Welcome back. Scarlet the band is all back together. Julie we had stock slipped today, we had a run, now we are seeing a pause. That dollar, we talk about the , butlation between oil this year, the correlation of inverse correlation is really with the u. S. Dollar. We dont spend as much time talking about that. But that has happened this year as well. That said, we are seeing stocks pull back today in terms of the biggest drags on the s p 500. In particular, facebook is falling today. Intricately, Deutsche Bank says you should buy the stock on weakness. Deutsche bank is also saying that near term, theres an unfavorable set up in the stock knowing into earnings. It seems as though the focus is more on that part of the commentary. General electric is falling as well, pristine downgrading that stock valuation and underappreciated risk for the company, including a longer downturn in the oil and gas sector. Cisco and jpmorgan rounding out the top four drags we are seeing today. Scarlet stocks you are mentioning, falling after reaching the highs of the year. Volatility was the story of last week, with a lack of volatility we saw. Julie even the volatility fix up a little bit today, its still a pretty low level. Printleague jovially in as a good story out today, looking at volatility and what has happened and how it is formed a love investors. X, this is fix vi the threeyear chart and the threeyear average, you can see right now we are below that level. Andtility, after spiking seeing the return of volatility here, we are now once again below the threeyear average. At a time when a lot of investors are betting the volatility is going to come back. This is the vx next, an atm that vix. S the backs the it has spiked up and now has come down. These the shares outstanding. It a lot of folks who have been trading this have been buying even of the prices has been going down. The volume of trading has been going up quite a bit. This is something we talked about recently to illustrate the idea that people dont believe the advance that weve had in stocks, the drop that we had in volatility, they are against volatility coming back up. Until now, theyve not been right. Another way to look at this is the bottom chart, this is the volume in the vx next. I contrasted it with apple, one of the most heavily traded stocks. You can see it tends to trade below above even the volume of apple. Apples volume below that of the vxx. You have high volume and high shares outstanding at the moment. Volatility is nowhere to be found. Alix we love that function. Scarlet lets check in with bloomberg first word news, Ramy Inocencio has more from the news desk. Ramy a new report says world leaders, criminals, and celebrities have a used companies to hide their wealth. Thats a Greater Group investigative journalists. 2 billion in transactions include people and companies that include Vladimir Putin. They say their information comes from files from a law firm in panama. In interview on bloomberg television, the head of a major russian Stateowned Bank dismissed those allegations as nonsense. Putinody says that mr. Was involved, because is not his name registered anywhere. But some people who know mr. Putin have certain offshore business. So what . Whats wrong about this . Companies can be legal, they also can be used to hide wealth. Supreme court has agreed to weigh in on a case involving claims of racial bias. He says he did not have a fair trial because a juror made offensive comments about mexicans. He says the comments were so bad that they deprived him of his constitutional right to trial by an impartial jury. He was convicted last year of unlawful sexual contact and harassment. Amtrak says its operating trains today is scheduled, although there may be some express, northeast regional, and other services between philadelphia and wilmington, delaware. This comes after a fatal crash disrupted travel. To amtrak workers were killed when a train hit Construction Equipment south philadelphia. About 30 people on the train were injured. A new study on air travel will he says more flights are arriving on time and losing fewer bags. But travel complaints jumped 34 last year. Its now its highest level since 2000. Top reasons for those frustrations, flight cancellations, delays, and the extra fees for things like checking bags and changing reservations. Global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. Im Ramy Inocencio, back to you. 2016 has not been kind to big banks, thats putting a mildly. A regime of higher Interest Rates is still not in the offing. The group has bounced back from february lows. Again still trail a broader markets. Alix one fed official a stepping up the rhetoric to break them up. Neil cash card will be Holding Town Hall meetings on two big sales. Lets bring in barry bannister, and equity strategist who joins us from baltimore. Your call is of the banks in the s p 500 are bottoming. Can you explain why, when theres no shortage of headwind . Whether its the rates outlook or the renewed debate . I talked about banks, was speaking more as you look up to 2017, they would be the last group to turn of the market is going to continue to edge higher. They are emblematic of the ability to have reinflation. More immediately, i think its the risk assets, the global and that seem to be doing well. They have one more leg up. Alix you brought up reflation, thats making the rounds on wall street. I spoke about what the reflation trade of the 90s could look like now. This year think is going to be a reflation year. Brought about by two things. One is obviously, the fed has dialed back the rate expectation, basically, if you look at the United States and janet yellen, she basically told the world that things are going to be turning very cautious. Another change is really from china, the chinese governments is actually making a turn for the right reasons. Scarlet in the 90s we had a 40 rally in emerging markets, 20 rally and emergingmarket concert currencies. Is this the reflation trade were in for right now . Barry whats going on right now is more interesting, its kind of a flip of what happened in the 1980s. Back then, 1985, the john was pushed down by the plaza. It was pushed up. Two years later, a nascent 87, that the dollar back up. In 1987, that pushed the dollar back up. Now, they are pushing the dollar down. They need more structural reform. The Central Banks dont to be solely responsible for economies and the fall guy if things go bad. And because it really serves everybodys best interest for janet yellen tout dove the ecb and doj and give a hand to the chinese to facilitate rebalancing. Scarlet you are in the camp of there was some kind of coordination on the currency back in the shanghai g20 meeting. If thats the case, what would it take for the different powers and Central Banks to break ranks with comes to currency . Keep in mind, the ecb and the doj dont want to bear all the load. We do have to shift some of the stress to the government officials to do more Structural Reforms to deal of bad debts and to do more fiscal stimulus, as you will probably see shortly in japan. But chinake a while, has got to facilitate the rebalancing, they expressed since august and willingness to devalue their currency. That is disruptive and deflationary for a lot of folks. Alix in the meantime, you see the reflation trade on right now. But we have the lack of volatility weve seen the last month. Take a look at the start of the bloomberg which comes to us from all over running, and looks the absolute value from close to close in the s p. You can see here, this is 1 . We really not seen a lot of 1 moves over the last month, which is really different in the past six or seven months. What gives . Barry weve only had the s p target of 100. This is about a sector rotational call we made first half of 2016. If you look at the vics, typically bottoms as the s p is topping out. Theres not a whole of market upside, this is really more of a sector rotational call to more global, more cyclical, less about the growth in the mexican defensive. The deflationary overhang that we have now is due to the strong dollar deflation. 