stunning turnabout. benjamin netanyahu a victory. $15 an hour to flip burgers? yeah, right. this is "bloomberg surveillance." i am tom keene. joining me, olivia sterns and brendan "yes, we had three irish martinis yesterday" greeley. olivia: netanyahu has called leaders that share his skepticism about peace talks with palestinians. he says there are issues that must be addressed immediately. >> we are facing great challenges. i cannot elaborate on all of them, but i can say we have challenges in diplomacy and

security. olivia:'s party was behind in the polls. the prime minister appealed to his supporters. investors will be listening when policymakers wrap up their two day meeting in washington. the fed may remove an assurance that it may be patient before it raises interest rates. janet yellen is likely to be questioned about the strength of the dollar and how it may affect monetary policy. oil heading into another bear market. it is down for a seventh day in a row. if fell below $43 a barrel and closed -- and if it closes at that level it will be 23% off-peak. inventory probably grew last week. in oklahoma state, they have

frozen hiring and salaries. brendan: protesters have burned cars and thrown smoke bombs and rocks into frankfurt. police responded with water cannons and tear gas. these are live cameras. the new ecb building is surrounded by barbed wire and barricaded. facebook has come up with the way to send money over the web. you can use the messenger app to send money to friends. facebook does not plan to take fees for the transaction. march madness has begun. ole miss roared back to beat brigham young. 94-90. the reward for a victory?

hampton against the top seed undefeated kentucky. tom: troops at bloomberg analytics always whip my butt. olivia: i have oklahoma going all the way. tom: let's do a data check. currencies, commodities surprising action. the euro churns. pain year yield -- nymex crude is ahead. 42.17 is game changing. gold south. there is the spread. $11 between brent in europe. important. we had a guest saying american

gasoline per galley -- american gasoline per gallon, watch brands. a massive shout out. here is the unemployment rate. janet yellen was talking about. fed december of last year december just past. this is the glide path to a better unemployment rate. the reality is, we have done better. brendan: this is pointing out we are doing -- the problem is, they want to overshoot the best way to hit a target is to overshoot it. there is a lot of pressure to not overshoot and just tap. olivia: any indication on how concerned janet yellen is about

causing instability with a rate increase. we heard those concerns from christine lagarde. towe are at the so-called -- rate. the rate of non-accelerating rate of unemployment. that is where we are. there are more dovish members. tom: let's go to washington. the fed meats in the backdrop. where we will be at 2:00 p.m.. peter, what will you be watching for? peter: i will be looking at janet yellen's final four picks. we will see how confident they are with the economy. i will be listening most

economists we surveyed is what will they replace it with? is there new language that gives them more flexibility or boxes them back in. the comments on the dollar, i think she will get a lot of questions on the legislative front. the treatment she received on capitol hill, i think she will be asked about that. she will be asked about proposals to rein in the fed. tom:brendan: a small percentage of the economists we asked said they do not think patient will be replaced with anything and is possibly being replaced with trust. peter: that would create a certain level of uncertainty and a certain level of flex ability for janet yellen. -- of flexibility for janet yellen. that would give her ultimate

flexibility. people in the marketplace might want a better idea of where she is headed. we will see. about 20% of the folks in our survey think there is no replacement. some economists think there will be some message that they are moving back to the 2% target. tom: thank you. the chief international economist at deutsche bank now president of william r rhodes global advisors and joins us this morning. the reality is, the data is tepid. is it just the weather or something that will be tangible? guests: we traded 300,000 jobs last month. that is fantastic. all other data, retail sales,

why comes to consumers and businesses, we are seeing a slowdown. tom: it is a mixed picture. this is the atlanta fed study that everyone is talking about. here is the forecast. these are people like peter hooper and torsten slok at deutsche bank. this is not pretty down here near 0%. torsten: they are scratching their heads, saying how can some data be fantastic and other data be so fantastic? why is this trend going down and how can the fed removed the word patient? olivia said there was a note out yesterday warning that a rate rise risk causing --he is worried and echoing comments

worried that if the fed does raise rates, it might do so too soon and what options do they have left? torsten: the fear we have is we are coming from a regime for the last six years. they were hunting yields everywhere and now is she going to say this regime is over and we have a regime change into a new regime change? that could be rather significant. tom: bill rhodes with us from citigroup. did you know arthur burns? . bill: he was the keynote speaker. tom: he would look at torsten slok like he was speaking german

or something. torsten: that gives her the flexibility to reach for yield. people forget that she has those concerns. brendan: i should point out the fact that torsten slok is danish, not german. bill, running the caribbean, a job i would like to have. when torsten slok talks about these businesses pulling back those are areas you spent time. is that what we should be panicked about now? bill: when you take a look at the effect of the increased

interest rates that the fed is going to have, they have done the proper structural reforms those will come out fine. many will not. brendan: do you have a list? bill: i have a very long list. mexico, being one, that has done the right thing. olivia: and brings us to another point, what extent should the fed should it be basing it on hitting the dual mandate in the u.s.? torsten: it is the argument for why they should take air out of the system hike rates, lean back, see what is going on. let's build -- let's hold back. we can wait longer to see how things play out.

tom: a lot of smart discussion on the challenges, the complexity of this 2:00 p.m. meeting. olivia: looking forward to it. what do you think -- will fed chair janet yellen lose her patientsce? we are streaming on your tablet, phone, and bloomberg.com. we will be right back. ♪

tom: good morning, everyone. a 42.05 in today. brendan: benjamin netanyahu celebrating an election victory.

