Transcripts For BLOOMBERG Street Smart 20150320

Here are the top stories we are watching ahead of the closing bell. Former Federal Reserve chairman ben bernanke speaking in mexico saying that he is more pessimistic about europe than the u. S. Or japan. He is cautiously optimistic about the north American Economy and believes inflation is too low in the u. S. Black rock in a venture seeking to raise one point 3 billion. Money managers are looking to expand the pool of money they oversee and diversify in the bond market. And bank of america will along will allow longtime investors to vote on its board to nominate its board. They will now be able to propose candidates if they have held shares for over three years. We are going into the close am trading. I want to go right to the breaking news desk. Scarlet, the nasdaq, are we going to see it . Are we going to see an extra high here . Scarlet the nasdaq is inching away from that level, but it is in our sites. The s p 500 had its best weekly advance and five. The dow, this is its seventh straight day of rising or falling at least 100 points. Perhaps the return of volatility. The nasdaq taking aim at that record high. There is no resolution for greece at the eu summit in brussels, but the assumption is that greece will get its bailout funds because it has every other time. The euro stocks 600 14year high. I sound like a broken record. The cac 40, also almost a fouryear high as well. The dollar has is worst week since july 2013. For the week it is down by more than 2 . For the euro, the best weekly advance since october 2011. Parity is a little further off down the road. And crude oil posted its first weekly gain in five, thanks to the weaker dollar. Up to 45. 72. Alix . Alix thank you so much scarlet. We will check back in with you later in the show. Bloombergs brussels chief joan kayden joins me now. Do you believe that athens will deliver the reform necessary . Guest i believe that they are optimistic on this point. The meeting broke up at 2 00. The leaders were tired, but optimistic area there are a couple of reasons. Greece needs the money. It really needs the next payment of its bailout funds. To do that they have to give the details of the Reform Program they are trying to implement. And the other thing is this meeting last night, it went about three hours until 2 00 in the morning. It really seemed to accrue the tone between greece and its creditors germany france, the ecb, and the eurozone officials here. Based on that, i think they are going to move ahead. Suppress Alexis Tsipras will be able to go back to the voters in greece and say, look, i have taken this to the highest level of our colleagues in brussels and i think we will get this done. Alix if you could use one word to describe the rhetoric among officials, all what would it be . Jones right now it is calm. Alexis tsipras was voted in to get rid of the Austerity Program and that is not feasible given that they need the bailout, the funding to keep the country going. But the conversation, the negotiations up at this point have been at the finance minister level. There has not been a Good Environment for those negotiations. But now, Germanys Merkel and Francois Hollande orchestrated this meeting with tsipras and have taken it to the leader level and now it needs seems to be on a alix better platform. Alix calm. I will take that. Secretary jack lew says faster growth of the e. U. Relative to the u. S. Will be reflected in current markets. The euro has weakened 21 against the dollar mid 2014 and this week, fed chair janet yellen said the rise was a drag on exports. Still, secretary lew maintains the strong dollar is good for america. Really . I am here with Bloomberg Intelligence economist and Lisa Abramowicz. Do you agree with secretary lew . Is it good for the u. S. . Carl no. Alix ooh, this is big for you. Carl we talked about this earlier this week. Before i came on set, i looked at year on year changes in the dollar and all the times when the dollar has appreciated as much as it has, and in every single move, gdp growth was slower four quarters later. It hurts the export sector. It hurts the to industry as well. We saw that in the q4 data and we will see that in the upcoming gdp reports this year. Lisa i think one of the Big Questions that underlay secretary lews comments is why is the dollar so strong . Is it because europe and other regions are doing so poorly . Alix that was my question. You took it. [laughter] lisa im sorry. Carl the expectation is that rates of return will be higher here. And if the fed has promised to raise Interest Rates janet yellen is sensitive to that and this week she said she is backing off. Lisa an important distinction here is if we get back to a point in time where the current the value of currencies really is a property of peoples perception of a nations economy, then that is a healthier way to be rather than a proxy for what people are expecting. Alix it is almost a trading proxy at this point. Carl they can push the value of the currency far beyond what fundamentals would otherwise support and there are consequences of that and the consequences are felt in u. S. Industry and janet yellen is putting us up to that. Alix here is my question. Secretary lew must know this right . Carl a strong dollar is in the best interest of the country. They said that when ben bernanke was devaluing the currency in the aftermath of the financial crisis. The treasury secretaries saying strong dollar is in the best interest. Lisa there is the argument, the stronger the dollar, the more purchasing power, that should increase sales, commercial activity. Basically if we are importing goods at lower prices in real time because of the stronger dollar, then main American Consumer should be able to buy more with their money. Carl i think it is the Summer Vacation to europe. [laughter] look at the price of the american worker. Joe the plumber versus johann the plumber in germany. Lisa you are hiring johan. Carl they look at American Workers and they say they are a heck of a lot more expensive. Alix and then in china we have a lot of manufacturing there. Carl exactly. We saw this when volkswagen made the decision to move an audi plant from South Carolina to mexico. Alix burnett he said the same thing. Stronger dollar is good for the u. S. Economy. What is different now . Carl it was like the 1990s when we were hollowing out the Manufacturing Sector and the industry was being offshore to china and elsewhere. Lisa right now also i think part of the problem is, we knew to move away from this policy and by virtue of doing that we will strengthen the dollar and the fed does not want to undermine faith in the u. S. Saying we cannot raise rates. It becomes a catch 22. Carl they will have to eventually move, but it is all shades of gray and how they eventually move. Alix great. Great conversation, as always, carl and lisa. Coming up cashing in on oil prices. You will not believe how much money they can raise. Alix 2. 