There was more reason to potentially raise rates a little bit more quickly. My own forecasts with four increases still has us at a 2 inflation rate and a full employment at the end of the year. Actually a little bit below. My forecast of the 4. 5 for on employment. Sep,is consistent with the below my estimate in the long run which is 4. 7 . Kathleen commercial real estate, is that one of the reasons you are pushing for the rate hike . Eric its one of the reasons i consider it. Kathleen is their support . Dots, and thene four with eric rosengren. You think there is a tilt . S a semester. Asymmetrical. Eric i can only speak for myself. My own view is that the economy is at the point where four can easily be justified. If it were to weaken, i would know what to do four. If the economy were to grow much more quickly and cause the Unemployment Rate to go down much more than on that im expecting, i want to do more than four. It is data dependent. If we had a Strong Enough economy, im not expecting that. My forecast is that we will have a little bit below full employment and the it our inflation target with four increases over the course of this year. We macro you say potential rules to mind the banks. We are relying on interest rates. Lets watch their leverage, their cap rates. Are you at all concerned a doddfrank a level could jeopardize overhaul to jeopardize those tools . Eric i think doddfrank has some pluses and minuses. Some of the pluses are substantial. Our banks are better capitalized than most banks around the world. Is one reason why a much is concerned about the economic downturn would be sometime in the future. I think we are better prepared to be were going into the financial races. That is probably doddfrank and probably various regulations they came in place to implement doddfrank. On the liquidity side, of a survey prepared making sure they have sufficient liquidity if there is a big shock. I think there are aspects of doddfrank that been very beneficial. People have highlighted the concerns about the regulatory burden. I think we should take a look at all the regulations. I would not want to see the capital regulation change in a way that caused our banks not to be among the most wellcapitalized banks in the world. Kathleen it doesnt directly plaintiff fed policy, it was a historic day. Theresa may invoked article 50 of the lisbon treaty. What is it mean for the fed if anything, the u. S. Economy, and for you looking at this . As someone who is benefiting supervisor or so many years, where do you think this is going to go . There has note been much of a collateral impact on the united states. I think many of the effects of a little bit more modest than people were anticipating initially. We will see. This will take time to rollout and in a lot depends what kind of negotiations occur between the u. K. In the eu. Hopefully those negotiations go quite well until we get a better sense of how is all going to work out. I think it is a little premature to know we are watching whats happening in europe very carefully, asia as well. International factors are things we have to take into consideration. That could be a reason why the economy and domestic economy ends up either weak or stronger. Those are things you cannot control we do observe that, watch that. To date there is not much evidence that brexit has had a spillover effect on our economy. Kathleen think he so much. Very interesting speech. I think you are given a lot of people a lot to think about. They give her joining city. We really preached thank you for joining us. We really appreciate it. Thanks to eric rosengren. Back to the new york city studio. Oliver this is bloomberg markets. Scarlet we went ahead and julie hyman deceiver stocks are trading with about two hours to go in the trading day. Julie we have a mixed session today. Things muddling back along the vix and some of its key moving averages. After the recent spike in a survey we are sort of getting back into what has been normal for tight trading range is inside with activity. That is the case once again today. You have to look to specific sectors or individual stocks for more movement. You get it today with some of the drugmakers. Their leader experimental treatment for Cystic Fibrosis showed positive results into final studies. That paves the way for them to seek approval for it. Shares of 21 . Some of the other pharmaceutical makers doing well. Regeneron up 3. 8 . Oil prices rally after smaller than estimated inventory numbers. We saw a drawdown in gasoline and distillate, which implies is demand. Natural gas prices are also higher today. Chesapeake energy are in that group. One of the groups that does not tend to do as well when oil is higher as airlines. Counterbalancing some of the gains in energy. To be fair, the index of your life is up for five straight sessions going into today. That could likely be a factor. Scarlet thank you so much, julie. Oliver with stalled policies in washington and lower treasury yields, the stock really limits of my be taking a bit of a breather. With longterm bull market intact, to bring in chief equity strategist gina martin adams. Great to have you here. With thehave you on launch of Bloomberg Intelligence stocks. Lets talk about the last couple of days. A little bit of a pullback in a relative sense biggest things are going up and up for a while. What you make whats been going on . Gina for the month of march weve been in a consolidation phase. A couple of things happened number one, the Economic Data is rising. It was going to happen at some point. There has been an incredibly tight correlation between the for the last year. Once economic surprises stop or slow down, as with the index momentum. Weve had a lot of these at a washington, disappointment out of washington. Importantly, a breakdown in commodity prices. Oil prices were below 50 again. How low can they go . That took up the Energy Sector of the s p. And the 10year treasury failing to rise on a young the other 2. 