Transcripts For BLOOMBERG Bloomberg Markets 20160314

Has been tracking the latest. Julie stocks pulling back after the big winning streak of the past four weeks. Taking a pause, and it does feel like just a pause as we are not seeing big declines as the major averages flirted with gains, doing the worst of the major indices as they had more of an energy bias. Taking a look at the bloomberg, stocks were down the most today with oil prices and Consumer Discretionary holding up the best. Losses and materials weighing things down. Within that i wanted to look at the movers. Interesting that that group is headed higher. Not much more moves on things like mcdonalds or nike. The only thing we havent disney is that zootopia was number one for the second week in a row. Starwood got a competing bid in china. They had already agreed to be bought by marriott. Offering 76 per share. Lets see what happens in this developing situation as shares rise and pull up other leisure stocks as well in todays session. Taking a step back to look at the stocks, a spokesman for was back pointing out that we are number ofurge in the stocks trading above the 50 day moving average. In the shortterm it means we could see some mean reversion coming back down on this particular indicator. For the longterm it could be a healthy sign for the markets. The percentage of members treating above their 50 day moving averages, a five day chart. The red line is the 50 level to show you that last year in 2015 we saw negative rep much of the time. Much of the stocks trading above the indicator and now we are surging to 89 . Interesting that it is improving as we have seen this surge upward in stocks. Now a bit of a pause. Oil selling off the most since mid february. Julie its interesting that that is not having more of a negative effect on stocks. Crude oil, down 4 after iran reported that their oil minister said that there would be no production freeze until they ramped up production. The dollar is increasing. Sort of another strike against the commodities space. Something not helping. Mark looks like stocks are rising for a second consecutive day. A small game today in paris. Up by 1. 4 . You still got the boost from last thursday, but that hasnt happened since march of last year. All the two of the Industry Groups arising, im still fixated with the euro and the inability of the ecbyou presidet to managed to push down the euro because it rose, of course, by 1. 6 on thursday. It came down a little bit on friday. Over three days it is still up by 1 . Of course he would be telling us that hes focusing on the credit channel. This is an area where he has had success in the bond market. This is the italian bond yield. And felt on thursday like 19 basis points and then wrote rose by five basis points. Its than the yields have come down and as you can see, yields are continuing to come down across the curve, scarlet. Scarlet there is some speculation that the worlds biggest or i should say oldest bank in italy could be bought out. What exactly are you hearing . Capacityy come on take depasti, bankomasti there is a report that the Prime Minister is considering a takeover of italys thirdbiggest lender. Case they are seen as two peopleys familiar with the situation. Look at that, shares are up by eight or send. Ashasnt been the easiest they have been selling and bolstering finances, tapping well. Ors as under pressure from the ecb. It seems as though the bank needs a suitor. Thats it for the moment. Alix the you just love having mark here . And now we go to mark crumpton. Mark i thought you were talking about me. Im hurt. [laughter] trump moved his scheduled rally from florida to ohio head of the rally. Polls have trump with a 20 point lead over marco rubio. It is campaigning in chicago. One person not by her side, the embattled mayor of the city, rahm emanuel. Bernie sanders is trying to make the boat into a referendum on him. Former adviser has an Approval Rating of 27 and is facing pressure to resign. President obama could nominate someone for the Supreme Court as early as this week. The Republican Party says they are launching an ad or pr anyone the do rail present picks to replace the late justice antonin scalia. The rnc says they will target democrats on the Senate Judiciary committee. Federal safety investigators on their way to the scene of a derailment in kansas. 32 passengers were taken to a hospital in dodge city. The train was traveling from los angeles chicago. 20 four hours per day, powered by our 2400 journalists in 150 news bureaus around the world. Back to you. Scarlet turkish warplanes struck in iraq after the car bomb killed 37 people in the capital of that nation. The turkish president is vowing swift retaliation. Lets go live to istanbul, where simmon joins us. This is the third attack there in the last five months. What is turkey doing to face these . Click thats right, the third terror attack in the past five months, bringing the death toll to 160 people. The president has vowed to retaliate, saying that he will bring it to its knees, but it is proving more difficult than that seems. The Islamic State and kurdish militants are who turkey is fighting. The government is struggling to bring instability in the southeast under control. This is spreading violence into major cities. If you look at how the is down slightly, whats interesting is that the demand for this has dropped a long way. , the tur. Tstanding going down steadily over the last couple of years now. It is basically at its lowest in two and a half years. We are also seeing the lira gain a little bit today as the dollar sells off. Talk about the reaction that weve seen. Up headed for the longest rally almost four years with his climbing for 11th consecutive days. With further stimulus last week it was heavily reliant on capital inflows. The yield on 10 year government bonds dropped for a fifth day heading towards its lowest since december. The lira fell against the dollar hitting 2. 88, its first decline in five days. Mark thank you for joining us from istanbul, turkey today. Next half hour, Central Banks in the spotlight. Three key rate decisions do this week. We will explore how the latest stimulus may set the tone for policymakers. The german chancellor, Angela Merkel, is setting the course with a refugee policies. How much is this costing her politically . Especially ahead of wednesdays big spend decision. Live from london and new york, im mark martin. Scarlet scarlet fu here with alix steel. You are watching european close. Areral policy makers expected to keep the benchmark Interest Rate unchanged, monitoring how recent turbulence in Global Financial markets has in fact affected their forecasts. Look for full coverage across all media platforms wednesday at 1 p. M. In new york. The fed decision is at 2 p. M. And then janet yellen host her News Conference at 2 30 right here on bloomberg. Adisappearing alix disappearing medical implants will get a new look at from the fda this week. Clear fating to clogged arteries, legislators are questioning the safety and effectiveness of the device. Playstation view has only been available in cities like new york and San Francisco. The package now starts at 30 per month but you wont get over the air channels