Transcripts For BLOOMBERG Whatd You Miss 20170308

He delivered his budget speech in Parliament Today as the u. K. Prepares to leave the european union. He raise the forecast for growth from 1. 4 to 2 . The budget deficit will be less than expected, too. Can only workforce grow over the next two decades if new immigrants arrive to replace retiring baby boomers. Thats according to a new report from the pew research center, which projects that the u. S. Working age population will go to 183 million in 2035. 6 this is bloomberg. Scarlet live from new york come on scarlet fu. And im joe weisenthal. The s pe s p five 500 down. Treasury selloff, 10 year notes falling for an eighth straight day. The fed is almost certain to pull it folder trigger on a rate hike next week. Oil prices tumbling to near twomonth lows. Nasa talks says probably wont begin until later this year. He says the administration is in preliminary discussions with congress. Alix now lets look at joe now lets look at where the number stand. Abigail we are looking at mixed trading action heading into the close. Indexw and the s p 500 trailer, the nasdaq slyly higher. The s p 500 does not reverse higher, it will be the third down day in a row, the lummis since the end of january. Just a little bit of bearishness for the s p 500 after last weeks rally. Ther whats happening with s p 500, also helping to explain why the nasdaq is slightly higher, this is the imap. This is a great way to look at the sectors within the bloomberg. Energy is the worst drag followed by utilities. , oil is down more than 5 on record supplies. That is really dragging on energy. Ratesensitive sectors, like utilities, real estate and telecom, those are being dragged on by the fact that yields are up for an eighth day in a row. Less stocks tend to look attractive to investors against the backdrop of rising yields. The biggest drag to the s p 500 are the two big oil names, exxon and chevron, down in a big way today, down more than 1. 5 . While these are the big utility drag, duke energy and dominion. High dividend yields for those utility stocks tend to look less attractive when yields are rising. Thats one of the big stories today, that yields are up for an a today in a row. Bonds slumping for eight straight days. This is the 10year yield or the past six monster. We see the big rise out of the election. Then into the sideways range. Here are those a todays. This puts the move into perspective. Sinceht be the longest 2012, but it is twice five basis points. We did far more than that last november. Us, we have a 10year yield stuck in this range, flirting with the 50day moving average. It is not clear which way this range will break, upper down. We will have to see if it goes above 2. 65 or below 2. 3 . When the fed did raise rates back in december, the 10year yield a did go down. It will be interesting to see how all this plays out. Hedge funds have decreased their exposure to equities, suggesting that some bigger firms are preparing for the ,rump bump to peter out especially as the fed prepares to raise rates next week possibly. We have loright, hein oh, deputy global cio at state street global advisors. Great to have you on set. After the election, we saw the risky assets. It seems as though institutions had to scramble to catch up with it, that they were all sides of that move and they had to compensate. From your perspective, where do things stand today, how those sames in same institutions are situated . You heard a lot of the trump speech last week around the reflation rates continuing, deregulation, lots of things that will be constructive. At since we have had such fast run already, this is a bit of a pause, particularly as we digest the next fed move. We talk about the reflation trade, there is a sense that it will aid to inflation. How do you distinguish between the two . Lori were not concerned about inflation. Range of 2 ,in the which is what the fed and the ecb have been looking for. Some inflation is a good thing. To your point, the problem is what if it runs away . We still dont have huge final demand. Even though we have unemployment in the u. S. Especially low, that is not true around the world. So we dont see a lot of signs that we will have right away inflation. And it would be good for stocks. From the Portfolio Allocation perspective, we have seen treasuries have not done very well. Theyve done badly since the election. Days, they have got hit again. Hasnt acted as much of a hedge on down days in risk assets. So traditional portfolio construction not performing that well. Is this a temporary blip in the longterm . Staying away been from sovereigns and treasuries for a while because there isnt any value there. And especially if you see trends start, inflation stocks to pick up at all, those would get the heart get hit the hardest. Inflation protection, i want to point your attention to this chart. It as my deep dive earlier in the week. A ghost or the end of february. It tracks data from the cftc. Determine s indicate longterm asset managers. They are long. Are shortterm positions. It goes in different directions. Joe speculators have been doing very well lately, especially going into this fed decision next week. The belief that not only is there going to be a fed hike in march, but possibly several more down the road. How would you expect the market to trade given what we have heard from the fed lately . Lori a lot of it will be dependent upon what they say is the next move. If they come out and talk about highly about being highly datadependent and getting ahead of the curve, you could see a bit of a rally because people will start to see that it is not rampant, runaway inflation or a fed that will put that abbas on growth, so to speak. Abosh on growth, so to speak. Jeff says he sees the fed going back to old school. Where glad youre here because it is also International Womens day. I wanted to bring up some proprietary data. It is the Bloomberg Financial services generate quality index. Track