U. S. Trading day. Lets check in with julie hyman at the markets desk. This is not the outcome that most people would have expected in terms of the markets. When we saw the news there was no agreement in market. Stocks rising to the highs of the session, particularly the s p and the dow. I just looked at an intraday chart. Here you have the s p 500 and here you have oil prices. We have had some analysts coming that someicipating investors would want to buy the dip today. There is also news that there is an oil strike in kuwait cutting that production by 60 . You can see it is climbing by the highs of the day. The movement in brent is even more remarkable because it briefly turned positive and is only down by a quarter of a percent. Energy is actually the best performing group. It is up more than 1 . Kind of an amazing turn of events as we see most of the groups actually turned green. If you take a look at some of the best performers within energy. You might want to call and selectively make some purchases. Alix all of that kind of helping. Also that every all is weakening the real is weakening. Every time incrementally it seems that Dilma Rousseff gets closer to impeachment we have seen the brazilian currency rally. Not the case today. The dollar up nearly 2 versus the real. The Brazilian Central Bank has taken steps to weaken the currency which appears to be working today. We are also seeing a decline today. Theres also the idea that whoever reset Dilma Rousseffs successor is will resetting challenges the economy. The dollar down 9 versus the real. If you look at the advance since the lows in january, its about double those gains. The pause we are seeing is on the back of a significant performance. Thank you so much. Alix lets check in on the bloomberg first word news. Ted cruz says he has zero interest whatsoever in being Donald Trumps running mate if trump wins the republican president ial nomination. Senator cruz told Good Morning America that one of the reasons is that if trump is the nominee, Hillary Clinton wins by double digits. Arguments have ended up the Supreme Court in the fight over president obamas move to stop deportations. More than two dozen states argue that the president has gone too far. Questioning suggests the judges are divided. The 120th Boston Marathon is underway. More than 30,000 people will be participating in the annual event. Athletes begin the 26. 2 mile run to bostons back bay. Its also the 50th anniversary of the first woman completing the course. Millions of taxpayers face a midnight deadline to file their tax returns while millions of others will ask for more time. Deadline today was delayed three days beyond the traditional april 15 deadline because friday was a legal holiday in the district of columbia. Im mark crumpton. The weak dollar is fresh air for emerging markets. Outlined his positive representation for emerging markets during his sevenyear tenure at jefferies. Looking back at the history qe driven was a trade. Almost a dollar give valuation that was going to take away from emerging markets. You at the europeans and the japanese doing similar evaluation trades. That forced emerging markets to do some pretty ugly things. They just dont do it with the same amount of credibility as a developed market which made us very nervous about their ability to deal with what was going on in developed markets. Bit here is that if we call off the Dollar Strength move that has come in to really impede emerging given their dollar liability and the fact that the europeans and the japanese are still doing devaluation offtegies, if we call that for a little while which we have done since february, we give the emerging markets kind of a breath of fresh air. Janet yellen and particular is not interested in seeing a dollar rise which would force a chinese break of the peg and another look at what we saw in august. Is it essentially a macro trade . Yes. Does that mean you believe it will continue . I believe it will continue through the election. If we were to get significant Dollar Strength going into the summer months and we saw a continuation of what we saw through last year when things got messy in the summer and again in january, we would have the chinese react to that. Because they are technically stuck on the dollar. For them, donald strength means unless they break. Unleash a huge tightening in the Global Financial conditions. Detente of we wont strengthen the dollar is a nice equilibrium for the moment. Particularly if you dont want to have a big correction in stocks or unwieldy set of action. If we went to the fringes of the Political Party in the election would be less advantageous for the Federal Reserve given that they are not so light on the fringes of these parties. How does this look from london . Is just a weak dollar trade, why is this the best way to play the weak dollar . Adjusting with the s p which we have been recommending for this year. We are going to run the u. S. Economy. We are going to run policy for the u. S. In a way that is not really right for the u. S. But right for china and the u. S. Together. I think that sort of start stops around in the end. That was jefferies chief market strategist. Scarlet he was asked about the failed oil output talks in doha. I definitely think the fundamentals matter more than the deal in doha. How do you think about the overall dollar policy impacting your view on oil in the sense that if we are to see a weaker dollar and a Federal Reserve that stays pat for a while, does that affect both the demand side and the supply side on the oil because you could make an argument that it could really be quite good for the demand side especially coming out of emerging markets. It could lead to global harder toseeing it see the Development Costs being lower as they saw the last several months. Costs saw Development Fall by about 20 . Could that reversed if that result ofverse as a dollar weakening it could essentially lead to even higher cost of production Going Forward. What kind of weakening would we have to be talking about . It would need to be a sincere weakening. It also comes back to the issue of what is driving what. Isnt oil driving the dollar or dollar driving the oil. It is very much intertwined. Oil moves for supply reasons, that will obviously rebalance the oil and dollar relationship. We also think that correlation is likely to break down a little bit. One thing we havent discussed is what this morning means to people who are u. S. Shale producers hanging on by their fingernails heavily indebted. What has this done to them . It has been a nice recovery in some of the highyield names. There was hope more in the u. S. Than anywhere else to get something on the books that would either increase the demand side or stop the supply side. I was kind of coming at it from the demand side when i asked the question, is there