Getng to see if they could a production freeze. They could not agree on anything. Oil plummeted. Now it has had an incredible rebound. Alix we were down. It was pretty lackluster, and thet when the bell opened u. S. , stocks shot higher and continued to grind higher throughout the session. Energy stocks also performing incredibly well. Exxon adding 15 points. Energy stocks at the highest level right now since december. Part of this is also short covering. Covering theirs short bets. Nevertheless, the fact that energy was technically down and stocks still rallied to their highest level of the session was incredible. Joe the theme of the day was instant risk offset around the world. It started in japan. There was a rush on government the 20 year and 30 year. Look at that line. It goes straight down over time. It looks like every day we are hitting new lows in japan. Of course, the failure in doha to get anything accomplished gave emerging markets a boost. Rubleg at the ruble, the initially sold off on the doha news or a lack of news. Right now at about 66 to end the session. As for the brazilian rail, that is a currency we are focused on because of the impeachment in the lower house. Brazilian currency has strengthened. As we get closer to an Impeachment Vote, the real has weakened. Brent was unbelievable, closing on most fat flat at the end of equity sessions at 4 00. The feeling was that supply outages became more important than the actual disappointment in the doha meeting. Off 7 . Oint, it was a striking difference, and really helping propel markets higher. Scarlet lets dive deeper into the bloomberg. Alix i have the one chart that explains why brent prices went relatively flat. This is kuwait Oil Production. Typically, it is around 3 Million Barrels per day, but there is a worker strike going on. 20,000 workers are striking because they dont want to see reduced payments or benefits. Because of that, reduction is estimated to be around one Million Barrels of Oil Production is estimated to be around one Million Barrels of oil per day. Kuwait has not seen production that low since the 1990s. They have a ton of inventory they can sell into the market. Are than a week, its significant supply disruption the market is not necessarily ready for, and inventories cannot make it up. Talkinge people were about that last night after the doha failure, Pay Attention to kuwait. As the day went on, more people were talking about the disruption. Atrlet i am taking a look another gulf market, saudi arabia, and able market has been snatched from them. Close but no bull market after the week and weekends delhomme meetings. Dohas weekend meetings. This is late march, and here it is again today. The green line is the bull market threshold. Low. Move from the today, we got within 43 points, but could not get over the last hurdle. At somethingking that really reflects the change in sentiment we have seen in world markets. Gold to silver ratio, and the reason why the ratio is particularly interest ring is because its too precious petals that represent interesting is because its two precious metals, but they represent different things. When people are scared, they buy gold and sell silver. Earlier in the year, the silver to gold ratio hit its highest level since 2008. Since then, we have seen a big reversal. Now the ratio is at its lowest level of the year, dropping more than 8 . Return tos a optimism, people getting rid of gold, buying silver. Have breaking news from netflix. Earnings per share, six cents per share. The consensus was four cents. This is an increase from the same time last year. Analysts were initially anticipating a drop per share. In terms of firstquarter revenue, pretty much in line with what analysts had been looking for, just a little shy on the low end of the range. An increase from the same time last year. ,hen it comes to streaming additional numbers domestic and international, this is what everyone is focused on. A bigic streaming is beat, and that is what investors will be reacting to. Alix Second Quarter and are national streaming is 2 million. Estimates were 3. 45 million. That seems to fall really short if you can compare apples to apples. And its relatively inline in terms of domestic streaming at about 500,000. The International Second order quarter guidance. 12 . The stock is up about that might be what investors are reacting to. Notoriousetflix is for sizable moves in either direction. Alex really pinpointed it. Its the miss on International Subscribers. Two million for the Second Quarter versus the estimate of 3. 4 5 million. Isx and their whole hope for international expansion. For more on earnings and markets, we want to bring in mike regan. Mike, lets go back to oil. Officials from the oils top met over theions weekend. Oil prices were down today. Energy shares led the game. Normally, i would say you have to buy the rumor, sell the news. This is in that. What to you make of it . Mike who would have thought this would be the market we were looking at today . Certainly not me. I had dow futures down 100 points. Obviously, the strike in kuwait has taken a lot of supply out of the market. The question is how long that will last. Thinks its a matter of days and weeks, not months, but its anyones guess at this point. You see these moments when there is a sunday night announcement or a failure to make a deal, but these kind of reversals happen from time to time. Everybody is positioned the same way. Everybody thinks its going to be the same move, and then it snaps back. Mike its true, markets never fail to surprise you. Themselvess bracing after the doha crisis. Oil did start down today. Weis sort of amazing that have Energy Shares leading the rally, but thats really where momentum has been. I think that is the key. You get the sentiment changes in the market. And the risk on sentiment has been with us. Even though the earnings situation has been bad. Alix netflix is a perfect example. It has a lot of momentum. You see a miss on the internationals of driver forecast international , and withoutrecast these, the market has nothing to go off of. Mike its almost like attention has shifted to the value stocks. We have banks, financials have gotten really beaten up. Themomentum now is toward value names. I think there is still a question, longterm, if we really want to break into new highs in the market, where will the leadership he . Its impossible to say at this point. I want to break in with ibm results. S oning the highest estimate the bloomberg survey. Revenue higher than anticipated, 18. 