from bloomberg world headquarters in new york, good afternoon. what we ares watching at this hour. stocks struggle for election -- direction as stocks try to pull away from week markets. week oil is not helping. scarlett: in ending exclusive interview, the italian prime minister says there will be a turnaround. alix: deutsche bank says it insists it has the cash to pay off its riskiest bonds. it is not just the bank that is making investors nervous. is the bubble about to burst? we want to get to today's market activity. let's head to julie hyman who has been tracking the struggle for direction which seems to have taken a move to the downside. julie: it has. there was an attempted recovery as we got underway this morning and it has not helped. now, all three major averages are down .4%.

as we haven't talking about, there is a struggle for direction. look at the s&p 500 over the course of the session thus far. there has men and a norma's amount of zigzagging between gains and losses throughout -- there has been an enormous amount of zigzagging between gains and losses throughout the day. there has been a huge spike in volume if you look at sector by sector. take a look. this is a function we are using. energy, the biggest declining group percentagewise, volume down about 15% over the 20 day average. materials volume is down. drops in volume and technology, industrials, utilities. there is an increase in trading volume in financials and telecom and consumer staples, but it is interesting it is not across the board that we are seeing an uptick in volume. as for stacks -- stocks, years today, it's a good he temperatures of declines for all three major averages. the nasdaq has trended in decline. it has been the lagging index for the year to date.

now, -- this is one year. over the one-year. , it is actually doing less poorly than the other major averages. alix: what about volatility in stocks? gold over $1200 an ounce for a brief moment yesterday. still rising. gold futures are falling. a little dichotomy. i want to start with what we are seeing -- here is gold. i that we were starting with the 10 year. let's take a look at gold. here is the year to day trade for gold and a 13% increase we have seen. not holding our $1200 an ounce of you give futures, but it is if you look at stock gold. also, the 10 year, we have that, as well. another expression of people going to what they perceive is more safe. the year to date chart shows the yield going down as prices go higher. 1.73% is the lowest in a year. all of this as volatility has been going up. this is the opposite expression of that. people hedging against what they

see as a dangerous environment right now. year to date. what i want to look at is the average price on the fix. that is closer to 25. we are in an elevated volatility environment. let's check in now with the bloomberg first word news with mark crumpton. mark: thanks. president obama has sent his final budget to congress. the $4 trillion plan from fiscal 2017 as packed with items the republican-led congress is sure to reject such as a new tax on oil and billions to give out of work youth summer jobs. the president also wants to raise $2.6 trillion over the next decade through changes in the tax code. day in newry hampshire. polls indicate republican donald trump has a huge lead. for candidates appear to have a shot at finishing second. ted cruz, marco rubio, john kasich, and jeb bush. meanwhile, bernie sanders is favorite to win the democratic race.

he leads national front runner hillary clinton by double digits. in this programming know, bloomberg television's with all due respect will have a two-hour hour special from new hampshire that starts at 5:00 p.m. new york time. germany's transport minister now says at least nine people were killed in this morning's head-on crash of two commuter trains. another 90 people were injured. that collision took place in the southern state of bavaria. police say the area isn't easy to get to, making rescue efforts more difficult. mobile news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton, alex and scarlet, back to you. scarlett: is italy's economy heading for a turnaround? it's finest minister thinks so due to a decline in public debt this year. in an exclusive conversation with bloomberg's editor in chief, he explains why he is standing behind us protection. i am confident in that

prediction and the commission with a very recent winter forecast. as testified to the fact that we gdp ratio inwer 2016. the point is this is a turnaround. turnaround of the dynamics of debt which is been growing for eight years now. and, given real growth and possibly given a bit more inflation that is beyond the control, we will see dynamics of the debt accelerating downward. this will change the perception of the markets. levels, somen the people look at the amount can say that is a tiny amount to come down. how important do you think the momentum is? >> i think it is very important. what messes up about that is sustainability and the direction that is taking rather than absolute level. also, on absolute level story, let me add those numbers ignore what i expect to be the receipt

from privacy taste -- privatization in 2016. >> you talked about inflation. do you see inflation is the biggest -- or deflation is the biggest risk to italy's economy? inflation in the euro area has to go as quickly as possible toward what is considered by everybody the equilibrium value which is 2%. we are very far from there. the ecb is doing a great job. my view is that they should continue to do so. countries, we the should do the best to facilitate the transmission of qe toward the economy which, in the case of italy, includes dealing with the banking system. >> in that attempt to try to get growth to spread, to pick up a bit, do you think italy has the right allies in the year in commission? is this something where you are automatically in a battle with the germans? >> i think there is a battle with the germans and a battle for a stronger euro zone.

we need more growth area let's not forget that we are not -- we should not be satisfied with the amount of job creation which is the ultimate signal of economic policy is working. >> as an economist, you will often talked about the role of opening up an economist. do you see that as the european union's great opportunity in terms of the regulation and opening up the european union? >> europe grows whenever there is more integration and liberalization inside europe here it also, it could benefit from more opening up of the rest of the world. the combination of more single market and more opening up with other economies including a north american economy would add to boost growth. this is what, by the way, historical evidence says about historical growth episodes. >> you think there is similarity between your position on that and david cameron? >> we have always been on the same wavelength with the u.k. governments position on the

benefits of more single market and more trade liberalization. scarlett: the thorn in italy's side has been those nonperforming loans. 360 billion euros. there was a plan and europe to fix them. it was met with a lot of criticism. what does he say about his confidence in the banks right now? >> he is in a difficult position. he talked about inflation being a big thing. he wants to get rid of deflation. the other huge thing dragging italy's economy back at the moment is these nonperforming loans and the inability of banks to lend. his argument, and for that matter, the arguments of most of the senior figures in italy, is look at the numbers. there are $200 billion -- 200 billion euros worth of bad loans, but we have provisions against back, 40%, security behind that which we can get.

the problem slightly with those numbers is that everyone looks at it and says that is on a good day. you might get that. , insecond problem is that many ways, italy missed its chance. all of these places like germany, spain went and collected money from the european union and were allowed to bailout things. italy at the time kept on saying no, our banks are fine. that was a mistake and opportunity. seems like there is the push for some kind of domestic solution considering that italy has not spent that much to try to recapitalize its banks. 2% of gdp versus germany at a percent of gdp. do you get a sense that there is commitment to that now? >> i think there is a commitment and italy that the banks have got to get sorted out. like many italian commitments, it requires a bit of nudging along, i think. things, if those think there'll be a lot of promise and they will be

somewhat close to it. the basic idea is they hope italian banks will come together. they will begin to do things like sort out the most famous troubled one sitting and which the treasury has to state. they will hope that banks through new laws which they are talking about bringing out this week will bail out, maybe move employees on quicker. also be able to get resolution which is really important. debt.tion of bad at the moment, if you're trained to secure, trying to grab a house which you have a security, it can take you years and years to get. by contrast in most other countries, you can get hold of the assets which you have secured your loans against much more easily. that is another problem which the italian banks hope are going to get freer to do. alix: broadening our conversation, what has he and the ministration done to aid that effort?

