Fourth quarter. And we go to washington where peter cook has the latest on tighter sanctions on iran. Peter, good afternoon. Good afternoon mark. There is new developments, the Senate Voting on him posing imposing tougher sanctions on iran. That vote was 18 to four. This legislation was opposed by the Obama Administration because they worry any new sanctions against iran could jeopardize ongoing talks and undermine International Support for the negotiations. Several democrats said that they support this legislation. But they said they would not support bringing to the senate floor before the end of march to give the administration more time to work out a deal. That is where it stands right now. At the first action of the committee, chaired by richard shelby. The second time that you have the gavel in your hands. Thank you peter. Why was it important to move forward now, given what the white house says we could risk undermining the talks . It was obvious with an 18 to four vote, a lot of us feel that we need to send a signal to iran we need business. Negotiations up and going on for a long while with not a lot to show for it. Will there be a lot to show for it before march 24 . We hope so. This is a serious business. It is a survival question potentially, for israel. We want to stop it where we cant. If they are serious about negotiations, serious about doing a come brands of deal with us, fine. If not, i think congress is sending this message were going to do something else. Do you agree with the notion we will not see this bill on the floor before march 24 . Democrats have said they are going to block it. I think whether you bring the bill up will be up to the majority leader. Senator mcconnell is very wise here. We will work with him whether we bring it up before march 24 or after march 24. I dont think it matters right now. It takes a while to get things in form in the senate. A few weeks wont matter. Do you think that the talks will not produce a result . I think this administration is doing what you call chasing running after a deal, looking for a deal because they have had so many failures and foreign policy. But this could be a huge failure and we want to make sure it is the congress, that it is not a failure. It is either a substantive, strong, concrete agreement we can live with, that we think is good, that iran can live with that will make them a nonnuclear power. At the end of the day will the senate have an opportunity to vote upward down on this agreement . I think so. Is the white house opposed to that as well, threatening a possible veto . The president has threatened so many vetoes and he has the right to do that under the restitution constitution. We will see what it does in congress at the end of the day. You have been chairman on a host of issues, important issues in the Banking Committee. What is your sense of janet yellen, how she is handling problems . They have had some problems. I did not vote for janet yellen. I knew her history. She was a very lax regulator, i thought. Others did, too. She has been there, what . A year now . We will see about the Federal Reserve. What matters now, the portfolio of the fed. All of those bonds, the securities they bought, what are they going to do with them . How are they going to deleverage . This is unprecedented. So, you are looking at oversight on whether they can do those securities, quantitative easing . Absolutely. What about legislation . We have senator paul talking about i am very interested in the fed, especially the portfolio. I do not want to be a member of the federal board of governors. But as oversight, we should make sure that they are doing right. No other questions about the portfolio of the fed. Can you have an audit of the fed that does not pass the metal of it depends on how you definemettle. What were talking about our substantive things. What about fannie mae and freddie mac . You were big critics about them before the financial crisis. What about the plan to unwind them . We will address that and see how far we can go. We need bipartisan support in the senate to do that, but i do not want to bill just for the sake of a bill. I am not interested in any bill with an explicit guarantee. I would like to get fannie and freddie up and running on their own without the government help. Is that possible . We dont know. Its a big bipartisan left. Big bipartisan lift. That is what we are here for. Let me ask you about dodd frank. You were an opponent. Where would you like to move. Frank . I think the Consumer Agency created by doddfrank ought to be under a Consumer Agency. Also, i would like to move the support to Something Like the ftse, Federal Reserve, and others where you do not just have onesne czar. Do you think there is political will for democrats to join you in that . I dont know. We will find out. All right, thank you senator richard shelby, taking over the Banking Committee and a whole host of issues. Back to you, mark. Thank you. The s p 500 coming back from his weakest monthly drop in a year. Lets go to the breaking news desk with chief markets correspondent scarlet fu. We turn to the corner about an hour and 20 minutes ago. This is the dow industrials, the yellow line, and since the lows it has made a steady recovery 141 points. That is 8 10 of 1 . We have stabilized a little bit. The white line is the s p 500. The green line is the nasdaq. Within the s p, you have 60 of the 500 numbers higher. At the dow is being moved higher by a couple of big name companies. Boeing trading at a record high. They could reach 200 within the next 18 months. Mcdonalds, of course getting a boost from that change in management. And home depot at an alltime high as well. This is interesting because crude oil, if you look across advertising has moved lower as well. It has gone to a new sixyear low 48. 