Deadline to sign up for the Affordable Care act. Also opening day for major league baseball. Turbine four opening days because youre the dodgers play the diamondbacks in australia. April 10 is openingday. They, by train and car. Back in the day. From florida. Is that like pennsylvania 65000 . Were going back a few. What if we got here . Data check. Boring first quarter, but sometimes i can be good. Futures up 7. Hydrocarbons elevated. They just wont go down. Ruble, foreignexchange, the dow not bad. Gold under 1300. The ruble after the festivities over the weekend with secretary john kerry and foreign minister lavrov, this is the putin vote. There is a stronger russian ruble for Vladimir Putin this morning. Lets get to the front page. We will pick up where you left off, which is russia. Russia is gradually withdrawing troops from the border with ukraine according to afp, which cites a spokesman in the defense ministry. John kerry earlier had demanded a withdrawal. He said this was a precondition for some sort of middle ground. For those who did not want to this week and, this was a posturing weekend. Vladimir putin and president barack obama also had a conversation by phone were not a lot got done. They talked about putins final four. That is a different final four. Secretary john kerry was flying home to new york and stopped in ireland to refuel. He got on the phone with lavrov and he said to get back to paris, so they turned the plane around. That is how they got together. More on russia and ukraine in a moment. Our next story, turkey. Landslide victory in the local elections by erdogan. By means a 146 won 46 . You went back and forth. This is not reported news, but within a few medication you have, saying it shut down they were tweeting me talking about how difficult it is to get access outside access to media. There has been a shut down there. First, they took down youtube and twitter. This is after months of allegations of corruption against erdogans government. We will also talk to elliott istanbul about this today. Can i go to istanbul . The food is outrageous. We will send you next. It is stunning. There is water, you walk through, freshwater from a zillion years ago. We need things to calm down first. Story, did you see Michael Lewis on 60 minutes last night . He was inflammatory, to say the least. He has a new book out. What he claims his highfrequency trading has led to the u. S. Stock market being read, even if it is legal. The stock markets are not commenting, but the president of another Exchange Says he disagrees with Michael Lewiss allegations and says it is unfair and youre responsible to accuse people simply because of using new technology. Listen to a key element from the lewis interview. The stock market is rigged. The United States stock market, the most iconic and global capitalism, is rigged. By whom . A combination of the stock exchanges, the big wall street banks and highfrequency traders. Highfrequency traders account for about half a share volume in the u. S. Arthur levin has been phenomenal on this. We him to permit has been just angry leon cooperman has been just angry. Michael lewis will be joining surveillance thursday at 7 00 a. M. Eastern time, author of the new book flash boys. Question, loaded which is why we are asking it today. Our twitter question of the day it is a loaded question. Weekend in new york city. We hope you had better weather. It was a fourhour meeting with the secretary of state of u. S. And the foreign minister of russia, agreed to disagree. Should the future of ukraine look like switzerland or Canadian Federation or some approximation of the union of soviet socialist republics . A private citizen who worked with the Army Intelligence in afghanistan and with the pacific can, adam parker with us as well. Talking on the equity markets. Wonderful to have you here. What was the backstory of the nondiscussion this weekend . Actingia is not really e a responsible Citizen International citizen. Im not optimistic despite reports about troop movements of ukraine or out moving away from ukraine, russian true movements. Im not optimistic about russias intentions there. Saying putin is trying to make some form of the ussr not the beatles song, but reality. Do you see as a pro the leader of russia would like to recapitulate 1950 . I think putin felt hurt, intoed by nato expansion eastern europe. I think he is trying to regain as much as he possibly can in terms of at least in terms of influence, possibly in terms of territory. He has shown us in georgia that he is trying to get back territory if he can. He is moving troops around. Just the fact the press has reported maybe theyre moving away or the Ukraine Defense ministry as and maybe theyre moving away, doesnt really mean much because the russians are masters of deception. They are moving their military around all the time in order to create confusion in the intelligence service. What is prudence next move putins next move . He could easily go into ukraine. Ive seen estimates up to 100,000 Russian Troops massing on the borders. I think that is a very dangerous thing. Lets be honest, are the Baltic States threatened . A relative when you threatened . I think nato needs to think about shoring up those National Forces that are in all of our Eastern European allies. Nato . Is theres a whole bunch of nato countries. Think of g7 and throw in the u. S. It hasnt been relevant, but does it suddenly become relevant again because of what putin has done in the past . Nato is very relevant to cause it is the organization because historically it is kept russia from expanding toward the west. Not only is nato relevant, but nato needs to start bringing in japan and australia closer into the fold. Interesting. Does nato necessarily need to reassert itself . Absolutely. And it needs to increase the strength of the bonds outside of just the old atlantic. Now russia and china are both expanding territorially. Ways, d meritorious in maritime ways. Theyre threatening countries like japan and australia. This is great geopolitical talk. I dont see this in your research. Is this completely exogenous to what we do with our investments . There is always going to be geopolitical risk. The question is, what can you reasonably forecast . We try to focus on corporate earnings. Are expanding through the euro crisis and the fear china hard landing and the rest desolate debacle. As earning season starts, i think well be ok news. Do you pick up the petroleum or emphasize the exxon and mobil of the world . I think it is not quite overweight yet. Shuttle diplomacy across europe as there were china figure out what to do with ukraine. A little shuttle the policy on the Basketball Court over the weekend. Louisvilletucky beat on friday night, a huge game, then beat michigan last night, going up against wisconsin. We have florida versus connecticut and the other half. Youre mr. International power. Lets get national. Final four . I dont know, who is there there . Kentucky, wisconsin, florida, connecticut. I would to the university of michigan, so im still licking my wounds. Get over here and look at this bracket. Such a shameless plug. Up top i want to have a moment of silence for stephanie ruhle. The reason she is so lame here is because she is on a threeweek vacation. Something like that. Im down near the bottom with a guy named bloom bloomberg. That is ugly. Company to bed in. Thank you. Ive never done as poorly. Wisconsin is my only final four production that made it to the final four. At least you got one in four. Lets get the company news. We start with comcast which may boost its buyback land. Considering increasing stock purchases by more than 80 . Comcast cfo says another 2. 