with that. They hope to cash in on the trend where viewers drop traditional tv services sign up with providers like netflix and hbo. That is your business flash for this hour. A big week for Central Banks. There are three key monetary meetings in the focus. Federal reserve on wednesday but the bank of england on thursday. For more perspective on those decisions we are joined by toian jessup, former adviser the u. K. Treasury, with me of course here in london. Who has the easiest job out of the big for . [laughter] i think the fed is in the most comfortable position. Probably the furthest along the line in meeting policy objectives and lifting inflation. The job for the fed is simply to reassure the markets that it can raise rates. Probably not this week but later in the year against the backdrop of a stronger economy without damaging confidence. How important is this meeting . No one expects them to raise rates but we will get a window into how important a view this is versus financial turmoil. They havehink . To do a number of things. They have to reassure people on the prospects for the u. S. Economy, nudging down the forecast a little bit. But it is improving and inflation is picking up slightly. It needs to be not defected to much affected too much by withl economic turmoil emerging markets and china in particular. The first thing they need to do, of course, is prepare the ground for further rate increases later in the year. Its got a lot of work to do in terms of signaling without taking action. What did the aggressive stimulus last week mean for what they can or wont do . If anything it does make the job a little bit easier. Global sentiment has improved as a result. The u. S. Will undoubtedly look at whats happening in its own economy. Late last year we saw where they could or maybe even should raise rates. They were affected by whats happening in the rest of the world. Its look at the move, thats encouraging with the dollar getting a bit weaker, helping to convince some in that way. Mark you heard with a set of pimco, Central Banks declaring a not good for the globe if it is too strong. Though one might have assumed that it would fall on the back of the ecbs stimulus, it didnt. Its that rising. Its been rising. There was this deal where they didnt want the dollar to be too strong. In the beste interest of everybody . Flex i think they are concerned about the dollar just continuing to rise inexorably. Thats probably what worried people. A slightly stronger dollar for now does make sense. The euro likely needs more support. Scarlet at the end of this week what will we find out about how coordinated it is . To respondbanks tend to the fundamentals driving their own economy. Lightly pointing to the need for further monetary loosening in europe and in japan they may well announce additional easing this week or next month. On the other hand, the u. S. Economic fundamentals justify higher rates. Everyone is watching everyone else because of the interconnectedness of currencies and bond markets. Is this bank of england meeting the biggest no meeting in the history of no meetings . [laughter] i certainly hope so. I think that the bank of englands position is more like that of the fed. Even then, the economy of the were u. K. Is performing like the u. S. Its tightly correlated to whats happening in europe. 2018 and beyond. Im a late 2016 man. By november the really enough evidence that it is in the current soft spot. Julian, always good to see you. Julian just that, keep josh chief global economist at capital economics. Still ahead, Angela Merkel suffering one of the biggest political set ask of her career. We will tell you what it means for the future of europes migrant policies. Mark you are watching the european close with scarlet fu and alix steel. Angela merkel saying she staying the course when it comes to her migration policy. She suffered one of the biggest setbacks over the weekend when she suffered steep losses because of opposition to her policy. Scarlet she said that her stance mark she said that her stance is the right one and refugeeange in the crisis. How much Political Capital has the german chancellor lost . Tony has been covering this story from berlin. Tony, she didnt backtrack. Shes sticking the course, isnt she, when it comes to her policies . Thats absolutely right. Berlin was waiting for this press conference. Its a tradition, the day after the chancellor comes out and pronounces her own verdict on what happened. She came out fighting and said that there would be him noconfidence vote in parliament, basically that she is not going to change course and stick with her approach. This is kind of what was expected, but she made she left no doubt. She also basically took on the critics in her own party, saying basically telling them that if you have a better idea, you can take me on. So, she threw down the gauntlet, really. Alix tony, the last time we saw the rise of the rightwing in germany was the 90s and at some point that faded. There was internal fighting and it broke up. Whats different now as opposed to the 90s . Theres been a real change in the influx, with one million coming last year. Into a company of 80 million. Country of 80 million. Angela merkel says that if we cannot handle that, we are not doing too well. Its caused a lot of anxiety and fear over National Identity and this is what the alternative for germany is capitalized on. It is also in line with whats number ofin a European Countries where these kind of nationalist or populist parties have been on the rise. Mark tony, what does it mean for next year . Federal elections are taking place in 18 months or so. What happens then . Do the weekends results have any bearing on the elections or not . Tony well, let me put it this way. People close to Angela Merkel that we spoke to have always sort of in the party leaderships of you and in her course onchanging something as controversial as this refugee crisis would be the wrong thing to do because it seemed like flipflopping and what germans actually want is stability. So, the elections are still some time away. Angela merkel is looking for this Global Solution with turkey and other European Countries. So, she still has time. That said, of course, it is a warning shot or a shot across the bow. The jury is out, alternately furious but there is nobody in the wings who is sharpening their knives and getting ready to take her down in her own party. Scarlet what is the alternative response from germany . What does the aft have to do in the next few months . Tony well, thats an interesting question. They said after doing quite well that what they really wanted to do was be in the opposition. Remember, they dont have seats in the federal parliament, in berlin. Now they have seats in half of the 16 state assemblies. They could actually turn it into something that so far they say that they are just here to show that not everybody agrees with what they portray as this cartel of establishment parties, which of horse sounds a bit like what you are hearing donald trump in the u. S. Thishey will capitalize on surge today remains to be seen. Tony, tony, got to leave it there. Thanks for joining us, speaking to us live from berlin. Having a quick check on the final