Transcripts For BLOOMBERG Bloomberg Markets 20160217

Pressure on financially strapped companies. How much would that be offset by the benefits of Lower Energy Prices to consumers . The dollar was weighing on manufacturing, but how long will hat last . There was concern about the difficult to read outlook for the chinese economy and what that might mean down the road for the u. S. And Financial Markets were the biggest concern of all. Almost all participants saw financial conditions sought tighter financial conditions pushing up market volatility. Voting members expressed a range of views about what the impact of that might be. A number of participants noting that the large magnitude of changes in the Financial Market conditions were difficult to reconcile with the incoming information on u. S. Economic development. The economy was stronger than the markets were suggesting. As we know, they punted, holding rates as they were in declining to provide a balance of risks assessment. Members generally agreed, the minutes state, that it was not sufficiently clear. They did observe that if the recent signing of Global Financial conditions was sustained, it would amplify Downside Risks. There is also this note a couple of participants question whether Market Participants fully appreciate that Monetary Policy is datadependent. Vonnie were going to stick around and come back even a couple moments. A number of said officials saw inflation as more uncertain. It strikes me there might be a Market Reaction when we dont often get 20 minutes, julie hyman. Julie we are seeing much of a light downward in stocks. The rally is holding steady. Not extending games, perhaps on the view that if the fed was so pessimistic in the chamber meeting, we will see any likelihood of an Interest Rate increase pushed out even further. Lets see what this is showing. We are seeing a little bit of a letdown heading into the minutes im a little bit of bouncing around. It does take a little bit of time. As we have been talking about, the Third Straight day of gains for stocks. Stocks every day have been making new highs as they head towards the close. See theontinuing to yield rising although interestingly enough, it did take a light down, perhaps on the interpretation that there would be less likelihood of a rate rise this year. Up on the day as we are seeing buying of stocks and selling of treasuries. Lets take a look at the currency board, if we could come and not at my bloomberg terminal at the moment. Im looking at a headline that we got a few moments ago. To death reporting abe isreporting that ruling out more stimulus for now bit in the wake of the fed minutes as welcome we saw europe turnaround slightly higher. Not seeing Much Movement in the vonnie. Market today, vonnie for more reaction and analysis of the fed minutes from the january meeting, lets bring from janneyter montgomery scotland. Editorh us is economics Michael Mckee just outside the Federal Reserve lockup in washington. You have been moving around her target for the 10 year nfl had the benefit of reading the minutes closely but it strikes me that the Downside Risks are played up here and it may not have made it into the statement quite is obviously. Do you think you will change the outlook now . We have the 10year i have below 2 , not much higher than we are right now. At the end of the day the Federal Reserve is a symptom of the underlying condition, which is low Inflation Expectations and low absolute inflation for the foreseeable future. There was a light in the fomc minutes that noted the inflation outlook has grown more certain. I question whether it could be over certain. Nearly all the inflation readings between the end of the Global Financial crisis and today have been in an extra nearly now arrange, regardless of qe or whenever it is supposed to cause. We can no longer say what causes inflation. It is one of the changes that came into the january 27 statement. Measures of longerterm Inflation Expectations are little change. Michael, do you think markets will see anything interesting ut of these minutes . Its richie we are learning more than we typically do. Vonnie. T really, janet yellen spoke last week in between the time we had the meeting and she said many of the same things. They do expect inflation to be lower for longer because of the falling oil prices. They dont know what is going on in china. They expect inflation to rise once these things are out of the way but when will that be . We dont know. Do a word search for the words downside risk. They didnt know whether they would be realized or not because they could know how long many of these threats would continue. With Oil Prices Keep going down . With the Financial Markets continue to be volatile . Those are the questions we are waiting to see answers to. Markets didnt understand them or data dependent. That seems to be the message that most fed officials since the meeting have been trying to deliver. We will wait and see what the markets what the chinese, with the oil prices do before we actually decide