>> welcome to the most important hour of the session. a 60 minutes left until the closing bell. this is "street smart." investors counting down to a high-stakes fed decision. some are saying it could be 1937 all over again. we have stocks slipping, yields falling, oil having near a six year low. "street smart" begins now. ♪ alix: global investors watching the federal reserve.

warning emerging markets need to prepare for capital flight if investors are surprised by the timing or pace of changes. even if this process is well-managed, the likely volatility could give rise to potential stability risk. and echoing her warning, a hedge fund billionaire says the federal reserve could calluse a 1937 style shock and slide. he's steering clear of big bets on the financial markets because they could be unseen consequence of changes to the fed policy. the new manager of the funds at pimco seeing a bigger return than his boss.

right to the breaking news desk where scarlet fu is looking at the action. scarlet: another triple digit move. breaking news from the cme. it is in talks to pursue gfi technology assets after losing a takeover battle. if you look at the screen behind me this is gfi group's shares right now. there is a pop on the headline. it is still up 1.5 percent from the session. as for the broader market, u.s. stocks are lower but they basically have a raised a big chunk of their losses -- erased a big chunk of their losses. trading in all three indices below their 10 day average.

housing starts, the latest report, shows some weakness because of the bad weather in february. alix: thank you. turning to israel now, we have about an hour until polling stations close in what is turning out to be a tight race for prime minister. elliott is on the ground in tel aviv, what can you tell us about the polls? elliott: we do not have polls throughout the day, they are not legal here throughout the day. you get the first exit polls about a minute after voting e nds, and that is in one hour's time.

that will give us an indication of whether the right wing or the left wing is likely to be able to form a governing coalition. it is very noisy and here, they are preparing for what they hope will be a victory party. earlier today, benjamin netanyahu calling on right-wing voters to really get out and placed their votes, warning of high error voter turnout -- arab voter turnout, those comments have been decried as playing politics and being racist. some commentators have likened it to saying imagine there are too many black people voting, we

must get more white people out, it is controversial. more comments in that again, saying that there will be no palestinian state on his watch. alix: another war of words over greece. this time on capital controls. dutch finance minister raising the idea as a way of avoiding a greek exit. the government officials are calling it a fantasy scenario. here to discuss is peter and lisa. what would capital controls me for the country? peter: greece having to leave the euro and i think it can be done calmly and organized that is the most -- organized.

that is the most likely scenario. alix: but they said they wanted to keep greece in the euro zone in the next wrath of that sentence. lidasa: the question that i been trying to answer is how much to the banks of europe to the specific a government of europe have a stake to lose should greece start to fall or show signs of deteriorating rapidly? alix: trish: if we're talking capital controls, does that bring up the liquidity? how much does that mean for how much money they are going to need from the? m? peter: it becomes very unsustainable very quickly. greece has about one billion --

1.6 billion euros coming due this friday. we are seeing the problem where it is a different story this time that it was in 2010 and 2013. almost all of the jet is owned to germany, italy, spain, and france through these lending facilities they have set up. alix: we have some news on that, greece is going to take a summit break, trying to get some sort of summit put together. one step forward, two steps back. lisa: it is hard to parse through the words to see what the motivations are. it is exhausting, people pounding it again and again. the finance minister of germany said that he can wear a necktie

or not he can talk a shirt in or not, we do not care, but verbal attacks on the financial minister are on acceptable -- unacceptable. peter: the other thing that is so hard with europe, most financial ministers are politicians. it is not like when we had the treasury department which really was finance people. whether you liked what they did or not they were true finance people, they understood it got the details right. what it goes on in europe is a complete lack of understanding and an unwillingness to dig into the details. a very two inconsistent statements coming out of the same time. alix: we do have a bank of england official coming out and saying failure to find a solution to the debt problem could cause market correction. peter: it will have a small

impact on europe, but not much. one thing that will surprise people as you will actually see a stronger europe. if you see greece leave, you will see a stronger europe, and that would catch the market very off guard. everyone is worrying what could happen, and if you start talking about greece exiting and a controlled way, that actually could spark a euro rally. alix: i wonder how that factors into the fed's decision. if the fed says that they are going to hike rates, it indicates a rate hike in june. does that make it easier for europe to allow greece -- alix: stronger dollar capital flows. lisa: exactly. peter: the fat is obviously watching -- fed is obviously

watching. no one wants to be in a position with greece with no central bank support. i think they're trying to actively encourage the ecb to not let this got of control, where all of the sun the chinese become the savior to the greek banking system. 40% to 50% chance, and a small probability of a german exit. they are getting very frustrated with this whole situation. we get this point of view of i will take my ball and go home. they do not need to deal with these babysitters. alix: thank you for joining us. coming up next, if you're on the fence about cutting the cord, apple may push you in a new direction. how they want to deliver

podcasts tv into your living room -- broadcast tv into your living room. why iron man is getting engineering assistance from an inspirational six-year-old boy. ♪

alix: this is "street smart" kerley headlines we're watching ahead of the closing bell. falling by the most in four years plunging 17%. there was a rise in the number of ruling permits which indicates that the slump in home starts may be a temporary blip. facebook allows you to send money to friends over its messaging service. and nintendo has dropped its opposition to using its characters on mobile devices. the company is partnering with another japanese firm to develop new games for mobile.

it had only allowed games to be sold on its own devices. apples target, your cable subscription. they are in talks with tv programmers about creating a service that would charge less than $50 for 25 channels that would live on your little apple tv box. is this a good thing? >> we are all looking for someone who is going to improve our living room experience and lower our bills in the living room experience has been very frustrating as far as development that occurred on set-top boxes. you're strolling through -- scrolling through so many channels. alix: how is this different from sling tv or hulu?

