Transcripts For BLOOMBERG Bloomberg Surveillance 20150316

Senators who sent a controversial letter to irans leader. What i do know is this letter was absolutely calculated directly to interfere with these negotiations p. It specifically inserts itself correctly directly to the lead are of the country saying dont negotiate with these guys because were going to change this. Olivia it has been predicted he will make a bad deal with iran. Crude fell today to its lowest price in six years. Trading below 4 a barrel before rebounding slightly earlier this morning. There is speculation the record oil glut in the u. S. May start to strain the countrys Storage Capacity. And the man arrested in the shooting of two Police Officers in ferguson, missouri, is said to have admitted to pulling the trigger but Authorities Say Jeffrey Williams told him he was shooting at someone else and not at the police. A Prosecutor Says they arent sure they buy that part of the story. The officers were wounded at a protest in ferguson last week. A shocking admission to the heir in new york. Last night a hbo documentary about robert dursst appears to confess to murders whispering off camera he killed them all. Hes been subject to intrigue for years because of the unrevolved disappearance of his wife and killing after friend. Yesterday he was arrested in louisiana for murder after authorities in los angeles issued a warrant. In israel, Prime Minister Benjamin Netanyahu is truge to pull his Reelection Campaign out of the fire. Netanyahus party is running second in the polls going into the vote and is argued to make a political rival of israels finance minister to keep the supporters on his side. Whichever party wins will still have to form a coalition government. And it is time to fill out your brackets. It is march madness. Undefeated kentucky got the overall number one seed in the ncaa announced pairings for the mens basketball tournament. Duke villanova and wisconsin joined the wildcats as the other top seed in the 68team field. The championship game is april 6 in indianapolis. Those are your top headlines. Tom . Tom kentucky this year, there they are dominant as always. I read a wonderful article on the defensive nature of the game the game has devolved on to boredom and a raging debate to change the shot clock to make it more exciting. Like the whole thing is in need of an adrenaline dose and hope kentucky gives them the adreen lynn dose. Olivia you painting your face red . Tom im not into it. Its so much fun at bloomberg. We have 70,000 employees, folks, and some of them really get into this. Olivia i have a fun fact for you from the American Gaming Association and said this year americans will fill out more than 70 myion brackets, tom. More brackets than ballots were cast for president obama. Tom very cool. Anchor well talk about that very subject later today, tom. Tom gambling. Well do that later. We look at equities, bonds, currencies what a friday late and what a weekend. Nymex crude up, 44. 5 now, down to a solid. 7 . It has a real weakness and will be a theme throughout the show. The europeo 10537. The bik 16. 00. Bent crude is the headline, more than american oil in at under 55 a barrel and theres the spread of about 10 almost exactly and gold was over 1160. A little soggy in the last hour. Lets look at the euro and go to the bloomberg terminal. This is the real euro 1999ish synthetic euro Deutsche Mark, a pretend euro. Weakness here weakness hear, to. 82 and up we go. Theres a brutal move and this is what Deutsche Bank and Goldman Sachs over the last two weeks as they try to find where were going. 90,. 80. Anchor this is where everybody is looking this is parity and one to one and shouldnt in theory mean anything but these psychological barriers have political meaning. Pair sit not a finance problem but a politics problem for europe. Tom i agree with that. Whats interesting is here is the regression over 20 years and were now one standard deviation and can you see how unusual two standard deviation is and thats where Goldman Sachs is. Olivia last time we were at parity is two standard deviations away. They see parity within six months and expecting them to drop patience and provide it lower near term for the euro. Tom part of it is rationalizing the politics. First on oil to be direct, this was predicted, whether 10 or 20 or Goldman Sachsed 39 a barrel, many have suggested oil can only clear a massive glut of supply by price and price means under 40 a barrel. Oil touches sixyear lows. One of them following this is a chief analyst at energy as pictures and joins us by telephone. What does sub 40 oil mean for opec . Guest sub 40 oil doesnt make the situation easier for opec. There are a lot of countries outside the g. C. E. Like libya, iraq iran and are highly cash constraint and even 50 makes it extremely difficult for them to raise revenues. Tom oil is a tangible asset. When we talk about finding a price, where supply goes away to find some form of equilibrium, how do you do that with a thing . Its not the dow or s p futures or pieces of paper, its a thing. Whats different with oil . Guest thats a great question. I think what makes it harder to do those balances is expectations because if you take a step back and yes, we have been oversupplied in the oil market the last six months but put it in the context of the global market, weve been oversupplied by around a Million Barrels per day. Were in a 92 million barrel per day market, thats about a percent, thats not that much. You get one huge outage in the middle east and all that oil supply will be gone. Its about the expectation that because opec arent cutting out goods is why prices need to fall to the point where nonopec production needs to react and takes time. Building in those expectations makes it even harder to do price predictions. Olivia those Storage Containers are full and people are moving oil overseas to keep it in reserve. At what price do we clear w. T. I. Supply . Guest i dont disagree with that actually, i dont think cushioning cushioning has a Storage Capacity of 84 Million Barrels and cushing is above 50 Million Barrels and need space fored blending so lets call it 70. You have enough case. Its due to expectations its going to fill up. I will remind you the same expectations were there about the global oil market, that we were going to run out of Storage Space. Guess what . It didnt happen because demand picked up so much. We put out a note last week as well as the week before that said we see spec prices coming off because this is the weekest period for oil and will see it happening in the next few weeks but dont think cushing will fill up and there will nobody Storage Space because in the u. S. , refineries are actually coming out of maintenance and you will see refineries pick up. Tom thank so you much amrita sen on oil. This will be the theme throughout the week as we hit 43 again over the weekend. Oil, the euro and markets are wrapped up in a geopolitical stew. Andrew course provided us with the dynamics of politics, oil and the future of opec producers and get an update on saudi arabia with oil and the new lows. Lets go back to something you and everybody else has studied in International Relations and that was ugly lessons from 1986. What are the ugly lessons we learn now as we ever descend in oil . Guest i think whats going on in europe right now thats important is that there is an increase in terms of politics, theres an increase of instability with russia. Putin is saying the 40,000 troops are now on alert in russia. Tom does that filter in with what we saw with europe and oil over the weekend . Guest i think its a geopolitical effect on those things. Tom this is critical. Ian bremer i thought was great on Eurasia Group over the weekend. I saw a lot of b. S. Gossip on Vladimir Putin over the weekend. Lets get away