numbers, looks like stocks will be finishing the monday session higher, gaining for a second consecutive day. January thel since seventh. Bloomberg markets, the european closes next. Stick around. Hohey s woiit ghong, estcak . Hoestcak. Th lais p hceotas hkeca hyso wn arett ey llsekeg lica hotkes . Cwithstomcain business tean fid wi, pro cthey bould e. Ju ddst aus a czetomid ey age yltowiour rofi pas splgeh pa an ud yo ll year cusomerer wheie thesr ey a aredylrea ju ddst aus a czetomid ey age on dheiresevic pas splgeh pa. Or upder. its hare tstn jui, wif c itelan howp grr younebusiss. U ydone t se ethat dveryay odintrg ucin pwifiwiro, fi hthatelyorow usur bs. Ines ascomct. Ness t builbufor sssine yorkb. live from new european close. Andre finishing up the day european trade. Lets take you to all of the action. Thirds of 1 . The second consecutive days of after four consecutive weeks of gains, the largest consecutive gaining stretch. The stimulus is working in the stock market, is it working in the currency market . Im afraid it isnt. On thursday, the euro rose. On friday, came down a little bit. It came got a little bit more today. Over three days, the euro is up by 1 . Will janet yellen do the a favorite . Money is going into the periphery right now. This is a lovely chart showing the difference in yield between the spanish and german. Over the last 12 months, the. Ecline in the spread fell down. Then, it has come it has fallen for three consecutive days. The measure is working in the bond market, at least. Inx especially if you are germany. Campari . Ut g mark b. look at the shares, it is up 4. 5 percent. Group rand marnier shares were suspended today ahead of an announcement. They are working to explore Strategic Options with the. Usiness, including a sale ofpari has grown over a slew acquisitions. Something solid comes out. Are you a campari person . Scarlet im not. I have to admit. Alix no. Mark b. im the same. Dont go near it. The dow we are watching and s p. Were drifting between gains and losses. Everyone is waiting for the big centralbank meeting. Within the s p 500, if you look at the 10 Industry Groups, Energy Stocks are leading by a large stretch. That is because they are seeing oil prices down. Iran is saying, we will pump as much as we want until we get to 400 barrels a day. Scarlet lets check in now with abigail doolittle, life at the nasdaq for more on the markets. Abigail the trading you just described is so true here at the nasdaq drifting between small gains and losses. Be chiphappen to stocks. The worst is western digital. The stock is down, going into a shareholder vote tomorrow on the companys proposed acquisition of sandisk. More recently, chinese investors withdrew last month. And analyst says that concerns around the nan market and acquisitions themself could wait going forward. Watching tripre advisor. Abigail there is takeover speculation on twitter. Mentioned as a potential acquirer. It is unclear who is behind the open outcry or account outcrier account. It is unclear with the motives are. Nonetheless, this news or speculation, i should say is certainly moving trip advisor higher on the day. Alix thank you so much, abigail doolittle. Mark b. lets get to the global market. Ll eyes on investors joining us now is a chief investment officer, he helps oversee over 1. 5 billion in assets. What is the message from the fed this week . Nothing will happen on Interest Rates. I think june it will be interesting but will happen on the dots. Mark b. meet in the middle . Likely meet in the middle. Mark b. do we really care about the dots . Can we look beyond our nose . I think people care about the dots. I think it is a fair and reasonable policy to have right now. The dots matter. Alix and term of the markets, we have been looking at is in p smp. Across the board, technicians have been very concerned. What kind of downside you think there is . Much. Ng into the fed, not i think there is some, if they shop the market, hawkish. I dont think that will be the case. End, aboutey will where they are today. I dont think theyre going to crash. I think europe is much better valued. Relative valuea that has a short on u. S. Equities at the moment. Scarlet you mentioned that risk aversion has eased a bit. Whether it is fear of a financial crisis, china hard landing, which could likely rear its head again . I think all the potential reasonable, but i think, where we were a month ago, the market was pricing them. S a real certainty if you look at where equity markets were trading on february 11, we were in the midst of a recession in the United States. I think the risks on the u. S. And chinese economy, they are all there, but should be viewed as low probability and not be priced as near certainty. Alix lets take a look and see what has happened in the last few weeks. Come inside the bloomberg. This is the Bloomberg Financial conditions index. The white line is u. S. Orange, asia. He green line is the eurozone things have improved relatively across the board. How can the fed not hike when inflation is picking up and financial conditions across the board are better . Positiond is not in a where the economy is booming, by any means. Wage growth is a little over 2 . You have unemployment at 5 4. 9 , which is quite good. Yellen said, we will let the economy run the hawks have reasons to hike relatively soon, but the doves will win out. Lifts outstill there. They are airing on the side of overheating. Mark b. how far on the risk curve is the ecb going to eventually go . Are we heading to the day went buys equities . Is that the endgame . In the q a, that is where he did not want to go to. He is hoping he does not have to there. He said, unlimited. I dont know how many times in january. Equities, i think would be difficult. More corporate debt, things like that, i think they are all there. They dont want to be viewed as this is as far as we can go by any means. I think there will be more my terry easing. I dont think it will be imminent. June 14, when they first moved , they indicated that was the bottom then. We are much deeper. Scarlet you added subordinate bank. Rom deutsche s . Ld you buy the coco we were looking to buy some, but they ran away from us. Almost. Was imminent, i would be attracted if they selloff a little bit from here. Carlet our thanks lets check in now with bloomberg first world news. Mark up has more from the news desk. Mark c. thank you. Former republican candidate, ben carson, says he believes more violence could occur at Donald Trumps rallies. On friday, he canceled a planned rally in chicago over fears of violence. Those fears materialize went Trump Supporters and those opposed traded punches. If theson its protesters continue with their possibilityre is a for escalation. Those who are the victims have two choices. They can submit to them, and meekly do whatever those protesters want them to do, or fight back. Mark c. Ohio Governor john kasich says the violence at some trump events represents what he calls a dark side of american society. Trump countered by calling john , a baby. Hillary clinton is still partys for her nomination, but there is speculation for her running mate. Mississippid residents are watching the rise of the pearl river as widespread