been losing money for eight straight years. apple fights back to crush the the fbi to unlock a dead terrorist's iphone. jon: a warm welcome to "bloomberg ." colleague,ith my david westin. the chief national economist is joining us for the next 60 minutes. front and center, the politics of the g-20, shanghai. talkingpple has been about its fight with the fbi, and of course the markets. matt: i'm looking at the number 1950. s&p has hit this number. this could be a trigger number where we see serious shortcoming

today. we are watching that and a lot more to her let's get you to london, where caroline hyde has the first word news. caroline: donald trump was on the defensive last night at the republican presidential debate and -- in houston. marco rubio and ted cruz one after donald trump from everything from his business -- rubio: there are people who borrow $36,000 to go to trump university, and they are suing them now. they got a cardboard cutout of donald trump. that is what they got for $36,000. caroline: it was the last debate before next week's super tuesday. dozens one more than a states and territories will hold primaries and caucuses. there has been another mass shooting, this time in kansas. multiplened fire in locations, killing three people and wounding 14.

the gunman was shot and killed by police. they say most of the shooting took place at the factory where he worked. nations security council will approve the cease-fire in syria today. that is according to russian's foreign minister, who worked out the agreement with secretary of state john kerry. secretary sergei lavrov says ist -- islamic state excluded. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus i am carolineld, hyde. matt? matt: futures are here up across the board. we're looking at gains across -- nasdaq dow futures futures, take a look at what the s&p has done year to date very we are getting closer and closer to the january levels, as 1951.70. mentioned, we are still under the lowest

target, the most bearish targets from j.p. morgan and bankamerica , for 2000. those have been lowered this month, but we're still not quite there yet. we are only finishing february. look at european markets across the board. this is where we are getting our impetus this morning. the footsie is up at -- the footsie as it -- the ftse is up 1%. there are three main drivers and there have been for markets all year. it has been asia, currencies, and there has been oil. those three drivers are what drove the markets in 2016. take a look at the asia board. we had gains after the governor of the bank of china sees the possibility of more stimulus and room to move to stimulate the economy. that may traders happy. the hang seng up 2.5%. have's borrowing costs

already come down. he said monetary policy is pretty common native -- is pretty a common native already. china'ssee that borrowing costs are here in white and have come down to extremely low levels compared to -- china dollar bond year the china dollar bond yields. take a look at currencies, the second leg in the three legged stool of what is moving markets this year. we have dollar weakness today, rubel gaining against the dollar. new zealand dollar gaining against the u.s. dollar, the yen gaining against the u.s. dollar as well. this is something everyone will address and g-20. some people want a concerted action, some people do not -- like wolfgang schauble, very vocal about that. matt: it isn't -- tophanie: it is important point out that this is not the first time we have seen the v

ix drop below 20. it has become somewhat muted, at least this week. matt: it depends on the asset class. if you look at the british pound for the week, volatility is there a big way. take a look at this. we are down 3% in the town this week. remember, we were flirting with 1.38 for a while there. currencies are still very volatile. stephanie: the beauty is a lack of contagion. earlier this year it was a one-for-one correlation. that finally seeing funneled a little bit. president -- that is a positive getting back to fundamentals. matt: the correlation is not there between all asset classes. or youto touch on oil can see brent and nymex crude rising today.

this is the lowest level we have that gas since 1970 nine. stephanie was still in high school at that time. 1979.ce stephanie was still in high school at that time. this has been one of the reasons you have seen the recovery here this month. david? david: markets are up all around today. i must say we are just getting started with the g-20, but they are already making a fairmount of news. -- a fair amount of news. -- china says they have multiple policy to address downside risks. david, there is a fair amount of news that you're are making over there already. good morning, by the way, from shanghai. i was at that speech where the

pboc governor was speaking. he was speaking in english, which i guess also shows you he was catering to mostly an international audience. we know there is a need to ease. interest rates, real rates, are on the way up. the real debate was not answered. it was how they planned to do that. we are in a situation in china where capital outflows are getting exacerbated by speculation that the pboc will ease, so they cannot exactly just cut rates. to matt's point earlier, where you look at the borrowing costs on the way down, they are really turning to daily market operations to inject liquidity into the system and ease, to some extent, that. he also made the point on speculation that there is no basis whatsoever -- you look at the fundamentals of the chinese economy -- no basis for a

persistent decline in the value of the renminbi. that speaks volumes to what they are now using to turn off, if you will, all the speculation that the yuan will fall further. it has gotten very expensive to defend it. there has been a massive drawdown on those reserves, which is not a trend. that is what a lot of people have been talking about, that they need to manage expectations. jon: i think that is what is revealing about this morning and today. the governor did not speak that very often, and it is not just the governor speaking. the pboc separately released a statement -- "prudent with a slight easing bias." it is a subtle nuance that matters to the market this morning, isn't it? david: it certainly does. it tempers expectations for broad-based easing. the broadpoint they are making is that they will be there to make sure that liquidity is

there to ease on the markets. if you have central bankers here, finance ministers, they are pointing to each other on who is supposed to be doing the heavy lifting at the moment. that is a real sense i get listening to all these speeches and panels, was that there is a broad disagreement on how we really need to jack up aggregate demand in the global economy. it is almost like going to a wine tasting and somebody brings out whiskey, if you will. stephanie: what is your take here? david is giving us the picture that they are pointing to one another and saying, "you fix it or cap that does not seem like a good solution." >> they would like to stabilize the economy, what is going on with inflation, social issues, and monetary policy is not the answer to all those issues.

that is why a very important issue is that they are trying to tell us, we have other options, we're looking at what is going on, and by going out and doing this, it is sending a very strong signal. david: to that point, we focus theovernor joe but also finance minister came out and said there is room to loosen fiscal policy, so it seems to be a coordinated situation with the chinese. : on thursday, they liberalized bond flows, so now it is easier to get money into china, that is trying to offset the outflows going on. difficults causing developments to quantify because we do not know how much money will come into china with the outflows we are seeing. i look at the rrr rate, and

that would typically be cut down to offset outflows, but a lot of to bill -- a lot of people are talking about exacerbating outflows. they could potentially do more soon, but the question for them is, why should we do that now? falling asta is not much as the market needs to be worrying about, so the first all is to calm down markets. maybe they should exploit this opportunity to try to get things , and thencalm order say what do we need to do instead of just panicking. stephanie: the chinese stock market stabilizing -- is this happening just based on headlines, or is it fundamental stabilization? i think maybe he cannot hear me. -- are wen, torsten

stabilizing, or is it off today's headlines that we are sitting at the same table? torsten: they get very excited in one direction, and that is why communication not only by central banks and those countries, but also by the chinese, is extremely important, and the message they're sending is take it easy and let's try to evaluate. after a while, we need to do more. jon: typically we come into a g-20, and there are two counts. what are you looking for out of the g-20 in shanghai? a discrepancy is between what markets are worried about and the anxieties we have all been going through this year, and what is going on with economic data. i think they follow what is going on carefully, but policymakers are saying is this really a crisis that requires a significant, coordinated statement?

based on what jack lew said earlier this week and what is going on generally, it is quite -- it is not quite there yet, but they are saying let's take it easy and try to see if we can talk about things and see if we can get markets to calm down and be less worried about these unquantifiable fears that are out there at the moment. easy." e: "take it i think that is common policy out of chinese policymakers. plunge afterres the u.k. banks posted annual losses. we will have more on that when we come back. we are seeing other banking names in the green. maybe it is because we are not -- we're covering a lot more here on "bloomberg ." ♪

caroline: this is the bloomberg business flash. i am caroline hyde. hilton is putting into three units. the company will spin off its property business into real estate investment. hilton grand vacations will become a separate publicly traded company. oprah winfrey was not enough to help weight watchers. the company plunged in the premarket after the partnership ath winfrey failed to reverse financial decline. weight watchers posted an unexpected loss in the fourth quarter, plus a number of active subscribers fell. audi will take another shot at knocking off bmw as the top luxury car brand. the of sport-utility vehicles last to third place behind bmw and mercedes-benz. jon: now to global go.

would see rbs stock getting absolutely hammered this morning, down around 8%, the biggest drop since 2012, after reported earnings this morning. the bank posting an eighth straight annual loss. ugly. michael moore joins us from london to go deeper. michael, this continues bad news after bad news for rbs. take me through the numbers for this particular release. is there any good news in there at all? michael: investors are trying to find some and are struggling. it is not just the earnings which were a little bit worse than expected, but rbs had warned people that a loss was company last month. they had talked about some of the charges that were coming, but i think investors are concerned about a couple of things. they are concerned about the dividend perhaps being pushed back.