from the gossip and give us what a pro like you assumes when a guy disappears for what is it, 15 days . Guest maybe hes going on vacation. Well let you ride horses and shoot tigers and go swimming. Tom if this were president obama, its unimaginable. Guest theres questions about a coup or his health. Olivia were expecting him to show up with the president of kurdistan. Russia head lead whers something was wrong and there was a history to this. Causing instability. This is bad for putin and the fact hes doing this. Hes causing questions about his leadership the fact hes been gone so long. Its not good for him. Something is going on. Somethings wrong there. Anchor theres a psychological effect on both sides in what is the iron curtain and there was a great piece over the weekend about polish paramilitary groups starting to train on their own and the polish military trying to figure out how you bring them into the fold and the problem, anders, im imagining once people become militarized, its very difficult to become demilitarized . Guest people in the baltics and poland are starting to look at putin as an enemy and will be hard to change for him. Olivia i was struck by today the annexation on crimea or the vote on succession. I was reading on the National State news channel, the name of this documentary about the annexation of crimea is road to the motherland. Is putin going to get a land bridge . Guest i think hes looking to do that. Hes softening up villages between the russian border and mripol, a port state and would give this new republic more access to the sea which is important for the viability in the future. Yeah, i think he would like to take maripol and youll see continued sanctions if he does. Olivia already. With us for the hour. Coming up, bloomberg surveillance returns and well return to the biotech firm and there is hope for those that successfuler from high cholesterol and a new group of drug coos lower your risk for heart attacks. Well discuss. Bloomberg surveillance streaming on your tablet and phone. Good morning. Tom good morning everyone, bloomberg surveillance. Futures up nine this morning oils 44. 60 the euro 105. 43. Lets get to our top headlines with brendan greeley. Brendan they wont accept a deal with iran. John kerry hints the u. S. Would be willing to walk away from talks. Talks are aimed at stopping iran from Building Nuclear weapons. The man charged with shooting two Police Officers in missouri admit to pulling the trigger but police say Jeffrey Williams was shooting at someone else, not police. The officers were wounded last week during a protest. Crossing the term fall this morning, an intense manhunt is underway for a pair of suspects after two Police Officers are shot in South Los Angeles and in an unmarked car and wearing plainclothes when attacked. Several city blocks were closed in the investigation. The u. S. Is changing its deployment plan in afghanistan. A white house official says more troops will be kept there into next year a concession to military leader. The plan was to cut troops to 5,500 by the end of the year. Roads are swamped and roads like canals in parts of ohio and kentucky. Rain and melting snow raised the ohio river to the highest decade in two decades. Cincinnati is hardest hit and analysts say the river will stay at flood stage the rest of this week. Two gay groups make history in america, second oldest st. Patricks day parade matched for the first time today in south boston and in protest of some Roman Catholic groups dropped out and the fight to keep gays out of the parade went back to the Supreme Court and dates back to 1901. Olivia theres a new class of cholesterol drugs that could cut heart risks in fact, ptks9 prohibitors and can cut socalled bad cholesterol levels up to 60 . These early test results show they could be half as risky as statins which are the leading treatments. Remgen and others are leading the race to get these to market. We have a bioanalyst on set now. Obviously the Patient Population here is potentially enormous, over one in four americans over the age of 45 is actually on a statin. Does make mean one of these drugs will be the new lipitor . Guest exactly. This is the excitement after coming out with these drugs. Because its a high Patient Population in the u. S. We know Heart Disease is one of the largest killers in the u. S. Even if you restrict these drugs to the severe patients which is where the Clinical Trials are going after, it is a big population. They are calling for the drugs to hit blockbuster status within two years of launching in the market. Not as sexy as the hepatitis c sales weve seen but still up, its a big market. Olivia what are we talking about in terms of the forecast what is the peak revenue for amgen . Guest its hard to say just yet because to hit the big sweet spot well have to see outcomes trials and thats whats coming in 2017, we should see the responses to that. Brendan what is being discussed in the new england journal of medicine, thats like being on the Rolling Stone . Guest you really make it when you get it on the new england journal of medicine. This is a dogfight between two companies and theyre trying to one up each other and have been doing this throughout the development of these drugs. Whats interesting is these drugs are very, very comparable very high efficacy and very good safety and are trying to find other ways to differentiate themselves. Olivia wont it destroy their Pricing Power . Guest we heard people from c. V. S. And others that theyll do what they did like with the hepatitis c drugs, pitting one against the other. Olivia however, theyre going to 80,000, the drugs. Guest exactly. Theyll force them to pay a gross number. Even though you have a high list price, a rebate will be kicked back to them. Olivia will it be amgens new number one drug. Guest wait until the fat lady sings and the drug gets to the market. Olivia thanks for watching. Watch his space. Tom interesting to see if its a true blockbuster drug. In our next hour, john shaft of the royal bank of canada is out with a new book and will be one of our themes throughout bloomberg, surveillance, a force of good john taft in the 7 00 hour on radio and television. Good morning. Tom good morning, everyone. Were watching oil near record lows. Brendan greeley has the news. Brendan just there for a week, for a wedding. I was struck. Everybody talked about the gruppings scandal. Petrobas is no longer trusted for what should be a National Champion and is one of the Largest Energy companies in the world. That is a disaster. Tom, what its really a disaster if is one of the most trusted institutions in the country and we dont have anything comparable in the u. S. And as petrabras goes, so does dilma. Tom in your expertise in brazil, what has changed since we were last focused on this. Brendan the unemployment rate. The unemployment rate. People there talk in terms of two terms. They say her first term was fine and the second term not so good. Everything she failed to do in her first term has come home to roost. She didnt address corruption at all that sucks money out of the system of brazil and didnt talk about the cost of doing business in brazil and now people are actually starting to lose jobs, both at petrobras which suffered in terms of International Contracts but also in other parts of the economy. Tom she won, right . Brendan she won. Olivia remind us who her base is. Its not to those shes been handing subsidies to. Brendan she inherited her job from lula, who was a head of the Workers Party and did an Incredible Program where he paid money directly to families in order to keep their kids in school. It was very successful and seen as a model of lifting people out of poverty and in fact did that. She continued to do that but didnt take on any new challenges and i would say corruption is the