Transcripts For BLOOMBERG Bloomberg Go 20160308

Michigan is the biggest prize. Donald trump has a doubledigit lead, but there are signs that john kasich has been gaining ground. Bernie sanders is still doing better with younger voters. The European Union is getting a deal with turkey to stop the flow of migrants. Turkey made its most serious offer yet to stop the tide of refugees into europe. The Un Security Council sanctions were not enough for south korea. It is imposing its own penalties on north korea. South korea will present entry of any ship that has visited north korea in the past six months and his blacklisting people linked to north koreas weapons of mass destructions. Take a look at futures. Down across the board. The same concern about chinese exports. Take a look at europe. Also going to see red arrows overseas. As far as what we saw in asia overnight, we did see red arrows, except for in china. Take a look at this chart. Japanese 40year yields coming below the u. S. 2 year. You can make more money loaning to the u. S. Government for two thrs then you can loaning to e japanese government for 40 years. Stephanie it is europe that is responding by taking a leg down. That is because the Chinese Government has purchased equities in the last minutes of the discussion. It looks like they are doing it again today. Im not sure everyone would argue that china is a free market. Take a look at oil. Oil had been driving equities. Yesterday, it he coupled de coupled. Still a relatively high price for wti this year. I want to look at a riskoff trade. You see people piling into gold, piling into bonds. Gold is still up. Samantha are here with powers, the u. S. Ambassador to the united nations. We talk about china just about program. On this we typically talk about it with regard to economics. Are they a rival or a partner as you try to deal with things like north korea . Korea, we have just come off a remarkably successful negotiation with china. ,he broader Un Security Council as well. They back to the toughest sanctions panel that the Security Council has laid down against anybody in two decades. Sanctions are much more likely now to tighten the grip on north korea and the limit its ability. It is also a signal of chinas willingness to step up. If i were the leader of north korea, that would give me cause. Pause. This is something new for china. In the past, north korea has been dependent on china, but china has been reluctant to use muscle. This seems to be a change, correct . Samantha yes. They have gone along with sanctions in the past. But i cant overstate the extent to which this resolution has done. It goes so much further beyond anything that china has been going along with previously. It is a sign of irritation, of recognizing the threat they pose to regional security. David north korea stephanie north korea is reliant on china for basic needs, correct . Samantha this is the balancing act they seek to strike. They want to put enough tipped theut not balancing act. We have urged to them to be more forward leaning. Urged all of us to try to be selective to protect livelihoods. We want to make sure we go after the elites, who have put this program about the welfare of their own people. Stephanie can you go after the elites . You actually make Progress Given how protected their structure is . Think we can. I think china has good information about who is doing what. I distinguish two functions of what we have done together with china. We have blocked stuff from coming into the country that has been used to advance this nefarious program. Over time, we want to change the calculus of the regime. The extent to which multilateral , the kind of difference that can make overtime in shifting someones calculus. When you talk about the progress you are making and the changes you are seeing happen, does it worry you that this kind of progress will be held up or held into question as you look at this political cycle when you have candidates who are so negative toward Foreign Policy . Does that concern you in terms of the progress you have made . Samantha i wont weigh in on politics. Ive become diplomatic enough to stay clear of that. I would say that certain aspects of Foreign Policy have to have continuity. There is no way to deal with the threats of our time, to deal building, without multilateral coalitions. To build multilateral coalitions, you have to listen o what other countries interests are. I think president obama has done a forceful job. We have invested in u. N. Peacekeeping, we have a coalition to deal with climate change, to deal with isil. We knit things in the bud it willgs in the bud, help down the road. You cannot just show up and get what you want when you want it. David we talk about europe every day on the program. There are a lot of headwinds. Even overnight, there was talk about a possible deal with turkey and the eu. Where are we right now in terms of refugees coming out of syria and the middle east more generally . What is the path forward . Samantha this is a global phenomenon and a global tragedy. There are 60 million displaced people. Refugees. Of them are the world has never been more generous and yet the need is outpacing the demand. The world food program, because of the size of the appeal and the inability to fill it despite the u. S. Giving 5 billion over the life of the war, by virtue of the fact that rations were being cut, schools were not being set up, there were barely enough resources to feed people, never mind take on the schooling, that is when people began to vote with their feet. If you are a parent, you are looking at your kids and thinking, it is make or break if my rations are going to be cut in half. It is either barrel bombs from the assad regime, isis, or a smuggler. Talk about sophies choices. As the phenomenon is a global phenomenon, so to the responsibility has to be spread more equitably around the world. President obama had the state come back together he will be chairing a head of state summit to spread the burden across more countries. Many countries across the world do not take refugees at all. They may be geographically far afield from syria, but there is a way to spread the burden. When you are talking about is the symptom, to some extent. Can we really solve this without radical regime change in syria it self . Samantha what we cant solve it in order to solve it, we have to have Political Solutions. That is why secretary kerry is investing so much in collaboration with the russian federation, which has been on a very different side of this for the past five years. One of the reasons the refugee flow is what it is is because the conflicts are not ending. Reduction in see a the violence by virtue of cessation of hostilities. A longterm solution is going to require a majority of syrians to put their guns down and convince syrians abroad to come home. Stephanie realistically, how close are we to any sort of real resolution to stop this . There are meetings going on in turkey right now. Will there be a resolution . Is that even a possibility . To see moregoing refugees cross into countries like greece and italy in warmer months. Samantha weve got to get a political solution, not just ,rom syria, out in myanmar there is the same issue. The rights within a country did take whether or not people are willing to entrust the lives of their families to horrible people who are putting innocent on boats that dont float. It all depends on what we can achieve on the political track in terms of whether the flow will continue. It is also important to note that turkey, jordan, lebanon there are Financial Investments we can make in these areas. Host communities have really born this burden without it being spread around the world. Part of what has to happen is we, the world bank, others need to invest more in what has shouldered a disproportionate gordon burden. David it strikes me that we have the situation in libya, where the western world took a different approach. It was a fairly militarily active approach. You have been a student of this for some years. What have we learned from syria versus libya about with the best responses . Samantha we cannot be satisfied with either outcome. The situation in libya is aryans table, although they are moving haltingly toward a government of national accord. In libya, there was great reluctance on the part of the libyans who had earned themselves life without gaddafi to want an International Presence on the ground. Very proud and attendant to their sovereignty and said, thank you for the help, weve got it from here. Then divisions tour the society apart. Argue it is hard to no one can be proud of the results. There is heartbreak every day because of the rise of terrorism. But it is hard to see this magic tool that had we just done x or y, then the demons would have gone back into the box or the bottle. These are very complex societies. We open the toolbox we have and try to deploy the tools to mitigate suffering to get the kinds of Political Solutions that will bring conflicts to sooner. Oner an end we only have a short time left as the obama administration. Stephanie as you watch all of this unfold, Foreign Policy is going to be extraordinarily important and difficult for the next president. May be more difficult than any president in our lifetime. What is the most important thing that needs to be employed those first 100 days . What do you think we need the most . Samantha i think an investment in diplomacy. There is a lot of talk in certain circles about military force, where would we use it, what would we do but truly building these coalitions is what is required to bring about Political Solutions and there is not one conflict on the global stage that can be settled simply by the barrel of the gun. ,ven the terrorism challenge youve got to cut off financing, youve got to maintain border security, youve got to share yourmation to protect people and make sure the wrong people dont come into your country. Stephanie are you surprised that diplomacy is what we have heard the least of and all of these debates and meetings . Samantha i dont know. Im a diplomatic nerd. Much of a sound bite or a bumper sticker. [laughter] it is not necessarily going to work in a campaign, but one hopes that cooler heads will prevail. There are a lot of career foreignpolicy professionals who fuel our foreignpolicy across administrations regardless of who is in place. We hope that investing in the kind of coalitions that you need, understanding that military force can be a component of dealing with , especially, but it has to be part of a fulsome strategy. Because you cannot succeed otherwise, people are going to come to that conclusion. Stephanie selfdescribed diplomatic nerd. No soundbites are around diplomacy. That is a bumper sticker. This woman is some extraordinary guest. Ambassador samantha power, thank you so much for joining us today. In honor of International Womens day, we have got a big line of continuing today. Melinda gates, Mary Jo White, and we are going to let samantha a big day withs Michelle Obama ahead, no big day. David mark carney is testifying today in england over a possible brexit. His comments are next on bloomberg. This is the bloombergs nest Bloomberg Business flash. It is the 11th quarter in a row that the regions economy has grown. Business owners are less confident in the economy. Small Business Optimism fell last month to its lowest rating in two years. Contractsuspended its with Maria Sharapova after she failed a drug test. She said she had been tricking for years forug Health Reasons and said she did not notice when it had been placed on the banned list on january 1. Global go. Now on to mark carney is testifying before u. K. Lawmakers today on the economic and financial costs of a potential brexit. He said the boe will avoid telling people how to vote in the upcoming june referendum. Economic questions are important questions in terms of the broader decisions the People United kingdom have to make, but they are not the totality of the which peoples upon will reflect and make their decisions how to vote. Nothing we say should be interpreted as making any recommendation with respect to that decision. It is International Womens day. Francine lacqua joins us from london. Can the bank of england really avoid swaying votes. . Francine mark carney has been testifying for 2. 