>> that is the interesting thing. you have a huge experiment in europe at the moment. you have draghi pushing and pushing and getting more money. on the other hand, you have other things which get in the way. one of them is of the banking transmission is not great. if you have a group of banks who are deeply worried about their capital, you can see that across all of the european markets at the moment, you added the bit about deutsche saying they had enough money to pay people back. in the otherthings direction, banks are nervous. particularly, in places like italy were family companies matter enormously, family companies said there and think, the people who went and borrowed money, they are the ones who people are taking over now. i'm going to hold back. i'm not going to push through. what happens is that money swirling around the system doesn't get into the real economy. they goes into asset prices, or at least it did. it doesn't actually get through to where druggie and runs he want it all to go. he has been focusing on

agenda focuses more on growth rather than austerity when it comes to the approach to the economy. what a his is an economy based on your conversation the brussels and germany would comply with that? >> two things. at the moment, he is a competent human being compared to the other your -- leaders of europe. , she has perfect problems to do with migration. cameron has his referendum. hiding behind cameron. spain where there is no government. italy very much looks like it is having its moment of leadership or something close to it. he likes that. the problem is none of that amounts to much animosity can actually get permission from brussels to get things going. also, more than many other leaders, he has a huge vested interest in the european project staying together. you begin to imagine what would if you could move from border to border come across

borders without passports, if that got into trouble, if there wasn't money in the sense -- to help deal with drums like the italian banks to beer it --. to be fair, he is trying to push something what you hear from the netherlands and from david cameron, the idea of a complete reform of europe, that you would open up the single market. you heard a bit of that from how to win there. that is quite a novel meshes from the italians to be honest about it. you had nothing about claptrap about that. this is slightly more direct. he is talking about opening things up. thank you for joining us. we appreciate your time. bloomberg editor and chief. coming up on bloomberg market day, we take you to san francisco were goldman sachs is talking to one of the country's top the seas.

alix: welcome back to bloomberg markets. the tech wreck that started around the beginning of the year is within spitting distance of a bear market. today.s extending >> the view is decidedly bright out in san francisco were goldman sachs is holding its annual technology conference. our bloomberg anchors live on site with one of the top in the country. >> you guys just raised one of the biggest funds ever. more than $3 billion. i have to start with the public market. scarlet and alex were talking on it there. tech has seen a bloodbath in the last few days. is this justified? personally, i think it is crazy. i feel badly for the people who have invested in great companies. you and i have both know they have been involved in tableau. >> it has less than 50% in three

days. >> i am not on the board anymore. last may. i can speak freely about the company because i don't will anything that is not public information. from $80 a went share. it was $97 a share a couple months ago. it is $38 a share today. it has gone from 10 times revenue to three times revenue. for a company that is still growing 50% a year, that seems unjustified to me. emily: what is driving the change in investor sentiment? >> i can only imagine people are fearing the overall economy is slowing efficiently that it will impact whether people are making investments in technology. emily: are you feel throw that -- fearful of that? >> i'm not fearful you. the world is in shambles. those worrisome. whether china will drag us down, nobody knows.

i still feel like the u.s. economy is on solid footing. it doesn't have to grow at an alarming rate for tech companies to do well. innovation creates its own growth. 2% growth economy, that is fine first. >> what about the tech sector specifically. are we seeing a massive revaluing? is that justified? >> i think not. i hearken back to what happens to companies a year ago in march. in a period of about two weeks, they lost 40% of their value, maybe not 50%. within nine months, they were back to all-time highs. people realized that there aren't that many places in the world where you can buy into a company which is either profitable or on the verge of profitability with a huge balance sheet and growing 50 plus percent a year. emily: what does this mean for the unicorn? or late stage private tech companies? nation's willly come down, there readjustments, and i think that is healthy or the class of uniforms, if you

have all of them at whatever the recent prices are, is going to turn out well. on a going to be based relatively small number of them which are truly home runs. there are going -- there is going to be a lot of carnage. not all of these companies that of achieve these valuations will even survive great >> how many survive? >> i would wager more than half survive. i am looking at what happens in a venture portfolio. and a venture portfolio, 5% of the companies generate all of the off of. another 60% of them do fine. they don't produce. they are respectable companies that bring wonderful, new innovation to the world, they just don't generate the output for the industry. 30%, i probably don't have my math correct, but another 30% go away. you follow every stage of the sandbox. as a late stage investor, others pulled back. is that an opportunity for you? >> it is opposite -- absolutely an opportunity for us. for companies we are not investors in yet.

for companies and are pro-folio need to read -- raise capital, it makes it more challenging. valuations we lower. we won't necessarily suffer more dilution because we get to invest. on the whole, i think it is healthy. emily: youd me -- told me that we are in a tech boom. where we end the cycle and how does what is happening in the public market change that? >> we have to change between what is happening in the product markets and what is happening in the financial markets. how are these companies doing? his animation -- is innovation thriving? of course it is. across more sectors than we have ever seen. looked at 20 or 50 years from now, people will look back and say we have never seen anything like this. innovation is valued, day to day, month to month, year to year, highly volatile. that is what we're saying. incredible volatility. especially in the public market. emily: what about china, specifically?

you have a number of investments in china. we have seen a massive slowdown. does that make you nervous? >> of course it makes me nervous. i am no more of a china expert then a lot of other people. what i do know a more about is what is happening in our portfolio. our portfolio is doing really well. that excites me. again, it is the fundamental innovation that is thriving. the overall macro picture is cloudy. the macro picture can impact greatappens to even companies who can do well in a terrible market. emily: managing general partner in her, great to have you here. buy from the goldman sachs technology company, i will set of rt. alix: bloomberg's emily chang. scarlett: still ahead on bloomberg markets, a tough day for financials. a look at lightbank scherzer falling globally.

