northwest of the ferguson police department, several shots were fired. at least three, and two officers were struck. olivia: the ferguson police chief is the first -- is the latest official to leave after the conclusion that the government fostered systemic racism. and deutsche bank and santander. jpmorgan, goldman sachs, and morgan stanley were cleared only after they result revised their proposal. bank of america was told to resubmit its plan. citigroup and 24 other banks passed without any conditions. the fed is using a stress test to prevent the repeat of the two thousand eight financial crisis. in another high profile embarrassment for the secret service. two secret agents have an reassigned after crashing a government car into a white house security barricade. the "washington post" said the accident occurred after a night of drinking. last month, president obama appointed a new permanent head of the secret service after a series of high-profile security breaches. hillary clinton's plans to use private e-mail drew some concerns early on. according to the "wall street journal" this morning, aides to president blue -- two former president bill clinton were concerned about hacking. many are skeptical about why hillary clinton used a private e-mail account but dan pfeiffer tells charlie rose it would be a bigger outlook for lesser-known candidate. dan: republicans have looked at hillary for a long time. they know a lot about her. this is one of those things that is happening because of the vacuum in a political discussion right now, and once there is an up and running campaign, this will be faint memory. olivia: meanwhile, the associated press has sued the state department seeking the release of all of hillary clinton's e-mails. in chinese biggest -- and china's biggest company is investing in tom keene's favorite app, snapchat. the mobile app is valued at $15 billion. that would make snapchat the third most valuable startup behind uber and chinese smartphone maker xiaomi. and critics say barbie has gone too far. the new hello barbie is wi-fi connected and will respond when kids speak, but privacy advocates point out that children's voices will be recorded and then sent over the web to a server. that is where the voice will be process. tom: are you kidding me? olivia: critics call it creepy. tom: yeah, creepy. i am all over it. i barbie is really struggling. there is a lot of cultural stuff going on here that nobody is talking about as well. we have a data check. we could do an hour data check this morning. futures up 5, we are really getting back pre-jobs, 2.08, the euro at a $1.0591. nymex has been soggy for the last 18 hours, $48.5 dollar index hit $100. sterling3. the under a $1.50. brent crude was a $56. we are back to 50 eight dollars today. to get us started on "bloomberg surveillance," today, this is the rubin dollar, the old trading partners. this is not brought trade weighted. here is the dollar strength down we go, here is the eight, 10 years of weakness. i use this to find the center point. we are now halfway back. are we going to call this the jack lew dollar? "the pulseolivia: probably not. it does look a lot like currency wars. overnight, south korea became of the latest to central bank to cut the rates. this divergence is because of fundamental reasons. the u.s. is going to raise rates for the first time in a decade. this is the story of dollar strength. tom: exactly. olivia: i was struck by comments by jon ferro, he says the reason is because nobody would believe mario draghi would buy negative yields. period that means we need to turn -- tom: that means winning to turn to james foley of rubble bank. gold coming up. olivia has a great segment coming up. we go to jane foley in london. jane, i know it is like dow 10,000, for what is the symbolism of the ex-wife -- of d xy to a grizzled pros like yourself? jane: it is a psychological level, but not perhaps as much as parity, not just for fx pros but for almost everybody in euro. that is the level we are reaching, a lot of market forecasters are chasing the forecast that have been coming down all year. a lot of people are thinking about parity. the big question is the timing. is this going to happen quite soon, or is this something was is going to be delayed. i think the lady will call the shot on the eurodollar, but of course janet yellen -- tom: absolutely. the mining question this morning, i know libya, you have a great question, does this make janet yellen blank? -- the money question this morning, i know, libya, you have a great weston -- does this make janet yellen blink? jane: even a moaned a bit about dollar strength, and why wouldn't they? the bank is cutting interest rates, and i think that makes about 24 central banks cutting interest rates this year alone. of course the fact that the fed is looking to hike -- it really means that it has facilitated the dollar's strength has facilitated the central banks in their ability to try to fight their deflationary pressures. if the u.s. repaired to stand by and allow -- is the u.s. prepared to stand by and allow the central banks essentially the cost of the growth in the u.s. over the next couple of years? olivia: jane what is the reason? we saw they divergence coming last night we broke through $1.05. jane: the speed is taken everybody by surprise, particularly when you think about these top market -- the stock market. with the ecb easing the stock market might go up, and you might see some capital inflow. the speed has taken everyone by surprise, but i think really the payroll data last week, the headline data the weight component of that. it is another nail in the coffin if you would like for the eurodollar because there is more talk in the market that maybe the rate hike its back on the agenda for the u.s. tom: jane:, thank you so much at -- jane foley, thank you so much at rabobank. ian bremmer may call it a g-zero world. geraldo rodriguez is in blackrock's emerging markets group. carl riccadonna with us as well with bloomberg intelligence. how do you compare this moment to the true shock of 1998 or other periods? we are really seeing some brutal move it in right now. geraldo: absolutely, there is a big distinction between a 1994 crisis -- olivia: the tequila crisis. tom: how did you know that? olivia: i read gerardo's notes. gerardo: you have exchange rates that are flexible across the board. so changing by generalized dollar strength, it is relatively low, and if anything, the weakness in currencies associated with the broadest transfer of the dollar is actually a source of strength when we think about going forward, gross prospects, export gross prospects in e.m., look for much better exchange rates. tom: critically, does this fold over? carl riccadonna, we see gold coming down. do you just suggest that it's full over to global equity markets as well? carl: it depends on earnings, momentum, and economic growth momentum. over the past three or four years, it has changed precisely because growth momentum in e.m. has not picked up. is it a weaker e.m. currency that will trigger that? history tells us that