in march what happens. Vonnie the fomc minutes show that officials believe markets are not listening, that they are not realizing how datadependent the fed is. The markets have started to price in a fed rate hike. Are the markets listening . Guy theyre listening. They are disagreeing, obviously. The last official munication priced in 4 rate hikes. The odds of that are extremely son extremely slim right now good the most viable predictions market to look at is the eurodollar futures market. Last time i logged into my terminal a couple hours ago, we were looking at a single rate hike between today and the end of 2017. That is nearly two years down the road. During which time the odds of a recession are actually quite substantial between now and the iod. Of that per it is hard for me to leave the fomc views the markets more accurately is pricing in that much the january 27 meeting it so like we had only just had the first rate hike. Guy six weeks. Vonnie the markets had just begun reacting, as had the economy, right . Two days later we get the japan announcement and there was a whole different ballgame. Beenously the fed had needing a number of months of data in order to make a decision. To . Is that now reduced guy i have no idea, to be blunt. The Federal Reserves decision i am paraphrasing their own wording is based on a strong jobs market, the expectation with the theory that inflation would rise. Now, inflation, as i noted at the beginning of the segment, since risen in any period the great recession. Although have going for them on the inflation argument is theory. Very easy to pop a particular argument with the data. Anotherone to show measure of Inflation Expectations. Really languishing. Isnt going anywhere. We got another the court was up but only up. 6 percent. There are aspects that make it less useful for predicting inflation than it used to be. It was a formulation change about three years ago. Good in food and energy and that was flat. Vonnie we will return to you in just a moment. Michael mckee, thank you so much for receiving those minutes and digesting them for us good in the next 20 minutes of Bloomberg Markets, we will look at retail giant walmart reporting tomorrow. Minimum wage increases reflected in the quarterly reports. An Shannon Pettypiece showing these increases may not be all bad news for investors. In the search for a grand bargain among Oil Producers shifted to iran today but that the output costs give u. S. Shale opportunity . Lets look at where we stand as investors digested the latest fed minutes. No major change. P 500 up 1. 7 you can see the nasdaq is the leader there at 2. 2 higher. Vonnie welcome back to Bloomberg Markets. I am a vonnie quinn. Time for the biggest business stories in the news right now. The white house says the Justice Department and fbi have the full support of the administration in the dispute with apple. The rejected a court order to help investigators unlock an iphone used by one of the shooters in last years california terror attack at press secretary josh earnest explain what the investigators are seeking. They are not asking apple to redesign its product or to create a new back door to one of their products. They are sadly asking for something that would have an impact on this one device. Reactionpples dramatically escalates the battle between the Tech Industry and the government on how much companies should cooperate in the fight against terrorism. American express is cutting costs. They will trim 1 billion worth of costs over the next two years. The plan includes streamlining divisions like marketing. The Company Announced that the chief marketing officer would the part after the transition to a new Marketing System is complete. Google is adding fresh fruits, toetables, meat, and milk its fruit express deliveries, seen as a response to the Amazon Grocery service. Google says it will at perishable groceries to select neighborhoods in San Francisco and los angeles. Memberships cost 95 a year. And that is your Bloomberg Business flash. Julie hyman has a check on coming movers. Julie we are seeking pretty broadbased rally today but there are stocks moving down. Groupon is taking a pause after an 82 session gain for groupon. The shares are falling back by 8. 5 percent today. There are companies with earnings that disappointed versus estimates. Again at out with numbers that missed and also forecasting slowing ad revenue this year. Losing after the company cut jobs and its dividend and capital expenditures, like so many Energy Companies have. Finally, a health care saidology company fourthquarter bookings missed its forecasts. Those shares trading lower as well. With the rise in yields today we have seen pressure on utility stocks. That has really been the one Lighting Group today. Con and an firstenergy all trading lower. We tend to see the inverse relationship between utility stocks and bonds yields rising today. Finally, housing. We have been getting choppy housing numbers as of late. Julie, thank you so much. We will check in with you in just a