5 billion dollars. That is how much Carlyle Group raised to buy oil and gas. The total war chest for energy over 10 billion and carlyle is just the latest digg name searching for value as Oil Flounders in a bear market. Here to discuss, our reporter. Overall, how much money is needed for them to swoop on end . Reporter by mike talley, the biggest private equity firms have 40 billion to invest in energy. Alix that is insane. Is anyone actually selling . Devin there are a few deals going on. I think there is a big valuation gap. The Exploration Companies are the main targets. Right now a lot of the owners think that the oil price tends to ride up a little bit in the second quarter, Third Quarter fourth quarter, they will not have to take on new debt or sell equity or let these private equity firms in. That seems to be the Biggest Issue right now. While were not seeing many deals happen there are 40 billion waiting there. Alix where are we seeing the deals . It looks like the oil services supplying the rig, are taking the hit on the cost they can charge their customers. Devin thats right. Private equity is looking at that very closely. We have seen them take on money from a private equity firm to help fund drilling. Basically it is a revenue share agreement. They are not giving away money. They are not taking on new debt. In a way they are taking private equity firms money. Drill, and then once the pe firm gets their return, the share will revert back. Alix so basically the bonds are not rated to give it away yet and there is a much waiting in the wings. Is that but the benefit for the seller because they can say i can go to your competitor and get that are deals. Do they get better turn technically . Devin right now the power is with the seller. That said, it is a broad generalization. There are some any companies completely struggling. Alix is that directly related to the oil slide . Devin for the most part directly related to the huge slide we have seen and brent the last 7, 8 months. Some are really struggling. Take blackstone. They have a Restructuring Group or a Monetary Group that is very bus because they are starting to restructure. Obviously there is a difference between the Restructuring Group in the deals group. But some of these private equity firms are busy because they are helping restructure these companies. Alix what will the catalyst be for all of these private equity firms to swoop in and get the deals . Devin what i have heard most is wait until they get the deal. If they wait until far off these companies will have burned most of their cash and will be ready to capitulate. Third quarter. Alix third. I am watching. Whoohoo. That is good news. Not for those companies, but for us. Thank you. When we come back a nuclear deal with iran. Is the president s strategy working . I will get reaction from former senator judd gregg, coming up on street smart. At alix from drums to electric cars, a lot of Big Companies today joining me, alix bring to an cory johnson. Guys happy friday. A test flight of age or own. That is a crazy headline that crosses. If the faa did not actively improve test flights. Does that mean i will get an amazon drone delivering to my house alex . Alex not yet. There has to be a driver controlling it. No beer to your doorstep quite yet. But if you see china open up for other companies, amazon says eight, if you dont let us do it on our own soil, we will do it somewhere else. Alix do you think we will see the faa move faster now . Cory what is interesting, the faa is really feeling like if they can enable this, it would be a growth industry. They are in their hearts, flight geeks. They want this thing to happen. When i talked to companies in on bloomberg west they find the faa quite receptive. Safety is a big concern. I was surprised amazon of all the top experts in this field, a lot of them have said the last thing that is going to happen is the delivery of packages. Alix taking a look at the faa website and looking at how many licenses they have approved, its actually quite a lot. Into your point. Do you think in a year we will see the industry open up . I have talked to farmers and this is actually helping their industry. Cory i have done the same. Farmers. Oil and gas. Alix mining, too. Cory and they will fly the pipeline, looking for any leaks. The notion that drones could do this could save them so much money. The same for farmers working crops in understanding what is going on with watering situations in distant corners. They have farms that are getting bigger and bigger. And for those to happen right now there are drones on construction sites. That is happening right now as well. There is a big thing in Silicon Valley with that is happening. Whether the faa legislature not, they want to get ahead of it. Alix fair point. Facebook expanding its messenger app, days after innovating a way to send money to friends. And they will have ways to offer experiences through its apps. That is according to multiple sources. What does that mean, alex . Alex if you look at that line in asia, those are platforms where users are able to message their friends, send pictures but they also have video games. You can do purchasing via this messenger. Alix cant you do that on facebook anyway . Alex you cant. But facebook separated it out. You have all of the news. You have all of the spam. And consumers started to complain about that. It is almost like they are doing this internal he. They are giving them self another platform to innovate on, to find another way to draw customers to facebook, but not necessarily be a facebook app. Alix what is interesting to me when we talk about facebook pivoting in this way, it seems like they are a smaller, younger company, but they are not. Cory there are 500 million users of facebook messenger. When you think about messaging and the crazy valuations for what facebook has paid snapchat the valuation in this private market what is really happening here from a 30,000 foot view, the biggest growth driver for the total communications carriers, whether it was orange or verizon or at t , the last 10 years has been sms and text messaging. And that has fallen off a cliff because of the other services such as whatsapp, facebook messenger, and snapchat. That is why they are rushing to get there. They see the growth going away from the big carriers in sms and going to other messaging platforms. Alix where do you think they will go next . Where will facebook innovate . Alex it looks like they are trying really hard to get people to spend money on the platform to take a little skim off the top. That cuts of the need to think about where do advertisers come in. That seems to be where they are looking to. They also may be looking at snapchat and seeing what they are doing with the buffer feature where Media Companies and news outlets have come in and given really specific content. Alix and they discovered a huge premium. Alex right, right. Alix thanks so much, alex brink a and cory johnson. Will be right back. Alix here are the top stories we are watching and ahead of the closing