of new york city. Lets get you up to speed with the Global Financial markets on the session. Equitiess softer globally. Futures pointing lower. The s p 500 negative three. Bond market gets even more fascinating. A load of supply coming onto this market and treasury. Some real demand yesterday. Year at the 10 moment. Goldman sachs with a big call, the bottom is in for the dollar. Yen, down by. 5 on the session. A bit of amight be messy 1, 2 hours away from the opening bell on wall street. Disney stock is down in premarket by 5 after the Media Company posted secondquarter results that disappointed analysts. Profit was down at abc. The strong dollar cut into its profit from star wars merchandise. Currency swings are being blamed for that as previous record profits have now turned into problems. Two possible deals being mixed because of regulatory concerns. Staples in office depot abandoned their merger after a withal judge decided antitrust officials challenging the combination of the two Largest Office of liars. Office suppliers. Pricing it would have created the uks largest mobile carrier. Jon tom keene joining me from bloomberg surveillance radio. There is a hunger for yield. It is being fed by governments in the euro zone. It is called the ultralongs. Spain, france, italy. A time of chronic disinflation. I remember my grandfather blotter andis bond 3 coupons. You wonder where that yield will be on the piece out of spain. You could get that much further in. It is an interesting dynamic. I dont want to over analyze about 50 or 30. It is a symptom of what weve lived for seven years. We forget how long these cycles can be. Hillary can bring up the spanish curve. It looks a Little Something like this. I would call it germany light. On the back end of the curve, you can put up 50 year debt around the 2 mark. Lower on the x axis. This follows from what france has done. Peter fisher has been the most articulate american about weighing those pluses and minuses. Ive never talked to bill gross about it. I would be interested. Jon something you really have to think about now. If you dont hold that until maturity, if you want to sell before then, you look at duration on bank of america, it is near alltime highs. If you get a move on yield at the moment by one full percentage point, that could get ugly. Tom way too much math this early in the morning. Trendseleration up these when you have longer duration paper can be damning. The immense challenge longterm money, pensions. Insurance companies have given the financial repression. Our viewers are very aware of the financial repression to retirees. Still immense for institutional investors. Money and6 to make they are not going to make it here. You wonder if they will make it in 50 years. Jon tom keene, thank you for joining us. Taylor Bernie Sanders is not going away. He says he will fight for every last vote. Last night, he defeated Hillary Clinton in the West Virginia primary. Still, clinton has a big lead in delegates. Meanwhile, donald trump won in both West Virginia and nebraska. In bangladesh, the top leader of the countrys largest Islamic Party has been hanged. He was convicted for crimes against humanity during the 1971 war. He was 73. Theres concern the execution could lead to violence. David cameron might have timeper time an awkward he told Queen Elizabeth the two countries are among the most corrupt in the world. The two leaders are coming to london for an anticorruption summit. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Talkinge been about here, we are watching these stocks in the premarket with the staplesoffice depot merger dead. This does not look pretty. Cited judge cited with antitrust officials that were challenging the combination. Office depot taking it even harder than staples. Interesting because staples was the weaker partner in this merger. Beinging list of deals curtailed by regulatory challenges. This one is not as surprising. There really are weak players. This was an argument about business customers, not consumers. The companies have tried to argue that amazon was coming on strong. Just recently, amazon announced it hit 1 billion in business sales. With this deal be viable if you years out . Perhaps. The judges seemed a little questioning of what the government was going to do. It was not a slamdunk. Amanda it raises this question of whether the regulator is keeping up with the times. Look at the hutchison deal in the u. K. In a matures are stage. Do we need to worry about that . They are not seeing what they need to see and one of this businesses thats one of these businesses could go away. The Business Environment has changed so drastically. You are seeing concentrations like weve not seen before in putting deals together. The actors behind the scenes are very important. Andce depot and staples some other deals. Deal. This railway it is good for activists. They opposed the existing status quo. They cash out. The deals will not win antitrust approval when you have this big concentration. Not go inpany does without considering the prospects of that deal. It is a miscalculation going on here . Or are they just being very surprised. They are being surprised to some degree. Out aaer has been laying different course. Or a long time, there was this idea that you can put together these job fees and see where you stack up. Ies. Eography we will look for places where the competition would be impacted. If there will be significant effects, we will take steps to do something about it. Companies are under this pressure from activists and others to bring more shall brother more shareholder value. In this case, the very disruptors themselves could be the subject of anticompetition focus. Google and amazon get bigger and bigger, disrupting more industries. Are they making their case badly . Im not sure i would argue that. Ofy saw that the opportunity others coming along was going to be great. At this point, you still have a combination of one and two. That is a hard argument to make that that would not be a monopoly. Jon what a story. The case for activist investing. A fun characterized as the antietf fund characterized as the antietf. Jon this is bloomberg. , speaking to david westin over in vegas. Taylor walmart has fired the latest shot in its fight with visa over the cost of processing payments. Filing a complaint in new york court saying be so once walmart to verify debit transactions with customers mentors. Walmart says that is less secure. Han the chip and pin Southwest Airlines is on a useding spree, buying 83 737s from around the world. Two dozen used airbus 3 19 from 319s from china. Toyota says annual profits will probably decline for the first time in five years. Japans Largest Company forecasting the current a problem. Re posing the yen has risen against the dollar this year. Jon since hitting his fourmonth high, the s p 500 has microsoft dampening investor appetite. Active investing is the way to go he joins us now. Congratulations on the funds launch. The antietf. Talk to me about it. Theres clearly a very large interest for an etf investing. Passive investing, lowcost investing is very much a viable tool for many investors, particularly those that have many years ahead of them to invest for their retirement savings. Once you get on the other side of the investing hill, it is appropriate to look for Risk Management strategies like ours. Any kind of passive the vehicle approach, you have to understand you are driving a car with no airbags. That is the purpose we provide. Amanda how do you manage that strategy back . Abhay the multiasset strategy it is an equity portfolio with fixed income, highyield, reserve management and a bit of gold. It is meant to provide equity like returns with not quite the risk of an index. The full cycle return should be close to an index or even better but much less swinging up and down. I know matt miller wants to jump in. Looking at your allocation, the , conceptually, you dont have a problem with it. It is just how it is being used . Cost concept is valid, but if you look at the Holding Period for an average etf, it is above 90 days. A less than one year time horizon. You have a low cost on the etf but these invisible costs, the frictional costs in trading. No one is buying and selling that amount there are invisible costs that do pile up. Amanda how much cash do you hold . Abhay we are about 40 in reserves right now. We believe the s p 500 as a proxy is at intrinsic value. Amanda i ask if my Financial Advisor once me to pay you a managing fee, why dont i just told it . Hold it . Abhay i dont want to hold cash. We manage reserves, try to get a yield around 2 . Offset thepful to fee you are paying me. It is a nice mix of risk and safety that is appropriate for those types of investors. Swatch, i can make a great bearish case for swatch. Is that the bull case . My it is hard to opinion versus your opinion at that point. What weve found is the main death of the luxury is the chinese pulling out of the luxury market. In the watch industry, while local chinese and hong kong demand has gone down on been picked up by demand in europe and the u. S. , particularly in europe. Watches are 30 less in europe than they were. Swiss watch industry as a whole has seen demand, but not as much as the decline in china. Sunoco is a great business. Volatile