Euro sterling. This is what Francine Lacqua looks at every morning. Further sterling strength versus the euro. Down at the bottom, 111. 24. This is the spread. This is great. This is the fiveyear 30. Good feeling ugly here is that fed induced sweetness and the curve. I dont hear many people signaling recession down here but this has sobered up the economists. I think the thing we are all trying to figure out. Is this no hope for the future . Or is this secular stagnation . They instituted a steep yield curve and the great distortion. Debt. The other thing to look out is see how narrow this is . This is janet yellen, mario draghi, and the rest. Thanks to john herman for that. I will still from anyone. I will steal from Brendan Greeley anytime i can. I try to do it every morning. What we try to do in washington is steal from mr. Cook. This most important case will center around todays arguments before the Supreme Court. Peter cook brings his wisdom and color commentary on what to look for this morning. Peter, you walked into the court today, what we you observe . I know i will have an obstructed view. Im told that my seat will be way in the back. It is like the Boston Garden in the old days. There will be a big pillar in my way but i can still listen and i expect to hear a fairly simple case. I know that is hard to believe because it is the u. S. Supreme court and there are all sorts of legal dynamics that can happen, but this case centers on four simple words. And the intent of congress when it set up the subsidies to help people pay for insurance under obamacare. Whether or not they really meant to limited only to those states that established their own exchanges because the language says that the subsidies are entitled to those states where exchanges were established by the states. We all know that a lot of the states handed this job to the federal government. The question is are the 7. 5 Million People eligible for subsidies in the 34 states that operate under the healthcare. Gov system do they somehow not have access to those subsidies . If it does happen, if that is the ruling there is a potential debt spiral for the health law overall. There are four people who are the plaintiffs for this case who want to prove that they were harmed. That is one of the legal wrinkles. You have to determine whether these people have standing. Therefore virginians. And they are four virginians. The could be an out for the justices not to answer the central question. If this is struck down later on seven point 5 Million People lose their Health Insurance. Does the government have a plan b . They would lose their subsidies and decide whether or not they would want to pay for the insurance on their own. The health and Human ServicesDepartment Says it does not have a plan b. Republicans, who supported this case they say they do have alternatives in the works that would essentially provide a bridge to what they hope will be an ultimate replacement for the health care law. Real questions about whether or not the republicans are ready for prime time when they come to that and whether what they are proposing could clear Congress Given that we have a certain number of democrats in the building. Lets look to the markets to look at Central Banks. Lets look at the interplay. Markets adapt, they adjust to each and every centralbank move. It is janet yellen and the fed. The ecb and cyprus tomorrow. Is it india . Is it banks adapting to signals from the market . We speak with frederick lane. He is now working with raymond james. What are you going to accomplish with Lane Generational . It is a wonderful name and it speaks to the angst of retirement. I think it also speaks to the angst of passing wealth on and teaching your family members about the responsibilities that go with the creation of wealth that has gone on in this country. Should we pay our kids cell phone bills . That would be a onehour conversation. There is a trust to that goes with money. Most of us who have been blessed with any kind of resources afterward knowledge the fact that no matter how talented we think we are, there is luck involved. I know olivia wants to dive into that later. Lets talk about Central Banks and the market. You have been a witness of this for over three decades. Are the markets adapting and adjusting to what these economies do . I think the Central Banks are looking at the Economic News and what toggle switches they can flip and they are basically saying we want to pile on the quantitative easing race to the bottom. I think it is very worrisome. We really have too much supply and insufficient demand. We need inflation. We need higher Interest Rates. Im not sure quantitative easing is doing the job. Amen. I also need a new car. We can just say that these are something we need, but how do we get it if not through the qe race to the bottom . We are going to get some wage expansion. We are going to get higher wages across the board. In this country and in the rest of the world. That is going to help area that is going to help drive inflation. I think the decision has already been made. I think it is going to be a couple of quarters before we see any bumps. I think a half a point is an insignificant bump. I think it will be good for the global economy. Great to have you here. It is a fascinating change that you went from Investment Banking to asset management. Fred, you are staying with us. We will be talking about russian sanctions. What sanctions . Why one oil giant is ignoring the penalties. This is bloomberg surveillance. Good morning. Good morning, everyone. Bloomberg surveillance. Brendan greeley