ritish prime minister hopes to get an agreement that would keep the u.k. in the european union. state of the holdout industry. -- the hotel industry. we will talk with loew's hotel chairman jonathan toews. -- jonathan tisch. welcome to bloomberg . for anie: we are hoping big day in the markets. for the last three days, we have seen the s&p up 1%. if we get it today, it will be the first time since 1982. is that reading tea leaves, is it looking at crystal balls? we know participants and the market are desperate for signs that things are turning around. when you look at crude. up to nearly 3%. this is a positive for those who thought crude was going to

continue to slide into oblivion. we are seeing a slight positive. david: people are looking for anything. if it is on the good side they go, raising up. on the bad side, they go racing down. stephanie: look at bank stocks. jonathanor this hour tisch. and shannon petit piece. she'll be helping us break it down because it is walmart earnings. walmart earnings are a bellwether to help us understand what the u.s. economy really looks like. if you think about the walmart consumer, the walmart employee. the reason they get their minimum wage raise, will they be shopping more in the store? you remember our sitdown with doug macmillan. >> they were getting clobbered. it is extorted could we need to find out what the consumer is doing. matt: net sales were, total revenue $129.7 billion.

eps was $1.49. it looks like walmart is beating on earnings. it does give an outlook, it sees save growth flat -- sales growth flat. pre-market, walmart is down 3.2%. let's take a look at the rest of the futures as walmart headlines continue to come across. we do see futures up. gains on the s&p .75%. if we get another positive day today, it will be the first streak like that since 1982, because we have had three days of more than 1% gains on the s&p. so, already, that has been an incredible streak we have not seen in a long time. take a look at where we see -- stephanie: we have got to put in

context. david: three days. matt: 1982 was the last time we would've seen four days, gains n the sep.ore o the dax and cac gaining. i'm going to show you later on on the program how correlations are breaking down, the super tight correlations we have had between oil and stocks. right now i'm going to show you how tight it is in germany. if you look at brent crude and the dax, the dax was down. brent was down. both rose in lockstep. the correlation is still very, very strong. it is just getting a little bit weaker. let's take a look at oil year-to-date, how far oil has come down, 15%. more than the s&p.

we are looking at the wti, not brent. let's take a look at what the losers are in europe, what the reasons are for the losers. with earningsout that missed expectations. the stock has been down 25% in south africa. that has pulled down anglo-american and rio tinto. it is the miners, the reason the ftse is down and the cac and dax are up. watch for the moves and sympathy today in u.s. stocks. david: let's get back to walmart. shannon, you have look at these numbers. it looks mixed at best. shannon: they beat on their earnings-per-share but it is fourth quarter. the number of a lot of people are watching is the same store sales, are more? is our only up .6%. analyst for hoping for 1%. expectations were really low.

i think the company really has to meet expectations. they say there are going to do. so, they are not even meeting expectations. set aside beating expectations. going forward next year, their sales numbers look lower than what they previously told. they are planning currency. but they are just not delivering what wall street is expecting. their stock's getting punished. stephanie: they are going to be raising their dividends 2 bucks. but we are seeing shares down 4%. you might not be a walmart super shopper -- maybe your -- -- maybe you are. david: there is not one in manhattan. stephanie: hudson yards has availability. doug macmillan, hope you're watching. what does it tell you, the u.s. consumer you see, what is it look like in terms of spending? >> the consumer is still on the ropes.

they are getting a dividend of their wallet because of the low prices at the tank. so, they go to the gas station and see there are paying $1.70. and some of that conference to travel dollars. that is a dividend for the travel industry. stephanie: across industry, you said when people have more money, this is low gas prices, they will be spending that we have yet to find some want to say they are spending with me. athan: they are traveling today. we are seeing it in orlando where we have our joint venture with comcast, nbc universal. the hotels are very busy. on the group side, not the consumer, the group business remains strong. we can get into this later. questions of oversupply which we may be entering a period where there are too many rooms, and th at'll cross in a negative way. stephanie: all that excess oil in those rooms.

people are spending on experiences. it's good to hear more from you. david: what about traffic? : they said traffic was up but it is not going to be up as much as people are expecting. they did blame, when i talked to the stakeholders this morning, he did say that food deflation, meat and dairy is hurting same-store sales. does whole foods or kroger blame food deflation? they are a huge company. i do not think meat and dairy -- as far as the american consumer goes, because walmart has been struggling with the quality of its stores and out of stock, how much of this is a walmart problem and how much of this is a consumer problem? they are so big that i think they do have to reflect what the american consumer is doing. stephanie: doug macmillan, the coe, has said we need to restructure what this company

looks like. we are trying to focus on e-commerce. 200 of those smaller, quick mart down. shut how much time are analysts going to give walmart? shannon: there is only one investor that really matters and that is the wall family. -- the walton family. if you're looking at the share price, you might think that ceo is going to get ousted. family is the walton on board, and that should ease the pain increasing dividends. as long as the walton family is you canthe ceo, guarantee this strategy they have set forth they are behind that, then i think he has some time. stephanie: the sam's and carl this iscould say another example of how we are heading into recession. those that are bears are looking for more signs. jonathan: we don't see that just yet.

there are some troubles and signs out there. but we are not seeing we are on the precipice of a recession. of this is amuch walmart issue and how much of this is a consumer issue? we have target out next week and the dollar store. again, how much is the consumer changing where they spend money. they are not buying a new bike at walmart, they're spending it on travel. stephanie: who is walmart's competition, target or walmart? they are in a different business then target. shannon: we cannot talk about walmart without amazon. we saw e-commerce sales growth 8%. it is slower. it is slow it has been slowing. that is going to trouble investors. david: the re-do doug macmillan is doing that e-commerce. is it too soon to see any results? shannon: on e-commerce? last quarter when i talked to

investors, they felt like they were getting impatient. if you like the company has been investing a lot for a couple years now. they expected to see some results. walton family matters. they are committed to this. they want the company to continue in this direction, they will david: went about sam's club, a slight miss? shannon: sam's club was in line with their saints -- their projections of half a percent. it looks like they met expectations but they are not doing amazing, either, compared to cosco. which is being seen better traffic than sam's club has. stephanie: in a different capacity, but you understand a family business. when we say walmart it is all about the waltons. when you run a major conglomerate can you say that? jonathan: i don't think so. the tisch family at loews are

the majority shareholders. but we're interested in raising values for all shareholders to we take our job seriously and want to do what is in the best interest of shareholders. family holdswalton a majority of the stocks. that is how we view our jobs. we take that responsibility seriously. sure doug macmillan would agree with that. they do not go to wall street and say we don't care. they are very concerned about what shareholders think, as well. it comes down to at the end of the day, who is in control? stephanie: we have doug macmillan talking about the big reinvestment they are making a few months ago. they did not do it from out wet. doug macmillan came to new york, said, wall street, i need to take my lumps. let's take a look at where he said they are putting your money in their focus. next year's investment is on top of the

costs we have in our business is related to people. about $1.5 billion as our associates enjoy a decrease of $10 to the starting wage rate. we added department managers. in e-commerce is and some of it is in price investment. interesting thing across all of retailers if you look at the amount of goods people are buying, that is not going down. it is that margins are shrinking. we have become addicted to discounting and the walmarts as their margins shrink, they have to increase their volume. shannon: how much can we cram into our homes? as margins are going down, wages are not going up. spending $1.5 billion increasing wages. part of that they say is the investment to improve their stores. doug macmillan worked in a walmart store. he feels that have your employees, better quality

employees they can and track and improve the quality of their stores. david: in your hotel business are you seeing wage pressure from when the wage -- from minimum wage loss? you look around the country there are minimum wage initiatives in many of the markets. we want our associates to be happy. we have got 10,000 men and women responsible for our products. wages going up it is putting pressure on the bottom line. we're always trying to find new sources of revenue at how we can increase profitability. but the wage issue is becoming big in terms of what on pnl's look like. centanie: the four dividend raise gives the family, the walton, family, another 64 million bucks a year. that is a good vacation. at a loews hotel. watch walmart

stocks throughout the morning. we have got to move on because eu leaders are meeting in brussels to discuss whether the u.k. will remain a member. i am talking about brexit. we will give you those details coming up. jon tisch will be with us. you are watching . we're just getting started. ♪

vonnie: your latest bloomberg business flash. sales rose in 2015 at the slowest rate in six years. it was hurt by with demand in asia and a product recall in india. nestle says sales will grow this

year at the same rate as la st. klm group is posting its first annual profit since 2010. air france is warning it must get a deal -- with pilots to stay in the black. marks spent about $20 million for 20% stake in double line capital. since then, double line has paid out $158 million to oaktree. that is the latest boomer business/. david: now we go to global . european leaders are meeting in brussels. at stake is a reform that help determine whether the u.k. remains a part of the union. ryan chilcote joins us from brussels. exactlyke us through

what the specific sticking points are and which are the leaders that cameron has to persuade? threeyeah, so there are bones on contention. the first on the financial front has to do with how countries within the european union but do not use the euro object to roll and ideas that the countries that do use the euro come up w ith. in plain speak, some of that has to do with how british banks can shield themselves from e.u. regulation. the french did not like that idea. they are concerned that the british banks might get some kind of unfair advantage out of this. they of said -- it's important to keep the minimum principle of the single market in mind when these discussions are happening. so that is one point of contention. the other is migration. specifically, how much welfare e.u. migrants in the u.k. can get. contention there is

some eastern european countries concern that britain gets away with some exceptions. may be other countries like denmark will as well. then, finally, just exactly how solid or long-lasting of a deal is this going to be? do e.u. treaties have to change as a result of this as well? at the end of the day, the other 27 countries, they want the u.k. to stay in the european union. they understand that the british prime minister needs is some kind of deal to take home so that he can get his referendum through na. david: does he need all 27 countries? that is a tough negotiation. ryan: yes. rub is the irony or the when it comes to the e.u. most are on board. you have the french concerned about banking regulations. eastern europeans very sensitive on the issue of migrant labor, because it is people from their