he survived a tough challenge from his main rival. investors will be listening closely today. the said ray -- may remove an insurance that states it will be patients before raising interest rates. also crossing the bloomberg terminal, an envelope tentatively passing -- testing positive for cyanide never reached the white house. another scandal rocking penn state. a fraternity suspended for a year. members used facebook to post nude pictures of women asleep or passed out. the school is still emerging from the jerry sandusky abuse scandal three years ago. lance armstrong is asking the u.s. anti-doping agency to overturn his lifetime ban from cycling. earlier this week, pete rose

asked baseball to reinstate him. aaron schock of illinois is resigning. reporters spotted instances of opulent spending. tom: you dealt with this. he has been on our show. brendan: i failed to find any of this. i wrote a glowing profile talking about his fundraising prowess. i did not pull on any threads and they were there to look at. for me, this has been a lesson that we should always be suspicious. olivia: you should always vett someone's instagram account. someone found a decorator in his

office and that sort of tipped everyone off there were a few layers of the onion to peel back. look at any member of congress that is probably what we should have been doing. tom: news on mr. aaron schock. olivia: benjamin netanyahu one a clear victory. let's get out to elliott gotkine . he shocked many, reversing his position and coming out against palestinian statehood. some said it came across as desperate. is there a sense that it won him the election? elliott: certainly he managed to shore up his right-wing base in

the last way four hours of the election. he said there will be no palestinian state. a statement of the obvious some would say. that was not the most shocking thing he said. the most shocking thing was the video he posted on facebook urging people to come out and vote because there was a large arab turnout at the polls yesterday, something that has not traditionally happened, and he was worried that the arab parties would steal votes away from him. some people might see it as desperation. others may see it as a series of tactical marks. it worked. brendan: do we have a sense of what his coalition will look like and what that will mean for policy?

elliott: he has spoken with the leaders of the other right-wing parties. a view to forming some kind of coalition, certainly, it will remain as it was regarding iran. as for palestinians, netanyahu has said there is no point in peace talks resuming because there will not be a palestinian state on his watch. the mood of music is not right for that to resume. olivia: elliott gotkine thank you so much. a surprising sweep in the final moments of the campaign. the highest turnout in israel and two decades. bill rhodes still with us. what do you make of his win? bill: i have learned to never underestimate.

when he was minister of finance, i am sure tom used to run into him and he was probably the most effective minister of finance israel has ever had. there is a concern in israel about what is going on in iran. he is a great politician, a great speaker. tom: is this an israel that has moved beyond the heritage of its previous generation? bill: it is a much different country. his successor put everything the palestinians want on the table and arafat was afraid he was going to get shot and did not accept it. we have gone a long way ever since. tom: bill rhodes with us.

we will talk about greece in a moment. coming up, charles allis will join us. this is charles allis in support of the book "a force for good." ♪

tom: good morning. olivia sterns and brendan greeley with me. a morning must-read with bill rhodes. this is paul, from the london school of economics. history teaches us that a balance must be found between creditors and debtors. the unilateral approach taken in

the eurozone almost always leads to a revolt of the debtors. we need an update on greece and the banks of europe. how critical is for the banks to do a workout with greece? the banks are desperate to get some form of restructuring done. bill: the achilles hill is the greek banking system. they cannot bank on their own. they have big-time withdrawals. they are dependent on the central bank of greece and the ecb to provide those lines of credit. tom: how fragile our the secondary and tertiary banks of germany, austria, belgium? bill: most reduce their exposure tremendously to greece. greece is mesmerized in the eurozone. instead of spending more time on

ukraine, they seem highly focused, the finance minister -- i watch him and he spends more time talking about greece than what is going on in ukraine. that is symptomatic of how important greece is today in the eurozone. tom: a spread out at 10.62 percentage points. olivia: we see why the u.s. property market may not be as healthy as it looks. this is "bloomberg surveillance." we will be back in just a moment. ♪

tom: good morning. bloomberg "surveillance" on a fed day. 2:00 p.m. with the important announcement. olivia: in israel, prime minister benjamin netanyahu's fourth term. the likud party captured the most seats. he is negotiating to form a coalition. netanyahu says there are issues that must be addressed immediately. prime minister netanyahu: we are facing great challenges. i cannot elaborate on all of them but i can say we have challenges in diplomacy and security.

olivia: netanyahu's potential partners will agree on one issue. skeptical about peace talks with the palestinians. federal reserve policymakers out with a two-day meeting. the founder of the world's largest hedge fund has a warning. telling associates if the fed raises interest rates too soon it could create a market selloff similar to the one in 1937. stocks fell by more than 50%. oil heading into another bear market. west texas intermediate fell below $43 a barrel. if it closes they are it would be a 20% drop from oil's peak last month. the government is expected to report that oil stockpiles rose again. pressure on state governments that rely on oil revenues. oklahoma has frozen hiring in salaries. brendan: shares of oracle are rising even though quarterly sales missed estimates. without a stronger dollar, revenue would have been 6%

higher. the company is making headway in corporate cloud. in california regulators are imposing restrictions on water use because of a drought in its fourth year. residents can water their yard two days a week and restaurants will serve water only if requested. a story that caught the attention of nfl fans, a cincinnati bengals player has a a story thatdaughter battling cancer. scans show there is no active disease in her body. more than $19 has been raised by selling his jersey. tom: great story. the topic is greeted with thundering silence in washington, d.c. what to do about the millions underwater in housing. the market has recovered in a most unusual weight -- in way.

