polls open in europe. is unity government the future? it's st. patrick's day. brendan greeley is at a bar. top of the morning to you. this is bloomberg "surveillance. that was my irish accent. brendan: was that romanian? what was that? tom: joining me, olivia sterns. brendan greeley, i wore a green bow tie. olivia: i wore celtic. brendan: i have a green tie i forget to wear. tom: i am sort of from ireland but mostly wales. olivia: israel the voters are casting ballots in an election that is too close to call. benjamin netanyahu's likud party is trailing isaac herzog

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. iraqi-led forces are trying to recapture tikrit. the us-led 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 first-year 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 jaw-dropping. 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 1990's. 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 e-mails 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. let's 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 second-round effects to a collapsing commodity. can oil force a collapse in yields? oil and other signals filter into everyone's 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 -- high-yield hydrocarbon market -- george: good point. energy markets within credits started to segment. the higher-quality 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 high-yield 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 high-yield market is doing well. bond yields are low, companies

can access the market and credit quality is in good shape. tom: let's 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: i'm looking at george bory's fixed income note. i'm 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 shouldn't 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. there's 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 netanyahu's likud party trailing isaac herzog's 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 trade-in 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 two-day meeting. no one cares about anything except "patient. we have been waiting for josh with bloomberg intelligence. let's 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 medium-term. 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 don't 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. patrick's 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 krugman's wheelhouse, isln. we get into this with josh and george. a "foolish insistence on micro-foundations 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. he's 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. let's get to top headlines. olivia: it might take weeks

before we know the winner in israel. benjamin netanyahu's likud party is trailing isaac herzog's zionist 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. there's 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: japan's 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. there's a chance cpi will drop to below zero. the pace of price growth is steady. brendan: the central bank's immediate focus, wage talks. the outcome will show whether japanese companies are willing to pass along cash holdings. a new poll suggests hillary clinton's credibility has taken a hit because of the controversy over e-mails. 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. netanyahu's 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 over here, we read and intangible and unquantifiable idea that israelis are kind of tired of benjamin netanyahu. does that resonate over there? elliott: for some people that in the past have voted for benjamin

netanyahu, there's a sense of wariness. if he wins his elections, it will not be his third straight win, it will be his fourth win total. he could end up being the longest-serving leader of israel , surpassing david ben-gurion, the founding prime minister. which is remarkable for a man who israelis either love him or hate him. ben-gurion was much less of a divisive force. there is an element of wariness. people who might have voted for him in the past. if they do not believe land should be returned or given to the palestinians in exchange for some kind of peace, they will be leaning to the right. you should be looking at this in terms of blocks. is the right wing, the right-wing parties including netanyahu going to have enough votes to form a coalition? more so than the opposition zionist union which would

form a left-wing or centrist coalition. netanyahu could end up losing these elections but still being able to form a government and become prime minister. olivia: elliott gotkine, thank you. looking for it to your interview with the u.s. ambassador to israel. brendan: adidas is making a shift in strategy. breaking up with the nba to focus on individual sponsorships. will it help adidas gain traction in the u.s.? this is bloomberg "surveillance" on bloomberg television. streaming on your tablet, your phone, and bloomberg.com. ♪

tom: something to watch on bloomberg "surveillance." moments ago, a 42 print on oil. we are at 43. oil very light appeared interesting backdrop to a fed meeting. stay with bloomberg for the next two days on the fed. brendan: adidas, the second largest sportswear company in the world, it has decided not to renew its deal to be the nba's official outfitter.

look at the yellow, that is year on year growth from adidas. that is just growth in sales in the u.s.. where do you see the pretty? the red, under armour. you can pay an entire leak or event to get your name all over shirts, or you can pick up players and get your name on their shoes. nike has done both but has focused on shoes. adidas likes to sponsor the entirely. olivia: it is a more precise allocation of capital. brendan: if you read these companies' history nike accidentally discovered this with air jordans. olivia: why bet on the bulls, just bet on jordan. tom: it is great that hockey season has picked up. in every frame of the tv, it has somebody's product.

