Push things up. Joe Consumer Discretionary is leading the way. Overall it was a pretty quiet direction less day. Scarlett scarlet alix turkish stocks surprisingly posting their longest rally in a must for years despite the terrorist bombing we have seen over the weekend. Muddling along but a lot of action happening overseas. Fairly quiet day in the bond market. The two year yield and the flat on the day. 10 year yield and it down a little bit. Not much happening in the u. S. Curve today. Scarlet the market drifted higher, paring some of its losses for the last two weeks. Egypt valuedank of its currency by a must 13 . There is the dramatic move. To conserveas foreigncurrency reserves and to boost its competitiveness. We are in a competitive devaluation world. At one point oil sells the most is the beginning of february, it is surprising stocks do not sell up as much. You name it it was down. Gold was down, iron ore was down. All the previous winter suffering quite a loss today. One commodity in particular i want to Pay Attention to is copper. It is perilously close to its 200 day moving average. Really inching to that level. Analystet to read and report that lisa missed copper rally. So if it gets to the 200 day and fails, what will that mean for prices . Has been a year where analysts at hedge fund strategists have been wrong about everything. Lets take a deep dive into bloomberg. The 200 dayoking at moving average and the s p. Wire theworried about s p is related to the 200 day, but what the 200 day has done over the last few weeks. In particular it has inclined somewhat. About 20clined by points since then. The idea is it is not a big deal the 200 p goes above day. That can technically be a bearish sign. The slope is much more important than a breakthrough. It is unlikely the s p is going to run away to the upside. Downwardse the slope scarlet slope downwards. Im looking at the aboutface. Youre a stock index falling 30 of the start of year. That is before it hit a 3. 5 year low on. February 11 since then these banks have rebounded 20 . Bank, alsoeases euro Deutsche Bank getting a sharp rebound. The group today basically stalled after the ecb last week boosted stimulus measures and signaled an end to Interest Rate cuts. Joe because banks we saw today that ubs is going to market 1. 5. Illion of those gogo bonds this chart really shows it, it is a corollary to your chart. Ofpays the yield, it is kind like a bond, kind of like a stock. You can see when those european inc. Stocks plunged. You can see it is down 86 to the dollar. It really has surged back a lot. There were questions about this whole asset class or this whole type of security. After this huge surge they are out marketing them again. To with the ecb, seemingly targeting banks specifically with their stimulus, the markets have reopened. Scarlet they are willing to take on that extra risk. You can see these charts and more on twitter. Alix i would to bring in our host for more on these markets. Scarlet oliver, what are the top stories one of the top stories you have been tracking is corporate buybacks and their outpacing of sources to equity demand. Oliver this is sort of the gift that keeps on giving, buybacks are a huge part of the market. My colleague had a great article today, discussing a trend we talked about last week, which is the idea that corporate buybacks and corporations as purchasers of u. S. Equities are out pacing other types of demands. It does raise questions as to what will happen if and when that demand slows. Right now it doesnt look like that is happening, because you have companies and is a more buybacks. We have we are getting on pace to a record this year. What is basically called the financing gap, it is a fed metric, it looks at how much companies are spending on everything, whether it is, whether it is evidence, whether it is buybacks. 200 billion is as low as we got in the last quarter of 2014. Four quarters, meaning the companies are spending more than they have on hand. The white line is the amount of buybacks on a quarterly basis. We got much more on the buybacks. The story that is less told is the copies are getting distended in terms of what they are spending money on, how much they are spending. If for some reason they need to rain that spending in a little like dividendsgs and buybacks do get put on the chopping block, potentially bad for equities. Much of these buybacks are being funded by debt . We have spoken for a while how the debt market is critical is open debt markets to this buybacks story . Oliver in may 2014 the number of bonds issued with dividends ofbuybacks listed as a use the proceeds got twin alltime record on a quarterly basis. In the last six months or so it has slowed down a little bit. And that is part of the story, if we do see credit spreads widening light we saw the first couple of months in this year and the end of last year, and that keeps happening, perhaps there is more Interest Rate hikes than the think, then that becomes an issue whether or not the copies want to go to the debt markets. Scarlet one recent stocks tumbled scioscia medically episode of the year, you didnt have that by that coming in as a source of demand. That absence meant that stock prices have drifted lower and