a lurking increase in demand that we are not necessarily taking into account that comes through from a weaker dollar and a stronger china and stronger u. S. . Really good question. There is certainly that possibility. India and china are very strong sources of demand growth this year. Should the dollar continued to weaken alix that was michael in. On oil have much more and commodities when we speak with ed morse. Scarlet up next, Dilma Rousseffs presidency in brazil is hanging by a thread. The senate prepares to vote. Alix youre watching Bloomberg Markets. Im alix steel. Scarlet im scarlet fu. Is running rousseff out of options. The lower house in congress voted in favor of her impeachment. Scarlet her prospects for survival are not looking very good at the moment. Mark joins us from sao paulo with more. Marco joins us from sao paulo with more. Everyone thought this would be the case, but the brazilian real is not reacting how you would expect. The markets have already reacted. The level we see right now actually reached at 3 45. Almostis currently at 3. 50. Much of the pricing arathi happened. Already happened. Things now are really getting into place given the possibility of the new president. Leadsregardless of who brazil, we still have an extremely high debt to gdp ratio climbing near 80 . Does any kind of government have any hope in helping brazils economy . The first thing to tackle fiscaloblem is to reduce from the 2 gdp level to the 0 in 2017. The ratio at 8 . More than that, the new president would have to come up with reforms in order to speed of growth in the long term. Thats the way to tackle it. Mainly through the Social Security reform. We also need to talk about the reaction in credit default swaps. Climbingnly has been but it has come off its worst level. Expensive to ensure the projected spread shows a platitude plateaued development. Pretty steady rise back toward even but its based on a lot of hypotheticals. Yes, of course. The first thing that we mentioned for this line to become even would be first to tackle current expenses of the government. First i mean the Social Security expense. The rules of the minimum wage and how it affects Social Security. And for current expenses and what you call mandatory expenses in brazil. As a percentage of real gdp growth. These two measures would at least guarantee that the fiscal deficit would be zero in 2017. And this would stabilize the gross to gdp ratio. Alix will the central bank be able to cut rates . It seems like thats what the market has been betting on. Do you foresee an ability to cut rates . No, i dont even know who the new central bank is going to be. Whos going to be the new president . Whos going to be the director of Monetary Policy . If youre talking about the central bank that is currently running, ok. We could talk about some reductions in the end of the year. The new central bank and depending on the new minister of finance would really fight inflation more boldly. Thank you for joining us, Bloomberg Intelligence economist who covers brazil. Alix earlier today, richard of sreed the president kumar Global Strategies compared brazils challenges to those of argentina. A governmentw as doing all the right things and maybe has 18 months to prove to the people that the medicine theyre being asked to swallow is going to be worth it. You will begin to see improvement. Argentinas economy is down about 2 . Brazil has not even begun the transition. Let me give you one example about the dysfunctionality of brazilian politics. In their congress there is no threshold for political participation. There are better than two dozen parties. Aagine trying to govern with coalition that has to be framed with more than two dozen parties. You cant make the government work. You have the state owned company that is just corruption on steroids and youve got a political culture that is deeply flawed. This is the rally, the success. Strong real. I completely missed the miracle that was mr. Lula. This is the backdrop to a commodity implosion in a global economy. Unlike me, you have been dead on about the slowdown. Is the backdrop to brazil continuing p. M. Slowdown and for that matter a possible global recession . Isi think a global recession very much in the cards. What you had is a big rally of 25 percent in brazilian equity prices in the First Quarter. Realave also run up in the Dollar Exchange rate coming from the expectation that Dilma Rousseff would be impeached. That has not happened. We wake up and face reality. Changes there are two problems. One is the corruption involving petrobras. Election in if the 2014 was itself fraudulently obtained in terms of making up fiscal data ahead of it. In my visit recently to brazil the point is to make it distinction between the two. If you call an election sometime both removed from office. I think for investors that would be the ideal solution. Haass. that was richard up, check out this chart. Todays mystery stock should be no surprise to the young heart. Or at least to those frozen in their youth. We unveil our mystery stock next. Scarlet this is Bloomberg Markets. Im scarlet fu. Alix im alix steel. Scarlet julie hyman has the big reveal of our ministry stock. The clues are young at heart, frozen in their youth, worth grabbing before it rockets even higher. Julie hasbro. Of the actual toys based on frozen, star wars, etc. Coming out with earnings that Beat Estimates by a pretty wide margin. The stock has done very well this year. Its up 29 and a lot of the game is coming today. We are seeing the stock rise in response to these earnings. Hasbro shares are also trading at a record today. Mattel shares have also risen by the same amount today. The boys and girls category did well. Both benefiting from the sort of princess and frozen category and the star wars toys. Today is also on the move due to the jungle book and its big Opening Weekend. Beingition to that it is upgraded over a pivotal based on that upcoming opening of the Shanghai Disney resort in june. Those shares up by 3 . Scarlet that is the movie i would be more likely to see. Alix coming up next, ed morse will be talking on the failed talks in doha. Much more coming up on Bloomberg Markets. Alix live from bloomberg World Headquarters in new york, i am alix steel. Scarlet i am scarlet fu. This is Bloomberg Markets. Lets begin with headlines from number first word news. Mark c. thank you. Hillary clinton and Bernie Sanders are backing legislation that would allow americans to sue saudi arabia over the 9 11 attack. The bill is proposed by the obama and administration, but is important to families of the 9 11 victims. Saudi arabia is threatening economic retaliation if Congress Passes the bill. Much of houston, texas is underwater after a storm dumped 16 inches of rain in 24 hours. Schools and to the offices are closed and for the offices closed. The mayor is urging people to stay off the roads. At least 70 subdivisions have reported flooding. We now know the winners of the Boston Marathon. Closed and womens championship were taken by ethiopians. A field of more than 30,000 in thepants participated event. This is also the 50th anniversary of the first woman to be just a indie contest. The death toll is rising from the earthquake in ecuador. The magnitude 7. 