the generate quality space. The white line here is the Bloomberg Financial Services Quality equality index. Over two years, it has outperformed the msci allworld country index. My question here is, with deregulation coming for the thencial industry, with reflation trade gathering momentum, will Financial Companies that have more to look forward to in terms of Growth Prospects put aside their gender initiatives because writer days are ahead for the industry overall . Lori we hope not. Female representation in all corporations is pitiful. Is lessook at ceos, it than 5 . If you look at boards, it is less than 20 . Those numbers are not good enough. What you find is companies that have more that more gender diversity perform better. A have better return on equity. They are better managed from a risk standpoint. And we hope finally Corporate America has opened up to that. Scarlet you guys are doing that. Ing about youre going to companies that you have investment in and talking to them and say you have to do something about putting more women on boards. Lori we are indeed. 40 does not have a single men on their board. Fewer than 62 have 50 or more female representation. We will 15 or more female representation. Speakingwe have outside the white house on drug pricing. Theble to meet with president s of the black colleges and universities. I said to them, the most important thing for those colleges and universities right now, is that you need funding. They need more funding. He said he would work on that. Our next thing, again, we presented the proposal to him and secretary price. And hopefully, we will hear from them very shortly. Thank you. The meetingpart of was about the currently high cost of prescription drugs that is really hammering people. Our pharmaceutical industry does a couple of good things. They create lifesaving and life extending drugs and drugs that relieve pain, but the price is starting to kill us, we just cannot afford it. What we are proposing, something we have been working on a long time, is to put the medicare program, which is the biggest purchaser of prescription drugs, negotiate price discounts. President trump gets it. On the issue of getting a good price. Basically, what the medicare itm does is it advise buys wholesale but pays retail. Thats not the way you run a successful business or a successful costsaving program. We presented our proposal and the president seemed first of all, number one, verio top of it. Didalked about what he about what he did with negotiation and saved hundreds of millions of dollars for the american taxpayer. Third, he really expressed concerned about the lives of people who need these lifesaving drugs that are every day put in this terrible choice where they have to risk a lost they cant afford, a child who needs and epipen or pace of the the cap afford. Or ais not a choice drug they cant afford. This is not a choice. I was happy to be at the table to talk about this drug pricing issue. As president of a hospital and a practicing internist, this is the most important issue facing iarc patience. Im thrilled this issue is getting some traction. Thank you. When you talked to the president today, what were the issues what did he say about [indiscernible] when you speak about Voter Suppression and economics. There is also the question about to be ok youre talking about health and the high price of health. Cbo has yet to give an official score on trumpcare. Much intot get too the aca. The subject really was for prescription drugs. To the hbcus, i the thing that i told the president s of the hbcus when im with them, to ask him about the money. Because hbcus need money. Like you said, they never asked. So i asked. With regard to Voter Suppression, he seemed to get it. They seemed to understand that you cannot have Research Done on voting in the United States without dealing with Voter Suppression. I gave him a letter that we will give to you all, two letters, that we have sent to Vice President pence and to the president about that issue and it lays it all out. What was the other issue . We didnt get to the cbo. Me, buthe agreed with you cannot scarlet you have been listening to an impromptu News Conference with Elijah Cummings and Peter Hospital and the president of Johns Hopkins hospital. They gave drug pricing bill to president trump. Joe after that initial republican bill the other night, trump said there would be two or three more phases of health care reform. We will also do stuff on state lines and, obviously, the administration has more to come on the front. Scarlet so the process has begun. Trump, according to cummings, was enthusiastic about targeting drug prices. Lori, we were talking about state streets campaign to add more women to their boards. Youve done this in a visible way, by putting a statue up in wall street. Lori the most visible engagement we have with those companies. We have a statue of a little girl, a very defiant posture, in opposition to or the pending on how you look at it, the iconic bull down on wall street. We have this installation for the next 30 days. We are hoping perhaps longer. Scarlet hopefully, that is something that sticks around. Thank you so much for joining us. Long will it be before we see a revise nafta deal . We asked wilbur ross on that. We will get his perspective from new york. This is bloomberg. Joe part of you as commerce secretary wilbur rosss job is to put together a trade policy for a president who has made it there that he is with the status quo. Discussed a nafta and why the secretary of so eager to target the trade deficit. Prenafta, we regularly had a trade surplus with mexico. Now we have a substantial trade deficit with mexico. So its not true that trade nafta and postnafta others no change. Theres a big change. Goals is tof your reduce if not eliminate that trade deficit with mexico. Absolutely. We think there is no logical reason why one country, namely the u. S. , needs to have a trade deficit that roughly those the combined trade