bell. Richard handler returned to california to stop declining revenues. This is according to people with direct knowledge of the matter. At the same time, jefferies competitors are looking at companies outside new york. Freddie mac is selling more than 1 billion of soured u. S. Home loans. The loans are all located in new york. And Deutsche Bank cutting its 2014 compensation for both of its cochief executives by 11 . As europes Biggest Investment Bank posted the worst growth theyd try to keep the fullfledged Business Bank and Consumer Lending unit, even as profitability suffered. We are 30 minutes from the close of trading. Lets go back to our markets desk wearers scarlet fu is looking at the biggest movers of the session. Scarlet bio jen makes an appearance biogen makes an appearance. Trading up almost nine times average volume. This is based on encouraging news on its alzheimers drug. This is a promising sign of an alzheimers treatment, which have been few and far between. Tiffany feeling the pain from a strong dollar. The worst day since january, a 4 . It predicted a 3 drop in profits for the Third Quarter. Tiffany was really counting on revenue in the u. S. But the strong dollar made it more expensive for customers to come to the u. S. And shop, so a double way for tiffany. And at nike, a different story. Nike responsible for 14 of the dows advance. Its earnings orders topped analyst estimates. And future orders are also higher. They are up 15 . They are up 23 in asia. Alix all right. Scarlet, thank you. We will be checking back with you in the show. After six days of Nuclear Negotiations in switzerland, secretary of state john kerry cites progress, but major hurdles remain. We want to bring in bloombergs Jonathan Allen and former senator judd gregg who joins us on the phone. How quickly can sanctions be repealed if there is an agreement . Jonathan the sanctions could be repealed very, very quickly. Many of the iran sanctions the president has the authority to repeal them. He could certainly do that immediately, most, if not all. He could do them in stages as well. Congress could of course impose new sanctions if it wanted to. There have been threats of that from congress, but the president would reject those. It is something that could be done. Alix does congress have the threat to derail these negotiations . They have definitely tried. Jonathan i do not think they have the votes right now. They have to have the ability to overcome a president ial veto and frankly, the republicans do not seem to have that, even with some of the democrat sympathetic to israel at this point. Alix when youre talking to your sources in congress, what is the likelihood of a deal getting done . What is the feeling . Jonathan i think it is up in the air right now. You hear the reports out of these negotiations and it is hard to put any weight on any of them right now. These are tough issues. The arabians would love to lift the sanctions. President obama the irani ands would love to lift the sanctions. President obama has to say it will be better for the United States. He is also getting pressure from hardliners. Alix definitely not an easy solution. I want to stand the diplomatic front. Speaker john boehner says that he will visit israel he Prime Minister benjamin netanyahu. At the same time, the white house says it will reassess parts of its relationship with israel. What does that mean . Jonathan i think there is a reassessment of whether or not the United States is going to continue to support israel via the united nations. Often resolutions are aimed at strengthening the palestinians strengthening their ability to go after the irani ands ir anians. I think the United States is not standing in the way of those things and more. I think this is more of a threat than a reality. You saw Prime Minister netanyahu immediately walked back from comments there should not be a two state solution with the palestinians. I think the two leaders have their egos, their pride, their political agendas getting in the way of a relationship that has been strong for a long time. And i think people will find a way to deescalate now that Prime Minister netanyahu seems to be settling down and will likely reform his government and continue for another term. Alix fragile. That is a diplomatic way of putting it. All right, thanks for joining me. We are counting down to the close of trading. We will have all the Market Action coming up ahead on street smart. Alix here are the top stories we are watching ahead of the closing bell. Simon Property Group is making what it calls its best and final offer offering 23 billion for mesa ridge macerich. And bio jen soaring to and all biogen soaring to an alltime high. They are skipping midstage testing and going to a final stage trial of a new alzheimers drug. And and new Search Engine planning a u. S. Ipo according to those with knowledge of the matter. It is seeking evaluation of more than 3 billion. It could file as early as the second half of this year. Allies are joining a new chinese lead Investment Fund said to rival the imf and other u. S. Dominated institutions. Former senator judd gregg joins us now. Thank you so much, senator, for joining us. At mr. Gregg mr. Gregg thank you,alix. Alix we have the u. K. , japan one of the u. S. . Mr. Gregg its very embarrassing. The administration has really deteriorated and the confidence of Major Trading partners with us and china has shown it is going to step into a vacuum created by this administration. It has created this fund. It is funding this bank. It may will be successful. It is clearly a slap in our face quite honestly by our trading partners to say, hey, were going to go with china. Even though the United States is please, do not do that. And we are really pretty superficial. There are Environmental Concerns. I think our trading partners really look do not look at an Environmental Concerns as being high on the list of things that limit their ability to participate in international lending. I think we made huge mistakes send this administration has acted in a very inappropriate way. Alix senator, on the flip side, congress is the one venting progress from the reform of the world bonk venting progress in the reform of the world bank. Wouldnt that change the scenario . Mr. Gregg im not sure about that. China has made it clear it wants to set up an independent sphere of influence. Especially in asia where a lot of the lending will occur. I think if china were to adjust the role of china and the world bank i think the bigger issue is why would our trading partners go along with this when we asked them not to . That reflects a fundamental lack of sway with our trading partners. This administrations saway and influence in International Affairs is really deteriorated dramatically in just the last few days. Alix does it have more to do with that or the fact that china has that much more economic power . Mr. Gregg there is no question but china is coming to the forefront is a very serious and almost equal partner in the issue of