, the five most important things for congress to ask the fed this week. mohamed el-erian tells us. energy sector,e chesapeake stock falls the most in 23 years. we see if that tells us anything about the rest of the industry. ♪ stephanie: there's a lot to cover. you are watching "bloomberg go." inis tuesday morning, we are new york city, and stephanie ruhle. david: i'm david westin. there's a lot to cover. el-erian, andd aberdeen asset manager at ceo martin gilbert. welcome back. it's good to have you here. stephanie: when you talk about global markets. yesterday alone we saw $900

billion in global medical cat -- market cap. it's the year of the monkey, china's market isn't even open. walk us through this. matt: i'm going to give you a couple of earnings for a quickly. we just had five, l, with eps that was in line -- we just had om.e, out -- viac coca-cola's growth beat as well. it beats on the top and bottom line, and gave an outlook of 4% to 5% organic growth in 2016. as opposed what we would see if we adjusted for currencies. now i will delve into the markets that really are going to start to shock you as we go through. it is relatively calm, with features down .4% on the dow and the s&p. amazingly so as we go to the rest of the indexes.

in europe, we are managing to keep our heads above water, or rather, we are not able to hold onto gains. occasionally we flip into gains, , butially on the footsie we can hold on those gains. .- the ftse in japan, down over 4.5%. this chart doesn't do justice. we haven't seen a move on the nikkei down since 2013. is been a while since we have been down that low. jgb's, i havethe it up on my bloomberg. hillary has it on her terminal as well. you can see japanese yields -- downars of debt, coming for 2013, 2014, 2015. now below zero. for the first time, you will have to pay japan money to hold

your cash for 10 years. it is pretty amazing. the negative rates, although it's the first time we see the g7 country with negative rates -- last week i counted 14 different sovereigns that had negative rates on tenure debt. now we are looking at 29% of all issuance this year is negative. very interesting -- interesting is a good way to put it. here's the dollar you on -- yuan. this is most today. yen.is is dollar to this is the best since 2008. take a look at u.s. 10 years, if you look at the year to date chart of u.s. 10 years, the yield is going down, the prices going up. it's the strongest gain in prices for the u.s. 10 year at the beginning of the year since 1988. inphanie wasn't even born

1988. stephanie: i wish that was the case. want to mention about japan, this selloff has been led by japanese banks and brokers. usda down 10% last night. it isn't just a japanese story. banks worldwide, the drag down yesterday is massive. matt: the bank story extends across europe. you don't see that in the numbers right now, because some of the banks are recovering from such a horrible start to the month and the year. are one offinancials the big drags. it's not oil, it's not china, it's a concern about financials that may be in that position because of the commodity or that country. people are running for safety. that is why you see negative yields in japan, that's why you see such a negative start to the year. that's what you see gold up 12%, this is a year to date chart. bearish, bullish these

safe haven trades. take a look at oil. this is one of those things what?you say oversupply is even greater than we thought to begin with, and oil is up. up almost 2% right now at $30.23. it has been battered down so much. cehic has the first word from london. >> in germany, to trades collided -- two trains collided. it took place in the state of bavaria. authorities say the accident site is in a remote wooded area, making rescue efforts difficult. several hours after the crash, there are still people tracked in the wreckage. commerce wants to know how the richest u.s. colleges are spending their money. congressional committees have e-mailed 56 private schools with endowments of more than $1 billion. lawmakers are evaluating

tax-free deductions for donors. when the first votes were cast in the first presidential primary in the u.s. nine residents in new hampshire used old-fashioned paper ballots to vote. bernie sanders got all four kasichtic votes, john three republican votes, donald trump got to votes. winie sanders's favored to in new hampshire, he leads hillary clinton by double digits in some polls. for the republicans, the latest how -- polls show trump in front, the fight for second is between marco rubio, ted cruz, and jeb bush. later today on bloomberg, a two-hour primary special on "with all due respect." global news powered by 2400 journalists and more than 150 news bureaus around the world. i'm nejra cehic. stephanie: we have to take back into these markets. aberdeen clearly had a rough

start, but you are not alone. global markets across the border suffering. for you, what matters most right now? i'm fortunate we were on our way to merging, which outperformed developed markets. what we are seeing is -- i'm sure we will come onto it -- the banks and the worry about return to the banks. than has a different issue most other countries. people will not take their money out of the banks of them and equities or spend it. this is them really throwing everything at trying to get people to take money out of the banks. we saw so money market funds being closed overnight. the fund managers giving money back to investors, which i can assure you is not something that fund managers do willingly. i think japan -- i think it is a separate issue from a lot of the other markets. think martin is right in saying japan has its issues.

but we are in the midst of a perfect storm. this notion that three things come together, and then you get the improbable, if not the unthinkable. the first element of the perfect storm is concern about global fundamentals. and therefore, corporate earnings. the second element about the perfect storm is concerned about effectiveness of central bank policies. people no longer believe the central brinks -- central next can repress volatility. the third element is the lack of patient capital. bringing these three things together, you get volatility and volatility with a clear downside to risk assets. that is what we are seeing. stephanie: those three issues are not changing. when you think about patient capital, you often think sovereign funds, and they have been among the biggest sellers in massive size this year, in large part due to oil, and that lead isn't going to stop. wealth: the sovereign

funds were set up for a rainy day, and that has arrived for many of these oil-producing states. from august last year we saw really big redemptions from the sovereign wealth funds. people wonderin: what else central-bank suck canrol -- central banks throw at this issue. we are seeing the bank of japan now really stepping up the pace. david: let's come back to the financial issue. if you look at yesterday in europe, the equities were down, and it was a financial institution. today, it is deutsche bank. in japan, 5.4% down everywhere. is this an income issue? this is a balance sheet issue? what is having this focus on the banks right now? mohamed: all of the above. it's a credit quality issue. people are concerned banks have lent to the commodities sector and are wondering about the quality of those loans. second, it's the net interest margin issue.

as matt showed us, and just rates are coming down. the yield curve is collapsing. it is cascading down. that means banks for less. thirdly, let's not forget regulation. regulation means the bottom of the capital structure is much more vulnerable. so when you get concerns about the first two, the bottom part of the capital structure, particularly equity and hybrid debt will selloff violently. as what we are seeing. martin: the first two, plus legislation, lead to lower earnings, which is what everyone is concerned about. can banks are the return on capital the need to pay the dividends. stephanie: what do you think the answer is? martin: i do think they can, which is -- i don't think they can, which is why they're going through massive cost-cutting. european investment makes it almost thrown in the towel and are concentrating on profitable parts of the business. and they defer to the u.s. ones. david: the most interesting point is the fact that deutsche

bank had to come out and say that there is no problem, they can continue to pay the coupon, that makes me think maybe they cannot. ,ere's the credit default swaps credit suisse and blue, ubs and green. they skyrocket, it cost $241,000 to ensure $10 million of deutsche bank debt. what do you think will happen? will he have to renegotiate, restructure these bonds? i think it's an earnings problem, not a capital issue. i agree with john cryan on that. whether the earnings issue leads to a capital issue, and as we've said before, banks are all about confidence. it confidence erodes, it does become a capital issue. david: as you cut costs, you could cut into earnings. you lose people who were making money for you, and you can get caught in a trap and a vicious cycle. mohamed: that's part of the biggest issue. we are due risking the banks and

financial way. -- in a fundamental way. banks are going during less on their capital, they're going to be a lot more boring, but you have to get there. the u.s. did it relatively well. europe is doing it in a much more clumsy manner. the good news in match chart is that there was differentiation going on. that is important. there was differentiation going on. i can tell you that if these stay where they are, and sends about banks are going to spread. stephanie: how bad? when we say concerns about banks -- the perfect storm, everyone died in it. i think a better example is ubs, which did it sooner. they have got there already. i think credit suisse will get there. martin: i think torture will get there, but there has to be a bit of pain getting to where they need to go. stephanie: there's going to be pain, and we have a lack of patient capital, how painful

does it get? what is it really going to look like? martin: we see the stock price valued at a percentage of book. which is what we are seeing. i think a lot of the payment is probably in the price. but it will take some time to get there. for the credit suisse and deutsche banks of his world. david: i'm happy to say will be with us throughout the hour. janet yellen had stood capitol hill, she will be answering questions about the health of the economy. we dig into the five things markets need her to answer on "bloomberg go." ♪

david: welcome back to "bloomberg go." watchingill be closely janet yellen this week when she gives testimony before congress. have markets become too reliant on central banks? that's an argument mohamed el-erian makes in his new book. bankers run on ignition, and we are adding to a junction where we have to turn right or left, right or wrong. what is the biggest determinant of whether we turn right or wrong? mohamed: when we get his handoff from excessive reliance on central banks to a more comprehensive policy response. that is the key. if we get that, you can unlock a lot of cash that is sitting on the sideline. and you can really tip into that equilibrium. it, it's noget longer about secular stagnation,

it's about recession and financial crisis. stephanie: recession and financial crisis. as you mentioned, we have to get through pain. but assuming we do, six months from now, 12 months from now, some say we are in recession mode. where do you say we are? martin: companies are doing pretty well at the corporate level. i don't think either. i think we are in an era of very slow growth. stephanie: the person who is going to help english -- figure this out is janet yellen, she's testifying tomorrow. you outlined the five things the market wants to hear from her. brady down from us. martin: -- break it down for us. martin: how resilient is the u.s. economy? there's a global slowdown, the u.s. economy continues to have a long. o hum along. and willis financial volatility contaminate the economy? will it lead people to spend less?