chief international economist at deutsche bank. this is the unsaid story. still millions of americans underwater. why is that? >> when i sit down with investors and discuss what is going on in the economy, when it comes to housing everyone says that has normalized. we are more healthy now than a long time. things are looking more stable in terms of demand and supply. the issue is that there are parts of the housing market that are not normal. we have a difference between who is underwater, those that are more expensive homes, and a small fraction is underwater, 8% nationwide. cheaper homes -- tom: what percentage? >> a third. tom: a third versus 8%. >> 30% are underwater. brendan: looking at this chart. i recommend you all subscribe to

his research notes. this chart you send not yesterday, the percentage of low rooms underwater is even higher in atlanta than detroit. forget detroit. in atlanta you have over 50% of less expensive houses. >> the housing recovery has not been benefiting everyone. there are still significant differences across regions in terms of who has been benefiting. atlanta detroit is still significant. up to 50% of the lower tier. brendan: is there any policy fixed? >> the quick answer is we want prices to go up on high end, low end and middle tier homes. if you keep interest rates low you are starting to get more low-paying jobs more middle income jobs coming back. that is why if you continue to pool in that direction you should eventually get more confidence. with consumer confidence up, confidence for everyone. olivia: presuming janet yellen

does raise interest rates sometime between june and september as the market is expecting, what impact does that have? torsten: the fear is that the fed is removing the punch bowl to quickly. some say why should we raise rates now? the debate between the hawks who say we have got to get going for stability reasons and others saying we still have a lot of time because we need to create more jobs and has more return on housing market. brendan: if people have not been able to refinance unless expensive homes in the last five years, when? what will another ear give them? torsten: an important part of this is credit availability. the banking sector needs more time before we get credit available to all homeowners. credit has been unfreezing and slowly coming down. tom: what drives me nuts, right

now our control room is chilling fabulous video of the sotheby's listing, probably in chelsea for $3 million. there is a whole american housing market that is totally ignored like 42 miles east of los angeles. torsten: it reminds us in manhattan that it is not representative of the rest of the country. tom: this is a problem among wall street and media wall street pit we are at three zip codes versus the rest of the country. bill: what counts is the rest of the country, that is what drives the decision making at the fed. tom: how do we clear the housing challenge? torsten: we need to create jobs. one thing that is amazing -- tom: we are doing that! torsten: that is why we are seeing even more jobs need to be created to catch up with the problems. it shows you the magnitude of the problems and how slow it is. bill: we've got to get wages up.

this is something janet yellen is watching. tom: do you see how he talks about her? to me, she's chair yellen. brendan: he knows everybody. we had a problem with torsten sl ok's chart earlier. we looked into housing and urban development data two years ago and found something we had not expected. new houses are trending bigger and not smaller. i would have expected with the idea around simplifying that houses are getting smaller but we are building bigger new houses. torsten: in manhattan, the story is that people are moving into smaller apartments. if you look at the census data, they are getting bigger and bigger -- the square footage is rising. particularly the last five years. in 2009 and 2010 it did go down. homes are getting bigger. the housing market is getting better but we are missing a substantial part. tom: love it.

brendan: teams are coming back to work. what that means for the economy and what it says about the minimum wage debate. this is bloomberg "surveillance" on bloomberg television. streaming on your tablet, phone, and not just manhattan bloomberg.com. ♪

tom: west texas bringing brent crude lower. leading the way this morning. $42.17. let's get to a single best chart. brandon looks at teenagers. brendan: during the recession and recovery teenagers stopped working. in the last six months we have seen increases in the number of teenagers finding a job. that is the subject of the single best chart. it also comes to torsten slok. every day i tell rachel come our charts editor that i do not like -- "smells like teen spirit," i graduated in 1992. the debate over the minimum wage. you hear from employers if you raise the minimum wage we will not be able to hire teenage

workers. what we are seeing is after a spate of state increases teenagers going back to work. torsten: this is a reflection that the labor market is getting tighter. it's tighter than what many expect. the one problem is that wages generally have been trending sideways. some of them are trending up. a year ago everything was sideways and some are now pointing up. the teenage story is clear that we are finally seeing more teenagers come out. they had been so hurt through the recovery and for session. this is good news. brendan: what does this mean for people in their mid-30's who have lower wage jobs. does this mean they are finding better employment somewhere else torsten:? during the recovery teenagers could not a job anywhere. we are getting the tail of the labor market can't in and get a good list. -- come in and get a good lift. better data across the board. brendan: does this say anything

about the minimum wage debate? torsten: despite the minimum wage being lifted, from apr economic perspective, people are finding jobs. there must be go something going on, companies can still hire with a minimum wage. brendan: what was your first job as a teenager? bill: i worked in a church digging graves. [laughter] brendan: thank you for that metaphor. olivia: tom? tom: in teenage years, i worked at an amway. i carried bags of grain and i put wheelbarrows to get it. they are taking that much out of my paycheck? olivia: what did you do? brendan: my first job was teaching sailing. olivia: oh!

tom: oh! terrible. olivia: top photos. tom: i'm all wound up about brendan's cushy life. olivia: london archaeologists uncovering a mass burial ground. the largest archaeology project in the u.k. dated from the 16th and 17th century. happens to be in the path of a new subway the crossrail come in london. archaeologists will work to excavate bodies. they will be reburied in a field east of london. tom: do you know where this is? does this have to do with the hanging areas? seriously, you know it well. olivia: i do not think it is near the tower of london. obviously london has several millennia of history beneath the ground. even when we were building the bloomberg headquarters the

project was delayed by several years because we kept digging and finding walls -- brendan: they found richard the second underneath a parking lot. olivia: that was further out. brendan: richard the third, anyway. olivia: cool. look at that. number two in ireland, a 75 foot wooden temple was constructed by burning man artist david best. the structure honor those who died in the trouble. the temple will be set on fire to release those messages of hope into the sky. tom: interesting. olivia: do you know what burning man is? tom: i have heard of it. no clue. i have no life. brendan: i would gladly underwrite the document to get tom to burning man. olivia: this is not ghostbusters. it is the aurora borealis.

