Transcripts For BLOOMBERG Bloomberg Go 20160510

Shaping up for a second day of gains. Futures positive of 65 points on the dow. Overall it seems like market this morning. Theda lets go around world for indepth coverage of our top three stories. Robin ganguly is in hong kong. Matt miller is here in new york. And Francine Lacqua is in zurich. Lets start with francine. Why the big jump in the stock this morning . The jump in the stock is basically because we had earnings that were not great but they were better than analysts thought they would be. Theyre trying to execute the strategy unveiled in november that he had to update in march when things got uglier when he thought they would. Execution andout costcutting and targets. This is not a great set of results but they are going in the right direction. The ceo said this means they are doing better and they are happy with the progress. We are pleased with the results. If you look at what we are trying to achieve, the growth divisions, switzerland, asia all had a really good quarter with Strong Influence and stable or increasing margins. Not only did we grow but very good quality. When you look at that share price reaction gaining almost 6 . Before the market opened Credit Suisse losing some 38 the most among european banks in the last 12 months. Amanda he remarks that this is a bit of a comeback after a difficult last quarter. E said it feels fragile how are they coping with market volatility . Worryne this is the main that the Investment Bank that has not been able to code volatility will have to take more pain. I tried to get his sense on china and world growth. He believes that it will get better but he didnt want to take a very strong stance on it. Overpromiseant to and under deliver. He wants to do the contrary. He said he does not expect the market to go to hell but he would be very prudent because of lack of liquidity in the market. David there was some china data that came out overnight. The Consumer Price index rose for a Third Straight month while the Producer Price index fell 3. 4 . For a closer look at the numbers we go live to Robin Ganguly and hong kong. What does it tell the chinese authorities about what they need to do in the economy . This is a cpi growing at 2. 3 for the third consecutive month. Pbocs far below the desired target rate, it does ease pressure on the central bank to ease Monetary Policy. We had data over the weekend showing exports climbed as well. This does give chinese authorities more room to act and less of an urgent need to cut Interest Rates again. David that number is still below their target. Isnt that right . Yes. We had a growth in fx reserves probably the market took it to dan that the components appreciated a fair bit against the dollar. This is all against the backdrop of the dollars worth quarterly performance in several years. Data dewpoint at certain do point at certain stabilization. David one of the numbers that jumped out at me was pork. What is that about . The cpi is often referred to in china as the china paiig pork has a pretty significant role in cpi. Nobody is really sure what exactly the components are but i think they increased about 7 this year. They did play a role in cpi. David thank you, Robin Ganguly from hong kong. Jonathan equities rolling over just a touch. Investors in the United States and beyond, a big earnings day coming. Allergan earnings coming up. , just waiting for them to tick across the screen. Earnings should be about 30 below what they were last year. Revenue down about 6 compared to last year. Looking for about three dollars per share. And about 4 billion in revenue. We will watch for any headlines about allergans spinoff of its generic business. Our Analysts Expect that to be approved by the ftc. Will watch that stopped. Its down about 30 year to date. Disney is another one we will watch closely. Very little change in the premarket. Just about even so far this year. It had a big drop in january and february and has been climbing since february 12. Disney is expected to show growth in earnings and revenue. The surp show you function. You can expect them to surprise. We have seen what they have done in the past quarter. Disney has surprised in 19 of the last 20 quarters. You dont know whether shares will react positively. Even if you get a positive surprise more than half the time you are getting shares actually fall on earnings day. Take a look at disneys earnings across the past 20 quarters. All of the green flags are positive surprises on earnings. You see a big drop in the share price after the earnings are reported. David we are looking for movies on the upside. They have had a couple of big blockbusters. They also have the jungle book. One. He marvel matt jungle book will be in this Current Quarter. David and we will look at espn on the defensive side to make sure it is not going down. Those will come out after the bell. Jonathan vonnie quinn with some first word news. Vonnie in canada, 90 of the city of Fort Mcmurray survived the massive wildfire. About 2400 structures were destroyed. The fire forced 88,000 people to flee and they will not be allowed back for at least two weeks. A german train station was probably politically motivated. An attacker killed one person in aounded three others town about 25 miles southeast of munich. The suspect is a 27yearold german. Witnesses said he yelled god is great in arabic. Congress could pass a bill to help puerto rico with its debt. The bill would crte a control board to approve puerto rico spending and restructure its debt. Week the islands Development Bank defaulted on 370 million. Im vonnie quinn. Suissen up next, credit enters the least ugly contest. A Second Quarterly loss. Not as bad as expected. We will hear from the ceo and his plans to turn around the swiss bank. The interview is next. Up 4. 5 . K of jonathan this is bloomberg. Credit suisse posted another quarterly loss but shares arising after the ceo, Tidjane Thiam said he is confident. Francine lacqua talked with him and joins us live with more from zurich. Its the classic least ugly contest. Its not as bad as some investors thought. Francine thats it. He was confident about the future. But what they came out with in march was a little bit distraught. They had to cut back on some of their outlook. Today there are no income was smaller than their net income was smaller than expected. He says everything is on track. There doesnt seem to be anymore capital raising. Overall he seems confident about the future but didnt want to be overconfident. Here he is. There wasnt there was a time in january and february which were very bad. March and april were better. March and may are showing some positive signs. It is always difficult when you are in that position. We still remain cautious in terms of outlook because it feels fragile. Sentiment feels fragile. Francine less volatility . We are not ready to make a prediction on that. Hopefully. But the market is very sensitive. There is not much look pretty. We have to see how the Second Quarter unfolds. Francine so it will not be easier to make money in the markets. Not necessarily. There has been an improvement. We look at things like our ipo pipeline, it is very strong. There are spots where we see strength but then those areas. Volatility around china and numbers coming out. Francine 6000 job cuts this year. You are on target . That was the target and we have done 3500. At the end of the First Quarter. We think that is progressing at that pace. We have the target of 1. 4 billion for 2015 of net savings. We have already done more than half of that. We are confident we will hit the target before the end of the year. I am always sorry to have to talk about job losses but its a price we have to pay to create the platform we want for the future. We dont believe in the boom and bust model. With great years and terrible years. We need a Strong Capital base. Income relatively stable streams. Something maybe we dont talk about enough, Good Business conduct. Good compliance. Healthy growth so that we protect the reputation of a bank which is our most precious asset. We really think about serving our clients and making sure that they are happy. About thealk connection between private bank and Investment Bank. We need 4. 2 billion of net flows in asia in the First Quarter. Referenced to pb. People who know our Investment Bankers say why dont you talk to private Investment Bankers. We really believe in that model. We believe it works. Longterm is huge. These were not a stellar set of results but, encouraging news that Credit Suisse badly needed. Jonathan some allergan earnings. Allergan will buy back up to 10 million in shares to consider extending a program after an initial caution. The big headline, a board authorization for shared repurposed rodin repurchase program. 4. 5 and some change. Allergan will buy back up to 10 billion in stock. David it is contingent upon them completing the other deal. Amanda i think its important to note that when the first thing a company says on their earnings day that they are buying back stock that maybe there is something in the earnings they are not too happy about. Jonathan put it right back. More on that story in just a moment. Lets get more on Credit Suisse from matt miller. Some of the figures. Some ugly figures. Matt maybe not as ugly as some of their rivals. Obviously the market has reacted very positively to these numbers. Credit suisse is the biggest loser of european banks. But look at the return on tangible equity. It is compared to ubs in white and Deutsche Bank in purple. Deutsche bank is doing far worse 13. 5 edit suisse with return on equity. Credit suisse also is still pricier than its peers. Or its peers are trading at a cheaper price to book value. Barclays are and both trading at a cheaper price to book than Credit Suisse right now. That the market seems to value it a little bit higher than Deutsche Bank. I think Deutsche Bank proved a bigger scare to investors than Credit Suisse with all its earnings problems. David and those legal issues are a liability problem. Revenue at the Credit Suisse Global Markets unit down 62 . Deutsche bank it was around the low 20s. Thats a huge fall away. Private bank has a who just reported some really decent margins, the highest since 2011. This is the unit he really wants to beef up and take advantage of. Investors are looking at the situation with the likes of Deutsche Bank versus Credit Suisse and saying the core of that company has something to fall back on. David their domestic swiss bank is doing very nicely. Amanda there is still a huge runway of layoffs ahead of Credit Suisse. Coming up, Mario Draghis decision to drop the benchmark deposit rate below zero has germany worried they may be entering a Housing Price bubble. We will take a look at that after this. Jonathan good day to those of you in london. You had two days of hot weather. I call it summer. Its over. Thats the rest of the year. The ftse 100 pretty much dead on the screen. Futures were largely positive. Dow futures up by only 34 points. Points. Res barely up 4 just. 2 . W up dollar yen with a 109 handle. Treasury yields a little bit higher at 1. 76 . The potential, the possibility to test 1. 