surplus of the rest of the world. Its not our fate in life that we have to absorb all the net exports from everyone else. David to get those concessions out of mexico, there will have to be some threats i dont think that is too strong a word about tariffs. Could that really disrupt trade overall with mexico . What does that mean for General Motors . First of all, i am not a very threatening figure. [laughter] so i dont know about the word threat. But the reality is the mexicans know, the canadians know, Everybody Knows times are different. We are going to have new trade relations with people. And they all know they will have to make concessions. The only question is whats the magnitude and whats the form of the concessions . Told the ive president repeatedly that he has made my job easier by softening up the adverse parties. What could be better than going into a negotiation where the fellow on the other side knows he has to make concessions . David what is the time horizon now . When do you expect negotiations to begin and how quickly would you like to have them resolved . I would like to get the results tomorrow. [laughter] but thats not the way the world works. We are now in the early stages of the tpa process, the trade promotion authority, the socalled fasttrack. Nature,cess, by its own has a couple of months starting point before anything any very serious happens. So youre talking probably the latter part of this year before real negotiations get underway. Prior you know from your role, a successful investor, business does not like uncertainty. When they make investment decisions, they like to know what is happening. There is a lot of urgency to get this thing resolved, to know what we are dealing with. They dont have any more sense of urgency than i do. You are well aware that the president has a welldocumented sense of urgency as well. David so we are going to get this says get this done as quickly as we can. Rules of origin, environmental restrictions, there have been a list of things people have suggested should be taken a look at. We are roughly 20 chapters to the original nafta and there are several chapters that need to be added because of the Digital Economy and other things that have developed subsequently. So the marriott points of discussion that will come. Which ones will bear the most fruit . To discuss. Remature but there is a lot to be dealt with. That was u. S. Commerce secretary wilbur ross with david westin earlier today. And a quick programming note Francine Lacqua has an exclusive interview with j. P. Morgan chase Ceo Jamie Dimon at 7 45 a. M. Eastern tomorrow. The conversation will focus on Donald Trumps first hundred days. This is bloomberg. Hey shout out to bloomberg other day when he hosted his webcast and included this line. This tracks the number of mentions of the word reflationarys is deflation. Deflation. N versus early 2015, that was the heyday of deflation mentioned. Of late, since the u. S. Election, reflation has been moving up. The fed may go old school and raise rates sequentially. Joe pretty remarkable. The white line has not been above the orange line since 2008. Why have stocks been rising . Maybe the answer is super simple. Because earnings have been better. The white line looks at the city global earnings revision index. It has hit its highest level recently. All around the world, more and more companies are advising their earnings expectation higher. The earnings are good. Scarlet its pretty fundamental. Lets look at the market close as we head toward that point. You can see the dow losing 73 points. We have been up to them we have been down. Right now, we are mixed. From new york, this is bloomberg. Scarlet we are moments away from the closing bell. The s p 500 set for Third Straight loss. Big story was yields on the 10 year getting pushed up after jobs data bolstered the outlook next week. Im scarlet fu. Joe and i am joe weisenthal. If you are tuning in live on twitter we want to welcome you to our closing bell coverage. We begin with our market minutes. We should make clear when you talk about the blockbuster jobs data it was a private payroll. Joe has a sort of shaky connection. Nonetheless, if you are excited about fridays report and the good data come exciting number. Scarlet we will get to the data on friday in just a minute. Here is how today is about to close. We were up, down, a bit of everything. You are looking at the dow off by almost 70 points. Straight dayhird of decline for both the dow and s p. When you look at the Industry Groups and how they perform im going to pull it up on the bloomberg. At the end of the day were talking about four sectors higher versus seven lower. But a lot moving by not much. Only three sectors moved by more than 1 . Utilities, real estate where the common trust. You see energy getting clobbered. Xle following the most in what the six months. Those are some of the big decliners. Marathon among the worst performers. Lets take a look at the Government Bond market your scarlet bond market. People getting hyped for this fridays report. Yields are up. 2. 08. Ear yields up to highest since around 2011. 10 year yield creeping out near the top of a range that has been at 2. 55 everywhere. Lets look at a longer chart of fiveyear yield. 2011ave to go back to basically until you see levels like this. And expectation not just of a nearterm hike but signifying a series of hikes. Comes after the signal that he thinks the fed might go back to his old School Methodology of raising rates sequentially at every meeting. That is how it used to be done once upon a time before the financial crisis. The jobs report spark a boost in the dollar. A leg up around 8 00 a. M. New york time after data showed payroll increase by almost 300,000. I also included the sterling pound. Falling to a sevenweek low. The 2017 growth forecast was resigned was revised up to two point to two points and to 2 . The pound is the worstperforming currency so far this year, down 1. 