♪ scarlett: welcome back to

bloomberg markets. we are going to head over to our markets desk were julie hyman has a check on movers in the banking world. a lot of red there. julie: particularly in europe where we are watching european banks fall. deutsche bank out trying to reassure investors about its debt position, its general financial health. not a lot of reassurance being felt amongst insurers. ubs is reporting that the company is freezing bonuses for its investment bankers through the first quarter of the year. berkeley falling. cases moren in some acute decline for the european banks than for the u.s. ones. let's check on the big u.s. banks to see how they are faring today. we have a number of the big ones falling. jpmorgan on this list. citigroup. we also have more of a mixed picture within the banks today. some of the smaller regional banks are trading higher. withof america had flirted being higher a little earlier today. earlier this morning on bloomberg surveillance, we heard

jonathan of rbc who thinks that banks actually look attractive right now. jonathan: i am not sure i would be buying deutsche bank or not, but i think financials right now, the market is really -- it is almost looking for an excuse to be concerned. interest rates are down. it is an issue. the u.s. banks are in healthier shape. they go way ahead of their issues. as charles was saying before, when interest rates are low and there are other issues facing the banking market, the sector has a hard lot -- hard time on a number of fronts. it has been placing hard indeed. if you look at the index over the past year, down 15.5%. all of its members are lower for that period of time as it is today as well. all of these declines have been since bank valuations, relative to other kinds of stocks are quite low right now. this is the msci bank index for

price-to-earnings ratios versus the msci world index. you see a big gap, the biggest on record. if you look at on a forward basis, it is a large gap between the two. when you hear people like gollup saying it is an attractive time to come in, some folks are looking at valuations and saying, is the depth of that discount warns it? alix: valuation versus fundamental argument here thank you so much. scarlett: still ahead on bloomberg markets, an interview with martin gilbert. they share their latest thoughts on investment banking in india versus china.

alix: from bloomberg world headquarters in new york, welcome back to "bloomberg markets." i am alix steel. scarlet: i'm scarlet fu could let's start with the bloomberg

first word news. mark crumpton has those. in hampshire, candidates are still stumping hoping to sway voters in the nation's first primary. hillary clinton was outside a polling station in manchester, looking for last-minute support. surveys indicate she will probably lose to vermont senator bernie sanders. on the republican side, donald trump is expected to win big, but the real fight is in second place for ted cruz, marco rubio, john kasich, and jeb bush. we will have a two hour primary special with "with all due respect" beginning at 5:00 p.m. new york time. the fbi investigation into hillary clinton's use of private e-mail server while secretary of state is free of outside political influence. loretta lynch says the i inquiry is independent and is used on tax and evidence. the investigation is ongoing. present obama is calling for a

$19 billion cyber security plan. it's included in the budget he sent to congress today. the plan is aimed at modernizing older information-technology systems and prevent them from being hacked. it would also include a campaign and getting people to secure accounts did canada will send more troops to iraq to fight the islamic state could prime minister justin trudeau is taking backplanes from airstrikes. that goes back against the campaign promise he made to halt bombing runs. detroit teachers are ending their sickout and doing walk-ins. teachers are reporting early and discussing issues facing the school systems. the sickout's caused schools to close in recent weeks. global news tony four hours a day powered by our 2400 journalist in more than 150 news bureaus around the world. i am mark crumpton. back to you. alix: emerging market stocks are

falling for a second day amid renewed concern global growth is falling. scarlet: earlier today, mohamed el-erian and gilbert were on "bloomberg ." stephanie ruhle asked him. and i'mwe are seeing sure we will come onto it, but the banks and the worry about return of banks. japan has got a different issue than most other countries. people will not take their money out of the banks and put them into equities or spend it. this is them really throwing everything at trying to get people to take money out of banks. we saw some money markets being closed overnight. the fund managers giving money back to investors, which i can assure you is not something that fund managers do willingly. is ank japan -- i think it

separate issue from a lot of the other markets. mohamed: i think martin is right, but we are in the midst of a perfect storm that precincts come together and you get the improbable. it's not the unthinkable. the first element of the perfect storm is concern about global fundamentals and corporate earnings. the second element about the perfect storm is concerned about the effectiveness of central bank policies. people no longer believe that central banks can protect volatility. the third element of a perfect storm is the lack of patient capital. there is not patient capital. thingsese three together, there is volatility with a clear downside to risk assets and that was what we are seeing. stephanie: those three issues andnot staying among sovereign wealth funds, they have been the biggest sellers in large part due to oil

and that bleed is not going to stop. martin: the sovereign wealth funds were set up for a rainy day and the reigning day has arrived for a lot of big oil-producing states. we saw that from august last year. really big redemptions from the sovereign wealth funds. mohamed el-erian is right. people wonder what else central banks can throw at this issue. they have done everything at it so far. we are seeing the bank of japan really stepping up the pace. david: stephanie said it's right. in europe, equities were down. now it's the financial institutions. today is deutsche bank. , athis an income issue skepticism over whether banks can make money? is this a balance sheet issued? what is this having this focus on the banks right now? all the above.

first, it's a credit quality issue. people are concerned that banks have left the commodity sector and are worrying about the quality of loans. it is a net interest modern issue. the yield curve is collapsing. it is cascading down and that means banks will earn less. then we, let us not forget regulation. the bottom ofns the capital structure is much more vulnerable. when you get concerns about the equitywo, particularly and hybrid debt will selloff violently and that is what we are seeing. martin: the first two plus lower regulation lead to lower earnings. can banks and the return on capital they need to pay the difference? stephanie: what you think the answer is? martin: i don't think they can, which is why they're going through this massive cost-cutting, especially in europe where the european investment banks have almost thrown in the towel and a really concentrating on profitable

parts of the business. matt: the fact that deutsche bank had to come out and say it's no problem and can continue to pay the coupon makes me think they can't. here is the credit default swaps for deutsche bank and white and credit squeeze blue and ubs and green. you can see they skyrocket here. it is now across $241,000 to ensure $10 million of deutsche bank debt. what do you think will happen? while they have to renegotiate or restructure those bonds? i hate to use those words because it's scary. martin: i think it's an earnings problem and not a capital issue. i agree with john on that. leadsr the earnings issue to a capital issue, and as we has said before, banks are all about confidence. when confidence erodes, it does become a capital issue. into: you could cut earnings. if you do not watch the people

are making money for you, you can get caught in a trap and in a vicious cycle. mohamed: it's part of a big issue. we are de-risking the banks in a fundamental way. banks are moving toward what i call the utilities market. they are going to earn a lot less on the capital. they're going to be a lot more boring, but you've got to get there. the u.s. did it relatively well. europe is doing it in a much more clumsy manner. the good news in matt's chart is that there is different region -- the french nation going on. that's important. where theyreads stay are, concerns about banks are going to spread. stephanie: hold on. how bad? when we say concerns about banks, the perfect storm -- everyone died in it. [laughter] david: that's true. martin: the better example is ubs, which did it sooner. they got there already and i think credits lease will get there. i think the wenzhou were get there -- deutsche bank will get there.

