Lets check on where stocks are diverging with Abigail Doolittle. Abigail we have a big divergent , one that is rolling as the day goes on. We have the dow, the s p 500 trading modestly lower, the dow down about. 3 , the s p 500 about 2 . 2 being dragged down by energy, look at the nasdaq. , andasdaq up about. 5 tech is helping, one of the only two sectors positive in the s p 500, but biotech is as well, pretty investing there. Oil is the big story after what could have been perceived as somewhat of a bullish department of Energy Inventories report. According to our oriole strategist at bloomberg, oil is down 3 , now down 23 from the february peak. Energy is the worst sector for the s p 500. These are among the worst performers. Chesapeake, apache, transocean. When we look at the bloomberg chart, thisthis will not come as a surprise either. We have the s p 500 energy index being taken down, and below we have percentage of energy to the s p 500. Right now, it is at the lowest level since 2004. That is the greed which investors are moving away from energy degree of which investors are moving away from energy. Here is health care, the s p 500 Health Care Index is at an alltime high, helping out with pfizer, merck, and biogen, big winners for the sector. Very quickly, if we go back to the bloomberg, this is for 101, and a yeartodate chart the blue, the s p 500 up about. 7 . In health care, 14 , the secondbest sector behind technology. That is really getting a bit off the sector that we are hearing so much about the value. Julia abigail, thanks for that. Staying with the market, chinese starks stocks are getting added to the msci index. They wanted to make more Stocks Available to international investors. Mark mobius, the executive chairman at templeton emerging markets. Great have you on the show. Mark thank you for having me. Julia a lot of people are only looking at a small portion of the msci index. It is its it is symbolic and this is 27 ce, but of the index. At what point does china get too much . Very i think it could get get that way very soon, because if you calculate where it could be a stone the current market, it could be up to 40 of the index. You have that cut waiting in the index, it feels like a bit too much because you are ignoring so many other countries. Julia so that is the idea of being julie is the idea of an investor being aware of that, and, as much as you are able, not to benchmark . Does this make the emerging markets index lest useful less useful as a benchmark . Mark no, because you have all the etf that still need a benchmark, and it is now 26 of the weighting, which is ok. Over time and this will happen overnight. It will take a number of years. The good news is that hope lee, in these other markets like brazil, it will grow. Theyre waiting will begin to balance out where china is and that remains to be seen. That china still range or top pick. If we look around, there is still a number of concerns about some kind of debt event in china, the real estate sector, you can take your pick. Do think investors are confused when they look at the risks in are notd the risks these restrictions that china puts on the control of their economy, but on the calibration of that being wrong . Mark if they look at it through the eyes of a western investor from europe, it looks pretty bad because the leverage in many cases is very high. And by the way, not higher than u. S. Leverage. With the you as a contest with the u. S. Economy, the leverage is quite high as well. But the differences china is a planned economy. Major banks are owned by the government. They can litigate any big problem. There will bee, bankruptcies, problems on the way. And they will allow that because they want to teach lessons to those people who have gone too far in their action. But you will not see a big, big crash. I do not see that. Julie they can contain the pain that does arrive . Exactly. Mark exactly. America,bank, bank of all of these other banks of america were owned by the government, as is the case in china, they could litigate and take measures to prevent bankruptcies. Julia one of the things we see in terms of the rally in emerging markets is if you look at the Monetary Policy that is being compared from various countries, they are all going in different directions, despite the fact we have tightening policy from the fed, some are tightening hard, some are loosening. Do you think we overestimate the importance of u. S. Monetary policy on emerging markets now, and tenet remained so throughout the moment of time in the United States . Can it remained so throughout this time in the United States . Mark i think we always have. They say just because the fed is going to raise rates, they raise the rates. But if you look at the correlation between the fed rate in the emerging market index, there is no correlation. Sometimes the fed rate goes up in the market goes up. So i think people have to focus on different things. By the way, it is interesting to note that if you take brazil now , it just made 14 for Companies Going down. You will see these discrepancies at the top of the markets. I want to ask you about valuations as well, because we have seen, despite the fed rate, the msci emerging market index has continued to go higher. I have a terminal on the bloomberg that is looking at the forward priceearnings ratio of the msci or emerging market has a ratio to the msci world index. The blue line is the average, so we are below the average over the past five years. Does that mean we are seeing some of that attracted valuations their . Mark definitely. We are about 20 cheaper if we look at earnings growth. And by the way, that is better and merge in emerging markets because the were growing they are growing on an average of 4 , chinas growing on an average of 6 , 7 . You have to be