Joe real risk on appetite. A big rally in europe, rally in commodities. Green everywhere. Alix talk about green, talk about amazon . At its highest level ever. Share,d to 1000 per looking at market expansion, and basically the profits will expand faster in the next two years. I want to contrast that with gap, down over 11 . Samestore sales down in april and the reason i thought that was interesting, it is like the new retail versus the old retail joe perfect dichotomy there. Alix cap could not get more people in its stores. Joe there is optimism about a deal in greece and you are looking at a oneyear chart of the 10year bond, where it fell below a percent for the first time in a long time. People are hearing positive noises out of europe. Also interesting, check out what is going on with the u. S. 10year yield. You expect with this huge riskon, it has shot up scratching his head, why are the stocks rallying . Who knows. Unchanged on the 10year and basically flat on the twoyear. Scarlet philippines peso is the biggest and are among currencies. Barclays says the peso may outperform the regional currencies in the second half of the year if the new president follows through on Campaign Promises to deepen institutional reforms. Alix on the commodities from, stocks were the story today. A cut of argentina and brazil in 2015 at 2016 supplies so overall, these global supplies less than estimated. Huge pop there. Interesting thing happened in the oil market today. Versus the vti moving averages. Golden cross, when you have the averages. Ving you have the shortterm trend outpacing the longterm trend. Technically that winds of looking bullish for the asset. Scarlet those are todays market minutes. You can find all the following charts using the function at the bottom of your screen. Alix i was looking at the Corporate Bond market. Etf is outflows for the hyg. The biggest highyield etf. Look at the outflows, you guys. Scarlet it has just consistently gotten bigger the last few days. Alix it is truly unbelievable. Overall you are seeing credit again, start to widen and it is not just energy. Yes, it is energy and materials, but it is also retail and other sectors, too. Morelast few days there is anxiety, his credit sending a warning once again to the market . I am looking at some data out of germany, if we go into a chart going back to the 1966, the german current account balance, and you can see from 1966 to 1999, the german current account balance was flat, and then the german current account balance exploding,solutely hitting a brandnew record high this morning. Everyone knows what happened in 1999, of course, when germany adopted the euro and some would say that we get the currency. That weakened the currency. The euro has been very good to germany. Scarlet that is the proof. There is anxious calm. Commodities are holding up relatively ok. The white line is the city macro risk index. Isthing about this. 5 line there is meaningful risk aversion. There is also a lot of anxiety because so much of the calm is predicated on the falling or weak dollar. If the weakening dollar seems to be critical in feeding the appetite for risk, it is not clear sentiment for risky assets are Strong Enough that if the dollar were to gain like it has over here, those assets could necessarily hold onto their price gains over longerterm. Joe arguably a lot of the rally we have seen has been the fed really pushing out the past scarlet rather than the fun and also the specific economy. You can see all these charts and more on twitter. Alix i want to bring in jeff currie, Goldman Sachs global head of commodities research. Scarlet the price of oil has been dictated by supply rather than demand, and we have gotten plenty of disruption from alberta and kuwait to nigeria and libya. The question is, why isnt oil rising more and at 50 a barrel . Jeff couple factors going on. We look at the disruption you are talking about. Most of them are transient. They are not persistent disruptions to create a rebalancing. Until we see evidence of that from which in our view is sometime late in the third quarter, we see u. S. Production falling off sharply enough to tip this market into a sustainable deficit. Until you see that it is difficult to really take a very strong view on oil. I would argue it is pretty mixed right now. You have the macro you just pointed out it has had a fed an weak dovish dollar supported commodity prices. There is a risk that that could burst if we see a strong rate environment. Alix if we take a look at the bloomberg here, ive charted the 12month time spreads. The pivotal level is zero. Prices are stronger today than they will be in the future. We didnt seek backward we did see backwardation just weeks ago. The markets seem to get ahead of themselves despite the oil production. How does that make sense . Did we just get ahead of ourselves . Has athe market Maintenance Program and it was very isolated to a certain internet. It may be that they bring the production down to fix the rig and the june program would have ended up being quite light and that helped