the stick, the goal of -- they have an oakley logo on the side of the visor. brendan: hiking is a good example. -- hockey is a good example. nike, there's the swoosh. adidas buys brands. in nike no matter the sport you see the same branding. there is a research note -- she did an amazing job. she found a note from brian that points out the simple work visibility. either you are everywhere or you're not. adidas' problem is that it is not the same brand everywhere and nike is. olivia: i am struck by the rise

of under armour. it is crushing it. do they have any sponsorships? brendan: when reebok an adidas company, trot to the nfl in 2011, under armour and nike split the sponsorships. this guess is, under armour might make a play. olivia: the reason i was distracted, i was pulling up the shirt that i tried to buy tom for christmas. a slightly photoshop tom keene. and under armour is crushing it. tom: it's as close as i get to this guy. brendan: tom will wear under armour when under armour makes bow ties. tom: he started this on his grandmother's kitchen.

brendan: the guy he is pointing at is not kevin plank. tom: and not tom keene. why did you want me to bring this up? olivia: is the innovative new thing under armour is doing. brendan: are you and under armour fan? george: my kids are. from an investment perspective we talked about oil plunging down to $42 a barrel. this is creating disposable income across the u.s. the u.s. consumer has been the biggest beneficiary of that. that money is getting recycled into goods, products, into apparel. olivia: not quite yet. retail sales numbers have been disappointing even though oil is back down to $2.50 a gallon, it is not showing up in the numbers. george: there is a little bit of a charming as people move away

from the big rocks onto online. -- a churn as people move away from the big box online. single name retailers are doing well. i think that is a good strategy whether you are a stock investor or bond investor, a way to capture return. tom: let's get some photos. olivia: i do not have a photo of tom keene and a compression shirt. in washington, a statute on display before its return to iraq. numerous artifacts were smuggled. over 60 treasures are being brought back to iraq after islamic state bulldozed cities including nimrod. the items will be on display at a national museum to preserve iraqi heritage. this is dicey timing. george: this is how soft diplomacy works.

that is fascinating. olivia: number two photo. tom, this is for you. tinder swiping at sxsw. what is tom's tinder profile photo? the under armour shirt. this is ava, she was a chat bot -- if you went on twitter and agreed this girl was pretty, it was a robot chatting back to you. brendan: you flirted with a robot. this is a tinder profile that subjected you to the test to see if you thought there was a gorgeous woman were realized it wsa a -- was a bot. a bunch of hipsters at sxsw got punked as part of a

promotional scheme. tom: whatever happened to could i get you an irish whiskey? olivia: it works on me. [laughter] brendan: single best pickup line hi. tom: more photos. olivia: landmarks lighting up for st. patrick's day. the global greening campaign began six years ago. this initiative promotes island as a visitor destination. tons of landmarks including the great wall of china. the leaning tower of pisa in italy. brendan: the crazed redeem a strategy in -- the christ redeemer strategy in rio. they're doing an amazing job. olivia: it's working. tom: they are the best economy

in europe. brendan: celebrating st. patrick's day. looking at whiskey, not drinking it. yesterday i got a head start. i know pros don't finish. i'm going to finish. tom: this is at 5:00 a.m. yesterday. brendan: this is bloomberg "surveillance," streaming on your tablet, phone, and in bars everywhere at bloomberg.com. ♪

tom: good morning, bloomberg "surveillance." olivia: voters in israel heading to the polls. the race is too close to call. one of the first to vote was benjamin netanyahu. paul's show his likud party trailing isaac herzog's zionist union. the winner will likely have to form a coalition. iran is sending weapons to fight islamic state in iraq. the arsenal includes artillery rockets and missiles. there are concerns the weapons are not precision guided and could harm civilians.