careful there, because the valuations in china now have changed in the sense that the tech companies, the Internet Companies have now taken a much larger share of the market. These companies tend to have higher p you ratios p e ratios. Julie so they are inflating the number with that. Mark yes, but it is still lower overall. Julie and i want to ask you about these investors comparing these stocks in the u. S. To these ones in the emerging market, and that is why we are seeing the flow into them. Cannot be sustained, and do you think the valuations of those tech stocks are still attractive can that be sustained, and do you think the valuations of those tech stocks are still attractive . Mark theyre making money and their earnings are increasing, so i think you can justify those ratios, but many of these companies are being attracted to u. S. Investors and european oftenors because they are cheaper than the same type of company in the u. S. Or in europe. At a charts looking earlier this week, one that looks at emerging markets and stock market, includes russia, china, mexico, and greece is in there as well, and they are all markets where they have inverted yield curves. We are talking about a developed market nation and look at that and go whoa. But in this case the stock market appears to ignore it. What is going on and why should we not be worried . Mark i think it is because people are ignoring these facts, and are saying look, i will escape the currency risk, i will escape the Interest Rate risk by going into equity. You know, equity always adjusts to the inflation and what is happening in the rest of the country. Julia so does use a safe haven by many. Ie but is that a risky equity is a safe haven for many. Julie but is that risky . Mark if you look long term, equity is the place to be anywhere in the world, whether that is in the u. S. Emerging markets or anywhere else. Buyinghow much are you into what we are seeing in the markets now, we had amazon programmers earlier on in the show that shows this is the most bearish concern that they have the 42030 years. That has to feed into the commodities, e. M. s, all of that very closely as well. Are you concerned . Mark the reason why i am not concerned is because we are not going to rush into Commodity Companies now. , but if you look at the statistics, it looks like china is reducing imports of oil. People forget that is based on the value, the price has gone down. If you look at the volumes, they continue to go up in a steady way. Imports, 1 a year, maybe. 5 year, that is a good thing. But no pressure. These pressure countries are increasing their consumption of commodities. Julia so there is a misalignment with perception as far as demand is concerned there. Exactly, and they are looking at the value of imports but not the yield value. Julie but it might not be might be might not be a negative indicator for emerging economies but for the probability of those companies and the economies right . You are important importing more of it, and the cost is lower, you know mark if you are a minor, you might be running into problems miner, you might be running into problems. We are talking to a gastric uterine china. Lower gas prices are great for them because they are buying that from importers, and distribute it to the retail consumers. Epends on what side julie and can they hold the line in terms of Retail Prices . Mark raising Retail Prices, because distribution is Getting Better so they can reach a lot bigger of an audience and raise prices, generally speaking. Julia you have to be having these conversations all over the american market. Greece is trying to keep china out of it in terms of perception what is going on in terms of the economy, the politics, the reform progress we are seeing . Mark i think it is a big misconception about africa. Countries in africa are growing at a very fast pace. They have a relatively low base, and a lot of people think about african countries as really being unstable, but the reality is that there are a lot of stable african countries and lots of opportunities in these countries because they are just offstage. Julia and a little while ago, there were as there was a lot of excitement about these countries like nigeria, and given what we have seen in the oil prices, they must be in dire straits at this moment but the economy is far broader than that, and the stock market is far broader. Mark exactly. Julia what is your favorite economy in africa . Mark i would have to say both south africa and nigeria. Julie even with the politics . Wow. Mark because the consumer markets are doing very well. Julie i have to ask a quick question about argentina, because argentina was left out. There is enormous investor enthusiasm for argentina. Does this do anything to put a dent in that . Mark it does in the sense that msci and other index providers are looking at argentina and thinking of putting them in their indices, but we have to be careful here because right now, they are a big fish in a small pond in the Frontier Markets index. They go into the Global Emerging Markets and they are a very small fish in a big pond. So this can be a disadvantage. A lot of people want the procedure being in the e. M. Index, but the reality is it might not help them very much. [laughter] much, great you so to see you. Mark mobius with templeton executivearkets, chairman. A great pleasure to see you in person in new york, we appreciate it. Lets check on the bloomberg first world news this afternoon with mark crumpton. Mark according to department of Homeland Security, there is evidence that russians targeted election systems and at least 21 states last year. A Homeland Security official will not identify the states. Acting Security DirectorJeanette Manfred says the state that are affected were aware of it are aware of