comeanie: assuming they do at 12 months from now, some say we are in recession mode. what you say we are? companies are still done well at the corporate level. i don't think either. we are at an era of very slow growth. stephanie: except for the fact that emerging-market corporate's, many are tied to commodity prices and their more lover today than the financial crisis. bigin: we have a very overweight position in india, which is doing extremely well. it is leading world growth at the moment. companies are well managed and below oil price actually does them a lot of good. david: their gdp is growing faster it looks like them china. martin: by a percent more than the chinese figure. they are seeing the benefit of oil. that is really where -- i think they were a massive importer of oil and that has been a huge benefit to them. it probably added 1% to gdp in india.

the difference between china and india is it's easier to make money in india than china. it's easier to find companies with good corporate governance in india than china. china will come. we are excited about china, the middle class, the wealth growth, all these things. it's going to be a massive driver of wealth -- world growth in the years to come here at the moment, it is still difficult to find companies with good corporate governance. stephanie: can you trust that government will do the right thing? many have stayed out of china because of the government intervention. martin: it's a very well country. they are all confident. i think they are all engineers from memory. it is a very well run country. they learned a ver valuable

lesson on keeping the market up and not allowing it to go down. that was martin gilbert and mohamed el-erian earlier on bloomberg. scarlet: deutsche bank's co-ceo says their funds are doing well, but their cocoa funds may be different. alix: what is behind the labor market slack? scarlet: is there anything to hide under this volatility? we get some of the answers. ♪

abigail: welcome back to "bloomberg markets." i'm abigail doolittle at the nasdaq. we have the three major averages

down by half a percent. the nasdaq is well off its opening low-speed still, the nasdaq is 2% away from a potential bear market. dragging on the nasdaq are shares of viacom. the stock is plunging after the couple he missed fiscal first-quarter sales estimates by 3%. the company chair says a rebound is coming and doubters will be proven wrong. with many activists investors pressuring management and the stock now below the buying support of recent lows, it may be some time before that possible recovery materializes. one stock really exemplifying today's volatility. tesla shares had been up sharply and now flat ahead of the company's earnings report tomorrow. analyst brian johnson at barclays lowered its price target to $165 from 180 dollars m reiterated his underweight rating, saying the fundamentals here need to come and check it .

that is down as the stock is worrying-to-date, wearin about a short interest bear rating. i am abigail doolittle at the nasdaq market site. now more "bloomberg markets." alix: you are watching bloomberg. scarlet: i'm scarlet fu . xlix: i'm alei steel. scarlet: we will hear from italy's finance minister. alix: whether the options for germany's biggest bank? --rlet: mcdonald's posted poised to post profits hired then years. what is behind the turnaround? italian finance minister says the ecb should keep up the good workk.

>> it should go as high as the equilibrium value at 2%. the ecb is doing a great job. should is that continue to do so and on the side of the companies, we should facilitate the qb of the economy, and italy, which includes dealing with the banking system. alix: italy's largest bank wants to ensure that it has enough money to pay its debts. deutsche bank says it has enough to take coupons on its riskiest debt this year and next good speaking exclusively to bloomberg, the german finance minister gave his foot of confidence in the bank. >> do you have any concerns on deutsche bank? >> no, i don't have concerns with deutsche bank. mcdonald's japan forecast it will return to full year profit for the first time in three years as the heavier chain puts forward new measures and attempts to went back customers after being hit by series of food crises.

the ceo of mcdonald's japan expressed confidence in the turnaround. >> we believe we have made good progress rebuilding our foundation, our customers are noticing, and they are responding. 2016 is toow in build on this foundation, accelerate our recovery, and complete our business turnaround. back to banks, the former j.p. morgan chase executive was fined $1.1 million for failing to tell authorities about concerns he had with the bank's activities in the so-called london whale case. cio international for jpmorgan failed to inform regulators about concerns that -- about the lender's synthetic credit portfolio, what became known as the london whale trade. scarlet: the european union installed record wind power -- so much in fact that when power became the third

biggest producer of electricity in the area. alix: this has been your global business report. for more stories, visit bloomberg.com. the big story in the market is the selloff in european banks. investors are worried firms like deutsche bank will not be able to take coupons on some of its riskiest bonds next year if operating results disappoint or litigation costs are more than expected. try to calm employees, saying "deutsche bank remains absolutely rocksolid even are strong capital and risk position." scarlet: but that is not the case when it comes to risky bonds known as cocoas. they have fallen off a cliff since late december. let us ask simon ballard who joins us now from london. what does the price of cocoa that we showed on the chart show about the financial health of deutsche bank overall? the interesting there is that while we have had him coming out and saying it's rocksolid, it's

pretty short-term earnings problem. simon: as far as the broader market is concerned, the interesting question is that these co-co have not been tested. it is an environment that we find are sold in these days and we are encouraged to look at cocos without anyone testing with these look like under stress. the fact that credit sites came out overnight questioning deutsche bank's ability to meet the coupon payments on their co-cos has been raising questions about the co-co market itself. it is feel the selloff we are seeing globally today at a time when we are already suffering from liquidity and a defensive investor based versus a global macro outlook if it were. alix: that is the issue that investors are worried they will not get their payments and also perhaps that it will convert to equity or that deutsche bank

will not be buying back those bonds after five years. isn't that the point? cos arehat what co supposed to do -- help out a bank when they need it? simon: they are basically there to fail as they need to fail without the failure of the banks. they basically act as a buffer in times of stress. they do what they need to do. the problem being that investors looking for yield in this environment with the fed at zero and the ecb continuing to ease have been forced to look further down the capital structure into these assets without perhaps really understanding the fundamentals that they are holding within their portfolio until they come to assign -- a time such as now and they see the market action. it's not be asset itself. if the market to market value on these assets that they deal with on a weekly basis that will then cause outflows, which then causes even for the price

disruptions and more exacerbated selloffs. scarlet: simon ballard, our credit strategist at bloomberg london. alix: how may people knew os a week ago? we will debate next good . ♪

alix: welcome back to "bloomberg markets." i am alix steel. scarlet: i'm scarlet fu could america's unemployment rate stands at the lowest since 2008, but the job creation machine slowed last month, something that janet yellen may mention in her congressional testimony tomorrow. where is still slack in the labor market? michael mckee joins us now. when we look at the dissipation rate for instance, that is where it a lot of people look at the possibility of slack. it started to stabilize an inch higher, but overall over a