forces are trying to recapture to -- tikrit. the number of americans without health insurance is down 35% under the affordable care act. new figures show the uninsured rate is just over 13%, down from more than 20% five years ago when the health law was passed. those with new coverage include all racial and ethnic groups. more than two dozen mcdonald's employees taking aim at the golden arches. they say they have been burned on the job, literally. and that the fast food giant puts other goals ahead of safety . the workers are supported by the fight for $15 campaign. relief workers reached remote parts of the island nation ravaged by a cyclone. the you and confirming -- the u.n. confirming that 11 people were killed when the storm hit vanuatu.

russia is the occasion for a three-day party. thousands turned out in sev astapol. the city voted to leave ukraine and join russia. vladimir putin and the area. brendan: yesterday i walked into an irish bar. today is st. patrick's day, i wanted to taste irish whiskey. growth in cases sold in the u.s. was up in 20154. he's been working with distillers in ireland to develop a whiskey for cocktails. >> happy st. patrick's day. brendan: you used to own a bar in minneapolis that sold more whiskey than any other bar in

the world. you are sitting next to george bory, a strategist at wells fargo. he is a scotch drinker. sell him. >> the scots, god love them they would be barrel aging water if it was not for the irish inventing whiskey. the smooth irish whiskey is the thing. brendan: it is coming or has arrived? you were part of what made it happen in america. kieran: correct. brendan: you just sold it to george but sell it to me. how do you make this distinction to people who are used to thinking about turfy scotch or have their bourbon. you are selling a wide range of products. kieran: two gingers irish whiskey came as a result of my work in the pubs and interaction

with consumers everyday. and looking at what is it that the movement towards craft etc. we looked at how do we get people to drink irish whiskey during the summer. tom: when i was a kid no one would be caught dead drinking irish whiskey. it was what bombs drank -- bums drank. [laughter] you're at the forefront. 2 gingers is for olivia sterns. it's a girl drink. kieran: absolutely not. people who do not drink irish whiskey, to convert people. olivia: i do not drink irish whiskey. tom: we are not allowed to open the bottle. she opened the bottle. olivia: it does not smell as toxic. tom: what do you do for someone to drink 2 gingers at the polo bar? kieran: this is an

entrepreneurial endeavor. it is the grassroots, out in the field. i go around the united states selling. getting people to taste 2 gingers iris whiskey. whether it is in our cocktails or neat. tom: olivia, the bucket endures. brendan: go ahead. olivia: do kids go to nightclubs in order whiskey? kieran: not kids but people of a responsible age. [laughter] olivia: nobody under 21 drinks. kieran: correct. if you look at the craft movement, beer, food, etc. irish whiskey, this is distilled twice, aged 4 years. it is really about a taste profile and about bringing people into a category l.a. from vodka. -- away from vodka.

olivia: does it cost the same as a vodka set up? kieran: who has trademark cocktails? we do. brendan: you are going after the dark and stormy market the gin and tonic. we have to disclose something. kieran and i yesterday discovered that we were cousins. we are both from the same town. it has 5000 people. there are greeleys there. some of them married into your family. this is actually your house. this is me. as you are selling, you used to sell irish whiskey to americans. the branding is not irish. kieran: 2 gingers is named after my mother and aunt.

olivia: i hope they have red hair. brendan: we are going to talk about forex. tom: the euro advancing, 1.0613. stay with us for another hour of "surveillance." ♪

tom: oil continues it's a surge.

can jenna ellen ignore the signals -- janet yellen ignore the signals? is a unity government the future for israel? a force for good -- corporate america should lose the crystal ball and stop gaining and guessing revenues and earnings. good morning, everyone. this is "market makers." it is tuesday, march 17, st. patrick's day. i'm tom. joining me come olivia sterns and brendan greeley. olivia: benjamin netanyahu makes it clear where he stands as voters go to the polls. he plans to form a coalition government with another party that opposes palestinian statehood. he says if he is reelected, he will allow palestinians to establish a state.