5 hours, lets give him a round of applause. He is trying to avoid getting into the political upheaval. However, he still needs to give an Economic Assessment of what a brexit would entail. What he doesnt want to be seen as doing is saying that it would be a disaster. He is trying to elegantly footsteps the situation. He almost lost his patience a couple of minutes ago in answering to one of the more conservative members. There is a risk to do domestic stability. David what is the point . They knew when he came in that he was not going to take a position and he spent 2. 5 hours not taking a position. Is this just political theater . Francine it is a little bit of political theater, but i think people are really trying to understand what the implications of brexit would be. Ruben king testified that the bank of england did not have the tools to do with financial instability nine years ago. This is a very Different Bank of england we are dealing with. Havecarney says they do the tools. Maybe it is political mustering to make sure the be a we knows boe knows their place and that they do not swear the voters. Sway the voters. Stephanie break down where it would actually affect us. Francine this is the question that we are in a difficult place in getting an answer. Some are probrexit saying that this will not make a difference. Contracts are written, then it goes back to business, they say. You could look at the housing market. There are so many foreigners from the eu coming here. Is that nohe truth one really knows because we have not had a situation like this. How do you know it happens to the pound six months after the vote . It is so emotional that the emotions get away in the facts. David thanks very much for joining us, francine. U. S. Equity futures are in the red. More on that coming up later on bloomberg. Stephanie we are watching u. K. Miners. They are all down. We will have more. You are watching bloomberg. We are just a little over two hours from the opening of the markets in new york. U. S. Equity futures are down a little bit. We are joined by tracy war sen. Joining us hot off of Bloomberg Radio hot is tom keene. First, lets get to first word. Malaysia is honoring the second anniversary of the 7 37pearance of the boeing 737. Over in california, the front car of a commuter train plunged into a creek after derailing. 9 people were injured and it is a miracle no one was killed. That train was traveling from san jose to stockton. Canadas Prime Minister says donald trump may tone down his rhetoric if he wins the nomination. He meets with president obama in washington this week. Deau says the things he may need to say to win the nomination may not be the things he says to win the presidency. David, over to you. David tom, it is time for your morning mustread. One of the leading experts on the dynamics of our economy. Stephanie Deutsche Bank hires the best. [laughter] he is absolutely phenomenal. Lets go right to the morning mustread. Increasing inflation appears to be late cycle. It does not justify monetary tightening until it is accompanied by acceleration in productivity. David, this is an incredibly Important Note about capital and labor. He is saying we are being ,looded with a lot of labor even our capital investments. Productivity is not therefore this nation. Stephanie we are focused david we are focused on getting employment up. We are not getting the output we should be getting, so maybe we are not asking ourselves the right questions. Citigroups wonderful Research Shows that it is about a lack of demand and we are waiting around for that spirit to go. We have been waiting a while. It is a singledigit world while we wait. I think there is a lot of uncertainty broadly. China, oil prices, the election. Our clients are very cautious right now. What i have observed since the beginning of the year is that clients are calm in the u. S. Is getly, the mood through this period, stay diversified, and we will get through it. Generally, people are pretty calm. Stephanie is inflation on the list of things people are worried about . To some degree, certainly. Right now, it is under control. Now, we are more neutral and it is going to take some time before rates go up. Reason they go back to productivity is the overarching measure of all the ever other stuff we worry about during the day. Service sector inflation, lawyers countants, stephanie lawyers always win. Tom the goods producing inflation is like this. Checked, theime i graph is widening. Indicating increasing concern. Tom there is a little bit of that out there. Do you see it . No. Stephanie how about Interest Rates . High net worth clients given where they are this low, maybe we should be concerned about the fact they have been a zero for so long, that unintended consequence. The one benefit is that our clients are ultra High Net Worth clients and they can borrow money very cheap and invest in higher yield opportunities. Overall, i think that is one opportunity. On the downside, everybody is searching for higher yields. Overall, we think that rates are going to stay flat for some time. A lot of people are looking at hedging future interestrate exposure for now. If you are hedging, you are going to get even less returns. If you are now in a lower return environment and you can add on hedging, get ready for less. Again, overall uncertainty is across the market. People are very cautious and they have to remain so. Tom the muni game continues to go forward. There is only so much they can pay for that is out there to buy. We think there is great opportunity in high assets, including munis. As well as highgrade investment bonds. Tom what is your duration on munis . It is all about selection, right . E have a fabulous muni team their performance overall is 100 basis points above the benchmark. It is about quality of the credit and duration. Stephanie obviously, your clients want higher yield. David in a low Interest Rate environment, that is tough. Higher yield comes with higher risk and higher volatility. Stephanie and liquidity. David exactly. How do you balance those against one another . It is challenging. I think the main thing is that we guide clients to diversification. You need a whole mix across the asset classes. Some of that includes less liquid investments. You get higher returns, but less liquidity. Weve got to talk politics. More investors are cautious and they are sitting in cash and that is not good for your business. What do you need to do to get those investors off the sidelines . People have their hands in the air during the election season. That is a big factor. It fuels the uncertainty, this current election environment. We are all talking about it. Stephanie what are you telling them . It is impossible to predict what is going to happen. Ultimately, we go back to diversification. We are saying today is no different, no matter what the outcome. We are not trying to predict the outcome. Stephanie is it a market friendly candidate . Tracey hard to predict. It is really hard to tell with these candidates. It is certainly an entertaining process. [laughter] tracey it is hard to predict. We dont try to modify our bylooks or asset allocations guessing who is going to win. Tom lets talk about the landscape of the industry of High Net Worth management. Stephanie he wants to be in it. Tom everybody wants to be in it. You are not old enough to remember 400500 basis points. Im kidding. Then you made a field goal, 300 basis points. Now you are lucky if you are making 100 basis points. That is an ugly trend. Stabilityu get to see given the Competitive Forces out there . Tracey the ultimate opportunity is the market itself, especially the High Net Worth market. Today it is Something Like 16 trillion is expected to transfer from one generation to the next in the next 30 years. The ultraHigh Net Worth Market Opportunity is huge and City Private Bank is uniquely positioned to take advantage of it because we are a Global Private bank in 50 cities, in 15 countries. Tom that was a shameless plug of the highest order. Tracey sorry. But its true. There are a lot of capital flows around the world. Not many firms can solve the problems for these High Net Worth families around the world. Aephanie we are no longer in times where banks should be all things to all clients. A good route your lane. What is it about your lane that you are so good at . Tracey were fundamentally a Different Company than we were in 2009. We are simpler, safer, stronger, we have shed 700 billion in assets. We are one of the best capitalized banks in the world today. We are simpler, safer, and stronger. What we are is scaled to serve. We are a global bank, but we are ,caled to serve our clients whether they are multinational or ultraHigh Net Worth families. David im interested about the increase of supply, but there also seems to be increased competition. Every time we turn around, there is a major bank saying they need to get in or wrapup business. Do you feel a lot more competition . Tracey interestingly, just the opposite, at least in the United States. A lot of the european brokerdealer models are closing shop and they are going back to europe. It is very difficult to run a brokerdealer business in the u. S. And make money and deal with all of the regulation. We are not a brokerdealer model. It is a different model. It is really a fiduciary model. Tom some of us are not High Net Worth because we are writing checks for summer camps. [laughter] and then martinis at the carlisle. What is the definition of High Net Worth . Tracey it is twice 5 million plus. 25 millionplus. [laughter] stephanie for the last five years, we have seen the rich get richer and now we have these hiccups. Not everybody has 25 large sitting in the savings account. I mentioned the 16 trillion moving to the next generation. Investors are not long investors. They have access to things that have higher returns. Stephanie none of us are your clients. [laughter] david we aspire to be. Stephanie thank you so much for joining us today. Keene. Ou to tom who else would join on International Womens day . David it took a lot of courage, tom. Stephanie the heavy hitters are going to keep on rolling next. Melinda gates is next. Out why she thinks the needs to be a fundamental change in policy for women. I do believe Melinda Gates would qualify in the High Net Worth category. [laughter] you are watching bloomberg. Iscoming up, Erik Schatzker going to be talking to Mary Jo White. We all want to hear what Mary Jo White has to say. This is the Bloomberg Business flash. Of a 90 billion says return pimco there will be better returns in riskier debt. May be an in metals opportunity for bearish investors. Analysts say demand growth for metal and china is unlikely to be sustained. Shares of burberry surging today. There is speculation that they are setting up defenses against a possible takeover offer. It asked advisers to prepare for a bid after a mystery investor took a 5 stake. Stephanie as we have brought you all morning, we have a very strong lineup of gas in honor of International Womens day. We face a strong possibility of our first female president in the United States. I asked Melinda Gates what impact that would have on our society of Hillary Clinton was elected. Melinda we want to see female role models at all levels of society. You want to see them in board rooms, and government, in nonprofit. , when you of the day are electing the next leader, you have to elect them based on your platform and what you believe in them. Ive seen the Prime Minister of canada, he does Amazing Things for women right now. I see a Prime Minister like chancellor merkel doing fantastic