biggest one so she is not directly implicated but many members of her own party including the heads of both members of both houses of congress there. Theyre being investigated for corruption in the Petrobras Scandal now. Tom what was the one thing you learned being on the road to brazil. Its one thing you go to the grand hyatt or ritz carlton. Brendan, youre in the trenches of brazil. Olivia he learned about a minivan. Brendan i had four children with me, what a minivan in brazil is not what a minivan here is in brazil. A what hear is drought, in the area around the airport, theyre out of water. Tom out of water. Brendan one day a week theres no water whatsoever where i was two hours outside. Water is the only thing they talk about. Olivia although the helps opened when you arrived conveniently for the greeley family and happy to have you back. Coming up, the Iran Nuclear Talks resume today and well head to tehran to our reporter to see if a deal will be reached. This is bloomberg surveillance streaming on your tablet and phone and bloomberg. Com. Be back in two. Tom good morning. It bloomberg surveillance. We will have much on the Federal Reserve throughout the week. Olivia talks between the u. S. And iran are underway in switzerland over the nuclear program. John kerry meeting with the Iranian Foreign minister. Important gaps remain. He is warning that the clock is ticking for a deadline. John kerry had a shop words for that letter of the letter. I am not going to apologize for an action that has been in the senate for 60 days. Olivia he was worth referring to tom cotton. The letter warned that congress could overturn any idea made by president obama. The prices oil is starting this week like last week, heading down. It is below 44 a barrel. That is a six year low. Oil lost 10 last week. A 20 euros man is in custody for the shooting of those two Police Officers in ferguson. Jeffrey williams admits he was the shooter, but he told police he was involved in a dispute that had nothing to do with the officers. He may have had a dispute with other individuals or felt some dispute. We dont know if we completely by that part of it. It is possible he was firing at some other people. It still assault in the first degree. Olivia the officers were shot at a demonstration outside the police station. Protesters were demanding changes after a report said the government routinely violated black civil rights. Brendan the leader of china will reduce the role of government in the economy. He will protect job creation if the economy slows down too much. The move would not be pleasant but they have more tools. China is trying to wean the Company Country off exports. It was the snowiest winter ever in boston. Through last night, 109 inches had a fallen, most of that in the last week of january. Most of it fell in february. The old record was set 19 years ago. That is a record tom can no longer talk about. Cinderella was the fairest of them all. It took in 70 million. There was a short based on frozen that was showing with screenings. Those are your top headlines. Tom i cant say enough about it. Kenneth branigan the ball out of the park. Its british. Its understated. Every second of it is restrained. There is no lecturing, there is no teaching or life lessons did Kenneth Brenna directed this. He permeates the film. The one thing that surprised me was rob stark from game of thrones or go. The chemistry is fabulous. Kate blanchette is great. Olivia we had the shoes, the actual glass slippers. Tom i cant say enough about this. I wish hollywood would figure out that this is what people want. The kids all clapped at the end. Hipsters were in the audience. The costuming is stunning. Its a great movie. Brendan olivia i am looking forward to it. Tom billy sings the song. Olivia that doesnt hold a candle to let it go. More on this later. The Nuclear Talks are resuming. John kerry is meeting in switzerland in an effort to strike a deal for a preliminary deadline. This time its the unusual open letter overshadowing the talks. Tom cotton warned that a new president would scrap anything obama signs. What we did was send a clear message to a dictatorial regime. We did not coddle the dictators. We told them that the American People will not accept a deal that puts iran on the path to a nuclear weapon. Olivia 47 senators signed the letter. We are going to head out to iran where our colleague is standing by. He is joining us the a skype. Senator con things he has sent a clear message. How has it been received . Guest i think the government was critical of the letter. They by and large have ridiculed it quite widely. The speaker of the Parliament Last week he called it ridiculous. Other officials have called it boring, repetitive. A lot of comments are a reflection of their reaction to Benjamin Netanyahus speech to congress. There was a letter in response to tom cottons letter. There was no legal value. It was an interesting letter. Its a good letter as a diplomatic rebuttal. It is a point by point this missile of everything that cotton had in his letter. Brendan we have him in the studio. He has a question. Guest its a statement. I think the letter is decent and that the administration has a responsibility to get the advice and consent of the senate for any kind of a treaty. The administration is way beyond the public opinion. 84 of americans do not agree with the glide path to a nuclear bomb to iran. Olivia what how popular is a nuclear deal in iran . Guest its very high. Guest its a good deal for iran. Guest i am not here to make the case for iran. I am just a reporter and i am telling you what i see and hear. This is what i hear from officials. Its incredibly important for the iranian economy. The people want a normalization. They want a reduction in hostilities tween iran and the United States. The public wants that. Things like the length of the deal, 10 years or 15 years or seven years these things are currently the major sticking points in the talks. Guest there is no verification of this deal. We cant inspect all of the different facilities that they have. How will we make a deal if we cant verify it . Guest look, i dont know what the organization does. I dont know what the atomic association does. Olivia we are not going to make you debate the merits of the deal. There are reports that the ayatollah is on deaths door. Should we be worried that whoever succeeds him will be more conservative . Guest those questions are very sensitive. There are always rumors about the supreme leaders health. All heads of state are subject to these rumors. He did have an operation last year which was successful. There were rumors last week coming out last week. He has been a photographed in public. There has been no statement on that kind of thing. As far as the talks are concerned, we should focus on what is happening in switzerland and whats going to happen in the following week. Olivia we will have to have you on to have you talk about that. Brendan we are going to hit that later on in the hour. Will the ukrainian economy recover from russia . That is our single best chart. We are streaming on your tablet, your phone, and on bloomberg. Com. Tom good morning. Bloomberg surveillance. Brendan greeley is back with the single best chart. Brendan it has been a year since the cremeans voted to secede. They have been destabilizing ukraine. The countrys economy, that is the subject of our single best chart. This is what we are looking at. This is investment both public and private. It cratered last year. This is data from the imf. Those numbers according to the imfs predictions get better, but not much better. We are looking all the way out to 2020. Private investment does not recover. There is not enough money in the public purse to make up for that. We were just in ukraine. I was struck by the retail numbers. They are way