value is the main driver of performance in e.mm.. equity markets. value has been underperformed by e.m. currencies. going forward, that has to be good for e.m. as an asset for us. olivia: what happens when janet yellen does raise rates? gerardo: i think we have seen already a lot of that. back in may of 2014, we saw that. markets are anticipating that move. interest rates have gone up already, credit spreads have gone up, and credits are adjusting, so the markets are already -- olivia: the markets are adjusting because they themselves are evaluating. gerardo: but that is precisely the monetary force. japan and europe is striving to a very larger extent this movement. one thing here is em.m. currencies have depreciated around 15% against the dollar over the past year. they have been trending against the euro 15% so that tells you the other underlying economic fund the metals in e.m. are actually not that bad. leavd the dollar against the euro in against the yen driving. tom: this is esoteric, and we will have a lot of esoteric rescissions. carl, give me the esoteric of the american economy. the atlanta fed is seeing some real soggyiness. are you ratcheting down at the "bloomberg view"? carl: it is doing a lot of heavy lifting for the fed. i think janet yellen has to take patient out of the statement next week. that is not mean that june is a paid account the -- is the paid to calmly. a lot of people say x words are 12% to 14% of gdp, so it is only affecting a small part of the economy. it has a larger impact. any domestic industry that is competing with imports is being affected by this dramatic movie dollar, about a 20% change. also american workers are competing against wages abroad. tom: yeah the wage dynamic as well. gerardo rodriguez and carl riccadonna, we could do this for six hours this morning. olivia: where else why the ethics of luck a.m.? coming up, -- atwhere else would i be at 6:00 a.m.? coming up, how low will gas go before we can -- how low will gold go before we could see a floor? this is "bloomberg surveillance." on bloomberg television, streaming on your tablet, your phone, and bloomberg.com. ♪ tom: good morning everyone. "bloomberg surveillance" in new york city. euro $1.0590. top headlines right now. here is olivia sterns. olivia: we have a latest from ferguson, missouri where two police officers were seriously wounded overnight during protests outside the city police station. it happened hours after the city's police chief resigned. the st. louis suburb was plagued by violence last summer after an unarmed black teenager was fatally shot by a white police officer. some of the nation pose the biggest banks -- some of the nation's biggest banks had a tough time passing the stress test. the u.s. units of deutsche bank and fenton santander fail the test. also, anger over the racist oklahoma university video spread to texas. people protested outside the home of the north texas student leading the chant. the sigma epsilon chapter has been close. and the new york state comptroller says the average bonus was nearly $175,000. the industry added 23 hundred new jobs in new york, the first expansion since 2011. a big lawsuit ahead for facebook, over online purchases made by kids without their parents permission. facebook says it plans to defend itself vigorously. nasa has a blast and the utah desert. it successfully test fired the world's biggest rocket booster. the engine fired perfectly. the 24 million horsepower booster could eventually carry astronauts to mars. those are your top headlines. gold is in the midst of its longest slump in six years, and to add injury to insult march is usually the worst month. with an average price wrap up 1%. we are joined now by btb's commodities analyst jim steele. great to have you on set of this morning. jim: thank you. olivia: at one point consumer retail demand from china and india -- jim: we have seen a rapid drop recently and the dollar led for most exclusively in the last couple of weeks. the kick in from physical demand is probably going to occur quite soon i would think. we have a four dollar to five dollar premium in shanghai compared to a local london which means it is tax sporting golden to china. we expect that demand, now that we are beyond the edges, it would begin to pick up as well. "the pulse what is-- olivia: what is the most important driver of gold right now you go people are looking to hedge against deflation. \jjim: it is negative for gold coupled with a stronger dollar. this is a powerful bearish cocktail. i think that is why we have dropped. tom: come on in here and look at gold. this is inflation-adjusted. we have got another boom and down we are. the gold bug in richard reid. you say it is a cocktail. what will be the catalyst to get gold under $1000 an ounce? jim: i think we would need a more extreme events, possibly much greater dollar strengthen we have even seen today. tom: dollar strength where you get a true ruben-jack lew dollar. how does that for you to the fear -- this is away from your expertise on demand but how does it following from the reality of disinflation? jim: as a traditional inflation hedge and of a hard asset -- tom: why would i need gold? jim you: would not need it if you thought the dollar was going to remain strong, that would dissuade you from being a big buyer of gold. there is also the argument that gold is still a good portfolio diversification instrument -- tom: you sound like a lawyer! jim: oh no, no no. i could never have gotten through law school. tom: when you look at it, james steel how did the etf's change the dynamics of gold? jim: that was one of the reasons the market was able to get up to the highest that it was. before the etf, we did not have a good way for many investors to be able to buy gold and hold it without problems of insurance and storage. tom: i love those in my dresser drawer. jim: exactly. there is a premium for points. it is a much more simple way of doing things. tom: carl you are dying to get in here. what have you got? carl: this is not a jack lew dollar. this is a janet yellen dollar. tom: excuse me, shot stop the show, is that a "surveillance" correction? carl: it is a "bloomberg view" objection. jiolivia: -- jon:im: i think we will come and that will stave the market above $100 will about this price, gold will be very attractive and the emerging markets them up but they held off because there were thought that the indian government would reduce the tearrif, which is very high on gold, 10% in the last budget on the 28th of february, and they did not, so those who held back may have to now replenish the coffers. tom: fabulous. olivia: thank you so much, jim. we have to have you back on simple stop james steel -- back on soon. james steel with hsbc commodities. tom: oil falling beneath $50 a barrel. good morning, everyone. "bloomberg surveillance." ♪ tom: good morning everyone. "bloomberg surveillance." futures up 6. here is olivia sterns. olivia: my morning must-read comes from ambrose prichard writing in the "daily telegraph" -- gerardo rodriguez of blackrock still with us on set. how punishing