>> asian stocks draw. yen hits a 15 month high. european stocks snap a seven-day drop. a vote against the establishment. donald trump and bernie sanders defeat rivals in new hampshire. this is "bloomberg surveillance." we were all over the banks yesterday.

the markets, in the words of one of the most respected bankers is crazy at the moment. about a bounds, you see the headline. the biggest gain in four years. all of that off the desperation move last night. the spirit and desperation of deutsche bank. france has i think you are right. that is a theme we well explore today. voters sent a message to the candidates of both parties. two outsiders have won the first presidential primary. for the republicans, donald trump was an easy winner. john kasich was second. sounded a familiar theme. >> we are going to make america great, but we are going to do it the old-fashioned way. china, japan,o be

mexico, all of these countries that are taking so much of our money away from us on a daily basis. it is not going to happen anymore. benie: bernie sanders hillary clinton by 21 percentage points. together we have sent the message that will echo from wall street to washington, from maine to california. is in: the next primary south carolina. may deploy troops. will discussters the issue in brussels. any deployment would include british, u.s.,f and german troops. british lawmakers say the u.k. to protect the

climates. the u.k. will struggle to lead -- to meet its climate change targets. the idea is to trap carbon emissions and store them underground. tom: we need to capture the global audience. sharp.ly news has been dead clown walking and other slams at mr. trump. voterse: new hampshire calling them mindless zombies. when is the upset going to happen, if at all? tom: we will do this in both hours of television this

morning. data check. the what you need to know about francine's europe. yields lower. yesterday..13 print crude oil is a back story. second board, please. vixk's showing the -- showing the tension. more than anything else, through the rebound of deutsche bank and feeling better, janet yellen flattening ase she speaks to capitol hill today. francine: janet yellen, we will be listening to today on the european data. 600.entioned the stoxx the real story is in yen.

strong.is so morgan stanley is saying there may be more intervention. tom: a lot of people calibrating with the noon negative rate. you bring the negative rate down until you affect the institutional and consumer market. we are nowhere near that in most of the five nations. this is the banks in america. the contagion feel of bank tension. up we go. a nice recovery. this is the rollover. the bk acts, it is down, but nothing like europe. kx is down, but nothing like europe. 600 up.: the stoxx

guest, jamesn our bevan. we need to talk about the turmoil. is some bargain hunting out there. the drop in equities has been so strong and fast, what are people worried about? the markets are crazy because they are not looking at the fundamental. partially right. we are seeing disappointing earnings numbers from the companies and that is upsetting investors. there is the risk of contagion from the emerging economies. i do not agree that negative interest rates are good for consumption. i think they are corrosive for the global financial system and

will lead to a reduction in credit. that is a concern. i would conclude equities --. japan, it has been markets.5 weeks in the are realizing this might not be a good idea for the banks. i think the doj's experiment was interesting. you do something normally powerful and it is drowned in the fact that the market is assessed with one thing, what is going to be the stance of the six months.ext there's nothing you can do in tokyo and frankfurt that will upset this uncertainty. you are making more calm -- life more complicated for banks. things go worse in japan or

europe, the response should be lowered deficit rates, you have to wonder whether we are in counterproductive territory. not giving an opinion on negative rates, rather the suggestion that we will hear this from janet yellen, the idea that more negative rates is part of their toolkit. james bevan, i need you to confront deutsche bank's rush to getting fixed. bring up the long-term chart. desperation of deutsche bank is tangible. they are going to use liquidity to buy back their best paper. explain why they would do that. are trying to put a floor under the loss of confidence attached to the outlook for deutsche bank as a business. believe weying we should demonstrate confidence in

the business. i find it interesting. i look at the work you do in terms of insider buying, where senior staff of entities by their own shares. we see a lot of that in the states. we have not seen that in deutsche bank. that is an important step forward in terms of enhancing confidence. tom: a lot of people in london care about it. we care about it because we want to see there is a mismatch between the market valuation and what the business owner believes. if you explore that a little longer, there is a mismatch, but it goes back to whether you think markets are leading the way. in past crises, markets latch onto something. it becomes a self fulfilling. thewhether you believe markets are --. james: i think the people are

close to businesses, have an understanding of what is going on in their businesses. ownhey buy back their shares, they are making a firm statement about the expectation that the future net value of their company is greater than the current share price. that is an important signal. have mergers and acquisitions, we have businesses say the market is wrong, it is too cheap. if you do not want to price it properly, we will. francine: david morgan chase found negative interest rates could go further negative without impacting bank profitability. gilles: one of the reasons i the wrong instrument is not because the negative rate

has a direct impact through excess reserves and you tax the banks. the problem is, it is more pervasive than that. by taking the rate further into negative territory, you take the market rate further down and you eat the interest rate margin of banks. we are in a situation, as we in a fairlyanks are -- situation in europe. at the beginning of last year, we had the sense there was a sense of nominal is a short bank behavior. nominal was a sense of nominal bank behavior. janet yellen and her comments before congress.

