Zionist union. Whoever wins will have to form a coalition. Nine told voters he will not allow the establishment of a palestinian state. Iran is sending weapons to iraq to help fight Islamic State. The weapons include artillery rockets and missiles. There is a concern that the weapons could cause massive civilian casualties. Iraqiled forces are trying to recapture tikrit. The Usled Coalition launched airstrikes. The u. S. Is not taking part in that assault on tikrit. New York Real Estate heir robert durst has been charged with murder of a friend in california. Durst was the subject of a documentary on hbo. In a finale durst appeared to admit to killing three people. Brendan mario draghi says the euro area needs to calm fears that governments are not accountable. Draghi was speaking in frankfurt. He says it is time for europe to make a link between decisions and responsibility. Mario draghi there must be a leap in institutional convergence. We need to move from a system of rules for policymaking to a system of further sovereignty sharing with common institutions. Brendan draghi says the feeling of no accountability has led to the rise of populist Movement Speed apple in talks with networks about rolling out online tv. The wall street journal says apple wants a bundle of 25 channels that would include abc, cbs and fox. Nbc universal would not be a part. Apple and nbc have had a falling out. A firstyear nfl player is calling it quits because of concerns about head trauma. He started eight games with the San Francisco 49ers and led the team in tackles. He says football is not worth the risk. 5000 former players are seeking damages for head injuries. Tom german zew the expectations index. A bit of a bid on that news 1. 0609 on the euro. Oil is south and ugly. 43. 32 is challenging to say the least. The vix showing good equity markets, resiliency 15. 61. Gold churns. Brend crude brent crude is jawdropping. I thought with janet yellen meeting in washington, d. C. We would look at 30 years of gdp and why we are miserable. It is not like it used to be. 0 , 2 percent, sort of like the benchmark on real gdp. You have good times where we felt great. A four year moving average. We have not gone back there. We are not back to the effervescence of the 1990s. Brendan two ways to look at this. One is that we had a 30 year period that may not be sustainable. The other is, how many angry emails will i get if i say gdp is a relic that does not reflect what the real economy is doing . Tom maybe but it is all we have got. It is flawed. They do a great job adjusting it. There are two ways to calculate gdp, this is one that we use every day. In the last six or seven years this is a challenge chair yellen and others face. Lets dive in. Olivia, the news is oil and it cannot find a bid. The collapse of oil reverberates. Cherry yellen will meet with a two day meeting. George is from wells fargo, he knows there are secondround effects to a collapsing commodity. Can oil force a collapse in yields . Oil and other signals filter into everyones world, including the world of debt. George credit markets have been focused on oil prices. As soon as oil started to crack last year in the middle of the year, bond prices started to come down. A pretty big concentration in both Investment Grade and high yield markets. More so than equities. People started to use credit markets as a proxy trade. Tom is the high yeield highyield hydrocarbon market george good point. Energy markets within credits started to segment. The higherquality better performing Oil Companies sought a bid, we saw clearing levels. There are companies exposed to oil that are over expanded and carry a lot of debt. Olivia a lot of domestic producers recalculating their break even point as oil heads to 43 a barrel. The think there is opportunity for you and highyield credit . George it has become a market of two halves. The companies that are directly related to lower oil prices. Those bonds trade down. If you look at the rest of the market, the rest of the highyield market is doing well. Bond yields are low, companies can access the market and credit quality is in good shape. Tom lets bring up an oil chart. This gives you perspective. I like my greenbelt type. I like my green bow tie. Brendan george bory wearing green. I failed. Tom the crude collapse continues. Adjusted for price and rising incomes worldwide. The feeling on oil is we are getting back 15 years. Brendan im looking at george borys fixed income note. Im interested in credit. You write that American Companies are moving into european credit markets to get access to credit. Similar to what happened in japan. American Companies Moving into the semi market. When you ease in your own economy you benefit Strong Companies from other economies. George the ecb has done a great job of pushing down Interest Rates. U. S. Companies, especially Large Cap Companies are global. When they can match find those operations to achieve currency or funding that to a cheap. Currency or funding, that is to their benefit. We have seen an issuance in europe. Carpet america is looking for the cheapest financing anywhere in the world. Tom this is American West texas intermediate. Almost back to where we were. Olivia why shouldnt we be . Supply in the u. S. Is at a record. Everybody is focused on what the nuclear deal with iran tom this is important. Iran is john kerry and they are yapping about iran. They get an agreement and enron brings more oil . Olivia the thinking is if they get an agreement, suddenly we could lift the sanctions on iran and iranian oil comes back on the market. That is several years out. The effect we have seen is because of u. S. Brendan we keep waiting for a perversion to the mean rev ersion to the