of cyclically business. Stable andery markets. End markets. And make cans for pringles cardboard rolls for toilet paper. Im trying to make this sound interesting. The buying habits do not change that frequent me like they do for cell phones, for instance. Im willing to pay a higher multiple for stability and duration. Jon up next, we will talk about gold. Saying the rally is just beginning. Jon this is bloomberg. A quick check in on the equity markets for you. Futures softer following a loss in europe. Good thatgative for futures off by about 45 s p four. Gative now off by about 45. About 45. By amanda how the Technology Sector is helping to transform the city. 35 of our office space is tech companies. We have a lot of great innovation. Theave 25 universities in city and 75 in the Greater Boston area. The bloomberg west a special continues today at 6 00 p. M. Eastern with the m. I. T. President. Jon gold just had its best quarter in several decades. Drug miller. Now, paul singer. Matt miller on gold. Matt even hedge fund bosses are piling into gold. Everyone is in. Is netis shows you bullish bets and blue in blue. The highest theyve been since 2011. Open interest. The highest it has been since 2011, 2010. Everybody is in on gold right now. John mentioned the two most famous names. Not just their positions, but the language they used. Said gold is his biggest currency allocation. Putting it at odds with every fed chairman since weve had fed chairmen. Saying Central Banks around the world are doing their best to debase their own currencies. That is why he is piling into gold. We know this from a letter at the end of april. This is a look at the Morgan Stanley implied pace of rate hikes. Yesterday, i was talking about months. What it really shows you is how many rate hikes they think we will have any year. Wasas at 2. 5 when the fed saying they will have four this year. To one. Ome down now this is the price of gold. As the implied pace of rate hikes falls, you see the price of gold going higher. Everything else is negative. That makes gold a precious metal with no yield a more attractive investment. Amanda the gold bulls believe Central Banks will virtually collapsed. Goldmanold call not quite going there. What is your take . You like gold. A great point. When Interest Rates are presumed to be zero, what is the risk of holding gold . I would remove myself from the argument back and forth. I am not a gold bull. I dont have a future view of the gold price. , ive beennsistently a proponent of having some gold in your portfolio. Ive been coming to bloomberg for over 10 years saying the same thing. Stanleymatt and druckenmiller talked about, why not diversify your Currency Exposure by having some gold . Jon matt miller, thank you very much and special thanks to a bhay. Amanda we are minutes away from macys earnings. Bloomingdales ceo Michael Gould will be here. Jon a big rally tuesday has the s p nearing record highs. Little upside for the rest of the year. Last time does the mist on earnings, it triggered the biggest twoday drop in seven years for media stocks. Ssed on earnings. Jon how insurers can diversified their portfolios diversify their portfolios in a low yield world. To our viewers worldwide, welcome to the second hour of bloomberg. Amanda with us in new york for the week. It the shortll straw assignment. This is the assignment you really wanted to get to. Vegas. Amanda a tough gig. But he has a great lineup. Including t boone pickens. We have lots coming up today. We are watching earnings for macys, which have just crossed. Matt firstquarter eps at . 37. Of the numberme becomes . 40. Both numbers better than what the street was looking for. That was . 33. The estimate was 5. 93 billion. It be on earnings and a miss on sales at macys. Beat on earnings. At macys inlook stock and we will watch it fall, trading at 35 in the premarket. Lets take a look at the other stocks that are moving today. Out, missing analyst estimates for the first time in five years. We can see the stock down 5. 5 right now. It has not missed estimates in 20 quarters. Sales at espn fell 31 . Electronic arts wrapped up a record year for earnings and sales by posting fourthquarter results last night that top analyst estimates. Sales rose 12 . Ea up 7. 3 . Electronic arts has been a competitor with one of disneys units, infinity. They make video games you can interact with. His knees closing that unit. Disney is closing that unit. Rocks will buy the palms casino, just two weeks after its own ipo. Rocks owned by the ufc owners. The family may consider selling ufc four 4 billion. 4 billion. They almost kill each other and do it online tv for our entertainment. Amanda some of the best ufc guys in the world are canadian, including the women. Keep that in mind. Matt i believe that. Thank you. One of the biggest bulls on wall street in the second half of 2015. Now, take a look at this chart. A target ofter has 2100 for the year for the s p. He joins us from baltimore. Limited returns in the bond market. In the equity market, too. Barry Growth Stocks are expensive. If you look at value stocks, they dont have any immediate catalyst. The s p does not have a whole lot of upside. We went to that 21 target at the end of last year. We keep talking to people who talk about a range bound market. Where do you go for returns . If there is not an immediate catalyst or Good Alternative out there, what is the answer for you . Barry it is an unusual bull market because its been so influenced by policy. It has rapid sector rotation. It segued quickly and we been calling for it, the reflation trade. I was on this network two days before the march meeting saying that the fed had to take a global mandate. Weve had a good trait in energy and materials. As far as the 2017, it looks more interesting. The back half of 2016, there is too much uncertainty. Speculatinge been about what happens in june. Are you betting the fed does move in june . Barry i dont think they will. The Global Growth picture is still very tenuous. The china situation is unstable. , theyt europe and japan are very nascent in the recovery. The fed is aware of the deflationary implications of a premature exit. Jon we looking for companies to deliver topline growth. Difference, the spread between the russell 1000 index and the russell 2000 index. Talking about the trading at 1. 8 times sales for the big caps. Small caps at 1. 2. The widest gaps ins 2003. Why do you think that is . Since 2003. Facebook andhat google trade at 49 times earnings they would have to grow at 20 per year for five straight years to keep an expensive market at 19 times earnings. It is pretty hard to get that excited about largecap growth. Themes, theof the top line is getting a bit soggy. Market were more normal, if this were like a 2007 late stage market, what would be the catalyst to shift right out . In terms of a real market correction, what would be the catalyst for that. Herding thing. I dont think that is a good strategy for anyone. As far as the market, the macroeconomic act drop of deflationary pressure spreading more sectors, making topple and more difficult, that has been the driving force for the last six or seven years. Making topline more difficult. , youe that got rewarded now have an expensive market and difficult segue to reflation regrowth globally. Ary growthon globally. Taylor Bernie Sanders facing Hillary Clinton into running two races. He defeatedsh the Democratic Front runner in West Virginia. On both West Virginia and nebraska. In baghdad come a car bomb exploded in a crowded outdoor market in the mostly shia neighborhood. 45 people were killed and dozens were wounded. Islamic state has claimed responsibility. British Prime Minister David Cameron may have an awkward time when the leaders of nigeria and afghanistan visit this week. In remarks captured on video, he told Queen Elizabeth the two countries are among the most corrupt in the world. The leaders are coming to london for an anticorruption summit. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Amanda raining on the macys parade. Shares plunging after earnings failed to impress the street. Disney says game over, pulling the plug on its infinity videogame business. Will the move do anything to untangle investor concerns . Amanda you are looking at a live shot of new york city. A rough start be for the markets, certainly a rough start for a couple of shares we been watching. One stock is macys. Plunging in the premarket after it cut its f fullyear sales forecast. A lot of hopes riding on that u. S. Consumer. Is macys the canary in the coal mine here . Is here. Ould r the good times over . Michael i dont think they are over. Not paved with pebbles. I dont think the good times are over at all. As the Department Stores are facing a difficult time. They have changed dramatically. The way the customers shopping it is not a sea change, but a notion change an ocean change. Amanda how have they performed in the Online Retail world . Michael the Online Business is good but is not carrying business anymore. Theres so many choices out there. To me, the internet is just a channel. Whether the Internet Business is the out of is good, its all one number. Macys, it feels busy with things everywhere. I used to come to new york to do my shopping. What can they do to get people into the store . Michael if i can talk in a last monthse, in the or so, ive been to toronto, ive been to a number of other cities. Phraseways easy the bringing up someone elses children than your own. As you walk through the malls today, it is stuff. Where is the excitement . Where is the thing that says by me. What i found interesting, 27 up in disney studios. People are going to the movies. Both in florida and california, the parks were up. That says people want an experience. Go to the lion king. It is completely full. Families with two or three children paying 150 a ticket. People want entertainment. There is a real ocean change out there. Amanda matt miller wants to get in on this conversation. Matt i was thinking about macys and the possibility of a sea change. Underperformed in orange, the broader index. In yellow, the Consumer Discretionary index. Macys had been beating both of them. And now, has basically crashed down. You are still making money, total return over the last five years, but not nearly as much as you would have because of this big drop you saw at the end of last year. Madehappened here that macys work so much less worth so much less . Amanda is it overdone, is it oversold . Maybe there is hope here. Michael i am a passionate it is a sense of engagement. A social activity. Why are people going to restaurants today . Boy, did 18yearold not want to go out to dinner the other night, had meatballs. Whered you get meatballs from . 44th street. This is the same 18yearold boy who has always gotten his clothes at bloomingdales. He is now old enough to go by himself, very responsible. What happened a week ago . A box comes to the house. Box . Is the trumk club. He calls them up and gets close he would have bought in the store. Thats clothes he would have bought in the store. Amanda back to matt miller for todays morning meeting. Citi with the largest overweight in u. S. Investment grade corporate debt. Stephen, thank you for joining us. Let me ask you about the credit markets here. The recovery weve seen. The you think it is on solid footing despite Global Economic concerns do you think it is on solid footing . Spillover from bonds,o corporate perhaps the target spreads in rates outside of Government Bond markets in the eurozone just leaves a great deal of appeal in the u. S. Corporate bond market where you can still get 4. 5 longterm Investment Grade yields. You can do fairly well in the highyield market risk adjusted as well. 30 of world Government Bonds are trading with a negative field. You have to pay more than the return of your principal in discounted Interest Payments and people outt his push into risk, but reasonably given the spread levels in u. S. Debt markets. Go . so, where do you surely, you are not going to blindly chase yields. Howd you choose your risks . Steven one thing that has happened, we have now been through a 2. 5 year period of retrenchment in the energy sector. Lots of complacency, tremendous amounts of risk. Now come others lots of fear about the next oil price leg. The oil price is down more than 60 in global expiration activity down 50 . Going forward, we expect the rebound in petroleum. We try to avoid petroleum credit. It is worthy of some overweight for certain securities. The generalized picture is not always going to be sunny. Central banks are pushing problems off and the performance ahead is better for credit markets. Almost all come down full percentage point for u. S. Companies. What should dividend yields do . Not go up. Matt very good points there. Weiting from citi. Jon coming up, the billionaires get behind bullion. Gold prices have jumped 20 in 2016. Coming up, the best quarterly gains in 13 years. Amanda we are watching the premarket trade here. Dow, s p andower, nasdaq all suffering under the weight of the negative earnings report. The european markets had been higher, getting dragged down by what we are seeing here in new york. The Retail Stocks very much in focus. Macys disappointing, it is lowering its guidance on sales for the year. That is also the story at fossil group, getting slammed 33 . Jcpenney going along for the ride. Office depot and staples, the disappointment of their failed lockup. That deal will not be happening. Matt absolutely. It seems like everyone would have expected that. Lets look at whats going on in futures market. A slew of influential investors turning to gold. Raising itss forecast coming even as it remains bearish on the precious metal. Paul singer thinks bullions rally has just begun. Stanley druckenmiller is in, to bank. Is in, too. Joining me is bob iaccino. The best quarter in a decade for gold. Does this have legs . Bob i think it does, matt. Last time it was on, we put on a shortterm long in gold mediumterm long that turned out to be a shortterm long that we exited at 1300. In the long run, i agree with singer. It is difficult to say on television that you disagree with goldman. The fed is losing credibility. Global Central Banks continuing to have that pressure. Of time, theeriod dollar index fell a 3 , gold is up 22 . If you expect the fed has to be a little more dovish come you can expect another large rise in gold. Disagreeing with goldman seems to be the trade this year on any asset class. 1300 come the level it has bounced up against. When does it get there and how far can it go . A target of 1407 right now. I hate psychological levels. You always see markets pierced through it. I have a target of 1407. I think it will get there within a month and a half. If it is getting as bad as druckenmiller thinks it is, there is a lot more to run. Againstb iaccino Goldman Sachs. The goldman call on the dollar was one of the worst ones of the year. Would disney be better off without usb and without espn . We have a top analyst who will give us his two cents. , Michael Segal on where he sees value. Hour, four an minutes from the open. Down around two points on the s p 500. [ 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. Shoah, ha ha. Ew artist. Show me top male artist. My whole belieber fan group. Its not a competition, but if it was i won. Xfinity x1 lets you access the greatest library of Billboard Music awards moments, simply by using your voice. The Billboard Music awards, live sunday may 22nd, 8 5 pacific, only on abc. I this is bloomberg am jonathan ferro. Lets have a look at what futures are trading for it we are negative, dow futures up by 31 points. S p futures negative. Switch of the board quickly and we will get to the treasury market. A ton of supply coming this week. Threeyear notes, a really good option got away this year this week. Over 20 billion worth of 10 year securities being auctioned today as well. A lot of supply on the treasury market. The yield keep grinding down lower. Looking at the fx market, Goldman Sachs looking for the dollar rally to continue. At 1. 1413. Amanda one hour away from the opening bell on wall street, here are some of the stories you need to go at this hour. Shares of office depot and stables getting crushed after a federal judge sided with u. S. Antitrust officials, blocking the marriage of the Biggest Office supply retailers. Disney stock is sinking after it missed estimates. Profit from abc and concerns over espn as the head of investor concerns. This may be the last day in office for brazilian president Dilma Rousseff per the senate will vote for whether to impeach her for illegally using state banks to fill a budget gap that would force her to step down while a trial ensues. We are going to go to taylor riggs with first word news. Taylor House Republicans are setting up a fight with the white house over defense spending. Devotedsubcommittee has to use 16 billion of the pentagons war fighting budget to pay for new military aircraft such as the f 35 per that is a in paris, to hundreds of protesters battled police during a demonstration against labor reforms. Francois hollande use special powers to push reform measures through the lower house of Parliament Without a vote. The measures would extend working hours and make layoffs easier. Francois hollande says the reforms will lower unemployment. In the u. K. , lawmakers say the National Health service is having to raise cost and forced patience to wait longer for care. It relies too much on temporary staff because of bad planning. The house of commons report the nhs suffers from a shortfall of 50,000 doctors and nurses. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus i am taylororld, raikes. Jon . Jon the Global Insurance industry represent more than 7 billion in trade sheet assets, engleman says accent management joining me now is mike siegel, the first global head of Insurance Asset Management. Great to have you with us. Mike thank you very much. Jon what did you learn . Mike let me start with our survey covering 7 trillion in assets. The Global Industry is about 25 billion in assets. We represented 30 of global assets and we think the results are very supportive of where the industry is headed. It is a global survey, as i mentioned. We had over 20 Different Countries in the survey. 