4 . Joe now lets look at commodities. There was a lot of action today and it was very ugly. Here we are looking at a oneday chart of oil getting absolutely clobbered, down 5 . Everyday we joke it is down, but today we saw a real move for the first time. This is the worst day for oil since very early 2016. Contributing to the selloff, inventories. Inventories coming in higherthanexpected. Look at that climb. That is a 30 year chart of oil inventory. Oil to get to bullish about when the world is swimming in it. Scarlet it is not like you can wind is that down quickly. Joe these imbalances are out there. Lets look at a few other ones. Nickel down over 4 . Another industrial metal, not necessarily a good sign for the global economy. Gold selling off a little. Scarlet those are todays market minutes. Lets take a deep dive into the bloomberg. You can find the charts using the function at the bottom of our screen. Im going to take you to one of our favorite functions, the whisper function allows users to contribute the best guesses. Were focused on the big jobs report friday after the adp number raised the bar for what will likely be reported. The whisper number is for 210,000. Were going to hide this other panel. This is how the number has evolved over the last few weeks. You can see a big bump up over today following the adp number. Somethingout 160 contributions to this number. Joe everyone should go to whis go on the bloomberg and try to be the smartest one. But i think it is cheating to get your guess and afterwards. Scarlet there should be a cutoff. Were going to take a look at what the consensus is. Right now it is for 200,000. Just two days ago it was at 180,000. If you click as of, you can see a bunch of economists updated the estimates as of today. We have seen more red bars on higher and of the forecast. Forhigh forecast is 273,000. Gothe low end you have 150,000, but it really centers around this area, around 200,000. A lot of economists forecasting 200,000. Joe lots of excitement for friday. Lets go back to commodities. We talk about oil getting clobbered and nickel. Milk. As traded in new zealand, getting absolutely destroyed the last couple days. Down a percent and 9 consecutive days. Higher supply out of europe, maybe weak demand. Really surging milk supply. One thing we have seen, the milk supply is the white line, blue line is new zealand dollar. The one currency that is very sensitive to milk. If we look at that milk price we can see how much it has been tumbling lately. It is not just industrial metals, even some Agricultural Commodities doing badly. Investors are finally taking record he was Oil Stockpiles seriously. Willis slumped more than 5 to below is close this year after Government Data showed production cuts from opec and other producers have not been enough to reduce u. S. Supply. Here to talk about what is next for the crude market is tina davis, bloombergs managing editor for energy and commodities. What is going on . All the stories are supposed to be good for oil. Opec is sticking to its god, u. S. Oil production has not been we see hedge funds betting aggressively on oil. Why is it not working out in practice . Tina i think this is the first time we are seeing the market listen a little more to the stockpile reports. They have an out at records for a while now and obviously ecb stockpiles increased because we are in turnaround but i think they are now paying attention to the numbers and starting to worry about them. When they announced the cut is said it was being done to draw down the numbers. That is not happening. They arethe saying and needs to happen quicker. Scarlet if you come into bloomberg, what we have seen is that rigs have been climbing steadily since the middle of last year. Does not like this should be a surprise. We had plenty of warning. Tina the oil minister yesterday referred to free riders. What you arely seeing. You are seeing the rate increases. There is a concern shale producers are coming back quicker. This will ultimately undo the effects of what the unpack agreement with the opec agreement does. Year from thene market bottom. If you read the stories him back then it was just doom, the market is never coming back, it is all over. There is a big conference happening in houston right now with all these oil people what is the overall mood . Tina it is much better. It is easier to be optimistic when oil is 50 compared to 30. There is a concern that the price level is where it is you are going to see too much and too quickly a response which will send it back down. Will traders have been bemoaning the boring trades in oil. It has been stuck between 50 and 55. Joe it has basically gone nowhere up until today. Tina it has been a horribly boring market but today it is breaking loose of that. Scarlet are people in the industry talking about the possibility of a going back to 80 . Or they coming to terms with the fact that it is stuck . Tina some people say 60, 70. We got a little warning yesterday from one of the shale producers said if opec does not extend its cuts this year you will see oil at 40 again, was a clear call for them to please continue to hold back production because we would like to fill up the space you are leaving for us. Joe lets talk about u. S. Shale. Hopes of the saudis was that it would crush the shale industry. Does not seem to have happened. Economics of the industry right here basically a 50 a barrel . Tina if you look at the chart that was put into earlier, it is isically talking about it fantastically economical to produce oil. If you are a rigged owner, if you are someone looking for oil or produce oil, most of that rate increase has been there. It is forced the industry to revert to the most profitable place they can find. Scarlet they had managed to do it much more efficiently. They can get up the rigs than pump gas oil much more quickly than in the past. Tina in with the shale revolution it is not quite such a no deal anymore to get wells bring to reignite, or to production online because