things. You can be a man or a woman and be profemale policies. Said wee john kasich had to get women out of their kitchens to help with their campaign. Women are leaving their kitchens , many do want to be with their kids, picking them up at school. Do we want jobs that require 40 weeks of traveling per year . Melinda i think we need to be honest that Women Deserve many options and they should decide for themselves what a fulfilling life is, whether it is in the u. S. , western europe, in the developing world. Many people want to be there to care for the elderly and their children. That is fantastic. Women also feral fulfilled feel fulfilled if they get the opportunity to work. We need to talk about all of this unpaid work that women do at home. Lets name what it is. It is work. We should put a tag on that and say, lets measure that in our gdp because in the developing world, women will do five more hours of work per day at home than men. We want to make sure that if women reach their full potential , that they have those choices available to them, to name the work they are doing at home and the work they are doing in the workplace and redistribute it. Stephanie the year from now, how will you measure your success . Melinda i will measure it if the world continues to get better for women all over the world. Say, is life Getting Better in tanzania on a whole host of measures. We will use the data to measure. Suchanie you have done great work for women and girls. Do you feel satisfied . So many women and girls are frustrated. I think women are starting to reach their potential around the world. And impatient optimist. The world is Getting Better for women, but it is not Getting Better quickly enough. Melinda we blame Corporate America stephanie we blame Corporate America, but is it Corporate America or is it society . The school calls me, the Doctors Office calls the woman. I do consider myself the primary caregiver. Im the mom. Above. it is all of the i think we need to have the right policies to make paid family leave to work for women in this country. We dont have a great family leave policy at the federal, state, and corporate levels. Change, but it is also recognizing that this is work at home. Say you can do three things, recognize that, reduce it, but the third one is to redistribute it. We have to have these conversations in our homes and we have to role model in society what is right. When we ask for policy changes, other countries might do it in terms of family leave policies. In terms of productivity and companies that do the most, do the best, you are here in the United States. Melinda the tech sector decided to be competitive. They are offering generous paid family leave policies for women and for men, too. You need to have it for men so that you can say it is ok to do it. The other thing, the california Business Community puts back a lot when they put their paid family leave policy in place. But it did not decrease competition. They have been doing it for over a decade. The tech sector is leading. It is easy for Mark Zuckerberg to have roundtable discussions. Think about how flush with cash these companies are. If you had to give woman six months Maternity Leave in a small business, you might go under. David if you have a mature business on the way down and you are saving every nickel and dime, it is hard. It is harder to provide those benefits. Stephanie that is the reality. Even when you look at some of those nordic countries, they have less fulltime employees. They have more parttime employees so they never have to fall into this some rela. All eyes are going to be on the as he lays draghi his latest plans to boost euro area activity. We are talking about a central bank boost. We know he said he would do whatever it takes. Does he have anything left . David this is bloomberg. All eyes are on mario draghi. Matt, take us to it. Ecb. Matt first, i want to show you this chart. What this is basically is a rateine of the ecb depot and the rate they are trying to manipulate. Stephanie the blue was what the ecb does and the white is what they are trying to get to. Matt thats right. You can see when they announced their rate change in 2011. What they did is they started Forward Guidance in 2013. That put them in front of the curve. David they are Getting Better at it. Matt much, much better. They had a bit of an issue in december 2015, but they have managed to remind the market that they have a number of tools, including Forward Guidance and the depot rate. The market has a very short memory. 490,u take a look at chart this is most interesting. When Jonathan Ferro came from london, he kind of reminded us of this. I call this the ferro factor. You see german bonds down on the curve. We are talking about six years here as the upper limit. Rate below depot which they cannot buy. Policy is maintaining a of quantitative easing. David they are running out of things to buy. Even the six is flirting with it. Matt this means they have to buy further up the curve. They want to manipulate the rates in the front of the curve. They need to come up with some kind of other tools because they have to spend 66 billion per month and they only have 200 billion down here. David they have to reach for new tools. Thanks very much. Lets go back to stephanie. Stephanie when we come back, our coverage of International Womens day continues. Coming up next, erin exclusive interview with Mary Jo White. Find fantasy shows. When it comes to the things you love, you want more. Love romance . Get lost in every embrace. Into sports . Follow every pitch, every play and every win. Change the way you experience tv with x1 from xfinity. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. An hour of exclusives. We speak to mary jo right. She has managed three ipos, liz myers is here to discuss when the market will recover. Welcome to the second hour of bloomberg. David today is stephanie today is International Womens day. Carla harris is with us today. Carla good morning, and welcome. Stephanie we are going to get a little bit of first word news first. Offirst up, it may be a test the trunk movement when Republican Voters cast their ballots in four states today. Show whether ted cruz, marco rubio, or john kasich have picked up any momentum. Hillary clintons also lead does double also leads by digits in michigan. The European Union is getting turkey on a deal to stem the flow of migrants. Any agreement will take time to work. Meantime, opponents of the campaign against merkels open door policy. The white house is unhappy after Benjamin Netanyahu canceled a trip to washington. The u. S. Was surprised to learn through media reports that netanyahu canceled. Global news powered by our 2400 journalists in 150 news bureaus around the world. Matt im just looking at oil right now. Big spike up we are gaining on crude. Keep your eye on that. Oil and the equity markets have been really well correlated with the exception of yesterday. Futures. We could break that correlation down. About 0. 5 on nasdaq futures. As far as the risk off trade, we had seen some purchasing in bonds pushing the yields down. We do see purchases in gold, as well. Today. Is weaker 113 yen is what you can buy for your dollar. Take a look at gold. Edfse 18th day in a row, etfs are boosting holdings of gold. Etf 1. 3e added the metric tons of gold in the last couple of weeks to have now 1700 and change in metric tons of gold. Etfs hold a lot of this stuff. Because gold is up 21 over the last three months, you see a lot more buying in gold etfs. Shake shack is one of the stocks we are watching, down almost 9 in the premarket. Shake shack excepts samestore sales of 2. 5 3 this year. That compares to 13 growth last year. A big slowdown in sales growth. Urban outfitters. Stephanie it is all about growth. Shake shack, if you look at the outlets, there are lines around the block, and that is where they have the Pricing Power to raise prices. Even though they may not be able to grow in regions, they are acting defensively. Matt something is working for Urban Outfitters. Stephanie Everyone Wants the rubiks cube. Matt the telephone that plugs into your iphone. They have a lot of stuff you dont need, but you still want to buy a Urban Outfitters. Thanks, matt. President obama hosted a group of financial regulators at the white house yesterday, including Mary Jo White. President obama used to the meeting to push for stronger oversight of wall street. Fcc chairman reach a white is no joining sec chairman Mary Joe White is now joining Erik Schatzker in washington for an exclusive interview. Erik good morning. Great to join you on National Womens day International Womens day. Mary jo thanks for having me. Erik regulating wall street is issue on the campaign trail. Mary jo what you want the sec to be is that very strong, independent agency where you have expert career staff, with commissioners dedicated to the mission. I have confidence that will happen. Erik you dont think that will risk the outcome in any two directions . Mary jo i think appointments important, but i think, historically, you have seen the seriousness come to bear on the appointments. Erik you have accomplished a great deal in the three years as your role as chair. Of enforcement actions, billions of dollars collected in fines and penalties, but you have also enacted rules that remain unpopular on wall street. Would you not expect say donald trump were taught ted cruz to got some of that . Mary jo i think it is always an evolving landscape in terms of what is optimal regulation. You want attention to rulemaking going forward, but nobody wants to relive the financial crisis and many of those rules that the agency executed on have really made us much more resilient. As a Market Structure and a financial system. If we were to roll back some of what the sec had done, you believe we would be exposing Financial Markets . Mary jo without question. Sec how about what the gets from the left, not just the right . Of thee politicization agency and regulation make it harder for you to do your job and make it harder for the next chair to do his or her job . Mary jo i think the criticism from all directions comes with the territory. In particular and its policymaking particularly, it touches very important industries, investors, everyone else. 50 of what you do is going to be disliked by everybody. It wont be the same 50 every time. The key is to fulfill the mission as an independent agency. I think it does it very well. Irrespective of political parties, you come into the agency with a mission to fulfill and that is not to be politicized. The clock is ticking on this administration. Markettart with structure. What can you accomplish before the risen other president in the white house . Mary jo i think we have accomplished a great deal already. One of my highest priorities was to focus on enhancing our equity Market Structure. We have taken a number of measures to do that. We have also set up the mechanism and the energy to do the First Comprehensive review of the equity Market Structure. We have a Market Structure advisory committee. It is quite active and it is getting more active. We are taking on all of the issues soon to nuts. Soup to nuts. We proposed a rule for Greater Transparency that is enormously important. We will take more measures through the rest of this year and into the next. Erik you have talked about the potential for fundamental changes. Will we see the fundamental changes put in place . I think some of them are different, as far as what is fundamental in the eye of the beholder. This is a review that will continue past this year. If it is done right, it needs to be comprehensive. The worst thing you can do is look at something that superficially seems to make sense. It is not something you want to rush, but it is something we have major traction on. Think could orou should be done to improve the equity markets . In addition to a number of the areas we are talking about, whether it is conflict of interest, the fee