Afternoon, stocks bouncing off the lows, but we have had so much volatility, so much bouncing around of the major averages. Right now, it looks like oil and stocks are tracking relatively closely together. Take a look. This is the intraday basis, and oil and the s p 500, so if you take the bloomberg apparently, we cannot do that, so i can just tell you we have got a Technical Glitch here. We are seeing oil, which has been trending lower. Right now, it is down about 5 on the day. We had the International Energy agency come out today and say essentially that supply remains ample, and, in fact, even more ample than their earlier projections, and then we had the Energy Information administration here in the United States saying that Shale Companies continue to pump more oil than anticipated, so and ite on oil prices, also affected stocks. Now, in terms of the sectors that this is effecting, we are seeing energy stocks, as you might imagine, the clyde. I natural stocks feeling pain following on the heel of Deutsche Bank and ubs declining. And we have been talking about the highlow index, the number of highs versus lows, 52week highs versus 52week lows, there you go, and you can see on the screen that those bars are taking downward at a higher pace. Andave new 52week lows, one of those internals we see of growth or lack thereof in the stock market. There seems, a, sort of ghost in the machine today. People are talking but the prospects of entering the bear market. How close are we with the nasdaq . Bank index has entered it. The nasdaq is getting closer and closer to that level. This goes back to july 20 of last year, and including todays declines, we are down 18 . 20 would technically be a bear market. We are seeing energy really underperformed. This is pretty much neck and neck with the composite, down over 14 , and we have seen it go down. Within the nasdaq 100, the worst performance this year is tesla, which has definitely been having a negative year, and a lot of biotechs have been hit. These are the very worst in the index. That is julie hyman at the market desk. Mark crumpton has more from the news desk. Mark . Mark thank you, david. President obama has sent a with items the republicanthat congress issuer to reject, is sure to reject. Toir president also wants have trillions for tax law changes. It is primary day in New Hampshire. Polls indicate Republican Donald Trump has a huge lead. Four candidate appear to have a spot at finishing second, ted kasich,rco rubio, john and jeb bush. Meanwhile, Bernie Sanders is favored to win the democratic race. He leads Hillary Clinton by double digits, and this bloomberg reminder. With all due respect will have a twoday our special starting at 5 00 p. M. New york time. Transport minister says at least nine people were killed in this mornings headon crash of two commuter trains. Another 90 were injured. Place in then took Southern State of bavaria. They say the area is not easy to get to, making rescue efforts more difficult. General motors and the United Auto Workers plan to help kids in michigan who were exposed to lead, with help for Education Services p. M. Services. At least 60 million is reportedly needed to prevent Water Service shut offs. Global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. I am mark crumpton. Over to you. David thank you so much, mark. Across industries, volatility still plagues the market. Targeted ipos, and only two ipos have started traded in the u. S. Have started trading in the u. S. , and we are going to with a headof these from Goldman Sachs, and emily set emily chang is there with the Goldman Sachs president. Emily . Emily david, thank you so much. Of Goldman Sachs with me now. Gary, thank you very much. The nasdaq down almost 6 just in the last three days. How justified is that . Cohn we have almost 2000 people here registered, so we are having a great turnout, and i appreciate your being here and having the event. This clearly will have an impact on the private company. When you take a company public, you look at the comparables that exist in the market today, and that is the first inch mark of evaluating any new offering, which is to look at Similar Companies and take your metric from what exists out there, so everyone is watching what is going on in the Public Market. Emily so linkedin, for example. A weak forecast. Is it really half of what it was last week . Knows, even one what it was worth a week ago to get what investors are trying to say today is that cash flow and earnings matter. The market is now maturing for internet and Technology Companies. It is a more mature industry. You start thinking about earnings, revenue, cash flow. Not nearly as much about growth. Historically, the Technology Companies had been valued on growth, and you put big growth multiples on these companies. As we are shifting from a growth multiple to and earnings multiple and a cash flow multiple, we are coming up with different valuations. Yes, it can be shocking to growth a company from a multiple, but it is happening, and it is a natural evolution. Normally, we see it evolved over a longer period of time. For a variety of different reasons, we are seeing it happen relatively quickly with some of these Technology Companies. Emily a revaluation . Mr. Cohn you are seeing a revaluation. We cannot go mean back up to the old valuations, but the market is taking a pause and trying to understand the longterm viability and the longterm wealthcreation vehicle for shareholders. Emily it was said today you are seeing pent up