to create the tightness. More broadly, this market is not out of the with yet. The fact that you have a very deep entangled the vti despite the fact that you have the wildfires in canada, the return back in the broad market, all pointing to an oversupply market, it goes to answer your question, are we in a sustainable deficit that would push the market substantially higher from here . The answer is still no. If you look at the highfrequency Inventory Data for the month of april, it points to the seasonally adjusted deficit. We are see it as being sustainable yet. Scarlet what is history joe what does history tell us about supply disruptions come in several that are analogous to what is happening now in canada and nigeria . Jeff excellent question. The biggest pushback we get from clients over the view that these are transient disruptions, there are so many of them, is it is systemic. Think of strikes in kuwait or civil unrest in nigeria. Is this a random event or the cause of the lower prices . I would argue, yes, i cannot dismiss this there is too many of them to say they are idiosyncratic, oneoff events because they become systemic. When we look at it historically, and you typically find that under stress you are running these platforms longer than you you normally would, which creates the need to take them down for maintenance longer. I do not want to completely dismiss this as being independent of the price environment. However, i just dont see it as come again, pointing to the fact that we were looking for the sustainable deficit in the third Fourth Quarter that is really going to get us excited. Alix is there. Scarlet is there predictability to supply disruptions . Does one beget another disruption . Jeff strangely, if you get much higher prices you end up with, once again, the high probability of supply disruptions, because you have the higher probability of workers going on strike. There is the in between around the librium where the disruptions around the equilibrium, where the disruptions are at much lower levels. Creating civil unrest, creating worker unrest, all leading to disruptions. Alix last time we spoke you are looking at 20 40 oil and a lot of volatility in between. Do you still see that call . Jeff that view is driven by the probability of containment issues. What i mean by that is the surpluses are so large they itach the capacity and crosses into the 20 range. We saw that in january, we saw that in february. Cannot happen between the months of april and october . The answer is, very unlikely. The reason for that is january, february, and october, refineries go down for maintenance so the demand collapses for crude, which backs of accrued, creating a likelihood of that happening. Upgradedhe reason we oil to neutral a month ago because during this period from april to october, the probability of that happening is lower. I dont want to dismiss it right now because you have a lot of supporting factors. Joe going back a second, you mentioned the role that fed policy and the weaker dollar late in providing the bid to oil and other commodities. That policy can work the opposite way, that easy money keeps marginal producers alive and ultimately deflationary. Do you think that element is a factor in terms of what is going on in prices . Jeff when i think about commodities more broadly, i like to separate the macro drivers from the micro drivers. What you are talking about would be a micro driver. It would create more supply but it the macro driver would lead to higher costs to create the supply. You think about producing oil in canada. Upwards of 80 of the cost denominated in Canadian Dollars. When you have a weaker dollar, you end up with a star Canadian Dollar at a higher cost to produce the oil. When you are talking about is what i call sentimental or micro drivers, which drive the shape of the forward curve, while the macro drivers drive the price level. I like to point out more broadly in thinking about commodities that the number of barrels, the number of metric tons of commodities, primarily drive curve shape, while these macro variables drive the overall price level. There is a reason why oil is considered a fixed income instrument, because like rates, like it is much more of a carry instrument, and it is also, when we think about the equilibrium value, function of rates in these other macro variables. Jeff curry, global head of Commodity Research at Goldman Sachs, you are sticking with us, because we will talk about speculative mania in chinese commodities. A quick check of fossil and Electronic Arts. Fossil tumbling right now, 24 lower after reducing its fullyear forecast. Electronic arts gaining more than 6 after reading earnings and revenue estimates. Im mark crumpton. Vice President Biden has not endorsed either of the democratic president ial candidates, but in an exclusive interview with abc news, he shares his views on who will win the nomination and the race for the white house. You bring up the next president , we are anxious to see. Vice President Biden ifo confident hillary will be the nominee and that she will be the next president. Mark the Vice President decided not to seek the white house. Breaking news on disney earnings. My colleague scarlet fu has details. Scarlet it is amiss for disney for the Second Quarter. Missing the analyst estimates of 1. 