276 companies. Companies,alty reInsurance Companies, and health care companies. The biggest take away, the Biggest Surprise was the fact that this year for the first time in four years, the industries have turned more optimistic. Now, being optimistic does not estimations are higher return expectations are higher. In fact, they are lower. For the first time in several years, we do not have a major macro event looming over the marketplace. Greece, the collapse of the european banking system, the u. S. Losing its aaa, potential default on the u. S. Government debt. There are a lot of concerns, but absent of the catastrophic concern. Amanda how much of the positivity has to do with, at least for the u. S. Market, a theoretical return to higher rates . How much of that changes the outlook . Mike i do not think that is the view. We do ask views on Interest Rates, and there is a modest increase belief, 25 basis points over the course of the year, that has not panned out yet. Equity returns, a view toward muted higher equity returns, but the view is not that we are going to see significantly higher Interest Rates, which would be quite good for the industry. Jon every single morning, there is a headline, whether it is jgb or treasuries or wherever you want to go in the eurozone, there is a headline on yields grinding ever lower. Where on earth do you get yield in the bond market at the moment . Where do you go . You, thatve to tell is the single biggest concern for the Global Industry. If you think about it, the basic aniness model is, i write insurance policy, i take the premium in, invest the premium, i get a return, i hope, and then i get a return to make my claims payment. As bond yields continue to come down, getting less return for taking the same amount of risk and for the same business model, so it is an erosion of value for the Insurance Industry. The Insurance Industry savers just like Pension Plans and individuals and they are getting less return. Amanda it is also not unlike Pension Funds, where you want to match duration. Question,k to jons you described the problem, but what are they doing . Are they too heavy in equities as we saw in the last bull market . Mike i will answer that in two ways. Jonathan, you referred to europe, where we had negative Interest Rates through most of northern europe. We have negative Interest Rates in japan. Companies in these countries really are in search for return. Many of them are coming into the u. S. Corporate bond market. , and. S. Treasury market the u. S. Municipal market, buying these assets and even on a currency hedge basis are providing a positive return relative to what they can get their local markets. For u. S. Companies, the story is a little bit better. We do not have negative interest , but it is forcing companies to search further and further away from their core interests, which is fixed income, into equities, private equity,real estate hedge funds, and a liquid Asset Classes such as commercial mortgage loans, private placements, and market lending. You see a lot of money. How much risk to you have to take over and above what you used to be able to take and get the same amount of pickup . 50year debt being auctioned in the eurozone at the moment you have no clue what is going to happen. You hope you get your money at the end of 50 years, and maybe you get a yield of 2 or 3 . How much risk do you have to take to get the same kind of pickup as several years ago . Right. Ou are absolutely you need to get further out on the curve. You need to better diversify your investments the on your traditional investments, which are basically Government Bonds and Investment Grade corporate bonds, into other Asset Classes. There is increased interest in equity type securities, public equities, private equities, real estate equities. And hedge funds we will talk about that. Also local and lending. The Bank Capital Requirements are increasing, the banks are shrinking balance sheets. In many places the Insurance Industry is becoming that lender. Amanda on the other side of the ledger is any potential payout. There are fewer uncertainties than we have seen, but extreme weather related to Climate Change is surely on the minds of the Insurance Companies. The fire in alberta will cost that government more than katrina cost the u. S. Where is that on the list for Insurance Companies . Mike we are talking about the propertycasualty industry and the reInsurance Industry. That is their core business, which is to insure against property and to take concentrated risk when we have hurricanes, earthquakes, wildfires, etc. That is the basic business they do prefer the last several years they had cad they have had good results. We have not had major catastrophes. As a result, the capital base in the industry is at an alltime high. Jon thank you very much. Amanda coming up next, michael explains why he is going against the grain and recommending insurers do add hedge funds to their portfolios. And will disney results drag its media peers into the trap today . We will evaluate the sector when bloomberg returns. Jon this is bloomberg. Colleague david westin speaks with one of the most influential names in energy. Boone pickens. That is in las vegas at 2 00 p. M. Eastern. Amanda here is your taylor here is your Bloomberg Business flash. Walmart has fired its latest shot in the fight against the on processing payments. Visa wants walmart to verify debit transactions with customer signatures. Walmart says that is less secure but is a big moneymaker for visa. Visa is not commenting care chipotle is stocking up on itself. The burrito chain spent 1 billion on buybacks this year. Chipotle has been trying to boost its stock price after a food safety crisis. Chris wonder whether money should be spent on new technology or remodeling restaurants. The worlds Richest Airlines cannot get enough of handmedown jet spirit Southwest Airlines is on a shopping spree, buying 83 used boeing 737s from around the world. Two of them are coming from a Russian Airline that collapsed. United continental is importing as many as two dozen used airbus 319s from china. Cheaper fuel has made the older planes more economical to operate. That is your Bloomberg Business flash. Amanda Hedge Fund Outflows in the First Quarter with the biggest since 2009, according to hedge fund research. One firm is driving insurers into hedge funds holdings. Mike siegel, global head of insurance at Goldman Sachs is also with us. Lets talk about this, in terms of the value in hedge funds. There is a washout coming that has been disastrous. We talked about the fact that you cannot get too risky in an insurance portfolio. Why hedge funds . Mike over the last several years, hedge funds have had very good performance, particularly on a riskadjusted basis. Hedge funds returns are not correlated with fixed income in equities, so they are a diversifying asset. Absolutely accurate that over the last year and the last quarter Hedge Fund Returns have been particularly poor and i have a suspicion that today the merger of hedge funds are not going to have a pleasant day as well. However, the way the Insurance Companies operate balance sheets, they like to build on thefied portfolios risk liability side and all the asset side, and hedge funds are another asset class that fit into that. That fits into that. When you take a look at equity valuations that, as we sit here today within 2 of the highs on the s p and the dow jones. Jon is this 8 amanda is this a trend we are seeing across the Insurance Industry . We definitely are seeing a shift into alternative assets. Hedge funds is a tricky situation coming into the industry. Aig says they are pulling out of half of their portfolio, so they have submitted redemption notices. Metlife come which said they would stick with the holdings for a while, but indicated they would not pull out, are also pulling out of one third to two thirds of their holdings. Some folks are pulling out. Most people said they would consider adding to that. It will be interesting to see where the money goes. Jon the said pretty much that he said look at the date on the roster. He said 1970. We have heard the story again and again and again and again. Does it play out the same way as it has a last three or four decades . The Hedge Fund Industry has grown from 1. 9 trillion to 2. 