5 billion to be added. The investigation into possible currency rate fixing gross. Swiss regulators are looking to see if banks traders manipulated Foreign Exchange rates. The antitrust Commission Says more banks and brokers may have been involved in the possible pricefixing. Huawei forecast sales gains. They also posted record sales for 2013 and two gains in its enterprise and consumer businesses. Weren we come back, going to detroit, talking about yet another series of recalls at General Motors. This thing is getting absolutely frightening. Youre watching bloomberg surveillance. I can talk. Help me. Randy levine. President of the dreaded new york yankees. The yankees opener tomorrow. He will be here at 4 00 today. Love the cover of the New York Times this weekend. Really interesting. It is spring, opening day. It should be april 10. This is bloomberg surveillance. Lets get to our number of the morning. 2. 5 million for the number ceo awake atm night. Recalling 2. 59 million vehicles because of faulty ignition switches that have led to the death of 13 people. The Detroit Bureau chief joins us by phone. He was congressional investigators released a bunch of documents yesterday on the ignition switch problems. What did we learn . The two main things is that gm decided not to repair this and one of the factors was a business decision, which is the first time we have used those words in this case. And he was government try to do something in 2007 and did not. Is this decision. Hows that different from a cultural decision . The fact it was a business decision suggests that he was an issue in that has not been something we have heard up to this point. That is one thing mary barra will have to answer for when she testifies tomorrow. I want to be clear because that is a shocking concept. Business decision. In other words, was some sort of bean counter a gm saying, if we fix this thing, it will cost us x and if we dont fix it and we get sued, it will cost us y, and y, therefore, we are not going to fix it. We do not know the y part. Really know the offsetting cost. There were tooling costs and a business reason for not doing it. We dont know what the other side of the equation was. Frame this for us. We are three weeks into the soap opera. How big is this compared to previous recalls . Is this the biggest thing since sliced bread or lesser deal than toyota of a few years ago . The biggest difference is the gm executives have already thrown themselves on the mercy of the court. Theyre not trying to justify it or say they did not do anything wrong. Theyre saying, we were wrong, were sorry, we need to figure out why this took so long and fix it. Throwing themselves out there to let Congress Beat on them. Thank you. Look for his reporting at bloomberg. Com. A smart story on the admissions in 2005. Adam parker with us. A dumb question, is the Auto Industry a sector anymore or so globally diffused a u. S. Guy like you cant get a handle on it . Is a small part of the s p. We have no auto exposure in the portfolio anymore. Why . Added a lothey have of capacity. The stocks went up a lot in 2013. If you look across the market, theres not that Many Industries were there for added a lot of capacity in the last few years. Capital spending has been suppressed. Not so true the Auto Industry. The nonautor on sector. Were just Getting Started right here on bloomberg surveillance. Will bep, Stephen Roach our guest host. He had a great essay on chinas effort to rebalance the economy and the u. S. Is not effort to do the same. This is bloomberg surveillance. Good morning, bloomberg surveillance. This weekend, wire senator and were away, and women there was snow in washington. Came out. We did our imitation this weekend in new york city. It started raining. So much snow and rain you have to get in the ark and save yourself . A bipartisan ark. Keeneorning, i am tom with scarlet fu and adam johnson. Time for the morning must read. I have a good one. This come to us from our london office. She writes the following essay of the weekend, Simon Johnson said the same thing. All about corruption. Anders corr with us. Help us here. Corruption is just that deep in the ukraine and other countries . My understanding is that corruption is very high in ukraine. All you have to look at is the former president yanukovychs sigrid palis they came to light shortly after he fled. Secret palace that came to light shortly after he fled. Corruption is very high. That is one of the biggest risks to doing business in that area. You founded your business corr analytics, your wheelhouse is running numbers. How do you quantify corruption, the impact on the economy . Transparency international is a great source for quick and easy understanding of corruption , pretty much in every country in the world. As far as quantifying corruption, we would have to do some research on that. But i dont mean to interrupt, but does secretary terry read that . I think so. If anyone who wants to understand relative corruption around the world will look at transparency international. Is the u. S. In any position to influence ukraine or russia on this . We try. I think the u. S. Tries its best to promote their business , butngs around the world frankly, it is so deep and local it is very hard to change a culture from being secretary of state. You look at venezuela. They are more oil than any other country in the world and they cant make it work because of corruption. How do you get rid of corruption in 30 seconds or less . I think it is a longterm game. It is going to have to do with Economic Growth in those countries. Posit economic wealth increases, theyre less willing to take bribes to do things. We will see how it plays out. Thank you for joining us, anders corr. Coming up, Morgan Stanley bets big in the tech sector, but is there fear of a bubble . Good morning, bloomberg surveillance. Quartery of the first of 2014. Lets do a data check. We had a mixed first quarter. It has been a big jumble. Futures up a bit. Hydrocarbons are up, up, up. Texas is doing better than good. We will get to that in a moment. Small caps have led the way. Ibm, Texas Instruments and the like. Adam parker is with Morgan Stanley, not in cash. Bill white joins us, a democrat. That was an extinct species until he took over houston. We are honored to have you with us. Adam, technology is unloved. Ibm is a character. But it is a whole group, isnt it . If you look at the fastestgrowing industries in the stock market, two of the three of them, then he have internet and software. I dont think you want to have no exposure to tech as was in income statement and i did they werent going to be a value trap, but get it going . Is it the top line of the income statement . For the old Tech Companies, they have to show progress on growth. Youre right. Otherwise, you to focus on new tech and wrapped her arms around whether you can get from travolta valuations of some of those names. Biotech Companies Leading the nasdaq down, is that an indication of a bubble and doesnt presage more decline among the Tech Companies . It was the height growth companies, even internet and software. We a styleneutral. I dont want a big growth fell on my portfolio. Adam johnson, to review, adam parker was a pinata 18 months ago where he was underperforming, supposedly, but you in the market. You pivoted. Outperformedlios every of