8 quake was centered about 100 miles from the capital of quito. Some coastal towns were devastated, and many people were in collapsed buildings. In japan, the death toll has risen to 42. An explosion on an empty 15 peoplebus injuredchampionshn in a nearby vehicle. The cause of the blast was unknown. Initially called the blast a terrorist attack, but all options are being examined. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus i am mark world. Crumpton. Affect to you. Lix thanks so much talks between the Biggest Oil Producers unraveled at doha this week after saudi arabia and toer nations refused eliminate supplies. Iran was not even there. Scarlet elliott, many people a deal wasent that imminent, heading into the weekend. What happened in the last 48 hours . Elliott i suppose the notional of the iranians put a downer on things. The Oil Ministers arriving here from all corners of the globe would not have come here if they did not have some hope that an agreement could be reached. We got word that a draft oneement had been reached saturday. The saudis, venezuelans, all on board. Some ministers wanted to change things right at the last minute, before the meeting was due to begin. That is when it became apparent that it would be hard to reach an agreement because it went more than 10 hours beyond the scheduled finishing time. The Russian Oil Minister refused to blame iran. I think we have not reached expectations that we had when we prepared this meeting. How does the country that does not participate in the meeting be the reason for not reaching an agreement . Iran did not participate. This is an issue of the largest member, saudi arabia. Elliott although iran was not here physically, they were certainly here spirit. Their wording of any agreement says it will only come into effect once the iranians come on board. That is what suffered this deal ultimately. Alix i cant help but wonder the distinction between the Saudi Arabian minister andy deputy crown prince, and who actually is dictating oil policy right now for saudi arabia. Elliott i dont think anyone has any doubts anymore that it is the deputy head prince. I dont think the timing was coincidence coincidental. Will berated that they freezing oil at that for everyone. Im sure some are guessing that that was designed as though iranians were not going to show up in the first place. As i say, if they did not have any hope that a deal could be reached, the Oil Ministers would not have showed up. Some are suggesting that this is quite embarrassing for the saudi oil minister, who has reigned. Upreme he is more than 80 years old. Perhaps there will be suggesting that might be time for him to hang up his boots. Scarlet thank you so much for setting the scene for us there. Doha sent oilin prices plunging almost 7 , but they have made their way back. It is trading just over 43 per barrel. Ere joined now by ed it is very curious, the reaction throughout the day, why arent we down 10 . This is another event that happened, the disruptive supply thousands pulling of barrels out of the market. That is much more than could have been accomplished at the doha meeting. We think that the strike the cause this pullback will be over quickly. Once it is over, the frost will be taken out of the market completely, and prices will be back under 40 per barrel. Scarlet what is your take away on how these producers communicate with the market . Talking the market up is not. S easy the Energy Minister of russia an saying, and dont expect easy agreement, no pieces of paper will be signed. They did a great job anticipating market reactions through the top hearing now, i qatars has said, next is for opec, and we will see what happens at the june 2 meeting. The expectation is more of the same, the saudis are not willing shares to market anybody, least of all, iran, least of all, the u. S. , which was the big elephant not in the room, and the big party that needs to balance the market. Fastening is what happened in the first three months when we first got the freeze warnings. Take a look at the bloomberg. The oil freeze talks started, holdingrally held out, steady, now, after the failure of the deal, still relatively high. Did doha do what it was supposed to do . In about too much of time for the producers to get hi themselves in order. Now, i dont hear anyone calling per barrel. You are absolutely right. If this was scheduled for january, it would be different. They need to do this is no longer as critical as it once was. Scarlet what did the saudis do now . We were talking about the divide. How does the nation procedure . I think elliotts comments were overstated. I dont think the oil minister has ever done anything then follow the directions, as they have been. I think the directions may have ambiguous. After the fivehour interview with the prince, exactly two weeks ago, the instructions have been clear. There was not going to be an agreement. I think the guys who came in from around the world were trying to listen to some other message than the one received. I think what the saudis do now is an open question. The logic is they will put more wereoil into the market rather n freeze production. Certainly, the deputy crown suggestions. De he has adjusted that sometime next week a new step will be weensaudi arabia m off oil. Alix i have been hearing more more production. We have a chart on opecs capacity wrong chart. It is basically the extra oil you wind up having in case of the supply disruption. It is low, meaning there is not that much juice if we have longerterm supply disruption. Absolutely. That is why we s expe a market to be more of wildcat we expect the market to be more fall a tile Going Forward. We already saw, and this is the most critical reason the prices went up in february and march, there were over one Million Barrels per day taken off the market. Nigely people in the the pipeline. That is why prices went up. Had to your point, we just p, looking at the supply dynamic in the world. The u. S. Is the white bar. Opec is blue. Rebalancing is starting to happen. When you dont have iran attending no, but you have saudi arabia. The saudis have made it clear that they are not going to balance the market by reducing production. They have made it clear that they are the low cost producers, and the high cost duces have to rebalance the market. Now that they are actually seeing u. S. Production already eia, and nonopec in general expects to be down. This is not the time to say our plan was wrong. Scarlet doubling down. Ok. Think you so much for joining us today. Netflix and ibm reporting after the bell today. What to expect in the First Quarter earnings. Alix this is Bloomberg Markets. I am alix steel. Scarlet i am scarlet fu. Lets get you a quick check on. He markets now as julie was mentioning, energy leading. Alix lets go to abigail doolittle, live from the nasdaq. You are starting with netflix today. Abigail we are. Netflix shares are lower. Russia for the stock is the news that amazon will be launching a video only Subscription Service to compete with netflix. Piece of uncertainty is whether they will meet their subscription estimate of 1. 