Streak due to data out of china. Joe it didnt feel dramatic at any point, but after a string of gains, we had a real selloff. Alix you could see it starting u. K. He miners in the that spread over here to the u. S. In particular, the u. S. Metal and mining etf, falling the most since 2011. Not sustainr could the rally. Joe japanese borrowing costs, sovereign debt, the yields continue to collapse. This is a chart of the fouryear bond. Rate 40year government bond. Its continuing with disappointment and growth and inflation. Scarlet in currency, speaking of japan, the yen getting a safe haven bid for the second day, stronger than 15 of the 16 major currencies. The pound had the biggest decline and a most two weeks. All of that stemming from the commodities market and the continuing route. You had oil at one point breaking above the 100day moving average, but could not sustain it, then declined over 4 . Goldman sachs saying you have to short copper, saying it could fall another 20 . Squeeze, a major short no notes said the rally was sustainable. You saw it play out there. Blame chinesean Retail Investors betting on iron ore. Into thee a deep dive bloomberg. Alix im looking at the gold price versus world stocks. This is a normalized to chart. They tend to move in opposition. Over thebeen happening last few weeks is they have been moving in tandem, higher. The theory behind Something Like investors global dont really think the rally in stocks is sustainable as one explanation for why they are both moving higher. Citibank said it is hard to see the correlation between oil and gold continue with oil as a proxy for stocks. 50 oil andave 1500 gold . Scarlet the u. S. Stock market is getting less correlated, good news for bottom stock pickers. The higher this line goes, the more lockstep all stocks move. February when investors theed on risky assets, by end of last week the correlation fell to a low. You less correlated market are look for value stocks to outperform growth stocks. The end of fang perhaps . Joe we mention this are there earlier, we could chinese export numbers, extraordinarily weak. Here are a bunch of lines that show chinese exports to the u. S. , the eu, everywhere, korea, japan, all down here in the 20 range year over year, really dismal numbers. No might have been some seasonal effect that cause this number to be particularly low, but these were worse than what people had expected. When you look at the sustainability of the chinese tonomic model, they continue invest for exports, these numbers dont say that is promising, pretty ugly for the world. Alix they are still importing go, iron ore up 8 . Basis, a year over year this is not reflect global trade. Scarlet it is the trajectory. You can see the charts and more on twitter. Alix i would like to bring in a Bloomberg News stock reporter. Scarlet lets start with the vix futures curve. Maybe a little too positive given that weakness we had today. If you look at the futures curve, three different curves,ooking at the vix, the spot going all the way back to october. Around march, which is now, getting pretty flat, generally sloping upward, thats normal. To januaryke a back when things were selling off, highly inverted, first month of aboved contract vix way next month. In the middle of february, yous started to rebound saw it flatten out. Through a certain degree it can tell you things, get less anxious going for it, but is aly it toes you there little less anxiety on wall street. You can see there is not that big inversion we had earlier throughout the selling. That is a positive thing for stocks. I was talking about gold versus world stocks, heidi expand the fact they are both moving higher . Is a perfectat example of a creative hedge. It is incredibly inverted, almost a perfect inversion, one goes up, the other goes down, but this is a time where rebound is not invoked a ton of conviction in the market, hasnt gotten people super bowl is. People super bullish. At least not taking off enough to keep it flat, covering, but still adding shorts on. People seem like theyre trying to fade the rally. Joe you saw scarlets deep dive showing stock correlations have been breaking down. Maybe it is a stock pickers hearingbut ive been people call it a stock pickers market forever, and yet the general trend is people who index and dont try to pick stocks. Real signs of that changing or is this temporary . We wrote in january about how everything is moving together, not just stocks, but large Asset Classes in different indexes. My colleague was talking about that correlation. It picked up a little bit. You have seen a little disconnect. There is a long way to go to get to a stock pickers environment. Ups version has not picked dispersion has not picked up, the only way it happens is on the way down. We have a long way to go. Scarlet that has been halted dead in its tracks. Way ahead of this one, corporate stock buybacks, huge demand inequities overall. There was an interesting chart that shows the breakdown of demand for treasuries versus stocks, and what is interesting is that buybacks totaled 2. 