the s p but theyre been years when ive had a good market call and years where ive had a bad. Isting bullish 18 months ago because i dont think corporate earnings are going to be anything but growing the next few years. I think it is the call of the duration of the cycle more than anything else. The average estimate for growth is about 8 . Health, bestperforming group last year. Why not just a with health care . It has been our biggest overweight and still is. When i compared to other parts of the markets, it is cheaper, beating estimates mark, etc. Beating estimates more, etc. Bill white is with us, the former mayor of houston. Oh,y to the north dallas. A small city there. Texas instruments is there. How important is the tech to texas . It is pervasive in our state. Austin was a real center for semi conductors. Then there are Software Companies throughout the state of texas. One thing that is occurring, youre seeing austin benefit from it, there is relatively low tax rate, good quality of cheaper cost of housing. Youre seeing a revival of tech in places other than silicon valley. Heres a quote from adam latest m his rat what is the valuation factor . , very fastestgrowing stocks valuation doesnt work. Fastgrowing stocks that are cheap, underperformed are expensive. Figuredet is all ready out something about your Business Model is not sustainable. You have to be careful for those fast growers. It wont help you make any money over the next six to 12 months. Fold in what we heard from janet yellen is signaled six months for interestrate increase in and other fed president s kind of backpedaled a little bit. Howdy folded into what youre expecting . Our house call is about 15 to 18 months from now they will see the front then move the funds. Equities lets say six months anticipatory of these kinds of actions. I think you have a ninemonth window where good economic news, good corporate earnings will be rewarded, and the stock market will go higher. Mayor white, you talk about texas being the place to be for business. You guys generalize america. Am i right . Texas is booming and that is where the investments will go . Served are doing better than others. Some places are doing better than others. Named,her Morgan Stanley j polonsky, he talks about the emerging or the American Manufacturing renaissance. People bringing any faction back to the u. S. Do you see that in texas . We do see that throughout the u. S. And also in texas. Youre seeing a of the wage difference in india and china, higher wages, and the u. S. Wages and productivity are up. Youre certainly seeing it in taxes. A lot of it is in oil and gas related because of the renaissance of the oil and gas industry. Most wouldggerate happen with the shale gas and normal manufacturing, after all, energy is a small component of most manufacturers cost except for aluminum, petrochemicals. President clinton in the energy department, and i think in the democrat tradition, within texas, or is your president probusiness enough for this nation . I dont know about the nation as a whole, certainly, the whole atmosphere in the United States is a lot better than it is in some places in the world right now. In particular im a there does that make is the locomotive . The stock market is pretty much at its alltime high. Is related to politics or not, i dont know. But those are pure facts. I think you should get out of cash. I would get out of cash. Youre a little late to get out of cash. Theyre getting out of cash april 1. We have a lot more coming up. Will join us excuse me, bill white, the former mayor of houston. Is shifting its manufacturing strategy even as it dominates in the world stage in the sector. Nogood morning, there is drought on the east coast of the u. S. That is not pollution. There is the view. We say good morning to the makers of noah that did better than good this weekend. New york alone having its own gray, rainy moment. I am tom keene with scarlet fu and adam johnson. U. S. Secretary of state john kerry said russia must pull back its troops from the border of ukraine and progress is to be made from ending the crisis in that region. He made the remarks after meeting with his russian counterpart yesterday. Both agreed a diplomatic solution was needed to deescalate the crisis. Additional meetings between the two men are planned. At the box office, there it is, tom, your movie. Up 44lical epic rang million of the Box Office Receipts for paramount. Heres another one, Michael Lewis says u. S. Stock market is rigged. The bestselling writers at highfrequency traders and advanced computers make tens of billions of investors. He made the accusation last night on an interview on 60 minutes to promote his new book. Those are your top headlines. Onhe will be on bloomberg surveillance thursday morning. We have a twitter question. And it links up with this Eric Schneiderman has all ready started looking into this. Topic, to say the least. Heres the single best chart. This comes to us from a firm that assists Foreign Companies and their strategic choices in china. It shows manufacturing output as a share of the world total for the u. S. , and white, japan and yellow, and germany, blue. The u. S. Peaked at about 26 in the late 1990s. Japan and germany have also seen their share drop as well. The reason is because of china. The red line. It has been steadily climbing. More than us. Is sort from 3 in 1990 20 in20 to almost 2000. Bill white is with this, former mayor of houston. It is a whole new wage dynamic with steve roach between the u. S. , mexico, and china, isnt it . Labor arbitrage has been going on for a long time. We have seen it occur really since the 1950s. U. S. Policy. We want other people in other parts of the world to have good jobs that are sustainable. Certainly, weve seen a growing middle class in mexico right now. Some of the initial benefits you saw in nafta, some manufacturing jobs, moved to asia. There is a shift going on in the world. For most nations, including the u. S. , the big thing is to make sure that your competitive for the future. Steve roach will join us in the 7 00 hour. We have photos. We do. Turkey, big elections over the weekend. According to unofficial results, Prime Minister erdogan won 45 of the National Vote for his reelection. There he is. Erdogan and his wife casting their ballots istanbul yesterday. Curious, isnt it, you can win with 45 of the vote. In how many votes did obama w with . 51 or 52 . The number two photo related to this, supporters outside the Justice Development party headquarters. There they are rallying around the candidate, the Prime Minister. The ragingker, debate should they join the euro and back and forth, the u. S. Again as the locomotive of this, isnt it . My view is for Asset Allocation global you need to have u. S. Economy be strong and people believe it is going to grow, people believe corporate earnings are going to grow. I think part of their recent u. S. Profit margin is at an alltime high is the big 50 or 100 companies in the u. S. Have done a good job of reducing cost , moving labor to lowercost areas, taking advantage of Energy Efficiency and other things. We have great companies. We have Companies Leading the way, even in turkey. One more photo. Supporters in front of the party headquarters. Holding up their iphones. Turkey, you have youtube has been shut down, twitter has been shut down, everyone uses iphones. What a dramatic image. You realize how Pervasive Technology is, even in places where they try to shut it down. In the president ial election is in august . This was the Prime Ministers election in the president ial election its staggered. A wide number of elections across europe in the second quarter. 