bit. Here with us is kind of boss lebas of Jenny Mccarthys got. I want to play a sound bite from the most dovish member of the fomc. Lets listen to what he has to say. If inflation slowed to return to target, Monetary Policy normalization should be unhurried. We dont have to be in a rush to change Monetary Policy that we should make sure we actually are going to get both expected natural inflation up to the 2 we want. Vonnie ok, so he is clearly saying Monetary Policy or any further move should be unhurried. What does this indicate to you in a project in Inflation Expectations . Even negative Interest Rates seem to be a possibility. The hurdle of reversing course after the first rate hike in 10 years is very, very high. More likely, for more likely than a true course reversal, is this constant waiting game for the Federal Reserve for the higher inflation reading. It is our own base Case Forecast that jobs growth, while it slows in 2016, remains decent. That part of the puzzle is taking care of. It is hard to have faith and that is what the Federal Reserve does, is faith come in higher Inflation Numbers right now. Vonnie particularly when other parts of the world guy mired in deflation, absolutely. Vonnie japan is instigating negative Interest Rates, which might portend something worse than the road. In europe, we dont know what will happen in march yet. How will that impact the u. S. In terms of gdp growth . Guy i will focus on your comment about negative. We have had discussions with clients over the past two weeks especially around yellens speech about the potential for negative Interest Rates in the u. S. In japan, the negative Interest Rate policy applies to a relatively small slice of the overall economy. If you really want to get things moving you got to cut rates deeper than that. Vonnie do you see happening in the United States . Guy extremely unlikely scenario could the cultural rebellion against deeply negative Interest Rates could be severe, such to put the longterm independence at risk. That is even worse than having slightly tight policy. The fed risk losing credibly if he doesnt move in some sense this year . Guy credibility is to find if the Federal Reserve says it is going to do something, whether or not they do a good while they said they were going to raise Interest Rates in december, and they did it, that is credible to me. They said that they are truly datadependent on the data is disappointing, at least on the inflation line item. If they dont act, that is not a credibility issue. That is, ok, forecast was wrong issue. Different than true Monetary Policy credibility. Vonnie do you see anything on the horizon that will boost inflation . Guy as i said, the fed is sort of the inflation faithful. There are inflation atheists who think it cannot happen. I am an inflation agnostic. I dont know if it is going to happen because the data of the last three years has been so unclear. Vonnie what reformations do you have even in terms of the wider world of credit result, corporate issuance back onto the world stage the last couple of days . On the margin, yes. That is an example of a highquality corporation at some use as a surrogate for treasury bonds. Now we are recommending our clients stay defensive in terms of credit quality. We are probably in a little bit of a countertrend rally in the shortterm. We are nowhere near the bottom of the credit cycle. Credit cycles dont just stop after three months in reverse. We have barely scratched the surface. I believe we will see cheaper prices and highyield credit before the year is out. Of course come that tends to swing around. Probably speaking, we recommend our clients say defensive. Vonnie do you see it continuing to flatten . Guy we have some planning in our forecast. If you are rate hikes that do occur, the less likely that is. We have been more optimistic on the yield curve. Even if we do get a little bit of the backup over the course of the next 10 months of the year, we still think it will be a decent year for the longterm. Vonnie thank you very much. Right after the reform see minutes, the twoyear yield and 75 basis points. We saw the 10year move a couple of basis points. Still ahead on Bloomberg Markets, shares of walmart have been soaring this year. We will look at why it is the secondbest performer on the dow. Vonnie welcome back to Bloomberg Markets. I am vonnie quinn. Discount retailers including walmart up significantly this year. They are beating the performance of many of the doubt and minimum wage was raised in 14 states. Shannon pettypiece joins us now. A lot of debate about what the minimum wage hike actually does, first of all, for investors, but also for the walmart worker. Talk to us about this. With way the opponents talked about the Employee Base as being biggest the Chinese State army. Walmart has 4. 4 million and plays in the u. S. The minimum wage at the company is now 10 an hour. That went into effect this year. 14 states have raised the minimum wage. 3 million workers affected by that. On the huge scale of the macroeconomy, that is not a big numbers. 