We have less than an hour until the close of trading. Lets go to the breaking news desk where scarlet fu is looking at the action on the street. Scarlet the action was concentrated in the moment morning. There is some drama that has given way to a quiet afternoon. A sharp drop, and a recovery. We reached session highs about 90 minutes ago. We have since been drifting lower. The morning did feature disappointing economic data. An unexpected drop in Consumer Confidence for one, and another month of contraction in the richmond manufacturing. All of this is as the fed began a twoday meeting that concludes tomorrow. Right around the time the data came out, there was report that irans military seized a u. S. Cargo trip. The pentagon denied the report saying the ship fired upon was flying a Marshall Islands flag. Treasuries did fall with yields currently at session highs. You can see right there, the 10year at 1. 89 . The dollar weaker as well as we head into the final hour of trading. Matt two i very much. A story we are watching president obama rolling out the red carpet for japanese Prime Minister shinzo abe. They talk security and Economic Issues and face reporter questions. Peter cook is at the white house with more. The leaders sounded optimistic about a pacific trade deal didnt they . Peter they did sound optimistic. The hope was some time ago when the leaders met they might be rolling out a final agreement with regard to the truce transpacific partnership, an agreement that might pave the way for the other 10 nations to jump on board. That is not what happened. They talked about the progress they have made, but they are not there on a final deal. The president sounding optimistic they will get there in the end. Take a listen to him a short while ago. President obama with respect to trade we reviewed the progress our teams have made toward the transpacific partnership. I know that the Prime Minister, like me, is deeply committed to getting this done, and im confident we will. Peter and could get a helping hand from shinzo abe tomorrow when the Prime Minister speaks to a joint meeting in congress. He could make a pitch to help the president send this deal, a transpacific partnership, too skeptical democrats in congress. Matt peter, the president also offer tough words and a long drawnout answer on the situation in baltimore. Peter that is right. We knew he would get the question, asked about the violence overnight. He was critical of those that he called thugs, criminals who were alluding stores and causing problems overnight, and also some words for the injured police officers, but he said the country as a whole needs to do soulsearching to deal with the issues that are basically at the forefront of the violence we have seen not just in baltimore, but other american cities. He said it is not just polices responsibly, the country as a whole. Matt stephanie one Erik Schatzker are at the milken conference. Nouriel roubini joins them now. Stephanie take it away. Stephanie thank you, matt. Here we are at milken and we always hear about the new normal. For you, it is the new abnormal. What does that mean . Nouriel seven years after the global crisis, policies that did not exist are still the norm. Zero Interest Rate policy qe forward guidance, and that is the first puzzle. Some people argue that all of the ezine of money, Balance Sheet increases will cause runaway inflation, bond yields through the roof, collapse of the dollar gold prices going through the roof, but look at the reality. The opposite has happened. Bond yields are low and falling, negative around the world. The dollar is soaring. Gold prices are falling 50 , and last year the worst performing currency, if you can call it a currency, was it coin, that lost two thirds of its value. We live in a world when there is a lack of capacity. Too much supply, not enough demand. Labor market, high unemployment. Lots of oil, energy commodities. We have these inflationary and deflationary demands in the world. Erik what will it take for the demand to revive . Nouriel i would say many things are required. First, Structural Reforms that increase potential growth. Recently, i said between the age of population lower productivity growth, potential growth is falling. We need more aggregate demand. We need them right combination of monetary and fiscal policies. I think we emphasize too much the use of monetary policy, not enough of fiscal policy. With Interest Rates so low a mother are in for Structure Problem projects in the u. S. , europe japan, in emerging markets, that would be highly productive. We have to produce aggregate demand on the physical side. Erik the supplydemand balance you are looking for you calculate on the basis of what the supplydemand relationship we knew before the financial crisis . Nouriel certainly potential growth for a number of reasons including too much debt and a rising inequality has fallen but we live in a world where there is a glut of capacity, Good Neighbor good labor market. Erik this is capacity that was installed before the crisis or since the crisis . Nouriel some of it was before but investment rates in china increased from 40 of gdp to 50 of gdp, and now china is slowing down leading to a deflation in commodities, but all of this excess capacity. Manufacturing is being dumped in global markets. Therefore, these Inflationary Forces will be not only in the commodity space, but also in the space of industrial and manufactured goods because of the slowdown in china. Stephanie lets talk oil. Oil prices are rising. Woody think they are going and why . Nouriel i think over the next year and a half gradually oil prices will go higher, but it will be closer to 70 a barrel for two reasons. Demand will recover, but more importantly lower prices imply that highmargin producers are going to produce less, and more importantly, everyone