50. We see Energy Companies the biggest decline are in the s p 500 for the second day running. Scarlet fu, thank you. Ford motors posted earnings that exceeded expectations. Matt miller lovers the Auto Industry for us, and he joins us covers the Auto Industry forest, and he joins us now. One thing that they did they changed over from steel bodied to aluminum bodied f15 0s they had to shut down plants for his long as 13 weeks which reduces, number one, the best filling best selling vehicle in north america and cuts into margins because it is their biggest margin vehicle. I think that is why it was better than what a lot of analysts estimated. They came out at 7. 4 and analyst expected that to be a much lower number. That is why they had a profit rather than dropping to a loss. Trying to get ahead of this, forward warned there would be a bumpy ride ford warned there would be a pumping ride. Because they were looking forward, they were looking to make more investments in the future. Thats right and there were more of that today they said earnings will be weaker at the beginning of the year, rather than last year when we had a strong first half in a weaker second half, you will see us come in lower at the end of the year and start to pick up at the end of the year after we hit past of a lot of these changeovers. Not only the f150. They will introduce those new cars this year. They will put that into profits at the end. But also geopolitical concerns as well. They lost hundreds of millions, specifically russia, because of the week wrubel weak ruble. And they will lose more in europe and they forecast in september. They had forecast they would lose 250 Million Dollars. It will be worse than they originally thought because of what is going on in russia, because of the strength of the dollar against the euro, and because of the highly competitive aspect of european car sales right now. Everybody is trying to gain market share, and because of that theres not a lot of pricing power. Bloombergs matt miller joining us to talk about ford. Thanks so much. Coming up, bearish bond bets uruguay some investors bearish bond bets. Welcome back. It is 15 minutes past the hour. Lets check bloomberg world news. No word on the fate of a jordanian pilot and his fellow hostage a japanese journalist. Isis had threatened to kill the men at sunset unless a prisoner was released in jordan. Jordans amended jordan demanded proof that the pilot was alive. The Republican Guard camp was used by American Military experts until 2002 to train locals battling al qaedas powerful affiliate. They seized a number of locations in recent days. They captured the capital back in september. European Foreign Ministers gave the goahead for work on any appropriate actions to force the kremlin to observe a ceasefire in ukraine. The decision could pave the work for further economic sanctions. There was concern that greece would block the proposal but that did not happen. Thats the latest world news. We will have another update at 45 minutes past the hour. At investors in the Federal Reserve do not have the same investment in the u. S. Economy. Investors say that bond purchases are saying a different thing. We are joined by lisa rommel was. Now, lisa, why is the bond market flashing these bearish signals . 30 year treasuries. Best game gain ever for january. More than 8 return. Yields, record lows, but the stock market it has been a really rough month. And that kind of speaks more to recessionary conditions and a sour outlook, but yet you have janet yellen coming out and saying they see a strong growth pattern in the u. S. And they do seem to be on track for a rate hike. Lisa youre just in florida at an atf conference. What are people talking about . What is the worstcase scenario people keeping people up at night . The worstcase scenario is what if the u. S. Cannot diverge meaningfully from europe or japan, even canada . Everyone is lowering rates everyone but the u. S. They are saying, we need 2d value our currency. At the u. S. Is saying, all right. We are ready to hike rates. The dollar strengthening. But can we . I dont know. Can we really succeed to accelerate while everyone else that needs . Lisa the talk has been and we have been hearing this since last year the fed was going to raise rates by june by the very latest, but people are still piling into long dated government bonds. Why . There are a couple reasons in a couple theories. One reason, even if the fed hikes overnight rates that will be affect shortterm bonds the twoyear, five year. Longerterm will not be as affected because in the long term, especially if they hike rates, inflation is not going to increase as much. They are going to try to cool the economy, right . Bond traders do not really see the deflation weakening that 2 target the fed has put out there. Do they think the fed is talking about it enough . We heard yesterday they want to more about inflation, they want to know what the fed is going to do because how long can it stable of this 2 target before the fed decides, well, what are we going to do now . Exactly, and not only that but what tools do they have left . They do not have anything in their personal weapons to combat deflation and they are saying oil is a transitory trend and another big turn in the market is people do not see why oil would regain its value. Why would it go up to 100 44 a barrel from 107 a barrel last june . What are some of the consensus bets we are hearing from the box market right now . From the bond market right now . Certainly a strengthening of the u. S. Dollar, a continuation of the trend we are saying. They say we will not be that will not be good in american business. Exactly. Where is the consensus there . You see them going away from riskier assets. That kind of place into the bearish view of the world. You also have the flattened curve. All right, lisa abramowitz. Thank you so much. Coming up down almost 24 . Does this luxury brand need a turnaround . That story when bottom line continues in just a moment. Be sure to check out the latest edition of Bloomberg Business week. It hits newsstands in your tablet today. Coach is attention to make a comeback. They posted secondquarter profit that exceeded analyst estimates due to a turnaround. For more, lets bring in our senior markets correspondent julie hyman. Julie, is the plan working . Sort of. You are looking at some of the new product coach has put out. There is a new collection by a designer at a higher price point. Some analysts have questioned that strategy. It is hard to increase your prices after you have decreased your prices. Coach has a lot of outlets. Have done a lot of discounting. They are sort of turning back the clock to reverse that strategy. Coach is trying his best to do that. The company says it has at least been somewhat successful in the quarter it just reported. They had new Concept Stores with a try this strategy. However the overall numbers do not look as good. North american sales down to pursue 22 . Not as bad as estimated, but 22 is still really, really poor. The stock is up the most it has been since april 2013, but there are still questions about whether the big plan is going to work. Speaking of the plan is it farsighted enough that they think they will compete with their rivals . Thats a good question. There were a lot of rivals out there and they are growing. Michael kors, very aggressive. Another competitor closing higher today. I looked at other retail brands. Coach itself, by the way, had a revival of a brand in the early 2000s under the leadership of the ceo and the chief designer at the time. Design is very important. Mold returned around. J. Crew turned around. Design is in important element of that. Our senior markets correspondent julie hyman taking a look at coach. Thank you so much. Coming up, the ceo of citizens financial will talk about the banks fourthquarter profits and the year ahead. Stay with us. You are watching bottom line on bloomberg television. We will be right back. Welcome back to the second halfhour of bottom line on bloomberg television. Im mark crumpton. Thanks for staying with us. Citizens financial reported fourthquarter estimates. The rhode island based bank exceeded analyst estimates at 40 at . 39 per share rejoining me, bruce van saun. Has your complaints with regulations come to the at the expense of profitability . We had a very strong ratio as part of rbss desire to have Strong Capital. We have these drinks to grow loans and are converting some of that capital into lesser forms of capital. That is a plan we are executing over a two or threeyear timeframe. You have been expanding into auto loans or student loans. How risky is that . We do not play in the subprime space. We have historically played with very strong fight go scores and what we call super prime borrowers. We are now moving into prime because of a little return into the marketplace, but that is stable. Does that give an indication to the Banking Sector and the public at large that credit standards are not as tight as they were before, that they may be able to come into citizens financial and try to get a loan . I think it is part of our adjusting the overall risk profile a little bit to get more yield. The Net Interest Margin is like that of our peers. We are stable and our peers are coming closer towards us. Citizens gave its inc. Stress test to regulators the third of this month. Have you addressed the problems outlined last year, specifically how your losses were calculated . I think we have done a pretty good effort of responding to things regulators pointed out. We put a huge effort beyond that. I feel good about that. We will see the results in a number of weeks. Rbs is your parent, and they are reducing their stake in citizens. When will that be complete . They have a headline with the European Commission to divest us by the end of 2016. If Market Conditions are not conducive, that can be extended by a year, but their goal is 2d consolidate us in 2015, which probably means getting below 35 . Look for another one or two sales this year from rbs. Sir, when that the consolidation is completed, what will it allow you to do . I do not think it will change much. We have a constructive relationship with rbs. We will have an ongoing commercial relationship. The real went to them is the augmentation to rbs capital ratios. You have only been a publicly traded bank for a few months since last september. How would you gauge her performance from last fall to now . It has been choppy, and certainly growing revenues has been challenging for the industry. We have levers to pull in terms of good Strong Capital positions. We can go for that long growth. There are areas we were underinvested and where we are making those investments driving more revenues, reaching our full potential. We are doing a good job of constraining our cost in delivering revenue growth. Yesterday the Federal Reserve completed its meeting and the watchword was patients about when the fed was going to raise Interest Rates from record lows. When that move is taken, how will that affect citizens profitability and will it have any affect on your loan strategy in the near term . It will