6 trillion, the purple line, from 20082015, more than wanted more than a quantitative easing. Alix im unbelievable thesis. What happens if buybacks roll over. You guys are awesome on charts today. You have to look at how much investors have put in and how much is taken out, that is less than the corporations have purchased. Joe somebody pointed out that q a allow those buybacks. There has been a lot of borrowing. It has slowed down a little bit. Tend to see that with Corporate Credit spreads widening out a little bit. Arguably one of the best pillars of the market. If that slows down because of credit spreads, Interest Rate hikes, the companies have extended margins, any of those factors could come together and that will be a big part of trying to figure out if the market could stay afloat. Alix we speak to the former ceo of bp regarding oil and 30 prices. Mark first word news. With primary voters headed to the polls in mississippi and michigan, Hillary Clinton has 50 of the delegates needed. She has 1134 delegates. Bernie sanders is 449. The utah chapter planned parenthood are challenging a Lower Court Ruling that allows the states governor to block federal funding. Isy say the organization being punished over those controversial videos purportedly showing employees from another state discussing fetal tissue from abortions. No word on when the judges will rule. Security officials in indonesia say the government will take all necessary steps to make for president obamas plan to close the prison at Guantanamo Bay does not result in the return of an alleged us out the east terror South East Asian chief, accused of heading and al qaeda link militant group for bombings in indonesia. Marking the second anniversary of the disappearance of the boeing 777. The Prime Minister says the government is dissolving what he called the agonizing mystery. Global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. I am mark crumpton. Alix whatd you miss . Big oilthe latest axe to itsing an Capital Expenditures. Chairman lord is john brown. You are looking at the decline in Capital Expenditure, do you think take oil needs to cut more . More ifobably will cut the price of oil stays low because there were not be enough cash around to do all the things it wants to do and still pay dividends. The Capital Expenditure has been cut, will have an impact, but not immediately on production. It will take several years to work through before we see an impact. Ae the big oil news from couple of weeks ago this idea that saudi arabia and russia had agreed to freeze production, not cut it. Will this have any impact in terms of stabilizing price, perhaps lifting the price . People want to see the reality of this agreement. Lets see what happens. Russia is doing well in production because the ruble is so weak that their cost base is down heavily, so they can keep going. Lets see what happens over time. These agreements require great skill to be made to work. Alix just the idea that they will talk has really helped to boost the oil price, in addition to some production coming off. Notlet that rhetoric does necessarily precede action, or is rhetoric enough that countries dont need to do anything . Markets, butoves then the markets go back to where they used to be. I think opec and the big producers really have to demonstrate that they are doing toething in a concerted way make a real difference. Over history it has happened only rarely that that concerted effort has permanently adjusted the price of oil. It has gone and come back. Alix as part of the big question in oil, where is all of the m a, any price value cuts m a off at the heels. ,here is no deal count for m a and everybody thought it would be coming. When will we see it . We dont know. It will come because everything is a delayed reaction. All, the amount of money that people can borrow has not been adjusted to reflect the price. Secondly, people still have a lot of production which is hedged, allowing them to pay debt service, but debt ratios capital high indeed and expenditure is being cut to the bone, maybe then people will have to put up the white flag, or some of them will clearly go bankrupt. Scarlet you have been in the oil industry for decades, rooms, bus, now the price of oil is driving other Asset Classes. How does that compare with other cycles . In the other cycles, it was good news when the price of oil was down. It boosted input costs were down, boosted production, and people expected Global Growth to pick up. Here people are using the price of oil as an indicator of demand weakness. Athink people are thinking bit like that anyway in spite of what is happening, and demand isss is the signal signaled in the decline in oil prices. Im not sure that is right. I think it has more to do with supply. Scarlet that makes sense when you think about china and the slowdown, central oil coming down from 90 to 70, but does it make