how do you deal with world finances. They are the worlds secondlargest economy and probably headed to being the largest economy within 15 years. That does not mean we should not having gauged in a way we should not have engaged, rather than letting our allies had off basically into the sunset without us having a horse to ride on. Alix senator, youre sticking with me. Lots more to talk about. Coming up, should the fed regulate wall street . We will discuss one proposal, coming up. Alix should the fed regulate wall street . One commissioner think so. He wants to prevent banks like Morgan Stanley and Goldman Sachs from transporting physical moderate he will that mean less risk . Senator former senator judd gregg joins me along with our guest. Senator what will this mean, a transferred to another platform . Mr. Gregg the second point is correct. Trading houses are trading houses. No one has stopped doing business, by the way because of pressure from the fed. It does not mean the Commodity Trading those away. It just goes into a shadow trading business somewhere which becomes less regulated, less visible to the public, less visible to people who know what is going on. Does it affect the ability of the Banking System . No i dont think so. These Commodity Trading houses were very effective. They knew what they were doing. Some may have gone bad. Carl i would argue a contrary opinion. If the fed is responsible for mopping up in mass, they should have some ability to prevent having to go in. Alix fair point. Mr. Gregg thats legitimate if the fed do that. The fed did not step in and mop up Commodity Trading failures carl they do have a responsibility for the solvency of these banks. Mr. Gregg thats absolutely true. I agree that there is a too big to fail issue that has not been resolved under doddfrank. But the Commodity Trading partner exercise is not the problem. It is not the elephant in the room. You cant represent that pushing these banks out of commodity training trading is going to have a significant impact. Its not. Its not a big enough part of their underlying activity. So, the fed is not going to have to come in and protect banks of from bad commodity traders. They will be absorbed by the banks. It hasnt happened. Carl if the fed regulates is sufficiently that they cannot place the kind of bets that would pull them under, as we saw the housing sector, that would certainly have a balance. Alix i have to point out mr. Gregg the commodity sector is completely different. The housing sector is completely different. There is no question that what happened in 2008 was carl but in the commissioners defense, he is preventing banks from getting into deep and needing a bailout. Alix but it is not just about the size of the best though. It is also that you have a trading business that is making money out of what is happening in the market. At the same time you are responsible for a storage business that may give you insight that others do not have. Carl he is not advocating the banks getting out of the commodity business. Mr. Gregg carl, thats not true. What is happening is these banks will get out of the commodity business because the fed will make it impossible for them to stay in business. Personally i do not care if they are in the commodities business or not. But i do think that it is a big push to claim that this is going to have the risk of too big to fail they should not be in the commodity business. The fed has made it clear they will not let them in the commodities business. Carl i think this is a point that governor truerullo mr. Gregg i thinkalixs alixs point is the valid point, which is where does the trading go . So much of banking today, because of doddfrank, is moving off the transparencies screen and into the shadow bank activity. That is the biggest unintended and downside consequence of what is happening as a result of doddfrank. Look at what is happening. It is not transparent. It is not audited. Very wealthy houses which are not subject to regulation during the banking. Carl and they will not be bailed out when things go south and taxpayers will not be on the hook for propping up the mess. Mr. Gregg that may be. But as a practical effect there is an issue of reducing transparency and pushing people into opaque activity. Raising standards and making it clear that the audit process alix senator senator, to be fair though some of the spinoff of the commodity business is happening before the regulation even was brought out. Basically the banks were less profitable. It had nothing to do with what was going on with d. C. Carl i do not think that banks should be run as a casino just because it would all be pushed into dark tools pools, as you say. Mr. Gregg that is simply hyperbole. What an absurd statement. Alix all right, all right. Mr. Gregg we are not in the financial crisis. [all talking at once] alix okc,arl, senator. Thank you so much for joining me, senator judd gregg. The close of coming up on street smart. Alix welcome to our viewers around the globe. You are watching bloomberg television. I am alix steel. This is street smart. We are moments away from the closing bell. Energy shares are rallying. The nasdaq at a 15year high. Lets get right to chief market correspondent scarlet fu at the breaking news desk with all of the details. Scarlett . Scarlet thats right. Come inside the bloomberg terminal here. This is the Dow Jones Industrial average so far this year. We are up about 2 on the year. The pattern in the last seven days has been alternating between triple digit leads and losses. The trend is a jagged move higher with the dow up about 3 from the flow in midmarch and about 1 from the record high. A lot of people wondering if we have reached a natural top in u. S. Equities right now, doing what the fed did and said earlier this week. Alix thank you scarlet fu. Lets go to bonds reporter Lisa Abramowicz and david leibowitz. What you think about what scarlet just said . Are we had a top in the market . Reporter i do not actually think so. I think the fed was very dovish. Even if equity stay low key multiples tend to increase as credit comes down. We see the fed basically walking along the futures curve. I think the market will push higher. Alix but if we are not in the bear market cycle guest yes, if you think about it, it does not portend dramatically high rates. That could have a very high impact. I agree with the other david that we are going to see higher equity prices and valuation here. The other thing, if you look at the behavior of investors, they are becoming more confident of what is going to happen. They are putting pennies in the jar and i think that is going to power us to new highs later in the year. Lisa just leave fact that janet yellen is not confident enough to lower the forecast we are entering a cycle where the fed is going to hedge at some point and they are lowering the forecast going forward. That is giving credence to the international talk. David b on the other hand, if you look at the employment numbers, which have been extraordinarily