countries going to the u.k. but, you know, if he is lucky, maybe he can pull it off. his master plan is to meet with a 27 leaders today. then they have dinner. at the dinner, they discuss the migrant crisis. that is where he will talk about what britain can do to help deal with the flow of refugees coming from turkey and syria through turkey into the european union. that is the way of showing, we can play ball. than they are going to have an english breakfast tomorrow morning. david cameron gets his wish, he will be on the plane around 1:00 p.m. tomorrow with the deal and had, so he can be with his cabinet and announces referendum we are expecting to happen on june 23. david: that is ryan chilcote joining us from brussels. curious to see those europeans eating blood sausage for breakfast. stephanie: i was just thinking that. not specifically on europe -- whether it is or oilor refugee crisis

prices are china, when you look at europe, is it a good opportunity? do think it is stable? jonathan: we think it is fairly stable. for the issues we just heard about with the meeting of the e.u. we want tow is that come as a relates to travel, we want people to have lower farriers so that the ease o travel is much more expedient. so, if you look at what we do in the country with the countries that are part of the visa waiver program, we want to lower barriers. make it easiern to go from one country to another. when you look at the global picture and what is happening in china and what is happening with capital that was coming into the industry with big purchases -- as you look at the chinese buying the walled off a story -- the waldorf astoria. there was always a rumor that a

chinese company would by starwood. the question is are those flows of capital from china and sovereign wealth funds with this current economic level, will that start to drivy up? we start to see the purchasers of big real estate, hotel companies might pause for a whi le. stephanie: in terms of ease of travel, what could the refugee situation mean for the travel business? we saw travel to paris drop in airlines get hit. jonathan: it is a big question. i do not have the answer. it is something to be aware of. we will have to see what they decide in terms of the e.u. david: next, we will tie about the top trending stories on a bloomberg, including how one deutsche bank analyst had a crisis affect. tisch staying with us for that on bloomberg . ♪

welcome back. time to look at the top trending stories from the bloomberg. you can find these on your own. bloomberg. the last one is the one i'm curious about. is down 5% is your. he looked at corporate earnings that are down 5%. if you take out energy stocks copper corporate earnings are up 1.2%. why is there a disconnect? thethan: you can buy with way the markets have acted, you can buy a lot of these stocks. their balance sheets are strong. you can buy some major u.s. global companies pretty inexpensively today. stephanie: why aren't we seeing that happen? jonathan: maybe it is starting to turn. but they're pretty inexpensive these days. stephanie: if they are

inexpensive, we hear day in and day out more investor sitting in cash. do you believe it is because they are waiting, the efed action -- jonathan: i think they are waiting. there are so many issues investors are looking at. hopefully people are not studying therefore one k every day because then they would get day becausek every they would get depressed. if you take a longer view, i am an optimist. things are going to get better. stephanie: think long-term. i've a feeling howard marks will say the same thing. when we come back, we talked instructors in travel -- disruptors in travel. ♪

stephanie: you are watching "bloomberg ," and we are watching futures. up this morning. across the board, in the green.

a few names not parried walmart out with earnings and shares have been down for percent. messed gross targets for the third year in a row, so a bit of lemixed picture -- nest missed gross targets for the third year in a row, so a bit of a mixed picture. tom keene is just off radio. welcome. let's get you some first word news. vonnie: thank you. a trip that will underscore the huge change between the u.s. and cuba. president obama will travel to havana next month. theythan a year ago, normalized the nations. cuba is still criticized for human rights abuses. congress will not miss the trade embargo. -- big lead in decided areas trump has a big lead into saturday's south carolina primary. marco rubio and jeb bush are

fighting it out for third. a big boost for marco rubio who was endorsed by south carolina governor nikki haley. bernie sanders has also spent money on advertising. he spent almost a million dollars on broadcast ads, almost twice as much clinton. bernie sanders is taking advantage of the funding that has poured and since you won the new hampshire primary. i am vonnie quinn. david: thank you. tom is here for his morning buzz three. a very compelling report. scalia debate began the evening of his death and there are a few touchstones. them, whenever anybody thees, at the bottom of wonderful essay this morning, she talks about the last time she spoke to the justice and the express.the northeast

the justice said, so linda, what do you think of the new pope? the justice went on, well, he is a transitional figure. and she goes on to transition from scalia to the new court, which is, will his original is him, having served its? purpose, now leave the stage and she served the has it it served the purpose and the new stage? carefule have to be about judicial review. the supreme court has to be careful in limiting its powers. if the codes too far, -- if they goes too far, it will be politically vulnerable. tom: linda is very detailed and i will be direct, i am not a for pureert, but

bloomberg view, a tweet then i doubt after the passing of judge scalia, they tried to explain the balance between a liberal and conservative. john, this is a profound time for the court. jonathan: it is a profound moment for the future of our country and we will see how president obama plays this and what he puts in front of the congress. it is very important moment, as you said. david: if you look at his record, he was not in the majority of a lot of notable cases. the opinionsign because you cannot compromise. he was more imported for his speech and what he said in the positions he took and how eloquent he was. -- johnt have you read tisch mentioned the president goes toward the mainstream or more divisive candidate -- where is that setting right now? david: i don't know where the

vetting is. i think the prudent thing for the president to do, go to the center with a highly qualified candidate and dare the republicans in the senate not to confirm. i have the candidate on the d.c. circuit was approved 97-0 three years ago and he clerked for two republican judges and worked in george w. bush's justice department. jonathan: i would think the president would want this approved before the end of this tenure. the clock is ticking on that and the congress, there is a lot of disruption, and there was a more centrist candidate who would stephanie: have a better chance of passage. the clock is ticking which takes us to the election and all eyes are on, not just the republican side, but the democrat side. as you look at this as a new york real estate guy, are you surprised by donald trump? his strength and what we have seen?

jonathan: i have no donald for at least 25 years. stephanie: are you sending him to julian furled to get a haircut? jokehan: that is an inside that stephanie has. the answer is, i don't want to touch donald's care. i'm not sure anyone does except for his wife. donald is a strong guy -- a smart guy and he is paying to a piece of our electorate that is concerned about the future of the country. ginning up people by saying things that may be no other candidate would say, but in terms of getting things accomplished, whoever the next president may be, i come from the school that you need to be centrist to work with both sides of the eye to get things accomplished. 'sdon't know if donald rhetoric will allow us to do that what he can be the nominee and elected president. tom: you have a number of businesses where there is a lot of labor. you employ a lot of people and

you do it with the benefit structure and a salary structure. mr. trump and mr. sanders before angry people looking for the next marginal ways. why are they not getting that raise from a guy like jonathan tesh? jonathan: we are very responsive to the needs of our coworkers and our salaries, or the most part, are market-driven. and see wages. we pay attention to minimum wage initiatives that are popping up in a lot of areas where we run our hotels, and we try to offer a fair wage to our coworkers because we know how important they are. tom: if you need a strategic decision because of the minimum ite rules and if you turned down a building plan or acquisition plan -- : we have not. tom: you are not. . stephanie: america is depressed over the lack of wage growth. we have seen bernie sanders and donald trump do well because of the disconnect. at the same time, the person who us been in office, president

obama, is touting we are in a beautiful economic recovery and says anyone who believes the u.s. is not doing well is heavily lies. is there a disconnect? there is a think disconnect may be and the truth is somewhere in the middle. companies are understanding. at walmart, there is an understanding of what their coworkers made and they understand how important the people are to their success. i am not sure if the recovery is as robust as the president may be discussing. that is why i think it is somewhere in the middle. stephanie: i went to talk about your business because it has been robust. in the last few years, you are continuing to grow and expand your hotel business. what is the endgame and how big do you want to get? commitmente made a to growing our subsidiary of the corporation over the last years. we have purchased six hotels and markets we thought we needed to have to have the national distribution platform. stephanie: northern new jersey

perry jonathan: no, austin, washington, san francisco -- a line -- stephanie: northern new jersey. no, boston, washington, san francisco. people stay with us, they want s hotels.or other loew we have also built some from scratch which have been successful and added it to our bottom line. openedhicago hotel downtown. our joint venture with comcast and nbc universal. stephanie: do you have a target for how many you want to own? atathan: we would like to be 50 by 2020. that puts us at a disadvantage to the much bigger names and lodging. look at the starwood marriott merger. they will end up with one million rooms and 30 grand. if you look at destination

hotels, there is a sense in the industry that bigger is better. there is that sense -- stephanie: bigger is better or the complete opposite, airbnb. jonathan: that is the complete opposite and we like to be somewhere in the middle where we sake smaller is better. we can offer what the big guys do, but the big want to get bigger to compete more effectively with the airbnb of the world. david: explain the mechanics of bite-size matters. is it a matter of brand, reservation systems? what are the advantages of being big? jonathan: the advantage of scale, a large scale to go to third-party intermediaries, expedia, priceline, i have more to offer you, give me a better way on the rooms you are selling for me. also, in terms of the airbnb of the world, which i really disrupting the industry, and we understand they are not going

anywhere. airbnb is not going anywhere. the question is what is the real impact of airbnb every single day on the u.s. hotel industry? up to now, it has been up to the consumer to use airbnb and they say that they are adding more travelers and not taking away from our bread-and-butter traveler. we are not so sure about that. often, they are slowly dipping their toe into getting the business traveler, which is really the core of what we do, especially at loews hotels. in orlando, we will have five hotels and there's not much of an impact there. atnew york, with occupancies historic highs, mid-80's in terms of occupancy, what we are seeing are the travelers coming but the ability to raise rates has been impacted by what has gone on in the world, the stronger dollar and a little bit with airbnb. negative core

growth in new york city even the occupancy is high. stephanie: you mentioned marriott getting bigger with one million rooms to compete with airbnb. they commented on that specifically. take a look. the vastare still majority of travelers could will stay in hotel as opposed to taking the uncertainty of statement someone's apartment. we think that will be the case for many years to come. we don't see that changing. we have not seen the material impact from airbnb in our business. stephanie: yet. arne is one of the brightest guys in our industry. he is spot on. right now, it doesn't have a major impact, but goldman sachs wrote down the demographic of through the airbnb user is. interesting because of a certain age range, i think it was less than 30 years old, they were saying if you use airbnb, you might not go back to using the hotel.