will this be to the emerging markets you look at? gerardo: i think most of the pain has already been processed through the system, and we are seeing some policy actions and reaction to this thanks to the central bank rate cut by korea last night, mexico announced fx measures to lower the volatility of fx markets, but again, you take a step back and major currencies are dragging these movements. there is not much in e.m. that is specific. olivia: we will leave it there. "bloomberg surveillance" will be right back. ♪ tom: good morning everyone. "bloomberg surveillance." some stability in the markets after a wild 3:00 a.m. morning in europe. let's get to top headlines. olivia: two police officer's have been shot at a protest in ferguson, missouri. they were seriously wounded at a shooting near ferguson rosie police station. road testers had gathered there after the police chief had resigned. the shooting occurred just as many were headed home. jon:police chief belmar: the night was uneventful until midnight, the crowd was breaking up, in fact several officers had left the area. to the immediate north northwest of the ferguson police department, several shots were fired, at least three, and two officers were struck. olivia: last summer, riots broke out in ferguson after a police officer shot and killed an unarmed black teenager. ferguson's police chief is the latest official to leave in a top-level shakeup. last week, the justice department found out that ferguson fostered systemic racism. wall street biggest banks almost got stressed out. jpmorgan, goldman sachs, and morgan stanley had a tough time passing the stress tests. they were cleared up there only they revise their decisions to pay back shareholders. the u.s. units of deutsche bank and santander also failed. citigroup and 24 other banks passed without any conditions. u.s. units of deutsche bank and santander, as i said, failed the test. the fed uses the stress test to event a repeat of the financial crisis. and the imf is coming to the aid of ukraine. while it fights pro-russian rebels, imf chief christine lagarde said ukraine will get money if it makes progress on economic reform. chief lagarde: i can assure you that ukraine has satisfied all of the prior actions that were expected and required of it in order to start moaning running the programs. olivia: ukraine hopes to get back $40 billion. the u.s. and the european union are expected to control the -- to contribute the money for stop in florida, there was a candlelight vigil for seven marines and four soldiers who are feared dead after their black hawk helicopter crash after a routine training exercise. the weather forced another helicopter to turn back just before the crash. and shake shack shares fell more than 8% after its first earning report since going public. fourth-quarter revenue did beat estimates, but shake shack predicted same-store sales will only grow in the low single digits. shares had more than doubled since the company's ipo in january. in boxing, floyd mayweather says get ready for the fight of the century. floyd mayweather and manny pacquiao held a press conference for their bouts on may 2. it is a fight that has been any making for five years. total prize money estimated $200 million. wow. manny pacquiao. is that how you say it? tom: yes, the pride of the philippines. olivia: i do not know anything about boxing. tom: exciting sport. it is our dollar, their problem, no "there" more than mexico. he faces solidly -- the peso is solidly weaker, but the big stories the success of the mexico economy. mexico must adapt with a vengeance. gerardo rodriguez is uniquely qualified to discuss his mexico. he a senior investment strategist at like rock and has served mexico as an undersecretary of their ministry of finance. -- at black rock and has served mexico as an undersecretary of their ministry of finance is that we have seen weakness. what is thedoes it signal for the government? gerardo: it brings back memories of the crisis, 1994. fortunately, currency movements are a source of strength and of a source of weakness. the mexican government has been able to develop a structure of local rates, and to move into a fully flexible -- the two rates and fx, move the economy, and taking volatility off. tom: we see the success of chile, the challenges of brazil, what mexico is going through now. it is all a maturing monetary system. how does all of its hold over to the real economy in mexico? can they keep that success of the last 5, 6, 7 years going given all these real shocks? gerardo: mexico is one of the most open economies in the world. it is fairly well integrated. in the manufacturing chain into the u.s. market, so if anything currency weakens, to the extent it is not treat a major financial stability, has to be good -- tom: like germany and all its exports. gerardo: exactly. tom: olivia, you have been reading up on the oil exporting mexico and the overlay of the map a success. olivia: mexico is liberalizing pimex. i spoke to lawyers about it. that was when oil was $80 a barrel. gerardo, what does this do for the liberalization plan? francisco:gerardo: the timing for the drop in oil prices was very unfortunate for the mexican economy and the mexican structural reform agenda. oil is not that important for the mexican economy. it is not that important for mexican exports. it is only important for -- 1/3 of government revenues are associated with oil. with the energy reform, which is the most important peeler of the structural reform of the government, what the government it is double down on oil prices as a driver of economic prospects. now we are at half the oil prices we were a few months ago, and what that implies is the geology of oil fields in mexico is relatively favorable, see you cannot expect a major change in prospects for investment in mexico for the short-term. tom: what does your all in calls? -- all-in cost? how does it compare to russia and canada? gerardo: it is mostly shallow waters they use around the $20 margin cost of production, but there are some less productive fields that are more complex, deepwater fields. for tho yous could arguee that, about their plans. olivia: does the government have to cut spending because of it? gerardo: absolutely, and they already did some of that. the government announced a .7% of gdp expenditure adjustment. there may be some more to come as they prepare for the budget of next year. it has to be submitted to congress in september. certainly there are some short-term pains to this, but medium-term prospects for the economy in general, i would say emerging markets broadly speaking are much better at $50 oil price than they were -- tom: i would recommend la blanc spine resort in cancun when he peso goes to 15. than it is like let's go. think of greece. olivia: i am thinking of going to greece this summer. gerardo: that is the beauty about currencies. currencies are arguably the single most important price for an economy so at 15.5, i would say everything looks cheap. olivia: coming up, gerardo rodriguez sa it is 5:00 somewhere. if you have ever wondered whether