from bloomberg world headquarters in new york, good morning. i am betty liu. here is a we are watching. we are a half hour into the trading session and stocks are joining the global rebound in stock markets after china's latest numbers supporting views of a stabilizing economy. and what do policymakers think about the rates? we will hear from former treasury secretary larry summers robertlas fed president kaplan. i will be talking to the ceo of pharmaceutical giant eli lilly on drug price hikes and research on break to treatments for diabetes and alzheimer's. a lot in the pipeline. we are about a half hour into the trading session. julie hyman has the latest. right nowlooks calm

in the market, but we have the inventory report coming up in a half hour. julie: it looks like another volatile day, but it is in a tight range. we are not seeing run away moves. slightly higher for the averages. investors are pausing to take stock here. we are getting into the earnings season. that is something they are assessing. it seems there is a little bit of reassurance on the china fund. there is still a lot of unknown. investors are taking a pause. if you look at the s&p year to date, with small gains today, we are still down 5% year to date. investors are trying to assess where the value is in this market. if you look at the u.s. stock market versus other asset classes, other markets around the globe, what is the most attractive? k, to at my bloomberg terminal, looking at the forward price to earnings ratio.

it has come down, considerably lower, even, than where we saw it in the selloff in august and september, in fact, is that a lowest since october, 2014. that is something to consider -- the price-to-earnings ratio. betty: also helping to support the market, oil prices. julie: indeed, which is ironic. , upprices are getting a bid 3.5% had bouncing back. yesterday we heard jeff gun lock say we had reached a short-term technical bottom. we are seeing a bounce that could change with the inventories number that i will bring to you in about a half-hour. the big cap oil companies are changing -- exxon, chevron, comical phillips, all seen a lift on the downside. -- conoco phillips, all seen a lift on the downside. disney,ia stocks,

saying downward pressure, counterbalancing some of the gains we see. betty: thank you. julie hyman. less checking on first word news with vonnie quinn. ie: vice president joe biden says an apology was not given nor needed after two u.s. both drifted into iranian waters. the u.s. and iran said one of oats biden said the incident was handled in a routine way. vice president biden: there was no apology, nothing to apologize for when you had a problem with the the you apologizeboat? anre was no looking for apology. it was a standard process. calle: it is too close to in iowa. senator ted cruz leads donald trump 25% to 32% according to the latest bloomberg politics

and des moines register poll. the lead is within the margin of error. bernie sanders is now outspending hillary clinton. media trackers say the vermont senator spent $4.7 million on a ds in the past three weeks, about $1 million more than mrs. clinton. polls show the democratic race tightening at the iowa caucuses in the new hampshire primary draw closer. a decade of sections on he ran might come to an end by monday. the iaea is expected to report iran has met its commitments under the new nuclear accord with world powers. once sanctions are lifted, he ran would get access -- iran asld get access to as much $550 million in cash frozen and overseas accounts and it can sell more oil on the world markets. global news powered by our 2400 journalists and 150 news bureaus

around the world. i am vonnie quinn. betty: thank you. now, the china-fueled volatility appears to be easing today, but the question he makes -- is all the turbulence we have been experiencing just a temporary phenomenon? weight in during an exposing interview with michael mckee. mr. kaplan: so, as a monetary policy maker, you have to watch these market moves, but you have to realize they may or may not reflect what is going on in the underlying economy in the united states. betty: well, joining us now with a view from newport beach is mihir worah from pimco. he helps to comanage the total return fund, which beat 87% of its peers. great to have you with us on our program. you just heard the dallas fed president saying that the markets may or may not reflect

economic fundamentals. do they, or do they not? mr. -- mr. worah: good morning, betty. right now, there is uncertainty around what the fed is likely to do. will it hike a couple of more times, four more times, and boc is doing.he e there is some uncertainty. we do think u.s. continue to grow at a healthy pace of 2% to 2.5 percent, and that is fine, but clearly the market is unsettled right now. betty: so, have they been exaggerating or over-exaggerating the concerns -- or do you feel the markets are accurately reflecting the uncertainty you just described? mr. worah: markets sometimes tend to overreact. and at pimco, we