and then the issues on wages and prices. inhave had good wage growth the last employed in the last employed report. how sustainable is that? we finally get the increase in wages that everyone has been hoping for? or is this a blip? which leads to the second issue -- should we worry about inflation or deflation? the fixed income markets are starting to worry about deflation. the final question is what we talked about earlier -- the state of the banks. is this the beginning of something really ugly? or is this the move to a lower earnings equilibrium? if she answers these five questions, will have a much better handle on where the economy is going, and where fed policy is going to do. stephanie: do you agree? i agree with a lot of it. we have to get away from this era of relying on the central banks, get back to the company's earning money. that is why i think this is

actually quite an important turning point, as far as emerging markets are concerned. they start the year relatively better. that is where the growth is going to be in the next 5, 10 years. i would say that. stephanie: except for the fact that emerging-market corporate, many are tied to commodity prices, and they are more leverage today than they were before the financial crisis. martin: one of the good things is we have a very big overweight position in india, which is doing extremely well. it is leading world growth at the moment, the companies are well managed. the low oil price actually does them a lot of good. david: this is the mystery to me -- why is it the janet yellen knows the answer to these questions, and we don't? stephanie: yes. checked through those five things, we have a lot of data on every one of those right now. mohamed: we don't have a lot of data that gives us one way or the other, but importantly, she controls fed policy. with her colleagues on the fomc.

the fed is still the most important central bank. --t we are not going to get this is really important. we are not going to get what i call the catalyst. the realization in congress that this is about them, not about the fed. stephanie: one more time. mohamed: what we really need is for lawmakers to realize that it is not about the fed pulling the economy, it is about them doing what is needed. david: why isn't that the most import and thing in her testimony? why doesn't she say that to congress? it, as dide will say ben bernanke, as did the ecb chairman, they are not listening. she will say it, but will it be the catalyst? will he be the little spark that causes a change in the policy approach? i don't think so. stephanie: if the answer is i don't think so -- you are gloomier than i feel like i have ever heard you. mohamed: let's be clear.

what i'm telling you that the path we are on of low growth, repressed financial volatility, is ending. investors have to realize, this path which has served as well for the past few years, is ending. able,i am still not unfortunately, to tell you for sure whether we turn left or right when we had this to comeson, is what afterwards. that's up to decisions that we make as a society. unambiguously, forget about slow growth equilibrium, forget about punishing -- repressing volatility. david: she says she can to growing -- keep going with slow growth. mohamed: in 2009, this was dismissed by many people. finally, conventional wisdom has gotten there. we call it the new mediocre, we call it secular stagnation. finally conventional wisdom has gotten there.

when you look at the implications, those of us who have studied it really closely say you can't continue for another five years. it is going to get exhausted, and it is getting exhausted. stephanie: if we need to leave wisdom in the textbooks, we have to get tactical in terms of trading. how do you trade this market? investors are being bled dry. martin: what they are doing is forcing you out of banks -- stephanie: what are you doing? martin: we have done what we always have done, which is investor defensively. which has really hurt us over the last three to five years. hopefully, this is a turning point for value for managers like ourselves. and emerging-market fund managers like ourselves. hopefully, these of the first signs we've seen of a recovery in those two sectors. and that is a relative recovery. don't give iraq, we are still losing clients money, but not -- don't get me wrong, we are still losing client's money.

but not as much. martin gilbert and mohamed el-erian, staying with us. janet yellen breaking down a volatility, and you want to see the full coverage on jenna yellen, 10:00 a.m. tomorrow, we cover that. stick with us, you are watching "bloomberg go." ♪

stephanie: you are watching "bloomberg go." with mohamed el-erian and martin gilbert of aberdeen. aboutre just talking emerging markets under long-term positive growth story on india. how do you keep your investors patient? when i look at the indian stock market, it has gotten smoked. morgan negative -- the more negative news we see, your investors can be stoked. gotin: the stocks overvalued, because of course,

it was the best of the emerging markets. the one that would benefit most from low oil. and it would just tell them they to be in for the long term. you cannot market time, you have to stick with it. stephanie: are they following your advice? martin: most people are. but we did see was the private banks coming out of emerging markets 20132014, starting to look to come back in. the sovereign wealth funds are different issue. the need the money for their budget deficits. stephanie: it's a problem. we cover that and a whole lot more. energy when we return. energy shares plunged yesterday. good that have wider effect on the energy market? you are watching "bloomberg go." ♪

stephanie: you are watching "bloomberg go." we are watching futures falling this morning, the s&p, dow, nasdaq, across the board. oil, on the other hand, is up,

but falling off the morning highs. we are seeing a slide across the board, much of this when you look at global markets is led by banks pushing down. we're going to give you a bit of first word news, here is nejra cehic. mary: -- nejra cehic: the bill to congress today is filled with items that the congress is sure to reject like taxes on oil and programs for youth. bernie sanders and hillary clinton may be challenged to embrace or reject mr. obama's policies. the director of national intelligence is joining the threat posed by homegrown terrorists. james clyburn tells congress the most significant threat to the u.s. will come from extremists raised in the u.s.. threatscited terrorist posed by russia, china, and north korea. a federal court has rejected the blockingtexas' request

the resettlement of syrian refugees. a judge said it is up to the federal government to decide whether the refugees pose a national security threat. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. i'm nejra cehic. tom keene, welcome back. we missed you. he's joining us from "surveillance." he has the morning must-read. coco.ve tom: it's the contingent convertible. i will call it a derivative. you have them in europe, you don't have them here. that in itself is is an interesting issue. let's go to the morning must-read. back to 2013, and the definitive primer on this by the bank of international settlement. the only one on the planet that has read this primer note to note is mohamed el-erian. private investors are usually

reluctant to provide additional external capital to banks in times of distress. offer a way to address this problem. they can absorb losses either by converting into diluted equity or by suffering a principal write-down. that goes up to the many key decisions that are out there right now for mr. cryan. good all-american cash call, exhibits european. and they raise more money if they need to? mohamed: it's going to be hard if they are willing to pay 300, 350 basis points. that will reprice the whole yield curve. they're going to try navigate that was what they have. tom: the degrees of freedom they have -- they have a lot less year with the stock coming down yesterday, rallying, coming down again in the headlines moments ago. do you have in your head a price point where deutsche bank has to go to ecb and say this isn't going to work? mohamed: i don't. we are going to have a real test

of the capital structure. in the old days, it was equities, bonds, and then deposits. and this threat was that you get up there too quickly. the idea was let's have a cushion that absorbs the loss as you go up, and make sure the loss doesn't migrate all the way up that quickly. now we have the test of that. it's going to be important to see how they are priced. when matt put up the numbers, we have seen differentiation in europe. is trading atbank 220 basis points, but ubs is only at 86 basis points. the markets are still differentiating's between the banks. stephanie: when you think about deutsche bank and these cocos, we're going to be ok for 2016. but then we have 2017 to worry about. it's not like this is an

overnight problem solved. we have long-term issues. martin: i think is a really good point. ubs are ahead of the rest of them in this journey. they also have the best wealth management. credit suisse are probably in a better position than deutsche bank. they have to get the risk-weighted assets down and so what they can. but i don't think it will go out and raise more money. stephanie: deutsche bank sold their right to client service businesses in the u.s. to raymond james. every other bank is making a push saying private wealth is the place we have cushion and growth. what are you going to do, what is your growth strategy? martin: i think deutsche bank felt it was different -- difficult to be in wealth management in the u.s., felt it was better the raymond james were in it. they're going to try and build wealth management globally, basically. i do think there's a difference between credit suisse and where deutsche bank is at the moment. said, we don't have them in the united states. tom: we are not going to have them. david: the reason why coco's exists is to absorb risk, reduce

risk, but there's a run on their credit because of the coco. mohamed: the minute you have a cliff, and you get close to the cliff, you start causing these technicals. tom: this is one of the tribes we used on "surveillance," this morning. i need a thank you from john london and michael moore for making me smarter on this last night. up six dinner deviations. it's about stalling and measuring time until you get to a jump condition. are we there? were not only derivative strategies kick in, but management strategy has changed. stephanie: it's credit derivatives that are exaggerated situation, because they are pushing out so much. you have speculators playing there. youmed: the last six month, have heard me say there are

three unhinged sectors in the global markets. and we arergy, continuing to see that unhinged. high-yield bonds, and three was emerging market currency. tom's question is critical. if banks become unhinged, then we are in a completely different place. i don't think that's going to happen. but i would keep an eye on it every single morning. tom: one thing that is so important, david, is deutsche bank is a national institution. hans nichols was brilliant from oculus about the unique here, cultural calculus. almost cultural finance, never use that phrase. never use that phrase in my life. it's almost a cultural finance. write that down. stephanie: could that be the reason that deutsche bank was overprotected over the last five years? many analysts said i'm not going to look at them or invest because the amount of that assets -- bad assets they can have on their books that are

hidden and wedged that other banks have exposed is a different picture. the most important moment in a crisis for me was senator , with the papers in his hand on the white house driveway outside the west wing, screaming about what we were going to do. the answer is, we did, europe didn't. it was a distinctive feature. stephanie:? martin? think deutsche bank's sound, and at the end of the day, i think he is under promising, over delivering. stephanie: another company causing fear in the markets, chesapeake energy. shares plunged yesterday after reports from debt wire that the company hired lawyers to help restructure a $920 billion debt the slide extended chest's 12 month lost to more than 90%, wiping out $838 million in market value. with you do with something like do you do with

something like this and what is the broader effects to the market? mohamed: if you are in equities, it is too late. stephanie: party over. mohamed: if you are higher up in the capital structure, and you are in unsecured bonds, you have to have a discussion with the company. and you have to have a discussion, i go back to calm keene's view of game theory, you have to come together and figure out how to restructure the debt in a sustainable manner. tom: the game theory is an institutional impulse. and deutsche bank, you have the ecb as the adults in the room, saying that sticks this. the mystery is who fixes the energy balance sheets in the united states? david: this is a workout. they have $11 billion in debt, $1.4 billion in equity. when i learned the way these has a lot of, leverage. that some point, those bondholders will end up holding debt -- owning the company.