demand because private funding is drying up. Our companys thinking of going public in a market as volatile compan thinking . F going publicies mr. Cohn we will use this funding to grow, which will ofow us to do the next run funding. If you cannot get funding, it changes the premise. You now have to think about changing the model from pure growth to creating cash flow to creating revenue, creating return on capital. If you can create cash flow return on capital, you will have access to the Public Market, and buyers and investors will show up at that point. Historically, companies have not wanted to go into the Public Market because of Public Markets will, at some point, like we are seeing now, they will demand earnings power. Able demand some return on capital. They will demand that you actually create revenue. Do not grow your company forever. Emily then what happens to the ipo volume in 2016 . It happens to m a . How does 2016 compared to 2015 . We will see a pickup in the amount of ipos, but if theyre forced to go public, the question is, will the market allows them to go public . Longduration business model, only they will be able to access the market. In january, we did not have an ipo. Emily exactly. We did not happen an ipo because the flow of funds were not there. You need capital to be coming into the market. If you are an asset allocator today, or you are running a mutual fund or ra week investor, you are probably fully invested or are anor our investor, you are probably fully invested today. A better outcome, you have to be getting positive income in order for those to work, and the ipo is a great place to put them to work. We have not been seeing positive inflows into the market. In fact, we have been seeing outflows. We get a change in valuation of the ipos, it is going to be somewhat difficult for some of these companies to go public. That said, we think we will get a normalization. We think that many of these companies will be able to go public as the markets continue to settle down or when the market settle down. Inly you guys are invested uber. They were called out, saying they should go public now, and i , wimping out, that should be a publicly traded company. What do you think . Mr. Cohn everyone is entitled to their opinion. Uber still seems to have access to capital. A are closing a round right now as we speak. Able to race at an everhigher multiple. Emily an unprecedented multiple. They have cash flow and earnings power. They are doing the things i was talking about other companies doing. Investing a lot of their u. S. Earnings and their u. S. Cash flow in building out their International Business and their china business, but their u. S. Business has proven to be very positive for shareholders. Emily what about liquidity . At some point, investors want to the community, but as long as they are creating value. Where investors will get concern is when you have down rounds, and then investors will start worrying about the community more than they are today, said the companies having trouble raising capital, having a flat round or a down round, that is when you will start hearing i am anou know what, investor managing other peoples capital. I need liquidity at some point. Emily how are you advising him . Mr. Cohn we talk all the time about his thinking on strategy and how he is optimizing for his current investors and for his future investors. Emily does you guys want in on that ipo, right . Because you guys want in on that ipo, right . Mr. Cohn we do, and so do others. Emily a few years ago, it might have been Morgan Stanley that won the ipo. What have you guys been doing differently . Been in san have francisco, in the valley, and we have a great team. We have great bankers. We have been with the client. We have been invested with the client from the beginning with many, many of these companies, and we will continue to be there and continue to do for our clients what they need in all aspects of our business. Emily even more so with Goldman Sachs. A tech company. What is the number one thing you have done to change it . Mr. Cohn look. We had to change Goldman Sachs, for many reasons, for almost every reason you cant think about the gets we have had to change our business because of our clients. The way we interface with our clients, the way we automate with them. It makes their ease of doing business it makes it easier for them to do business, and that is important for them. Ofhave had to change many the processes from a regulatory standpoint. We have lots of regulatory requirements. We have to get those rights every day. We have to automate those processes. We have to make ourselves more efficient. In every part of our business, whether it is running our own internal business, interfacing with the client, interfacing with regulators, we are always thinking about how we can use technology to improve the product and to improve the outcomes. Emily banks are selling off, as well as tech, Deutsche Bank down year to date and others. Why is this happening . Is this justified . Not going to say it is justified, and i am not going to say it is not justified. All i can say is we at Goldman Sachs have to run our business well. We have always said we are in a highly cyclical business. As the world good will say we are at the top and not as bad as the world will say we are at the bottom of cycles. We went to do with the best would be possibly can. The market is now trying to figure out what is going on with Global Growth and what is going on with the Monetary Policy in