Equity markets come up switch up the board. The weaker dollar story, stronger yen. It is just the movement at the front end of the Treasury Curve driving the fx market. The curve more sensitive to what the fed may or may not do. Rates stand low for longer. We are just getting headlines from valeant. It isonth comfortable with the current liquidity decision. Airport in brussels will remain closed after last weeks terrorist attack. Senting passengers will be to the hangers to collect their bags and the departure hall will handle 1 5 of the normal flow of passengers. According to police, the what isasked someones post do when he has not seen his wife and children someone supposed to do when he is not seen his wife and children in 24 years . Republican president ial candidates backing off their promise to support the partys nominee. He does not says feel beholden to the loyalty pledge because hes been treated very badly. Yellen, it seems. T urging caution regarding Interest Rates, pushing back on a handful of colleagues who have suggested another move may be just around the corner. Heres janet yellen and to fed president s with different outlooks. i consider it appropriate for the committee to proceed cautiously. Especiallyn is warranted with the federal funds rate so low, the fomcs ability to use conventional Monetary Policy to respond to economic disturbances is asymmetric. We are still trying to make sure the data we receive on inflation are real, not a mirage. Given that, we are very much on the right track. You can argue about global risk, gdp Growth Outlook as may be a little bit lower, but you can another strong job support, labor markets are improving, you can make the case for moving. David it was just laid out for you. What is an investor to do . Janet yellen sending out a pretty dovish signal. Other fed members singing a different tune. Michael janet yellen is in charge. Two nately, the other the federal open mouth committee. With good reason. It has been the source of uncertainty for the markets. They are not going to raise rates. Jon is she in charge at this point . We dont see the boats at this point. Votes at this point. We see a lot of dissent publicly. Michael i dont think it shapes policy, but i do believe it shapes the markets. It has continued to do so. Interested, thinking of david running businesses. If you are in charge and there are people out there talking against your position, what would your reaction be . David they would not be working for me. Simply put. Michael this does not make any sense to me. Vonnie it seems like theres been a huge change. Stagnation for the first time in the telegram. Are the people really warning about the potential for a pitch up in rates very quickly . Does anybody really know which way we will go . Michael nobody knows. Lala land now, there is no historical precedent for where we are with respect to world Central Banks. Weve never been here before, so nobody knows. For these talking heads from the fed to speak with certainty about it takes my breath away, sometimes paid stephanie youre confident that we will not have a lot of rate hikes anytime soon. Explain to me equity markets. Im not as clear on that. Saying janet yellen shes not going to raise rates corporate rates are down, not up. Is the a 9 decline current view for the upcoming earnings cycle. Knocks s when alcoa kicks off the earnings. It will be the sixth consecutive decline. The only thing we have going right now is the fact that we have these very low Interest Rates. The pricetoearnings multiple is supposed to be higher. Onre is nothing else going in terms of economic growth. We will talk later about china. Growth there, but thats about the only other place in the world besides the u. S. Mood inside the fomc appears to have changed. Back in december, they would emphasize, this is positive. I dont hear that anymore. Michael the message is changing with some of the talking heads. That is also disconcerting to the markets. You have major declines in the markets around the world in january. You forget about that. The china market today is the worst performing market your today, but it was up 12 in march. It is down 15 year to date. U. S. Market again down 12 . You have these crazy market moves which are reflective of the uncertainty caused in part by these talking heads. Jon this is what is driving the market. Two passengers just ride the wave . Michael what happens is you get ion in thelate markets. Theyve withstood these ridiculous headlines for the last year and a half in incredible fashion. Companies are doing ok. You look at some of the performance of the companies who have these large global mandates , theyve been performing recently well given the craziness in political circles. There is a lack of leadership globally. Youve talked about this ad nauseam. Its a fact. Companiess largest and the people to manage them are doing ok. They are using Technology Come a lot of things they did not have five or 10 years ago. They had these headwinds. David as an instor, how do you separate out this signal annoyance . Should not Pay Attention to chinese equity markets. Theres a lot of moms and pops in there setting. T you Pay Attention to these are the numbers i really care about. You approach it as a business person, you look at the valuations, look at the prospects, look at what the world looks like and then say, the the value security valuations around the world for the best companies are pretty attractive in a lot of places. The u. S. Market is pretty full, but the best house in the neighborhood right now. As itina market is priced was in the crisis. Incredibly low valuations. , asou step back as an adult janet yellen is an adult separating herself from the , is this a good value here . Thats i you approach it. Thats how you approach it. Streete