happen for sure because we have a Balance Sheet that we may refer to as acid sensitive, which means the Interest Rates go up as they go up and we are probably one of the more asset sensitive banks. It will be good for us when that happens. It will not change much about how our Balance Sheets is positioned. We have tried to keep the makes at and next at a consistent level the last 12 to 18 months. Bruce van saun. Sir, it is a pleasure. Thank you for your time. Thank you. In argentina, the death of a prosecutor as another twist to the troubled economy. That story and more when we come back. Welcome back. It is time for todays latin america report. Argentina in president Cristina Fernandez is facing a new problem. The death of a government prosecutor who was investigating her. Is the death of the prosecutor affecting public support for the president . It remains to be seen how the holes are going to be looking. Her poll numbers are already very weak. The result poll taken just after the incident that it would affect her image and a whopping 80 said it was going to affect her image. Within that, there was also the result of people who were voting for her party in the upcoming president ial elections in october and almost half of the people who were planning on voting for her party are doubting their decision or changing their minds. What is the back story here . What was the prosecutor investigating . The governments involvement in basically he alleged the government was trying to court iranian officials. Basically the prosecutor accused the government of an exchange getting these officials. What has the governments response been to this . The government has not really been handling this people have been taking to the streets saying they demand justice and the president should step down. The president went on tv. First of all she posted on facebook that the man had killed himself, and a couple days later went back on and said, no, this is part of a big conspiracy. Someone sent him this information, and then killed him and made it look like a suicide. People are not very inspired that this is going to lead to a soft crime. A solved crime. Is there a remote possibility of a Silver Lining . How should investors be reading this . It will throw support from the governor of when sras buenos aires to the mayor, because he is the most market friendly candidate in the president ial election in october and voters want someone who will radically change what is going on there. It will probably help them. The opposition i do know what to say are the exuberant at the chance they could move her out of office, but there is a fine line between saying we have an opening here and then understanding this is a tragic education. We got a statement yesterday and he was very clear. He said, i do not see how it is possible to say there would be any benefit to what happened. Sure. Even for argentina that has corruption scandals all the time, this is definitely a new thing. He said this is a sign of the situation we are in and the way that institutions have eroded. Ok, you can read more about this. Katia, thank you so much. That is your latin america report for this thursday. Coming up, white Lower Oil Prices may not be good news. Welcome back. This is bottom line on bloomberg television. Streaming on your phone, your tablet and bloomberg. Com. It is 45 minutes past the hour. Lets check bloomberg world news. An explosion outside the maternity and Childrens Hospital sent a column of smoke billowing over the area in western mexico city. Aerial footage shows much of the building collapsed with firefighters during to extinguish flames. Stocks rebounded after problems with the antiausterity. Greeces deputy Prime Minister said the initial comments were due to the inexperience of the new governments. In germany, the inflation rate is turning negative for the First Time Since 2009. Prices have fallen 100 this month. The European Central bank admitted that it has spent more than 1 trillion to try to prevent deflation. That is a look at world news. We will have another update at 3 15 new york time. There is movement on a bipartisan Keystone Pipeline xl bill. It has enough to pass, but not override a president ial veto. Crude oils 50 slide is waiting on big oil earnings. Bloombergs alix steel joins me with more on this story. What is the biggest take away so far . Lashing. They all said that they would cut spending on things like wells and pipe as much is 10 billion this year that would be enough to drill 1400 new wells. Barclays is looking it over excuse me, is looking at at decline of 9 overall. That is the fourth decline in the past 30 years. Is there a Silver Lining . The picture looks bleak, but Big Oil Still making billions and billions . Did we forget that they still make billions of dollars even though the prophets get squeezed . What could be a positive, they are all looking for low cost. The stuff that they used to drill wells will be cheaper because things keep falling. As people are drilling less they can go to the driller and say, hey, guys, i am not going to pay you a Million Dollars for this rig. I will pay you 100,000 and that is how we spend save money. And they cannot produce enough to run in place at the end of the day and its possible this oil decline is going to put a lot of pressure on those mid tier small caps, perhaps acreages that do not look good that could make consolidation targets. Analysts say only if you believe in Higher Oil Prices will that consolidation makes sense. Are dividends and buybacks protected . They are saying they are iconic here. A beasley that is the rhetoric. Obviously that is the rhetoric. Analysts have been