And it will cost them millions of dollars. Welcome to Market Makers. I am stephanie ruhle. My partner, Erik Schatzker, will be here shortly. Lets take you to the bulletin the top business stories of the morning. We havent seen the dollar this strong against the euro in almost a dozen years. It is now approaching parity. Earlier today, the euro crashed through the 106 bubble and the dollar is up 11 this year, 22 since last june. The stronger dollar will hold down inflation and consumers will see lower prices on important imported products. Bond guru on the west coast has a message for the fed raise rates at your own risk. Even janet yellen may make the same mistake as counterparts in europe, raising too soon and then having to cut again. In an investor presentation, he also predicted that gold could climb 20 this year, and he says you should not bet against the strong u. S. Dollar. Airlines in the u. S. Are expected to have a great spring break. The trade Group Airlines for america says that march through april spring travel will be the best for domestic carriers since 2007. The forecast calls for the number of Airline Travelers to rise 2 . As a whole, the Airline Industry has posted a profit for five straight years. And shes back. This is a woman who helped develop credit default swaps two decades ago at j. P. Morgan. Now she will be in charge of a bitcoin startup that wants to overhaul the way traded assets are settled and recorded. She has been named ceo of Digital Asset holdings. The company will use its Virtual Currencies for settlement and record of stocks, mortgages, and the loans. There is a report out that iraqi troops may have made major gains in their offensive against the islamic state. The Associated Press says that iraqi soldiers and Shiite Militia allies have entered the city of tikrit one of the largest cities held by isis forces. The u. S. Led coalition is not taking part in the assault and u. S. Authorities are not happy about the presence of shiite forces and Iranian Military advisers. We have got to move on to this rate hike. The debate is heating up. We know what Jeffrey Gundlach things about the fed but lets hear from the cio of fundamental fixed income at blackrock. Rick, Jeff Gundlach calling the fed a blockade . What do you blockhead . What do you think . Rick the economy is moving ahead aggressively. We have created 2 million jobs in the last seven months. That is a quarter of the city of new york. You look at the top 10 market Cap Companies in the s p 500. You have functionally just recreated all the employment. The economy is doing well, 2 million jobs, gdp approaching 4 over the Fourth Quarter basis. The reason why it is an epic window is what the ecb is doing is they are keeping rates in down for the u. S. , and you have a window where at the long end of the curve which is really what affects the economy the long end of the curve it will be held on because rates in europe and japan are sitting at zero. Stephanie what about the fact that rates are low . If you raise rates too soon, what do that due to the market . What about the consequence of leaving them so low for so long . Rick when people say there was no cost to keeping the rates at zero, that is not true. You are functionally taking subsidizing borrowers through savers, hurting savers, and creating distortion on where they have to invest. There is a nocost dude doing it. There is a real cost to doing it. There was a benefit to thinking through things pragmatically. At this rate of employment acceleration, what we are saying is that if you move the funds rate to 1 the stock market will get concerned and go down and you will retrace 4 or 5 potentially but at the end of the day it is not a big deal. Stephanie you mentioned the ecb before. They started their highly anticipated Bond Buying Program on monday. Rick i think it is extraordinary in terms of the size. When you think about the developed world it has been deleveraging, and the european issuance, which has been low and trending lower, the amount that you are taking out of the marketplace is just incredible. It continues to pressure yields down and gets to the point about why european equities are rallying. You are taking this amazing subsidy and sending it right to equity holders. Stephanie lets talk mechanics. They are looking to take out 1. 2 trillion. Is there enough liquidity . Are there enough bonds with sellers, holders willing to sell . Rick great question and, quite frankly a question i asked him as every day. Countries are going to issue long dated bonds and there are banks that have been extremely well encouraged to sell into this. It is a very big number, though. It is one thing when we are trying to evaluate in march, but you get to june, july, august that will be hard. Stephanie do you think there are holders out there who will say, no, i will sit on my hands . Rick they are going they dont want to lose that yield and they will sit on it. Simultaneously, it is important the european economy will show better data. Stephanie why . Rick first of all, these rates are extraordinary. Energy has been an amazing boon to the european economy. And you have a currency that is working extraordinarily i looked at the german data recently. It is incredibly powerful. Have this confluence of events that will lift the european economy. The data will be pretty strong. You question what ecb is going to do i think it will be in addition dynamic. Stephanie you are not worried about greece . Rick i am worried about greece. Germany has taken a very hard line, and as you get into particularly may and june, you will have election issues and a number of people i think greece staying in will be a tricky dynamic. Stephanie you dont think they should . Rick so i think it is very hard to grow