did expect ather volatile year for 2016. a key factor is the fed, as the fed starts to hike rates were the first time in nine years. that feeds some uncertainty into the market here along with the fed hiking is the fact that valuations across many markets are fairly healthy. betty: right. mr. worah: as prices have been pushed up by low interest rate. the market is reacting to this uncertainty. while it is more than we expected, we expect a volatile 2016. betty: all right, and that leads to your expectations for the fed to do what? mr. worah: the market is pricing the fed will hike two more times in 2016. the fed itself says it might hike four times. we think the solution is summer in the middle. we do think one of the surprises in 2016 will be stability in inflation and oil prices. so, as inflation stabilizes and expectations can stabilize, we think the fed could hike more than the market is expecting. i am glad you mentioned

energy. i know back in 2015 you were largely able to escape or avoidance some of this energy turmoil that we have seen. dlach of, jeffrey gun double line talked about the dollar in his webcast and i want to play what he played -- set about that. dlach: the rally in the dollar has happened in the dollar falling could be consistent with oil going up. i am not saying it is going to some huge number, but it might short-termrom the bottom, it might go up to $45. even that number is not enough to save the energy market from some of the troubles that it is having. hir, i hate to pit you against your competitor,

but is there some agreement on oil prices? mr. worah: i think there is agreement that oil prices might be near the bottom. we based analysis on a year from today -- not short-term, but a year from today you can see oil prices in the high-50's, low-60's, not just in the 40's. betty: ok. that would be, at least from a different path than what we have seen with oil prices. given that, would you be playing in the energy patch this year? mr. worah: not yet, and the reason for that is while we expect an oil price recovery, obviously there are risks around the view and there are better ways to position for recovery in oil prices rather than playing in the energy patch. some simple ways are just by buying crude oil futures all right. if oil prices do nothing, you do not lose any money, you do not make any money. to buy way is inflation-related securities, like inflation-linked bonds, where if oil prices go up, you benefit, but if you are wrong, and oil prices do nothing or go

down, you do not lose as much. on the other hand, in the energy patch, on the bond market or the equity market, if you are right, and oil prices go up to the 50's and 60's, you could do well, but if you are wrong, there is a lot of risk that companies could go bankrupt and default. i think are better ways to position oil recovery than the energy patch today. betty: are you doing that right now in your portfolio? mr. worah: yes. some of the things we are doing -- one of the things is many in the portfolio that can trade commodities and crude oil -- we have had bearish positions and we're starting to take those off and put on neutral or slightly bullish positions. the other is inflation-linked bonds, or we think the market is 2016ng 1% inflation for people with inflation is going to be closer to 2%, so we are positioning ourselves in that sector as well. before we go, tell us the

one asset that you are not bullish on it all or that you would not play this year. mr. worah: probably -- you know, goodi said, valuations are across many markets, but we expect low returns. we see the possibility that high-yield bonds outperformed the s&p. in terms of what i do not like, i still do not like gold. gold has sold off by 10% to 12% this year. we think it could sell off more this year. as interest rates rise, people realize there is no point holding an asset that gives you no coupon, no income, and very insight. betty: thank you. thank you for joining us, mihir worah, joining us from newport beach, california. still ahead on bluebird television, president obama is not on the ballot this november, but did he succeed in laying out a democratic roadmap in his

final state of the union last night? what are the voters saying, and why hillary clinton appears to be losing her lead to bernie sanders. much more ahead. ♪

good morning, and welcome back to bloomberg markets. we have some breaking news on a stock that has been extremely volatile lately. sun edison. we have breaking news on this. julie hyman has more. julie: sun-itis and has been volatile, and now reuters -- sun edison has been volatile, and reuters is reporting there is a suit over a deal to buy vitamin solar. sun edison has a complicated

structure which has a couple of affiliates publicly traded, and it is one of those affiliates buying vivant. the structure has come under scrutiny, and now, again, is being sued by help a loser. you can see the shares are down, but the stock -- chart looks unusual with these straight lines because it has been halted several times over volatility. remember, if the stock drops too far, too quickly, it gets automatically halted, and that is what has been going on. gotten a lot of negative commentary as of late has well over this capital structure we are talking about. i will bring you more details when we get them -- details on this suit, and exactly what it is about. right now it is reuters reporting it, and we will let you know. isty: it looks like the link .ppaloosa is a 10% holder

vivant is the company name. vivant and i think appaloosa had been an investor in sonatas in itself. betty: thank you, julie hyman. let's turn to politics. president obama drawing stark contrast with republican frontrunners, with the president admitting rank or and suspicion has grown -- rancor and suspicion has grown among canada's. he did not mention donald trump by name, but the president took aim. president obama: the united now,s of america, right has the strongest, most durable economy in the world. anyone claiming that america's economy is in decline is peddling fiction. here on set with me is bloomberg's washington bureau chief megan murphy.