2008, it back to 2007, was due to the lag effect of the greenspan rate hikes of 2004, 2006. That was debt deflation. Currencyation and induced deflation are two different things. I think janet yellen is afraid of the deflationary risk of a slow Global Economy and a fast fed exit. Torlet looking ahead thursday one janet yellen will be speaking after the markets closed. What did you say that makes people rethink their position in could she sayhat that makes people rethink their position right now . Barry i dont think she is going to go off message. If you look at her Economics Club meeting, she reiterated the march meeting. March was under show in of this year, two days before the fed meeting, i said the fed had to really reconsider its global role and take into account the lack of growth overseas. The exit should not be a company by too strong of a dollar. Thats highly deflationary. By letting the rest of the world catch up, and some of the gerrymandering that went on in shanghai behind closed doors, i think we have this risk on trade for a little while longer. Alix when . Barry i think it will last for a couple months at least. Its also very highly seasonal. We should get this trade through about may. Alix barry bannister, equity strategist. Scarlet coming up, we speak Energy Minister about his countrys pursuit of clean energy. Alix you are watching Bloomberg Markets, and alix steel. Scarlet fu. 195 countries committed to reducing pollution in the coming decades. One country leading the charge on clean energy is chile. Alix the south American Country is aiming to get 70 of its power by renewables from 2030. When power has soared in projects for solar projected to grow in the next five years. Bet e on chiles digs big bet, i want to bring in their Energy Minister, maximo pacheco. Blow awayhow to chile the other competition and be such a leader in alternative energy . Chile has been a growing business in renewables for investors, and also local investors that have realized son,we have a lot of good and a lot of wind and water, and all of this boom in renewables has no fiscal subsidies, thats very important. Its sustainable. Conditions with sun, wind, and water to produce energy with renewable technology, thats very competitive. Arehe past 10 years, there bids, and renewables have been awarded, most of the bids because they have proved to be clean, and also very competitive. Has laidarly, chile out ambitious plans. We saw from the chart it really is ahead of the pack. The critics will say the growth was too much too soon, and that chile wasnt prepared, or as prepared as a could be. For instance, Transmission Infrastructure didnt follow the progress. How you respond . Maximo yes, we realize we have the solar radiation in the north of the country, which is the desert. And we have very good wind in the south and water in the south, but most of the consumption is in the center of the country. So we need to transmit this energy, and thats why we have been strengthening our transmission lines. Today, energy represents a big sector in the economy with the highest investments. Even more than what we used to , in the past we should be number one, now its energy the number one. Because we are building new Power Generation capacity. And also because we are building new infrastructure. We have more than 1000 kilometers under construction today, and more than 58 power plants under construction. 13 billion inan infrastructure, both generation and transmission, to enable all of this Renewable Energy to come under operation in these years. Scarlet something that has happened during this has been the fallout of Commodity Prices. Like you mentioned, mining was really the number one thing there for chile. If you have alternative energy to power the minds and mine shut down, what is that do for the demand for alternate energy . What happened with mining is that mining is a price cycle. With lived for many years the boom in the price of copper, similar to other commodities. And now, the prices are low. But we know this is a cycle. We know that todays prices for mining copper are low. But they will come up. And therefore, we need to have a longterm strategy. And thats what weve been working as a government to assure that we have a longterm view, and thats what weve called energy 2050. Mining was one third of the total demand electricity in the country. Thirds have another two that are other sectors of the economy. We need to restructure our Energy Matrix so that enables a lot of opportunities for renewables. And also, we are in a region of the world that has huge opportunities for integration and interconnection. South america is probably one of the least integrated energy systems. There are huge opportunities for chile also to export some of this Renewable Energy to other countries in the region. Scarlet the government believes the solution for a limited chilean to messick market would be to provide power for neighbors like argentina. What kind of steps would be necessary for regional integration . Maximo we have taken the steps already, as a matter of fact, weve started to export from chile to argentina in the northern part of the country. Weve also builds, in the 90s, eight pipelines, Gas Pipelines that we used to import gas from argentina, now we are exporting gas to argentina, gas that we dont have but we bring from other parts of the world through our infrastructure. And now we are exporting gas to argentina, which is a net importer of gas. Scarlet speaking of exports and imports, the minister had mentioned commodities and copper. I want to show you a function on the terminal which is ett are go, a trade flow. Im sorting by exports. This shows where chile sends its goods. Not surprising that, it sends the bulk of its goods to china. 21 billion worth of exports in 2014 copper is a big part of that. Thats more than double chiles next biggest customer, which is the United States at 9. 