A meeting between president obama and raul castro. The president is expected to urge castro to seize the opportunity to improve u. S. Cuba relations by expanding human rights and Economic Opportunities. For the second time since friday, north korea has conducted Ballistic Missile tests in the sea of japan. Officials say kim jonguns regime launched five short range missiles today. Earlier this month, the United NationsSecurity Council enacted sanctions to punish korea for another Missile Launch as well as a nuclear test. The German Government says it took in 2 million refugees last year. A 49 increase compared to 2014. Of those 2 million, 860,000 have moved to other countries. Angela merkel has resisted measures to control migration such as putting a constraint on the number of refugees. ,lobal news, 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. Im pimm fox. Matt thank you very much. Good morning. Take a look at markets in europe. The dax has turned around to big gains. The stoxx 600 turned around and gains as well. You still see losses in the ftse. One of the reasons for those gains has been the movement in basf. And you can see monsanto unchanged upthe premarket but byer 3. 25 . Take a look at u. S. Futures. We see green arrows across the board but really little changed on each of the major indexes. Oil has come back down again and oil has been determining the fate of stocks. Right now we see nymex crude still at a relatively high level considering the last few months where we have seen this movement. 38. 95 per barrel. Barrel coming down to 1248. 90. To 1248. 90. Ng down sherwinwilliams taking out valspar. Jonathan you might want to dig starwood says revised marriott 8536 dollars per share. Starwood saying the revised marriott, 85. 36 per share proposal is a superior offer. Stephanie everyone thought this thing was a done deal. We sort of forgot about it but you forget until these things are signed sealed delivered, it is not over. Starwood inking a deal, the first Major Hotel Operator to be operating in cuba. They are taking the approach, being the biggest is the best. David we had some this we had the ceo on set and it seemed to be a done deal. I would not be surprised if we did not hear jonathan the conversation last week, a superior offer in terms of numbers or the company you are about to go with . For a lot of people talking about this deal it was going marriott because if you want growth, go with the company with the existing infrastructure to grow. Gotshareholders, they the company they maybe wanted as well. David how much is in cash and how much is in shares . Stephanie it is a sign for the Global Markets to see deal flow happening and to see some level of a bidding war when you look at overall market conditions, that is a positive. David despite the slide in the dollar and drop along bets on the currency, Goldman Sachs is unmoved. Itsfirm is holding onto bullish stance on the greenback. It is predicting three u. S. Rate increases this year to fight the feds signal that it is taking a slower rate hike cap. Guy haselmann, we have something of a divergence he interdicting the dollar. Morgan stanley saying its going to get weaker. Goldman saying its going to get stronger. Guy i think its going to trot overtime. Goldman could be right for the wrong reason if you do get three rate hikes the dollar i think will go up. We are the cleanest dirty shirt. Our economy is the strongest there are main factors. One is some of the shale revolution has structurally changed our current account. Our current account deficit is shrinking. The other that i think matters overtime is demographics. The u. S. Has actually the better if we had that demographics, much better than europe, china and japan. Jonathan the core of this call for a stronger dollar is three rate hikes this year. Unusual for a bank to be more hawkish than the Federal Reserve. You think the fed can fit in three hikes this year . Guy i think it is hard to predict. I think the fed is sort of making it up as they go. They moved the goalposts on us last week. We are really not sure if they are focused on International Events or the u. S. Higher. N is not it is hard to know what the fed is going to do in terms of 2ether it is one, two or three. Stephanie what kind of sign is this . Traditionally people are flooding into that u. S. Dollar. Is it that the dollar is not giving them enough . Guy i think it is more about regulatory rule changes. They hold less Corporate Bonds and more treasuries. I think treasuries are Monetary Policy cannot be as effective as it needs to be if they dont have the support of fiscal and regulatory agencies. The treasury yields are going to stay much lower, just because banks not just because banks are hoarding them but because the fed has so many they are and theover at auction yield so much more on a relative basis than other countries. Matt i put together a chart showing what stephanie is talking about. Here we see primary dealers holding a treasuries. 