has our top headline. The Supreme Court will hear a major challenge to obamacare this morning. The case could affect coverage for some 8 Million People. The white house says there was nothing new in Benjamin Netanyahus speech to congress. Also on the bloomberg terminal at least one confirmed death in an explosion at a ukraine coal mine. The mine is in the war zone. Prorussian rebels say they are not to blame. New details about how Hillary Clinton controlled her email as secretary of state. The Associated Press learned that she used a private computer server registered to her family home outside new york city, which gave for total control over access to her message archive. Headaches are on the horizon for judges of alabama, deciding whether to issue marriage licenses to gay couples. The state Supreme Court said that marriage ban would be illegal. The bid for rob fords tie is at 13,000. It could still be yours. Those are your latest top headlines. Exxon is taking a big bet on oil in russia. Exxon now has drilling rights to almost 64 million acres in russia, that is bigger than all of england. That is up 11 million acres from one year ago. Why does exxon seem so unfazed by the sanctions . They reached an agreement to buy this acreage back in 2011 and 2013. That was before the sanctions. In terms of the sanctions, you just cant drill. You can build a pipeline, you can explore, you just cant drill. This is really a longerterm bet on exxons portfolio. 64 million acres in russia, 14 million in the u. S. It is huge. It is an enormous bet on the future of one of the biggest oil and gas reserves in the world. What are they going to do with all of the money that they do have . How are they going to keep making money at oil prices at 50 . Exxon needs 85 per barrel to cover its capex and dividends before any buybacks. He sees cash flow shortfalls in excess of 9 billion this year and next year and that is pretty significant. The stock is down 15 from a high. It is essentially a bank running an oil company. Can they sustain the dividend . Can they sustained doubledigit Dividend Growth . That is the money question. I have heard no one say they would cut their dividend. The reason why you on these companies is for the dividend. This is a trap for boards and managers. It is the problem and a commodity business. When you are tied to commodity pricing, you are stuck. You are tied to appeasing shareholders. You are absolutely right and they are going to have to balance and the dividend. They may not grow the dividend but they will maintain it. It is a great option play on a spike in oil prices or a reversal in oil prices. You are getting paid by the dividend in the interim. You also have to look at the correlation between big oil and oil prices over the last year. Net income has risen what is the correlation mark . 51 increase where sexual oil prices are up 300 . Where as actual oil prices are up 300 . Lets assume Oil Prices Continue to go down. The numbers you told us are stunning. We are only looking at 1. 5 million acres does any of the shale acreage look attractive as the price goes down and Drilling Companies opened their fold . Exxon did not have a great track record when they bought natural gas in the u. S. However, they do have 5 billion in cash. There are areas where the do not have huge exposure. I dont know where they are going to go. I dont think anyone knows were they are going to go. That is one of the questions. Bp is spinning off one of their shale assets in to a company in the u. S. Bp has had a tough time in russia. Bp has had a tough time across the board. That is a whole separate issue. Alix steel, thank you for joining us. She will be covering exxon for us. Richard haass will join us in our next hour. We will speak to him about europe and Economic Data about a weaker euro. This is bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. From new york city. Im going to weigh out in front. This is possibly my first nominee for the oped of the year. This is exquisite. This is dead on. David brooks. Of the New York Times. This is a mustread. Leaving and cleaving. Instant communication creates a new sort of challenge. This is twitter. This is facebook. We have forgotten how to move on. It is a brilliant essay. I have to greet i have to disagree with you. Welcome to 2005. This is not a new issue. Finisher point so i can disagree. [laughter] go ahead, please. Here she makes a series of minute by minute decisions to not text, to not email, or call. It is so true. This is at the top of the pile. I was thinking exboyfriends. [laughter] olivia is a pro on this. We know that we can only keep a number of friends that we are willing to interact with. One of the things that facebook does is it forces you to hold on to people you would have appropriately forgotten. I literally do not go to College Reunions as much as i would because i feel a cano exactly what people are up to because of facebook and instagram. Everybody can follow you on or you can follow other people. They have got to get on top of this. I met with a senior Facebook Official who said that this is front and center for facebook senior management, stocking and all the rest of it. Not even just stalking, but even the graceful idea of how much how do you move on gracefully in a Facebook World . You have been married for too long. We leave posted notes for each other online. There are reports that the royal bank of scotland could cut up to 14,000 jobs. We will discuss in the Investment Banking days glory being gone. Good morning, everyone. Bloomberg surveillance. Im tom keene. Here is olivia with the top