Transcripts For BLOOMBERG Market Makers 20150305

Chains are struggling, many customers are coming in for the meat. It is Market Makers here on Bloomberg Television. I am Erik Schatzker. Stephanie i am stephanie ruhle, and im glad we are starting today coming in with the meat. Coming in with the meat . Erik coming in for the meat. Stephanie you know what we need now, a bulletin. Erik abbvie has won the battle for pharmacyclics and will buy the company. It makes a blockbuster blood Cancer Treatment that cost 100,000 a year and has been approved for four blood cancer uses. Johnson johnson had been on the verge of buying pharmacyclics. The European Central bank is releasing details of its stimulus program. At a News Conference in cyprus, ecb president mario draghi says that the sovereign Bond Purchase Program will start next monday. Ecb will be buying 60 billion euros a month of assets through september. 16. This is all part of a plan to invert deflation in the euro zone. The ecb wants to get inflation back up near 2 . China has since sent an Economic Growth target this low in 15 years. The National Peoples congress premier says that he wants the economy to grow 7 down from last years target of 7. 5 . China is facing a number of headwinds, a real estate slump for one and access industrial capacity. He says hes trying to rein in another problem the company faces. Out of stance on corruption is here to stay. Our tolerance for corruption is zero, and anyone guilty of corruption will be dealt with seriously. We will see to it that every instance of corruption, should it be committed to hire up or lower down is seriously punished. Erik last year chinas economy grew at this list pace in a century. In a latenight tweet, Hillary Clinton says she wants the public to see her emails. She is tried to defuse the controversy over her emails when she was secretary of state. She is urging the state to release the messages she wrote from a private account. Clinton has been criticized for using private email to conduct state department business. Authorities will review the emails for release soon. I houston when he has subpoenaed many of those in a House Committee has subpoenaed many of those emails in connection with the fiasco in benghazi. Stephanie i dont like the idea of a late night three. I like the idea of 95. Erik what . Hang on a second, you are a latenight tweeter. Stephanie i am not the secretary of state i am a regular person. Where was she in bed, in the kitchen, in her pajamas . We have to get to factory orders for the month of january. Scarlet fu is in the newsroom with headlines. Scarlet unexpected decline for factory orders. The prior month weakness of 3. 4 loss was also revised lower to a drop of 3. 5 . Bit surprising, given that you have gas prices down about 8 in january 2 2. 06. Factory orders used as a gauge of Consumer Spending and consumer orders as well. My guess would be that it was not as much of a factor given that most of the snowstorms didnt occur until midjanuary. Perhaps the stronger dollar is in effect here on the factory orders being a disappointingly. In terms of the effect on the markets, u. S. Stocks are paring some of their advances and are Still Holding onto modest gains. Buying picked up in treasuries and the dollar remains near its high. Stephanie all right, thank you so much, scarlet. We have got to talk about that abbvie deal spending 21 Million Dollars to buy pharmacyclics. Here is a little nugget for you the cancer drug company had just 86 million total in net income last year. Lets bring in Bloomberg Health care reporter drew armstrong. You have got to walk us through this. This drug erik said earlier is the hot, hot cancer drug. Drew there is a bunch of hot, hot cancer drugs. This drug is supposed to go from 5 million 500 million in sales in 2014 to 3. 5 billion by 2018. They keep adding indications stephanie what does that mean, indications . Drew they have approvals for four different types of blood cancers. They keep adding about one of these a year. It has become the preferred drug for a lot of these treatments. They are using it earlier and earlier. Their partnerships with tons of other drug companies. It is one of these things that you go from being a relatively small niche drug into something that is used very, very broadly. Erik how quickly the prospects for a company like pharmacyclics change . I have to imagine a change request because if you rewind the clock two years, it was fired at the market at 6 billion and all of a sudden these families are finding fighting over it. Drew that is health care these days. Cancer is often behind a lot of the big deals stephanie what do you mean . Drew we were talking about pfizer and astrazeneca, a lot of it was to get the esters and get cancer pipeline. Stephanie because cancer is so massive. Drew we have been talking about drug pricing, how hard it is to charge a huge price for these drugs. Cancer, you can still do that. A 100,000 drug. It works, hard to say no to. Stephanie isnt that just horrible to get your head around . You can charge anything because if you dont pay 100,000, you will die. Erik well, it raises a question we are not going to answer here, what is the value of life. Stephanie because that is what we do at 10 07. Erik but in the way that cancer is being treated drew there is a lot of work in understanding the human genome and huge advances in cancer, just from figuring out how cancer works. We have better treatments than we did 10 years ago. Also the cool stuff going on right now, using the bodys own immune system to attack a very targeted things, like these pharmacyclics drug, they dont have the awful side effects of chemotherapy. Really significant scientific advances that people have been willing for a long time and especially right now to pay for. They are not necessarily as we are seeing from the discounting that is going on with abbvies drug. They are offering big discounts right now. Part of the reason abbvie needed this, to be honest. Stephanie what would it look like if they didnt have it . Abbvie makes half its revenue from one other drug. Real risk because you are so dependent on that and eventually it is going to go away. They have been trying to diversify their product offering. They have to have see drug that is they havent a hep c drug that is not doing as well as they hoped. Erik you point out that there is less pushback from insurers and National Health authorities on the pricing of cancer drugs. Is there a Regulatory Risk that what we have seen happening in hep c is going to find its way into cancer . Stephanie want to walk through what we are seeing in hep c . People might not know. Drew a couple years ago treatments didnt work, huge side effects, they took a lot of time. 5050 shot of getting cured after years of also treatments. You feel like you have a hangover combined with the flu with these shots. With this they are charging 1000 a pill for it or more. That sets off this massive pushback by Health Insurers pharmacy benefit managers, to say we are not going to take us and we will put you vs. Your competitors. Ggilly is discounted its product by 46 . Abbvie tried to undercut gilead. In the process they are only getting 20 of the market, we think, and not making