8 million, and whether they will have changed guidance at all, by a planned price increase that could spike turn. We see the buying momentum slowing. The stock is near the low end trend. Volatilityome big for netflix. Alix yahoo is reporting earnings tomorrow. Of course, we have a lot of bids in for the bid deadline for yahoo abigail that is the case. What people are focusing on is preliminary bids are due today. Fries and is emerging as the front runner. Ng alphabet has dropped away. The companyed that has not given suitors of Financial Outlook a Financial Outlook for toy 17. Price could be a sticking point. Marissa mayer is looking for 10 billion. The stock is up on the year for 10 by 10 , above the moving average. Q so much for setting the scene for us thank you so much for setting the scene for us. Alix we want to bring in cory johnson, in new york. We have netflix dropping. Is this a fear of earnings . Cory the trade, in terms of how to standard deviations generally, earnings day is the day. After the report comes out, i way it goes. Which a lot of it is because of the big changes we have seen. We see them growing internationally. Theamount of content on site is coming down. They are also spending a lot of money. 250 billion on content this year. Also way itcourse, theres already aople were subscriber, they are grandfathered in. Cory i think the subscriber growth they have not figured out what the price means. They need it. Beenash flow has disastrous. Theres only other bidders like amazon, hbo, and networks. Scarlet i know you are a big fan of house of cards, netflix that they would invest in original content. Cory im actually a daredevil fan. Alix ibm also out after the bell. Cory perfect segue. The only comparison will be the finances, Everything Else will be different. Companies like to do this. What we will see most likely is a deterioration of the business. Revenues shrinking, but so are profits. They say they will get rid of the higher revenue business. Business is shrinking in terms of profitability. If you look at the net income decline pected 20 expect a poin 20 decline. Ultimately, it will be about the net income number. Scarlet cory johnson, thank you so much. Ere in new york for the week everyone will be focused on the buyback number. Alix we will be back with more Bloomberg Markets after the break you. Scarlet youre watching bloomberg. Im scarlet fu. Alix i am alix steel. This is your Global Business report. Scarlet google, the tech giants woes in the european union. Alix plus, the shakeup with the worlds fifthlargest bank, the hsbc ceo is said to be stepping down in two years. Scarlet the earthquake in southern japan taking a toll on toyotas bottom line. Alix we begin in europe where google faces more antitrust problems. Rupert murdoch has filed a esplaint against googl search and services. Google has yet to comment on the development. Gulliverhsbcs stuart will step down in two years. The company has began compiling a list of potential candidates. 80,000ve slashed jobs and exited 80 businesses. Advisorsbal strategic say the outlook is not so dire. I think the big eggs are anks are big b fine. Banks are safer, but lending and making markets is trickier because of the need for liquidity erasures, and the like. We are in a different world, and we have to get used to it. Scarlet in japan, earthquakes that struck the region are skely to cut into toyota profit. According to mitsubishi, toyota be looking at a 277 million drop in profits this quarter as a result. Alix time now for the bloomberg quick take be looking. Japans Prime Minister bold economic plan promise appears to be stalling. Heres the situation. It is built on unprecedented monetary easing in business Even Commission to snap japan out of a malaise. If the goal of triggering prices remains elusive. Recession in 2014 was followed by tepid growth last year. In an extraordinary move to get things to lend banks to lend, they approved a 0 interest rate. Since japans real estate and stock market bubble burst in the early 1990s, companies have focused on cutting debt and sending jobs overseas. It led to two lost decades with no nominal growth in the economy and persistent deflation. The years is quick and the devastating one in 2011 have added to this years earthquake and the devastating thein 2011 have added to conditions. The imf remains elusive. Recession in 2014 was followed by tepid growth last year. In an extraordinary move to get things to lend warned that t could spike Government Bond yields and printer the debt unsustainable. We will be right back. It is 1 00 a. M. In hong kong. Welcome to Bloomberg Markets. Alix scarlet good afternoon. Alix heres what were watching at this hour. Scarlet the European Central bank decides on Interest Rates on thursday, followed by the fed and bank of japan next week. What can investors expect . Hillary clinton and donald trump are the hometown favorites to win the primary tomorrow but they are not going down without a fight. Scarlet opecs producers threatening to have a route losses earlier to slightly lower this hour. Word julie hyman has the latest. Down but not by what it was earlier. The down the s p are each up half of 1 . Those gains have comments oil has paired its declines. We tend to see a correlation there. Oil is up sharply off the lows of the session. Now down just about 1 as we have been talking about. Strikes that kuwaiti oil and also a lot of commentary, saying they expected some investors to buy a dip today. What isars to be happening with energy stocks. Energy producers, energy index has been climbing throughout the day and it is up i 1. 5 . The bestperforming group in the s p 500 did individually, some of the Big Oil Companies rising today, exxon mobil, chevron, all of them gaining traction, which again, as we talked about earlier, is not what you would have expected in the wake of a failure to come to an agreement. Earnings coming up as well. I wonder how those will play out. Youre talking a little about the stocks last hour. I wanted to get a check on how they are trading. Amazon as they announce the Amazon Prime Video service and monthly option amazon prime subscribers. After its bigger Opening Weekend of jungle book, nearly 104. 