sense at 30 . To my mind, no, it doesnt. People are still worried that less and less oil is being consumed, and that may not be the case either. Is still a lot of oil being consumed in the world. It is after all the big thing that moves people from poverty to a slightly better standard of living, and eventually to the middle class. Joe speaking of demand in china, chinese demand for oil has hit a new record even with the slowdown. Years ofr in the later the last decade when people talk ,bout china being the marginal demanding the marginal barrel and setting the price of oil. How significant is chinese demand in the global price of oil . It is one of many pieces of the equation. The middle east itself is quite important because a lot of the at very low cost in the middle east, india, a variety of places. China is important because these were new additions to growth, but other places are also important. , connect,our new book you talk about the importance of this is is in how they succeed. Tell us the value of risk . If businesses break the relationship with society by doing something that breaks the trust they have, their value is hit badly. You have to look at what happened to volkswagen. That event occurred two weeks after this book was published. Withu broke your bond society, you can expect your value to drop 30 , volkswagen went down 30 . Get theout how to concerns and the input from different parts of society into the Core Strategies of companies. A long time ago we in business used to think of customers as an addon strategy, now it is the heart of everything i company does. You have to think of communities, regulators, employees, all the people core to the strategy, not an addon. It takes quite a swipe at the developed activity of corporate central responsibility, which is perhaps a way of satisfying people but not doing very much. Alix thank you very much for your time. , coauthor ofne connect. Rowling, 30an bonds year bond paid less than u. S. 12month note. We have the chart to show you, next. Alix i am alix steel. Whatd you miss . Oilchart you need to see on companies could a lot of companies have raised equity, so lets see how they did for investors. Was pioneered resources, that white line, they issued equity here. Here, up here, share price rally, share price rally. Its rally and shares a rally, more investors are willing to give more money to oil companies, keeping them in business, giving them the money to survive. Loterpetuates the supply a glut. If youre willing to give money to oil companies, they will take it and keep producing. Need to sellhey shares, that means they need to raise cash. Think of the banks that have done that. Alix across the board for these guys who have issued shares. Scarlet it is a crazy world yieldu. S. 12 month notes more than a 40year bond. The white line is the japanese 40 year bond yield, 56 basis points, where is the 12month note yields 65 basis points. Everybody talks about Monetary Policy diversions, this is the one they should look at. Joe Bloomberg News did a version of this chart earlier. The 40 yeard it, was yielding less than the 12 year, and by this morning it had already fallen to that level. Japanese bonds is something that people have been doing forever. They call it the widow maker. Speaking of government bonds, we had a big rally, risk on, inflation, good news, but one of the people things that people have their eye on is the twoyear treasuries versus 10 year treasuries. If they invert, that is historically seen as a precursor to a recession. They are not inverted yet, but they are only 96 basis points, a lot flatter. Its not necessarily bad news. You can look back in the 1990s and see it was much flatter than it was now. There have been other times when it has been much flatter, so its not a warning yet, but as a gets closer to that zero line, people will be paying more attention. Alix it is hard to in for with twoyear yields at 1 . Joe maybe it already is inverted. Scarlet what could break up the European Union . Be the strawould that breaks the camels back. We will discuss. The first word news. Paul ryan has spoken to donald aboutand senator ted cruz the republican agenda. He plan similar calls with marco rubio and john kasich. The conversations, as gop leaders have called for the party to find an alternative to donald trump. The World Health Organization says reports from several countries show sexual transmission of the zika virus is more common than first thought. There ish agency says increasing evidence that a spike in birth defects is caused by zika, mostly spread bite mosquito bites. , chinas president threatened to punish polluters with an iron hand. Now there is evidence the iron hand is loosening its crib. Air pollution in beijing has improved, but there have been a number of days where air quality was listed as hazardous. Global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. I am mark crumpton. The s p 500 had the worst day this month, halting its winning streak. Asian markets opening, paul allen is in sydney. Good morning. Good morning. Were not expecting great things today. New zealand opened for about 30 minutes, looking flat, expecting asx ands on both the the nikkei as well. Expecting a deal between sharp and foxconn, but now that looks like it will be put off until tomorrow because foxconn said they could not convene the board. Investors flocking to the yen as a safe haven. Malaysia, a Cash Register from their, the rate staying on hold, but an interesting meeting the cousin it is the last for the central bank governor, and no replacement has been announced. Scarlet also, some big australian miners will be in focus. They got hit hard in london. They did. Tinto, 9. 