your alcohol intake is normal, you will want to see today's single best chart. this is "bloomberg surveillance." on bloomberg television, streaming on your tablet, your phone, and bloomberg.com. ♪good thursday morning to you. ♪ tom: good morning, everyone. futures up 6. new york city looking at a stronger dollar. you wonder what that will do to tourism in new york. let's get to our single best chart right now. olivia has a doozy. olivia: after spending his whole week with you, i could really use a drink. drinking is the subject of today's single best chart. this is your life story told through alcohol. the story comes from research and "bmc medicine." it studies alcohol consumption per week by men and women, and frequent drinking becomes more common during the two older age, -- during mid to older age, most notably among men. tom: i guess if it is some nice smooth curves, it shows we have fun in college and out of college. olivia: older folks do not binge the way college kids do, so their overall consumption is not more, but they do drink more frequently. tom: if we wait around by next thursday, there will be an article that says out the whole is bad for you, and a week from now, there will say you should have one drink at a few do not keel over. olivia: these are british statistics. the numbers show that americans a drink less because there are more nondrinkers in this country. gerardo, just curious because we have you on set, what with this chart look like in mexico? francisco:gerardo: probably the same, probably shifted upwards a bit. tom: that is political. [laughter] the major message, particularly for older people is the confusion of our all the well-intentioned articles, do not do this, have a glass of one a day, right? carl: exactly, but make it red. the peace in your chart pretty much matches the average age for getting married here in the u.s. tom: oh really? carl: young men are drinking a lot at a faster paced as they get married. olivia: i want to point something out, that i was struck by how it is not taper off. men in their 90's still going at it. i can say i've been to visit my grandparents, and i was struck by the fact that in their 90's, they were still ordering martinis at lunch. tom: the martini -- olivia: at lunch. tom: i distinguish a difference with me a great glass of wine is something more potent. there you have it, single best chart. photos, please. olivia: number three photo of the day, a native american headdress is on display at the met. tom: it will close in may. travel to new york to see the most extraordinary exhibition of plains indians materials. so much of this is out of the lourve in paris. this is not looks like something out of hollywood because hollywood was a fraud. this is 18th century, think george washington out of the great lakes. we do not know where this is from. this was in france. what is wonderful but the headdress is the son of the king of france saw it in versailles and about 1780. we know that for sure. it is raven, it is crow feathers whatever, it will take your breath away the way it is displayed. it is truly one of america's giant artifacts, and it is in france. now in new york until may. olivia: i studied a new exhibition at the met, and congratulations to emily -- tom: yes, emily and mr. campbell and the entire team. olivia: people take part in a wind instrument festival. the tradition dates back 400 years for the kaili people. the ceremony is performed in hopes of a good harvest. tom: it must sound gorgeous. very cool. olivia: out number one photo of the day, speaking of my grandparents and florida, a giant alligator was spotted at a golf love. -- golf club. the gator interrupted -- tom: are you kidding me? olivia: this is very common. the images have been posted on facebook and have already received over 300,000 the use. my grandfather at one point not been alligator on the head with a golf club. you do not have to be afraid of alligators -- crocodiles are the ones you have to be afraid of. tom: so that is routine? olivia: parents in florida no -- never leave the baby in the garden because -- it is a big deal. it is enormous. look at that tail. tom: i am speechless. olivia: as we head into the break, please answer our reporter question of the day for cap we would love to know how are used winning the money you are saving on gas? please tweet us @bsurveillance. this is "bloomberg surveillance." on bloomberg television streaming on your tablet, your phone, and bloomberg.com. anywhere you get the internet because it is 2015. ♪ tom: good morning everyone. "bloomberg surveillance." 5:42 this morning, the german 10-year hits .186. that is stunning. it blows through japan and every other nation. let's get to our top headlines on america. olivia: we begin in ferguson, missouri where to police ulcers were seriously wondered overnight during protests at the city's police station for stop it happened hours after the city's police chief resigned. one officer was shot in the face, the other in the shoulder. police are looking for the shoulder -- for the shooter. jpmorgan, goldman sachs, and morgan stanley were cleared from the stress tests only after revising their proposals. the u.s. units of deutsche bank and santander both failed. also on the bloomberg terminal, a man whose heroic action save lives during gabby giffords's shooting had died. six were killed and 13 wounded. he retired army colonel died at the age of 78 of pneumonia. and it is getting crowded in the cloud. google is offering a new kind of data storage service, and it is priced to challenge my catoctin amazon. it costs a penny per gigabyte and will retrieve data in three seconds. and a bidding war breaks out for a drugmaker. ireland's -- is worth more than $11 billion. it already agreed to a buyout. most of endo's offer is in stock. americans and russians returned to earth after nearly six months aboard the international space station. among them was the first russian woman to live on the international space station. tom: they're a good. we are doing a lot of space. retail -- olivia: retail and gas. the price of gasoline has been slashed in half, and curiously consumers appear to be pocketing the savings. retail sales in the same period have been sluggish. economists we have surveyed at bloomberg are exciting to see a gain of just .4%. our already own a is chief u.s. economist for bloomberg intelligence. -- carl riccadonna is with us chief u.s. economist for bloomberg intelligence. also gerardo rodriguez of blackrock. carl: you see the overall consumption figures, some of that spending is going toward services rather than the goods that are measured in the retail sales numbers. a very common misconception now is while gas prices are increasing in the first front of this year, so that means the so-called tailwind is finished. that is not true because everything is relative, and the increases we are seeing in gasoline prices are still muted relative to what normally happens in the first half of the year, so in february, gas prices were up about 5%, but they fell 20% in january. so that tailwind is still very much