Transcripts For BLOOMBERG Street Smart 20150319

Bell influential investor at giardini says odds are increasing for the s p to hit 2600 this year. He says the feds explicit patience is increasing the odds for stocks rise to stop his most optimistic forecast represents a 24 increase from yesterdays close to stop tesla is updating its model s sedan this month adding more safety and connect to the features. An alert will tell drivers of they are running out of charge x italy. But there is also an ability for cars used your themselves in highway. At t will have to shell out what he Million Dollars in a Patent Infringement case because its lawyers did not read a court document. They miss their deadline to appeal a case for 26 million. To wait me accused at t of using its technology for tracking what you watch on streaming Video Services will stop we have less than an hour before the close of trading. Lets go to to scarlet fu who is looking at all the action. Not as exciting as yesterday. Scarlet investors are still interpreting and reinterpreting the feds action from yesterday. Whether it is semantics to drop the word patient. We are getting a reversal of yesterdays kneejerk reaction. Within the dow, you have 23 members falling, including apple, the newly added constituent. Within the s p 500, only the health care and Technology Industries are higher which is why the nasdaq is outperforming the other indexes. Still just below the level at 4998, so revisiting that milestone. Starbucks was one of the constituents a record high. Crude oil down for a seventh time in eight days. It had touched 42 a barrel every day this week, so we are seeing that bear market in our faces. If we move on to the u. S. Dollar coming back after its worst day in six years, the plunge in the dollar yesterday, a lot of people talking about a Short Covering rally in the euro. We are getting the stronger dollar trend reasserting itself here. And i wanted to mention copper the best day since february 3, a sixth week not the sixweek high, but the best day in six or seven weeks for copper prices with a gain of 3. 5 . Alix Oil Bear Market in your face thats the quote from you. We will check back in later on in the show. All markets are digesting a World Without a patient that. The dollar clawing its way back from its biggest slide since 2009. We see tremendous volatility in the currency markets, the stronger dollar hurting exports in the u. S. And weighing on inflation two things janet yellen acknowledged yesterday at her News Conference. Joining me to discuss it is the chief economist for Bloomberg Economics and the cio for merck investments. I was mentioning the call for 2600 on the s p and you are totally shaking her head. I guess it grabs the headlines. A fed exit what that would achieve is at risk premium will rise again. The s p was rising on the backbone of volatility, so if theres anything affecting volatility, be that a lack of clarity lack of clarity Everything Else has to on lower asset prices, lower equities and lower bond prices. There is no way we are going to get there and was we have a speculative low out. Alix what do you think . I think it may be a tall order to get that far as well. The stocks like it any time are going to move more slowly and thats the reaction we saw in the market will stop that being said the reason for the fed being more patient is not strong economic fundamentals. That argues stocks will have less upside potential. Concerns over the dollar, the dollar weighing on the economy on exports and the domestic economy, that is going to hurt earnings from s p companies, a lot of those earnings come from abroad and the headwinds here. Alix how much more momentum do you think the dollar has . Momentum is the one trait that works in any market. But people play with leverage. Those things can wildly unwind, so we have not taken away risk, we had just masked it. As far as the dollar is concerned, a lot of bullishness is priced in. Everyone is thinking europe is going down the drain and the u. S. Will have a great future. The reality is in the middle of that and that has to be repriced. That might happen as leverage is coming off the table. In the meantime, we will see people piling in on these trades. Alix you and i have talked about predicting the dollar as the question no one can answer but everybody tries. If you take the ratio between two year treasury yields and germany yield and compare it to the eurodollar, you see that you have it rising and the yield spread not quite there yet. What does that mean for dollar momentum . The correlation in that chart is about 80 correlation. Has been a useful model in recent years and that tells us despite what happened yesterday, the fundamentals have not changed. The fed is going to be mover going to be moving sooner than the ecb. The dollar will have a bias toward strengthening. Whether we get through parity or for much beyond parity is not clear in the immediate term but sometime this year the fed is going to become more aggressive. Mario draghi is not likely to back off on tv. That is the irony. If janet yellen is not likely to push the dollar higher then thats going to increase the burden for bank of japan and the European Central bank. We have seen the decline in the euro, thats not something Central Banks want. If you listen to the central bank, they have backed off from some of the rhetoric. They think it has gone a little too fast too far. Everybody powers in with leverage and the Central Banks have taken risk away. That has to have a bad ending somewhere. Alix what country or currencies . It doesnt have to be the currency market. Volatility is compressed and people are piling into risky assets. The problem is where do you hide because everything is floating higher. Alix where do you hide . Treasuries and the dollar. I wouldnt count on it. The equity market rises in the dollar, so if it tanks dont count on the dollar. Alix a word of warning. Thank you. Coming up next greece is on the agenda as european leaders gather in brussels. The strain of keeping greece afloat is starting to expose many cracks. And officials are ready to intervene in the swiss franc if needed. Alix welcome back. Here are the top stories we are watching ahead of the close. European stocks climbing to their highest levels since 2000 after yesterdays that statement. Energy Companies Leading the game but investors watching talks between greece and its creditors happening in brussels. Petrobras is working with several companies to sell stakes in three units. Its part of it Investment Plan according to people with knowledge of the data. They are engulfed in brazils a guest ever corruption scandal. Cities citigroup shareholders will vote on whether to postpone pay for several years. Under the proposal, executives would sacrifice money even if they are not deemed responsible for legal violations. German chancellor Angela Merkel is vowing to keep the euro intact, telling berlin lawmakers of a euro fails, europe fails to stop she is meeting with mario draghi today, but is cautioning dont expect a solution in the coming days will stop for more on the greek debt saga, Rebecca Christie is at our brussels bureau. And the president and cio of merck