we will have the full testimony at 10:00 a.m. it will be interesting what she says about global liquidity. new hampshire, we will do that next. we will do it in both hours. the stunning victory of mr. donald trump and mr. sanders as the drama most of south carolina. stay with us this morning. "bloomberg surveillance." ♪

vonnie: this is "bloomberg surveillance." donald trump them bernie sanders have won the primary in new hampshire. sanders beat hillary clinton. for more, we are joined by megan

murphy. she is in new hampshire. the candidates head to south carolina. the republicans have 10 days to get their acts together. changes amongate staffing? >> we have seen hillary clinton. she released a memo last night talking about how they are going to refocus the campaign, refocus the energy. late last night and early this morning, she is going to bring in additional help to focus her message. expect on the republican side, we will see some of the candidates think about how they are going to break out of this lane. time is running short for them to mount a single candidate to donald trump. speaking to hans nichols.

he says normally new hampshire clarifies. this time, it has not. how long will this go on for? >> i think what you are seeing from donald trump, as much as people call him and anger candidate, he is doing the things a candidate who traditionally wins these type of races do. it is going to be interesting to see how they can stop him and whether the establishment can form a candidate. on the democratic side, that has been stunning. bernie sanders, 22 point win over hillary clinton. he won in every demographic. women, young voters, older voters. upended this race. she is in for a tough fight. we would not have predicted this three months ago. her campaign has become difficult. more directionen

in terms of donald trump, but in the democratic party, it has upended the field. francine: is there a candidate we are underestimating? >> we will have to see. jeb bush. he had a pretty good night last hampshire.w he moves on to south carolina. how is crazy to say, giving poorly his campaign is performing, but he is playing war of attrition now. if he can outlast, he has the money to keep going. jeb couldtumbles, and emerge. for our global audience, what stopped me was the chart in the washington post over the whiteness of america. iowa, way up her.

in the number of days vonnie antioned, we migrate to different part of america in south carolina. i get to trump, clinton, mr. k sick -- kasich. sanders get how bernie plays in south carolina. who will vote for him? what he reminds me of, in and whatthe enthusiasm he has built among the base. it is a progressive part of the party that has not as -- that has not had as much of a voice as it should have. what he reminds you of is the movement politics, rather than -- he is movement politics than

a certain voter he is appealing to. winning talk about him every demographic, that is an important statistic. if ernie can mobilize people street,nd anti-wall reducing income inequality, it is a single issue that resonates. francine: people want change or this is voters voting and anger? >> this is the real question of what we are going to see. what is animating the electorate? when i look at the economics, look at new hampshire, unemployment is lesson 4%. people would not be as angry as they are, but they are upset about what they see as the inequities of wall street, the rigged economy. polls, they said they believe the economy is rigged in favor of the wealthy.

donald trump and bernie sanders are both addressing the issue and tapping into that sentiment from different ends of the spectrum. it has been fascinating to watch. tom: thank you. we will see you in the next hour. mack with morgan stanley, a couple of trading -- ago. john mack on the global turmoil in his banking. ♪

francine: welcome back. we pick something from the writing in bloomberg view. -- dependmediation upon deposits is to support balance sheets. we are talking about negative rates. this is part of the conversation we started earlier. negative rates have unintended consequences. do you think it is a mistake from central banks to try them out? they are just tinkering at the edges because they are running out of tools? thiss: when they move in direction, it is because they want to trigger more policy diversions. we had this first

move with major ethic problems. then, you moved to the ecb. the more you look into it, as you get into deeply negative territory, we are not there yet. to deeply negative territory, you have to balance -- in an economy, in europe, in terms of patterns, i think we are losing the positive, especially after the doj's lukewarm reception. francine: you go further than that and say this is counterproductive. it in courage as people to save more. james: i think it is dangerous

to have negative rates. it is end of the day, primarily about trying to engineer economic recovery. observing, people are saving, not spending. francine: thank you. coming up next, we talk to the ceo of the bank. we will last about the troubles in russia. we will talk about consumption around the world and margins. this is "bloomberg surveillance." we are back in two. ♪

tom: futures up 20. yields higher across the board.

nymex crude gets a bit. the whole back story away from the liquidity crisis is oil, not finding a, not record lows. lower for longer. vix elevated over the two decade average, but not to a crisis level. 210 spread, i am watching. that is surprising. yellen like a janet curve flattening. let's get to first word news. vonnie: hillary clinton lost big and john kasich gave himself some breathing room. >> help us raise the funds we it is $10 or $20

or $50. help us raise the money we need to take the fight to nevada, south carolina, and the state on super tuesday. trump won the race. the surprise runner-up, john kasich area -- john kasich. are going to win nine ace out carolina. i love you all. thank you very much. another purge in north korea. un has had the chief of military staff executed. a number ofd officials since taking power in 2011. negotiations in geneva broke

down last week. military made major gains against military forces. they will meet with other foreign ministers tomorrow in germany. global news powered by our journalists. francine: thank you. andust heard from heineken carlsburg saying demand in asia is sustaining. guest what ask our they make. none of the results of the beer makers. from an economic point of view, earnings are worse than expected. there is cost-cutting. there are glimmers of hope. there is zero evidence we should expect global recession. the key is the united states.

