Tom is in washington, d. C. Tom it came out widely as expected. There were some nuance francine through the night. It was fascinating to watch the political derby at about 10 00 last night, maybe 10 30, particularly the tension among rubio of florida on the republican side. Lets go to some of those results. I think we know seven states in seven states for donald trump and Hillary Clinton the opening frontrunners but then it gets a lot more interesting. Well get to the secretary in a moment. For mr. Trump it is simple. Mr. Cruz of texas wins throw states. Really quite a speech from him and mr. Rubio needed badly to win and he won late in the night in minneapolis. 23 of the delegates are taken out by the secretary and by mr. Trump. 285 delegates for mr. Trump of 1237. 23 . Hillary clinton with 544 delegates, 2383. Mr. Rubio, i guess his staff breathes a sigh of relief and says we took minnesota. Here is donald trump going after mr. Rubio. I know it was a very tough night for marco rubio. He had a very tough night. He worked hard. He spent a lot of money. He is a lightweight as i have said many times before. Im not sure who that guy is standing behind mr. Trump. Governor christie looked a little lonely last night. Over to the democrats, francine. Secretary clinton, who did she go after . Not mr. Rubio. She went after mr. Trump. It is fair tonight that the stakes in this election have never been higher. And the rhetoric we are hearing on the other side has never been lower. Trying to divide america between us and them is wrong and were not going to let it work. Tom francine, very quickly, your thoughts viewing this from new york city. How odd was super tuesday for you . Francine it was baffling. I had not been looking at the super tuesday as much as you have over the last couple of decades. It is baffling and also when you look at the markets, these Political Risks are not really priced in at the moment. Not today. Tom strongly agree we havent priced it in, at least at this moment. Mr. Sanders of vermont won four states. There were places the secretary expected to lose, vermont, minnesota, oklahoma and colorado. 23 of the delegates for secretary. Mr. Sanders compare to that 544 has 349 delegates. There is the super tuesday Early Morning wrapup. One of the things well be talking about certainly as we go to michigan and the big state of florida, the winner take all. An important state, clearly critical for mr. Rubio as well. We need to go to london. Here is caroline hyde. Caroline u. N. Secretary general ban kimoon said the ceasefire in syria is loosely working. He said government and rebel forces need to show their good faith that humanitarian aid can be delivered to those living in areas under siege. In spain, the head of the socialist party is asking eople to join an alliance. If they reject the plea for a coalition they would have two months to elect a Prime Minister before they would have to hold another election. London has beaten out new york and five other cities to be the capital. It is more internationally diverse. New york has the largest number of jobs in the financial sector. Tom . Tom thank you so much. Equities, bonds, commodities, up, up, feeling a remarkable change looking at bloomberg across our assets. Were not on the 2 watch but get there go quickly. Nymex crude lifting with brent as well. Oil an see brent, european the quote levated, is flat out wrong. That is 11433. On dollar yen, we have seen a weaker yen the last few days. Francine . Francine this is the picture, i want to show you basic resources. Global equities rallying, gaining momentum in asia. Emerging market currencies also strengthening. Better than expected ecodata not only from the u. S. But also from australia. The ftse is really benefiting. It is one of the biggest gainers. It has lost a little bit of momentum. It is still gaining 0. 2 . Copper gaining some 1. 4 . Lets bring in our guest for the hour from wells fargo. George, great to have you on the program. When we look at negative rates and are trying to understand what the next move is, similar to what we had in japan, do you worry about banks . George i think negative rates specifically, it is to a doubleenled sword. It is indicative of weak global growth. Inflation concerns and this happening upheaval across the market. The banks in particular are challenged in that part of the world. It is very hard to generate reasonable profit when your yields are negative and yield curves have very flat. What is created is companies attached to the government directly or indirectly in that they are very high quality, they fund at governmentlike levels, they are doing just fine. Companies that are very growth sensitive are not. They have to pay high borrowing costs. Credit is constrained and specifically the banks kind of sit in the middle. If youre a bank with lots of capital and youre well funded, youre doing ok. If you have to earn your way out or recapitalize your earnings, it is going to be heavy. Caroline how do you marry that with the Political Risk sweerg. Super tuesday, quite baffling but were not seeing any risk placed on the market. George High Quality Companies are holding in reasonably well both on the credit side as well as on the equities side. You look at the multiples on consumerrelated companies here in the u. S. And they are trading at a pretty nice multiple. The same can be said in the credit market where the credit spreads are relatively tight and the borrowing costs are low. Once you are dependent on political decisions, it is a much different question. Tom george in your world, what is the correlation right now to other Asset Classes . Are they going in lockstep with everyone with the improvement we have seen in the equity market . George Corporate Bonds have been at the leading edge of this whole cycle. Corporate bond markets are in a state of upheaval now. Were seeing rising defaults and downgrades. You look within the market, it is the part of the market most sensitive to this Pressure Point whether it is commodities or energy or metals and so that is really where the Pressure Points kind of emerge. Were starting to see some signs of improvement and some Companies Start to shift towards a slightly more Balance Sheet friendly position. I would look for your guidenses where stocks are ultimately going to go. Tom tell me about securized bonds. Where do we stand on the pricing and liquidity and the bid of fancy paper i cant pronounce . [laughter] eorge i think there are securized products like bonds and loans. The liquidity in those bonds tend to be more reasonable. Mortgages in particular are very, very liquid. As you get into more complicated types of securities, liquidity goes down and in particular when you get linked to asset s that areunder a fair bit of pressure now like leveraged loans in say a collateralized loan obligation, liquidity goes down and pricing gets more challenging and there is definitely a lot more volatility. There is a readthrough through the underlying aspect of this product. Tom george will continue with us throughout the hour. It was a super tuesday on this super wednesday. Well do what we try to do every day. Look forward to michigan, to florida. Winner take all florida. Well speak with megaan murphy and Michael Mckee. Their perspective for clinton and trump. Francine im Francine Lacqua in new york. Tom keene is in washington, d. C. Caroline g. D. P. Rose. 4 in the fourth quarter. The most in a year. Switzerland is fighting off the impact of a strong franc threatening to send the country into investigation. There has been a Silver Lining to the credit market. European companies able to buy back loans. It has generated instant profit and reduced the companys debt load. Mcclendon denies the allegations. Three years