basically youre not having to drill five miles beneath the ocean to get to the oil. He basically deceptive find the shale, figure out what the formulation is to move it out and get a producing. You mentioned earlier traders being board of the range. But traders themselves are very long oil. As of recently anyway, record long speculation in futures. Painful would this be this is a chart of net long positions how much pain would hedge funds and traders be in if the next move moves down . Tina at the end of that chart you see a slight to down. We had been a slight tick down. We have been waiting for when it will ease off and it might be today, the start of the exodus. The next data comes out friday. Joe that will be interesting to see market reactions come how that translates. Tina exactly. They will be thinking about what the saudis said. Joe great stuff. Tina davis, thank you very much. Have you caught bloombergs new show, Bloomberg New yield . Jonathan ferro focusing on issues that directly affect debt markets. This is bloomberg. Mark it is time for first word news. Women all across america stayed home from work today, wearing red and rallies across the country to show the economic strength and impact on society. It is all part of International Womens day. The main event being called a date without a woman was organized in washington with smaller rallies being held in cities across the globe. It is the first major action by organizers of the womens march since the day after president trumps inauguration when millions of women poured into the streets in protest of misogyny, inequality and oppression. San francisco is seeking a glimmer new you judge and that president sthe executive order on sanctuary cities. The order calls for cutting funding to many saudis and other jurisdictions that protect undocumented immigrants. Officials say the order dollars ino billion funding, although no federal funds had been withheld yet. The signs are that british Prime Minister theresa may will trees it trigger brexit towards the end of the month. May 1 has to wait for her brexit bill to pass parliament, which probably will happen next week. Then the Prime Minister is unlikely to want to clash with the dutch election on march 15 or the Scottish National partys conference next weekend. U. S. Ambassador to the u. N. Nikki haley says the u. S. Has to seek what she says is positive action from north korea before he can begin discussions on ways to reduce tensions on the korean peninsula. That is an response to a call both nationsday to avoiding a headon collision. The chinese want north korea to stop its Nuclear Activities and u. S. To suspend military drills with the south. Ambassador haley says the exercises are defensive and have been held for 40 years. Global news 24hour today powered by more than 2600 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Joe whatd you miss . Of healthh and pull care legislation and broyles washington, d. C. And cofounder of motif investing and is seeing all the winners and losers in the Health Care Debate in realtime. Us, what is motif investing . How does it work . Wealthwe are a Digital Company and what we do is build thematic models. The build them for Goldman Sachs and they put them in their nose. We build them for retail structures. It is systematically weighted basket of up to 30 stocks or products built around an expression. Those expressions can be thematic, trading models. One of our most part of most popular is about values. More and more americans are wanting to talk about, wheres my money going . Because they are not eds or funds yuan you own the underlying securities. if i say i want to bet if i want to invest in stocks that will thrive under obamacare is revealed. That is all i know, i just say it will be repealed. A basketosket specifically designed to do well under that scenario. Hardeep that is correct. For investors to do not want to get into the nittygritty, you can then invest in things like diagnostic companies, medical device companies. These are companies that were taxed, they had headwinds of diagnostic medicine, defensive medicine. A lot of cost controls under obamacare put a lot of pressure on these companies. When obamacare was thriving these companies were doing very poorly. Now you see even the hope of that. You see these companies doing better. Scarlet in these baskets, is the waiting proprietary or can i replicated . Hardeep you can replicated on your own. On your own. It our Retail Products you can build your own model if you have an idea. My father knows nothing about investing. He can tell you all about surgery and he can build it. At the big theme here is posttrump, people voting with their values. It is remarkable, you could be a peace corps volunteer and not know in your portfolio you are investing in cluster bombs. That transparency and abilities to vote with your values and manage money with that is very powerful. Post election, 83 of americans have told us investing consistent with their values. Just yesterday we made a big announcement that we have launched a first of its kind, think of it as a Digital Wealth product. But unlike anything out there, you tell me what you care about. Child labor, Corporate Governance and we take out companies from your motif. We build asset models using underlying latif motifs. You can put as little as 1000 to 250 securities. We show you us ripping them out and we replace them with equivalent equity exposure aligned with your values. Scarlet what are the hottest motifs . What has surprised you . Hardeep the day after trump got elected, warfare. This is not defense spending, this is smart bombs and the drones. That surprised us. Battling cancer, oncology really doing well. They see it as specialty drugs being immune. It a lot of Health Care Money is moving in. But now were seeing a lot of people getting out of obamacare. What is interesting is they are not confident enough to bet on the repeal yet. Scarlet they just want to be exposed, i guess. Hardeep