4 , rio off as well. Even though iron ore has ofbilized at the high price 63 per ton, nobody expects that is sustainable. Stockgulator asked by the sharpge to look into the spikes and steep decline. That is what we are watching. Alix whatd you miss . A recession could destroy a eurozone. From neville hill, raising the stakes for the ecb when it meets. Could a recession mean the end of the eurozone . The third recession and a decade could put the financial and Economic Future of the eurozone at risk. A renewed increase in unemployment would further fuel the support, particular in southern europe, for radical populist parties. We would have three recessions effectively pushing the employment rate backup. At that point, a lector its on the political and Economic Framework of they are inhabiting and effectively seeking a different political and Economic Future. I think politics is one fault line that another recession would build up. The other is the financial sector. Scarlet i wanted to ask about the broader backdrop. Area cyclicaluro indicators, and it looks as though it has rolled over. With emerging markets having bottomed, what does that mean for europe . I think it means cyclical momentum will continue to weekend. Europe had outperformed over the last year or so. I think this slowdown looks to be broadbased across a range of economic indicators. It is likely to continue for at least a few more months. Thehat regard, it does put eurozone recovery at a bit of a risk in the sense of having seen a long time were economic momentum was strengthening, it is starting to deteriorate. Joe who is to blame for the weak growth in the eurozone, the ecb not doing enough . It seems that mario draghi is the only one doing anything. Heads of statet not doing enough to boost things on the fiscal side . What is it in your view that is preventing a true robust recovery in the eurozone . Fiscal policy, if you want a theer bullet to transform Economic Outlook in the eurozone, and in some sense push a satisfactory economic recovery into something more sustaining and diminishes risks, a fiscal stimulus would without question be capable of delivering that upside to growth. The weakness in demand is persistently persuasive across the eurozone, continued high unemployment, theerforming loans, and eurozones very large account surplus. Alix what happens to banks . If you have tightening credit conditions, and weakness and breaks banks, how likely will they be to lend . Scarlet you talked about blanks banks being another major risk. Centralful are you of banks, negative Interest Rates, but is it enough . Ask what theyr to might do to help the banks. For me, that is the area i am most worried about. The eurozone has been in a virtual circle, and financial conditions in the Banking System, and sometimes delivering stimulus that sustained a modest recovery, it is vital that that continues. I think in part that is a consequence of markets being worried about negative Interest Rates. The ecb will probably shy from being too aggressive in cutting the rate. We are only looking for a 10 basis points cut. One thing that can help is credit easing through purchases of Investment Grade Corporate Credit or a further provision of liquidity to the banking sector. Full estimateour of what you think the ecb will do this week, and how do you think markets will react . I think markets will react positively in part the cousin expectations are much more cautious going into the meeting. It is also the case at the action is more likely to be bold than it was in december, when markets were collectively disappointed. If you look at what the Economic News has done in the last few months, it has been materially worse. Economic data, which was strong and now weaker, and Inflation Numbers which were picking up back in december on a core basis , so were looking for them to cut the rate by 10 basis points, a larger extension of the quantitative easing program, another 20 billion a month, also credit easing through small purchases of corporate Investment Grade credit. Back to theng banking sector, because it is such a sticking point, the sector has stabilized recently in the past year. When you look at the nonperforming loans, especially the italian banks, you have to wonder at what point we have peaked on