investment whats the rhetoric on the ground right now . Greece is not on the official agenda. Instead after they finish the first day of talks on things like energy union and relations with russia related to the ongoing conflict in ukraine there will be a site meeting between mario draghi, Angela Merkel, the french president and other high level officials. There will be a chance to air some of the issues and, if everything goes well, possibly pave the way for more talks ahead. Alix who is the m most important present most important person the greek president has to meet with . Last night, they passed a subsidy package and said forget about everything. We dont care what you guys are doing it. Alix this is significant because official creditors that dont try to pass any package that would give subsidies to anyone until we could work this out and they approved it anyway. No one died. Obviously, but they are getting away with everything. You only put in place conditions if there are consequences for not meeting them. If i were germany, i would not be trying to find a way to appease them. Angela merkel does seem to have come down a little bit. She is taking a softer tone. They have to find a middle ground where both parties can claim some victory. The mandate of the election in greece is that they in some way have to have a reduction of the strict rules put in place. On the other hand, germany does not just want to be handing out money for free without some conditions will stop i think they need to buy some time for the euro area to continue to recover so we are not in the midst of high unemployment and stagnant growth. Alix buying time has been the problem. Greece has 2 billion euros due tomorrow. Is there the urgency you would expect on the ground . Not for tomorrow. The greek government says it will fulfill its debt obligations coming due tomorrow. Looking ahead, they will have to find a way to make some space to figure out payment plans for things. One thing i saw before i came into the studio was a poll done by a Greek Television station that sounded that may be the new government should postpone making good on campaign pledges in order to build trust with europe. Alix what do you think about that . Recent case first. The one thing europe is lacking is a central figure. Theres ahead of the eurogroup but his powers are limited. If you look at merkel or you look at the greeks, they are talking to their own constituents. Everything that comes through the media is through sunday coming through the eyes of their constituents. Angela merkel is the one person trying to facilitate things and keep kindergarten in check. You know who else is . Mario draghi. He holds the purse suite heals a person strings. Is he the most important person . I think is actually Angela Merkel driving the counterbalance affect here. Greece has to do something to show they are making a goodfaith effort to be to meet the compromise. We were passing stimulus measures, that flies in the opposite direction. The important number to follow is greek public sentiment to remain in the eurozone. A lot of people say fine, go ahead with the exit. A majority of greeks want to stay in the eurozone. They are probably more likely to abandon the current greek government and abandon plans to stay in the eurozone. In 2012, it was mario draghi who introduced the program. If you lose control of your edge it, we will help you. What he did not assess properly is the backlash locally. Its not a popular policy. That is a political question and given europe is politically not integrated, thats not easy to solve. So, yes, hes giving them money but ultimately it will be up to merkel. Alix are people nice to each other in brussels . It depends how tired they are how many meetings they have had and what sort of meetings they are in will stop alix meetings they are in. Alix do they like talking . They have not spoken to each other as far as we are aware. I think the tone, maybe you can see from some of the comments you saw the belgian Prime Minister saying im angry not to be in this meeting. This is our money to. And from luxembourg you had the Prime Minister saying we need to stop making this so personal. Alix thank you so much. The rhetoric will continue. Great to have you. Just a reminder that we will be bringing you the eu News Conference with the next hour live from brussels. Coming up on street smart the snb saying the swiss franc is still overvalued and officials are ready to intervene again. Are there more swiss surprises in store . Alix this with National Bank is keeping rates at record low. Thomas jordan said the currency remains overvalued and officials are ready to intervene if needed. Overtime im convinced this is not overvalued its not really attractive at the moment. Alix the snb shot markets when it did that. Still here to discuss that is axel from merk investments. What kind of credibility to have right now . Zero. He got the job because his predecessor had to leave because his wife was caught currency trading. He was never on board with that. Got cold feet. In the press conference, he was asked some economic question on Monetary Policy and he did not have an answer. After a minute and a half he gave a textbook answer. The biggest risky has is a political backlash at home. I dont think you will have his job a year from now. The commitment to weaken the frank is going to hurt all of his supporters and thats what they really rely on any economy. The power of the central bank is a have a bazooka. It doesnt matter. The bank of israel has had a negative net worth for 20 years. It doesnt matter how much money they lose, except that the public does care and image does matter. The image of the swiss National Bank has not been good in the policies have not been clear. Alix i should say a lower frank is good or exports. Do you believe in currency wars . Its not whether i believe in it. We are in the middle of a currency war right now. People have taken a step back because they are hoping for the fed to do the job for them. Janet yellen does not quite know what to do with the currency. She doesnt really know what the dollar does they dont really have a model. She should ask mario draghi. Clearly in the u. S. , it does not matter quite as much. Alix we have currency wars when does it end . Where were where are we in five to 10 years . We have moved further and further away from the gold dandridge. That cash is losing its function as a store value. We have kicked the can down the road just about everywhere. That means we will go further down the road and have further instability. The folks who are losing out are the mom and pop savers and thats what we see. The folks to saving their money in a inc. Account, they are losing. Hedge funds that are sophisticated have a great time because they know how to deal with this environment. Alix hes a realistic to expect the fed to divert from all its brothers and sisters all over the world . Theyre trying and they have compressed risk premium. Asset prices have gone up on the back of low volatility is the fed tries to engineer and exit. That ties the hands of the fed but it does mean they will try. Shes focused on labor economics. Alix and no safe place to be. Thank