104 billion. In the wake of the announcement , also, other big percentage movers include endo pharmaceuticals, Deutsche Bank saying shares look undervalued, that there has been a lot of negative news but the stock has fallen too much even give that negative news. Rising in the wake of investment earnings, and a Data Storage Company arising as well after. Numbers. S out with his those are beating estimates with revenue coming in line with estimates. Benefiting inng part from volume i am growth. Not huge but up nonetheless and pulling the other companies as well. Mark crumpton has more from our newsroom. Mark a new nbc news wall street journal poll indicates Hillary Clintons National Lead over Bernie Sanders has twinkled to two points. Mrs. Clinton is now supported by 50 of democratic voters nationwide, compared with 48 and a full release just one month ago. Most americans are fed up with the federal government. According to his an Associated Press survey. Half of gop voters compare with about one quarter of democrats or independents in being angry. Ash carter is in baghdad after meeting with iraqi leaders. The u. S. Will send 200 additional troops and apache helicopters to fight Islamic State in iraq. It is the latest push to retake the city. The u. S. Isy said also considering more airstrikes and cyberattacks against i is il. Sexual assault cases that portrayed civilian Law Enforcement officials as less willing than military commanders to punish sex offenders according to an investigation that found the pentagon used in accurate and vague describing steps taken by authorities. Brazil posits president is on the verge of losing her office. The lower house of congress yesterday voted in favor of impeaching the president and ending 13 years of rule. Win the be difficult to votes there. She needs to stay in power. She is accused of hiding budget deficits with illegal loans. Global news 24 hours a day powered by our 2400 journalists in more than 100 50 news pure around run the world. I am mark crumpton. Back to you. The ecb kicks it off with a Rate Decision thursday. Next week, the fed and bank of japan announced their decision and he does weeks after that, we hear from the bank of england. Fixed income strategist joins us now from philadelphia. The middle of the meetings, we had a stronger euro. A relatively weaker dollar. What will be here . Hear . L we forur expectations are not all that much. There is an implicit pledge that evolved out of some of the discussion or discovery that a stronger dollar impact negatively nearly every world. Conomy from that data point, central bankers have to agree to reduce further rate cuts into negative territory. What thursdays meeting horribly looks like is no new announcements and probably numbers which i think are a critical phase supporting the Banking System over the course of the next several months. Scarlet when you look at what the ecb has to do, it is all about moving consumer business long growth. Loans are tracked of but the question is, what kind of demand is there for that . Growth is already growing out before the financial crisis. Business loan growth has barely recovered. It is not even matching the pace of 2012 or 2007. Alix ken draghi talk down the market . Can he help Business Loans . I do not think the issue is really about the supply of credit from the european Banking System. This is more than just europe as well. It is a worldwide phenomenon. Companies and aggregates seem to face is a lack of profitable Investment Opportunity and we see that in the u. S. Where firms are not buying u. S. Capital equipment and we see it also in europe as he referenced a moment ago, the relatively low growth in corporate credits despite in some cases negative and in most cases zero Interest Rates. Alix we have a great start for , it hasn expectations fast. Much gone nowhere they are unable to get Inflation Expectations any higher. What can they say in the next few weeks to help this . Guy we found it was less correlate with Central Bank Action and more correlated with risk. Like many other things such as oil and pay equity, it seems to be that risk is trading in one direction without much distinction. Tend ton expectations follow risk trading rather than central bank trading. I do not inc. There is anything easy a central banker can say and europe in particular, we ast need to wake weight these come to fruition. Scarlet in terms of allocation recommendation, youre looking at a little more defensive. You had to rush to safety and , but yourned to risk are not convinced by the relief rally here. You look at the typical spread widening phase, followed rally, when it comes to highyield corporate and s, ittment grade corporate started in february 11. Subtle signs that it seems to be petering out. We are starting to see actual default. We have a chance to see spreads widen before another opportunity extends itself in terms of credit risk. Alix it sounds like seventh inning . I dont know. Guy the gains not over. Outs thank you. Scarlet coming up next, can Hillary Clinton and donald trump score hometown wins in new york tomorrow . Bernie sanders and ted cruz trying to steal scarlet breaking news. Julie Bloomberg News is reporting that laboratory corp. Witherica has held talks Research Holdings about a possible deal greeted people from failure with the matter. Try to solidify its position as the biggest in the United States. It may not end up having a transaction. Representatives from the Company Either declined to comment or could not immediately. For comment. See last corp. Shares, though not up by much, certainly rising dramatic in the wake of the headlines. Imc Research Also shares have shares are rising. Presumably, lab corp. Would be the acquirer in this case. It is time for todays metal bulletin. Lets get to what is going on with gold prices today. We have seen stocks rally and we have seen gold come off to a degree as we have seen the Risk Appetite come back. Right now, it is very little changed. We talked a lot about the rally gold has had year to date. That rally has lost steam recently. Your to date, the rally is intact and we have seen gold prices gained 16 or so for the year. We have a look at the chart for gold prices as well. Date even though we have seen sideways movement as of late. Still have a lot of folks interested in gold. We have Gold Holdings through etf. , 965. Look this level is at the highest since 2012 through etf. Measured ended april 12. We have seen 13. 