9 trillion dollars and has had a very good run. All Asset Classes have had their day in the sun and their day in the shade, and this may be one of those times, a day in the shade. I cannot say the model is dead. I do not believe that. We have had periods of time when you bought 30 year u. S. Government debt and regretted that. Investment grade corporate 2008, equities, 2007 and they dropped 50 . There is a rotation that takes place. Amanda co. I would have thought that it would be patient money, that they could take a longer view. Is there a lot of pressure when the negative returns show up to get out . Nonpublic life insurers may be the focus of those hedge funds or Public Companies that do not mind the quarter to quarter all agility. Quarter to quarter lately, people have been paying a lot of attention. It depends on where you are. Global head siegel, of Insurance Asset Management at Goldman Sachs asset management, and sonali basak. Jon results fell short of analyst estimates. A big writeoff in the videogame business as well. Joining us from los angeles is stan myers, Piper Jaffray analyst who has an overweight rating and a 120 price target. Looking at the results overnight, did you rethink your price target . Not exactly. Disney has reported put a solid results, came in line with our expectations, 2 below consensus. If you look at the breakdown, the studio did exceptionally well. The weakness came from the Consumer Products side. The Consumer Products have sort of undersold or there was a tough comparison versus frozen last year. We do see captain america andtroduced spiderman, finding nemo could be the next frozen to direct sales Going Forward. Amanda so the concern for disney and other Media Companies is that the core business, the broadcast business, is one that has been on the decline. Is that not a thesis that you subscribe to . Stan we believe espn will stabilize. We see the espn revenue sort of decline over the next three 1 to 2 . Ewhere in it is still a very stable business. It generates a lot of cash flow, very high margin north of 30 . So we are still believers there. Remains one of the most valuable contents for disney. All of the skinny bundles want to include their sports rights into that package. Jon typically they will call up and analyst and get the analyst to go through the case about why they should buy the stock. They will decide why that is not already in the price. What is in the price of disney that will drive us back towards 120 . Obviously there is the big picture of disney, but then we also see a lot of catalysts near term. We have a very strong advertising market. We are heading into a very robust upfront in may. We also have finding nemo, which could be the next frozen , very much anticipated film. We have the continuation of star wars Going Forward. With theme parks, we have shanghai opening up in june as well. So a number of catalysts that should drive the stock higher. A lot of them are not really priced in. Management, not a lot of caller and subscriber growth, but in the filings it did say that subscriber growth was down 1 compared to 2 last quarter, so we cease and deceleration in subscriber growth that is likely not priced into the stock. Jon stan, thank you very much for joining us. We appreciate your time on disney. Coming up, it is the brits versus the u. S. In the biggest showdown since the revolutionary war, apparently. Matt miller. Fighting it out in chart moores. That is next. In chart wars. That is next. Jon this is bloomberg , about 38 minutes away from the open in new york city. Lets get you up to speed on where markets are right now. Futures softer in the u. S. , equities softer as well. Dellures up by 36 futures off by 36. The stoxx 600, the italian banks leading in some of the losses. Thes go through some of other Asset Classes. More supply coming in the downury market, 10 years, by 1. 75 . Theputting the bottom in dollar, calling the bottom and saying we have room to rally, 15 over the next two years. Dollaryen at 108. 71. Amanda we will have more on the dollar story coming up. But now for a cross content of the battle of the charts. It is miller versus spartans. Matt, kick things off today. Matt i will. I was going to focus on Technical Analysis, but i think that is mumbojumbo, just a bunch of drawing on charts. Doodling, right . But the Technical Analysis tells me something that this chart tells me as well. This is what happens when traders put their money where their mouth is pretty Technical Analysis points to a drop in june for the s p 500. Plus, we have the fed meeting on june 15, the brexit vote on june 23, the spanish elections on june 26. A lot of possibility for geopolitical discontent. What this looks at is ultra aggressive traders. These are triple short and triple long etfs. The long is white, and the short is blue. This is just a look at 2016, but if you go back and pull it back for another year, we have had the longs above the shorts. Right now among super aggressive traders, we have finally seen the cross, and the super bearish traders are now more bearish than the superlong traders are long or bullish. What you see is go ahead, hillary, and pull it back a year. It is the same trend. You can see that we finally have this bearish over bullish kind of death cross, and i love it. Amanda death cross. I cannot wait for miller to come back to his spiritual home this friday. That is the big news. That is what really matters right now. Lets cut to the chase, guys. Three weeks ago today, global stocks hit their highest level since december last year. This is the msci all country world index from february to april third we saw a gain from 16 . We think, in the last three weeks, where is the best place to put your money . There is the msci all country world index. We have seen a drop of 2. 3 in the currency space. Here onw 154 currencies bloomberg. The bestperforming currency against the dollar in the last three weeks is they take a stand this is the only place you the currency like the som. Geous dan the bestperforming asset, greek stocks, 7. 1 higher. There you go. Jon thank you. To make charts like this to work out how much money could be made. I was actually my vote goes to what i think is the best chart, because i think he has a real story, and that goes to matt miller. Thank you. Matt why does mark start the 420 . On is it on four 20 . Jon that was when mark that is when global stocks had their last peak. You know that. Jon counting down to the market open, just 33 minutes away. Jon calling the bottom. Goldman sachs thinks the fed is a midpricing action. Dealbreaker. Shares of office depot and stables are plunging after a judge lost a planned merger. Jon and a day of reckoning pretty brazil pot senate will vote whether to him preach to impeach Dilma Rousseff later today. Jon a warm welcome to the third hour of bloomberg , three hours 30 minutes from the opening bell in new york. Amanda is with us. David westin is on assignment, supposedly, in las vegas. I am going to count you down to the opening. It is about 29 minutes away. Futures indicating a soft open for the moment. S p 500 futures down marginally by. 1 of 1 . In europe, the ftse barely down for the dax low by 62 points. Banks leading in losses throughout much of the recession in the stoxx 600 going to the close. I will get to the other Asset Classes Goldman Sachs, we will get to the dollar call in a moment. The euro, stronger against the dollar, 1. 14. Asset across the board right there. Lets go to matt miller with some stocks to watch. Matt we will take a look at macys. Firstquarter earnings beat consensus, but that is where the good news stock for the where the good news stops for the iconic retailer. Inventories rose and revenue , 150 Million Dollars short of forecasts are macys is also 13 off its fullyear earnings guidance, and when guidance gets bad, investors sell the stock, down almost 9 premarket. Walt disney also posted his first earnings miss since the Second Quarter of 2011. It has been five years since they missed, and this was the quarter they did it. The espn cable channel fell 13 from last year. Shorteruarter epf was than consensus. Cable profit rose 12 in the quarter, though, as espns that less for programming. As espns spent less for programming. And a record year for earnings and sales by posting fiscal four q results that topped analysts estimates for electronic arts. It was led by video games like fifa and madden nfl. You play videogames . Jon i just plug into the terminal and fall asleep and just let it run straight through. Matt i actually know that to be true. Stables and office depot officially called it a day for their merger. A federal judge said the combination would have created an unrivaled giant for pens, inc. , and copier paper. This anybody really buy this stuff at brickandmortar stores . Amanda i do. I like to print things. Matt i thought people but most of that stuff on amazon. People go to staples for this stuff and to all bus depot and to office depot. If they merged, you would note be able to buy an anywhere else. Stables is down 15 , even though most everybody in the market though is down 15 , even most everybody in the market did not think this was going to happen even though some influential hedge funds did, and that is why it is getting killed. Amanda joining us is bruce , and talking about goldmans latest call on dollar and gold. It is interesting that goldman says the dollar slump is over on a day when we do have gold talking about gold. They do not move necessarily in the same direction typically. Lets start with the u. S. Dollar, bruce. Bruce the dollar had a huge run from 2011 to 2014, over by 37 . Eventually that caused a lot of havoc with our trade, or profits, and it rolled over and eventually into the commodity area, especially when commodities peaked around 2014. Then the dollar stayed alive and fell 7 between the third and Fourth Quarter of 2015 until today. Perhaps thethat dollar rally, the big rally is over. Whether it can rally 15 from here, i do not believe that can happen. We learned in 2015, it will be a big hit for trade, profits, and emerging markets will suffer. Anyone with dollar loans will be hurt. My guess is the dollar just treads water over the next six to 12 months, and perhaps that might be in part to the election also. The call on the fed, there is basically a conclusion that Market Participants are underpricing what the fed is going to do this year. It goes against this argument that the fed will only move if the market is pricing it in. If the which side of the trade you take . Bruce i think the fed will hold off in