Jonathan no time to enjoy that in the markets this morning because it is deep red across equity markets. Equity markets down in europe. 1. 36 on the ftse 100 with a miners leading losses. S p 500 futures negative. Switch of the board to japan. Dollaryen, down by. 9 . Three years and a day since the kuroda experiment began. Yields in germany. You have to go to two decimal places just to get one. To thesis points days where yields were around five basis points. Wti down to 35. 64. What is happening in the markets. Stephanie i want to give you a quick headline crossing twitter. Really getting big and the content game, far fiat beyond 140 characters. They will be streaming thursday night games. Is this the kind of business that yahoo wanted to be in . David facebook was in discussions with this and they decided not to do it. Stephanie yahoo wanted to be in this and but for is a meyer is using a different strategy, needs to up their game, and they are trying to do it on the field thursday nights this falls. Now we are going to send you to vonnie quinn. Vonnie donald trump faces his toughest test in the race for the president ial nomination. Polls show trump trails ted cruz. Reduces chances of reaching the number of delegates needed before the last primaries are held in june. Polls show Bernie Sanders with a slight edge over Hillary Clinton in wisconsin. His fundraising machine outra ised clinton for the third month in a row. Saying, it was one of the best finishes ever and the ncaa mens basketball tournament it North Carolina down by three. Marcus paige hits and offbalance threepointer to tie it. Villanovas ball and kris jenkins has a buzzer beater for the victory. It is the School Second ncaa title. Global news powered by our 2400 journalists around the world. Stephanie ther eyou have it. Villanova fans feeling it. Its a risk off day. Stocks declining and oil is dropping as investors reassess last months reaally. Adam parker is here with us. Adam, what is your take on sort of this, you had you are a seller of this recent rally . Adam in the last couple weeks we had a bit of an inflection in our thinking, given the huge market rally. Seven weeks ago i was arguing things are mixed, not terrible. Now i am are green things are mixed not amazing. The fundamentals are the same. They are 4 Earnings Growth for the market but the differences price. The market is up a lot. There are some risks out there. Stephanie like what . On thene would be back dollar strengthening path. And more fear about the European Economic trajectory. We have brexit in a couple of weeks. The contagion there. Most importantly, economists in asia is forecasting the second half of the year the chinese economy slows down. If you get back on that pop process, we have seen with that can do to sentiment. Im not saying, its an apocalypse. I think we are closer to fair value after a pretty big move. 1 when we change our view we have got 1 from an alltime high in the market. Just wonder what the shape of the year looks like. Forget the year end. What is shape of the year look like . The earnings from q2 whthis year two years out. 12 months from now, i pay 16 times for that. You have to have some context. A lot of investors think my assumption of 4 Earnings Growth is too high. That is above the bottom numbers for this year. I think the question will be what do you expect from earning season . We did not get any huge negative prereleases yet. I think and youre talking about is the same pattern we have seen. In line to weak revenue, bad than expected margins. Thats the formula sets the bar low for next quarter which we have seen 28 straight quarters this cycle. That is what you should expect. Is that enough to get people excited . I dont think so. Has been more multiple expansion positioning. Question ime getting seems to be when our going to be fully exposed such that i can pull away from this rally . David what about the rest of the world . Matt i wanted to ask about the diversions in equities. It is interesting if you look at a longerterm picture. This is 10year look at the msci, and the entire World Without the u. S. You can see vista versions. Even in the last two weeks, the stoxx 600 fell to a five week low. A couple days ago the s p 500 was at its 2016 high. Why is that . And will it continue . Been ourt has firms preference the real reason is earnings. The price. Europeshink earnings have grown in five years. The u. S. Has doubled. If you look at the composition of companies, the u. S. Has a much Better Health care and Technology Sector, its banks are better marketed. Can go down the line. A, nation of Earnings Growth and a relative safety of the environment, both. Stephanie when you look at corporate earnings in the u. S. , 2015 was rough. What makes one think we are going to see Earnings Growth . Forced m a, and buybacks, what are we seeing corporate stew . Corporate do . Ams earnings were up 6 exand a gp the wild the financials and energy sectors. And energy, the s p is around 119 last year appear to energy was 5. 