i wonder if this is the first of several -- tom: in defense of the experts, they said spring of 2016. we are there right now. eric lee was just on with bloomberg "surveillance," and he said you could see price erosion's within oil, and it will change their calculus as well. david: are we in spring already? stephanie: not yet. groundhog day. clear,t me make this young miller, when you were on bloomberg "surveillance," and a.m., you at 3:00 notice when a hong kong has a later and later evening, the lights are on in hong kong. it's occurring right now. this is early spring. david: did you want to say something, matt? matt: carl icahn is essentially the biggest holder in chesapeake. on the hds function, you can click on any of the holders in a , thatand see in green

person or that company's position, ended white, the share price. in q2 2012, boosted his stake to about a $2 billion stake. he added a slight bit to it throughout. but obviously, he has lost almost all of that. 73is still sitting with million shares in chesapeake, as it climbs down to zero. stephanie: the one pressure carl doesn't have his investor pressure. yes, he is the second-biggest shareholder. but as they pointed out earlier, as part of this perfect storm paradigm, it is investor pressure, investor worries. carl doesn't have that. does it make a stronger case that he can be patient and sit through this? mohamed: a lot will depend on what he wants to do with it. what is important is, in his case, he is not forced to sell. and that's really important. this capital is locked up, but he has a decision to make us what he wants.

i think this is ultimately going to be a takeover candidate. this is a takeover candidate. and lots of other energy entities will be -- hetin: i expect he admits made a mistake, he was buying in 2012 with oil prices is a very different level. david: interestingly, he bought last summer. stephanie: he loaded up again in december. martin: 2012 is when you started. he also, by the way, in september of 2015, got into freeport-mcmoran. 100 million shares, that is $10 billion of freeport-mcmoran, which was trading at $10 when he got in, and now it is trading at five dollars. stephanie: when you're talking chesapeake or freeport, they've gone down so much. you're really going to sell into this or cross your fingers and say i have to bet on a takeover? martin: you hold in the sort of markets. stephanie: you hold. tom: look at the price of oil.

i've seen this a million times. commodity rationalizations are different. they are in every instance of balance sheet rationalization, and we are not there are two great extent based on the price of the underlying copper or nickel, or whatever. david: two things that are connected. i saw lawyers bills in new york had just gone over $1500 an hour, and kirkland and alice are the lawyers they are called in to try and fix this. they are not entirely unrelated, in my opinion. tom keene, thank you for being here. mohamed el-erian and martin gilbert, you are staying with us for the rest of the hour. we are turning to china's foreign exchange, there is reserves are dwindling. yuanhey are navigating depreciation. that's next on "bloomberg go." ♪

stephanie: welcome back. i'm in the green room, and coming up, david stockman on everything from markets to today's new hampshire primary. that's coming up here on "bloomberg go." ♪ nejra: a former j.p. morgan chase executive has been fined $1.1 million in his role in the so-called london whale case. he failed to tell regulators about concerns with the banks credit portfolio. ran up more trader than $6 billion in losses. the european union installed wind capacity, and wind power is now the third biggest source of ellipticity in the euro area. germany installed almost half of the new wind power capacity.

international group plans to exit at least half the hedge funds in which it is invested. it's according to people familiar with the folio. in with him aings hundred funds and plans to cut that number to 50 or fewer. that's your bloomberg business flash. back with martin gilbert and mohamed el-erian. we turn to china. depreciation pressures are growing on the want. -- on the yuon. martin, what is your biggest concern about china at this point? 6 martin: we are not so concerned there's going to be a hard landing, the economy is doing pretty well. we just have to go there. i'm going there in 10 days, you will see it is booming. the biggest concern is finding companies that we can invest in, with good corporate governance -- that's a big issue we have. david: if there is a depreciation and the yuan, how much does it depress your business? martin: not much, we tend to

impressed -- invest through hong kong. the way to invest in china is investing countries that have good connections in china. they learned a lot from trying to keep the market up and realize that was a terrible mistake. if people can't sell, they want to sell. if they can sell, they don't want to sell. i think they have learned a very big lesson from that. stephanie: what do you think a chinese evaluation means for the global markets? mohamed: it wouldn't be good news, you would be viewed as an attempt to take rose from other countries. i think china right now has dilemma. and that is reconciling its domestic responsibilities with its global responsibility is. it were to focus on its to mystic response abilities, it would do exactly what martin said and let its currency weakened. also has a huge global role. and its currency has now been admitted into the sdr basket. how do you reconcile the two?

when the markets are calm, they devalue. when the markets are volatile, they slow down. that's what we see. it's going to be devalue as long as the markets can take it, but if you push the global markets too far, they will stop. and wait for the calm to come back. stephanie: hsbc is exley change their mind about leaving the u.k. it really is based on their concerns over china. what do you make about that? martin: i haven't seen the announcement. as i said once before, my expectation is they won't to move. i just think it is too difficult, logistically. and whether hong kong would be the right place for them to go would be a different matter. stephanie: you are a massive holder of hsbc, so this is a positive for you. which: i haven't seen it, shows how far behind i am. i should have prepared better. stephanie: we don't like prepared.

martin: it is a sensible move. i think the u.k. have conceded enough to try and keep them. i think the treasury push, as far as they can until the banks no more. we reached that point. david: some of the foreign reserve uses were to buy you on -- buy yuan offshore. where's the spread? out, that's been working hopefully few spend that much money, you get something for it. here is the offshore, onshore spread. we have come down to almost and even trade. that's what they have been getting for their money. my question has always been -- when stephanie and david were talking to larry fink in he'soes -- in davos, against capital controls, but he doesn't want china to allow their current -- the currency to devalue. because that would require

haydock -- that would wreck market chaos. the world be better off if china finally allowed its currency to devalue and free float? --amed: over the longer term yes. short-term, no. it's not the time to have a massive devaluation in the chinese currency. i think importantly, we have to remember -- they still have $3.4 trillion of reserves. the whole point of reserves is to help you navigate these difficult times stephanie:. -- these difficult times. stephanie: they are heading in that direction. mohamed: we used to claim they had to any reserves. eriod was a very scary p in january when they were losing control of the offshore market. that's something that for china, is really important. the fact that they regain control of the offshore market is an important development. david: let's turn back to india. we talked to you about it

before. their gdp is growing substantially faster than china. martin: something like 5%. 1% more than the chinese figure. are seeing the benefit of oil, they were a massive importer of oil, and i think that has been a huge benefit to them. it probably added about 1% of gdp in india. the difference between china and it is easier to make money in india than china. it's easier to find companies with good corporate governance and india than china. china will come. we are excited about china. the middle-class wealth growth, all of these things. it is going to be a massive driver of world growth in the years to come. at the moment, it is difficult to find companies with good corporate governance. stephanie: can you trust that the chinese government will do the right thing? many have stayed out of china because of all the government control and government intervention. martin: it's a really

well-managed company -- a really well-managed country. they are technically very competent, they are all engineers, i think from memory. it is a very well run country. they learned a valuable lesson trying to keep that market up, not allowing it to go down. mohamnie: martin and ed, final thoughts when we return. you are watching "bloomberg go." we're watching global markets slide, and oil starting to get off the high. china close this week, but japan headed one direction -- down. much like u.s. futures. ♪

stephanie: you are watching "bloomberg go." we are back with mohamed

el-erian and aberdeen asset management martin gilbert. ,ou know i've asked you before again and again, but the market has changed. outflows are worsening, not just for you, but across the board. you still want to maintain independence, not looking to sell. martin: never. stephanie: as other smaller organizations are also suffering, is this a time when you could intentionally look to acquire? martin: i think in terms of market dislocation, there is good opportunities to buy businesses. stephanie: for you, since you spoke in davos, you lost your cio. what are you going to do? martin: it's good for her, and it's a reflection on our business that she has gone on to be ceo. you can't stand in someone's way when they get offered such a big job. even though she is difficult to replace, she is not a replaceable, as she knows, and we will survive without her. david: what about your outflows?

martin: we are seeing a slowdown in emerging markets. but it is early days yet. but definitely slowing down. stephanie: i see him going like this, aren't you happy you don't have to worry about outflows? martin: he doesn't know how lucky he is. stephanie: he does. yes. gentleman, thank you so much. martin gilbert, ceo and cofounder of aberdeen asset management, and mohamed el-erian. sitting cool, not worried about outflows. back, former omb director david stockman. ♪

the conference call. the ultimate arena for business. hour after hour of diving deep, touching base, and putting ducks in rows. the only problem with conference calls: eventually they have to end. unless you have the comcast business voice mobile app. it lets you switch seamlessly from your desk phone to your mobile with no interruptions.

i've never felt so alive. make your business phone mobile with voice mobility. comcast business. built for business. stephanie: is it more than the correction? european stocks are down for more than seven days in a row and the s&p 500 opens at the lowest level in more than two

years. deutsche bank tries to reinjure investors they can pay back their riskiest debt. scorecard.s what numbers say about the strength of the u.s. economy. we will be speaking with david stockton. it is a the clock in new york, 9:00 p.m. in hong kong. welcome to the second hour of "bloomberg ." i and stephanie ruhle. david: i am david westin. we are joined by david stockton, very well-known as the former budget director under president ronald reagan. first, a check on markets and we go to matt miller. stephanie: busy day. matt: and moving down throughout

the morning. 1%ses on futures were about and coming off a little but the many contracts for the dow jones down 135 and nasdaq down .8 of 1%. take a look at the chart of futures this morning. you can see that we have come down into the morning. this is the end of yesterday and into the morning, down, down. take a look at the stoxx 600. down now 2%. is not so bad considering what has happened in other indexes. the nikkei was down 5.4%. the biggest loss in the nikkei since way back in 2013. if you take a look at the breakdown of the company is that lost money, it is pretty much everybody from the owner of unit e central japan

a big machinery maker, so everybody from industrial the tech stocks to retail is waiting on the nikkei for that huge drop. if you take a look at japanese investors, they continued to pile into japanese 10 years, now yielding a negative .3 of 1%. you are paying the japanese government to hold your money for you. if you take a look at the yen month to date, this has been the best month versus the dollar since october 2008, which tells you something. as this line goes down, that indicates yen strength, you can buy less than 115 yen for one dollar, and you take a look at the u.s. 10 year, investors are piling into what they continue to be safe haven investments.