300some Million People in the u. S. In the slice of the economy that caters to lowincome worker, the discount retailers, walmart, the dollar stores, Companies Like rentacenter, which rents furniture to people who cant get credit, he is the places where the minimum wage workers dollars are concentrated. In some cases the paychecks are going up quite significantly. They could be thousands of dollars a year that a consumer has to spend. Vonnie stossel left significantly lasted because walmart did increase last year as well. And they issued guidance saying that the profits would be between 6 and 12 because of this. A onetime transfer and we are seeing that again now. For itr from capital will go back to capital eventually, right . When walmart gives workers are raised they dont spend 100 of it in the store if they give a generous discount to employees on a lot of merchandise. Their own employees have extra income. You can expect them to be spending some of that back in the store. In states like california where you have the entire minimum wage going up, you could see that going into the store, too. Vonnie how do you quantify that . If you do the same store sales, does that mean anything . Manyon part of it is too factors and walmart is a difficult one because they are so big. 100 million shoppersplus go into walmart every week. What will be interesting to see is some of these not so much smaller not small but not as huge as walmart to see what happens to them. I mentioned rentacenter. They have been struggling, lots of issues at that company could but the ceo has been on Conference Calls with analysts yes, we are having to pay more wages to workers but our customers are going to be getting a raise. Maybe that will offset the increased to have to pay. Vonnie you will be up tomorrow morning for earnings. What is the one thing you will be looking for . Shannon samestore sales. Hasnt been a Great Holiday season for a lot of retailers. Like to see what walmart does. Vonnie Shannon Pettypiece, thank you so much. Still ahead on Bloomberg Oil outputeaningful cuts for saudi arabia, russia, and others. Vonnie from bloomberg World Headquarters in new york, this i amloomberg markets, and vonnie quinn. Lets go to the headlines. Ramy inocencio. We head on over to u. S. Politics and the race for the white house. A big president ial endorsement on the republican side. Governor nikki haley, the in South Carolina politics, well backed senator marco rubio, according to the state newspaper. She will announce her support at a rally today. She delivered the 2016 republican response to president obamas state of the Union Address and is considered a top potential Vice President ial candidate. 28 people are now dead after an explosion in the capital of ankara. 61 others have been wounded. A suspected car bomb exploded near turkeys military headquarters during rush hour could the turkish Prime Minister canceled a trip to brussels because of the explosion. Will Lady Michelle obama join president obama in visiting the Supreme Court when Justice Antonin Scalia lies in repose friday. Vice President Joe Biden and his wife will attend the scalia funeral. Mr. Obama will not attend the funeral. It appears the force is no longer strong at the box office. Theet sales for Star Wars Force awakens are fading fast. If past performance is any guide it will fall short of Box Office Leaders including titanic and avatar. It has made a little over 2 billion globally. Just a little over 2 billion critical news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. I am ramy inocencio. Funny, back to you. Vonnie, back to you. Vonnie mining shares are adding to the rebound in 40 rallies. It is rising as much as 8. 2 today. Copper prices are heading for a stretch of gains in december, settling around two dollars a pound. Said the proposal by saudi arabia and russia that would freeze production at near record levels. About 31 ae vti up barrel. There just one problem with the semirussia saudirussia effort to avoid this like in oil prices. Texas, are successful, oklahoma, theyre waiting to pounce on the opportunity. Joining us is a Bloomberg Energy reporter. David, have you heard from shale producers . Are they waiting to pounce . David i mean, they would like to get that being said, they are trying to portray a little bit more caution than last year. They absolutely did pounds last year. They pounced and brought the race back on line again and thought things would be great and we have settled back into a bear market again. The bottom fell out. Last year was an example of pouncing. Land inest owner of eagle protests that even if oil prices doubled to 60 a barrel, they would be cautious and wait to rush in. That being said, there are some cashstrapped explorers out there who need the revenue coming in fifth it is a question of whether you believe vonnie exactly, and you were at the industry conference. That suits him to say that, right . If he is putting out the idea that there will not be any shale or fracking done in eagle third, he would be hoping that would influence others. There will be a lot of posturing, who rates the collective embargo, if you like . David exactly. That being said, they have to balance that with the shareholder interest. Shareholders dont want to see their own company being the wants to pull back. The ceo has had to balance that with keeping shareholders happy. Isnie the frack log looming. 