flooding continues. The National Weather service predicts the river could reach 21 feet this afternoon. That is the same height as the 1983 flood. Deathst for this four have been reported. Positive and constructive. That is the description of talks in geneva to end a bloody civil war. The United Nations is hoping the new ocean nations the negotiations will lead to an agreement in six months, followed by elections a year later. Global news 24 hours a day, powered by are 2400 journalists in more than 150 news bureaus around the world. I am mark crumpton. Back to you in london. Mark b. coming up, it is a big one. Are you ready . Battle of the sharks. Been faringx has well. I have a chart coming up next. Scarlet we have been promising, but it is time now for a global auto of the charts. We take a look at the most telling charts of the day, and what they mean for investors. You can access them on the bloomberg. Alix versus mark orton. Let me guess, commodities . Alix no i am still nervous going up against mark barton. Rates thanpact over the fed this is a correlation 10 year yields. It is at the highest level since 2014, at. 6. If you can get it to one, they go perfectly together. Correlation does not mean causation. If they go increasingly negative, they have to find the money somewhere. How does the fed dictate longterm rates when you can see the rate coming from overseas . Predicament. Fed of scarlet what does the fed do, or what does that leave room for . Alix quite frankly, it could mean nothing in terms of getting the 10 year yield up. Scarlet very germanic, especially over the last two months. Mark, what you have for us . Mark b. february 11 of this year, that is when an index fell to its lowest level. Since that day, almost five weeks ago to the day, the bestperforming stock market in the world is greece. Yes, greece. 28 since thep lowest level five weeks ago since 1989. Does this rebound . Technicalsome ta analysis. This is crying out for some ta. I have it over the last six or seven months. Day and 14 day moving average. Moving average should be above the 200 day moving average, but look at this. It rose above the 50 day moving average. His positive momentum. What is the relative strength index telling us . Day is at 63, below 70. I have a caution for you ladies. 91 since is down by the record in september 1999. That is nothing compared to the drop we have seen, which is why we have seen this resurgence. In 1999, and since, wait for it 99. 95 . There you go. Some ta on a monday afternoon. Scarlet wait for the ta is impr. s chart canark be found on the bloomberg. I like the colors. Alix you like rsi. Scarlet yes. Drumroll. I have to go with alix steel. Correlation from late may until now is impressive. Alix sorry, mark. Mark b. i will be back tomorrow. I what you do to battle tomorrow, and i will be the judge. How about that . Scarlet he can win some revenge. Alix steel with the chart of the day. You can find those on the terminal. Still ahead, it is a huge week for trading. Live from new york and london, i am scarlet fu. Lets talk about Central Banks. It is a monster week for Central Banks. We hear from the fed on wednesday. Most economists expect a further easing in the coming months. Theaps not so soon as january shock. Will the doj be influenced . It has been surprise, surprise, surprise. Uslock joins now. Clients whotern. Ave been surprise twice it is not impossible, but is not. He view of most economists he wants to see how the policy adopted in january settles down. Scarlet to that end, what is interesting is the banks did not pleasant presi effects of the Interest Rate. You have people doing damage control. If you come inside the bloomberg, look at what happened to the yen. Right around here is when the doj decided to go negative. Obviously, you saw the yen fall against the dollar. Yes, it was bad market timing. You can make that excuse. Scarlet why is it that they rely on surprise so much more than other Central Banks . You have to go back to the corroded history of the minister of finance. Kuroda went into the position. He is a very astute study are of markets. He has been around the scene for a long time. He felt that if you can surprise people, then you can get more bang for your buck. A everyone is anticipating policy, when you actually make the step, it will be more muted. Mark b. on the impact front, is there a lesson to be learned from mario draghi who delivered when it came to stimulus, but honest byto admitting, that will be it when it comes to the Interest Rate. Is there a lesson to be learned here for kuroda . The press conference after the meeting tonight will be interesting. You should to say not be honest. It underscores that if you have a policy, you need to stay ruthlessly on message. Scarlet lets look at the fed as well. It is not what they are going to do, it is what they are not going to do. We know they probably will not raise Interest Rates this time around. You talk about the kuroda surprise. If the fed raise rates this week, that would be the alltime shocker. If we go back to the end of last increased the fed rate, the projections called for in 2016. Ases but, given the drama of february and january, they said, that wont happen, they might even ease. Showy show two, it may three. What would be the chairs commentary surrounding that . Of globalmaes, editor economics at bloomberg. Before we go to break, we want to take a quick look at where stocks are trading. Definitely a pause. Nergy is the worst not a lot of movement. Not a lot of positioning into the fed meeting on wednesday. Scarlet the fact that there is no Economic Data today makes for a catalyst for poor trading. Mark b. the boj, the fed, the Swiss National bank, and the bank of england a very exciting week. s course, mario draghi spurt last week. Have a look at the figures. Coming off of four weekly gains, the best stretch since march. That is it for the european close. I am signing off. Bloomberg markets continues. Welcome to bloomberg markets. Alix from bloomberg headquarters in new york, good afternoon. What were watching at this hour. Jenny yellen and the fed have investors to hold as they get ready to meet tomorrow. The central bank is widely better to keep the central bank steady. Economic data supports the case for a rate hike. We will go inside the billion dollar date to americas biggest copper deposit, down and not turning back. Alix millennial are putting vancouver in the rearview mirror. Threatening the citys tech industry. To the we need to head market desk to check in with julie hyman, tracking the numbers. We are jesting. Julie a mixed picture. Is dow and nasdaq nasdaq rising. At where thelook prices are going. We are seeing a little bounce off the bottom. The reportfollowing that iran is not going to production it until it ramps it up considerably. Have been watching other commodities as well. Gold hurt in part by the higher dollar and futures selling off to some extent as well. A little more direction outside of stocks today. We have a battle over starwood with china coming in and making a bid for the company. Already agreed to a takeover from marriott. Trip advisor arising on speculation on social media that the Company Might be a takeover target. On the downside, not