there is a lot being debated right now, and health care is complex. Understanding the elements. You cannot do a lot of these using an etfts because it is like doing surgery with a machete. Which is why we try to translate what you want as an investor into something very manageable. Policyother big question wise for this administration is infrastructure. Infrastructure stimulus. At some point people expect there will be a bill but who knows. What is interesting there . Hardeep after president obama got elected there was a big flow of funds into smart grids. Were not seeing any movement in infrastructure right now. I think partly that is because people are try to figure out is infrastructure a good play or not. We have not seen anything lately but it is interesting, when president obama got elected money was moving into smart grid, but were not seeing a big surge into infrastructure right now. Scarlet are there any motifs that have had transaction had traction under multiple president s . Hardeep over the last few years are Rising Interest Rates motif has been doing quite well. I guess that is hard to go lower than where we are today, but that motif has been consistently post trump and the prior administration. In something im interested , obviously there are thematic stories related to policy. Obamacare, infrastructure, smart grid. Do you find things you can sort of reverse engineer what people are into based on these flows . We know where to look, health care, but where you see the flow first and extract the signal . Hardeep we do. We have to be careful, there are regulations on how to do that. We have built a lot of motifs. We have phds who build these models but we have empowered our customers. The first year we built 100 motifs, our customers build 85,000. There are now over 300000 and you get a roti and you get a royalty payment from us. That data is actually interesting to see what people are interesting thats interested in investing in. Ple now are diminishing demanding interesting plays on marijuana. The community is saying give us a way to him invest in that thing. Scarlet crowdsourcing, in a way. Thank you for joining us. Joe a quick programming know. Toombergs will be talking jamie dimon tomorrow. That should be fascinating. Obviously a time to talk about, especially ahead of a possible article 50. This is bloomberg. Lets take a deep dive into the bloomberg. You can find our charge is in the function at the bottom of your screen. This chart is courtesy of bloomberg fx markets specialist. U. S. Dollars used as a quoted currency. This goes back to the start of 2016. You can see a wide range, not everything moved in unison. Then came the brexit. Things got out of whack. Huge declines in correlation. Around late september everything reverts back and now there is notable compression. This could be because of times in political stress, almost tend to synchronize. We have seen little stress increase. Joe i like that. Scarlet lets go back to this brexit shock. What is interesting here is these Currency Pairs that define the correlation, you would think the pound would couple with the brexit but it is actually the yen that decouples. The blue line is the correlation between the booty dollar and aussie dollar. The yellow line is correlation between loony dollar and yen dollar. The other yellow line is correlation between aussie u. S. Dollar and yen dollar. It really shows you how the market sees the yen. Joe i love that. Everyone thinks of the dollar as the ultimate safe haven but it is really the yen. A reminder that every friday at noon you should really be watching bloomberg real yield posted by Jonathan Ferro at noon eastern. They talk about fixed income, have to watch it. This is bloomberg. Mark i am mark crumpton. Fbi director james comey says the cybersecurity fight can be compared to the fight against terrorism. Spiking at a conference at boston college, he said the threats are too fast, too big and too widespread for any of us to address them alone. These are more attacks on our infrastructure. These are attacks on employees and customers, attacks on reputation, attacks on our economy and security, and increasingly attacks on our fundamental rights. Mark comey says he intends to observe his tenure term as the our director, telling the crowd and are stuck with me for 6 a half years. He began in 2013 appointed by president obama. Police in three European Countries have raided offices linked to suspected cyber criminals. More than 1000 investigators searched homes and businesses in germany, latvia, and britain in connection with a socalled darknet site that is used to buy and sell stolen goods, drugs, and medication. Iceland will be the first country in the world to force improvers force employers equal pay regardless of gender, sexuality, or nationality. Iceland says it will introduce legislation to parliament this month requiring companies with morning 25 employees more t han 25 employees obtain certification proving they give equal work of equal value. The first country to make equal pay mandatory for public and private firms. Islamic state claimed response ability for an attack on a hospital in kabul, afghanistan. 30 killed and others wounded. It began with a suicide bombing. The attackers apparently wore medical uniforms. Global news 24 hours of a powerpoint 2600 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. U. S. Stocks little change most of the day. Nasdaq still finished that way. And s p 500 in the end the recovery we had could not last. Energy shares continued to be epic track of the overall equity market. Joe one thing that is recovering, 10 year yields, its biggest string of increases since i dont know, in a while. 