5 on the 10 year yield. Lets take a look at the top trending stories on the bloomberg terminal. I want to start with one that struck me. This is john malone. This suggests that he has to make a decision about what hes doing in europe about his cell phone business. There has been talk about him buying vodafone for a while now. What this piece is saying is they may have to back up and go for 02 which is owned by telefonica. I understand it is more expensive than vodafone but maybe he could get that deal done. He has to do a triple play. You get your Cell Phone Service and broadband and landline altogether. He needs more space. A prettye has successful track record at making these deals work for him. David i should say. Amanda we will go to matt miller for market movers. Vader of cable was his nickname. David but darth vader who made a lot of money. Matt i never got my kids would want to be luke skywalker. Vader is way cooler. We have the big drugmakers rising across the board. Todayre having their best rally in three weeks. Bayer is up. Take a look at the european banks. We talked about Credit Suisse. Big gains of 4. 5 percent. Financials are doing quite well across the board. As far as a earnings what we had yesterday after the bell so far fairly disappointing. Solar city, huge disappointment. The same is true of mankind and gap. It will not be pretty today for the gap. Jonathan coming up, Deutsche Bank sees a single Silver Lining in a lackluster q1 earnings season. We will take a look next on bloomberg go. [ soft music ] e. T. Phone home. When you find something you love, you can never get enough of it. Change the way you experience tv with xfinity x1. Jonathan this is bloomberg. Im jonathan ferro. Of the early some gains up by 51 points. S p 500 futures positive. The dax really rolling over. Now just of. 3 up. 3 . Dollar yen to a 109 handle, up. 7 . Governor kuroda with a big smile on his face this morning. Citigroup joining steve major over hsbc with the likelihood that the yield could test 1. 5 . Yields currently 1. 76 on the u. S. 10 year. Amanda we are just two hours away from the opening bell. Up moreuisse shares are than 4 . Bank reported a Second Quarterly loss but the ceo Tidjane Thiam said he plans to deliver on cost cuts this year. Industrial production in the euro areas three biggest economies down in march. The drive to oust president Dilma Rousseff is back on track after the lower house reversed a decision that had earlier threatened to throw the entire brazilian impeachment process into chaos. We have breaking news on allergan. Matt allergan coming out with earnings. Was 304. Etf we were looking for three dollars even. By four sense. Cents. Revenue from botox. Beating on that line as well. Allergan selling more botox than the street was looking for. Total revenue was 3. 8 billion. A little bit lighter than the 3. 95 billion. That may not matter much. Botox is obviously the main product. They are spinning off their generics division. Coming out with better earnings than estimated. Shares up 1. 9 . Amanda giving of earlier gains after they announced up to 10 million 10 billion in a stock buyback. We will see how investors react when more volume starts to train. We are only looking at a few hundred shares trading. Investors want to know exactly what the incoming president of the philippines will do with the economy. He was elected with 39 of the vote. He campaigned on a platform of fighting crime. Of 6 iny grew upwards the last year. The trades Union Congress in the u. K. Warns british employees will face excessive working hours if the country leaves the European Union. Integral a group for British Union says brexit supporters want to be able to scrap employee working time protections. May just a mandatory state ride Water Conservation statewide Water Conservation advisory. Quinn. Nie jonathan tom keene comes from bloomberg surveillance radio. Tom i got botox right here. Jonathan the last couple of days a cloud of doom and gloom and a debate dominated by the fed. The fed, the markets and their relationship and a minneapolis fed president that has a lot to say for himself. Take a listen. I think Market Participants are too focused on the fed. Im reluctant to draw even more attention to shortterm monetary decisions when attention should be focused on solutions to longer term issues. Jonathan tom keene. The market obsessed by the fed or the other way . We are going to look at this chart. This is what hes talking about. The red line is the market and the green line is the fed. That red line is distant. I think the analysis is overwrought and ill placed. We have a sum of moving parts and a developed economys central bankers trying to affect good policy. They are doing it for two uniteds, two c kingdoms, two switzerlands. There is a large body of americans not participate. Jonathan that spread has been there for a long time. When it reconciles it doesnt from the top down. Does it from the top down. This is not a market obsessed by the fed. The market is ignoring the fed. Tom im going to defend the fed. The markets were fixated on the next data point. The fed is going to look at the data and on june 14 they will start to figure out what they are going to do the daytoday analysis we have zany to say the least is zany to say the least. Big house, small house, activists, everybody coming out with the world is coming to an end. Equities are way overvalued. It is the oddest of times. Jonathan this huge amount of bearishness. That doom and gloom as is manifested in the bond market. Global bond yields near alltime lows. Tom we are supposed to have a debate in the market. Hsbc and relative optimism thats what makes the market. My issue is this new media focus and market vigilante focus on the back and forth. We have central bankers by mandate being patient nation to nation. Thats what they are supposed to do. Kashkari . Tom hes very controversial in minnesota. Differentging a outlook, different resume, and different mandate. When they founded the fed i would suggest that is a bit of what they wanted. Jonathan a real catalyst for a conversation. Thank you for joining us. David i did not know the fomc ordered pizza. Amanda that is real insider information. David lets turn to earnings. 90 of the companies have reported their earnings so far. Not do so well compared to the same quarter last year but that does not mean there was any growth not any growth at all. David bianco of Deutsche Bank is here with us. But first lets go to matt miller. Matt i wanted to show you a little bit of what you already know. Done with earnings season. 444 companies out of 500 have reported. It has been terrible compared to the same quarter a year ago. Is energy. Loser earnings are so far down we cannot even measure it in positive terms. Financials down 15 . We do not often look at this price reaction chart. I want to zoom in and look at whats going on. Everything in this quadrant is very interesting and in this quadrant. We have the one day price changes. Things have gained. Below they have lost. Aggregateis we have Earnings Growth for each of the individual Industry Groups depicted here. Interesting to sing Something Like energy. Earnings are down more than 100 and yet the shares are up over the season. Its also interesting to look at telecoms. Earnings are actually up but the shares have gotten beaten down so hard. David david bianco of Deutsche Bank. You have a projection of 2200 by the end of the year. Had you square that projection with those earnings numbers . We pay a lot of attention to the earnings estimates. We do this analysis for every company and the s p and we track all the macro factors that influence the earnings. First quarter was a week quarter. Earnings were down 5 . Not many Silver Linings in the First Quarter but a lot of people have taken concern with margins at the s p. Down from 10. 5 to 9. 9 . If you exclude energy and financials the margins are flat. A lot of stability in the margins. The gap earnings have had a nice rebound. Excluding energy and materials the gap earnings are actually back to their normal spread. 2200, earnings are going to be flat this year. Slight growth off of the 118. Weve been talking about Wage Inflation and wondering what that will do to company margins. You see expansion . We believe the labor market tightening. Thing is this is mostly related to the service side of the economy. Tightening labor market, corporate activity, rising unit labor costs. There is absolutely no margin impact to the s p 500. Most of the s p is manufacturing oriented. Lack of sales growth is the problem. Amanda david bianco will stay with us. When it comes to investing their personal money, you wonder who does better hillary or donald trump . We will take a look at that after this. David this is bloomberg. Im david westin. Coming up, president ial investing. We all know theres an election going on. What does it mean for your portfolio whether clinton or . Rump is elected jonathan theda time for a look at powerful and influential personalities in business and politics. Today we will look at the personal investing styles of donald trump and Hillary Clinton. Hillary clinton is somewhat more conservative when investing her familys wealth. Funds. Vors index donald trump is betting big on hedge funds. Charles stein is with us from boston. Lets start with the difference between them. I want to focus on trump. He is a lot of money invested with one particular hedge fund. Between 25mewhere million and 50 million in a fund called obsidian run by blackrock. Recent years. In it has been positive most years. It has not kept up with the s p. Over 10 years and has actually done quite well. We dont know how long mr. Trump has been in it but its a pretty good fund. Isnda Hillary Clinton mostly in an index fund. Is that driven by the fact that it would be much too complicated for her to be in anything more interesting . I think thats exactly right. If you are a career politician a microscope,der whats a better thing to do than to be in the most plain vanilla investment you can do . Amanda we are looking at the results over the long term. That hedge fund has outperformed. That has not been the case in the last year or two. We would expect over the longterm it looks donald trump has done better. He owns some mutual funds that have done ok. You need to remember that mr. Trumps a billionaire from real estate. Some of these liquid investments may be a relatively small part of his overall wealth. Amanda thank you, charles stein. Us,d bianco is still with Deutsche Banks chief equity strategist. We were looking at the chart about how energy outperformed despite the fact that reports were underperforming. Whats your expectation for the year . For ahink it is priced rapid rebound in oil prices to 60 or higher. We see pressure on refining margins finished product pricing. Energy shares are vulnerable. Slight appreciation on the dollar. Pullback in oil prices and you would have substantial pullback in the energy sector. Thatnk its fair to say during earnings season some of the most fundamental disappointment was from energy and banks but they had really strong bounces off the bottom. I think banks are one of these great your teeth and tolerate it. We recognize its a tough spot. Health care pleasantly surprised us. 10 sales growth. Sales growth is encouraging. But a lot of these companies showing margin growth because of financial engineering. How concerned are you about the quality of the earnings, not just the amount . The Earnings Quality improved in the First Quarter from