enough from this thing to necessarily offset that whole thing with it there other big drug that uf got to go out and buy submittals. Erik that is why i asked, could we see what happened to cancer drugs what happens with hep c drugs . Drew it is becoming a big issue. Big organizations are saying we need to talk about cost with our patients now. They can be a major cause of bankruptcy. Just take a lot of stuff that at seven and seven at upcoming you dont have a choice because you have cancer adds up and as dds up, you dont have the choice because rough cancer. The therapy a lot of times is unique compared to other commoditized things. I dont think we are there yet and that is why people are willing to pay premium. Stephanie drew, thank you so much. Erik coming up, the bestperforming Exchange Company in the world. You will hear from the ceo of the lse group. Stephanie stressed out banks are waiting to find out today how they did on those allimportant said stress tests. Stephanie welcome back to Market Makers. I am stephanie ruhle, with of the worlds greatest partner Erik Schatzker. The European Central banks plan to avert inflation gets underway on monday. Ecb president mario draghi says the bank will begin selling 66 billion worth of bonds each month through september of 2016. Speaking in cyprus, draghi unveiled forecasts showing higher Economic Growth. He said the ecb is on track to reach its inflation goal come just below 2 . It was once one of the most feared regulators on wall street. Now the new york fed has lost power in a behind the scenes reorganization. The wall street journal says a littleknown committee has taken over the feds job of overseeing banks such as Goldman Sachs. The committee is headed by fed governor daniel tarullo. The fed reorganized after the financial crisis. Tarullo tells the journal it was obvious regulators had not done a good job for the crisis. It is the end of an era at ringling brothers circus. Starting in 2018, ringling brothers will eliminate its iconic elephant acts. The circus says it is because of public concerns. Animal rights activists have complained that the elephants are mistreated in the past. Ringling brothers have said that the elephants are well cared for, not abused, but clearly they made this decision here. What do you think about that . Erik about . Stephanie elephants not being part of the circus. Erik i think the service will survive without elephants. Stephanie i think so, too. I think it is a good thing. I dont like clowns. He is saying you are a clown that is what he is trying to say right there. Hurting me. I dont like them. They are scary. Theyre not that funny. I like to drag queens. I dont like clowns. Erik trading stocks appears to be not good enough. For years they have been expanding beyond equities, everything from commodities to Interest Rate derivatives. The London Stock Exchange group made a bet on indices with the frank also company. Something appears to be working, since the start of the bull market six years ago, the lse group has been the bestperforming Exchange Company in the world. Today the lse Group Reported that revenue rose 32 . With us now, xavier rolet ceo of the London Stock Exchange. Thank you for being with us. Xavier good morning erik, how are you . Erik doing well. Why is it that people say that the cash equities business is so lousy . Xavier it is a good business, i have to say. Margins are good if you can bring your costs down to a sustainable level and innovate. It is indeed and can be and certainly is for us with market share in the u. K. Markets for the group circa 80 , and overall, about a 40 market share in europe. Fundamentally the equity market is here to support Something Else it is cap and it is Capital Raising for the real economy and what you saw last year is a boom in tech ipos and general Capital Raising in our debt and equity markets in europe, howard, i have to say credit has to be given where it is due powered by reforms undertaken by the u. K. Government to recalibrate our fiscal system to move it away from overreliance on debt and to basically reduce the weight of taxation on equity which as we know is the sustainable means of financing innovation and future growth. Stephanie what is innovate is really mean . It is a term Everybody Loves to use and it looks great in a powerpoint presentation, but how, where . Xavier in terms of our equity business . Things like new options, innovating with an elite platform, private financing training platform for young, innovative startups on their way one day to a future listing. Monday morning we are launching the second iteration of our company to inspire britain. There is everything you could do from the big picture, helping these Young Companies moved from startup to startrdom, as we call it, is a financial excellent, including from when they are private startups to technical innovation, the things we have done without technology. We have taken costs down drastically, enabling us to pass on the savings to our customers. It also innovation for example, crossing networks, the ability to do more options, to create block discovery opportunities for large investors. We started this process five years ago. We repealed in 2009 and we have been able in our markets to do when an exchange should do which keeps a neutral position between the competing interests of investors, corporate issuers, and a wide range of users from highfrequency traders to longterm investors. We are at the core a neutral infrastructure platform and it is because we have remained neutral and brought down our costs and innovated that our market shares have gone back from the 40 or so it was in 2009 to about 80 today. Erik xavier i mentioned at the outset that Companies Like yours have been expanding beyond their original business xavier that is true. Erik for quite a long time now. Five or 10 years more than five years ago, but there was a wave of consolidation among exchanges and you have chosen other routes like Frank Russell to expand. Where are you going next . The Hong Kong Exchange ceo said today he perceives a window of opportunity for european 70s to expand into mainland chinese stocks. Is that where the lse is going next . Xavier well, we have made 14 acquisitions in the last five and half years, and of course integrating those is paramount. You pointed out earlier that 52 growth is what we scored in terms of revenue increase for this year, but if you look actually, the shape about 30 of our total income was driven by organic growth erik xavier you have to pardon me for interrupting you. We just dont have a lot of time. I know that you have got a good answer, a good long answer, but i need to make it a good short answer. Xavier ok, i will try. Erik what are you going to do in china . Xavier 15 of our revenues are in asia today. I know there are massive opportunities in china but we are already there. If you look at 60 of Exchange Traded funds benchmarked against domestic chinese equities, they rely on ftse indices. The on our existing presence the on d 66 Chinese Company beyond the 66 chinese, is listed on our exchange is, there are massive opportunities Going Forward. We talked about the r d london is one of the very few Global Offshore centers. There are opportunities