that and start going down. Alix you talked about the correlation between nonperforming loans and the Interest Rate, thats where the Banking System has the risk for the ecb. Cycle thatvirtuous turns quickly into a vicious cycle if we get that recession scenario. To some extent the recovery at the moment, and in particular what matters for banks is earnings is the recovery continues, and those ratios in theigh italian banks and other parts of the sector can start to abate. , earnings ands capital are likely to improve as a consequence of recovery. If it goes the other way, it tell you we are at risk of a Sharp Financial selloff and those easing financial conditions in the euro will ando tighten and the intensify. Bill andwe hear from Melinda Gates on the importance of womens role models across all parts of society. Scarlet i am scarlet fu. It is time for the Bloomberg Business flash. Shares of Lumber Liquidators betting against the company for a second time. The most vocal critic before announcing the end of his short position. Liabilities are likely to cripple the stock. United continental shareholders are battling the board. Candidates,g six including a former continental ceo as part of an insurgent ectors slate here it slate. They are frustrated with the airlines and blame the current board. Alix residents are renting instead of buying. In 2014, upters from 23 in 2006. Among the reasons for the renters surge, foreclosures and tighter credit. That is your Bloomberg Business flash. Whatd you miss . Stephanie ruhle spoke with Melinda Gates of the bill and Melinda Gates foundation on how women need to be role models at all levels of society. To see female role models at all levels of society, so you want to see them at the ,orporate level, boardrooms ceos, government, nonprofit sector. I think having a woman makes a difference. At the end of the day, when you are in electing the next leader, you have to elect them on the platform and what you believe in. Men, justing trudeau the Prime Minister of canada, and doing amazing things. And be be a man or woman profemale policy and probusiness. Had to kasich said we get women out of the kitchens to help with their campaign. He said this in 1978, but it is true. Women do want to be with their them up at school, do we want jobs that require 40 weeks of traveling a year. Women deserve many options, and they should decide for themselves what a fulfilling life is, whether it is in the u. S. , western europe, or the developing world. Many people want to care for their children and elderly, that is fantastic. Women will also tell you that also feell for fulfilled if they get to work. Part of our annual letter talks about all this unpaid work that women do at home, and lets name what it is, it is work. We should put a tag on it and say, lets measure that in our gdp, because in the developing world women do five more hours at home than men, and it keeps them out of the economy. The want to make sure women have those choices available to them to name the work at home and the work in the workplace. You have written a letter, set a plan, a year from now, how will you measure your success . I will measure it if the world continues to get better for women all over the world. To clickting statistics as a foundation to say whether life is Getting Better for women in tanzania, western europe, the united states. We look at women in business, are they having entrepreneurial success, able to do the things they want to do, so we will use the data to measure. You have done such great work for women and girls, do you feel satisfied and fulfill that so are still frustrated . I am frustrated. I call myself an inpatient optimist. The world is Getting Better for women, but not quickly enough. We need to do a lot to move forward. We blame Corporate America, but is a Corporate America or the society . When it comes time to take my child to the doctor, the school calls me, the Doctors Office calls the woman, and i do consider myself the primary caregiver. Is it the corporations, government, or us holding us back . It is all of the above. We dont have a great hate family leave policy at the federal, state, and corporate level. We need a policy change, but also recognizing that this is and as a society we want to a change that you can , but the it, reduce it third one is to redistribute it. We have to have these conversations in our home and role model in society and do what is right. Ruhlethat was stephanie with Melinda Gates of the bill and Melinda Gates foundation. Scarlet jack dorsey doing double duty. , we did in two squares financials one day before it reports as a public lee traded company for the first time. Scarlet i am scarlet fu. Whatd you miss . Square set to report its first earnings as a publicly traded company. Jack dorsey,on because he is also ceo of twitter. How he juggles both is a critical question going forward. At aroundck trades 12, not far from his postipo peak. Thirdent is negative, a of its shares short, in part because the company is not making money. Net income on adjusted terms is trades atyet square 10 times revenue, the valuation for visa and mastercard. Slowed tovenue growth almost 50 in the previous quarter. One reason why is the transaction revenue rate, 2. 