22to 111 billion, all primary dealers. The highest level we have seen since october of 2013. In red you see Central Banks or other foreign officials movements in treasuries. I should have put a zero line here. We come below the zero line. They have dumped more than 100 billion in treasuries in the first two months of the year, the months for which we have complete data. It looks like Central Banks and foreign officials are selling off u. S. Debt. Stephanie if you think about investors they have been punished for sitting in u. S. Debt. They have been pushed to the Corporate Bonds. The ecb spent said they are only getting pushed further. Matt these are the punishers im talking about, not investors. Im talking about the actual Central Banks. Stephanie and those investors are not incentivized to own government bonds either. In. I could jump i think there is a portfolio affect that is happening. Countries her currency started to fall and he wanted to support their currencies some of them may be raised rates like in latin america. Others, the reserve managers would be selling treasuries to try to support their currency. The negative portfolio effect im talking about his budget deficits really got impacted in a negative way. Saudi arabia and other exporters. When their budget deficits blew out, it was not just reserve managers but sovereign wealth funds that had to sell. They basically sell everything. Treasuries got caught up in that just like they got caught up and that is why tips sold off and risk assets had a difficult start to the year stephanie . A lot of sovereign wealth funds were they just own so many treasuries. David i would like to come back to the question about the dollar. We talked about Federal Reserve rate hikes. You said there are fundamentals like shale and demographics. How related are those . Does one really affect the other . The fundamentals are looking good, does that mean the fed is more likely to raise or other becoming divorced . Guy i think this is more about the globalization and connected world. The dollar plays a very important role. I think when you are at the zero lower bound, the other major Central Banks when they do more stimulus or qe or cut even more, the release valve typically should go into detail going their currency. , ihink what happened is think there is a negative affect which is why the currency didnt react the way it should have. In my opinion, the fed missed an opportunity to raise rates last week. If they were data dependent, they had the data to support that. The most important reason why i think they should have done that, they could have helped these other Central Banks drag themselves away from further negative rates. I think negative rates are really counterproductive ultimately. Jonathan just to pick up on something you said about the fx rate. How do you reconcile all time low yields in japan with a stronger japanese yen . Guy maybe it is years worth of carry trades being unwound. Now you can go into other currencies to do that trade. I struggle with that myself. Jonathan does that mean it is getting harder and harder for these respected Central Banks to weaken their currencies even if they wanted to . Policythink centralbank is not going to be as effective as they think. I think it has come to the point where it is counterproductive. It is hurting pension funds, Insurance Companies, negative rates are attacks on the sabres. Are a tax on the sabres. Savers. Low rates have indebted the entire world, not just china with the Central Bank Governor just said about china being indebted. We got out of this crisis because of massive amounts of debt that has actually been taken out. It has not been taken out for an investment in the future. It has been taken out for misallocation and speculation. Stephanie if Central Banks are not going to be as effective as they want to, what is going to be the outcome on the economy . Guy my biggest concern is that the markets have this unhealthy dependency on Central Banks. They are powering risk asset Prices Higher but those prices are not being supported by the fundamentals. Stephanie what you do . Guy what happens is that the central bank of taken on too much. They will not be effective at if fiscal and migratory authorities will not help. What im concerned about is higher risk assets, what that ultimately means is lower future returns. All that debt has been taken out at some point borrows from the future to make debt today better. The longer Central Banks wait with policy that i think is counterproductive in the long run, it is only good in the short run. Now i am even questioning that. They need help from trying to solve the root causes, which really are in the hands of fiscal authorities. Jonathan guy haselmann, director of Capital Market strategies. You are going to stick with us. Coming up next, china him of the governor of the pboc says he is concerned about corporate that. On the other side, margin trading gets loose. Discuss contradiction, next on bloomberg go. Pimm the bidding war for Starwoods Hotel has escalated. Thanid was valued at more 13 billion. Word if an important deal in the financial interest structure industry today area ihs and market have agreed to merge. Ihs shareholders will own 57 of the combined Company Valued at more than 13 billion. The new entity will be called ihs markit and will be headquartered in london. Monsanto is exploring possible crop deals with basf and they bayer ind germany. Ferro. O over to jonathan goathan in today possible we look at china as that shanghai composite rallied to a twomonth high laid brokerages and led by Technology Companies after policymakers loosened controls on lending. A conference organized by the state council. Take a listen. Translator overall i think the view on chinas reform going forward, chinas economic future, and the remnant the exchange rate. If we can go back to normal, those discussions will soon be gone. We have seen evidence of that type of argument dissipating. Jonathan despite the reassurance is policymakers underscored their concern over rising corporate debt. Jeff kearns joins us now from beijing. Great to have you with us. It seems like somewhat of a contradiction that the governor of the pboc says he is concerned about corporate debt. Not so concerned about investors piling on debt with an increasing marketrate. Why is the corporate debt issue such a concern . Definitely this is down in shanghai the markets up. Green in every sector today. In beijing, still a lot of questions for policymakers and it is not clear how they will be answered. Being at a gathering of top of top officials in beijing. A Second Public appearance