ago he was forced out of the Natural Gas Company he cofounded. Tom thanks so much. I hope caroline you were watching some of the political discourse of the United States of america, all of that the default of megan murphy. She is with bloomberg. She runs our d. C. Operation. When i come to washington, she demands to go to new york so she doesnt have to speak to me r go to lunch. Megan murphy joining us from new york and Michael Mckee in washington now to look at the consequences. Megan, let me go to you first. Your thoughts on what we saw last night. I was thunder struck by the back and forth of the pundits. The it was an onlyal super tuesday. Megan it was an original one. When i look at the main takeaway ux the crisis that we saw. Marco rubio had a tough night perfectly he really needed more than minnesota. He needed that virginia victory. This is a party that is goings to have to make some serious decisions. They are going to have to consider whether throwing money behind trump or marco and hope that he can pull out florida. If not, they are going to have to decide whether to go all in behind trump or pull a plan b. Tom we had a unique moment with judd gregg saying he will support the nominee and vin weber was very clear he would not support mr. Trump as the nominee. What will we look for in the next two or three days it is a republican establishment tries to establish any kind of momentum. Megaan they are looking to the senate and the statehouses in 2018. If they see a huge fraction of the party, the type of civil war that has long been threatened since the tea party surge, that risks the senate and risks them losing the governorships, they are thinking look, trump may be not perfect but he certainly is not the candidate we would have chosen but not to back him ruins everything we fought for. Tom lets link this other to the investment we look at every day. Michael, it has been a wild 24 hours. Donald strump going to make my smart phone 90 more expensive. Speak. Mike looking at their economic plans. Trumps economic platform sort of like his campaign, confusing, contradictory. Deporting ann documented workers. Bloomberg news suggests that could leave 8 million jobs unfilled and citizens may not want them. They will be hard to fill low wage manual labor. Social security loses 12 billion. Of course there is that wall. It would cost about 25 billion to build. Meaning of course mexicans are not going to pay for it. Meaning he has to cut spend or raise taxes to pay for it but he is proposing an across the board tax cut that would cost almost 10 trillion over 10 years unless offset by growthkilling spending cuts. They say the that the tax cuts would go mostly to the upper 1 10 of 1 . He is proposing a huge tax on chinese imports. Thats where the smart phones come in it would raise the rice from apple to walmart. Tom bow ties too . Mike of course nobody know what is his health plan is. Tom this is brilliant. This is what we like best about surveillance. Francine, have you ever heard a report like that in the United Kingdom . Francine we do have also, you know, someone in the extreme of the opposition so we could always have surprises. They are just not in this kind of race that you have here in the u. S. Megan, if you look at his policies, if you look at the economics and go back to what you were saying, plan b for Republican Party, do they split . Megan i dont think they can afford to split. Were going to see some chaotic things we havent seen. Sitting governors saying they will not support him but at the end, it is very hard. What are they going to do . Put up mitt romney . Some sort of Third Party Ticket . It is not going to be feasible. Maybe they think we can take it to a convention. Marco rubio faces challenges. Ted cruz is looking like the antitrump candidate. Maybe john kasich does well in the midwest and carries on to the convention. Francine on the democratic side, can Bernie Sanders get it back . I dont think Bernie Sanders can get it back. Hillary clintons support from africanamericans is too big. What he can do is use the money he has to push his message to drive her left and make her ontinue to focus on income inequality and the most impressive wing of the party, the Elizabeth Warren wing. Tom the basic theme i heard last night, mike, you and i saw his at the penguinscapitals hockey game. Love and kindness. Can we have love and kindness in america . Mike you can try. Hillary clinton is not proposing any deportations but she is with financial industry are losses. She wants to extend dodd frank. Put in a high frequent she trading tab. Tax. She wants to impose a buffett tax. A minimum 30 tax on incomes over 1 million. 12 million minimum wage and companies to share profits with workers. Tom lots of love and kindness. Megan, thank you so much for joining us early this morning. We have so much to talk about. Michael mckee, we will do radio later. We have somebody ration offensive line to speak to make you smarter about that. His name is lonnie chen. Out of stanford helping mr. Rubio. From washington to new york, bloomberg surveillance. Francine im Francine Lacqua here in new york. Tom keene is in d. C. We have been talking about it all month. From frankfurt were joined over the phone to talk about negative rates and the pressure we have seen on a lot of these European Banks. This is just seven days if that very important e. C. B. Decision where draghi meets on march 10. You were just at this conference. You talked about overcapacity and negative rates. Are you confident that if the e. C. B. Puts a two tier system very much like japan, withstand it . Rgio i think we are used to a lower rate environment or a negative rates environment for a while. Taking action over the last couple of years the weak price, our services, the credit side of the equation. What is going on with negative ond sheet hat your b is getting a subsidy from the left side of the Balance Sheet. The credit. We are being clearly asking for higher rates to our clients. Francine do you think that eurozone session tos are less ready . You have the swiss example. What does it mean for certain rivals . The side effects of negative rates are extremely difficult to judge. Sergio this is something European Banks are starting to get used to. Just a few months, quarters. You can see the effects of that. In order to avoid negative rates, some banks are overextending credit. Conditions that in my point of view may create in the system. In the real estate and the mortgages. And so i think the way out of this other than pricing as i mentioned before. The credit side over the Balance Sheet, the left side of the Balance Sheet and also start with the ask for fees on services that used to be subsidized by deposits. Deposits today is a rates environment or negative rates environment are also making a proposition. Francine you also talked about overcapacity. Are we going to see consolidation in the Banking Sector in europe because there has been so much pressure on some of your rivals . Sergio i think clnk i think in general, there is a huge overcapacity. The problem is really to create an environment in which we flern the mistakes of the past is that not every bank should try to copy the other but rather every bank has to find his own ways to live through the next stage, but that means focusing on what you stand for. What you good at. Either by geography or client segment. Tom you mentioned what youre good at. It is a pleasure to speak to you. Your storied career in equity derivatives and trading and working in the trenches. As you look at the strategic path forward for your bank, your competitors are slashing costs for Investment Banking. I would particularly note mr. Of Deutsche Bank with some very strong language. What everybody