the gap perspective. To exclude energy and materials is the best quality of earnings we have seen. Cleaned keep a close eye on things that annoy me. We know who the offenders are. Think its fair to say that there is a lack of sales growth at most sectors except for Consumer Discretionary and health care. Buybacka lot of activity funded with operating cash flow. Companies are borrowing to offset the cash accumulating offshore. S p haveors of the ample deck capacity. I would expect more borrowing for the purpose of acquisitions. Buyback payouts have plateaued. Dividend payouts should continue to climb. There it strikes me that are really two sectors that brought of earnings by themselves. Half of the sectors are in the negatives and it was really overwhelmingly discretionary and health care. They accounted for almost all gains. Even Consumer Discretionary is a diverse sector. We have not been thrilled with what we have seen out of retailers given the backdrop that was only beneficial to them in the First Quarter. Competition is extremely stiff in that space. We only see healthy fundamentals of health care. David bianco is sticking with us. Next, we take a closer look at the markets. About one hour and 40 minutes away from the market open with futures positive. Two days of gains. We are shaping up for it. Jonathan good day to our viewers worldwide. Summer is ending in the city of london. David bianco is with us. Before the commercial break we were talking about energy and materials. Those sectors make around 9 more than that of the s p 500. You are talking about 60 oil to justify those valuations. How do you justify a yearend target of 2200 . We are in a profit recession. Expect as things improve on oil prices that we get a nice rebound in earnings power but not until 2017. The underlying Earnings Growth of the s p is only going to be 4 to 5 energy and materials. Its not a good Earnings Growth environment. Its the potential for pe expansion in sectors that are payable. Tech were care and the multiples kent move from the mid can move from the mid to upper teens. What we need is stability and more confidence in the economy. As the year goes on people will realize that we have weathered this profit recession and collapsing Commodity Prices and we will start exiting. The profit recession you will see the earnings rising than being down 5 in the First Quarter. I think that from the profit recession emerges from the profit recession. Hikes the 10ed year yield stays low, thats what gets investors paying more. Jonathan how much time are you spending with the fixed income team at Deutsche Bank right now . I see them every day. We talk about currencies all the time. We all agree that Economic Growth is slow. Very sensitive to things like dollar and oil. I see no need to add capacity anywhere. We are still waiting for more productivity enhancers to be found. The sales growth of the s p will likely stay slow. Thats why we are so interested in sectors like health care. David i dont want to talk you out of a rosy picture of the s p. Health care is particularly subject to some geoPolitical Risk. If we have a president who is for price regulation, what does that do to your projection . Methis question gets put to almost every day. Unfortunately i do not have a great answer to it. Who knows whats going to happen politically . Healthcareat the sector it is still generating great sales and Earnings Growth well above everybody else. If you look at other sectors that have no growth and have their own challenges, look at utilities. These are sectors without growth. I think the Health Care Sector trading at 15 or 16 times is a concern that is probably overdone. Toess you expect politicians do very heavyhanded price control policy i think these stocks are undervalued. Amanda some of the pes are already pretty rich. Could you use a contraction . You see a lot of pdx and that is wholly dependent on longterm w. Elds staying lo the Interest Rate support them. Thats Deutsche Bank chief u. S. Equities strategist david bianco. Coming up, president ial investing. Which stocks could flourish under a Trump White House . One analyst gives us his forecast. Thats on bloomberg. Jonathan u. S. Futures point to a green open but remain in a long sidelights trend sideways trend. Carol ask not what your country can do, but what they can do for your portfolio. We unveil the stocks that could outperform with clinton or trump and the white house. David Brazils Senate is moving forward with the impeachment process after a pickup, yesterday. Does a political plot twist present a buying opportunity . Jonathan welcome back to bloomberg go. David a political power struggle in brazil, earnings from europe and media giant disney after the closing bell in new york. Jonathan Global Financial markets to get you up to speed. Futures in the United States still firmer, s p futures positive, six points. Some ofeurope, trimming the earlier games with the ftse of a quarter of 1 . Switch of the board quickly, the dollar index, a sixday winning streak. Eurodollar down to one one of the 1367. A lot of surprises in the market. On theof a basis point ,0 year to 1. 76 and crude, wti 45. 33. Lets cross over to matt miller. Matt lets take a look at some banks that are gaining credit. Says plannedn tm cost cuts are being delivered as expected. They reported a pershare loss for the Second Square that second straight quarter. Better than the market anticipated, and that is how stocks work. European automakers having a chinaeek, and they have to set they have china to thank for that. That is surprising to investors for volkswagen, Fiat Chrysler and all the european carmakers putting up some decent gains. Gap stores not doing well. A turnaround plan is not paying off, falling short of estimates. Worse than the 1. 1 gain we were looking for. The new ceo had predicted signs of a turnaround by this season, but old navy is faring especially poorly. You can see gap is down 11. 5 in the market. Four cents higher after they failed 180 billion merger with pfizer, also buying back 10 billion of shares with about half of those coming in the next four to six months in the open market. The buyback we paid for out of the proceeds of the generic cell generic drug unit. Sales fell short of the consensus by 150 million. Shares of just under a half of a percent. His stock to watch as the earnings season goes to the final stretch and with a dovish at the hell, at the helm helm, looking break is out of his range . A lot of people say to me, they do include ground the doom and gloom crowd how do you look at this market . Thingsmarket needs three to be in a bullish trend. It needs reasonable valuation, robust Earnings Growth and liquidity environment. Accommodated, a fed, etc. Valuations are fair, i think the market is very efficient and innate low growth, lowinflation environment according to my own discounted earnings model. Go to a different economic regime, and you could argue it is overvalued or undervalued, but i think he market is sufficiently priced. We have been in a tightening liquidity market. Upward pressure on the dollar is a tightening of financial commissions and there has been earnings, which have been because of energy and the dollar and so far in 2016, they are mia as well. Every friday, i see were the sale size consensus is and have a beginning of the year, they were looking at about 7. 5 growth in 2016, two weeks ago and now we are down to 1 . Liquidity size has certainly improved. Amanda a lot of your funds are big in cash. What are you looking for as a catalyst to get the cash back into the market . When do you stop being neutral . Earnings growth recovers, which it really should be doing now that the dollar is down and oil is up, there really should be more upward momentum to the earnings picture but so far, it is not happening. If it did happen, it is not going to take much for us to break out. 2 dividends, you compound 7 times 2100, you are at 2300 and no time, but it needs to happen, first. David one thing i found interesting was a breakdown of some correlations we traditionally have between the yen and the s p 500. The yen goes up and the s p 500 goes down or vice versa. With the bank of japan going to negative Interest Rate policy , and clearly not having its intended effect, my guess is that the marketplace is concluding that japan is basically never going to escape deflation because even these new efforts are not really igniting the animal spirits, and when you have a deflationary country or economy, you currency tends to go up and that is whats happening. David if we need those earnings to get us past this sideways movement, what does that experience tell us about what Monetary Policy can do back in the United States . The ecb in europe has seen the same thing. This ongoing quantitative easing in little over a year ago and the german banks are still down 20 . Supposed towhat is happen, it is supposed to be the other way around and the ecp is and the bank of japan is embracing it and we may be at those limits. Jonathan you have some interesting perspective on the bed. The idea of a tightening cycle is done and it began when qe ended. The fact that stocks have pretty much gone nowhere. Talk to me about the tiny cycle being done. I have a thesis on the fed cycle. To. 25 ande rates is only getting started. I could argue that when you bring qe ended the picture and you look at it this is like the stock versus flow debate. If you look at the momentum of qe and the fact that when qe ended in 2014, the fed basically began passively typing, you can see that the fed has already gone through more than your traditional rate cycle. The atlanta fed has a shadow funds rate and that bottomed at 3 in 2014 and is now at plus 3 8. The average typing cycle over the past century is about 200 basis points over two years. You can argue that the fed has done more than a typical tightening cycle you look at it from the low side, which i dont think the fed does but if you did, it tells you why the market had all this indigestion. Already 300 over the past two years. That is my alternative scenario. Jonathan fantastic insight. Quinn over to vonnie lets crossover to vonnie quinn. Vonnie Hillary Clinton and donald trump are in tight races in three swing states according to a new poll. Clinton leads in florida and pennsylvania, where trump leads in ohio. Since 1960, no one has been elected without winning at least two of those three states. A reversal in the middle of the night has the brazil impeachment process back on track. The head of the house changed his mind and revoked his own call. Now it is up to the brazilian senate, which votes tomorrow. The president is accused of illegally using state ranks to plug a hole in the budget. Euro area finance ministers have come out with their most detailed plan yet for greek debt relief, they are trying to get the International Monetary and in the rescue. Greece has said david coming up next, clinton versus trump, which candidate would be best for wall street . A topological analyst reveals the likely stock winners and losers under each candidate. More bloomberg go after this break. David this is bloomberg go. The raise is on for the white house. It will have a big impact on wall street, who gets to occupy that house. Our next guest looks at the and sector winners and losers under donald trump or Hillary Clinton. Terry haines is