the United States, and the way they are expressing some of their concerns about growth and Monetary Policy is clearly in the ranks. When the world was convinced that the fed was going to raise rates four times in 2016, banks were the darling of the market. Banks are going to make a lot more money. Say, wait. Y are we are not sure. Interest rates are going down in the United States. Banks are going down in other places. What is the fed going to do . Maybe we do not want to own bank stocks. And then they are saying maybe Global Economy is new not is maybe not doing as well as we think it was. Global gdp is going down. Not be as much advisory business get there will not be as much underwriting business. There will not be much activity. I do not really believe that. There is a enormous opportunity for the banking industry. I know there is enormous opportunity for us at Goldman Sachs. We are out with our clients every day. We are very busy with our clients. Our clients have a lot to do in this environment. Is gettingsche bank a lot of attention. How would you advise the ceo . Every bank has gone through their own situation, in each of us have gone through a unique situation, and the one thing i am proud of at Goldman Sachs and with almost all of the our medicinee took early. We went out and raise capital really early in the process, and then we went out and raised capital a second time, and we did that years and years ago, and we really built our Balance Sheet up. We really do leveraged ourselves, and the enormous the wemmunity, we do leveraged are subject and we to enormous stress tests here in the u. S. , and they stress test the banks in the United States to where no one should question the viability of the u. S. Banks. I think some of the european banks have been slow to get themselves recapitalized and getting their financial Balance Sheet in the best place they can be. What do you most worry about . Do you worry about another lehman moment . Worry the most about liquidity. I think in some respects, we have a bit of a liquidity crisis going on in the world today, and part of the volatility that we have in these markets i think is really a lack of the community in the market. A small amount of buying or selling in any market today has a dramatic impact on price, and when i sit back and look at day now,es, and every whatever market you look at, we have unprecedented moves. If you look at the s p, or you look at the dow, since january 1, we probably have not had a time period where we have this day inspersion of prices and day out. 200, downwn 100, up 200, up 300, down 300. You have to ask why that happens, and we have gone from growth and through cycles where we have unclear monetary fiscal policy. We have gone through all of these cycles. The issue to me is we have never wherehrough one of these we have had no liquidity in the market, so to me, what i really worry about is the fact that there is no liquidity, and when investors and Retail Investors particularly need or want to perhaps get out of the market, their ability to get out of the market may not make sense to them. Emily what happens to oil and gas . Shale and gas . Terms of price . Look. The oil and gas market is its own unique animal. I have been talking about the fundamental picture of oil. We are clearly in an Oversupply Oil market. That has to clear it self up. We believe that will clear itself up as we get into the spring turnaround season. Once we get through spring turnaround, we think we will get to a more rational balanced oil picture, but you are right. There is debt out there. There are companies that are leveraged the price of oil. Those companies will have to go through some form of restructuring, which is quite natural for the market. And othereen this industries before. I think the Financial Markets are wellequipped to deal with this. Last question given where we are at and the need for liquidity. How much stomach does the public have for mega deals . Are we at the peak . Mr. Cohn the private markets . Emily yes. Extent that the companies, private companies, are providing a good or a service that you and i want, you and i need, we cannot live without, and we are willing to pay for it, and they have a model where they can create revenue, cash flow, and earnings, the market will love them. If they do not have a market with products and services that you and i need, and we are not paying for those goods and services, i think it will be a much tougher sale in this market. You will be onn, the stage with sheryl sandberg, another famous ceo, later today. Thank you for being with us. David, back to you. David emily chang, speaking exclusively with the chief operating officer of Goldman Sachs, gary cohn. Now, julie hyman at the market desk. Julie really bouncing off the lows of the session in pretty dramatic fashion. We have seen this out single , whichthis volatility really characterize our recent trading, and i also wanted to look at some of the other Asset Classes to see how they are trading. We are watching oil prices, as well today, as we have been talking about, because we have seen them track with stocks to some degree, but we are not seeing much of a recovery in oil prices, a small bounce, but the bounce in stocks is much larger, the dow still down. Looking at the 10year, the seymour treasury yields, we see 1. 