walter: it is not. we do not know what they are going to announce and include. there is this expectation that you need to include every broadcast channel, and they do not know that that is the case. there are customers out there, if you're going to save them a lot of money, they're going to take one bundle that may not have something. alix: how much is it going to cost apple? presumably these retransmission fees are huge they are a huge moneymaker for these broadcasting networks. walter: they have been able to get their price point down to as low as $20. it is a person driver fee -- per subscriber fee. alix: apple left their juicy

margins look at their iphone. will they have to eat it? walter: it is more about the ecosystem. if they could sell you additional phones or ipads, if this drives more usage, and people can get a very -- by ipads and give them a fat margin. alix: steve jobs never seems to care that much about apple tv, and all of a sudden he was like tim cook is making a payment. -- all of the sudden tim cook is making a pivot. we thought it was going to be a big huge flatscreen tv, not a tiny box. walter: again, we have been expecting it as an industry there has been some new developments with slaying,

perhaps sony, even verizon doing an over-the-top service. there is a change in that in the past apple has thought about partnering with the cable companies, while now they are more credible with an over-the-top solution worthy do not have to rely on a managed service to deliver something like this. back to be a change that makes 2015 the year for apple. alix: what are the cable companies going to do? they have my wi-fi. walter: they have broadband pipes in your home that they can charge a lot of money for. this is not going to appeal to everyone. this is not an all or nothing. cable has that monopoly in the broadband, that is a key. none of this works without the broadband pipe. alix: in your best estimate, or terms of what this might mean

what will this mean for other apple products? walter: it we will have to see what it -- we will have to see what they charge. but they can create revenue in other products. it is about a massive company continuing to grow and 10% or 20%. if they can show that they can grow at 10% or 20% even at the current stock price, the stock is cheap. alix: kind of cool. walter, great to see you. coming up next, i'm going to introduce you to albert the changing the world of prosthetics. >> i designed one of these, it broke on me. i keep working on it. >> you work until you get it

right. ♪

alix: the big names reporting earnings after the closing bell. scarlet fu at the breaking news desk with a preview. scarlet: oracle and adobe reporting earnings. i want to focus on oracle because it is not participating in the rise of overall shares today. growth from licenses has been slowing at oracle, as customers switch to cloud inscriptions. -- subscriptions. only 5% of revenue is showing great look for a strong dollar to be a part of the narrative as

well. a lot of analyst forecasts indicate that oracle has been giving guidance that underestimates the direct from the stronger dollar. look at the bloomberg terminal this allows us to show you how often oracle surprises when it comes to the revenue line. overall analysts are looking for a 2% growth last quarter, and in general this is the trend. in the last four quarters, they tend to disappoint when it comes to revenue. in terms of what it is projecting overall an increase but only 2% and the average surprise they have reported in their sales have been 1% over this time that we trekked. -- terracked. that gives you a sense of what they are dealing with. alix: one of the big issues in talking to managers is going to

be the currency issue for hewlett-packard. we have seen it all across the textch sector. how much will it impact earnings, and forward guidance. scarlet: analysts all saying that they are looking for the company to give their revenue in terms of constant currency terms. strip out the effects of a stronger dollar, the weaker emergency -- emerging markets, all of that. it will be something were analyst and investors will be asking a lot of questions because nobody will have difficulty projecting a much of him had wednesday stronger dollar will be -- because they will have a difficulty projecting how much of a headwind the stronger dollar will be. alix: they did guide to about a 4% hit on revenue. what about -- the great thing about oracle is it is a huge

window into the entire world of how sales are going. 30% are in the european areas. a good window into how those countries are holding up in terms of demand. we have gotten a lot of indications from those companies as of late. scarlet: whether it is oracle or intel, who told us that quarter sales would this point because of the stronger dollar as well as the slowdown of the pc refresh cycle. all of that coming to an end. that cyclical part of the industry as something that we cannot look for as a boost or our earnings anymore. alix: thank you for that preview. we look forward to the actual earnings at 4:00 p.m. coming up next, the new managers

of the pimco total return fund has been trumping former boss bill gross. i will speak about their new strategy and a look ahead to tomorrow. ♪

alix: here are the top stories we're watching ahead of the closing bell --great calling for european union cap. the talks would be held in brussels on thursday ahead of the eu leaders meeting. all of this according to the ap. just raking, jp morgan is fighting the right to handle $45 billion in home loan from off when financial familiar with transaction. that are like that to performing debts by any made. expect to -- to complete the transaction by mid-may.

pursuing a technology assets areas the asset may be valued at more than hundred million dollars. bill gross versus pimco. this time pimco win. the total return fund cut the exposure to short-term debt laden -- betting on a short-term that in june. it is paying off for pimco. 2.6 return -- 2.6% from september through march. joining me to discuss the strategy is a co-manager. also the cio of global credit of pimco. thank you for joining me. when bill gross with that pimco did you and the other managers disagree a lot cap >? >> i do not think we disagree

that much. we have been incorporating the insights of the incredible team at pimco. we noticed basically around the time phil left that there were growing divergence economically as well as future monetary policy that caused us to think the economy with picking up. we wanted to get the interest rate it measured down and increase the currency positions. over the past 5.5 years, the team, which encompasses myself and scott have done a good job getting the insight into the portfolio. the portfolio has been quite well. alix: was that a big change from when you work with bill gross? it seems like you pivoted the strategy. reducing the exposure by about five years. >> not a big change. remember, the pimco strategy is top-down and bottom-up. i think one of the benefits with

three managers is all of us have worked together for 17 and 19 years. we all have managed very large teams. scott with global and myself with global credit team and analyst. we get tremendous amount of insight every day from this incredible team. we are incorporating 15 much more proactively. alix: part of the issue as everyone expected the rates to go higher and prices to continue to fall, and that did not have been. we saw a lot of redemptions, about 100 billion at the end of september. he -- can you tell us about where those are right now? >> basically some of that money has left. some of it is going to income at pimco or credit. some of it could be going into europe. we have managed to liquidity very well. i think the performance speaks to that.