surprisingly, you have Energy Stocks once again. We have been tracking these stocks frequently that are heavily shorted. They have been volatile over the past several weeks. Very frequently making appearances on the list on a daily basis. Investors thank you so much. Crumpton has more from the news desk. Mark thank you. Husband of 2008 republican Vice President Vice President ial nominee sarah hospitalized in intensive care. He was involved according to multiple news reports in a crash. Sarah palin was supposed to appear in a Trump Campaign event in florida but canceled to be with her husband. A dogfight in ohio. Polls show governor and john kasich ahead of donald trump. Aternor kasich spoke earlier a town hall. About uss country is coming together and not about us tearing one another down or having fistfights at it and pain rally. It is not what america is. Mark trump is on the campaign trail today. Among the five states that will vote tomorrow. Mr. Trump leads marco rubio in florida in a poll by monmouth university. The survey has trumped leading rubio to 27 . John kasich is fourth with 9 . Will shockio says he the country by winning his winner take all primary tomorrow. President obama says he is confident he will make progress on Foreign Policy in the next few months. Fight thentinue to Islamic State on all fronts and says he will work to enforce climate agreement and engage with asia. He says he is looking forward to his historic trip to cuba which begins this weekend. News 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. The fed alix there are some who believe the monetary strategy has already just not jeopardized markets. Warned of the repercussions earlier today on bloomberg market. The fed is completely lost it ignores the fact this is 86 months since they went to zero Interest Rate. You cannot have seven years of zero cost money without creating huge distortions in the financial market. They have created another huge ready to bere repudiated. The bubble will collapse at the time we are heading to the next recession. Karen, you want served as director of monitoring at the new york fed. Do you agree and see bubbles of bounty right now . I dont. The fed has made a considered assets,o push up risk equity, and high yield. We have seen substantial correction in the last few months. Many point to oil and say the fed caused a shell boom. Companies got cheap borrowing costs. That has caused the issue and a burst we have seen in oil prices. Quasithink you have to think about the county counter factual. They also fought a lot about the fact that there are risks to that strategy. They have to go ahead and think, with we want to do with price stability unemployment. They went after trying to save the economy without worrying about possible asset bubbles in the future. When it comes to the decision tomorrow, the focuses less on whether the fed will raise Interest Rates but with her cast it will give. Plot, with the fed offers. You see objections for when the fed month target will be. This shows the fed members expect fletcher hikes. The red line is the market expects to be. The far right side shows 3. 5 for the longer term. How much does the fed lower their projections . We think they will lower than a little bit. 3. 5 for sitting around the longterm to mediumterm projection. Saide other hand, they they want cointreau hikes. It is possible they will come down to maybe three. I think the market might need to scale back in a few more hikes and get over the initial bearishness they have. We priced in one hike for at least november. It is possible the market might meet the fed halfway in common. Time to move up investors expectation. One thing they have not focused on is the fact that inflation will come back here we see a hint already around 1. 7 and we think by the end of the year, inflation could be higher than it is now at im not a they will feed the 2 target, but we could see inflation come back confidently and were out of that range. I think investors will start to think it is possible the fed will start to hike a little bit. How will the fed categorize inflation. ,ou mention core cpi moving up but you also have Inflation Expectations still very low. What will they focus on . They would like to focus on both. Actual inflation starting to the better but they want to see consistency. Moving in data points the right direction, hire, and expectations trickling down at the beginning of the year and it has come a little bit backup, but i think they want to see more. We need to see both and i think for this actual statement, they will characterize inflation as maybe slightly improving but they will not sound too optimistic yet. We saw a slowdown in with quarter gdp and the official read will not come until a day after. How important is it for the fed to get reassurance the army is drawing at 2 before they start to raise rates again . I do not think they will be overly focused on what the gdp will tell us. What does consumption look like, what does the jobs market look like, what is going on with wages and wage growth, and if many of is manufactured really finding a base here . We added the slump we had early this year. Looking at all the core components underlined gdp and they will worry less about the measure itself. Much, karen. Very coming up, americas deepest mineshaft. 7000 feet deep into the billion dollar venture. Todays away for venture janet yellen on whether there will be a rate hike. How investors may react to it. The numbers have nothing good for china. Can it still achieve its growth margin . Julie i am julie hyman with your metal bowl. Platinum is on a losing streak five Straight Days lower, the longest losing streak since november as we see platinum continue to decline. We have been talking about metal we have the price of platinum, perhaps. We have been seeing metals generally we have seenay as a stronger dollar. In the case of platinum, it is not so much the dollar as the South African we have seen it falling, failing to reassure investors that it is not under threat because there is a policy this is the dollar rising. That nation responsible for 80 of world production. How is this playing out among the miners . You look at the five u. S. Plenum users, stillwater mining, we are seeing it down by more than 1 , and the number of 80 the track platinum producers in the United States. Many u. S. Not that producers. You today, platinum has seen an increase. Here are the listed shares of how they are doing. Platinum fell for three years in a row on annual basis in each of those ears. Here you have it. Little on aking relative basis. Alix the arizona desert. More than 1 billion has been spent hoping to tap nearly 2 , lessn metric tons of ore than 2 of which is believed to be cocker copper. Scarlet the fourth biggest copper deposit in the world. I want to bring in matthew phillips, who visited the mine and wrote about it in bloomberg businessweek. You are thousands of feet below the surface. We know that mines are dangerous place to be. Matthew the deepest mineshaft, which they finish at the end of 2014, 1. 