previously rbs talked about the first quarter of 2017 being that time period for capital returns. it is moreaying that likely to be later, and now there is a laundry list of things they have to get done before that point, one of which being a settlement with u.s. authorities on some of the issues that a lot of other banks have already settled on. asset -- ther big other big aspect to this is the day shareholder is the government. it is around 407 pence. we are nowhere near that this morning, just north of two pounds. how much of a problem is this for treasury? it looks like it is slipping further and further away from the u.k. government to do anything about this. right, and a year ago it got pretty close to that 407 level. the government has shown that it is willing to sell below that level. they did it in august, but clearly we have reported that

they have postponed some of the sales late last year when the stock kept falling, and we have seen more declines this year. it does make you wonder when they are going to be able to sell down some of that. jon: you mentioned some of the litigation, a whole string of litigation issues for the u.k. lenders, the biggest one ppi. they have seen the biggest hit u.k. lender with that issue. as you look at rbs, the whole host of litigation issues, where are we? talk me through what is left. michael: there are a few big pieces left. lloyd's got early on the ppi issue, and they indicated that might be wrapping up. rbs was not so positive on that front. they see more to come on that. the big one is the rbs for them in the u.s., and they warned investors today, we do not control the timeline on that. that is up to the regulatory

authorities, so they could be waiting on that front. michael moore from london, thank you very much print coming apple"bloomberg ," and the fbi. the s&p 500 futures, positive 10 points. dow futures up 77. nasdaq futures positive 26 points. i want to whip through the other asset classes. the good, the bad, and the ugly. wti having a big week, could close out the biggest week since 2009. cable, one .3971, down hard this week here it and then we talked about all morning, rbs, down 8.44%. ♪

david: the fight over apple's is destined from washington. the key question is, will congress or the supreme court break the impasse? for more on what is to come, let's bring in winnie o'kelly, who knows all this. late yesterday apple filed a document in central california saying, please do not make us do this. they have shifted their position. when we first heard about it, it was all about privacy. not in there. winnie: it is security. security for average sick -- for average consumers versus national security. which one wins out at the end of the day? apple's argument is that the security of this individual -- it is a slippery slope. here, what happens

down the road on every request? stephanie: what could happen? winnie: every single time, law enforcement wants in. the chinain china, government wants in. elsewhere in the world, the government wants in. apple has to respond, and that is what they are afraid of. this ruling is more narrow, but that is the concern. very: jim: me is also a accomplished lawyer, and he testified yesterday in front of the house and try to narrow this. the san bernardino litigation is not about us sending a message or establishing a precedent. it really is not. it is about trying to be competent into investing in something that is an active investigation. i do not know what lawyers and judges will think about what is the limiting principle on the legal side. david: it seems the government has tried to make this as narrow and unobjectionable as possible. winnie: that is right, they have

crafted a narrow and elegant decision. an encryptionlow -- we will not ask you for an encryption key, it stays there. apple and other companies are following an amicus brief and say that they do not think that is the end of it, that it is just the beginning. apple is saying that the justice department is overstepping their authority. winnie: it is a very difficult argument. mey said ithat co brilliantly, that it is the most difficult argument he has ever faced in government. and it is true that it should not just be up to the court. congress should be deciding these kinds of issues. stephanie: if he says this is the most difficult argument, opening it up to other people makes it easier? winnie: we have to decide where to law -- where to draw the line on privacy. after the paris attacks, there

is much more of a sense that we have to protect ourselves from terrorism, privacy be damned. david: thank you for joining us this morning. matt, you have some breaking news on cars. renault nissan is going to raise cash by selling shares to the market in france for renault, and then it will buy back 400 million yen in shares for nissan. it may have to do with the currency fluctuations we have seen. 5% -- aw, two point very interesting move when you say that you are going to sell shares in the market, that they would actually rally. we are going to take a quick break and come back with more international movers. ♪

stephanie: if you are watching "bloomberg ." we are watching futures in the green across-the-board as we head into the end of the month.

we are seeing things push higher. hitting that inflection point of 1950 on the s&p, could be a trigger for a whole lot of shortcoming. with us now are tom keene and peter collected let's get you some first-order news. here's caroline hine. caroline: it was marco rubio's last shot against trunk before super tuesday and he went up against the front runner in last night's republican presence ultimately -- present presidential debate. >> you're the only one on the stage has been fined for hiring illegal immigrants. caroline: rubio and crews are tied at 20%.

prime minister enda kenny leads the coalition government and he's trying to win a second consecutive term. soccer's governing body, fee ifa, has approved reforms for ending corruption as they try to overcome allegations that brought down sepp blatter. authorities are still investigating. for hours a day from reporters in 2400 news bureaus around the world. jonathan: peter coy joins us this morning for the must-read could the cover story in this week's business week. about everyone is talking it. everyone, especially big business. y? won't it fight back why won't business fight back in

this presence of campaign? business has done well lately without fighting back in last thing you want to do is get in a scrum like the republican debate last night. you do not want to get an award with donald trump you -- into a war with donald trump. they've had a amazing success over the past year. the at the success -- import export bank got renewed odds, thell permanent extension of r&d, the deal to keep -- sorry, i'm losing track of all these. they had five or six important victories. david: the transportation bill was a big victory for big business. itphanie: but they are doing under the radar screen without running a victory lap because clearly at a time when big

dozens is not in fashion, it's not the right message to send out there. peter: right. the question over the long-term is can business thrive if the public is against it? the answer to that i think is no. i think politics does matter of the long-term and that is why business needs to have a very positive message and how it can contribute to rising living .tandards over the long-term the rising tide lifts all boats message has to come through. david: it big business wants to fight back, how would they do it? tom: six or seven years ago at davos, this was the number one issue on a given thursday or friday. if you want to send a message, what's the way to do it given the historical precedent? i don't see any other way than to create jobs and investment /. peter: i agree.

it can't be just words. it has to be actions. we have seen high profit earnings, but not a lot of investment could a lot of money going into buybacks and dividends. buybacks are fine for the employers, but they want to see it for the employees. they want to see investment for all. stephanie: peter coy, thanks so much. you don't want to miss this. when you see this cover, you want to buy this thing on the stands. matt miller, i think you have breaking news for us. matt: vivendi says it will pay liberty media $775 million to end the dispute that kicked off in 2003. it looks like investors were not expecting quite as much. the stock is selling off a

little bit in france. it had been up before this announcement. vivendi says it's want to take a 200 45 million euro provision in its 2016 accounts for the settlement. it will pay $775 million to liberty media. stephanie: i was worried about him for a second thaere. matt: my first started in the business, we covered media and we refer to john loma as the darth vader of cable. stephanie: the grandpa ball, anyone works for him. david: or the emperor. stephanie: he does have all the close. matt: overseas, renaud is actually rising after the company says it was going to sell shares in a secondary offering and it's going to buy back 400 billion in the yen

at mea nissan, both run by es, and investors like it over in paris, . i want to look at a tire maker. it is right now down almost 7%. it's the biggest drop in two years. it is a finnish tire maker that has a great reputation for putting snow tires on my truck. according to a finnish newspaper, they have been manipulating some test results to change tire characteristics to score better than competitors. the company itself is not responded, but this is a shocking allegation. when you put it along with volkswagen and other problems -- david: rates test results -- where have i heard that before? matt: that was just a finnish

newspaper report so far and it's dropped the stock the most in two years. actually rising after saying 2016 profit is going to be 10% lower if oil reaches $40 a barrel. when i saw this headline, i said oh no, they would get crushed in frankfurt. says it's better than our worst-case scenario. you have pearson gaining on earnings as well. the british publisher up 5%. analyst peel hunt says the earnings were in line and that was enough to drive the publisher of 6%, to its highest level since november. there are a couple of overseas movers. i thought since jonathan is here, he has given me more of a global perspective. jonathan: the city of london is watching you. matt: matt early in the

morning, i want to hit the international movers, s. stephanie: we are talking about our partnerand david westin sat down with current treasury secretary jack lew. we also spoke with one of his that assessors, larry summers, just a week ago. these two gentlemen have opposing views. >> policy makers a mistake when they lower markets. yes, they are often driven by psychology. they are often driven by technicals. they make mistakes, but they also have a very important canary in a coal mine aspect . >> this is not a moment of crisis. you have real economy is doing better than markets think. stephanie: there you go. jack lew, larry summers, what do you think? jonathan: i'm with jack lew on this one.

industrial production has been doing better and capitalization has been expanding. we have durable goods that is also improving. there is no sign of a dramatic slowdown in the economy could that is why markets are overly anxious about unquantifiable worries that are not showing up in economic data. jonathan: we are seeing in the spread and i wonder what that is telling you coul wha., what is the message in the yield curve and what is it is misleading? come to equities have where they were a few weeks ago. they are incredibly worried about negative interest rates . they have been this whole new cloud of fixed income. what does that mean for my future returns as a bond portfolio manager? what does it mean for the financial system? what does the need for money market futile funds -- mutual funds?