wants to know on global wall street is how are you going to retain your intellectual and trading and banking fighter power . Bhar you going to do in the what are you going to do in the next six months to keep that talent . Sergio everybody as i mentioned before has to find his own way. If you look at our Investment Banking, we focus very much on what we believe in our clients, our clients believe what we are good at. The Investment Banking this idea of onestop shop is dead. The story that you hear people commenting on competitors exiting, youre going to pick up the market share. Actually i think that is very little to gain if you dont. The full capacity and also in certain businesses. The reality is that the capital retirements makes certain businesses structurely unprofitable. Therefore i think so you can retain an Investment Banking franchise and experts but you need to pick up which segment you want to be good at. Tom right. Im going to assume the segment you dont want is the movie the big short. I assume you have seen the movie. You look at the trading of six and seven and 10 years ago, are we pass that on the a utility bank . Have we reached the utility bank . Sergio i think the utility bank, we would love to be to get the market for the utilities. I think we as we mentioned before, the Capital Requirements and the regulatory requirements in certain businesses impose you to stay very strict and focus on what you good at in order to be able to make your gain, make profits that allows you to pay for the capital. And eventually also a little bit more to our shoulders. It will be nice to have utility to have Pricing Power. Francine when you talk about overcapacity are you talking about the fact that there are a lot of European Banks chasing the same segment and is that one of the main risks you have control over . Serge crow s is when i look at the european landscape, you look at basically personal banking, retail banking, many aspects of commercial banking. You see huge, huge overcapacity. Actually a lot of savings on the deposit side that you know, there are banks that dont know what to do with deposits. Everybody is basically trying to beat each other on pricing and eventually this has been leading to a structural deficit. If you think about the European Banks now yield 6 tony 1 return on eck si. If you look at with new regulation coming, being fully implemented, the return on eck si would go down to 1 . That is the bad news. The good news is that in this environment, focusing on what you are good at and creating to create a new paradigm for banking to be successful and also to stimulate and be part of the economic recovery of europe. Francine we talked about super tuesday. We have to talk about Political Risk. Are you worried about a possible brexit and does that have a direct impact on certain regulation in the region . Sergio what worries me is anything that goes on in europe r the u. K. , that limbs the exibility and the freedom of giving Service Cross border for money to be moved cross border so a free capital market, anything that comes within europe on globally that is an impediment to this globalization that i think is good for Financial Assistance and global economies worries me. Corrected to the extent that you would see Something Like that being triggered. Yeah, its worries me. Lets see how it comes out. Francine thank you so much for joining us on the phone from frankfurt. The c. E. O. Of u. B. S. It was a face nating conversation. We have seen the biggest losers from the beginning of the year where of course some of these banks, they were not u. B. S. But a lot of them were rivals. Now difficult it is to push their new Business Model where the Global Environment of growth is so difficult to read and manage. Tom it was a very important conversation. He reminds me of lloyd blankfein. He has terrific experience actually working in the machinery of trading as it is inked to different Asset Classes. I have a full disclosure to make. I had a bank account at the union bank of switzerland over half a century ago. Let me ask you the question i would have asked mr. Ermotti, is the pixie dust of secure thish still there . S the magic still there . Francine you have seen law irms hiring regulatory lawyers. For tax evasion, the u. S. Had to seriously crack down on a few of these banks. There is a little bit of dust. Watch out if you have something to hide. Tom lets wrap up the politics that we saw. Francine lacqua stunned in new york as the american spectacle of super tuesday. Donald trump and Hillary Clinton seven states each. That was the play and the expectation through the evening but at the margins, there were some really interesting ideas as well. Mr. Cruz with three states and mr. Rubio holding his breath at 10 00 p. M. Looking for minnesota. He won that. The delegate what you need to focus on is 23 . Give or take 1 for both mr. Trump and Hillary Clinton. 161 for mr. Cruz. 87 for mr. Rubio. Secretary clinton, 544 delegates of 2383. Bernie sanders picking up four states including his verbatim. Much of that expected. What is fascinating is the path on from super tuesday to a week from now, michigan and then on there to mr. Rubios florida as well. Francine, it is going to be the most interesting two weeks, particularly for the establishment of the Republican Party. Francine im still trying to figure out the key dates. March 15, this if and when marco rubio loses florida it is over. Hillary clinton is pretty much the nominee. Things can change but im right. Tom i think it was 1986 or 78 or one of them there was a mistake. Memorizing the primary schedule is a mistake. You so forth go day by day. There are important caucuses including wyoming between the super tuesday in michigan. Well do this again through all of bloomberg surveillance this morning. Right now london with caroline hyde. Caroline thank you. A u. N. Security Council Votes on new sanctions for north korea have been delayed until today. The sanctions are aimed at punishing north korea for its recent missile launch. They would be banned from selling minerals. The Worlds Largest money manager said levering the European Union would be a big risk for the u. K. And holds few rewards. Blackrock warned it would generate less Economic Growth. The volatility in the u. K. And European Assets would increase caroline hyde. Francine . Francine as we look at the negative rates we also look at the impact that this has on global currencies. Were joined by from london. If you had to pick one currency that was most difficult to predict, would it be either pound or dollar because of these unknowns in the political worrell . I actually think there are quite a lot of unknownings out there if you look at the potential landmines. The brexit. It has been volatile. The market tries to pin down exactly how many times it might hike rates this year. Outside of the you have quite a lot of risk in asian market. North korea has emerged as a key risk there and has been weighing on the korean won. Ongoing concerns around china. Francine if you look at Political Risk and how difficult is it to try and figure out a trump win . How that would play out on the currency markets and on the dollar . I think that would be a big shock to the market. Certainly there is a lot of uncertainty around that at the moment. Well watch to see the next few weeks how the dust settles before we make any forecast provisions on the back of it. What it means is things will remain somewhat frozen in the u. S. Regardless of who takes it. Tom sue, if i look at the japanese yen and the migration the big announcement of a number of weeks ago and stronger yen now, is it the opportunity of the year to bet on a weaker japanese yen or is that the sucker bet of the year sue i wouldnt know whether it is a sucker bet. We think the buyers for that currency here is to be higher. We do see two or three rate hikes that year. The gravertational pull should see rates higher. Tom george bory with us from wells fargo. I like the gravitational pull, the litmus paper through trends, foreign exchange. Explain to us right now what the unreal real rate is within your space . George i dont think the real borrowing cost is high for corporate america. Especially for high yield companies. If you look at your average High Yield Company trying to borrow money now, if youre a healthy borrower, youre borrowing money somewhere between 6 and 67 and with inflation lets call it at 1. 