9 billion come etfs this year, about 80 of all of the funds commoditycome into a etf overall. It has been overwhelming. But it has also benefited silver, as we talked about a little bit. Little changed today but it is also at its most expensive versus goal that we have seen thus far this year. The lower this goes versus gold, the more expensive. We have seen a lot of flows into silver funds as well. Alix Hillary Clinton and donald trump appear to be headed for home turf wind winds. Wins. Ted cruz and john kasich look to deprive trump of delegates. Steve, if Hillary Clinton and donald trump have injuries, what would it mean for their ability to clinch the nomination . Steve their systems are slightly different. Lets start with republicans. Needs a big win. His campaign is banking on clinching the nomination before the convention in cleveland the summer. To do that, he needs to win big in new york. Because of the new york rules, if you win more than 50 , you get the winners of you are the winner of the delegate. If you get the congressional district, he get those delegates. If he wins everywhere, he could get all the delegates. Five or so districts. But if he posted big numbers, that sets him on a good half toward the nomination you would only need about 56 of the remaining delegates between now and june 7. It is not easy but it is doable. The democrats are in a position where neither Hillary Clinton norb Bernie Sanders, no matter what the outcome of the new york hi mary, neither could reach the majority of delegates they need on just pledged delegates alone. They could but if clinton wins huge in new york, and she is she would still need 68 of the delegates because of the way democrats allocate their delegates proportionally, it is really hard to do. Superdelegates, the Party Leaders in all of the state who get to vote freely for whomever they want and whoever can convince them, no matter what, either of them are going to need to tap into those delegates. The question is how many. Scarlet i have got to ask you about john kasich. He has been campaigning hard in new york. There is no way kasich could the kids a campaign could win. Could clinchay he it on second ballot or maybe even third ballot. What he is counting on in cleveland is the deadlock convention between trump and crews and the number of delegates as it goes on, more and more delegates get unbalanced. Crews and ted cruz are deadlocking, the Kasich Campaign hopes to be there. Keep us in mind. That is their pitch. Electability and i can be not the compromise but the alternative. Scarlet thank you so much. Alice more on the conversation next. \ alix more on the conversation next. Scarlet this is Bloomberg Markets. Alix few wouldve had predicted that the s p would be in striking distance of alltime highs to from a worst start ever to a remarkable rally. It is easy to see why many bulls are skeptical of stocks right now. Scarlet from work, we turn to our colleagues carol massar and cory johnson. Carol welcome. This is the bloomberg advantage. Our next guest says we are close to return a profit cycle. Of portfolio and market strategy, roughly 82 billion in assets under management. Back. O have you he take a look at the picture. It has not been great at all. Some of the headwinds we have been experiencing so far, the strength of the dollar, oil prices, all of that comes to fruition. Those headwinds we think will go away. Will actually experience Profit Growth. Companies reporting this week, dow stocks. You have to have growth and demand. Think the economy is growing. Present danger. You put all together and you are growth at theenue mid to Single Digits range. That would allow stocks to events and post singledigit returns. Cory we have seen Revenue Growth without profits. Growthill see revenue and Profit Growth where margins premuch toe the line. We would see growth premuch in line with Revenue Growth. Ofdo not see much in the way expansion. We think it will happen from capitalfashioned growth. We see opportunities here in the United States and outside of it as well. Getting youryou optimism . It,f you think about rational experience prints or runaway inflation, we dont seem to have any of those. Poor economic results. As earnings decline in the last net, declined by actual share buyback. You have positive rate of inflation and that is the sales line for many firms. Result, the total level of profit will be higher in the future than it is today. I think the market is aware of it and thats why the market has a fast as much as it has since february 11. Classy talk about it so much and it has been dissected word by word from then officials, but where does fed policy fit into all of this . In the u. S. , said will be raising Interest Rates. From for backed away from when they first raise rates in december. We also have negative policy rates. 40 of the world by gdp is operating with negative policy interest rate. And we think that will be one of the features for international equities. Look at the stock as a whole, they are trading at 13 times equities holdings, versus 17 times, a stable monetary , those negative policy rates, and for investors looking to manage volatility, a civil is what currency hedge we think is a thoughtful approach to managing that uncertainty. Ary did you say we would see probably the lowest we have seen in any summer in memory . My memory goes back pretty far. The shorter answer is yes, when energy a decline in prices, you see it rather immediately, it has a negative impact on profits. Tendenefits to consumers to happen over a long time. Consumers need to know the Energy Prices will be sustained at a lower level in order for shape andally reorient the contours of their behavior. Carol your favorite investors right now . We like highyield bonds, 7 ding at the 7 s bread spread over treasuries. Scarlet as we had to break, we want to share news. Longtime Silicon Valley veteran has died after a long battle with cancer. He was a columbia football coach and regarded as the coach in Silicon Valley for his close friendships, including the late steve jobs. Alix he has served on the board of directors for 17 years before he stepped down on 2014. He had worked in several key positions at Companies Like apple and go. He was 75 years old. Alix you are watching Bloomberg Markets. Scarlet lets start with the headlines. Mark crumpton has more from the newsroom. Mark ted cruz says he has zero interest whatsoever in being Donald Trumps romney made if trump wins the nominations. Onator cruz spoke earlier Good Morning America. He said one of the reasons is if trump is the nominee, Hillary Clinton wins by double digits. Mrs. Clinton gave her republican opponents one last jab before the primary. While making a campaign stop, she told them she would not let someone like donald trump or ted cruz speak about hardworking people in new york or immigrants like they have on the campaign trail. Fight to stop deportations, more than two dozen states, most of republican governors, argue the president has gone too far. It suggests the justices are divided. It can alter the state of millions of undocumented immigrants. The pentagon is offering big bucks to hackers who find security