down. They are bad everywhere in the country. Guest i was in the east where there was fighting. We have had panic buying. The real story that was revealed a customer asks which of the bears are selling best. The shopkeeper looked at him like he didnt know what he was talking about. They hadnt sold anything today. The Economic Activity has fallen off a cliff. Brendan the imf demanded that ukraine make changes to its economy. That is going to be bad as well in the short term. They assume that nothing is going to get worse. Guest i think its unfortunate that the imf asked for conditionality in the middle of a war. I think its politically the wrong thing to do. It sends the wrong message to the ukrainian people. We need to be supporting the people and not demanding conditions from them. Olivia do the people believe that the peaceful hold . Guest no, they dont. I did not find anybody who thought the ceasefire would hold. It depends on who you listen to. The separatists say it has been violated 8000 times by the ukrainians. Neither of us knows. Olivia excellent reporting from ryan. Everybody should check out those features on his experience in ukraine. Olivia two planes clipped wings during a right to session of an air show. All four pilots were ejected and parachuted to safety. I know we are showing a map, but we do have a photo coming up. Tom lets move to number two. Olivia i found this yesterday on instagram. She received a cat scratch. Tom is this a drunk tweet . Olivia thanks a lot. Its a legitimate question. Taylor swift posted this on instagram. She wrote, great work meredith. Brendan meredith is the cat. Do we have independent verification that those are her legs . Olivia it was on her instagram. I thought it was funny. In illinois, the Chicago River was dyed green ahead of the st. Patricks day. Thousands celebrated over the weekend. The coloring process took five hours. 40 pounds of vegetable diet was used. Brendan this might be a moment for me to tease ahead to our groundbreaking coverage of Irish Whiskey tomorrow. Olivia brendan will be joining us with a hangover and an indepth look at the Irish Whiskey market in america. Brendan i am very excited. Tom tomorrow is st. Patricks day in new york. The parade is fabulous. Coming up we have an important book. Its going to be a lot of fun in our next hour. Stay with us. Tom good morning. It is a fed week. Lets get to the top headway desk headlines. Olivia the u. S. Will walk away from a table if it does not get a verifiable deal done with iran. The u. S. Will hold firm for a strong agreement. John kerry his in switzerland for more negotiations. The talks are aimed at stopping iran from Building Nuclear weapons. Crude fell to its lowest price in six years. It is trading below 44 a barrel. The glut may start to strain americas Storage Capacity. The country must rebuild everything. Cyclone pam destroyed 90 of the buildings. The country is one of the worlds poorest. The president is pleading for aid. Vladimir putin says he was ready to put his Nuclear Forces on alert during the crimea situation. He made the remarks in a Tv Documentary that aired last night. Russia annexed crimea one year ago. New owners for willis tower, it is being sold for 1 million. The buyer is a private equity investor, the Blackstone Group area this is the second tallest building in the United States. Facebook was to clear up what content bands and why. They will issue new Community Standards today. Terms will be redefined. Facebook reaches 17 of the world population. Tom is on it most hours of the day. Tom it is evolving and changing. All of a sudden, it worked. I think javon carter, my toughest call is West Virginia and buffalo. Brendan luckily for you and me, we have someone here in the studio. The president has one eye on us but the other is on college basketball. The brackets were announced yesterday. This president is the nations bracket guy in chief. There are several different degrees. He is going to explain the following to me. Guest nate silver seems to have it figured out. This is in terms of brackets in figuring them out, its between a game of skill and a game of chance and a game of love. Brendan we all have our preferences that creep then despite what our brain tells us. 40 Million People filled out a bracket this year. They are going to bet 9 billion that is what the American Gaming Association says. That is twice as much bet on the super bowl. Why is this amateur sport more attractive . Guest all of this speaks to so much to go on. Its not just one game, all in. You can really figure out what information you need to make a decision. This is all out there. In a bizarre way, we like getting overloaded with information and we like to play that line between skill and chance. Brendan march madness is like the kentucky derby. These are relatively untested horses. We dont know what they can do. Guest this is all bets are off. When you have a team like kentucky that is undefeated, you get into the postseason and its a different thing. Tom is there a big difference in the math of Lottery Betting versus some form of framed probability . This is more like a lottery. Guest you are asking that of a someone who studies behavior. Tom what is the behavior of a lottery . Rich guys do 14 brackets. Its like the lottery. Olivia i have never filled one of these out. Brendan get busy and make maryland win. We were just beginning about the loss of productivity to this. What is it about this event that is such a beautiful time suck . Guest im not sure about what goes on with this lost productivity idea. I think there is a holdover from the 20th century and the way we used to work, the industrial comedy and we havent updated to the knowledgebased. Olivia i am multitasking. Guest whether that is productive or not, thats a different story. Really, there is some need to look into something beyond just what are people doing at work for a certain amount of time and what that output is. People needed brakes once in a while. This turned out to be a great break. Brendan when people fill in their brackets, had we divide with the head does and the heart does . We know the likelihood. Guest i dont think that they know. That is part of the fun of it. I was talking to somebody last night. He said he did not know what to do with kentucky. Not being a math guide, the probability is not really there. But, im just going to fill it to brackets. That is an easier way to do it. Brendan thank you so much. He is going to help me fill out my bracket right now. Tom Olivia Sterns is halfway through right now. Olivia does anybody wear pink . Tom stay with us. Tom oil tests those. Will we see 20 a barrel . Forget ukraine and march badness madness. Will Vladimir Hooton darken the door . He is missing. Is wall street could there be a better good for america . Were live from our World Headquarters in new york. It is monday, march 16. Joining me is olivia and brendan greeley. Get away from the bracket and get to top headlines. Olivia ucla or smu . Talks between the u. S. And iran are heating up. John kerry is hinting that the u. S. Is willing to walk away if iran cant say yes to the sort of deal the International Community is looking for. The clock is ticking. He appeared on face the nation and repeated his criticism of senators who sent that letter to iran. What i do know is this letter was absolutely calculated directly to interfere with these negotiations. It specifically inserts itself directly to the leader of another country saying dont negotiate. We are going to change this. Olivia Mitch Mcconnell defends the letter saying the president is about to make a very bad deal with iran. The price of oil fell 10 last week and its starting this week the same way. West texas intermediate is trading below 40 a barrel. There is speculation that the record oil glut may start to strain the capacity