00 of that. So, you have seen that huge decline. The question is, what you expect out of energy and financials . Price know what the oil is going to be, i can do a better job. Our view is lower yields and lower world price and that will limit earnings for places that grow health care, select tech, consumer and financials. Stephanie how are financials going to get any better . There are no clear signs. There is not a bank ceo showing us a rosy picture. Says wesche bank ceo are not going to make any money this year. Not a good sign. Adam the case for financials is one they are having pretty good growth and shareholder return. Two, the credit card companies, that is an area we have a pretty good bet in the portfolio because the consumer is in relatively good shape. You see this stocks trading at nine times earnings. A lot of them are discounting much bigger default cycles that are likely to unfold with this environment. It is not just the big banks. The other thing would be if our firm is right, our currency strategy is expecting a strengthening dollar. If that is true, the bank is the one area that outperform spirit you can create an area with shareholder return and by that s currencyand then thi issue, have a little bit of a head start. Particularly versus energy where it seems like every week there is a new deal to dillute shares. I can our to your question is really important. Your question is really important. Im trying to break the market so ithree buckets, just dont get run over if we get these regime changes. Yields in germany down to nine basis points. How can you recognize can you reconcile that . Strategy has been negative. The earnings are flat with five years ago. My view, we write this all the time in my european colleagues give me a hard time. You do not have Earnings Growth in areas of health care, of tech. You do not have a basket of Consumer Companies that have exposure to the u. S. Consumer. The u. S. Consumer dollars are still the biggest game in town. A lot of this is also e. M. Exposure. Europe has a lot more exposure. If you are risk on, and you think the commodity complexed is solved, then you buy it. There is still 60 deal capacity in china. If you look at the longer trend, it is still pretty bad. I am not an expert on europe, other than jonathan other than saying it is only good for vacation. Adam i just know i like vacationing there. Its cheaper than it was a year ago. David that was a big endorsement. Thats adam parker. Coming up, despite some heated last few days, the Imfs Christine Lagarde says she is ready to move forward with greek negotiations. Our interview next. Vonnie here is your latest Bloomberg Business flash. All of a sudden, Succession Plans and disney are not sort clear. No reason being given for the departure of cheap operating officer tom staggs. Had problems convincing some disney Board Members he was the right person to succeed bob iger. Tesla grabs the spotlight for taking deposits on 276,000 of its new model. But when it came to delivering vehicles, the company has come up short, selling less than 15,000 cars in the First Quarter. Tesla blames apart shortage. Now. Han to frankfurt tensions between the imf and the greek government have been growing. Today, Christine Lagarde indicated a growing level of flexibility with greece. In an interview with Francine Lacqua, lagarde said they want to help the company regain the country regain stability. Madame lagarde we continue to be focused on addressing the greek situation by negotiating in good faith with a two fold objective. One is to restore the Financial Stability of the country and to give it debt sustainability. Number two, to equip that economy with the competitiveness, the productivity, the Structural Reforms that are needed for it to be independent. The objectives have not changed. The negotiations will continue. I have a team on the ground at the moment. We will continue to do so in good faith. Francine the transcript suggests the fund is a is willing to agree to a more lenient fiscal surplus. Madame lagarde everything has to add up. Those are magic words. If the primary surplus is lower because that is what the authorities and the greek people can deliver, then it means the debt operation needs to be a bit stronger or longerterm. It needs to add up. We hope it is not going to be done, we wanted to be done by longstanding sustainable measures that will last long after the imf has disappeared from the greek landscape. Francine at the moment, youre willing to play an active role in greece . Madame lagarde i have been invited by the greek authorities to engage our efforts through ve competent Staff Members to actually help the greek people. And we have to do a transparent, evenhanded job. We cannot cut a special deal on the side. We have to do the way we do it with all country because we are independent. We do it for all. Francine the anger or the animosity amongst the greek government towards the imf is something we have in the past. Is it unfair . Madame lagarde together with the greek authorities, we have gone through ups and downs. For sixeen a sageaa years. We will continue because we are therefore that people the people so the economy can strive, can be standing an independent. And independent. Jonathan for many other viewers, theyre wondering why we are still talking about greece and why there is no conclusion. We need some event risk to get this over the line . Is that whats it going to take, some playing to situation . Problem is a goes back to politics. I was surprised that there was this leak. The conversation was the imf saying that they needed to be on the brink or some kind of event to push the eurozone members into granting debt relief. I am not sure what the endgame is, buddy if you are the Prime Minister, of course, but if you are the Prime Minister, is it in your edges to have this advantageis it your to have this leak . Christine lagarde wrote a stern sipras, saying we mean business. Please do not do anything that jeopardizes our relationship. Today she was a lot more diplomatic. Did we forget about greece . Im guilty of that. Its certainly back at the forefront of everyones mind. David there is a third party in this negotiation. Its also the bundesbank. I wonder, Francine Lacqua has Christine Lagarde, sorry. Explicit about debt relief. How much pressure is being put on the bundesbank . Francine i asked Christine Lagarde what she thought about debt relief. We know she is traveling. Right after a interview she went to berlin to meet with angela merkel. This is the dance around greece. We understand from the transcript the imf was willing to