i think the s&p can figure -- finish between 2100. >> the talk about the recession is missing one big ingredient. recoveries do not die of old age. much.s. does not respond to dementia from outside. you would have to find some -- on policy. fiscal policy, lection's, no one is trying to make a mistake there.

francine: we are joined on the phone by the ceo. he joins us from copenhagen. when you look at your figures, it will be tough. this will be a challenging environment. ?hat are you most worried about macroeconomics do not develop in the right direction. francine: how worried are you about russia and nigeria? managers are all worried about the same thing. how bad will he get for your bottom line for beer consumption in those countries? it is less than 30% of

our earnings. we are worried about russia. we still haveand, opportunities to grow. year,e remainder of the we focus on delivery that we anticipated. tom: you have a lot of beers i haven't tried. will go through every single brand. is the new guy on the block, what are the best worst practices from nestle and unilever? what are the giants doing that you do not want to do or you do want to do? we are focusing on

ourselves. is to sellt to do the best beers in the world. tom: what have you learned from the mega beer mergers? what is the lesson you have learned from two big in the beer business? manyt: we are operating in countries. we are in 20 to come but -- in 22 countries number one or number two. number one, number two in the market, it is important.

amonghat do you see consumers now? to they want to buy a preemie -- a premium product or the swill i drink in college? the new craft beers bring new news to the market. it creates growth and that is good. francine: craft beer is what is driving the segment. you are the only large beer maker that has not bought a craft manufacturer. will you? buying craft or having some craft band -- kraft brands are two different things. we have more of these kind of brands, which are growing very nicely. when we review our strategy, we

will talk more about craft brands. carlsburgnot trying a summers these -- summer bees pear cider. francine: you will change your mind. we will try to educate our new york counterpart. would you be interested in buying perrone or groll's? cees't: a cannot comment on that. francine: do you have a treasure trove? sayhere something that you i have this much amount of money in the next 12 months and this is the perfect time for me to strike. we want organic growth.

we have been growing for 50% in india. tom: that was fun. very good. thank you for wisdom. she will not have a beer today. she will go stone cold sober up to capitol hill. this is important testimony with the liquidity crisis in europe. stay tuned. "bloomberg surveillance." good morning. ♪

tom: good morning, everyone. we have to continue the discussion on deutsche bank. has to step lightly. james can talk more freely. strong --was thunder thunderstruck by a note. tom surprised he was able publish his brutal note on liquidity. zero hedge for bringing it to our attention. he will join us on friday. it is about liquidity. link inclinometer -- link economics with the advance in the european system.

we running out of dollars and trust and confidence within the european banking system? gilles: there are two different things there. there is the issue on the apital position as being long-standing issue. liquidity per state, access to funding. access to funding has been made very abundant. it has been a bit lost in the debate recently. what can the ecb due to try to improve the position of banks in europe. the ecb has done a lot. it is a very different problem i gets to the capital position in the banking industry. justi agree with what you said in terms of ample liquidity.

janet yellen goes up to the hill and here's the chart she is not going to show the good politicians. emotion.t one i will call it a standard deviation move. the blue line, down we go with a little bit of a bounce yesterday. what does janet yellen have to she have to not say this morning about global dollar liquidity? gilles: i am not sure it is front and center of what she can say. the focus will be on the mac or situation, the shock the west may get from the rest of the world. the problem yellen may get today is the market will be very dovish. she can a knowledge the risk from the outside has grown. problemame time, the

they have is when they look at the inferences, what they got last friday from the labor market will tell them that there is no reason for them to change courses. she is facingsue today, how to ignore knowledge yes, there are risks. at the same time, if she --if the labor market continues to improve and it has, the amount of dovishness that she can provide is limited. francine: if you go back to liquidity, is there enough liquidity out there? is this why we are seeing harsh moves on the market? there is significant currency risk written into it. where do all of the dollars go in quantitative easing? servicing those debt costs when the dollar strengthens turns out to be expensive. i would discern a significant

shift in rhetoric. we have mr. fisher having it followed through. out and: when this came it was a clear move that was pushed by credit. for the first time in four years, there is a ceo saying we do not have a problem and now we are talking about a possible bond buying program. this is not a great place to be in. >> no chief executive wants to watch his share price slither and slide away. he needs store work hard to get that confidence back. hard to getto work that confidence back. this is a wholly different challenge. you have to position yourself back to zero at the end of the period. system is ahe euro