you for joining us. A quick programming note we will be bringing you the News Conference from eu leaders in brussels live in the next hour so stay tuned. Coming up next, oil prices at an incredible six year low and theres a looming threat that could push prices even lower. Alix here are the top stories we are watching ahead of the bell. Time is running out for greece. European leaders urging the greek president france and germany preparing on the sidelines from brussels. We expect to hear from you leaders the next hour. We will bring you that Conference Live when it happens. Chicago fed president Charles Evans saying fed rates should remain near zero permit substantial uncertainty about inflation and an limit. He says the biggest risk we face is prematurely engineering restrictive monetary conditions. Amazon is expanding its same day prime Delivery Service to baltimore and miami. They expansion will continue to other cities throughout the year adding pressure to brickandmortar retailers and raising shipping for online merchants. We are just under 30 minutes from the close of trade. Lets go to scarlet fu who is looking at some of the big movers. Scarlet we have to start with facebook. Facebook on its way to closing at a record high. Above its closing high of 80 one dollars 40 five cents. No specific catalyst for the game, but says its rolling out a tool to let friends go through the messenger app. Facebook could be a contender here. Lets move on to tesla falling in fairly heavy volume. Investors apparently not impressed with elon musks Software Update that as more safety and connectivity features. The Software Update is supposed to end range anxiety. Finally, cumulus, a radio broadcaster is plunging as much as percent today, trading at the lowest in more than two years. No specific news on this company. There was some concern the company would not have used of a Revolving Bank loan but then he had he expects they will have it once again in the Third Quarter once they close on some land sales. Cumulus media a big hit, down 40 this year. I was looking at some of the trades and there have been walk trades around the 2 00 p. M. Hour. That probably accelerated the sale as well. Alix oil prices at an incredible six year low and there could be more pain to come. Now it ran is turning to flood the market with as much as a Million Barrels of oil a day if sanctions lifted. Joining me to discuss this is the principle of berkshire advisory and Resource Group and advisor at notre dame. One Million Barrels a day coming from iran if sanctions are lifted. Is it possible that you mark we will see. I would say 500,000 or 600,000 is possible. But they are adding more crude oil to the market that is already saturated. This is adding fuel to the fire and prices are already near sixyear lows. The market does not need further Iranian Crude Oil on the market at this time. But the way politics will play itself out, time will tell. Alix iran will want to sell no matter the price because they want the revenue. Also joining me is julian tell me where it ran would get this they have not had the money to invest in production, so where are they going to get the oil . What initially, it will come from oil they have already produced. We have identified supertankers mort off the coast of the run partially or fully loaded with crude. That is a potential 30 Million Barrels of oil they have already out of the ground, already in ships waiting to go as soon as they have the buyers and the green light to sell it. After that, its going to be a case of bringing back on some of the capacity. It was shot down in quite an ordinary way and some analysts are arguing that in effect these fields have had a twoyear or even threeyear rest from being produced. That allows pressure in the fields to recover and it may actually make it easier to produce oil rather than more difficult. Alix so even more oil on the markets. Opec, saudi arabia, not going out there to cut production. Tim pickens says it should be u. S. Shale producers who do that job. What do you think about that . That is how the market is playing itself out. We have shale producers versus saudi arabia and smaller producers are sidelined by the bear market in the crude oil market. Small and midcap producers are already sidelined and we will continue to see them sidelined as prices recover. Shale producers are definitely feeling the pinch. Especially as storage continues to build. When is the last barrel going to roll . Theres a huge storage area in the united dates were oil and they are getting turned away. I give stocks continue to build at the rate they are doing now, that could happen this month. But that is probably unlikely for top there is a good amount of flexible Storage Capacity contingency capacity at the top of the tanks. Its not report has working Storage Capacity but it is there and is significant. That may give some flexibility, but if you look at the dynamics of what is going on, u. S. Refineries are beginning to come out of maintenance, so we would expect throughputs to pick up. The eia suggests the growth in shale output, though it has not come to an yet, there forecast is we might see the first downturn by april, so we see this things coinciding. We may see oil coming out of storage. When he chooses this low price, everyone is trying to produce as much as they can. If you take libya out of the opec equation because of the violence going on there since the agreement in november, opec production has gone up by almost 300,000 barrels a day. Its only offset by the loss in libya. Alix you have opec must the u. S. Providing continued oil in the markets and those lower prices. Thank you so much for joining me. Coming up apple joins the dow with little fanfare. A look at the impact of the worlds most valuable company on the index. Alix apples first day on the Dow Jones Industrial average ending with a thud. Shares down about. 5 , but what are the longerterm implications . Does anyone really care about the dow jones that much anymore . Good to have you guys with us. Does it matter, apple on the doubt . Its a great badge of honor for the company. Prestigious names are in the dow and its a nice check mark to have, but it is not an investment these this. It is nice of them to have made it in that regard but part of the issue with apple is it number one across many metrics and included in multiple industries. You will see some volatility be generated not because of the fundamentals but because of the fact they are in his indices. Alix if apple was added to the dow and stead of at t, the dow would have had a much bigger rally. Does that mean apple is significant . Some of our team did the numbers and if i were to play mr. Spock, i would say its illogical we even have a Dow Jones Industrial average. Obviously that to know money is an smart is benchmarked. But we are not broken. We are humans and whether it nostalgia or half, there is still this tendency to look at the dow. Even wants they will talk about the dow even know they havent done a study in 20 years. Whether you are main street or wealth treat, theres a sentimental connection to it. If it were to bring the dow much higher, theres no logic, but they do catch peoples attention. Its