both are well short of majority coming meaning whoever does when will have to form a coalition government. iran is sending advanced weapons to iraq to help fight islamic state. the weapons include advanced artillery rockets and missiles. there are concerns that the weapons are not precision guided. forces are trying to recapture the city of tikrit. the u.s. coalition launched strikes against targets in iraq. they are not taking part in the assault on tikrit. robert first charged with the murder -- he appeared to admit to killing three people, including his wife. he was arrested saturday in new orleans. brendan: mario draghi says the

euro area needs to do something to calm fears that governments are not accountable. thousands of protesters are expected wednesday. it is time for europe to make a more direct link between the citizens and response ability. >> there must be a quantum leap and institutional convergence. when he to move up from a system of rules and guidelines to a system of further sovereignty sharing within common institutions. brendan: this feeling has led to the rise of populist movements. apple planning to move out its online tv service next fall. apple wants to come out with a slimmed-down bundle of 25 channels. nbc universal would not be part of it. apple and nbc have had a falling out. the concern of the long-term effect of playing football is growing. chris is walking away from

football after starting eight games leading the 49ers in tackles. more than 5000 former nfl players are suing the league seeking damages or head injuries. tom: important comments by medela guard -- madam legarde. this is worth watching. the feed on twitter as well. we begin a two-day fed meeting. it is ugly. olivia: we do have a couple of headlines. the prospect of tightening in the u.s. she's is acknowledging -- reaching the point that the u.s. will raise rates.

tom: she has been front and center with criticism of washington's close to view. -- closed view. brendan: they're worried about international consequences on the u.s. economy and what the u.s. economy can do to the world. tom: maybe we will see that in the statement tomorrow. press conference as well. on oil, it is ugly. in search of a bid. assistant surveillance with perspective on the desire of oil producers to not stop producing. we are up to our eyeballs in oil.

it doesn't stop. how do you know when it stops? it is just down, down. right now, $42.96. why is it just migrating ever lower? >> you had this transparent supply-demand imbalance. we have seen 900,000 barrels of output added since that june price peak. the output is quite resilient. tom: who was on the phone or not on the phone on the bid? exxon or a refiner or a boat company? >> it is advantageous for these refiners, given these prices. it is an input into the manufacturing process for these refined products. they are taking advantage of

this white differential. -- wide olivia: differential. there is real stockpiling going on. >> it is continued production. opec has not broken the american west. what we are seeing here is a deferral of completions. we have wells that have been drilled but not completed. you are starting to see this deferral of capital. we have this just-in-time inventory when prices come back. you have this wall of output, while of production that comes on through. olivia: the rigs are becoming a lot more productive. many of the newspapers decided to connect the dots. what would an iran deal mean for oil prices? >> if it allows that output to

come back onto the market, you have this transparency of supply that comes into the market. you will likely see that suppressed price overall. tom: he has taken on new duties on the toronto maple leafs committee. right now the desk in alberta. how damaging is this world for alberta? >> it is a huge wake-up call. they are facing structural deficits. when things go great they find ways to spend it all and when there is such a drop in their number one revenue source -- tom: do you have a price in your head for when it unravels? >> not really.

this is such a classic case of all the oil companies meeting -- needing to keep on doing expiration develop and assuming oil prices will stay high. just like in banking, the dance stops. >> producers are -- they are hit pretty hard. tom: there is a price where loads become -- we blink. >> as long as you are covering your cash costs, your insurance costs you are incentivized to keep on producing. olivia: if you look at the numbers come only very few people are going to get to negative cash flow. >> we will cut cap x 20% in 2015. output is likely to remain higher.

brendan: we keep wondering, is this what it is or are we going to reverse the meter? there is one more surplus that has to get flushed out of the system. our assumption that oil will always look like oil used to look like. it is a different dynamic today. you have this unconventional drilling mechanism that provides this just-in-time inventory. it is a shorter cycle type. you think things have changed for good? >> i think so. i think the saudi's have decided -- they understand what the cash cost looks like and they will play this as far as possible. olivia: we heard from the saudi oil minister and he says the reason opec did not decide to cut output was because the non-opec members refused to cut