5 ish. Your real cost of borrowing is pretty high. But if you have any type of challenge or any type of concern, the market is actually imposing a very heavy tax on you. You go very quickly from 6 to 7 to 10 to 12 to 13 very, very quickly and that can be that will put tremendous pressure on a companys operating performance, on its funding ability, its credit worthiness and ultimately its survivability. The segmentation in the Corporate Bond market now is imposing a lot of discipline on different companies. Francine george, are we going to see more Corporate Bonds go into negative territory . Why are we so cool about it . George i think logistically it is hard. You can start to issue bonds above par that guarantee a negative return over the life of the bond. That is distinctly possible. But you know, sort of orchestrating in deeply negative returns or the corporate sector, it is not impossible but it sort of runs against difficult logic. Francine thank you. Sometimes were not seeing it play on the markets. George bory there. Lets have a look at what a lot of these equity markets are doing. We saw a very nice rally in commodities. The u. S. Stocks filtered through asia. The m m. I. C. Index gaining. Basic resources higher. Copper gaining some 1. 5 . Francine im Francine Lacqua in new york. Tom keene is in d. C. It is super tuesday. Still with us, george bory of wells fargo. We started talking about negative rates. It is a little bit crazy to think for example apple has a negative Corporate Bond. Is this rereach are we reaching the limit or could we see much more o of it . Are we creating bubbles . George if you look at fixed income in general, the low yield structure driven by quantitative easing and Government Bond yields falling is helping very high quality borrowers, if youre apple and with a to fund in euros, you can fund at very interactive levels. In the dollar block, it is still very much positive yield territory. Those obviously have come down pretty meaningfully and just a few weeks ago we saw apple do another very large delordenominated issue. It looked relatively attractive from a pricing standpoint. Borrowing costs continue to ratchet lower and lower as government yields go lower and that is a real boost to some very high corporate borrowers. If you have a singlea rating or ao above, it is like the world is your oyster. Francine certain oil sectors or, Oil Companies are being punished. The Balance Sheet looks healthy but they are being punished because of world growth. George i think we looked back a few years ago. Premiums came down dramatically. Now risk premium is relative to Government Bond yield, looks pretty attractive. A Corporate Bond looks pretty attractive. The only yield that is still pretty low, if youre borrowing at 3 or 1 or. 5 or maybe negative, there is a lot of sensitivity to Interest Rates and inflation. Ultimately any marginal change there is going to put a lot of downward pressure on those prices and you have seen that. You can see how quickly that moves already. Tom right. George, what is your expert as a separate 1800and indistinct world over the bond market san francisco, i look at the full faith and credit, automatic vanilla yield curve spread, it has flattened out, a lot of people including you have predicted curb flattening. What does a vanilla two cent spret not at a recession level, that what does that mean for the high yield disstressed market . George i think it means that growth is slowing. It is not implying a recession. That is very, very important. When you look at Corporate Bond markets, the way bond markets have sold off would have suggested that we were heading directly into a recession. Were seeing the market come back a little bit and improvement in credit spreads and bond prices. Particularly at the loaned of the curve, lopeds of high yield in the deeply disstressed parts of the market. There is still a lot of tension. In the world of relatively slow global for surveillance this morning on americas we are on Bloomberg Radio later this morning. Jared bernstein will join us from the center of budget and policy. Well talk to him and lanhee chen working with marco rubio. That is a wonderful lineup on mericas politics. Tom up at 19th street. At that steakhouse next to the acclaimed willard hotel. They are the republican establishment. They wake up to a critical 14 days moving to michigan and then on to florida for the grand old party. It was most fascinating last night. Well continue our coverage through bloomberg surveillance this morning from washington. Francine lacqua is in new york with a look at the week. What do we have . Francine we just had some breaking news before get to what we need to watch out for the rest of the week. The Sports Authority, a retailer in the u. S. , a Sporting Good and apparel retailer just filing for chapter 11. Were understanding that basically they will plan to file for bankruptcy within days. Now this is tom, i guess it is huge because we talked about defaults from the fact that in this kind of environment, we may see more retailers go under. Tom have you ever been in a Sports Authority . Francine i havent. Do they have them in new york . Tom i remember the day of their i. P. O. Years ago. This is a symbol and a massive shoutout to someone we spoke to on bloomberg surveillance. Way outfront on the challenges. I think mr. Davidovich would suggest this is the tip of the iceberg. Sports apparel competes with amazon. Francine there are parallels to the u. K. Retail sector. These kind of Sports Companies are struggling. On the other side of the atlantic as well. Lets focus on banks because we have a big banking conference in frankfurt. Michael moore is leading our coverage from the Banking Sector in london. We spoke, we had a great interview with the chairman of u. B. S. , sergioermotti. He said he was looking at the impact of further negative rates on the european Banking Sector. U. B. S. Said they can withstand it. Others wont be able to do so well. Right. Sergio talked about the impact it will have on banks forcing them to go further out the credit spectrum. That is something some of the Credit Rating agencies have warned about, this notion of force them into riskier loans and youre also going to have to see them take other measures, hsbc, their c. E. O. The other day talked about disparaging deppeds on the continent amid these negative rates. I think youll see more of that as well. Francine what did you make of the comment it would be nice to have utilitylike Pricing Power . He is probably not alone in that. Certainly a lot of bank c. E. O. S have rejected this notion of the bank as you tillity. They are not the growth story that they used to be but they are also not the income story that many utilities are and they dont have some of the structural advantages so i think they are hoping that this is a transition period before they go back to being a story but as he said they would like to be more like utility. Francine thanks so much. Michael moore in london. George of wells fargo, well have plenty more from him and talk about what