in america. In ferguson, two Police Officers were shot last week. The suspect in the case admits to pulling the trigger. But, he told them he was shooting at someone else and not at the police. The Prosecutor Says police are not sure if they buy that part of the story. Brendan a shocking admission to he whispered off camera that he killed them. Durst has been under question for years. In israel Benjamin Netanyahu doesnt have much time to turn the election around it the party is running second to the polls going into tomorrows book. Whichever party wins, we will still have to form a coalition government. Its that time of year when you are asked to do gamble illegally. Fill it of brackets in your office pool. Olivia is already on top of it. Kentucky got the overall number one seed. Pairings for the basketball tournament. The temperature game is april 6. Olivia oregon or Oklahoma State . Brendan Oklahoma State. Tom Vladimir Putin has been found very quickly. A view of crude oil is remarkable. I will send out a bunch of charts on radio today looking for a market clearing price to a secure low under 44 a barrel. To frame that jeff of Goldman Sachs is visiting 20. They are really looking for some supply were. I know we should talk about Vladimir Putin. I guess he has been found. Olivia he has a scheduled meeting. He is in st. Petersburg. He sat down with a reporter. Rumors were swirling about his health. There was a rumor that someone was flooded to treat his back to brendan we have a reporter saying that he is alive and well. Do we have a video of this question mark . We saw flat taylor swifts legs today but we havent seen Vladimir Putin. Tom this is the end of the first quarter. It beckons. There was a new volatility. We will be lucky to get out flat in the equity markets. They listen to their customers without question. What is interesting in the first 90 days . What are you hearing from Capital Market clients . Guest a lot of volatility. Our clients are confident in the economic recovery in america. They are worried about valuation. They are waiting for the correction that doesnt seem to want to come. When our Interest Rates going to go up . Tom what people dont know is there is a lot of talk about the s p 500. How repressed is this new level of financial repression that we are living . Guest you are talking about the fact that keeping Interest Rate between zero and 2 helps borrowers who are a central governments and it hurts savers. Its a major issue. The risk is that it pushes these investors out into higheryielding and riskier investments as rate go up. Thats the concern. Olivia the dollar has been a higher yield. Guest since the financial crisis, our clients have been over allocating. This is true of individuals everywhere. They see cash as a safe investment. They are not confident in the equity markets is a place to put their savings and the problem is cash is not safe. Cash loses power at the rate of inflation every year. You will cut the purchasing power of your savings in half over time. Its not a safe investment. Brendan i suggest they get into ukraine. Your message is the of good cheer. Capital markets will create more returns for patient investors. Whered you get that and how long are we talking . Guest the high single digit is 2015. There have been robust returns the last couple of years. We think this year is going to be ok for u. S. Equities. You could get into double digits. Its a sand one outlook. Why we feel that way . The u. S. Economy, the glass is halffull. The rest of the world, the glass is halfempty. Olivia we have noticed that there is very little correlation between the strength of the economy and the performance of the stock market. Are you getting phone calls from clients . Guest we are constructive on european equities. That is not a bad play right now. U. S. Dividend paying stocks are the place for individual investors who are savers who need income to retire on. Its an old story, but it works. Brendan that happens to be the number that states allow their Pension Funds to assume overtime. Lets forget that they are not contributing the way they should. Can they count on these returns . Guest that is one of the major issues we face in the United States. Overoptimistic longterm us a assumptions. Lets say we get a percent over the long term. Thats only on the u. S. Equities orson of the folio. Blend in fixed income and cash. It returns that are much more in the 5 longterm. That is not a very large margin for error. Brendan i want you to know that i can see toms screen. He is right now, filling out his bracket. Guest my anguish is that yielded not make it. Olivia sorry about that. Im going to have to go with North Carolina over harvard. Tom i usually ignore these things, they have done better than good on this. What is missing in these articles is the elephant in the room, we have to put more money aside. That is an absolute canard. I see no mathematics in that whatsoever. What are we going to be adults and start putting aside what we have to put aside . Guest this is one of the key social issues in our country. The gap between what they should be saving for retirement and what they are is huge. Its across all income levels. A big part of it is investor literacy and education. People do not understand the math. They dont understand the realism of returns and they dont understand what that means. Tom john is with us as we look at a force for good. Olivia we will continue the conversation and ask if wall street has made improvements since the financial crisis. We will be back. Tom new york city is beautiful this morning. Its a little bit cold. Lets get to the morning mustread. Olivia mine comes from gordon brown, the former Prime Minister. He writes this is a hot debate. We have seen the rise of the Scottish National party. The political scene in the u. K. Is fracturing. We were struck by the fact that merkel did not take David Cameron with her which he had that emergency meeting with Vladimir Putin. They are losing influence on the global stage. Brendan you studied there. For me it seems like there are two things going on. There was always london which want to keep its experience away from the european regulatory takes aryans. Experience. Olivia i think one of the turning points was David Cameron went to parliament and he asked for permission in the fight against isis and parliament turned him down. They turned down airstrikes in syria. Tom these are live pictures of Vladimir Putin in russia. This is in st. Petersburg. This is in one of the houses. Im looking to see if he had Plastic Surgery on his face. Olivia we talked tom keene about what botox does last week. Tom i took your advice. I did not get it. I was going to, but i didnt read. Olivia last week, we saw questions from the German Foreign minister when you look at what is happening ukraine and russia. There is no defense policy in europe. Its a wonder what britains role is going to be in this. Brendan the European Union is in the wilderness on this. They have been trying to do this since 1994. They havent gotten closer. Olivia preinternet brendan greeley. Wow. I recommend it. You should check it out. Coming up, stay tuned. Market makers will be talking about m a in the media industry. We are streaming on your tablet your phone and bloomberg. Com. Tom good morning. Bloomberg surveillance. I am tom keene. Olivia sterns has the top headlines. Olivia john kerry says the u. S. Will walk away from talks if they dont get a Strong Nuclear deal with iran. They will hold form for a verifiable agreement. The talks are aimed at stopping iran from building a nuclear weapon. The oil rally fizzled. Crude fell to its lowest rice in six years. It is trading below 44 a barrel. The oil glut may start to strain americas Storage Capacity. The u. S. Is changing its deployment plan in afghanistan. More troops will be