40, comparing with 1. 23 in the yearago period. A little bit shy when it comes to where analysts have been looking for adjusted earnings per share to come in. Revenue for the Second Quarter, 13 billion, also lighter than what had been anticipated. Analysts were looking for 13. 2 billion on the number has come down in the days leading up to the earnings report. Media revenue this includes the Cable Networks like espn and, of course, the broadcast networks that is the lion share of disneys business. 5. 79 billion fourthquarter. Again, missing analysts estimates year. Despite decent advertising trends, the Second Quarter media visit a little shy here. In going to the results, we are looking for any kind of comment from bob iger. He is not saying much about the succession plan, as you might expect, in the earnings release. That is a team that will be counted on in the conference call. Isney shares are taking lower this is the tick by tick trade. Alix i want to piggyback off the Cable Network revenue you were talking about. Part of it they did have an increase over at espn, which was the good part of it. The bad part is it was offset by lower Equity Income at a any. At a e. The big concern was espn. It looks like that part of the does this held up well. E that was the big question. As you mentioned, there was a lot of optimism about disney due to the fact that the Cable Networks had shown increase in a video growth and other Media Company said shown strengthening and market for tv. Scarlet not to mention the movies that alix gets so excited about. Joe disappointing that disney earnings and i joining the beat parade. Alix all right, whatd you miss . The truth behind the recent selloff in commodities. In china,ll of money then real estate, then equities, then commodities. That great ball of money is now leaving. bloomberg here. Aggregate interest for steel, iron ore, and cotton. It has come back since then. Is on the normalized basis. The long positions have gone nowhere fast. Jeff currie, global head of Commodity Research at Goldman Sachs, is back with us. What happens when this ball of money go somewhere else in china . Jeff well, it is in the process of going somewhere else right now. I want to think about this from the fundamental perspective as well as from the speculative perspective. Clearly not only do we see in china or even here but even here in north america, commodities more broadly have a lot of money in them. With fundamentally is this fundamental he justified . In the very near term there was fundamental reasons. What was it . If you look back at, lets say, december and january, where everybody was very concerned about what was going on in china, we saw a significant amount of destocking of everything iron ore, steel, the basic commodities. D inventories to a level that is consistent with a 20 decline in demand could guess what happened . Insaw the credit injunction january, february and demand was not down 20 , it was up 6. 2 . The market was caught very short. Hence, the pop in steel. The steel rebar went to a higher 2800 and is now turning around so there was one of mental justification but longer term just like the story in oil, it is not a persistent underlying shift in fundamentals that justify the type of money increase we saw. Scarlet a case of massive catch up and the individual investors. Re joining if you look at the average Holding Period for investors for rebar and iron ore joe some of the statistics about chinese speculative Retail Commodity trading are absolutely mindboggling. You explain these sort of mediumterm fundamental stories, but how much does this speculate decorative bubble affected the price, and what is the longterm where does the money go next . Jeff that is my think, the question actually comes on the arguments ive heard recently as to why you get more money in commodities is, yes, in net for tons or barrels, you are at record levels, but not in absolute notional value. When oil was 147, the notional value of money and commodities was higher than what it is today, despite the fact that the actual number of metric tons or barrels are at or near record lows. Now, the concern i have with money ight now the this was part of the reason why i think the longterm expectations need to be taken down. There is still the view that this is a once in a lifetime opportunity from the investment perspective. Think,hose types of, i unrealistic views are gone, you will still see a lot of money attracted to this sector. The problem is eventually it creates supply, which can put further downward pressure on prices for the further out. Alix right, because of the prices iron producers alike, back in business. Trying to clamp down on speculators. Rebar claims have fallen off a cliff due to that. Can china control it . So far come when you look at the class in