4000 wealth waiting to be turned on, basically. Is going to happen first. What are 4000 wells in the context of all u. S. Tracking and how quickly could they be turned on . David great question. It is seen as this bugaboo that could turn things off and put Oil Prices Back down again. 55,000 wells drilled at the height of the boom in 2014. Here were talking about 4000 wells. 18,000 of them were frack. You are really only talking about a down payment. Not a lot but it could give them a head start. They would have to be Serious Movement to keep up the pace. Vonnie what were the forecasts like . You were at this industry conference and for every producer there is a forecast of where the oil prices are going and whether iran will get on board with the deal. Give us an idea of what the range of forecasts are, timewise as well. From all i hear on earnings Conference Calls from its also the first of the year is going to get worse before it gets better. Second quarter may be worse than the first quarter. No one is willing to call a bottom, necessarily, but they think it could be the worst of it this year, and eog at the conference from jb prices. Backup a little bit towards the end of the year but nobody wants to put the spectrum on how much they would take. Of couple of dollars, 10 no one will put their money where their mouth is and say other than things will start slightly improved this year and look for the beginning signs for improvement. Vonnie were there bankers at the industry conference . 64 drillers that are expensing difficulty with their debt. What is going to happen to them . Might not much in it for banks to cut the drillers off, is there an . David well, there really isnt. They dont want to be stuck with property they dont know about. It is not like the banks can take this over and find a grand slam for how to make these assets were properly. They will not sell them for anything but pennies on the dollar. They are trying everything they can while holding on to regulations for when they need to take over. Much extrao get as legroom as possible. Im sure they were wondering the conference, much less attended than in years past, obviously. This is a conference where they buy and sell properties. I just think you are seeing a lot of deals happening in that space yet. Vonnie thank you so much. Precious little relief although the oil is bouncing and settling around 31 a barrel. Coming up in the next 20 minutes of Bloomberg Markets, with the South Carolina primary four days away, candidates are trying to navigate and economic landscape with pitfalls. Profits reports rising and the ceo of the company says they crushed it. And apple refuses to unlock an iphone used in a terrorism case, setting up a pivotal fight with the government. Tonie welcome back Bloomberg Markets there seems to be no love lost between donald trump and ted cruz. Cruzs darren come to sue over in you at that portrays trump as prochoice. We are two days before the South Carolina republican and Nevada Democrats cast ballots. Lets go to columbia, South Carolina, where Cellular Company kapur coversl politics for bloomberg news. Nikki haley is endorsing marco rubio for president. What kind of vrable effect is campaign . G on the sahil we dont know. He is battling for second with ted cruz. Donald trump is in the league, we have a new poll that shows them up by about 15 points. His surrogates are saying that even third place would be a success for him. In that sense the endorsement is going to help him get that, at least. Vonnie it is a battleground for the infant jellico vote. What are you sensing down there about the evangelical vote . Is it prone to change . Is it waiting to see what is going to be said . Sahil vonnie, the astonishing thing is donald trump is blowing away the rest of the field even where evangelicals. This is supposed to be an area where he is not strong. There was a poll by cnn yesterday that shows leading by huge margins with evangelicals as well. Uzat is supposed to be a cr constituency. Cruz was looking at the evangelical voters as his ticket. This is bad news for anyone not named trump. Vonnie where getting the news of the lawsuit been threatened by trump. Do South Carolina voters seem to enjoy negative campaigning . Is it having an impact . Like this tinge their view of our trump in some way . Sahil i dont know that they enjoy negative campaigning. South carolina is known for its dirty, ugly brand of politics. Every campaign operative you talk to say they dont want to do negative campaign but voters responsible to it. Attack as work so much better attack ads work so much better than positive ads. Takers held a press conference