it's very hard to quantify and that is the fear sitting in fixed income less inequities at the moment. tryingif i'm an investor to follow this, whether jack lew or larry summers is right, it's not important. are the instances where the markets were way off in the economy, and if so, who is right and who is wrong? torsten: the market is always right and then you go back and look at the stock prices and interest rates and everything, was it also right at this point in time? at least it came back to a mean reverting feature. i would say up to this point that it's clear that markets are worried and looking forward to many things. china has negative interest rates. those correlations have started to break down somewhat, so it's so maybe wesign get consumer spending later today. maybe there are more signs that markets are not falling apart

and they will wake up and say we are fearing so much. stephanie: what does the markets being right mean? markets are always right. torsten: the question is are the markets worried? if you look at expectations for gdp growth for the rest of this year, we have a very clear picture. type o u t l and you can see the comingly growth over the six quarter says gdp will be in the range of two part 2% and 2.. at theseets and rates low levels, they are definitely having a different fear than economists. cfc to chart itf coul. here in white, you can see the median forecast holding steadily above 2%. atre are people out there

the lower end of the range that are forecasting a recession. there are also people out there forecasting more than 4% growth a couple years ago. to aen: they're reacting standard deviation between the red and the green line and it's for the significant. i meet people who say this is going to end very badly. i meet other people say why are we so worried? things are not that could that is why the markets are volatile. that is also telling you that some of the uncertainty is subsiding. we need more time for markets to basically solve the data. c.tt: i used ecf what did you use? torsten: a chart that looks everything in the world. jonathan: we are talking about the economic reality being up here for it being here in the market being down here.

the last five years, we have had the same discussion. but it's the other way around. we have had the disconnect for along time. it just seems to switch on its head. if it's not right now, then it wasn't before either. why are they not reconciling anytime soon? torsten: you look at it and this is what the way things look like it the markets fluctuate around that. at they distinct feature moment is that some of the people are worried they missed the last crisis that they do not want to miss the next one. people are seeing crisis and problems everywhere. for every one, it can be hard to understand. this must be a really big issue. stephanie: maybe because monday is a real reality day when investors have to mark their buckets to market. and investors are saying, guess what? i am redeeming. david: are they write about sentiment or underlying

fundamentals? i think that's the question. thank you torsten. next, gary cohen speaks to bloomberg 20 over in shanghai. ♪

david: i am here in the hp greenland. next hour, we are going to hear about u.s. personal spending numbers and who better to talk to about that then michael gould? that is on "bloomberg ." g-20 has begun and makers are trying to tackle the global monetary policy. david ingles has an exclusive interview with gary khan, president and ceo of goldman sachs earlier today and shanghai

specifically on monetary policy, the fed, and china's role in global policy. take a look. isy: my view is the u.s. better than people may feel. the u.s. consumer is still very, very strong. the fact that we have had this really dramatic price cut in oil or we have taken the price of oil from $140 to $30, which transfers directly to the pump in the united states, and consumers in the united states are seeing that in disposable income. consumers in the united states are pretty good at spending their disposable income. if you look at the sales numbers, not necessarily in the day-to-day retail sales numbers, but at the durable sales goods numbers, we have seen retail consumer spending money selectively, which is strong enough to keep the economy going. i'm not expecting runaway growth, but i'm not expecting the session. when i look at growth, i'm probably the lower end of growth 2.5% range.

the u.s. has been one of the few countries to have a relatively strong currency. if we continue to have a stronger currency, i think that will take growth to the lower end of the spectrum. if our currency falls into line with other currencies, we could surprise india the higher end of the spectrum with growth. --id: we saw the driver dollar drive up laste year. do you think these are sustainable levels? gary: it depends on monetary policy. there's a lot going on with central-bank policy. the g-20 meeting here in shanghai -- that's when the big topics i would be talking about of more court nation with global monetary policy. we have global problems of growth. we cannot fix these with local monetary policy. we have to talk about monetary policy more globally today than we ever have.

david: does it still work, monetary policy? of thexception fed, we have that ecb and we are looking at six or seven years of these rates being at these levels. what have we achieved? seen five to seven years and even longer in japan or places like that, relatively low zero interest rates with very little growth to prove and inflation. how effective has this monetary policy been? has this monetary policy been more effective at initially is countries trying to use their lower interest rates to lower their currency to try and grow their economy. at the expense of another economy . but what had happened as every other central bank lower their interest rates to not allow their economy to be the victim of someone else's growth. david: they won't say that publicly. gary: but if you look at the

five or seven years, that's what's been happening. we don't have high-growth and we don't have inflation. scenario, ourat historic policies aren't working. why is that? i think it's relatively simple. if you look at what is happened in reality over the last couple decades, the amount of transparency we have in markets in the amount of fungibility we have in markets is extraordinary. almost every investor in the cand on their mobile device real-time see the price of every asset in the world. they can real-time trade every asset in the world. relative to's high another currency and they can trade that or they can arbitrage that out. so effectives been at arbitrage and out the slight differences in the world that it has taken away the effectiveness

of local monetary policy and we need a much more global approach to monetary policy. david: what does that do for the fed though? at the moment, people started talking about does the fed need to counter this aggressive policy from all the other central banks and even reverse course? is that too early a conversation that have? gary: leica said, the fed and china are more or less the two countries left that have allowed their currency to be relatively strong versus the other countries. that is a tough position to be in. where the value of your currency is being dictated by the actions of others and not by your actions. i think that is something that the chinese are contemplating and i think it's something the fed has to contemplate. are they in a position where the

currency is at the right level for the potential economic growth for the united states? i think that is something the pboc is looking at as well. the one and only gary cohen, president and ceo of goldman sachs. next up, we are going off the charts, a deep dive in the bloomberg and to the state of japan's economy. stay with us. ♪

jonathan: welcome back to "bloomberg ." today's off the charts is all about japan as the bank's governor heads to shanghai for the g-20. he has a problem at home called japanese no flexion. miller, 0% japanese cpi -- a problem. matt: we are talking about the headline number. if you take out food and energy which central bankers like to do, you still have 7/10 of a percent inflation. all a shocking to me and we

know this because we talk about the keynesian economics behind it. we are desperately trying to raise the cost of living as of the cost of living is not extensive enough already . jonathan: a lot of central bank's are doing that by weakening the currency. aree look for the young, we heading for the biggest monthly gain since the financial crisis. matt: they have been trying. they want to weaken the yen and yet it just continues to get stronger and stronger as volatility around the world forces investors into it as if i a safe haven. jonathan: everyone knows about the deteriorating demographics and japan and the japanese population is shrinking. they can't print people. you see it just rolling over now. matt: they have had a demographics problem as not having a lot of young people for a long time. the young people are not reproducing or not reproducing at the rate that would help growth population.

this is the first census in five years and the first time we have seen a decline in the population . jonathan: first decline since 1920 and i think about the governor going to g-20 and talk about monetary policy. it's the latter the needs to be happening in shanghai. there's a lot more work to be done there. matt: they are going to be some of the people pushing for some concerted action, some choreographed action from g-20 members on the other side of the table. you have wolfgang schaeuble saying no way. jonathan: matt miller, thanks so much. a better look at how the consumer is reacting to potential ounce with u.s. income and spending data. ♪

♪

as theie: markets moving china's top central banker says he has plenty to stimulate growth. how is the u.s. economy doing?

we will get a read on it in 30 minutes. the latest figures on gdp and personal income. apples tim cook versus the fbi. the legal fight is heating up and the stakes for the company cannot be any higher. ♪ stephanie: this is the second hour of "bloomberg ." i'm stephanie ruhle with my colleagues jonathan ferro and david westin. the head of as derivatives strategy as susquehanna and national with a big day at the g-20. jonathan, you have to be completely focused on this. jonathan: the keyword is communication. we heard from the finance minister, the central bank governor, and the statement from the pboc i as well. futures off the highs with dow

jones up 73 points. the other story to talk about is the legal back-and-forth between the fbi and apple. david: what is that stake is the real question. apple is acting like there's a lot at stake could a lot of other silken valley companies acting as well. let's go to the first word with julie. : front runner donald trump is on the defensive last night at the republican presence of debate in houston. marco rubio and ted cruz went after trump for everything from his health care plan to business activity. at one point, rubio brought up the now defunct trump university. > there people who borrow $36,000 to go to a fake school. you know if they got? they got to take a picture with a cardboard cutout of donald trump. that is what they got for $36,000. debateit was the last before super tuesday when a dozen states and territories

will hold primaries and caucuses. voters in iran are casting ballots since the first election since the nuclear agreement was reached. hoping to increase support and parliament and historical rivals have blocked attempts to revive the economy could escalating tensions between greece and austria. refused a meeting could they have denounced austria for leaving a group that wants to prevent refugees from leaving greece and going to the balkans. 24 hours a day powered by our journalists and more than 150 news bureaus around the world. however the matt miller on the markets. matt: looking at gains across the board, but not huge considering the move around the globe considers to be risk on. s&p futures up half a percent and nasdaq futures up a little bit more. we went from negative to