prices, it has been rather orderly. Created a massive collapse. I think it goes back to the fundamentals story i started with. Theres just not longer term, and why do i say not longerterm . Unlike oil, where you could argue their air there are supply restrictions come in metal or steel, we are dealing with massive surplus capacity. Producers will respond to the higher prices and create more supply. We saw last week the inventories in china began to increase, which spells much lower prices and a much weaker environment going forward. Stories you talked about, the weak dollar, fed driven oil rally, and the credit the Central Bank Credit stimulusled rally in china with metals. What does that say about the longterm commodity complex . Does that mean ultimately none of this is sustainable . Jeff with oil and energy you could argue it is more sustainable and metals. In metals we take a very bearish longerterm view. Think about with oil, it has the natural depletion rate. Aluminum once you build it, it is there. Is pretty difficult joe we are not running out of it. Jeff not running of the metals anytime in the near future. Alix jeff, such a pleasure to have you. The shares of get disney and the late trading. We told you earlier that the Company Reported sales and profits that missed analyst estimates. Media Networks Revenue also falling short of what analysts had anticipated. Scarlet i am scarlet fu. Whatd you miss . Shares of disney falling after sales and profit missed analyst estimates. The abctv network, broadcast network, and the Consumer Product division declined when it comes to revenue. Itn you look at the shares, is the most actively traded stock by value, 135 million worth of shares changing hands right now. Alix on the good side, let me take into this cable profiteer, led by espn come up 12 to just over 2 billion. Espn benefiting from lower programming costs as well as higher affiliate revenue. They did see a decrease in advertising revenue grew espn a key metric for disney to watch. Joe it is amazing that espn, because it is an old as it is from is still growing 12 . Obviously, investors are disappointed overall with the growth, but 624 million, still pretty extraordinary numbers is around aspany long as it has been. Scarlet not just the parks, but the studio entertainment the movie business, getting dividends from the star wars movie last year. Alix all the movies i watched were disney last year so that drove their revenues higher. All right, we will be back with more. Marco im mark crumpton; lets get to first word news. Donald Trumps Campaign manager will leave the search for a running mate. The Washington Post reports the nominee will had the team that will survey and vet possible candidates. As previously announced, they will impose ben carson. President obama will make history later this month when he travels to japan to become the first sitting president to visit hiroshima, or the u. S. Dropped an atomic bomb 71 years ago. A white house aide says the president wont apologize for the bombing. Meanwhile, a u. K. New service s shinzo abeay may visit pearl harbor. An excuse not to do business there. The exception, entities that are still sanctioned, including irans revolutionary guard. Says theykerry can still facilitate legitimate transactions. In basketball, golden state seth curry has won his second straight nba most valuable layer player award. He returned from a sprained knee to win 17 points in overtime. The warriors beat portland, to take a commanding lead in the semifinals. Global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Im mark crumpton. Scarlet were keeping an eye on disney shares, folly in afterhours trading after the Company Reported a miss on the bottom and top line. Falsely joins us live. Paul, when you look at the breakdown of the different divisions of disney, park in studio entertainment beat estimates; what missed was Media Networks and Consumer Products. Yeah. I think Media Networks is what people focus on the most; it is where investors put the highest multiple on. It has been the profit engine. We for callbacks last summer; the Company Called out the fact that they lost subscribers and that started a big selloff, not only in disney but in the media sector overall as investors became increasingly concerned about the risk of cord cutting and what it means for the Cable Network business. If you are concerned about the Cable Network business, top of your list would be espn. I think we saw a little more of that here in this quarter. Cable profit up by 12 , and lower programming costs, higher affiliate revenue. It seemed like there were good parts. There were good parts. There was a timing issue of college bowl games, and that help lower programming costs. But again, people are looking at the overall, topline operating income, missing expectations. That brings to the service peoples underlying concerns. What really is the next three to five Year Growth Rate for the Cable Network business, for the company that last summer took down their guidance . Is that still the right level of profitability . Joe when we talked to you before previewing disney, you pointed out that the Cable Networks had seem decent video growth; other companies saw solid at market. Why is disney more exposed than some of its peers . Its interesting. Disney had a decent advertising quarter, but because of espn, its kind of a perverse logic. They are the biggest Cable Network, therefore they get the largest amount of affiliate seeds to the extent that you lose subscribers and you lose the affiliate growth. Thats something that is disney is more exposed to, which in the last 20 years has been a good story. Unraveling,undle is that becomes a larger risk for disney than other companies who have less exposure. Scarlet so benefited when things are going well, and hurting more as things are slowing down. As disney articulated a strategy for reviving growth . Aside from watching subscriber growth drop off a little bit, isnt doing anything or has it so what is it going to do . Well, they continue to invest in the best programming, to the extent that if there are any games to be made on the advertising or affiliate side it will be driven by ratings and they continue to make huge commitments to the best programming out there. Scarlet its a Nuclear Arms Race though. It is. But the good news for espn is that they are way in front. They have been cutting other costs. L we have seen around the playoffs costs. Ing other we have seen the layoffs. They are cutting costs outside of programming where they can. Theyre starting to think about Digital Opportunities for espn. Is there a model where they can offer espn direct to consumers and commoditize younger demos that way . To date, they have been reluctant to do that because of the big economic model they have. Scarlet they dont to cannibalize. At some point, they will have to do that. Joe how upset with the Cable Companies be . I think they would be extraordinarily upset. They pay over 6 per subscriber per month, by final largest, and they demand is. Ifst households, it you look at the numbers were espn is not including , the question is a lot of these operators should try to figure out is there a market for a skinny bundle, a one offering of channels that does not include sports . Not everybody likes sports and everyone is going to pay. Alix what we saw last summer when disney came out was a huge selloff the media, that in some ways was a preamble for the big august selloff. Disney down almost 6 , is this the same thing or has the story changed . Investors are probably more comfortable with the longerterm story relative to last summer. We have seen a rebound in television advertising; a lot of the Companies Reported very Strong Network television and broadcasting cabletelevision advertising revenue. Companies are reporting increases in video subscribers for the first time in seven or eight or nine years. The concern that the world is coming to an end tomorrow, which was the precursor of last summer and what prompted the meltdown, i think investors are more sanguine. Scarlet call sweeney, thank you. Whatd you miss . For the third time in less than a year, an extensive interview with an unnamed official address challenges facing the worldss secondlargest economy china. This time around, the focus is back on supplyside reform. Joining us now to discuss is for anyone Global Investment chief. An unnamed official people seem to think its xi jingping what was your biggest take away . There are three major takeaways. One, the piece is aimed at managing expectations. If you think about the chinese, there is a return of very optimistic assessment on the chinese economy. The government understands full well that this gross stabilization has been achieved by using the old wave of stimulation. They havent done anything on supplyside restructuring. Aimed athis piece is telling people, or at least preparing the public, that there are tough times ahead, and once the government addresses the oversupply problem, the overcapacity problem the second take away is that government is trying to defend its economic policy. We all understand that president xi jingping really wants to make the supplyside restructuring a hallmark of his economic policy. But the bad economic reality has basically torpedoed his plan, forcing him to rely on this old way of creating more debt, more credit, to solve the economic slowdown, which was caused by loss of debt in the first place. The government is trying to tell the guys both inside and outside china, the critics, that yes, i am not forgetting about this debt problem; im not addressing the problem right now because of the slow down. Im dealing with demand, but at the same time, i understand your concern and im going to deal with that problem later on. The final one, the most important thing, if you read carefully about the interview, it seems to me that the government is not fully bracing this physical and monetary support of the economy. That basically says, going forward, i think chinese economic policies, especially in terms of fiscal and monetary stimulus, may follow a pattern of stop and go, and that