it came after a massive solar flare burst earlier this week. noaa says the northern lights could be seen as far south as pennsylvania and i what. -- iowa. when charged son particles collide with the earth's magnetic field. tom: st. patrick's day green. brendan: do you know what i learned you cannot teach sailing to a husband and a wife in the same boat or you risk divorce. separate the couple. olivia: i worked at a clothing store and i learned to tell everyone that they looked great. [laughter] do you think i am too old for this? no. it works for you. tom: fabulous. olivia: we will be right back. our twitter question of the day, will fed chair janet yellen lose her patience? 2:30 p.m., right here on bloomberg television. this is bloomberg

"surveillance," streaming on your tablet, your phone, and bloomberg.com. ♪

tom: good morning. bloomberg "surveillance." in the next hour we will speak on the underlying theories or

non-theories that janet yellen faces. an important conversation with robert shiller of yale university. our top headlines. olivia: israeli prime minister benjamin netanyahu celebrating a victory. netanyahu and his party survived a challenge from isaac herzog's zionist union. the likud party entered the race trailing in most polls. investors will be listening when fed policymakers wrap up a two day meeting the fed might remove an assurance that it will be "patient" before adjusting interest rates. opening the door to increase as early as june. gay marriage getting the blessing of america's largest presbyterian denomination. leaders of the presbyterian church usa changed their definition of marriage to include same-sex couples. the church has nearly 2 million members in the u.s.. a historic arrest in what was your's -- europe's worst

civilian slaughter since world war ii p seven men have been taken into custody by serbian police. prosecutors say they murdered nearly 1000 bosnian muslims in 1995. the first to be charged with the massacre. kraft foods is recalling 6.5 milling boxes of macaroni and cheese. some boxes contain small pieces of metal. the boxes were sold in the u.s., puerto rico and parts of south america. kraft says 8 people found metal but it has no reports of injuries. internet explorer heading to history's dustbin. the browser was an internet mainstay for 20 years. being kicked to the curb by microsoft in favor of a flashier replacement codenamed project spartan. the browser will run on phones tablets and pcs and be released later this year. no love lost. tom: no love lost at all. i cannot believe you are reading that in 2015. sounds like a 2011 or 2008 new

story. olivia: i'm surprised it hung on. brendan: it was once the only browser. there were antitrust concerns. that is amazing. tom: i have gone recently to safari because even google chrome is a little glitchy on a mac. i have been forced to go to safari. olivia: tom keene's tech news. brendan: i use firefox. tom: firefox is less and less. brendan: we will move south. once not too long ago, the brazil worker party did everything right. it got me world cup and that the olympics. now, as the petrobras investigation moves its way closer and closer to dilma rousseff parts of sao paulo are running out of water. expensive to do business in brazil. bill rhodes, you are now of william r rhodes global

advisors, you have been in brazil since the cardoza government in the 1990's. after that debt restructuring, brazil had a chance to make changes, what has it failed to do in the last 15 years? bill: they have made a lot of progress. from the agreement in 1994, running for two terms of president. the next leader build a basis for the economy. he was lucky because he had a great policy. watching levy -- joaquin levy was his deputy. in the last four or five years they ignored a lot of structural reforms. so they did not reform the tax system, they did not refund the pension system. they did not have a fiscal

reform. that is coming home to hit them now. brendan: is it fair to say they had been tackling government by government problems? they created the real as a credible currency. they tackle poverty. it is the last step no one has been willing to get into corruption. bill: obviously the petrobras corruption is probably the biggest corruption scandal in the history of brazil. it is still very much unresolved. this is really holding back dilma rousseff from getting reforms she wants under the new finance ministry. brendan: let's say she has a mandate to get something done which is questionable and where should she look in latin america for an example of what needs to be happening? bill: she has examples in what was done in chile, peru and colombia. she's got to make sure that she has the workers party with her and that is a real problem. it is not clear -- tom: let me ask a dumb question.

brendan, you visit brazil last week. did they get lucky in that there was a commodities boom that made lulu look good? all of a sudden they are facing reality. brendan: i did talk to our sao paulo bureau yesterday. she said exactly that. they had a chance with the commodities super cycle to do some amazing things. when times were good, they did some very important anti-poverty work but they did not do structural changes. olivia: the anti-poverty work, funded by the commodities, it was very effective. bill: no doubt about it but they did not make structural reforms. long-overdue. tom: i talked to mohamed el-erian about this. how close is brazil to not collapse with the drama but becoming the new problem child of the global system? bill: they've got to make a lot of progress quickly.

they ought to start by solving the petrobras problem in getting support in congress from joaquin levy's reforms. two leaders of the upper and lower house are on the list of people who received bribes. bill: including the treasure of the party. brendan: structural reform is the hardest thing for any government. this is the thing nobody can tackle. torsten: we did a lot of work on trying to ask which countries do structural reform speared demand answer is countries that have a crisis. if brazil has had a downtrend in gdp growth, are we heading towards a situation where brazil is coming to some inflection or point? tom: thank you for joining us. a quiet market before janet yellen's press conference. 1.0627 on euro.

robert shiller from yale. and charlie, we talk about index funds. stay with us on the fed date bloomberg "surveillance." ♪

tom: janet yellen holds a press conference this afternoon. she will patiently answer questions on patience. in a stunning turnabout, benjamin netanyahu make promises and wind clear victory. and charles ellis and robert schiller of hill, both of them of gail, on a blank find that both of them of gyale on a blank find society. here the top headlines. olivia: netanyahu beats the odds. netanyahu has called leaders of other parties that shared his skepticism about peace talks with palestine and helps to open a coalition government in three weeks.