did he carve a path for the democrats? a policy did not carve platform. what he was trying to do was set up a tonal difference -- we are the party of optimism, hope, change, the future, whereas republicans are the path, -- past, particularly donald trump, though he did not mention him by name. the thing with the speech, it was very partisan. i think it plays well to people who like president obama. it certainly was not going to play well to people who do not like him and on foreign policy in particular, i think he set himself up for some unnecessary political challenges. betty: let's look at some polls. the bloomberg politics-iowa-register poll say crews and trump are not and neck. megan: it is tight, hard to predict.

people need to realize how important this is in terms of how the race plays out. if ted cruz takes i will come as on to newt, he goes hampshire, unlikely to win, but takes strength and momentum, and moves on to south carolina. if trump wins iowa -- he has huge lead in new hampshire -- although, of course, pulling has always been -- if he wins in iowa, he takes huge momentum, which fundamentally changes the nature of the race. it is all about iowa. betty: it is, and on the national front, clinton has an 8% lead, but that is 20 percentage points lower. it is extraordinary how the race

has changed. resonating with the base. she is having trouble getting people to support her in terms of the amount of support among the sort of passion that goes behind her. he is winning on that. he thought he lost some steam. now it is picking up. we will talk to the ceo of eli they to ask him how alzheimer drug might be different. also, inventory numbers on oil. that is at the bottom of the hour. ♪

well, shares of eli lilly today, are hovering near the unchanged level this morning, giving back gains in the market. franciscoaker in san at the jpmorgan health care conference. has an ambitious slate

of drug launches including andtments for psoriasis heart disease. i want to bring in eli lilly john lechleiter. good to see you. it has been a while. on investors minds, and from the reports we have been seeing, how you will get growth rates higher for the industry, where some are growing at double digits in terms of sales. : keep in mind, that he, in 2014, we lost the patents on serious products, and up fromorking ourselves that trough. we promised investors we would return to growth, which we have, and we continue to expand markets. oure explained during

guidance call, when you take out the impact of rate, the dollar strengthening against so many other currencies, and you also take out a one-time again we had in a security that we owned last year and sold, then our underlying eps growth rate between 2015 and 2016 is between 50% and 20%. so, i think investors understand that, and in fact, even though on the guidance they we did not meet our expectations, the stock did not take a hit. onty: i know a lot depends the pipeline, the eli lilly pipeline. i want to talk about the alzheimer's treatment. ceoad the biogenic yesterday we talked about their own trials on expendable treatments for alzheimer's. it --itical is experimental treatments for all timers. how critical is it that you have success, and what if the program underperforms -- how critical is for eli lilly?

mr. lechleiter: one significant accompaniment is data on our psoriasis drug, positive outcome data for our diabetes drug. i think investors see eli lilly has more than a one-trick pony. it is not all writing on alzheimer's. having said that, we have the most extensive investment in alzheimer's than anyone in the industry. phase-three drug. we should get a read on that study by the end of the year. as we explained to investors last year, we have many molecules behind that that work target, anda boyd also on another culprit in alzheimer's disease. betty: john, i know you sell your drugs all over the world. i am curious if what is going on in china will have an impact on you. mr. lechleiter: our exposure in china is fairly limited. although our business had been

growing quite robustly until last year, when i think things slowed down for everyone, we take a very long-term view of china. it will be an important market, elieat source of talent for lilly in the future. we have a resource center, manufacturing in china. i think there will be ups and downs. things have slowed. i think our commitment and the focus we are taking has not changed. and justl right, john, before we go, we have been talking about this with various health care ceo's -- drug pricing, a hot-button issue in the election cycle. should drug companies be more transparent about how and why they are raising drug prices, and where that money goes? mr. lechleiter: well, i think it depends on how you define transparency. obviously, there are assets -- aspects of discounts we provide on many or most of our products