longer term, it is come down, down as you can see right there. a lot of people can say that this might be something that is masking slack. michael: take a look at the two lines that. the white line as percentage of people over 65. those of the baby boomers. they started retiring around 2000 or so. you can see how they have retired at an ever faster rate as the participation rate has gone down. demographically, we were expecting this. the question is the decline in the participation rate accelerate because of the great recession? it probably did and to what extent did it? it is extent that cyclical because of the great recession, you have to ask how many people will come back into the labor force. how many underemployed are there? if they can be learned back in by the right kind of job or the right kind of salary? alix: that leads us to our next chart which is why we have seen this change could we talk about it being structurally. the unemployment population

radio say stating -- ratio staying steady. this is something that will not be changed no matter how good job growth is. michael: not a whole lot. it basically tells the same story. the employment to population ratio is how many of those who could have jobs actually do while the unemployment rate measures the number of people who are in the labor force who do not have jobs. they're kind of the converse. as long as there are more people who do not want work, that employment to population ratio is going to behind. again, it is the back to can you bring people back into the labor force? in the 1990's, we thought that ratio would not change. all of a sudden because some of the people working learned a lot of seniors and, we got unemployment down to 3.8%. scarlet: i've an obvious question here -- how do you quantify slack? how do you measure it on its own or is it a mystery expedition for why something about recovering the way it should? michael: essentially what the

fed is looking at what's it going to take to start pushing wages higher. enough of a shortage of workers that employers have to pay more to attract them. we are starting to see may be some signs of it. the question is does that continue? if not, is it because of these other measures of slack? are there people who are not employed that could be? alix: this leads us to the third chart, which points to the cyclical element of why we have action slack in the market. it looks at food stamps in the and employment -- unemployment to population ratio. if you are on food stamps, that means her income is below the poverty level. that shows how many people do need more jobs and more money. michael: it gets to the quality of the recovery and quality of jobs being offered. this is related to the people who have part-time work and cannot find full-time work and issues about whether or not jobs theg created address education levels and capabilities of those available to work. there are fewer jobs in the

middle now and it does not take much to be pushed below the poverty line. it could be that there is some slack here as well. scarlet: the job skills mismatch. alix: thank you so much, michael mckee. one programming note for you -- tune in tomorrow and thursday for janet yellen's fall testimony to congress. that starts at 10:30 a.m. eastern time. global: the cio of credit will be giving his outlook ahead of janet yellen's testimony tomorrow. that is coming up at 2:30 p.m. eastern time. hour,at the top of 2:00 we will talk to gary cohen and hear what he has to say about .he markets we will be back. ♪ ♪

betty: it is 1 p.m. in new york and 6 p.m. in hong kong. welcome to bloomberg markets.

scarlet: from bloomberg world headquarters in new york, welcome to bloomberg markets. alix: here's what we are watching at this hour -- stocks extending their slide with all three indices in the red. scarlet: how low can oil go? one analyst says don't be surprised when earnings hit alix: the teens. disney is reporting a lot of cable subscribers, but will its theme parks carry the day? to head first, we want to the markets desk where julie hyman has been keeping her eye on the declines we are seeing across equities. julie: they have stabilized. we have declines of about half a percent. goingt a soundbite of alix

that we can play it over and over again. we are seeing declines across the board. just a remarkable amount of choppiness once again in stocks as we have crossed above and below the unchanged line a number of times today and are working back toward the lows of the session. utilities, consumer staples holding up pretty well. energy stocks are the biggest laggard in terms of percentage terms and financials are still not able to gain much traction. technology is a group has turned lower. some interesting action today because even when oil prices were higher, energy stocks are higher. session.ad a volatile from thet some numbers u.s. government on the price forecast for the year that was a

little lower than previously. not enough to help prices, so oil making the lows of the session following those headlines. to look at the movers within the dow jones industrials today. stocks counting for all the declines in the dow today -- chevron and walmart and goldman sachs, all trading lower and the biggest drags on the dow today. will be under 5 million barrels a day, but still higher than the first estimate that they had. the resilience of shale is sticky and and a drag on oil as well. oil rising didn't help and oil falling, even less. alix: what are we looking at in the indices? julie: for market cap, we've

seen about $3 trillion wiped out of the value of the u.s. market. we talked a lot about the nasdaq being the laggard for the year. if you look at that in market cap turns, that does not include today's action. the market cap average we used gap,ack the mobile depending on where we go today, that 3 trillion number could go higher. alix: that really puts it into perspective. scarlet: let's check in now with bloomberg first word news with mark crumpton at the news desk. is underway in the nation's first presidential primary. the big race for republicans in new hampshire may be for second place. kohl's indicate donald trump should win easily. for candidates have a shot at winning second place. senatore, vermont bernie sanders is favorite to

win on the democratic side. he leads hillary clinton by double digits. later today on bloomberg, we will have a two hour special on the new hampshire primary beginning at 5 p.m. new york time. president obama has sent his final budget to congress. the $4 trillion plan for fiscal 2017 is loaded with items the republican led congress is sure to reject. the president is also seeking to raise $2.6 trillion over the next decade to tax law changes. general motors and the united auto workers plan to aid kids exposed to lead in flint, michigan. $3and the uaw art donating million for health and education services. the states administrator says the pledge to help pay water bills is not enough. neededt $60 million is

to prevent water service shut offs from resuming. germany's transport ministers as nine people were killed in this morning's head-on crash of two commuter train's. another 90 people were injured. the collision took place in the southern state of bavaria. the area is not easy to get two, making rescue efforts more difficult. news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. back to you. the marketse now on as turmoil continues globally. our next test says there appears to be nowhere to hide. alix: he's the senior portfolio manager of sky bridge capital and joins us on what you might want to consider and what to avoid. gold topped $1200 an ounce for a moment. obviously there's a lot of things for people to be

concerned about like a china slower growthnd and deflation. these are the times that create the best his location. is a play outhis of 11, it's very similar and going to create tremendous opportunity. if you think it is a replay of 2008, which we don't, the only answer is cash and long dated treasuries. scarlet: what helped markets stabilize and is it going to be oil? we don't think we'll rising were going sideways is going to help. valuations got to levels that were egregiously chief and even equities were far cheaper. ande's also operation twist dramatically oversold conditions. constructive on

assets that we are pretty sure would make money even in the event of a recession. if you don't get a recession, you are very attractive cash flows for a long time. alix: what is this selloff about? of around $28 and $.40. some would not be surprised for hit $26 and some said you could have a spike into the teens. what is it now? with: you came into this valuations at the highest since the crisis in equities. when qe ended and liquidity startedto tighten, you to see liquidity evaporate. then he started to see concerns a china hardon and landing. oil was one of the catalyst.