risk. it has not to do with liquidity. isncine: deutsche bank trading between 68 and $.73. the only ones trading cheaper are places like brazil. in a way, deutsche might be taking advantage of this. i worry the market has become detached from the reality of underlying businesses. the volumes are skinny. positions are coming out. we know sovereign funds have been realizing assets. in terms of the mainstream institution investors in europe, i see low volumes. we do not see price action to follow through portfolio. superb, short,

must-read from bloomberg. the single best a short article on deutsche bank with a killer chart on tangible book value. ofres now traded about 35% tangible book value because equity investors cannot get a handle on what lies ahead. he says nervous investors await further communication. underscoreswhalen the 35% book value today. what to you need to hear to write or stabilize the ship while europe figures out its liquidity and dollars? james: absolute confidence that the business is motoring along at a comfortable rate, that there is no significant black hole in terms of problem loans that would come. we had the news the other night

about credit default in the state bank of india. investors are windy about bank risks in the current environment. we need certainty there are no skeletons in the closet. make germany this more amenable to more ecb action? have seen a certain change of communication from the bundesbank. if you take the latest features, it is on the prudent side of the occasion. there is a problem with inflation in europe. we have second-round effects from low oil prices. before, we have this issue with german banks. there was a recognition, even of the bone this bank. there was a need for more action from the ecb.

in january, there was a unanimous decision by the thecil to accept and review stance in march. it means that even the -- our concern. are going to come back in a few minutes and continue this discussion. risk on futures up 18. this is "bloomberg surveillance." ♪

vonnie: let's get our latest business flash. earnings plunged at southbank. carrier wireless turning things around, sprint. sprint has lost more than half of its market value since softbank bought a controlling interest. -- sharesbusiness are of disney are falling. investors focused on flagging profits. cord cutters are disrupting the traditional tv business model. francine: thank you. earlier this morning, i had a of theation with the ceo

biggest market cap on the italian stark market. italian stock market. he does not understand what a stock market is in such turmoil. >> the market is crazy. there is no other definition. no correlation with the fundamentals. kind of have this market, they are irrational. they are in a panic selling mode. the end, they will come back to the fundamentals of the situation. francine: we were talking about market turmoil at the beginning of the program. it is correlating with the price of oil. is it true there is no real linkage to the economy? thats: we have forgotten normally lower oil prices is a good thing for most of the wealth. that seems to be completely lost.

you see the negatives very clearly in some company's resolves. they are easy to spot. positive impact takes a while to manifest itself. the market is looking at it as a glass half empty. -- have we gotten to this level over an extended period, it would have been fine. if you have a headlong decline, pain in those who provide solutions, pain to the banks that lens. look at the junk-bond market. borrowers are out there. this is not a constant correlation. it is a correlation we observed that is not always this sort.

if the oil price goes up, the equity market will rally. i draw comfort from global equity markets. fuels and gold. it inches up about 7% from last november. tom: thank you for getting us started. gilles, thank you for joining us. lightlyllen will step on economics and politics. it will be fascinating, the full testimony and that the q and day from chair yellen. we continue the discussion. stay with us. ♪

catches ache bank

rocksolid bid. this morning, the bank route is on hold. , we consideren american cash bonds and stocks. nott yellen considers mentioning deutsche bank, japan, and new hampshire. donald trump triumphs. of life support. mrs. clinton regroups. a very busy wednesday. i am tom keene. with me, francine the clock. laqua.cine francine: shares are rising. maybe there is a bit of opportunity rising. they are trying to assess valuations. tom: we have a suburban -- a guests.et of a strategist scheduled to be with us on friday.

in new hampshire have sent a message to establishment candidates. a billionaire and democratic socialist were the winners in the first presidential primary. winnertrump was an easy with 35% of the vote. john kasich was second with 16%. themesounded a familiar in his victory speech. >> we are going to make america great again, the old-fashioned way. china, japan,o be mexico, we are going to beat all of these countries that are awayg so much of our money from us on a daily basis. it is not going to happen anymore. vonnie: for the democrats, bernie sanders beat hillary clinton by 21 percentage points. the race was close -- the race was called almost as soon as the polls closed. -- we have sent a

message that will echo from wall street to washington, from maine to california. the supreme court has to presidentetback obama's plan to block the clean power plant until the final his presidency. the epa overstepped its authority. deployed troops to defend against russian incursion. defense ministers will discuss the issue today. any deployment will include large numbers of u.s., british, and german troops. by ournews powered journalists and news bureaus around the world. i am vonnie quinn. tom: data check, very nice soft or -- very nice after the carnage.