flaws on its website. Hack the Pentagon Program runs until may 12. Participants have to agree to a background check before participating in the program. They could walk away with 150,000. Struck twon that buses injured 16 people. Two are in serious condition. Police say a small explosion device at the back of one of the buses caused the blast. Smoke sent thick black billowing into the air at the southern edge of jerusalem three miles ahead of bethlehem. Dayal news 24 hours a powered by a 24 hundred journalists in more than 150 news bureaus around the world. Alix oil prices off their lows even after sales over the weekend. It ended with no final agreement. That is the latest disappointment for an industry that has reduced cost, headcount, and canceled projects. Many Energy Companies are fighting for survival here at one absent is significant dealmaking. If 26 oil does not do it, what will . Later. Sk the oil and gas andy, how much m a do we see this year . I think we will see a lot more Going Forward than we have now. Foras been really difficult buyers and sellers to agree on what things are worth. One of the good things that came out of the meeting is we are getting no one is expecting anyone to wave a magic wand. As you see consensus on whether oil prices is going, you will see more activity. Scarlet give us an example of what you mean about the divide in terms of not being able to you have had yours around 50, you know, probably saw longterm and not short term. The difference between what buyers and sellers thinks things work. The Capital Markets refused to close on Oil Companies. You have a pioneer on other Oil Companies issuing equities. More than willing as the fed forces them to look higher term. Chesapeake is a great example. Good call. Why are you so convinced the Tipping Point will be now . A couple of things. One, in terms of what we are a few outliers, raising money in the capital market, the volumes are minute compared to what the industry needs. Companiest a bunch of being assessed at the moment. The banks are cutting back on what we think reserves work and in terms of what they lend against. That they consolidate, sell assets, or go to chapter 11. When we see activity, what will it look like . Even as the treasury comes out with new rules . Relevant justo because of the way they pay. One thing is one of the biggest taxpayers, it not have the same benefits. Alix we have seen 51 Oil Companies in bankruptcy, a total of about 27 billion dollars all told. . Here will the action be there will be continued south cut consolidation in the market. Consolidate in terms of consolidation, across geography. There are a lot of companies that do not have the money or have the wrong management in the wrong assets. Not necessarily the same values as the top end. Alix why would ask on want to be settled with a company that has 1 billion in debt and assets that are not worth that much . I think the thing is we do have a lot of private equity money looking to deploy in the probably consolidation, and the platform to pick up assets revert either voluntarily or involuntarily. Scarlet who wants to take certain risks, when it is in a Holding Pattern now. How differently when oil is also fairly stable at 60 per barrel . I think everybody has gotten the message now in terms of that we are in a new world. It is not temporary. They have become much more moreious of cost and much conscious about how difficult it is to raise capital. This time last year, the assumption was you could go and raise capital. That is not the assumption now. They are being reasonably riskaverse now. By their very nature, they are risk takers. They are one of the biggest holders of capital. 20, 40, 60, 80, i have heard. Private equity, very savvy. Theyre waiting for the prices to be right. Said wetally, we have do not agree with the prices the sellers want. That is changing. We are finally seeing that. [laughter] we finally get to see the action take place. Scarlet thank you very much. Alix coming up next, a very close eye on yahoo the latest developments on the eating were next. Next. Ding war scarlet the Canadian Dollar took a mighty tumble today. Lets get some perspective now from pamela who joins us from toronto. What is the what is the it was sort of a disaster last night and early this morning. Have seen, World Markets have shrugged this off to some extent. Many of the losses it had early on. Essentially flat on the day, sitting at . 78. At the stock exchange, you see. Aterials higher picking up on a rebound and copper. The oil and energy side, oil reduces an energy users are doing just fine, thank you very much, i day where it was a disaster. Best performing of developing year, up 2 on the on the last five days, half of 1 . If lt is the equity markets doing well, it presents another piece of good news that might be tough news on the Overall Economic teacher in canada. Scarlet the bank of canada met last week. It did not have anything to say about the markets . Had a story in the bloomberg terminal today referring to some of the comments and talking about the terms of trade are so tied to the relationship between banknd the governor of the of canada referred to it as a bit of a dog on the leash. They will leave the dog park together. The difficulty is it a stronger than all the other parts of the economy that canada is igniting, the nonenergy it part of the equation. There is still difficulty and concern there. What is one thing analysts are pointing to today in canada . I have a huge question about that and it is one i think we will talk about for a long time. Difficult for manufacturing to pick up the slack they lost. Thank you so much. Alix julie hyman has the latest, looking at m a on monday. Julie a lot of potential m a activity. The news we got in the past 30 minutes or so about lab course in talks about a potential deal according to people familiar with the situation. It would create the biggest Diagnostics Company in the u. S. , though it is already the largest as we solidified a physician. It may not result in a deal, but they might. Saw last court shares have come back down. Imc shares also spiked higher and they have been holding onto at least some of their gains and lab court is by far the Larger Company with a 12 a dollar market cap. Another deal we have been watching today is the company that makes club taste Management Software for businesses, being acquired by affiliates for 1. 