it. Meanwhile, former Homeland Security chief jeh johnson says it would have been unforgivable to not alert the American Public head of the 2016 election that the russians had. Acked democratic email systems testifying for the House Intelligence Committee today, johnson also said he was not happy that he learned about the hacking well after it occurred. For the next two years, brexit will dominate Prime Minister theresa mays agenda. The secondbeth outlines the priorities in her annual speech to lawmakers. This will trigger the european withdrawal u. K. s withdrawal of the european union. My government priority is to do the best possible yield as we leave the european union. Itk Prime Minister base of may submitted fewer bills the normal, a sign of her weakened status that left her Party Without a majority. The u. K. Government has bought extent new apartments to rehouse people made homeless by the glen felt our fire 60 new apartments to repeople made homeless by the glen fell apartment fire. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in one hundred 20 countries over 120 countries. I mark crumpton, this is bloomberg. Julie coming up, President Trump taking a victory lap after republicans held onto two house seats in tomorrows special election yesterday special election. Is this a sign of what is to come in the 2018 election . This is bloomberg. Julia this is Bloomberg Markets, im julia chatterley. Julie and im julie hyman. Julia its time for a look at the business flash. s home goes for about 1 billion. Brand goes for about 1 billion. This is one of the biggest ituisitions in 2014, and will be followed by a potential 100 million. Amazon will start selling nike shoes direct way through their new brand register program. This gives nike a greater poll over county fit paul pull over counterfeit merchandise. Are 2000 Brand Products currently registered with amazon. Airbus story is going for twice as much of as their as boeing is going for twice as much as their french rivals. As 52 billion was a boost for the bond for the max 10. They posted a tally of 229 airliners, valued at around 25 billion. That is your business flash update. I want to get a quick check of what is going on in the markets at the moment. We have seen stocks turn mixed after a bit of a stronger showing earlier in the day. A lot of the reason why . Oil prices, which earlier spiked higher, following this mornings inventory reports. Now oil crises have turned prices have turned lower by 2. 5 , the lowest since august 2016. This is bloomberg. This is Bloomberg Markets, im julie hyman. Julia and im julia chatterley. Some breaking news regarding the Company Planning to point tpgs david through a low David Trueblood to the board. Daviding to reports, bondsman of tpg resigned after making some comments after a Board Meeting that were perceived as sexist in a shape a party perceived as shakeup already perceived as uber. So now we are seeing somebody new at uber sport in this boards board ubers in the shape of david to reload turilo. Julie and donald trump taking a victory lap after republicans held onto their seats in the house in both georgia and South Carolina yesterday. So of course, the spinmeisters are out today to talk about what this means particularly in georgia. How big of a loss was this for the democrats . It was a devastating loss for democrats after they put so much into this race. They had invested about 30 million between the campaign and the outside groups, according to the candidate, and after this, 04 inare 044 special elections. But they are over confirming in the district by an average of eight point and need to win 24 seats in 2018 to take back the house. At some point, the moral victories the democrats are talking about need to turn into actual victories if they want to make a dent in the trump agenda. Race and this was a tight up to this point. So there are Lessons Learned for republicans here as well, that the race should not have been holding thoseer seats for 40 years. What are the democrats also saying about this and how they tried to translate that speech in the midterm defeat in the midterm . Democrats are noting accurately that republicans have held these seats consistently since the 1970s. It is a very public and leaning district republican leaning district, a more educated district, wed the country by republicans by about 8 as a whole. It was a lot closer than expected, instead of an a point republican advantage, they won by less than four points. But this means for republicans that number one, their political agenda is not necessarily caustic for them in these republican leaning seats, but it does give them cause because the democrats are over performing. And this could spell danger for republicans the 2018 midterms. Julie thank you so much. Julia still ahead, we have the commodities close, the oil slump continues. We will be talking about that more. Stay with us, this is bloomberg. Julia from bloomberg World Headquarters in midtown manhattan, this is Bloomberg Markets and im julia chatterley p Commodity Markets are closing in new york, and before we get ,o the big story of the day which is oil, i want to give you a look at gold. They look to end a twoday losing streak. Gold still below its 100 day moving average. We are looking now at. 3 higher, but lets talk about oil. It has been a choppy session for crude, prices of spiking after countries came out showing a drawdown of 2. 4 million barrels. However, crude could turn 43 ave, going down at barrel. Right now, we are lower by 2. 7 . Dipping belowghs 45 a barrel for the First Time Since november. So the market is really in a depression. Iteck out this market shows a death cross forming in the last momentum for the time of the benchmark. You can see it in that corner there, the death cross their circled in yellow. Julie . Juli