janet yellen can do next. Well talk to the Capital Markets chief investment strategist. Kindness between cruise and rubio as they try to make it to the gop connection. Sanders helps clinton adjust her message against hate and anger. Forrecalibrate michigan and on to florida. Good morning, everyone. This is bloomberg surveillance , live from our World Headquarters in new york and also from washington. I am tom keene, and in new york, not in london, Francine Lacqua. What did you learn about the political system of america . All, if yourst of look at Global Equities and the runup that we had in u. S. Stocks yesterday, at the moment we are not seeing any effects from this political upheaval. Is this the most baffling super tuesday ever for you . Tom absolutely. You talk to halpert and heilemann, and it is an original year. You just pray, pray, pray that markets will write the next volume. Is sportsws item authority. We see this, i believe, chapter 11. A really remarkable thing to me, to see what Sports Authority did. Francine Sports Authority is a retailer that has had a lot of trouble in the past. I do not know how surprising it is, but it is huge news because they are filing for bankruptcy. Tom we will see how that goes and have more perspective on this through bloomberg surveillance. Lets recap super tuesday away from the difficult wednesday of Sports Authority. Mr. Trump and mrs. Clinton have seven states each last night. That was widely expected, not a real surprise in any way, shape, or form. But the nuances for the other candidates are critical. Ted cruz had a big win in texas, and of course a very challenging night for marco rubio. The tension in his face i saw him on fox around 9 30 last night, and the tension in his face of needing to win minnesota to get a little bit of momentum on to michigan was absolutely it was front and center in his face at 9 30. Of 1000, 237h 285 delegates, ted cruz far behind at 115. Mr. Rubio has to find a vision here. Mr. Trump went after mr. Rubio. Donalonto the Democratic Party as well. Bernie sanders, winning four tes, but they were removed retary clinton starting to mrs. Clinton has 544 delegates, 23 of 2383. She and mr. Trump share that very much in common. Mr. Sanders follows up with 349 delegates. I believe michigan, a week from yesterday, will be a most interesting sub super tuesday. Super firsto to word news with caroline hyde. Caroline the yuan secretary Council Votes on new sanctions the u. N. Rea secretary council vote on new sanctions for north korea has been delayed. They would also be banned from selling minerals. The world pass largest money manager says leaving the European Union would mean big risks in the u. K. But few rewards. Blackrock warns that the country would generate less Economic Growth and have a drop in investment if voters decided june to leave the you to leave the e. U. The Obama Administration is sying to shoot down apple refusal to release we are not against phone encryption, our only concern is with i think companies are developing things every day. Technology has changed so much in the last six months, those two years, three years. We do not know what is on the horizon. Caroline apple says complying with the court order with threaten privacy of millions. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am caroline hyde. Tom . Tom lets do a data check. If you were following the politics, you may have missed the deal, cross asset looking at equities, bonds, currencies, commodities. The yield is higher, risk on over the last few days. Oil with a legitimate lift. Brent crude on to the next screen, if you would. Handle,ude with a 36 36. 54. I would note the dollar index. This is not something we look at but it is the same at 98 point it is sustained at 98. 45. That is a big bundle of dollar strength. Francine you have to look at yields in europe, germany coming off with a five year option. It is wednesday. People are not worried about where world growth is going today. Growth see the msci will index at 0. 4 . We had a nice rally not only in asia but in europe last night. The ftse just turning but pretty much flat. Copper getting some 1. 5 . Lets bring in our guest for the hour. Great to have you on the program, because we also just found out that Sports Authority filed for bankruptcy, chapter 11. This was coming. They had not done so great in the last decade, so at some point against so at some point i guess they had to face the music. It speaks to the secular structural issues with respect to traditional retail, that for all intents and purposes has been unwinding for several years. But the velocity of the unwind has taken hold the less two or three years as Companies Like amazon and cosco have taken over with respect to traditional retail. For instance, a company like Sports Authority has to deal with nike and under armour and all these brands that people are going right to the brand to buy their equipment, so that is what i mean by sexual o secular stru. It looks like we are starting to see one by one this forcibly change. This is for retailers that do not keep up. There retailers that keep up in the way they offer the goods or they have their goods that they want to buy. Is that fair . if they go in and out, you have seen things in terms of whether or not it is a denon ,ear or other types of trends and then you have the capacity scarcity situation in terms of where you are able to buy the goods and services. The bottom line is why it is such a secular problem. There is too much retail or inventory per you walk down 7th avenue in new york city, and store after store after store, they need to create more of a scarcity to be stronger in longerterm growth. Tom we are going to continue this conversation. Brian belski, lets go to your research note. I thought your quote on the bull market was spectacular. This remains the largest bull market in our careers. The largest stealth bull market of our collective careers are i do not buy the idea that it is just because of the shock of the great distortion or the market crash of 2008, the lehmans moment. There has to be some other reason. Brian from a longerterm perspective, a lot of investors have no perspective because they have not been in the business pre2000, so they have not seen the real cycle, meaning the 1980s and the 1990s. Number two, people forget that andhis 15 year bull market compliance, the compliance issue started in 2000 and 2001, that put a crimp in the Financial System and forced other things to happen, into 2007 and 2008. The general distrust of the Financial System from a sideline skill from a psychological perspective is deep. Going in equities, equities in particular are in the bunker, and Equity Managers are in the bunker, so they are managing their portfolios accordingly. No one has longerterm perspective, and we are trading more of the blips than we are trading fundamentals. We think we are heading into a fundamental market. Within that fundamental market and we will get back to that with our single best chart we spoke with mr. Ahmadi of ubs. Can brian belski be in the financials if ubs, jpmorgan, and , if they areurgh going to be a Utility Industry . Brian three different companies, but at the end of the day we think we are seeing a generational opportunity to buy high quality things not only here in america, but canada, especially considering that financials remain on the most feared sector in the world there over complied, there is too much regulation. As the economy continues to recover, we think loans will continue to grow. But the real picture is going to be the final transition, or the beginning of the transition out of bonds and into equities. That is an expressly profitable business. Tom you can buy the Canadian Banks if there are no canadian