>> we are facing great challenges ahead. i cannot elaborate on all of them, but i we are facing challenges with both diplomacy and security. olivia: he appealed to his supporters to save the government. investors will be meeting to pay attention to what the fed does not say. on the thought that it will be patient before it raises interest rates, that will be addressed at a news conference at 2:30 p.m. eastern time. and the price of oil is falling again this morning for the seventh straight day. below $43 per barrel in early trading. new government figures are likely to put even more pressure on oil prices. all this is putting a squeeze on

states that depend on revenue from oil taxes. for example, oklahoma now freezing hiring and salaries. brendan: violent protests happening right now. protesters have burned at least seven police cars and have thrown bombs and gas. demonstrators claim the ecb for cutting programs in the euro area. facebook says it does not plan to take fees for its new messenger transaction. and david ole miss quarterback and that did not stop the pirates from beating manhattan's also -- beating manhattan's.

those are your top headlines. tom: olivia, argue oklahoma? olivia: oklahoma all the way. and kentucky. brandon: i have new hampton inn a sweetheart run all the way -- to the top. no, of course not. time: zero at 1.0624. -- the euro at 1.0624. peter cook will look beyond the theory to the announcement this afternoon. what should we expect this afternoon?

peter: economists resurveyed, as you know, expect the fed will remove the patient language from his statement and signal there is again the possibility of a rate increase as soon as june. are they really data dependent? she will have to reassure folks that june would be the first opportunity for liftoff, but not necessarily a lock from the top. -- a lock for liftoff. how she handles it will determine whether there will be the tantrum of 2013. tom: has she taken press conference 101 or the advanced course during her tenure? peter: we've seen her breast offices involved. she certainly comfortable up there. she knows -- we've seen her press conferences evolve.

she certainly comfortable up there. if she wants to articulate a message, she will have the opportunity to do that at this press conference. tom: peter cook with coverage look for that at 2 p.m. this afternoon. and smart analysis here on bloomberg television and radio. robert shiller is a professor at yale university. today, mr. ellis with landmark work with equity investment. and of course, mr. schiller is a nobel laureate in economics. if any of this in the textbooks? which textbook do you use?

charles: -- robert: there is no party line. tom: negative rates 101. robert: we are in a new regime. tom: what is the yellen regime? what is the druggie regime -- the mario draghi regime? robert: i would describe that as record lows. we had the all-time record low mortgage rate in 2012. that really focuses people's attention. we are in another world and we seem to be stuck there. it seems to be stuck with this secular stagnation story. tom: charles you have been legendary at this, including helping mr. swenson in endowments. do you have an underlying

confidence in the markets right now given the turmoil that you see in robert shiller's world? charles: that is a tough question. tom: i'm glad to hear that. charles: the market has more brilliant people that we've ever had and they have access to more information they are able to use it in a way they never have before. we have the best market players. tom: is that because we are so in -- efficient in our information that you have to give up the active edge? charles: basically, you bet. brendan: i want to point out that tom has been passing notes like we are in the great class. when we talk about the word patient, we are really talking about is forward guidance. do you trust the fed or do you

need them to tell you exactly what is going to use? is the idea forward guidance now over given the last six years of experimentation? robert: i think forward guidance was an act of segregation. that's sequestration. now they don't need it so much if we are going into a tightening phase. tom: i would go into the idea of having samuelson as a student. because of this silliness that is an act of desperation. brendan: you are so good at describing finance as a tool. is this a tool we do not need anymore with forward guidance or is it a tool that did not work echoes robert: -- did not work?

robert: there are been a lot of changes. we are living in a revolutionary times. it's very hard to be in econometrics and now -- economi trician now. olivia: how afraid should we be of the bond market? robert: we should be a little afraid. when they are close to high record prices they are more likely to go down and up. tom: charles ellis, when you look at this, do you fear a jump condition of some form? with the equity and the bond market that olivia talks about or do you have a sense of stability as we unwind from a seven year ballet that we can

blame on schiller? charles: i would blame bob for everything that is right, but not the things that are wrong. let's be clear about that. olivia: -- tom: do you believe in stability we unwind everything that we have done? charles: i believe in managed confidence. olivia: we will also have complete live coverage as the federal reserve releases its forecast for economic growth inflation, and growth. 2:30 p.m. ♪

tongue: good morning, everyone. -- john: good morning, everyone. all eyes are focused on washington. olivia: many eyes also focused on rate dalia. he made the cover of the financial times this morning. and he writes that the tightening of the fed super cycle, we don't know how much tightening will knock over the

proverbial applecart. we think it will be best for the fed to err on the side of being later and more delicate. ray dalio worried that we could tip the recession. robert: franklin delano roosevelt would not call it a depression. these out the psychology was just horrible. tom: what do you think about what the bank of japan did 50 years ago where they did raise rates? why can't we raise rates just a little bit to get off krugman zero bound? olivia: and not actually trigger -- tom: yes, why can we do that? robert: it depends on how the

market reacts and the psychology is kind of high strung right now. but isis eckley can do that. -- but i suspect we can do that. olivia: what tools does the fed have left if they turn over the applecart and rate to 1%? -- raise to 1%? robert: i suppose they could put their deal between the legs and go back. these things happen. brendan: professor how the label's history? is that economic analysis or fear mongering? robert: i hope it's not fear mongering. you have to recognize the great depression was the worst economic experience ever for this country. it's an outlier. we live in a black swan world where we worry about these outliers, so it's healthy to look at them. tom: do you agree that it's a black swan world?