started collapsing. Alix and the recent rally we did sees because buybacks were coming into the market. The other thing we have seen is a slight rotation from Growth Stocks into value stocks. How much more that rotation can we expect . Oliver as always you can take a couple of perspectives on it. Not only the performance of that turn around, but if you look at how the growth breaks down, i have another chart looking at the growth 1000 experts and growth index. Ofre is actually a lot overlap as well as these two indexes. An artifact of indexing and try to keep market waits. It is also the fact that companies dont clearly blowdown into the growth or value. What is interesting right now is if you actually take out the duplicates from those indexes and look at the strippeddown version, the disparity is even larger than here today. I dont know if it is the slower fundamentalo a stock taking environment, which we talked about last week, or if it is a matter of going in and buying down the most been up stock. The fact that the companies are very clearly defined by a value title and are not overlapped by that it ist indicate a bit of a head fake in terms of what people are buying. Were people forecasting this . I read a bunch of stuff about how people were getting something wrong. Of ais another example factor that was unloved going into this year that nobody liked . Oliver its pretty much the whole old market. Growth has been the outperform her. It has been trying to find whatever companys are going to give you the biggest return, whatever companies are going to give you an outside return in a market where things are moving together and you have those little dispersion rates. I think going into this year, it is hard to say. There is a certain truth to the idea that people are hesitant to extend themselves right now. That would be the argument for this being an actual trend and not just a buying of the beaten names. Saying, i dont know if i want to go in and spend this kind of money on a company. Think about the linkedin stuff like that. There could be a fed a mental aspect for people who want be in those value type names. Scarlet as we get ready for the downeetings tomorrow, double digit percentages, off 32 for the dow. Everyone is waiting for some kind of signal from the fed. A position into a big question mark . Ander he said one thing then said maybe we are not going to have stimulus after this, but the type of moves that you see after that is clearly an indication that people are getting positioned ahead of these type of events. Environment,iction those are the type of things that can limit themselves to having an outside move. Sometimes you have a huge strengthening and reversals throughout the day. Thats the type of thing that happens when you have the low volume environment. Thank you very much, Oliver Renick of bloomberg news. Talkst our next guest about how janet yellen should approach any potential Interest Rate increases. Mark Oklahoma City police today saying the former ceo of Chesapeake Energy was going 78 Miles Per Hour when his car slammed into a bridge embankment earlier this month. He caps on the break several times, but didnt act to slow the vehicle in the last 31 feet before the crash. His death came a week after he was charged with rigging bids for oil and gas releases. Donald trump leads marco rubio in florida. Just before the winner take all primary vote, the survey has rubio leading 44 through 27 . Ohio Governor John Kasich with 9 . To shocks hes going the country by winning floridas winner take all flora winner take all primary tomorrow. Has ordered his main military force to begin withdrawing from syria. In a meeting, president putin said the pullout should begin tomorrow. Me peace talks resume today in geneva. They were described as positive and constructive. After more than 18 months locked ind bars, washington roast Washington Post reporter Jason Rezaian met with obama today at the state department. Are 24 hundred journalists and 150 news bureaus around the world. Here is what the Federal Reserve should raise rates and aggressively by more apps by more assets. Federal reserve bank of San Francisco joins us from los angeles. Good to see you. Why is this the action the fed should be taking . That is a good question. If you think about the way the fed is trying to think about it, most people are based on a broken model. That broken model connects the kind that connect Economic Activity with inflation pokemon kenexa connects Economic Activity with inflation. The philip that broken model connects Economic Activity with inflation. Ae philips model he drew scatter plot of Wage Inflation against unemployment in the United Kingdom and it looked to be remarkably stable. Unfortunately it hasnt existed , and yet ite 1958 has become a central part of the way Central Banks think about the way their policies are transmitted to Economic Activity. There was a lovely book published recently called the search for vulcans. There is a good analogy between that and economics. What he found there and what he argued is in the early 20th century, there was a problem of physics. One explanation was that there was a planet out there and it was called vulcan, and a lot of astronomers searched for it and a lot of