7 million 18. 7 billion. T notable here is that pardon me, not earnings per share. The revenue represents a decline. But over the past month or so, for different analysts upgraded their earnings per share assessment for the first quarter. Looking ahead, ibm has maintained its forecast and improved its view of cash flow. A perfect example of what mike was just talking about. We have ibm, a boring bluechip stock. Then we have netflix, which is a highflying momentum dock. Stock. Of it kind of encapsulates the issue the market is dealing with. Thelet kind of oldfashioned names versus momentum stocks. My one thing i wrote about mike one thing i wrote about a week ago, right now we are looking at a 12 drop for about 40 or so companies that have reported so far. , if thegs being equal s p were to stay at the same level, that is going to push those valuations higher. High as its been going back to 2010 when it was on the downswing. Learnors really have to how to stomach these higher valuations. I think Going Forward that still the question. From the macro level, not just stocks that might be higher valued. Its not unprecedented, but its something that hasnt happened in this old market. Alix for more of his commentary , go to blooerg. Scarlet a quick check on the afterhours trade of both netflix and ibm. Netflix down by almost 12 after its forecast for International Screening additions trailed analyst estimates. We will have more analysis on netflix after this. Mark a new nbc news wall street journal poll says Hillary Clintons National Lead over Bernie Sanders has two adult to two points. Mrs. Clinton is now supported by 50 has dwindled to two points. A nine pointhad advantage in a poll released just a month ago. The two face off in a crucial new york i married tomorrow. At the supreme court, arguments have ended New York Primary tomorrow. Court, arguments have ended over deportation of immigrants. Could alterdecision the fate of millions of undocumented immigrants. Vladimir putin and president obama discussed ukraine by telephone. Talked about syria over the phone. The effort tod reach a political solution. U. S. Airlines delivering water, bread, ready to eat food and other emergency supplies to a remote area of southern japan today after the region was hit by a powerful earthquake last week. 44 people died and more than 1000 were injured by the earthquakes. Rescuers are still searching for the missing. Global news 24 hours a day powered by 2400 journalists in more than 100 50 news bureaus from around the world. I am mark crumpton. Scarlet whatd you miss . Earningsirstquarter out just moments ago. The stock plunging in afterhours trade after coming in with the Second Quarter forecast of International Streaming additions that trailed analyst estimates. For another look at the tech giant, i want to bring in cory johnson. Everyone thought to the u. S. Market was mature and they would not get that much growth. Growthtionals was where is. Netflix may be too ambitious in internationals. And they are running out of new markets for that growth. Efforts have grown as markets do the heavy lifting. We knew it would move, but we did not know the direction. We have a chart that shows you the move of a stock on any given day. If we go into your bloomberg, we can actually see that. Look at these massive numbers. We have seen a stock that moves with great violence after the reported numbers, in part because these numbers can be a logo the place. The thing wall street didnt know can be all over the place. The thing wall street didnt know going into this was now we can look at the chart. You can see the beats and mrs. The big swings of the stock happen on the days beats and misses. The big swings of the stock happen on the days they reported earnings. The real question going into what subscriber growth would be after the price hike. They were slowly rolling out a price hike to new customers. Existing customers were grandfathered in. They said the grandfather was going to end this year and everyone would have a higher rate. They expect that to have an impact. Joe one thing you always watch with netflix is content cost. Thats a huge deal. Do we know anything more about that . No, because they dont put it in the press release. It was 10. 5 billion last year. But they can make up for it in subscriber growth. This is a business that has dramatically changed in its ability to generate Free Cash Flow. They used to have a little Free Cash Flow to pay for the content they had and to develop content. Now they are losing more than 200 million in Free Cash Flow. Had 51 million in the last quarter. Beenee cash flow has coming apart. In addition, operating margins are down two point 2 . So the combination of low operating margins, negative Free Cash Flow, billions of dollars content costst is going up. They are out there competing with not just netflix now. Its the worst quarter theyve ever had in terms of Free Cash Flow. Theyre operating margins are at 2 , very low. And this mystery of content , where the minimum they owed at the end of last year was 10. 