teams in the nhl stanley cup . Is that true . Brian it is true. It has been a tough year for canadian hockey. But the haves will do ok this year. Tom we will have to see how this goes. Brian belski with us. Wewe run out in 60 minutes will have to extend to 80 minutes. What we will do is talk Washington Capitals with a great lineup of washington experts. We are thrilled to bring you on Bloomberg Radio this morning, e j dionne of the Washington Post with his perspective. Jared bernstein on the economics of clinton and mr. Trump. And lonnie chen in support of marco rubio. That will be on Bloomberg Radio. Bloomberg surveillance. Tom it is a shake in. Good morning, everyone. Bloomberg surveillance, from our nations capital. Francine lacqua in new york as well. We welcome all of you. It will be a most interesting 14 days, from michigan and on to florida. Martin shanker is with Bloomberg News in washington, which barely describes his global services. Forsenior executive editor global and economics. If you were to its plain hell important florida is in 14 days, it is a big deal. Martin it is a huge deal, and rubio. Lly for marco that is his home state. He has to calculate if he can win. Tom i thought bret baier asked tough, hard questions, and mr. Rubio was shaken. What does he need to do to get that president ial feel that you see from mr. Trump or mr. Cruz last night . Martin he has to make the calculation he can win florida because if he does not, many people are saying he can write off his little ambitions if he does not win. There is a lot of pressure on him to get out. Francine will ted cruz dropout soon . Martin will ted cruz dropout . No, not at all. He is the only candidate who has actually beaten trump in the primaries, so he is feeling energized. Judd gregg of New Hampshire yesterday was saying that he would support the candidate. What would you and your team suggest the establishment would do . What is there tactical todo to get the ship righted . Martin this is the real conflict within the Republican Party. If they want to stop donald trump, they have to coalesce with another candidate. If it is ted cruz, another antiestablishment candidate. They faced with a very difficult choice. Do they go with trump the outsider or cruise the outsider . Francine why does the Republican Party as a plan b not split up . Desperate times, desperate measures. They split up, they can basically kiss off the election this cycle. Tom did you see Savannah Guthrie on msnbc . Chuck toddery time mentions the whig party, they take a drink. It seems like a historic moment, but dont forget, Barry Goldwater only carried two states, and everybody was writing off the Republican Party then, and eight years later we got richard nixon. The big advantage of talking to you is you talk to all of our domestic political teams. What is the risk with the republicans in the senate and the house given the donnybrook as we go to florida . Marty it was interesting last night that donald trump said he barely well knows paul ryan and sort of nose mitch mcconnell. For a republican candidate to say he barely knows the leadership in congress does not bode well for anything substantive. Tom the establishment will be around us, drinking bourbon. Marty drinking bourbon and holding their heads because they have no idea what to do. Tom Marty Shanker with us. Authority with sports , he predicted it. Howard davidowitz will join us. On the great struggle of american retail. From washington, from new york, this is bloomberg surveillance. Tom we welcome all of you worldwide. The focus on the nation, the focus in new york is on economics, finance, investment, and indeed politics as well. New york wakes up to a march with a struggle in retail, to say the least. Sports authority goes under this morning, filing for bankruptcy. Joining me, Francine Lacqua and limits is Howard Deville is Howard Davidowitz. Howard, congratulations on your call of retail distress. Who is the next Sports Authority . Howard i am just going to say this. There are about eight Retail Companies out there with their bonds selling at pennies on the dollar, and it is pretty easy to figure out when youre bonds are selling at . 15 on the dollar. , and most long list of those will be gone this year. Tom you have done well linking real estate with the larger bills due in retail, with getting merchandising right. Sports authority i use their tights when i do my yoga but Sports Authority did not get it right. What did they screw up . Howard one, they let dicks Sporting Goods take over the business. They were the king of the hill just like bnp was king of the hill, like sears was king of the hill, like lots of people working of the where king of the hill. Francine bloomberg understands that sports will close about 150 stores as part of its bankruptcy plan. With dicks Sporting Goods buy them . Does that make sense for them because they are not doing so badly . Powerhouseks is a and they have all the things that the customers want, just like in the nike stores. I think they will buy a lot of them and just continue to grow like crazy because dicks Sporting Goods is the big winner in the space. Francine brian, is that right, what howard is saying . Eight retailers on the brink . Brian i think what has to most likely occur is that you have to , maybe theypanies will cut more than 150 stores. It will prove to investors to reengage on the recovery, and then investors have to decide whether or not this is real change or a trade. That is the key thing with respect to retail right now. When you go in a bankruptcy, everything is totally out of control. The creditors are there, everybody is there. There are hundreds, thousands of Retail Companies that go out of bankruptcy. How many of them are still operating today . About one out of a hundred, maybe . They are never the same again. Tom compare and contrast Sports Authority and the workout they will go under with the recent exercise in American Apparel. Explain to us the lessons you learned from American Apparel. Howard American Apparel was totally different from Sports Authority. They were the only apparel manufacturer manufacturing in the United States, still doing it, which is impossible to do. Also, American Apparel expanded all over the world with one store in this country and one store in that country. American apparel there have literally been 100 apparel chains that went broke. There is not one of them, not withf them who is still us. That is the shape American Apparel is in. They will not be with us in a few years from now. There is no such thing as reorganization in retail. You reorganize, disappear a few years later, and that is it. Tom Howard Davidowitz with spirited perspective for Sports Authority as they file for bankruptcy. Us, and iki is with look at bankruptcy and i know it is not your area at all, but it is a part of our system. Which sector will we see the most Creative Destruction over the next few years . Brian you always want to look duringt sectors led really large moves in the market. In the 1990s, it was technology. The last cycle was about financials and credit. Now energy has to go over some massive structural change, and whether or not we will see some bankruptcies, it is too soon. Tom we will come back with brian belski. This is bloomberg surveillance. Francine i want to show you the markets around the world, taking a break from the angst we had. In the last couple of weeks, you can see the index getting 1. 