3 miles beneath the. Urface it is hot down there and very wet. Than one billion years old, they still carry the heat of the core of the earth even though you are still thousands of miles away from that. Lakeboard into an ancient in the mine. They came up with all kinds of for moving solutions the water out of it. Massive comes pompous 700 gallons per minute of to the surface. A really interesting look at how difficult it is for the industry to overcome these engineering challenges. Alix what is the total budget . Matthew by the time they are done in several years, there will be more than 7 billion in. Hearing that copper prices are falling off a cliff. We will have to see mine closures and going off because you cannot of or the numbers. How will this get sanctioned in this kind of environment . Matthew you do not see a lot of Mining Companies pulling billion dollars out of a new mine. They are laying people off. The strategy they are operating under here is that by the time this thing opens in several will, theyre betting we be through the cycle, that the surplus will be enough and that copper will be rebounding and will continue to rise. They are betting a lot on potential demand for new love energy. With this much at stake . Case,w i think in this it was the only solution, really, because of the amount of capital needed. They are 55 . Bhps 5 . This is on the back of an old coppermine that operated for almost 100 years and had to shut out shut down in the mid1990s. We have only known about it for about 20 years even though it is the size of a mountain. A mile underground. Geologists have known it has been down for hedges of years. When you were down there talking to people who work in the minds, where their discussions of china and the fed . How connected are they to the conditions . Matthew they try to think about it. Are dependentods on the commodity markets. These go up and down. Closing for years at a time on the back of commodity prices. They are hoping this puts the u. S. In a better competitive advantage to lowercost mines in latin america. Much more is coming up. We will be right back. Scarlet youre watching bloomberg markets. Alix the Federal Reserve meeting taps a very busy week of economic news. We get updates on retail sales, very important tomorrow. Industrial reduction as well as in patient. How will investors respond . Carol massar and and have a guest on to answer all of that. Their second meeting of the year. Investors are looking for clues of a trajectory when it comes to interestrate increase as we might get. Manager private reserve, thank you and welcome. Lets talk about what we might get from the fed. What are you anticipating . We would expect to see some modification as far as their summary of them at projections, which would be the key for investors. Cory youre looking at how they look at them. That is absolutely correct. Were that they would have four occasions to raise Interest Rates. We expect that number to be moderated to read. Cory you think they will bring that down . Themarkets, when we look at tray on futures, we do not see trade hikes. Quite literally, month ago, it is on none and now weres team just over one. We are of the opinion we will likely see 23 this year, as we see economic numbers come in generally better than we have feared. Carol doing what they did last week, i caught it shock and all, because they did everything to help out the european economy. What the bank of japan might do tomorrow, how much would that shape . This is a continuation of what we had gone through into this 13 and 2015. Bank of japan, the fed, we also the bank of england later. We are captive to this Monetary Policy merrygoround, if you absence of any Material Change in fiscal policy. Carol on are we taking cues now . Someone earlier was saying the fed took a lot of cues are we taking cues from a lot of Central Banks . It is Just Technology sensitivity. It is a different environment. They will be more keenly aware of the impact on currencies in particular. We will see the most of our major training trading partners and that should create forttle bit of a retreat multinationals. That is something the fed has been keenly aware of. Corrie does the lack of efficacy of Central Bank Moves start to change the Way Investments work . The stock tickers market. You if other Central Banks are having the inability to do that, are we seeing a lot more divergence in the markets and more stockpicking results . I think you are right. , weg back to middecember saw on overall frustration on the part of investors really debating the efficacy wearing limitation limitations on Monetary Policy. We think it becomes much more in environment where selectivity is key. Carol the economy is not fall you part so where do you want to be in this market . From our perspective, within sectors we continue to like technology. We like Consumer Discretionary. Health care. Balance,een energy certainly up 45 on crude in the last 30 days. A huge move. Move alongng a big with that. The fears of recession and inflation have largely been defeated and that is giving them a little bit of a background backdrop in the strength of positive trend. Good that we are starting to see groups and Industries Trading more on the correlation and everything kind of trading in tandem, if you will . No doubt about it. We saw bonds do well on a year to database is. Devaluation become a much more sensitive and even to a lesser extent, just looking at dividend payers and dividend growers, releasing a nice tailwinds in this environment. Carol good to get your thoughts. Alix, semi back to you guys. Still ahead, pressure is mounting for china to meet its Economic Growth target. Latest status suggests about the task at hand. Alix from bloomberg World Headquarters in new york, welcome back. We go to first word news. Mark k leverett president obama thinks he can make significant on u. S. S foreignpolicy in his last month in office. He says they will fight isis on all fronts, and work to close one time monday guantanamo game. Bay. Wewe need to make sure enforce effective sanctions on north korea, and our upcoming summit in washington will continue to increase nuclear security. He isthe president said looking forward to his store trip to cuba, beginning on sunday. Mitt romney is hitting the campaign trail for john kasich in ohio. He is urging voters to chooses governor kasich in his home state, and senator marco rubio in his home state. That will keep donald trump from winning in either state tomorrow. For House Speaker john boehner is endorsing fellow ohio john kasich. Hillary clinton is leaving Bernie Sanders in ohio and florida. Donald trump asleep marco rubio in florida according to the latest poll. In ohio, it is a little tighter, cisco is leaving 51 to 46 . Trump and jump in her john kasich are tied at 38 , and other polls have hes a leading from have john kasich leading trump. Amtrak says nearly all of the 30 people who are hospitalized have been released. With traveling from los angeles to chicago when it went off the rails about 160 miles west of f wichita. Y that to you. Xpect new covenant that there is no need to boost growth. Talked bloomberg about what these numbers really say earlier on bloomberg. Get aare starting to decent read on how chinas economy has started 2016. Notwithstanding seasonal distortion, it is a pretty disappointing start by all accounts. We are seeing different