the manager of political analysis at evercore. Ets start with the losers lets assume donald trump is president , who would be the president who would be the losers . The biggest losers are exporting companies, particularly those that are trade sensitive. One reason why we ended up with the number of stocks in what we call the clinton basket was because we thought she would be better for trade. Particularly trade sensitive areas. Business, tech, those sorts of industries are ones that would not do so well in a trump residency that would be more hostile to increased trade deals. David give me some examples. Caterpillar, john deere . Terry we had john deere in the clinton basket this reason. I would imagine that apparel businesses like nike and others, company we thought was a winner and a clinton world would be negative. Amanda lets talk about some of the big losers in each case. Argue thatou can both of them have expressed antitrade sentiments, but anything trade related with trump, what are other sectors that would suffer . Have fore ones that we wereinners under Clinton Health care insurers and providers, largely because we inc. That there would be some overhaul to the Affordable Care act, but there will also be a bit more stability in the structure than under a repeal and replace with trump, see you expect those to lose. Pharmaceutical companies would probably lose under clinton pricing,f tougher drug and also, there are some incremental differences between lands. We think both mr. Trump and mrs. Clinton will want repatriation of overseas cash but donald trump will drive a lower tax bargain, so you could way that in the next as well. We do think that the winners, regardless would end up being infrastructure, could structure that construction and aggregate companies because we see Infrastructure Spending matter who is president. Jonathan the markets are fixated on who runs the fed. How does that factor into your thinking of winners and losers and the impact that either candidate could have . Terry it backers little bit, but our view has been we think that donald trump is the most dovish of the republican candidates on the bed. He said a lot of things about mrs. Yellen, but overall, he seems to favor the lower Interest Rate environments, so we see him being a positive for the fed. A positive him as for the bed in the short term because we think the relative dovishness of both candidates ends up giving you an environment where the fed has greater room to maneuver in the shortterm. , managingry haines director and head of political analysis. I want to turn to you on this Political Risk when it comes to the u. S. President ial election. How do you take this into account in your Investment Decisions . The market doesnt like uncertainty, so when you measure hello to clintons numbers, a kind of correlates with the market and i dont think that is necessarily a positive or negative view on either candidate, but whoever the candidate is, that is considered most uncertain, the market will withto get compensated maybe a lower multiple because that is the way these things work. On a broader picture, coming back to a conversation about centralbank lessee, i do think this,he next iteration of if growth does not come back is the combination of fiscal and Monetary Policy. Of the recent comments weve seen, i think that is for the conversation is ultimately going, and this country at least. Up, sharesext trumbull tumbling since the deal with pfizer got terminated, but will earnings get the company back on track . We discussed that plus the impeachment of brazils president. Markets reacting, we discuss. Amanda you are looking at a live shot of new york city an hour before the opening bell on wall street and we have a slew of earnings out as earnings season wraps up. Disney set to report after the closing bell. Matt miller is with us with a preview. Matt if you go in and look at the shares, they are up half a percent and they have not changed very much. If you go in to a function have not changed much if at the beginning and the end, in the middle, they have changed quite a bit. Matt they came down strongly and have rebound back to unchanged levels so that is true. I want to show you something quickly with disney, this is an Earnings Report card that a lot of reporters use to analyze whats going on. An important cap to click on and that is growth. To click on and that is growth. We expect 13 profit growth, 6 revenue growth. I like to compare it to what they did in the same period a year ago because analyst expectations can be massaged. Lets go ahead and take a look at what happened when you do look at analyst expectations. You kind of get duped. You can see that over the last has sharedisney price reaction is often negative. That is why it is important to look at growth. If you look at it another way, you can look at what i like to type in john you have you do ern. Same place, to the but you can see the share price reaction with a lot of her mission to play around with. Be aware when you are looking at analyst estimates because oftentimes, they are lowballing. David disney does not give guidance as a matter of policy. Matt and try to stay out of that game. And yet they continue to beat. Amanda always learning a new function from matt miller. Bloomfield in boston. Catch us up on what you take away is. We saw the numbers and some of them look better. But that top line did miss a little bit. Donnie i think one of the big takeaways here is that they have said that they will be putting up to 10 billion in the Share Buybacks. This is a company that is rebounding from the kind of breakup of the 160 billion proposed deal with pfizer and one of the things they are doing is taking some money that they are getting from teva, they are selling their generics to teva for 40 billion in the deal is supposed to close in june and taking evenking yet more money and putting it into Share Buybacks. It is one of the ways the air trying to stabilize their shares or post their shares in the mediumterm but as you said, there was a topline miss that may signal and we will see whether they need to hit their year. Ce for the amanda price erosion was expected on the generic side. How does the rest of their business look in terms of pipeline . They are still seeing some growth as they said, in the generic business but from the analyst, she said she is reviewing the rating on the company with a neutral rating. She is reviewing it because that topline week this, they have signaled that they are willing to do some real deals to try and boost the pipeline even further. Will take that money and buy back shares, does that tell us they will not be in the market for any major acquisitions . Donnie still to be seen. They said they are planning on spending about 45 4 billion to 5 million, even though they do have a lot of debt 4 billion to 5 billion, even though they have a lot of debt. They did give their 17 billion in Sales Guidance and that is where above where analysts are on this company and some are wondering if this is an optimistic view for the full year, but it is yet to be seen, whether they can beat on revenue. Amanda thank you so much. Jonathan up next, search like capitals Founding Partner joins us to reveal how he is putting some money to work amid geopolitical turmoil and low rates. We are back with that an open from an hour away from the market open as futures stay positive. Amanda just about an hour away from the opening bell on wall street and we are here at bloomberg go. We want to check in on what you need to know to go. Credit shares are spiking on their Earnings Report. Our Francine Lacqua he was confident they would deliver on plan cost cuts this year. The eurol reduction in areas three biggest economies disappointing. Giantainment and media disney is set to report its numbers after the closing bell. Now time for first word news with vonnie quinn. Vonnie president obama will become the first sitting president to visit one. Of the cities where the u. S. Dropped the atomic bomb. The white house says the president will travel to hiroshima well on a trip to japan, this month. In the past there was concern that a president ial visit would mean the u. S. Was apologizing for the bomb. Personcker killed one and wounded three others in a town about 35 miles southeast of munich, germany. Witnesses for the attacker yell god is great in arabic. Authorities say 90 of the city of Fort Mcmurray survived the massive wildfire. About 2400 structures were destroyed. The fire force 88,000 people to flee. They will not be allowed back for a least disco week for a least two weeks. The push to oust brazils president is back on track. Housead of the lower reversed his twoonone the impeachment proceedings. The senate will vote tomorrow was a on whether or not to put the president on trial. This has been quite a drama. Should we make anything more substantive out of this . It was quite an eventful monday and this was the interim lower house chief, this is a relatively unknown politician who came in with this decision and then very late at night after the senate had already decided to ignore his decision and move forward, he revoked his decision, not really explaining why he was doing so. Amanda it seems clear that what the market wants is resolution to this issue. What are the next steps, what will happen and when . That is exactly what the market is hoping for. Should start the session at bangkok a. M. Local time which is 8 00 a. M. , new york. About 60 senators are expected to make 15 minute speeches so voting is scheduled to start after 7 00 p. M. And it should be relatively quick, they should all vote at once, not like what we had in the lower house where each one goes up to the micro. David this is to put her on trial, when would it start and how long would it take . She would be removed immediately if the Senate Passes the decision, for up to 180 days and the senate will make its own trial and ruling and the full days, andn those 180 which the Vice President would take over the government. Amanda what is your expectation about how the market will respond and how well the Vice President will be able to write this listing ship . The market has already rallied very strongly on hopes that the them of the impeachment so after it passed in the lower house, we did not see strong reaction. Yesterday, would it look like it was not going so well, the market had a very negative reaction. The overall sense among investors is to act very fast. Is alreadyesident outlining his economic plans and he just needs to move fast and show that he can get us back on track. David thank you, julia. Jonathan if anyone wanted some confirmation on whether political bias was in the market, we got it, yesterday. Matt julia just described this chart. Here is the brazilian stock market, and here is the rail right now the news of the impeachment not happening since the reall down even though it is a tanked as soont as the investors got the news that the impeachment may not after, and i you can see the lower house chief called for a new impeachment vote, stock market begins to recover all those thomas the level it had, before and the real begins to recover as well. A concrete look at how much the market once the president out. Over a fewinating hours but over the longer course, the markets have been very optimistic about what happens when she leaves without really