6 level it formally reached in december and again in march. Its about the financial sector. A lot of the leadership was taken out over the last month. The web waffling around searching for the new leadership and new catalyst and i think that continues today. Some people are looking for a correction. A couple of technical indicators as well. We have one on bloomberg. S p 500 candle index. You look at the macd. Focus through what we are seeing here. Gina you can see the breakdown started to occur a little while ago. The most recent peak, he saw one in the peak in the ratio. Momentum is still deteriorating. That little green bar shows to the crossover. When the green bar is a negative territory, you have negative momentum in the market. Than momentum is suggesting price action is fairly weak. Until the momentum starts the swing higher and was back, you can inspect price action to remain relatively weak. We are still in a corrective mode or whatever you want to call it. Oliver how do you assess momentum . I would be curious to hear your take on it. I can see going either way. You look in the market and say there are things going on together. At the same time for people that will Pay Attention to a relative strength, they might say momentum is telling us things move too quickly. What do we seem to be in . Gina the got to the point where the victim was too extreme. Rsi, another way of looking at momentum reaching extreme levels. That was a worrisome indicator because it has gotten to extreme. The other way to look at it is neither confirm nor deny price. If you would like to see them together, momentum can be a leading indicator prices. Its a worrisome indicator for future price action. You want to use it as a confirmation for price and a general sense. And also added extremes. Scarlet what about the ratio . Gina put call is a measure of sentiment. Can go through longvix the vix king of a long periods of an activity. This is a much better indicator of the market. The ratio is the a line. Oliver this is free which across the market . Right gina . When it is too extreme low levels it would suggest maybe you are out of buying opportunities selling opportunities. At a summit you soon extreme high level and its in a buying opportunity. Right now it is waffling around in the middle. Is not suggesting we finally reached that great point. We are all prepared for doom and gloom. We also not on the extreme on the other side. I think thats another reason the market is waffling around. There is no stimulus to get you to buy or to sell. Oliver you talk about things so low and lack of conviction. When you look at some stuff, you skew index. Lets check it out. Stocks on the bloomberg terminal. A great function of a gain through it today to see and read a lot of stuff. You missed all your outlooks on the top. Critical themes. Then of the right side the head of tracker for the onemonth move across sectors. You can go through the technicals and look through seats, your technical cases. You have moving average is down here. You also have the news down here. You can link to stock market news. On the fundamental side i thought it was cool. You focus on one of accurate elements. The rally is happening. Looking at the sb purchase the trailing estimates and earnings, its kind of new for us. 20152016, they went through an earnings recession without an economic recession. That is not happen very often. I think part of the recent the market has been so much higher over the last year we came out of a recession as far as the market is concerned. We were trading up until early 2016. Thatre getting out of under pretty much any scenario we have. Earnings should grow faster this year than they did in 2016. Earnings andshows, stocks tend to it together. It cans to work tends to work overtime. Scarlet in terms of leadership in the earnings picture, which sectors must poised to power this . Gina from a macro perspective we run a lot of models on what the like the Earnings Growth is for the cyclical sectors. One is stands out as technology. this is a sector analysts expectations are half for growth, half of the expectations for the macro indicators. Tech should produce good Earnings Growth this year which is good because its the largest sector in the s p 500. To see that grow is very supportive. And the fastestgrowing sector will be energy. Easy come, energy will go faster. Scarlet Tina Martin Adam Scott they you so much. We should mention again are to equities strategy coverage watching today under bi stocks. Lets get a check on the bloomberg first word news with mark crumpton. Mark as we have been reporting throughout the day, the United Kingdom has filed for divorce from the European Union. Triggering a twoyear countdown to the final split. He was british Prime Minister theresa may in the house of commons. Prime minister may this is a historic moment for which they can be no turning back. Britain is leaving the European Union. We are going to make her own decisions and our own laws. We are going to take control of the things that matter most of us. We are going to take this opportunity to build a stronger, fair britain. A country our children and grandchildren are proud to call home. Mark a Senior European Union will not look to punish britain. There has been speculation in the British Press since last years rising referendum that the eu would take steps in order to discourage others from leaving. Police officers and civilians gathered on Westminster Bridge today to take of each