kept there into next year. That is a concession to military leaders. The original plan was to cut down to 5500 by the end of the year. The tomb of Saddam Hussein was leveled by fighting in iraq. He was buried in his hometown. Iraqi Officials Say the attack is on hold so that civilians and escape area a manhunt is underway for a pair of sus x after two Police Officers were shot in South Los Angeles. They were wearing lane close when they were attacked or it they suffered minor wounds. Several city blocks were closed. A one season record few people in boston want to see again. It was snow. More than nine feet of snow fell on the city this winter. Half of it fell in the past month. That breaks a mark set 19 years ago. Tom we have a terrific analysis of where the water goes. It really depends on the ground temperature. Where does the snow go . I have been waiting for this for months. There is a book about a working theory on how to dampen the urge of capitalism. John taft has provided leadership on that. Stewardship was a mustread. Im guessing this will be my next. A force for good, he compiles thoughts of many others. Congratulations. I thought the quality of the authors in your book and the thinking was outstanding. How to get them to do this . What was the motivation . Guest i picked up the telephone and asked. It was gratifying. There are 25 contributors and i think i asked 27. 25 said yes with no compensation. The proceeds will go to charity. They did it because they believe in the topic. They believe in the importance of the Financial System and they believe in getting it back on the rails. Tom let me go to roger martin. He speaks of authenticity. What does he mean by that . How does that help us to better . Guest the chapter of his book is called get real. Finance needs to focus on real people in real markets in real time. The issue is too much of the engineering has caused us to focus on expectations markets. That is where we get in trouble. We need to reorient the Financial System to focus on real markets. That is what he means by authenticity. Olivia the buzz word is inclusive capital. A lot of people say that capitalism is exclusive and its nature and cant be inclusive. Guest the phrase youre referring to is used i that socialist, the governor of the bank of england. This is a mainstream economists using the word inclusive capitalism. Fiduciary capitalism sustainable capitalism. Those are efforts to say the following we now no longer want growth at any and all costs. We want growth balanced with stability and inclusiveness and sustainability. Tom lets look at the ideas in the book on how to fix wall street and move forward. The rest of them, people would say it a fee structure. Feebased is fine. When does wall street get over the disease of 90 day pressures to create revenue . You can call it what you want. That is the reality. Guest i was in new york last week at a conference sponsored by the canadian pension plan board. This was on longterm is him. One of the issues is compensation. The system in the Financial Services industry each one of these topics you can talk about for an hour. We have come a long way today on how compensation systems are designed for Financial Services versus where we were before the crisis. Brendan the Labor Department has been working on fiduciary responsibility. Guest restoring Investor Trust and confidence and ethics and integrity is number one. A fiduciary standard for everybody who gives advice should be done the right way. Tom we will feature this through the week. This is the future of wall street. Tomorrow, roger martin from the university of trial. Stay with us. Tom friday was ugly and weeks heart soft on oil. The euro is back here. You can see the weakness. This is a longterm trend. We have two standard deviations out here. It is going through parity. I put this up to show how far removed from the trend we will be with that brutal move. Brendan this is germany kicking and screaming. They are saying we cant possibly devalue the euro. This is going to be really good for germanys industrialist. Tom is it good for greece, poland sweden . Olivia a weaker euro buys a lyrical time for these reforms were waiting for to occur. My question is why does that chart go back for the euro was created . Tom its an algorithm. Its a synthetic euro. It approximates the Deutsche Mark as the previous euro. Brendan its making an accidental political point. You are looking at how the euro was created. Tom this is the synthetic euro. Next week we will have the synthetic march bracket. Tom lets go to our top headlines this morning. Here is Olivia Sterns. Olivia for the first time in a few days, Vladimir Putin has been seen in public. That led to all sorts of speculations and rumors about where he might be and the state of his health. The kremlin Spokesman Says that putin was in good health all along. Talks between u. S. And iran are underway over the countrys nuclear program. John kerry is meeting with irans foreign minister. Kerry says they are working with ties between the two sides. He has start her beats for the authors of the controversial letter to irans public leaders. Crackscollects im not going to apologize for it on thought out unconstitutional action by someone who has been a senator for 42 days. Olivia congress would overturn any future deal made by president obama is what was written in the letter. West texas intermediate falling almost 3 this morning to below 44 a barrel. As a six year low. Prices now rebounded slightly. Oil lost almost 10 the last week. There is speculation that the u. S. Is starting to run out of Storage Capacity because of the Incredible Oil rush. Brendan police have a suspect in custody for the shooting of two Police Officers in ferguson, missouri. 20yearold Jeffrey Williams admitted he pulled the trigger, but told police he was involved in a dispute that had nothing to do with the officers. He may have had a dispute with other individuals. We are not sure we completely by that part of it, but in any event, it is possible that he was firing at some other people and the officers were in the back. However, it does not it is assault in the first degree. It is a felony. Brendan the officers were shot outside a demonstration outside the Ferguson Police department. Cinderella took in 70 million. 20 million came of it from tom keene seeing it 18 times. Tom the frozen short was really executed. It was very funny and genuine. It was not a throw up thing. This is of course on the announcement of frozen to pick out i just put 2. He was one of the lizards that turn into a coachman. He was chilling later in the movie. The casting was unreal. Olivia brendan frozen 2 is such a key demographic. Olivia a demographic film are the key target. Coming out with jimmy to shoes because cinderella gets tom keene and not just fiveyearold girls. Tom i was blown away. Major shout out to the prince. I thought he would mail it in but he pulled it off. I do not think he could do it. Let me do a data check here and move away from hollywood and the money that disney will make. S p futures up seven. The euro of 1. 05. We are watching dime backs crude. I would stay tuned to what we see on street smart. 