knowing. That is the interesting part, anything but her is what the markets are saying and you have to wonder how the government reacts to that. Where are private Equity Investors funding opportunity and do valuations express the risk . We are seeing some valuations with anything technologyrelated getting a little out of whack. Ofver s p has been kind flat since the start of the year, european markets slightly down. If you look at it in a intorical context, pilot private equity, we see very high multiples. A lot of that is driven by very low Interest Rates. We are living in a new paradigm. We never live in a row that we had such low Interest Rates with a sustainable amount of time. People are searching for return, so they are willing to go into more equities, they are going into classic cars. It has more value appreciation that anything else, wine, art. Cash flows. Anything that can be levered because it generates a lot of cash flow with such low Interest Rates on your debt. It ends up getting traded at much higher valuations. You have this low rate growth scenario. A discount, the think you would get, you are not getting. Where do you get the opportunity . Oliver you have to get a bit more creative. When we launched searchlight, we wanted to make sure we did not raise a fund that was as large as possible, but as flexible as possible. We can buy minority stake, equity, we can even buy debt. That possibility allows us to help solve problems for companies and structure investment that is interesting. David we noticed you will take a are no position which is unusual for a private equity firm. About the idea was we had the expertise to come in and run your company and get extra value out of it. Why does that minority position work for you . Oliver they can work if you have a strong alignment of incentives with people go investing, common goals. We will always make sure these minority investments that we have a significant order representation. We have worked on partnerships to by other businesses buy other businesses. We are trading a little bit of influence. Amanda we were showing some of your holdings. You like to invest in a brand, what do you see as an exit strategy for any of these . Oliver we love to find brands that are bigger than the underlying company. We see a brand that is bigger than the company and we can invest in it at a reasonable valuation and we think there is a lot we can do. Ultimately, if you do a good job, you can go public and tell it to another business. Operating is it not at a peak level, already . Is it moving into different territories . We have bought two successful regional brands, and roots,. K. Brand a Canadian Heritage brand. Both have phenomenal market shares and presence in their core markets but we saw an opportunity to internationalize them and ultimately leverage those brands selling other types of products. Amanda with access to capital, you can bring things to businesses that they were not, themselves doing. Oliver for whatever reason, they were doing it, but maybe not as quickly or aggressively. Sometimes when we invest, we can attract new management because we are willing to share some of the equity in the business you managers. With hunter, we were able to attract the Management Team because we had them say look at this works out, you will have access to equity with a higher caliber. Amanda we will come back to you. A Founding Partner of searchlight capital, stay with us, we find out how he chooses which Retail Companies to back and increases amid increases in bankruptcies. Jonathan this is bloomberg go, coming up, we have strategist at wells fargo, he will give us his forecast and where he sees pockets from. Pockets of opportunity. Asnie plans to buy back many as 10 billion 10 million in stock, that comes in the wake of a failed deal with pfizer. Now, they are focusing on competing completing the sale of its generic business. Volkswagen is closing in on a fix for those diesel engines in the u. S. They say the fixes would result part of the emissions testing scandal. It would also reduce the risk of an extensive buyback program. To pump evenplans more oil. The ceo said the state of company will have Significant Growth this year. One of the field was capacity by 33 in the next couple of weeks. The saudis are leaving opec members in a battle for market share. With all we are back of her of spotlight capital. Oliver ofr spotlight capital. You are looking at equipment makers, you just raised a big block of cash, almost 2 billion, where is the money going . Oliver we like to invest in themes, things that might make sense, you just mentioned equipment makers. We had a team of a low Interest Rate environment, got governments might be incentivized to invest in infrastructure and encourage housebuilding. They create a lot of other jobs, and on top of that,. Infrastructure building. How do you invest in that . We look at industries that would benefit. One business was Equipment Rental and we try to find Equipment Rental companies and through that effort we found two different businesses we acquire in merged together, operating as a platform to acquire new companies in that sector. What is the thinking on liberty . Data communications is liberating all around us, other it is everyone on their smart video, that using ultimately means we need better networks, better pipes to get all that data to consumers. We had a broader theme on broadband let us to looking at cable assets because cable has phenomenal capacity and as a result, we have investments in liberty and pci, which are both fantastic platforms. David why isnt that fully valued because a lot of people are interested in that area. Oliver because back to what we were saying earlier, you need to wind element of complexity that allows you to potentially invest in those businesses at more reasonable valuations. We partnered with a corporation to help them make an acquisition and liberty and puerto rico we put in capital and ultimately have consolidated the market in puerto rico along cable tv operators with liberty as our partner. In alaska and gci, we helped our capital with a mobile operator which created a fully integrated platform through negation to medications platform. There is lots of capital and valuation around the world, are there some countries that are offering better opportunities . Oliver we tend to focus on north america and europe, so i cannot comment on emerging markets. Have been high in both markets, but the u. S. Has had better underlying growth. The u. S. Has been growing anywhere from 2 to 3 annually. Have had a lot more political upheaval in europe over the last few years, every year there is a new greek crisis, we have exit coming up, things get frozen brexit coming up, things get frozen. A lot of that creates uncertainty, and you are not getting paid for that. The u. S. Has had less of that, now it is changing. Jonathan now getting paid because people dont think it is going to happen . Oliver maybe, but it is dangerous to be smug about that. Ultimately, it will depend on turnout in the u. K. In terms of who wins the referendum. The older people who are proexit are often much more loyal at actually turning out in the voting booth. I think there is Reasonable Risk that it could go very differently from what people think. David political upheaval makes you think of our election. As you compare the u. S. With canada, because you have mr. Make canadadoes it a more attractive investment because you were not sure who will be our next president . Oliver canada transitioned to a more liberal government seamlessly, very quickly with a very short election cycle and a clear agenda and that creates an environment that is predictable, which is what investors look or. What are the challenges in the u. S. Is people are questioning assumptions that we all have made would be the norm, such as encouraging free trade, movement of labor and goods. Crushing that creates uncertainty that makes it difficult and forces investors on future cash flows. Jonathan canada doing the unthinkable, Infrastructure Spending. Go over to matt miller for a quick look at some stocks on the move. Solar city extending losses to its second day after an 11 drop on earnings on monday. Shares are plunging ahead of the open on a slew of analyst downgrades. It is down after a big is lost bigger loss expected that will the least trained change its strategy. You think a change from strategy would be a good thing, but dean foods swung to a profit in its firstquarter. Earnings topped estimates and the Company Offered up guidance for the Current Quarter and i dont know for me, friendlys ice cream was a part of my childhood. David years ago. Matt growing up in ohio and dean foods is going to buy friendlys. That will be interesting. To take a look at amazon take a look at amazon. Up after it had samestore sales grow in 13 , year over year which is weird, ebay had samestore sales down 6 10 of a percent, google has samestore sales up. Go into the bloomberg and find that data, but there was an analyst who raised his target on amazon to 1000 a share over at bernstein. A says he sees few obstacles that are in the way of getting to 1000 a share. This is from the anr function on bloomberg and you can see in white, let me highlight these. In white, you can see the price, in yellow you can see the average analyst price which is 809. So he is far above that. Jonathan reminiscent of some of those early 2000 calls. That people are thinking the euro area finance ministers might be releasing more a greece. We will pick a look at that, next. Amanda welcome back. Matt miller takes on lisa. Lisa today, i have a chart that is in orton and chose what i titled the great greek hope. This line is the aspen Stock Exchange index, the highest level this year. The blue line is yields on 10 year greek bonds with lowest of the year. Stock exchanges up more than 40 since february. This is great recovery from a pretty dark place. In brussels, finance ministers and the imf are meeting to talk about unleashing or unlocking greecebt relief or a for auiid for greece. These finest ministers for the First Time Ever talked about actual debt relief finance ministers for the First Time Ever talked about actual debt relief. Matt they came from nothing to begin with. Yield is at the lowest of the year and still amanda dont trash talk the chart. Lisa it just people are not as concerned about a greek debacle or a grexit or a imminent disaster. Matt you can get 8 on your 10 year money. I have a technical chart that i got from bank of america. If you take a look at two out of three of these technical indicators, the our bearish for oil. The top is the price action and is forming what is called a golden cross in the 50 day average. That should be bullish, but he points out that the open interest the virgins from a 15 day trend and the volume divergence is bearish. Bank of america thinks oil is going to go down below 40, into the high 30s and that could be a rally after that. Technical analysts say watch out as far as oil is concerned. Also, may is a bearish month. Jonathan just throwing that stat in. David the question is when . Sooner or later, this will be right. Amanda weve got iran saying it is at peak oil and saudi planning to more. Amanda of it matt miller i think matt miller. Jonathan i think matt. David i like lisas. This isote i think money they already said they will give them,. Jonathan congratulations. Coming up next, senior strategist at wells fargo gives his forecasts and reveals where he sees opportunity these sees opportunities. David shares of Credit Suisse are higher, but they are paring back earlier games. The ceo says cost cuts are on track. Amanda allergan will buy back 10 billion in stocks following its failed merger with pfizer. Jonathan the companies Succession Plans and the details of the shanghai theme park opening and fo in focus. David we are now just a little under 30 minutes away from the opening bell in new york. I am David Western alongside amanda lang and jonathan ferro. I think it is time for a market check. Jonathan future stay positive with the dow up 64 points. S p futures positive seven. The dax is up a third of 1 as we head into the close over in europe. I will get to the fx market cou. The dollar index sixday winning streak. The euro down a touch by a temp of 1. 