5 billion. Alix in order to run the country, you need to have a view on the Global Economy, in particular, china. From where you sit, how is china doing right now . For us, china is an important market. One third of our total copper experts to china. Weve seen declining prices globally, but also some are driven by with happening in china. China will not continue to grow the rate that we saw on the past. Its still a very big economy. Believe that this is a cycle in terms of Commodity Prices. And prices come back clearly will not be at todays , that but will recover will probably happen in a year or two years. Scarlet minister maximo pacheco, chiles Energy Minister joining us. Alix shares of this particular company shooting lower. They are taking aim at the entire sector, we dont know what it is. We unveil why analysts are biting the bullet and cutting their targets. Like a solarto say stock. Scarlet it could be a gun maker. We will see. Scarlet this is Bloomberg Markets, im scarlet fu. Alix steel. Julie hyman has a look at the company movers, and i said solar, said addison was on my mind. Scarlet lets consider the , shooting lower, taking aim, biting the bullet. Wesson, this is the two day chart youre looking , youown 16 today alone see the big dropoff between friday and today in the shares. The stock has been downgraded by a number of different analysts, tea, ande and cb and that has to do with the data from the National Institute criminal background check system. The kerley there were sequential designs apparently, there were sequential declines. It was the weakest of the pack out of the past decade. You can chart this on bloomberg, with chart of this National Criminal background check system. People who request background checks, thats the next chart we have. In this decline we saw in the month of march. Over the past 10 years, weve seen it go up. But look at this big dropoff that weve had thus far this year. Thats the source of these analysts concerns. Way, pulling down other gunmakers as well today. Its not just affecting smith wesson. We are seeing ruger also taking a hit in todays session as a result of this. You have this outdoor Sportsmans Warehouse also declining relating to this. Lets take with sin stocks. Looking at casinos today, and particular, the boko haram based on valuation. On friday we saw the casinos fall after the macau monthly revenue, the games of chance revenue they come out with phil by 16. 4 , melco shares down. Remaining the is topic of morgan stanley. The price there is 110. Shares are up. 3 . It has increased confidence that the companies noncombustible tobacco products, also known as ing products will help the company. Alix no solar. Coming up, and saudi arabia revamps its economy, we discussed reforms that what it means for the global market. Alix alix live from bloomberg World Headquarters in new york, i am alix steel. Scarlet this is Bloomberg Markets. President ialthe politics. All political roads lead to wisconsin with voting tomorrow and democrats. Trump is telling john kasich to get out of the race. Showe democrats, pull Bernie Sanders leading hillary clinton. The president , meantime, goes to law school posing the nomination Merrick Garland to the Supreme Court. He will go to the received chicago on thursday to argue for the nomination. Meanwhile, garland meets with two more republican senators. Passengers traveling out of are asked toort renew check in procedures. New security measures aim to minimize the chances of any repeat attack. Security was visibly tight. A u. S. Governmentbacked panel wants to clear commercial drone residential areas. The call for four classes of drones that commercial operators can fly over people. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Thank you so much. Saudi arabia is looking past the oil age with plans to remake its economy, and create the worlds fund. T sovereign he has this obsession about moving the saudi economy away from oil, and basing around something new. This 2 trillion fund into which ramco will go is an amazing thing. If you think about it, it is enough to buy google, microsoft, alphabet, the whole lot of them. They would still have change to spare. Into that would go ramco. They will add land, property, all these things. It is roughly twice as big as any other sovereign wealth fund. John, you are on the ground, what are the reactions of the people to all of these drastic changes that the deputy crown prince wants to make . You are very right to define them as drastic. I would say that people are welcoming this fresh approach to economic reform, which is very much needed. They do perceive this with a a butter positiveness. Of positiveness. I think a lot of people are expecting that more reforms will come. Saudi arabia needs to think of the future beyond oil, especially as oil revenues have to client. Overall, there is a positive sense that we feel through society and other places in saudi arabia. This is aurely massive shift for the country. I wonder, what is the support within the royal family for the proposal . Concern. Is always however, i would say this is the definitive move forward. The royal family has several views definitely. However, one view is encapsulated under the aegis of the prince. He is pushing this forward with the support of the royal family. Like any marriage, there is discord, disagreement, but still, everyone realizes, or at least most of the royals realize that this has to be a reformist move. Saudi arabia can no longer rely just on the oil. Think of its future beyond oil. It has to privatize. It has to create a sovereign wealth fund, and certainly, it needs to look at the crown jewels, how best to modify that. Alix there is no doubt then that he will become the next leader of saudi arabia would his father passes . Nobody knows that. There is a clear succession tion that has been cited decided. The third in command is prince mohammed. That is something that is there. I dont think there is a question of succession. What is happening is the country is changing, and it is obvious for people on the outside what will happen in the future. In my opinion, there is no question of who will succeed. Is, as, the debate always, there in the western media. It is clear who will take over. Scarlet clearly there is a lot that has to be right for this to go smooth. I want to bring in the Atlantic Council in washington. What your confidence that saudi arabia can achieve this . It. Think they will achieve they have an enormous amount of support, as was mentioned. Mohammed is 30 years old. He has the support of 70 of the population. I think, indeed, they will see the daylight. Pressurestrong within the royal family. There is no doubt that pub the support is with the young prince today. Alix no doubt saudi arabia has to diversify away from oil. The offset is a substantial rise in cost of living. You have new taxes, bigger fees. At some point, are we going to saudime pushback is this aramco cannot deliver the 2 trillion that they are talking about. There will be some pushback for sure. Definitely the cost of living will increase. Another impact will be the theive effort to pursue division of the economy were more young saudis will get jobs, but not at proper salaries. The cost of living in the kingdom will increase. There probably could be some pushback. Realizehat the people the devil the devil they know s better than the double they dont know. They will swallow it. Scarlet as saudi arabia makes this transition, there are a lot of questions about how much more transparency investors, people outside the country, will get when it comes to the economy. To expect to see there will be more transparency . Yes. I think that is exactly the game of mohammed. He is pushing for the privatization of saudi ramco, not so much for the money, but because it will force them to be completely transparent. Governmentw how the has to move away from just being and show whatte, the royal family takes out of all of this because it becomes a member of the 21st century, not live in the past. Toeed, transparency is key this evolution. I think we will see more and more. That is what the young prince is supposed to do. Changed for saudi arabia in the last year . One is the resilience of