charles: sure, you've got people who are very smart being a -- paying close attention to very fast-moving information. when things start to go wrong it can go very fast will stop tom -- it can go very fast. tom: and that underscores passive investing. can we spend like six hours with these guys? olivia: we've got to bail. being a force for good is what we will discuss next with our guest hosts. ♪

tom: good morning, everyone. it is a fed day. olivia and brendan are fired up from what we see at 2:00. olivia: i could barely sleep. that's why i broke up -- woke up at 3:00 a.m. benjamin netanyahu is celebrating a big election victory. they survived a challenge from

their main rival. and investors will be listening closely to the fed policy meeting. it may raise interest rate as early as june. and the secret service as an envelope tentatively testing positive for sign i'd never reached the white house. a separate screening facility intercepted it more tests are being done. i hear this did actually go through the mail and was not delivered by a drunk. and in federal court today, tyrone pugh is charged with obstructing justice. he was arrested two months ago. and members of cap a delta row used facebook to post nude pictures of women passed out or

asleep. aaron schock of illinois resigning in the middle of the fourth term. he was elected at just 24 years old, but supporters noticed numerous instances of inconsistent spending that did not appear in his account. a washington post style reporter stumbled upon the fact that he -- brendan: he is well-known for his instagram account. i wrote a glowing profile of him two years ago and failed to pull on any of these threads and figured this out. it's a lesson to all of us. olivia: do you not ask politicians how they decorate their office?

tom: i was in senator crapo's office and he had a potato on the shelf. brendan commode we'll talk more about this. i think it's important. let's continue celebration of our coverage of an important book. john chancellor's force for good. with us, robert -- john taft's "force for good." with us, robert shiller and charles ellis. charles, you have the most wall street chapter. what would you like in terms of leadership from goldman sachs on bringing good to capitalism? charles: i like what i've seen let's start right there. lloyd blankfein is one smart cookie. everyone underestimates him until they get to know him right -- quite well. he has the concept of what he must do before he retires. he has put goldman sachs back on

the right track and that a lot of things to make that happen. tom: at the heart of this in the endless conference calls you have been on is bringing compensation from revenue metrics down from the income statement to some form of profit metrics or profit ratios. are you optimistic we can achieve that? charles: i'm always optimistic. you've got to watch out for the natural bias. but i do believe we can make real progress in that direction. but it's a question of governance and that often relates to the board of trustees that have been chosen to take seriously the role of governor. tom: brendan, here is a quote for good. time will tell whether it will continue to earn the mantle of questionable leadership -- of unquestioned industry

leadership. goldman -- brendan: how do you make that happen? charles: i think any competitor is unique to itself. brendan: how do you get each company to think differently about capitalism? that is a huge lift. charles: you don't go after the whole elephant. you go after one bite at a time. it starts without you behaving your own work, and if you focus on doing a really good job -- tom: at the heart of this, olivia sterns, is the idea that corporate leadership represents a lack of exuberance. olivia: i would say it does not matter how adult any leader is in the room, but he's still a slave to the quarterly metric. robert: reading charlie chapter in this book -- reading charlie

ellis's chapter in this book, it seems like some the happened to goldman and all these firms, and that is, an emphasis on profit. before, it was we work for a great company. and then it became "i am making ," and these lives changed. are we getting back tackle -- getting back? charles: i think we are getting back. you are right, 90% of these companies, based on relationships. you really care about your clients. olivia: do bonus caps on help? charles: although zinc compound together and leadership is one

-- all those things compound together in leadership is one component. tom: john rogers will join us tomorrow in the 7:00 hour. stay with us. ♪

tom: good morning, everyone. let's go to a great chart from in shepherdson of pantheon. the unemployment rate, janet yellen became very slack key --

slacky. this is the feds game in december of three years ago december of two years ago, in december of last year. it shows that conservative bias. olivia: we will put this chart out for bloomberg radio listeners, but to be clear, the red chart is the reality and the others are the predictions. if the charles ellis world. expected optimism. brendan: the fed has an economic job to do, but also a political reality which is assuming it is overshooting, and yet it cannot overshoot. is that the way to look at it? the fed has certain targets of inflation and unemployment. politically, it's very hard to get above that 2%, for example. robert: it does seem very hard.

the question is, should they be more aggressive? tom: if you look at bernanke or anna schwartz, or timberlake and the georgia school, can they get out front with the crystal ball? i see no evidence of that. robert: and they also have to worry about long-term expectations. they could overshoot it. this is what you are getting at. tom: the expectations game of robert lucas and others, is that destroyed with the financial crisis? robert: robert lucas is a brilliant mathematical theorist who is thinking long-term. he does not even want to think about the short-term decisions. he wants to think about what would happen if the fed adopted a policy rule and followed it instantly over the centuries. this is lucas type thinking.

olivia: to your point about the timeliness of the metric, this is why the fed is looking at revising the basket through which it measures inflation because it tells you it's not a great indicator of what is happening. tom: absolutely. let's get to the headlines. olivia: benjamin netanyahu's fourth term. his likud party capture the most seats in yesterday's votes:. he said there are issues that must be addressed immediately. benjamin netanyahu: we are facing great challenges ahead. i cannot elaborate on all of them, but i can say with certainty that we have in both diplomacy and security. olivia: the coalition will agree on at least one issue they are all skeptical that peace talks with the palestinians. and investors are waiting to hear what federal reserve policymakers are saying about interest rates when they wrap up

their median this afternoon. and ray dalio says if the fed raises interest rates to fast, it could create a market selloff similar to what we saw in 1937. stocks fell by more than 50% in the following year after the fed raised rates. and trading -- oil trading at $42 per barrel in early trading. u.s. oil stockpiles rose once again. those are already at a 30 year high even though energy producers have been doing rick out of our wheel fields. -- have been pulling rigs out of oil fields. brendan: oracle says without the stronger dollar, revenue would have been 6% higher. a drought in california is entering its fourth year and that is wanting regulators to them pose more restrictions on water use. residents can water there yards

only two days a week and restaurants conserve water only if a customer asks for it stop -- asks for it. and an update on an nfl player's daughter. cincinnati bengals player devonte still has a four-year-old daughter who is battling cancer. scans report there is no active disease in her body. they are still waiting for tests. more than $1 million has been raised for cancer research. tom: let's get a dated check if we can. oil front and center. futures are negative nine. 1.90 nine is different than 2.00%. crude oil down to 42.21.