structures, you have to look at whether things make sense or not. There are also places to get Greater Transparency. Also on what happens to your order. How is it routed . Who gets paid what . How are you getting best execution . Erik some of that is wrapped up in concerns over highfrequency trading, the maker take her model and the Pilot Program the sec has started about talked about starting . It will begin while you are the chair. Mary jo it will begin. Very pleased to see that get launched. The objective is to get the data, to see whether you can increase secondary liquidity for smaller businesses. Very happy to get that done. It will begin this year, as well. In terms of highfrequency trading, as with most areas we deal with, it is important to define ones terms. Are not aency traders monolith. They use lots of different strategies. You see studies that talk about the benefits they yield for the market. We are studying it very carefully. Engage in market manipulation, we continue to bring enforcement area enforcement. The automated markets and the highspeed markets it is not just highfrequency traders, Institutional Investors use that. Some risks come that we have to be constantly evaluating. Erik youve promised a rule in 2014 to address those strategies. Put in place or is that something we have yet to see well you are still chair . What is actively ongoing is the staff formulating a rule. We are dealing with areas of particular vulnerability in the market. Some of these strategies may be damaging to the markets and investors. , ak more specifically related point, will you approve plans for a consolidated trail, the kind of system that Everybody Needs to understand what happened during a flash crash or more recently on august 24 . Mary jo that is very high priority to get that signed and approved this year. I expect the commission will act on a notice to get that quite soon, actually. How about a fiduciary standard for Financial Advisors . Whatever the nomenclature or regulatory regime, they should act in the best interest of clients. We would do it under section doddfrank. The sec has been studying this because of its complexities, for many years. I think it is enormously important to proceed right on it. We want to see traction on it this year. To create the impression that it is something that is going to be easy. I certainly hope there is a proposal this year. Department isr going to put its own fiduciary standards in place. Is it not crazy that brokers are going to have to operate under two sets of rules regulating the same thing . That sounds like government mary jo coordination is very important. You see it over the derivative space where we need to coordinate with International Regulators to be at least as compatible as we can be. We dont have identical market spaces. We are independent agencies with independent statutory responsibilities. The department of labor has what is enormously important. Brokers are dealing with our rules and they are dealing with the Labor Department rules. That not a new phenomenon there may be different requirements in those spaces. Madam chair, securities lawyers have noticed a marked decrease in the sec Administrative Law courts over the past year. Why have they been turning more to federal boards to adjudicate cases when your success rate in administrative courts has been so great . Mary jo you take a slice of the statistics. Our success rate is quite high in district court. We lost some in administrative proceedings. Congress set up the administrative proceedings as an avenue for us to protect investors in certain kinds of cases. We certainly want to use that authority. We use both avenues. We have tried to increase the transparency of our choice process. Both systems are fair. They are not identical. Specifically, in a related Justice Scalia was trying to narrow the scope of Insider Trading courses. Death is his death a victory for regulators . Mary jo it is very hard to determine how the layout of the Supreme Court will affect regulation. It is an important decision. The impact has been less on our enforcement of Insider Trading cases than some of the commentators had envisioned. Anhave continued to have active Insider Trading program. That is enormously important. A ninth circuit case that will do with the personal benefit requirement is an important decision to watch. Erik you are a former prosecutor. The death of Justice Scalia will affect the outcome of that case . Mary jo we really cant judge that. There are a number of issues that could impact the thinking. Recognizingchair, all of the accomplishments you have had as chair of the sec and on this International Womens day, blazing a trail for other women to follow, what you have done and what you have done in concert with other regulators, i think it is fair to say that it is to attempt to change the culture on wall street and in the Financial Services industry. To what degree have you been successful . Mary jo i think much of wall street has been significantly successful, but there is a distance to go. Erik what to do . Mary jo changing culture is not an overnight or fiveyear project. When you are trying to change culture in significant ways is you change it at the top, you may even change it in the trenches, but you have a big swath of middle managers where youve got to make sure it is absorbed and lived. It is an enormous responsibility on the part of regulators and wall street. Erik a pleasure speaking with you. Stephanie, that is sec chair Mary Jo White. Stephanie thank you, Erik Schatzker. Coming up, we are going to talk markets and a whole lot more with carla harris. We are watching the markets. Down, down, down across the board. China exports are shrinking. Carla harris is with us. We are looking at worries around the world. How big of a concern is the china slowdown to you. Carla i think there is a lot more understanding this time around. I think last time i saw you, people were much more concerned with the slowdown and the hard or soft landing. People are starting to understand china a little bit better now. There is less uncertainty around it. I think we have had some good news. Inhave had some resiliency terms of confidence. The labor numbers have been good. We have had revised gdp numbers. There is still some uncertainty and you know my refrain is that the market hates uncertainty and surprise. I do think there is enough good news that will counteract some of the shakiness and concern around china. Where does the sources of concern come from right now . Carla there is a lot of uncertainty around what is going to happen in this political environment. Depending on who the winner might be, people dont know what that means for the market. There is some uncertainty. There are still question marks around britain and the eu. There are concerns about refugees in europe. Thered still argue that has been a lot more positive data in the first couple of months. Stephanie you have said that the fed does not want to rock the applecart, but do we know what is in the applecart . Carla we dont know everything that is in the applecart, but i think janet yellen has been Crystal Clear in her communication that is long as the labor numbers stay strong and there is no inflation, they will have a bias toward tightening over time in a measured flash and fashion. If there is data that suggests the recovery is soft in any way, they will retreat. Stephanie david, if carla talks bias . David as we start this discussion, even today in america, only 20 of all Corporate Board seats are women. You would expect to see a shakeup of the status quo with activist investors. Today in Bloomberg News, there is a piece from Stephanie Ruhle she took a hard look at what activists stephanie do with boards. David and i started speaking about this. One would think when activists are coming in, what happens . We talk about good Corporate Governance. The Peterson Institute did a survey of 21,000 publicly traded Companies Across 91 come to an countries. Companies with 30 women on boards and in executive positions are positioned to have six percentage point net margin improvement. When the rubber hits the road and we looked at these activists who have done the most in changing the composition of work reports. In the last five years, the five biggest activists have swapped 174 board seats. With lessfilled them than 7 women. At the same time, if you look at filled 446 board seats, 26 have been filled by women. When we have longterm views, we are making progress. Does it concern you that when the rubber hits the road, all of this flies out the window . Carl icahn, elliott, pershing, nowhere to be seen. Carla those are discrete people who have not observed all the data. The data tells you that the more diverse your board are, the better your performance will get. The National Womens Business Council released a report that talks about the survey of Business Owners that says we now have 10 million businesses owned country. In this today, it represents 8 million jobs. There will be greater opportunities that are not even counted when you look at the or 1000. 00 there will be more opportunity for women on boards assuming we continue to keep the pressure. That is where the jobs are in the economic growth. Stephanie that is because those women are doing it on their own. Andsquier follows activists says that they are putting the best people on the board and not slouches. Carl icahn disagrees. Onsays he does support women boards. There is a much Bigger Picture to consider. He said that he has worked with many boards over the years and has supported women on them. There is often this argument that women do not have the operational expertise or tenure. Carl icahn is putting 34yearold guys on boards. You cant possibly say they have the operational expertise in industry. Carla there is no question it would be helpful to women. As you see more women go into senior positions, that argument will become defunct. Who aree more women getting opportunities earlier to lead. Those who dont get it will hug the data. The more data that comes out that talks about the outperformance of diverse boards, the more you will see change. Stephanie it is not going to begin for women, it is going to begin for business. Are you listening . Carla harris, thank you so much. Stick around. More to cover here on bloomberg. Find fantasy shows. When it comes to the things you love, you want more. Love romance . Get lost in every embrace. Into sports . Follow every pitch, every play and every win. Change the way you experience tv with x1 from xfinity. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. You are watching bloomberg. I am having an amazing International Womens day, and the hits keep coming. To bloomberg. Thank you for having me. Stephanie Many Companies have had a tough start to your. How do you see this . Being below 20 level is a much more hospital condition for the ipo market. We have seen a lot of Short Covering driving the recent rally over the last couple of days. There is a lot more to go to fuel the market further. But stability in the market is really important for issuers thinking about tapping the market. Stephanie stable enough to come back and issue . Time need to see a of stability for people will come back. When the sectors that are out there waiting for ipos . Tech and health care for sure that we have a lot of technology and health care companies. But it is quite diverse. It is pretty broad. Stephanie when you look at what industries could actually issue, or as you advise companies, is there a place you say they are waiting in the wings . Defense on the type of investors you are. Different sectors have different preferences. But the generalists are looking for opportunities where there is a highgrowth element to the story, leaders in their sectors, good operating leverage. If it is technology, a good path to profitability. Ofid is there any concern valuations, as we have heard of down rounds where they worry if they have valuations, they will get a hit. Saw a more challenging environment earlier in the year, the down rounds were reflective of that as the market continues to stabilize and come back. We will see that reflected in ipo evaluations as well. Theres always the ipo discount to take a higher risk opportunity in the market for something that has had a public track record for some time. Years,ie the past few it seems the private market is where people want to be. There is more noise and people want to get out of those investments. Is that the case . Private rounds is also a liquidity opportunity for early investors. We have earlystage investors in the private road, we have later stage investors in private rounds. It depends on their objectives and priorities. Stephanie we always believed that these startups wonder to raise money and grow with the idea of going public. But others are saying, if you are interested, you better be here to stay. We did not hear that even a few years ago. There is a good amount of liquidity in the market. So this is not the only ability to raise capital. If the market continues to be robust, there is not pressure on companies to go public if they have a good axis. Stephanie and there is no accident. For investors who are annexes can you wanted to be with a favorable backdrop abounded, you want to be an ipo that trades well. Having conditions appropriate for that type of next step is really important to make sure that everyone comes up out of ahead. David how developed all those uncharted devices, because it was recently where you could actually get cash out. The banks are coming out with these devices to do that. The secretary to party in the e placement category can do that. David does that raise issues with the sec at some point but because they would rather have a public issuance with all the disclosures that are involved . No. I think the sec is focused if youre selling on a Broader Group of less sophisticated investors. A priority to make to sure disclosure is appropriate. The appropriate caveats are in place, so that investors know the risks they are taking. Stephanie does it concern you tech,ically intact, in that we could see investors that were not necessarily the stick sophisticated in those companies, and that is where we can see unicorns die . The points of unicorns dying, unicorns having down rounds, if you are ultimately going public and that is your objective to run the stock price even further, your investors will make out way. Stephanie i am talking about those who are just entering the party now, and saying i just invested in snapchat, and it is where . There are different marks of different weights in time. The opportunity to have a mark from a liquidity event is a sick gets moment. But that does not necessarily mean someone needs to sell. They may be having to wait for the progress of the stock price, and there is greater liquidity once you have an ipo. At the beginning that things are Getting Better in terms of the ipo environment. How good do they have to get, and what is going to determine that . Oil prices, commodity prices, things like that . Having more than a week or so of low vix is important to give buyers and sellers back together. That is what we see when we see fewer ipos. A reluctance on the part of the sellers and cautious risk aversion on the part of buyers. Putting those two together when things stabilize is a lot easier. In terms of the oil price backdrop the correlation between oil in the broader equity market is very high right now. Higher than weve seen in recent history. In theentum we have seen price of oil in the last few weeks has been a very positive tailwind for the equity markets. That will have a trickle effect on the ipo market as well. Stephanie do you hope to see that 121 correlation separate at some point, because equities across the board, not just those that are exposed to commodities. You do not want a single factor to drive such a large portion of the marketplace. When we start to see catalyst like the upcoming ecb meeting, the bank of japan, the fed, those are important catalysts for thinking about investor sentiment. The decline was so precipitous, so many are thinking about it. Hashanie if mario draghi more tools of his toolbox and can do whatever it takes you what does that mean for the european ipo market, because if we are slow here, they are even slower there and even slower in asia. How does this change the climate . The european ideal market has been a little bit more robust than what we have seen in the u. S. Bit less, have been a but importantly, the opportunity to road test and i feel before you formally launch it, that regulatory opportunity is a really significant do you factor in the european ipo market and its increases the odds of success when we launch a guilt because we know what investors are thinking, as we know how much they are interested in paying. David there is a real difference between the year between europe and United States with protesting. There any thought that might change in the United States . We are hopeful that it will print with it is an opportunity where we are seeing a divergence in the volumes and volatility of the ipos. That ishat as i eyecatching for regulators in the u. S. That we cannot access to the capital market. This is a clear, practical example for latest but helpful socialize and ipo storage ipo story. Nd ip stephanie what about asia . What is the climate like there . In asia about the climate is reasonable. Domestic Chinese Market we have actually seen, interestingly, very significant and offeringss getting done in asia, mostly centered on a domestic Chinese Investor base. Not as global a spread of investors, and friends and family are significant anger buyers that have helped those deals get done. Stephanie isnt that tough . Given what a strong presence Retail Investors have, it is strongo keep a ipo because they are so skittish. Would not seee Retail Investors driving the ipo outcome in in a market, typically. He will see them in the aftermarket performance with a try to catch the trade. David are you talking about listings on hong kong, or shanghai . Domestic shanghai. Sensitive is your business to the regulatory problems, the issues they have had . In terms of predicting ipo volumes in the diversity Chinese Market, regulators are in decisionmaking mode around how they will let certain ipo come through the pipeline. Has been very specific and with a certain set of criteria. Then they sent a signal they would open it up to a Broader Group, and now the trend is to go with a more controlled strategy with releasing ipos through the pipeline. It is in flux. Tophanie you speak investors and issuers every day. How big of a concern is there out there about a global recession . There are big names out there saying warning signs, we are headed in one direction, down. Other names are saying we are growing, albeit slowly. As witnessed by what we have seen in the equity markets very recently, the risk or the concern about the risk of recession seems to be a bathing among u. S. Investors. But it is very data dependent, and it relies on the Central Banks to think about what types of ammunition they are willing to use to help support the markets and to help try to avert recession. David you have mentioned the cycle begs several times. Looking forward to thursday, is easing good news, necessarily . It viewed as a helpful stimulus for the economy. If you believe that economy drives market levels of commitment that it is a very important part of the rebel in terms of supporting equity market. Stephanie we also say in times of volatility, market are frozen in terms of issuance. But this is a trying time for converts. Is a prime time for converts. It is thevertible opportunity to sell stock at some point in the future at a higher price while receiving proceeds today. There is an equity option that pen and aat to hap volatile times it is more valuable. Investors are finding this an interesting and attractive financing alternatives. Stephanie and right now youre talking to issuers every day. What is the will of they face . Is a lot of choice. There are different markets available at different price points. Even though we a good about the challenges in the headwinds and the various security markets, there are a lot of opportunities. Would we about the nature of the dialog we havent issuers, it is walking through the different channels. If you are a company that was to go public, you might be looking privateic market if it does not line up. You want to look at the opportunity to raise private capital rather than selling shares of the parent company. Stephanie you are officially cautiously optimistic, i feel like. I am. It has a opportunity to build on itself. We are seeing utterly Short Covering, but a shift in long shift in momentum oriented names that have less attractiveness in their value versus the lord down value names versus the more beatendown value names. Themetals mining, where values are pretty interesting if you believe that we are not hesitant to recession. We have seen a lot of increase of trading on our desks in those sectors, and particularly in the Energy Sector to Fund Companies getting back to a more stable balance sheet. Stephanie financials are a different position. Balance sheets are available compared to 2008. We have very good success bringing capital to public emp producers and oil filled Services Companies that are looking to recap what is the balance issues. Maybe they are under ratings pressure over overall feeling the pinch of the environment. It has been very helpful for restoring help to the sector. It does not mean that every company has access to the market. We are looking toward success for Companies Whose Balance Sheets are not at the shipping points, and who have attractive geographical prints. Stephanie she nailed it. Much forank you very being with us. A terrific conversation. Hearg up next, we exclusively from the ceo of Digital Asset holdings. She will talk about the Technology Business and the applications on finance. I am here in the green room. Coming up, special guest to the show. Scarlet fu takes me on in battle of the charts. You do not want to miss it. Here you see futures down across the board. Guess what, i sat down exclusively with blake masters, the ceo of Digital Asset holdings, farmer the head of Global Commodities at jpmorgan. I asked her about the challenges her company is facing, the applications of block teambased technology, and how she has been partnering with her alma mater, jpmorgan. It is good to be working with mater, good friends, former colleagues. Jpmorgan themselves have identified this and other areas within the Financial Technology space as a high priority for them. They are rational in the sense that they are pursuing this because they see significant is this benefits for themselves and ,y extension, their customers and to an extent the regulators. One of the things that we feel to talk about is the extent to which the technology has the opportunity to improve transparency from the perspective of regulatory oversight, which is an important objective for regulated funds. Stephanie you see regulation as an ally to your type of is this, not a hindrance which it is for banks . It is very much a catalyst. Many things ins the context of Financial Services. You need to think about the regulation of markets themselves, the regulation of farms from a potential point of view, the management of the financial economy Systemic Risk control issues. Se are all disparate different aspects of regulation. What is interesting about technology though, is in many respects it is helpful to all of those. For us, regulation is very often a driver of the kind of change that technology can facilitate, and comply with regulation provides transparency, realtime access, those sorts of features that have not been possible using traditional infrastructure. It is driving interest on the part of both regulators and they regulatees. Hashanie jamie dimon expressed interest in this. Have you