earlier today threatening or basically telling donald trump to bring it on if he wants to file a lawsuit. Donald trump most people should know, is a very litigious person. He threatens lawsuit pretty frequently. A lot of the time he doesnt follow through. It is a jewel in his arsenal to get people to fire a warning shot, to scare them a bit. It seems like that is what he is doing here. Nothing clearly defamatory in ted cruzs ad. He was playing a clip from donald trump in 1999 saying he used to be prochoice, he is prolife now. Vonnie tell us a little bit about the democratic machine and what you are learning at head of the voting for that. Vonnie, the democratic democrats are going to be voting in nevada on saturday, sunday republicans will be be voting in South Carolina. The latest poll, cnn poll, shows very clear and strong signs of trouble for hillary clinton. Nevada was supposed to be her firewall. She was supposed to be up by bigger margins. It was not supposed to be a state in Bernie Sanders backyard that she could write off to Bernie Sanders is trailing her by one point it will be and i can race for democrats on saturday it will be a net and grace for democrats on saturday. Vonnie our thanks to sahil kapur. Catch with all due respect tonight at 5 00 p. M. Eastern. John heilemann and markup and will have the latest poll results. You can see those at 4 45 eastern. Will be ablend he to hear all about it on the show at 5 00 p. M. Eastern time for the latest Bloomberg Business flash. Lombardi eight will cut more than 10 of its workforce, 7000 jobs. They reported fourthquarter profits that missed estimates. One party eight has been hampered by cost overruns and delays on the newest planes. Mulling its egyptian unit according to people with knowledge of the plan. They say the Company Wants to focus on more profitable businesses in the u k and the u. S. Of itsover the future business starts today in london. Did you can unit of barclays is said to be worth 500 million u. S. Dollars. Wells fargo could be planning to set up a bigger shot in the financial district. On aose to a deal to building constructed bank of england. The 225,000 squarefoot workspace would have a rooftop, garden, views of the river thames. That is your latest Bloomberg Business flash. Julie hyman has to latest. Now that investors have had time to digest the fed minutes were seeing stocks hold steady. How much change in the buying we have seen throughout the day. A little bit of a leg up from where they were before the minutes but very similar levels here. All three major averages continuing to rally. Nasdaq has been the underperformer all year, a performer today. Treasuries, we are seeing yields go higher as people sell treasuries and a little bit of a hiccup here in the increase in yields since the minutes came. Ut but still 1. 82 it was 1. 84 for the minutes came out. I wanted to take a moment as was pointed out on bloomberg, how rare it is to see not just the threea rally but a threea rally where the gains have been 1 or more on each of those dates for the s p 500. She built a custom index and this graphic she kindly shared with me. Instances, three sessions in a row of gains of at least 1 . Here is the time we have seen 2 instances. This goes all the way back to 1990. It has only been 15 times that we have managed to have three consecutive sessions of 1 gains or more on each of those days for the s p 500. Of two inords, a rate 1000 trading days going back to 1990. If this would happen another day tomorrow, that would be the first time we have had four trading days of 1 or more. It is quite a rare occurrence. Ive have been looking at the s p 500 over the past year versus the various moving averages. 50, 100, 200date moving averages. We are still well below those moving averages and still down on the year, still down from the record where we were last year. A lot more upside to recover all of the losses. That said, it is fairly remarkable, the gains we have had the past few days. Vonnie pretty stunning could only have been 15 times point years at this almost 26 years at this point . Coming up, apple refuses to unlock iphone used by one of the San Bernadino sugars. Well get the latest from emily chang. Vonnie you are watching Bloomberg Markets. I am vonnie quinn. The nations Third Largest wireless carrier is reaching for the top spots. The sixthosted straight quarter of adding more than one million new monthly users. Stephanie ruhle sent down earlier today with the often outspoken tmobile ceo, john legere. John i couldnt be have your our employees, customers, and shareholders. Youre right, we crushed it. 108 of all the postpaid phone growth in the industry. The native unido what that means. In 2015, tmobile added 2. 5 million postpaid phone subscribers. At t, verizon, sprint, can you guess . 