around the world is not reducing Capital Spending in the sector by 30 . Over the next two years, reduction in spending will affect prices in the future. We will not go back to a world of oil prices of 100 a barrel. I think the new normal in oil markets will be around 70 for the next two years. Erik and why the Production Capacity that is being taken out of the market, or the behavior of the saudis . Nouriel well the behavior of the saudi this important because they did not want to lose market share, so they decided better to have that Lower Oil Prices to get rid of the high marginal cost producers, maintain that Capital Spending, to force everyone else to do under investments into new capacity so prices are low, but the market share of saudi arabia is going to be larger over time. There also geopolitical considerations. With low oil prices the strategic enemies of saudi arabia, whether it is a ran and ran supporting iran, and iran supporting syria or russia. Stephanie lets talk greece. What happens if the greek Banking System truly unravels . Nouriel the risk would occur if there is an accident and greece decides to go to the imf, the bank run accelerates, capital controls run out of money and they will start to use a parallel currency. One of the reasons why the greeks are going to become more compromising and the decision yesterday to try to sideline mario draghi was because the greeks know it is an economic and Financial Impact on the banks. That has more losses for greece than the troika. The troika has more leveraged power on greece then greece has on the troika. We have avoided an excellent, and i think we will avoid an accident. Erik lets look into this further. You are saying that by effectively firing a negotiated for the eurozone with greece, that signals that greece is not willing to play microchip, take it to the end. Brinksmanship, take it to the end. Nouriel there was a game of chicken where they were saying they were not going to blink but in terms of leverage, i think people realize that the compromise is the troika. Miracle told Angela Merkel told them that if we optimize the middle, we will give you the money, and that is why you have to phase out the groups. You have to create a new coalition. Erik that will be one hell of a short run as Prime Minister. Nouriel well, he he goes to unilateral action, or he gets to the left of his party and you could find other centrists in a coalition. That is the direction we are going. Stephanie be realistic. You say it is going to be bumpy but it sounds more like an earthquake, a tsunami that bumpy before any of these things to happen. Nouriel if an accident were to occur, as i say, you have other contagion occurring, and both sides are realizing an accident will hurt both sides and there is more willingness to find a compromise. We have the time. I think in may the ecb will give greece enough to offer tbills to pay the imf, and then a program in july and august. So, it is not yet an earthquake at fedex it were to occur. If an accident were to occur. There are political and geopolitical reasons. Russia is becoming more aggressive in the ukraine, and the baltic, and the americans and germans know you want to have peace in europe. Erik i want to take one step back and talk about geopolitical risks because we have been told for years already strife in the middle east, and what is going on right now in syria that isis is waging the tension around iran, we have been told that would always lead to oil prices being higher. Oil is not 125. It is 55. We have been told that instability in panic in greece will lead to inflation, and it is trading through the 10year treasury. Stephanie which is crazy. Erik and we have been told that the antics Vladimir Putin has undertaken in the ukraine will strengthen russias hand and demonstrate the weakness of the west. What has happened instead letter putin cannot turn off the gas taps to europe because he needs the cash. None of the scenarios have played out. Erik we are stephanie we are confused. Nouriel Central Banks have suppressed voluntarily with unconventional monetary policy. The volatility would have been higher. Secondly, in the past, whenever there was a geopolitical risk in the middle east, there was an actual set shock to the supply of oil. In 1973, the iranian revolution, the iraqi can invasion of kuwait. There is not a shock to the price in the middle east, but because of the shale gas revolution, we have a glut of supply. The premium is not there. There are differences relative to the past. Stephanie lets talk the fed raising rates. Last week, Stanley Druckenmiller said they should have done it nine months ago. What do you think . Nouriel i disagree because the economy is weakening. The dollar is strong. I have been saying they will not hike in june. This point, september is not obvious because three months ago we were saying demand will be strong. Consumption is weak. Capx is weak. The strength of the dollar is hurting exports, inflation, and growth. And the fed is to be worried about the impact of the dollar on the real economy. I would say december, maybe. Not earlier. Once they raise rates, they will be slowing gradual. Erik people accuse janet yellen of talking down the dollar. A , is she and b to talk down the dollar . Nouriel i would say she is not exquisitely talking down the dollar. Six months ago people say domestic demand will take care of that, even if exports are week. Now we realized the mistake demand is softer, and now we have to worry about the dollar. Certainly, talking to people about the fatty, i sense a different concern for the first time in years about the strength the dollar the fed, i sense a different concern about the strength of the dollar. It is not an exclusive policy, but it is what you hear. Stephanie what do you really think . No opinions . Nothing . [laughter] i am kidding. Nouriel roubini, thank you for joining us. Always a pleasure. Matt it was a pleasure to listen. Thank you. Coming up, more from the global the milken global conference. We will hear from double line capital cofounder and ceo Jeff Gundlach. He sometimes has strong opinions as well. Twitter reports after the bell. We will bring you those numbers as soon as they cross. Can the company keep up user growth question mark shares headed into the report are down. Matt just about 40 minutes until the close of trading. Scarlet fu was looking at notable movers as we approach the bow. Scarlet i want you to come inside a bloomberg terminal. This is twitter. You see a leg down in the shares where it went to below 49. 