41 on west texas intermediate. Good morning. Im tom keene and with me is Olivia Sterns and brendan greeley. Brendan the accident of u. S. Registration legislation that we routinely ignored and less bought about. We can start avoiding default for another six months using extraordinary measures. Phil mattingly joins us from washington. He is in watching this for as long as i have. It seems like Republican Leadership is tired of brinksmanship. Is it even going to be a debt ceiling standoff this time . Guest Mitch Mcconnell if he had his way would say no. Lawmakers have about six or seven months to try to figure out how to deal with this before default is an actual threat. They currently have no pathway forward on how to get that done. There a enough clips like severe cuts to doctors and medicare payment. They have to figure a way to stop that. You have nutrition programs that need to be reauthorize. There are a town of major issues coming out that are going to be serious debate on capitol hill. Before we get to that point, theres no direct pathway yet for how to deal with this. Brendan we are also in the middle of tax season. How does that complicate negotiations . Guest it is a lot of wait and see. If returns are good, and could extend the amount of time lawmakers have, perhaps pushing it into next year. With that said, if they are bad and returns are not good in receipts are not positive, that shortens the time when a little bit. I think there are two things you need to keep an eye on here. One is vehicles. Right now lawmakers are looking for an area to slip this into. You do not want debt ceiling to stand alone. If they could slip it into a must pass bill, that is a great option. The others legislative or procedure. Thats the other is legislative procedure. There is an arcane process that you might be able to get it in with fewer votes to get there. It is legislative lead type stuff, but theyre looking at possible options to figure out a way to slip this through without massive debate or political fight. Brendan it seems like the last time this happened that the president played good poker. He basically said that he broadcast that he was not going to negotiate and he did not have to negotiate and at work. Did he figure out a formula for this . Guest they made a clear and conscious decision last time around that they would never negotiate for policy issues when it came to the debt ceiling and they have not backed off yet. It has been a very effective policy going forward. Everyone ive talked to is saying that we are just going to let congress handle this. They know what our position is on this. We are not going to change. On some level, they feel at ease right now. They have made their positions known and theyre not going to change. The one interesting thing to watch here is able sign the scenes issues a behindthescenes issue. There are a handful of republican senators that are running for president. I talk to people who were involved in the fundraising committees for the Republican National committee, the National Health can Senatorial Committee over the last couple of weeks. They say unequivocally that they have lost millions of dollars in the shutdown and debt ceiling debate leading up to the last election. There are a lot more public into care about this right now. That is something to keep an eye on. Tom phil mattingly. Let us talk to john taft in celebration of his book. Within your book, you talk about the debt super cycle. This conversation does not lead to confidence, does it . Guest it is incredibly destructive. The spectacle of the United States of america even talking about reneging on its public debt is incredibly corrosive to public. Tom why dont they do this in canada . You know the toronto maple leafs. What is it about canada and fiscal where they get it and we dont . Are they different . Guest in my first book, there was an and yet on the cultural differences between canadians and americans. You can overplay that, but there is a cultural difference. They are wired to focus more on the longterm. 40 Million People less than the state of california in the largest most resorts rich land mass in the world. They just dont need to screw it up. [laughter] guest the point is is that they have got it made. Olivia did Erik Schatzker set you up for that . [laughter] guest no heated. They are wired to do the right thing and a way that americans arent. Olivia john caps on canadian. Tom john taft, a bloomberg surveillance force for good. Stay tuned to bloomberg surveillance. Tom it is gorgeous in new york. We welcome you to citigroup tower to the left of the Empire State Building in the distance. The Freedom Tower in the distance of lower manhattan. We say good morning. Bloomberg surveillance. Brendan we have betty liu on the desk with us. Youre looking at Housing Trends in the coming years and you are saying things are getting smaller. Betty throw out your mcmansion. It is time to get small. We have seen luxury home prices stall in many of the major markets, new york in particular. Home prices up just 3 . That was underperforming the average increase in prices overall. We have a big week in housing. I know we are all watching the fed, but you have the housing index out it 8 30. Tomorrow, you will Housing Starts. On thursday, you will have when art and you will have a good better glimpse of the Housing Market. Wire we going smaller . Blame it on the young ones. Millenials cannot afford these houses or they just feel that they dont want to be in a very they come. Olivia from portlandia . Betty oh. You caught me off guard there. What it has to do with olivia, is that many are coming back into the urban areas. They are not living in these big suburbs. They by the way, are the number one homebuyer in 2014. They were 33 of the Housing Market last year, surprisingly. They are likely to continue that this year. Brendan betty, we looked into this for our chart. We had evidence of people building houses with their own hands. Im looking right now at housing and urban Development Data and it shows that the longer trend is that houses are getting larger, in terms of square feet. I wonder, are we saying that because people are ready to downsize our finding that it makes more sense to buy a larger house . Guest ive no idea what that chart says. [laughter] guest but as someone of that demographic, everyone that i know is looking to downsize. What they end up his trading square feet for. 5 more on their current house worth. Downsize. Olivia im not looking to downsize to be clear. Betty the thing about downsizing these tiny homes are popular right now because these homes go for 80,000 to 100,000 for this tiny little 50 foot space. This is what you are talking about paying more for square foot these days. Brendan it is 100,000 of simple. [laughter] olivia youre are absolutely right. We should all be simple fight. Simplified. Are your clients biding buying childrens homes . Guest some are buying their childrens homes. What is interesting is that our children are saving less at each age then we were saving in the same time. They need our help. Olivia youre coming back and staying with us. Tom good morning. Capital markets with a terms note on canada. This is off the fed meeting in the United States. He is looking for a week or canada diluting to a 1. 30 forecast. Let us get to our headlines this morning. Heres been included brendan greeley. Brendan the secretary of state and said the u. S. Will be willing to walk away from the table. He is in talks with the foreign minister of iran. These are talks of iran building a famous weapon. And an arrest in a famous cold case. Robert just first arrested in new orleans. It was caught off camera on documentary saying he killed them all. Homes are swamped and roads are like canals and parts of ohio. Rain and melting snow raise the ohio river to its highest level in two decades. Lowlying levels near cincinnati are the hardest hit. They will be in a flood stage for the rest of the week. Afghan refugees are fleeing pakistan. 1000 are poring through one checkpoint. The u. N. Says pakistan has almost 1. 