that remain proprietary between us and the other party we are negotiating with. you know, i think we need to be clear that what is expensive is disease, ok disease, ok? remains a fraction of what we spend on health care. costs ineed to control health care. we think medicine can help do that by lowering costs elsewhere in the system, and i think that is the approach we need to continue to take. betty: john, thank you. john lechleiter, the chairman and ceo of eli lilly. we will be back with the oil numbers. ♪

betty: live from the headquarters in midtown manhattan, you're watching bloomberg television. oil inventory numbers are just

moments away. we have been watching these over the last few months. fallingh yesterday, wti below $30 a barrel, we expect a buildup in inventory over 2 million. .ulie hyman has the data 234,000 -- 2 in at million barrels was what the inventory number was estimated. in oklahoma specifically, because that is the big hop. 97,000, the increase, 6000 was estimated. gasoline,n barrels of 2 million barrels was estimated. front,news on the crude

not as much on the refined products front. why we are seeing a potential drop-off in oil prices, because if there is a buildup in the refined products, but eventually, there could be a backup in crude as well. we are seeing oils come off the highs pretty rapidly, it does usually take a little bit of time for traders to assess the numbers. we have watched oil stocks go higher, helping support the gains overall. if you look at the oil majors, we are seeing them hold on to their game. stocks are now turning negative as we see oil come up high for the day. take a a chart up there, look at my terminal, i have a chart of the s&p. a leg down and this is the positive/negative line. this is moving in tandem with

oil. on has had a terrible month top of a terrible couple of years. we have seen sharp declines and down 16% over the past month. let's take a check on the refiners because of that idea of the bill in the refined products -- build in the refined products. they were declining going into this report and they are continuing. betty: we have been losing all those gains in the stock markets ahead of these numbers. now, more of a leg down. julie hyman at the breaking news desk. to more reaction, i want bring in the bloomberg intelligence oil and gas analyst. we had some numbers came out yesterday from api with suggested we had a much bigger drawdown in inventory.

haveg that storage levels even built is a big -- a bit shocking to markets. nasa volatility around these numbers, it is a guessing game. are suggesting a drawdown of 3.9 million barrels. a builds is suggesting of 2 million barrels. you can drive a truck through both of those estimates. betty: why are they so wide? peter: it is a function of who is providing the estimates. consensus numbers tend to be economists. betty: they will disagree. we saw that play out. we seem safer at the moment, oil prices are dipping lower, but they seem to have stabilized. let's see if this last. you can call oil hovering around $30 stabilizing.

are reaching almost record levels and there is a fear in the marketplace of storage capacity. next one or two months, stores continue to build, there is a fear that you might hit the top of the tank. betty: what would happen? peter: there is still capacity available on the gulf coast. you may see a positive side, a widening of the spread between -- if you see that spread actually widen, it is a positive sign meeting a potential to move inventory from cushing to the gulf coast where they have more space. -- how thispeople's all ends is predicated on what happens to the u.s. oil producer. they seem to be the target of opec and saudi arabia. big oil producers was

on this morning and i want you to hear what he said about oil prices. have our own estimates of what that will be in the future and i have said, we are looking at six to dollar prices toward the end of the year. -- $60 prices toward the end of the year. ][laughter] peter: wall street analysts have analyzed what the expectations meeting by opec and they expect oil prices to be $57. predicting were oil prices are going to be has been a losing game and in 2016, we are likely to see a lot of volatility. $60 is a lot of wishful thinking. how this i right that plays out is what happens to the oil producers in the u.s.? peter: yespeter:.