1375. This call was made by steve major. Citigroup potentially joining the club, saying we could test those levels. And wtithe nymex crude has been volatile to say the least. 43. 74 as we head into the cash u. S. Equities. Lets go over to matt miller was some stocks to watch. Matt i want to kick off with a company that makes a drug near did my hear an dear to my heart. Aftert drugmaker is down Pershing Square says it is going to unload its shares. Bill ackman says it is shopping its block of the company. Pershing square disclosed last month that it would not seek a new term for its representative on the board. They make this docudrama that steve loves to eat. Lumber liquidators continues to feel the effects of the report of its tainted flooring story. Itscompany has posted First Quarter lost more than doubled the estimate. Stores turnaround plan has not been paying off. Fell short of the streets estimates. It is far worse than what we were looking for. Firstquarter earnings may fall short of the . 44 target by as much as . 13. A huge gap there. The new ceo had predicted that signs of a turnaround would hit by the season, but that has not happened. Old budget store chain, navy, is faring especially poorly. Jonathan just to be clear steve is matt miller dog. David and whiskey is my sons dog. Zoetis only makes drugs for animals. Somehan now time for stories and now here with us is charles. We are talking about Credit Suisse earnings. Negative headlines and chinas commodity bubble that is one fascinating story. Let us begin with credit suites. Reporting a loss that was slightly better than analysts estimates. Lacqua told francine that the bank would likely hit its job cut target before the end of the year. We have done 3500. Target58 to hitting the at the end of the First Quarter, so we think that is progressing at that pace. We had a target of 1. 4 billion for 2016 of net savings. We believe we have already done more than half of that. We are confident we will hit the target and probably hit it before the end of the year. Jonathan joining us now is our commo columnist from bloomberg gadfly. Looking at compensation down 17 . I guess the question is whether Credit Suisse can cut quick enough given that the revenue is not looking that great either. It was a pretty ugly quarter. Net loss and revenue down a lot. The only thing booming as he pointed out was staff getting fired. The bank is clearly showing that it can cut aggressively and the bank is making much of the fact that it is very ahead of its own plans, but we just do not know what the sacrifice in terms of revenue and business will actually entail. That is a big unknown for the rest of the year. Jonathan just looking at those compensation cuts, i just wonder where the good news was here. Wheres the bright spot the fact that management is doing what it says it will do or the margins over the private bank that still pretty good . Lionel i think today, it is management delivering on its own promises. Remember that the ceo had to actually double down and deliver more costco plans during the year cost cut plans during the year. It is bad, but investors are happy to see some blood on the wall after that quarter. Usathan the ceo is asking to keep our eye on the cost cuts, but what about the opportunities in a slowing market and perhaps even a falling one . Lionel it is tricky. The bank is trying to spin a positive story about asia, saying it did hire staff and is there. Ng i figured us is too early to talk about these bright spots. Q1 was not great for rough management or asia. It is really difficult to see what will happen to the Investment Bank franchise. That will be crucial to see how much these other bright spots cushion the pain. It is just too early. Jonathan lionel, thank you very much. Charles, looking at what is happening at the likes of credit and the stock has lost a third of its value over the last year alone. How patient can you be with a turnaround like this . Charles 10 rounds take time. Turnarounds take time and Capital Markets are volatile. Things heng to do the can control, but i think the bright spot is doubling down on Private Banking, especially in asia. Speaks to how the branch is resonating in those markets. Capital ratiose remain very strong at over 11 . Those have stabilized. They are decent versus their peers, but the swiss want them to hundred basis points higher than their global peers. Nicelye building capital as they move to more fee sensitive businesses. Jonathan we going to move on to number two. Amanda the current calm in the market underlies the coming storm. We were warned yesterday on Luna Bloomberg television of a vortex of negative news. The upcoming news are the brexit vote, the feds june meeting, and the u. S. Election. Do you see this as a time where negative factors could come together in a brutal way . Charles i think guessing the macro is impossible. Guessing the obvious is irrelevant. We live in a globally interconnected world where money is moving at breakneck speed and the velocity of the movement in money is astonishing. Focused on the fundamentals, know what you own, understand what you own, because whats wrong through february and the end of march will remain very expensive. Amanda this is where a long short strategy works out. Sharles we tend not to gues tomorrow, so we let our cash flows and our analysis speak for itself. David moving on to the number three story that matters. This is the one that you find fascinating. There a speculative mania unraveling in china. Shares have surged by 183 billion. Chinese authorities are introducing trading curbs to manage the frenzy and speculators are retreating just as fast as they poured in. We talked about this a fair amount. This is insane what is going on with commodities in china. Jonathan 40 of the volume comes into the night session and thats because a lot of people participating this particular market have day jobs. They didnt go start trading steel rebar futures. I mean, come on. Amanda it is interesting that the Chinese Market is only trying to introduce curbs now. It is a little bit after the horse is out of the barn. Jonathan some of the charts visualize the story. Matt hillary put together a slew of charts for the story. I do not know that they trade enough cotton to make a pair jeans for everyone in the world in a single day. Make 56 alien surveys. 56 billion surveys. This is the volume and huge jump in volume in steel, iron, and cotton. You can see that the open interest has hardly changed. They are just ramping up the volume. If you look at this chart, you can see the volatility of steel rebar has surged here. Is a interesting leave the volatility of the stock market has come down and is fairly calm. You can see returns from the beginning of 2016. This is the stock market here the shanghai composite. This is the egg futures contract. Killing it if you bought eggs. And this is steel rebar absolutely soaring. David its interesting you mentioned the shanghai Stock Exchange because last summer it felt like this. Amanda what was interesting to me is that it was a lesson for the chinese traders because there were a lot of investors in the market saying that the government will intervene in a very severe way. Theyve basically shut it down. Jonathan it is gone from a cow and the property markets to eggs apparently. Matt miller, fantastic story, thank you. David you only wonder about whether it can affect the economy when people think if they have wealth and they dont anymore that it will slow down the chinese economy. That is when you have to care about it. Charles how productive are you the next morning at work . [laughter] david thats a good point. Those are the three stories that matter to markets now. Charles will be remaining with us as we go over to vonnie quinn for first word news. Vonnie a new poll shows that Hillary Clinton and donald trump are in tight races in three swing states. According to the Quinnipiac University poll, clinton leads trump in florida and pennsylvania while trump leads ohio, but all three are close to call. No one has been elected president without winning at least two of those three states. A report as the british economy will grow less this year and a vote to leave the European Union would make things worse. They cut a forecast for Economic Growth for 2016 to 2 . The brexit vote next month would slope of next year by almost 1 o. Global news 24 hours a day by our journalists and news bureaus around the world, im vonnie quinn. Amanda much more ahead on bloomberg. Details on our against billion dollar buyback plan and disney results that are expected by the end of the bell today. Jonathan this is bloomberg. Counting you down to the market opened United States. Future stay positive of 75 points. S p 500 futures positive. The dax is up about half of 1 . The ftse 100 collett 18 points higher. Amanda we are talking to Charles Cantor and the key to investing in a volatile market is to reduce your exposure to the full equity market. Your funds outperform the s p 500, but in the First Quarter, you did beat the markets. Charles we did it with significantly less exposure in the market. 