alix: what are you going to buy now gekko what is the strategy y? >> we think the fed will remove patients tomorrow and will raise rates in june or august. the reason is the unemployment rate is coming down dramatically. the labor market has added one million jobs. we have added 3.3 private sector jobs. unemployment rate of 5.5% is coming down 1% annually over the past two years. wages will eventually start to rise. the fed has to be forward-looking. what we're doing is we're overweight the dollar versus the euro and the yen. we also have been reducing interest rate x version are particularly the front end of the curve that looks very vulnerable. right now the market is pricing in no interest rate hikes. looking at her market that only

1.25% literally two years from now. at the end of 2018 2%. basically no risk premium on the front end of the curve. we have reduced exposure. alix: what do you say to the billionaire ray. leo who is concerned about the collapse of the fed? christine lagarde thing it will be hit hard? >> the reality is the consumers nearly 70% of the u.s. economy. it is the strongest it has been in years. the income proxy, job growth, income and hours worked. income proxy is upset -- 5%. the reality is we are very close to the point where you will see wage inflation. the bottom-up suggest it is happening more broadly across a lot of industries.

the reality is you want to stay overweight dollars. you want to favor housing and housing way sectors. finally you want to own inflation-protected securities. inflation we think we gradually -- will gradually had higher. tips are for winners. alix: that is like your slogan. do you miss bill gross >? >> of course we missed bill. he is a legend. pimco is strong 2400 employees around the world and 13 offices in 12 countries. we are routine united, and we are working very well. the performance as you said, is good. alix: we miss them, but good without him. thank you. the u.s. chamber of commerce is hosting the annual aviation summit and easy, and matt miller has been talking to bury the

layers in the future based and aviation. he joins us from d.c. >>matt: i am here with tim clark. there was an attack launched a u.s. clay or -- carriers that three middle eastern carriers are giving subsidies and asking the u.s. government to almost hold you back as far as your participation in the market. how do you feel about that ? >> first, we need to respond about the allegations made against us. these have been brewing. we need to sit through that and deal with allegations. all i know is it has been this way over 30 years. very profitably and successfully. we will keep it that way. we want to continue growing the market. matt: have you already talked

with lawmakers? >> we have had discussions with certain stakeholders in the government. we found very constructive talks and very fair and reasonable talks. i hope we can take this further and respond as we will do. matt: james hogan was saying the u.s. carriers get also a lots of advantages because of the near monopolistic terms that are set up here, the infrastructure, tax breaks on fuel, pensions that can be wiped out with bankruptcy courts. have you tried to quantify the amount of subsidies that u.s. carriers are living off of? >> the main part of it will be mainly to deal with allegations made against us. very important the united dates government understands we are here as fair players in a fair market and doing the right thing by consumers and the advocacy of the consumers is very important

to us. if we have to go and visit those , chapter 11 pension, it is endless. he goes back to the 30's 40's and 50's when it was a protected business. the of a job to do and want to do it well. we want to look after the consumer supply on the side of the united facing grow the business. that is what we tend to do. matt: how is the financing end of the business looking right now gekko sources are telling us you may do another billion-dollar bond. >> it is part of the way that we go about coming together that we need to purchase fleet. we have a very large order book. the government does not give us any,that absolutely clear. we have made our way through the debt providers and we have a

number of debt instruments. this one is supported by the u.k. government. so it is an area of growth. a lot of governments are trying to get involved in this and a very healthy market. we believe it is a very good source of funding. that is what we will probably do. matt: i do not have time to us about airbus orders. . sir tim clark, ceo of emirate. alix: thank you. a lot more coming up. we will be right back. ♪

alix: european stocks catapulting higher. the back posting a record high yesterday. is there is value to be had in europe? here with me to discuss, active equity investment portfolio manager. also happens to be a really good

friend of mine who taught me 90% of everything i know when i was super down about eight years ago. -- super dumb about eight years ago. >> hot topic year today. everyone is talking about it. i still like your is -- europe, yes. q we just started. we have seen green shoots already. just imagine when he kicked in. we have seen better german gdp. we have seen better think lending. incrementally a little bit better. auto registration of 17 consecutive months. there are things to get excited about. add on 50% drop in oil prices. the euro falling 12%. so i think all of these things wrapped up for very well -- do

very well for the economy in the market. not cheap but as the economy improves better topline and margin. alix: do you make a distinction about which company -- country want to be involved in gekko would you? >> you can own u.s. multinational companies because they have 45% of the total revenues are international. you certainly get it those are if europe is turning. you could own the etf which is a hedge etf. you could get a bigger hedge to currency. very different than the vgk, which doesn't. you can do countries. i think you can pick whichever you are most comfortable doing at this point. we are going at it from the u.s. consumer. alix: we will get to sectors you

like and in a segment. a bank official talking about grief saying that failure to make grief a in the euro and fix it could trigger a market correction. what tailwind there? >> no one was talking about europe back in november and december, which is when we started to take a look at some of the names and sectors. i think now that it is more popular and it has outperformed the u.s., you want to pull back. i think you want to use that as a pullback opportunity to be fighting. i think there is a lot of tailwinds. qe just started. i think the momentum will continue. alix: sticking with me for a while. coming up next the questions that will try to answer tomorrow, is the u.s. economy strong enough for the rate hike e?