5 billion. Stuff. Ood thank you, cory johnson, bloomberg news. Shockingcoming up, a chart. The answer to todays mystery chart later this hour. Alix what is it . Alix whatd you miss . Then meeting of Oil Producers in doha failed to reach a deal on production. Bullishnificant, major outages in kuwait, venezuela, and ecuador. Those matter. London, theow from head of citigroup. Seth, do you agree with Boone Pickens . Yes, its amazing the amount of press coverage the doha meeting was given, and then literally nothing happened. Joe i have a question about the strike in kuwait. Is this something we see workers upset about pay cuts, privatization, is this the type of thing you see that rebalance is the market, that you are likely to see at a market bottom when its push coming to shove and cuts having to be made . I dont think the kuwait strike is necessarily indicative of the bottom. Outages when you look what happening with nigerias pipelines getting blown up, iraqi pricelines getting blown aroundombia, ecuador, the world, you do start to see thats what happens when you have fiscally stretched governments unable to appease their populist high throwing oil money at them. Alix can we count on the tightening market we have seen recently continuing . Its really tricky to pull apart how much of this Tighter Oil Market we are in right now is because of outages, and how much of it is because of organic rebalancing, because there are solid indications of both. We are in april. This was supposed to be the max bearish part of the cycle. See thisot going to market rebalancing until the second half of the year. Have certainlys been contributing factors, but you can also look at solid data coming from mexico, colombia, and china, and you can see that ,e as, we are seeing ex u. S. We are seeing the impact on production. But not had necessary sufficient conditions for the rally to go over 40. We needed to see ex u. S. Declines, and thats happening. Thats sustainable. Thats not going to go away. It means the bear market in oil is over. It seems to me the one take away from doha was that saudi arabia will export and continue producing. They have extra oil in their bank. Piggy right now, its a little over 1 one Million Barrels a day. What kind of upside risk does that pose for the market . Its clearly a significant risk. I also think the market has to recalibrate the way they look at inventory. Still a big, heavy weight on the market, well, yes and no. Buffer of Spare Capacity that we used to expect opec to carry for us. Carried scare capacity and libya went offline, we could turn around and hope that saudi arabia would put millions of barrels of oil in the market. If we need to look to the samees to fulfill or less Spare Capacity, then we need an extra 365 Million Barrels of oil to cope with the fact that we dont have this opec buffer. So the Spare Capacity is above ground and no longer in the ground anymore. Exactly. Alix well said. We should get that on a banner. Thank you for staying up with us. Up, president g rousseff hangs on by a thread in brazil. Shes lost the Impeachment Vote in the house. Will the senate steal her fate . Mark two buses exploded in jerusalem today, wounding at what policeple in said was a terror attack. Prime minister Benjamin Netanyahu told reporters, we will locate who prepared this explosive device. Reach the dispatchers. We will settle the score with the terrorists. The indonesian president is countries use of the Death Penalty for drug offenses. More than 130 people are currently on death row for drugrelated crimes. Global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. I am mark crumpton. Scarlet lets get a recap of todays market action. Surprisingly, stocks closed higher with the dow up by 106 points, above 18,004 the First Time Since july. It looks like the failed doha talks had minimal impact on the markets at the end of the day. We saw oil futures plunge and then this incredible turnaround. Everything turned, especially energy stocks. Alix exxon added 15 points. Brent around 4 00 was flat. Unbelievable. It was down 7 last night. Scarlet however, if you look at what happening in afterhours trade, a lot of individual company news driving stocks. You have netflix plunging after weakening International Subscriber growth. Domestic numbers beat analyst estimates, but the stock is reacting to the mixed forecast for international. Ibm lower in extended trading, even after earnings beat analyst at the analysts estimates. Netflix, additional headlines, says it does plan to raise added capital later in 2016 and early in 2017. Raise capital to through the high markets. The content costs you pointed out earlier are quite high. Netflix into news to get hit afterhours. Scarlet its all your house of cards. Alix my dad. Bad. Joe whatd you miss . Check out this chart. Remember last friday we were talking about the pretty solid on ase gdp data yearoveryear basis . They beat expectations. But then over the weekend, we got the quarter over quarter data. For some reason, it was released later, and there is a really big gap. In theory, one number should apply to both, but there is a big cap. The orange line is quarter on quarter data. The white line is year on year. A margin ofays error, but look at that big blue gap. So, for people already skeptical about the data and the quality of economic growth, this number should give people some cause. Alix absolutely. Forough, if you round up the quarterly numbers, it works out fine. Scarlet maybe the bar is exaggerated. One other cause for concern, you can look at a potential bubble in the Housing Market in china. Over the weekend, we got the latest on chinese property prices. The average is 2. 