production. is that a sign that opec has lost its grip on that will market? >> you have other operators here who have grown. whether it's north america or a, you have this shorter cycle manufacturing type process that can output in a short amount of time. tom: thank you so much. greatly appreciate it. olivia: it's time for our twitter question of the day. how do you think cheap crude is going to affect janet yellen? this is "market makers." -- "bloomberg surveillance." ♪

tom: good morning everyone. "bloomberg surveillance." brendan greeley and olivia sterns. olivia: my morning must-read is from stephen, writing about the balance of power in the middle east tipping towards iran. we have lost the essential counterweight to iran. this general is saying "today we see signs of the islamic

revolution being exported throughout the region from bahrain to iraq." our headlines, the iraqi shia militias, iraqi government forces going into tikrit, they are doing so with the help from baghdad, not the u.s. government. this is raising concerns about the expansion desires of iran as a nation. tom: i'm confused. is baghdad an ally of t ehran? olivia: very much so. baghdad is predominately shia. it takes its abuse from ta ehran. brendan: the shadow commander. it was an amazing piece that pointed out that he is the one pulling the strings all over. in the wake of 2001, he reached

out to the united states he thought there was a chance. it was the axis of evil speech that pushed iran away. i'm glad i'm not the one in charge of playing this game. olivia: there is a precedence of military cooperation between the u.s. and iran when they agreed to have a greater enemy. tom: how does the peshmerga fit into this? olivia: they are also fighting islamic state but they are not coordinating. brendan: you spend time their reporting. it seems we are in the middle of a transition. we would pick states in the middle east. now we have to think in terms of nations, ethnicities. that seems infinitely more complex. olivia: an interesting point that stephen carter is making here. more worries about a nuclear armed iran.

baghdad historically is the heart of shia iran. tom: who are the quds? olivia: special forces of the iranian revolutionary force. go on to bloomberg.com and check out the piece. still to come, what wall street can learn from the nfl. ♪

tom: good morning, everyone. "bloomberg surveillance." are cap headlines this morning. -- our top headlines this morning. olivia: the race for prime minister are wide open. netanyahu is trailing -- both are well short of the majority. who ever wins will have to form a coalition government. iran sending advanced weapons to fight islamic state in iraq.

the arsenal includes artillery rockets and missiles. there are concerns that the weapons are not precision guided and could harm civilians. forces are trying to recapture tikrit. house republicans set to unveil their budget this morning. it would partially privatize medicare, turn medicaid into state grants and repeal obamacare. the chairman of the fcc heading to capitol hill in a few hours to discuss neutrality. -- neutrality. -- net neutrality. the debate has been did internet access against big cable companies. organ becomes the first state to sign up voters automatically --

oregon becomes the first state to sign up voters automatically. apple is expanding its smartphone trade-in program. apple will soon except blackberries and android phones. i phones are now outselling android devices here in the u.s.\ tom: very good. a force for good is the theme this week. the skill and talent of winning a super bowl with winning a bet on the same super bowl. they tried to gain forward the conference call. general electric's amazing ability to come within one penny of expectations. thinking about the future of

corporate responsibility. he writes an important chapter "a force for good." you mentioned richard edelman's trust barometer which is gospel. the american public does not believe in wall street. john: it is a sad thing. their trust level of wall street is near the very bottom. it is a force for good. a force for good. force for expanding the economy, growing companies creating value rather than trading value. right now, a country thinks of wall street as a place where value gets traded and gets told by insiders and doesn't grow the economy. tom: within the compensation debate or green debate, doesn't fix the whole system or just fix the outliers? we know ceos that are high compensated for lousy

performance. john: i used to think of the outliers, but you have to fix the system. it simply does not work. it creates incentive for ceos to pump up expectations in the short-term and get out before they fall. everyone thinks the shortening tenure of ceos has to do with ceos being fired. there is not evidence to suggest that. tom: they make a pile of money and quit. roger: exactly. olivia:brendan: ideas under for a long time. -- endure for a long time. how do you kill the idea? it persists. roger: the author says you have not gotten it quite right.