95 previous three months. This decline is due to squares efforts to lure bigger clients away. Another drag on revenue is slowing blame growth. Most growth comes from increasing sellers using it service, currently more than 2 million. Gadget first of its kind allows anyone with a cell phone or tablet to accept credit card payment. Square needs to branch out to grow. One strategy is to use transaction data to help merchants conduct targeted marketing. Square will report its results after the u. S. Closing bell on wednesday. Alix good stuff. Digging deeper into square is david ritter, senior payment analyst. Scarlet mentioned jack dorsey wearing two hats, how does square deal with that . How do investors do without . Sure. I think investors are sophisticated enough to take the two companies separately, but it raises pressure on square to have positive results. Thats has struggled, so something to look forward to this week. Scarlet is there a discount on twitter because of that jack your seat effect . Relative to other Payment Companies are higher growth Payment Companies, it has had a sharp recovery of late. The Earnings Report will be telling. There has been positive chapter on the street coming into the quarter. If you look at the growth estimates going out, this is a Company Moving from hypergrowth, doubling its revenue in 2015, by 2017,teens suggesting a lot of skepticism on the street. Joe how is sentiment towards square compared to paypal and other companies. I know there is a lot of interest in one particular unit. What are investors most excited about these days . In terms of paypal, they have multiple growth drivers. Thats the most important thing to look at. One theyre trying to monetize with letting people pay at merchants instead of just pay each other, that is one avenue of growth. International is a big avenue of growth. So there are multiple channels. If you look at square, in essence it is a merchant payment processor. That is a highly competitive segment. So they came along with a very exciting proposition, simple unit,g, an all in one hardware, and everything you need to process payments. For a small business, this was a great thing. The problem now is that that whole thing has been discovered. First data has their product called clover. They have this massive distribution network. Differentall kinds of names out there selling things that look a lot like square. Im sure youve seen ipads when you go out shopping. Those are all things that compete directly with square. The question is when will square start making money. Scarlet do we have any indication . They put out in their road show a longterm target for 20 to 25 revenue growth. Scarlet what about profits . Street estimates are not looking for profit at all, and a marginal one in the latter part of next year. Alix is that sustainable . It is. It is a fairly good margin business on a transaction itself. The reason they are not making money now is because they are trying to spend a lot of money to expand their distribution beyond just what it is now, just a word of mouth sale. People heard of it and go to staples to pick up the unit or send in for it, but they are competing against companies that have a lot more distribution. You veryid, thank much. David ritter of bloomberg intelligence. Full coverage of various sectors on the bloomberg terminal. Scarlet breaking news, doubleblind capital making comments now. He is holding an Investor Webcast and says the market is pricing in one Interest Rate increase. He also says oil rising more than 38 is much more challenging, and there is no base case for u. S. Recession in the near term, and that we now have what he calls quantitative tightening. Also says the s p has about 2 of side and 20 downside, making for a lousy riskreward tradeoff. He weighs in on the elections pretty says if donald trump wins, expect fiscal stimulus for the military. Joe there you go. Coming up, what you need to know to gear up for tomorrows trading day, next. Norway releasing reports on investment. Joe mortgage applications, another part pulse of the housing market. Scarlet find fantasy shows. When it comes to the things you love, you want more. Love romance . Get lost in every embrace. Into sports . Follow every pitch, every play and every win. Change the way you experience tv with x1 from xfinity. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. John i am john heilemann. Mark i am mark halperin. With all due respect to dreams of republicans ability, the race is dog eat dog. He could not run for dog catcher. I do not think he could be elected dogcatcher. I think we heard that, mr. Trump. Some suggesting this is dog whistle politics. Lies like a dog. Romney choked like a dog. Choked like a dog. He knows i know