10 year. 5 on the that is on the back of that strong avp jobs report. Whatd you miss . Highyield issuances gained momentum amid expectations of a rate hike next week. Yesterday was the busiest day for the group. Followed by today with another 4 billion. For those who are questioning how much money could go into the leverage will, my next guest says a lot more. He is the head of microstrategy joining us from macro strategy joining us from stamford, connecticut. We have seen this russian issuance rush of issuance. Junk bonds versus leveraged loans. What kind of action are using in the market . Were seeing caution in the credit market. None of the deals in the past week are trading particularly well. They are trading around where they are issued. It is like snapchat, but you are not even getting that initial pop. That has dropped off a little. It is showing the market fatigue. Money continues to go into these etfs that track. This white line tracks the total assets of jfk. Of jnk. For most of 2016, it was higher. What is likely to stop the momentum, especially for bkln . Peter that is where we will see flows continue. I think the closed end funds will continue to attract money. You have good yields, not as high as bonds. Helpstra safety especially as we get closer to end the 10 year treasury will come. Joe that seems to be the big question. I have a longterm chart going back over five years looking at key Technical Levels on the 10 year. There is talk lately that it has broken out of a range. On discharge, it is perhaps breaking out of a range. Our week seven for the next leg higher . Peter i think we will test somewhere in that 260 to 262 level. Ahead ofe test that nonforeign payroll. I think we could have a quick move to 280. There is a big gap risk. On the other hand, i dont think there is a gap risk tighter. I dont think people are that short rate products. I think going from 260 to 280 quickly israel quickly is real. Joe it is easy to talk about year, whetherand 5 the fed will go toward march, but that should not have a huge impact on rates 10 years note. What is forcing people to reprice on the long end . Peter i think people are looking at what is going on in europe. Tople are pulling the ecb pull back from qe. If you see german bonds and bit, itonds dragging a will drag our yields higher. Treasuryre our 10 year works out equity markets were able to observe that. Higher and we get a flattening of the yield curve, it could hurt the equity markets. I want to go back to the idea of the rates that keep climbing. When the 10 year yield to comes down, it usually lines up with politics, whether it is brexit or something else. The idea that political shocks have not been priced in. Frexit was absorbed like brexit was absorbed in 3 weeks . 2 days . Whether this is next in the netherlands or whether it is unexpected, people will think they will get past that right away. What is the confidence in that quick recovery . Peter it is realistic we will not have the shock. People are getting complacent at each shock is easy to support. The u. K. Was not part of the euro. What has been going on in this has been happening in greece has been going on 5 or 6 years. If it happens in france, it will be much worse than we have seen. The cb will have trouble controlling it. Which donald trump will show up if it is the state of the Union Donald Trump that scared equity markets, projecting growth, etc. Or the one that scares us that nothing will get accomplished. Merkel or say that scholz wins in germany and nothing happens this year goes uneventful, where could we be looking at longterm rates by the end of the year . Peter 2. 75 to 3 . I think it will take a lot of actual growth to push us towards that the present. 80. Uld like us to break 2 at some point i would like to break wewill have to see that if can sustain growth as these Central Banks pull back. Coming up, the cofounder of stock twist tells us what he thinks snap stock is falling off with analysts after getting to such a strong start last week. From new york, this is bloomberg. Joe it is time for the Bloomberg Business flash, a look at some of the biggest business stories right now. Boeing is considering building a new tween engine plane for flying the atlantic, dubbed the , seating from 295 to General Electric is nearing a deal with the potential value of over 1 billion to supply equipment to multiple powerpoint in the u. S. Power plants in the u. S. Ge would provide Wind Turbines and other equipment. 2018 willor 2017 and become final by the end of this month. Disney ceo bob iger says he will remain part of president trumps strategic and policy for. He davis as a response have this as a response at a meeting today. I dont believe my membership in that Group Endorses any specific policy of the president or his administration. I think it is a privileged opportunity to have a voice in the room. Joe and that is your business flash. Scarlet whatd you miss . The snap selloff taking a bit of a breather. The app maker trading as low as 21 yesterday. Of the analysts surveyed by bloomberg, you can see that none have a buy rating. Re are 3 holds snapd, if nothing else, picked the perfect time to go with record highs. Joe i like how you left out the word no relation. Laughted at the word valuation. Measure thaty any wall street has made up his overvalued. Joe none the less, people have said this about many tech companies. I remember facebook going to 15. It is eightfold since then. A a lot of times people on wall street get this totally wrong. Howard when amazon went public, it has been in a sense we have been printing money. These have been silent it is business in the sense that they are reliant on a younger sector of the demographic. Joe can there be a number two social network, or is facebook such of the human and they are such a behemoth and are such wellknown. Pullinglike instagram in other technologies. Is there a space . Howard it is just the question of who is the winner . Facebook has the best data. Scarlet lets talk about sentiment on snapchat. This is u. S. Equity gt go, measuring the sentiment on the stocks. There is a big spike up around the ipo. The price is this line right here. We will look at sentiment cant. Sentiment count. Positive mentions of snap are gr een bars, negative are red. Howard