of the four victims of the attack that took place there one week ago. Another vigil took place in Londons Metropolitan Police headquarters. Police Constable Keith Palmer was one of those killed after observing and minute of silence, acting commissioner craig mackey encouraged all officers to go talk to londoners about how the city has responded to the incident. Three top officials have told South African president jacob zuma they opposes plan to fire the finance minister. Zuma plannedsident to fire him because he was trying to undermine the president was speaking to overseas investors. Pressured toa was appoint korten in 2015. A Research Group in japan will propose the country arm itself with its first offense of weapons since world war ii. Thats according to a member of Prime Minister shinzo abes liberal democratic party. The Research Group will also recommend japan improve its Missile Defense systems. There is growing concern over north koreas recent missile tests. Global news 24 hours a day powered by more than 2600 journalists and analysts in more im markcountries. Crumpton. This is bloomberg. Much. T think you so the worlds biggest asset manager, black rock, is it will tell you how, next. This is bloomberg. Scarlet this is bloomberg markets. Oliver blackrock is replacing stock pickers with machines. After years of sluggish gains the Worlds Largest money manager is firing 30 people. This comes as competition grows. Joining us is bloomberg personalfinance reporter peggy collins. Lets talk about the story you guys have on the bloomberg today. It is fascinating. Was this a Long Time Coming . Peggy blackrock has been working on this for a while. That hired some of last year to really work of active equities business. Larry fink has been making tweaks over the past several years. It has been lagging its rivals. What they announced was essentially they are taking out of the 200 billion in their stockpicking funs business funds, moving about 6 billion into their group that is a way of allowing access to those funds to take advantage of some the computerdriven trading the coming has been building at over the years. Itattempting to lower is going to lower what they are repackaging and selling to this group. Oliver roughly about 3 of active equities. It is not a giant portion, but it is an important thing conceptually. This is what the answer potentially could be for some of these big Money Managers that they continue to bow against Lower Exchange traded funds. It is they are not necessarily moving money over to etfs. They are announcing a new series of nine funds. Wheres the type of funds they will be able to leverage some of the computer driven trading. You are right. This is different than what we have seen in terms of hedge funds that are moving entirely to quant, whether that the algorithm pick the securities in a fund. This is essentially trying to use computers to go through a lot of the data out there, to use the data we are seeing populate around the world and better select securities through that. It is also about lowering the fees. We see investors worldwide really demand lower fees, moving to etfs where blackrock is the world leader and putting pressure on active managers to show their performance and lower their fees. Oliver there was another stage before this that continued to assess how they would run the equities business. A couple of years back they said lets bring in some of the top stock pickers and try to build out stockpicking strategy. Is a sign potentially they could move more money over here that it will ultimately not be the answer . Peggy this could be a first step in moving this chunk of money, 6 billion, entities computerdriven strategies. They are cutting jobs in the process of doing that. The struggle a lot of these active and passive managers and revolution we are seeing happen is how do you offer lower fee products and still hated people that you use to pick stocks . They are using Computer Trading to try to lower their costs as well as lower the fees for investors. Oliver a great story on the bloomberg. Is also online at bloomberg. Com. Thanks so much. The eu is blocking a Major Exchange merger. Competition commissioner tell us why it will not be a thing. This is bloomberg. Scarlet this is bloomberg markets. Oliver it is time for the Bloomberg Business flash, some of the biggest stories in the news today. A 14 billiont takeover of the London Stock Exchange that would accretive europes biggest exchange. Margrethe vestager said this. The u. K. Is part of the European Union until it is not anymore. That means it is part and parcel of the legislation and directory you ector of director review until that is not anymore. That is the beginning of the procedure. Oliver they deal would informed competition by creating a de facto monopoly. A potential deal to redevelop a Manhattan Building links to the trump family falls apart. They pull that to buy Starwood Hotels last year. That is your Bloomberg Business update. This is bloomberg. Attention homeowners age sixtytwo and older. One reverse mortgage has a great way for you to live a better retirement. Its called a reverse mortgage. Call rfree information kityour with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money and more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home. And heres the best part. You still own yohome. Call now take control of your retirement today from bloomberg World Headquarters, this is bloomberg markets. Im scarlet fu. Lets begin with oil. Crude is higher after u. S. Inventories lessened the forecast. The bgi above 49 a barrel the fromextending gains yesterday following a disruption in libyan crude output. Meanwhile, we look at sugar and it is continuing to decline. It is down 2. 