positive on wednesday. yesterday was a decent rally. all eyes are on the g-20. i think people around the globe are wondering what kind of action we are going to get out of them. could there be more stimulus? we have the bank of china governor saying that there is room for more stimulus from his country. only wolfgang schaeuble is ouring on are parade. oil has been a strong driver for markets obviously. it has rallied up. it comes off a little bit, but it's $33.60 a barrel. interesting things is the spread between wti and brent. if you remember, it in bird of prey while -- inverted fray while. anything over this line is an inversion where west texas intermediate costs more than

brent crude. we see the spread getting bigger and bigger as the old up in inventory continues to rise. i think it's an interesting relationship. you can see this chart yourself 348.g #btv jonathan: i'm going to rip up the script and put you on the spot. can you bring up the euro intraday chart because we had moving? and this is off the back of the previous reading of 0.4%. at themple lowflation core of the eurozone. you see a pullback down towards 110 levels. the will put pressure on german authorities who are saying no more monetary stimulus because that number out of germany specifically does not look good, matt. matt: you see the chart right here and the numbers came out right at 8:00. 110.09 coming down to

right now. is on the heels of mr. wolfgang schaeuble saying we are not content fiscal in germany. matt: that's what he always says. i wouldn't say he's a stick in the mud, but he is a german. david: i don't think we should say that of the finance minister. matt: i lived in germany for seven years, and i have respect for the guy, but he tends to be on the same drum. let's pull up the pound because the moves there have been incredible. it was down 3% over the last week. here you can see the pound right $1.39 68 andt here's a pound crises of the past chart. 304 #btv. inhad a sterling crisis

2008, 1992, and 1981. a couple of these years were before jonathan was born, but we are at number four of my lifetime. jonathan: 92 stands up to me and we talked about the big short back in 1992. that was a real trade right there. given the current account deficit in the u k, people are talking about whether we could get a run on sterling c and what we have seen so far this week is not that. what will happen if we get a brexit and how do you rally post brexit? it's a big deal and you're right to bring it up. matt: as they prepare for that, they may want to pull up hillary's amazing chart of g #btv three o 3024. jonathan: speaking of the conference in shanghai, where finance ministers and bankers are meeting, chinese governor

says they have multiple also instruments to address any downside risk. let's head to shanghai where david ingles has this report. david: expectations are high that chinese policymakers deliver the goods the markets wanted to get, which was a classic case of where they want the currency to be or the plants an additionaledy stimulus to the ailing economy. what we have heard so far was ok. it was an acknowledgment of the slowdown, but also that the underlying fundamentals of the economy they say are not dire enough to merit a big bazooka. prescription is coming from the government and finance minister is a little bit of government spending, a stable exchange rate, a promise that if the situation worsens that they have the tools to do with a slowdown. that is the gist of it. the more immediate concern on the currency and on the level of fx reserves is the pboc governor

reminding everyone here at the conference that if you look at the fundamentals and how strong the current account is coming look at china still having the fastest or among the fastest growth rates in the world, there is no basis for a further or persistent devaluation in the currency. on the short-term changes we are seeing in the fx reserves of the country is this massive drawdown that we have seen, they say that does represent the trend. the message was twofold -- to businessmen and investors, don't fret. to traders, don't speculate. david inglis, bloomberg, shanghai. jonathan: i was looking at the see of smog behind him. david: i hope that's fog and not pollution. i think of beijing like that, but not shanghai. jonathan: i'm surprised to see that in shanghai. i want to bring in stacy gilbert now.

stacy, stephanie has been saying it quite wrot correctly. the rest the market did not react to it could i hope we can -- move away from the shanghai composite, but quite clearly the shift from manufacturing to services and in between where we are right now is moving markets in a big way. stacy: it is. what's interesting about the markets right now is that they seem to be setting up for a breeder here. the u.s. markets rallied here. what we are seeing in terms of how the market is setting up is that we are somewhat range bound, a lot of the information coming out is good and bad, kind of a ping-pong table here. we are looking at a situation where the market will likely continue to move. it is seeing moves around 120 basis points twice a week for the u.s. markets. that is likely going to continue, but it will not break out on either side because information keeps going back and forth. we have not fix anything.

nothing has changed. it is tough for the markets to break out on either side until you have substantial changes in policy and growth. we would love to see some earnings growth. anything would be great there would love to see monetary policy not relying on negative interest rates. i think the markets right now are taking a digestion of let's figure that. does this make sense? we will go up and down and i just at the end of the day. stephanie: trading volumes are slim. normally volatility would cause a spike in volume, but it's not. this breather has investors putting their pencils down. for you and your seat at susquehanna, how are you going to weather the storm? stacey: you want to find the stocks you like best. market has discounted a number of stocks out there. take the names that you know and do not buy this broader based whatever product that might be. there are names that you can buy, but overall it's we are

range bound, having a portfolio and understanding how to increase your returns by overriding the broader indices where you're taking some the premium that the market is pricing in, tap these big moves, but back in forth moves is a prime example of what you like to do. david: you talk about policy changes getting us out of these ranges. we have something called a presidential election going on this year, which means that washington will be preoccupied. what does that tell you about the equity markets? are you looking at a bear market? stacey: nothing will ultimately change, even with a present election. that takes time to come to fruition. here's the one thing that i think is interesting right now. we have the volatility in the equity market, but we are seeing notable inflows into gold. we are seeing a pickup and options on the gold etf. investors are getting longer gold. why? part of what the argument might

be that is out there is that gold and equities may start to move together and little more in sync now especially people stopped talking about negative interest rates and reach for cutie. gold took off during cutie and , buties took off during qe when you see these types of trades going together coming up to wander people are beginning to question whether that's what's coming down. finalan: one quick question -- we look at the federal reserve's and whether they are going to hike again. where is the line in the sand where for political reasons they would not make a move as far as you're concerned? stacey: a good question. they would have to see evidence that the economy in the u.s. has really slowed down and we have not seen it yet. we will see the gdp number here at 8:30 a.m.. at that number were to come in about the expectation, that's a positive that at some point they could raise rates. y areact that the talking about negative interest

rates in the u.s. is frightening and unrealistic. what's the likelihood of a bear market? if we look at the options pricing and right now, by december, it's 30% probability we are below 1700 that puts us in their market territory from the highs of last may. if we are at that level, clearly the fed is not reacting about. david: there's no rule of all, but i would look at the conventions in the summer. once you have nominees, it gets really hard for the fed to do anything either way without being seen as political. jonathan: basically the summer months? stephanie: what a surprise. the government goes on vacation during the summer. stacy gilbert is staying with us. is pushing toward the supreme court could what's at stake for the tech giant and what's at stake for the shareholders. .hat's up next ♪

stephanie: you are watching "bloomberg ." apple's lawyers have issued their legal arguments against having the company unlock the iphone of one of the san bernardino shooters. the outcome of the battle pitting public safety against personal privacy. veryll no doubt set a important precedent. for more on what is at stake for the tech giant, let us bring in paul kedrosky joining us from san diego. paul, what is your take here? paul: you know that. it's this fundamental tension between privacy and law enforcement. in the limit of privacy, you cannot enforce the law. in the limit of law enforcement, you can't enforce privacy.

apple's arguments was week based on an 18th-century law that has not been revised since then and one that did not anticipate the rise of iphones, devices where you can store so much information. they areg on it, what implicitly saying is that you can create this zone of almost extra legality built around iphones. from a law-enforcement standpoint and from a broader societal standpoint, that is just not acceptable. in the end, apple is going to be forced to give way in his argument to not going to matter very much. david: it strikes me that a lot of of it is that this is going to be really, really hard. it will take a lot of people and time. for a company of apple size and researchers, i wonder if a judge is really going to be that sympathetic. honestly, they could've made it sound a lot harder.

they said it could take 10 engineers to-four weeks. at that is all it is going to take, i'm up at hung up on it. that is one of the arguments that apple didn't know they could do it and it could take a long time and yet they conceive in their motion that it would take 10 engineers for weeks. judge would bea swayed by that at all to one of their are the arguments was rather mischievous that the first amended cannot compel apple to write software because software is free speech and you cannot compel speech without violating the first amendment. as an extremely mischievous argument. haveappens when we other software that causes safety and issues? we can't compel software authors to fix problems on the road. let's be serious. stephanie: michael hayden is siding with apple. take a listen. >> on the general principle

being the fbi directors and require and demand and request that apple universally enable backdoors and to all their devices to break otherwise unbreakable encryption come on that one, i actually side with apple. stephanie: former cia director siding with apple -- what do you make of that, paul? paul: that's essentially the argument people are making that if you put in a backdoor that it has anticipated -- unanticipated consequences. the backdoor is a bogeyman that is troubling and mysterious. i think that is the mistake to introduce the term of backdoor. we are not talking a backdoor that is like a feature. him, there's a backdoor on new releases of software. far to say gone so that we will hold onto the phones and you can do whatever you want to do with it.