june about raising rates. Then we get very close to the election. Jon and there is another excuse. Bruce and i think they will use it. They will be reluctant to raise rates, and of course it brings up prospects for december. If that scenario is correct, then the dollar rally is probably not going to take place. It will probably sit where it is or maybe had lower. we do have bullish calls. Some of them are moderately bullish like goldman. Thehat likely to happen in influence of inflation, which is normally what would drive the metal higher . Bruce typically inflation is golds ally. We have not had that for a while now. We have had huge Central Bank Intervention in the markets, and flooding the markets with liquidity, and gold is a hedge against the Central Banks doing something or making a big mistake. I do not think gold will do a whole lot from here immediately. I think it would take more aggressive moves toward negative and perhaps qe4 in the u. S. That is unlikely, but if that were to happen, i think gold would have a big flight. Look atber two, just this. Spain joining the group of countries offering ultralong belgium and france recently fell 50 year debt. That was back in march. Bruce, if you want yield, countries in the eurozone are saying come and get it, but you will have to go ride the way out along the curve. For me, here is the eurozone country without a government that will be able to come to the market with 50 year debt. Probably getting a yield of around 3 . What kind of lunatic world are we in right now in the bond market as far as you are concerned . Bruce we are in very unknown territory. Negativerly with Interest Rates. It is a great deal for the issuer, and my guess is a lot of Pension Funds will want those bonds simply to match up their liabilities with income, so i think they will find buyers. That is not to say that these without risk. The risk is enormous. Jon and the risk is duration risk. Duration risk if you look at that measured by the bank of america and Merrill Lynch references, it is at an alltime high, going back to the mid1990s. 7. 5 currently. According to bank of america, it translates into a 7. 5 kind of price. For every one percentage point live in yield. If we get a bond tantrum in the same way we did at this time last year. It is going to be very painful. How much risk is being taken in an asset class that apparently is not meant to have much risk at all . Bruce we follow stocks, bonds, gold, cash. Bonds have the greatest risk. To see what the longterm prospects are for bonds since rates are slow. It is very difficult to judge what rates are going to be three months from now, never mind 60 years from now. That risk is enormous. Been talkingve about shares of disney falling premarket after their Second Quarter numbers missed analyst estimates. It is their first miss in five years. There are renewing concerns about the outlook for broadcast and cable tv companies. We are seeing those Companies Falling premarket action as well. Again, disney has headwinds from the dollar. They are facing that. Where do you stand on this sector . Is it a troubled sector . Really. Ot we are Firm Believers in relative strength. If you look at the movie and entertainment sector, it has been in neutral territory for quite some time but recently it is gaining relative to other groups. We are fairly positive in that area. So we have had a very negative analyst today on disney and a somewhat more positive analyst. We know disney gets beaten up whenever it reports its numbers even when it is good. Do we see entry points for some of these names here . Bruce i do not follow individual stocks, but i think the disney situation is probably isolated to disney. I am not sure it overflows into other companies, so, like i said earlier, that area has been positive. Despite what has happened today, we will continue to recommend it. Amanda one of the concerns is that broadcast cable is disappearing, that the ad model has changed. You are seeing this on a relative basis to other sectors. And that is one of the reasons you are relatively toward it. Bruce that is correct. Amanda Bruce Bittles is going to stick around. Now we go to taylor riggs with our first word news. Taylor we are sticking with politics. Bernie sanders is not making it easy for Hillary Clinton. He won the democratic president ial primary in West Virginia and he thousand to keep battling for the nomination. And he found and he vows to keep battling for the nomination. Help, sanders with your we are going to win in oregon next week. Leadr clinton has a big in delegates, closing in on the numbers she needs for the nomination. Meanwhile, Presumptive Republican nominee donald trump won in West Virginia and nebraska, facing voters for the First Time Since rival ted cruz dropped out. Day iny be the last office for brazilian president Dilma Rousseff. The senate will vote today whether to impeach her for a leisurely using state funds to fill budget gaps. She appears unlikely to survive. Ata buyers help set records the contemporary art auction in new york. Than 57 million on an untitled painting by jean michel by scott John Michelle at a 50 decline from a similar sale one year ago. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus i am taylororld, riggs. Ahead onmuch more bloomberg. At a moment, you are looking at a live shot of the debate happening in Brazils Senate over whether to impeach president Dilma Rousseff. The vote is expected at 6 00 p. M. Eastern, 7 00 p. M. Brazilian time. We are counting down to the market open, 18 minutes away. Jon this is bloomberg. We are about 15 minutes away from the open. Dell futures up by 47 points, s p 500 futures, negative three or negative for. There are so many stock stories out there. We will get to them in a momentary. Here we are cross asset class. Goldman sachs putting the ball them in Goldman Sachs putting the bottom in on the dollar. Lower, top grinding 1. 76 on the 10year, and crude going with it, at 44 bucks and around . 40. The story on the s p 500, rallying around 14 since its february lows. It is said that sentiment has not improve and markets will go higher. Bruce, how do you measure sentiment . And guyisten to me johnson at 4 00 a. M. And say it is bearish out there . How do you do it . Bruce we have a number of indicators. What we see in the various surveys from the American Association of individual investors, investors intelligence, and a number of indicators that measure senate that measure sentiment. Mostare saying this is the bull market in history, and i would have to agree with that. We have had this big run since the february 11 autumn, yet no one is optimistic. Aaiiatest numbers from the at show the biggest the top of the market is maximum optimism. It seems to me that we have ways to go. Jon does it have to be bruce that would be helpful. Jon does that have to be the way it was historically, to point at where we go next . Is,e the reason for that when people are excessively optimistic, it means they are already in the market and there is no more money to come in. That is typically the top. Amanda one thing that this thing wishes this bull market is that it has not one thing that distinguishes this bull market is that it is not a very fun one. The s p has been sideways since early 2014. The volatility up and down in e maybe is causing the pessimism. How do you see this extending itself . Bruce the top is limited by the fact that we have a profit valuation drop off. Valuations are in some respects. Igher than we saw in 2007 and even in 2000 and before the market really peaks, you will probably see new highs to bring in the level of optimism that i think is necessary to cause the market problems. Jon where is the trade . The pessimism that you see in you are worried about china, you see that heavily skewed. I could take the brexit debate. A lot of people are worried about that. Is the value on the upside . , you can look at it anyway you want to. But if you look too deep, you have missed the big picture. For instance, yesterday when the market had that big run, the demand for puts was about as high as it has gotten in recent weeks. They are still buying those puts all the way into that rally, and that is probably the most bullish figuration you could have using that one indicator. Amanda we were just looking at matt miller was showing us his chart. It won the battle of the charts today, showing this aggressive move into shorts as well. We see bit we see people betting against this market. Weve seen high valuations on growth. On weak topline is it apiece is it a case of finding individual things that are the gems here, or riding the whole thing back up bruce we have been sitting in the same place for two years. You have seen a 14 move up and down and that is about it. We have had a few episodes of volatility, and some weaker too. Basically there has been no volatility looking at the bigger picture. With the fed desire to increase asset values, correlations have disappeared. Find very difficult to that form, solow you have to go with the trend. Jon Bruce Bittles, thank you for sticking with us. Amanda coming up, shares of office depot and staples plunging after we saw their planned merger collapse. More details after this. Jon we are eight minutes away from the market open. Shares of office depot and staples probably seem a