it has to do with millennials and how they think, but the industry and hotel business is coming out with all these brands. there is a multiplicity of brands that are going after the millennial travel. tom: what is your average roommate versus airbnb competition? jonathan: -- in line -- tom: hundreds and hundreds of dollars. jonathan: right. tom: i'm not sure my kids are looking to stay with john tisch soon. jonathan: we have a credit card on file. [laughter] stephanie: for you, if the fed does raise rates, does that kill any of your expansion plans? kill our it does not expansion plans. it is getting harder to find credit in the hotel business. the last couple of beers, we have been blessed with strong

travel but low supply as it relates to demand, so demand has stayed fairly high, but the concern in the industry today is that supply is increasing. if you look at certain markets, take new york city. running the visitors bureau 10 years ago, we had 70,000 real rooms. there are about 110,000 now with 20,000 more under development or under construction. tom: i talked to a senior officer recently who said the mileage thing and the affinity cards and all that are changing the business. his digital loews friend or enemy? jonathan: it is our friend because in the future, that is how we will talk to accompany and customer -- talk to our customer. what we have to do is interact with them in a way that is easy , but to, easy for us show them we really care, so we can make the connection digitally and that is an area

where we are committing dollars in terms of i.t. to upgrade our digital communication with our travelers. stephanie: if anyone views digital as their enemy, they are dead. in recente seen that experiences with hotels that that is the case. david: we are going to lose you to read year, but john tisch will be staying with us. china is pumping more money into the market, but what does that mean for investors? we will let you next on "bloomberg ." ♪

stephanie: welcome back. i am in the green room. coming up, howard marks joins us, giving his take on how the average investor can make money

in today's market. stay with us. vonnie: i am vonnie quinn. shares of ball mark are falling to premarket trading where they lowered their annual forecast today. the stronger dollar is hurting the value of ball mark and it overseas sales. fourth quarter u.s. sales fell. dish network says their first profit missed estimates. offered sling tv, fewer channels for $20 a month. you.anie: thank let's return to asia. china's central bank announced it will conduct open market operation every business day, strengthening their influence on his tourist rates. they also released their cpi data for january, which climbed along with food costs. for more on their moves, let's bring in the chief investment at a hedge fund that

focuses on asia. how do you take this news, chris? chris: i think we have to move to that. to that has to get area, but investors like ourselves are still going to be very cautious in knowing this will be volatile in the markets will remain volatile while the pboc transitions to what the rest of the world does. david: does this have any affect possibly on the outflow of capital? does it make it easier to take their money out? chris: it does. we have seen a massive outflow of money from china over the last years as chinese yuan balances are deposited in hong kong and have ballooned massively. that will continue and be a concern that china has, but in order to equate themselves more with the rest of the world, they will have to make this move. david: they have to liberalize, but is it possible to get it too fast? chris: i think with china, as we

saw with the equity market last year, because of the magnitude and the economy of scale, everything seems to be too fast, so it will be very, very tender how they do this so it does not move too quickly, but that is a huge risk. david: we also got inflation data out of china overnight. tell us about that. chris: the ppi numbers were all in line. i think about 1.7 or 1.8%, and that is in line, so everyone is expecting that. i think japan would love to see numbers like that as they have been trying to get those kinds of numbers recently. erik: let's go to -- david: let's go to japan. i am baffled because was it last month they went to negative interest rates or the reserve? we would have thought that devalued the yen but in has gone that. chris: we saw it move up as i sat at my computer that night,

and it happened within minutes. we have gone back down to 1.11 and it was a huge shock. i think japan has had a very crowded trade market with global investors speculating on the yen and equities over the last years since it started. i think a lot of global investors got squeezed out with yen strengthening. i think it is overdone and it should be going weaker than it has been. david: matt miller has something on bloomberg. we can describe it to you. matt: i have a chart of the yen in blue, and as a combined more japan gets dollar, more tourism. i am not sure this is part of abenomics, but it will increase the economic intake of the company if the yen weakens and more people visit the country. do you notice that? do business don't in japan but it is an interesting chart.

our concern in the united states is the stronger dollar and the negative impact that has because it is more expensive for international visitors to come to the united states. a is interesting because with stronger dollar, we are not seen that much of an impact. international visitor numbers are still robust even as the dollar strengthens. david: thank you, john and thank you to chris from chicago. stephanie: john is here so we have to cover business. you are a board member and treasurer of the new york football team. one positive for you is eli manning now really wants to get another ring. jonathan: he has two, his brother has two. stephanie: when you look at the team, how long will it take to improve because a winning team is good for the team owner. jonathan: we have had a couple disappointing seasons and we

hear from the fans, but we don't need their emotions because we feel it ourselves. my late father bought 50% in 1991, so we have been in the business now for quite a few years. coughlin, first-class guy, great coach, but he decided to step down kelly took been back at you, our offensive coordinator and promoted him to head coach and we are optimistic. ben has put together the staff and free agency starts soon. we clearly have some key positions to fill. the only way to do it is through free agency, through the draft, trade, but free agents are first heard we do have room in the salary cap and hopefully we can get one or two impact players who will immediately make a difference. stephanie: when coffin was fired -- jonathan: he wasn't fired. stephanie: sorry, there was talk that he was not having the right personality. will there be personnel changes the team needs in order to support?

jonathan: our general manager works closely with the coaching staff and they know where the who were and they know will draft. i think we draft number 10, so we can get an impact player in the first, second or third round. us,ave to work cut out for but we want to get better. franchise and if you disappointing years. david: what is the position you need the impact player for most? jonathan: we are looking at defense. offense was good. manning had a great year and ben is now the head coach. stephanie: roger goodell had the great year. his salary just released. to think he is worth that? doing a gooder is job in a difficult position and i have known roger forever. i am not involved with compensation for him, but i do think roger is certainly a good

leader for the nfl. stephanie: is this your favorite job? the giants? jonathan: i not that involved but i left the hotel business. we have a new ceo and we are doing exciting things and i love the business and talking about the hotel industry. i grew up in the business, have done it a long time and i am fortunate to be in the role. stephanie: football also has great hospitality. david: we will be right back and jonathan toews will beat -- tisch will be with us. ♪

stephanie: you are watching "bloomberg ." a big thanks to jonathan tisch. next hour, howard marks. ♪

stephanie: how the average investor can make money. we will be talking to one of the erage investors around, howard marks. silicon valley versus the fbi.

the biggest names in technology are standing with apple in the fight over on looking -- unlocking a terrorist iphone. and the chief executive stealing the heat. are expected to miss the forecast again and we will hear from the ceo. we have had a good start to a great morning and you are watching the second hour of "bloomberg ," i am stephanie ruhle. david westin. it is always a pleasure when howard is here. stephanie: it will be a big one. david: let's get started with vonnie quinn and first word. vonnie: a trip that will underscore tick change between the u.s. and cuba. president obama will travel to

cuba next month. more than one year ago, the agreed to normalize relations. the countries have been estranged for more than half a century and cuba is still criticized for human rights abuses. donald trump has a big lead into saturday's presidential primary in south carolina. poll shows he has a nine point lead over ted cruz and marco rubio and jeb bush are fighting for third. byco rubio has been endorsed south carolina governor nikki haley. david cameron helps to have a deal by tomorrow on the european union number shipped terms for the united kingdom. he will travel to brussels for an eu summit. british voters may decide in june whether to stay in the eu. last night, the president says there is no guarantee david cameron will get an agreement. global news powered by our journalists and news bureaus around the world. matt miller now.

matt: thank you. we are looking at gains across the board. not huge gains but one third of 1%. theave been talking about run we have had with the s&p 500 up more than 1% the last three days in a row. we have not seen mistake like 2000 11 in october. -- we have not seen a streak like that since october 2011. unusual, andather we may not want to expect that kind of strength in today's market. take a look at the european board. we get a sense of direction on u.s. market looking at european market. they trade midday and we had to the open. the ftse is down about one third of 1% and skied johnson mentioned me earlier and reminded me that thursday is the day when british companies, dividends, so you will see some big ones. astrazeneca trading on the ftse at the x dividend.