9 . This is our ministry chart, property prices. The purple line is the 70 city average. Its two. 9 . But look at the blue line. That is third to cities where prices declined. 9 . The one you want to Pay Attention to is the white line. Thats the big story. A 30 growth at the start of 2015. During each cycle, the gains have gotten bigger. In so the big ball of money china is really rolling into tier one property in a huge way. Scarlet huge. Alix another reason to think the prices might be unsustainable is this chart. The white line is the supply of housing. Bar charts are demand, anything from urban markets to urban residents. There is a whole kit and caboodle. Right around 2015, its going down. By 2020, supply is still higher than demand. The point is, if there is a pickup in construction now, its going to come at the expense of growth down the road, but at some point, inventory has to meet demand. Joe all kinds of reasons to be nervous. You see good data, but underneath, there is still concerned about real estate and a sustainability problem. It never ends well. Up, is president rousseffs impeachment all but confirmed . We discussed her fate, next. Scarlet im scarlet fu. A look at some of the biggest business stories right now. Ibm beat analyst estimates, alleviating some pressure on the tech giants revenue. Adjusted earnings grew 19 from a year earlier. Added 2. 2 3x million new u. S. Subscribers in the first quarter. That beat analyst estimates. The Worlds Largest Online Entertainment network has 4. 5 million customers internationally. However, the second order outlook falling short as International Gains are expected to slow. Scarlet elon musk is on schedule for a huge tesla payday. He could net as much as 1. 6 1. 6llars from billion from options he was awarded eyes the company. He has already achieved 50 awarded by the company. He has already achieved 50 of his goals. That is your Bloomberg Business flash. Alix whatd you miss . The brazilian president is running out of time. Is asked acted to make us expected to make a statement in an hour when she makes a last attempt to salvage her president s the. The impeachment her presidency. E impeachment has support of 45 senators. It would remove her from office for 180 days. Are also waiting for president rousseff to speak within the next hour. What do you expect her to say . Her aides have spoken about some kind of National Reconciliation pact, an appeal to Political Forces to stop the process. At this point, it seems like things are growing a little desperate. It looks like the process will go on to the senate and there will be a small chance she can defeat it there. Joe i was watching the vote last night. It was quite an extraordinary spectacle. At one point, confetti cannons went off inside. People cited various reasons for voting for her impeachment that did not seem to have to do with scandal. Did the move last night add credibility or did it not really change anything . It all depends on how you interpreted the accounting tricks she has used. If you interpreted as a crime of responsibility, you would imagine the process is legitimate. If not, if you see this as an administrative issue, there are those who say the process amounts to a coup, that they are looking for ways to get her out of power because she is unpopular. Alix a small majority also support to the impeachment of her Vice President. What has he been doing . Paulo, where sao he spends a lot of time. He has started to put together policy proposals and there have been names floated about who could be the next finance minister. Goings something we are to be following in the next few days. Alix what kind of horse trading do we expect behind the scenes . So, the lower house chief did impeachment request to the senate. The first step is to compose a committee that will analyze the impeachment request and recommend whether it should go to a full vote in the lower house. If it is approved by a simple majority, then president rousseff will be removed for up to 180 days. Alix thank you very much. Joe meanwhile, we are getting some headlines from president rousseff. She says today i feel the victim of injustice. She says it is absurd to accuse someone of a crime if there is no crime. We are monitoring the headlines out of brazil. She says she is indignant with the lower house for the impeachment. We will be following these headlines. Scarlet you can expect more of that rhetoric from her as she continues speaking. We want to bring in an analyst from sao paulo. When you hear these comments, does president rousseau have a chance to turn the tide against her or is her impeachment a done deal at this point . Seems like it is increasingly difficult for her this able to overturn decision by the Congress Last night. On the one hand, she already tried to increase confrontation, calling the proceedings a coup , and calling her Vice President a traitor. It seems increasingly unlikely they will see the Impeachment Vote as increasingly credible. How would you assess the Vice President s prospects for reforming the economy or serving out a full term . , i think the prospects are quite grim for both. I think there is no question the Vice President will appoint a team. The question is how much they will be able to deliver. He does not seem to have enough to create thetal coalition that would deliver some of the reforms he has been talking about. As you rightly i did, he has no uncertainties regarding his own mandate, including the that he had illegal funds in his campaign. Now the instability we see is very focused around recess and her Vice President. Her andtical r her Vice President. Supportersher an illegitimate government that should be removed. I think we are also talking about unions and other Interest Groups opposing the austerity