one of the issues today we are grappling with his you don't have market making operations willing to step in and act as shock absorbers. the reason you don't is because of dodd-frank -- because of three.ank and basel you don't want to be a hero. you have 20 of times -- plenty of time to pick up assets, particularly if china has not devalued by then. scarlet: banks are supposed to be more helpful but they are not in the market providing liquidity. have we seen the worst of that? guest: it's hard to argue that it is going to get worse on their side. soldhave pretty much everything. they are just acting as a middleman to facilitate transactions. is much more robust to economic weakness. of bank of america or

citigroup failing is not zero but it is close to zero. otherreally that investors have to step in and investors are suffering from substantial losses everywhere. it's not oil has sold off in i'my thing else is fine -- getting killed on oil, getting killed on everything. some of this price action is going to take several weeks, if not months to pick up. scarlet: so we could go into oversold conditions? guest: of course. you are still 15 times forward earnings. equities are the most vulnerable. alix: if we dig deeper into a recessionary call, we did get data out of a fed officer survey and we saw contraction in commercial real estate loans. you still see commercial real rise. prices do you feel that's an early indicator of some trouble?

guest: you have to look at securities versus commercial real estate. commercial will likely be a slow uptrend. that certainly going to roll over but in order for commercial real estate to suffer losses, you need much slower economic growth. seeing is lending conditions tighten up in the downside is lower price appreciation and the asset class would be much more stable if you actually get a rolling over of the underlying commercial real estate properties. alix: so sometimes tightening is not a horrible thing? guest: it happened in 2011 and that helped perpetuate this a little longer. you extinguish risky behavior and then make the site -- make the cycle last that much longer. alix: thank you very much. scarlet: coming up in the next 20 minutes, crude oil hitting session lows, $28.40 a barrel. the 20 see prices below

handle soon? alix: one company suffering from the low oil prices is chesapeake. they announced yesterday they will not the bankruptcy protection. justet: the president unveiled his $4.1 trillion budget or postal but it is being called dead on arrival. we will explain. ♪

alix: scarlet: welcome back to bloomberg markets. let's head to our markets desk where julie hyman is taking a look at the media movers, starting with viacom. and ways sentry fox both reported after the bell

yesterday. fox cutting its profit guidance, blaming that on the stronger dollar and saying poor theatrical results are contributing to the outlook of -- companies vulnerable here in filme lower growth and entertainment counterbalanced by growth in cable and broadcast networks. faring a little better. i have, missing on a number of the front fronts. domestic advertising revenue down 4%. revenue at paramount pictures down 15% and revenue from pay-tv systems that carry viacom is little changed from a year earlier. philippe dauman on who just took over the chairman spot pledged he's going to try to get the stock price back to where it was and this is a five-year chart.

the stock was much higher for much of the past couple of years, particularly in 2014. but like most media stocks, they had a tough 2015, so this illustrates the challenge he's going to have to get stocks back to level on a day when air down 15%. used bloomberg intelligence tools to map out the change in domestic ad revenue over the past several years. is the changed year over year on a quarterly basis. has not had positive growth in the mistake ad revenue since the third quarter of 2014. it has been showing a drop. and we've got to look at disney because that company is coming out with its earnings after the close of trading. it's falling by a little more than 1%. a lot of challenges have an plaguing disney, including how espn is faring and i know how you guys will elven to what

disney is expecting later and the show. the big story of the day is you are looking at crude prices hitting their lowest level since january 20. $28 a barrel just moments ago with nymex crude prices down after the international agency -- international energy agency says surplus is bigger than expected and the eia downgrading their forecast. earlier on bloomberg, goldman sachs head of global commodity research says oil can fall into the teens. think ise thing we do cheap is oil volatility going higher. we saw this in terms of what's happening in cushing, oklahoma is that the inventories and surpluses are pushing up against infrastructure constraints and that's constraining the ability of supply and demand to adjust, which means price has to do all

the adjustment. there is one thing we think is cheap and that is volatility. >> the theory of $20 oil and we have to have this aggressive move to the downside -- the conversation we're having this morning, are we at that level already where we see that sharp move to the downside or is $30 crude not enough? we saw the market first go down to 26. we are definitely in the zip code and these numbers, the 20 is based on what we call cast -- cash cost. cashs have to spike below cost because you have to shut production and almost immediately. for us to nail that number down perfectly is difficult. i would not be surprised if this market goes into the teens.

that 26 or got into $20 range, we started to see some action and we certain to see price volatility turn into fundamental volatilities. i think the most striking feature of this market is the lack of a supply response or cutting budget expenses by the sovereign's but now, we are beginning to see fundamental movement. the $20 a barrel number was cash cost taste on assumptions and physical differentials and location differentials. >> this morning, is your message to expect more aggressive downside moves to get the market to rebalance? absolutely. look at the late 90's or early 2000's. it was littered with false starts. 10, 15, 10, 15. >> how long does that carry on for?

guest: we think six or nine months. what you did almost all of 1998 in the first part of 1999. this surplus is likely more extreme, which means this thing could carry on. if you get a demand shock to the downside or iran surprises to the upside, it changes how long we stay in this environment. scarlet: that was the global head of goldman sachs currency. alix: we will be right back. ♪

scarlet: welcome back to bloomberg markets. bloomberg has learned goldman sachs has exit five it extract trading recommendations for the

year due to market turmoil link to smaller economic growth. the big bets everyone had coming into this year was the continued strength of the u.s. dollar and goldman had called for the dollar to continue strengthening. were betting the dollar is going to appreciate versus an equally weighted basket of the euro and the yen. unfortunately what we have seen is that has not been the case. the euro and the end both strengthening on the back of haven bits and that has been a problem for goldman. there has been a currency-based call and they were looking to see strength for the mexican goo and they've had to let of a couple of inflation linked that's. they were looking at the 10 year

breakeven going higher. scarlet: and there was a big call on banks. financials have been one of the biggest laggards with her you are looking at the united states and they had a call that big on the bet that the fed normalization meant there margins would be strengthen a bit and they would see higher profit margins. guest: unfortunately, the opposite happened. particularly in europe. not seen that set to work out. they were betting on large cap banks versus the s&p 500. is not a fundamental conviction call. they got stopped out of a trade recommendation because of the volatility we have seen guest:. absolutely and they do stick with their strength for dollar trade. they still see the fundamental act in dollar strength and also see zynga from the european central bank continuing to push