let's take a look at -- actually, take a look. bloomberg has this world capital market. you can see some of the tech gainers in europe. the reason you see some of the gains of the dax and cac. if you take a look at the cac index, you we can see how much all exchanges are worth around the globe. it has risen about $2 trillion in the last week, so you can see that year today, down 10% on all the equity markets in the entire world, but we had a pretty decent leg up. as you get a leg up, we have seen the correlation between the and oil. between all equity and commodity markets, they break down because correlations were so tight. i have the screen right now on my bloomberg terminal and let me walk you through how to set up the correlation chart. if you have an hs function, put

in each asset class in these boxes and you click correlation in the upper right-hand corner of the screen and we will change it to 30 days. it is important to change this percentage side to a ball you get the correlation between zero and 1, 0 being the least cord needed and one the most. we can see that we were mad correlated. as my cousin would say. almost perfect. zero point 196 and we have come down to 0.183, so it has come off as equity markets do better. david: .83 is pretty strong. wet: still very strong and had oil up yesterday and markets were up strong and oil is up today. oil is still down year to date, but it is -- you can see 15%, but it is doing better today and it had a dip and came back up and markets tracked with it. they are fairly correlated. stephanie: correlated right

there. matt went nerd and street. he have to move on because howard is here. what you make of the recent market volatility? is this part of the normal cycle? said we are inn a perfect storm and that doesn't seem like the perfect cycle. howard: i think fits of volatility are normal. i was talking to my friend, and pilot, who talked about his job as hours of boredom punctuated by moments of terror. stephanie: hours of boredom interrupted by moments of terror. is that how you describe investor life? howard: i think that is right. this is one of the last six weeks of the stock market that has been a moment of terror but it is normal. the reasons are not quite normal. we have one off. i think people have gotten used

to dealing with normal economic cycles, the recession, recovery, now, kind ofhave cosmic issues that people don't have experience dealing with. terrorism aretes, just four examples. stephanie: is the fear exaggerated or punctuated by the presidential election? when you see donald trump but there, there i say, putting fear economy and speaking and such declarative statements about the disastrous situation we are in. this that affect the market? howard: i can't tell you definitively because i don't have research but i would guess so. they are scaring the hell out of people. donald says the chinese are killing us, the mexicans are killing us, the japanese are killing us, but we are going to get the jobs back. i think that people tend to believe that. the others are competing to

be equally -- stephanie: dramatic. howard: and dramatic, and it is hard to compete by saying, the latest information from the commerce department says this, but they don't want to hear that. he has more attention. stephanie: more headline worthy. matt: i'm not sure how much market volatility that attributes to but more social volatility. dayexample, the 30 volatility in oil has risen to a seven-year high and you could argue that would have happened with or without donald trump's insane hairdo. sure that is too and i doubt he has much to do with the price of oil but i am talking about mood. matt: but this has a lot to do with the moment of terror in equity markets. howard: yes, but it drives me a little crazy because i was listening to what you said before and you talked about -- stephanie: he makes us crazy all the time.

howard: oil prices up, stocks doing better. why? because asset classes get very tightly correlated in times of fear, right? an assetut oil is not class. who do you know who has a position in oil? i believe that higher prices through oil are bad for our economy balance and that for japan, europe, all the places that import but don't make it. we import more than we send out, we are a net importer but we make some, but high oil prices are not necessarily good for us. i think that the fact that stock prices go up really proves that most people don't know how it works. stephanie: what do you mean by that? are one you think etf's of the reason that the popularity of etf's are one of the reasons that the correlation gets stronger?

howard: i think you're probably right because i think that etf's, for some people, are awaited gamble. gamble.ted if people wanted to take a gamble on oil in pre-etf days, it would have been challenge and today is easy. they can get in, get out and they have appear play. most other oil companies in the past and other businesses, coal and others, so i do think there is a component. with all derivative trading's, it has basically made it easier to bet short-term speculation than it was in the past worried -- in the past. david: i want to go back to how afraid people really are. it is actually at 22, which i don't think is that terribly high historically. it was a higher in november. are people that afraid?

back to august. howard: how about showing the 10 year chart. david: here is back to march. matt: we actually went up. howard: that was china. that was the tipping point in the market, when the market went from incredibly complacent, oblivious miss and denial -- oblivious and the nile two, i have to get out and i don't know what is going on. david: how do you measure that fear? i am not a student of the fix, but with this shows is you had an all-time high on this chart at the global financial panic in thead a summer of 2011 with connection with the budget follies and the downgrade of u.s. debt, and then you had a spike in the summer of 2015 with china. but we are at a high level,

for the spikes, so i think that in general, if we look at the last year, it is higher than most of the other years. stephanie: you say that before they were etf's and derivative instruments, you cannot necessarily put on a position around oil, but you can in terms of pi yield with loads of energy names out there that have got beat up given the price of oil and we are not seeing people by because the companies are so levered and what it costs for them to operate is so much. howard: we expect to see substantial defaults in the coming year. stephanie: so you don't want to make loans to any energy companies? howard: i think you have to be selective. you have to look at life probabilistically and you have to realize that you don't know what will happen. you think you may know. the smartest thing i ever heard was the morning of the super bowl. one of the sportscasters was

asked, who is going to win the game and he said, carolina wins eight out of 10 and this could be one of the two. most people at the hear that caroline is likely to win, they will say, denver has no chance but no, they have a 20% chance and they did. or things may go down from here, but i want to do buying, not in substantial chance that they go up from here. i want to do some buying. our mantra for the last four years has been moved forward, but with caution. in the memo on the couch that we talked about, i said with prices down now and people more negative and risk aversion having raised its head, we are willing to apply a little less caution. stephanie: you must agree with ray dalia who agreed with lower returns and greater risk. i want to touch on one thing about derivative products. do you think we need more regulation around them?

if they do contribute to more speculative trading that exaggerates where the market is, if you look at think cdf, -- bank cdf, it blew up so much because of liquidity and leverage in the product. are they a problem and should they be changed, the regulation round? a deep question, but my personal answer is no. thes just -- first of all, most important thing is honesty and full disclosure. the broker should practice, know your customer and should not buy those things for people for whom they are unsuited. i think if you have disclosure on the issue or the organizers side, and some care on the broker side, i think people should be able to place the bets they want. enterprisea free system. freedom is important.

we will get to that subject really talk about apple. stephanie: i cannot wait. whoave got to talk about owns high-yield debt. it is mutual fund and do they really know what they are investing in? will get to that, but first, the clash between apple and the federal government that keeps growing as other silicon government -- silicon valley companies jump in. that is next on "bloomberg ." ♪ ♪

is "bloomberg ." i am vonnie quinn. boeing has avoided a potential strike. they have a six year contract extension that includes the pay

raise and more job security. the deal is the latest of several long-term agreements they have reached in the union. way tond an unlikely raise cost -- to raise sales. they are in the top for repairs. people familiar say if bmw had not pushed the strategy, it may have lost the u.s. sale title to lesser. david: thank you. the legal battle between apple and the u.s. government is growing. the california judge ordered the tech giant to unlock a deceased criminals encrypted iphone. ceo tim cook has refused, citing the need to protect citizen privacy. other silicon valley executives showing the support for tim cook. importantweeted -- post by tim cook, forcing companies to enable hacking could compromise users' privacy.

tom, why do we see apple competitors so quickly jumping in on their side? their concern is uncle sam will come after them. if apple does not hold the line on this one, they are concerned this sets the legal precedents that makes it easier for the government to come after them and say a google device is used in some kind of criminal act, some kind of terrorist act, and at some point, the concern is it is a slippery slope. david: let's go through exactly what they are trying to do with what the government wants from apple. governmentially, the once help going to the device and removing the ability -- if you swipe it, you don't have the right passcode and you only have 10 attempts and they want to have apple change that. essentially creating a backdoor into the phone, something that apple has not done for the

government in the past. normally come up before they changed security procedures, there was a way to get to the late 2014, apple got rid of that ability. david: part of the concern is the government once this ability and wants to have it for one phone, they have it for all. why don't they ask apple to decipher the phone and give them the information? : apple does not want to be the gatekeeper. that is what they had been in the past and they say, once they do it for one person, they will not to do it for other actors, perhaps, outside of the country and they will take advantage of that. stephanie: how would, if the government gets what they want, what kind of precedent does this set in terms of the government team able to intervene in the industry? howard: intervene in industry? i don't think that is the issue. the issue is privacy. we have an unqualified right to privacy. we are an american citizen,

freedom is the most important thing in america. the other thing that is the most important is safety. sometimes, we have to give up freedom to get safety, so we had absolutelyly -- two unalterable rights in opposition. it is a personal opinion, in my opinion, have that should be resolved. the constitution doesn't say so. as chuck schumer would say, constitution does it say where cell phones can be enabled to enhance national security? this is something that will have to be resolved probably by the supreme court because they'll get the hard ones. david: howard put his finger on the right issue. however noble the issue of travesty, he is fighting an unattractive case. this is not that we think there is a terrorist but someone who killed people and now we would like to know who that person was in contact with. that is a tough case. tom: it will become a

politicized issue in the campaign. trump wasted no time weighing in and say, who do they think they are? being very clear on where he stands in the issue. i think we will hear from other candidates and it will continue to be an issue. hillary clinton is on record saying that social media companies need to do more to keep or help the government keep terrorists from spreading the gospel. clearly a this is story that is not going away. m, thank -- tom and ti you. we are going to dig in to high-yield when we come back. can high-yield rally without over leopard energy companies weighing it down -- with over leopard energy company -- over-levered energy companies weighing it down? ♪

tephanie: you are watching . marks.here with howard first, do you consider these companies being so levered and oil where it is, are they dead money at this point? howard: one thing i try to say every time i come on the show -- sayhanie: welcome back something year. howard: i can't. there is no such thing as the good idea or bad idea, it is about price. there are good ones and bad ones. remember, when you are high-yield bond investor, you buy it for an 8% return today, and the return does not come from the market but the company. if they pay you the interested principles promised, you make it percent. if you buy into high-yield bonds and let's say you don't at the

moment by the oil ones but you buy the rest, and they have good credit and they pay, then you get 8%. stephanie: you are talking about getting it percent, but can the high-yield market rally outside this weight energy is causing? if you have pending defaults, can the rest of the market outside energy rally around it? howard: when you say it rally, you are asking me to predict what psychology will be and it cannot be done. i don't know and i don't care. when i buy in 8% bond, the only thing i care about is getting 8%. it is falling to get 8% -- to buy a percent bonds and get 10%. stephanie: they say, what is your bid for 20 million bond and i wanted to be 103 and out 101. howard: and today, the banks say, sorry, not interested. david: what percentage of energy

companies with high yield will default? we have heard 20% up to 50%. carl icahn is watching so don't upset him. howard: i don't know, david. i don't quantify. my guess is -- i just don't know. i don't know the credit in-depth enough, but you know, they are selling at very high yield today and imagine how well people are going to do in the ones that don't default, whether it is 50% or 80%, and they could be profitable. stephanie: howard is saying, you need guts and patience. when we come back, we are talking about they can investments that howard made that paid off. ♪