-- peter: yes. 9.6eak, shell produces million barrels a day. given thet a lot current prices and recount and the degree to which that comes off and the u.s. becomes what people are calling this producer will kind of dictate where pricing actually goes. people are wondering where will that in balance close? right now the imbalance in global supply and demand is 1.3 million barrels. where's the rest coming from? that is what 2016 is going to be about as the market trust that the route those answers. betty: that is like the word of 2016 so far, volatility. thank you so much. oil, bruce flat sat down with bloomberg anchor eric chapter in a sitdown.

we posed the question, is now a good time to put money into a cheap oil market? >> now is a good time to be putting money to work in and around oil in the low 30's. >> our infrastructure business is owning the backbone of the global economy. we own ports, we own rail lines, ,rand terminals, pipelines electricity transmission systems. all of those things are around the commodity business. companies in the commodity business need capital today in our capital is available to harvest assets which are unproductive to the mainline business. more often, they keep those balances on their sheet because

--se assets were essentially they are unnecessary and we can take them off the balance sheet and provide them significant amounts of capital to put back into the corporations. when they had lots of money, they did not have to do that. all the commodity companies are looking for capital. to get people have tried into industries and businesses around oil and gas over the past few months and have found themselves -- that they try to catch a falling knife. >> we bought a oil and gas business in western australia, the apache operations. they sold to us about nine months ago. we hashed all the gas and oil, going forward for a long time. -- what we are trying to do is earn a conservative return, a decent amount over a long period of time.

investment,nto an we are always trying to protect the downside. foremost, we think about downside protection and we think about how much return we can earn for the clients. >> do you worry about oil prices and the impact it will have on your company? edges, calgary and houston and the portfolio, leasing is not as rose -- as robust as it was three years ago. our commodity infrastructure businesses are not as good as they were a few years ago. -- but itportunity creates opportunity. and i think there is more opportunity coming than the issues it brings for us. >> commodities are volatile and

that does not mean they always go down. at the top, we never think they will ever go down, but they always do. everyone of these commodities will be -- if they are low today, they will be a higher price. >> how can you be so sure? >> supply and demand. when oil cells or natural gas cells at what -- sells or natural gas sells at less than -- thet to replace is, price will go up because you will have to on a new build, you will have to spend it. gasp rick nash -- natural out of the ground for two dollars forever. betty: that was the ceo of brookfield asset management. we will hear what former secretary of treasury eric summers is saying.

that is after the break on bloomberg markets. ♪

betty: welcome back, this is bloomberg markets. let's get to the first word news. -- you won't be seeing any north korean delegations. north korea has been uninvited. after their nuclear test last week, it was decided there would be no opportunity for a global dialogue. next in officials say they are moving el chapo from cell to to --ow that he is back

back in the prison he escaped from in july. the cell from which he escaped in july did have a blind spot near the shower. time in more than two decades, los angeles will have a team in the nfl. owners voted to let the st. louis rams returned to a lead. they will move into a new stadium costing almost $2 billion. the san diego chargers have been given one year to work out a deal. if they don't move, the oakland raiders might. betty: now for a look at the u.s. markets as we have been taking this leg+++

abigail doolittle is live from the nasdaq were you have the latest on two big tech companies. >> it is a bumpy day at the nasdaq, but the top point is trading higher and that is microsoft. shares are trading up after morgan stanley raised its rating. keith white also boosted his price target to $66, suggesting the stock in trade higher by nearly 20% from current levels. is based on the idea that earnings to put a cell array on the cloud and it's durable office franchise. 's new price target suggests this stock could crack its old record high of about $60 set all the way back in 19 -- in 1999. this is another stock that has been trading higher, mainly flirting with the iphone in china, the government and analysts are estimating that the perhaps by 33% in the last quarter in china. it goes against the grain, if so. the stock has recently taken a

dive, but has been finding support. will that support hold? betty: thank you. larry summers is selling policymakers to heed fears of the financial markets. before the -- the former u.s. treasury secretary elaborated on bloomberg . mistakeymakers make a when they ignore markets. they are often driven by psychology and technicals. they also have a very important canary in a coal mine. markets aggregate large numbers of people's views because they are fundamental purpose that is to judge the future where as economic statistics look to the past. in forming a balanced view, you have to give weight to what is happening in markets and when you look at the long-standing

judgments in markets, -- if you will get indexed bond markets anywhere, inflation isn't going to get up to the 2% level over the next decade, let alone the next several years. you look at the low real interest rate that markets are predicting, then you look at the sites of apprehension that are surely coming out of global commodity markets, that are coming out of the stock market, they are manifesting in markets in china, you have to regard the situation as one where risk is substantially tilted to the downside. that is the perspective that policymakers around the world need to have, especially in light of the reality that there is less ammunition stored up now that there is at most moments because interest rates have