44. Ian bremmer was with us on friday. 44 elections and the emerging markets this year. That is in part why emerging markets have been lagging. Theres so much uncertainty. In the development its, you have generally, policymakers and more stable backdrops and Higher Quality set of companies and corporate earnings. Is been the case for over a year. I think will be the case until the you get to the other side of the Monetary Policy. Where we are with Monetary Policy and corporate earnings trajectory, we like the u. S. Relative to some other reasons right now. The u. S. Has its own mid term elections later on. Dont forget that. Health care is going to be at the top of the agenda for everyone. The Affordable Health care act of line is today, march 31. What does it mean to you . A congressman who is also a physician will be talking to us next here on bloomberg surveillance. This is bloomberg surveillance. Lets get you some company news from the files of bloomberg west. We start with alibaba, beefing up its offline shopping assets. Theyre buying and almost 700 million stake in income retail group. The companies will form a venture in china to develop an online and Offline Business around those stores. China mobile is giving ball, boost. Theyre offering discounts on smart phones using Faster Networks in china. There is a leading supplier of chips that offer the faster speeds. China mobile predict it will sell 100 million devices by the end of this year. Technologies forecast a 10 increase in sales. The government make her estimates revenue this year will reach dirty a billion dollars as demand for its year increases. Thousand dollars to record sales for 2013 angst to gains in its enterprise and consumer businesses. That is todays company news. Know, theas we deadline to sign up for the Affordable Care act. There is a grace period if the system shuts down again. Dr. Andrew harris knows the details of all of this all too well. He is a republican congressman from maryland in addition to being a practicing doctor. Leisure to have you here. You went to washington to fix things. How close to being fixed is the signature legislation . It is not fixed at all. The uncertainty continues. The deadlines get extended. We dont know where things stand. The individual mandate kicks in tomorrow for but of course, the deadline was extended last week. Youre rated by your peers as one of the best doctors in the land. You are an anesthesiologist. Worried. They are worried their access to patients will be limited because as we know, a lot of these panels that are under Obamacare Exchanges dont include certain specialists, certain hospitals. They are uncertain whether they will be paid on time. Theres a 90 day grace period for people who stop paying their premiums. They can still access hospitals and physicians. A great deal of uncertainty. We have a conversation with dr. Harris of maryland. Bill white joins us from houston. The former mayor of houston. Adam parker with us from Morgan Stanley as well. Mayor white, if i look at this debate, to me it is the haves and havenots. You have some havenots in houston. What do republicans get wrong about the Affordable Care act debate . I will tell you, it is always arbitrary when you look at the fact that people have medicare at age 65 and they can have some of the best medical care in the world, but Somebody Just a few months before or a few months younger has the same condition and they can be condemned to death or bankruptcy. That was the problem of the system. Personally, i have a problem with the Affordable Care act. What is your problem with it . We are running immense deficits. Before you start expanding benefits, then we need to start paying for some of the benefits that we are ready have. Within this, dr. Harris, the idea of fiscal responsibility, the budget is improving, isnt it . We cannot hardly call hatchling dollar deficit and improvement half chilean dollar deficit and improvement. Weve had 10 billion in subsidies the first three months of signups, the first three months of the year. Were digging the hole deeper. That may be the case, but there is a poll from kaiser, dr. Harris, that shows the majority of the people polled say they are tired of folks in washington debating Affordable Care act. They want politicians to focus on other things, whether it is the budget deficit or something else. Are they wrong . The vast majority of americans dont want the in pollle care act after poll. They may want us to stop talking about it, but i think it is because they want us to repeal most of it. There are parts that are good, no question about it. There are a few parts that are good, but the restaurant current creates uncertainty. We know were going to get an increase in premiums in the vast majority of states on the exchanges. And the penalties will go up. Bill white, im just amazed by this, the Texas Public Policy Foundation calculate for an individual living in texas making 20,000, the minimum amount would have tospent 1000 a year. That is 5 of income. That is after the subsidy. How can we be this ineffective at putting something together cost wise . I will tell you what, it used to be 10,000 a year to get an individual premium. Take that out of a 20,000 year salary. We are doing a lousy job in this country to littering costeffective medical services. It is a systematic problem we have. And now were basing 75 million baby boomers, retiring, becoming eligible for medicare. Thank you so much. Go orioles. Adam parker with us as well. Caregroups vote, health straight to the moon. Do you link the great performance of the Health Care Sector with just this huge shear over the Affordable Care act . Thatm not sure it is quite simple. The stoxx were super cheap. They were discounting on the snow growth. The pipeline for research and development for biotech and pharma got complete rerated. You sell biotech and pharma stocks go up. The second half, medical distribution, just benefit from volume. More people getting signed up and going to the system, so hospitals and distributors i think the stoxx work because of the growth rate in the valuation they offer. And open parker is the ipo market adam parker is the ipo market a good sign of things to come whether it is keene digital or twitter ipo . Economyrically, the improved. You saw more m a. I think corporate, the managements have been a little more sober. An alltimerket as high. I think part of it is because we know were running a deficit physically and part we know we have a lot of accommodation monetarily. I think that is a good thing that could make the cycle last longer than people realize. Maybe he could go as long as 2020. Adam parker, thank you. The red sox we look at the red sox the mayor white will to do with us. I want to talk about his important new book. Last day of the quarter. I havent made a dime in my foreignexchange. Ruble is putinfriendly. Much more on bloomberg surveillance. The final day of the first quarter. Steve roach, next. Does ukraine rekindle ancient china russia did, say rekindle and chin china russia diplomacy . Rekindle ancient china russia diplomacy . Good morning, everyone. This is bloomberg surveillance. Is monday, march 31st. Joining me a scarlet fu and adam allson, windowdressing week. Our guest host for the hour, Stephen Roach, former chairman of Morgan Stanley asia. Also with us, bill white, author of americas fiscal constitution , the democrat from houston, texas. Time now for adam johnson. All right. Overnight, march inflation slows to weaker than the forecast. Investor production drops to. 3 , the steepest drop in eight months. This is ahead of aprils tax hike, intended to help reduce Government Debt. We have some weakness in the Economic Data around the world today. In the u. S. , the purchasing Managers Index is a big deal, as is what is coming out at 10 30. Remember Richard Fisher . Raisethe man who says rates, we have had too much money for too long. A big deal, at 10 30 we will break that for you when it happens. Finally, we want to point out that today is the deadline to for deadline to sign up the Affordable Care act. Also, major league baseball. The washington nationals, i know you think it should be . 