something people would take note of. And trying to financially engineered their stocks how long can they continue Something Like that . Thats a great question because they did do the stock split to put it right in that spot and perhaps be included in the dow. They have been aggressively repurchasing their own shares in the magnitudes of ilions of dollars. They are running low despite the cash they have. They are down to 20 billion in domestic cash. Alix that sounds like a lot to me. Their domestic cash is declining and theyre using it faster than they are punishing. The focus is when you set yourself up to drive stock prices, its great on the way up but reverse leverage can kick him well. Kick in as well. Alix thank you so much. Youre sticking with me and mike reagan. Coming up, elon musk is your model has its charge unless you want it to. Alix we do have some breaking news. Were going to take you to scarlet fu at the breaking news desk concerning bank of new york mellon. Scarlet the headline has just crossed that they have settled a probe into Foreign Exchange with the federal justice and the new York Attorney general. It will pay 714 million in the settlement. We had heard earlier a settlement was coming this morning and now we have confirmation. The new York Attorney general and u. S. Attorney have announced the settlement. Bank of new york mellon is selling this forex pro for 714 million and take a new york ellen will end the employment of all of the executives involved. I dont have names but we have a settlement of 714 million in those involved will be let go. Alix now we are going to move to yahoo . It is shutting its doors in china. It says to buy to its offices eliminating about 300 jobs. Yahoo plans to streamline operations or is the Company Getting sick and tired of trying to do business in china . Cory johnson jointly. What did you make of this move . When you look at yahoo there are two problems. The top line growth has been stated, infected declined 1 last quarter. The other part is they are expensive. The revenue per employee is relatively low compared to their peers. Its about one third of google. You need to find the products for yahoo but the aim time, you want to be competitive with industry peers. So yahoo is not that competitive. What you are seeing is Marissa Mayer going to trying to streamline costs and reallocate headcount. Nothing to do with a geographical focus as much as it is trying to rationalize the cost aces. Alix it has been difficult for Tech Companies to work in china. We saw microsoft shutting factories in beijing and hewlettpackard trying to sell a majority interest to gain share. What do you think . Cory i think those are very different issues. When i look at the success cbs is having, running tech media in china, theyre having fantastic success. It depends of the company. But that said, there are interesting issues facing Technology Hardware providers in china. When you mention hp, frankly the nsa and Edward Snowden leaks have shown a lot of u. S. Tech companies are being compromised by the u. S. Government and Companies Like this go and symantec and others have talked about how much harder it is to sell into china in particular for that reason. Their products are not as trusted. In sponsoring Government Back and these or supported entities alibaba is another great example where china has given them the blessing to do what they are doing and foreign competitors be dammed. Thats why you havent seen twitter, facebook and other companies with similar products because they have gotten a blessing from the Chinese Government and it is hurting u. S. Business. Alix Tech Companies need china. It is an or miss market, so what do they do about it . If you take yahoo specifically, its important to run for a majority of the value comes from their stake in alibaba which they got when they transferred yahoo china to jack ma back in the day. That stake is worth north of 30 billion for top its the majority of value inside yahoo . In terms of what do multinationals do there is just risk associated with it and investors need to be aware of that, particularly for a company like apple where the highgrowth segment, theres risk to that revenue. Alix what is the risk of Companies Like apple to the Chinese Government . But its one of the situations where when you enter into a marketplace, if you run afoul of local laws like google did in china, you can get not out very quickly. Google had a very tough time penetrating the u. S. Company that has a of their Growth Prospects in that country, you have to treat that with a degree of risk factor. Alix thank you guys were talking about the challenges of doing business in china. Good to see you. The close is coming up next. Stay with us. Alix welcome to our viewers run the globe. Youre watching bloomberg television. Im alix steel and this is street smart to code stocks are retreating as oil resumes its plunged toward a bear market. Lets get to scarlet do at the breaking news desk. What are some of the movers you are looking at . Scarlet i think most people are still deliberating over what the fed did. Did the action hurt or help u. S. Stocks eschew mark it did remove the word patient but that does not mean the fed is impatient. They also cut projections, suggesting rates will rise until september. One interpretation is the fed has decided to stabilize the dollar before it does real damage to Companies Earnings. While global stocks should take strength because of the euro, in the united states, perhaps stocks should be closer to a talk than we thought. Alix im joined now by lisa abramowicz. And the chief global strategist michael perverts. What you think of the fed yesterday and what do you think is the effect on the stock market . I thought it was instructive for the stock market. When you parse through the details of their communications what is starting to be revealed is that we will get a high get some point. But its going to come with more conditionality and its not going to be a strategic half away from what i called the vision when needed. They will manage the rate hike extremely carefully and over the broader term at least based on yesterday, its very much close to the money. Alix so wheres the rally . What is fueling the rally . Its not optimism about growth, and there are mixed signals, if its not coming from International Signs of growth where is it coming from eschew mark just more rates for longer . At some point, that loses its efficacy. The market hasnt given back all the game. He saw a big swing back in the dollar and oil, but stocks havent given it all up. I do think it is interesting weve seen this weakening data and prior to the fed decision and chalk it up to winter or some of the inflation aspect was transitory but she took the weakening of the data perhaps more seriously them people had expected. Alix do you take the Stronger Oil Prices seriously in your these us . I do. One of the things i thought was interesting their gdp and Inflation Forecasts were coming down. One of the interesting dynamics was they are saying unemployment is a new play but Going Forward. Not a precondition. Janet yellen and her colleagues are much less concerned about a sudden six lotion of Wage Inflation when and if that comes. That was buried in some of the details. You are seeing that effectively in oil prices. Alix there we have the closing bell for the day. The dow off i 115 point the nasdaq in positive territory. You have the dollar rallying today. Markets are digesting the fed without this patient language. At the same time, you have this point philly fed in x that rocked markets as well. For now, we want to get to the biggest equity movers and go back to scarlet fu at the breaking news desk. Scarlet i want to start with chevron and it son contributing the most to the point decline. Goldman sachs, because it is heavily weighted you can see losses of at least one week 5 . On the s p 500, commodity related names are the worst performers. This comes as Oil Prices Continue their dissent. They have resumed their slide. When you look at eps growth for 2015, its projected to be up 2. 