in the last few days where he specifically identified risks he has been seeing. This weekend he talked about the level of debt, 250 of gdp. Something that signals they are watching this closely. Corporate debt, he mentioned, 160 of gdp. This follows his press conference during the National Peoples conference a few days earlier where he specifically talked about the Real Estate Market and banks and told them they need to know the customers and said the banks need to control the risks. He was also talking about this in the context of big real estate price gains. That are diverging from different parts of the economy here in china. Jonathan before we get to the stock marketjonathan , where are we in terms of nonperforming loans. Great story on the bloomberg about how companies are taking so long to actually get the money they are owed. What is the story . Jeff that was a really great story today, really interesting to see that. Duration since 1999 to get the bills paid. This is another signal of credit risk spilling out. Theme of whater the government is going to do to steer the economy through this restructuring as they are wholeheartedly committed to the 6. 5 growth goal for the next five years. At the same time, how they are going to address the overcapacity and unprofitable government run industries and potentially get rid of millions of jobs. This is a natural tension we never really see resolved. We hear a little bit of this conference rest closing the peoples conference a few days ago. He kind of left it saying they would be able to do both and this would be a winwin as far as doing the restructuring and keeping growth on their target. Jonathan jeff kearns, great heavy with us on the program. The governor complained of a corporate debt and the market rallies beyond 3000 points on the shanghai composite. Somewhat of a contradiction in china. That is your story in asia. Next up, we will talk about president obama, nine decades later a u. S. President touches down in cuba. Next. L discuss that david for the first time in nearly 90 years an american president is touring the streets of cuba. President obama arrived in havana yesterday expecting to lay out a vision of greater freedoms and more Economic Opportunity during his visit. Margaret tallis joins us now by telephone. Give us some sense of what it is like having president obama Walking Around the streets of old havana. Margaret before we even touchdown on the ground there was a sense on air force one of the excitement of the president and his team to be there. In the pouring rain yesterday as the president made his way to the cathedral, hundreds of cubans lining the area outside the square, cheering and calling out his name as he walked in. A lot of anticipation about this moment although neither on the u. S. Nor cuban side does anyone really know entirely what it means. A lot of possibility for the expansion of business and in theory for some of the freedoms that may come with that for the cuban people. Still very much fledgling and its stages. David lets talk about the business. One deal has been announced. Starwood will be managing a couple of hotels. A letter of intent for a third. Is that up and running . Margaret the announcement is a big deal but marriott is here as well. Whatever is happening between marriott and Starwood David it was news about tournament ago about news about 20 minutes ago about that. Areopagus it is in the running. Margaret part of what president , and is doing here investment coming to cuba anyway, whether it is china, other countries that are involved in investment here. 90 miles off the coast of florida. Owninggoing to be properties, it is all interconnected. You see marriott trying to get in on the game. Starwood having a foot down first. Airbnb, active in cuba. You see other ceos beyond the hospitality business. Xerox is here today on this trip. We expect some deals to be announced. They have been pretty coy from the u. S. Side about what those are going to be, trying to leverage this for maximum drama in days to come. The embargo remains and as long as the embargo is in place there will be a limit on investment, as well as the cuban government and some of their approaches to human rights, communications, the ability to hire. Talev in havana. Thank you for joining us. Richmond that president jeffrey lacher made some comments earlier today on his outlook for inflation, coming up next on bloomberg go. John good morning to you. The ftse 100 is down a little bit this morning. Tom keene joins us from radio and Carl Riccadonna joins us as well. Pimm a suicide bombing wont did many people in istanbul. The donald trump president ial campaign will add security to his larger events. Recent rallies have had outbreaks of violence, spokeswoman says the republican front runner does not condone any of the scalpels and says protesters have used profanity to provoke responses. Drama is expected this week in brazil, the countrys Supreme Court and congress are trying to come up with a way through the political crisis. 2 3 brazilians want the president ousted over corruption. Almost dads and e puttingn titans ar up 10,000 each while they put up money for march madness. Texas a m was down 12. 2 Northern Iowa with 47 seconds left. To tie in managed regulation by going on a 142 run and won the game in double overtime. Watching and weeping, most people got loan out why the Michigan State game friday night. Bigbasketball weekend and a morning here. In paris, people are getting together. The esteemed president of richmond is here of closect inflation to 2 next year. I think it will generally be firmer of this year than last your. Riccadonna is with us. Favorite industry cbi which gets is way above 2 right now. How now is now . Definitely seeing a gradual acceleration in inflation. We are finally see