strong if you look at the common nation of what is happening to the consumer and the fact they are able to spend more and the hiring cycle and that does support the idea of a moderate level of growth. What we are beginning to see is potentially a longer expansion that i think people really anticipate. Maybe a little shorter, but definitely longer. David l i think this ties back to the wage issue which has been central for so long. Alix but that is not a precondition to raising. Davidl they are still data dependent. And now it is the closing bell. [laughter] alix that is the closing bell. We are looking at the dow up but the nasdaq is really the story of the day. 15year high, 20 points away from that record high we hit about 15 years ago. A huge move also in territory where the s p in the dow are struggling earlier in the day. For a look at the big movers we want to do to scarlet fu at the breaking news desk. Give me the top names youre watching. Scarlet certainlybiogen because certainly biogen because it is not only in the nasdaq, but it is a health care stock. That is the cause of results from a treatment for alzheimers. Health stocks are the best performers for the year and the week, too. Valenat winning salix and of course what i just told you about biogen. Consolidation is gathering pace and as the alix . Alix i am here with david balin David Leibovitz and Lisa Abramowicz. If we look at the markets currently, what is the biggest risk . David l that Earnings Growth fails to materialize this year. I think the dollar can rise on the back of quantitative easing in europe. But we have seen earnings fell apart on the back of energy prices. Net, Higher Oil Prices are a good thing, but alix lets break down the main factors moving the markets right . We have a gains for the whole week. The nasdaq continues to be in that rally mode here, the 15year high. The dollar falling this year, this week, although it still stronger overall. Investors looking at the bonds as a way to anticipate what the market thinks will be the next fed move, when that rate hike will go. You see oil as a measure of the u. S. Economy and consumer demand, correlated with the u. S. Dollar. All of it has to do with the dollar, right . That is the common theme. Is the dollar a sign of a stronger u. S. Economy or a sign of Central Banks elsewhere dealing with negative yields . David b i think it is a factor of both. If you look at the spread between the 10year treasury and the david l i think it is a factor of both. If you look at the spread between the 10year treasury and you also have the curve rally where you have the 2year and the 10year and i think the combination of higher monetary rates in the easy dollar a pushing higher. Lisa if there is an inverse relationship between dollar and oil dont they cancel each other out . The strengthening dollar could be problematic, while the weakening oil could be positive for the consumer . Alix although sometimes you have companies that are reliant on inputs like oil. I will ask david in the pinstriped suit to answer that one. David b the answer is when you take a look at the risk, it could grow appreciably more. Even though rig count is a lot, the expectation is they will rise through the year. To answer your question, the effect of Lower Oil Prices affects all consumers a little bit. When asked what oil does to the companies, it is very extreme, as the dollar can be as well. There is a general impact any specific impact, and that is why we are worried about earnings as well. Alix what sector will be hurt the most if earnings continue to grind lower . David b broadly speaking, the exporters can be impacted. Alix the u. S. Multinationals . David b the big u. S. Multinationals. It will be a big increase in the dollar. The dollar is nowhere near where it used to be. And the euro, which everyone inks is a dollar, four dollars five dollars. We have a lot of room that can take place and that leads me to think much more can occur. Alix how low can oil actually go . David b if you listen to ed morris alix i know. David b 30. If you look out two years, you can see this, but in the meantime, you see an exceptional blood of oil. Alix you did mention europe. Lets focus on that. The big focus on greece. Athens looking for more bailout money from eu officials. All the while, Prime Minister Alexis Tsipras added to berlin to talk to Angela Merkel on monday. Lisa, earlier today you were saying you have to watch the threeyear yield. Why is that so important right now . Lisa that is peoples impression of the ability to finance the shortterm debt right . Whether they can survive this latest round of chest pounding. And today, there was a little bit of optimism. Its home seems to be softening a little bit. Saying the past is behind us. Alix but but the german finance minister coming out and saying he does perhaps expect greece to exit the euro. That was a german newspaper report. Supposedly he was saying he was internally anticipating it. I mean david l when i think about greece, i think that greeces biggest problem is greece. If greece were to leave the eurozone, it is kind of like, so what . Greece is going to be in much worse shape than the eurozone as a person who looks at economics. I think greece leaving the eurozone is much worse for greece than the rest of the eurozone. It is no skin off their back. After brent durham their own currency. They have to correct a lot of structural imbalances and they have to do it without the support of the central bank. Alix then why are they still in these negotiations . Scarlet lisa then why are they still these negotiations question mark there have been so many acts of the circus. David b i respect fully disagree. If you look at the markets, they are pricing in the idea that greece stays. It would be extraordinary of greece were to leave. Alix is it possible the biggest risk in the u. S. Would be a greece exit would lead to a collapse and what it would do to the dollar . Would that be fair to say, or would that be off the mark . Im asking. Scarlet it might strengthen lisa it might strengthen. Alix what would you think . David l the market would have a kneejerk reaction. People at first would say whoa what is going on . I thought there was a European Union and they were all constructed together. But i do not think it would be negative for the european markets generally speaking. This song and dance has been going on for a while and if you are anything like me, it is getting old. Alix lets continue to look at the health of corporate balance sheets. Filings off 30 year to date. 15 chapter 11 filings filed through march 18. What is going on with that . My job dropped open my jaw dropped open when i saw this chart earlier today. David b i think what you are seeing is limited financing for small to medium businesses. Alix i guess the question being, of course, what might be happening in the bond market related to the corporate find filings. Is there the will of investors to provide Companies Cash . Scarlet weise lisa we see a bifurcation in the credit