down 2.9%. and $11 spread call between brent and texas -- west texas intermediate. gold was weaker, but advances a little bit. good morning, everyone. this is bloomberg surveillance. with me, olivia sterns and brendan greeley. olivia: a stunning sweep for prime minister netanyahu winning an unexpectedly clear victory. elliott gotkine is standing by. in the final 24 hours before the vote netanyahu shocked many, reversing his earlier position coming out formally against palestinian statehood. he did win that election, though. elliott: he did, and i think he did one better or one worse depending on your perspective when he talked about the big

turnout among arab voters, 1/5 of the israeli population, and encouraged people to come out to vote. because otherwise, those that represent the air of voters would get so many seeds that they would usher in a left-wing government. it was like a boxing match. he landed a couple of punches perhaps, below the world. -- below the belt. he will get to choose a government coalition and in all likelihood get the third straight victory and be prime minister for the fourth time. olivia: elliott gotkine, thank you. joining us live from a very windy shot in tel aviv. i was shocked by this. going into this the polls show the netanyahu was actually behind the zionist union group.

brendan: and this desperate gambit works because if you do that at the last minute and then you win, you have a mandate. tom: how does it change for him 30 years -- 30 days from now? olivia: the zionist party had been doing very well talking about the and affordability of housing. prime minister netanyahu came to the u.s. and made that joint reach to congress -- joint speech to congress, joint session. tom: more on this through the day across all of bloomberg digital. charles ellis and robert shiller are with us. it is a long way from the speeds of another time and place. how does the news flow and the news crunch effect investing today? if robert schiller wrote his behavioral economics now with

this news flow, it would be different from the iconic books and papers we saw 30 years ago. charles: sure, and it's faster information. tom: smarter? charles: maybe smarter, but faster reaction. the speed is the most amazing part. tom: and the cyprus blowup that we saw two years ago, and i think of the head of the central bank in cyprus. we talk about the world -- the word toolbox. it's a lot harder now with this geopolitical ballet we are all dealing with day to day. robert: the big, broad issue is the rise of nationalism in the world. we have putin most notably. tom: do you know where he was. robert: i don't know where he

was. how would i know? olivia: it's interesting to see this playing out in greece and spain, including england. a rate hike too soon could cause global instability. do you think that janet yellen has the monetary responsibility to make decisions for the global economy? robert: it seems. what is margaret rome -- mario draghi doing? he is repeating our quantitative easing. tom: christine lagarde says the u.s. is the central banker of the world. do you agree that janet yellen is the central banker of the world right now? robert: i was it is a bit of an overstatement. but psychologically the u.s. is the hope of the world. it has the finest new technology

ahead of this fracking business. things are happening here and it's looking all right. tom: bob schiller and charles ellis with us. olivia: we should have asked if janet yellen will lose her patience. ♪

tom: good morning, everyone. it is fed day at 2 p.m. this afternoon. mr. crumpton will make you smarter. peter cook will be there as well. here is brendan greeley. brendan: this morning, i read a columnist based in tokyo who wrote that the doj should be based on wages, not inflation. robert shiller, this is what is supposed to happen when you ease that it creates wage inflation. it's been fascinating. in japan, he saw this coming a month ago and he talked to industrials, saying to be prepared to give wage hikes and then they did not do it. is there any kind of what that

you can hold over a company to force them to do that as the central bank or? -- as the central banker? robert: this is the problem japan has had for many years. should we blame kuroda? should we blame the japanese government? it is a sticky problem and it's hard to make things happen. tom: so many of the charts showing anglo-saxon comfort with capitalism. can you block in another theater -- another theory or export that to any other nation? lipstick on nigeria. olivia: i like the -- let's pick on nigeria. olivia: i like the dot that you pick there.

robert: he brought a locomotive to japan. tom: but can we do that with abenomics? robert: we did not invent abenomics. tom: ben bernanke spoke about it with his inflation speech in tokyo. brendan: he proposes to tools for corona at the bank of japan for someone is, using a bully pulpit, saying, i have done this for waging creation -- for wage gains. the other is that you can do some programming with the companies to get them to do that. if a valid tool? -- is that a valid tool? rubber, i suppose so. it's a kind of moral leadership. corona has downplayed that. as someone who is in a position of authority who has a moral

purpose something to do with fairness and equity for everyone, that is not in our models. brendan: should it? robert: i think it is underestimated. the power of a central bank chair is very much the power of -- you call it the bully pulpit. a get back to, what is goldman sachs about? what he says matters. olivia: we will discuss whether you are saving enough for retirement when we come back. ♪

tom: good morning, everyone. well, watching it carefully, a bit of a bounce, $42, $43. olivia: netanyahu is surviving a big election victory. the likud party capture the most seats in the yesterday's election. they entered the election trailing in most opinion polls. policymakers at the fed wrap up a two-day meeting. there could be an increase in rates as early as june. also gay marriage is getting the blessing of the largest

presbyterian congregation. they change their definition of marriage to include same-sex couples. the church is nearly -- the church has nearly 2 million members in the united states. and recalling boxes of macaroni and cheese. some contain small pieces of metal. they were sold in the u.s. puerto rico, and parts of south america. eight people have found metal in the product. the company says it has no reports of injury. and another disgraced sports icon is seeking forgiveness. lance armstrong is asking the u.s. anti-doping agency to overturn his lifetime ban from cycling full to compete in triathlons. earlier this week, pete rose as for reinstatement. and an internet made it for almost 20 years is being kicked to the curb by microsoft.