two opposing views when we come back. ♪

alix: the big question the fed will try to answer tomorrow, is the fed strong enough to withstand a rate type? -- rate hike? here to discuss that any link equity investment portfolio manager, and frank friedman deloitte ceo and cfo. all we talk about in the investment community is when is the fed going to raise rates. do you even care? >> some businesses do care. i talk with a lot of clients, and never do we talk about it. businesses do not forecast when a rate hike is going to occur. probably in the initial stages it will be relatively small. i can tell you, i have had almost zero discussions with ceos, cfos about rate hikes.

i think it sends a signal about how strong the economy is. i think it sends a signal to the globe about the economy. we expect a strong economy continuing in 2015. it sends a signal. also sends a signal we're in pretty good shape. every business would trade up a modest rate increase for more revenue. alix: do you think the u.s. economy is strong enough to handle a hike in june? >> yes, i do. only because we have expected it for so long. so businesses, big as mrs. had built it into the plans and forecast. alix: from where you said, our strong enough? >> i do think we are strong enough. i think the manufacturing part of the economy has seen deceleration. maybe part of that is whether.

by and large, the numbers like pmi or isnm when the numbers on a three-month basis is still showing expansion. you also look at something like the consumer. the consumer has been pretty strong. household consumption running it 4.2% annualized. that is a really good number. annual sales at a good number. yes, housing is mixed for sure but there are pockets of housing that are quite strong. i think it is a good set up. they are on the right path. jobs are getting better. we need wages. certainly need wages, but i think they are ready to go. >> we make it real wage increase concerning the price decline. if you look at consumer spending, each quarter was higher than a quarter receding. i think the economy is in really good shape.

alix: a really optimistic conversation. not what we were acting. thank you. we will be back. ♪

alix: welcome to our viewers around the globe. you are watching bloomberg television. i am alex deal and the fifth "street smart." -- alix steele and this is "street smart." metals retreated and treasuries rising. the fed may not be in any hurry to raise interest rates after the today meeting ends tomorrow. for all of the market moves, we go to scarlet fu at the breaking news desk.

scarlett: the backdrop is a strong dollar and week oil. today however, the dollar is backing off a bit after unexpectedly weak housing starts because of the bad weather in the northeast. building permits surprised to the upside. investors looking for a short covering to halt the euro's life. getting a little bit of that today. no one thinks the euro has ended its slide overall. nymex crude ali to as low as 43.63. today's catalyst is no different than what it has and yesterday or the day before. plenty of domestic supply. the outlook is more of the same, the global supply demand. the question is, to what extent does the fed acknowledged either the factors as it excesses the economy and set the rate tone ? a th alix:alix: the million-dollar

question. home construction plunging last month. other data educating u.s. data not out of the week. will this impact what we hear from the fed when they are sitting in the two-day meeting? >> i think there are other parts of the economy that are doing ok and we talked about that. i think the consumer is on better footing at this point. obviously we have to see and get through the weather implications, but if you look at the pockets of data it within regions hit hardest from the weather the northeast and midwest. so let's focus more on the permit numbers as well. >> what if the fed does know the word patients? there is a trust issue. how do they keep going with that gekko getting the signals and then not doing it. that sends a signal that the u.s. economy is weaker than some people in acting, and b, not to

trust their word. >> we are hostage judith -- to the data points every single day. for the most part, i think we are in better shape. they will go slow and do very transparent. i think that is something that is somewhat comforting in terms of where we think rates will go over the next year. alix: there may not even be an alan greenspan world where there is 25 basis point jump every meeting. >> if they do remove the word there is still plenty of time before the june meeting to see if the string of wheat data was just weather-related or continues to weaken. if it continues to weaken or be mediocre, janet yellen make clear removing the word patient would not tie them to rate. >> they could remove the word patients and insert something else. alix: a have to replace it with

something. they cannot just leave a word gap. coming up on the closing bell looking at down down by 127 point. the dow as well as the s&p, still in the green for 2015 despite the losses we saw mind this is the fourth straight triple digit move that we have seen in the dow and s&p, settling down there about six points. nine out of the 10 sectors finished in the red. technology is actually the only positive sector we are seeing. we have the housing starts slumping in february with single-family home construction really struggling and of course that is the protection -- the picture therefore potential rate rise scenario. oil is inversely correlated to the dollar as well a fresh fixture continuing to grind lower with european oil coming down as well. oracle earnings are crossing

what -- crossing right now, the big tech company looking at insight from the rest of the world. for those numbers, let's get to scarlet fu. scarlet: $.60 for the third quarter that is in line with what they were looking for. revenue coming in at $9.3 billion. that is a miss. we had known the strong dollar would be a headwind for the company. oracle was very, very firm in pointing that revenue was up, an increase of 6% on a constant basis. in terms of hardware, let me just pull up that headline. the quarterly software and cloud revenue increased by 7% in the fiscal third quarter, hardware revenue was down to $1.3 billion. there is also deferred revenue here, short-term deferred $6.4 million for the quarter as well.