7 percent, a twomonth high. They are less concerned today about growth in the world. Also australia, copper rising to the strong as level since november. Corporate debt also against default rate we are riskon. Tom i am glad you mentioned rebound,eally a nice and we will let others decide. Super tuesday an original for the nation, they be taking the concept back to 1976 for mr. Trump. For mrs. Clinton it was a better than good day. Seven states each, really quite expected, and they gave the expected speeches for the most part. We will get to that in a moment. Away from them was the unexpected, ted cruz taking three states, including texas. Challenginghaving a early and middle evening, a sigh of relief as he takes minnesota as his one state. A delegate update. 285 mr. Trump, 285 delegates. Mr. Trump was not a surprise, when after mr. Rubio. Was a trump i know it tough night for marco rubio. He had a tough night. He spent a lot of money. He was a lightweight, as i have said before. Tom almost like a dress conference last night with governor christie behind mr. Trump. Secretary clinton took a shot at mr. Trump in her victory speech. It is clearton tonight that the stakes in this election have never been higher, and the rhetoric we are hearing on the other side has never been lower. Trying to divide america between us and them is wrong, and we are not going to let it work. Hillary clinton, searching for love and kindness seems to be the theme last night. That isd colorado an eclectic mix for mr. Sanders. The delegate count for mrs. , in the vicinity of 23 . Mr. Sanders is far behind with 371 delegates. Right now we need to go to london, and our bloomberg first word news. Caroline ban kimoon says the working. E in syria is he says the government and rebel forces need to share their good faith that humanitarian aid can be delivered to those areas. In spain, the head of the socialist party is asking lawmakers to join the alliance to oust Prime Minister the Prime Ministers peoples party. If lawmakers reject sanchezs plea for a coalition, it would have two months to find a Prime Minister before spain has to hold another election. A new study says london has beaten new york and five other cities to be the worlds socalled soft power capital. London isrates more diverse than other cities. It now has the largest number of high skilled jobs in financial services. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am caroline hyde. Tom . Tom thank you so much. It is not a soap opera anymore, but it is a discussion. The wonderfully performing honeywell step away from united technologies. utx is not going to happen. We would like to know what the discussion in the boardroom of honeywell was as they walked away. There lovely dining room overlooking the park today. Our guest joins us now to say he works withh the establishment of the grand old party, leading off with senator lott. I love to say that name trent lott. It is another time and place for your Republican Party. What is your twodo list for europe of them party . That the race is being tightened between Hillary Clinton and donald trump. There are multiple republican candidates. Donald trump will continue to vacuum up those delegates, and i will make it difficult for the others. It is not a twoperson race. You have ted cruz, marco rubio, and even john kasich at the party. Said he can get to the nomination. Do you see evidence that he can beat tech Terry Clinton . Ron the polling shows that clinton would actually beat trumpet this point it however, trump is a chameleon, as we have seen over the last several must. I could see him switching out to be more of a centerleft candidate in order to win the nomination. Right now, no, i do not think he could beat secretary clinton. But eventually he potentially could. We just do not know when it comes to donald trump. I will translate for you. We grew up with southern democrats. The idea of southern republicans is just as germane. Francine trying to figure out what it means for economic policies, it does put the Republican Party in disarray in many respects. When you look at u. S. Politics currently, in the past every u. S. President ial election went to a lot more volatility for stocks. Is this year different, how it is playing out on the market . Be a it most likely will little bit more enhanced because as we at his investors are still dealing because we as investors are still in dealing with the unwind of the energy sector, the emerging market, and what does the fed do next. Given the fact that so much of investing is focused on what the fed does, now we have to look at with who is going to be leading our country for the next four years. This is going to be a volatile summer. That the market was going to pull back to 1800. It already did that. We think it will be volatile. The election and politics will have a big part in it. Tom you look at the politics of it. To get back to the horse race that we have right now and to go from a horse race to what you do so well, which is strategy what does the republican strategy not need to do . What do they not need to do . A difficult question because the republican establishment is scratching his head, trying to figure out what to do with themselves. With someone like donald trump, and now the alternative, their hope was marco rubio. Instead it looks like it is going to be ted cruz, neither of which are something the republican establishment is in love with. Even senator Lindsey Graham said he might have to support ted cruz to beat donald trump. If i were the republican establishment, i would not try to get in the way of donald trump. That is the voters speaking. Tom one more horserace question. Was mr. Rubio running for Vice President last night . Ron know, in the heart of each of these candidates, they truly believe they are going to be president in the United States. I do not think he thinks he is running for Vice President. At the same time, the insults he is lobbying against altra would he is lobbying against donald trump would most likely axe him. A sense ofive us whether you think it is a clear win for Hillary Clinton to get the nomination, or if Bernie Sanders can get this back in any way . Ron i think clinton is cruising toward the nomination, no question about it. Sanders can pick up a few other states, but the momentum is in Hillary Clintons direction. She is a gigantic snowball going down that hill, and Bernie Sanders has a lot of catching up to do. Francine what is the one thing that baffled you the most yesterday . We talk about 2016 being a president ial year like no other. What are the underlying causes of this . Ron one of the things that baffles me the most are the multiple candidates on the republican side. Someone like john kasich, a respected ohio governor, but who has no chance of winning the nomination. He has questioned it. He was the skunk as a party ruining marco rubios chances in virginia, for instance, helping him establish a narrative. Someone like john kasich should think about dropping out. Tom one of your quotes here ,rom ejb on from ejb deion from the Washington Post tom as someone said last night in the heat of the crazy discourse, on the networks, this is the party of lincoln. How do the republicans reattach themselves to some sense of an american middleclass . Is exactly right. Donald trump has been appealing workers,gry white male middleclass, bluecollar workers. The other candidates have not been able to connect with those people. They will need other demographics in order to build a coalition to win in november, and they have to figure out a way to thread that needle. I think paul ryan did a good job in the last day or so standing up for republicans to donald trump. Do that unilaterally with the speakers power, or was he suggested to do that . Ron with the speakers power. It is ok to say that you do not side with the ku klux klan, than to say lets not play games with you look very establishment this morning. Coming up, on Bloomberg Radio we dionneeak with of the Washington Post. Also with Jared Bernstein, and money chen. From new