market where they can get a lot of credit really cheaply. They just failed to refinance debt. So, there is a bifurcation. And they are being pretty specific about where they want to lend. Alix and radioshack, they are some of the ones they filed for bankruptcy. Ok, thursday we may learn that new home sales declined last month, while Consumer Prices rose for the first time in four months. Today former fed chairman ben bernanke you said that inflation was too low in the u. S. What does the fed need to see from the cpi report . David l i think cpi is one metric. The fed has said they are much more focused on pc. There was a big article in the wall street journal talking about this. Our view is cpi will be up slightly next week. Nothing surprising majorly to the upside. But we will see inflationary pressures grow. Our thesis is it will pick up over the back of the year. You will get stabilization and that will bring core inflation and headline inflation closer to the fed target. Alix david, do you agree . Bank of america came out with a note saying that corsi pe stands at 3. 5 and more could be coming . David b i agree with david in plain gray. This temporary moment where the oil prices are down make the cpi and the cpe look unusually low. I think they will normalize. If oil were to drop another 1 at some point you will have wage growth in certain sectors. It certainly looks to me like it could be, you know, stable at 2 . Alix thanks very much. Great conversation. Lisa, good to see you. Thank you so much for coming. All right, coming up next greece will it convince brussels to give it another bailout . We will discuss the drama coming up next. Alix this is street smart. I am alix steel. Heres a look at the top stories we are watching off the close. At least 137 people were killed in suicide bomb attacks in yemen. According to local television reports. Former fed chairman ben bernanke he is more pessimistic about europe than the u. S. Or japan. He said that the ecb stimulus plan has, rather late. He says he is cautiously optimistic about the north American Economy. And google is rolling out a tv ad tracking system similar to the Technology Used to measure ads online. They are testing it in kansas city. Brussels is telling athens, show me the reforms. Greece has a weekend to figure out how to convince the eu to give it another infusion of bailout money. The creditors well addressed the finances while greek Prime Minister Alexis Tsipras will visit berlin to chat with Angela Merkel. Here with me now is Bloomberg Markets managing editor joe weisenthal. What kind of rhetoric are you looking at. What are we going to hear . Joe it always seems that when the lowerlevel people are talking you hear a lot of negative stuff and then the leaders, the top leaders, by the time they get together, they are usually a little more civil and stuff like that. I do not think we know. But i think you always have to assume that in the end they come up with something. Alix that is what i keep hearing. Joe we do not know what is going on but you have to figure that they will keep kicking the can and get something together. Alix what new measures have you heard might be talked about in terms of what greece can offer to the creditors . Joe they had an agreement back in february. Alix february 20. Joe in the immediate days after that, that agreement seem to come apart, and you saw the left wing of the Leftwing Party attack it. It seems like the main thing that alexis the needs to do is tsipras needs to do is reconsider power. One of our columnists in europe said what he thought was the left wing had been sidelined. If there are no huge spending measures, maybe they can come to an agreement. Alix again, maybe maybe, maybe. All that rhetoric. Thank you for joining us. All right, well, coming up streaming music, but players like spotify are pulling more cash than cds these days. We speak with the ceo of the brand of a new streaming service. Alix some Big Companies getting into online tv are looking for the special treatment. According to the wall street journal, hbo, sony want their content to be preferred services. There are questions about whether it would violate Net Neutrality rules. Joining us, bloomberg west editor at large cory johnson andlou. Thank you for joining us. What does managed Services Mean . What does that mean . Lou it means that they would let their traffic have priority. During times when traffic is congested, these little elements of data we call packets are cute, and there is not there is not enough bandwidth to get them all across to users. They want their traffic to take priority over all of that other traffic. Even though they may have not been the first one in line it can jump to the front of the line. Alix doesnt that violate everything that you neutrality was . Cory where the rubber hits the road is how we figure out how the Net Neutrality rules work. Yes, it might. At i think what is important is that companies cannot pay for that. And come venues like comcast that have their own content, could use their ability to charge others for traffic or charge them more, as they were with netflix. So, the charging of that could be a big portion of this. The classification may not be so egregious. Alix a continuing gray area when it comes to neutrality. Staying on the streaming debate revenue from scripture Action Services some scripture and Services Rose 2000 . Subscription Services Rose 2000 . Now there is a new player on the market. Station digital has a new way to get your music. Of course we have the ceo. Congratulations on launching today. What is different with your service and spotify or pandora . Guest lou we are a discovery service. Spotify is more of an Ondemand Service where you can choose which songs you want to listen to win. We will the launching an Ondemand Service a little later this summer. Our we different from our competitors is, number one, we have a very large database of over 30 million mobile songs, 18 million here in the u. S. We have fewer commercial interruptions. We are still in asset supported platform like pandora. And we actually give users reward points for every minute for every lap our they listen to our programming and then they can purchase physical and digital media. Alix so i could listen to your radio and buy some shoes . Lou you can listen to our radio and buy some shoes. Alix i could get there. Cory, at what point will streaming take over digital doubt lines downloads or at what point does it get a higher audience . Cory the trend suggests we will certainly get there. Its an interesting business also, because there is an underlying is no structure for companies that go out and acquire all of the rights to a service and they have a rich catalog to manage that. I think we saw this week when rhapsody struck a deal or Real Networks that owns rhapsody struck a deal with twitter so they could send out links to music and link to rhapsody to gain subscribers. I think that spread will help it happen a lot faster. Alix fascinating. Thank you so much. Lou