important astronomers claim to they found it. The problem is it was never there. The phillips curve is a similar phenomenon in economics, people have been seeing it ever since the 19th if these, but it is just not there in the data since the 1950s, but it is not there in the data. To get inflation up in east to move nominal rates on the short end if it was to raise inflation. Why is that . The standard idea is in order to get to higher rates, you need to lower them first. The idea is if you lower rates now we would he talking about moving into negative territory in the same way the ecb has done recently or the bank of japan, the idea is that is supposed to stimulate demand through the phillips curve mechanism, and that is supposed to get the economy moving and getting prices and inflation moving up again. You take the view that that channel is broken, you recognize that for a given real rate in the economy, inflation goes along with higher nominal rates. I think it is critical we gets nominal rates up sooner rather than later. Fed was 2 if the meeting on wednesday was to simply raise nominal rates, that would almost certainly have a bad effect on the economy in the short run. I believe markets with tank, our wealth would fall, and that would certainly generate a recession. But if you think about in tandem with raising rates, in gauging with a cutie program that prevents that from happening, i think we can get back to a situation where we would like to be longterm, which is happening which is having rates around 4 or 5 without generating a big reduction in Economic Activity. Scarlet the question is whether the fed will do much with his forecast. This is our function that allows you to see the fed number projections for where the fed target rate will be. The yellow dots reflect what these affluent policymakers believe. The redline is where the market actually expects rates to be. It is a pretty big gap, and especially if you look at the longer term, policy members are looking for 3. 5 of defend of the fed target rate. Ecb youeek the mentioned the ecb in negative territory. The thrust of what they did is more of the asset purchasing side as opposed to the rates. Mario draghi suggested there might not be much more on the rate side. Is he a long your line of isnking, that the real juice from the rates and not yesterdays news . Went from 60 billion to 80 billion euros a month. The other thing you should realize is asset purchases by Central Banks are global. When the bling when the bank of England Stock Bank of england stopped its asset purchases, i was talking to people at the time who said, we think the fed stepping it is a good substitute to what we are doing. Now it is time for the ecb to step in. Haveate cut they engineered is quite innovative. Ive never seen anything like it before. The creative part is whereas they lowered the rate they are paying on reserves to buy a time, in , at the same order to be able to borrow at gang e private private banks were told they could have as much liquidity as they needed. To only if they were willing lend it out to the private sector. That is a creative new move and i will keep my eyes open for how that works. The what do you think Tipping Point would be for the fed to raise rates again . That is a good question. The difficulty is we are not dealing with one person, we are dealing with an entire market entity. Can some of them are going to look at this in a different way than others. To need to are going see strengthening in more than one part of the real economy. Inflationary expectations, for example, well below the 2 , which is the feds target of inflation moving forward. There are other issues, Industrial Production seems to be growing into negative territory year on year. I would like to see that moving up again. You will certainly see arguments to raise in june. I dont think they will be racing in the next meeting. Thank you very much. We do have a programming note you can catch our special coverage of the fes decision on wednesday. Janet yellens News Conference scheduled at 230. At 2 30. Scarlet volatility is easing. Stock prices and yields have turned higher. The implied volatility of font and currency markets began in early 2016. Is whynot this is this not this is live television. We are zooming in. You can see it is rolling over here in early 2016. The red line is implied volatility. According to the global markets, investors are increasingly positioning themselves for an end to the currencies and the end of diverging monetary policies, because most are returning to some kind of easing. Everybody expected this year we would see all this volatility as a regime shift and it really is not even taken play. The pavilion says it is a return to the 2014 regime. I am looking at a corporate profits. It is the worst on record, take a look at nonbank earnings, earnings before interest and taxes and all that, divided by net worth. That is the ratio you are looking at. It is lower than what we saw in 2008 and 2009. 