obviously the twitter awf what we see on volume. Snapchats audience. Howard the stream started getting bearish in january. By bearish, i mean less than 15 . Since we skew younger, that is pretty bearish from the demographic, at least from the male side. From a pretty bearish demographic that is supposed to be the most bullish. From a user perspective, that is not a good sign. The question is, do they deserve to be negative . Users, that is not good for the company as it sits with their product today. Joe you hang out with a lot of family types. Types. Ber valley i remember they were snapping their meetings. Are these guys still into it . Howard in 2013, the people that got hit saw their kids using it. Was 3 early as 2013, it billion. Real money got put to work. It is not wall street money, but definitely take big vc money. Scarlet people did not stick around to use it through. Of all of the startups out there looking at snaps ipo, how many will actually pull the trigger . Howard it is still so big. It is not fun for a young person to see these valuations. 40 billion is such a relative number. Public, youwent wonder how they would get thicker. Get bigger. Even if it is a home run from this standpoint, it will not have returns like starbucks did in the 1990s. We need Companies Going public sooner. There are many moving factors to this. Joe as an investor in private companies, theoretically some might ipo one day how important is it to you that Companies Like snapchat find good reception on Public Markets . Howard in the end, the companies have to perform. I think its important that the companies have this endgame and not rely on the Big Companies to buy them. Joe always great to have you. Stocktwits cochairman and founder. Scarlet we have shares of Urban Outfitters and expressed falling after a grim outlook. Is adapting staples to the changing world. Scarlet staples is set to report earnings before the opening bell. Repositionings the Office Supplier after a merger was blocked with office depot. Like its retail peers, staples is struggling with sales in an increasingly digital world. This is the year over year volume growth for the Office Supply industry, which has seen sporadic down periods, but nothing like the steep drop offs like we have seen in the last two years. Due to the slowdown, staples projects its fifth Straight Year of revenue decline. You can see the protections for a gain starting in 2020. Cap matches with its 2020 strategy announced a year ago. Executives want to change the profile of staples. Sales,s a snapshot of its branching out into north america specifically. When they say deliveries, they mean a shift to fewer stores. There is a decline in global locations. Staples shut down hundreds of stores in 2011. Closings could accelerate further. Staples wants to focus mainly on north america. The company sold a controlling interest in its european operations to an affiliate of cerberus capital. Ples pushups talk 5 pushed up stock 5 since the decline of the dramatic merger. We will watch it after the opening bell. Joe for more analysis on staples before they report earnings ahead of the opening bell thursday, let us bring in our guest that covers these companies. Stock has bounced a bit lately, but overall it looks terrible. It looks like what a lot of bigbox retailers look like. Are they showing any stabilization . Sales havere stabilized in the negative low singledigit range. They still have to continue to close stores. There are locations that are not as profitable. As scarlet mentioned, the shift is to the commercial business. That is what they want to focus on. Specifically the big market, the customer. Pricing at about 80 billion. Scarlet what are contracts like on the commercial side . It is abit of. Bit opaque. I think office depot was buying for the same regional players. They are saying they can be a National Player and have Storage Systems to deliver from. I think it is still quite competitive. Joe does staples have any International Ambitions . Not so much. The new ceo has been focused on north america. That is why they have divested u. K. Operations. They are seeking the rest for their international business. I think north america is the goal. Scarlet i am a member of staples because i buy School Supplies or my kids. I cant emails all the time about this being slashed by 50 . It is a very promotional environment. What does the market look like going out . They remain under pressure, especially on the retail side of the business. That is why they are going beyond Office Supplies to adjacent places like programs. Needore services if you to print something. Scarlet i needed to laminate something once. They charged me an arm and a leg. Joe my printer is always broken. Player,les be an online where is that unrealistic . That is not realistic for a huge legacy retailer. They will want to keep some channels open. Scarlet that is good because i like going to staples to buy School Supplies. Thank you so much. Coming up, what you need to know to gear up for tomorrows trading day. This is bloomberg. Scarlet no shortage of news today. Data 8 30tes its cpi tonight. Joe i will be looking at the ecb decision with the Mario Draghi Press Conference to follow. Scarlet we mentioned staples earlier. Announcedd others Quarterly Earnings tomorrow. Joe have a youre watching bloomberg technology. Lets check with their first news. The city of San Francisco is donald for block on thompson executive order that it drifted friends 2 billion for San Francisco. Hawaii has gone to federal court to try to block the federal travel ban. They say it will harm residents heard the president s new executive order restricts entry into the u. S. From six muslim countries. Americas workforce will only grow over the next two decades if new immigrants arrived to replace retiring baby boomers. That is a report according to pew research. Thousands of women across the u. S. And world staying home from work today in honor of International Womens day. Many were read