just send codes to it so we can try to unlock the phone. this is not about a widescale product release of a future otherwise known as backdoor. i believe that is so history. the bad news good news? no one's talking about the business anymore, are they? paul: it's a sideshow and it reflects the incredible importance of smartphones and these peripheral devices like this. it has no bearing in the long run on the business because this is an issue all manufacturers face and not apple. david: apple loses -- what happens. what the next day -- happens to the stock price the next day? paul: honestly nothing. david: stacy gilbert, you're going to stay with us.

next, top trending stories crossing the bloomberg this morning. ♪

david: let's take a look at the top trending stories on bloomberg. you can find these by using the function read go on bloomberg. this is the top five here to the one i liked was about emerging markets. you know about emerging markets. the man whoned called emerging market route has a warning for the bulls. john paul smith has been good on the bears calls with emerging markets and he is saying do not rush back into emerging markets. stacey: i would say that investors are seeing the opposite. you have three billions of outflows everything will your the last three years. as underperformed in the broader

markets since tony 14 versus the spf around 9%. i think we are starting to see a shift in terms of risk being pressed into that market. if you looked at the risk priced into emerging markets wrist as the u.s., it's back to five-year averages. headlines and pullback, the markets are now saying that we are at those levels we have seen over the last ideas. , we have seenng the ship where the outflows have stopped and we are started to seeing the return of buyers. stephanie: matt, do you have anything? so many charts and the last few weeks, some of the people come out and say that it is a buy. a pimco advisor said it's the trade of the decade . g btv 335.

in the last few years, they have lost 20% or more of their value. thisuestion is -- is really that cheap? let me change it quickly took 332 because it shows you pes and we were down at nine price to earnings back in 2011. we were at 10 in 2012. in 2013 and 2014, we got back to 10. is it really that cheap? stephanie: it is if you have capital. pine river is shutting down in the asian focused form of their funding coul. earlier this year, lazard asset management closed their asia japan strategy. we saw the same thing out of a&p over the last several years. we have seen more and more funds

start to scale back specifically in asia. people are putting their pencils down. a breathing it in. if you do not have patient capital, you don't have an opportunity to invest. stacey: you also want an environment that you understand and that's a really tough environment now. shanghai was down 6% yesterday and it's up today. it's based on we are going to do everything we can. what is everything we can? what does that imply? i only have a certain amount of capital i can put at risk in a want to put it more right have a better return. stephanie: with all that smart, it is hard to see what is happening there. thank you so much, stacey gilbert. we will be back with more breaking news on the economy. ♪\

>> we are just minutes away from the opening bell.

inre tracking europe higher the stocks. we talked about correlations in this program. one correlation that is intact is the crude. wti up by 14%. some breaking u.s. economic data. gdp annual quarter over quarter. the personal consumption of her we are looking at, better than estimated. as far as the gdp price index,

these are the second looks at these. these are revisions. i just got big euro trading behind me to see if we get any strong reaction. fighting dust and exciting way to watch live trading -- this is an exciting way to watch live trading. we know that the trend has more room to hike in that would be more divergence and monetary policy. bring up the front end of the treasury yield curve we are higher on the back of those numbers to put the two-year at 76 basis points. ofre starting to see a move in the front and given what may or may not happen with rate in the coming months. opened to just below 73, pushing toward 76 again. stephanie: you are the former chairman and ceo of

bloomingdale. we are desperate to understand consumer today. when we look at the data across the board, it is a mixed picture. >> it certainly is. depot, hudson bay outstanding earnings. limited brands, another outstanding. expand -- it is a mixed bag. department stores in the u.s. had it very difficult. nordstrom have it very difficult. i think it will continue that way. n interview the other day with a set education and entertainment combined in the stores do the best.

people what energy in the store. we've talked about this every time i have come. it is all about the direction. people merchandise. so where is the excitement and store -- in the store? you see the difference of that brands versus the department stores. there is a sameness. look at the margins and -- the margins at nordstrom's. they have been clobbered. they are competing on every promotion that everyone else has, so their margins have .that is thessure real unknown going forward.

going look at the numbers forward, you can forecast with different companies are going to do on sales. nobody is going to be at the -- best margin spread able to forecast margins. david: there is a larger question of how much is the u.s. consumer spending overall? retail brick and mortar stores losing to other forms of experience like travel, and even within the retail space, what is going on with online? i am more concerned about consumer spending. >> if you look at the target numbers, they reported 1.7 and. 1.2 of that was the online business. it is taking some out of the stores.

if you look at the totality of it. we come back to travel, we come back to restaurants, theater, broadway. ticket price was $150 . king was hundred $50 a ticket, and 3, 4, 5 people in a family are going. about writing entertainment with shopping. i think there has to be something more than just another outfit. another pair of black pants. we really don't. i do want to see hamilton and i want to see the american dream. the gdp numbers that we got, the

second revision higher than the original estimate. the yieldly driving on treasuries across the board. this is a look at the 10 year. a big jump from one that never came out. you see real reaction if you look in the euro as well. i have to give kudos to david this morning because it is never sure strong, important for markets. the euro comes off, because it .ives the fed more room to move let me show you a quick chart of s&p futures. they have come up a little bit since the number came out. >> that is going to be a big story, because in two weeks the -- becauset the ecb

two weeks the tiv rate will be coming in ecb. when we take this in a ruling on the markets, we're starting to see more and more companies become takeover targets. amedisys is considered a bellwether in terms of consumer product. the biggest retailer out there in terms of department stores. cannot s s saying i spend because i could be a takeover target for activists. i think they are important to the people are doing business.

u.s. the question before, and people are spending money. i understand restoration hardware had a big blitz the other day. but when you look at home depot, you look at lowe's, people are spending on their homes. you talk about theater, you talk about travel, business is good. an important voice, they reduced capacity and the price of oil is drastically lower. the matter is we are over stored in the united states. it is incredible. take whatever number you want. whether it is 25 square foot or f -- per capita, it is over space. is no reason for them to exist unless their distribution centers for the online business card -- business. it is nice and called out, but it is too late.

whether did hurt somewhat tight i say that because i want to see that smile on your face. the fact of the matter is committed is a deal. spaces too much retail out there, there is not enough differentiation out there. there is a lot of excitement in stores. here's home depot, here's lowe's, here's our friends doing well tj lower end of the scale doing well. calls got positive response because they are closing stores. matt: let's check out market movers. i'm going to kick it off with jcpenney. julie hyman just send me a chart on jcpenney. when a writer that has been. here is same-store sales. the white is jcpenney, and you can see the turnaround.

the orange is macy's. has been a real shift as far as the winner and who is the loser. stephanie: but you have to put it in perspective and jcpenney was on the brink of disaster. you are not hearing apple versus apples. >> you have to start with the premise. it is a nice bar graph. it reads anything you want it to read. increase showing some around $11 billion. versus jcpenney where they were at? i think it is a world of difference. i am not going to talk negatively about anyone, but i would not bet long-term. somebody --is what if somebody disappeared with anybody miss them?

i am no street analyst was nobody is we did do a debate on my comment. i just do not know what they stand for. anybodyu can prove right with data on which you put the time zones in the right spot. investors are oppressed, at least today. the shares of the premarket are up 14%. beating a bill ackman, also moving, herbal life right now. they may have a resolution with the ftc, if that is even a possibility. stephanie: this is so important this is more than what their sales look like i bill ackman said this company is worth zero. the thousands of hours he had put behind this is a regulatory short. many short-sellers have sat out there and said a regulatory

short is a recipe for disaster. you are betting on government action. that is a crazy move. for herbal life to say they are getting close to a resolution with the ftc, that is a very bad sign for mr. and\/\ ackman. are: weight watchers shares down 26.5% in the premarket. david: where was it before opera came in? matt: i will look. it will be clear from the chart went over kman. if you take a look at my bloomberg.

you can see, right here around october 16 is win over kman net-net out -- is when opera came in and an ostrich steak. it is a healthy momentary game. that oprah effect caused a big spike up, and now we see that dissipate. it is not just weight watchers, robert latta, that is what they do. herbalnteresting to see like taking a leg up and weight watchers not. let's take a look at rbs. you can see the shares down 7.5%. is really an amazing story in that the company has not had a profit 2007.