for the partnership and cooperation. Of course im going to keep my answer very short im not when it talk about anything else. You would be surprised if i did. Erik if your company in such discussions with authorities in beijing is her company in such discussions with authorities in beijing . Xavier i miss what you said. Erik are you talking with the Chinese Government about ways the lse group could do business in or on Mainland China . Xavier well, of course we do because we are already regular and by the chinese at the death regulated by the chinese authorities, owing to our presence there. Yes, we are at avenues and areas of growth we are looking at avenues and areas of growth and increasing our share of the ipo market, looking at chinas need for capital and further activity with global markets. And the relationships between the countries, u. K. And china is very warm. I was in china with a state visit, for example, the last two state visits. There is plenty of opportunity and i will just say, i will keep it short, there is plenty going on. There will be in due course i assume some announcement, but for the moment we are very busy and working very actively with our chinese stakeholders and friends. Erik xavier thank you very much. Pay us a visit next time in new york city. Ceo of the lse group. Stephanie really finding your group with these testy exchanges. We will be back with more Market Makers after the break. Erik coming up on Market Makers is a citigroup ceo Michael Corbett stressed out . He may be when he gets the results of fed stress tests. Stephanie opportunity in the oil laps. Well collapse. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Erik it is 10 30 in new york city. Welcome to Market Makers. I am Erik Schatzker. Stephanie and i am stephanie ruhle. Erik we are going to start with some news. It was a multibilliondollar title in the drug business, and abbvie is the winner. They make a blockbuster blood Cancer Treatment. They came in at the last minute, because Johnson Johnson was on the verge of buying pharmacyclics. In cyprus, ecb president mario draghi announced that they will bill be bond they will begin the Bond Buying Program on monday. Draghi says that the eurozone government must do more to fix the economy there. Strictly, credibly, and effectively. And this will not only increased the future Sustainable Growth of the euro area, but also raise expectations of higher incomes and encourage firms to increase investments today as we move forward the economic recovery. Erik since june, the ecb has cut Interest Rates twice. Qe is the next at. Initial jobless claims in a bit higher than expected. They hit the highest level in nine months. Tomorrow we get the governments jobs report for february, a much more important document. And the ambassador needed 80 stitches after what you can see here was a terrifying attack. He was attacked by a north korea sympathizer. The man slashed at his face while dementing that the u. S. End military exercises with south korea. The surgeon of the hospital said that heaven and god saved him. And an interview as part of the new iconic voices series at Arizona State university. Have a look. Warren buffett i would consider myself a journalist. I assign myself a story. Erik for someone who did not get to become a journalist, buffett has quite a consolation prize. He does own two dozen newspapers. Stephanie he conjures up extraordinary stories and people believe them. Erik he is a great storyteller. And people believe them. He is very lucky. Stephanie now to wall street. Wall street on edge as investors await the results of the Federal Reserve stress test this afternoon. One ceo in particular will know soon if he needs a new job. Mike corbett has pretty much admitted that he could be fired if citigroup does not pass the test. Our correspondent covers wall street for bloomberg. And let me say, i think it is pretty badass of mike corbat to put it out there, say, i could get fired. Erik either that or it is a threat to the fed. You will get a bank without a ceo. Stephanie i like it. There is a president. Vikram and it that was the reason for him failing a few years ago. We will not know until next week, but today we are looking at the banks did in this test from both the fed and how the banks say internally on their own test they did and sometimes the gap between the two can be instructive for next week when the fed gives approval or rejection of banks plans on capital. Erik to your point, what we get is the first part of a twopart program. Michael yes. Erik they try to make an apples to apples comparison . Stephanie hold on. Erik they make every bank go through the same severely adverse scenario. Michael in 2000 nine, this was the big story. How were banks doing, could they survive the crisis . Now it seems like most of them could under the test. This is a preview for next week and it is not as crucial, because the banks are a lot more capitalized. Stephanie if they get through today, does it give you confidence that next week will be check the box or it will be significantly worse . Erik you might think so. [laughter] stephanie they are to forward to two for two there. I get it, banks supporter. Banks reporter, what do you have to say . Erik had a good day yesterday. He is on a roll. Michael you can pass this week and still fail next week if you ask for too much. They put in a mulligan system so the week between this test and the next test, you can change your ask. You can lower how much you ask. Erik and that was important for jpmorgan and Goldman Sachs right . Michael they asked for too much and had to scale it back. Some banks of had to do that and some Bank Executives say you should not use a mulligan because that means youre asking for a lot and you are working for your shareholders. Erik i think it is worth pointing out another thing. Which is kind of crazy. This was brought to my attention by another wall street executive yesterday. If wall street if these banks release information on the schedule the fed releases information, the sec would be all over them. Think of citigroup last year. Citigroup seem to have all of this room to give capital back to shareholders because it did well under the stress test. As michael pointed out, it failed the qualitative assessment, but Michael Corbat did not know that. The ceo then, the ceo now was in south korea at the time. The moral of the story, when the stress test comes out, make sure you are in new york city or San Francisco stephanie im sure that day he was in south korea, he did not want to be there. Erik but they were buying those stocks on the basis of stephanie that information. Erik well, incomplete information. If it were up to citigroup to release this information, you would think not doing it all at once would be harmful to investors . The fed clearly operates by different rules. Michael the counter argument the fed would make is this twopart system allows that mulligan that the fed says they want. If the fed is going to have a black box system where they do not know where they stand, at least give them a second chance. And this allows for that. But there is only you are going on september 30 data. Six months later, things have changed. So there is some stephanie can we talk