congratulations on launching your service today. Corym cory, thanks for joining us from san francisco. Mark andreessen starting a boot camp to help women and minorities. We will discuss it when we come back. Alix we want to take you to scarlet fu it are breaking news desk. Stocks posing with a pretty big bank. The nasdaq was at a 15year high. Scarlet the nasdaq did have a lot of headliners. There was no consistency. When all was said and done, the s p did rise 2 area at the big story of the week was the dollar. The fed made clear that it is not impatient when it comes to raising Interest Rates. The latest rejections suggesting the rate hike well will not happen until september. Clearly this is a kneejerk reaction from the market. You look at the high, the domestic stockpiles remain as high as ever. And treasuries yields back below 2 . Not only is the fed in coaching, but that looks attractive encroaching, but that looks attractive relative to european yields. And healthcare shares are also gaining on equities. They were the best performing group of the week. M a certainly helped. The biggest gainers always encouraging reports. Biogen has the encouraging earlystage reports from its alzheimers treatment. Biogen and amgen have seen a lower death rates. Alix thank you very much, at our breaking news desk. Officials are expressing concern about the dollar. A wrote a policy knowledge inc. The soft dollar is the head went for growth. Mgm resorts international rejecting proposed board nominees from an activist hedge fund manager. Mgm rejecting all for director nominees, setting the stage for a proxy fight. And snoop dogg says he is developing hbo series while giving the keynote at sxsw. The former gangster rapper says that he is working on a show about 1980s los angeles. It is the talk of Silicon Valley. The gender discrimination lawsuit filed against a company. Closing arguments are approaching. What are the broader implications of the case. To join me alix ruddy. Alix, thank you for joining us. For those not familiar with the case, why is it so important . Guest it is important because ellen powell has taken the courage to stand up and talk about tiny cool opportunity in Silicon Valley. It is a problem going on for a long time and she has the courage to speak up for herself and all underrepresented peoples who may not have opportunity at different levels. Alix what is it like to be a female vc right now . Alex i am not a female vc, but we are woefully underrepresented in terms of our participation in what equates to the money funds, and the Tech Industry the Tech Industry, the industry fueling our economic growth. It is particularly troubling. Alix i have been reading a lot about this Ellen Pao Powell case. Something that comes up going to vcs to raise money. Why might that be and what can we do to change that . Alex the data is conflicting because there is data that suggest that female vcs are more profitable as partners then mailed vcs. There is a mixed message. About how the general top echelon response to women and other underrepresented minorities is an ongoing issue of bias, unconscious bias, and something needs to change. Alix not just for women, but minorities as well. 3 of women of color on the boards of these companies. It is an issue to be sure. Speaking of, Mark Andreessen is waiting in himself. He has started a boot camp to help women and minorities get spots on boards. What you think about that . How can you be on a board if you have never been on a board . Alex i think that is a fast test it fantastic first step and i commend him for it. That for the folks at the top today, they are the ones who issued the invitations to join the club at the top. They need to be aware how they have preferences, biases unconscious and conscious. Alix alex, to be fair, when women get to positions of power, do you think that they are very hopeful to women who are under them in the hierarchy or do they wall themselves off . Alex that is a fantastic question and i think that is a mixed bag as well. I think we need to stick together. Men need to be part of the solution and women need to be part of the solution. We need to help each other to build stronger companies, a stronger country, and a stronger planet. We need to ensure we have the top talent in every possible situation. Alix thats not the problem. The top talent may not be reflected in terms of gender equality. Why would you give someone a board seat who has never been on a board . Alex because the reason they have not been on a board is not because they are not highly qualified and capable. It is because they have not received the invitation to the top. Alix i want to move on to a broader topic. Yesterday Monica Lewinsky gave a talk and said that she was the patient zero precise verbal he and. What do you think about this . She was patient 04 cyber bullying. What you think about this . Alex first i want to commend Monica Lewinsky for breaking the silence and having these courage to speak out. I think something we did at the age of 22 cannot continue to define as for the rest were alive. The question of criticism and the tableau it has to stop. That is not part of vision. That is not part of leadership. We need to help each other to move forward. Alix what is the role that social media plays for the good and bad side of that question mark bad side of that . Alex we all need to take it upon ourselves to exert our own leadership and look for the good and the positive and not condemn a 22 euro golf for actions that happened 20 years ago. Alix girl, fairpoint. When it comes to Corporate America what is the Biggest Issue . Is it gender bias or racial bias . Alex i do not want to prioriti ze between the two. I think the issue is lacked of access to power. I want to commend ellen pao. We have to remember there are all kinds of people denied access as well and they do not have a bully pulpit. They cannot be part of a national conversation. She has raised our awareness. Alix thank you for talking to us about an issue you are very passionate about. Coming up a man standing big to the lefts global empire. Find out when and why he is placing bets. Also coming up a major upset. Blowing up brackets. Who is celebrating other than the underdogs. Alix japans ecommerce giant just picked up another companies. They are paying for 10 million in cash for the Digital Content business. This investment is the latest in a couldnt in rakutens push to acquire outside of japan. They invested in lyft and eb ates. And long before that they sprinkled a little cash on interest. To discuss, i want to bring in the cofounder and ceo of the startup button. He joins us by the phone. You talk about all of these acquisitions of u. S. Companies. Whats the bigger strategy here . Guest thanks for having me today. I think it is about looking at the foreign markets and how big the pie is here in america. Youre looking at Companies Like alibaba and rakuten setting their sights on the technology and innovation out of Silicon Valley, new york, probably we could say. The innovation