65 billion. That private equity firm already has holdings in the industry. Shares up 56 at 35, 25. The price for this is 36 per share. I have seen analysts split today on whether it could get a competing higher bid. Stocks are not behaving as though it will. Also, another were watching today, according to the sunday , estrogenic a has held internal talks about an offer for the company but it has not yet made a formal bid. Bloomberg actually reported last week that the takeover offer have been rebuffed, and barclays say today that medivation would be a better strategic fit than interesting commentary on that as well. Alix breaking news. A digital at business of yellow pages. Com said to be planning a first round it for yahoo . One of the Biggest Advertising Companies in the u. S. , does a potential deal with yahoo make sense . Whos get more with alex, wrote the story. I think people are wondering, this company is still around but yp holdings is bigger than you think. It gets about 1 billion in annual revenue. Other 47 is owned by at t. About 560 million in annual revenue. It is almost double the size of yelp from a revenue standpoint. 166 million, with about 1 billion. Alix yahoo shares now, you see nonetheless,ike up any it for yahoo is like yes. Not just rise in. Yahoo oday is a day for and we told you throughout the day we are slowly getting trickling bids beyond verizon and a couple private equity firms. This bid is sort of by a private equity firm as well. Learned,what we have the structure of the deal would be something called a reverse this is something time also thought about. The idea here is that you could spin off yahoo s core business, merge it with a business that is a smaller size such as wipe he holdings. Yp and partially by at t. That yahoo stair shareholders, if they were not bid, they could still own it. Givesp Holdings Gets to yahoo is more than 3000 local salesman, on the ground states,in the united selling local advertisements. A national platform, but they do not have a huge salesforce. On, what this would improve an advertising basis is you could get in with small and mediumsized businesses. That is really what the strength is. Scarlet what about search and those other parts of the business . In many ways, it speaks to yahoo s benefits and problems. What is yahoo . Different buyers will see different parts that they want to exploit. The company theoretically could continue to yahoo today. But then you are right and you look at this and, does yp holdings fit with yahoo . There needs to be ongoing conversations within yahoo management about what exactly the company is and how you focus it. Really what it brings is advertising. You can sell advertising against any content. Even if yahoo those in misdirection, which i think it is still a long shot to verizon coming up and saying, we will buy yahoo of japan for you for 8,000 and another 2 billion, yp holdings cannot really compete with that if yahoo feels a kid will get a rich cash bid. Structuredoes the compared to what yahoo might look like . There is a benefit and that is one reason why yahoo might go with it. Other is they get the future benefit of the company. Yahoo shareholders remain shareholders in this new merged company. If they sell to verizon, they are just cashing out. And they will basically just ended at that point. I doubt mercer myers will stay with either version of this. Yp has a Management System in that is stillbe an open question. We do not really know the answer yet. And maybe we will see more bids from other companies and private equity firms as the day goes along. Coming up, a History Lesson on the shrinking of wall streets trading businesses. Scarlet Morgan Stanley reported firstquarter results. Revenue from fixed income and Rapid Equities trading. Alix former cfo Lehman Brothers and longtime analyst brad gave tradingtory lesson businesses. You had an industry that was a much larger ranking business. Businesses since the crisis have not been able to meet the capital. How many years out our we since the crisis . We only have a couple of them operating above 10 . The rest of them are all dragging down. Can you shrink the fixed income businesses . Yes, you can. Who have to pay for it is larry think. It will be the Asset Managers and ultimately the investors. If you want liquidity and you want to execute a trade quickly, you will have to pay for it. Taking andf risk making money from risktaking is gone. And regular have taken that away from the banks. You heard that Goldman Sachs is getting more interested in cutting peoples ability to entertainment and airfare and only taking expensive trips trex. Are these the only ones that matter . It is not exactly 50 anymore, but compensation is by far the largest expense. Compensation, it is really to cut the number of managing directors. Moveare not paid enough to the needle. It is managing compensation that can move the needle in deferred compensation can movement needle. As a cfo, you have to do what theyre doing. Everyfo, you have to say penny has to be counted four. Understand where the big movement will be, compensation is where you get the big impact. You have to be disciplined across the board and goldman is disciplined. It still has at least a partnership culture. You mentioned Goldman Sachs and the extreme costly efforts it is undertaking. Give us a sense of how bad the , revenues climbed 37 , earnings per share, and at the same time a year ago, it would be down almost 60 . Itll be interesting to see the earnings tomorrow. You have to wonder, what is the end for costcutting . The quarterly story of more hedge productions around the world, it is quarter after quarter. You dont really make big changes with trimming around the edges. If you want really significant benefits from costcutting. Investors like to see companies lop off. We will talk about one of the most fascinating charts of the weekend. You pointed this out over the weekend. You have to guess what it is. Explain what were looking at without revealing what it is . It is something that went up a lot and it says a lot about the major economy. A major economy not here in the east. Scarlet there is an outlier. That is what were looking at east of us. Alix we will reveal the mystery andt and why it is crucial important for clock p. M. And check it out. Scarlet check it out today because we will speak with the european head of energy research. Coming up, six clock p. M. This evening, cofounder of audacity will be with us. We will be right back. Udacity will be with us. We will be right back. David it 2 p. M. In new york and 2 a. M. In hong kong. Carol welcome to Bloomberg Markets. From bloomberg World Headquarters in new york, welcome. David here is what we are watching this hour. Crude oil is still down but well off its lows on the first day when opec members decided not to freeze reduction. Oil could be tumbling back into the 20s. Lisa and the impeachment crisis in brazil the president is one step closer to being removed from office. David and a verizon is said to be the leading suitor as other Companies Drop out to buy yahoo , including the business known as yellow pages. Com. We are two hours from the close of trading. Its good to the markets desk julie hyman has the latest. Julie an unlikely rally. When we heard about the no hot talks