u. S. Demand. Nd worries that demand will not be as efficient in the future as analysts have thought. Did the deputy crown prince basically call peak oil . I dont think so. I think is part of this modularization process. ,lso, a process of governance deepening governance within the country. This was the sacred most important aspect that saudi arabia has. There are no taboos. This is the message. It was a taboo to keep gasoline to theat six cents leaiter at a time. It was said there would be a revolution if gasoline prices went up. The same was said about water prices. This is no longer the case. People have taken it quite well that the country needs to change. It is important that oil prices if saudi ramco will later, isntnot basically saudi arabia leaving money on the table and saying, we dont believe prices will hit 80 per barrel again. Later exactly, i think this o the point of prince mohammed. He said that he will appeal less than 5 of the company. They could do that initially in the saudi stock market, and as oil prices pick up, they could ipo more and more. This is a gradual process. Assets of the company will be valued, and estimated at a certain price, 2 trillion or 3 trillion, or more. That will be held by the sovereign wealth fund. That could be gradually sold off, or pieces could be sold. Has a lotsaudi ramco of these companies that are Huge Companies within themselves. Alix yes. Gentlemen, thank you very much. Change in thee Global Economy. Absolutely. Coming up next, a new report rocking leaders from russia to argentina. Told bloomberg about reports of Vladimir Putins involvement. Criminals and celebrities are hiding their money in show oil, according to a report. Hondathe fifth time for having safety concerns take the company. Sellet apple failed to used products. Alix the dubai airport is the Third Largest airport in the world according to a new global ranking. Scarlet we belong at panama where a trial shows that politicians, criminals, and celebritys worldwide have used banks and Shadow Companies to hide their finances. According to a series of reports, it had obtained over 11 million records outlining outlining the creation of 2000 offshore Shell Companies linked to current and foreign former foreign leaders, including iceland Prime Minister and russias Vladimir Putin. I never bred anything which led to mr. Putin. He was never involved. The fact that his daughter was at a sking a wedding ,esort, which is not expensive i dont know how they can relate to his businesses. It is bull and sorry to say. Honda is recalling more than 280,000 cars after fires after a defect. Apple is having little luck breaking into india smartphone market. It is the second time that apple has attempted to forge a deal, but industry executives remain staunchly opposed. They say would jeopardize indian phone makers, and make a farce of them. The chart of the hour. Global passenger rankings. Tokyo, london, and los angeles lost ground. You can see more on the bloomberg. Time now for the bloomberg quick take, where we provide context and background on issues of interest. I am alix steel. California governor jerry brown will sign up today to increase his states minimum wage to 15 per hour by 2020. Your estate is also set to do the same sometime soon. The question remains whether it is good or bad for the economy. Heres this duration. The minimum wage of 7. 25 per hour is the 10th highest of 28 companies that report this data to the oecd. The United States falls behind the u. K. And australia. When measured as the share of average wages, the u. S. Ties with mexico. By the start of 2016, 29 states, and more than a dozen u. S. Cities had minimum wages higher than the federal rate. Background. U. S. Federal rate has been raised 22 times since congress created it indicted 38 at . 25 per hour. When adjusted for inflation, the value peaked in february 1968 , which iss 1. 60. Bout 10 it was found that adopting a 10 tends that wage nationwide with list 900,000 people out of eliminatinge 500,000 lowincome jobs. Heres the argument. Minimum wage enthusiasts say the companies that rely on both turnover atr enjoy increased consumer spending. Another hand, someone has to bear the cost of higher wages. Wage mandates nimble at corporate profits, increased prices, or both. Increased squabble over this issue, the debate is becoming more and more academic because not Many Americans actually work for 7. 25 per hour. In 2014, just 4 of hourly workers earned that amount. That is your quick take. For more stories, visit over. Com bloomberg. Com. Scarlet lets do a quick check of u. S. Stocks. Their fluctuating, retreating a little from last weeks gaining in remarks by janet yellen. We have healthcare shares leading the advance on the plus side of the column, while discretionary is declining. Looks good Abigail Doolittle live from the news that nasdaq. Abigail apple today is the biggest boost to the nasdaq. Shares are higher after they. Aised its price circuit and analysts are saying that he believes Apple Services are underestimated as a driver. This is not dissimilar to comments from Goldman Sachs last fall. 200 today is above the moving average. The stocks trading action suggests the this may not be be longlived. Ot love the chart. Thank you so much. More Bloomberg Markets next. Alix you are watching Bloomberg Markets. I am alix steel. Scarlet i am scarlet fu. Patience andlost hedge funds last year, things are not much better this year. That was echoed by michael finger. Not pretty, but getting better. In 2015, the broader indices were up about one point, hedge funds down one point. We are calling hedge funds a strategy. Theyre not a strategy. It is a wrapper. What does that mean . Way not to be a mutual fund, and be able to invest more flexibly. , theyarkets get rough have a hard time. Lets talk about this. The commonly held hedge fund names tend to date down 4. 5 . Not having a great year. In the middle of february, it was dicey. You had equity long shorts down 8 on six weeks. Brutal. The quarter were down double digits. That is the worst start i have seen in my career and hedge in hedge. That is not the whole story. The quarter werealligators wille they want to go. In the year like this, if you invested in global macro, in ctas, managed futures, you would money this year. You have to be smart about the space we want to invest, and do the work to choose the best manager. If you were to invest in a long equity insurance manager, you could be losing a bunch of money. If you did the work, and focused on managers, someone who had an epiphany in their career those who had the macro perspective, so they could change the net exposure, they would not mind this spike over 20. It would give them an opportunity so they could pick stocks well. People have real expertise and can diversify to give you a different kind of exposure. I think what you just said is you can if you choose a , youy great stock ticker are ok. How you choose . The two in 20 negotiations started here is. Grams so many nasty from friends. Is are there great factors . Carlet that was michael singer on bloomberg. Alix we will spend the next hour talking to exxon ceo chris the canadianl as minister of Natural Resources. Dont missed those interviews right here on bloomberg television. It is 1 00 p. M. In new york. It and one ok and in hong kong. Welcome to Bloomberg Markets. From bloomberg headquarters, im scarlet fu. And im alix steel. It u. S. Stocks