>> welcome to bloomberg go to -- go.marks is it

howard marks is here with us. >> the u.s. counts one of those groups as a major outline in the fight against islamic state. yesterday the attack killed at least for people in angora. says he cannot refuse anyone from the potential for release -- links to terrorist organizations. hash korea's kim jong-un ordered his intelligence units to increase their terror capabilities. south korea's government is pushing the national assembly to push national antiterrorism bills. bernie sanders has wrapped up his spending on advertising. sanders is taking advantage of the donations that have forwarded since he won the new hampshire primary. global news 24 hours a day powered by our 2400 years --

journalists around the world. markets now with matt. we have initial jobless claims out, and we're looking at 200 2000 in the week. 275,000,tation was for coming in significantly below the estimate, and also below the prior week of which was to 69. as far as continuing claims, which may be an interesting number, 2.27 3 million versus 2.7 5 million. getting a picture of the labor markets through this piece of data, if you look at my bloomberg terminal, i have been graphed for the last five years. look how significantly we have come down. we have been holding at levels below 300,000 since september 2014. even a little earlier than that. take a look at walmart right

now. you can see walmart down 4% and change, even with an increase with an increased dividend. the reason is that walmart came out with a forecast that was not pretty, looking at sales being unchanged for 2016. same-store sales also missed in the fourth order. withtors see a problem walmart's outlook and ability to do sales in this market. although consumers have more money in their pocket -- pocket. to boost theirle margins a little bit? let's take a look at ingram micro. this stock right now it's up 21%. it is getting taken out. deal being bought in a that is valued at $31 a share. a couple of tech stocks to look at this morning. they are big movers over in europe.

nvidia is one of them. you can see synopsis there, unchanged. they come out with fourth-quarter revenue of $1.4 billion. we were looking for $1.3 billion. synopsis not moving in the market this morning. ibm is one of the other big tech stocks look at right now. you can see they are both. ivy and gain by a little bit more than amazon, but we have seen tech stocks as drivers in europe and maybe they will be drivers this morning as well. you wrote another memo, which you called what does the market now? what does the market now and not know? >> i do not think the market knows what is going to happen tomorrow. i do not think the market knows anymore than the average people who participate in it i do not think that the market has

intelligence that supersedes that of the participants. thehe market reflects wisdom of the average investor, those of us who are trying to be about average should not take our cues from it. stephanie: you have to know something. you put $20 million in 2009 into the investment firm. you didn't do it just because you did not -- he wanted to help your friend. that is now a billion-dollar game for you. what did you know then that we did not? no reason to expect it would go as well as it did. it has been probably the greatest success story for a new money manager. $85 billion under management. here we are six years later.

what i didn't know, is that i knew that jeff reported to me in my last year at kc w, my previous employer. i knew how smart he was. i knew his partner, i knew what a great team they were paid i believed that they would be successful. stephanie: you believe that back in 2009. today, what are you passionate about, because you want to keep this going. >> i am more confident about the past and the future. i want to question your point about the market a little bit. there is a law of large numbers when it comes to people in one person estimate, and a thousand people come close to being right. some advantage of having thousands of market participants, saying what they think is going to happen. thatere is a good chance

the average is closer to write than anyone, unless the one is a superior investor. that is what you need. the average investor does not do any good. the average mutual fund does not be the market. need superior, and it is hard to be superior. that is why i wrote the memo called it is not easy. it is hard to be superior, but it is not impossible. that is why we backed individual money manager. there are many investors were here and they are fearful, especially market like this. just today, the new york fed blog said that mutual fund managers can be vulnerable to a run, even if they are not leverage. part of it is, you have so much exposure. mutual funds are so exposed to the high-yield market. they are the biggest holders of high-yield debt. if they start to pull out quickly, could there be sick stomach rest -- systemic risk?

there are some that say i just want to give my money out. >> first, we make reference to my memos, anybody who wants to see them can see the on our website. stephanie: and you can watch ask him and we will really dig in an. >> i wrote one earlier last year, in march, called liquidity. i said that it is very dangerous for investment vehicle to imply that it has more liquidity that is possessed by the underlying asset. if you take a lunch of nonliquid bonds, and he put them in a mutual fund, an etf harmless as liquidity, something wrong with that. where did the liquidity come from? we go back to what we said before. if the mutual fund discloses that it holds nonliquid volatile

acids, and if the investor is civic instigated and performed the to make a good decision, that is all they need. people should have the right to make the investments they want. stephanie: in the law of liquidity, especially high-yield, liquidity dries up. if you believe the market is turning, you want to be the first to walk in and sell. given the massive amount of debt high-yield, have in how do we protect the high-yield market from not getting completely clobbered, because they are all going to run to the door. >> two over the possibility that 70 was to be a long-term investor, which is the only intelligent thing to be. nobody knows what is good to have in the markets tomorrow, or next year. i watched the piece on walmart. it is down 4%. is it a goodbye or not, what is it going to close at today? none of us know. why should anybody act is if they know?

the only intelligent form of investing is long-term investing which means that if the market is going to turn nonliquid, there's no reason to run to the door. in hold the portfolio, and you collect the interest, and you get paid at maturity, and what goes on in the market for the weather becomes a liquid or other also or cascades does not matter if you have made a fundamentally good investment decision. stephanie:? à la daytrading -- outlaw daytrading? discourage a. >> so you want full disclosure. you'll somewhat sensitive for a. research there is some instances where the government says we're not willing to take the risk that you will make the wrong decision. i want to come back to the runs on mutual funds.

i would decide which method of regulation is more appropriate in that situation? apple and back to privacy. it is everybody's own opinion. my opinion is free markets based on disclosure. the great thing about the markets is we have them in theory, the mutual fund companies and the brokers interposed to make sure that the people who are investing know what they are doing, and that it is appropriate for them. i think that is all we need. i hate the idea of soliciting in washington, saying david is too flighty, are not adequately financed telephone a high-yield mutual fund trade stephanie: we have seen lawsuit after lawsuit after the fact, say but i did not get it. so why not, in order to protect the market against mutual funds triggering a run on assets, why not require holding time? why not give the government

the right to look in all cell phones? it would enhance national security. we have to make decisions. i am a free-market guy. i believe in caveat emptor. by the people who would make those regulatory decisions since world war virtuous or smarter? elizabeth warren were speaking right now she was saving it to protect new orleans definitely need to protect 401(k)s. choose every regulation that protects us from ourselves in terms of the liquidity? >> i don't think so. it is all just opinion. >> houthi of the systemic risk of these mutual fund? hurting thest putting people who are putting their money in. it could hurt a lot of other people. the subprime mortgage-backed

securities were highly leverage. mutual funds are not leverage. that is a big difference. was peopleing rule paying incremental interest for the right to not disclose their income and asset. there must've been something wrong. the underlying assets in high-yield mutual funds are not roger lynch. the other thing is, remember this. high-yield bonds are much less volatile than stocks. high-yield from the beginning. stephanie: when it was joe. >> or worse. i've seen lots of the text regulated, but nobody regulates the stock market. it is assumed to be virtuous, and the high-yield bond market is assumed to be a speculative casino.

but high-yield bonds have been much steadier, much less volatile over the last 37 years. i think it will remain that the high-yield bond is a contractual instrument which proceeds you a rate of return and money back at maturity. get no promise with a stock, it is inherently riskier. i would like to see that regulated first. we should do a show on that. stephanie: i would like to see marks on bloomberg go every year -- every day of the year. next we will hear from nestlé ceo on the company struggles with the strong swiss friend. you're watching bloomberg go. ♪

>> coming up next, senior portfolio manager, plus the former u.s. treasury secretary, and joe weisenthal. >> we have your latest bloomberg business flash. clotting the global growth forecast for the year. in 2016,p will rise 3% the same as last year, 3/10 of a percentage point less than the november forecast. slower growth in the u.s., germany, and brazil. and it is one more benefit from around. can now buy government bonds. they still cannot invest in north korea, nor in syria.

stephanie: thank you. earlier today tom keene and carol spoke with the nestlé ceo on how the company's earnings are getting pounded by the strong swiss frank. take a look. the timeot think it is to comment on that. that is still out there. i will abstain from commenting there. we have a board that is responsible and will look that up in due time. >> caroline does not know what a butterfinger is. the next time i go to london, i am bringing a case of butterfingers for caroline. cap here please. >> do you have to drop your long-term goal of a 5% growth? yourou really stand by goal in the longer term?