this is year to date for the 10 year. we have not seen this strongest deal for the u.s. 10 year -- yield ball this low in the beginning of the year since 1988. let me close out with wirp to show you the expectations for a fed rate hike. and in the end of december beginning of january, the odds were 50% that the fed would hike rates at the march meeting. now they have fallen to 0%. as you look through the rest of the year, the market is not predicting a fed rate hike at all this year, at all, so very interesting. i am surprised the probability of a cut has not climbed. stephanie: that is a change, a notable change we clearly did not see earlier. matt: that is right. that is why w.a.r. p is a great function. stephanie: without a doubt. matt: here is david gora.

david: voting is underweight for the first primary. under way for the first primary. for candidates have a shot at finishing second, ted cruz, marco rubio, john kasich and jeb bush. meanwhile, bernie sanders is the national front runner i double digits. later, we will have a two hour new hampshire primary special on "all due respect" at that :00 eastern time. the death toll rises in germany on a fatal train crash. two commuter train's collided in southern germany. authorities say the accident wasn't a remote wooded area, making rescue efforts difficult. in taiwan, they arrested the builder of a high-rise apartment complex that collapsed in the earthquake over the weekend. 38 buildings have been recovered and more than 100 missing. global news powered by our 124 journalists and news bureaus

around the world. stephanie: thank you. european stocks are having with gains and losses. mark barton joins us with the latest. seven days in a row, that is the declining straight for the stoxx 600, down as much as 2%. the longest losing streak since october 2014. there is symmetry to the indexes falling to the lowest level since october 2014. this was the index in the spotlight yesterday, the athens stock exchange with as much as a percent yesterday. continues the decline, falling as much as 4%. in the last six days, down by 18%. risk year assets are being pummeled today, so the greek banks are falling, concerns about the economy and the bailout talk.

they are worrying amidst the heightened concern. take a look at europe's sphere index. this is europe's volatility index, it is increasing for the third day. 35 is the price, august of last year after china devalued on the yuan, that was the highest in four years and we are about five away from the highs. i want to finish with deutsche bank. were dark saying about deutsche -- what arencement investors saying about deutsche bank's announcement yesterday? i'm afraid after rising as much as 5%, they are falling again. deutsche bank has dropped by 11% and investors are not listening who said the bank was solid. david: david stockton, that's turned to you. we heard negative news around the world. take us behind the numbers. what is going on?

david s.: i think the markets bear.ing pawed by the they are going to be maule d. the reason is this is not just bull market but the end of an era, a worldwide era printed central banks money, injected liquidity, supported markets, manipulated and intruded in the pricing of financial assets of never before. what it did was create a massive credit expansion. in 199540 trillion debt in the world and that we have $225 trillion today everywhere. banks arethe central all out of power -- dried powder. the fed has painted itself into a corner and now the markets are

saying, no interest rates. that is 100 months effectively at zero money market cost. we will destroy the financial system on eight years of zero calls money. china is actually hiding desperately a massive capital outflow, which means they have to tighten their quantitative tightening. stephanie: we need to break this down. you are painting a bear market picture, a recession on the horizon. global recession on the horizon, recession coming to the united states much sooner than anyone realizes because they are misled by the lagging and phony employment numbers that are put out by the bos every month. if you look at what counts, what employers are paying uncle sam daily and payroll tax withholding, it has turned

negative on the real basis after inflation in the last four weeks, negative 4.5%. ant has always been indicator that recession is coming, that a big pullback is happening on the economy because the whole narrative about how awesome everything is has been wrong. erik: so this is a make -- david: so this is a negative picture. we had someone else come in with a different picture saying the chance of the session is limited. goldman said 25% chance or less there is a recession. what do you see that none of them see? david stockman: out of the last seven recessions, wall street and goldman, in particular, has predicted none of them. [laughter] over the last three or four downturns that we have had in the market and economy, the fed had no clue it was coming. the mainstream, which is dominated by the view that the

labor market dries the whole gdp, is not only failing but it is so completely wrong that they , they're looking in the rearview mirror and they cannot see what is coming right address, which is a global deflation. as a result of massive overinvestment in everything from iron ore mines to container ships that resulted from cheap capital and cheap bank credit that the central banks generated over 20 years. we are in something new. it is closer to the 1930's than anything we saw before in the sense that we are going to have a depression -- a cap x depression. that drives profits. they pay a big wage. jobs disappear and it has

an anonymous impact on the economy. wrong so all of us can be . if you are wrong, how are you wrong? the u.s. consumer or the average household is not nearly as leveraged as 2007-2008, correct? they have more money because gasoline prices are lower. david stockman: i think the point on that is a were so hideously overleveraged into 2008 that a bad thing happened. than $13ere is more trillion debt on the consumer and there is 180% of wage and salary income. historically, it was 80%, so we await out in the woods. about top 10% of the consumers go to macy's but now they are not, but the bottom 90% of households are living hand to mouth, 60% to not have cash savings. they haven't uncovered at all,

so the idea is that the consumer is so healthy but it is just wall street propaganda. stephanie: the consumer is unhappy and you can see that playing out in the presidential donald trump aee bernie sanders doing well. when you said a moment ago that banks did not see this coming, why would we think they are seeing it now? do banks realize the junk they have on their books? from deutsche bank ceo saying, we are really good, rocksolid, we heard that from hank greenberg two days before they got kicked, so how bad are the banks in terms of their own balance sheets? david stockman: it is hard to know because they don't disclose. i know deutsche bank has a 2 trillion balance sheet and they have tangible equity of 66 billion, so that is 3%. they are leveraged 30 to one in terms of tangible equity. let's world around in the 2

trillion, nobody knows, but i did inc. the banks have unloaded the worst of their stuff and it is in mutual funds, etf's, non-bank and financial institutions like all these companies that have come up overnight to make auto loans by selling junk bonds. assetsie: so these bad that the banks had on their books, they are elsewhere and they are now in the hands of mutual funds, mom-and-pop. david stockman: those are worse, run is moref the dangerous than banks. back then, main street banks did not have to market most of their assets and there was never a run on mainstream banks but just at the wall street hedge funds posing as banks that should have been liquidated and reorganized. this time, you will have a run on five or six trillion of funds. this time, a run on ats, there were less than one trillion of

etf's into 2008 and there are 3 trillion now. they are an accelerator mechanism. when everybody sells the atf's, -- bts, they have to liquefy themselves by selling the underlying. they are not nearly as liquid as the offered at any time you want etf, there is a bid and anytime you want to sell your mutual fund share, there is a bid. i will tell you what -- that is where the collision is going to come in the markets. stephanie: david westin, i need a stiff drink or a break. david: me, too. david stockman is sticking with us. i want to thank mark aren in london -- mark barton for bringing us up to date. coming up, a look at the troubles of deutsche bank. ♪

david: welcome back. coca-cola posted fourth-quarter profits with improved margins with a $3 billion cost-cutting program. that helped offset the impact of the strong u.s. dollar which reduced the value of coke sales and other countries. they have agreed to by holdings and cash value at $11.3 billion, including debt. they will pay 14% to the closing price yesterday. they have the highest rate of return among utility owners. goldman sachs warns volatility in the oil market could lead to prices falling below $20 a barrel. sachs the commodities research told bloomberg tv that prices may swing between $20 and $40 as supply and demand is

rebalance. david: thank you. abouthave been talking this morning, concerns mounting about deutsche bank's ability to face their debt. the collect -- the coexecutive addressed the concerns saying, they are rocksolid, and they're trying to concerned -- address legal concerns. hans nichols joins us now. what are the options at this point? hans: settled. they need to settle the suits. that is what is clear. they will be focusing on trying to clear up litigation matters. take a look at lenders to employees. i -- it says they are going to be removing the uncertainty. you look at that uncertainty and it is so many different places. the high end of the argument is that of the bank of america

settlement which was for 60 point 7 billion and last month, goldman sachs settled for 5.1, it is a question of where deutsche bank comes in. the goldman sachs settlement was not a good sign and this is concerned litigation will bring down that tier core one capital and they will be below 11% and 8%.s will trigger at 5% and this gets down to the unknowns of litigation and how to solve them. saysanie: if john cryam the company is rocksolid, where are they to say, i am personally investing time to resolve -- blah, blah, what does that mean? hans: they said for 2016, they have one billion to pay, including 350 million for the bonds due in april and for 2017, haveig question is they 4.3 billion. some of that has to do with the

sale of banks, so yesterday, they gave new numbers in that .eem to calm the markets today, they are backing it up with more of an emotional argument saying, we do have or we do need to resolve these and these are the challenges and we will figure out with the litigation cost will be. david: we have had all the major banks with litigation problems and they had to resolve them with uncertainties. we never had one bank, who said, by billy, we can pay our debts despite litigation, is this because it is so much greater at deutsche bank or much smaller? hans: when you look at the reserves, the capital ratio is like 11%, so i think they are fine. they have been making the case that they are strengthening that. this could be a case of the market looking at declining revenues. you look at what happened to fixed incomes in currency and commodities and there is a 45% of revenue stream that was down 37% in the last quarter, so

revenue is not there. there are dealing with a low interest rate environment. take a look at credit default swaps, this year, they have more than doubled. you can see real action. other side of the equation of what folks are talking about is that when you look at what deutsche bank's trading, what shares are trading relative to theoretical, they are about one third. no other bank is close to that, stockman has a lot more experience. is this the case of the market looking at the weakest link in pressuring it or is there something rotten within deutsche bank that's one of lawyers the litigation side that they have detected in the market is reflecting it? david: mr. stockman? david stockman: when the crunch comes, bank ceos like. my experience has been in the tot 7 -- and let's go back ,008, the ceo of morgan stanley probably was on care, he said he