are struggling. The fed janet yellen people talk to one strategist to raise rates. We have an interview with exelon ceo chris crane. He will tell us what m a opportunities he season never noble energys. Unforgettable 2015, some bond managers had made a stunning turnaround. We will take have a did it. To head over to the markets desk where julie hyman has been checking the waffling in u. S. Stocks. Julie it is a stall. That is what it feels like after making the highs from the year. All three major averages not doing that well. I want to focus on individual movers. Bestd Life Sciences is the performer climbing 19 . This is after a presentation after the american cardiology annual meeting. Edwards newest the valve is implanted through a catheter and allows patients to avoid openheart surgery. It has a lower rate of death in surgery. This opens up a new market for edward. That accounts for the big surge we are seeing in shares. Also surging, shares of southwestern energy. This is a stock that has been very volatile a lot of energy prices. The company is borrowing all of its existing credit line. Fullbillion is repaid in april 1. It is an accounting maneuver. The transaction should be viewed as more of it should be viewed as more of a tactical move instead of a need for additional cache. That is reflective of how shares are trading. Also, richard says he plans to retire next year same the companys founder once a change. This is unexpected because he has been leading a return to profitability. Those shares down 7. 5 . Arounds season is right the corner, but analysts are so pessimistic across the board when you compare this to a year ago. This looks at the change in earnings estimates. This chart goes back to 2010. You can see the drop, here is the largest. , some say this is a good thing because there is so much pessimism going into earning seasons. Leadss ample room it ample room. Something else i want to point out that was a pattern last year. Stocks outperformed during the various Earnings Reports of the four seasons last year. We had increases in the s p 500. You did not have a big rally. Stocks were up by 4 10 of 1 . You did have a little bit of a bump up during that period of time. If see that repeats this time around. Thank you so much, julie hyman. Lets check in with Ramy Inocencio. We go to the kremlin. It has record harshly to Vladimir Putin to offshore transaction. Is targeted putin of stabilizing the country. Report said it doesnt the report says to encourage 14 people were killed in a wellknown restaurant popular with she got militia. Coalition has advanced against islamic states, but extremist have struck back targeting civilians. Two of the worlds fastestgrowing airports would be dubai and chicago ohare. Dubai is now third after its passenger traffic rose 11 . Ohare is in fourth. Itself stillirport in atlanta. Beijing is number two. Mens College Basketball is set meeting north carolina. Carolina coach roy williams will be looking for his Third National championship with the tar heels. Global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. Im Ramy Inocencio. The key to the equity market if the credit markets. Dont they say credit always leave . Our next guest says the credit market started the foundation. For its neutral view. Now. Ter joins us for the last four years in a row, he has been voted institutional allamerican for his market research. You take a look at the credit market. They got a reprieve after the dovish janet yellen. Highyield on margin as the one i can to look at because it is the riskiest of credit markets. It is the one that tends to act more equitylike when things get more volatile. Highyield, it rs, but the midfou they were as tight as to dollar . 90. Highyield is another story. It is essentially closed. That is much more bearish than the spread would indicate. The red flag is riskier assets will have trouble. Why havent spreads reacted . We think they will. The recent rally cross markets. We saw emerging markets rally. If you try to figure out the underpinning, our thought process is about the dollar. The dollar rallied quite a bit. It rallied 25 . It has been off 4. 5 this year. I am looking at the dxy. Euro is most of it about 30 . The rally off the low correspondent with the dollar weakening quite a bit. The dollar weakening. Oil rallied. Commodities rallied. It squeezed people out of shorts. Out, theygot squeezed thought, perhaps that is a change in tone and fundamentals. That catalyzed long buying. If you see where long buying is, there has not been a lot of volume. We think we are close to the squeezed by that occurred off the low. Investmentgrade is different. Issuance is higher than last year. You have some bullish factors in the id market. If you study cycles, and it at look at what it happens the end of a virtuous credit cycle, high year issuance falls off first, and companies that can issue debt will push the investmentgrade paperwork before the market turns. Moreover, at the end of the credit cycle, it corresponds with peak m a. Byks in m a are funded issuance. You noted something it showed profit in the fourth 11. 5 year on year. Caveats to that are much of that was energy. Although it did involve industrials in financials, which had negative earnings. There are adjustments they make. The fact of the matter if the data is compelling. Since 1949, i believe, there were 17 instances where we had profits going negative like this and i believe 11 out of 17, 60 5 of the time, we were in a recession, or out of a recession. It is profits, not earnings. It is not eps. , thereofits down 11. 5 were nine times were a came in that much and eight of those nine times, we were about to go in a recession, or in a recession. Profits are rolling over. That concerns you. It seems like you think the id market will catch up to the highyield market. What kind of decline are we going to see . We came into the year thinking we would have 10 toecast was down 20 . Everybody said, whats next . We think it was a buying opportunity. Financials appeared very oversold. Even know we were bearish in financials, we say, cover your financial shorts. We have been on the wrong side of the call for three weeks. We have been a little too cautious as we rally on the s p. Me if wenot surprise see it grinds down here throughout the rest of the year into our target range. Value stocks narrowly outperform Growth Stocks in the first order, which has led people to believe 2016 will be the time for value stocks. Do we have the right conditions . I tend to love value. Columbia Business School and a value. I love that. The value trap is notorious in an environment like this. There are times when things look cheap, but they looking for a reason. I would yet be willing to say value is going to outperform growth just yet. We need to go through our deleveraging cycle and then there will be compelling values, especially if Commodity Prices stay as low as they are. Is the growth nor value will be in a performer this year. She says quality will be the key driver a relative returns in 2016. Give us your definition of quality versus growth versus value. That is a tough one. Quality over arches everything. You can have a quality value stock or a quality growth stock. Inequality stop, there are a number of nondiscretionary companies that fall into that category. Something that doesnt have the volatility for his for its cash flow. There are plenty of those out