little bit like that picture right there, dead and gloomy. Those two stocks plunging in premarket trading. The companys called off their planned merger following a by ay a federal job federal judge siding with antitrust officials. Amanda we are just seeing crossing the wire here that gap is facing a downgrade by fitch, cut to junk. Ofer a painful couple sessions already forget gap, it will have a couple of test sessions a couple of tough sessions today. , the first question you asked is, did they not see this coming . Ed i think they probably did. , thatas an assessment this thing will get destroyed by regulators, and obviously they failed. Theregulars came out and judgment has gone against them and they are now abandoning it. The spread on the steel was so much, plus 50 the spread on this deal was so much, plus 50 , so the market gave it a very low chance of getting it done as well. Amanda what is the rationale for trying to do it in the first place . If both the companies and the market saw the chances as being low . Out,hey are kind of maxed having as big a footprint as they can have without and are as consolidated as they can get. So they said lets have a shot at this. A similar deal had been blocked previously on the grounds that you would create this unrivaled giant. Their argument is that we have amazon, 20 years ago you did not have amazon. It was not there then, now it is. Still know id but the feds said still no. The between the market and offer price, a lot of people thought it was not going to happen. We still got a 15 move premarket. Someone was looking forward here and saying this isnt good. The future without this deal is not good. Where do these come in his go now . Ed i think they do not go anywhere. This industry is at maximum consolidation. We have seen a similar situation in telco, which they did not get very far along with. It is the same thing here. There are no big deals left ear. They have to continue as they are and hope that amazon with deal, they have to hope that really does not take off. Historically amazon has been bad at doing this for big global customers. Amanda we are bringing matt miller in with some moving stocks. Matt lets take a look at some of the stocks. Fiat chrysler gets an upgrade from moodys on its debt, but the scherzer falling anyway. Some analysts say no more upgrades are likely. Munis rates the automaker at bea three. It does not matter what good news comes out for carmakers or how good they do, investors say it will always get worse, so you might as well sell the stock. Analyst vincent king check discover shares are up over 4 this year, well above the andstry giants, visa mastercard. Ross stores is the latest victim of a slow shopping culture. The stock has been downgraded to underweight from neutral. We can consumer environment is being blamed for the cut. Seaworld shares could fall much further after Credit Suisse doubled double downgraded the shares from form to outperform. There ischaikin says little possibility for them to raise prices. Jon i extent a thank you to ed hammond. He is busy man at the moment. Up next on bloomberg , futures are soft through much of the session. The s p 500 futures, negative four. The market open next on bloomberg. Jonathan lets get you up to speed with the Global Financial scorecard. S p 500 futures negative, down by four points. Dow futures off by 52 points. In europe, a day of losses throughout much of the session as we head toward the close. You can hear the opening bell. As well buto the fx the fx market 1. 09 on the euro, 1. 68 is where dollar yen is at. 44 for crude. That is the market open coming up. He was matt miller. Matt after yesterday we had the best rally for u. S. Stocks. Lets look at the indexes are, third percent for the dow, s p at 279. If you look at the breakdown, materials and utilities are the only gainers, not by much. Eight out of 10 are down, Consumer Discretionary, stable, consumer stocks are taking a beating. Especially the Consumer Discretionary. I was a you those in a moment. Metals are doing better. We have can ross, newmont getting upgraded, goldman raising its gold price outlook, expectationsative for gold fields, bearish over the next three years, but medium it is positive as everybody else gets positive. Retail had a tough day. This is what i was talking about in term of Consumer Discretionary stocks are you may see has earnings macys had earnings, but they cut their outlook. Ross had a downgrade, and target may be the next. Everyone is worried about mold foot traffic. Macys expects to lose a warm weather inventory. You can see the Consumer Discretionary stocks are down, macys taking a beating down a present or three dollars a share to 3408. 34. 08. Consumer isthe u. S. Not going to be spending. We had again in Consumer Spending at the end of the week, but it would be the first of the year. We have bloomberg gadfly columnist shelby here with us. Here. Uce biddle is still lets start with macys specifically. It is not specific to macys, but what is your take . Department stores in general are being hit. You can see that with nordstrom, one of the strongest apartment stories historically. Macys had its own problems. They have a huge store base that they have not actually taken down that much, and they are suffering. Bruce we were looking at the whole category getting up. I do negative or positive on the outlook . Had a dualretail has problem. There is no pricing ability there. Number two, the consumers are very conservative the last six to nine months, and probably the elephant in the room, amazon is losing sales, so they have serious problems. Jonathan so you either got the stores are consolidate. Macys is talking about getting money out of real estate , leasing and selling it back, things like that. But they are not talking about the stores, they are actually building more stores. They have 800. Jonathan it is like nabisco in europe. They actually went out and builds a huge real estate portfolio and ended up with a shops that they no longer need because the model has changed. Why are they going deeper into what many see is the problem . Macys will say they have cut stores, and a have rationalized a little bit, but it is not enough, especially for todays customer. Shopping more online, and macys will not say it, they have brokers coming from online. Vonnie the moment you are operating businesses smaller than the value of your real estate, you need to have a good long inc. About what you are doing think about what you are doing. Is there a Silver Lining for macys . They do have some value . Star fire is one of the ones. Macys has been taking the right steps, we are hiring someone to look at this, see if we can do something with flagship locations and the malls. But they have been saying that for the better part of the year. So when do we start to see something happening . A retail route does not look good for the u. S. Consumer. Is that really the story . Is this a play on the u. S. Consumer not going as planned . Bruce i think is the u. S. Consumer i merrily. Everyone had the expectation with the result of cheap gas, but at the not happen. One of the reasons it did not happen was going back to 2008 and 2009 when the most important asset was the house, which declined in value. So you look at the debt situation, the asset of the home , and things changed. It has been changing and evolving and turning more conservative. One good thing of that is happening, we are starting to see rates go up. Over time, that is very bullish, but that will continue. In the shortterm it is disastrous. We do need retail spending numbers to be strong. We have seen wage inflation. At least in pockets of the economy. Can we take that as a positive sign . I think so. You can see a lot of good reports from home depot, lowes, amazon, people want to shop and spend money on their homes. It is a matter of where people are choosing to spend their money. And they are not borrowing like they need to. Dissented on their list things to spend it on frivolous things, they are instead buying things that matter. They call this company largely irrelevant, cut the junk by fitch today. Never mind macys. I will look for what is happening with earnings. The reported Monthly Sales last week, and more changes are to come. What that is, we will see, but this is something the Company Needs to figure out quickly. They had been losing sales for a while. Vonnie this is a 10yearold story of gap on decline. Thethe space, there is fickle, pretentious consumer at the other end, and if you do not get the mix right, gap will fall out of favor with the mix of its offerings. Are you more optimistic about the Department Stores because they are more diversified . Bruce no, they have a larger problem. They has been no income gains. In many years. You cannot have both without income growth. Until income and wages begin to ratchet up, it will be very difficult for most retailers. I we are seeing them all hit today. One question you have got to ask is if this is overdone, that overreaction . We do not like to see a company with a sponsor top lighting results to get earnings through stage. Ts, it seems late you concerned about the whole group where their earnings are going . I am about Department Stores. They were on top a couple of years ago. But now the best of the best are coming down. We need to figure out how to change their business models. Jonathan the bloomberg gadfly columnist, thank you very much. We are about eight minutes into the session. Np down 0. 