crude oil captures a bid after a rocky two days. a two cent spread is finally steeper. i am surprised where we are. maybe some of the tension. mexican peso gets a bid after a horrific two days. francine: european stocks are rebounding from the lowest level since 2013. was at 114 point 21, we had an interesting note from morgan stanley, flagging there was some sort of intervention gain was soyen strong and so quick. it points to the fact that we are not expecting opec to come together and cut production. think 30 or 31i

would be a rally. american bank index, here is the crisis. a nice recovery. this is a rollover to give scale to it. let's call that normal banking inst versus what we see europe as well. two wonderful guests to drive the conversation. carl will brief us on chair comments or non-comments. frederick lane is with us. to make people not lose money. how strange is that? someonece to talk with sitting at the desk saying this is how not to lose money. with the testimony.

how does she avoid not talking or creating fear about global dollar liquidity? that confidence that oil in the system? carl: we are going to do it the old-fashioned way. historically, this has been a market moving event. in the new era of said semiannualy, the testimony has diminished insignificance. we have not heard from yellen since the december fomc meeting. it is a changed landscape. what she needs to do is shake the markets and say get a hold of yourselves. she is not going to be as aggressive as the fed was in december. tom: this is the theme of the hour. we are going to play a wonderful video. dumb,says the markets are

they do not get it. rule number one, the markets have an intelligence and they act in a rational manner. tol: she is going to try steer the market and a more upbeat direction. she will give it a dose of lithium, if you will. economicsay look at fundamentals, the consumer is doing well. growth may be weaker, but it is moving in the right direction. she will try to dispel those recession concerns. francine: rule number one, we debate everything. -- thing the markets are crazy, that is debatable. this is global markets testing something. saying they are trying to revisit 2000. tom: i do not agree with the "testing."kets are

carl: we have concerns about constraints in the banking sector. as we dive into negative rates, you cannot hold a bank -- you cannot hold a gun to banks' h eads. economic to see strong conditions. there are echoes here, but this is not a repeat of 2008. janet yellen needs to the markets today. you disagree that the markets are crazy. what i am saying is the markets are looking for a culprit. do not agree. in my experience, the markets do not establish a behavioral construct. i suggest pricing is down from oil, from a slower china. i do not mean to be gloomy, but they are repricing risk this morning.

how does she do that? carl: they are repricing risk and expectations for global growth. that does not mean recession. we see concern about recession. that is not where we are heading. it is grappling with a slower china and a slower global growth. isno chance of recession? carl: she is going to walk back expectations. at the time of december liftoff, we highlighted the potential that there was a remote chance of them delivering. potentially, we could see liftoff at me dear. i do not think we will see anything close to four. watch for that june or second half move coming up next.

francine: we are having technical issues. what are the chances of a recession? carl: 15 to 20%. people have to step back and look at the reality of what is driving the u.s. economy now. housing to ars, smaller degree. government spending will provide a bigger lift. do not look to what is driving growth the last three or four years. there are new drivers. this is a different stage of the economic cycle, different drivers. is lowerof recession than what people are pricing. why are we talking about possible negative interest rates? what has happened that we are now looking at japan is singing next one may be the united

states -- looking at japan and is saying the next one may be the united states. byl: they will ease signaling fewer rate increases. they are not signaling a reversal of course. the negative consequences would far outweigh the benefit of lowering rates by 25 basis points. the rulebook is not written for negative interest rates. we have little evidence that is a successful strategy. tom: thank you. we will let you go. fred, you have heard this discussion. it is something you and i have tell with for decades, the markets have had a mind. back to finance 101, what is thee risk, risk for investors? fred: there is perceived risk.

the u.s. economy is not in bad shape. projected earnings will increase. we have productivity gains. unemployment is low. wage growth is present. some inflationary pressures. it is not a bad story. if enough of us come on tv and act sensationalist and talk about china and oil -- --: fred: is it going to impact the economy? question carl answer about the gdp, are we heading into a recession? i do not think we are. we can talk ourselves into it. extent, people's behavior is driven by what they hear and what they read. this market is irrational. the market does not have a mind.

it cannot associate with the way youand i made -- the way and i might think. it is a collective. this goes back to where tom and i disagree. ,he market is seeing something fundamentally the economy is missing, or the market is concerned for the sake of being concerned. fred: there are all sorts of things to be concerned about. we can be concerned about a meteorite hitting the united states, an asteroid. to be serious, the china impact is not to be ignored. oil is a source of our economy. there is a lack of reinvestment in that sector. that impacts related industries. we'll listed in, there is a lot to be concerned about. standards for performance in this economy are low. i saw macro economic

advisers where the gdp had zero point 4%, some shocking number. we will discuss -- we won't continue this discussion -- we will continue this discussion. she will not be concerned about that at 10:00 a.m. this morning, chair yellen. she has her hands full. the monetary economics of washington and the international finance on america. look for that at 10:00 a.m. futures up 17. ♪

tom trump and bernie sanders have won the latest primary. trump -- we are joined by megan murphy. there are several days for south carolina. 10 days before the republican primary. another seven before the democratic primary after that. megan: there will be staffing changes on hillary's side. she will make some changes. ground game, what to watch for, john kasich. he does not have a ground game in south carolina. it will be interesting to see what happens to him. on the establishment side, jeb bush, south carolina may be a

good state for him. are we any wiser about who will win the nominations? megan: it will be a lot longer than people thought it would. that fight is going to be quite a germanic one. on the republican side, donald one. a big victory. he goes to south carolina with a tone of momentum. momentum --me of ton of momentum. carlo: tom: --tom: how does he -- how does he gain traction in south carolina?