the new browser will run on phones, tablets, and pcs. it will be released later on this year. no love lost for internet explorer. tom: brendan greeley, this is a pure wheelhouse. quoted earlier today by martin wolf. martin wolf with the quote of the day. brendan: you tell that to your friends. i will turn the subject to janet yellen. about half of all american workers are unable to maintain their standard of living in retirement. charles ellis wrote about this in his career proving that money managers don't know what they are doing. charles: wait a minute. i proved that money managers were so good at what they're doing that they had perfected it and there is no point anyone

else trying to do better than they are doing now. active management has sold itself into an oblivion. brendan: lets sit with that for a second and figure out what to do for our golden years. thank you for that correction. the most common way that has been suggested to fix this problem is that we simply need to put away more money. is it that simple? charles: no, not that simple, but it is correct. we do need to save more. we have a huge change in our society that is quiet and nobody else notice it. or when all of us used to go out to get a tan and -- remember when all of us used to go out to attend and now we go to the skin doctor? long-term troubles do exist. this is one that is a long-term trouble. we switch to find benefits, pension funds to 401(k) plans.

brendan: americans who have access to a savings plan through either a benefit or a defined contribution, both are down. it's not just the shift to define contributions. is that people are not saving through work anymore. charles: that is correct. tom: this goes back to the retirement income security act of 1974. bring that chart up. for those on radio, basically we are not really doing retirement. is the risk of 74 a failure? we do a revolution in retirement and boston college is saying this is not working out. 80% of people are underfunded. has it been a failure? charles: you cannot look at anyone and say that is the one but there are at least half a dozen different changes. tom cole and who is going to be the adult of the room that solves the american retirement

system? charles: now we have decided is going to be the president of the united states, and he's right it is a grievous problem that will do harm to america. olivia: to what extent is the problem just the asia retirement? with social security was set at 65, life expectancy was about 10 years from that. tom: the most upset i've ever seen bill dudley, now with the new york fed, bob schiller, was over this question of the age of retirement. he said, most of society cannot work until they are 73. their bodies wear out. what do we do about this economy a successful people who never want to retire, including me and everyone else's bodies wear out at whatever age? robert: you have to recognize that everyone is different. northey -- healthy people don't want to retire. the solution cannot be for the

whole country to save more. because we already have zero interest rates in real terms. if everyone tries to save more it will just reduce the aggregate demand and put us back into recession. but i think, increasing the years of work is a different solution and it's more effective at a national level. tom: here's a great solution. schiller agrees with stearns. brendan: i'm just looking at the fact that tom keene is never going to retire. olivia, you do what you want. tamil and we have an orange casket outside bloomberg radio. olivia: i think this is a good time to move on. let's look at the agenda and the story saving the day. tom: iris the -- i refuse to believe that senate fisher is

the most important person in the room today at the fed. international matters, you brought this up earlier. they will never mention oil, but there it is $42.50 per barrel. brendan: obama is in cleveland talking today about "middle class economics." i don't know quite yet what that means, but i'm curious to see how he reframes it. we were already talking about the pulse abilities of moral leadership and change in the wake think about things and how it can have an economic effect. olivia: and on my agenda, the fed at 2:30 p.m. special coverage on bloomberg television. we want to see whether or not she dropped the word "patien ce" and whether or not she sees any indication of inflation. appropriate that we are showing a picture of janet yellen sitting next to christine

lagarde, head of the imf, who yesterday was sounding the alarm that a janet yellen raises rates too soon it could cause mobile and stability. tom: drew madison joining us on radio in a minute. between medicine and lagarde that establishes that debate. olivia: a nice segue to our twitter question of the day. we asked you will fed chair janet yellen lose her patients ♪ ♪ -- lose her patience? robert shiller, is that we mean by having fear of the bond markets? robert: we had negative inflation for a full year. there is this fear about a major

correction in the bond market. i think she will be very cool. olivia: that actually is a perfect segue. the third and final answer, she simply cannot. economic data is not looking good but on the other hand current economic models aren't working anymore. tom: he goes back to the models that -- it goes back to the models that we work with. it's about models. we are in a new territory this afternoon at 2:30 p.m. charles: sure, where's your new model? you don't have a model if it is not robust enough to crank through a model to come out with a useful answer. olivia: but it's not 1937 again. charles: no. brendan: i'm not sure about that. tom: we would be honored to have both of you back.

olivia: schiller agrees with stearns. tom: don't forget, this afternoon, janet yellen in her press conference on bloomberg television. we say good morning. ♪

betty: good morning. we are live from world headquarters. you're in the loop and i'm betty liu. we have a great show lined up

for you on this that day. first, we will bring you the fed decision live at 2:30 p.m. this afternoon, as well as janet yellen news conference at 2:30 p.m. eastern time. first, we will your the senate side of the budget. what won't they accept from the house version? will be joined by republican congressman tom cole of oklahoma. he is a member of the house budget committee. and also upgraded the world to 5g and why hans vestberg is out to stop apple. johny hendricks, the founder of discovery joined us in just a few moments. here's a look at our top stories this morning. benjamin netanyahu is in a strong position to ask and his lengthy role -- to extend his lengthy rule in israel.