areas where we were hoping for traction at this stage, and when you consider the backdrop of hefty fiscal stimulus and a whole suite of measures by the central bank creditto get lending and flowing into the economy, here we are now talking about retail sales heading backward. Some Silver Lining on residential sales picking up. But overall, an economy that remains stuck in the slowly. Would never heard from the governor much before, and he is everywhere. This is his fourth appearance in just a few weeks. How much sway does he have a long those who are vague governors and Business Leaders in china . For sure he is a powerful man. He is trying to improve the strategy in communication, and suddenly message. He is pretty silly message of stability. Over the weekend he was trying to manage expectations a little bit for foreign Interest Rates. But when you consider the growth target they have set themselves, that they dont think will have to cut rates more. But one problem that he has a convincing his fellow officials around china is that Interest Rates are not really having the impact they once had in china. That transmission mechanism is not flowing through the economy the way it was desperate even though the central bank has and can cut rates further, it is not having the impact because of the high debt levels, and because of the excess capacity in some of the key areas. The rejected take the surgical scalpel to some of those areas in Industries Like the coal mines and steel plans to try to shut this down and get rid of the heavy debt. Ratesoblem is, interest are not what they once were. Scarlet that was earlier on bloomberg. Alix this is a visiting for world central bankers. After last weeks surprising rate cut, investors will be closely holding the statements coming from the fed as well as the bank of japan and bank of england. Scarlet earlier on bloomberg surveillance, they said there is too much pressure on these policymakers. Almost enough to begin feel sorry for central bankers, they are being asked to do so but theres a structural reform. We can do things for japan on the Foreign Policy side with our presence in the region. How we deal with north korea, how we deal with china. One thing we cannot do is tpp at the moment, before leading contenders for president are all against tpp. Are you predicting it will fail . Is will not pass. Central banks are becoming more creative. They are trying things out. The problem is that things can go wrong. Negative rates, the structure that they did last week. Are you confident that this will not be the Tipping Point and policy has put a blanket of safety in the world, but that this could go wrong at any minute . The answer isnt to go wrong. We are in Uncharted Waters on all these things. Go the other direction. The question is now how many times they will rise over the next year. What strikes me is how out of balance it is. Central bankg to because our politics will not allow us to do anything on fiscal policy or anything on basic structural reform. That is something United States and japan and europe and india all have in common. That is what worries me so much. Bankers arecentral geniuses they simply cannot do enough and sometimes they will make mistakes. Alix that the council on Foreign Relations president earlier on bloomberg surveillance. Scarlet a former Bloomberg View columnist says that central bankers have become powerless in their ability to stimulate growth. Alix earlier he said most countries have problems Central Banks cannot fix. We are focusing so much on Central Banks. The car is not working well, and we are debating whether to put super or premium gasoline. It will help a little bit, but it is not the core problem. The core problem is demand, and Monetary Policy charges have marginal effects on that. Monetary policy is nowhere to be seen. Japan is a great example. Year, they are absolutely committed to going together with a consumption tax increase which is exactly the wrong thing to do when trying to boost consumption. What is the alternative . That is my point. It overwhelmed the impact in 24 were tryingt they to do. It has even less effect on the fiscal authorities. If youre a central banker, what are you supposed to do . Thehey are in charge of premium gasoline, that is great, thats what they should be doing. But national policy, theres a broader responsibility that is just not being addressed at all. The right thing to do is when Interest Rates are so low, couple a lot of shortterm additional demand infrastructure with longerterm deficit reduction in a barbell approach. That is by far much better for all of the leading economies in the debates we are having over whether the Central Banks has this or that. Our central bank is being forced to erase the pencil marks at the boundaries of their mandate. The ecb is no buying Corporate Bonds for example. Thing that should be happening is it, so they are trying to do as much as they can. They are stretching the boundaries of what they can do in order to be as helpful as possible. But ultimately the problem is they cannot solve this themselves. Talking about Federal Reserve on wednesday, and it comes down to something as ridiculous over the guidance of whether they will hike over this year. This again does it make a difference to you on the margin . A little. I think the fed is going to be trying to, you have this tension between what the fed has been trying to signal and what Market Expectations are. I think the fed will be trying to narrow those gradually. That would entail moving the market toward what they had been trying to signal while also coming off of that a little bit. That was peter earlier on bloomberg. Alix even in the treasury , but marketers are from other markets. Scarlet we see this in terms of how treasury futures have really taken off. And the Asian Session especially. It is about 10 , almost 10 of the trading in the u. S. Session. That was really interesting. That is up a lot from even a few years ago. It shows people are making their bets on treasuries overnight. Alix i am looking at the correlation between the 10 year german bunds versus the u. S. Treasury market. The correlation is extremely high. What does this one of telling you about the market . It tells you people are looking at the ecb and they are looking at the boj had trying to see what they are going to do, especially on the long end. If you are a u. S. Investor, you have to Pay Attention to other Foreign Investors and whether they will be buying treasuries. The yield the treasuries provided so much higher than international yields right now. Scarlet they are tracking on a relative basis, and because they are so low overseas and heading even lower, that is going to put pressure on u. S. Deals and send them down as well. Exactly. Scarlet we also have another chart that shows the bond bill forecast. Right now, as of march 14, investors and economists expect to point 3 for the 10 year. That has come down from early february which was just below 2. 