40 , so werun around are trying to drive attractive riskadjusted returns. If you can ever meet the market with less exposure and volatility, i 1 certainly think that meets our objectives, especially making money. Amanda you do not look at the macro figures as much as you are a bottomup guy. Where are you finding those opportunities . Charles on the short side, we find a lot of bifurcation. On the long side, we try to find a lot of investors. We think the market is short a longterm investment timeframe. On the short side of the book, the volatility is really helpful to us and we find a lot of bifurcation in the Consumer Retail space. , otherenced today traditional retailers like nordstrom and the cap are finding themselves very tough to compete given their real estate footprint and the lack of real traffic drivers and a very competitive pricing environment. Amanda are you short on gap . Charles we are. Amanda i noticed you are long on enbridge. Charles we have owned enbridge for a very very long time. It fits squarely in our total return bucket. Think of it as dividend and income. We like asset intensive businesses if they come with regulated returns. They generate slow and steady. Slow and steady works for us and they aroiwn a unique set of assets from canada to the lower 48. Amanda we are also seeing a lot of health care in your portfolio. Can you give us an example of a short that you are negative on . Charles on a Financial Services side, given the regulatory laws, etc. , i think that will create pressure for some of the traditional Asset Managers that are distributing their own product. We focused there as well. Ben franklin would be example of another company. It is important to realize the on the short side, Holding Periods of three to six months, theres a lot less information content on the short side than there is on the long side. Thing thaty likely we will own enbridge. We are not betting consecutive decline forever. Jonathan you bet against the company on a bottomup case or is it a hedge for the wider market . Charles we think of everything as an idiosyncratic single name investment. Every investment has to stand alone and the fundamental analysis. When you have weakness in revenue, it usually shows up in margin degradation because most businesses run with more fixed cost that could be suggested when you simply run an excel spreadsheet. Jonathan to balance your portfolio, a lot of people would see to look at the dax right now. They are at the highest since about a year ago. Those options are getting more expensive, so why not hedge the overall portfolio . Charles hedging comes with costs. We have managed the money we have managed for over a decade now. We do it our way and we are proud that we look different than traditional hedge funds. We stand for a fundamentally driven approach to security selection on both sides of the book. You got to know what you are good at and we did look to the Options Market on the single name security. For example, im sure later on in the show, disney that market, you can go to the bloomberg function and understand what the market is pricing in terms of volatility post earnings. We try to understand that. We are always looking to think what is the most efficient way to put in our exposure, but its always to the ledge of a single name and not a macro trade. Amanda in terms of the balance of your lungs and shorts, is it about what it typically is or are you negative now . Charles we try to keep and exposures consistent around 40 . We have flexibility to be more, but one of the things that has helped us is staying consistent against the volatility. The worst thing that you can do is reduce your exposure is at the bottom and then issue exposures at the top. When you look at some of the tears along the longer time, theres a lot of that going on. But the Company Speak for themselves and not guess tomorrow. Amanda thanks, charles. David up next, we will have the ans 10 billionen Share Buyback plan following its failed merger with pfizer. David this is bloomberg. Im david westin. Allergan shares are on the move as the Company Plans to buy back 10 billion in stock after reporting earnings that beat analyst estimates. Joining us is drew armstrong and charles. You have been on the Earnings Call as i understand it. What did you find out that we do not know . Drew we were on the phone when they were starting q a. The big thing that people were asking about is what is your next deal . After this pfizer thing has fallen apart, allergan has been one of the most Acquisitive Companies out there. Now they are saying the next thing we are going to buy is 10 billion worth of our own stock. They have kind of signal they might do that at some point, but its a pretty big turn for a company that has done deal after deal after deal. David does the fact that they are putting 10 billion back to buy back the stock mean that they will not be in the market anymore for big acquisitions . Drew they did say they might do something transformative. Now is it going to do Something Like a megamerger with pfizer . Maybe not, but it does feel like they are positioning themselves to pay down some of their debt. They are going to have more firepower to close out this deal. They will have a lot of capacity to doing the type of deals that the have been doing. Charles i think the key here is the debt capacity given the cell of teva. Timesbt will be about two assuming they get all the cash from teva. You cannotspeaks fix a bad Balance Sheet could. They will have a strong Balance Sheet. The buybacks will be perceived to be an undervalued security. What you know the most is what you want today. It still leaves them with flexibility to do m a down the line. Amanda you are positive compared to value. Charles valeant was an example of tax arbitrage, rmb arbitrage, balancing arbitrage. Allergan spent 8 of their revenues on r d. That is your future revenue down the line. When you look at the Balance Sheet that is fundamentally different, while there Business Strategy is better now, given the cards that were dealt, it seems sensible capital allocation. Drew it is funny that you mentioned valeant because every time ive been on the call, there is this almost now ritual proportion of prepared remarks where everybody makes of thinly veiled reference to. Upy have levered significantly and overpaid and they did this again coul. They said, hey, we are not valeant. It is becoming this things where and big pharma companies, you emphasize that we are not those guys. Please by our stock. Charles they are different and they are just allocating capital differently and their r d is different. David bloombergs drew armstrong, thanks for being with us. Toathan a special thanks david westin who is leaving us for the salt conference. David i will be on a panel with boone pickens. The good thing is that i will not have to do too much talking. We will also interview austen goolsbee. Jonathan when the guests are that good, it makes your job very i easy. This is bloomberg. We are counting you down to the market open. Future stay positive with the dow up 73. Amandajonathan this is bloombg. Around the table is amanda lang and Matthew Miller on the markets. Ahead of the opening bell, you can hear it ring away in new york city. Dow future stay positive. S p 500 futures positive about eight points. There is the bell right there. Winning. S the eurodollar 11385. Yields are little bit higher. A lot of supply coming onto the market. Threeyear notes being auctioned today. Just a one basis point higher on the 10 year to 1. 76 . Crude is marching higher at 43. 69. Lets go to matt miller to strip it back. Matt gains across the board as you pointed out. Lets look at the terminal roof quick. When we strip in fact, all we see is up, up, up. Consumers, discretionary, i. T. Leading the way, but everybody is winning today, eating defensive stocks. The biggest winners are now showing green right now. Lets go back to amazon because its a really fascinating story. And analyst has come out with amazons first thousand dollar target. An analyst at that milestone target with this latest note up 47 from last nights close. He only obstacle might be what to do with all the cash. You can see the shares are up to 697. 50 early trading. Allergan is what we have been talking about a lot. It is going to use the money from teva because it is selling its generics in order to fund that. We have heard that for a wild, but earnings were better than the street estimated. Amanda we have got some bullets coming up. The Conference Call is helping out, saying they are open to deals, but also open to a transformational deal. While pfizer is not getting done, there could be something down the road. Matt tucked in deals as the trendiest thing for an executive to say recently. It is the new phrase. Guess what . Something else that is trendy is taking a cruise and really cold places. Have you noticed that recently . Amanda it seems ill talk to, but off, but according to chart, it is. T Norwegian Cruise Line its down right now. It had a loss in the First Quarter last year. Shares are down 60 this year. They look down on most half of that again today. Much of the revenue game came from higher prices and less discounting. People do not look very pleased with th Norwegian Cruise Line. Baxter international gave the company a positive outlook. These margins shrinking without 2008 spending. You can see baxter is up about two thirds of 1 right now. Theres a lot going up in individual stocks. Take a look at my imap. You have seen the imap a lot on bloomberg television. The best thing is this tech technology. Touch technology. Staplesen up consumer and i can see where the losses are. Food in staples is a problem here. I can see that kroger is down 2 . Kroger is a problem. You can back out and take a look at the entire pie thomas a very interesting function there. Amanda just one note on Norwegian Cruise Lines. They do go to hot places, but the reason why is that we are getting older. The older we are, the less likely we will put on a swimsuit. Theres actually controversy about arctic cruises. Jonathan matt miller looks concerned. We will get disneys results after the bell today. Paul sweeney is with us now. What are we looking for from disney. . Solid quarter with 10 Earnings Growth here. I think one of the key issues for disney since last summer has been yes pm and their Cable Network business. The question is are they losing subscribers . How much is that going to impact the longerterm growth in revenue and affiliate fees . Jonathan what about the Succession Plan because that has dominated the last month or so . The conversation about who replaces the man at the top . Our investors concerned about that or the numbers that come out later . Are concerneds because disney was a company that over the last 45 years had been instigating a textbook Succession Plan. They identified two strong candidates and put them up against each other. The board after a very delivered exit deliberate examination chose tom stacks to be ceo. Very soon after that, they decided that he was not the person they thought could be ceo. What was up until then a textbook plan for a proper succession went by the wayside. The good news is that bob iger has two more years left on his contract. Can they identify an external or internal candidate over the next few years or does the board asked bob to stay longer . Amanda one of the things that disney has gotten right is hitting on the movies. They said theyre are going to stop shooting the moon on movies. They have switched from that strategy. Paul the movie business for disney they have been the most successful studio in hollywood for the last several years. For the next five years, that looks to continue. Disneys strategy was to make big bets on and went for property right pixar, lucasfilm, and marvel studios. There have been mining those assets incredibly well. The have at least two blockbuster hits. Jonathan they dont just do well in the movie business. They do as well and surprising the upside. Chartlet me show you this that will show you the five total return with reinvested dividends. Disney in white has blown away not only the index but the competition. Ob iger has done well does he deserve 60 million a year . You decide as an investor. Heres to johns point. I shun this a couple times, but i think this is shocking. Out of the past 20 quarters, disney has surprised positively 19 times. What is going on here . This company suppresses positively so often that the market is not care anymore. Half the time it comes out with a huge beat and the shares fall. How come analyst do not up their game a little bit or is just a disney just constantly outsmarting them . Paul the espn business is fairly predictable and people have a good idea on the profits for disney. When it comes to the movie business, you do not know. As long as they continue to generate the cash flow from espn and other Cable Networks, the theme business is a very steady cash flow rohwer. Theou look at the movies, they have reduce the risk by making these big acquisition franchises. Amanda is this very high . Paul this is one of the bestperforming media stocks. Quite frankly, they deserve that valuation given their strong predictable performance and strong Management Team. The next challenge for this company is to work that Succession Plan. They have a big opening of a themepark and shanghai next month, so that will be another catalyst for this so theres a lot for cattl analyst to hold oo o. Jonathan coming up, we will bring you in interview with the ceo of Credit Suisse as that guy looks at a stock that has lost a third of its value yeartodate. He has a tough turnaround plan and we listen to what he has to say about that. Stocks are of higher with one half of 1 on the s p 500. Two weeks of losses on the stoxx 600 over in europe. The dax is up half of 1 in the , 18 points asird we head to the close of europe. Amanda i am amanda lang and the hp greenroom. Theng up later today, global head of Commodities Research at goldman sachs. That is coming to you at four clock p. M. Eastern. 