50. It is good for a drop of 3. 2 . Celerity tweeted out the earnings. They are sending headlines saying that adjusted earnings per share of seven cents per for the quarter, which appears to top the average analyst estimates of four cents. They are reporting revenue that would be below what analysts anticipated. The Monthly Average user for twitter up 302 million, basically in line with what the company had guided for in its first forecast. An increase from the previous Fourth Quarter and the oneyear ago period. The fact that these numbers are coming out is causing a big leg down in shares of twitter right now. Really about one hour before earnings are supposed to be released. Matt yeah, getting leaks this close to your report is not a sign that would make people feel couple with your company. We just heard Nouriel Roubini speaking about what is holding your back. Joining me for the rest of the hour, wall street veteran mac mark patterson. You like what Nouriel Roubini does and how he doesnt. What you think about his performance just now with erik and stephanie . Mark exceptional. He is a gifted mind that can reach into the vaults of contemporary and historic data and cross pollinate. The range of topics he covered was quite profound. U. S. Come a lot of questions. He is very thoughtful, not just analytical ideas but conclusions and recommendations about the future. The hardest part is the letter. Matt you agree with what he says he was described you as you a person in the room more bearish than he. Mark that was back at a panel for and why you students. Nyu students. Within months, things have gotten better. Lets tackle a couple of things he talked about. The first thing he talked about, Interest Rates he is not a big believer that the fed is going to raise rates eminently. I share that view. I also think it is not highly relevant whether his june september, or did whether it is june, september, or december. Matt it will be nothing a quarter of a point raise, then nothing again . Mark i agree. All that is healthy for two critical components of the economy. The Insurance Companies will go bust if we having no Interest Rate policy forever. Their Business Model cannot hold forever. We need positive Interest Rates. Matt do you think the economy justifies zero Interest Rates . Even if you do not think the growth is not as it steep as steep as it should be, we are still not a zurich economy. Mark people like you and me and more portly the people that look at these decisions, cannot make these decisions in isolation or we have to look at where we are versus trading partners, the strength of the dollar interrelationships who owns our currency, our debt . Not very unlikely germanys economy. Matt what you think about the strength of the dollar . Do think it continues or have we plateaued . Mark lets hope we plateau. It would be better if we can become a strong exporter and oil could add another 10. I think he is a little bearish on where interim, 18 months out, oil prices are going to be. Im a little more bullish. I think were going to see, not 100, but he is looking at brent going from 65 to 70 over the next month. I think it will be 10 to 15 at least. I think we will see a stronger oil base. Matt he had great reasons. One of the most interesting things was his take on greece. He says that record is in a stronger position because they think they can ring fence any catastrophe that comes from a greek exit. Do you agree . Mark yes, and that was the most powerful card the greeks could throw at those that had a grip on the throat. Matt if we go down, were taking you with us. Mark semicomical hollywood element is they get a motorcycle got in a black shirt, a phd, to confront a guy in a wheelchair. Matt he cannot be messed with. Mark you cannot mess with the guy. It was a big card to play. The imminent catastrophe would destroy greece. They cannot afford that. The outcome Nouriel Roubini described as commonsensical in my view. Matt he said they are raining and verify kiss, but there are two schools of thought either they are taking him out because it was too embarrassing for them, or they have moved into more of an admiral or generals position and sent in someone else to be on the field. Matt he is Still Holding the bad and the ball. Mark you Still Holding the bad and the ball. He loved the role. No question about it. I think they have recognized the reality you sketched 30 seconds ago. They could lose a lot more than anybody else could at this juncture. They must meet the 750 Million Dollar imf payment and multiple payments behind it. This restructuring is critical for the longterm benefit and politically he says that. Citrus has has since that and he pushed varoufaks who did a good job of breaking tables. Matt lets move to china. They let they are blowing up a huge bubble on the way. Mark you can see elements of that. Theyre almost in a nochoice mode. They have to somehow feed the bubble. Far from comedy. 7 gdp is a terrifying ambitious number for all countries but china. That is the week number for them. Matt although if you keep inflation up at the same level it does not look as appetizing does