present and will impact retail sales numbers. tom: but are we saving more money? i believe i saw a 5.5% save rate. is it a blitz? carl: it is a blip. tom: what is the vibrancy of 60 something percent of our economy? carl: consumer sentiment has been on an uptrend, a little bit choppy, but it is supported by the dramatic improvement in the labor market, not only job gains but increased hours and some very modest wage inflation. if we look at aggregate income growth -- tom: wait a minute. carl: it is accelerating. olivia:tom: olivia, are you in charge of the show? we just all yves saint laurent purses. olivia: i think people who are saving $1.50 at the pump are going out to buy -- carl: they are going out to buy imported goods because the cost of imports are falling as the dollar appreciates. that is a problem for domestic producers. olivia: certainly. we had jeff rosenberg on earlier this week, and he said we will not see consumer spending the extra cash until they have the perception of the discount is permanent. carl: the improvement in consumer sentiment is more the confidence in the economic outlook, i think relative to main street america understanding the dynamics. olivia: what about the weather? carl: this is the big question for february. we should see the gas price tailwind the labor market kicking in the stronger consumption, but february is a very lousy month. the jobs report is weak. retail is a full month's survey. we had called weather, big risk for retail. olivia: you know what was selling well? those little puppy shoes for the snow. tom: i saw them yesterday and 60 degree weather. puppy shoes. you are right. you are so manhattan. gerardo rodriguez with us. i want to talk about confidence in emerging markets will stop we talk about the bloomberg consumer confidence index. how do you measure confidence in mexico of the people of mexico? is that easy to do? gerardo: absolutely, and you can gather that based on overall business sentiment and investment. tom: where is it right now? gerardo: it is related to short-term economic activity. it is very, very low. it has been going down significantly over the past two years, mainly as a function of the global cycle that has made the mexican economy sort of a slowdown. tom: let's back it up. to the people of mexico and the elite of mexico, do they blame janet yellen durant bernanke? -- or ben bernanke? gerardo: not necessarily. it is driven by local politics so there have been a few scandals corruption that has been driving. olivia: 30 college kids went missing -- gerardo: exactly. so what you have in mexico is two realities. one is stricken by the structural reform agenda as good as it has been over the last 30 years, but at the same time, the cyclical dynamics and this scandal are generating concern at the social and the corporate level. that is not good for economic activity. tom: gerardo: thank you so much carl riccadonna as always, thank you so much with bloomberg intelligence. this report was on fire at 3:00 a.m. euro $1.0613, sterling was below $150 weaker british pound, and dollar index making history over the last 12 years ago, about $100. it is an defendant u.s. dollar, which means washington and the capital stand tall as well. we will have much more. there is washington on a perfect morning as well. we have much more for you, another hour of "bloomberg surveillance." stay with us. ♪ tom: the u.s. dollar reaches 100. it is mario draghi and the global economy's problem. renewed violence in ferguson missouri. two police officers shot overnight. a decisive battle in iraq. allies take on the islamic state. good morning, everyone. this is "bloomberg surveillance ." it is thursday, march 12. let's get to the top headlines. olivia: more violence over in ferguson, missouri. two police officers shot and seriously wounded. st. louis county police chief says it appears the officers were targeted. >> this evening, the only shots we were aware of where the shots taken across the street. they were standing there and they were shot just as they are police officers. olivia: last summer, riots broke out in the town after a police officer shot an unarmed black teenager. a justice department report concluded that the cit y fostered systemic racism. jpmorgan, goldman sachs and morgan stanley were cleared after they wer revised the proposal. citigroup passed without any conditions. just what the secret service needs, another embarrassing incident at the white house. two senior agents have been reassigned after crashing a government car into a white house security barricade. the accident occurred after a night of drinking. one of the agents involved is the second in command. hillary clinton's plans -- she worried that adding her acute to a private server would make it a target for hacking. many have been skeptical of her explanation. dan pfeiffer tells charlie rose it would be a bigger problem for a lesser-known and it. -- candidate. >> this is one of those things that is happening because we are having a political discussion. once there is an up and running campaign, it will fade into memory. olivia: china's biggest e-commerce company is investing $200 million in snapchat paid alibaba's investment values the mobile app at $15 billion. mattel calls the newest version of its payment stall -- famous doll "hello barbie." it is wi-fi connected and has voice recognition software. privacy advocates point out that children's voices will be recorded and sent over the web back to a server. tom: secretary clinton's server? olivia: mattel's server. it will help form barbie's responses. critics call it creepy and say that mattel should don't at all. -- should dump the doll. tom: the 10 year yield at 2.07. nymex crude at $48. it was a big deal this morning. the dollar index touching 100. her traditional trading partners , 57% euro base signals in the dollar strength and a europe that must adjust. i just looked at the german tenure .195. it is grinding down. the you and the people you speak to presume that we will see a negative interest rate on german tenure -- 10 year? >> on the eight year we are only three basis points away from going negative on that. the main part is what is happening with the long securities. the 30 year closed at 1% on friday. now approaching .6%. you and i have never seen anything like this. tom: a new stridency. how fragile are the secondary banks from austria to sweden? >> the banks and austria have their own problems. the top that bondholders will have to be held in. germany and german banks have exposed that austrian bad bank. how that plays out remains to be seen. i caught up with the central bank governor and asked him about the austrian banks and he did not seem too concerned. you look at austrian debt negative all the way up to six years. olivia: wow. we are struck by the speed of the movement. i was interested in what you were saying earlier -- nobody thought mario draghi would buy. >> they set the threshold at the deposit rate. i spent the day in frankfurt and listen to marry a drug you. -- listened to mario draghi. nobody talked about how quickly the euro had fallen. last