considered selling to jpmorgan . Argue that the benefits to this technology is greatest when it is adopted by more than one party. It is part of our tragedy that the technology we are developing , is at least important being in the open source community, available to multiple parties, including to our competitors, to build solutions. The reason we are doing that is to promote the chances of standardization which makes the prospect much less risky. Multiple uses of the same infrastructure, which is more appealing than the idea of proprietary technology within the organization. Stephanie if not one of your clients or partners, why not to a Massive Technology company . N aboutbbie has spoke the this business. Would you sell to an ibm . We are not focused on selling at the moment. We are fixed on building a business, to become profitable and deliver the products that we promised to deliver. What will come after that, naturally is the process of growing the company, and is growing the Company Requires soliciting capital for what are other sources, we will do that. But the big challenges execution. Adoption and execution. You mentioned ipo is a partner of us, but as an investor in the company at a product partner with whom we are working on other projects including the opensource work that i mentioned earlier. To workhe opportunity closely with Big Technology giants such as ibm, who have a significant amount of the zs of the space. Now we are working on execution, delivery, and working on making it profitable company. What else is the future will come when it comes. David that was blind masters, ceo of Digital Assets holdings. We have a special visitor for battle of the charts, coming up. Stephanie Battle Royale time. It is International Womens day so i called in some females of work. The best. The woman who most charts better than anyone in this joint, the one and only scarlet fu taking on matt miller for todays battle of the charts. Matt i feel like i cannot wait on International Womens day. Scarlet here we go. The white line is usm, the etf that tracks crude oil prices. The blue is the market cap of u. S. The white line, oil prices peaked in 2000 and went down, down, down. Market captanding, went of the 2019 and then went back up again. Why is that . Of shares outstanding has increased, and that is a measure of demand for the etf. We do not know exactly why, maybe people want to short the etf, or go along, but it is an increase in speculative position, and this matters the lastn analyst says time it happened in 2009 when well prices are a lot of humor there was a lot of demand for that etf nine. If you are looking at this increase in market cap, that is probably when oil prices are bottoming once again. Stephanie genius. David some people want to play more. This i was going to call the stephanie spread, but i thought that was inappropriate. Stephanie yes. Matt they think that john is that a junk bonds are a great opportunity because the yields that they provide. Barclays highyield index, 8. 5 compared to the Free Cash Flow which is 5. 6 . The cool thing is, pimco did some work, and they took out energy as miners out of the high yield index, and showed that appreciation are still 3. 5 times dividend payment. They have great earnings to cover all of the dividend play payments. Stephanie scarlet, scarlet, scarlet. David im going with matt. Stephanie International Womens day. Identity double votes. Scarlett will win. We will be back with more. Stephanie a slump in chinese exports putting the brakes on a global stock rally. Government bonds surging thanks to demand. Isormer Goldman Sachs banker said to have been subpoenaed in a u. S. Probe. We will have the latest. And great guest this hour as part of International Womens day. Several companies will join us. We are all about 30 minutes from the opening bell here in new york city. I am Stephanie Ruhle, and this. S David Ferrell welcome. Also with us, one of my heroes, bloomberg editor christina harper. Lets get you the first check of the markets with julie hyman. Julie continuing on our ladies the this morning, we are seeing declining features across the board as we have been talking about throughout the morning. Export data out of china, gdp data out of japan, on the committee to selling around the globe. Not super steep in the u. S. , it should be pointed out. We are oil prices because if there is any mitigating to the decline in stocks, it will come from oil, which are of the gains in the u. S. Stock market yesterday. We have the weekly inventories report coming out tomorrow, so there is a little bit of optimism going into that. Overall, there is more of a risk off feeling this morning with the selling that we are seeing a global stocks. That means that we are seeing buying of socalled safe havens. We have the 10 year yield coming down, if there is money going into the treasury market, going up to 1. 84 . Before buying gold once again. A little bit of a rebound once again. In terms of other things we are watching, i want to bring up on my Bloomberg Gold etf fund inflows here. Just like we heard scarlet talk about demand we are seeing for uso, theres also a lot of demand for gold right now. We are seeing is evidenced by the gold price going up. We can also look at inflows into the gold etf, which have been going up and up with demand for that. I also to take a look at how the miners have been doing on a relative basis. We are looking at their performance versus gold itself. This is something that caught our eye is Something Interesting here. This is an index of global miners, and this is an index of other types of metal juicers, and then here is the s p 500. How miners has done has outpaced the underlying metals, and outpaced gold. Granted, they had been down more, so the magnitude of the rebound is larger coming out of that. But it is an interesting phenomenon year to date. Matt you can go ahead and put in a oneyear chart, or even three years. Julie exactly. Relative underperformance. But if you bought miners at the beginning of the year, instead of gold itself, you would have done better. But if you bought it a year ago, you would have done worse. Lets get the bloomberg first word news. Ramy thank you. The first attest of the white house, and the possible stop trying movements. Trump movement. Meanwhile, democrat Hillary Clinton liens of michigan, but polls that show that Bernie Sanders is still doing well with younger voters. Appealing apples with a apple has win in a court battle about unlocking an iphone. And it was just one year ago that chinese president xi jinping threatened to punish looters with an iron punish air polluters with an iron hand. That is evidence that loosening. The problem is tensions between environmental growth and others. Back to you. Is time now for three stories that matter to the markets. The number one story, chinas exports slump deepened in february, dropped the most in almost six years. After earlier declines, the shanghai composite down a smoking for the day. Came out with a small gain for the day. It strikes me that we are so fastened on the china numbers. It is interesting to be the disconnect with the voting public with the u. S. You have this incredible support for donald trump was saying lets cut off trade with china, and meanwhile mr. Market is saying we will focus on what is happening with china. If china is not doing well, we are selling. It is interesting how much our ourune are charged fortunes are ties to china, and yet voters are saying lets pretend we are not. David yes, the markets seem to be divorced from the political process. Stephanie apple has risen the last few years that the market has gone up. There are others who have been left out of this. But on some of them, theres pensions or 401 k s that have apple stock in them. Any 401 k . Actor of , theu look at bond yields effects that japan is having. Matt the main disconnect is the people who are voting for donald trump, are angry that they have taken those manufacturing jobs, not that they want to work for two dollars an hour building iphones. Investors are more concerned billion, 3 billion people who can buy our products. There is a different view as to what is going on in china. If the chinese gdp continues to fall, the Chinese People are not moving up in the middle class as quickly as they code, and there are fewer of them that are going to be available to buy our iphones, our cars, what have you. That is the concern in the markets. And there is a legitimate question of what is good for capital be good for labor. Shareholders in these committees have lots of these trades, it is not always good for these workers. Stephanie number two, treasuries are rallying after that traded deal. The 10 year yield dropping further into negative territory. Yield plunging to a record low. The u. S. Will in fact avoid a recession. We are hearing that more and more often. Year, beginning of this the climbing a wall of worry, more and more investors thought thought leaders were say a recession was imminent. And as we see the vix goes down, as more and more data comes, and ecb does begin to stabilize, more people are saying global recession is off the table, things are improving. A low 30 year bond should be market,r the housing cheap cost of capital will be good for these energy companies, and other companies that are having trouble in the markets. That is all good. , wehe other hand, for banks have stories about how japanese banks are struggling with these negative yields. Obviously for there are winners and losers when you have this kind of environment. David i wonder if the larger story might be the limits of Central Banks on these economies. People buying the bond as they go to the negative. Because of that fear of recession. David exactly. Rather than going to risk assets, they are putting them. Theie where are they european makes way to make money . Right now they say in the private Wealth Management business. But that is not enough good when you look at european banks, and look at where is the growth potential, it is unclear when you are facing negative rates. David absolutely right, but there was a story just yesterday about the danish banks. Matt hillary has that chart. David they have had negative Interest Rates lower than anybody, and they have actually pretty good banks in denmark. The Interest Rate differential that makes someone a, that interest margin, there are also fees. Advise clients on how to manage their assets, but there are also other fees. Matt if you look at shares, they continue to rise even as rates go negative stephanie. Stephanie when they have a smaller scope of businesses they are in. Theyyou look at others, have a much bigger crosssection of businesses, and a high watermark to get over. They are in a much more negative vertical. David fair point. Apples and oranges. Matt if you do want to see hours chart the chart, here we go. It is a very small market, but the share price of the bank continues to rise in this environment. The positive news, here we are in a market environment when were getting back to fundamentals, and were out of the momentum late which is what we have seen the past two years, everything headed in one direction, we have seen a true bifurcation among banks. Number three, remember yesterdays spike in iron ore . They say the commodity rally that is a false start that is set to fizzle. Short theod time to metals. A spike earlier, and weve come down to a drop, but gold is saying across the board, copper, aluminum, iron ore, and and insane surge yesterday which people do not expect to hold. Tephanie all down at least 5 but over the last seven days, they are up 30 , 24 . It is a gain of massive volatility. Matt i think the miners are more volatile did the volatile than the metals themselves. David it is not that there is more demand for these metals, it is whether you can get the supply offline . Convictions on the lines, and cut back . We have seen big asset sale plans and job cuts by the minors. That is what were trying to do, but