2007. >> and the government has a 73% stake in it. that is a problem. much.you very boast some of being a successful international businessman. we'll take a look at the gop front-runners track record next. on the s&p 500. i want to give you across asset snapshot. an upward revision on the u.s. gdp. we are up by five basis points this morning. crude is higher, we're up by 3.66%. the u.s. versus the euro zone, the stronger dollar, weaker euro. the euro weaker by one third

of a percent. ♪

matt: i am here in the green room at the top of the hour. the chief market strategist on how to invest in a low interest rate environment will join us. >> during last night's debate about marco rubio hammered the front runner donald trump for its business ethics. taken them. you hired a significant number of people from other countries to take jobs that americans could have failed. hotel,was a maid at a and instead of hiring hurt you rot in over 1000 people from all over the world to fill in those jobs. find -- were fined for

hiring people illegally. 85% of those deals are outside the united states, but what finds some trouble. you did some throw reporting on his international business deals. disclosured at his phones, and without he has made many millions of dollars, but has made deals with an experienced operators, customers that are unhappy, and has ended up in litigation on a number of deals outside of the u.s.. stephanie: help us understand donald trump not wanting to texas city is under audit. people are not under audit for five years. what is the holdup? onmayor riley getting him twitter for that. some cpas also questioned why he

could not release older audits. when we look at his financial disclosures, we were able to trace where he was doing business. we found some deals where he was on golf courses in the u.k.. when we looked at income statements in those countries that are required to be filed, we felt losses. it was projected future profits. david: even i can do that. donald trump as a real estate my neck, but he is really life seeing him name -- licensing his name. >> he is pushing outside of the u.s. to sell his name to developers in places like panama, istanbul, the philippines, and in these deals, it is like a car factory. he is just popping out his name to these places that he's giving

money to put his name on the building, and a share of the sales, or a management sea to run the hotel in the facility. stephanie: 85% of his deals outside of the u.s., this is a guy he wants to make america great again. mitt romney can back down after trump told him to shut up, you loser. who can push him into saying showing those numbers? lying, if he doesn't have anything good in there, who's going to open that up? >> you'll see senator marco rubio pushing harder. he came out swinging last night. mitt romney really knows this issue on the taxes not disclosing. that is an issue when he ran. he is been very vocal this time around the question is, will his supporters even care?

they see something else in this candidate. stephanie: you can say anything you want in a financial statement from you cannot lie in an audit david. david: that is true. people have not actually looked at the numbers. team has looked at international deals. it's the battle of the charts. we have joe weisenthal in here. ♪

>> this is bloomberg . time now for the battle of the charts. matt miller against joe weisenthal. matt, you get to start today. adams lowered her s&p forecast for the year. she took it down to 2100. she is one of nine strategist who have lowered their forecast this year. that is the biggest drop we have

seen since 2003. what she is saying is that credit quality, which i have graphed here with an in and averted spread on investment-grade debt, credit quality is holding down s&p multiple old. the inverted spread here in green. multiples part up, but this is after a recession. strategists that we survey gave us this. weeks we havetwo seen this many cutbacks in markets everywhere. but at the same time, we still see this incredible plunge in yield.

got seven bond got --i want to point out sovereign bond changes. under the thing to watch, the german five-year, hitting a brand-new low it -0.372 in place inflation. in the big markets around the world, government debt, the yield continues to reach these low levels. no signs of reflation. this chart is your jim. lookingu're basically at a picture of equities and a picture of debt. i is smiling because we have been talking about who is right, the credit market for the equity market.

and we have this competition right here. who i am: you know faithful to come in the credit market. but actually going to go with joe because it was a surprise for me. david: i am with joe as well. >> i'm going with joe -- stephanie: clean sweep. nice work. matt: can i just tell people how to access these charts? even late in the as a winner, it is incredibly useful . up next, how to invest in a lower interest rate environment. you are watching bloomberg . stick around. ♪

david: stocks rallying around the world is the chinese bank still has tools at its disposal. a split in the g-20 over how to

spur global growth. central-bank policies are losing their effectiveness and will they have to take even more drastic measures? making the case for credit. pimco's cio joins us for the opening bell. ♪ we're just a little over 30 minutes from the opening bell. i am joined by jon ferro and stephanie ruhle. we just had 10 or encouraging economic data -- we just had some encouraging data. stephanie: we also have some big movers as we mentioned earlier. herbalife numbers, tough for bill ackman. maybe it is a good morning and china? >> and maybe dinner time.

the real story is not divergence, but economic data. downward revision for german inflation. that will be the story for the markets as well this morning. matt: thank you. let's take a look at features across the board and you can see .5% gains here on the s&p. not a hugeres also game inequities, even though you have this risk on trade around the world. positive sentiment around the world. we are positive for the month of february, which is in line with what we would see historically. i have that on my bloomberg. if you take a look at the sc ag function, it shows you unadjusted look broken down by month. here,uity or second class you can see for 2016, we are of 6/10 of 1%.

that is not nearly as much as we have been the past years except for 2009, which was a disappointment. then in march we really took off. right now for the rear down about 5% because we have the month of january still driving a -- still dragging it down. if you look at oil year to date we have not come back. obviously it has cratered. we are only off about 8% in oil. even sentiment there is starting to turn around just a little bit as far as how much supply we have, and how we could work cut off. themeeting between opec countries kind of helping. let's take a look at the volatility because that is not really come off. if you look at our library of

charts, this one is number 271. this shows you the price hereinbelow, but you can see a 30 day historic volatility in white. it is really taking off and it has not come back even with a little bit of recovery that we have seen in the underlying commodity. let's take a look at gold and copper. gold has been a risk off play this year. on a day like today it is down. copper and other metals are coming up today. pretty decent gains for copper. you see them across 11. let's go to julie hyman. julie: we begin with last night's republican residential debate with marco rubio going on the attack. candidates last time will be together before the

super tuesday primaries and caucuses. >> numeral have been high -- find for hiring people to work here illegally. they both have a ways to go to catch up with trouble a poll showsolitics that travis backed by 37% of likely voters. revealing crews are tied at 20%. headed toobama is jacksonville, florida today. he will talk about the benefits of the massive spending bill he signed years ago. the president will visit a factory owned by staff to which makes high-tech batteries. global news 24 hours a day, powered by our 2400 journalists and more than 150 news bureaus around the world. back to you. david: it is time for the three

stories now. we have the cio for global credit that will be weighing in on these. the number one story's global finance chief gathered for the g-20's. they are split over how to increase the economy. this ran into opposition from germany. director christine lagarde says the effects of central-bank policies are diminishing. wet: we're for again because have an incredible headline. honeywell is looking to reengage for $108 a share. this is a deal that we have been talking about. it is a massive deal. we're talking about an $82 billion company that they still have to offer a premium for. honeywell getting together with united technologies corporation for $108 a share. the m&a does not stop it is market. it is such a blockbuster, that

it would be the biggest deal of the year. and see the to look last time we had an $82 billion deal was. we will have to see how the stocks move in the premarket. it has been speculated on this week but this is no up 2% and climbing. are about thethey same. honeywell, right now it is unchanged. that headline cannot be missed. we talked specifically about acquisitions, looking for opportunities. he indicated something like this was coming along. stephanie: for the fact we are looking at $108 a share, it is no ordinary one. this is a big game. >> the g-20, shanghai, i have

never heard, i cannot remember the last time i heard the finance minister, the central bank governor, and the pboc all of the same time and that is no coincidence. david: you are the chief market strategist for av. welcome. it is pretty extraordinary. all of this is going on in the g-20. they have a history of coronation, but they are sharing the same view. monetary policy has had limited success. for the left quadrant your global earnings growth has been zero. stock market is up 20%, so liquidity is driving assets. we are not translating that into a real economy. that frustration is the reason

behind all of these statements. stephanie: the more uncertainty around the world, you are not seeing corporate spending. you're not seeing actual action. while we sit in his uncertain environment while we sit amongst political gridlock, we are in a haze. >> you are correct. it has been negative for the next dust last for five years. years.the last for five in europe, where it is virtually , you are seeing productivity. going into it, he wanted better communication. you now have the pboc governor coming out and talking and the finance minister. forget that the

first phase statement: killing -- we often forget that the first in a statement came out in 1994. to promoteou trying consumer spending, what are they doing? the u.s. economy unexpectedly expanded at a faster pace in the fourth quarter. gdp growth at a 1% annual rate compared with an initial rate of 0.7%. consumer spending was revised lower. spending revised lower, but if you look at the retailers who, with earnings thus far this year, they are doing better than the rest of the s&p. >> i think this is terrible news. i think this is awful. the reason is, you do not want to see gdp growth being revised for the reasons of inventory. inventory takes away from the growth of next quarter.

i have had hopes that the inventory is starting to get cleared, so the industrial production picks up in the next couple of quarters. this report i see as negative, coming on top of the low inflation out of germany. stephanie: it is a cam ticking exercise. pretty good,o look pushing the problem off a little bit longer, which is the same thing we are to as a relates to global market for the last five years. >> that's exactly the right port. that's right point. that is the frustration. markets are reacting to it on the positive side. i would like to see inventory get drawn down. that way i have low hurdle rates. >> does this tell you about the market? the market moves with it in momentum anyway. the position is there, but the minute you have a little bit of upside, you break out again. >> in the world of extreme

uncertainty, as you have said, the new term data is the only thing you can go by. but the fact is we are now relying on trailing data and that is a step beyond. on data, thatying is not putting your stake in the ground and staying there. that is a dangerous place to be, because it is a market without confidence and conviction. >> hence the volatility. stephanie: those are the stories that matter most in the markets right now. much more ahead on bloomberg go. bell, breakingng down whether the case for it is though we seeen angels fall from the sky by the minute. let's get a check on one stock is moving in the premarket. has results that outshine his department store rivals.