year $1.14. we go from one extreme to another. now we start to think about, what is the threshold here? when do they start getting uncomfortable with this? and when do we start thinking about the euro being too weak? tom: dollar strength is expressed across equities, bonds and commodities. understanding gold is one thing but then there is the linkage to all the markets. b i s working papers for 83483. this is the serious paper of the moment. translate for us the concern that the smartest people have on all these interdependencies we are seeing right now. francisco: the real issue is how quickly this all is happening. as it relates back to the u.s. markets how is the dollar strength going to affect corporate earnings? back to the real economy and back to the interest rate cycle. are we putting pressure on inflation and will that create problems? tom: there is more deflation. is there a discussion at merrill lynch about jennyanet yellen being overcome by events? francisco: one of the issues you want to look at -- any commodity market gives you an indication. the global market -- we have seen that market. we have seen currencies, the austrian dollar continuing to depreciate. you are seeing that across almost every commodity market. we get to that cost -- tom: are these destabilizing forces? olivia: are we going to see taper tantrum because of this dollar-denominated debt? francisco: you have seen a lot of pressure on emerging-market currencies. look at the turkish lira, the russian ruble or the currencies in the former soviet union countries and they have all seen a lot of pressure. there is no question that the cycle of strong dollar, weak commodity prices is going to have a fair amount of impact across many different assets. tom: janet yellen dials one 800 stanley fischer. francisco: we are looking at -- we are projecting a september hike. we think the u.s. story is driven by the domestic dynamics. the u.s. dollar run at this point if we continue to move that may change. olivia: we will be talking about iraqi forces retaking to to ikrit. ♪ tom: good morning, everyone. "bloomberg surveillance." going after the gold -- qualified to speak on this. the decline is the real story. we were promised the collapse of fiat currency and the u.s. dollar. a beautiful use of gold and there it is the return of the gold standard. the one true currency. there we are. francisco blanch he absolutely nails this hysteria. gold bucks, go. francisco: gold bukcks have been crushed. think about what happened the last few months, interest rates kept going over, risk was contained. now rates are starting to push higher so gold is coming down cold will continue to come down -- gold will continue to come down. gold is going to anticipate the end of the rate cycle. as long as we get close to that rate cycle, that is when gold is going to turn. tom: do you get a jump condition when risk slams in and we have major risk factors? francisco: it could happen. it is difficult to forecast a spike in risk. tom: i would go back to 20 years ago, the compensating factors. the system recalibrate's within these movements. francisco: exactly. the key here for cogold, the market might said the fed hikes 1%, whatever it is, once it is priced in that's when you want to come in and buy. with the number of bonds going down to zero, that is going to be the real issue. tom: we are under .20 on the german tenure. i have never seen this. -- german 10 year. olivia: please answer our twitter question of the day. how are you spending the extra money you are saving on gas? ♪ tom: good morning, everyone. "bloomberg surveillance." we look across equities, bonds currencies commodities -- the german 10 year grinds ever lower. olivia: we begin in ferguson missouri where two police officers were seriously wounded overnight. it happened just hours after the city's police chief resigned. one officer was shot in the face, the other in the shoulder. some of the nation's biggest banks barely passed the fed stress test. goldman sachs and morgan stanley cleared -- deutsche bank failed. anger over the -- people protested outside of the home of one of the students. wall street's bonus to $28 million. -- billion dollars. the industry added 2300 jobs in new york. the first expansion since 2000. i bet a lot of it was in the back office. compliance. a big lawsuit for facebook. a federal judge said thousands may sue the company because it will not pay refunds. facebook plans to defend itself vigorously. rents soaring for the smallest apartments in manhattan. the median rent climbed by 10% last year. a record high. one reason for the increase many would-be buyers cannot afford bigger homes. tom: this is incredibly fluid right now. there is a dynamic here across manhattan and london as well. with the currency movements, you wonder where we will be fourth of july. olivia: you would be shocked how far it won't get you. tom: merrill lynch has to live this every day. a studio is outrageous. you were way ahead on this story. olivia: i'm shocked by what's going on in iraq. there are rockets and mortars echoing across saddam hussein's hometown of tikrit. security forces are battling islamic state militants. islamic state is in retreat. good news, though. you can thank iran for their progress. >> the activities of the iranians, their support for the iraqi security forces is a positive wing in -- positive thing in military terms. we are all concerned about what happens after the drums stopped beating and isil is defeated. olivia: he was former advisor to the -- who is in control of these shia militias? do they answer to baghdad or tehran? >> good question. some of the groups we are watching in action to report directly to iran's guard corps. some of those groups are tight with iran. others are more indigenous. those groups are much more in play. the bigger problem of whether they will integrate back into the security forces. olivia: this is frightening. the man who led the iraqi insurgency against the u.s. how does the dust settle here? as iraq become a proxy state for iran? >> iran wants to have iraq within its spear of influence and wants to be the primary player in iraq. iraq does not want the u.s. to have a long-term presence. at the same time, they still resent the amount of iranian influence. that is one thing u.s. policy should be emphasizing. we will be there, other arab states will be there. it is not all about iran. tom: nicholas burns, one of our great diplomats says this is a time to authorize u.s. military operations directly against the taliban. do you agree that it can be a catalyst for a greater american operation? >> we needed to have a strong response to isil. what we have been doing so far the airstrikes helped somewhat but are not efficient -- sufficient. what we see in tikrit is encouraging. to retake mosul i don't see how we will do that without u.s. presence. olivia: do you agree that the enemy of our enemy is our enemy? or can we work with iran to fight back islamic state? >> in some ways we are forced into the situation because iran has such a strong presence it's impossible for the