5 . You dont want to take out energy. This is going to be a big issue Going Forward as well prices continue to fall, what that means for Companies Earnings or job growth Going Forward. Especially if you have high death companies. We are waiting to hear from eu leaders in brussels. That is where greece is meeting with its creditors. Back to the close now im here with lisa abramowicz, joe weisenthal, and the chief global strategist, michael purvis. I had been talking about the philly fed and a possible warning for investors in the numbers we saw there. Manufacturing index, is that a higher concern because of the stronger dollar . Is the u. S. Economy Strong Enough for a strong dollar . What shes clearly setting the road up for it not to be quite as strong. By not mentioning explicitly the dollar that many times but sending a clear message theyre not looking to hike rates quickly for that soon until they see the u. S. Economy was Strong Enough to withstand that. Alix you had unfulfilled orders were negative that is logged. Those are orders that will be coming later. Thats forecasting lower production. Ask it was a pretty mediocre report through it all. Last week or earlier this week, we had the empire fed number in a less interesting. The labor indicator was pretty strong. It is one survey and no economist with putting too much stock in any of these regional surveys, but it continues this general theme. If you look across the smattering of economic reports that have come out over the last three months, they have been pretty good, but nothing pointing to any dramatic acceleration. Alix production accelerating and unfulfilled orders with whack they are all pretty you are. Alix it raises the question is the fed raising rates quickly enough . Blackrock saying no keeping rates excessively accommodated polson increased risk for markets which wrongly suggests fed rate normalization will not only be borne well by the economy that it may hold a positive impact. Is he right . Its interesting because his view goes against the view of other big bond investors. Frankly, theres a risk the federal act to save hike rates quickly and send the economy back into a tailspin. The fact that there are such smart people who have been in the market so long has directly opposing views shows how hazardous it is for the fed and how much is at stake and to your point, ray dolly is saying its going to be 1937 all over again. The concern is the longer we live in a zero Interest Rate world, it encourages people to delve into riskier assets they may not be to get out of later. Then it does not reward favors. If they are not getting income, theyre not going to spend as much. I think the debate comes down to what are you looking at eschew mark then there are the people looking at the market perspective. Weve already had this incredible run, the longer we keep it easy, the greater the risk of a bubble. I feel good knowing janet yellen tries to listen. They are all smart she has her view and shes not going to be swayed. Alix what it does do is increase the volatility particularly in Foreign Exchange markets. You can think the global central bankers making it challenging for the fed to decouple u. S. Monetary policy from the rest of the world. How long does the dollar rally last . You brought up a couple of good points. In terms of the dollar rally it seems like parity or bust is the consensus trade. This was the mother of all consensus trades and we saw in extreme move yesterday the biggest with whack single drop since 2009. In two hours. Then today, the dollar strengthened again. My guess is it will keep going down, but i dont think it will go down forever. Look at the euro. It has been blowing away the numbers over the last three months and we have been underperforming. If it can recover there will be more of a floor there and i think janet yellen is strategically dennis. Equity strategist saying for every 5 rise in the dollar versus the euro, it sees about one dollar from annual eps. This is the point you were talking about with volatility. Not only did you see the biggest slump since 2009, volatility increased the most in 14 years. That means its harder to figure out where that is being priced at any given time. Even if there is incredible power on corporate earnings and the price of oil this shows you how alix the big elephant in the room is greece. Its going to have a huge impact on the currency market. I agree. As long as the police issue is still out there, theres always going to be a slightly nervous trade in europe thats going to pile into bonds. If that could get resolved maybe people at your economy as it is beating expectations pretty significantly unsurprising dramatically to the upside. It could be the narrative changes and the rest of the world is doing ok. Foreign Central Banks to keep easing like crazy and you could have this reversal. Alix you pointed out theres a big discussion on wall street fears liquidity could lead to big changes. Explain what we are looking at in why it is such a big deal. This is just a snapshot but since 2007, u. S. Treasuries market has almost tripled. Meanwhile, trading volumes have fallen. What does that mean . When people try to go and sell their treasuries in the most liquid market in the world, it not turnover has frequently as it did in 2007. That means when someone wants to make a big move on some kind of news whether its a press conference or whatever, the mood is going to be that much more dramatic. Nothing will be there to cushion it. This is very concerning to the market because the entire mechanics are what allow people to price to raise money and mortgages and auto loans it a pivotal race. I think its huge across many assets. We saw in the dollar. We saw it in october, in treasury volatility. Bontragers had never seen anything like that in their careers. Its not healthy and i agree. The fed and other Central Banks are inflation managers but theyre also volatility managers and they dont want this because it unconstructive. Where is the one place you do want to put money . Asked the s p 500. I think the expansion is the pain trade Going Forward as it was last year. Alix thank you so much, everybody. Coming up, we are waiting on the eu News Conference from brussels as they urged the greek Prime Minister to reach a compromise with