40. First of all, they opened last night. It was actually last week. About march 31 . It is too early. Why do you think it should be april 10 . It makes sense. It is warmer. The league has gotten warmer. That bigger. That was before they had under armour. Yankeesstros and the faceoff tomorrow. In houston. What about company news . Another blow for gm in the ignition switch recall. Back in 2000 five a project manager cited costs associated with the plan. This all comes to us from occupants obtained by u. S. Congressional investigators. Merit mary barrow will be investigating tomorrow. Comcast, the cable giant is considering increasing stock buyback per stock buyback. Michael lewis says the u. S. Stock market is rigged. The bestselling author made the accusation on 60 minutes. The stock market is rigged. Globalt iconic market in capitalism is rigged. By whom . A combination of the stock exchanges, the big wall street banks, and highfrequency traders. He was emoting his new book. He will be joining us today. A Real Public Service for him to bring this up. It is confirming to have him come out with the things he has done, now getting a legitimate debate. Adam, you are the traitor, i would say that this is a more polarized. Hugely. Remember, this was supposed to be the fix. You use to have a system on the floor where you went to the specialist and he said that he created the bid ask spread. This was supposed to fix everything. A piece of paper, the biggest thing was to buy or sell correct on it. Likeuld go by raven, just game of thrones. It would go by raven to new york and land at the top. Some little guy would carry it down. Trading, first started 1988, went behind my years, fresh out or princeton. It would take four and a half minutes to get a report. What is the price . I dont know. Buy or sell . He really gets going. He criticizes those value investors. A lot of people follow him, leon cooper. Our twitter question, certainly relevant, do you believe the u. S. Stock market is rigged . This is a heated question, we want your heated response. Coming up this week, Michael Lewis himself, the author of a new book on highfrequency trading, will be here on wednesday and he will join us on thursday. Looking forward to that. I am going to talk about baseball. Opening day . Can the red sox repeat . What was the book about the oakland as . Moneyball . I am not a baseball guide to the extent that you are, but that i saw the movie and read the book and i could not put it down. Change. I dont care about brad pitt. I do. Ok. About stephene roach. He is here with us. [laughter] the chairman of Morgan Stanley has a new book that is not about the red sox. Unbalanced. That would be about the yankees. Steve, does geopolitics get in the way of our Economic Growth as we go to these imf spring meetings . Is there a dampening of growth because of what is going on . Not yet i think that geopolitics, if anything goes too far, it can certainly have an adverse impact. Worry more about frictions in asia, japan, the south china sea. We were just talking to adam about at Morgan Stanley the u. S. Doing well and being the locomotive. Is the United States the locomotive of the Global Economy . It is moving pretty slowly. Locomotives really pull the rest of the world. What do we have, three percent growth . The locomotive is still not going at normal speed. Relative to where we have been, we are doing a little bit better. Bill white joining us, the author of americas fiscal constitution. The economy, chugging along, but rather slowly, what does that mean for texas . Texas is doing a bit better, but we should not be surprised if you have very low growth in the working age workforce. We are not in the situation of some countries where we have a decline in the working age population, but you would expect lower growth because traditionally those two drivers of growth have been increases in productivity and in the working age population. Texas is doing pretty good. Thanks to energy. Is the most diverse city ethically in the United States. The fastestgrowing city in the United States. And you are in the american league. Yes. And those International Cities have hubs of growth with real expertise that are doing well. The litmus paper is not the dow. It might be the bond market. My morning must read, catherine mann. You may not know her name, a giant in International Economics and trade, the caribbean is where some foreign holders can be found. Do not get a test with china, japan, or russia. Move on and watch the many other things out there, steve this is like you wrote this. A china obsession in the United States just has to stop. We are too focused on china as the marginal buyer of paper. I dont know about that. We are a saving short economy. Toneed external funding provide finance for our budget deficits and our shortfall in personal savings. The chinese have been the biggest marginal buyer. They are going to start absorbing the savings. Have you seen that yet . Or is that a prediction . What if they are a current account surplus, the biggest measure of their external savings. Do you predict they will go to deficit . At some point in the next three years to five years it could shrink further. Who is going to fund us if we cannot rely on the chinese . This talks about the japanese going into deficit in the second quarter. The last time that we saw japanese increase in taxes, it killed their equity. I cannot even frame a double deficit issue. Cannot even get there. Understood. How is this for double deficit . There will be winners and losers coming up. Another bracket testing weekend. We are obviously talking about march madness. The final four are set. To giveconds left here the wildcats a win over michigan. Goodbye, wolverine. Yeah, right . All five of the wildcat starters are going to be in kentucky, meanwhile versus wisconsin. Steve roach likes that. Go badgers. And we have got florida versus connecticut as well. Final four . In the wisconsin is my only original pick that made it. All right. We will take a quick break and be right back. Good morning, everyone. Bloomberg surveillance. Our guest host is the former mayor of houston. A member of the Democratic Party and republican state, texas, his wonderful new book is out, americas fiscal constitution. All you have to know is not only does james mason and bill clinton like it, but they give it a rave is well. A fabulous book, what is your single message . Wax that we can balance the budget. Just whining, we can do it. For 90 of our history we have been able to balance the budget except where there were extraordinary emergencies and politicians refused to borrow money just to pay routine operating expenses. There has been a radical departure from historic