megan: he had his mother in new hampshire, where she is popular. he turned it to his family. he is using them more. something big out there that will be viable. in: does profanity work south carolina? trump start swearing more in south carolina? i do not mean to be disrespectful to the good people of colombia. hasn: this is part of what made him who he is and why he is doing well. every time he does something outrageous, he gets a boost in the polls. people are responding to him on a different level. it is the economics on the fear. animating angst and

his celebrity personality, people are drawn to. tom: thank you. you are a trooper to join us. moving forward to the politics, maybe they will do it from an airplane over maryland. maybe they are in south carolina or onto nevada. with all due respect." and these guys are out there doing it. ♪

francine: you can see european stocks gaining 2.2%, rebounding from their lowest level. determine ifing to valuations fell too much. 14.94. yen, 1 it is time for my morning must listen. it got tom keene all worked up. the ceo told me that current market volatility, given that term we saw on the market, he thinks are crazy. >> the markets are crazy. there is no correlation.

you have this kind of position, markets are rational. they are on a panic selling mode. in some winks, they will come back to the fundamentals of the situation. come some weeks, they will back to the fundamentals of the situation. frederick, where'd you stand on this? do you think the market is seeing something the real economy is not? the market is emphasizing the negatives, not the positives. they are deluded by slow -- they are deluded by slow economic growth. it is now affecting the bank balance sheets. those things add up. people are reacting to those and

ignoring the positive fundamentals. that happens. and oil issue is real. the short-term paper trust issue. said, itat dominique is about the spread, not the rate. janet yellen and others have to deal with the new spreads that are out there that indicate the distrust within the system. fred: treasuries and gold are attractive now. why? they are putting your money in a mattress. tom:. post, where we have no

intention -- francine: if you look at market followingns, they are the prices well. if you look at utilities, they are performing so differently. it is a debate worth having. markets are crazy, no correlation. debt is flat out wrong. there is no other way to put that. uplook at markets, futures 17. coming up, new york fashion week. stay with us. ♪

tom: good morning. we welcome all of you on economics, finance, an investment in international relations and fashion. here is vonnie quinn. will do the first word

while you are practicing your blue steel, tom. , thaty clinton lost big is what came out of the new hampshire primary. bernie sanders beat her by 21 points. sanders: help us raise the funds we need, whether it is 10 bucks or 20 bucks or 50 bucks. help us raise the money we need to take the fight to nevada, south carolina on super tuesday. won the race as expected. he is setting his sights on the next battleground. donald trump: thank you, new hampshire. we are going now to south carolina. we are going to win in south carolina. i love you all. thank you very much. -- ie: democrats

the u.s. is sending hundreds more troops to afghanistan to fight the taliban. it will be the largest group outside major basis since the u.s. and its combat mission in 2014. and senator robert kennedy in --8 -- certain answer hand certain answer hand -- he is serving a life sentence. global news 24 hours a day, powered by 2400 journalists in 150 news bureaus around the world, i am vonnie quinn. tom: it is a most interesting time. would you bank is front and center. the there is a world out there, and it is a world of american aspiration. rebecca minkoff has been out front on american fashion, back and forth, the than flow of the industry. basically an annual visit with

her chief executive officer. it is great to have you here, and for us it is a wonderful digression from all that is going on in the world in finance. but your industry is a war zone right now. let me start with the basic muchion -- is there too fashion out there? is there too much luxury, too much stuff out in your world? rebecca: i just think there is an over proliferation of images now that we have social media. i think it feels like there is too much, but what you can see on snapchat, instagram, you can see it all the time. tom: we remember the magic 8, 10 years ago of the new york fashion show. is gone,sed to be a it over. how are you going to reinvent how you move the stuff out? rebecca: we had a lot of late nights, decided that the system is broken. the consumer is in -- the

consumer has image fatigue. confused her,t and there are so many choices. what we are doing now is including her in the process and see-now,er ac-now -- a buy-now approach. tom: i saw that the other day. francine: i am not confused. i know exactly what i want and i know exactly what i want to buy. the price things that are affordable for the middle class at how much growth do you see in this segment? huge amount of a growth for us as a brand. growne have historically 20%, 30% a year, and we see that for the next five years at least. vonnie: i know you mentioned that there are two very many images, but you are showing on saturday. what do you anticipate getting

out of saturday's show? rebecca: we are showing at fashion week, but everything you are seeing is shop a bull -- is shopable. showing a spring summer collection. we hope it inspires the consumer. vonnie: you are showing for the first time, yourself, the men's collection. from "the washington post" yesterday, it takes 10 years to fully involve -- to fully involve. does it take 10 years? i thought skinny jeans were long gone. itecca: i think these days is getting a lot quicker. these days anything goes. it is what makes you look and feel great. uri: it is what gives you confidence. you are ado you think takeover target?