2001. Than what we saw in that is unbelievable. Great stuff. You see how much it has declined and how low it is. Joe i would imagine 2008 would be much worse. It is a dramatic decline. Story. that tells the coming up, Angela Merkel talks german elections, or we talk what is next for Angela Merkel. Mark lets get to first word news. Mitt romney campaigned with john casey today. Romney, the 2012 republican president ial nominee, is not endorsing a candidate, but is urging voters to choose governor kasich in his home state of ohio and marco rubio in florida. He says that will keep donald trump from winning in either state tomorrow. President obama met with the Washington Post today after being detained for more than 18 months in iran. He was released along with three other americans as part of a Prisoner Exchange between the u. S. And iran. In geneva today, a human rights expert call for the prosecution of kim jongun. In an address, he said that criminal law holds military leaders responsible for failing to repress crimes against humanity by those under their authority. Global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. Alix, joe, scarlet . Scarlet little changed today ahead is a two day fed policy meeting. Lets look ahead to asian markets. Paul allen joins us from sydney. Good morning, paul. Paul good morning. And the new asx Zealand Stock Exchange will open in under 30 minutes, with gains on the nikkei in japan as well. In japan, everyone will be watching the bank of japan. There is expected to be no change negative Interest Rates,. 1 , but an interesting thing is happening in japan. New data from Deutsche Bank shows money is flowing into savings plan. Deposits are rising at 3 on year; people apparently are tracked it by the Interest Rate of. 001 being offered. For everyone thousand dollars you have on deposit, you can make the princely sum of 1. Those are attracting funds despite the negative Interest Rates. Rba minutes in australia, we are expecting the rate to remain on hold at 5. At 2 . Scarlet there has that another Credit Rating cut for one of the biggest iron ore miners in the country. Paul yes. It was cut by movies; no huge cut by moodys; no huge surprise. They are two steps below investment grade, mainly due to the fall in the price of iron ore. We did get a bounce last week, but it is well off the highs of five years ago. And that is just some of what we are watching. Im paul allen for bloomberg tv. Onx the german elections sunday work as terrible for Angela Merkel as everyone thinks. That is according to our next guest. The rhetoric out of the election in thege win for asd referendum on michaels refugee policy. What is wrong about that take away . Asd had a goods night, where they won almost a quarter of the vote in saxony. If we were to frame these elections as a de facto referendum on the refugee policies, which some people have hat 59 ofing, given t germans arent happy with fiscal policies, the vote share for asd in that sense is not as impressive as it appears at first glance. Wonntially, the party that in each of those three states were parties that support her refugee policy. Thisif the lesson isnt wasnt just a referendum on her refugee policy, what other takeaways from asds strong showing . What does it say about the state of german politics . German politics for a long mune tove been impun the same problems of the surrounding countries. You know marine le pen, the danish peoples party. Germany for a long time was immune from this nationalist politic, but actually, with asd, they are quite established, and to me it is likely that they will win the fight they need to win seats in the bundestag next year. Scarlet what makes them different from previous political movements . Germany has same political movements come and go i am thinking of the tire party in 2012, the left in 2009. You are saying that be adf have some staying power. I think it does. Without overdoing the comparisons to other countries such as the u. S. , with the political upheaval we are seeing now, i think theres definitely a constituency in many developed, industrial nations of people who feel left behind by globalization. In germany, it is through the refugee crisis. These people feel alienated, and they are voting for parties that articulate that. I think that is the difference between them and the other parties that were a flash in the pan. Joe what does sundays election tell us about merkels political future . I think merkel has been written off before, and she has staying power. She has been in power for 11 years now, and her Approval Ratings are still positive that is pretty impressive. Im talking to you from the u. K. , and politicians would have killed to have those kinds of ratings. They have followed that recently because of her handling of the crisis, but i think it is important to remember that the response of the crisis isnt whimsical. Its firmly rooted in german political culture since the second world war. Even if people dont like that approach, other Political Parties have agreed to the sdp. By and large, they broadly support her stance. Alix the question becomes what happens next if they get to the bundestag. What does that mean for the other parties that need to form a coalition . Does it make it more difficult of course, for them to form a government . Scarlet thats a good point. How does the German Business Community work with an establishment that needs to coalesce and come together to fight off adf . Thats a good question. I think the Business