happening here has global ramifications. If they can place their bets be part of these companies that are growing and basically defining how our future will exist on top of these new devices, its one of the best things on earth. A lot of innovation happens in america. That is the larger overall theme. They have tremendous cash flow. Alix what about other Companies Like europe israel . Michael i do not think it is discriminate. I think they are looking everywhere. Frankly, it is the size of the Market Opportunity in the u. S. Is those significant they are putting their dollars to work to not only a choir the Innovative New technologies being built here, but also a choir a cquire the Innovative New technologies being built here, but also the users. It is a two birds, one strategy. Of italy this is a big component in the decisionmaking. You watch as the dollar falls or grows, you will see the strategy heat up. That is something you have to look at with the dollars of any country, how they measure up against the u. S. Dollar. You will see the increase in spending as soon as that balance gets out of whack. Alix what is the problem then . Competing with alibaba, amazon trying to get over in asia . Michael its a great question. For rakuten to have such a magnificent run under their leader and they have great executives here in the u. S. Running the operation in the United States i think really what the biggest goal is replicating the success they have had in the asia in market. And what they have built and what they have been able to master and the japanese market is really hard to translate into those markets. So really i think it is about being able to leverage those experiences and having it transfer into the u. S. Entities. Alix but i think of amazon trying to get that foothold in china. What would it be like poor in asia and company tried get a foothold here in the u. S. . Michael there are convocations. One is culture. Another is the ability to retain executives postacquisition. Those are hard elements. When you are competing, it is hard. You look at a lot of the deals that have happened, and a lot of it has to do with translating to value. I think it is being able to invest in vertical leaders and let those vertical leaders continue to fly. That is the agreement. Amazon has done really well with the u. S. Investment. I think that is something they should do more of. Alix that is fascinating. Thank you. Thank you so much for talking to us about this. Michael jaconi. Coming up, big names headed to beijing this weekend. What you need to know. Stay with us. We will be right back. Alix china will be buzzing with activity this weekend. The China Development forum, a major conference, essentially the diverse of asia, will be taking off and we have a preview. We all flee to davos. We do not flee to china for the development forum. What is going on with it . Guest right. We can expect to hundred leaders in the political realm business, all of this descending on beijing for the next weekend to talk about what will happen in china over the next year or so. Some of the people we will be looking toward is henry kissinger, Christine Lagarde, sam walsh, also the head of the bank of china and in the development world, the director of the oecd area big names. Alix i want to go. Ramy i want to go. Alix there is a prevailing theme and here it is chinas economy is the new normal. What does that mean . Ramy good question. China is telling the world, listen. We know that the new normal is not 10 growth yearoveryear. You have to get used to it. We will see growth at 7 for the foreseeable future. Many of the panels do speak to this. At least the third of the panels have new normal in the title. The monetary policy. You mentioned Christine Lagarde earlier. As well as new normal with the ford ceo. Alix what does that mean for industries though . Ramy for industries, there will be an almost across the board fall into growth. This will go to barclays which you shared with me yesterday. [laughter] so, hopper is going to fall. Aluminum is going to fall. Wheat is going to fall. This is in terms of growth. But on the flipside gas volumes, they are going to rise 75 . Alix interesting. I love when people read the barclays report. Street smart will be right back. Stay with us. Alix this is street smart. I am alix steel. Another blast of snow on the east coast. You are looking at a live shot outside of our offices in new york city. Forecasters calling for six inches of snow in the northeast and midatlantic states. Boston has seen a record 108. 6 inches of snow and could have another inch or more. A suit over the value of a rare pink diamond. The family is saying that christies failed to investigate the rightful ownership of the prince diamond before auctioning it off in 2013. Christies blames the family for fighting over an inheritance. And former executive going to work at tinder tweeting out it is a match. An emotional, crazy start. Two sons winning games for their five coaches. It has blown a practice but there are plenty of people celebrating the underdogs. Joining me to discuss our bloomberg sports reporter. How crazy was this . They upset these games. Reporter two of the first four games of the tournament. Five games yesterday were decided by one point, which is also a record for the first day of the first round. All in all a pretty wild day. Alix i am looking at numbers. What is it 9 million overall . Eben it is wild, yes. Vegas had a wild day yesterday. If you are a vegas bookmaker, your dreams came true. Iowa state lost outright to heavy, heavy underdogs. But you know, they lost a smaller margin and when that happens, bookmakers make a ton of money. We do not want to bet on an underdog. We want the favorite. Alix yeah. Eben generally when underdogs cover the spread, vegas is happy. Alix and who else is happy, the coaches for those teams. Eben a lot of this coaches will go back to the negotiating table. Alix look what i did. Eben they may be able to leverage this, like ron hunter at georgia state. And then if there is another for five days of media exposure. A lot of schools would think, ron hunter. He has done a lot with lesser talent at georgia state. Why do we give him a shot at a Bigger Program . Alix do they get more money or interest at the ncaa . Eveb more than eben more than half of their money comes from these three weeks. Make no mistake when it comes down to the final four and the final two, the ncaa once duke, kentucky, wisconsin. Alix eben, thanks for joining me. Big weekend. That is all for street smart. Have a wonderful weekend. We will see you back here on monday. Enjoy that snow. Campbell i am campbell brown. Mark i am mark halperin. The streets arent for everyone. That is why they made sidewalks. On the show tonight, why clinton wont back down. And what does the market say . First americas most eloquent politician, benjamin netanyahu, who has given more interviews than malcolm gold while gold well on a book tour. A briefing in which josh was asked about the pursuit of the two