mean. But perhaps there has been a shift. Tom we will talk about the fed in a minute. The street has been wrong calling for higher rates. What do you do day today to advise people hoping a dangerous word hoping for higher rates . George you have to be careful about Interest Rate management, which is what you are talking about. There is a need for yields. Cash return is negative or zero. Theres a lot of money looking for incremental yields. There are ways to incrementally extend the yield curve to add to extra yield. You can go down into the lower ratings. Of the credit market. That can help us set the Interest Rate sensitivity that can help offset the Interest Rate sensitivity. If bond yields start moving higher, on prices will go down. Tom we have markets plunging. I do not know what has happened. Oil just plunged. Olivia we also have the feeling of the prophecy of jeff, saying if we see oil state down at 40 he thinks Interest Rates will go to 1 . Tom that is the linkage, debt on. The linkages are tangible. Brendan german Investor Confidence missed forecast. Tom i am not olivia i am not worried about frankfurt. The dax is up. Our twitter question, we want to know what you think. How does cheap crude affect janet yellen . An fomc meeting this week and we get the statement tomorrow. Tweet us. Tom good morning. Oil south. Not near the 42. 85 west texas intermediate but we are getting there. The yield, two point 2. 075 . Brendan in israel, the race is too close to call. Polls show Benjamin Netanyahus likud party trailing Isaac Herzogs finest party. Zuioionist party. Iran sending weapons to fight Islamic State in iraq. There are concerns the weapons are not precision guided and could harm civilians. Iraqi forces are trying to recapture tikrit from Islamic State. House republicans set to unveil their budget this morning. The plan would partially privatize medicare, turn medicaid into state bought grants and repeal obamacare. President obama is criticizing caps on military in domestic spending. Apple is expanding its smartphone tradein program. It will accept blackberries. Apples are outselling Android Devices in the u. S. New financing boosts pinterest to 11 billion. More than twice the value of last night. The company last may. Do you forget your internet password . Yahoo has the answer. Users can sign up for on demand passwords. Customers will get a secure message with a code when they want to sign in. Tom on d fed as they begin eight two on the fed as they begin a twoday meeting. No one cares about anything except patient. We have been waiting for josh with bloomberg intelligence. Lets talk about the silliness over patient what does it mean . Josh it means they are unlikely to raise rates for the next two meetings. Putting june on the table for the first rate hike. Tom i have never seen this silliness. Josh it is very serious. When you are near the zero lower bounds you cannot bring rates any lower, you have got to use other tools, there is asset purchases and forward guidance. You cannot take rates lower, you can say we will stay at the low level for longer and now they are trying to get rid of that. We talk about trying to normalize policy tom is the surprise that they will do more than get rid of patient . They will have a paragraph that provides clarity towards data dependency . Josh the idea of data dependency is there is more discretion. It is a Pretty Simple concept here day might shore up the language a little bit. Tom george bory from wells fargo. Do people throw things at you on the Trading Floor when you talk about this . George sometimes. Olivia i throw things at tom sometimes. Josh be fed has three tools. Number one has the statement. If they change the verbiage they are trying to open a window and create more flexibility so they can ultimately change policy if and when necessary. Secondly, they can also use the commentary. Janet yellen could put out a very hawkish statement by dropping patience. Finally, there are projections. The dots the infamous dots. They can deliver a nuanced message to the market. What they had done over the last few meetings is they give you a Little Something for everyone. You could view it as dovish hawkish but they are incrementally creeping towards a tighter policy. That seems to be where they are heading in the data allows them to get there. Olivia it does seem to be consensus around the idea that janet yellen will drop you were patient. What happens next . Everyone thinks two or three months, one Analyst Thinks the fed is going to it does not matter, the rate hike is not coming for nine months. Josh the criterion they have set out so far is the committee wants to be reasonably confident inflation is going to return to the 2 target ever the mediumterm. What makes them feel reasonably confident question mark it sounds like they want to see inflation stabilize if not turn up a little bit. Back to your question about oil. If Oil Prices Continue to decline they are going to slow down. It depends on how that feeds into inflation. Tom this is a surreal conversation and rationalization of a crystal ball. They are forward guiding and it is all new territory. Rendon talk brendan the tension around the fed is the same as the tension between you and josh. Our audience want a yellen bot, not a human. Saint when the data does this, i will do x. They dont have that. Josh janet yellen is trying to get us back to the old normal in policymaking. When they talk about meeting by meeting, that is what we saw before the financial crisis. Olivia can you pantomime the dot plot . Tom the hawks are here, the doves are here, where is chair yellen . Josh it is going to start squeezing as we get closer to lift off. Brendan there is the dot plot. Tom nerd dollar. Stanley fischer