it is one of the most clear cases of one theory dominating against all evidence. the evidence has been very bad on how this has worked out. brendan: that is not an. -- an accident. roger: you build up an infrastructure around it. the way compensation committee's work and how people benchmark one another. tearing down the infrastructure is hard. olivia: what are the metrics we should be using? roger: real things. such as market share, return on real assets, growth in real revenue. all those things are real. you have to go into the marketplace and earn those things. expectations -- the stock price is just a function. the stock price is an ephemeral thing.

your imagination about what this will do in the future. i liken it to betting on a football game. if we went back to compensating on the basis of real things -- i don't mind ceos making lots of money by creating real profit, real sales, real value. tom: within this giant was henry singleton. how do we get back to him? roger: that was an era before there was stock-based compensation. in 1970 less than 1% of all ceo compensation in america was stock-based. he almost did not exist. they were compensated on growing their companies. growing belly for the economy.

tom: we will talk about the force for good. -- growing value for the economy. ♪

tom: good morning, everyone. let's look at britain didn't greeley -- let's look at brendan greeley's reality. things used to be good. they were good in the 1980's, the 1990's.

here is the financial crisis. this is unreal. this is back 100 years unreal. we cannot get back. brendan: you have to wonder how far back you need to run it to get a good look at reality. things were here for a while. maybe the expansion is the exception. tom: you mentioned productivity as being part of the issue. olivia: russ is ahead of this issue. there has been a stec killer stagnation and productivity growth since the financial crisis. he has raised the question and how concerned we should be about this. brendan: the hope was computer technology would raise productivity, but that has not shown up. computer technology has not

increased productivity in the ways indoor plumbing did. tom: canada has had a challenge with productivity. >> it is one of the worst in the entire -- tom: why is that? itroger: it is innovation. canada in 1879 we expected that you americans would overrun us and we put up huge barriers and kept them place until 1989. tom: let's get to the top headlines.

olivia: weeks before we may know the real leader in israel's election. netanyahu is trailing. neither party likely to win an outright majority. the president will decide which party is best able to form a coalition. the process may take several weeks. the u.s. was concerned that the military officers are in -- that it ronnie -- that iranian military officers are informing --. they are concerned the rockets are not guided. they are trying to recapture a city. the air to a new york real estate fortune faces murder charges. durst was the subject of a documentary on hbo. he appeared to admit to curling -- killing three people.

olivia: a negative -- brendan: a negative inflation rate in japan. >> we see the impact of falling energy price. there is a chance cpi will drop below zero. it will not affect the long-term inflation trend. thebrendan: it will show whether the japanese countries are ready -- are willing to pass along cash holdings. clinton's favorability has fallen. 57% say they would be proud to have her as president. in baseball, the former player known as charlie hustle wants to get back in the game. p rose is asking the

commissioner to lift his ban -- pete rose is asking the commissioner to lift his ban. the new commissioner says he will consider the request. tom:i think he has done his time paid his tenants. lots of people have suffered. he contributed in ways that peoplewill always be remembered. tom: i do not have a strong opinion. we will see where that goes. we need to do an new data check. negative seven. the euro, 106. -- the hero -- the euro one

.06. the industry has to look at 42.80. there is no question it is front and center this morning. good morning everyone. brendan: elia got keen as our middle east editor. he is live in tel aviv. he is the former ambassador to the u.s.. it does not look good for benjamin netanyahu. elliott: it is too close to call. i would not be betting on the outcome of this election. we had prime minister netanyahu going to congress to address

them about the dangers of a bad deal. you support netanyahu. what would it mean to the u.s.-israeli relationship if netanyahu remains prime minister? >> the basic relationship is very strong. there is more understanding than misunderstanding. personal relationships, i read a story that president obama does not care for personal relationships with other people in the world. israel is important for america with regards to what is happening.