72 , the lowest in more than one years time on the treasuries, so interesting that even though we are seeing somewhat of a recovery in stocks to some degree, yields remain lower, with a lot of pessimism out there. David julie hyman, thank you, at the markets desk. At bloomberg news, i want to talk a little bit about what we at sevenm gary cohn, he was talking about with emily was valuations, and i wonder the degree to which we saw that yesterday influencing the trajectory, is that continuing today, as well . To some degree, it is. On friday,cused, but there was definitely a selloff in some stocks come especially in the nasdaq, especially in some of those tech stocks, but it held up with selling in the past month, and on friday, just valuems of the higher stocks, they were selling off a little over 3 or so, so you can see investors might have been starting to evaluate whether they want to be owning stocks that have gotten this high over the past four years and whatnot, at i think the past couple of days, today was definitely a big focus on financials. In my inbox, looking at all of the notes coming in, everyone is talkingabout about Deutsche Bank and credit default swaps and all of these sort of issues about Corporate Credit and the health of ofpanies, having some sort leadon effect with the financial institutions. David i want to take a look at what you sent me today. It is the vix volatility. Explain what we are talking about. Talkingheard gary cohn about it. Oliver yes, gary stole some of mine. Essentially, the volatility implied here with the money options on all of these bank stocks, banc of america, Deutsche Bank. It has gone beyond just Deutsche Bank get we saw that investors confident,ling too but it is not just Deutsche Bank. If you look at bank of america, Morgan Stanley, a lot of these have started to unwind, and now investors are starting to say these are going to be pretty volatile securities, not just now but going forward, and that is a big for the market. Five out of 10, 6 out of 10 sectors will were performing, but with banks down three quarters of a percent, it is hard to get going. That is almost 1 5 of the s p earnings right now, and as gary pointed out, not only are they looking at the fundamental picture, our banks going to be holding the bag on some of these Companies Whose earnings are starting to demand a, but it is also sort of a very excitable part of the in industry. We all have memories of 2008, when we have ceos coming out saying, yes, we are going to be ble to make our bond payment. There are certainly some sentiments happening there. Predicated a bit, emily talked about the financial sectors taking a hit. He said he was not going to say it is justified or not justified. Goldman is sort of a separate entity, as he pointed out. They did what they did early. Thesche bank is conversation today, but again, if you look at the volatility measures and the spreads, it goes beyond some companyspecific stories with Deutsche Bank today. David thank you. And still ahead on bloomberg to dry up. Tarting whether investors should because his or compelled by the credit next as we near the close of commodities. Boiled down, gold down also. More Bloomberg Markets coming up after the break. David from bloombergs World Headquarters in new york, this is Bloomberg Markets. I am david gora gura. Mark crumpton has more. Mark infinite michigan, they say the removal and replacement of pipes will begin next month, and a special Committee Says they were discussing possible criminal charges today. We are here to investigate what possible crimes there are, from anything to the Involuntary Manslaughter to the deaths that happened to a young person because of this poisoning to misconduct in office. We take this very seriously. Mark meantime, General Motors and the United Auto Workers there,and to help kids donating money for health and Education Services. Voters are heading to the polls in New Hampshire today. So far this campaign season, the thecrats are dominating race for Campaign Cash based on figures compiled by bloomberg news. Democratic front runner Hillary Clinton has raised more money than vermont senator Bernie Sanders, and topping 10 crews and marco combined in contributions. Jeb bush leads all republican candidates in contributions and spending, and today, we will have a special twohour special with John Heilemann and mark all due with with respect beginning at 5 00 p. M. , and the case against president jacob zuma, justices will decide whether he violated the governmentn by using items to refurbish his home. It was recommended that he pay back some of the more than 20 million for Home Improvements back in 2014. Determine ifmust the recommendation is binding. People of new orleans are marking the culmination of the mardi gras season today. Celebrations began before sunrise this morning. Thousands lined up on canal street and other bracing cold wind before lent begins tomorrow. Global news 24 hours they powered by our 2400 journalists in more than 150 news bureaus around the world. I am mark crumpton. David, back to you. David thank you so much, mark. Its fourday rally after prices touched above 1200 for the First Time Since june. Prices were closing around 1194 per troy ounce. About 24 hourst a barrel, the oil glut not going away. Goldman sachs warned of wider swings to come. And the head of research was speaking to bloomberg tv europe. Cashsed upon what we call costs, meaning that once you reach storage capacity, prices costs, spike below cash because you have to shut production in almost immediately. For us to nail that down in a certain location around the road is difficult. I would not be surprised if this market goes into the teens. David a chief Investment Officer who oversees 300 billion at pimco, i know pimco was forecasting 50 per oil or 60 per oil this year. Is that still the forecast . Hi, david. We are more in the 50 camp. The market is oversupplied by about 2 million barrels, and the first quarter, we could see lower prices, but ultimately, we are going to work off this imbalance, and we do see higher prices ahead. David how are you playing that right now if youre looking at 50 per barrel right now . Securities. The market is pricing in only 1. 