5 . 11 for the month. The approaching brazil harvest. G btv 7228. This looks like natural gas versus cold. What you can see is over the past decade, gas prices have continued to fall down almost or, where coal as increased held steady. In ohio, where the coal boat helped give President Trump his victory or helped, the switch to gases making it harder to deliver on bringing back mining jobs. Natural gas prices remain a competitive to call. Is the meantime, china biggest gold producer and co2 emitter. It is trying to take the lead in cleaner tech. Stephen reports on a generator trying to scrub kohls dirty s dirtynts coal reputation. Here is a clean coal burner. Spewing far less toxins than the older generators in a beijing. ,his plans, halfway to tengion along with the World Coal Association invited bloomberg for a to work. Coal is cheap and abundant but it is the World Biggest source of carbon emission. Intelligence says colts still accounts for nearly 75 of chinas energy mix. Down for 84 a decade ago. The move to renewable takes time. Coal should retain its dominance in chinas energy supply. We are rich in coal and has less gas and oil. Coal is that energy for poor people. New coalis building plants that are cleaner than the average gas points. He says it doesnt matter measured co2 emissions on site. Emissions ofe sulfur dioxide and nitrous oxide that, they say, are about 10 times less than a traditional coal plants. The government gets this data realtime and can punish the plant if emissions get too high. [indiscernible] burning cleaner coal does have its costs. They say they are spending a little over a billion dollars installing the clean coal tech. A time where china is in forms of crisis. There is more overcapacity and electric generation in any other sector in china. The utilization rates are down. Its is an industry with extraordinarily high costs. When he gets that low, there are huge losses. The World Coal Association once the world to use more. Plan can that trumps lead to cleaner solutions. We believe that President Trump will be looking at this technology to employ in the u. S. It doesnt help your sales pitch in the weather either. Lets get you a check on the headlines on first word news at this hour with mark crumpton. Mark as weve been reporting, brexit has officially room begun. Sean spicer says the Trump Administration backs the voters in britain. Of theespect the will british electric and her majestys government in taking into parting the European Union. We want the u. K. To remain a strong leader in europe for both the eu and u. K. To remain strong leaders globally. Triggering brags it is a historic moment from which there can be no turning back. President trump will be briefed tomorrow for the various options on tax reforms. Issue,familiar with the say gary cohn will be among those conducting. One of the things that will be a just presented is the border tax. That will be a 20 tax on Companies Domestic sales and imported goods. Spend a 2002 these plan has been looked out. The declaration a senior israeli capital Ministry Says it stands with the many changes the arab world. Helping present courage awards to 13 women from 13 different countries. The first lady called them true heroes for finding the courage needed to change the world. They have honored more than 100 women from 60 nations since 2007. It recognizes women that showed leadership while advocating for peace and womens empowerment, often at personal risk. Day,l news, 24 hours a powered by over 120 countries. This is bloomberg. Scarlet . Scarlet thank you mark. Pandora has a new service that will help when back listeners from spotify. From new york, this is bloomberg. Oliver this is bloomberg markets. Scarlet lets get a check on markets with julie. Im looking at a longerterm perspective on the s p 500. It is a foreign port by percent for the year. E have had the stall going on it is up 4. 5 for the year. Something that has come back into the news today, it is margin debt. When a very is Market Participant pledges collateral to get out from alone to make investments. In this case, in the stock market. It is once again at a record reaching thats milestone since 2015. Heren debt are the bars and they are going down because it is a deficits. That is at a record level. Even as the s p 500 has continued to climb. Here were prior instances in yellow, where we saw margin debt spike. Is that what is going to happen this time . Of asset fieldk management. He says that what we are seeing this time around is much smaller than prior instances. Yes, it is at a record but it hasnt has a huge hasnt had a huge increase. Carrie looked a margin debt in white, s p 500 in blue. On the bottom it is the rate of change. We see margin that my only increased by about 14 . Prior instances, it was about 60 to 80 . That was 2000 and 2007. He come up for one, is not concerned as a potential negative signal. Scarlet thank you julie. Oliver in businesses, and or is introducing a new service where they hope that the online Radio Company can survive and compete against rival spotify. Lucas has the story from los angeles and was us now. Premium is 10 bucks a month and you get a big database of music. Sounds a lot like something ive heard. Of here are a lot lucas they want everyone to believe every thing that they are doing is going to be different, 80 million users already and we know their tastes , and they know the suggestions of music where others cant give it. Is it too little too late . Built the big user base with the free online radio product. It was the First Company to bring the music business online, pandora, and itunes. There was this moment seven years ago, where ondemand started to pick up on spotify. Marketsis entering the where there