we have great independent brands here, but they have all been taken over by big brands. you must have had interest because the brand is doing so well. uri: we have a tremendous amount of interest. we are one of the largest brands , where we are a family and rebecca and i can control it, and we love that. tom: where is your distribution in five years? you guys are at the cutting edge of use of technology for bricks and mortar, amazon. do you sell on amazon? rebecca: we do. tom: tell us where your distribution is in five years. is jeff bezos your best friend? is harrods ort the best apartments -- the best department stores in the world, there is huge growth for us. tom: i was in harrods the other week with francine, going floor to floor shopping.

you are so exhausted by the time you get so many floors up, you are -- what is your experience with harrods? harrods is beautiful. it is an incredible showcase to doors in london, and i get an incredible workout by the time i get to the top floor. tom: exactly. so does my wallet. vonnie: is it tough to compete with the bigger brands? francine: pricing, for harrods? rebecca: i would say we are in a game and we are playing it. vonnie: rebecca, there have been so many changes in designers in the bay houses, so many this year, and everything is changing over so rapidly. has it helped you that rebecca minkoff has been around for so long, we know with the brand stands for, and there have not changes?

uri: you're getting the does cofounders at front and center. it is our names that are there. it is really important. tom: are you going to do an evening before clutch? are you going to do the evening before clutch? uri: we have the first date clutch. tom: the affair. uri: we have the first kiss. tom: francine, help me here. francine: the unlined coat is what you should -- rebecca: it continues. tom: congratulations. back with an update here, particularly with what you do with spring/summer. rebecca minkoff with uri minkoff as well. janet yellen will not be carrying a minkoff clutch. far too aggressive.

she will be in something quiet, something -- i don't know -- talbots? it works. "bloomberg surveillance." stay with us. ♪

tom: good morning, everyone. "bloomberg surveillance," on economics, finance, investment, and international relations futures. oil still shocking, below $30 a barrel. let's get to our bloomberg business flash. here is vonnie quinn. vonnie: burberry is suing jcpenney. jcpenney sold a coat and a winter jacket that is a replica of burberry's design.

heineken expects more volatility in certain markets. beer sales and oil -- in oil-producing countries like russia and nigeria have been falling. shares of disney are falling in premarket trading. they posted record sales in earnings -- and earnings in the fourth quarter, but investors are focusing on sliding profits at espn. that is the latest bloomberg business flash. tom: very good. really quite interesting day. day three of deutsche bank. it is a good time to talk to fred lane, who has a little bit of experience on this. he is working in management, lane generational. he has an esteemed career at credit suisse, and who for that -- and before that, with donald luskin. flow --een the end and

the ebb and flow of trust and confidence. fred: you look at deutsche bank's situation, and they are in a world of hurt right now. tom: bring up the chart. if it looks like a duck and walks like a duck, it is a duck. i understand we are going to rationalize that. does a grizzled pro like you put an asterisk next to this because they have an action all -- because they have a national -- there is no jamie dimon, no lehman equivalency. at some point in time, it will be back to own deutsche bank. i do not make those bets unless i see some visibility of return. but that will happen. it is just a question of when. there is always periodicity. how long does it take a bet to

pay off? if it takes five or eight years, it will probably not be a very good investment. i want to invest in great companies with great margins, great fundamentals, that frankly, despite being buffeted by the kind of market we are in now, are going to allow us to justify what we are doing, feel comfortable, and know that in two or three years, these companies will trade at higher values. they may trade at substantially higher values at any period of time where the market is flat. go out three years, five years, whatever it might be, there are a number of companies, usually 100 or more, who have appreciated at 15% on an annual basis. a --rr appreciates in green mountain coffee for many years. francine: what is deutsche bank

were to be taken out in some kind of m&a merger either from a european bank or from the u.s.? fred: it is hard to know. i do not see a u.s. bank wanting to wade into that. they will have to work it out over time. they may need to be selling assets. going tonk they are have to basically slowly work their way out of this, as has been the case with the u.s. banks, by and large. vonnie: what about energy? anything attractive there? fred: i have never been much of an energy investor. i do not like exhaustion us factors that i do not understand, or a commodity market underlying performance of companies. this is getting compelling. at some point in time we will wade into the energy patch. right now we are steering clear. how longion is time -- will it take for the energy

patch to turn around? tom: one of the great shifts recently is cash is cash, the theoretical construct of cash within investment mathematics and finance. the new idea of cash as an asset asset an investable class. we did not study that, did we? fred: if you look at structurally the market going forward, and you look at the persistence of low interest rates, and the demographics driving low interest rates -- and i have said this before -- you have to look at the u.s. equity markets being the attractive market. where else do you put your money? do you want to invest in a 10-year treasury with a 2% yield? i certainly do not. persistently, equities will outperform. however, you have to have the stomach for it.