means the chinese economy will indeed play out as lshaped, which is not as positive as i would think. Scarlet that would suggest a big dropoff and stagnation. Films this message being directed at . Is it internal critics, individual investors . Theres a lot of different schools of thought here. One is that xi jingping si not very happy with what the Prime Minister is doing. Thats why he basically used his hisest friend to voice dissatisfaction. That is one thought. The other is that they are trying to defuse the criticism that we have often heard, especially from abroad, that the Chinese Government is reverting back to the old ways of physical and monetary stimulus instead of doing the right thing, which is applied restructuring. Two theories. We dont know which one is correct right now. , we sawiously in q1 this extraordinary surge of new debt issuance. Continue . Ect that to i think so. Its a very unique problem in china. Dont forget, this is a very high savings economy. 50 of Gross National savings, which translates to 5 trillion per year. You have to convert that massive amount of savings into investment. How are you going to do that . The only feasible way is to do that through the Banking System. That is why the chinese banks credit gdp ratio is very high. If you look around the world, all nations with higher domestic savings, they all end up with very high debt to gdp ratio. Which country has the highest in the world . Singapore. Singapore has a very long time a very high savings, and the Banking System has been the key conduit to transform savings into investments. I dont think that is a problem, per se, but of course there is a problem of misallocation of resources. Theres oversupply in the real estate sector, theres oversupply in the resource sector, but that debt to gdp ratio itself is not a problem. Think about japan. Japans ratio is very high, and the economic and Financial System has been stable. Alix in to see you. Good to see you. A quick check on the main stocks moving in late trading. Disney missing on the top and bottom line; shares off by 6 , stock plunging in afterhours trading by 28 , missing his earnings and cutting its forecast. Meanwhile, Electronic Arts up by 7 , the videogame maker beating earnings. Alix brazilian stocks resume rally as the drive to out Dilma Rousseff appears to be back on track. She reiterated the sour she will not resign. Joining us from washington to discuss is the director of latin america from the eurasia group. Joe thank you for joining us. 36have had this pretty crazy or 24 hours where we saw impeachment moving forward and reverse and reverse, and it looks like it is moving forward. Now it looks like its going to happen. To you see any further monkeywrench is being thrown into this, or does look like it is on . Id say we have seen a pretty crazy six months to say the least, but i think the impeachment is on track. We dont see any major surprises, although we are talking about brazil. That we think overall we do think the impeachment will happen tomorrow, and with that, the following day, theyll be able to begin to take brazil. Scarlet the government is appealing once again to the Supreme Court. You expect them to intervene in the process . Its a possibility, that the court has traditionally refrained from what they see as intervening in other branches of power. They set up the rules earlier this year, pretty clearly. Now my educated guess is theyll avoid weighing in again. I think this is a matter that pertains to the senate. Scarlet i ask because so far the Supreme Court has focused on procedural matters when ruling on the impeachment. Is there a chance that at some point it might be tempted to intervene on the merits of the process . Well, there is a lot of debate around that. Legal experts in brazil have different views. But if you look at the constitution, and brazil had another impeachment process in 1982, the Supreme Court does not weigh in on the merit. The meri is the senate. I think it is unlikely. The procedural doubts are mostly clear, so i think now and keep in mind that this is the first vote in the senate, you still have the trial in the senate that may last up to 180 days but i think the Supreme Court will weigh in. Of course the government will continue to the last minute to try and delay the process. Joe lets just say it all goes, and she is ultimately removed. Weigh the odds of meaningful reform that will improve the economy and improve Investor Sentiment . I think Investor Sentiment will improve. Were more bullish on the sectors microeconomic reforms, the low hanging fruits. They will probably open up the oil, telecom, the infrastructure concession package that the government announced. I think those below hanging fruits that hell be able to bat the first three months. Of more structural, macroeconomic reforms, particularly with the fiscal situation, we are more skeptical. Scarlet joining us from eurasia group; thank you. Alix coming up, a tough year for oil and gas. Wheres the sex are going to find relief . Alix im alix steele. Whatd you miss . As the global ratings expect the u. S. Speculative default rate to increase to 5. 