can it happen in time to affect the prices . Matt with the exception of gold. Gold is definitely an increase in demand. Central banks go to negative rates, volatility increases across asset classes, the zero hedge crowd is out there buying gold for sure. Stephanie what does that mean . A website iro hedge is like to look at. Fantastic stories. But there is a lot of conspiracy theories, there is a lot of things they say that the numbers with. Aligned i appreciate those, but not as much as i like Bloomberg News stories. For you, what is most important thing you are focused on right now . We have a great scoop from our team that covers Financial Crime today about him leister being subpoenaed by the u. S. Justice department, which is investigating dealings around the malaysia fund. We like that so much, we will come back and do a whole segment on it. Matt and it is International Womens day. A great piece of datadriven journalism about how few women. Re the two boards by activists those are all stories that matter right now. Christine harper is going to stick with us to cover much more ahead on bloomberg. Morgan stanleys head of m a for the americas and vicechairman of investment suzy weighing will onn us, and other guests International Womens day. Ramy you are watching bloomberg. In london, lawmakers are accusing think of england governor for jeopardizing rates in the European Union. Upon his essay he is signing with those who want the u. K. To stay in the eu. Carney is rejecting the suggestion that they focus too much on the purchase of membership. United continental, shareholders are fighting to change the board. Their nominating six candidates this spring. They are frustrated with the airlines performance, and they are blaming the current board. And owners of Small Businesses are less confident in the u. S. Economy, according to the National Federation of independent business surveys. Small businesses the last month to the slowest reading into years. Six of the 10 indices that make up that report declined to grant that is the Bloomberg Business flash. Over to you, julie. Key market rumors, including shake shack, falling by 9 . It looks like an is a bumpy ride. The company saying the 2006 comparable sales will rise by 3. 5 , but the 2050 were up by 13. 3 . This is the reiteration of a forecast the company has already given. Nevertheless, there was hope that they would be taking it higher. 323,riceearnings ratio, only about 27 for the s p 500 restaurant index. Priced evaluation, and slowing growth. With consumers, lets take a look at retailers that are out with numbers. Urban outfitters beating estimates. They had come out with comparable sales that were ahead of what analysts anticipated, so they are rising. Dicks sporting goods, falling and missing estimates. They are blaming warm weather among other things. Analysts say that takes should stand to benefit from the bankruptcy of sports authority, but that has not materialized as of yet. Finally, a vivid solar had agreed to be acquired, but a number of different shareholders were fighting, including the number three holder of terraform power. He did not think it was a good deal. Terraform was going to buy some of the assets as a part of this deal. Matt some of that is worth less than 1 million. We love mrs. Stock, because it is so volatile. Funds onlot of hedge it, including david einhorn, but now this acquisition is not happening. That it is a little bit higher and lower. That is an average daily move. Matt i miss radioshack. Stephanie they have not gone completely out of business. Nick cannon is the new spokesman. Julie a former Goldman Sachs banker to malaysias investment and has been subpoenaed. We will have the latest on that story coming up next. David this is bloomberg. Therefore Goldman Sachs banker with subpoenaed in the investigation of the malaysian state investment fund, where they are deceiving whether those have been misappropriated. This is quite a story. I did not know that the department of justice had a it is a great title. It is a complicated story, and goldman is in the middle of this story and so is tim likes her. If you go back to how this started, Goldman Sachs raised about 6 million for the malaysian government linked investment fund. That goldmanfunds raised went into the fund controlled by elijah, champion by malaysian Prime Minister. David and the purpose was for Development Projects by the Prime Minister, legitimate developments. Yes. What happened is that all of that money went into the fund, and we started getting calls that the fund was getting mismanaged, that mysterious funds were showing up in the Prime Ministers bank account. There are multiple investigations, including the department of justice, figure out what happened, and if any of the funds were misappropriated by malaysian links political figures. Winds the department of justice in the United States of america happened care what happens to a Sovereign Fund . David a lot of money showed up with expensive apartments in new york city. So because they are driving a real estate follies, it is important to the doj . They have two runways they can establish how they can get into these investigations. One of those is that if the money is moved through a u. S. Bank account. I cannot confirm that here, but it is likely. And one other aspect, when the bond deal originally happened, goldman got ridiculously high fees for doing this bond deal. Stephanie what is ridiculously high . It was a sovereign backed fund, so it was considered safe credit. The number on the reports 500 million dollars. At the time, and even now, that is significantly higher than usually seen for those types of bond deals. David we do not know that goldman has done anything wrong. Right. The expiration of the time doing took a lot of risk this deal, because they wanted it quickly, and by doing it so quickly goldman was on the hook in case something went wrong. That could be a legitimate explanation, but there was a lot of questions raised at the time of the bond deal, and now the fact that he is david i thought this was a default . Basically what you have is the Prime Ministers political opponents saying this fund is overly indebted, it is missing payments, and your mismanaging this and the economy. His opponents would in his head was going on with this fund, and that has triggered a global rollout of basically how is money moving in and out of the . This . Was the conduit for they were the investor for the bond, but that does not mean that it had anything to do with the underlying issues that we are facing here. Matt so lets talk about tim for a second. This guy, people say he has been subpoenaed. But he moved to los angeles to get married. Did he move there before after these issues started appearing . The investigation has been going on for some time. But he left the bank, basically ed for personal reasons, and that he moved back to the u. S. Stephanie a nice story. Thank you, thank you. We will be back with more. And m a slowdown. Stephanie you are watching bloomberg on International Womens stake in it we moments away from the opening bell. Here with us now is the head of m a for the americas, and vice chair of investing at morgan stanley. Welcome. So much talk of m a in the last year,. Given how volatile the markets are i hear the bell ringing. In the boardroom, they are talking about fundamental gains that drive the fundamental strategy. They are talking about where do i get growth, mi in the right market majority to be in a different geography, how do i optimize my product or service . Matt unless the bottom has fallen out in the commodity market they operate, right . Must who operate with oil be talking about volatility when it is trading at 25 a barrel oneweek and 35 a week later. People are talking about how long it will be in the 30, 40 range. People are trying to figure out what do i do if this is a longerterm scenario. Stephanie Widget Company start to get real in terms of how tough things are in the oil market . Companies have this moment when they say this is what my real valuation is, and it is time for a little m a . Industry, people are trying to understand with the market is going to do, and trying to understand what the new normal is. I cannot tell you when that is going to be in oil, but i certainly think it will be watching it. As i said, i think people are going to be proactive about making sure their own businesses are working well first, and i think they will be focused on what is the longterm view, and not just what is it today or the next three months . Stephanie a quick look, the markets are open. I only like to go to you when they are in the green. Julie sorry to disappoint you. [laughter] nothing goes in a straight line. Facing declines once again. That is the pattern we have seen. Upside on on the certain days, but on the days we have seen a down, it has been a big drag. I want to show movers we are watching. Airlines are coming off their february traffic numbers, and were mostly seeing a downdraft even after some of the numbers were fairly positive. American airlines about 4. 7 . Southwest about 13. 5 , and yet we are seeing some declines, some of these numbers worse that hadnt been estimated some of these numbers worse than had been estimated. Matt some are forecasting a drop of 4. 7 . Julie exactly. That explains that, but does not explain the other ones. We are also watching them into stocks, including commodities related ones. We see a rebounded commodities that is going in the other direction today as we are a little more risk off. Example ofis a good that, southwestern, and copper and gold as well. I am looking at the rate of change for the chesapeake stock, how volatile it has been. Moves untilnot huge we have got him into 2016, and then we see enormous daily swings for this stock. If you look at any of those, southwestern, Freeport Community a chart freeport, you would see a chart there. And oil could not sustain those gains, resuming the decline. No hot for now, when it comes to the stock market. David thank you. We want to go down to the nasdaq and abigail. Thank you. Is down a 10th of 1 after it snapped a poor day winning streak a four day winning streak. With all the volatility, it is better to be prepared. This,ock that is bucking beating quarter estimates by 8 . The ceo Urban Outfitters says he is pleased by the companies margin improvement. Positivest says he is on this improving margins story, hoping to explain the stocks big turnaround in 2016. Stephanie thank you. I want to go back to suzy from morgan stanley. We were talking about the m a climate. Given the volatility, do we see an uptick in 2016 . We know we will not see it in other markets. There is a chance we will see less volume this year than last year. Volumeknow, the deal from transactions was relatively flat. It is still early days, but the first couple of months activity has been a little bit off. Dependent on big deals, and there has been fewer big deals and these months. It is at or higher than the levels we saw in 2013, 2014. It could change. Matt i have the chart here. It is such a wealth of information. You can go to the timeseries and see if broken down annually. What a strong year 2015 was. It was a lot higher than the last record in the last decade which was 2007. Stephanie is this a fair haveent to say that we seen a slowdown this year. Utcause of volatility, b because last year was so massive there is not that much more to go around. Especially in biotech. But especially there, they are looking at each other and all looking for the right portfolio, the right technology, looking for growth. Those things have changed. It is difficult to take anything away from there being a little less volume in the first two months because last your there were six five deals over 10 billion. These big deals can move the volumes. It health care you will see activity. David you have said repeatedly that growth is the issue. There are several ways to grow, one is topline, the others to save costs, or