headlines. The debate about president obamas Affordable Care act will be up to the Supreme Court again. Only 16 states built their own insurance exchanges. The rest use the federal healthcare. Gov system. The court is expected to rule by june. Benjamin netanyahu did not change president obamas mind on iran. He spoke for 51 minutes yesterday, blasting the u. S. Efforts but president obama not impressed by the speech. I did not have a chance to watch the speech. I was on a videoconference with our European Partners with respect to ukraine. I did have a chance to take a look at the transcript. As far as i can tell, there was nothing new. Nancy pelosi called the speech an insult to the intelligence of the United States. House Speaker John Boehner defined conservatives in his own party and let the house vote to Fund Homeland Security through september that averted a partial shutdown of the agency. Former cia director david petronius has omitted to sharing classified documents with his mistress. He entered a guilty plea to avoid prison. Target is getting ready to cut jobs. It will get rid of several thousand positions. Most will come from their headquarters in minneapolis. There will also be job cuts at the royal bank of scotland. They will eliminate as many as 14,000 Investment Banking jobs. A large proportion of the cuts will be in the u. S. And asia. Coffee may actually be good for your health. A new study says that drinking three to five cups of coffee per day can reduce signs of blocked arteries. We are on top of every new piece of coffee news at bloomberg surveillance. I would call that correlation, not causation. I would imagine the people drinking three to five cups of coffee per day are little more active, like Brendan Greeley. Cheers to you. Rbs is cutting up to 14,000 jobs. It is the latest in a long list of global lenders to make moves. At the same time, paying for Investment Bankers is shrinking and Asset Managers are making nearly as much as Investment Bankers. Fred lane spent 30 years in the trenches. He has crossed the chinese wall to asset management. Is this the end of the willful wall street wolf of wall street era . That has been in decline for a long time. This is an industry that is even more highly regulated. We used to be able to travel back and meet with a Research Analyst and there was a sense of responsibility to our clients. We knew where the chinese wall was. We did not have to be reminded of it. We were involved in banking transactions where we were principal. That is the management of a conflict. I think wall street has really changed. The best and the brightest no longer go into the business. There is more money to be made in the Investment Management business. We live in a world with tremendous corporate liquidity. Issuance is down. The fix is down. Interest rates are low. Volatility is low. You cant make any money on wall street. The phrase coverage. Coverage plans. The delusion is that any given bank can get out of the game and sort of stay in the game with coverage in the netherlands were coverage in florida. I have found over the years that that is absolute, total hogwash. I totally agree with you. You do not do coverage in the game of trust in banking. You are no more thing the quality of your people. You are either growing your business and creating opportunity for your people. Sending a 28yearold to show up and make sure you get the fruit basket at christmas, it is delusional. What is driving this . Is it economics or the Regulatory Environment . One way to look at this is that the money is in private equity and venture capital. I think that is true. Public companies are also being taken private. We have hedge fund compensation. Lets not confuse hedging the market versus hedge fund compensation. But there are better ways to make money. That is the truth. The margin squeeze and the volume shrank in the business. Those things combine. There is just too much capacity. There are too many Investment Bankers. Do you think that doddfrank has succeeded in taking risk out of the system . No. Not really. Not really. Do you think it is getting banks to do leverage . It may be doing that, but it also has a Chilling Effect on lending. Very quick, i want to get this in. This is in the New York Times today. 81 percent of americans cannot retire. What are we going to do about this . What are we going to do . One of the things we have to do is a jacket the public that there is something called deferred gratification. We have to educate them on financial literacy. There are number of schools that are trying to do this. Ultimately, there are two things. Investment managers are charging too much for fees for substandard performance. A good percentage of the population does need passive index investing. It does not mean that that is the only approach that makes sense. The other side is that people have to be responsible and think ahead and learn how to plan. Youve simply got to put aside more money. You have to put aside more money. Can i just say quickly that Goldman Sachs put out stacks numbers thing that millenials will inherit 30 trillion in Financial Aid and nonfinancial assets. There were amazing presentations by Goldman Sachs trying to get a piece of that money. We are going to find misery in a different way. It is being in a country where unemployment and inflation are high. The most miserable economy to live and work in. It is coming up on the single best chart. This is bloomberg television. Good morning, everyone. Bloomberg surveillance. It is a miserable day. This is not about the boston red sox. In a normal country, the basic idea behind ce