>> it is a longer-term line you want to walk. it is what you do overtime. we are at a softer trading environment but we have to be realistic. endel 4.2% as of the higher . that life to 6% lower term. i am ok with that. >> what about new countries you are entering? do you look to add it to your portfolio? we are already in. we have to factories there. for nestlé, we are there for a long time. we know how to work there. have madestrength we we have a brand strength, and we have one for nutrition. to see nowre again

that it is opening up, how can in that country even more now. about this wasou national bank. you have a lot currency dynamics to deal with. what do you need from thomas jordan and the swiss national bank that has been such a story as switzerland has struggled with the money coming in, this stronger swiss bank. 20 unique? -- what do you need? >> i need to stay independent and do what i have to do. while this is frank is strong, we are weak. years, we would have 50% more turnover. us in the last five years. 30% down.

it is good for aesthetics, and we grow, getting smaller in number. stephanie: there we have it from the nestlé ceo. howard one is your take on europe? you have been optimistic about the region. is that still the case? oni was optimistic securities, because they were cheaper. and ours have gotten cheaper. they're all looked is not compared to ours. they do not have the business dynamism. they do not have -- there are lots of questions about cohesion. whichis issue of britain, they are trying to get settled. what is quite scotland, was going to happen to spain. there are a lot of issues coming up. the point is, they are fighting to preserve the 35 hour work week, and his top treatment once

said, china and india are fighting to have the 35 hour work day. [laughter] stephanie: who is right? >> i'm going to bet on the economy that wants to work harder. stephanie: there you go. david: when we come back, we will have that battle of the charts, and it is joe weisenthal today against matt miller. ♪

>> time now for a special tech version of battle of the charts. howard marks of trees our special guest. matt miller goes first. at of was given the task

looking at the technological. lending apple apple's on the cloud might surprise you. it is actually eclipsed amazon and google. i think of amazon s3 cloud services company in the world. spending,ally come in all of the services really are operating in the cloud. as a result, it will get increased buying power, and a lot of other companies. david: a cool church. what do you have?

joe: i am wondering about the unicorns, how many of those will disappear. we looked to public markets for some clues. one thing i like to look at it bloomberg ipo index. you can see a one-year chart comparing it with the nasdaq is also a reasonable proxy for a lot of tech. it is down just over 8%. down over 20% in the last year. these are markets, theoretically. you cannot have a disconnect between private and public markets that goes on too long. you have to figure that a lot of those tech companies have seen their values smashed based on what is happening. howard?e: so, >> i do not consider myself an expert in technology. i like to think we know something about value.

the latter charge says something about value. is in the absolute: shows shows that the ipo's down more than the nasdaq. the question is, where were they before they came down? tooe they were ridiculously high, and have they gotten fair? we do not know that. stephanie: i am also going to go joe. david: i'm going to go with matt. stephanie: joe is our winner. that will do it. ♪

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we are now just a little bit over 30 minutes for the opening bell in new york city. welcome to "bloomberg ." i am david westin.

stephanie: and i am stephanie ruhle. andaw joe weisenthal win, what is his prize? us for the hour. our guest post for the hour, a former colleague of mine who i would like to say aged well, looks great, michael lipsky. another guest. him matt miller, who did not win the battle of the charts, but every day, you win our hearts at the terminal. matt: futures up across the board. dow jones futures are climbing points.5 nasdaq futures right now up about .5% as well. i cannot decide if i should look at s&p over the last three days or futures over the last four days. i've chosen the s&p. take a look at my bloomberg.

it is not terribly exciting when you take a look at the chart, but we had gains of more than 1% of everyday. that has not happened since three consecutive days of more -- october 2011. if we do that again, it will be the first time since 1982 that we have had four back-to-back gains of 1% or more, so it if you are a betting man or woman, stephanie, you may be betting against that happening today. let's take a look at the majors here today. we have had such a rough year, although it is getting better. now we are only down about 6% for the year on the dow and the s&p. the nasdaq still down about 10% for the year. chart,saw with joe's there is a good reason, because there is no out for these unicorns, although i guess the nasdaq only measures companies that are already out. take a look at oil. this is one of the things that

has been driving markets. a very strong correlation year to date. more than double year to date what we see on the s&p. one of the interesting things we saw out from bloomberg news survey is the correlation has been breaking down just a little, but i showed you the correlation between oil and stocks. 1 being the perfect being a weak0 correlation. you see the correlation for a lot of asset classes breaking down. a number of other commodities that were strongly correlated with oil, and they are slowly breaking down. let's take a look at oil today and see what it is going to show us for markets. , so you see oil rising 3.5% this could be another one of the reasons we see some gains and markets this morning, guys? stephanie: thank you, matt miller. i have to point this out really quick. truvene -- ibm acquiring

health analytics for two point $6 billion. there have been so many questions about ibm. last week when i sat down with mark cuban, i said what is the future of ibm, and he said watson had better work. if you see the acquisitions, there have been a lot, and many are saying show me the money. david: i remember the weather company. stephanie: there you go. we will clearly cover this throughout the hour. big headline out of ibm ceo jimmy romilly. back to you, matt. matt: not a problem. take a look at oil. still a very strong correlation. 3.5%. we saw the market rise up yesterday. in the morning, we did not see the strong markets. let's go to vonnie quinn for your bloomberg first word news. vonnie: matt, thank you so much. u.s. and cuba -- president

obama will travel to havana last next month. they agreed to normalize relations. cuba is still criticized for human rights abuses. meanwhile, congress has lifted the trade embargo. a donald trump has a big lead heading into saturday's republican presidential primary in south carolina. trump aerg poll gives 19 point lead over ted cruz. rubio has been endorsed by south carolina governor nikki haley. bloomberg, facebook, and other tech companies are supporting apple in its fight against the u.s. government. apple is fighting a court order to release a phone lock of one of the san bernardino's shooters. they should not be forced to build so-called backdoors into their products. global news 24 hours a day, powered by our 2400 journalists and more than 150 news bureaus around the world. i vonnie quinn.

stephanie: it is time for the three stories that matter. number 1 -- disappointing sales forecast from walmart and nestée this morning. walmart blaming the strength of the dollar for change. meanwhile, nestlé is missing is long-term sales target for a fourth year. mike lipsky, i want to start with you. we are seeing across the board earnings numbers really week, a true reading it to the strong dollar. what is the outlook for corporate america? walmart newshis this morning. i think they picked up on exactly as it should be, the sales numbers flatted third that is a problem. that said, this strong dollar issue started in june of 2014. . n when we look back at what started this, and his hawkish rhetoric out of the fed. markets are up, oil is up this

morning because if you read through the minutes from last their the fed always has one if by land, two if by sea phrase. if they said they were confident, you knew they were going to hike. that is direct evidence of inflation. that is the new tagline that appears a couple of times in the minutes. that is a very strong, i think dovish, signal from the fed, that they will not fight until they see the whites of their eyes, so to speak, of inflation. oil trades globally in dollars. the strong dollar has hurt china and hurt growth in emerging market countries. it is the one-two punch between weaker china growth and lower oil prices. the red cross -- the root cause of this crisis is the strong dollar, and that is not go into the fed takes away the rhetoric or takes the phillips curve and eradicates it. stephanie: walmart is looking

for green dollars in the door. what is going on there? >> if you look at the u.s., you increase.comp they are looking for 1%. they are blaming part of it on deflation, which is interesting because we have seen deflation in the food category, and that is hurting them, but on the part of -- on the positive side, they have lower gas prices. continued increase in track traffic, e-commerce and the u.s. is strong. it is internationally where it is weaker. also sellsart gasoline. how much is that dragging their sales? at sam's club, that is where the gas stations are. but if you look at walmart, gas stations are not in the bulk of those stores. at the u.s. comp level, it is probably a net positive, given it drives traffic into their stores. david: let's go to number two.

ecd cutting its forecast for global growth to 3%, less than what they protected in november. the economies of brazil, germany, and the u.s. are all slowing, and it is warning that some emerging markets are at risk of exchange rate volatility. michael, this is one further data point. as you see as you manage, are we slowing down? around the world? mike: there is no doubt about it. countries like brazil -- and i would throw all strong in the mix -- reacting to the slowdown in china. it is something we are starting to react to in our portfolios. we kind of had a zen moment where we looked at the growth and say all right, do we short oil companies? the problem is we want to focus more on the em, so we got involved in short em oil. howard marks said earlier he

does not know too many people in oil. it happens to be one of the things we are using to manage what matt showed you today. in terms of a global slowdown, i do not think there is any doubt. let's look at the shockwaves from the earthquake, obviously a drop in oil, a drop in the growth in china. what are the shock waves that come out of that? if you look at the agricultural equipment buy, it is pretty bad. if you look at the companies that make that equipment, it makes sense intuitively that if we will idle half of our drilling rigs and we need a new compression pump, we will not buy a new rig. if we need a tire for one of those, we have four that are idle. i think the equipment buy will be lower. we're going into a period of lower growth. you have larry summers on later. he mailed it back in 2013 when he set interest rates will be low for a long time. stephanie: i will give you number three.

we're going to stay on oil. oil extending above $31 a barrel after industry data showed a decline in u.s. crude inventories. meanwhile, iran is cautiously supporting the saudi-russia oil trade deal. noise, rhetoric out of opec or re we really- when a going to see the market in a long-term way respond to this? joe: it is funny that you say rhetoric because the last two days are almost entirely about that rhetoric. everybody knows that saudi arabia and russia cannot on their own affect the supply and demand equation of oil right now. there are so many other producers. nothing seems to be slowing down u.s. production. but what people say, the bold case is that the rhetoric is changing for the first time in a while. for a long time, the strategy was, "we will set back, we will let prices collapse," but for

the first time, there are some noises out of opec nations come out of russia that they want to do something specifically about this. so this could become the inflection point. this could be the start of some sort of bigger change. to get a takes a lot cartel together, and we are not there. as you set a month ago, that russia and saudi arabia would get together, you said a week ago, iran said it will not happen. it is moving in a direction, it feels like. amplify what you were talking about, which is the numberto free-spirited one producer and number two producer agrees to freeze. who cares? the market was pricing in. it was everybody's reasonable expectation that saudi arabia and iran, who do not like each other, would basically be in a

race to the bottom to see who could sell their inventory cheaper. when people talk about $20 oil and staying there for a well, that is what they are referring to. this agreement to freeze between the russia and the saudis -- boy it goes a long way to taking the right tail out of oil. i think you are seeing that out of commodities. stephanie: there you go. this is a top three f i have ever seen one. those of the stories that matter. thanks to our own poonam goyal. 18 minutes from the market much more ahead on "bloomberg ," including former treasury secretary larry summers right here on "bloomberg ." ♪

vonnie: this is "bloomberg

." i am vonnie quinn with the latest business flash. the number of americans applying for unemployment benefits dropped by 70,000. it is a small sign the labor market is strong despite a slowdown. shares of walmart are lower in premarket trading. of the world's retailer lowered its annual forecast today. meanwhile, fourth quarter u.s. sales fell short of estimates. suffered what is constituted a low blow. the company will have no business dealings with the filipino boxing champion after comments he made about gay relationships. quiao says he respects nike's position but stands by his stance against same-sex marriage. matt: since stephanie voted against me in battle of the

charts, i will look at all losers right now. there will be a lot of red on the screen here. jack in the box reported a miss on earnings, a miss on revenue, a miss on same-store sales. one of the reasons -- mcdonald's all-day breakfast is so strong yearsidea that i had 30 ago -- that it is stealing money out of the tail of jack in the box. people are going to mcdonald's for breakfast and instead. it has only lost 92% of its value over the past year, but it just had a contract canceled by hawaiian electric because they said they could not wait on sunedison's output. stock fell another 14%. goldfield, a waterfall affecting minors today. it is not going to get nearly as much as gold out of the ground as it previously thought. 2.61 million got ounces. today, it will get less.