are more than 150 million users and it is unclear how many will go back to pandora instead of spotify. Tims greatthis is idea to revive pandora . To do what the rival is already doing . Is is going to pass with the investors building stake in the company . Lucas it depends on if they are successful or not. Everyone that ive spoken to in and out of the company says they have about six to nine months. Other investors who are getting restless, say pandora has been. Tuck in neutral for a while they need to show some progress. That is going to be adding a couple million subscribers. If they get to the targets, investors relax. If they dont, they are in deep trouble. Oliver i want to bring up some numbers on the terminal. On pandora. Phs here is revenue growth. It is not quite growth. It has declined dramatically from when the Company First came on the scene. If you look at debt, they have a lot of short and longterm debt. Thats coming up. How do they figure out how to take the revenue stream and make it profitable . Thatere any indication this is the answer . Lucas they are hoping by turning some of the free users willpaid users that will help. If you look at the comparison between pandora and spotify, it has 80 million users and 4 million subscribers. They have 100 million users and 50 million subscribers. Because spotify has so much more subscribers, the revenue is as of what least double pandora is. Oliver thanks lucas shaw in los angeles. We continue to monitor that battle. Thank you so much, lucas. Scarlet heading east now, right now the Senate Intelligence Community Leaders are giving an update on the investigation and s involvement in the 2016 election. We are checking in with kevin who is standing by. Kevin, give us the highlights of richardy are saying burr says he is nationally kevin they say they are interviewing Jerod Kushner at a later date. That was first reported later this week according to the new york times. They say they are going to have ongoing series of interviews with people in the trump campaign. The backdrop to all of this is, over on the house side, led by house selected intelligence , is also nunez continuing with his investigation and whether or not the Trump Transition Team was surveilled during the transition. Either way, i can tell you that this continues to dominate inside then both halls of congress and reverberate throughout the country. It comes at a country where this administration is looking to have a policy when following lest weeks loss on health care. More these headlines continue, the harder it makes trumps agenda to continue. Scarlet thank you so much kevin. You can watch the senators comments live on bloomberg right now. We have some comments here. Letter is the annual reports that he has published. Lets read a highlight. He is talking about valeant. The investment that hasnt worked out. Valiant was a in huge mistake, they needed flawless execution and therefore usual influence on management. This contributed to our loss. Mistake, regret our which is cost all of us a tremendous amount and damaged the record of our firm. Oliver incredible decline in valiant. When he speaks about that tremendous amount, that is in the billions. That was a pretty big loss for them. Not a magic, this is something they came out repeatedly and fought for, defending the company over and over. Obviously, a pretty big admission there. A loss from bill ackman. Say up, shotblocker jeanclaude talks with us. Also, the rise of populism at 3 35 p. M. This is bloomberg. Scarlet this this is bloomberg markets. Welcome back. Oliver earlier today, joe spock. O jeanclaude shay here is what he thinks the European Union will look like. See, that depends on the United Kingdom on the one hand, and of the capacity to engage in, i would say, rational negotiations. For bothery damaging the european economy and for the is the uncertainty on what will be the final deal on both entities. I hope this thing will go as rapidly as possible, certainly in within the two years. And that we will clarify the situation very soon. The hardvery much that brexit has been chosen by the british side. I think it is a mistake for the United Kingdom and certainly bad for the european and global economy. That is life, the decision has been taken. The British Government took their decision and we have to see what is going on. How concerned are you that other countries, that the u. K. Want to be the last country to do this . That over the next several years another country in the eu will follow suit . I must confess i dont expect that, personally. I think that it is an illusion which is very often shared in theon that it is the only first in a sequence of exits. I dont think that at all. Important in london and washington that we are in a universe where the experience of renders theeurope overall European Union much more solid and resilient than suspected. We can see that in the worst financial crisis ever in world know, theyre, as you proved to be much more resilient than expected. You have to use the knowledge that europeans have that their forn is a key condition , and for, price, peace prosperity. Scarlet that was jeanclaude aichet a as we lead up to special where we focus on the rise of populism is affecting or will affect the global economy. How do you define populism . Partt part is is him schism art a growing antagonism toward free throw labor. Styles of politics you see on both the left and right in which attacking the elites and politics and academia scarlet and media . And media. T are the economic and economic ramifications . Scarlet we have seen the netherlands defeat the popular candidates. They still need to take some of what the fringe candidates had said and incorporate into what they are doing. The