25 there is a debate in Brazils Senate other whether to impeach Dilma Rousseff. The vote is 6 00 eastern, 7 00 brazilian time. Does the rally still have room to run . We speak to the black rock emerging markets fund man. Later today, david westin interviews Austin Goldstein at 12 30 eastern from the salt conference. This is bloomberg. The Prolonged Oil slump is getting to jump in cars. 67 jumpota leads with in series dealing with these. Oklahoma has also seen big jumps. Mitsubishi motors is blaming the overambitious fuel targets are the tedious data. Shares plunged after admitting to the fuel economy being wrong. And now nine more models may not have been properly tested. The European Union has vetoed billionaires proposal for the british where your carrier. Wireless carrier. Regulars were concerned to less competition and higher prices. Jonathan a lot of stocks we are watching. We are opening low on the s p 500 down 0. 33 . Lets look at stocks on the move. The merger of office depot and staples not going to get together. They plan to refile, a judge backing the sec applicant fcc application. The judge said he thinks these two combined would create a monopoly in pens, inc. , and paper and nowhere else. Only other be the place you could get it. Cleveland research targeted from neutral to buy. The First Quarter shares slightly below estimates and it seems more risk than upside for the full year. Target is a part of the bad retail story we are seeing. Macys and gap as well, but target and walmart both falling. Profitseeing a terse drop. It seems the primary cause, weight will buy back shares, but the strong and good go down to 35 of of 35 drop for the first year. But they have had a big tailwind over the last few years, so not all bad. Abigail doolittle is taking a close look at the early trading. Starting with fossil group. Shares are plunging after the company missed firstquarter results pretty badly. And to put another way, very bad print. They offered no visibility and there is a huge amount of volatility. Also a bearish shortage, 90 . Some investors may be made pleased. Down is ross stores after the discount retailer was cut underweight from neutral by piper. The weakening consumer environments and a macro player as well and think that the stock could come under pressure if the fiscal First Quarter results are underwhelming. All of this as ross comes dangerously close to a two day moving average. To brazil, today could be Dilma Rousseffs last day in office. A vote is expected at 6 00 eastern, 7 00 brazilian time. A civil majority takes the steps aside. Rockndo rodriguez of black joins us from san francisco. They currently have about 6 of their weight in brazilian assets. Talk to us about what is happening in brazil. The markets tell the story, really building up momentum ahead of the impeachment. Down 6 insales out brazil from a year earlier. Why does that change in the next couple of weeks, whoever is in charge . It is a historical day for the case of brazil, and i would say for the case of emerging markets. It is not very common that in in ncy emergen one needs to be relatively positive that the institutional framework can lead to this type of outcome. This is happening in a context iswhich the gdp decline very much worse than what we saw back in the crisis in 2008 and 2009. It is a pretty severe Economic Conditions that have led to this political turmoil. So the rally of markets in brazil this year, which is a top performer across the board, equities, currencies, local rates, is proven by the prospects of an improvement of economic policymaking that could lead to a recovery in the brazilian economy Going Forward. Amanda the fiveyear chart is really painful. Of my questions is, what the government needs to tackle, you say fiscal reform including the massive deficit, are you taking an upside in deficit risk . Is is eating at any profits in the market . We have a structural challenge not only on the fiscal but also competitiveness. There is rigid nest in labor. Economy that is a very slow savings rate. Is declining, insulation keeps growing, and Interest Rates actually go down in order to facilitate an economic recovery. The reaction is particular has been driven by politics and the prospects of actually political change in that country. Going forward, assuming everything goes planned today, which is still a big if, if that forward, the going dynamics of the currency will be very much determined by the ability of the new government to economic a credible program, a credible cabinet that can deliver on infrastructure and work with congress to push through the changes that will bring about an economic recovery in brazils economy today. In return of the currency the 13 so far this year, it is much sentimental driven Going Forward. It will be more fundamental. Amanda as you see a recovery like, what sectors do you in brazil . How are you playing the market, is it earlystage typical, or what are you looking at . Gerardo it has been difficult to play the brazilian market. What we have been doing recently after the 30 rally in with equity markets in 2001, we basically bladed the stability stabilization, that this would be streaming down the positions and flocking to these closings. Going forward, it will be very much a function of fundamentals. Jonathan who is to say it ends with Dilma Rousseff . What are the chances the new person gets impeached . Gerardo that is a good point. That is the potentially the close of a chapter only. The investigation will continue, and separately you have the investigation of electoral accord that could lead to a fresh new election. Right now, there is a lot of uncertainty out there, but there is light at the end of the tunnel because when you see the narrative the prosecutors of the prosecutors, you can see the ability to continue with this waning, and this will need to. Et to one end eventually the fact you can have a political change after the vote today, i think it will be important to set the stage potentially for the closure over the next few months of all the investigation process, and then brazil can move on to a more positive chapter in the economic history. Jonathan it is great to your your insight. Amanda still ahead, it is Bloomberg Markets with vonnie quinn. Witha we are starting up conference in las vegas. Rubenstein of the salt the challenges facing private equity, investors, searching for alpha and highyield. Also speaking with israels finance minister. We are asking him about the rescue fund and the countrys problems and if they can shore up fundamentals as well as the 50 year bond on the heels of the same thing. Also looking at the four seasons restaurant, celebrating that restaurant which has done so many deals over the years areas will become of the power small risk . Coming up, a look at the agenda. Jonathan a good day for the city of london, the brexit continues. John osborne testifying in front of the Treasury Committee talking about the costs and benefits of the eu membership. And most say this Capital Investment will be canceled if eu. U. K. Leaves the the sheer weight of opinion leaves the brexit making u. K. Forward. I guess this is what this is what it is, battle of opinion, and it will continue up until the june 21 referendum when the british people will answer the in then, leave or stay European Union. 25 minutes until the session in the united states. Lets get you up to session. Soft session globally it seems, no different in the u. S. For the 0. 05 0 down 0. 4 , the dow. The disappointment of the up deal of Office Supplies breaking down. Lets weigh in with the sectors. We go to the other Asset Classes, the u. S. Treasury at 1. 76 onnchanged. 1410 year, eurodollar 120. And where crude goes, that is down the s p goes, wti 0. 25 . Amanda we get the bank of england decision soon. And then jcb jcpenney earnings. Stay tuned to bloomberg television. There is a great lineup of death from the salt conference guests from the salt conference. That will all be on the air coming up. Jonathan david westin is actually doing some work there, and you will see him on bloomberg, and it is not just a trip to do gambling in the casinos. But that is what i am told. Amanda there is a lot of time to be talking about it. Jonathan looking up to that. A lot more coming up. That does it for bloomberg. Fromrow we have the people Merrill Lynch. All coming up tomorrow on bloomberg Bloomberg Markets is next. From new york, i am vonnie quinn, in for betty liu. This is Bloomberg Markets on bloomberg television. Vonnie we will take you from new york to london to las vegas in the next hour. The magic well in kingdom. Shares of disney tumbling after the Company Listed earnings estimates for the first time in five years. Those results raising concerns about broadcast and cable, which is losing to online media. Mark in the last sale for brazil president Dilma Rousseff. The country is debating right now on a crucial vote that could force or out of office and into impeachment. But does it mean for the Vice President and his countrys Economic Future . Vonnie and a bloomberg exclusive, we talk with the cofounder, david rubenstein. This is coming from the salt