Community is concerned by asd. They weres founded in economically liberal party complaining about the eurozone bailout. Support. Ed business now a lot of those supporters have left out of the party and become more populist. For that reason, they are very toxic. None of the other parties in the parliament at this stage could form a coalition with them, and i think that is interesting. If they winans is 10 of seats, that would very much narrow the scope. It could potentially force the others into a grand coalition. Joe you mentioned that people have priority with marine le pen. Tell us about asds leader. How is she similar or different to le pen . I think there are certainly similarities. They come across as quite d they certainly appealto a certain kind of demographic. Although a lot of people were surprised by comments she made a couple weeks ago which insinuated that german Border Guards should be allowed to use lethal force against refugees. Up until that point, shed been seen as reasonably moderate and sensible compared to other politicians making more inflammatory comments. But even those comments havent appeared to have tripped her up, or damaged the asd in the elections. They have a clear platform on other issues aside from the migrant issues . Not really. Its a that is a catchall, populist type agenda. In some issues, they do mirror the other party. For example, they are quite hostile to freetrade. Theyve also taken a softer stance on russia. They called the eu to drop its sanctions against russia that it imposed on russia in the wake of the intervention ukraine. Alix thank you very much. Weekend coming up, protests demanding the impeachment of president dollar also, book can it the president of brazil, but cant recover . Scarlet im scarlet fu. Whatd you miss . It is time for the Bloomberg Business flash. Almost 280 volkswagen Institutional Investors have signed on to a classaction lawsuit against the automaker, according to multiple media reports which say that legal action is over share prices that declined after the scandal. It hasnt yets seen the lawsuit and cant comment. Alix British Oil Companies are likely to get a break when the new budget is released. There is speculation that taxes on the north sea oil will become. British grid producers had been hit by lope low producing. Scarlet the collapse of the drumsh irish bank david had fought to claim bankruptcy protection and his eight irish law charges. Hes accused of hiding massive losses from shareholders and faces up to 10 years in prison. And that is your Bloomberg Business flash. Whatd you miss . Legislators are gearing up for an impeachment process after millions of people took to the street in brazil. Our Sao Paulo Bureau chief joins us now. We saw these massive demonstrations the pictures are stunning. Where does the protest stands now . Now we are waiting for congress to come back. The Supreme Court will rule on the impeachment guidelines on wednesday. On thursday the president of the lower house has said that once he has this ruling he will resume future proceedings which have been stalled for a couple months. If what are the prospects, the impeachment proceedings were to begin . Look at me look out for what is the timeline . It is a little confusing. There are a few options of look at happen. Peachgress votes to in and then it goes to the senate, the senate votes to impeach her, ite timeline is sort of has been put in may as a possibility, so not that soon but not that long. Looking ate unbelievable footage of millions upon millions of people protesting. We saw this hope and optimism reflected in the market. Rally, its huge highest level in four years. The question is what happens after. Joe what is the symbolism of the huge rubber duck . [laughter] the rubber duck is a campaign from the Federation Industry against more taxes. It plays on a brazilian expression of no, you willockuck, not leave this problem for me. Scarlet i always wondered. As alix set up, currency and stocks are recovering in brazil, reflecting some optimism. What kind of effect has the recovery in Financial Assets of brazil had, if any, on the millions of people who took part in the demonstrations . I dont think it came up as much. They were mostly protesting nd it didnt get into a lot of the recession and economic crisis. It was more political and against every party and everything that is tied to corruption. Alix which makes the case, what happens . You still have extremely high inflation. Is still have very low recessionary gdp. Even if she is impeached, can brazil do anything to help its economy . Thats right. We still have large bank such of Goldman Sachs and Morgan Stanley downgrading their prospects for brazil. Its hard to tell, because if you dont know what the government is, you dont know what its Economic Policy will be. How can you forecast the recovery . Some people seem to think that anything that comes will be better. Joe what is the prospect to join the government . There were reports last week that he could join the government and escape prosecution. That rumor came out again today. One of the local newspapers reporting says he will take a rousseff isat waiting on his call. It is certainly possible. Joe that would be a shield for him . He wouldnt