we heard the interview with the former chief of the saudi intelligence, speaking harshly about the possibility that iran would get the bomb. the gulf states, more or less sharing the same opinion. i hope president obama will consider that. elliott: what about europe? when they hear things like netanyahu saying as long as i am prime minister there will be no palestinian state. is this all scaremongering? what should we read into it. >> we are in an election period. europe wants to see this problem

be solved as quickly as possible. so do we. you have to be realistic. if you have a left-wing government, it will not be easy. there is no well for compromise. without compromise, there will not be peace. elliott: not much inclination towards compromise on the israeli side. >> the willingness of israel to consider a two state solution is a compromise. elliott: something netanyahu went back on yesterday. you used to be close to the opposition leader. what do we have in store if he wins and is able to form a government? >> he is a nice guy. the question is if it is enough

to lead israel with the chaos and what have you. he is a good fellow. no doubt about that. elia: thank you for joining me. back to you in new york. brendan: looking at news off the terminal. olivia, netanyahu, caught by a reporter said he would rule out a grand coalition. that may be a new reality or a negotiating tactic? olivia: he said he would seek a partner opposed to a palestinian state. i found that stunning. he said he was going to reverses position and formally oppose a palestinian state. how is president obama supposed to help negotiate peace? brendan: i do not see how the relationship could get worse. you pull the lever hard if you

are ever in trouble and he is in trouble. olivia: interesting to see how it shakes out. before we go to break, our twitter question of the day. how does cheap crude affect janet yelling? ♪

tom: oil plunges.

let's go to the bloomberg terminals. we have reached -- we have breached. this is beyond mathematically elegant, how oil comes up and moves on. this is four days ago and we have breached down. this is a chart or slope matters. this is curved. this is curved, or quadratic. it is really ugly if you are in the trading business. brendan: i just got an e-mail from a user who says the gulf war high of -- was hit october 11, 1990. tom: everything is said and

done, we are seeing history made with oil dropping below $43 a barrel. brendan: it is march and there is basketball. there will be pizza. betty liu has patrick doyle with you. he is representing the american pizza community. betty: there is a lobby group up in arms over the menu labeling that is going to be taking into effect later this year. it has lumped pizza along with other menu items where you have to, you are disclosing the calorie counts. the american pizza community says we should not be compared to a big mac. brendan: i am a member of the

american pizza community whether i like it or not. what is their justification? betty: they are justification is that pizza is a different type of food it is not fast food. olivia: starbucks has to do calorie counts. betty: two slices of pizza is 300 calories more than a big mac. it is not as if it is not high in calories. if you throw a bunch of vegetables on it, you can call it dinner. olivia: the ncaa is to dominoes as the super bowl is to buffalo wild wings. betty: buffalo wild wings does very good during march madness. it is one of the few stops that move. during the past 10 years, except for last year, they have outperformed by two percentage points. the flow wild wings did better. about 5% to 6% percentage points

-- about five to six percentage points above the margin. maybe you want to buy one of these during march madness. maybe. olivia: i'd rather take a pizza or a breakfast burrito. watch betty's special, coming up. betty liu will be speaking to patrick doyle. you do not want to miss it. ♪

tom: what you don't see our the conversations when we are on break. getting a dissertation on cartel economics. brendan greeley, as we go to top headlines, that is something. olivia: the race for prime minister is wide open. benjamin yen -- benjamin netanyahu is one of the first ofto vote. whoever wins will have to form a coalition government. he said if reelected, he will form a coalition with the germ -- the home party.

an arsenal includes artillery rockets and missiles. there is concern the weapons are not precision guided and could cause civilian casualties. iraqi forces are trying to capture to crete from the islamic state. the uninsured rate is just over 13%. that is down from more than 20% five years ago when the health law was passed. those with coverage include all racial and ethnic groups. new financing boosting the value of pinterest to $11 billion. that is twice the value it placed on itself in may. they raised money from investors and may get $211 million more. lyft is making progress. they are in a struggle against

uber. logan greene saysl lyft is profitable and is looking to expand. american airlines making a comeback a little more than a year after emerging from chapter 11. american well replace allergan. there are two other airlines in the s&p. southwest and delta. both of those airlines benefit. tom: i think it is boarding on -- bordering on scandal. the private equity deals are getting out of control. olivia: that is what silicon valley does. tom: it is getting out of control. olivia: it is a nice segue to our next segment.