already been brought so low and central bank balance sheets have already been substantially expanded. i think it is a moment for apprehension and for planning with respect to problems that could very well come. david: in your writing, you said that regulators should hope the best but prepare for the worst. you also talked about secular stagnation. unpack what you just said. i could the fx markets, commodities, one of the specific things that are making you the most worried -- what are the specific things that are making you the most worried? >> we have a chronic excess of saving overinvestment. saving over investment. that is leading to deflationary pressure. that is leading everyplace to want to have a trade surplus and

a capital outflow. the one thing that cannot happen is that every place in the world gets to run a trade surplus and gets to have a more competitive currency. economycular, the world is writing very heavily on -- is writing -- is riding very heavily on the u.s. our economy is not without its own fragility. there are many people that believe fourth-quarter growth will fall below 1%. i have been encouraged, and i think it's the brightest spot there is, by the u.s. employment picture which was very robust last month. robustness was not enough to produce meaningful wage increases. i think the right posture is

being readied, -- being ready, aggressively to respond to fiscal policy and being preventive with respect to a slowdown as the dominant policy priority, rather than being preemptive with respect to an overheating that given the global context, seems to be very far away. >> i've here at the td ameritrade offices.

betty: quest diagnostics dominates the medical lab testing business. they face competition from an to put that wants traditional testing companies out of business by making lab work easier using blood from a , rather thannger the current need for test tubes of blood.

let's bring in quest diagnostics president and ceo who joins us live in san francisco. good to see you, this morning. i'm sure a lot of people are asking about the overall lead testing industry. it has been you and labcorp. that needs toany be updated with more innovation? >> this industry is at the center of health care. we are the leader in it. people don't understand is a small fraction of health care costs, but we represent about 70% of health care decision-making. we are the world's largest laboratory, but what we are in the business of is what we described as diagnostic and mission services. andar as information innovation, we put a lot of our

resources into making sure we serve up the right in the nation the right way with the right partners to provide better access and better information for physicians and caregivers making decisions in health care every day. betty: in terms of getting the information from the source, which is the bloodwork and this is what the upstart is targeting, should that be updated? is it about time we update that technology? >> we have been updating it all along. we have an application we provide to doctors and hospitals that allows them to enter orders to us and we bring results back to them. we interface with all the electronic medical records available, including the big homegrownnd the small ones. but we have done this year is brought a new application to the market.

can get access to the blood results as soon as they are available. we have about 2 million subscribers already getting access to the blood result tests as we speak. we brought a lot of innovation to the marketplace. betty: let me point blank ask about the start up. do you believe in their technology, or is it a pipe dream? that easy answer their questions about what they have or don't have is a company, what i've shared about them is what i like about the dialogue we have had and it's around diagnostics, the dialogue is making sure that people get good access to diagnostics, making sure they are -- there is convenience in that access and that they get those results when and how they want that information. finally, offering those diagnostics at affordable prices. we have been hard at work at

qwest in delivering all of those aspects of what we need to do in this industry. do you trust their results as they stand or do you believe the fda needs to get involved? >> the fda is looking at what they need to do to potentially regulate our industry. sharedndustry, we have publicly that we do not believe they have the regulatory authority to regulate laboratories. we are trying to understand how this dialogue will continue with the fda, but we are regulated by an organization that provides oversight to laboratories. betty: thank you so much. ♪ we live in a pick and choose world.

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only at a sleep number store... find the lowest prices of the season, going on now. save $600 on the #1 rated i8 bed. know better sleep with sleep number. betty: it is 11:00 a.m. here at the bloomberg -- bloomberg headquarters in new york. will come to the european close.

mark barton joining me from .ondon markets noting back-to-back gains. for the month the european close starts right now. ♪ betty: we are going to take you from new york to london in the next hour. all, your map says it which is that we have all sorts of different directions. mark: we were up over 1%, just a bit of 1%, we are heading for back-to-back games for the first time in over a month. that a substantial if we achieve that. two of this years worst performing groups are leading today's advance, basic resources and oil companies.