it's deep south mine in south africa is slow to come on. devon energy coming out yesterday with a sale share that was priced 8% lower than yesterday's closing price, and rbc had a little bit of a surprise. these energy companies are howevero raise funds they can. devon energy as a result fell 5.5% in the premarket. up next, how stressed that investors are handling oil lows. later on, former treasury secretary larry summers will join us first right here on bloomberg television. ♪

david: futures are in the green this morning. that is the s&p and nasdaq. across the board, up, the dow. crude is also up, correlated

once again. wti is over $30 a barrel. there it is, up three point and presented welcome back to "bloomberg ." -- it is up 3.1%. "bloomberg welcome back welcome back to "bloomberg ." stephanie: michael, howard marks just said to is not if, when. we will see a default in that space. you agree? mike: i agree. stephanie: can high-yield rally around that? mike: soon. you remember at deutsche bank there was the text crisis, and it was about 20% of the high-yield market. in 2000 come a fell out of bed, and the question was -- will it take the rest of the market with it? in hindsight, of course it did. the 10% fall from tech companies, high-yield rallied

about 300 basis points. i think you could set up like that now where you will start to see a bifurcation between commodity-related high-yield and the rest of high-yield. but we're not there yet. right now, we have about $74 billion of debt trading under 250 billion dollars trading under $70 prices. between howard marks and myself, we will be playing over the next couple of years. stephanie: these bankruptcies matter to you. mike: they matter to us. they are how we apply our traders typically by trying to figure out -- the current capital structure does not work. what capital structure would work, and can we achieve a valuation? that can be a risky drill, particularly in mining. there have been a couple of bombs like samsung where debt went down, and you do not get another chance at it for you literally gets closed at the

bottom, where the company is foreclosed. we have a company that is trying from bankruptcy, but da has a negative evebit number. the question is -- is that a good buy? number 1 -- try not to lose a finger by owning things were you do not get a chance to come back, and we had a zen moment when it came to energy and investing for we think it is too soon to pile into the oil and gas, the metals and mining, because we had secure lenders as the top who do not want to be there. they are breathing down the net of the large commercial banks to limit their energy exposure. everything we know about bankruptcy is a little twisted. it is the bill paxton voiceover rudder titanic," "the was too small, the ship was too big." emerge from bankruptcy as the new secured debt of the company,

but they do not want to be there, so you are buying the debt behind them, and you can find yourself in a situation where you lose 100% of the money. so our zen moment was let's just own oil. on the other side of that, we were actually short, focused more on the e.m. oil exposure. that has been an interesting proposition because it stops us from losing a finger in something where you do not get a chance to come back. david: matt? matt: i actually have a pretty cool function. if you hit zis go on the bloomberg terminal, you will see a list of the distressed debt issue. you can organize them by spread. it is pretty cool. if you take a look at all of the issuers, click on the upper left. there is a box that shows you. you can see that since 2008, we were doing relatively well. we have really come back up as far as distressed issuance.

look a pretty incredible you can get from the bloomberg -- you can see this chart with 221, or you can message me. anyone can message me with charts and functions. but it is fascinating, right? mike: howard marks will appreciate this because he talks all the time about investor behavior, and this all comes back to chapter eight of ben graham's book. you look at that chart and you say, "oh, my god, it is 2009 again." we do not think it is 2009. we do think it is the 2000 to 2002 episode. we will go up and down 200 basis points in high-yield. during that episode, we had the opportunity to take advantage of some volatility. it is not to thousand nine. we do not see the badges of systemic risk that you saw in 2008 and 2009. stephanie: the blog the fed put up this morning around

mood troll -- mutual funds, if we see redemptions, which high volatility moments, could we see a run on those funds? look at what happened to 3rd avenue in december. mike: the beauty of it is -- stephanie: the beauty of a run. efficientbeauty of an or maybe an efficient market is there are investors like howard marks who have brand-new, fresh capital that they have raised for this opportunity. there are others raising topic l for the opportunity. obviously in the accounts that we manage, this is what we do. capitulate,unds they have a mismatch between the liquidity of fund and liquidity of the investment, there will be people to invest. obviously the securities have to get to a level that meet our investors' requisite return. investorse forgotten what normal recessions look like?

because of how scarring 2008 was, do people say no, we have downturns? mike: you are 100% correct. everybody points to 1937, 1938. here it is, we had a great recession, hike too soon, put us back into recession. 1937-1938 into that episode, it was over by march of 1938. could we go through a growth? are you in for the systemic risk where literally you're running down the street with a cashier's check to get the money out of the bank? no, i do not see that happening. stephanie: we talk about banks losing top talent. mike lipsky, joe weisenthal are staying with us. ♪

stephanie: you are watching "bloomberg ." we are moments away from the opening bell, and we will take a quick check on stocks moving into the premarket. ingram micro surging on news it

is getting bought by a chinese rival, another example of chinese dollars stepping in and making big acquisitions. and walmart of course in the red after cutting its sales forecast for the year. mike lipsky, for you, the a distressed as guy, even if they are big companies you are not specifically invested in, what are the broader things that matter to you? mike: why do we care about the macro? why do we have to be macro aware? my first boss on wall street said a well bought bond is have sold. the question now is -- half sold. the question now is -- sold to whom? the question about the markets, and we will have to take advantage of it as this reduction in the amount of capital chasing assets, capital that have been deployed by sovereign wealth funds into financial assets is now going home. it is going back to the middle

east, the fund deficits because oil at $31 -- stephanie: you thought that money was wrapped up forever. mike: that is right. when jack in the box misses and is down 16%, when walmart beat but have a flat same-store sales, you can feel that money coming out of financial assets. have beeneserves that deployed into the markets since the global financial crisis are going back to their respective countries and coming out of financial assets. there are redemptions from asset managers, and that is why we need to be aware of it. stephanie: all right, michael, do not go anywhere. joining us right now former u.s. treasury secretary larry summers joins us from boston. kashkariy, neekl stirring up the pot talking about breaking up the banks. back in 2013, you are giving speeches where you are saying days of remorse for the

financial industry are not yet overcome us a you have been calling for this for a few years. what is your reaction to neel's comments yesterday breaksclusive larry: i was -- yesterday? surprisedas a little to see the minneapolis fed does not have any regulatory nexis with any of the large institutions. was a little bit surprising. i do nother hand, think any of us are completely satisfied with where we are with respect to the financial system, and while a great deal has been done since the passage of dodd-frank, i think there are very large challenges, both with respect to the shadow banking system, where i think the greatest risks lie, and with respect to continuing risks in the large financial institutions, so we need all the good thinking we can get about how to have a financial system

creditintains a flow of andat the same time is safe stable. that is a very fundamental question where there is a lot of work that still needs to be done going forward. i cannot honestly say that i saw much that was new beyond the kari's speech,h but i think the impulse that this needs more thought and perhaps some good new thoughts will come from the group he is forming. i do not think anybody can be satisfied with where we are with respect to the financial system this isw, but -- but -- the crucial thing -- we do need to keep in mind that balance between supporting the competitiveness of the united

states, gaining a flow of credit on the one hand, and on the systemicd, assuring stability. we also need to stay focused on responsibleing to behavior and making sure that this seemingly endless tendency towards scandals and problems malfeasanceior, that seems to keep getting unearthed, that we find some approach that is more effective difference to malfeasance than what we have had in the past. from that point of view, i have got a lot of sympathy with those who feel we need to move to moreach that is based on prosecuting individuals and less on fighting institutions, which ultimately means taking money from their shareholders

but not holding the individuals who did wrong things accountable. i would like to see a move towards more individual account ability. -- individual accountability when there is proven, serious malfeasance. david: larry, as you said, we can always use more good thinking. is there an issue with who is doing the talking? are you surprised at what comes out of minneapolis and talking kashkari, we asked if he had talked to dan tarullo, and he said no. at some point, doesn't the bank have to know the regulator is that is talking to them? larry: i am not going to get into the internal politics of the federal reserve. as i said, under the rules of they now stand, the minneapolis fed does not really have any important regulatory responsibilities with respect to the issues that governor

kashkari was discussing. and in recent years, he is coming out of a background in a premium on puts making very strong announcements in a way that i guess is a little different from the tradition of the federal reserve. on the other hand, i think that we cannot be focused too much on financial reform. from that point of view, i think there is a prospect that something constructive can come out of all of this. >> larry, for a long time, the fed come other policies is have not been great for the economy but have been great for assets values. then the narrative seems to switch when markets were everyone down, and