people have spoken and everyone gets pushed outside. If you are leader, you have to assess whether you want to get on the bandwagon or if you want to reach peak populism. Peak question that we want to look at. His brand of nationalism isnt popular enough to win. We do continue to see the disintegration and the parties. More parties are in the Dutch Parliament today than in the postelection than there were in the preelection. No easy way to say this is happening globally. Scarlet pinoy strikes me about any conversation with populism that the leaders think seek to simplify the conditions. Populousy complex but comes out with a very simple message. Make America Great again. Trumps message is very simple. Good politics is part of it. Finding something that resonates with a large group of people. U. K. Innk in both the the brexit vote and many other areas, you see politicians having a hard time articulating the counter case because it does seem messier. The benefits to what they say is did, is more than a fews fews. Its not very difficult to point it to point at two people that lost of their job. Scarlet populism can make for good politics. Does it translate into good economic populace. There are a lot of questions wrapped up in that. Especially as people try to renegotiate trade agreements. This have been in environment for several decades now of a more and more globalization, trade integration, Free Movement of labor so it stands to reason that if all of these things are rolled back to some degree, it will have meaningful ramifications on the economy. Scarlet maybe the way to frame populism is a readiness to change the status quo . Joe, thank you very much. As we begin, we roll out to our populous special at 4 p. M. Former italiane Prime Minister. Withll as the conversation several big names. Heard some ofst that from kathleen hays. He is going for for rate hikes this year and find out why. Hear from two more of those president s. Attention homeowners age sixtytwo and older. One reverse mortgage has a great way for you to live a better retirement. Its called a reverse mortgage. Call rfree information kityour with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money and more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home. And heres the best part. You still own yohome. Call now take control of your retirement today oliver it is 3 p. M. In new york and 8 p. M. In london. Scarlet im oliver. Scarlet im scarlet fu. Welcome to bloomberg markets. Oliver we are alive and World Headquarters in new york over the next hour. Well be covering stories out of various cities. Here are the top stories. Markets, the s p 500 is struggling to add. Todays bigector is gainer with the stocks climbing along with crude oil as u. S. Inventories rise. Action, for rate hikes are going to be called for this year. Will have more of his exclusive interview with bloomberg. Theresa may triggers article 50 asking for a friendly divorce from the eu. What would those negotiations look like and how long will they take . Lets check on those markets with julie. Thehings are improving as day goes on. The dow has not managed to climb out of the red. Down 27 points. It has cut its declined substantially. It feels like a return to the calm that we have been seeing for the past several months. The dow is down in nine sessions of the past 10. Although, it is very small. Take a look at the bloomberg, this is the average net daily change in the dow. The yellow line here, the overall change. The overall changes the blue. The vix has been languishing on top, the white line, the s p 500 in blue. The inverse correlation between these two is weakening between these two. Correlation is the strongest inverseeast week, least as it has been in more than a decade. It is at 0. 65. Usually at senate usually it is that a different rate. As oliver mentioned, we are seeing oil rally in todays sessions. Are also higher on the anticipation of the inventory number. We will also be bullish for this commodity. Only smallernot than estimated, but there is an estimated drawdown in the gas inventory. Tech is also part of the story today. Stocks hits these records again. Amazon, apple, facebook all hitting records. Amazon is in the running to be one of the First Companies to reach a trillion dollar market cap. Market gap. Much. Is not a by very only. 33 . Facebook was also included in that initiation. Tak is coming back a little bit and that only part of the rally today, oliver. Oliver thank you so much, julie. Scarlet the feds should be hiking again and more this year. What it rosenbaum said in his exclusive interview. In one year would be much less than we did when we were coming out of the recession. At that time, we were raising it every single meeting. This is much more gradual than if we did it every other meeting. Scarlet how does this impact bond strategies . Joining us now is kathleen. What i meant to say is that the fed should raise every other meeting. When we look at what the fed is saying and likely to do, how much is that really Holding Investors back . Investors are always watching the fed. How relevant is that when so much of what is weighing on the market is less about Monetary Policy and more about fiscal policy. That makes it challenging for the fed as well. Oliver is there a better show that shows better chart that shows that . Here is a p great year for the fed on the 15th. It has come down. Doesnt and sort of add to the oint question mark in ratesk the hike up was about giving the fed more bandwidth. Giving it flexibility to go up or down. Is still so much uncertainty about the fiscal side and we started to see that the last week or the first time. That was with the failure of the Affordable Care act. Scarlet the fact