policy since 2001. By the way, the politicians that did this, the elected officials managed to get reelected. Tax time here as well, fill out the taxes, send them in. You say that there is a limit to using income tax as a weapon of choice . I tell you what, the amount in the economy that consists of personal income is not 100 of gdp. Once you start getting over 40 in the effective march bracket, you start getting tax avoidance. Rely more heavily on the personal income tax than we ever have since 1917. I will editorialize and call your conservative democrat. Where are the scoop jacksons of the modern democratic arty . They are hard to find sometimes. Politics has become so polarized. Republicans vote for budgets where they spend more than available tax revenues and then they condemn the spending that they voted for. Democrats say that they are preserving spending, that it is being paid for on did Hillary Clinton win your taxes . Texas . No republicans in austin, i read that. But can she begin to compete in texas . Wax she will. Her husband did well in texas. Be a competitive state. We are a forwardlooking statement. Like me, we are a lot more fiscally conservative than some parts of the nation. Most people in the United States of america want to see us balance our budget again. Coming up, conversation on highfrequency trading and a rate stock market. Good morning, everyone. With me, scarlet fu, adam johnson. With me this hour, Stephen Roach. He has a wonderful new book on china. Although with us, bill white. Mr. White is the former mayor of houston. Adam johnson has our top headlines this morning. Going overseas first. The Prime Minister of turkey vows to weed out traders. He said that a win in local elections gives him a mandate to go after people spreading allegations of graft and his administration. His party won 46 of the vote, up from five years ago, but less than half the popular vote is considered a mandate. Politics alive and well across borders. The socialist party lost control of cities across the country as voters backed more conservative politicians. Nationwide voting comes as france struggles with nationwide jobless claims and the country that has barely barely grown in the past five years. Finally, bringing it home, mcdonalds, offering her a coffee during the breakfast hours in the next two weeks just two weeks after taco bell rolled out its stunning new breakfast the muchhyped waffle tocco. I havent had that yet. It is up your alley. I had a few bites. But it is weird, it is not a tortilla, it is a waffle that they just fold up. You would think that they could have spanned wide ages there, 16 to 19. Wax the male persuasion, no less. Exactly. Highfrequency trading, a bit on the defensive this morning, Michael Lewis claiming that the u. S. Stock market is rigged. What does the industry say in response . , currently ceo of trade financial, here with us. Steve, give us your thoughts on what Michael Lewis has said. Highfrequency trading certainly makes up a bigger part of the stock market than it did a few years ago. I dont think the market is rigged. Before,nk, as i stated you have an issue with phantom orders. Things he brings up in the book. I think that is a problem. You go to execute an order and it is not there anymore. Who gets victimized in that situation . We are pointing a lot of fingers and saying retail, but most using the retail platform are sending in order to a market maker using a highfrequency behind that. They are protected. Those orders are protected. This is not about the little guy . No. Who is it about . The institution. He wants to sell a book, he goes on tv saying it is about the little cai little guy. You saying he is wrong . Steve roach likes the quality of the chinese execution in beijing. Highfrequency trading . Journalisticst sensationalism. Flash traders are bit players compared to the biggest rigor of the fed. The idea that the market is rigged makes it sound like some computer is in a backroom conniving to squeeze this guy or that guy. Remember quoting, eight, half s . Ope i remember seeing you on the floor. I was this tall. But within that, arthur levin who has been there forever, he is like you, ambivalent as to how important this is. What did they miss about the heat of this debate . There is no doubt, talking about 8, 16, you had spreads that were rider and spreads that were wider. The cost to retail customers was huge. Paying 150 for a 100 share order. Now you pay less than 10. And then you had to wrap your. Ead around steeped explain to me why the system is not rigged. The system is not rigged. Ecause i think you do need hft meaning highfrequency traders for liquidity. Right. You have seen the flash crash. You have seen the volume tapering off. What about the assertion that Michael Lewis makes in his book regarding Companies Providing access to exchanges three milliseconds faster. That sounds like a race to me. There has always been met with automated electronic trading. We have talked about that for years. Look, this is about margins on transactions, not price levels. The word rigged makes it sound like someone is inflating or deflating the overall price level. That is just incorrect. Steve, when you look at this and you look at the assertions anraid, you feel as investor, as a retired from Morgan Stanley working for working fulltime that you can go into the market and get full price . If i dont get down to the last i dont care. Do they teach scientific notation at yale . I dont think so. What is the number one thing i need to know, steve . That they are getting a fair execution every time they execute their order. Steve, thank you so much. , joining bloomberg television, look for him wednesday on market makers. Arly looking forward to it that conversation continues with your feedback. Tweet us, do you agree with Michael Lewis, that the u. S. Stock market is rigged . We should mention that bill obrien has said that he good morning, everyone. Bloomberg surveillance, in h, it ison of noa snowing. March 31, april fools. Opening day is april fools. What is that about . Maybe a photo from 1940 or something. Look at that. Brown snow. Lets get you some company news right now. Criticize for traveling to moscow, meeting with the russian president last week, the meaning was criticized by angela, who said that German Companies should not sellout European Values to protect business with russia. In the meantime, an investigation into currency rate fixing increases, regulators looking at eight banks, including ubs, and citigroup. The antitrust Commission Says that more banks may have been involved in possible pricefixing. A big weekend for viacom. Just like you talked about. H took the Top Box Office spot over the weekend. The second place went to divergent. Company news. S all right, the 2014 verano. The verano. You want one, i want one. The problem with mary barra is that we dont want 1 that is a buick. Maybe that is the underlying problem that General Motors is having. Tesla, on the other hand, cant make them fast enough. Television,mberg just back from singapore, they are the autos. Betty, how was your trip to singapore . Let me throw up the photo. People think i am obsessed with tesla . Matt . Yes. Downmanaged to hunt them in hong kong. That is a hot looking car. It was at the conference we were at. Tona and hong kong are going be the big drivers for tesla. G. M. , matt miller, there is that big buick sign in shanghai. Bring that back domestically. Mary barra, is she selling cars . They are selling cars, but they will have a