americans used to make stuff. today, talent has replaced natural resources. roger martin is with the university of toronto. why this is talent economy that feels things like pinterest and uber carhas actually peaked? roger: we have transitioned from a world in which the biggest and most valuable companies were natural resource companies. in that world, capital was in the seat and suppressed what talent could earn. olivia: it is no longer oil. it is facebook and apple and google. roger: talent started to wake-up and say we are in charge. it is about us.

it has cap extracting more of the value and capital is getting upset because the returns to capital are lower in the returns to talent are going through the roof. that is why we have the situation with income inequality. olivia: that is counterintuitive if you think we are moving away from an economy based on capital. why does that fuel equality? roger: the holders of the talent is a narrow set. previously it was capital holders making the earnings. it is a narrower group and talent is continuing to say it is more about me and extracting. if you look at the tale of the distribution, it is talent.

it is now the richest americans are exploiting their own talent. it is a good thing, but causing inequality. brendan: you can talk about the 99% or the top 10% and you have the top .1% as opposed to the top 1%. 1% of the top 10% are looking at talent people who are educated, ceos, doctors, lawyers. the .1% is about capital. it is about people experiencing returns to their investments. don't we have to be precise talking about income inequality and talent? roger: that is not the data i see. the top 1% will manage other people's capital. they will charge a fee for their talent for managing other people's capital.

it is disproportionately, in the very top of the distribution talent, and i am not saying it is entirely a bad thing. we have an economy which talent is rewarded for expressing itself. how far can talent push this? the hedge funds are a perfect example. they are managing other people's money and earning a huge return. some of the top hedge funds, it is five and 50. if you keep pushing bad things happen. capital in the 1930's pushed on labor, suppressing wages to subsistence levels per what happened in 1935? the government stepped in and said there was an imbalance. capital is damaging labor, we are going to step in and do something, which they did. olivia: it is a news cycle based

on natural resources. this brings us to our twitter question of the day. how this cheap crude affect janet yellen? the only option is to raise interest rates soon. the second answer, the fed does not need to raise interest rates. lots of facilities need an overhaul. it becomes cheaper for her to drive to the fed meetings. brendan: i was waiting for that. olivia: does the weakness in oil filter through to inflation does it strengthen the dollar meaning that janet yellen holds off? tom: this is a time bomb people are underestimating, the structural shifts in what the new price of oil is.

ross thinks this is an equilibrium level. brendan: how -- everyone has a different basket to define inflation, in your basket or out of your basket. tom: i am looking at oil. it is an ugly chart. $42.72. i do not have a clue where that is heading, all i can do is telling you south. olivia: my agenda today, the israeli is lection -- the israeli election. obviously unlikely to know who the winner will be until thursday, that is when the bargaining begins. benjamin netanyahu saying he would like to form a coalition with the home party.

very interested to see what happens there. it will be a few days before we have any idea. brendan: my agenda today is st. patrick's day. -- is at the white house. they make this visit. his visit is different than his visit to years ago. or three years ago. i wrote about how he was trying to convince americans that the irish economy was recovering. it is very strongly recovering now. they have reentered the capital markets. they are the quiet success story of europe. olivia: they swallowed a bitter pill of austerity and has the fastest growing economy in the euro zone. prime minister kenny is the only prime minister that will speak with reporters and the

cold. that has not gone unnoticed. bloomberg "surveillance" will continue with mike mckee and tom keene on the radio. happy st. patrick's day. ♪

betty: 90 minutes away from the opening bell. a great show for you.

american airlines chairman and ceo on the company joining the s&p 500 today. patrick doyle helps us kickoff march madness. he delivered more than 1.7 million pies during last year's game. thor equities on why the stronger dollar means he is going shopping. he is shopping for big real estate properties. voters turn out in israel is the highest and two decades. the race for prime minister remains wide open. benjamin netanyahu was among the first to vote. netanyahu's party is trailing