that economy without depreciating the currency. If you were to dra chmatize the economy, that ultimately may be the decision that they make. It will be an interesting dynamic. Greece you put it aside today, but it will come to the four again and there will be a vibrant discussion about it is time to leave. Stephanie you think they should leave . Rick so i think there is a mechanism by which they could that could be done in a way that doesnt disrupt the entire european system stephanie for real . Rick absolutely. Stephanie i feel like everything about greece disrupts the whole system. Rick part of the reason why germany has drawn the line in the sand and part of the reason why it ultimately makes sense to move on so it does not disrupt the bigger paradigm in europe. Stephanie you are looking at the measure that blackrock has put together here, the yellen curve, or the yellen index. What is that . Rick the markets always love to be simply stick about focusing on the Unemployment Rate or the payroll number. There is a series of metrics, including job openings, vacancy rates, etc. We use a broad metric to broad set of metrics to look at what is really influencing the decision. The reason why we think it is so profound today stephanie there it is right up on the screen. What does that tell us . Rick back to levels in 2005 2006, 2007, where it is so clear we dont have to be at the zero funds rate and not only is it extremely high relative to where we have been, but there is another series of metrics that shows the momentum of the index, meaning the fed has to move when the momentum is with the economy. I. E. We havent had the number we will start to decelerate. Both of them are suggesting that it is so clear that the fed is ready to go. Stephanie so you think june. Rick so listen, i think we err on the side of june. No matter when it is, there will be very deliberate in terms of how they do it. Stephanie whether it is june or september, how much does it affect the way black rock actually invests or allocates capital . To me, june, september, whats the big difference . We know they are doing it. Rick it is not that big a difference. It is at the front end of the yield curve, but i would say that is more nuanced and more tactics. I think there are three metrics were three ways that the fed thinks about it. The time you start, the pace and the destination. Timing is not that important as long as you are in the zone. The case will be very deliberate. The destination is lower than it has been historically. Markets could be disrupted for a shorter period of time. It is not crazy to have a nearterm rebalance in terms of where markets move to, but at the end of the date it will be a great opportunity. We hope the markets overreact in the near term in terms of the fed moving. It is not that daunting a prospect. Stephanie all right, schatzkertino has arrived ladies. Erik i have to sit in the dun chairc . Excellent. This is great. Distortions if the markets are potentially distorted because of all this im going to stand up. How distorted our prices . Rick clearly prices are being distorted in europe, distorted in japan erik how do you invest with confidence, if it is not a real price rick thats a great question. Stephanie erik, you were really relaxed moments ago. You walked in with guns blazing. Rick two categories, one being in the rental department, and one being in the court investment hold. There is money to be made in europe alongside italy b onds. That being said, 60 billion a month is going to drive them even lower. You have to write some distortions for a period of time and look at what are your core holds. Core holds for going to continue to do well and are more in what i would argue a state of equilibrium versus this incredible distortion being created intentional but distorted. Erik you have to have patience. Rick you have to have patience in the things that are your core holds and the tactical. Stephanie can you be tactical, given how big you are . Rick 100 . We have a series looking at different parts of the marketplace and where we think the most efficient expressions are, and a lot of these markets are incredibly deep, so you can move around. They may not locally be deep if everybody is time to go one way, but if you have a longterm thought process around what you are trying to do, be tactical around you from expressions, you could really do it. Stephanie rick, thank you so much. And even erik got to join. When we return, the dollar is soaring, almost out of 12year high against the euro. We will see how long before American Consumers reap the benefits. Plus, a blockbuster Court Decision rocks the music world. We will talk to the winning lawyer in that case involving the hit song blurred lines. Erik you are watching Market Makers. Time to bring you up to speed. Chinas economy is already running behind the government target. Investment and retail sales growth missed estimates in january. The twomonth factory output reading shows the slowest start to the year since 2009. Analysts surveyed by bloomberg forecast that the Chinese Central Bank will try to boost the economy by cutting rates again. New Jersey Governor Chris Christie christie may have to raise rail and bus fares for the first time in five years. The new Jersey Transit is expected to run and 80 million deficit could christy may boost fares to fill that gap. In the past few years chr has beenistie christie has been using money he saved by killing a real project and that money is all gone. They stopped two armored vans on a highway and made off with almost 2 million worth of jewels. No one was injured. Last year a lone gunman stole 136 million of jewelry from a hotel. Stephanie lots of handwringing about the effect of a strong dollar on corporate profits, but