that belief further. there's no mismatch in divergent monetary policy guest:. guest:that continues and they mention they have change their expectations of the fed rate increase that they came out and goldman revised their expectations from four to three, so that is keeping with the expect tatian change their and they agree it is going to be a theme there. evans.: rachel alix: chesapeake energy announced it will not seek investor protection after investors fled after worries they would not make their debt payment in march. julia winters covers bankruptcy for bloomberg intelligence. are the conditions that would have to be met for chesapeake to file bankruptcy? many: there are so

variables that go into a company filing bankruptcy. it would be a board decision, obviously but the reason they are probably not filing a new near-term as they have plenty of liquidity. they can continue to pay their debts right now and try to ride out the oil and gas prices and wait for a rebound. markets are skittish. do they have a credit facility they can draw down? actually borrow more. in december, they did an exchange offer for some of their bonds and interestingly, they did not include unsecured bonds which come due in march, which is an indicator they don't need to file right now. they have enough liquidity to make it through. engaged are certainly in restructuring efforts and shipg to shore up the

while the gas and natural gas and oil prices continue to decline. scarlet: walk us through at a bankruptcy filing would mean for other stakeholders guest:. bankruptcyhe playbook really varies. one thing you see a lot lately is companies engaging in negotiations with creditors before they file. alix: great insight. we will be keeping our eye on this story. scarlet: at the top of the next hour, we will speak with the president of goldman sachs. that is coming up. ♪

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. worldfrom bloomberg headquarters scarlet: in your, welcome back to bloomberg markets. scarlet:let's start with the headlines on bloomberg first

word news. mark: the white house plans to appoint a new high level cyber security official in a move to effort the nation's response to such threats are better coordination with civilian, military, and intelligence agencies. the new role comes with a $19 billion increase in cyber security funding included in the administration cost 2017 budget proposal. in new hampshire, presidential candidates are looking for is last few votes in the nation's first primary. hillary clinton was outside a polling station in manchester but polls indicated she will probably lose to vermont senator bernie sanders. donald trump is expected to win big but there may be a real fight for second place between ted cruz, marco rubio, john kasich and jeb bush. we will have a two-hour new hampshire primary special on "with all due respect" starting

at 5 p.m. new york time. the numbers of uninsured dropped significantly in eight states according to a new federal report today those -- report today. the rate of the uninsured was 9.1% during the first nine months of 2015 compared to 14.4 in 4014 before the obamacare expansion. congress wants to know how the richest u.s. colleges are spending their money. havengressional committees e-mailed private schools with endowments of more than them ilion dollars. they are looking at policies that permit text inductions for donors. global news 24 hours a day powered by our 2400 journalists in more than 150 news euros are around the world. as volatility continues to rock the markets, calls for an

approaching recession continue to mount. scarlet: david stockman joined bloomberg this morning with a grim forecast, saying the markets are being taught by the mayor but will soon be mold. david: it's not just the end of a bull market, i think it's the end of an era. it's the end of a worldwide era in which central banks printed money, injected liquidity, supported markets, manipulated and intruded in the pricing of financial assets like never before. what it did was create a massive credit expansion. we have 40 trillion of debt in the world and 225 trillion today. everywhere is at peak debt. second, the central banks are all out of dry powder. the fed has painted itself into a corner and we hear the market

saying no interest rate increases in the coming year. that is 100 months at effectively zero money market cost. you will destroy a money market system on eight years of zero cost money. china is fighting desperately a massive capital outflow which means they have to tighten. >> we need to break this down. you are painting a bear market picture and recession on the horizon. david: global recession on the horizon, recession coming to the united states coming sooner than they realized because they are misled by the lagging and phony employment numbers put out by the bls every month. if you look at what counts, what employers are paying into uncle payroll taxd

withholding, it has turned negative. on a real basis, after inflation, it is running on a real basis -4.5 percent. that's always an indicator that recession is coming at a big pullback is happening in the economy because the whole there a tift about how awesome everything ends -- our meeting is has been wrong. we have had person after person come in with a different pictures and the chances of recession are very negative. goldman said it 25% or less. what is it that you see that none of them see? seven after the last recessions, wall street and goldman in particular has protected none of them. fourf the last three or huge downturn's we have had in the economy, the fed had no clue it's coming. stream narrative which

is dominated by a keynesian view that the labor market drives the , but itot only failing is so completely wrong that they are looking in a rearview mirror and cannot see what is coming right at us, 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's closer to the 1930's anything we saw before in the sense that we are going to have a depression. and capex is what drives profits. jobs that caterpillar that pay a big wage.

jobs disappear and it has an enormous impact on the economy. david: if you are wrong, how are you wrong? nearly. consumer is not as leveraged as it was in 2007 or 2008. have more money to spend because gasoline prices are lower. the point on that is they were so hideously overleveraged that a bad thing happened. they're still more than $13 trillion of debt, mortgage, credit card debt on the consumer . it is still 180% of wage and salary income. so we are still way out in the woods. most consumers. at the top 10%. the bottom 90% of households are living hand to mouth. 60% of them don't have cash savings. all.have not unlettered at

this idea the consumer is so healthy is wall street propaganda. that was david stockman, former director of the office of management and budget. releasessident obama 2017 budget proposal just a few hours ago but most budget proposals are dead on arrival. republicans voice their disapproval with the plan before it was even released. our bloomberg reporter joins us now from washington with the details. if release this budget everyone is going to say it is dead on arrival? present a vision as far as laying out proposals democrats think should be implemented in the coming years. as a policy document, it does make sense. on the smaller details, whether it is the request for a moonshot on cancer and a billion-dollar request to fight opioid abuse, there's a chance hungers can come together.

but on the bigger questions, the tax increases and deficits that increase throughout the budget , that0 year time frame will have republicans ready to pre-much dismiss this document. scarlet: he speak of a lot of symbolism but republicans are also conscious about tradition and not inviting the budget director to present it. what are they trying to say? guest: it is the first time the -- that he was not invited to come up and testify. they are being very emphatic in their dismissal. on the other hand, both committees are struggling to come up with a republican alternative. they have to come up with about $7 trillion in spending cuts to meet their pledge and that is a tough lift. some members want to tear up a two-year agreement was meant to keep the government functioning through the election and that is

causing a headache to the new speaker, paul ryan. alix: can you walk us through some of the top basel that stood out to you? guest: the thing that got a lot of attention was the $10.25 fee on oil that obama would use that would raise money to pay for a big mass transit infrastructure buildout and increased infrastructure. obama is trying to establish a climate change initiative as part of his legacy and wants to fuelter the fossil industries with some of those proposals. scarlet: what parts of the proposal are democrats likely to take up if they win the white house? question.t's a good it depends on whether it is hillary clinton or bernie sanders. to what much closer hillary clinton is advocating