much more to cover on bloomberg . we are 90 minutes from the opening bell. -- 19 minutes from the opening bell. ♪

bloombergave been business flash through the u.s. economy unexpectedly rose much faster in the fourth quarter than originally estimated. gdp rose at an annual rate of 1%, that is at a higher value of business inventory. consumption was not as strong as as expected. we will get more economic data at 10:00 a.m. on personal income and spending. i will be bringing you those numbers when they break. felton is fooling itself into three units. they were in off into a real

estate trust, and then the timeshare business will become a publicly traded company. morerk zuckerberg says work needs to be done to police the speech on the site in germany. they say it has no place on facebook and has been instituting better controls on monitoring and removing it. matt: thank you. i am going through some of the financials to see what is going on with this honeywell, united technologies deal. i pulled up on bloomberg the united technologies screen so we could see how their profitability has been looking, and see how they have been a target of the acquisition. honeywell wants to reengage in merger talks with united technologies which is an $82 billion company. it says it will offer $108 a

share for united technologies. that would be a $90 billion deal, which would be the largest deal we have seen so far this year. that maybe the largest deal we have seen since 2014 as well. united technologies profits, not , and the analyst estimates are not for growth going forward. that may be one reason they want to get involved. if you look at united technologies over the last year, you can see that we are still down considerably. they had only risen about 12% since reports surfaced about this merger on friday last week. it could be a very big deal. jumpis why i wanted to in there and pay attention to it. let's take a look at jcpenney, a big deal as far as earnings and staying store sales are concerned.

have lighted up 15% in the market. run for room to jcpenney. it has been an incredible turnaround story. it for a long time. -- we have been talking about it for a long time. more than just bill ackman being invested, he specifically put ron johnson in that job. it is one of the criticisms of mr. ackman. when he gets involved in a company, he becomes the man in charge. he controls the narrative. he becomes the spokesperson for the company. the ron johnson move as nothing short of a disaster. matt: but the stock is done well since then. if you look at jcpenney year to are up about 25 percent. that is not included this 2% move that is in the premarket.

when we get into cash trade you may see, if you were long on this for 2016, you are a happy camper. evidence. a look at stephanie: coming out and saying we cannot see this deal goes through, the cap -- the fact that these nobodies will combine , has been told to thank you for no thank you. clearly from the shares of both companies are responding in a positive way. matt: very cool story for sure. massive gains, almost 40%. granted, it is a penny stock, but 32% in the premarket. finally, we want to touch on halted. it will spend awesome real estate and timeshare businesses. as result those shares were up 5.5% in the premarket. craft is a mover in the premarket right now on earnings.

stephanie: we saw craft when he got announced, such a huge spike. there were predictions of these companies were going to do so well. until now we have nothing numbers reflects that. this is a moment in time when we see that streamline of operational excellence happen here. matt: i like to do this with you. i stay with my bloomberg and you give me all the details. the shares are liking it. next, christine lagarde says central bank calls these are becoming less effective. the question is will central bankers have to result -- resort even more drastic measures to stimulate growth? we're talking about this on bloomberg . ♪

>> welcome back. this week, earnings an annual loss. reports, that they may be cut by the s&p. the units may be cut by s&p. i will give you an update when i get the breakdown of that particular report. our chief us, strategist. the g 20 meeting is well underway. it kicked off with a warning tone. cautioning against pushing interest rates too low. >> nonetheless, when negative rates are implemented in ways that insulate retail customers, shutting off channels that affect domestic demand, that allows wholesale rates to adjust. the main effect can be through the exchange rate. from an individual country perspective, this may be an

attractive weight activity, but for the world as a whole, this excess savings and transfer of demand weakness elsewhere is a zero-sum game. resort,e option of last you look into the effect of lower bound. how much further can they take this experiment? >> it depends on the region. in china, incremental credit is generating no gdp growth. they have a challenge. they are in fiscal policy tools to bear. growth has been ok, so there has not been an impetus to make big changes. europe is worth the action is, and so is japan. in europe, native rates are dysfunctional, because the regulators are keeping things from lending. and if they were to land the profitability would be very low because the curb his flat. even though the negative rates are designed to's economic activity with lending,

they are not having an impact. japan, that is a real surprise. was a huge surprise in terms of negative rates, and yet the end goes up because of a safety currency. the velocity of money is the economic erie behind all of this. the reasons are very important. certain regions, it makes no sense, given how flat curve. reserves, negative on with the lending rates being only modestly above zero, banks are not making that much money. so the lending activity is not as robust. david: we have experience now. you have social and have done work, you have sweden. as it stimulated growth anywhere? last year low growth was quite robust. it looks very promising. january head, the capital

requirements is raised, all of a sudden we start to hear don't promote the robustness of the lending activity. without that credit stimulus, there is not going to be a self sustained recovery. that is a challenge. david: wasn't able mistake to raise those? >> my answer is going to be yes, because you want to avoid a repeat to maintain financial stability. stephanie: the financial industry needs to recalibrate who they are and how they make money. maybe they should operate like a utility. u.s. that took place in 2009. they have no issues lending. in europe, they have not raise capital. now they're continuing to struggle with the same issue that should have been addressed a number of years ago stephanie:

european banks are just late to the party in terms of getting real about what their reality is , and that has put them in this situation. >> japan is somewhere in the middle. i think they should start to lend more aggressively. the issue there is wage growth rate march will be the critical month. that will be critical for japan. >> next up on this program, it is the u.s. equity market open right here on bloomberg . bell,g us for the opening the cio global credit. ♪

stephanie: you are watching bloomberg. we are moments away from the opening bell. let's check out some movers in the premarket. weight watchers not losing weight, losing market share.

those shares are down. took a stake in this company several months ago. while we shot a short-term rise, weight watchers is not feeling it anymore. sign addison, not able to block the deal. is going through, and we are seeing both shares in the green. and herbalife having a positive day, seeing a deal with the ftc. what does this mean for bill ackman? not good news. a lot to cover. the bell is rigging. we are taking a live shot of the nasdaq and the nicaea and we're taking it down with some special guests. we are asking question, does this signal a time to get out, or a time to get on board?

joining us is the chief market strategist at amy capital. i want to bring in global head of credit of pimco. mark, let's start with you. when you look at the amount of all in angel's the start of january, totaling $51 billion, what does this tell us about the credit market? typing without, or time to move in? mark: we think it is time to move. or saveook at cash methods around the world, they are yielding zero, or even negative. 75% of japan and german government bond market yields negative yields. equities are facing the headwinds of low growth. we think bonds, specifically corporate bonds, can earn doctorate 8% -- 4% to 8%. be actuallyse will quite manageable. overall the inflows into credit

will offset this risk. specifically, investors are non-energy-related credit. those capital inflows are going to cause credit to rally. credit will be the place to be this year. stephanie: matt: manageable for home? -- stephanie: manageable for whom? they bought corporate bonds, thinking they were a safe haven. they do not look that way anymore. that is true. pimco has been underweight energy, metals and mining in a lot of the credit and we are sitting in a position of strength. simply put the yield alternative to investors run the world are so low that credit offers that 48% rate we are expecting significant inflows to offset will be a fallen angel risk. the default rate, excluding energy, metals, and mining will be around 3%. thisarket is pricing in

default. pimco does not think a recession will happen this year. if you believe that, credit should outperform. i read a piece on negative rate interest policies and what it does volatility, and how safe haven assets become riskier. is there another way to look at this? de-risking elsewhere? mark: you will see flows from two different styles of investors. they now face the prospect of negative returns. they are going to be moving into the corporate bond market which can offer equity returns with volatility. at the same time, investors are

reversing risky assets and are facing more risk around the world. d china, low nominal gdp. those investors can get near equity returns by taking a lot less risk in the corporate bond market. the flows will come from both sides. basis,sk, reward corporate bonds are the best place to be, relative to all assets today. quicknie: let's take a look at where stocks have opened. we love the big question, does credit forecast equities, or to equities or grass credit? -- equities forecast credit? right now we're looking at gains across the board. they are substantial enough. dow jones industrial adding 84 points right now as it looks more and more like a risk on trade globally. we do not seem to be feeling as much as the europeans. they were up 2% early in the morning and are still up