plan that would negatively come with the administration. He has spoken about rebalancing public finances, and the comes with a cost, particularly budget cuts. Interest groups are likely to fight back. The former president was beloved. You wonder what his role is going to be. Do you see him increasing his profile and visibility as we get to a vote by the senate . Is he a viable candidate come 2018 . I think he would be an important articulate her ahead of the impeachment proceedings up to the very end because he was president rousseffs mentor. After that, in the case of the likely impeachment of president will go ai think he step further and try to be the voice of the opposition against the Vice President and to renew his political capital, which has been somewhat punished by his political movement. Rousseff isent speaking in brazil right now. You are looking at a live shot. Says thereecap, she are no grounds for the impeachment process and its absurd to accuse someone if there is no crime. Basically saying the former president did the same thing she has done and that she would leave with a clear conscience. President weree to become president , you said he could implement a team that could appoint a team that could implement economic measures. How fast would he need to move . Shortterme no solutions for the brazilian economic crisis. A series of measures need to be ,aken right at the beginning but it is highly unlikely that brazil will be able to revert reverse the debt levels that are predicted to continue for another year or two. It will be difficult to fully and thisis promise, newfound optimism about the impeachment proceedings may well be shortlived. Alix thank you very much. Scarlet coming up, bidders are lining up for yahoo scarlet im scarlet fu. Whatd you miss . Analystestimate estimate a 19 drop in yahoo this quarter. Lets see what the rest of the numbers say in todays numbers dont lie. Financials a have deteriorated, but the company is still the third most popular web company after facebook and google. Yahoo s relatively slow adjustment to the explosion of mobile devices has sent its ad market share plunging. This is its drop over the last decade or so, pretty steep decline. Net digital ad revenue has dropped. Estimates 1. 4er billion worth this year. One marketer estimates 1. 4 billion worth this year. Steady last year, it is likely to contract 15 . This way ads have become yahoos a guest earnings drag. Are crimpingosts the margins, and that means from 5 to 26 over the past year, three years really, that yahoo margins trail facebook and google. He had emergede as bidders for yahoo , yp have emerged as bidders for yahoo it is unclear which parts of the business. We will get more on yahoo news efforts to sell itself after the closing bell on tuesday. s efforts to sell itself after the closing bell on tuesday. Alix is this it . I dont think so. We know other private equity firms are going to bid. Or two othersne out there that may put in bids. And we may see a couple of Strategic Companies bid. More late tonight, early tuesday. It requires going through the reporting process. What scarlet said really sums up what yahoo is. Yahoo is an advertising company, and that is why yp is interested. Is tumbler or flickr, but that is not where they get their money from. They get it from advertising. Yellow pages sounds like a Boring Company to merge with yahoo , but i spoke to a he admitted, i am not too jazzed about merging , but that is what yahoo does, they effectively place advertisements for other companies. The idea is to put the companies together. Or to make a bid a reverse morris trust sounds like exciting tv. Explain what that is. The idea is if you have a company that is a little smaller in size, this Dollar Company buys the Smaller Company buys the bigger one. The Bigger Company needs to spin off assets with the Smaller Company to make a new company. In this case, yahoo s core business would spin away its alle in japan and alibaba, of which is currently housed in yahoo inc. The new company would be coowned by shareholders and, in this case, yp. Would bew company yahoo , shareholders, at t. Plan to so is the game sell off different parts of yahoo so that it is only left with alibaba . Potentially. Softbank owns the rest of yahoo japan. Yahoo japan owns like 35 , softbank owns the rest. Does alibaba want to buy back the state yahoo has in alibaba . Possibly. Only at the right price. They are sort of waiting on the sidelines. I think investors are hoping they jump in and monetize it so that shares in yahoo will be worth something. But we dont know exactly how thats going to transpire. Its possible this is a very slow process for yahoo scarlet coming up, what you need to know to get ready for tomorrows trading day. Also, president rousseff is speaking in brazil. She says she will continue to fight and there is no democracy when the Vice President openly conspires. She adds no government will be legitimate without being elected and she faces a coup. Ecb bancorp in survey out tomorrow. Have expectations. You get opinions from financial people and see how they are feeling about the markets. We will see if its expanding. Goldman sachs will be reporting earnings at 7 30 a. M. Eastern time. I will be looking at housing Building Permits out tomorrow. We will be checking that out. We will see you back your tomorrow. Mark i am mark halperin. John i am john heilemann. With all due respect to Hillary Clintons list of favorite new york foods, what is this . Chopped liver . Happy tax Boston Marathon Animal Crackers day. Campaign ted cruzs is writing a high of political wrangling in wyoming and georgia where his delegates swept up state conventions, narrowing Donald Trumps lead
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