worstcase scenario . Lets say they fail. Can corbat lose his job if he fails . Michael he has put it on himself, i should be held responsible. Whether that means fired i dont know. Two years in a row i do not think there is a major bank that has failed two years in a row. Stephanie what do you think . Erik clearly it is up to the board. Based on what he has said, you would have to stephanie you are a huge backer of mike corbat. Erik i suspect that he would offer his resignation to the board. Stephanie if he did leave, who would get the job . Michael no idea. Erik jamie and his clients will tell you, hes an incredibly counted banker, but not a consumer banker. He is an investment banker. But regardless of how good his management skills may be, could he run citigroup with its reach across skills may be, could he run citigroup with its reach across the globe . Stephanie Vikram Pandit was not a commercial banker. But where is he now . What is your twitter handle . Michael mooremichaelj. Erik we are moving on. Thats all. Michael, i love your suit. [laughter] erik we will have the restructuring chief of goldman. Stephanie i wish you could hear the producers in our ear. Stephanie welcome back to Market Makers. I am stephanie ruhle. Orders for manufacturers fell 2 10 of 1 . A economists had been forecasting an increase and if you factor out has tatian like airlines, factory orders were down almost 2 . In china the government has set its lowest economic target in 15 years. The Peoples National Congress Excuse me help me, erik. Erik we see [indiscernible] stephanie last year chinas economy was at the slowest pace in a quartercentury. And Hillary Clinton is trying hard to end the controversy over emails she wrote as secretary of state. The potential democratic president ial contender is urging the state department to release all of the email that she wrote from a private account. She has been criticized for using private emails to conduct public business. Erik these should not be busy times for the restructuring business. Think about it. Restructuring rates are at or near record lows and investors keep snatching up the bond yields yet there is more distressed assets out there than you might think. Here to tell us were even more trouble lurks, tim goleman, the head of the Restructuring Group at blackstone and soon to be part of the firmware blackstone is merging its advisory building. Tim, welcome back. What is keeping you up at night . Tim we are spending a lot of time in the energy space. Erik why . Tim if you had bloomberg cut the terminal by 50 stephanie that will never happen. Tim that will never happen. But that is a cut of 50 from august until now. Erik if you were to rate your priorities, where would energy rank . Tim energy is probably number one, number two, and number three. We are spending a lot of time on that. It is a vast change erik what is a lot . Quantify. Tim we are probably looking at 80 names that in some form or another are struggling. We probably have a lot of new assignments, both on the debtors side and you cannot run a company and have your prices dropped by 50 and not have issues. Not ask the lawn and things not ask the lawn, and Companies Like that. Stephanie what do they need to do . Ride this out . Tim we are spending a lot of time helping them right out the balance sheet. If they have enough liquidity they can ride it out. The second thing, look at how you might take advantage of this. Some are doing Exchange Offers. We are doing Exchange Offers right now. If you have debt trading at 40 , you can go out and buy it, do an exchange is . 60. You can your debt at a discount. Its an opportunity. Its really gutsy, so if you spend all of your cash, you may run out of cash. E characterize erik characterize for us. What is it like to talk to these companies. Some of these guys are wildcat ors, roughneck types stephanie good old boys. Erik are they willing to capitulate stephanie erik, they do not have a choice. Isnt that a gross overgeneralization . Boss hogg. Erik i like that. Tim first of all, they are not already next. Erik i said roughneck. Stephanie you can be a smart redneck. Tim we are all try to figure out what you can do. Erik but capitulation, what i mean by that doing a deal with a tim why is that ahead . Stephanie no one wants to go to a loan shark. They have to. Vulture debt tim vulture. These are hedge funds. These are good companies. These are good firms. They put in hundreds of millions of dollars in to companies, which makes a difference in the company surviving or not. I do not think that is capitulating. I think that is taking advantage of whatever financing is available to the company. And by the way, some of them that we are looking at our looking at acquiring companies. It is a great time to acquire an energy company. Stephanie what happens if oil prices do not go up . Tim two who . Stephanie what if oil prices do not stay where they are . Tim we are not looking at it and saying, lets do a deal that lasts for one year, two years. Lets do a deal that lasts once and for all. The last time we did this in the 1980s, it went down and stay down for a long time. If it comes back, good. If it does not come back, you have to assume this is the price. This is commodities. This is the price. Erik lets go back to the list. Energy is number 1, 2 and three. What is next . Tim shipping. Your favorite vulture. They now own those shipping companies and the prices are going down still. So, that is another area we are spending time on. We are spending a lot of time in the municipal area. We just punished detroit, by example. Erik what is next . Tim municipal or not we are working in puerto rico right now. S really stephanie really . Do you see puerto rico as a Good Opportunity . [laughter] tim i like the way that you ask the question. They have a lot of debt. They lost their ability to file for what they call chapter two and three. They are before congress. That does not solve their problem. Some of their problems it does not solve the commonwealth problem. Stephanie without private investment, u. S. Investors, what is it like an puerto rico . There is really no one left to help them. Tim they have a lot of help. Stephanie external help. Tim they have public corporations, sewer and water, what we call product not the shoot which is Transportation Companies what we call prada not the shoe, which is Transportation Companies. Erik i mentioned at the outset that youre part of blackstone will be merging. When is that going to happen . Tim we would like to know that ourselves. It is going to be a public company. And with all that would be necessary to make the Company Successful in that arena, it will take longer. We expected to happen in 2015 but it will be a very exciting venture. [all talking at once] tim a trillion is not funny. [laughter] we have heard that old name. Listen, it is a great name. You will love our logo when you see it. It will be a truly exciting venture. Stephanie that is awesome. Erik tim coleman, head of restructuring at the blackstone group. Stephanie we will be back with more Market Makers in a few. Stick around. Scarlet welcome back to Market Makers. Im scarlet fu. Mario draghi of the ecb and announcing an increased in the forecast for gdp and inflation as well. It will allow investors to move ahead and fixate on the jobs report for friday. A couple moves. Cancer biotech names on the rise after abbvie snapped up pharmacyclics. That deal highlights the scarcity of blockbuster drugs. Also moves in tg and juno therapeutics. And whether you are looking at the moves and brazil embraer weak real is reducing the companys defense revenue and dollar terms. And finally, trading at a fiveyear low after it cut its estimates because there is less demand for mining equipment. Erik thank you. Scarlet fu in the newsroom. Coming up, what is John Stewarts beef with arbys . Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Stephanie jumpstarting europe. The ecb ready to launch its plans to get the economy back in care. Will it be enough . Erik it is a website for art seasonal products and a lot more artisanal products and a lot more. Etsy plans to go public. Stephanie roast beef sandwiches and a public beef with jon stewart. It seems to be working for arbys. Welcome to Market Makers. I am stephanie ruhle. Erik and i am Erik Schatzker. Mario draghi has announced the ecb will begin its Bond Buying Program on monday. It will be a total of 2. 2 trillion. This is all about draghis effort to avoid inflation. They have cut Interest Rates twice. Qe is the next step. There was an unexpected drop in factory orders in the United States in january. Orders for manufacturers fell to 10 of 1 . And if you factor out transportation, orders were down 2 . It may be a sign that harsh Winter Weather is hurting the labor market. Initial jobless claims have hit the highest level in nine weeks. Tomorrow, we get the jobs report for february. Economists are expecting an addition of 230,000 jobs. There appears to have been a power struggle within the fed and the new york fed lost. The wall street journal says a committee has taken over the new yorks fed job of overseeing banks such as Goldman Sachs. The committee is headed by dan truly low. He told the wall street journal that it was obvious that the regulators had not done a good job leading up to the crisis. Plus the curtain is going down on one of the acts in the ringling brothers circus. Three years and now they will eliminate elephant performances. The circuit says this is because of public concern spirit Animal Rights have complained that the elephants are mistreated. In the past, ringling brothers has said the elephants are well treated. Stephanie and for all of you who have sent me pictures of clowns, thank you very much. That was horrible. Not to the ecb. Mario draghi has announced that the Bond Buying Program because a monday. Jon ferro was at the News Conference. John, how confident is he that this is going to work . I guess he has to be. Jon that was an amazing. He looked confident. We got a full forecast for inflation. That is pretty much a bank on target, but that is a longterm horizon. It comes with a lot of uncertainty. And that is why these forecasts are conditional on full implementation of policy. That is the big ball of wax. He is going to keep his foot on the stimulus battle. Take a. Listen mario draghi at this point in time, we have no reason to think or plan or act and any different way from what we have planned, namely the purchasing of 60 billion euros a month. Until 2016 or beyond, if needed. Jonathan steph, i think the question Going Forward the Bond Buying Program on monday, you going to meet those targets . A big question mark on that. Stephanie do you think that they are doing a smart move by buying bonds ahead of time . Jonathan hard to say. You see an epic rally. The big question coming into this a little technical what is the appetite the ecb has with debt to negative yield . How far will you go . He answered that question. He said we will go as far as we have to. Negative 12 . Anything that is negative. 2 , ecb will have an appetite for. I think that is a difference between the Federal Reserve and the ecb. When the Federal Reserve got going, treasury yields have been way more than that. What do they do when they buy and they push it . That is a debate happening in cyprus. Erik jonathan, if i may, lets go back to draghis forecast. Did he give you a sense of how he believes the economy will perform in terms of growth and inflation without quantitative easing . Jonathan no, this is very much about with quantitative easing. That is where these forecasts are coming from, which is why you saw the euro fire up and i know it is hard to read a News Conference based on the movement of eurodollar. Initially there was improvement on those forecast, but then it went low because this is all about implementing qe in its entirety and possibly going beyond 2016 as well. The ecb, erik could well do more. It will come down to more than and inflation reading or gdp. It will be conditions and that is something that he is optimistic about. The glass is halffull perhaps. That contraction thing is getting less bad. I have got to say though, we have seen this movie before. Erik jonathan, among the ecb members, has support for quantitative easing consolidated since draghi announced it back in january, or is the difference of opinion as pronounced as ever . Jonathan i think there will always be a difference of opinion. If these guys want to turn around and dissent, i think they are whistling in the wind. Fine, you want to take on debt with a negative yield. I think the big point, erik the longer dated maturity, 30 year bonds in spain and italy, do you want to hold that debt . Are you sure that within the next 30 years italy or spain will not want to restructure it . That is very uncertain. But i think the discussion of that amount of risk is not going to go away anytime soon. Stephanie there you go. Jonathan, thank you so much for joining us. It is getting late. So dark there in cyprus. Bloombergs own jonathan ferro. Erik after the break, we will ask a member of Germanys Bundesbank whether he thinks quantitative easing will. Work stephanie and why arbys sales are rising while mcdonalds are not. Stephanie lets get you up to date on the top headlines. The winner of the multibilliondollar fight is abby. The drugmaker has agreed to spend 21 billion box to you by pharmacyclics. They ousted Johnson Johnson at the last minute. It is a pill that avoids some side effects of chemotherapy. And china has not set and Economic Growth target this low in 15 years. The chinese premier says he wants the economy to grow 6. 