continuing to look at this, we have another one people are looking at, use of cash, boosting their quarterly dividend to $.12, a bit of a surprise given that analysts we surveyed were expecting oracle to keep it at $.12 per share. alix: thank you so much, scarlet. stephanie when you look at these numbers, what was your take? i know it was a big question for the company. stephanie: first, let's go back to the revenue of 9.3 billion. there was a range but the low-end people that it took into account, the currency, that is where they came in. a bigger hit. i would say that just the 6% cost of currency revenue growth the 4.8% guidance of revenue that they gave on a constant basis, they have to trend out currency for now. that is what i do. cloud is extremely important to

this company. they have very good things up over 140%. you would think the numbers would be pretty good. alix: you might be upset about that? stephanie: i liked it, but i would've liked more more. alix: boosting the dividend to $.15 over $.12, do you like those big tech companies? stephanie: i want to see buybacks, dividends, m&a. this company needs to get out of its sub 5% growth number from revenues and we saw that today. but to really expend and extend a better growth story as well, but i like the news. fair enough, let's bring cory johnson in from san francisco, what was your bigger take away from here? cory johnson: i would agree with the constant currency focus, but with currency in their favor

they do not mention currency helping so much, but we haven't -- they have mentioned the consistency improving up to 6% again, stripping out currency but let's also remember that the way they have been using cash is not just buying back dividends it is buying other companies and they have spent early in's and i positions. if they had not seen revenue grow after billions in acquisition, it would the serious problem. i would not say that they are out of the woods, but they have used big acquisition to try to throw something else on the fire . as far as earnings per share think we have been dismissive of missing those revenues because they can manage earnings-per-share in a lot of ways that are harder to manage than this company right here. alix: stephanie was talking about m&a being the lifeblood of this company. do you feel like m&a is done for this company with its cash on a dividend hike? cory: certainly not done.

oracle will always tell you that they are looking, and i know for a fact they are their m&a team is one of the best in silicon valley in that they quickly analyze deals and get back with fast answers. they are also very ready to pull the trigger that they walked away from. we have a full m&a team in the house that is working on deals all the time. they are ready for valuations to change. to that point, valuations for software are bonkers right now. they have done a couple of software for service acquisitions already but it is a very tough arena in which to do acquisitions. alix: in talking about currencies, what you guys were just saying, oracle saying that without it they would be up 6%. it would have been even better but for the dollar. oh well. stephanie: i like that. the currency basis smoothing it out, i totally agree that when the currency goes in their favor

that we do not break it out and at this point it is such a challenge and we are all scratching our, wondering how much more difficult it will be. i would also say that i am really looking forward to the comments on europe. 30% of revenue. we have to listen to this call. they normally give a lot of great details about regions of the world and if they are improving or not. alix: adobe earnings are crossing right now. scarlet fu is looking at that on the breaking news desk. scarlet: $.44 per share adjusted earnings per share adobe anticipated earnings according to analysts we surveyed. revenue coming in higher than anticipated. analysts were looking for 1.8 billion dollars. in addition adobe says that their first quarter service revenue was $105 million, they

gave a lot of details on the new cloud subscribers being up 28%. clearly this is a big part of their growth story and where they want to focus their growth. 70% of their first quarter revenues from recurring revenue streams which are so important to these companies as they shift away from hardware software, and into recurring revenue streams, things that they can count on time and again. once again, earnings-per-share over $.44, revenue at $1.11 billion, higher than expected. alix: cory: i want to go back to you. what do you make of these numbers from adobe? cory: they made big changes selling big boxes of software selling on the cloud. it took off faster than expected. initially they had revenue numbers that were missing the estimates. analysts to not understand how quickly that was happening. now one of the criticisms that

they got was that they were taking an entire box of software and putting it online as a creative cloud. that is what they call it all. illustrator, acrobat, bunch of things that do things that illustrators did not need -- that users did not need. they wanted a smaller tailored app and to a large degree adobe refused. you can see the success of that decision right here. they have 517,000 customers in the quarter with their egg box of cloud software called creative cloud. that looks like a big success for them. sticking to their guns, selling a big portfolio software as one package online. alix: when scarlet broke that number, you gave a thumbs up there, stephanie? stephanie: [laughter] as you read through the details and subscriber numbers that is what got me excited expectations were for 480,000.

it is a big deal. it just proves that their strategy in their shift to subscription-based recurring revenue is working. alix: so what --- why is the stock down? stephanie: it has been in the last couple of quarters, but it only takes a conference call and we will have to see what they say. i don't know the margins are the underlying details, but i would say that the numbers that we care about to validate the strategy of the subscription-based model are certainly supportive of the story. alix: scarlet, i want to bring you in, you were looking at these numbers and a you have a question for stephanie? scarlet: adobe also highlighted deferred revenue significant in that their risk reported revenue was $11 billion last quarter, making a point to say that they had deferred revenues as well. is this trend of reporting

deferred revenue just a way to get people to focus on what is coming up rather than what happened before? it feels like something new. stephanie: cloud is something the stock trades on. recurring revenue is also very important. all of these things are going to matter on a conference call. it's kind of hard to trade this stock in the after-hours. you have to listen to the comments coming from the company , they give you so many different pieces to put together. alix: thank you so much everyone. i will have more with stephanie lake in just a moment. a quick note on the election in israel, the vote is too close to call exit polls are split on a winner. we will continually -- continue monitoring those developments. just ahead, we are watching earnings from oracle and adobe. more announcements, coming up. ♪

alix: this is "street smart." these of the top stories we're watching after the closing bell. exit polls in israel are split on a winner. we are continuing to monitor those developments. staying on travel you can fly across the atlantic for as little as 10 pounds. you heard me, 10 pounds. ryan air is reportedly extending its lucrative market and is said to be in talks with plane manufacturers. deals could start in four to five years if ryan air secures the aircraft. fixed income revenue, dropping 56% to $126 million in the first quarter. wall street has watched the results from jefferies for assignment on how larger banks will fare and those firms report first-quarter results in april. the biggest question, will the federal reserve moved to raise interest rates tomorrow?