2 inflation over the next 10 years. We think we will get towards 2 core inflation by the end of the year, so there is significant value in tips right now paid we are also focusing our investments in the credit market. Credit is offer equity returns today in Corporate Bonds pay it 6 , 7 even 4 , 5 , in investment grade, highyield bonds. We are also tilted more towards the consumer and more towards tanks as opposed to energy, focusing on the 70 of the economy that is doing quite well. David how much of it is based on fundamentals as opposed to technicals . It is based on three things. Technicals, and valuation. There is a huge disconnect between what is happening and the economy, where the u. S. Economy is creating 2. 5 million jobs. There are 5. 6 million jobs openings. That is up 15 from last year. Wages are picking up, and the Unemployment Rate has come down 2 , so the u. S. Consumer, which is 70 of the economy, is doing quite well. We are not heading into recession, and yet the credit markets are pricing in an increasing likelihood of recession, which gets to technicals. We see interestrate heading higher, particularly given that the market is pricing in right now less than one rate hike this year. We think that is not enough if the economy can grow at 2 . The fed will have to go higher than the market has priced in. That should tighten credit spreads. And lastly, valuations. Credit is as exciting today as it has been in seven years. You are looking at equity inurns in bonds by investing highquality Corporate Bonds. That is as exciting as we have seen it in seven years. David what you make about the disconnect that i see . The labor market doing pretty well, but when you look at growth in the u. S. Economy, it is a different story. Well, the growth we see basically the u. S. Economy being able to generate 2 . I think a lot of the headwinds hit in the Third Quarter and had to do with the restocking of inventories. Most of that is over. Also, there was a significant trade drag in the last year. As the dollar stabilizes, that trade dissipate this year. Also, the Government Spending had been growth. That is likely to add 5 10 of a percent to growth this year, so basically you have a situation where headwinds turn into tailwinds, and the consumer is generating that growth, so we are ultimately pretty optimistic we will be able to avoid a recession, and the stock market and Corporate Bond markets are clearly pricing in much higher recession risk, which we do not see the to realizing. David mark, where do you see the benefits of low oil prices playing out . i think basically youre talking about 120 billion dollars of a windfall, into your point, consumers basically saved every dollar of it, instead of going out and spending it, what they did was build up savings. That is not necessarily a bad thing. Incomes are rising. If you look at the income proxy, it is growing at 4 , so this is not an economy heading into recession. This is an economy actually doing recently. Energyeficiaries of low prices are going to be the consumer. Housing still has tailwinds. We like housing. Also, Building Material companies. They are actually benefiting from lawyer lower oil and commodity prices. They are also going to benefit from pentup demand on behalf of consumers, so they are waiting on both sides of this, and finally, the Health Care Medical device sector, which is benefiting from aging demographics, so there are many ways to play this today and to earn what i consider to be an equity be turned by taking half to one third of the volatility of equities by owning Corporate Bonds. David janet yellen going to cap it is a to testify. I wonder what youre going to be listing for when she talks to them. She is clearly going to acknowledge the growth slowdown and the uncertainty over china. We have seen a significant tightening over financial conditions. U. S. Oint though is the economy, again, 70 u. S. Consumer, is doing well. The labor market is generating sufficient job growth. We actually think if you look at the inflation data, 59 of the inflation data is services. The u. S. Is basically a services economy. Service inflation is running 2. 9 . In fact, Service Inflation extruding shelter is up 2. 