the fed is deftly trying to normalize. Out that as investors look to capture more yield, more return in markets, there is a contrast between the markets and the monitor policy there which is more traditional than we would expect compared to the other markets. Kathleen isnt it interesting. Emerging markets are looking more mainstream than the developed world. That is exactly its, you do have fundamentals that are far more positive. We have seen supply into the. Arket corporate issuers who want to get to the market, ahead of the inauguration, and it was interesting to see how well received those deals were. Something different is a going on. The markets are finding acceptance. On that,o push back what happens to the viability of the claims paying all that type of stuff with the bond issuers populism around around the world, what happens when the developed World Leaders retract from the rest of the world . Kathleen those are all the right questions. The way i think about it is in the developed world there is a very real mandate to get growth going. It doesnt matter who is in office. The populace is saying certain things right now. Global growth is still happening. The recovery that has been in place, already, is showing signs of more growth. That growth is global. I think it is positive for emerging markets. Reforms that you see happening there are keeping some investors estimate. In latin america, we know it as a corrupt region. It is very hard to believe that that will ever change. That is where the opportunity is created. Scarlet what are you doing with your portfolio . We talked about volatility and waiting for it for increasing. How do you position yourself . Kathleen with increase volatility, you deftly want to dry cast. I have been holding cash from five to 10 . Looking for those real opportunities and being patient. The volatility hasnt shown up quite yet. I think it will and you want to pick your spots. Taking your spots means security selection. Not a particular sector, not waiting for highyield to drop, but looking for those specific countries or companies that look good right now. Scarlet so it becomes bottomup . Kathleen exactly. I am a believer in active management. Are goingle marketss to prove that it is alive and well. Oliver we are going to see if that continues. There was some decent performance there. I want to look at the idea of highyield. That is something you have been looking at. If we go into the terminal, im looking at this. Throughout 2016, largely, the bottom is the green positive correlation. They are both rallying together. Around the election. , we saw something happen that didnt happen in it over a year. Negative correlation. Week, what happens to the spread . Where does that go from here . Have the senseo that growth is going, and that is a positive act drop for highyield. You really havent seen rates move up, but when rates do move up, high yield has become much more rate sensitive. Sector. About buying a there are credits in the highyield market that are attractive right now in the retail area, for example. Also the tech sector. I was simply want to avoid some higherquality names. Highyield, dollar pay, converts, and going up in structure with bank loans. Scarlet re kathleen, thank you very much. First word news with mark crumpton. Mark . You, we already miss moments after he received a letter from theresa may triggering brexit. There is no reason to pretend that this is a happy day. After all, most europeans votersng almost half the wish that we would Stay Together and not drift apart. Mark he says if there is anything positive about brexit, it is that it has made the European Union more determined and united than before. Angela merkel says germany and the eu partners certainly didnt wish for this day. Saiding in berlin, merkel germany will purse for other eu citizens living in british to be britain to be as minimal as possible. They want britain and eu to remain close partners. Betty devonte has accused her predecessor of using money supposed to be used for fixing schools. A 7 billion project targeting failing schools, did not produce any significant improvements. She argued that School Choice was the best way to reform the system. Choice for thes food and drug administration, once to lower drug costs by getting cheaper generics faster. He is a former deputy commissioner. To make streamlining approvals as time priority. Crumpton and this is bloomberg. Up, brexit will lead to a decadelong slowdown says this man. This is bloomberg. Oliver this is bloomberg markets. Him are oliver. Scarlet and im scarlet fu. The emphasis on negotiations between eu and the u. K. , how long will it take . We asked the chief economist earlier today. We tend to look of probabilities. The negotiators will be long. Negotiationsrce may not be finished in the twoyear horizon. Course, the renegotiating for trade regimes across border that,nt, people, and all thats will take many years. A decade or more. Ists after the divorce complete. All we know is that it is going to be a. Of protected uncertainty which can only be bad for the british economy. And to a lesser extent, for the eu. What does the landscaper the u. K. Economy look like . They are out of the single market. We think that is fine. Any taxes onrdly manufactured goods. Fortunately, it has nothing to do with the status. It is administrated rules, regulations and zero constraints. Rules of origin. Environmental standards, health and safety standards, human rights standards. You can have zero quotas and is still be able to take the same. You begin your academic path at the university of amsterdam and ended up in new haven. You study the equilibrium. Help me here with the new british equilibrium. This is a huge deal. I have