the emotional challenges that make this game very difficult. francine: because you are expecting a lot more volatility? say the valuation seems attractive, but given the fact that one day it is up 5%, the other it is down 10%, you may want to wait. fred: that is exactly what is happening. people are pulling out of the equity markets. we find ourselves, having more cash than we are generally used -- aving tom: do you own the american banks? fred: we can. i do not find it compelling right now. we have to have the higher interest rates for the banks to make the kind of money that they make. who is calling you looking for advice?

fred: we have pretty sophisticated clients. most of them come from pretty sophisticated backgrounds. they are not in panic mode. i am concerned because i do not want to sit there and just blithely say everything is fine, everything is going to be great. it will be. but it is a question of emotional damage being done day today, month-to-month. you in theo talk to real world. i agree. coming up tomorrow on "bloomberg surveillance," we will be joined by the imf director of monetary affairs. he was warning about dollar-denominated debt, especially in oil-producing countries. that was at -- that is at 10:00 a.m. tomorrow in london. ♪

tom: i guess it is risk-on after what we have seen here. let's get a forex report. 114, as shock, and awe.

the elephant in the room, what has not moved, 6.57 on yen. scathing over the lack of activity by the beijing government. let's get to our single best chart. this is a great chart. this is an american chart. we do this after new hampshire as we go on to south carolina. you just said new hamster. it is very unfair to president carter. he never said the phrase with high inflation, and then up we go to a modest malaise of a 10-13-year period. when you look at that, fred, is it a vector up that you have to be in equities, or can you try to figure out when the malaise happens?

latter.od luck on the it is hard to time the market. it is hard to know -- this market, by the way, harkening back to earlier parts of the conversation -- this is not somebody we have a rational discussion with. market, be rational, cooperate with my feelings. the market behaves the way the market behaves, and timing is difficult. in a market like this, should investors be plunging in, confident that it is all going to work out? the truth is, it probably could, but they will not. too -- whod i are else was in there? it was like a must-read on wall street. it was the doj book. it was the same stuff today. should your clients -- should

vonnie or i or francine be reading economics removed from investment decisions? fred: we all do it. we live in a world -- tom: we are still listening to john riding. sure. i do not let it drive my decision-making, however. ultimately i have to have a point of view, a process, and i have to believe in growth companies, and i have to be convinced that their business model is pretty were surrounded competitivelyning they are strong. and i have to believe in the long run that they will be rewarded for their growth, and they will be. there is no question about it. history proves that out over and over again. call it a variant on the warren buffett model, but if you own 12 or 15 or 16 stocks and you follow them closely and you know them very well, you have to know them, you have to do your homework. then you will end up with good

results in my opinion. francine: are we going to see a lot more bankruptcies? this was something that the imf put out, saying that it was dollar-denominated, that smaller oil companies have their debt issued in dollars. this will start hurting. will we see this this year, or will the cheap money prop them up? fred: i think we are seeing it already. cheap money will not be lent to companies in trouble. we do not want to put bad money after good money. i think there will be bankruptcies, and there is a restructuring already ongoing in the energy patch. it will not only be the energy companies, but he will be the upstream company's, the downstream companies, and their suppliers. vonnie: you were saying growth companies have a moat around that. on 2015 -- a lock fred: it is changing. when we see earnings per share

problems, there has to be a reaction. at times we will see there will be companies where we will have very strong convictions about the company but we know it is going through a tough patch. tom: can you buy apple computer? is that a blue-chip stock? fred: it does not have the per sharearnings momentum that we are looking for. we bought facebook two weeks ago. tom: but the cash generation on apple -- fred: not in our growth portfolio. there is another portfolio in which it could reasonably fit. , atin our growth portfolio an important time like this, growth starts to be better. ulta cosmetics, which is a company i am pleased with and i understand the model extremely well. we own o'reilly automotive,

which is benefiting from the age of the auto fleet. we own quintiles, which is in the contract space -- tom: are you getting some portfolio advice here? vonnie is taking notes. you not be a stranger, fred lane. , as always --a are you here next week, francine? francine: the week after. tom: yes. we will have a carlsberg beer. yellen will testify. stay with us. "bloomberg surveillance." good morning. ♪

stephanie: the stock soars as the bank considers a buyback. walking a tightrope on capitol hill. janet yellen will try to strike

a balance between sounding confident and acknowledging risk from around the world. and the new normal for technology. investors now say earnings do matter. we will hear from goldman sach'' chief operating officer, gary cohn. stephanie: welcome to "bloomberg ," here at bloomberg world headquarters in new york city. i am stephanie ruhle. david: the market is down, up, we don't know where it is. stephanie: we will bring inexpert and try to break it down. david: who better than to have john mack with us? they will help us sort tou