was liquid but he had $100 billion worth of undisclosed -- bailout from the fed in washington which meant they were insoluble. my point is that the banks do not know what they have and that is why there has been 200 billion of the major banks of settlements. fines, settlements, penalties, 200 billion cents a crisis of 2008 and it is coming out of the system. don't trust deutsche bank, i don't trust what they are saying and there is a reason why, as it is becoming clear that a recession might happen and as warren buffett always says, we will find out who is swimming naked, and there is a reason the market is selling off all the banks around the world. because people are realizing -- stephanie: let's pull back to what we know. i don't want to see any bankers swimming naked. [laughter]

across the board, banks have paid huge fines and they had had their compliance and risk management efforts. one could argue they have cleaned house in a significant way. david stockman: to me, it is assigned they did not know what was going on or what was there. otherwise, a bank would not have ended up paying these massive fines if the bank had been under control. stephanie: but they did pay it. david stockman: wait a minute, the london payout happened because no one knew if they were hedging or speculating. if you have a $9 billion elephant in the room and you don't know whether it is a hedge or speculation, which are opposites -- stephanie: that was five years ago and they pay the fines. couldn't one make the argument they changed their tune? will we continue to punish them for since for six years ago? david stockman: i think they ought to break them up. they are too big to manage. they are spread over the world and every kind of different feature an aspect of the

financial system. no one can really comprehend or manage. we did not do that. we have this idiotic regulatory legislation in 2000 -- with 2000 pages that no one can penetrate yet. the regulations have not been written and they should be broken up. stephanie: we got david's message. we will be back with more. thank you, hans nichols. ♪

matt: welcome back. take a look at futures. we are down across the board on the s&p around 1% 500, nasdaq and dow jones after the nikkei fell 5.5% overnight. they went negative and oil bounces between gains and losses.

david: welcome back. here at this is david stockman. we will get started with first word with david gora. stephanie: the house of david.

david: items are filled with the republican majority in congress are certain to reject a new tax on oil and billions -- so the president's budget may influence the race of 2016 while bernie sanders or hillary clinton either challenge or embrace the budget policy. it calls for a cyber security action plan aimed at modernizing older technology systems to prevent them from being hacked and the campaign aimed at getting people to secure online accounts. they take a look at how colleges are spending their money. they have e-mailed private schools and lawmakers are evaluating tax-free earnings for schools and tax reductions for donors. over to my friend and colleague matt miller. matt: i were showing named david for today -- i wish i were named

david for today. after the eia came out and said oversupply was worse than the estimated, oil actually went up and it has come back down. a drop of about 12 cents. $29.57 a barrel. futures are down and they have been down all morning. we are looking at losses of about 1% across the board. that is compared with vigor losses, about 2% in europe -- with vigor losses, about 2% in europe and 5.5% on the nikkei. bottomla was beating the line and revenue. coca-cola is still down as all humans fall. it is trading down in the cvsarket about .1 of 1% and was in line with estimates that down ahead of the open net 2.4%. foris a power line operator

the canadian natural gas distributor and they are buying up for $6.9 billion, i believe $44.90 a share, so a 15% premium to this 41.05. a couple of stocks i love to watch, ferrari and fiat chrysler, the former owner trading down right now. ferrari said earlier this month that they were going to seek slowing of sales, which is good as an owner but bad as investor. now, let me talk more about oil. it is not just a three-day losing streak rebounding for a little while from below 30 for the second time in less than a and this could be a key time to invest in oil and gas stocks. we got further in a morning meeting with;. -- with sam.

do you think it would be a wise move or incredibly risky to invest in oil and gas right now? both. i think you hit it earlier, the data is mixed and price reflects that. spending has come down a lot from oil and gas companies and people are starting to get comfortable with the supply outlook that there is downside. right as this occurs, people get bearish on demand and the underlying global growth outlook. there is conflicting takes, but i think the companies we like, exxon, chevron and shall, play a long cycle. if their position to right side their business by 2017 or 2018, that seems like it could andcide with stabilization rebalancing the market underneath them. i do think timing wise you might be volatility and it's risky, but over the long-term, we

expect the stocks to be higher. ant: you like the big integrated oil players. are those your favorite picks in the patch? sam: bill oil refiners have been under pressure because of the demand fears talked about earlier, and a lot of that is warranted. the inventory data has been pretty negative. they could be attributed to weather factors or other seasonal issues. one thing different about refiners out of this cycle than the previous one is that balance sheets have been more or less transformed and companies are very healthy. the group as a whole has has been underneath one-times leverage and i think they could absorb volatility in the earnings. we think driving season will be good for them. that is more of a 12 month to 18 month call as opposed to oil majors which is more of an 18 month to 36 month call. matt: thank you. lin giving us a smart

but admittedly risky play. stephanie: thank you. earningse for the scorecard. i want to break down numbers and oil is the great thing to start on. let's go through some of the biggest names in the market and break them down. matt: i wanted to take a look at their earnings scorecard rehab with the bloomberg because it shows a few very interesting things. first of all, if you click on the growth cap, as opposed to what analyst estimated as they lowered estimates, you can see what we are doing compared to the year before. down fourth, sales is and a third percent compared to last year. earnings is down 6.3% compared to the same quarter last year. showsox down here something interesting. starting in q2 last year, sales

growth turned negative and then in q3, earning growth followed and got more negative in q4 and more negative now. analysts looks like they're being pretty honest and expecting a drop in earnings here. how honest is an expectation of to 50% our to 10% needs growth in the fourth quarter? we were looking at that chart yesterday from mark barton and it seems that analysts always have much higher expectations out a year and they ratchet them down into the actual earnings. stephanie: when you look at corporate earnings, you have to say the influence and impact you have seen on oil. what is your take on oil right now? david stockman: we are going to be at a long and low bottom for considerable amount of time. i think demand is likely to weaken or even fall as rapidly as production adjust, which will be slow. the issue is -- matt: what will -- because people don't want to drive?

believeockman: do you that people sitting in beijing have their world under control or do you think the most in history hasi been created there were 30 trillion debt that is beginning to fracture and? fall apart -- and fall apart? stephanie: where is the ponzi? david stockman: they built things through borrowing. david: that is typical of emerging markets. mankind,story of amerco is deeply in debt in the late 19 century to build railroads. that is the truth of every emerging market. it does not make it always right or wrong. david stockman: i would bake to disagree that the scale or the magnitude of it is off the charts. $1 trillion of debt in 1996. it has $30 trillion debt today. that the goes of 30 x where you

don't have financial discipline and you have a banking system basically an appendage of the communist argued that allocates credit down cascade and gdp back up. highly unstable, it is falling apart and the overbuilt everything. they have a 1.2 billion tons of steel capacity, maybe .5 billion tons of demand. they produce more cement in three years and we did in the whole century, the whole 20th century. you have to look at the massive overinvestment. what is happening is billionaires are disappearing every day. factories are closing, jobs are going to disappear and the idea that you are going to have a smooth transition to consumption and service led economy is absurd. with demand in china falling, the whole oil equation of the world is going to suffer. as a result of that, we're going to be in the 20's -- in the

1920's, i believe, as far as the eye can see, and that means the debt is predicated on $70 oil and it will be in default. the sovereign wealth fund of oil, which accumulated from one trillion to 7 trillion of excess assets, are going to beat liquidating. stephanie: we are seeing that happen on the sovereign side, but what about the industries that should be benefiting from lawyer oil prices -- from lower oil prices? why are those not doing well? david stockman: the shipbuilding business will be dead for a decade, the mining business both be dead for a decade, caterpillar is heading nowhere but down. matt: why don't consumers who are saving money, i fill up my gallon.r $1.81 a why can't i take that money, pay down some of the debt i have or going by close at the mall --

clothes at the mall? david stockman: consumers are doing that and that is light restaurant sales were up 9% last year, but we are a big producer. last year, we consume 19.4 million petroleum barrels a day and we produce, with the ngl liquid crude and ethanol, 13.5. we only import 29% which is 2 billion barrels a year which every $10 is the rounding of attempt 10th of 1% of gdp. the oil thing is not going to lift the gdp of the u.s. economy. trucksmashing ford sales. stephanie: ok, we got your bear market claw. would you buy gold? david stockman: everybody should have that as an insurance asset and option. the whole central-bank

system breaks down, i think it will break down, you have people talking absurd talk. go bank of japan will negative interest rates in an economy with an old-age economy. matt: when i woke up this morning and saw the nikkei down yield,i sought negative -- i sought negative yield and there are other big sovereigns with negative yield on 10 year debt. and then i saw gold and realized that 12% year today, i started thinking -- wait, is this the time to get in? do you start to hear more people say that gold is an important by like in 2008-2009? david stockman: i think you will hear it. there are 40 bear markets in the world. not only is japan down 40%, but the chinese market is down 50%, hong kong down 35 percent, singapore down 26 percent and

india down 20%, so a stock markets all over the world are correcting people with fleeing risk assets, and they are temporarily going to flight safety and the treasuries. at the end of the day, it is not a stable system when you have 6 trillion of sovereign debt in the world and it is trading with the negative yield. that is what is killing the banks of europe, that is what is going to totally end the viability of the banks in japan. how in the world does anybody think you can go for any period a time with negative interest rates? you are going to have the monetary collapse. david: let's do a factual. let's suppose for a moment that u.s. does go a 2% -- stephanie: larry fink thinks that. david: let's suppose china is growing 6.5% and india is going 1%,, europe growing .5 to

does that lead to a session? it is growth. saying weg, you are will not grow, but people say we will. david stockman: if dogs could whistle, the world would be a chorus. matt: we see 2.5% wage growth -- david stockman: if you look at the forecast for q1, it is barely 1%. on a dynamic racist, if you look at what inventories are, we are , business 2008 levels sales are down 5%, and gave the numbers on withholding tax reductions, which are the most current, accurate indicator to get because nobody sends taxes to washington for someone who is not working, and went tax collections go negative, which they have, it means the real

employment situation is beginning to deteriorate. stephanie: it feels a allentown time state is right around the corner. david: david is going to stay with us and we are going to talk about politics. stephanie: david westin telling a joke. david: let's take a look. i am afraid the futures are down. , the0 year yield down japanese yen against the dollar, down. all correlated asked tom keene would say. the first votes of the new hampshire primary have been cast and we take you to manchester for the latest, next on "bloomberg ." ♪

in the green room.