saying buybacks might be at risk. Morgan stanley says they are not the strongest, but buybacks might be a case. Other Companies Like chevron might be in trouble with their buybacks. The issue, mark is Free Cash Flow. They cannot exist without Free Cash Flow and Free Cash Flow had been falling even before oil prices started to tank. Exxon Free Cash Flow is at 43 in just the last 10 years. It has nothing to do with the last four. All right alix steel following oil for us. Thank you so much visitors in nuremberg for the worlds biggest toy fair. One of the hottest trends is the socalled smart toy. Our editor has this exclusive report. He may look like an ordinary cuddly toy but it is much smarter than that. Chips and Software Help him connect with his alter ego on screen, transforming them into a smart toy. It is risky and takes a lot of time. [indiscernible] traditionally Toy Companies develop small toys more easily. Big companies probably do not needseebo, but there are plenty of others who do. They are working on the Technology Hurdles and they have the toymakers working on the play, the pattern, the experience, the licensing, etc. A lot of toymakers, friendly, do not have the budget, the time, the manpower for this challenge, so taking this solution is the way to go. With children crying out for smart toys, seebo says manufacturers are eager to get on board. The first toy has characters like simon and freddie here who play out a story ont he tablet and the board, all of which is controlled by the child. It looks like fun to me, but i am not the target market. How ell do you like it . [indiscernible] is it fun, is it a fun game . As Companies Start using the technology, there is a fair chance children will never give you back your tablet. Elliott gotkine, bloomberg. We wanted you to know that bloomberg is the only Financial News service offered on kindle fire tv. And you can watch us on apple tv. Stay with us. Scarlet fu will have another check of the Market Movers on the other side of the break. As we had to break, the markets are trending higher on this thursday. Industrials higher following the dow joness biggest slide in a year. The s p and nasdaq are up over 4 10 of a percent. Oil, as we had to the break, oil on the decline this thursday. As you can see nymex crude was a down 52, finishing at 44 44. 54. Bottom line continues in a moment. Get the latest headlines at the top of the hour streaming on your phone and tablet and bloomberg. Com. That does it for this edition of bruce van saun. This edition of bottom line. Another edition of on the markets is next. I will see you friday. Im scarlet fu and this is on the markets. Treasury prices going down pushing yields up. Oil prices at a fresh sixyear low. That data is supposed to be good news for consumers, and therefore retailers. If you look at xrt, up almost 20 for the past year. A bunch of specialty retailers rallying, kate spade and michael cors rallying the most and nine months. Our senior markets correspondent julie hyman covers the industry and joins me now. Theres a lot of carnage in this sector. Gap has really been struggling. Yes, you have lower gasoline prices, you have utilities doing well and then there is the flipside of that. And a company like gap which has been struggling with top Sales Numbers for quite some time it brought in a director a couple years ago who came out with a collection at h m too much success and acclaim, and gap was hoping for the same. The same. You would think it would be a good fit, and yet it did not resonate with customers. So, she is out. The company is getting rid of the creative director role entirely, the role she inhabited, and is doing restructuring with the brand. And the results of a change of the top of mcdonalds, a lot of people saying that mcdonalds noticed the transition. Did gap miss something in retail . I think everybody is missing something. Retail has changed. That is part of it. I keep hearing analysts say over and over, there is no compelling fashion trend right now. There are no skinny jeans or if that is the trend, that is the only one. So, that is something that has affected a lot of retailers. There is also been a lot of consolidation in retail. That has changed the landscape to some extent and one analyst earlier called it a secular change in Consumer Behavior where people are saving up and buying bigticket items, things like cars and electronics. And on the apparel side, they are willing to do a little work, find the bargains. And they are not heading to the mall either. You have been keeping track of a bunch of retailers that have had to file for chapter 11 or are looking to. Yes, and the biggest name today is jones new york. It is no longer a public company. It will be closing all of its outlet locations, 127 of them, and discontinuing its wholesale business. It is seeking a Strategic Partnership maybe the licensing business. It is unclear. There are a lot of bodies by beside of the road, so to speak. Wet seal filing chapter 11. Body central filing. Seawonder the retailer owned by chris burch, filing. A lot of retailers made it through the Holiday Season to only then say, we are out of money. Julie hyman, thanks so much. Street smart is up next. Hello and welcome to the most important hour of the session. We got 60 minutes to go until the close of session. Stocks reversing earlier losses. Plus we are counting down to earnings at amazon, google and visa coming out of coming out after the bell today. And is now a good time to invest in greece is to mark Robert Shiller says its a spectacular investment. Youve got to hear this. Street smart start now
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