said negative rates are so terrible, and it will break the business model of the banks, and markets are forgiven. what is your take on this negative rates policy? is an effective? could it help stimulate the economy, or does it make sense that it is harmful to banks and there is a reason for markets to be nervous about them? i think we will have to watch the experience over a longer period of time. that easieris money, even if it means a move toward negative rates, tends to be stimulative. you can look at places where there are a lot of doctors, and you can see that there are a lot of people who are sick, and you can conclude that hospitals hurt people. that people are

in hospitals because they are sick. and i think we have negative rates because of some deep issues in our economies, a set of issues and arguments that i've talked about when i talked about secular stagnation having to do with the chronic excess of saving over investing. so i am more inclined to regard the monetary policies as a problems rather than a cause of the problems. at the same time, i do think that the central macroeconomic issues for all of this going forward is that a large part of what monetary policy can do it that certainly in japan, in europe, perhaps on a forthcoming basis in the united states, we need further impulses for growth, and that means that fiscal policy and

demand-oriented structural policies are going to very much come into focus. stephanie: all right, larry -- larry: i was interested -- go ahead. i was interested to see in the whichay or two, the oecd, has been a traditional bastion of kind of austerity thinking that tends to come out of europe , and particularly out of germany, did a 180 and has now recognized that once again for itsnth year in a row, forecasts were too pessimistic, and it has echoed the call that i have been engaged in, and many other have, for investment drop the industrialized world as a way to put away these savings to work productively, to employ

people in the short run, to expand capacity in the medium eun, and to reduce what ar massive deferred maintenance deficit burdens in the long run. so i think there is -- stephanie: larry, these are big ideas. whether you are talking secular stagnation or infrastructure spending, fiscal/monetary policy changes, we have heard them from you. it is hard to argue that you are wrong here, but we need to get real about actual actions that can turn the market around. you put on your blog recently that you think there is about 1/3 of a chance that we will face a recession the next year. to avoid that, what can actually happen now? what action steps, and who can take them realistically to help the market? larry: we should be launching a substantial infrastructure investment program. corporate tax reform and the revenues from repatriating a trillionf the $2

abroad would also stimulate private investment and would be an important contributor to that. we need to make a deal. that will require compromise on both sides, and the economy would be better off if it moves forward. stephanie: larry, hold on. i need you to get realistic with me. we need to make a deal. let's look at washington. we are most likely not going to make a deal. so does that mean, guess what, kids, recession? , it means we will live with a one in three chance of a deal. i think, as i expect they will, if the fed is indeed data-dependent rather than ofcks with their view december, which is really looking very shaky right now, so they do not move forward with thatind of rate increases

they plan don at that time, i think that will be -- planned on at that time, i think that will be constructive as well. if mario draghi is able to continue to do things that are important for europe, and if europe moves more strongly rather than less strongly to support its banking system, that will help. you know, there is an upcoming g 20 meeting. i believe it is next week when the world's finance ministers and central bank governors get together, and it will be interesting to see -- they can make statements, and the central bank governors can take actions without being dependent on fractious legislatures, and it will be interesting to see whether they recognize that there is a global demand and growth problem in a clear way, or whether they produce

traditionally relatively clichéd statements about cooperation for stability. and the like. i hope there will be a recognition that we are in a somewhat new paradigm and that policy needs to adjust to that paradigm. look, these are not ultimately insoluble problems. these are not fundamental constraints. these are challenges that people can easily meet of putting people to work and pushing economies forward. but it does require recognizing are,ssues for what they and having an awareness that we are in a new world where the challenge is not excessive inflation, the challenge is getting inflation up to 2%, and markets are saying that is not going to happen in any major

place over the next decade. that is what we have got to take as a kind of organizing problem when we think about macroeconomic policy. david: larry, that is exactly the point you make in the lead out of "foreign came out.hat just you go through a number of possible prescriptions to get it going again. two things jumped out at me. number one, your suggestion that maybe the fed is too independent and should be cooperating more with fiscal policy, with congress and the administration. number two, instead of focusing on inflation, perhaps it should=== -- perhaps its growth should be gnc growth. argue in favor of those two changes for the fed? you in favor of those two changes for the fed? larry: i think we are in a different world than the world paul volcker was in where establishing credibility, the government was not going to .rint money paper over problems

today, the central challenge, as i said, is to get inflation up, and that is going to mean cooperation between the fiscal authority and the monetary authority. i will give you an example. for much of the last half-dozen years, the fed's has been buying up long-term debt, and the economy has been shifting its debt structure toward more long-term debt. they have been going in opposite directions. that is an area where there should be much more cooperation. where ie other areas think a more cooperative posture could be constructed in pushing the economies forward, but of course it needs to start from the premise of an independent central bank. you know, david, i have come to given how much questions there are about the way in which we measure prices,

given the slowdowns that we have seen in gdp growth, i think that it is worth thinking hard about whether the fed should target , not the growth rate of the economy, but the growth as a kind ofr gdp, overall proxy. i think if we had done that, we would have been even more concerned through the last five years or six years about where we were, and it would have imparted a stimulative bias to policy. and at least for most of that would have been right. if you look, the fed has been too optimistic every december for six years by an average of a point.

the consensus has been similarly too optimistic. but i think that we do need to adjust a bit more rapidly than we have to this new paradigm of excessive savings relative to investment, what i call secular stagnation, and i think in that context -- i am not prepared to say that the fed should change its target tomorrow, but i think there should be a lot of reflection on the idea of nominal gdp targeting. david: ok, larry summers, thank you very much for joining us today from massachusetts area we need to check on the markets. they have an open for about 7.5 minutes now. matt: we are down across the board after three straight days of gains. down .2%, the dow really unchanged, and the nasdaq off .25 percent. individual movers -- walmart is a big one, and it is down after releasing a forecast the market

did not like. same store sales growth with less than expected in the fourth quarter, so a full year going forward and the fourth quarter backwards to not look good. currency issues are hurting revenue at international locations. take a look at ibm and amazon. a couple of analyst upgrading posting these stocks. a great valuation after a 20% jump for amazon. ibm making an acquisition for its watson product, buying a health care company for $2.8 billion to add to its watson artificial intelligence. the market up 4.5%. as far as hotels -- marriott actually down today after earnings. the market did not like it. to fold and starwood and ilg. to $284earn $52

this year. marriott is down. it had a conference call with investors saying it is expecting to be earnings neutral in the balkan by this year, and it is cutting down wells and has no plans for new wells and basically had its financial footing. it does not look like the market like that at all. i want to take a look at oil to see what is going on with oil. $31.39,till off 2.4%, and normally the market is terribly correlated. you can see the correlation has broken down a little bit. this is crude oil, the stocks at the shanghai composite, oil in purple. it has come off a little of the data that we talked about earlier. it is still more than .8 correlation, so still very close to perfect. less: maybe a little

correlated today. thanks very much. no challenge is -- a new challenge is heading for us a heading marissa mayer's way. that story next on "bloomberg ." ♪

matt: this is "bloomberg ." greenroom. new hpe be sure to tune into my interview with ed hyman at 2:30 on "bloomberg markets." ♪ star: activist investor board value may be taking the first steps toward a potential proxy fight with yahoo!. our own tom jones is with us,

welcome back, and erik schatzker we are trying to get on the phone. we will you know when we have it. tom, we will start with you. stephanie: star board has been knocking on their door. , the thirds, like time around for yahoo! it has been a difficult story for many years and has only gotten worse and persisted under marissa mayer's. are likelyas said we to launch a proxy site. partners tored start having conversations with investors. it is important for an activist before they launch a proxy fight -- talk to the investors, get a sense of what they're thinking, what are the possibilities, what do you really push for as an activist? know marissa mayer and yahoo! have been shaking the tree for quite some time. erik: good morning. wants isboard

two things -- sell the business or spend it off, and starboard made clear that it also wants a change in management. star board as an investor has zero confidence that the current management can deliver more value for shareholders. and they believe strongly the other investors share the same view. as tom pointed out, you need to engage proxy solicitation firms to find out, to actually know whether other investors do in fact share your point of view. the next step you take is to nominate your own slate of directors. that would happen between late february and late march, and by the middle or possibly toward the end of april, we might find out who those people are. it is possible that yahoo! or starboard may notify the world who has been nominated as a director, but neither side is under any obligation to let that out until the proxy filing is

submitted to the fec. isid: what marissa mayer being forced to do -- she is laying people off left, right, and center. they are shutting down offices. tom: the races under way. she made all these changes that you just mentioned. at the same time, the board has said we are going to explore the possibility of a sale. they have kind of put the company on the block already, so they are doing a lot of things that activists really push for. the big difference here is management is still very much in place. go and actually actively replace the board, get marissa out, and how does that change things? if the company is already up for sale, does moving worse out of change things? she will probably -- does moving things?out change she will probably leave anyway.

stephanie: larry summers, oil, energy markets, marissa, back to you. >> it will dovetail with something dr. summers said come if you look at five-year forward inflation break evens and you invert it and plot it against corporate spreads, i think that makes volumes because we have been told since birth that inflation is bad for bonds, but i think we are in a low-growth environment. stephanie: there you go. mike lipsky, thank you so much, of matlin patterson. later today, it hyman, chairman of ever core, will be on "bloomberg mark -- later today, ied hyman, chairman of evercore, will be on "bloomberg markets." ♪

>> at 11:00 p.m. in hong kong. welcome to bloomberg market. ♪

from bloomberg world headquarters in new york, good morning. here is what we are watching this hour. forget the new normal. are the stocks getting back to the old normal? we will have the latest on three-day gains from the s&p 500. you know that the fed raised interest rates. should the central bank have gone negative? we will talk to none other than john taylor. it is silicon valley versus the fbi. the biggest tech firms are backing apple in the fight over unlocking a terrorist iphone. you will head to the markets desk where julie hyman has the latest. the rally continues. not as strongly as it has in recent days. we are now seeing a mixed picture for stocks. earlier, futures were indicating a higher open. it has lost some steam here. the only major average