5 million afghan refugees. Today groups make history in america second oldest st. Patricks day parade. They marched for the first time in south boston. In protest, several cap at groups dropped out. The fight went all the way to the Supreme Court. The event dates back to 1901. And facebook wants to clear up what content it bans and why. The social network will issue new Community Standards today. The rules on threats, pornography, and terrorism will be redefined. Facebook reaches 17 of the world population. Tom this is a huge steel. I talked to the senior offices of facebook about this. It includes instagram as well. Brendan something that olivia and i talk about a lot is what is the responsibly of the organization of twitter and facebook. They become the mouthpiece of a terrorist organization. Olivia the Islamic State is tweeting in 30 languages. At some point, there has to be a relationship between twitter and beat an essay and the cia. 30 trillion. That is the amount millenials are set to inherit from the baby boomers of any next two decades. This is according to federated investors. Sitting with us is john taft, ceo of one of the largest management firms in the u. S. 30 trillion it is hard to get your head around that much money. What are you doing to capture that market . Guest the whole issue of money in transition besides Retirement Savings is the number one issue for individual investors. Of course, it is a conversation that older, baby boomer generation needs to be having. Thinking about how do you him under what conditions, with what kind of strings attached, or none, how do you leave your money to her children . It is a critical issue. Number one is tax planning. How do you do it in a tax efficient way . Once the money is tax down brendan we are saying that millenials are different investors. Is money just money . Guest they are different. The first thing is they have no experience with and they dont necessarily want, to teal with individuals. We were just talking about one of your relatives, facetoface human conversations with human advisors millenials dont want that. Brendan the disclosure that we need to make is my grandmother has rbc managing her love right now. Guest she relatives relishes that facetoface. Millenial do not care about that. What a digital experience. That is one major difference. Olivia i was struck by one of the takeaways of the study which is that 42 of their millenials described it investment stance as conservatives which is well over the numbers of baby boomers. Guest ive not seen that study and im processing why that would be the case. I think it might go to the outlook of the future. Millenials generally are not that optimistic about their ability to improve their state of being through investment. Brendan the hagel of looked at this and discovered behavioral economists looked at this and discovered that baby boomers saved and invested their entire life. Does that stick with the . Guest you have to. You have to absolutely allocate your money to a diversified basket of investment or there is no way that you will achieve any investment goal over the long term. Tom i talked to many state lawyers who told me it is a disaster waiting to happen whether it is a debate over perpetuity trust or a revocable trusts. It all seems to be changing. How can the old people, or for that made her matter, the Young People Trust when laws are broken each and every day . Guest what are you referring to, tom . Tom i think there are a lot of trust questions that older people are having one they want to hand pot to millenials. Not about rbc Capital Markets but legal people in relation to wealth managers. Guest ive not seen those issues. What we have seen his older people being overwhelmed by the complexity of trust law. What do you need to do to leave your assets in a tax efficient way to individuals . My role for anything when it comes to individuals managing their wealth pick the simplest and most straightforward solution available. That will keep you out of trouble. Tom it is not just handing the money to the kids. That is definitely a license for going to the euro in three years. Brendan what we are talking about with this 30 trillion that we are looking at is a political issue. We are about to start having a really important conversation about inheritance taxes. Guest absolutely. We were talking about canada earlier in the show they do not tax. They do not tax for Capital Gains upon your death. The idea that you were tax when you earn the money why should you be taxed once again when you leave it to your heirs . Brendan a doughnut to our neighbors to the north. Tom i look at this and it is a huge deal. It goes back to older people being afraid to affect trust and pass it on to those millenials. There has to be a new confidence that a state lawyers know what theyre doing and that whenever they write up last for 10 or 20 years. That is very difficult for managers like rbc. Guest theres this whole issue of trust in the Financial Institution with whom you have established the trust. That was preached as well. People are scared about leaving their money in trust. Olivia do millenials trust banks . Guest they do not. The trust level for traditional institutions are not there. Theyre much more likely to seek alternative solutions. Tom Rebecca Patterson is very articulate about this. The whole landscape about how we move the pot from generation a to generation be ordered generation c. Brendan im fascinated with what you say about millenials not preferring facetoface. You can just part your Morning Money somewhere and then god will take care of it. Vanguard will take care of it. Guest his first client walked into the office and 40 years later, he had dinner on the courts of the house in tucson with the money in their investment portfolio. What is it going to be like when he opened up an online account . Are you going to have that same account 40 years and now . Probably not. Longterm longhaul focus is important and individuals play a part of that. I work i worry about the digital solution. Olivia it is time for the agenda. Tom, youre kicking it off. Tom it is got to be oil this morning. Theres a real weakness in the last hour and a half. We will see at noon about the lows below 43 point 80. Olivia tom, i know you are heading over to radio. In the meantime, on my agenda. It was going to be when the worlds last meal. And, but it turns out he was in st. Petersburg. Mine is iran talks have resumed today and switzerland. Obviously, we saw the letter from senator tom cotton. Iranian leaders say that any deal with president obama will be overturned. The sticky point is verification. Brendan my agenda is bracket filling out. You go with a heart or the head in march madness . Im going to go with a heart and putting marilyn going much farther than they should. I have some family who are rock chalk jayhawks, so that might work out better for me. John taft, are you going ohio state . Guest im still grieving yells yales exclusive. We have lost so many things the harvard, that it has gotten painful. Olivia i filling out my brennan bracket. My question is wisconsin or North Carolina . Brendan wisconsin. Olivia wisconsin it is good we will continue to fill out our brackets. In the meantime, in the loop with betty liu is coming up. You do not want to miss it. Back in a moment. Betty good morning. It is monday, march 16. You are in the loop and im betty liu. We are 90 minutes away from the opening bell. We have a great show to start you off this week. Did you know that the debt limit goes into effect again . That means we have to find a way to run the government or else we run out of money. Former director David Stockton jointly on a big week and washington for the budget. Why is small better again in housing . Taylor richardsons explains the whole ratio effect. Tomorrow, we have Housing Starts and homebuilders begin to release their earnings on thursday. A big week in housing. If you are a big old bug, have you thrown in the towel yet . Bay riddle says give up already. Gold is going to continue to lose out to stocks. Get out of the yellow stuff. First, heres a look at our top stories is morning. John kerry says it is iron a good deal or no deal with talks with iran. The secretary of