wiseguys on wall , the lineup for the rest of the is your got advice to investors to sit here and keep that janet yellen speech in mind . Michael absolutely. She is speaking common sense. Outnumbers that have come in the last few days, theres nothing there that would argue against what she is talking about she talks about this asymmetric response. The cards are pretty laid out on the table. For people to speak to the opposite, there is such a disconnect here between the reality of what they are talking about. Its like, what are they thinking . Jon we will be talking about china very shortly. Coming up, the Worlds Largest lender by assets. Thats coming up on bloomberg. Jon some breaking news on valeant. Positionedrket, well to meet obligations, the company says come asking lenders to amend interest coverage. Added items. D a positive spin from the company this morning. Up by 4. 38 premarket. Job cuts are on the way at boeing, they plan on illuminating 4000 jobs at their commercial airplanes division. 1600 workers have elected to leave boeing under a voluntary program. Corporation takata the worstcase scenario would involve 218 million airbag inflators. They are still trying to figure out how the cost will be shared. A deal that brings together the main a similar of iphones with the maker of japans Top Television sets. Struggling jon have using the price point for tvs . I was in the market for plasma cometh 50 inch, 400, 300. Back in the day, this was a really highend item. It was 3000. Youre not just buying a company it speaks to what the Japanese Corporate culture wants. Devastating. Vonnie hardware, that is the point about hardware and technology and progress. Video players whose to be expensive. Jon dvd players as well. Forget about my bachelor pad. Chinese Bank Earnings do this morning. Due out this morning. Its Profit Growth is installing in light of rising bank loans. I want to get to our asia bank senior analyst. A lot of people expecting some bad figures. Were they as bad as people thought they would be . Francis i think the results are coming in stronger than the consensus, especially on the earnings. The market has been focusing on the dividend payout cut. I have seen the bank writing off a lot of their balance in 2015. Thats why you see the bad debt balance and a lower pace. David are those two things directly connected . They cut their dividends to have more cash to put into bad debt reserves . Is that the idea . Francis in fact, it is more about the reserves. It has put pressure on their capital. The return on equity for chinese banks has been quite strong on the accounting basis. 14. 4 through 2015. Even with that kind of increment, they still dont see cutting dividend payouts, that is a warning for the banking sector. Vonnie we are high, but not quite at crisis level. Is it good that bankers are rejecting this notion or bad . It is onlywould say a shortterm relief for the credit problem for chinese banks. Theiry cannot serve obligations, how can we take the it is a very shortterm measure. Trying to boost china Bank Earnings. To support the government expanding in the coming years. For a lot of people, theyre quite cynical about the data coming out of china. If i dont believe in the government gdp readings, how do i get a proper read . How do you look at Financial Stress . Francis you are spot on. The npr numbers you see for the , only thenking sector commercial banks, we see the balance growth. We do see many of the banks off their Balance Sheet to some vehicles like Asset Management, vehicles set up by the Chinese Government to be distressed asset managers. If you are trying to look at the in chinese banks, it might not be a good reflection of the credit quality situation in the chinese financial sector. Michael could you spend a couple of seconds talking about the current valuation . We have dire circumstances for the banks on the one end. On the other hand, vonnie hrase crisis level. Valuing thearket banks themselves . Fairly inexpensive, i understand. Francis the biggest banks in the kong has been hitting market low in hong kong. Since then, there has been some rebound. A rebound for the chinese banking sector. It is still much lower than the 2011 during during the european sovereign debt crisis. Now, it is the chinese crisis. It is not a surprising phenomenon. Michael the price earnings of the level generally right now would be what . Times. 57 michael five to seven times earnings. 15 to 20 at some points in the nottoodistant past. The good news there, i been investor for many years in the they have been not very much exposed to the banks. More recently had some exposure to the Insurance Companies pairing that back as well. A little different reason than we just heard the margins on the investment side, how much they can earn coming bookcases in both cases, continues to be challenging. Thank francisto. Hen and Michael Holland next, the auto industrys biggest recall ever. The costs could climb to a staggering amount. Details next on bloomberg. David Takata Corporation shares plunged to a record low on rising costs estimated for the auto industrys biggest recall ever. The called the recall could be as much as 24 billion. Honda motors also fell. For details, we go to craig in tokyo. I found is pretty stunning. Theyre been estimates of 7 billion before. Now, it is to 4 billion. Where did this come from 24 billion. Where did this come from . Raig the stadium today scenario figure and not something set in stone. This is a doomsday scenario figure. November, after months and months, even years of the u. S. Sayingmissing weve lost confidence in takata airbag inflators and we will give them a couple of years to say to us to show us that they are safe. Up to this point, using regulators follow in moves like this. Youve seen regulators following in moves like this. David how much of this is a good faith estimate and how much is a negotiation with the automakers . If they had to pay 24 billion, they would probably be bankrupt. Absolutely, this would definitely overwhelm takatas Balance Sheet. This is something that will have to be resolved both with takata and the automakers because takata will not be able to shoulder the cost burden itself. Even if we do not get to the point of a total recall situation. Nissan, also the american carmakers and some german carmakers, takata has many customers around the world involved in these recalls and will likely have to shoulder some of the burden. David oil will be coming up after four days of losses. Next, we will take a look at the energy names to buy. That is next on bloomberg. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Youto get the help yourefar looking for. Thats why at xfinity were opening up more stores closer to you. Where you can use all of our latest products and technology. And find out how to get the most out of your service. So when you get home, all you have to do is enjoy it. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Jon this is bloomberg. Good day to the beautiful city of london. The yellen Global Equity market rallying. Biggest gains in about two weeks. Energy, the miners lead in the gains this morning. Tom keene joining us. Good to see you. It was completely predictable and yet, boy, did the markets seize bigtime. Lunch was the worst dont get me going. Vonnie the u. S. Will speed up its military presence in europe, toding an armored brigade reassure allies who are concerned about the threat from russia. Take actionh to against iran for its recent missile test a new report calling the test destabilizing and provocative. Myanmars first democratically elected leader in decades has been sworn in. He will begin his term friday. Suu kyi was named the foreign minister and will lead the in will lead the entire government. Tom, the morning mustread. China. Tom a lot of choices today. Equities running up a storm. This one from professor roche at yale university. Crisis economic identity , notwithstanding the Unfinished Business of consumer led rebalancing. China appears to be embracing yet another shift in its core economic strategy. Arehina, internal debates carefully subscript appeared nothing happens by accident. Something has happened in the last 48 hours. How interview to interview, offcamera and on camera, all center back to china. It is clear that she is concerned about china, as well as oil. She sent a clear message. What struck me about this, why expect a shift to the consumerbased economy . If you really read carefully what they are saying, they say we have to start doing things from the top down. Tom a command and control issue there. I would suggest an overarching macro theoretical debate that of scares the debt debate that is really going on within financial systems. Jon another debate that happened about a month ago at the g20. When you see a series of regional fed president s come out , they were not there. Janet yellen was there and she has come back and she seems to be putting this idea on the table it is fueling the argument that the world needs a weaker dollar. , we want ae ecb stronger dollar because we want a weaker currency. Day or twothis a ago. S press conference 14 days ago, there is a single sentence in there about new hope in the fourth quarter. That was completely reversed yesterday by what we heard about global dampened growth. Vonnie exactly. Dominik on this show as well sing there will be no fed hike this year. Saying there will be no fed hike this year. It was very interesting how many strategists pointed out the number of references to the Global Environment yesterday. We dont normally get that from the fed. Its a read from all the economies that china feeds. David its all about supplyside at this point and all time and again, with the quantitative easing, it is not working. Tom you can have supplyside supplynn hubbard is a sider at columbia, even he would shift over to a demand analysis. That demand is clearly dampened. David that is what we are lacking in the end. Tom while you were gone on your 14 day vacation, it has moved down to what, 0. 6 . Jon he doesnt like people going on vacation. 0. 6 or 0. 4, i cannot remember. Vonnie 0. 6. I mentioned it earlier. Talking about this inflation, lets go to the commodity market now. Oil for the first time in five days is up. This signals lest support less support for the dollar, cushing Asset Management joining us now. Dontiew on equities depend on crude getting back to 70s. ,s libby even though we have seen this pop in crude, we will see companies in the energy space, they have to have 70, 80 crude. The way to play energy right now is through the Energy Infrastructure. These are companies with real assets, real cash flows and they had the ability to survive and continue to grow even in a 40 crude market. Tom has the Balance Sheet adjustment occurred now . Libby the Energy Infrastructure companies do not have they have challenges to their Balance Sheet, but they dont have the distress you see in the producers. The producer stress will continue at 40 oil. David the you see them as bargains because theyve been taken down with the entire Energy Sector unfairly . Libby that is the great point. These companies have continued to grow their cash flow. Yet, their prices have been hit just as hard as producers who have seen cash flows deteriorate. Vonnie it doesnt make sense committed they are the suppliers of the infrastructure and Oil Companies will be stopping production or maybe going bankrupt, why wont these companies suffer down the road . A volume business, but the reality is, even though weve seen bankruptcies, that production will be taken over by the better pro