coming up, to not miss matt miller and mark are in they stop in the battle -- mark barton they stop in the battle of the charts, next. ♪ stephanie: in today's power go, we get to covert the primary underway. i went to bring in john from manchester. midnight andd at the earliest votes have been counted. but are we seeing so far? is a landslide for john kasich and bernie sanders. i don't have the vote totals, but they are the big winners of their in those obviously predicted and determine contest. david: this is what i went to ask. who has to come in second or third or has to leave the race at this point?

i am thinking about chris christie, john kasich and jeb bush. nobody ever has to leave the race. it is a question of you never leave because you want to but you run out of money. all of these guys could conceivably go on with super pac's. a lot of what matters in the republican side are the margins. chris christie is in sixth or seventh place with 4% of the vote and it will be hard to make a compelling case of white to go on even though he has enough money to do so. on the other hand, if you have second place with four or five republicans with four or five republicans within a couple of points, all could credibly say, this is a model with no clear second place and we are in a virtual tie for second place and there's no clear establishment candidate so let's continue the fight in south carolina and nevada. wephanie: across the board, are seeing up, down, it is anybody's race. david stockman: it is a gone show. stephanie: why does it matter?

david stockman: the country has become on government. you have eight debates or however many they have had, and there has been hardly a minute on the fundamental problems of the central bank that is out of control, destroying savers, they are being destroyed, gamblers on wall street are making massive windfall gains. we do have a huge income distribution problem, we do have a financial system that is allocating to only secondary speculation, no real investment, we do have 19 trillion national debt and we are doing nothing about it. most of the republicans want to protect social security does not exist. stephanie: hold on, john, what is -- what are the three key things for those of us who do think the country is revocable -- governable? largethat is such a

existential question. i am a simple man and i'm interested to see what the outcome is on the republican side. we are confident bernie sanders will win on the democratic side and i am interested in seeing the answer to david's question, how does that mainstream sort itself out, assuming donald trump wins, which everybody assumes on the basis of polling and what rival campaigns thing from internal tracking numbers. who is among the establishment based candidates, if anyone can claim, to consolidate that part of the party and who gives speeches tonight that kind of capture the sense that they have momentum leaving the state and heading into south carolina, which has been historically the most important of all republican states. the one who wins there usually goes on to get the nomination. david: thank you, john. david stockman, you are staying with us. you can watch results come in on

"although it -- come in on "all due respect" at that :00 p.m. -- at 5:00 p.m. ♪

david: time now for our new and exciting segment -- how to the charts. matt miller will take on mark barton for the second day. we will judge the winner at the desk. matt, you can go first. how can you redeem yourself from yesterday? matt: let me pull up the chart with something i showed you earlier this morning. i gave david stockman a sneak peak, but this is pretty simple, the credit default swaps for three banks, the deutsche bank, -- twod it tells three stories. one is this amazing rocket of cost to ensure debt. that debt is pretty steep for a national institution of germany. one other thing that it tells

you is there is real differentiation. it is at 80 -- 86.8 for ubs and swisss.credit s that thereshows you is real probability for deutsche bank but that the market is still working and there is differentiation and that is an important thing, even when certain companies have big problems. david: mark, he is selling this card. mark: i want to talk about value destruction, not move destruction which is how you feel after listening to matt miller. this is the bloomberg world of oil and gas index going back to 2008. worth $4.5aid it was today, weforward to are at $2.17 trillion. how much value has disappeared? $2.35 trillion. let's put 2.5 $3 trillion in

perspective. the german stock market is what 1.6 trillion, the french worth 1.7 trillion, the canadian stock market worth 1.7 trillion, and that's put it another way. exxon mobil is worth 3.3 7 billion. that is the value destruction, so matt miller's mood distraction is forgotten. it is value destruction. david: time to vote. thed stockman: i go with oil one. it is important. fundamentally important but it starts at the wrong place. if you go back to 2000, it was 1.2 trillion and we are getting back to rationality and that is not good for the markets. stephanie: i am going to side with matt miller. that differentiation is so important but i want to make one more point. when you look at this massive spread differential, do you make the argument that may be we should not use this tool and the more?

the way they can exaggerate the market, are they unsafe? david stockman: when they go parabolic, it is too late. david: i have to break the tie, sorry, mark, but i think this was the story of the day, the deutsche bank and that illustrates it beautifully. barton! your face, david: tie, one and one. stephanie: david stockman, you are negative across the board. give me one positive thing. david stockman: one positive thing? give me a couple of minutes. [laughter] stephanie: that is how bearish he is. yikes. david stockman, the one and only, will be back with more. ♪

minutes awayno 30 from the opening bell in new york. i am david weston. stephanie: and i am stephanie ruhle.

we're joined now by christine harper. and we're not letting him leave the building yet -- david stockton. day in theassive markets. futures are a see of fred. or emergingn markets, it is a tough market. remember, china is not even opened this week. deutsche bank specifically is in focus and we will break that down but first, the first word news. david: voters are voting in the first presidential primary right now. trumpindicate donald should win easily with four candidates appear to have a shot at second. marco rubio, john kasich, ted cruz and jeb bush. meanwhile, bernie sanders is expected to win on the democratic side, he leads hillary clinton by the double digits. we'll have a special on with all

at 5:00. president obama is sending a budget to capitol hill today. there is a new tax on oil and billions of dollars to provide summer jobs to out of work young people. also included, a cyber security action plan aimed at modernizing older systems. the federal court has requested a were -- has rejected a request from the state of texas about refusing refuge to the immigrants from syria. they say it is up to the federal government to decide whether the refugees pose a threat to security. matt miller, over to you. in the red and we continue to move lower throughout the program. 1.2%,tures are now down 176.ones down tech took it on the chin and

europe and japan. .heck out europe we continue to move lower there. we have seen it come down throughout the morning. was positivech when i came in at 5:30, is down now. even though some of the banks are continuing to tread water. nikkei, downt the 5.4% overnight. this doesn't do it justice because it is a one-day move but i will tell you that it is the biggest drop they have seen since the early 2013 in japan. so massive move there. .nd take a look at my bloomberg i have a chart there with one of the most interesting things i have seen in a long time. this is the japanese 10 year bond going back to the beginning of 2013. here you can see where the first monetary base target was set, when they started pushing the

bond buying to record levels at the bank of japan. ratehere is a below zero policy actually works and they are yielding negative. he first time we have seen that happening in a g7 country. you can access that on your bloomberg terminal as well. take a look quickly at oil. it has been spinning back-and-forth. it is pretty solidly positive wen though the iaea says have more than anticipated. seeing itare 11. 96 perut at ounce. a lot of people have been running for safety. it looks like we have snapped that streak. 1.7% healed on the 10 year, an amazing run for u.s. treasuries.

stephanie: we could talk markets all day but now it is time for a few stories that matter most. number one, is deutsche bank's new ceo seeking to reassure investors this morning -- saying it is rock solid. the bank was prompted to say that it is able to meet obligations. stockman, we already know how you feel. christine harper, you have to weigh in. christine: they are going into overdrive to assure the stocks and the bond market, because we know for 2008, it is always the bond market that matters the most. so the area that it started ,acking up was in the cocoas which were designed after the crisis to allow banks to get new capital when they got into trouble. those started trading down and

people started to worry about whether the capital isn't what they think. stillare legal issues outstanding and people don't know how much those are going to cost. they don't know how much energy exposure the bank might have. isall of that exposure leading to people thinking that there might be more capital. that heceo has said will take personal responsibility to make sure that the legal and regulatory issues get resolved. people still don't know enough and they don't know what they don't know. they are being cautious. when the ceo has to say that he will take personal responsibility for legal problems, you have a problem right there. >> you do. it reminds you of banks going to the news and say it is ok, and everyone ran to computers and sold the stocks. 2008, we can in criticize what we did here but we react my ties our banks

really quickly. raise capital to and they didn't want to do it but it was a good job. the european banks, they didn't react ties them. i have a great chart. can i show you quickly? this is with the deutsche bank story. it shows price-to-book and deutsche bank is here below half, citigroup is doing a little better. but all of these -- credit suisse, morgan stanley, goldman sachs below one price-to-book. not until you get to ubs and jpmorgan that you actually climb of of one. so this is a measure of how banks are and they are unhealthy. thatanie: it was on google european banks were late to the party. david stockman: i have an optimistic note.

deutsche bank was worth $90 million at its peak and it is worth $20 million now. once it gets down towards the bottom, the german government will bail it out. there is not going to be some big crash on account of deutsche bank. it is a symptom of how serious the financial unwind is. stephanie: so deutsche bank won't be a bear stern? david stockman: absolutely not. the stock isn't worth anything. i'm not saying it is worth 20% of the trading value that it is trading at today, but they will have to raise capital. people don't believe the book value. people don't believe that what they have on the balance sheet is properly assessed. david: number two story, the global selloff. stephanie: i would like to point

out -- ohlone. that was not optimistic. [laughter] david: the bank index is sinking to a three-year low with overall markets plunging 5%. the country's 10 year bond yield is now negative for the first time and the yen is surging against the dollar. so this is what i don't understand about this. happens withwhat the bond because it is a safety. what is going on with the equities? we have had a number of people in here saying japanese equities are a growth opportunity in 2016. stephanie: they went out of business already. they aren't coming back on. mark: i think you're right. when the sky is falling you go to the most protected asset class. you don't care what is happening in 2017 or 2018. their trades are buying cash right now, cash and bonds.