1% across the board. take a look -- mentioned as we earlier, s&p hitting 1950. this is an inflection point. this could be a trigger part pt for systematic traders. that could be why we see such a strong rally. and we are in months and. your majesty windowdressing today you will see it on monday as well because people like to beef up their hooks a little bit before they have to present the numbers to the boss. lessig and look at the imf here on the s&p. you can see who the winners and losers are. stephanie was talking about the breakdown and correlation, it is not the kind of day where everybody is up or everybody is down. we have utilities, consumer staples, and telecoms, defensive sectors, off today. the letters, energy and health care. that is the exact same look

as the stalks hundred. -- stoxx 600. you see it in european equities, and you see it in the s&p 500. come the correlation has down a little credit. we were almost anyone in january, and that we are now at 087 -- 0.7. we are almost 4% on west texas intermediate. it feels like a month ago that we were heading close to a 24 handle. it is very interesting to see a boost in crude. southwestern is not feeling it from this. southwestern energy company with an adjusted loss of $180 million. losing more than the market was looking for a nerdy and that is the 14%. but the other oil and energy plays are up across the board.

the cabinet gaining right now, you see diamond offshore. the are all getting with the price of oil. stephanie: you said earlier, you on the markets outside of energy. if it is possible for the high-yield market to actually rally as get around the big energy hope, seeing that we are more likely facing so many of so many 70 defaults. yieldsou look at the offered in high-yield, even excluding metals and mining, you're looking at a sense you'll creditr a double profile. this is an equity returns with significantly less volatility. the fact is if you look at fundamentals of the companies, excluding energy, metals, and mining. the companies that are tied into the consumer health care and housing, those fundamentals are actually improving. there is a catalyst for spreads tightening out there.

the market is overpricing the risk right now in high-yield. that is going to cause the spreads to tighten. matt: i was going to the blacks have a concert in medicine -- in medicine garden, and this is my mind. investment-grade energy companies, they are levered more bitda.0 times eve if you look at s&p companies, the average is more like two times. the just shows you how much debt these guys are holding. when you take your ebitda down, your leverage goes down fast and matt. matt: for sure. just to flip this on its head

a little bit, crude has been blamed for almost everything that is happening in high-yield energy. shouldn't we be saying that oil is just exposing some of the dreadful lending and is happened in the last five or six years? i think that is a great point. the fact is that credit markets are going to get tighter. is that there are still many great companies to invest in that are tied into the consumer when it growing two or 3%. it is a beautiful market to be inactive manager, because we can pick the winners like the consumer housing health care actors that are doing well. could we make the argument that high-yield corporate credit is finally

right price? that did not make sense, it just happened to be market reality. >> that is exactly right. we took a step back when those yields were low. now that we see the wider spread and these attractive yield, we are starting to play selective offense. we are even starting to play selective offense even in the energy sector. these locomotive prices are not going to be there forever. at some point you to go from a defense of position to playing selective offense. picking the winners between the energy sector, because there will be great gains mandate and energy. the nasdaq giving for its third straight day. give us the latest. we are 10.5 minutes into the open. >> we are looking at another bullish open for the nasdaq and led by consumer discretionary.

it will be interesting to see whether these games can hold, three days in a row. higher on the week for a second week in a row. one of the big movers on the open today, monster beverage and they were sharply down after the fourth-quarter estimates were missed. revenues were missed by 8%. blaming the mess on variances with some of the non-coca-cola distributors. i spoke to beverage analyst who says that this noise is difficult to transitions around leaders. he also does not think it might be indicative of what is ahead. we have analysts who are bullish, saying that the weakness should be bought. in when the 50ut day moving average to below the hundred day moving average. the last time this happened, it was around a drop of 49%.

it will be interesting to see will shake out. stephanie: thank you. in terms of high-yield, i comparison of equity markets is a little bit misplaced. it is usually issued by the most cyclical companies with the highest debt to equity. you want to prepare those companies to the equities of the company with a similar profile. they are among the cheapest in history. the question is, do you want to express your views about the ability of economic recovery through high-yield debt, or do you want to do it through equities? i'm not sure the differences profound or pronounced. stephanie has talked about

hedge funds. last week we talked about jpmorgan's trading revenue getting hammered. this volatility is not good for their business either. what is it going to take to put more cash to work? >> i believe fundamentals matter. we have not seen a pickup in growth. i would love to see inventory come down. i would love to see some pickup and small business confidence and new business creation. that starts a cycle that is self-defeating. until that happens, we are at the mercy of central bank policies, which is a much more difficult way to invest. stephanie: are you in a better position than your hedge fund dis brethren? does that put real money in a better position to invest? >> yes, it does. inco as a long-term investor

what we think are the best strategic assets in the world. hedge funds have to day trade. they are going to be much more susceptible to a liquidity crunch that a long-term investor like pimco or warren buffett. we have a long-term blessed blown up front based on barriers to entry -- long-term disciplined approach based on barriers to entry. investments focused on the consumer, the consumer is the strongest they have been in 10 the health-care sector, even the pipeline areas where you have significant pricing power. always focused on the upper tier of high-yield. we are buying companies that are rated high-yield today that will be investment-grade one to two years from now. for spreadscatalyst tightening, and that is how you outperform in the credit markets. joinings pimco cio us. thank you.

stick with us. coming up, honeywell looking to reengage with a merger talk. that is coming up next. ♪

matt: this is bloomberg. on monday, bedroom bondage veteran bond investor will join us for a discussion. ford: here is the capacity

honeywell. >> we have 25 to $30 billion of capacity. we have a lot of room. david: and hammond is a deals reporter for bloomberg news. tells about this deal. statement they put out, the latest twist in a strange week. they originally approached honeywell last year, about a deal about buying honeywell. honeywell trinitron more recently and said we will buy you. they came out and said that they had no way that this flies. so, honeywell has stepped back

and said that his scorched earth. it is nullified we will be able to do it. honeywell continues to put pressure on. they offered $108 a share. they are basically making public with the reasons why they think this makes sense. david: this is not a hostile bid, nor is it friendly. they are trying to argue in the public that they should change their mind. >> it is akin to eberhard, where they have made public that they made an offer that they are not receptive to. what is interesting is that honeywell has made it quite clear they do not want to go hostile. they have done all they can. it is out there that they are interested. you tx is very public defense that it will not have a trust. they are pursuing a smart deal. they think they can get over the

hurdles. and to get the shareholders to apply pressure to the company to reengage. 10% right there because of the regulatory low? >> the regulatory reasons are quite low if you look at isolation. the problem now is if they turned around in the next 18 months, it is going to be a red flag to the regulators. essentially, they would be asking the regulators to overturn the company's own thesis that this will not fly, and it creates an anticompetitive environment. it is difficult to do. is this a broad positive, because earlier in the hour you were talking about the lack of growth, the lack of r&d and spending. this is quite a big deal. >> i am not sure will positively affect their sales, but it will improve their cost structure to the extent we can consolidate

the overhead. stephanie: that doesn't create jobs. >> it improves asset prices. it provides for another path to draw equity from the markets, and rate value of the remaining equities. as far as an indicator of stronger economic growth, i do not see this. stephanie: thank you for coming in and breaking down this deal for us. let's take you back to the markets for a quick check. time ino spend as much the markets as i can when they are in the green m. oil, or any look at of the commodities, you see a rally going on right now. up 3.5%. aluminum and copper are also gainers. up.mlvmlb

they are all energy players except for the top gainer with copper and aluminum. i want to take a quick look at herbalife. stephanie: this has been a huge loser for him. been halted. stephanie: let's get this right. matt: i was saying herbalife, he is saying helton. they have talks with the sec. it can see the huge game here. up.y they have rocketed back on december 19, 2012, he

announced his short at 42.73. stephanie: it is not just the price where he got into this trade. remember the amount of money he has spent on this trade, on .esearch and development matt: it has not been a winner. and then stamps.com. it was a darling of the internet bubble. it has gone back to the price that it was back in 1999. out with earnings and revenue that the market likes. this is a $2 billion company. they earn between five dollars, $5.50 a share. >> thank you for breaking that down. the dow jones of about 50 points this morning. up next to we wrap up the markets on bloomberg . ♪

stephanie: what a day, what a week on bloomberg . final thoughts before we wrap up. stocks around the world rally in. oil in gaming, industrial metals feeling it. we have positive news from earnings. it seems like a good today. the g-20 started to talk. china starting to speak to us as well. next friday, the big one. that does it for bloomberg . have a fantastic weekend. best of luck to the rest of your day. ♪

>> 10:00 a.m. in new york, 3:00 london, 11:00 in hong kong to welcome to "bloomberg markets."

betty: from bloomberg world headquarters in new york, good morning. i'm betty liu. excuse me for my voice. stocks are higher after economic growth in the last quarter was revised up. crude oil is higher this hour. we will be heading for a weekly game in oil. as the g-20 gathers and shanghai, china's top central banker says he has plenty of tools to stimulate growth. and what a night in houston. the candidates take off the gloves in the republican debate go afterio and cruz trump ahead of the crucial super tuesday contest. was it a little too late, though, to stop trump's momentum? we have breaking economic news. we will head to the markets desk. julie hyman has the latest on personal income and spending.