consumers are poised to benefit but it will mean lower prices. Senior markets correspondent julie hyman has been looking in to it. What exactly does this mean . The strong dollar means cheaper goods and services . Julie yes, because a lot of the stuff we buy is made another laces. In other places. The cost of the currencies is lower for these various companies as they are making these things abroad. If you think of the many things we buy clothing, automobiles, in some cases electronics a lot of it is made abroad. Fed researchers in a 2011 paper found that 14 of the entire goods and services in the u. S. Economy comes from abroad. Youre talking about a chunk. If you are looking at just goes it would be erik much higher. Julie and with services as well. Declines for seven straight months in import costs coming into this country. It makes sense, then, that that would feed through to us. A more than 20 surge in the u. S. Dollar since last june. Stephanie what kind of copies are getting hit the worst here . Those who arent hedged . Julie it not necessarily, is that getting hit the worst could if you are an apparel manager, you are saving money by making stuff overseas. Are you going to pass through those savings to your contenders . 2stephanie heck no. Julie well, we have already seen a drop in apparel costs and you may think that it is because they want people to buy the stock. There is not a lot of Pricing Power with retailers right now. And there is Huge Customer appetite for discounts. With these manufacturers whether they are electronics on clothing, if they are saving money on the backend economists say they will be passing on at least some of that savings to u. S. Consumers and therefore keeping a lid on inflation. A narrative was over the past several months that because oil prices were low, that was keeping a little inflation. It was also giving the fed more running room before it would have to raise rates or be able to raise rates, depending on how you look at it. And now economists say the narrative is sort of that oil prices the decline in oil prices, has been replaced to some degree by the action we have seen in the dollar and again, a lid on inflation or even disinflation happening because of this Consumer Price increase. Decreased. Erik do we know which copies of benefiting the most . Julie we dontof it we which companies are benefiting the most a week and a strap relate because most electronics and we can extrapolate because most electronics and Apparel Companies are making stuff abroad. I was talking to an Apparel Industry Association for another story and they pointed out that 97 of the apparel we buy in this country is made in other places. We know this anecdotally even if we dont know the actual numbers. It makes sense that anyone who is making apparel right now is going to be spending less to make that clothing. Erik point of the problem though, especially when it comes to technology and electronics, has to be that there hasnt been nearly as Much Movement in the chinese yuan against the dollar as there has been, say, in the japanese yen. If you are and a laconic manufacturer like panasonic or yamaha and Electronics Many fracture like panasonic or yamaha making goods in japan and selling them here, your profit in u. S. Dollars is much greater. Julie yes, it does depend us erik but if you are apple making iphones in china you dont make as much. Julie or making apparel in india or bangladesh or vietnam you have to take into account what we have seen with different currencies in this country. Stephanie julie, thank you for bringing it breaking it down for us. Erik when we come back, Hillary Clinton tries to end the controversy over personal email account. Most analysts say that yesterdays News Conference left as me questions unanswered as answered. Stephanie a lot more to cover today, erik. Stress test today round two. Will Goldman Sachs get a better grade than in the past . As long as they pass, does it matter what great they get . Erik well, yes, because of the capital return to shareholders. They do not the wall street banks did not do particularly well in the first round last week and it is up to the fed to decide qualitatively if they are good enough provide tax. Stephanie it is a big win for the children of the late saul singer marvin gaye. A copyright case is likely to rock the Music Industry. We will speak to a gaye family lawyer about their win over Pharrell Williams and robin thicke. Erik 7. 4 million. Stephanie i thought the hot video hot girl in the video shouldve gotten the money. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Erik good morning, everybody. You are watching Market Makers. I am Erik Schatzker. Stephanie i am stephanie ruhle. We have breaking news on the oil markets. Scarlet fu is in the newsroom. Scarlet we have up bill of 4. 5 Million Barrels for the week ending march 6, slightly smaller than what analysts had been looking for. They were expecting a buildup of 4. 5 9 Million Barrels. The prior week we got a blockbuster number, 10. 3 Million Barrels, the biggest increase since 2001 using the overall level the highest since 1982 basically as far back as bloomberg data goes. If you look at how well prices are trading right now, this is the intraday, and the like a n reaction to that build, that pretty much in line build a drop off compared to the previous week. Crude oil is trading at 47. 76 a barrel. Stephanie thank you, scarlet for giving us the latest. Erik u. S. Banks get their annual report cards from the Federal Reserve with the second round of stress test results. The stakes as you may be aware, are especially high for citigroup ceo michael corbat. His job is on the line. Goldman sachs just barely past the first round of tests last week so will regulators give Lloyd Bl