there. Nondiscretionary space you can find a lot of quality companies. Peter, thanks so much. Thank you for the insight. Coming up on bloomberg exelon ceon chris crane will be with us. What is his next move . Bond traders have been world leaders. We will tell you who they are and how they did it. Sinking two years of oil prices, how canada is tackling its operations. You are watching Bloomberg Markets. Im alix steel. And im scarlet fu. The future of energy is underway in manhattan where leaders are discussing the Critical Issues of energy for the next decade. Among the attendees is chris ne, the ceo of exelon that he joins us now. Update from you pepco. Merger with what is the status report getting this through and making sure a complete on time . Chris we completed it. We had the approval the week before last the d. C. Commission that allowed us to file and the state of delaware and we are close. It is a completed transaction. We are in the Integration Phase of bringing the companys together. Part of the issue is you are the largest owner of Nuclear Power plants in the u. S. And you been difficult are trying to expand anymore regulated business world. Do you expect more acquisitions like a pepco to help you along that road . Chris right now, we are focused on the integration of pepco. It is a very concise transaction. We believe consolidation in the sector on the regulated site is necessary and can provide a competitive advantage for not only the consumers, but also the other stakeholders within the communities we serve. Talk a little bit about what kind of regulated utilities you might be interested in want the integration is sorted. Well, you know, as i said, our primary focus is the integration. Theill be integrating largest, as you mentioned, consumer serving utility in the country and getting that right first is imperative. If there are other opportunities we see theye, and make economic sense, we could look at things, but that is not a primary focus right now. Thecarlet and i spoke to commissioner in chile. They are making the biggest provider in south america. Is have our that wind energy heard in the Nuclear Power of business. What is your view now on alternative energy . We support for noble energy. We are a developer of wind and solar, not only at the largescale, but at the commercial level for private solar. We have always been former nobles. Fore have always been renewables. Past, our conversations have been about the consequences of certain incentive programs the production tax credit, or the investment tax credit for solar. The are incentivizing a technology versus an outcome. I think the shift that has gone on over the last year is looking much more at how do we get a low carbon environment and how the generation stacks competes in that. It gives us predictability on how we should make investments in our new year plants. Nucleartment in our plants. If you dont have a demand curve that shows demand is increasing, but your continuing to develop Energy Generating sources, it is going to have an oppressive effect on the existing generations. I will give you an example the clinton facility in Central Illinois has been uneconomic for years. It is not because of natural gas. It is because it is constrained with a significant amount of wind around it. If you shut the clinton station down, that is almost three orders of all represents three quarters of how the wind is developed in illinois. Instead of talking about technology, lets talk about outcome and design the markets properly around that. Do you see most of energy coming from a noble powerplants . Nuclear Energy New Energy coming from their powerplants. Chris sorry, there is a lot of background noise here. We do see the development in regulated markets. You have to understand, there are two types of regulated designs. Regulated, integrated where powerplants get a regulated return, and the other is the competitive markets, which are powerplants are in. I dont seek new nuclear being built in the new future in a competitive market. There are five reactors, one in the startup phase in tennessee. Two in georgia and two in south carolina. Those are the only ones that are being discussed, or under construction today. Thank you so much. Chris crane, the ceo of exelon. We have breaking news. Concerning halliburton and value act. Here is the deal. Value act is being seen by the doj for failing to notify the government of 2. 5 billion in share purchases in halliburton as well as baker hughes. The two oil services are planning to merge. Value at what those stakes with the intent on influencing the companys Business Decisions after the two wound up reaching a deal in 2014. That meant that value act was required to report that state to antitrust officials, and that is what by you at is being sued over by the doj. This merger would be halliburton buying baker hughes and would unite the number two and three oil services. They are still investigating whether that take over will go through. In the meantime, value add being sued by the doj. You can see that halliburton shares were down and remain low with baker hughes. Still ahead on Bloomberg Markets, metals have fallen 1. 5 . We willhow you what is behind that weakness. Is Bloomberg Markets. Im scarlet fu. And im alix steel. Lets head to the markets desk julie hyman. Julie taking a look at gold. As you mentioned, it had this monster First Quarter and today, sort of modeling along. We are seeing gold stall out. It did have this big First Quarter. The biggest going back to 1986. If you look at figure today performance for gold, you are seeing gains up 15 still. We are seeing a lot of bullishness surrounding the price of gold even after that run. Pointed out by one of my Bloomberg News colleagues. This takes a look at speculator holdings in gold. This is the difference between long that an short. We are seeing the14 months. We are seeing people buy more gold, whether it is through options or etfs. Silver, which we thought was the poor mans gold and mark d . They are down as well. Here is another interesting chart. On the top, we have silver coins sales, which is the highest going back to 1986 when records began. Goal, it isd with falling to the lowest we have seen in quite some time. A silver gets cheaper to gold, it is attractive to retail investors. I remember the time i am partial to those ratios. Still ahead on Bloomberg Markets, from worst to first. We will show you hiim here to tell homeowners that are sixtytwo and older about a great way to live a better retirement. Its called a reverse mortgage. Call right now to receive your free dvd and booklet with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money. And more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today, youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home and heres the best part. You still own your home. Take control of your retirement today alix from bloomberg World Headquarters in new york, you are watching bloomberg market. I am alex deal. Steel. To bloomberg world markets. Mr. Obama meets with nato secretary general discussing the andt against the state potential operations in libya. The president is using the meeting to call attention to the migrant crisis stemming from the city of dust syria civil war. The Supreme Court unanimously help codeshat everyone in electoral districts. This could have district boundaries and affected the nation latino population. The court ruled the districting the principle of one person, one vote, the rule that political district be roughly equal. Governor jerry brown has signed a bill that will gradually raise the state minimum wage to 15 per hour. This would become the highest state minimum wage in the nation. Republicans and business groups say it could cost thousands of jobs. The items include gold and diamond rings. 