5 , so if you take off the energy impact, inflation is going to be trending higher, and that is why i think she is not going to take off rate hikes the rest of this year. I think she is going to leave that option open. Right now, the market is really not pricing in any rate hike this year. We think that is wrong. We think the yields are headed higher. David mark, thank you. Tomorrow, we will have live chair janetfed yellens testimony and on thursday, both day starting at 10 00 a. M. Eastern time right here on Bloomberg Television and bloomberg radio. Coming up in the next 20 minutes on Bloomberg Markets the New Hampshire primary is underway. Can republicans donald trump and democrat Bernie Sanders meet expectations . And can viacom and disney fend off critics . Onlineg competition from media will cut into profits. Media roundup is coming up, and the s p another 10 to fall. Further weakness in market. That is coming up on burke markets, after the break. On Bloomberg Markets after the break. David welcome back to Bloomberg Markets. I am david gura. Primary, the first polls close tonight, and candidates have been going across the Granite State to pick up votes, and john and mark join me. Mark, tell us about the importance of this particular election, especially when you look at the republican field, which is still quite sizable. Are jockeying to finish in the top slots, and in the past, the notion would be maybe three or for you them will go on from here, but we will have to see the results. They are trying to shape expectations that matter how they finish, they will go on to south carolina, and i would not be surprised if some do go on and try to fight it out. We have another primary coming up. Goes againstthis what we have seen historically, right . Saying all six could go on would be something different. John well, look. Sometimes there is three. Sometimes there is two. The last time around for the republicans in 2012, jon huntsman finished third and announced he was going on to south carolina, and three days later, he dropped out of the race. There is no guaranteed number. I think what mark is saying is right. Of all of the candidates now, especially those in the bottom of the six, they are hoping that the slots from two a to six are so bunched up that they have an argument for a justification for going on, and in the age of super packs and wellfunded candidates, the main thing that would cause someone to drop out in the past is they did not have enough money and that the fundraising would dry up. They have enough money to go wide, and they can count on being able to raise more. The reasons to drop out are less. It would be unusual. David mark, i want to ask you about the role of independents in New Hampshire. When you look at how that could affect thanks, what do you see . Mark well, an interesting question. It has been a little less fervent bears simply because senator sanders is thought to have a big lead. , a lotf the independents of them are aligned with one party or another, and there are some who float, and all of us up. For sandersld vote or k6 or clinton or bush, and were going to see tonight where more of the action is. Getting their share of the because there are six candidates, the majority of whom are trying to appeal to the independent voters. About john, i wonder marco rubio and how he is resonating since the last debate. Thate over that, or is pretty much driving the conversation up there . John it is certainly driving the coverage in the media. The press is obsessed. And they are following him around, the timehonored tradition. It used to be chicken, chasing people around who refuse to debate. I have no idea at this moment how much it matters at this moment. Are not think people going to vote for him. Some people say he is doing just fine. I would not be surprised, and i think a lot of people are watching this closely, i would not be surprised to see marco rubio finish anywhere from second to sixth tonight. Mark, all right, john, thank you. That is John Heilemann and mark halperin. They will have more on with all , posting a twoday our event that starts at 5 00 p. M. Eastern time right here on Bloomberg Television. And the biggest story in the news right now, Deutsche Bank is bid. Nuing considering a germanys biggest bank is looking to shore up the value of its securities. And they were reassuring investors that the fragrantbased lender is rock solid. Riska Strong Capital and position. Halliburton is still trying to appease regulators, and people familiar with the matter, halliburton is adding more assets to businesses it plans to sell to ease competition concerns. Turmoil is adding to belttightening at ubs, freezing salaries at the Investment Bank until at least the second quarter, according to people familiar with the matter. Even traders who have been promoted will not get pay hikes right now. They employ more than 5000 people. That is your Bloomberg Business flash update. Oprah sing on financials, the lowest in more than two years, and julie hyman has the latest. Julie it looks like banks are bouncing back to some degree. Financials,at the you can see it is definitely coming off its lows, bouncing and briefly turning positive, now negative by only 1 10 of 1 , recoversl see if it more decisively by the end of the day, and there was that report about a potential by back. I wanted to look at it on an intraday basis. This is u. S. Trading. We are also seeing a leg up, although it has been coming back down in the past few moments on that news. In terms of some of the other big banks in the u. S. As well as to look at howt they are trading. Bank of america still in the red although not by much, particularly for bank of america. In theding declines financial sector. This is a Real Estate Investment trust that has properties that cater to the elderly, and the company came out with results that missed of estimates, so that is want to watch. Overall, this has been trending lower over the past year, and here it is last july, july 22, to be exact, because that is what it was at behind, and you can see it is now down 20 , so this is one of the sectors that has now technically entered a their market. Hass also the sector that done the worst so far in the s p 500, and it also means with these losses that some investors are stepping back and wondering if this is time to get into this