west to come in with the same amount of military power. this is a challenge for us to move forward. i'm not sure how we move forward without iran. olivia: thank you so much for joining us. answered our twitter question of the day -- answer our twitter question of the day. ♪ tom: good morning, everyone. "bloomberg surveillance." let's go to the bloomberg terminal. carl suggesting it is the yellen dollar. here is the reuben dollar. francisco blanch, what is the significance of the 50% retracement of that history from another decade? olivia:>> insets us in a stage of strong american economy. we had emerging-market prices, loads of issues across latin america. it, we are retracing all of that. we still have a strong american economy but other nations are going to -- tom: bring up the chart. dxy back to 1967. we adapt abruptly to too strong a dollar. are we anywhere near that? francisco: we have a ways to go. that is where we retain a negative -- tom: deutsche bank making a splash yesterday. francisco: i'm not going to run over -- we will have a negative tone. the strength of the dollar is something that won't stop. tom: let's get to our top headlines this morning. olivia: two police officers have been seriously wounded overnight at a protest in ferguson missouri. the protesters had gathered at the police station after the police chief resigned. the shooting occurred just as many were heading home. >> tonight was fairly uneventful up until midnight. the crowd was starting to break up. several officers have left the area. to the immediate north, northwest of the police department several shots were fired. two officers were struck. olivia: last summer, writes broke out after a white police officer shot and killed an unarmed lack teenager. -- writes broke out. -- ryaniots broke out. jpmorgan, goldman sachs and morgan stanley had a tough time passing the feds stress test. bank of america was told to resubmit its plan and the u.s. deutsche bank failed. the fed is using these stress tests to prevent a repeat of the 2008 financial crisis hundreds turned out to remember the victims of the military helicopter crash in florida. it was dark and foggy at the time of the crash. the weather forced another helicopter to turn back just before the crash. it shares of shake shack fell more than 8% after going public failing to live up to investor expectations. same-store sales will only grow in the signal digits. -- single digits. hbo says get ready for the super bowl of boxing. floyd mayweather called it the fight of the century. they held a press conference to promote their welterweight champion ship out, may 2. -- championship bout. more than $200 million. i am excited about this. tom: a giant deal. a dream matchup for the sport. you wonder how they can leverage off of this huge moment. olivia: does this go on hbo over the top? tom: i don't know. it is a huge moneymaker. let's do a data check this morning. here we are, thrilled to bring you the smartest guests we can to explain the euro. oil a bit of a bid right now. we will talk about the oil supply in moments. a lot going on. the fix at 1687. we had a 100 print three hours ago or so. brent crude was a $10 bread -- $10 spread this morning. good morning, everyone. this is "bloomberg surveillance ." i'm tom keene. with me, olivia sterns. looking at china. olivia: china's central bank boston says he is close to scrapping the deposit rate -- the reform would affect the system that has -- we are pleased to be joined by the president of china international -- china's pagebeige book international. the chinese government is trying to told the chinese economy from an investment savings led model to a consumption model. >> that is exactly what he has to do. if you have a system based on financial repression, you have to stop subsidizing the expenses. they're trying to put more spending power in the pockets of consumers. because of all the hectic disinflation they think they may have an opportunity this year. tom: you nailed this call. you were so low. what is the real gdp growth? -- you were solo. >> nowhere near 7%. we don't know what the actual number is. the ip of the gdp target is ridiculous. tom: the knock on effects arguments. -- our imare immense. >> there's a lot of believe that they will have to devalue the currency. what china needs to do is keep it relatively strong. the route the relationship -- they will crush japan and the euro. it will be relative-- tom: francisco blanch blanche with us this morning. do you agree? francisco: we are looking for iron ore to go $50 or under. olivia: i look at the index every morning. how far along are we? >> a lot of people are saying that we are not in the middle of all that easing. the chinese are doing the least amount necessary to maintain stability. little interest rate cut here little cut their. this is part of trying to keep things relatively stable. tom: will they do what the swiss did out of the blue? >> very unlikely. they are trying to move in a particular direction. olivia: what kind of marks would you give them? >> a lot of the gauges we have for rebalancing have not been that good. there has been this overwhelming clamor for more and more stimulus. they have handled this relatively well. they are not trained to stimulate to get higher growth. tom: the fed puts brian moynihan in the timeout chair. if they went over to china and audited their banks, would any of them passed the stress test? >> absolutely not. everything that comes after that is also fiction. no one knows what's going on behind the scenes. the numbers are much higher than the chinese -- tom: will it trigger a lehman moment for china? >> they don't release that much data. as long as they can keep things relatively stable, we are missing a collapse. olivia: there was the group that missed its payment. >> they may have local government finance vehicles on default. the government will step in and the next few months. the default pattern is a good thing. olivia: thank you so much. 7% gdp from china is a bit dodgy. how are you spending the money you are saving on gas? ♪ olivia: good morning. this is "bloomberg surveillance ." lumber liquidators holdings to stabilize after stocks fall 15%. the report accused the retailer of formaldehyde. betty liu joins us on set. what do analysts want to hear? they have >> several questions. there was some nervous issness. they knew the report was going to come out. the numbers came out this morning, the undershot their earnings. they have enough liquidity for the foreseeable future. that is some of the question the investors will be asking. how much money do you really have on hand? how much money did you earn from selling this laminate flooring by the chinese? they have earned about $1 million according to some analysts. -- $100 million. will they have to replace that flooring? how many customers have complained? there is a lot of questions here. olivia: what are people saying? will management be able to hold on or will management have to go? >> that is a possibility. it will depend on what the ceo, how his answers are. tom: he's has forget about 60 