fed officials are debating the timing of a would be move, their first interest rate increase since 2006 after a six-year bull market where the s&p 500 tripled in 2009. janet yellen holding a news conference tomorrow, it is high-stakes all the way around with huge implications for the global market. on the one hand, the imf chief warns that emerging markets need to prepare for capital flight if investors are surprised by the timing and pace of policy changes. helping me to discuss it, stephanie lingfield and charles schwab with charles jones. the headline that made me pause today we could have a 1937 kind of situation with the fed rate hike. you're shaking your head, what do you think, kathy? kathy: there is some risk, but they are also very aware of it, so i think they will avoid it.

people have to appreciate that because the dollar has moved up so much, we have already had a tightening of malik -- monetary policy. the way that we calculate it, that's over 100 aces points of tightness that already occurred in terms of the impact on the economy. i am in the camp that says probably remove the word patient , but i don't know why they are in such a hurry and i don't think that they will actually in practice be as patient as people believe. alix: did mario draghi do her job for her? kathy: it was a matter of removing that stimulus in hinting at raising rates in a world where the rest of the world is easing and we are moving towards tightening. that is why the dollar is up. alix: you will your eyes at the 1937 market event? kathy: how many years did they spend trying to get us out of that situation? what signs that the economy is getting better? i don't leave

that they will use harsh language and tighten aggressively. that is not consistent with anything she has said from the get-go. i think it will be small, study, transparent and data dependent. if the data is getting better i am ok about raising it slowly. i'm fine with that. alix: there is a great chart coming to us from bank of america that i wanted to show you, looking at the average rate height cycle that you can see there in that white line the shaded area on the left being the next year. the blue line is what the fed is looking at. the yellow line is the current market expectation. my question, does the fed come down to a market expectation? or does the market have to readjust and go up to what the fed is thinking about? kathy: our view is that the fed will come closer to the market rather than the other way around . their expectation for growth ratchets down every year.

they expected 3% growth for several years and we have not ate it yet. in order for that to close, we need 3% growth for a couple of years, which is still what they are implying. i think that is still a tough call for the economy to do that, but i think that the fed can push the market rather than the other way around. >> i absolutely agree, they will continue to do what they have consistently said they are going to do. they don't want to ride the markets, certainly not the international markets. alix: do we want some kind of greenspan hike where it is a few points every meeting? should it be more spread out? >> the other part of their mandate is, of course inflation. it is falling below the target rate. alix: they did not seem to care last time. oil prices schmioloil prices. >> that will be a very big data point going forward, in my

opinion. alix: interesting, talking about the average rate height cycle that we saw in the chart it's way below that and we have a long way to go before we get up to any kind of long-term average in the market. >> there is no average rate height cycle. if you look over the decades of -- as i have done, there is no average, they are all different. you were thing that they have in common is that the fed was raising rates. in the 80 possible extremely high, double digits. in the 90's it looked different from the 2000's. alix: well, high-stakes with comp participants with me here today. --c calm participants with me here today. good to see you. we will be back in a few minutes. more "street smart" coming up after this break. ♪

alix: the polls have closed in israel. everyone's eyes are on the race for prime minister. exit polls are split on a winner. we have more from tel aviv. l.a., what are you hearing on the ground? -- ellie, what are you hearing on the ground? >> i will tell you one thing, if they had been thrilled to win resoundingly, they would be making a hell of a lot more noise. instead channel one and channel 10 is geared in through 27 in the eyes of the union, a dead heat. only channel to has moved by one seat.

even if you look at the left block and the right lock, it's a dead heat. new knew it would be a tight race. we did not know it was going to be this type. more relief from the headquarters next door where they expected to be defeated. a tie is better than losing out. they had been hoping for some kind of victory, unable to bring a change to the government and as it stands, we do not know who is going to win. nor do we have the foggiest idea as to who will form a government. alix: thank you for that update. house republicans say that they can balance the budget in less than 10 years without raising taxes unveiling their first spending plans and taking control of congress this

morning, they are calling for a full repeal of obamacare cutting medicare in food stamp privatizing medicare. entering -- entering a meeting with the british prime minister today, president obama criticized the proposals. president obama: we are unfortunately seeing right now failure to invest in education and national defense. all of the things that we need to grow, to create jobs to stay at the forefront of innovation and keep our country safe. alix: it is not only democrats who oppose the plan, but also some republicans highlighting the divide within the party. joining me now is diane black member of the budget committee. really great to have you here, this woman. talk to me about how you are going to get this passed the senate when the senate is stepping away from making cuts to medicare. congresswoman black: thank you

for having me today. we are very excited about this budget document. i know that often the news media in the previous years have said that we would not be able to get the votes in the house, but we feel that this year we have put out a budget and the senate is going to come with us as well. alix: but it is not just about the house, it has to be the senate, who are not touching medicare. does that just show a deep divide within your party? congress one black: we are just -- congresswoman black: as we talk about this in full measure, you will see the senators coming our way. this is an exciting year to think that we could get the house and the senate to agree on a budget document so that we can start doing real things, like budget appropriations. alix: what if you do not? what if you cannot get the

senators on board? congresswoman black: i do not want to look at it in a negative way this time. we will be marking the bill up in committee tomorrow and we will be voting on it next week and i think we have a lot of time to have our discussion, but at the end of the day -- alix: congresswoman, thank you for joining us. got a go. ♪

alix: welcome back to "street smart." here other top stories we are watching after the closing bell. oracle reported third-quarter sales that missed analyst estimates, saying they were hurt by a rise in a weak u.s. dollar and weaken demand for cloud software. they have been hurt over he recent years as they lagged behind life force delivering business offering services over the internet. adobe, reporting topping -- reporting first-quarter analyst estimates the top expectations. starting today you can fly from jfk to cuba, travel services

offering the weekly flight for $849 round-trip covering the airfare, cuban medical insurance and u.s. departure taxes. stocks finishing with triple digit losses today, our key markets correspondent is at the news. -- news desk with the brave thought. scarlet: we know that lower oil prices are supposed to help the consumer like a tax cut, but the idea shows that it is having more of an effect in terms of bringing down retail sales particularly gasoline and a lot of people are saving the extra money and pocketing it as savings overall. it is helping to boost airline shares. let's show you how jetblue, delta, and american are climbing on the day obviously outliers because being added to the s&p