4 00 p. M. Eastern. Jonathan this is bloomberg. The bearish sentiment using somewhat. Recentt guest says the Market Action is a combination of noise and consolidation after the big rally of february lows. Join us now is the senior equity strategist at the wells fargo institute. Lets start with the noise. What do you consider noise at the moment . Just this backandforth reaction to certain economic data. One day, good Economic News is good. The next day, good Economic News is bad for the market. One day, Oil Prices Going up is good for the market and the next day, Oil Prices Going up is bad. Its a lot of consolidation and a lot of wide range. I would argue on the downside which we have not touched. I think we are going to bang around in this range for a wild hile. We are going to react on a daytoday basis to comments, but we are consolidating these off the mid february low. Jonathan what is the catalyst to get us out there . If crude is noise, what are you looking at . Catalyst tell you, the in this type of environment is too strong to use. I use it myself, but i cannot think of a better word. Mind, the catalyst is a Comfort Level that the Global Economy is going to continue moving ahead at a slow pace. Growth here in the u. S. , inflation moving at a slow pace. It is investor confidence, consumer confidence. It is a Comfort Level that is really what i would call it that we believe would help drive stocks forward a little bit from where we are right now by the end of the year. Amanda in other words, coming to terms with the facts that we will have low on the long for gross side. You are not looking for stronger growth to act as an upside catalyst . Scott we will come in at 2 gdp this year. We do not have an official 2017 number out there, but if you told me it would be 2 , that would basically be right up our alley anyway. I think in this cycle, youre the gdp growthe accelerate anywhere near 3 or above on a regular, consistent basis. This is more of the same modest inflation, modest growth. It is the same story we have seen for five years. 2016 is not going to look a lot different from 2014, 2013, 2012. It is one of the same. Amanda what are you favoring right now . A believerou are believe that the recovery will continue, which we are, you will believe the growth will continue. What we do not want our clients doing is hiding in these defensive sectors. At some point in the cycle, a little bit down the road, youre going to want to hide, but we do not think the time is now. We want to be assertively looking at this market, expecting gains. We are looking for 2190 by the end of this year. Valuations are not stretched and all we need is a little bit of confidence and we will push them to that range. Jonathan your words to the Chicago Mercantile Exchange you have been a senior fx dealer in the past. How much does that inform you of what is happening in the u. S. Equity market at the moment . Scott as far as the dollar goes, the dollar was way overvalued after people thought that the fed was going to be a lot tighter than these other central banks. It is all a game of which central bank is perceived to be tighter right now. Is why the dollar has lost a little bit of its luster from its highs. I think the bond market is going to stay probably, by the end of the year, around a 2 yield in the 10 year. I think that the other Asset Classes are telling me anyway that this modest growth is going to continue, that it is pretty dependable, and that this economic cycle, we are probably in the seventh inning, but theres still more baseball to be played in it will be played out over the next couple of years. Jonathan scott wren, great to have you with us, buddy. Thanks for joining us. Amanda lets go to Abigail Doolittle come alive from the nasdaq. Abigail shares of solar city lower after it cut its fullyear installation forecast to offer as little as 50 growth this largely reflects sluggish booking. Analyst pretty frustrated here. Two downgrades including chris van car. Shares of solar city are more ipo double of the price of 20 a share. Boosting the nasdaq the most and hitting a record high just a few minutes ago, amazon, after bernstein raised its price target to a street high of 1000 per share. And Analyst Thinks that margins are likely to expand faster over the next two years as compared to the previous two years. Amazon. Llish on an his new price target of 1000 per share suggest that the stock could move higher by 47 from yesterdays close, suggesting that the buyers may finally overtake the sellers. Jonathan thank you very much. That is the action on the nasdaq. The action over in europe is financials leading the gains on the back of the big story in the financial world. Credit suisse has a second consecutive quarterly loss. There is stock price action for you right there. The stock going into the closed just up by over 4 . The ceo spoke to Francine Lacqua earlier this morning. Volatilityout market in the banks process on job cuts. There was a time in january and february where they were very that. March was better. Paper was better than march. May is showing some positive signs, but its always difficult when you are in that position. We still remain cautious in terms of how to move because it is fragile. Less volatility is what you are expecting . We are reluctant to make a prediction on that, but i think hopefully. The market is very sensitive. Theres not much liquidity. Triggers a lot of volatility, so we will have to see. So what would not be easy to make money on the market . No, not easy, but theres an improvement. China is very strong. They say our plan is quite strong, up 16 year on year. There are spots where we see strength, but there are also aroundith volatility Global Growth and growth in china. Cuts, somen the job 6000 job cuts this year. You are on target . Tidjane that was the target and we have done 3500. We are 58 into the target at the end of the First Quarter, so we think that is progressing at that pace. We had a target of 1. 4 billion for 2016 of net savings. We believe we have are ready to done already done what half of that. We are confident we will hit the target and we will hit it before the end of the of. Year. I am sorry to talk about job losses, but it is a price that we have to pay to create the platform we want in the future. It will make the bank resilient through the cycle, which is really what this is all about. We have had great years in terrible years. And terrible years. To be successful, we need a strong base. The first thing we need is price capital. We need relatively stable income streams, some not too volatile. We have been to risking the Global Market hopefully of portfolio. Good conduct and compliance, healthy growth so that we can protect the reputation of the bank, which is our most precious asset. Its the strength of our clients and shareholders. We think about serving our clients and making sure that they are happy. To give you a quick example, i talk about the connection between Private Banking and investment thinking. We did 4. 2 billion of net flows in asia in the First Quarter. 1 billion of that 4. 2 billion can be referenced. Ourle who know Investment Bankers say, why dont you take this money to private bankers . We really believe in that model. We believe that works. We believe the numbers show that it works. The potential longterm is huge and it shows stable high quality earnings. Jonathan that was the Credit Suisse ceo speaking to Francine Lacqua. Stock up on the session down on the year 35 . Amanda outperforming its peers though. Coming up is labor markets markets bloomberg with mark barton. Mark John Oppenheimer has a 2300 target. That is a 10 upside. Busy sticking to that gekko is he sticking to that . The Market Strategist will talk about the big mac or stories out of china, mexico, the philippines. Will not 4 ntuality of gdp in the cave next year. And heres one for betty. Hotel chocolat is the purveyor uk. Ine chocolates in the day thatthe first shares have listed. The shares have jumped by 33 . What is the secret behind the success of Hotel Chocolat . That and more in the next few hours. Amanda coming up next, we will take a look at what is on the agenda today and for the rest of the week. Jonathan from the heart of new york city, good day to you all and viewers worldwide. 25 minutes into it, equities opening a little bit higher after a couple weeks of losses. The dow up by a 10th of 1 on the session. The s p 500 also higher by 7 10 of 1 . The banks are leading the gains with the dax up in the ftse 100 with a similar move. Ive been telling you about a dollar winning streak. The dollar index flirting with negative territory. 1. 1389. Dollar 1. 76 s. 10 year with a yield at the moment. Amanda some of the stocks that we are watching today is allergan. It is rallying against. We have disney on the move ahead of the bill. We have West Virginia with democratic and republican presence of primaries. President ial primaries. The is holding its republican primary. Disney in Electronic Arts reporting after the bell today. Jonathan thursday, we get the bank of inland decision. Friday, u. S. Retail sales and jcpenney earnings. Currie coming up, jeff is on what yo did you miss . Jonathan that is a conversation i look forward to. David westin heads to vegas tomorrow. Bloomberg markets is next. It is 10 00 a. M. In new york, 3 00 p. M. In london. I am betty liu. Mark i am mark barton. Ons is Bloomberg Markets bloomberg television. Betty we are to take you from new york, to london, to hong kong. Here is what we are watching. Cutting deep after posting its Second Quarterly losses. Shares are jumping as much as 6. 4 . The ceo may wind down unwanted assets at a faster pace than previously rejected. Mark disney reporting after that bell. Adjusted earnings of 1. 40 a share. Couldadvertising revenue be down compared to one year ago. We will get a preview, including who could be waiting in the wings to succeed bob iger. Betty i we facing a vortex of negative headlines