minutes. what questions will the crew ask this morning? >> you've had some analysts come out in the midst of all this saying the tests 60 minutes used were wrong. tom: you got that would off the mayflower. in your family room right? >> completely. i don't profess to be a flooring expert. there are some levels up from aldehyde that are used but it was the amount used by the chinese cash levels of formaldehyde. tom: what does the cell aside and say this morning? >> they will be all over the skull. the stock is down 50%. there were some serious problems. what the company has to a sure if they have a handle on the situation and the liquidity should they have to repay us to make up for all the product. olivia: lots of interesting questions. betty liu will have full coverage. she will be joined by penny lou to discuss the future of hillary clinton's potential run in 2016. ♪ tom: good morning everyone. "bloomberg surveillance." olivia: two police officers were seriously wounded in ferguson overnight during protests at the police station. one officer wasn't shot in the face, the other shot in the shoulder. police are now looking for the shooter. -- one officer was shot in the face. jpmorgan, goldman sachs and morgan stanley cleared after revising their proposals to return money to shareholders. bank of america was told to resubmit its plan and the u.s. units of deutsche bank and -- both failed. and man whose heroic actions saved lives has died. he tackled the gunman who killed six and wounded 13. he was a 78 years old. it is getting crowded in the cloud. who offering a new data storage service. -- google offering a new data storage service. stock pickers at jpmorgan are bucking the trend toward index investment. jpmorgan attracted more new money to is actively managed stock fund that any of its u.s. mutual fund rivals. the bank added more than $18 billion. nasa has a blast -- successfully testfiring the rocket booster. it could eventually carry astronauts to mars. tom: very good. more space between mr. monk and the u.s. government -- mr. musk and the u.s. government. an alarming rate. america up to its eyeballs in oil. what will be the ramifications of $20 or $39 a barrel oil? others make a lot of headlines with a single point. you go in for very granular analysis. when i say america is up to his eyeballs in oil, what do i mean? >> there at the highest levels we have ever seen them. we are seeing cushing, the storage sites also extremely high. we have high inventory. tom: how long does the inventory stay there? can it stay there for years? francisco: that oil is going to be there for a wild. olivia: 450 million barrels. francisco: in commercial crude storage. then you have the spr. tom: does price clear our glut? francisco: in the end. it does. it will require a lower level. you are not going to take barrels out. tom: i'm fair and balanced. what is your single point on oil? francisco: we think wti goes down to $41. tom: it can clear at that level? francisco: we think it can. you look at european inventories, they are not that low. as we go into the second half of the year, we will get better numbers. we will get somewhat lower supply. u.s. production is going to start declining sequentially. olivia: when people talk about u.s. production, a lot of people associate it with the rig count. this chart shows the stunning drop off in the number of active rigs. francisco: we think there is roughly a 4-5 month lag. olivia: in four months, that yellow line starts to head south? >> starts to head south. the question is the speed. i don't think it will be nearly as fast as the drop in rates. we are taking down the least efficient rigs first. production may not necessarily collapse. olivia: productivity is catching up. tom: people see it. there are a lot of moving parts. the elephant in the room is dollar strength. dollar strength in the european oil. brent is at $58. how does jenny l installer affect -- janet yellen's dollar affect oil? francisco: we have seen oil stabilizing and the dollar gaining strength. the last few weeks, we have not seen that linkage working together well. it is something commodities will have to fight against. tom:olivia: a final question on oil. what would an iran deal do? francisco: add additional dollar pressure. between five dollars and $10 a barrel. the question is what kind of deal we get. if we get a full repeal of sanctions or a -- if that is the case, we will not see an immediate search -- searcurge. olivia: are you expecting a deal? francisco: we think it is a growing risk because of the issues around islamic state. at the end of the day, if america does not want to come in iran -- that sets the stage for more discussion. olivia: we asked you, how are you standing -- spending the extra money were saving on guess?as? "definitely saves money but higher utility bill due to harsh winter is high." "extra money from cheap gas my family used better and feels better -- eats better and feels better." "saving up for my apple watch." tom: i am not there yet. this is fascinating. olivia: it is time for our agenda. tom: my agenda is simple. the continued dollar strength. a lot of fireworks at 4:00 a.m. and then we get stability. stay tuned to bloomberg radio and bloomberg television through the day as markets set up for tomorrow morning in asia and europe. seems like we did that 12 years ago. down we go and up, up we go and we are finally to a rare level. olivia: dollar index has not been that high since i was in high school. my agenda is iraq. serious fighting going on across the country. i'm focused on what is happening in tikrit saddam hussein's home city. iraqi shia militias are making progress, beating back islamic state. the catch is they are being backed by tehran. tom: the washington post article this morning says how fragile this is. it is by no means a victory. olivia: very much in flux. the ground forces are coming from iran. retail sales out at 8:30 a.m. the big question whether or not the weather is going to take a big bite out of retail sales. carl riccadonna tells us economists have upgraded their forecast coming second to see an increase of 4/10 of a percent. tom: we will have that across television and radio here. futures of six and the 10 year yield 2.08% on the 10 year yield. francisco blanch thank you so much. betty liu with important perspective on lumber liquidators. i will be joined by michael mckee as we care to shreds retail sales. -- terror toar to shreds retail sales. ♪ betty: good morning. we are live from bloomberg world headquarters. you are "in the loop." we are 90 minutes away for the opening bell. the right and left together. penny lee joins me on the whole you hillary e-mail flak. the king of all media, howard stern's contract is about to expire. does he need sirius or does sirius need him? the guy is living the dream. how did he do it? the two officers shot overnight in ferguson, missouri are in serious condition right now. they were wounded during a demonstration at the police station. protesters gathered after the police chief resigned.

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