1886lica of an Championship Ring and electronics. He spent 16 years. News 24 hours a day have heard by our 2400 journalists in more than 150 news bureaus around the world. Back to you. We counting down from the Eu Referendum vote in the eu. And an exclusive interview, the u. K. Ambassador to the u. S. Made the government case against a socalled exit saying the financial risk of leaving the eu are very real. There are strong positive in. Ments for staying the top line is that the Prime Minister believes we are stronger, safer and better off inside the european union. There is no question there is also risk to leaving the chancellor and the government and bank of england has said this is the biggest single financial risk stability in the near future. There are positive reasons to aroundnd there are risks leaving. What do you believe . Personally i am strongly in favor of staying in the european union. I was ambassador for five years. The government position is very clear on this. You say look at it from both sides. Lets look at it on both sides. They may say we are better off out because we can do something about what is happening in china, the dumping of steel. All . Ie in that at believe were much stronger in terms of trade negotiations and forming trade deals and in terms of protecting ourselves against dumping if we are part of the single market. Much more coat doing that. I think it is a straightforward case for being stronger inside. You are the keeper of the socalled special relationship being referred to by Winston Churchill initially. What would happen if you actually left the eu . Text this was coined by Winston Churchill 70 years ago last month. It is a very strong and genuinely special relationship across a whole range of areas, including security, train investment and culture. You are the keeper of the socalled special relationship being referred to by Winston Churchill initially. I spent the weekend here in brooklyn where they sold out 27 performances, a huge success. There are many aspects, and it is strong across the board. The Prime Minister has said he potentially we could be less influential in the world if we are not partial of the european union. Business really matters. If this happens, what will things look like in terms of england and the states . If this happens, and that is not the plan. The plan is we stay in the british people vote on the 23rd of june to remain in the ear pain or, that will trigger a twoyear process in which you have to negotiate the terms of exit and presumably whatever other arrangements you want to make in terms of trade deals around the world. That could be a time of uncertainty and risk. The u. K. That was ambassador to the United States. Alix commodity collapse led to one of the worst years since the making aisis that turnaround, returning over 5 to investors. What is driving the track records gekko asking suzanne who wrote the story. Talk about the common themes. What were some of the winning best that they made gekko they bet primarily on commodities, mainly energy. They also that on financial investments. Bnp. Ke hsbc and there were banks especially in the u k and europe that have suffered. They have underperformed. So some of the funds were ting their money in putting their money and those types of investments. It is so interesting. You saw this happen across dr. And commodities and currencies and bonds. His this just luck . How do they do it . How did you value an asset that is based in oil price and no one can pick a bottom for it . Time will tell. Thatthey are saying is centralbank policy will strengthen the economies worldwide. We will not see a downturn that people were expecting. We will not see the global crash people are expecting. So they saw this particular time as a time to put more money in their bigger bets. Freeport mac moran and the other u. K. Bank stocks that they were looking at. Petrobras also a big pic they made. Alix i will not take a lot to have a shortcoming rally. Clearly it would see these winning funds were looking at a situation where they still , leverage and power with the Global Economy. What do you think this says about the divisiveness in terms of years . You have a lot of people ining they are just waiting the wings, the recession is going to happen. You have yeldon, the ecb, the Japanese Central bank and the mandate is to make sure there is Global Growth and that they boost Global Growth and they are trying to do the best that they can. Those are the ones that believe oil will make a big recovery. Energy was going to do that. All of the other financial assetsmandate is to make underpy were going to make a comeback. So far, they have been right. There is the divisiveness. They do not think these other investments, that they will actually do very well. They are focusing on Investment Grade and treasuries. Those have underperformed the broader market. Here is bifurcation. I will take on risk. Centralbank policy and credibility. They believe Central Banks will be successful. Scarlet thank you so much. Treasury reporter for Bloomberg News. More layoffs comingcredibility. They believe Central Banks will be successful. Scarlet thank you so much. Treasury reporter for Bloomberg News. To canadas oil industry. Some Companies Cutting by as much as half. How many jobs could be lost coming up next. Scarlet this is Bloomberg Markets. I am scarlet fu. Alix time for the Bloomberg Business flash. Scarlet filtering being acquired by by phone. Train being acquired by viacom and others. They will get 1100 Television Episodes and 40s bushels. They began the syndication back in 1971. X promising advertisers that real viewers will see their advertisements on the web. Promising to jointly sell advertisements across the web. This includes popular advertisements. Some worry they made paper advertisements that are falsely advertised. Tesla announced it has 266,000 reservations are the new model three electric car. Tesla ceo elon musk says that cost 42,000. Alix that is your business flash update. Now going to markets desk and julie hyman. Julie facebook is one of them. Trending down. Obviously investors are not taking that advice, down 3 . Deutsche bank says near term is what theyre calling an unfavorable set of going into the Earnings Report going into april 20. There is mixed channel check that is meaning to the setup. ,his is what is behind the call even if folks are selling the stock today down 3 . Some other stocks watching include twitter. A report that mastercard is looking at partnering at twitter with the buy now button, which could be embedded into the tweet it sends customers to various companies shopping sites. They have been underperformer and quite volatile as well. A new venture firm backed by comcast. 