500, where united, southwest, and alaska are moving higher closing higher for a fifth straight day. the interesting part of all of this and you know this as well as i do, airlines are not passing the savings on to customers. particularly here in the u.s. they have rising power so they do not need to move the savings they can continue to keep the fares fairly high and people have no choice but to continue looking tickets. alix: ryan air, across the pond for 10 pounds? scarlet: you know that there will be a million of those. alix: that's true, $10 and here's the bathroom kind of thing. thank you, scarlet fu. apple wants to be on -- in your car, on your wrist, and now in your living room. they are picking to deal a package that would include fox, cbs, and abc for under $50 per month. joining me to discuss his rad gas worth, -- brad gasworth and

cory johnson. do you like this? apple tv for the masses. brad: it is another thing that gives him a foothold into the digital home. in terms of the bottom line, it will be minimal. iphone still generates a significant portion of the profits. but i think it is important for them to reinvent the way that we watch tv. i do think that it makes a tremendous amount of sense for the company. alix: corey, what do you think? -- cory: what do you think? cory: it is not clear if this device will offer those selected channels or if the programming comes as part of a package to your ipad, iphone, or combination of those things. i think the real big question here is not the delivery platform of the device, but it is what gets delivered as

content. how do they curate that? the cable industry has responded by saying that we will give you every channel you might possibly want. i know you, i know you do not like sports. alix: are you calling me out? i love sports. cory: you do not. alix: i do, i do. but to your point -- cory: that's the big thing, espn is the big gorilla in the room. they are one of the big reasons your cable bill is so high. apple is trying to do that without espn and this is an interesting difference from the a la carte offering. it is a very different way to approach the audience in the world. alix: they are going to have to pay for what is on their and i can only assume that those fees might be quite high.

what do you think? what might it due to the margin for apple on a product like this? brad: the thing that gets quite interesting, if you look at apple tv and their service as reported by "the wall street journal," with netflix for another $10 and some other things you might want, suddenly you are closer to that $100 price point to are already paying for cable. you guys are making great points and ultimately we need to see what we can get in the prices per channel. i like the d bundling. out of 700 channels, how many do people really watch? certainly it is a negative in the near term but this is not -- but ultimately there is not a lot of competition for broadband and i would not be surprised to see broadband prices go up significantly. alix: interesting, i would have thought more competition would have tracked people away from apple tv, for example.

android iphone, a person familiar with the matter says they plan to start accepting apple and blackberry phones as trade-ins. they are now taking android devices in the u.s.. did you like this? was it a good idea? brad: it is a convenient way to switch from a non-iphone device to an iphone device. the interesting thing is that our team surveyed many apple stores to get an idea of employees being aware of this coming soon and not one person was even familiar, which is typically the case with apple. they are typically hush until they roll it out, but you would certainly think that there would be trading with price points. this form not add anything significant to apple, but it does make it -- it does allow

them to more subscribers in an apple wants more iphone users. alix: cory:, what does this say about iphone saturation? have they gotten all the customers they can get on their own? cory: they want to have potential iphone users walking into an apple store. they really feel that the customer experience at the retail level helps to sell. part of that exchange is just that walking in with your old galaxy and walking out with an iphone, they think that is an important part of the sales process. particularly as they develop different kinds of stores. it is an intriguing focus for a company that wants to take people away from the bricks and mortar and away from the experience of shopping for stuff apple is taking a different approach. alix: interesting.

fascinating how apple continues to morph into something different every time. thank you so much, cory: and brad. a quick update, everyone. as this poll suggests in the race between isaac herzog and benjamin netanyahu in israel, it is still close -- too close to call. this is a live shot from tel aviv. both sides seem to be falling short of parliamentary majorities, raising the prospect of weeks of negotiations to form a coalition. we will continue to monitor these headlines out of israel as they develop. coming up next, take this, cory johnson, we are talking sports and i like it. lori, selected to be on the front of "sports illustrated." will he have the same power as tiger woods? coming up next on "street smart." ♪

alix: this is "street smart."

here are the top stories we are watching after the closing bell. alibaba possibly as investors will have a chance to sell shares for the first time tomorrow. the ipo lockup expires for 13% of the companies publicly traded stock. 337 million shares will be eligible for sale. and some investors may be looking to get out. alibaba shares slumping 19% so far this year. show me -- xiomi working on a new smart watch. it will sport around the dial and a brushed metal design. and nintendo is finally joining the smartphone era. the makers of super mario brothers and zelda, teaming up with japanese mobile giant dna to develop new games for mobile devices. their existing titles will not

be available on mobile, sorry, no super mario brothers on your smart phone, because that would have an awesome. we are just a few hours away from the open for asia's market. china, making waves. major european i have -- allies have said that they will join the asia infrastructure investment bank. why is this so significant? what is the drama? >> first of all, for people who do not know what the ai ib is it is like the chinese counterweight to the world bank. the purpose of this is to provide funding for infrastructure projects across asia, but the u.s. does not want its allies to basically be saying yes to china, they see it as a counterweight to what has traditionally been the u.s. dominated organization. interesting, that conflict there between east and west.