real problem with this recall issue coming up. Look, if you have a car company that is proven to have found a default that is the kind of thing that could kill a driver and says it is too costly to fix . Not a car company that is ancient history. She was in a serious management role at the time. Everyone came in, including the government, as a majority stakeholder. It speaks the process, right . If that is how management views decisions . I like that. Within your reporting, is the process different at gm and ford . Absolutely. It is a very different Management Structure and management culture. General motors has a history. Remember ralph nader . And then they had problems how does he know about ralph nader and the corvair . He is too young. Betty, the zeitgeist over the weekend when you were flying the surveillance jet back from singapore, the idea that elon musk is using every loophole under mankind. Within your reporting, was he successful because the american taxpayer help him out . Like that is generally the idea, getting by on government subsidies, but he is beat he is building beautiful cars that people in the upper echelons of society are buying. Growing competitors, he is going against the likes of general whens and toyota and ford it comes to electric cars. The thing he is trying to do is build these standalone stores, right . He has been fighting with states throughout the country to get his stores approved. Oni went to his store saturday morning. Hang on, let me get to the news. Over the weekend, Governor Cuomo in new york and tesla agreed to allow his stores to remain independent. I went to a tesla store on saturday morning. Let me just say, i could have been going 120 Miles Per Hour. It is an amazing car. The actual purchase experience is also really great. It is luxurious. The whole thing, start to finish. He is saying look, i want to be able to bypass the dealer. Did you drive that car 120 Miles Per Hour . Surveillance exclusive, matt miller, driving a tesla over 100 Miles Per Hour this weekend. You heard it first. Matt miller, betty liu, later this morning on bloomberg television. Thanks for joining us. We have a data check this morning, including a chicago purchasing manager coming up. I had of that, futures are higher by six points. Yield was elevated on monday. Good morning, everyone. Look for all of our interviews on digital media. Thanks for watching them on bloomberg media. I am tom keene. With me is scarlet fu and adam johnson. We are honored to bring you Stephen Roach. His new book, unbalanced, will talk about china in a bit. Right now, someone interesting from chicago. The big theme for today, it was the buzz on the buzz on twitter last night, highfrequency trading ripping off americans. Another bestselling author argues that american capitalism is dying and we need to save it. The ouija gonzalez from the Chicago School of business joins us by phone. Fold in what Michael Lewis is saying about share volume and the rigged u. S. Stock stock market. I think that the things are very much related in the sense that what often emerges from the market comes not from the society at large, but from a few traders. I am not an expert, but what i understand is that in the dimension in which we compete, one of them is price, the other is timing. The competition of price benefits everyone, the competition of price does not. It can create an unfair advantage. We need to look at that to make sureorder that the market works for everybody and not just for a few large traders. That sense of unfair advantage is the driving force behind your book. What is the difference between promarket and probusiness . Do policy makers understand the distinction . Thehe business distinction is simple. Every businessman is promarket once he enters, but once he enters he wants to make more profit. This is all natural and good as long as this person does not have the political power to make those points from a political point of view. Being promarket means being in favor of markets when you are in or out of the market. That thehink politicians today, neither the left nor the right, understand this difference. I think it is quite important to bring it about. Is different between the america of today and the america after world war ii, where we were presumably doing it right . Are twonk that there big differences. One has nothing to do with us but is important, america after world war ii was in the unique position in the world. As a result of that unique rant thatit was a allowed people to go to college and buy a house. Today the middle class in america is in competition with the rest of the world and is not particularly better equipped, which creates attention. It is more difficult to support the market, politically. The second difference is that i thereafter world war ii was skepticism over business that helps to keep the political power of business at bay. We went from lobbying to get the government off your back, something i love, to lobbying to get the government in your pocket, something i hate. I think this is the problem. In the time we have got left, quickly here, is the United States the locomotive of the Global Economy . I think they are in this moment. Wax ok, luigi, thank you so much. Reassuring us of the capitalism for the people. This is a terrific, short read. Cannot say enough about what you can learn here about the respective. Playg up, the agenda ball, opening day for opening opening day for baseball. Sure, show yankees video. Sure. This is bloomberg surveillance. Good morning. Good morning, everyone. With me this morning, scarlet fu and adam johnson. Said that russia must pull back its troops from the border of ukraine if progress is to be made in ending the crisis in the region. Both men agreed to a diplomatic solution. I should say that both men agree a diplomatic solution is necessary to deescalate the crisis. Additional meetings havent planned between them. The euro, its lowest level in four years. Consumer prices rose in march slightly lower than forecast. Inflation of the euro has been below one percent for the last six months. The central bank is forecasting an inflation rate of one percent this year. In sports . Play ball. The padres used in eighth inning 31, ao top the dodgers full slate of games is scheduled for today, including the one from boston. In boston . Ey called some kind of color of socks. Socks . Pink the defending champs, those are your headlines, tom. I am nervous. Why . The first time that they had won the world series, i had to get therapy. Such a tortured childhood of failure. I did not believe it. Well, they made good and it has been no looking back ever since. Talking about no looking back, ae turkish Prime Minister one landslide victory after months of turmoil over allegations against his government. Joining us with the latest, elliott gotkine. 