be much looser in terms that they would ask if they eurozone countries, especially germany, would be ok with debt relief. We have not had a sign that is the case. Although markets are interpreting it as the bundesbank and germany agreeing to debt relief. But this, back to what Christine Lagarde was saying, there are moving parts. The imf will do their part, but the books have to be balanced. You have to find agreement that clears everyone but make sure that there is sustainability on greek debt for the future. Stephanie that is Francine Lacqua joining us from franklin. Coming up o n , the u. S. Treasury targeting corporate inversions putting into question the allerganpfizer deal. Those details next. Jonathan it is a risk off day in the markets. In fx, a stronger dollar store with the exception of one notable currency pair. Dollaryen down by. 8 . A stronger japanese yen. Gold up, yields down. Down by five basis point to 0. 0 9 . For the First Time Since april 2015. Stocks lower in europe and crude down 1 3 of 1 on wti. Lets cross over to matt miller for some of the big analysts calls. Miners out of your. Bank of america, Merrill Lynch upgrading e. U. Miners to neutral. No longer saying sell. Tail risks have receded from equity markets after a recovery in commodities prices. Etf is up 39 . The big mindeers in europe getting smoked today is markets fall. Glencore down 5. 4 . Rio down 3. 5 here shares of Goldman Sachs and the red after snapping a fiveday winning streak yesterday. Three months after predicting goldman would put the end of 2015 behind it and stabilize profits, analysts are cutting projections again. Analysts have2 22 analysts have lopped 94 cents. David the Treasury Department dropped a bombshell yesterday. It is proposing new regulations about tax inversions that could affect the 160 billion deal with allergan and pfizer. Rules takee es effect, does the deal makes sense between pfizer and allergan . Sam the deal only ever will make it if the companies could get their tax and version, i. E. , go from the 20 tax pfizer is paying down to the 18 allergan is paying. And more portly gave them access to cash they had overseas. The reason for that is our population suggest this deal is really only accretive if there is a major buyback element to it. That buyback they need the cash for. They need about 24 billion of cash coming in to make it work. It really would not work out. Whether the know regulations would be an effect in time for them to know what the rules are . Sam i mean, look, you have got to Big Companies. There are advisors and lawyers and financiers, etc. We are almost 12 hours into the announcements of these new rules, and we have not had a response. This is very hard to tell. I cannot really give you a direct answer. What i can tell you is it does raise the risk that even if they say they are going to go ahead, it will unravel at some point in the future. David have you had the opportunity at what other deals might be affected . This would apply retroactively back to september 2014. Any earlier deals done . Sam right. Part of the thing that changes in this calculation is that the treasury all those deals that allergan has done over the past 36 months or so will have to be unwound in terms of the calculations we are making for this deal. And what percentage of the ownership would be in the u. S. Versus outside the u. S. Whether it affects or whether it will have jurisdiction, i am not a lawyer, previously finished, done deal, i dont know the answer to that. But it raises the risk. Of london. N the city thank you for joining the program. Allergan getting absolutely slammed in the market, down 20 this morning. Much more on that story. Coming up, we will look at where krkr is finding opportunities in distressed assets. Caroline you are watching bloomberg. And you are watching a sea of red. Equity futures are red across the board. We are exactly two ours from the market open, hoping for a turnaround. Wordsgoing to catch his in the moment, but here is the bloomberg first world news. Arerter european leaders taking a quilt a look at the scandal between Shell Companies and offshore investments. Documents leaked show how the rich and powerful use Shell Companies to conceal their assets. A Helicopter Crash killing all five people aboard. No word yet on what caused the crash. Witnesses say they heard two extra oceans. The president s legal cambridge congress. Claims from state banks to cover up a deficit. A recommendation next week. Global news 24 hours a day, powered by 2400 journalists more than 150 news bureaus around the world. The store that keeps on giving. It just keeps snowballing here. It keeps getting bigger and bigger. I truly agree. Lets get to a quote in panama. Is isney washing is and bebal in scope and will not eliminated until banks and law firms and other enablers are held accountable and pay or facilitating such illegal actions. Fines may not be enough. It may also be necessary to have the power to close down such businesses, creating the ultimate this incentive for such bad actors to break the law. I am not sure that is what were going to see out of this. There will be selected issues like what we see here. This is the panda Minium Law Firm that frankly, i have never heard of. They seem to specialize in tax avoidance. Which is probably why you have never heard their name. It strikes me, there are two things here. One, is the illegal activity and the other is perfectly legal activity, but when it is brought to the light of day, people might not like it much. A lot of countries may be saying, i am not sure our tax laws are working the way they should be working. We will have to see and again, it is not just panama. There are many other tax statements. Is that over by france, right . Jonathan if i had known you were going to ask this, i would