creditors. Plus, president obama is not the only one to pick kentucky to win it all. I will tell you whos betting on the wildcats. Alix here are the top stories we are watching after the closing l. Bank of new York Mellon Bank of new york mellon will pay 76 million to settle a probe. Meanwhile, a federal judges ruling jpmorgans 13 billion settlement with the u. S. Cannot be blocked by a Watchdog Group because the group could not prove it was harmed by the deal. The deal allows allegations that jpmorgan misled investors. The faa giving amazon and experimental airworthiness certificate. This means the company will be able to advance its Delivery Service the ground. Every Prime Minister is meeting with german chancellor Angela Merkel, the french president and the ecb president. European leaders are urging him to find a compromise with creditors. Joining me over the phone is the chairman and ceo of greylock capital who was just recently in athens talking with lawmakers. What was your biggest take away . There are so many things you could sense there. In some ways, you probably got more information from the newspapers. Theres a sensor has a lack of direction by the government. We spoke to one advisor who admitted they had not made more headway doing detailed work with the eurogroup, but i think the main take away is people recognize what a mess it is but you feel like that things will come together. Is there any kind of disappointment or disagreement within the party . I think the sense on the street and the people we spoke to in the banks i would say you could pick it up a little bit. There may be a bit of a split between the deputy Prime Minister. Certainly the press seems to be coming down more in the last little while there is nothing over. Its just talking. Alix for the rhetoric we have seen the feeling is greece is very much hartline. We will not submit to austerity. Is that the rhetoric and the actual government . Not with the people i met. Most of the people i met seems seem to go out of their way to say they were going to do the best they could to come to some sort of agreement. They didnt have the bench to do the details work. We picked up signals they are bringing additional advisers and. They were acknowledging there were some mistakes and they said as far as they were concerned, there is a backtracking mainly by germany on the agreement of february 20. But most of what we heard was very prolets get it done. Alix in the meantime, greece has to pay about 2 billion euros tomorrow. Any sense of what is left in the greek banks right now . Deposit flight has accelerated. The numbers for yesterday were three high in the meetings i had with some of the banks there. Maybe some of the senior levels just a bit of the from having lived through so much in the past few years. But the one point some of the bankers made was not thing the same kinds of deposits they saw in their crisis that its mainly switching to other. It doesnt seem to be as worrisome as the last go round but then again, the numbers are certainly quite big. Alix if a deal that is get done, is there any sense there might be a fall guy within the government and mark within the government . Who knows . Theres a sense that there needs to be reset. There is a lot of speculation with the paris match story and the middle finger thing that came out on youtube. I heard a lot of speculation he could be a fall guy, but he made some presentation to creditors yesterday as well where he seemed ready confident. Its amazing how much talk there is in the community in athens and its hard to get a sense of what is real and what is rumor for the alix thank you so much for that perspective. Nike earnings just crossing. We want to go to scarlet fu for the latest. Scarlet this is an earnings beat on the bottom line topping the consensus of . 84. On the revenue line, nike did report higher sales or 7 but was shy of what analysts and because of the stronger dollar. 7 . Analysts were looking for 7. 61 billion dollars. If you stripped out the effects of the stronger dollar. Rose margin in the Third Quarter was 45. 9 . Piper jaffray had said gross margin would be in focus because the company saw thirdquarter margin shrinking. This thirdquarter margin is higher sequentially than the Second Quarter and also higher than last year. Regionally, up 11 if you back out the fx impact. North america futures orders and asia futures orders are higher than it eight. Western europe plus orders are up 7 versus the consensus. Alix coming up, we will speak with Eric Schneiderman over the bank of new york mellon settlement. The back. Alix bank of new york mellon will pay more than 700 million, pulling allegations that defrauded clients in foreignexchange transactions. Joining me now is the new York Attorney general, Eric Schneiderman. Thank you for joining us. How did you feel about this element 714 million . I was a very good settlement. It resolved a lot of outstanding fees. We had investigations of new york state laws and it was running parallel of the investigation the u. S. Attorney had. We agreed to Work Together and this settle a couple of class actions as well as federal and state claims we are getting money for. The most important thing is we are getting some potential restitution for the folks who were cheated on Foreign Exchange transactions will top alix you originally filed for a 2 billion loss due to. This is significantly less. But you file with great aspirations and i think we got a very good deal. Our focus has been restitution. We got admission from the bank that they knowingly provided their client a bad price on foreignexchange transactions. They terminated to employees that were involved and they have a new program. Customers will have transparent the in the future, so we think it is a good deal. Alix are you pushing to look at currency malpractice on other banks . But we dont comment about future plans. Scheme was unusual. They had a Computer Program with standing instructions and the program was supposedly by price every day for client. Its what they told the clients and there are a lot of Pension Funds and institutional investors, but thats money that belongs to a lot of little folks. They were playing the spread, executing to the best price, but telling clients they got a price that was worse and they kept the money that was the difference. Alix what are you my you pushing cap . Were talking about highfrequency trading. We are still interested in that. Were looking at start rules and High Frequency trading in dark pool. We are speaking with their colleagues in washington about it. But we are active in quite a few areas. Dealing with mortgagebacked securities and the crash of 2008. We are very active in a lot of areas and our Protection Bureau is active. We are working closely with them. Alix im sorry. We have to leave it there. Alix welcome back. Here are the top stories were watching after the closing bell. Snapchat is teaming up with turner broadcasting and cbssports to publish 10 videos from the march Madness College best of alternate according to people with knowledge of the situation. Not all will disappear after 10 seconds. Some will be chosen for a larger story collage and will be available for 24 hours go daddy is filing an ipo, seeking a valuation of almost 2. 