46 , that is the majority of the popular vote . What are people telling you . Is safe to say that when one party has 46 of the vote and everyone else got the rest of the vote, you can get the apression that this is divided country here. Divided between east and west, secular and religious, the Prime Minister and his party. And thatt believed him he was doing the right thing by blocking twitter and youtube, the conduits for the corruption and of those who did. Ot while we are on the subject, we want to show you that this is actually their official site. I am on a turkish wifi internet connection. Go onnot allowing me to to twitter. If i simply go on to one of the aggregators, there you go, i have full access. Elliott gotkine, thank you for joining us. Do you agree with Michael Lewis, that the u. S. Stock market is rigged . Send us a tweet. Good morning. Host for the hour, Stephen Roach, professor from yale university. We have got some breaking news just coming in the last couple of minutes. Johnson johnson accepting a 4 billion offer from carlisle, accepting a 4 billion offer. In there they trading premarket . Only 600 shares, the minimus, up a little bit. Roll is nice to see them that out carlisle. Especially towards the middle of the year. Stephen roach is with us. He got off the plane last night and made it straight to set. I would do anything for you, tom. Talk about what you saw there. All of the spheres, discussions of a hard landing for china. Is that what you saw when you were there russian mark not at all. In the west we are onedimensional in the way that we look at china. China is fixated on reform. That is objective number one. And it is a big deal. Defined the reform. Reform is basically changing the growth model from 30 years of a producer focused on manufacturing and exports to now focusing on services and internal private consumption and letting the markets play a more decisive role errico introducing a whole new process of governance in the legal system to go along with it. This is a massive, complex transition. There will be consequences for growth that are not the primary concern. Is there an irony here . The rest of the world has long urged china to make this change to its growth model. Now that they are doing so you have these skeptics and doubters out there. It is pretty hypocritical out there, actually. We are really hooked on the old china, producing cheap goods for our consumers and lending us cheap capital because we do not save at home. Now that they are going the other way, we are trying to push back. China . Is unbalanced in if they are making this big move . Theres a whole crew out there that does not agree. What is the most unbalanced thing about aging . Macro structure is hugely skewed towards exports in investment. Private consumption, 70 in the u. S. , is half of that in china. They saved too much, they spend too little. Wax are you observing changes . Number of daughters you are you observing changes . Changes asake as few possible. The changes i see right now serve the underbelly of the consumer, now the largest sector of the economy. In some ways the economy has grown more slowly. When you look at the growth rate , it generates a lot more jobs because of services, not capital intensive labor saving. You have talked about the growing pains. There has been some corporate default. There is a tendency to conflate the debt problems with what occurred in the u. S. And europe before pricing. Why is that the wrong approach . Economylew up our because we sucked consumers into borrowing against the property bubble. Consumers without savings and income to spend. The bulk of private debt in china is going to companies that have a huge cushion of domestic to guard against the issue. At the heart of the market what do you see . Different capital controls loosening up. What is also curious to me, and maybe you can weigh in here, as you pointed out the government is trying to loosen things up. Two companies have effectively defaulted on bonds in the last month. Are we going to see more of that . These are the first defaults in the history of modern china. What is our historic default rate in this country . 1. 7 for junk bonds. Bonds . Verall corporate this is the transition, right . They are going to theyre bonds are going to default in a normal society. The work you have done in. Lous, what the west gets wrong is the china message. Stay with the group state what the glue crew gets wrong about china. The glue crew, whether it is property bubbles the defaults. Local Government Debt is looking at china through the western lens. They have always been doing that. China is a transitional economy, centrally planned, moving to more of a more marketbased economy. Rebalancing from the producer to the consumer. What the west does not get is the way in which the economy changes during this critical transition. Within that eastern prism is what is going on in taiwan. Absolutely. You have protesters numbering in the hundreds of thousands. What is your read on that . Protesting against their governments trade deal with china. Antichina nationalism that has very little to do with the economics of cross straits integration. It ignores reality . Fairly so. It is in the interest of taiwan to broaden their markets. The country has actually been eroding in terms of economics in the last 10 years. Could this turn into a ukraine type situation . I have no idea. I doubt it. This is critical, though. Within the great work coming out of yale, and you have picked up so much of that work from professor spence, do you just assume that taiwan will be 10, 20, 50 china years out . Integration, i think, yes. The chinese and the taiwanese recognize that they are two systems as part of one whole. There is a new burgeoning russia chinese relationship. It is not stalin. It is not khrushchev. Can you envision how Vladimir Putin will work with the new leadership in china . It will be tough. There is a lot of historical baggage that has driven a wedge between china and the former soviet union. There are certainly some ofategic reasons, in terms energy resources, for them to begin to reconnect. But china is not welcoming them with a warm embrace to the territorial ambition of Vladimir Putin. Would you please state the microeconomics of the Wisconsin Badgers . It is time. It is time. You have been waiting for the red sox, we have been waiting for the badgers. Steve roach comment on his Wisconsin Badgers. Theyre there. What about the pollution . . Id you have to wear a facemask the pollution was terrific. It got a little bit better over the weekend. What are they going to do about this . What is the action plan for china to begin to fix this . They are focused on it. Is a matter of Huge National angst. The Chinese People are visibly upset. The government is definitely listening. Look, you dont turn it around overnight. Rew up, excuse me kim excuse me, in los angeles in the 1960s. It was terrible. It took 20 years. I dont know if itll take that long in china. By shifting to a services economy, by the way, far less energy, carbon, and pollution intensive, that was an important step in the right direction. The problem is that in that part arehina, those problems horrific. They wont go away. Unbalanced, grade up. Speaking of, our twitter question of the day has to do with being unbalanced. The first answer to our question of the day i dont agree with that. The next answer by the way, trade with limits, not market orders. Thank you. Last answer, there is some anger there. Again, mr. Lewis, wednesday and thursday. Steve, thank you so much. We appreciate the effort. In thentinue with loop. Next. Good morning. It is monday, march 31. You are watching in the loop. I am betty liu. Chicago fed president Charles Evans will be hosting fed chair janet yellen back home in the windy city today. We will get a preview with one of his longtime colleagues. Tonight is a deadline for americans to signup finally for obama care. About 6 Million People have enrolled. Take a look at the top headlines this morning. Also, china passes Biggest Online retailer making a big that offline. Aba investing coats retail group that owns a Shopping Mall in china. It will use the outlets to develop an online to ol