3 by march, 2017, and Energy Companies are in the middle of it. That clark is partner and head of Energy Practice at haynes and boone, and author of the and metal. K, oil what kind of default rate are you expecting this year . Well, i think we seeing some pretty high default rates this year for the highly Leveraged Oil and gas companies. Public bonds, public debt. We see 50 of all rape on some of those. The bond crisis would indicate that that is what the market is also expecting. Alix wow. Extremely high. One way to trigger that default is that the bank lowers their Borrowing Base below the amount that a company has borrowed from them to squeeze them. Have we seen these cuts recently . Yeah. You are seeing a lot of them recently. Bargain bases are determined every six months, so that can last all there may have been some cuts, but not cuts into the outstanding amounts borrowed. Below theborrowed amount that is outstanding they have to pay the money back thats easily a six month amortization, but the first month they have to pay the money back that is easily a precipitating event. Alix so whenever we going to see that click over to lots of bankruptcies and defaults . Iswell, the Borrowing Base being determined right now between april and may. Probably the more difficult may not be determined until late june. It is not required that it happened like clockwork. Once a Borrowing Base is reduced, it doesnt mean the company is in default. The company has six months to repay the bargain base, and they will certainly do that. But its indicative of a real cash crunch for these companies, and it really can be a precipitating event. I think probably the more proactive borrowers know what the new base level will be; they know what their debt level is, what their Interest Payments are. We have already seen companies not make her Interest Payments on their bond debt, anticipating reduction and preparing for bankruptcy filing. Thats certainly a pattern we have seen a lot. Alix you also point out in a recent report that banks are trying to sell them. Typically these are safer loans, because they are backed by physical assets, by actual reserves. Are they having any luck offloading them . Going onthink whats is banks would like to reduce their exposure to oil and gas, production loans, but they arent so interested that they are willing to take a steep discount. While theres a lot of private equity interest in buying the bank loans because as you indicate, their First Priority is a secure loan, so more likely than others to be repaid the private equity is only willing to buy it at a discount, so they get a return on investment. Bank is not pinched enough that they are willing to sell at a steep discount. Pieces ofcertainly loans that are trading on a daily basis, but the more distressed sales, which i think that privately fulfill looking for, that has not turned on yet. Alix all right. So more to come. Thanks so much; good to see you. Scarlet coming up, gap posts weak sales numbers. We dig into another retailer next, macys. Scarlet im scarlet fu. Whatd you miss . Star board value is turning its eyes to macys, pushing it to squeeze more value out of property holdings. This comes as macys sales decline. Lets see what the numbers show. Macys stock is down more than 40 in the start of 2015. Is the performance against the s p 500, which is up marginally in the period. Weakness in sales is driving macys underperformance. Comparable sales have fallen each of the four quarters last year, with an overall decline of 2. 5 . When macys announces earnings on wednesday, analysts estimate a 3 drop in quarterly revenue. Like all retailers, macys is suffering from a slowdown in traffic. Traffic data shows has been falling since the First Quarter of 2012, and most analysts see little chance of a sudden turnaround. In order to match sales volume, macys is treating its store count. This is all part of a plan to shape 400 million off expenses. The company had 871 stores at the end of last year. Macys is taking their advice and exploring options for its real estate; it hired two real estate executives this year, and according to their presentation from january, macys real estate is worth almost 21 billion, which is more than their current market cap. The will report earningsy before the u. S. Open theyll on wednesday. Joe Something Else we will be watching mortgate applications come out tomorrow. Not miss brazils lower house of Congress Voting on the impeachment of president Dilma Rousseff tomorrow at 7 00 p. M. Eastern. The government is trying to ask the Supreme Court to annul it. The drama keeps eating a. Scarlet and of course we will be watching disney shares in preopen after the earnings reports that mr. Revenue. Hiim here to tell homeowners that are sixtytwo and older about a great way to live a better retirement. Its called a reverse mortgage. Call right now to receive your free dvd and booklet with no obligation. It answers questions like. 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