is looking at International Matters but yellen is with the doves. Olivia not all dots are equal. Josh they are going to get more similar. It was not that useful and prior years when you have all the commitments. Tom was that two gingers . Brendan we have not started drinking yet. I spoke to an irish barman who wants to get in on your mixed drink habits. It converts people. Brendan this is a gateway drug. This is bloomberg surveillance. Streaming on your tablet, your phone, and on bloomberg. Com. Tom good morning. Bloomberg surveillance. St. Patricks day, there will be a parade in new york city on this irish morning. Good morning to all of you listening and watching in ireland. Let me get to a morning must read. A huge deal. I put it on social media. Krugman was a clinic. Paul krugmans wheelhouse, isln. We get into this with josh and george. A foolish insistence on microfoundations at all times. Monocausal is the key word. I cannot say enough, this is possibly my essay of the year. Josh you and i talked about this. Hes going after chicago, john cochran. Why is it a look back to 1937 . Simpler than looking at modern economics. Josh it is simpler in some ways because you are talking about relationships among a couple of variables without using higher math. Macro economic theory can help you do that even if you do not have an advanced degree. Most academic economists do. Tom is janet yellen listening to paul krugman . I suggest everybody at the fed is grounded in the core economics and they have been humbled by the failure of mathematics in the last seven years. George it has been difficult to normalize policy. There are investors looking for yields and incremental spots to park money. It is the recycling of global savings that has become the most challenging thing for central bankers. Tom look for my interview with josh on the radio. Thank you so much, bloomberg intelligence. An amazing essay from paul krugman. Many of you cannot stand him read the essay. Coming up, roger martin of the university of toronto. We talk about a force for good. They want just him out to stop having conference calls. Look for that in the 7 00 hour. We are doing whiskey soon ,when . Brendan not soon enough. Tom good morning. Bloomberg surveillance. Ready to get a 42 print on oil. Oil south. Lets get to top headlines. Olivia it might take weeks before we know the winner in israel. Benjamin Netanyahus Likud party is trailing Isaac HerzogsZionist Union. Neither party likely to win a majority. The president will decide which party is best able to form a coalition. The task will not automatically go to the party that wins the most seats in the process may take several weeks. The u. S. Was concerned Iranian Military advisers were advising iraqi troops. Iran is sending iraq weapons to fight Islamic State. They include missiles and rockets. Theres a concerned the weapons are not precision guided and could cause civilian casual ease. Iraqi led forces are trying to recapture tikrit from Islamic State. Robert durst faces extradition to california pitch charge with the murder of a friend 15 years ago. Durst was the subject of a documentary on hbo. Durst appeared to admit to killing three people, including his wife. Durst was arrested saturday. Brendan japans bank has a warning as it keeps stimulus in place. Cheaper Energy Prices will bring inflation to a halt. We see the impact of falling Energy Prices. Theres a chance cpi will drop to below zero. The pace of price growth is steady. Brendan the Central Banks immediate focus, wage talks. The outcome will show whether Japanese Companies are willing to pass along cash holdings. A new poll suggests Hillary Clintons credibility has taken a hit because of the controversy over emails. A survey says her credibility has fallen to 53 . In baseball, pete rose has asked the new commissioner to lift his lifetime ban from the sport. Paused so tom can sigh. He was suspended in 1989 after investigation found he bet on baseball games. It made him an eligible for the hall of fame. The commissioner says he will consider the request. Olivia israelis casting their ballot. Benjamin netanyahu could be out of a job. Results will not be out until thursday. Netanyahus likud party has been facing challenges from the centerleft Zionist Union. In tel aviv, Elliott Gotkine is standing by. I want to start from comments from netanyahu. Reversing his position on Palestinian Statehood saying there will be no palestinian state if he is still in charge. Is that going to tip the scales . Elliott it might prompt some of his core supporters people who would not ordinarily vote, to pass their vote. The pulse have been open for 5. 5 hours. When you make that statement you are looking to shore up your base and get votes that would have been gained by the more conservative party. Netanyahu trying to ensure his likud party, gets more votes. As you said it is not going to do much to the voters out there who are looking to vote in their words, anyone but bibi. Olivia we have been focused on is really Foreign Policy after netanyahu gave the speech to congress. It appears that the Zionist Union group has been gathering speed because it is focusing on domestic issues. What are the key issues . Elliott although netanyahu would love it to have been a raw and security, that is them and that is not the main concern. Most ordinary israelis cannot afford their own home. They are concerned about spiraling living costs, making ends meet. When isaac herzog and Designers Union says his top priority will be to do something about the housing crisis that resonates more with many ordinary voters rather than concerns about iran and a potential threat that it represents to israel. Something isaac herzog does not disagree on. Brendan from