that is will continue until we see a semblance of these currencies and we are not seeing it yet. that is why you are seeing strength. stephanie: david? david stockman: four years ago, the japanese stock market was 7000. that in tire was fast money from all over the world. london, wall street and elsewhere. chasing the market higher because they were running the printing press with this new program. that has now reached a peak. the japanese economy has not recovered. it is in its six recession in the last seven years. and what we now see is that even though the bank of japan has given up on qe, they are trying to push the interest rate into negative territory, which will destroy their monetary system. they are getting old, so fast. they have so much debt. 250% gdp government debt.

it will have to sell their debt to the rest of the world. and why will the rest of the world want to buy a negative yielding yen bond in a financial that is going to blow skyhigh one of these days. stephanie: you're right, they want to buy high-yield bonds in the energy sector. [laughter] i will give you number three. the international engines -- international energy agency says to get ready for a bigger oil surplus this year. supply is clearly the issue in terms of oil. so we continue to get the picture that it is not going to stop. where can we find optimism here? any sort of balance? david stockman: oil is going to be lower for longer because supply and production will be minor and demand will be major. telling the bulls are you now is that it is almost

done because supply is going to adjust and they are assuming that demand will keep going up one million barrels a year worldwide. i doubt that. the appearance of demand output last year was china buying oil for its strategic control and reserve and building of inventories. now has 3 billion barrels of inventory and even the chinese strategic reserves are full. so when you see demand destruction begin to happen, then we go into the next light down. stephanie: jeff curry earlier today said expected to go below $20. mark: i think that is absolutely right. we are hearing all of the rosy being 50% higher, that is not happening. andill probably get $20 oil somebody overtime will say at that price, supply has to be curtailed. stephanie: so what does that mean for a global market as we

climbed the wall? mark: if you sat on this panel a year ago and said unemployed will be under 5% and oil will be headed towards $20, good or bad? everybody would have said that was wonderful. are.anie: that such not if david stockton was here. now we are getting used to that. we also have politicians going on the news and saying how terrible the country is and how we are headed down the path to destruction. that doesn't help confidence and that is what is happening right now. my guess is that as we get to it gets al election little bit more rosy but that is not happening right now. christine: you are seeing the markets let down by energy company stocks and banks who are lenders to energy companies. so that is the market saying, we see where this is going at it isn't a good story for the energy companies and the banks will take a hit. european companies especially

because they are big lenders and the size of that exposure is not well-known. mark: and he gets back to the book value. david: in the case of deutsche bank, this may be a creeping stress test. , april, they have to reevaluate their exposures to these energy companies. david: those are the stories that matter to markets right now. we want to thank david stockton for being here such a good time. mark lehmann, you are staying with us, we are happy to say. we have talked about earlier, futures are in the red. not oure: i know it is job to be market forecasters but i'm going to throw it out there, i think we are turning green by 9:30. david: stick around and we will find out. ♪

to bloomberg go. coca-cola says its fourth-quarter profit beat analyst estimates. and theyoved margins handled the crushing impact of the strong u.s. dollar which has reduced the value of coca-cola sales in other countries. -- has agreed to buy itc holdings. that is at $11.3 billion. transmission line owner has the highest rate of return among all electric utility owners. sachs is warning

that volatility in the market could lead to oil heading below $20 a barrel. prices may swing between $20-$40 a barrel as supply and demand are rebalance. matt miller, over to you. matt: just a few quick pre-earnings stories. andissed earnings estimates as a result, we see stock down 7.3%. the market is being punished for missing estimates. beatcola actually estimates. coca-cola even beat on the bottom line with cvs warned that cost sales are not going to match. down 1.5%.s now take a look at boston scientific. deviceonfirmed that it's will be covered by medicare and investors are taking that as a

positive. that is coming through in today's market trade. and finally, wendy's. in the fourth quarter, they beat revenue. base was founded in columbus, ohio and they are at 3.5% up this morning. when we come back, sales and profit at five, fell, we will look at the challenges facing the newly elected chairman. stay with us. ♪

david: welcome back to bloomberg go. viacom earnings are out today. they reported a drop in first-quarter sales. i want to bring in keith o'regan often. this is not good for viacom. yes, topline miss was because of domestic ad sales being down 4% and a missed.

lining,one silver despite the drop in domestic sales, we are seeing a sequential improvement. so that might be some good news. they are turning around the ratings of some of their networks. although comedy central and mtv are very challenged. but still, that is some good news. they give us any indication of subscribers? or cable cord cutting? >> yes. they're one of the most exposed among the peers because of its target already and's -- target audience. it is skewed towards younger adults and kids. and they have been going to digital platforms. seeing ais why we are drop in ratings over the years.

tot they're doing is trying find more and more outlets to attract the younger audiences, so today they announced a deal with snapchat. they are putting more content on snapchat and they are selling some of snapchat added. they are trying to find ways to diversify their earnings. stephanie: it is the strong dollar that hurt the numbers last night. >> exactly. thereare seeing for fox, cable network business performed well but the foreign exchange caused them to take down their guidance almost 6%, a prophet hit just because of the foreign exchange numbers. and this is something that we are seeing consistency -- seeing consistently. thank you so much for joining us. gigi -- we have to talk

retail. let's talk winners and losers. .ere, we have the queen we have tough matchups. >> like you were saying, this is winners and losers. there are not enough dollars to go around where everyone is a winner. companies -- stephanie: you can if i am your only customer. >> yes. but we do see strategy in place. michael kors has been doing really well online. and they have gotten on trend with where the market is going on. ralph laurent took a beating where the company is being told it isn't what it is used to be. stephanie: is this a matter of

being patient? shannon: even companies like under armour at adidas, they do have a good strategy. they have been doing alright but investors are looking forward. they have to see contracts up next year and what will happen going forward? stephanie: how does the story change? the outperform a tough road until two weeks ago. how do things change? shannon: under armour has been the david versus goliath story. they have tried to get into the market dominated by adidas and nike. shooting hoops with steph curry. david: i heard about that. they have gotten smart in doing the endorsement deals.

they are executing on it and that is what will help the retailers stand apart from the pack at this point. stephanie: when we talk about retail dollars and consumer sentiment, our consumer spending? look at the overall markets, what is the consumer telling us? shannon: i'm interested to see retail sales numbers that come out tomorrow. the holiday was not amazing. it wasn't awful but people thought it could be great because we had gas savings. in january we saw wage numbers going up. again, signs you would expect consumers to be spending. those numbers tomorrow will be important. it's clear, when you see nike's performance, they are taking this casual to work phenomenon that is taking over. you see it with what the millennials are wearing.

it is clear in what you see in the stock prices. stephanie: all right, shannon pettypiece. your takeaway. are people buying more products? or do they want less product? shannon: people are buying more but it is not just retail. it is cell phone and retail and experience. stephanie: millennials, say are frugal. think about that, rent the runway. that was our own shannon pettypiece. last year's sure thing in the markets has quickly become a nightmare. ♪

stephanie: you're watching bloomberg go and we are moments away from the opening bell here in nyc. features are in the red. that is following negative

sentiment out of japan and europe. china is closed for the week that moving markets this week has to be european financials, specifically, deutsche bank. they are recovering from yesterday's selloff after reassuring investors that they have enough cash to pay their debt. we actually heard more reassurance from the german finance minister saying that the deutsche bank is ok. spokerlier, chris wheeler and said it may be was a market of reaction. >> when they told me in the middle of 2007 that they had time million subs exposure, i had no idea what was going on and i couldn't wikipedia it. so i think we now have a better handle as to what is on the balance sheet. but it doesn't stop people from having the fear factor. stephanie: if you look at the markets, the markets don't seem

to agree. mark: they don't agree because they don't have facts. when you don't have facts, you sell. they are trading and where they are telling you the stock is relative to book value, no one believes that right now. no one believes their buffet is for real. you have to tell people what they own and they will probably have to sell some assets. they will have to salsa regulatory problems that they have and get some stability. because right now, in the absence of fact, everyone is selling. stephanie: why is there an absence of fact? they were trying to deal with a strategy to begin with. he came in and said he was going to come up with a new strategy and make it clear at what they were about. saide end of last year, he don't expect any good news. we will be working on it and it will take a while.

assets, you to sell don't want to tell everybody what assets you will sell right away. because then you don't get good prices. trying to we see them shore up the balance sheet and they are trying to do it as fully as possible. and they seem to have stabilized things a bit. mark's gets impatient, it is difficult to respond in a way that isn't going to destroy more value. david: absolutely. you don't want to go out and say that you're going to sell these assets that it is a matter of confidence. take us through the steps. you have to take care of the legal problems? mark: yes, tell people what is on the balance sheet. stephanie: shouldn't they have done this already? i get it, after you lie and cheat, you have to ring me flowers. i tell my kids all the time. i will learn the to the eventually so you may as well tell me now.

they are trying to figure out what they're doing about it and the fundamentals have eroded and you eroded more rapidly than anyone thought. it will take time to figure that out. i think they will liquefy some assets but the good news is that there is lots of capital out there. itmay be at lower prices but will give people more confidence that they don't have right now. david: but if they have to admit that their assets aren't quite as attractive as they said, they have some write-downs. christine: exactly. the more people worry, the more people reduce the value on the balance sheet. you end up in this spiral. so at this point, what they are doing, what you see jon klein doing and what the finance minister is doing, they say every thing is ok and chill out and don't worry. one of the big investors in

london said that. it is ok. blankfein saying that banks are getting the credit for the balance sheet that they have. it is hard for investors who were strong in 2008. when they see things like a 30% book value, they say they don't know what they don't know. stephanie: let's share some of the comments from lloyd blank fine. >> we aren't standing around holding hands to get better but i should say, i do think the market can get better. i don't think low global growth with zero negative interest rates and the total discombobulated in emerging markets is a normal state. we are not holding our breath, waiting for it to change. backe future, we will look to this time and say, the golden age. but i don't think so.