york, bloomberg surveillance. Francine u. S. Futures are facing at an early rally, tracking oil lower. Tom keene is in d. C. Following super tuesday. Lets get straight to the Bloomberg Business flash with caroline hyde. Caroline bmw is in a battle with mercedesbenz for the self driving car. The german automaker is developing technology that will let the driver watch tv and check out facebook while speeding down the highway. It will be available in four to five years. Mercedes already has some Self Driving Technology in its car. The Justice Department accuses Aubrey Mcclendon of orchestrating the prices of drilling rights in oklahoma. Mcclendon denies the allegations. Three years ago mcclendon was forced out of chesapeake energy, the Natural Gas Company he cofounded. Sports authority has filed for bankruptcy protection. The retailers expect to get a 595 million loan to keep operations going. It may sell some of its stores. That is the Bloomberg Business flash. Francine . Us, brianstay with belski. We had an important conversation with the ceo at ubs. He talked about the impact of negative rates on banks across the eurozone. Have a listen. , thethink in general european Banking System is clearly has a huge capacity. The problem is creating an environment in which we learn from the mistakes of the past, that not every bank should try to copy the order, but rather every bank has to find its own to lead through the next phase. Francine he is also saying ubs is in a better position because of switzerland. But the industry at a but the industry as a whole is in overcapacity. Brian remember, the business relationship with asia is much stronger in europe. The european economy is much more reliant on what happens with asia, then what happens in north america and even in canada. The Banking System in europe is probably, from a very broad where the u. S. Banking perspective was in 2009 and 2010. It will take time, and through the structural change you have to cut cost, cut branches, take out capacity, and that takes a long time given the fact that so much credit creation occurred during the decade of the 2000s. Ubs is ahead of the curve because they started this process of shrinking investment banks on Wealth Management three years before their rivals are now trying to catch up. Overall, valuations in europe are so much cheaper than banks in the u. S. Are they bargains . Brian it is really important to take a look at valuations. Doitional valuation you believe in the earnings . Do you believe in the book value . You are still in the early process of contracting those valuations, number one. Number two, from a u. S. Bank and a Canadian Bank perspective, and how these companies and these banks are returning investments a return on equity, return on assets, and where the earnings are in american banks, we think are much more stable, much more believable, and it is all about consistency. Europeans have more of a problem. In terms of financial credibility, period. Tom within the American Manufacturing growth, recession, slowdown, are there opportunities . Do you wake up in minnesota and say there are just a lot of midwest, goodsproducing opportunities . You wake up in minnesota, you are proud of marco rubio winning at least one state. In ourongest part of gdp country is coming from the midwest. Investors around the world really positions themselves for and instrial recession, the last four quarters we have seen the Industrial Base go down. The railroadsnt, as we start to see gdp growth in the second half of 2016, and in 2017 and 2018, railroads and the Industrial Base are more explicitly positioned. We think that is a good place to be once we see more visibility on the earnings side. Francine we just heard from the Deutsche Bank ceo, john cryan, saying that the german lender paid a lot of legal fees because of legal troubles. He is hoping that the settlement will be resolved by the Third Quarter of 2016. Deutsche bank has problems of their own. They had to come out saying we have a strong Balance Sheet because of the credit note. Ceo does a European Banking need to do to convince you . Brian time, this is a duration game. In america in 2009, 2010, we were big on paying the charges. Get out in front of this, and then through that, rebuild the Balance Sheet, increase the dividends, things like that. Now we need to see the same thing from the European Bank system. Deutsche bank has something in his favor with respect to the german infrastructure that is growing and continues to show consistency from the economic perspective. They have that going for it, which is nice. Francine brian belski, thank you. , up on Bloomberg Ted olson. 9 00 a. M. View is at in new york, 2 00 p. M. In london. European stocks extending, rally futures down. Morning, everyone. Welcome to super wednesday. I am in washington, d. C. , at our news bureau. Francine likewise is in new york. Foreign Exchange Report we can exchange the idea that the yen is weaker, some significant yen weakness, 1. 1437, nowhere near breaking out of the yen weakness that the government wants. 114. 37. Nowhere near the breaking out of the yen weakness that the government wants. Bit of a foreign Exchange Report today. Francine . Francine coming up shortly, it with davidg westin and 70 will and Jonathan Ferro. What do you have on the show today . 66 points away from erasing all of the losses away from 2016. Fiveday winning streak, the longest such streak since back in october. You see in unwinding and fair trade as well, whether it is german or gold. The big policy meeting of the ecb next week i want to hear your interview with the ceo of ubs. Tom jon ferro, thank you so much. You can see the ahmadi interview in a bit. Our single best chart this morning is a smart one with brian belski. The idea of stocks and election lets look at a Perfect World of the huge apple trade, the yellow line down on the bottom just the modest performance of the s p 500 going back quite a ways versus apple. Individual stocks, if you pick them right, maybe it matters. Brian belski, where does it matter now if it is a value world . Brian what matters most is that when the markets rally, our value disciplines, our canadian clients outperformed. Growth outperforms when growth is scarce, meaning the value strategies are going to gain more traction as earnings in the economy continue to improve. Tom within that, not so much giving us names of value stocks, but where are the core ideas within sector . Brian financials, technologies. Some Consumer Staples are looking interesting. We are looking more at industrials, and health care, we think, toward the end of the year. Tom brian belski, thank you so much. Francine, thank you so much, in new york. Look forward to being with you tomorrow, back in new york. Bloomberg is next on television. We have a very important super tuesday followup interview in michigan and florida, and Jared Bernstein will join us as well. Working with Vice President biden, and the clinical and the critical interview with lonnie chen, who supports marco rubio. This is bloomberg surveillance. Ceo says that u. S. Banks are overextended. He joins us in an exclusive interview. Days before leaders gather to approve a fiveyear plan for the economy in china. All of this volatility is weighing on the luxury art market. The head of phillips joins us later. Hello and welcome to bloomberg. I;m Jonathan Ferro here with david westin and stephanie ruhle. David here with us, also, is josh steinem. Stephanie we have got so much to cover. Asia up today. You get a little bit of news out of australia. Asian markets like it. Lets get you first word news in london. You. Ine thank it was a big super tuesday for donald trump and Hillary Clinton. Each won seven states. Trump now has 285 of th