7 , down from last years goal of 7 . China is facing headwinds. He is trying to rein in another problem that the country faces. Our tough stance on corruption is here to stay. Our tolerance for corruption is zero and anyone dealing with corruption be dealt with seriously. We will see to it that any instance of corruption should the seriously punished. Stephanie last year chinas economy grew at the slowest pace in a quartercentury. The bad weather on the east coast may have heard jobless claims. The first time claims for Unemployment Benefits rose to 320,000. Tomorrow we will get the jobs report for february. Economists expect to see 235,000 jobs added. And we have heard this a few times this winter. Another storm is making travel miserable. In the eastern half of the United States, more than 2600 Airline Flights have been canceled for today. The system dumping snow ice and sleet from texas to new england. All right, boston there will be a half foot of snow in little rock, arkansas and maybe a little more in new york city. Erik the countdown is on for qe. The European Central bank will begin buying bonds on monday through september of 2016. Ecb president mario believes that quantitative easing will ease inflation and spur growth. Will it work . Who better to answer the question and someone from bundesbank . He is an executive member of the board. This is the big question. Can you answer it for us . Will quantitative easing work in europe . Would you not have any experience whatsoever with quantitative easing. Everybody who knows this now should speak up. The idea of the quantitative easing is, of course, to in a too long time of low inflation rates and inflation rates are low. There is an issue with two low inflation rates and that is according to the plan of the European Central bank. It will grow back to a reasonable figure. We are closer to the goal of 2 . And at the end of the day it is the judgment of whether this works or not. Erik the proof is in the pudding, in other words. Andreas the proof is always in the business. Let me be clear, quantitative easing in europe cannot be compared to the United States. Stephanie why . Andreas there are side effects as always. What we will start on monday and we will see. Erik when you talk about side effects, what are you most concerned about . Andreas if you buy government bonds at a largescale scale what you do is lower the incentive for the government to do restructuring reforms which we actually do meet in europe and in the eurozone especially in the eurozone. It is always what positive effect do you have on politics and the negative side. The yields are very low because of quantitative easing. That makes or signals that the normal Structural Reforms or less Structural Reforms are needed. Erik if it were up to you, with the ecb embarking on a system of a program of quantitative easing . Or are there other things they should have done first . Andreas it is not up to me. It is a decision that has been taken. Stephanie what are the consequences of low Interest Rates . We have concern that investors are going to asset lasses they chose classes they just should not be in. Andreas i agree with that. In germany, we have the big savers and the sabres accounts savers accounts and this is why the low Interest Rates are having a big effect on the German Market and its profitability. You would be investing in you will be investing in products he would not like. The Interest Rates on a 23 20 year mortgage is about 2 . You can imagine people are considering buying real estate in germany that normally would not he doing that. We always encourage investors and bankers not to do any deals they would not be doing just because Interest Rates are low. Stephanie but they do not have a choice, right . What else are they going to do . They need the returns. You andreas you have to look at it medium and longterm. Stephanie do investors even do that anymore . Andreas it would be my advice and it would be anyones advice from a Central Bank Point of view. You have to sustain profitability rather than shortterm gains. Erik one of the other differences with quantitative easing and the program the ecb is about to embark upon with the United States is that the yields are negative. Andreas yes. Erik doesnt make sense for the ecb to be buying bonds with negative yield . Andreas i will not discuss whether or not it makes sense. There is a decision to start on monday and the bundesbank will go through with that program as every other company in the eurozone. Erik you mentioned one of the unintended consequences is the governments may not be as willing to undertake structural reform. Lets talk about greece for a moment. Greece is widely knowledge to be the weakest member of the euro, the eurogroup, economically speaking. Do you worry this new greek government will be not much willing to undertake reforms. Andreas we know a deal has been struck between the eurogroup, the finance of the eurozone, and the greek government. This would give us a certain period of time, up to four months, in which we can see whether or not we can agree on a new program. There is no doubt in my mind that greece needs a program. Either an extension of the existing program as we have right now or a new program in order to be able to go through with their Structural Reforms. It is quite important that the eurozone remains and the Monetary Union remains a union of stability, and that is why it is impossible to go back to much. It is not for me to negotiate. There is a clear understanding in the euro area that we have to be in solidarity with greece but solidarity is always a twoway street. Erik how much room do you think europe is willing to give greece . Europe wants much smaller primary surpluses. The Current Program calls for a primary surplus of 4. 5 . At the greek finance minister says we cannot live with anything higher than 1. 5 . Andreas i am not part of the negotiation erik i realize that. But you have a sense of what europe is willing or not willing to do. Andreas if greece gets its economy back to a competitive level and has structures that are competitive but to do that you have to have to do certain things. I would hope that would be effective. Stephanie thats a fantastic idea, but do think that greece cannot will do that . Andreas greece has made fantastic efforts of the last five years and has improved its fiscal position. No one would have been able to forecast that five years ago. The progress has been there, but there is no alternative to coming back to a competitiveness structure in greece, and there is no alternative to Structural Reforms in greece in order to regain access to the capital markets. Erik it makes sense that if you were a member of the greek government, which you are not, that you would be pushing for as much as you can get, and it makes sense that other members of the eurogroup should be pushing back as much as they can in order to arrive at a consensus or a compromise. But there is an emotional component to this argument, and you have seen it play out. Is there a danger in this game of chicken, as it were, to see who is going to blink first . Andreas it is really important that the greek government understands that the europe area wants to help, but we have to play by the same rulebook everywhere. If i talk about our Monetary Union the union of stability, it also has to have the same rulebook. In a think the greek government realizes this very much. Erik thank you very much. He is executive board member of the bundesbank, germany. Bank. Stephanie Market Makers will be back in just a moment. Stay with us. Erik coming up, it may be silicon valleys turn in the spotlight. Get ready for one of the biggest tech ipos in years. Stephanie talking about etsy. Are you an etsy user . Erik i am not a user. I have looked at it. I have not found anything that i wanted or needed. Stephanie people say it is for millenials. I love that jam. We all know about the food. But what is this feud between arbys and jon stewart . We will hear from the ceo of arbys in just a few. Who does not love their roast beef . Hes out there. Theres a guy out there whose making a name for himself in a sport where your name and maybe a number are what define you. Somewhere in that pack is a driver that can intimidate the intimidator. A guy that can take the king 7 and make it 8. Heck. Maybe even 9. Make no mistake about it. Theyre out there. I guarantee it. Welcome to the Nascar Xfinity series. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Stephanie welcome back to Market Makers. Im stephanie ruhle. Erik and im Erik Schatzker. Across the pond, european markets are about to close. Lets take you back to scarlet fu for a recap of the action. Scar . Scarlet the ecb recently changed his forecast. Then the currency reversed its selloff. It made a new fresh 11year low at 1. 1022. People are selling into weakness and the euro support level is one awake. One analyst wrote earlier that you could hardly invent a better backdrop for european equities even if that is counterbalanced by continued corrections globally. And that is what youre seeing playing out in spots. A fresh seven and a half year high, led by industrials and insurance and financial needs. The german dax has gained 17 in 2015. The ftse also a beneficiary. The bank of england, no change to its monetary policy. And the central bank will be ready to purchase bonds on monday. You can see those yields coming down as a result there is now that we have gotten some more details that is really surprising the next focus for most investors is the jobs report on friday. We are all clear to go to the federal erik tomorrow at 8 30, as you point out, scarlet, the jobs report. The expectation that the economy created to 35,000 jobs. 235,000. Stephanie time to talk about superstars for silicon valley. First etsy which filed for and i feel last night. It could be the biggest for a new york Company Since he. Com boom since the dotcom boom. And then war be parker, the place where warby parker, where all the hipsters by their eyeglasses. Leslie picker joins us now. Lets start with etsy. First, break down what this business is. Leslie it was founded as a company for handmade goods. That was started about a decade ago. They had wooden computers. Get that for a tech company. And he created a marketplace. Now, over time this company has evolved and now they sell unique things. They allow their sellers to use manufacturers. Not so homemade anymore. In order to build scale and prepare for the ipo. Stephanie is rob part of the company . Leslie his name is not mentioned once in the ipo. Stephanie ouch. Someone should crochet him a pillow that says sorry, dude. Erik what is etsy worth . Leslie were looking at a 2 million company. Stephanie do they make any money yet . Leslie they have not. Stephanie what can the company due to become profitable . I do not see etsy being anything different. Leslie they actually set a standard for the ipo, and that includes expanding into more countries, going full speed ahead with their Manufacturing Program stephanie are they only in the United States now . Leslie they are elsewhere, but the main bases in the u. S. Erik what is the sales like . Leslie pretty strong. Another nice part they have 78 of repeat customers. 70 of the customers who buy on etsy come back and buy more. Which is interesting when you are a company that sells 1950 typewriters. Erik 2 million 200 million a year is what their sales are . Leslie yes. Erik so they are 200 time sales . Leslie alibaba was six times when they went out and it is the same marketplace model. Stephanie im going to look like a fool because it will be great and the hottest deal ever, but if you look at this and what etsy does and the fact that they do not make money now and the model is not changing go to more geographies for a business that sells macrame beer cozies, that sounds crazy. Erik you are going to get one is one of those for me. Stephanie totally. Leslie and you know, this is the opposite of scale. It is great if you stephanie it is great if you are an artist and you do not have to go to Brooklyn Flea and sell your gear erik we are about to run out of time before we talk about warby parker. Leslie oh, yes. This is interesting. There are mutual funds, Fund Managers going to warby parkers saying you have not raised money since december 20 13. Which in a normal world, that is not that funny but in todays world, they are saying you need to raise money erik we want you to be a unicorn. Leslie a unicorn. Stephanie i would like to be a unicorn, with a rainbow over me erik you are a unicorn. Stephanie thank you, bloombergs on leslie picker who is not a unicorn, but a fantastic reporter. Erik coming up, voting with their feet, as they do we will see why arbys sales are rising. Erik we are in the midst of a winter storm here in new york city and it is wreaking havoc on airports. At 11 10 this morning at delta plane skidded off the runway at laguardia. It is currently resting against the nose of the plane is currently resting against the fence. According to the associated press, the port authority, which oversees not just a cardiac, but jfk, Newark Airport as well not just laguardia, but jfk Newark Airport as well, says there are no injuries. The accident such as it is, and happened at 11 10. Delta plane skidded off the runway at laguardia. No injuries reported. Stephanie you may say that arbys is winning the fast food war with sales up 6 last year. Arbys is doing a much better job than mcdonalds spinning off the fast casual chain. What is in their secret sauce . The ceo, paul brown, is here. What are you doing right . Paul we have an ideal position in the market. We have done a good job of innovation and getting Innovative Products stephanie hold on. What does innovation mean in fast food . Paul innovation means new product concepts. We comment out with 15 new sandwich concepts on the menu. And that is not adding a tremendous amount of complexity in the back office operations. Is a big trick in the business. Erik what is the expansion potential for an arbys . You have closed the door since you became ceo but clearly you have growth in mind. Where does arbys need to be that it is not now . Paul urban locations. Traditionally we have not been able to do that because our footprint is too large. We have been able to get it down to an 18,000, 2000 square foot that represents a big Growth Opportunity for the brand. Stephanie on the roast beef side, are you under pressure to improve the quality of the roast beef you serve . Just yesterday, we are hearing mcdonalds is improving the quality of their product. Paul we talked to our guests all the time and we are constantly looking for ways to improve quality. There are lots of definitions of the term quality. What is important to our guests, protein, highquality protein and meet erik is it a question of health or taste . Stephanie ah. Because quality and fatty tastes so good. Paul ultimately the customers are the ones you will define what quality means to them. It starts with taste in most cases. They are looking for good tasting food. But they are also looking for good tasting food that does not bring a lot of the other negative elements. Erik do you feel inclined, as mcdonalds clearly does, to move towards a supply