7 . Interesting thing about this it is not a done deal. The 10 year being loan is not a bad thing. A lot of consumer borrowing costs are tied to longterm deals. The interesting thing is what this means for the dollar. If people continue to move into more dollart mean appreciation, and that is inherently deflationary for the u. S. That slows down growth that the fed is looking for. Alix especially when it hampers with the fed can do it all, being the tainted by the easier the doj. Exactly. Scarlet coming up on bloomberg markets, will vancouver lose it edge is they go for rising housing prices . Alix and we talked of how mcnamara. Scarlet this is bloomberg markets, i in scarlet fu. Alix lets head over to the markets desk were julie hyman has the latest. Taking into a note from David Goldman credit julie. Look ate is taking a where investors should stand right now. Targeta 2100 her yearend for the s p 500, which puts them in the middle of the pack. What he is saying right now is heelys higher Interest Rates will help u. S. Bank stops, they should boost the dollar as well. He says he was financials are the direct beneficiary in a rising rate environment. He says the tightening will push the dollar higher, and he says the commodities surge is immature and unsustainable. So where is he looking . He is looking at what he is calling strong Balance Sheets stocks in this environment. When i went through his stock i only found one financial on there. Otherwise it is a diverse group. Looking at the year today date performance on these companies that he says should do well, or a good place to be for the remainder of the year, he is looking at biotech stocks, he is looking with the Tech Knowledge he and what he says are the strong Balance Sheets stocks. , and it is a mixed bag here. We also have mixed year to date performance. He is looking at consumer stocks as well. Estee lauder, michael kors, starbucks. A few examples of what he is recommending in this environment. Dollar strength should be better for domestically focused companies. Scarlet thank you. Alix vancouver is considered the San Francisco of canada for its booming tech start of scene and maybe enough for high real estate prices as well. Scarlet housing has gotten so expensive that millennials are opting for cheaper nearby cities. Remind us first which Tech Companies call vancouver their home. Hootsuite, this is a social media dashboard company that has done well. They are a consumer Intelligence Platform company that has been tapped to go public but is waiting out market situation. There is a surveillance camera company, surveillance systems, and then they are a publicly traded company in canada. All of have roots in vancouver. Other companies that are trying to get started, create their own platform are finding the prices out of sight and it is driving them to other cities, like victoria for instance, which is the capital of british columbia. It is on vancouver island. It is not a long music, but it involves a fairy and it takes time. Some have gone to the internal in the an area wine region. A bit of a commute to vancouver. Just to give him a sense of the vancouver prices we have been price growth,the 21 over the course of the last year. Price growth in San Francisco is about 14 . All of this is leading to a bit of a transformation of people are starting the companies. Scarlet and all this is being driven by a lot overseas chinese buyers buying the houses, buying property as a way to safeguard their money. Alix and then you have the Technology Boom on top of that. Thank you very much. Scarlet coming up on bloomberg markets, emerging markets, what are the are that they are being simply mistyped . Alix welcome back to bloomberg markets. Scarlet im scarlet fu. Alix have investors got into negative on emerging markets . Some surveys say yes, and it causes many Fund Managers to get caught off guard when there stocks begin to rally. Scarlet carol massar and i asked Paul Mcnamara whether they are mispricing emerging markets . Everyone came into this year knowing that china is going to implode, all commodities are going to zero, that will all emerging markets downward. What you need to own is the u. S. , dollar, and tech. From that point of view, it has been a really horrible year for the average active investor. That does not mean it cannot worse . It is not as bad, but there are serious problems. Have more commodities coming on stream and so on, but really the market is priced for armageddon, if you want to use that phrase. Until investors unload out of that, there will be an opportunity. What is the storms argument whathan buying e. M. Is the strongest argument against buying e. M. . They were running current account deficits, we knew the five countries of the biggest deficits, which suffered the worst. But now emergingmarket trade on the aggregate has moved into balance. There are certain countries like brazil that have moved into unprecedented surpluses. That deficit has disappeared. Scarlet nec that in that chart right there. Mustve the adjustment has come by import, which people seem to be hung up on. It does not really matter. All big balance of private just was come on the important site all balance of private importents comes on the side. Scarlet that is an important point. I wanted to ask you about how important centralbank policy is right now. How does this play into your thinking for what happened in those emergingmarket . This is really interesting. We are clearly in currency wars. Theres no doubt about that. Seen the have just mexicans hike rates by about. 5 prevent arove sound from falling if he further. While everybody is trying to win the currency war, the emerging markets are trying to lose them. Emerging markets, we still have. Nflation,. From a monetary point of view, it is a much and are up to be an emc maker then somewhere else. When you look around the world, what you like . We like the countries that have adjusted. Their experts are great because the price of commodities have dropped. That areking countries moving in the right direction. India has been popular for a long time. The shine is starting to come in india. The banks is there a little delicate, and that is looking in little vulnerable. What kind of promises had the government made that it cannot keep . Structural reform. One of chinas great strength is this absolute or to relation to invest in infrastructure. They quite badly on that front. , i knowonsolidated has this is something we care about in china as well. But i think it is your profit in india at the moment, even if it is not only damaged. Scarlet he sure to watch what you miss today for more discussion on this week. An Important Program without, we will really special coverage of the fact decision including goes live News Conference started for you wednesday. Welcome to bloomberg markets. From bloomberg World Headquarters in new york, good afternoon. Heres what were watching this hour. Stocks are fluctuating as investors await meetings from the fed, the bank of japan and the bank of england. David shares are declining today as oil gets hammered. Iran indicates they will not freeze production. Less than 24 hours away from the critical super johnay primaries and kasich is running neck connect with donald trump in ohio. Market close in about two hours and stocks are bouncing around. Lets go to the markets desk with julie hyman. Julie i was looking at the volume figures for today, and there is not only a lack of price action, but a lack of