seen it in article after article. The social economic mix of stability for a nation. Do you believe in equilibrium for the United Kingdom . There are many kinds of equilibrium. That the u. K. Will go through a long and protected. Of uncertainty. Thats the new arrangements for and sort ofe, border relations working out. This will take a decade or more. In the meantime, both the potential of growth in the u. K. Will be adversely affected because of low investment, and and end to the infinite supply of labor that they have benefited from so greatly. It will be sort of an impact on the dawning of the realization that this is going to be tough. That will lead to a shortterm slowdown on top of this lower potential of growth. Do you assume a dampened gdp growth in europe and the United Kingdoms because of these negotiations . Not so much a recession call but just a weight to gdp growth because of attention to negotiations whether it is travel, migration, passports, or as we talked to matt miller earlier, automobile dynamics. It will be material, the slowdown. A cyclical slowdown in the u. K. Because theinor u. K. , relative to the eu 27, is a small fish. The impact on the eu 37 will be sector specific. It will be much less significant economically than the slowdown in the u. K. Not to the same order of magnitude. Scarlet that was william that. Ng on this man has taken full responsibility the trigger the 4 million disaster. He called the investment a huge mistake. Damagingpologized for the success record. They have lost 95 of its value since it has came undervalued for hiking drug prices. Toshiba has filed for chapter 11 bankruptcy in. They think they might have to take a 6. 2 billion writedown on the business. It forms half the basis that half the worlds basis of atomic generators. Its spotnce to regan on top the mobile market. 8 isnew device the samsung s being reduced after the debacle of the note 7 last year. The note 7 cost samsung more than 6 billion. Sit stiffl competition from china, the biggest mobile market. Ahead, can they gain the new hybrid this is bloomberg. Oliver this is bloomberg markets. Im oliver renick. Scarlet and im scarlet fu. This Investment Advisor at equity armor advisement. Joe, we had a couple spikes in volatility. Now we are back down again. Do you think we are going to see volatility start to rear its head again or do you think that was it . Joe it is a quiet day today, kind of interesting to see. We had some volatility and yesterday we lost its right away. It will have been paying attention to the skew and they should expect this. Skew, again you will see sharp decreases after the spike. What then, do you do in terms of playing it if that is your expectation for what is going to happen . Joe well, you just have to be aware of it. If you are paying attention, you should Pay Attention while the market is still high. There are trading it is a volatility trade. That means, they are trading it denver as delta neutral. In the market does go down, that is a bid to the market. The higher buyers of the volatility will be buying that in the market. That would argue against a correction in the market. You do have that supportive nature in the options market. Joe yeah, as long as the indicator is there, obviously some levels could crack through where traders let it go. There is some buying pressure when it hits. Your trade today is looking at the iw m. I want to bring up a chart on bloomberg that looks at the performance relative to the s p 500. If you look on it, it is still outperforming but its outperformance has shrunk versus the s p. It is just not doing as well as it did postelection. What you think will happen to smallcap . Therefter the election was the euphoria for the u. S. Stocks. Benefited most from the infrastructure play and tax benefits. Obviously, since then, has been question if any legislation will come through, how fast it will come through. It has been a little softer. As me as an option trader, i like to look ahead. I think that a better trade for me than owning these stocks in this to a cash cover year. How does that work . Joe im looking at the may 1 32 and sell that think like 168. I will be able to almost 2 for owning it for only a month. It is a lot less risk on the table when there is a potential turbulence coming up. We will see if it materializes. The you so much. At 4 p. M. , weg up have a special look at populism. The rise and its impact on the global economy. Our guests are here. P. M. S coming up at 4 from new york, this is bloomberg. Attention homeowners age sixtytwo and older. One reverse mortgage has a great way for you to live a better retirement. Its called a reverse mortgage. Call rfree information kityour with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money and more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home. And heres the best part. You still own yohome. Call now take control of your retirement today mark its time now for first word news. Brexit has officially begun. White House Press Secretary sean spicer says the Trump Administration supports british voters. Spicer we respect the will of. He british people whatever the future of the u. K. Looks like, we want it to remain a strong leader in europe and for the u. K. And europe to remain strong leaders globally. Mark british Prime Minister may said today was a moment from which there can be no turning back. President trump is creating a theission to address growing epidemic of drug abuse. Trump drug abuse has become a crippling problem throughout the united states. Drug overdoses are now the leading cause of accidental death in our country, and opioid have nearlyths quadrupled since 1999. This is a total epidemic
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