chain where the meat that you are buying is free of things like antibiotics for example . Paul they made that decision several months ago a long with other players in the industry. Erik but you are in the beef business. You know what american commodity beef looks like. You know what the production process looks like. In order to feed cattle corn they need to be pumped up with a great deal of stuff, hormones, antibiotics, and the like. Paul it is a challenge and we have been talking to suppliers about how that can possibly happen and we will move there as soon as the u. S. Supply chain will allow. Erik how long will that take . Paul it may take a wild. Its a fragmented market. Certainly longer than erik years . Paul it could take that long. Its hard to speculate. Erik just to finish the point is that somewhere you feel that arbys needs to go . And not just arbys but the rest of the fast Food Industry i hesitate to use the word organic because stephanie i would be willing to take my children to fast food restaurants if i felt like the quality of the meat is better. Paul they are certainly more in tune than they have been in the past. That is something the industry has to be attention to and we will have to respond to. Stephanie what price pressure are you under . Because it is fast food, people do not want to spend a lot of money, but if you look at fast casual like shake shack, we are willing to spend more to read what our customers telling you . Paul we have been very conscious about not taking our prices up too much. We slightly rose within 1 to stay within that window. Erik before we finish i want to play a short video clip [laughter] stephanie he may be a new employee for you. Jon stewart to be your employee, would i have to handle serve, touch, it, or even look at what you so generously described as food . [laughter] thats right, arbys. Because this is not over. I do not accept your piece offer. We shall always be enemies. You are a worthy adversary erik what is jon stewarts beef . Paul we have been trying to figure that out. We think we are the first fast food chain in the phone book. Stephanie it probably is great free advertising for you. Paul it really has. We had fun with him as well. We have catered his crew several times and gotten good response from them. Stephanie we have to go. I have not been to arbys for a long time. You do not have them in new york city. What is the ultimate arbys meal . What do you as the ceo get . Paul i get a reuben and potato cakes. Stephanie arbys ceo paul broun. Thank you very much. Erik we need to get you an update on that accident. Scarlet there was a delta jet that skidded off the runway because there was no covering it and we are now hearing that the faa anticipates reopening la guardia at 6 00 p. M. Houston time tonight. No word on closures at jfk or newark. Once again, this is because a delta aircraft skidded on a snowcovered runway. We will keep you posted on further developments. Erik . Erik la guardia closed until around about 7 00 p. M. This evening this evening. Overture he 500 flights canceled, it might have been 2600. This is the delta jet that skidded off the runway. Its nose is resting these are just pictures of the storm. We had a picture of the plane a moment ago. That is the most recent hasnt he of this latest winter storm to hit the northeast, a delta lane skidding off the runway. Market makers will be back in two minutes. Erik another update for you on the breaking news at local ardea, one of three new york city airports. A delta plane skidded off the runway. The breaking news at local ardea. This happened about 10 minutes after 11 00. Call it 40 minutes ago. No injuries as a result of this. Local ardea is going to be closed until about 7 00 p. M. This evening la guardia is going to be closed until about 7 00 p. M. This evening. Thousands of flights of already been canceled. Stephanie tomorrow, if you are snowed in, or even if you are not, set your dvr. Tune in. It will be a day i have waited for all year long. A special not one, not two, but threehour Market Makers addition of Market Makers dedicated to International Womens day. Me and my partner erik will be here erik i would not miss it. Stephanie we will sit down with valerie jarrett, the white house senior adviser, karen katz from neiman marcus, and the one, the only gwyneth paltrow. Its going to be a big, big day. Please join us. Erik and if you cannot join us live, set your dvr, but come on, tune in on the tv. Stephanie see you tomorrow. Scarlet it is 56 past the hour. That means Bloomberg Television is on the market. Major indices trying to bounce back after two days of losses after ecb president mario draghi unveiled the bond purchase the Bond Purchasing Program would begin on monday. The dow trading at 11011. Joining me for the options in sight, a strategist at ecb partners. Mario draghi was the focus. It definitely took some risk aversion and risk premium out of the market. If you look at the vix equivalent the curb in those options has come up significantly really in the last month or so. Investors are taking an even calmer approach, largely on the basis of what the ecb has done. Scarlet and with the euro that is more reason to come in for the dax, and then the case of the dax and he puts it, you have highs. Absolutely, something worth waiting, watching for traders. Scarlet the jobs report tomorrow this will be the one that determines whether the fed goes ahead and moves with rates higher in june . I think so. It is a tricky time because initial claims have been a higher. If youre looking for a linear regression, you might look at a jobs at around 245 scarlet and the consensus is to 35. I would not be surprised if the fed builds that in. We talk about this every week. I think they will Pay Attention to underlying factors more than the headline number. Scarlet that means more data points. What happens tomorrow . What do people fixate on after the ecb is done and the jobs report is over . The data we get will be important. I think thinking ahead right now there are factors in the second half of the year that are not estrada that is traffic systemic risks, but are born to as it if not the real economy scarlet such as . The profit cycle top for u. S. Stocks in those pressures could weigh on earnings for the second half of the year. That is the kind of risk that investors might want to hedge, even if they are looking for a dramatic downside. Scarlet give us your trade on the vix. You can buy at or near the historical middle of the range. The science is selling the may calls on the vix. We priced this this morning for about a dollar. The view is that things will be fairly quiet, fairly stable right now, but they will become more volatile later. They will not buy it outright. I think things will stay stable and this will work out really well as a hedge. Scarlet jerry woodward, thank you so much. That does it for todays on the markets. Money clip is up next. Welcome to money clip. Here is the run down. Etsy is going public. The online marketplace for handmade goods is going public looking to raise 100 million. The chief executives of emirates and Qatar Airways respond to accusations. An american in paris. J. Crews chief executive speaks about the european expansion