be able to be prosecuted if he joins the government . Right. If he becomes a minister, he falls under the Supreme Court, which is a different prosecution system. It would definitely at least delay things a lot. Alix but he could still be prosecuted . With this be under a different timeline . It wouldnt be under a regular court, which is the one that has been pushing the ca e further. We still need to see what this would look like, if the Supreme Court would pursue charges against him, but it would certainly stall the process. Alix thank you very much. Scarlet oracle cofounder Larry Ellison has his head in the clouds, and investors see that as a good thing. We explain, the next. We explain, next. Scarlet im scarlet fu. Whatd you miss . Oracles head is in the clouds, and that is a good thing. The Business SoftwareCompany Reports earnings on tuesday, giving us a look at how it is faring in the Cloud Application industry. Lets go inside the data. The public cloud markets growth is the stuff of envy. Forecasts reach north of 140 billion by 2019. That works out to 19 compounded annual growth rate. Oracle is looking to capitalize on this expanding market. Cloud Services Grew almost 40 . Total Software Revenue gained just 2 . If you go back to the previous chart, the orange line is dragging. Axt chart, oracle has seen drop as it makes its way to the cloud. As you can see. Its not unusual. Companies making that transition usually get a decline. That tends to lead to volatile financial results. Oracles expansion is weighing on margins as well. Its operating income growth, the white line, ihas been trending down. Oracle management says fiscal 2016 will be a prop year. Pathey face competition from the cloud industry, and what you are looking at here is billing currently grown more than 40 , year on year. Well see how oracle stacks up when it announces results on tuesday. Alix for more on oracle, lets bring in cory johnson. Hes in new york. Oracle needs a cloud, once a cloud. It has a good growth rate, but its competition is stiff. Amazon, microsoft. How does it compete . Cory understand where amazon and microsoft and google are they areferently providing hosting services as part of the backbone of the internet. Oracle is focused on the software sale. Much higher margins. Price competition is different. The metaphor i keep using for yes, you can change a fan belt while the engine runs, but it is harder that way. Thats what they are trying to do. They are trying to take this giant, licensed software business, transfer it to the cloud, where they continue to sell licensed software. Its a difficult struggle. Oracle is growing faster in the cloud. Sf you look at scarlet chart showed it in a certain way in year on year growth in Cloudbased Software sales, oracle is growing at a nice clip. Well be watching tomorrow to see what is the pace of growth, that second derivative, and can they keep it up . Joe so some of these other companies that are selling Cloudbased Software, databases, services, their growth rates dont cory growing fast, but in a smaller company. Salesforce is bigger, and they to point out that no Software Company of this size has ever been growing at a 20 clip. A lot slower than what they were going for. Scarlet what is the deal with oracle and its m a aspirations . We have seen that intensity serial acquirer, but it has slowed down. Cory it as one of the most renowned m a organizations. Theyre famous for doing good, fast m a. Theyll give you an answer in short order if you offer something up. I talked about this a few weeks ago and what he is that prices have been so high, that now that they have come up this year, i think it is something to keep an eye on. And on friday doing big deals. Joe going back to that growth rate chart, how much of that is sales to their existing customer base, and how much of it is going into the market and people who might be choosing cory almost everyone in business uses oracle databases. Sales will be to existing customers. They dont break those numbers out, but they talk about big customer wins. Alix great stuff. Thank you. A reminder that you cant find bloomberg intelligences analysis on the terminal. Scarlet coming up, what you need to know for tomorrows trading day. Thats next. Scarlet im scarlet fu. Whatd you miss . Dont miss this the bank of japans Rate Decision comes out overnight, and kuroda is speaking at 2 30 a. M. Out of 30 economists expect a change5. A good read on, inflationary trends on a producer level. Joe and we will be getting retail sales out tomorrow. This lover has been decent so far this year. We will see if Consumer Spending is holding up and what categories they are spending in, that is out at 8 30 a. M. Tomorrow. Alix i like the restaurant bar. Scarlet have a great night. John im john heilemann. Mark and im mark halperin. And with all due respect march, you dont need a bracket to see all the madness. It is a mad, mad, mad world of their. Hello from our San Francisco bureau. Another big tuesday primary extravaganza tomorrow. Some may call it super. Five states are voting. At stake, lots of delegates and big batches of momentum. Over the past 72 hours, protesters at Donald Trumps event have collided with his supporters in chicago, st. Louis, and dayton