moving on to the markets especially china, february property prices in beijing january was a complete mess. what are we expecting now? cory: ♪ ramy: -- ramy: if it comes out to be lower than expected, of course they are going to want to look at potentially cutting the rates again. right now the rates stand at five and one third percent. we will have to wait to see what actually happens. alix: when you look at china, what are the risks heading into a number like this? ramy: they have been trying to do it, but they basically cannot, so we will have to wait and see. chinese investors are not piling into property prices in the country, with a lot of people putting money overseas.

according to price waterhouse coopers between 2013 and 2014 they had $16.5 billion and you might see that continue on into the future if the property prices decline. alix: interesting. slowing demand in china for commodities overall was likely to lead to demand globally driving a lot of market action. looking forward to number coming out just a few hours time. coming up next, the louisville men's basketball program pulled in $24 million in profits last year. did the other 67 teams has -- have as successful year? not even close. we will talk about why. ♪

alix: today march madness gets

underway. debates rage on the hard-won -- hardwood as to how and if student athletes should do paid. last year each conference received over $250,000 per game that each member school played in. merchandise was over $10 million. total revenue's sword buy above $1 billion. those numbers are expected to increase this year. for more i am joined by david meltzer current ceo of sports one marketing. these numbers are unbelievable. they are a financial powerhouse but the kids do not get paid. what is the fair share here? >> there is not a fair share yet. it was to protect the ncaa from having to pay injuries to these athletes and now it is ludicrous that the lion share is going to

them. even though numbers are not large compared to the organization as a whole. alix: what would be a fair model? how do you do that? david: there has to be a marketing tool and revenue share for the demographic that allows the students to be paid for the number of jerseys or merchandise sold. even without the names on the back it is obvious that certain numbers are selling and certain brands sell better than others, meaning that certain brands are more popular. alix: what do you say to the criticism that says that these kids are students, not employees? >> i think that is unrealistic nowadays. there are several ways around it, including giving four-year scholarships to these athletes after they are done playing. they can take advantage of that while they are playing or after they are done playing. but we have to look at it realistically. this is a big business and these students should take these

profits now they can question -- can. alix: does that not defeat the purpose of education? they are there to get an education, not focus on playing all. david: i seek sports as a business. we have all of these things that we teach in schools and allow them to do as a profession. the prayer not realistic enough to realize that sports is a multibillion dollar industry and even the laying sports does not necessarily require so many books, it could be created into a curriculum as well to more -- make it more academically feasible and relatable to the public. the reality is that it is big business. alix: disenfranchised schools that have less of a big endowment? david: it is already happening with the power companies that we already have.

that is already occurring and i do not think it would create any difference today. alix: do you think the ncaa needs to be able to pass on more money to the schools themselves? david: absolutely. that could beat the combined program of this revenue-sharing. a certain amount needs to match for the sport generating the revenue and the extracurricular activities they could be funded with these huge dollars. alix: what has to happen for this to go down? david: i think that as a conference or two succeeds that will start being a catalyst to all the other schools and conferences. alix: more sports to come. coming up next, sports is betting big on rory mcilroy becoming the long base of golf.

is he going to deliver? ♪

alix: moreover, tiger. rory is playing through. after a 13 run on the cover of the golf franchise, tiger woods is being replaced by rory mcilroy. he is being seen as the next long-term star of the sport. still with me, the author of "connected to goodness." explain this to me, as someone who does not follow golf closely, if this is a big deal for him really. david: madden makes more money

in one year for putting his game on that thing than in his entire football career. it's huge. alix: is it sustainable? tiger woods was on there for a long time. alix: -- >> david: i really do. it is a whole mother platform for him to be exposed. i think he has the talent and the focus to stay number one for a long time. alix: do we know how much money they make on these kinds of deals? david: i know it is in the upwards of $100 million in total. alix: that's no joke. i remember buying that game for my dad 10 years ago. dave and: it is a time and ritual to let -- david: it is a time and ritual tonight -- let the next great players succeed them. rory has a huge future in front of him. put a nike platform on top and

it is an incredible platform for him to carry on his brand and successes. alix: how often do brands tend to rejigger their face? david: only when necessary. when you have someone like rory mcilroy, you stick with them to their entire career. nike themselves have their own jordan brand a separate company that makes billions. alix: a good point. you mentioned that tiger woods is still a great player, but if he was really that great way not have the title? david: because everyone knows what is coming. tiger is probably still the number one person for endorsement on apparel and merchandise but rory mcilroy has significant inertia. david -- alix: does golf need more than one player to appeal to a younger generation? david: absolutely, there needs to be a change in the game.

there are companies like top golf and one up golf shortening the game to make it more like bowling, more social for anybody to be able to play the game. we can still keep the classic game but there need to be versions that apply to our younger, more attention challenged kids that we have. alix: fair, fair. what else has it gotten you to do? david: definitely shorten the time of play. alix: like eight holes instead of 16? david: you could add the digital side. a lot of companies have these great top golfers that are growing fast, so quickly more social with the drinking eating challenges and competitions that are indoors on the more virtual side than the outdoor game. alix: david, thank you so much

for the insight on golf. my dad was definitely watching that. tomorrow, do not miss the special bloomberg coverage of the fed decision, starting at 2 p.m. eastern, followed by the news conference at 3 p.m. have a terrific evening everyone. ♪

lindsay: will respect to my south carolina fans, get to new hampshire, i need your help. ♪ mark: on the show tonight, budget cuts. but first, it is tuesday, it is election day in israel. we will not know