increase productivity. How much of this is a matter of saving cost . Some of it. That is the benefit of consolidation moves. I tend to think of it as a list of eggs that hit the bottom line a list of things that hits the bottom line. I think that is part of it, but only part of it. David you can see your competitor making a merger, so the better be ahead of be game. This is a key issue as part of what drives health care. People are looking to do deals and come up with the right portfolio for the future. That does not mean that every deal is the same. You want to do the right steel, and that is what you saw an uptick in unsolicited situations because people want to pick the right target. It is less about he did a deal and i need to do a deal, and more about i have my eye on the rights targets, and i want to make sure i get that target. Sideanie on the private we see more and more tech Company Valuations go down. Is this a year will be will see more m a where we will see more m a there . I think it depends on the company. I think you you are a company that has a big launch comin g, and you do not have the capital, and you cannot prosecute just been targeted for the last two years, that may make you more alterable. More alterable. E vulnerable. David two stephanies point, there was a time not too long ago, where the thought it was if im not doing well, others will buy me. That seems to have changed. Are there fewer acquisitions like that from the big guys . , butam not a tech expert my sense is that companies see a path to becoming more mature on their own, and so even if you were going to be bought my people want to be bought at the right time. Any moment of strength. Matt what about the funding side . You said there is a lot more right of funding out there. Is this a good way to find it . I think theyre looking at help heal, which you would expect if youre looking at a private deal. Matt the 10 years down at 1. 8 , we have seen negative yield in sovereign overseas. Doesnt that compress the spread a little bit . Healthy is relative. Relative to other yields, if you are providing private money. David we have seen the Point Exchange rates really fluctuate. How does this affect your business . Frankly i think the fx conversation is really in the board room. It is about how it affects your own business. People are looking at their own business and saying if the dollar moves, what is that mean for my bottom line . That is more of the conversation then and m a conversation. Buyers arese becoming a big deal in this space, in m a. They obviously want to be big players. If they continue to see a weakening u. N. , that makes it harder, although we have seen strictly the last five years seem strength for the last five years. There are chinese buyers, they are a big deal. I do not hear a lot of conversation about the exchange rate. I think they are driving for longterm portfolio growth. Theyre looking for please get in the u. S. And europe. I do not think that is going to be a main issue for them. Stephanie youre talking about longterm decisions in the border. We have a story about activist investors. Active as have often blocked companies from making longterm decisions, forcing them into a shortterm environment. Rhino willian 20 of companies with women on the board right now we only have 20 of companies with women on the board. And as activists continue to put less than 7 women on the board. What do you make of this . When the rubber hits the road, Corporate Governance seems to go out the window. I cannot be to the activist. I can tell you that my clients are looking for the right women to put on the board. They are believers in diversity in the conversation. And morgan stanley, we are trying to make sure that diversity is something we get right. The board room or idea generation in our own business, we are very focused on that as a macro topic. But what is interesting about women in management, you have to look at individuals. It is not about quotas and numbers, but it making sure that when you get an individual who is talented, that your coaching, tori, guiding the person have a longterm career. Stephanie so do these never surprising . So do these never umbers surprise you . You cannot have too many board memberships as any single person. That is something everyone looks at. So it is a question of getting the right people out there. Stephanie there is one Corporate Executive who definitely entries. Heres what she had to say. This day and age we should have more women in key leadership positions the weather does government, business, academia. Women represent 50 of the population. Im a big believer in diversity equaling innovation. Gender, i mean nationality, but i most importantly mean innovation comes from a diversity of thought. Boardroom, i know this, i am on the board, you want more diverse perspectives, more diverse experiences to advise you to help represent the shareholders because that is where the world is going. It is felt more input, not less. , when you in practice see more and more proxy fights, and the rubber hits the road, the numbers are not there. I think really, at the end of the day, asking ourselves is this person goes, not our they like me, but are they good . Making it happen at morgan stanley. Thank you for joining us, su sie. Next, the first woman to head a firm. Youre watching bloomberg of. Go. Erik matt this is bloomberg. I am in the green room. Tomorrow, do not miss her conversation with wilbur ross, founder and chairman of wl ross. It is my pleasure to welcome kathy ingle martin, the first woman to lead in a consulting firm. When he took over, you announced an Initiative Plan of adding headcount. How are you doing . We will hire 25,000 people in this fiscal year. David 25,000 . Stephanie to do what . Ouro work in all of businesses. It to work in our auditing iness demandtec business, auditing business, our tax business, these companies are transforming and we need to help them. David is that 25,000 net or gross . Net, ande high 18,000 we have an apprenticeship model where we are the future into Corporate America for a lot of a lot of as well as different angles of transformation. Stephanie is the reverse happening now, because most wanted to be senior bankers on the street. Headcountsing those and will they pay what banking used to pay . We are private partnership. In thelook at this workforce today, they are looking at purpose, value, and profit. Theyre looking at a triple bottom line. It is the dynamic of working for a company that has Diversity Inclusion as a big part of what we are doing about health and wellbeing a big part of what we are doing. Attractive model for the millennials, especially business majors, arts majors, stem graduate. Stephanie when you look at a or ibm, they have a hard time because their names are not interesting. That was really attract young innovators does this really attract young innovators . Great question. We have a look of we innovate. We not only innovate with technology with digital and ciber, but we also innovate and talent. Trying toays known to tell an engine and make sure we are attractive. For us it is we can attract the best talent, it is retaining them in our model that we are working very hard on. David explain to me how this works. I think of you coming to audit our books. Does the ceo turned you and say helped me digitized . Absolutely. David what do you supply in that . We have an end to end Digital Solution we just announced. An end to end solution. It is our auditing, and accounting, and tax work that allows us to go in and talk to se ceos and help them transform. Whether it is Human Capital whether it is in supply chain, whether it is digital, whether ciber. Cyber. Stephanie when market volatility is what it is, when they are under pressure of activists, can they make longterm decisions . An absolutehere is economy in 2016 about investing for the longterm and shortterm. If you think about data and Companies Using the data, 90 of the data out there today has been created in the last two years. I heard this analogy, would you drive down to 70, driving 100 Miles Per Hour with mud on your windshield . That is what we are doing now. You need to be nimble. Companies need to look at the longterm. This is the hardest part about being a ceo today, via the choice between the shortterm and the longterm. Stephanie does the shareholder allow him or her to invest and hire you . Patientsneeds to be out there as a relates to these longerterm investments. We included the pace of change, and technology allowing the fusion of this physical and biological world. Because of this fusion, they have to be patient. David you have been a ceo for about a year. What is the Biggest Surprise . The choices you need to make for the future. They are not shortterm, they are longterm. David for you . For us and for other companies. Five years ago we would not have thought of digital is something we wouldve been in. But None Technology is a big part of our business. But now technology is a big part of our business. Be able to change, the Fourth Industrial Revolution that was talked about at the World Economic forum, the internet of things, connected cities, connected cars, connected homes. We all need to be ready for that change. That is the hardest part, how do you make those changes, and drive sustainable profitable growth in the future . Matt fascinating stuff. Thank you for joining us. Vonnie quinn joins us for a look at what is coming up at the top of the hour. What you have on your show . Andormer ecb board member current chairman will be to us will speak to us about the meeting taking place. Also, the state of banking, we also have the ceo lending club, and lending tree in the 10 00 show. Stephanie thank you. More bloomberg is next. David now for a look at todays conversations in got a go. In certain talk circles in the campaign about military force, where we use it, what would we do . But truly building these coalitions is what is required to bring about Political Solutions. There is not one on the global stage that can be told by the barrel of the gun. There is a lot of uncertainty out there broadly, whether his Interest Rates, while prices, the election. We are cautious right now. There is Nothing Better for the ipo markets them to have the vix trend downward, to be below the 20 level is a much more hospitable position. Changing culture is not an overnight or five your project. When you are trying to change culture in a significant way, jamie at the top has been enormously successful. Changing at the top has been enormously accessible. You have a swath of middle managers where you have to make sure the message is taken in. They should decide for themselves what a fulfilling life is. Many people want to be there to care for their children, care for the elderly. That is fantastic. Many will also tell you they are felt with fulfilled when they get to work. We just need to make it easier. Stephanie there you go. I need to make a correction. Carl icahn was said to have it is ad to women, and correction, zero women. We will see you tomorrow at bloomberg. Find fantasy shows. When it comes to the things you love, you want more. Love romance . Get lost in every embrace. Into sports . Follow every pitch, every play and every win. Change the way you experience tv with x1 from xfinity. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. It is 10 00 a. M. In new york and 11 00 p. M. In hong kong. Bettyonnie quinn in for liu. Mark i am mark barton. This is bloomberg markets. Vonnie we take you from new york to london to paris. We are half an hour into the trading day. Aftertocks are climbing their longest rally since october in the s p 500. Economic headlines out of china are dragging down global stocks again. Mark bank of England Governor Mark carney defending himself from allegations he is trying to influence the brexit debate. He says it is his job to lay out the economic implications, but u. K. Lawmakers say they are he is jeopardizing the Central Banks credibility. Voni