250 million in groupon. It could bolster the advertising if the partnership does go forward in defense. Comcast said it will work with groupon to identify a potential Strategic Partnership opportunity so we will see what can come of that. Shares surged by 12 . Yahoo , not many details about increasing the price target from 37 to 32. Ground is trying to gain control of the board by nominating nine members. Though shares gaining 2 . Saudi arabia has been refocusing its economy away from oil dependence. Today we received more detail that the biggest economic , 100 billion in nonoil revenue by 2020. The otherhat about nonoil german economies, can suit . Ollow canadas Petroleum Industry still trying to trim the fat from the labor force. With more on how the country is time to shift away from the reliance on oil and gas, we are joined by Pamela Ritchie joins us from toronto. What kind of job cuts are expected over the next few weeks . Being added to the overall , as well asovus murphy oil, and arkansasbased company. They are cutting a number of operations in canada. They have a calgary, alberta and newfoundland offshore operations as well as natural gas in british columbia. More cuts on the books as well. Suncor. Going through rolling cuts so adding to the overall monthly picture that we are seeing on jobs. It looks like what you are calling the bloated Staffing Levels are six months away from being tackled. Isx what were seeing here they have been cut more in the Services Side and not the oil and extraction side, meaning that when we do see a rebound in prices come if they can get right back to work ands art pumping oil. Is it different in canada . It is to a certain extent. Canada, the canadian oilsands have the highest breakeven cost in the world. They have been cutting ready much across the board. That dynamic does exist a little bit. The Companies Overall are digging in for the long haul on the job cuts side of things. In the canadian economy, we have our job numbers you out this friday. 10,000 expected to be added overall. 36 million roughly. A notoriously swinging number that goes across the trend. Many less fulltime jobs being added to the payroll picture. Many added to parttime work. In terms of where they are getting jobs. Here in the u. S. , you lose your job in the oil field, i hear things like theyre going to construction work or is over drivers. Are they getting jobs after an oil or adding to unemployment . There are cases of it. We have had a number of reports enoughf people are young they can go back to school or may be based that he to be an engineer in the oilsands but with kidsave people and loaded down with that and much more difficult to turn their picture around. Stimulus the biggest piece of the picture for how we diversify. Nothing even close to the radical changes going on in saudi arabia. You could argue they have a lot canada. Get changed than the diversification picture a very long way out. Brain drain we have to contend with. Even if innovation does get going and get grounded, once you reach that, the brain drain takes off in the United States. What specific measures are they taking to ignite the other industries . One area of the budget we heard recently if they would they away from adding to Capital Gains taxes, which often will impact the start up side of things. Just steering away from that. There is certainly an effort to make sure innovation and high tech jobs have the funding and groundwork they need. On the other side of that, they are taking their time in ottawa to figure out what type of longterm stimulus and physics infrastructure building needs to be taking place. In a way, probably a good thing. Probably do not get the immediate injection. Tech is probably one of the pieces that probably still a few years out. Alix coming up next, tensions are running high we just between greece and the International Monetary fund. Scarlet in the meantime, Alexis Tsipras and joe biden have been discussing the greek bailout review as well as the greek refugee crisis. Something that assess and a Conference Call monday. They agreed this needs to be concluded as soon as possible so that debt relief talks can begin in april. Alix 2012 anyone we will be right back. Alix this is Bloomberg Markets. Scarlet i am scarlet fu. What are you saying, 2012, anyone . Great future in the euro could be back in place as this drags on july. Christine lagarde said the beleaguered country is a good distance away from a loan agreement. The greek Prime MinisterAlexis Tsipras has held calls for joe biden, as well as french president and cloth along about the bailout. They agreed the deal need to be concluded as soon as possible so the debt relief talks can begin in april. Welcome back, joe weisenthal. Right to see you. Great to see you. You are really focused on this today. It seems like last year this story was finally behind us. There was a series of resolutions revelations or even as they are trying to hammer out the forms. You see them talking about we still need to self tax. Ollection and privatization they really have not made any progress on all of the big stuff. They have this big debt payment coming up in june. Over the weekend there was a leak of an internal imf meeting regarding discussions of how they can move the ball forward. It has destroyed a lot of trust along the different parties. Not only are they far apart, they do not even trust each other right now. Obviously Christine Lagarde is upset. Everyone has a competing agenda as well. Greece would like the imf to put more pressure on germany. They may was to discredit the review. Christine lagarde followed it up asking amongtter other things about the safety of the imf people conducting a review, which says a lot. So not a good situation. Alix we are talking greasy and oil. I have a chart in the terminal. If you look at the bloomberg, three types of positioning in the oil market that will be key. Is the yellow line, which is basically etf long positions, relatively high. Have a lot of traders long for the oil price. These are merchant physicians. Lot of merchants are short they are buying inventories and hedging to offset that. A lot of long specs. What does that mean . A lot of volatility. I am dying to get the position on how this will affect shortterm oil price, regardless of fundamental. Scarlet this comes after the old relationship work oil rises, stocks fall. We agreed, oil. Emerging markets. The head of emerging markets and strategy. Ategy brazil and south africa. Brazil up 15 . 3. 59. Thening from four to economist are forecasting a rate cut. Inflation is starting to moderate. All of this predicated on a regime change. It is pretty remarkable given the deterioration in the political situation and yet you have a huge rally to start the year in all things result. I do not think a lot of people would have guessed that if they know new with the headlines were going to be this year. Up in the next hour, tom fanning, chairman and ceo of other and Company Joins us. David it is 2 p. M. In new york and 2 a. M. In hong kong. Betty welcome to Bloomberg Markets. From bloomberg World Headquarters in new york, welcome. Im lisa abramowicz. David stocks are fluctuating and investigators are waiting to hear clues from janet yellen. Did fridays job number open the fed window for a hike . Lisa crude oil bouncing around today. We will talk with canadas Natural Resource minister about his countries lands to whether a longterm slump and plans to attack im a change. David and we speak with the ceo of the Southern Company one of the most active companies when it comes to the Renewable Energy sector. We are two hours from the close of trading. Julie hyman has a look at the latest. Out, we have a stalling seeing a pullback of about. 3 across the