i don't think this is the golden age of opportunity for business. but jon klein took the position at deutsche bank nine months ago. wasn't that the time to open his komodo and say, here is everything inside the joint. christine: but they did it. remember, they wrote down major trusts. they came out and said that they have things on the balance sheet that don't make sense. so i think that we should give them some credit that they believe they did the best they could. in the what is happening market is pure fear. it is just the sense of the energy market unwinding and the credit risk there. a lot of italian banks and there are a lot of problems with the european banks. and deutsche bank is at the epicenter. they survived through 2008

relatively well. so it is interesting that they are at the epicenter. matt: if there is this much fear and you think buyers have the price, where is the price? index, euros&p bank bank index. this is the 200 day moving average, they are will be low eight. the bottom panel shows the percentage of members in that index who are above the 200 day moving average and it is zero. they are all getting crushed. when does this become a market in which you want to buy? mark: when you want to buy is when you see real capitulation. we haven't seen an asset set where you were like, wow. we haven't seen anybody do that. we haven't seen one of the big european banks get out of the business that they been in for 20-40-100 years.

when you see something like that, then you will see the stocks turn the other way. but until then, we have the fear laden market that we are in right now. people say they are not going to call a bottom. since 2009, at what point does the bund is bank have to say, they are fine. mark: no german chancellor is going to allow a bank with the word deutsche in eight to go bad. that is likely not going to happen. i don't think this country would allow the bank of america to go bad. i think they will probably extend their meeting and say, you need to figure this out now. just like we did here. we went to the banks and they said they didn't need equity and

that was the best thing we did. christine: there is a possibility here and we will do our best to report it if it is happening, that maybe there are saw funds thato are seeing positions go bad. so it actually could be a technical move that is happening and you could find it hit the bottom and comes back. because we are hearing from a lot of traditional investors saying that they are puzzled by it. goldman sachs put out a report saying that these are way too cheap. stephanie: we are accustomed to fast money hedge funds but we are not accustomed to this. not now, not ever. mark: i agree. january was one of the worst months that we have seen since 2008. including 2008. so this is not just, the stocks

are down but this is really bad. i agree with you with the sovereign wealth funds. stephanie: in the past, with sovereign wealth funds on deck, you never see it come to market again. when they buy it, it is gone. christine: they were some of the rescuers in 2008. they put a bid under citigroup. david: sooner or later, it all comes back to oil. let's see where the markets are now. are nine minutes into the trading in new york. matt: we are seeing markets that are under pressure, not as much but the s&p 500 is down. and the nasdaqwn is down about two thirds of 1%. if you take a look at my bloomberg, i have used the mov function.

you can see the winners and the losers. i have organized this in terms of index points. the biggest loser per index points. you also see some of the big is takingxxon mobil the most points away from the s&p 500 index. walt disney is down. well scarlet:. some of the movers are interesting. are doing well, like coca-cola. home depot is doing well. macdonald's doing well. some of the more defensive stocks and also some of the retail stocks. wellakers are not doing today. we sued to chrysler earlier, down in the premarket. here is a look at crude. at 29.7. this doesn't seem to have as much effect on the automakers as it does on the general market.

take a look at fiat chrysler. also getting hit today. fiat chrysler is getting into a investigationger involving its cars. that is pulling down the whole group. cbs is a loser right now, it even though we saw walgreens as a gain or on one of the previous screens. cvs and coca-cola both beat on revenue. cvs is having a tougher time with its revenue outlook. i want to show you a couple of companies that did beat or were in line with votes. 21st century fox and viacom but they both missed on revenue. viacom is down 10% and fox is down 5%. let's go to abigail doolittle, live in the nasdaq. abigail: regeneron shares are

down as the company missed fourth-quarter estimates for the sales and earnings. combination of rising costs and slowing growth. it is a relative slowing, looking ahead, the company expects the drug to grow 20% in 2016 versus the 54% a group last year. overtock is actually down the last six months significantly. so we are seeing a recessing of expectations. this stock may have to drop more before restoring growth and evaluation. stephanie: thank you to abigail doolittle. when we return, we will talk about value propositions. principles are now at the center of the feud. but the division of radical transparency, does it actually deliver results? ♪

matt: welcome back to bloomberg go. tomorrow, we will speak with john mack, don't miss it. ♪ welcome back. plans to shut at least 50 locations and is weighing the sales of its auto services business. sales are down nearly 7%. american international group plans to leave at least half the hedge funds in which it has invested in. the insurer has holdings in more

than 100 funds and plans to cut that to 50 or fewer. lenders present a buying opportunity. market strategists -- earlier have, low interest rates sparked a selloff. we have the worst performance of any industry group. that is a bloomberg business flash. back to you. stephanie: this one is for those with escape. this is where he zero in on controversial issues. founder, ray galileo are in the midst of a public feud, calling for a vote on each other's conduct. , evenan extreme example for bridgewater. it has made more money than any other hedge fund in history. here is the question.

does radical transparency work? ray makes the argument that having a table of people to disagree with and push back helps you make better decisions. the question is, is that true? do you need to go to that extent? i think that is very aspirational. to have everybody sit around a table and say what they think. i run a small company. only 200 people. i only hear the good stuff. maybe havinge -- everyone have a voice could be tough. running an organization is hard. it makes sense to have everybody who contributes probably having a forum to vent but i'm not sure that hearing every single thing is a way to run a company. their numbers are hard to question. they have done an unbelievable job. it is hard to argue

with the results. they have a quirky culture but it seems to work. it has to be a really awful place to work in many respects because of that extreme level of transparency. on the other hand, there is something awful about being at a company where everyone is hiding things. so there is no perfect solution. companies are complicated places and company politics are difficult. this is one really innovative way to deal with it. stephanie: isn't just the opposite of the way our culture is moving in the terms of everyone winning a trophy? mark: i don't know if that is true. if you look at your instagram and facebook, everyone wants to tell you all the time, everything, all the time. this is the opposite. this is telling you everything you think at every given time.

millennials and people in their 20's and 30's have an easier time telling you when things are off. when i was a kid, i would never go to my parents and say that i was having a problem with a class. 30's will say, i had a bad to say which today. we are in a new culture and people are trying to adapt. christine: here on bloomberg we work on an open plan. once upon a time, that was unusual. but actually it works really well. communication is much stronger and other companies are adopting that now. so this seems like an extreme version of everyone knows what everyone else is doing. hate a culture in which people are nice to your face and then go around behind you. there are things that i met sure i want my colleagues to be honest with me about. it's like a marriage.

i don't need to know every single thing. christine: that is common sense. stephanie: you don't necessarily need to be brutally honest about every single thing. 25-year-old ate work, did anyone ask you how you felt? mark: no. not going to happen. david: they asked me how many hours it was working. mark: a good point. there are times when my lower lip is tight because i don't say everything i should. that isn't necessarily the best thing. david: in a broader perspective, there is a 10 year succession web. they are halfway into that. , you have toy wonder, is this part of the succession? if he is, it is out there in the open and you can't

argue with this guy's performance. matt miller, do you want to weigh in? do you have what it takes to handle rich water? matt: absolutely not. i was glad to get some insight as for me, it is like a silence of the lambs-brave new world set a. stephanie: i wouldn't say that. elio -- you- rate can't argue with his performance. matt: i don't argue, it just gives me a creepy feeling. david: david: if you talk to these people at all, it is incredibly important. talk to people at the top hedge funds and the environment they work in, some of them go home and say, i don't know how i can take this. stephanie: there is massive turnover at some of these funds

with strong founders. huge turnover. have hadnow people who great jobs but then they say, i don't know if it was worth it. david: thank you very much for joining us. next, we will take a look at some of the show highlights. ♪

stephanie: welcome back. here is a look at some of the top conversations. path we were on of low growth is ending. realize, this to pass, which has served us relatively well for the past few years, is ending. i am still not able, unfortunately to tell you for is what comes afterwards.

because that is up to the decisions we make as a society. >> we have to get away from the theory of relying on the central banks and get back to the companies actually earning money. that is why this is actually an important turning point as far as emerging markets are concerned. they started the year relatively better because that is where the growth will be in the next 5-10 years. >> everyone should have gold in their portfolio, it is an insured asset. it gives you an option on the central bank. i think the central bank system will break down. you have people talking absurd talk. the head of the bank of japan is going to a negative interest rate. david: there you have it. go first.harper, christine: -- said bringing back

qe this year. it was nice that mohamed el-erian reminded us that the markets are working, even just for now. so even though there is gloom and doom, it is functioning. stephanie: for me, david stockton is a critical guide that across the board and the messages for him was scary. david: for me, it was mohamed el-erian saying we cannot keep going that way and he doesn't think janet yellen understands that. stephanie: there you have it. today's bloomberg oh, what a day. we will see you tomorrow. former morgan stanley ceo. ♪

>> it is 10:00 a.m. in new york, 11:00 p.m. in hong kong. welcome to bloomberg "markets." ♪

betty: from bloomberg world headquarters in new york, i am betty liu. we are half it hour into the trading session. stocks are trying to make it back into the green as global equities near a bear market with volatility near a seven-year high. ranking stocks are getting hit. one of the banks getting .queezed is deutsche bank co-ceo john cry on is trying to reinsurer investors it can pay back its riskiest debt, saying the lender is rock solid. to investors believe it? president obama releasing his last budget proposal of his presidency. 6 budget books were hauled into congress. they say they won't consider the $4 trillion plan.