group, and one of those is from rbc, and he was on bloomberg surveillance with tom keene this morning, saying he would not necessarily be going in and buying Deutsche Bank, but he says comparatively, the u. S. Banks are in a stronger position. Take a look. I am looking at the valuation of banks globally compared with the global stock market, and were seeing what a big gap, so here is the msci world index and bank index, and ucb pricetoearnings ratio, and you see quite a large gap between the two, quite a large discount would be banks, and some are saying that gap is to a large, given the outlook for some of those companies. David that is julie hyman from the markets desk. At a proper evaluation with a weak Earnings Report with a stock dropping, and disney earnings after the close. What effect will that have on the stock price . We have an update on both companies next, and on the way out, very little change, the s p down at. 05 , 1850 two. More Bloomberg Markets coming up after the break. David welcome back to Bloomberg Markets pupil i am david gura. Returning the floundering viacom stock to its highs, and they say the outlook and the facts have been distorted by the naysayers, critics, and publicity seekers. Todays weak Earnings Report did not help the case. The stock is taking a beating, we are going to delete philippe. Does he have planned . I think this is getting back to basics for viacom. It all comes down to programming in ratings, both of which have been a challenge, and they have weaknessal ratings breed there is a longterm concern, or is it because they have not invested in their programming as much, and is probably a lot of both, so the company is reinvested with their programming, a lot of new shows. Actually, their ratings have started to turn. We will see if that is a longterm trend. They believe they will start to see real improvements in their Cable Networks by the end of the year into next year. Unfortunately, investors are looking tos this sooner. David you look at comedy thosel, rebuilding networks, how far does disney have to go to make that turnaround happened . Paul their latenight programming with colbert and st ewart, they have to try. They have to develop new programming. We have seen it time and time again. The ratings come and go. You have a hit show, and every thing is great again. They need another jersey shore , as an example. It is not a shortterm fix, and, again, they brought down their guidance a bit on the conference call, and that is what i think the stock is reacting to, and he was quite defensive on the call. Ee,ot of people to that as, g maybe that is not is good as they think it is. David paul sweeney saying they need another jersey shore. Hulu and netflix and the potential of saturation and having so much content. Is it at all similar to what we are seeing across the industry . Paul whether it is a netflix or content on the internet, it is a competitor, so everyone is feeling the pain. Everyone is feeling the cord cutting. It is probably more pronounced at viacom, because their networks tend to go to younger demographics, and so the risk to the audience is probably greatest at the viacom networks, and the ratings have proven that moreso it is probably a difficult situation competitively than some of their peers, but they need to turn things around. David with disney, earnings come out after the bell. We have heard about the struggles that espn may or may not be facing. Paul i think it is clearly the number one issue for investors. They are a well diversified company, and their theme parks are good. Their studio has been a rock star for years, and the outlook looks good over the next five years, believe it or not, so it is about the Cable Networks, about half of the profits, and when youre talking but the Cable Networks, we are talking espn, and they lost some subscribers, and that really goes to revenue growth, affiliate fee growth, it so they really need to stretch the set the stage for what they think this company can do in terms of profit going forward. They did take out their guidance this summer, and that really hurt the sector and the stock overall, and i think they need to get out there and say the business is stabilizing. David all right, paul sweeney from bloomberg intelligence, thank you. Back coming up, Janet Sweeney janet yellen testifies on capitol hill. And before we go, lets take a look at the major averages, turning into the green, although barely. 2 , 1856. Up more Bloomberg Markets next. We live in a pick and choose world. Choose, choose, choose. But at bedtime. Why settle for this . Enter sleep number and the ultimate sleep number event, going on now. Sleepiq technology tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow only at a sleep number store, right now save 50 on the ultimate limited edition bed. Know better sleep with sleep number. It is at 3 00 p. M. In new york. Welcome to bloomberg market day. From bloomberg World Headquarters, good afternoon. Im betty liu. Markets are bouncing around today. Some gains in late trade. Global equities are on the doorstep of a bear market. The recent run is over. With lowth we are on growth is ending. Investors have to realize this path, which has served us relatively well, is ending. Ofty amid this backdrop sluggish growth, janet yellen is facing congress. What will she say as she faces lawmakers for the First Time Since hiking Interest Rates . Foris the momentum over netflix, amazon, we will ask analyst keith if the
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