9 billion the offering comes more than three years after a group led by kkr and silver lake acquired the company for 2. 25 billion dollars. Starbucks is facing a backlash over its weight over the race together campaign. The campaign has been heavily criticized on twitter, so much so that the companys Senior Vice President for Global Communications temporarily deleted his account. Just a reminder that we are awaiting the News Conference from the eu leaders in brussels. We will bring that live to you when it happens. Nike reported earnings shortly after the closing bell. Lets get back to scarlet fu for the latest. Scarlet in looking at how nike is doing in the afterhours trade, its higher by about 1 . This might have in a misprints afterhours trading tends to be thin, but we have a higher stock on the back of better earnings and sales can dare to a year ago. The strong dollar held back revenue with sales rising 7 . It did rise on a Constant Currency basis, but that increase did meet did meet analysts estimates. Demand in north america was pretty strong. Future orders rose 15 in north america. Future orders are in asia if you exclude the effects of a stronger dollar. The consensus among investors in afterhours trading is a gain. Alix the fate of ukraine and its eastern provinces remains unclear, especially as eu leaders struggle over increasing sanctions in russia. The only member to vote in against accessing crimea tells bloomberg that Vladimir Putins policies have created a situation that could spawn another hitler. Who didnt just appears to be the leader of the country but he actually paves the way for somebody like hitler. They are actually reading people like that there. But joining me from austin texas the senior eurasia expert. Thats a pretty incredible statement, but Eastern Ukraine is largely cut off from the outside world. Commerce has mostly stopped scarce. Is he on to something here . He is extreme in his views. He has always known to be an extremist. What we are seeing inside Eastern Ukraine is yes its relatively cut off from the rest of the country but we are not seeing an expansion of aggression inside Eastern Ukraine. Instead, its becoming somewhat of a frozen conflict. The ceasefire is holding for now. Is a very different story when it comes to russia. Hooton ordered emergency military exercises. Would you argue the kremlin is targeting nato at this point . As far as the exercises go russia is signaling the military still on the table. Not just about ukraine. This is not about the conventional war, but this nonlinear hybrid warfare we see in Eastern Ukraine. All of these options are still on the table. Russia is also answering nato who has increased its tempo in exercises so we are back to the tip for cap. Alix in the meantime, russias economy still struggling. Painting a dire picture of russia possible aspects. The financial credit the crisis is just starting to stop nobody wants to go in russia. Entrepreneurs, most capable Business People are going into exile or emigrate and actually coming here to the united states. This process is mounting up. Alix what did you think of that . Russia is facing a dire situation, slipping into it second recession in six years. Theres close to a dozen russian regions that could be and grabbed by the end of the year. The government budget will have a 45 billion shortfall and the russian banking system, Big Five Banks a majority of them are under eu sanctions and they are facing a debt crisis in which the 40 billion. Though there are these Major Economic problems inside russia, russia has money. The kremlin has money. Between kremlin reserves and a National Reserve funds russia has about 512 billion they can play with. What we are going to see is russia starting to plug the holes. Its going to drained funds fairly quickly but its going to keep things relatively safe for the next few months. The question is what happens after the funds are gone . Great question. They have said there could be a light at the end of the tunnel before august, but what happens at the end of august question that theres a light at the end of the tunnel as far as july. There will be a vote on whether sanctions will be renewed and right now, from what we have seen out of brussels, there isnt a ldap forces against russia we saw last year so it looks like the sanctions could possibly expire in july which will start trickling into russia for the next of the year. Alix we have seen some rhetoric crowd the brussels meeting. Will there will europe have any sort of negotiating power . We see a ramp up out of countries like poland and romania. We are seeing a constellation of states russia has connection to in which the states are not the ones that will most likely vote on an expansion. They are at this time against expanding sanctions. Alix thank you so much. A good conversation there. Just a reminder we are awaiting the News Conference from the meeting summit in brussels. We will bring that life to you when it happens. Coming up, when it comes to creating a smart watch, one company is asking apple for help. Well tell you who is entering that. Much march madness is in full swing. Alix this is street smart. Im alix steel. Out of the 1500 watch brands on this way the hot topic is apples smart watch. Bloomberg spoke with some of the Major Players to get their take on the future of luxury timepieces. It is brandnew and everyone is talking about it, but im not sure it will continue like this. There will be another integration soon, so its always evolving. I believe the sector is very creative. I want to be associated with brand are authentic to who i am in my beliefs. I believe in family, i believe in charity, i believe in giving back. We have announced a huge partnership. Silicon valley has met switzerland by publishing to giants google and intel. Google and intel partnered together in order to make the connected watch. Pimm fox joins me now. Jim pam just to take a step back tag actually stands for something. So this is a watch Company Started in 1860, but thats always been in the forefront of producing exemplary timepieces. For example, they made the first timepiece that was sitting on the dashboard of a racecar in order to time the labs of the automobile. The indianapolis 500, you will see one of their timepieces made specifically for that. If you are of a certain generation like me and grew up watching steve queen he is wearing one of their watches. This is an effort there will be others. We have seen month long him rightly given to the smart watch world. They are talking about a market right now estimated to be about 38 million pieces. If you go back just a couple of years, we are talking about 6 million pieces for a smart watch. This is a combination watch with intel and google thats not going to be made in switzerland. It will probably be designed in california, assembled and fill in the blank, believe in china. This is an effort by the switch by the swiss watch his list to capture the imagination of people that would like to have all of these electronic digital components that have become a utility. Alix if you have an apple watch costing 10,000 or 17,000, your competing in the same relative price point. Pimm you can go much higher with many of the swiss watches just to mention some of the celebrities, you got jeremy lin, Maria Sharapova henrik lundquist. But this is a big move and is a stamp of approval for the smart watch industry in a way you have not seen before. Alix you spoke to the head of a swiss luxury watchmaker. What is their response . Are they going to get into it in the same kind of way . Pimm a are making the distinction that was watches are a very small part of the market. Maybe 1 of the entire watchmaking industry is these are fine mechanical instruments. Alix have you ever seen someone tweak a watch . Its incredible. Pimm some of them are so small, you can see them with your eye. You have to do it with a microscope. They are going to go in their own direction, but hes supportive of what apple is doing. This is going to get people more interested in watches. Alix in three minutes, i will discuss the booming business of art address and social issues facing american universities. On taking stock pimm fox will speak with the ceo of cachet. Of piaget. Alix here are the top stories we are watching after the closing bell. Sales of streaming music topping cd sales for the first time last year according to a Music Industry trade group. Streaming Services Including spotify, pattern pandora and others were responsible for 1. 87 billion in revenue compared to cds at one . 85 billion in sales. Sharp cutting 12 of its workforce. Half of which will be in japan. Its all part of a Global Restructuring effort expected to cost more than 1. 7 billion. The company is on track for a third annual loss in third years in three years. 36 liters from top corporations and financial organizations are taking part in bloombergs bracket for a cause pledging 10,000 to the winners charity of choice. It includes eric schmidt, john chaney are John Chambers and strauss cellmate. Kentucky was the pick of 23 of the entries. Staying on College Sports, march madness is here and sports fans are hungry for a championship team. Could st. Johns be the answer . 501 shots of winning, fans are hoping the school can bank its first tournament victory in 15 years. Joining me to discuss it is a Division Chair and director of the Sports Management program at st. Johns university. Do you have money on this game . I have no money on this game. Alix st. Johns did not see a profit from last years game. What are the benefits to a win . The benefits of having a successful Sport Program typically, all have said you get increased marketing affect. Outside of the new york area st. John was strictly a commuter school. People across the country would not know about it if it were not for the basketball program. We are happy the program has a resurgence. 2000 was the last year we won a tournament game. Would you see more endowments . Possibly, but most of them tend to go toward athletics which is fine because they can use those resources to offer better facilities and improve the quality of not only basketball but the other sports the university offers. Alix talk about the head coach and what he has brought to the game. When steve came back to st. Johns, he had been with espn for a number of years. His name resonates with recruits. He had a successful time at ucla and when he came to st. Johns student athletes knew who he was because they saw him on espn. Unlike professional sports coaches are given the talent huge part of being successful in College Sports is being able to recruit talent and the name recognition the coach brought helps recruiting. Alix your wife has some brackets. She has three and i hope we make lots of money. Alix thank you for coming. Still numerous collegiate issues to address from academic scandals to racism. We will discuss how a school can protect its reputation following a crisis. Alix just a reminder that we are waiting for the conference from the eu summit in brussels. We will bring that life you when it happens. Cheating, racism and Sexual Assault these are some of the issues that have confronted some of the top universities in the past year. When controversy hits on campus like a recent arrest at uva, how can schools act to maintain order . Joining me is the Division Chair and director of the graduate Sports Management program at st. Johns university. How do you do that as a school . Like any organization, you have to have a Crisis Management land. We saw what happened at oklahoma with the students amid the fraternity, the University Acted quickly. Theres always this balance you want to offer do process but you need to take a stand especially if the evidence is clear that these students have done something horrible. He immediately through the students at school. Alix do you think universities are behind the curve dealing with this . I think part of the problem is they are trying to figure out whether they are a is this or a notforprofit. For so many years they thought we are here to educate and to have fiscal responsibility but it was a priority. Funds that used to go toward instruction are now starting to move away to things Like Research productivity, student services, toward athletics. A lot of schools are starting to understand that if they dont act like a business, they are not going to be able to survive in modern economic times. Alix you need students to go there and pay and survive. Why is someone going to want to go there for four years . Think of yourself as a parent. Do you want to send your son or daughter to a school where there are all these problems . If you look at college and dictation on a whole, these are isolated incidents. Schools are trying to get a better handle on how do we deal with them. Theres a real awareness of Sexual Assault that wasnt there in the past is something aarons, students faculty and administrators have to take seriously because the reputation of the school you have your name its the same in academics. Alix but you still have to teach in a world of social media apps. Theres been a lot of controversy where students are texting and make fun of the professor or make derogatory statements. How do you run your classroom when you have to combat things like that . If i worried about every derogatory statement made about me has a professor, i would have a lot of late. I do understand in the times a couple of weeks ago, there was this aspect of the social media app that has a range of a mile and half or two miles, so it is suited to college campuses. And i assume theres no way to trace theres no way he makes these statements, so they are completely anonymous. In eastern michigan they say we cant do anything because we dont know who made these awful statements. Sometimes your little behind the curve and the Technology Comes up somebody figures out a way that we can track an ip address. But then someone comes up with a new technology and its totally diff totally different. Alix that wraps it up. With all due respect is up next. Mark i am mark halperin. Campbell i am campbell brown. Your march madness is about to get a blast from the past. Step into our delorean as we go back to a simpler time, a time before pope francis when we still cared about what mitt romney had to say. He is talking to katie couric