269 thousand. Stephanie what are you making money doing it . You started this price war and it is great for consumers but how about you . John thereason reason i be having todays it is important to get across this white. The model is working. Subscriber growth is leading to Revenue Growth could Service Revenues of 11 percent yearoveryear to ebitda growth. Flow in q4ee cash was up 800 yearoveryear. The model is working. We are doing it by selling customer it sounds cliche but for solvingstands customer pain points and fixing what was a stupid, broken, arrogant industry for the most important thing in most peoples lives. You are also doing things in an unconventional way. The streaming service has a lot of people talking about Net Neutrality issues. John we are proNet Neutrality. And we very carefully described it not Everybody Knows what it is, but let me give you where we are headed. All content is going to the internet, all internet is going mobile. The Fastest Growing use of Data Services is video. Overages and over buying, so we which has beenn, highly successful. Why is it proNet Neutrality . Anybody can come, any provider, any customer. Most importantly, completely customer choice. 264. Turn it on and off very easily. We are content agnostic. Is in the sweet spot of proNet Neutrality. Stephanie where do you think it is going to grow next year . 2. 4 to 3. 4 Randy Stephanie what can you tell us about the u. S. Economy and the consumer . So many people say we are in a massive slowdown but i dont see it here. This quarter was the 11th quarter in a row that we added more than one million customers. Not that we are we can survive in any economy. Again, good economy, that economy, people are going to participate in wireless services. Vonnie and that was tmobile Ceo John Legere earlier today. We moved to apple. The committee rejected a quarter order to help investigators unlock iphone used by one of the shooters in the San Bernadino ever attacked it in a letter published on apples website, ceo tim cook said the implications of the government to mans are chilling. If the government can use the act to make it easier to unlock your iphone, it would have the power to reach into anyones device to capture their data. For more return to emily chang. Thanks for joining us. We have seen part of the open letter that tim cook wrote. What is the response from Silicon Valley so far . Emily this story is absolutely fascinating. Tim cook is telling the fbi to basically back off. I judge has ordered apple to help the fbi bring in to one of phone sprint youre got to get into the weeds to understand what is going on. There is a security feature on the iphone if you tune it on after a certain number of password attempts, all the data on the phone will be released. Vonnie in other was, if you try an unlimited number of combinations, and the ideal role for the terrorists, you get into the phone, but after 10 that is wiped. Emily exactly. You have about 10 tries and after 10 tries the data would be completely wiped off. What the judges asking apple to do is to create a master key, that would prevent this feature from essential essentially turn off this feature and prevent the data from being erased so investigators would have an unlimited number of tries. What is interesting is that the iphone also has a certain delay between password tries. If you try one password is wrong, you have to wait several minutes. Try the password again. It could take years for investors to find the correct password. It is not clear whether apple can change the time delay. What tim cook is saying, if we create this for just this phone, we cannot be sure that the government wont use this the wrong way and will use it to break vonnie i love the title that just came out in the article by ei lake, fearand the hackers or for the fbi. Arbiter . Be the final emily this doesnt necessarily create a president in this case. It is not creed in order by which other judges would have to abide. But it does give government more ammunition. If the u. S. Government can do this in the United States, could the Chinese Government do it in china where apple also operates . Welker the russian government or could the russian government . It has broader indications that people are scared of, including tim cook. Prece the president ent until itpreced is used. Emily exactly fit tim cook has put his stake in the ground vonnie all right, we will be tuning in to bloomberg west and im sure there will be developments between now and then as well. Our thanks to emily chang. Miss is at 4 00 p. M. Eastern on bloomberg television. Coming up with the next hour, equities move higher again today. Is throughou from bloomberg World Headquarters in new york, good afternoon. I am brendan greeley. Here is a we are watching the markets soaring higher. Oil added more than 5 . Now approaching 31 a barrel. The fed minutes came out an hour ago, boosting markets even more. The minutes show policymakers believe turmoil in the market is posing a rising risk to the u. S. Economy. Apple takes a stand, refusing to help federal investigators on that the iphone of the San Bernardino shooter. How will this impact apples business . We are one hour from the close of trading. Stocks are soaring. Julie hyman has the latest. Where are we . Hlie we are at the