than bernie sanders. see what might be characterized as a more pragmatic or small ball proposals, whether it is increasing pell grant rewards or having preschool for all. some of those proposals could certainly be taken up by clinton. if we have bernie sanders, he will likely try to enact societal changes. thank you very much. make sure to catch a special two-hour "with all due respect" this evening. scarlet: coming up in the next 20 minutes, portis agrees to buy itc. we will talk about what that would mean for the largest canadian takeover of a u.s. utility. strength in theme parks

and star wars be enough to lift off for disney? and we will hear from the president and ceo of goldman sachs coming up at 2 p.m. eastern time. ♪

scarlet: welcome back to bloomberg markets. to head over to the market is where julie hyman has the latest. you were looking at the effect of oil prices on the market. julie: the ripple effect we're seeing. we have been going toward the lows of the session, the nasdaq is the underperformer here, down more than 1%. all three major averages have been working lower. it does look like this have coincided with a decline in oil

prices. yellow here and has been drifting lower throughout the day. deals save itbout neither of them have been positive for oil prices. with this latest leg downward, we have seen stocks follow suit. something folks have been talking about is why you have seen that high correlation. heavilys not the most weighted group in the s&p 500, a number ofook at different things. we've talked about high-yield debt on energy companies and he was exposed to that. placed out on was being bloomberg is the spread high yield and we are seeing is highest on record, the point -- nearly 10% of

nearly 10 percentage points. it is an astronomical decline. we have seen more and more debt considered distressed, not just in the high-yield markets. this is the number of distressed issuers going back to 2008. this is the number of issuers of lawns in dollars trading at distressed levels. it has just about quintupled if you go back to 2014 and is at the highest since the financial crisis. spreads, the amount of distressed debt, and if you start to see more defaults, what effect is that going to have overall? alix: someone's exley come from investment grade companies. a big a risk as well.

thank you, julie. scarlet: in what will be the largest canadian takeover of a -- u.s. power company, fortis is going to buy itc for almost $7 billion. alix: why now and what was the catalyst for the deal? itc has a high-voltage electricity lines in states like ,issouri, kansas and illinois across the northern part of the united states. they are a pure play on electricity. many utility companies in the united states will have the electricity side of the business and also have coal and nuclear. is itc hasresents high voltage lines that would power about 20 million u.s. averaged size homes.

that's part of the reason they wanted this particular asset and the canadian company seeking revenues, they will be kept as a standalone company. the deal has its roots in newfoundland. talk about how that might benefit the canadian profits -- canadian province. to 1885, goes back long before to finland was even part of canada. it was their first electrical power company and newfoundland is trying to diversify their economy. this would probably act as a stabilizing effect, growing and getting her. in fisheries have been distress stress and oil, which had been doing so well over the

course of the last decade or so the low oilunder price. so this represents at least a stabilizing factor in the economy of new finland. -- newfoundland. scarlet: who are the guys looking around? certainly utility players and pension funds are looking around. in this space where everyone is seeing low growth, there is not much growth. they have to go after areas looking for expansions. of anre in the midst expansion themselves and need about $3 billion to help fuel this expansion and take in input from wind and solar. much of the legislation being drafted will lead to award more power generated from those renewable sources, but the new build out is to include power lines that would allow that type

of input to come into the overall grid. scarlet: pamela ritchie, thank you. alix: coming up, disney reporting earnings after the bell. how much of a boost for star wars ticket sales. ♪

alix: disney has come under criticism after losing millions of subscribers on its cable network, but to its credit, the company has a strong movie and themepark business. let's see what the numbers say ahead of its earnings. its sales growth. last corner, and was driven by a -- int in park avenue park revenue. you had affiliate revenue rise 8%. mosty does generate the

affiliate revenue among its peers. this data is from 4014, the last full data we have with disney $10.6 billion. these numbers are under threat due to streaming, unbundling and skinny channel packages. disney is also dealing with a drop in subscribers. the losses seen here are from a few select networks and just from june to december. minus $1.83 million for espn. the lowest level since 2006. as consumers view more media online, you will see a shift in advertising money. updating tv for the first time, you can see the projected growth for the next few years with those orange bars.

diversified company and does have the force on its side. : the force wakens" has made $2 billion. this is just the box office numbers. disney has another potential egg hit with the new "captain america" movie that comes out in may. wars might also help the themepark. you can see the bump up in 2009 and we will be watching all parts of its business when earnings come out after the close of u.s. trading today. scarlet: i want to bring in paul sweeney from bloomberg intelligence. i want to start with the tv side of things because everyone talks --ut espn being the crowned the crown jewel for disney. is there some espn exceptionalism here?

: it is truly reflective of the industry overall. more investors are becoming confident in this cord cutting and skinny bundles. on for allg pressure the cable networks, even the 800 pound gorilla, espn, which has reported subscriber losses at espn. as a big concern for the business going forward because that is how you generate affiliate fee revenue and ratings that drive the revenue. companies are paying attention to what the consumers are doing and are they going to pay for it? do they have to raise the fees to make up for scriber losses? hall: espn has the best pricing power in the industry. they just worth anything out there in the cable television business. they historically have the best

rising power because they have the most valuable programming -- the live sports. everywns pretty much sporting event out there. that allows them to go to the comcast's of the world. at the concern is they may be losing that pricing power going forward. aarlet: there is going to be negative impact for disney. how much pricing power does disney have outside its theme parks in the u.s.? paul: the themepark business has been a pre-strong unpredictable business for them, particularly for disney. they have been able to raise their rates in the low to mid single digits. that has given them the confidence to double down on the themepark is noticed by opening up disney shanghai in the spring of this year, which the huge investment and a major long-term

play on china and themepark is this. alex mentioned see the movie, go on the ride and by the toys. not good for anyone licensing content with distributors, but disney probably feels like they are in a good position given that the strength of their characters across the board and disney stores do well by themselves. paul sweeney of bloomberg intelligence. coming up in just a few minutes, we will be speaking with the president of goldman sachs at 2 p.m. eastern time. do not miss that conversation. ♪

♪ joe: it is 3:00 a.m. in hong 2:00 p.m. in new york. welcome to "bloomberg markets."

♪ david: from bloomberg's world headquarters, good afternoon. i am david gura. here is what we are watching this hour. forgive me. a bear marketnear territory. we will look at banks, many of which are resuming losses. will they got lenders' balance sheets? and from goldman sachs, gary cohn, and we are seeing a pickup in companies like uber, and viacom shares fall along with first-quarter profits pre-plus, disney earnings just hours from now. and could college football propelled results? but first, a look at the markets with julie hyman at the markets desk. julie: