francine: g-20 underwhelmed. china stocks tumble for the 15 month low after the pboc failed to buy back stimulus and raises its risk options. zero inflation expected a flatlined -- we will receive the numbers for mario draghi. and angela merkel warns that greece needs europe's help to deal with the influx of refugees. the next greek crisis. keene, new york with tom and we are getting some huge inflation figures. this has an impact on what mario

draghi will be thinking about inflation rates, falling to 0.7%. you look at the immovable force of the last five or seven days, lowering german rates. it signals that lack of inflation. francine: and german yield is what we are looking out for but we also have breaking news on china, canning the requirement ratio. china is a little more fragile. let's get to the first word. vonnie: thanks. trucelargely holding its and russian warplanes received a tax on the second day of the in syria and forces fired artillery at the government. meanwhile, us-led coalitions did not. get covered by the troops baghdad,hat, -- in

suicide bombings killed hundreds of people. the attacks occurred at a shiite muslim part of baghdad. angela merkel says that greece needs euros help on refugees to defend the country from plunging into chaos. it may lead refugees to be stuck on greek soil, and there could be a humanitarian disaster. ted cruz warns that tomorrow maybe the republicans last chance to stop donald trump. cruz is urging voters to turn to him and nominate the most proven conservative. meanwhile, trump picked up an endorsement from jeff sessions of alabama. the sixth time was the charm for leonardo dicaprio. he wins for best actor in the revenge thriller the revenant. the academy award for best picture went to spotlight, which exposed child abuse in

the catholic church. i watched too much of this last night -- it was interesting. it was a tapestry on where the nation's. awards --a phenomenal did you see any question mark franciney? tom: who won that best supporting actress? the yellow dress? anyway -- francine: none of us have seen any of the oscar movies. tom: no, i saw two. i saw "spotlight" and "danish

girl." equities, bonds, currencies, commodities. futures improve a little bit and 10 year yield is all messed up. 1.75% and euro-dollar is 109. a little monday morning glitch there. the german two-year is -0.56, driving a little bit lower. francine: it is significant the cousin fell beyond what we were expecting and european stocks are still on the lower side but then we also had the news which -- i cannot tell you how significant it is. china cutting the reserve requirement ratio. . earlier this morning we were disappointed that they weren't

doing enough and this is a step closer to them trying to do right. tom: there's a party -- a lot going on. we have greater focus. bloomberg equity markets set us up for two hours of discussion. the green light is a better slope than the last 10 years -- this is the horrific a bear market -- just appalling. we have come over to a ten-year trend. so much -- francine: central banks have still stepped up from 2013 onward. tom: i love that. for more on the eurozone inflation data we are joined by our guest for the hour

here in new york. great to have you. when you look at world growth and the fact that g20 weren't able to get any concrete action and inflation in europe getting worse -- the world is not getting easier. >> i think we need to separate -- as opposed to something where we are in a secularly weaker democratic environment -- i think we have to be really careful that the solution to every problem is not going to create more negative interest rate, more fiscal stimulus. i am not sure that the direction to solve this problem is going to do what it was intended to do. we hearing any other word aside for more ?entral-bank action >>

the g-20 had an opportunity to shock and they didn't take it. >> i mean, the question is -- if they have the u.s., been running in an environment that is way slower -- tom: nominal 3%. >> that is the right response to that to push interest rates below zero or is that making matters even worse because it kills all these other bad things? tom: what is your call on the now?est rate right >> i like u.s. financials right now but primarily because i think you will see it above 2% by the end of the year. we don't have the inflation problem in europe. tom: i want to go to negative rates -- here is the two-year german chart -- help me out. when does draghi pontificate on this missio?

francine: the 10th. when you are working in a negative rate environment -- how does that full over to equity analysis? >> one of the things you had on the screen before was the 10 year bond yield, but if you look at u.s. inflation and economy it andn't seem to make sense the u.s. treasury gets pegged to a slow line and takes away the signal you normally get. francine: what does make sense of these kinds of markets? -- valuation feeds pressure negative rates could go even more negative. >> over the long run, fed .unding has equaled nominal gdp

the current level of fed funds make absolutely no sense and an economy that is anemic. tom: what happens to the equity markets if terry yelling gets back on an increase? is this something that keeps you up at night? the market needs to get its head around the fact the market has the highest pe when interest rates are "normal." when you see in interest rate on at 10 year bond yield th 6% that is where you have the highest multiples. it tells investors that something is seriously broken in the capital market and as you look at the u.s. economy. i am not sure it is as broken as that but inflatione: is not rising in it is getting

.orse and worse >> some of that is commodity prices and now we have the extent that oil is stabilizing -- there is no question. we are in a weaker trend inflation environment. vonnie: the euro was flirting with going below one dollar nine. tom: sterling is 1.3872. leave.e will never coming up, michael holland will join us, joining the discussion on the equity markets. we will look at blue-chip america. futures at negative five. we begin monday -- bloomberg "surveillance." ♪

vonnie: let's get the latest bloomberg business flash. valeant pharmaceuticals is withdrawing its financial forecast and will delay releasing fourth-quarter results. the drugmaker has been questions about its business strategies and accounting. michael pearson is returning after a two-month medical leave. of tokyomer executives electric power have been indicted in the fukushima nuclear power plant disaster. under investigation is the former chairman. there were three core meltdowns after an earthquake and sue nami. -- and tsunami. -- a presentation tomorrow. he is leaning toward maintaining the securities unit without a

spinning off of the business. he is also expected to lay out plans for the africa business. let's go back to the breaking news we had out of china, cutting the reserve ratio requirement. frost,joined by richard in hong kong. this is the latest up in china trying to support growth -- is it worse than expected or does it mean they mean business >> ? >> well, it has been a long time coming and we have seen a selloff both today and on thursday on disappointment that there had been more solid steps taken by the government. they said on friday that there was room to ease and everyone was expecting something to happen and it didn't so there will be relief that they have is why but the question

they waited until 6:00 on monday to do so. francine: what have we learned in the last 72 hours question mark our markets convinced by their messaging on you want and how does that stack up compared to what we heard? g-20 was book ended by heavy plunges in the shanghai on thursday and intraday lasted more than 4%. we have the yuan continuing to weaken for a seventh day today, so while there is no basis for a continued evaluation in the yuan i guess there is still debt within the market as to what is going to happen, although what we have seen is an initial positive response in terms of stock futures on the back of this reserve ratio. francine: our guest onset has a question. >> yes. many of the challenges we are seeing out of china are related

to too much infrastructure, which is financed by too much debt. does this to a certain extent -- is this the right policy? are there concerns that making money more easily available will fuel some of the underlying causes of chinese weakness? >> i think that has definitely been one of the concerns and maybe one reason why they are elected is because we haven't seen an interest rate cut in some time. they have been coming out with these broad moves and some of that is complicating their efforts to try and boost growth. we have seen big gains in the top tier cities like shanghai. schengen is up over the past 12 months so that is definitely complicating issues when it comes to them trying to boost growth without fueling bubbles. tom: help me with the immediacy

of this downfall -- this is your china market, still up and looking back to years. all of a sudden we are at the precipice -- tell me the immediacy of market executives in shanghai and beijing. well, the probably always have is that 80% of turnover is driven by retail investors and everything they try to do to bring in more institution and foreign investors is undermined by how this has been intervened when it fell down the precipice earlier last summer. they do want the stock market to recover but what they want more than anything else is -- they have been trying to project this and when youility

have the shanghai composite falling it is hard to argue that in front of over global -- in front of other global leaders. tom: john golovin still with us -- i know this is separate from global markets, but nevertheless, it is just another market challenge. how do you filter and not so much the equity markets but all of china into your u.s. centered approach? >> i think the biggest thing with china is that you have this capacity thatpare right now is put on the world stage and that is a real challenge for u.s. manufacturers and while i am reasonably constructive on stocks in areral i think those areas going to really be under pressure. tom: this is something we have been talking about with dan alpert -- francine: if you take a step back, it is all about communication.

with china still so nontransparent, we need to make sure that guys like you believe what the pboc says and you have a better understanding of their endgame. >> there is a whole bunch of data that looks like it is more dependable -- you cannot get fried shipments around the company which have been falling for six years and negative for the last four. electricity has been falling. if you were to go on the back of euro an envelope and choose how you would calculate the gdp on those data, it would be something way, way below what the number is, and more importantly it means that for those in the business of manufacturing infrastructure, whether it is mining or factory equipment, you are seeing weakness that makes sense. francine: thank you so much. coming up, i will speak with mark mobius. it will be great to get his insight into the what the g-20 did or didn't do.

that is at 1:00 p.m. in london ♪

francine: morning must-read have a different angle -- this is mine. about the words he sends to investors and the word that stands out is value. there is moderate correlation between the frequency with which he uses the word value and the

performance of the s&p. i love this -- he correlates the ander of words that he uses it is like how we use the fed and the dictionary you need that he suggests that this is the beginning of a bull market. tom: i thought it was a breath of fresh air. remember the circus? in america it is absurd and i said this before to his great defense -- the lights are very bright and last year they really finally getting back to the annual reports that you and i read a million years ago. we were talking about using the word value as meaning something -- we did this research thing at rpc -- what happens with all this volatility when you only invested when volatility was high and everything seemed calm.

you would outperform everybody. is that all ofng this noise in the market -- you look at this down up fall, that angst is exactly what you get in the market. francine: as long as you don't predict a global recession, which we are still on the fence -- is it 50-50? >> the likeliness of a resection is probably like 10% or 15%. now,the yield curve right expectations for jobs this friday are almost 200,000. and the likelihood of recession and near-term is likely pretty contained. francine: with some of the transports -- it doesn't stop them -- tom: he has been such a great investor -- what is his style? what is the buffet style?

how do you define his style? >> he really is the quintessential value investor. when things are strained and beaten up, he is able to go when and by well. my answer is he redefines financing terms. francine: [laughter] he hasn't done so well in a couple weeks. up next, redefining managing director. we will talk about the risk of a brexit, of a grexit, and everything else. is it just sowing the seeds for a breakup? ♪

vonnie: here is your bloomberg first word. president alassane ouattara the and his allies in the new parliament can now focus on rebuilding the economy.

he wants to fix the economy now that international sanctions have been lifted. meanwhile, political deadlock in ireland. the two biggest political parties each got 50% of the votes in friday's elections which means there could be a first-ever grand coalition between them. the militants linked to al qaeda have set up their attack since amalia. three bombings over the weekend killed 40 people and ports of a multinational force fighting the militants. hillary clinton goes into super tuesday her biggest victory of the campaign. in won 47% of the vote south carolina and is now turning her attention to the other party. north korea says that a u.s. student has confessed to a hostile act.

he is accused of taking down a propaganda sign, all of this as s the u.s. presses for more sanctions against north korea. francine: thank you. german chancellor angela merkel .oiced her support for greece tensions in europe escalated on friday as greece denied a request for talks after the austrian government said it was introducing a daily quota on refugees. we are joined by the managing director sony kapoor. welcome. are we underestimating the chaos, politically, that the crisis will entail the next elections? >> i think so. given that the fundamental cracks are starting to open between east and west, between north and south, and between germany and sweden and the rest of the eu and implications that

the refugee issue has on how britain will vote in the brexit referendum, i think it is hard to see markets and political actors having taken into account the seriousness, the depth and the breath of the consequences that can flow from our inability to address the problem in a european way. francine: you are saying it is difficult to predict political risk until it happens. last summer we predicted a grexit. do you think europe or have to breakup? no,y instinct is to say partly because that is not what i wish to happen, but i think it is fair to say that europe is facing -- and i know we have been saying this in an escalating manner since the euro crisis started -- the word exit stencil crisis has been used, but if there were ever to have been a time when the risk is as

serious as it is today then i think it is fair to call it a nexus stencil crisis today and the brexit discussion is one part of it, of what happens with greece and the schengen issue is the third element. ,om: if you were at lsu lecturing right on the european experiment, how at risk is it of falling apart this morning? what isld say that being played up is essentially a lesson in how hard it is, in a in a worldworld, with technological and financial interlink's as they exist today to still make countries work together in a way that transcends traditional sovereign entity. and yet it is still the best experiment and the best example we have of how governments can

be balanced an increasingly globalized world. risky, say it is very perhaps as much as a 25% chance that something will go drastically wrong in the european union, but at the same time, this is the only way to tacklef countries issues that have crossed borders. we are learning lessons the hard way and how hard it is, and hopefully these lessons will provide significant positive ideas for how to do things differently next time. how much is historical allegiances in voting patterns weighing on the elections, on the progress of you europe? >> well, in ireland it is interesting -- the political situation has given an unexpected turn of events, where

if anything -- and given that this will most likely have a grand coalition, this could in no way be going against history because historically the two major parties have been on opposing sides of since the civil war. it is interesting if they manage to come out of political expediency, patch this up and strike a grand coalition -- that would be unprecedented. similarly in spain, despite the historical fractures dating back to the civil war between the socialists -- if there is an inability to strike any other politically stable configuration and in which they doesn't get a prime minister, i can't rule out the possibility of a grand coalition. in some ways, the political fragmentation is forcing politicians and countries to try which try and

paper over the historical cracks . despite catalonia still being at a risk of leaving, i think we will see how the political --uation were developed situation will developed and germany has been experimenting with grand coalition and it has been working. francine: how do you see all of this? you must feel a bit removed in new york -- in london we don't even understand how to play these votes are emotional, even the irish vote is emotional. >> the gets the question you were talking about before -- the interest rate environment what it is, how much can you have true economic vibrancy in europe? forget about what mario draghi is doing, until people feel comfortable with the longer-term horizon, can you have a more successful europe? senset know if we have a

of how much this does weigh on the economy. francine: how much is away on the economy? especially when you see more and more governments putting together budgets -- saying that they don't care? >> there are two extreme ways of looking at it -- one is that a lot of what we have seen in terms of citizens booting out the parties that saw austerity in spain and portugal and ireland, this is all about economics. it is the inability for eu citizens and politicians to promise their citizens a better tomorrow. people will tolerate a huge amount of suffering if they can see light at the end of the tunnel and politicians have been unable to promise that. the other extreme way of looking at it is that this transcends economics, that this same political fragmentation would have happened in a slightly different way, even if the economy has been growing, but i

would say that the economy does which heavy, dark shadow makes every other issue far more difficult. tom: in two years or five years, where is this heading? >> i doubt we will have found a solution, but have a core at least of europe, including france and germany, moving forward towards integration. or we would perhaps have seen a breakup of the european union. it is hard to see how this can roll along in this completely sub optimal way. nobody sees hope and everybody is depressed for three full more years. tom: thank you so much. sony kapoor. coming up, what a busy week in economics. off his symposium, talk about tough economics. hisill get an update on

u.s. terminal values. ♪

vonnie: let's get our latest bloomberg business flash. china is taking more steps to boost economic forecasts. china as as bank of reserve ratio 50 basis points, coming after their been smart fell again -- their benchmark fell again. this new concern about deflation euro areaozone -- inflation dropped to -2/10 of 1%, adding to pressure on the european central bank to expand economic stimulus.

and amazon is going after a bigger foothold -- the world's largest online retailer has agreed to sell hundreds of profits from the super chain. that is our latest bloomberg business flash. francine: time for the morning movers. this is a picture of european banks. a lot of the main losers are down,uropean banks, hsbc so let's get straight to stephen morris, who is filing european banks -- great to have you. it seems that banks are now correlated with risk and as soon as that is higher, european banks go down. >> indeed. today question facing most european banks of the moment is where exactly is revenue growth coming from? the strategy,e of which is cost and trying to be more efficient, but you still need to make earnings and that

is a question on a lot of people's minds. francine: all banks are not created equal. when you look at the impact of negative rates and inflation figures, who are the big losers? >> well, the big losers are the ones who will have to turn away deposits. we have the hsbc ceo saying that if these rates continued in your they would take some measures to try and persuade companies not to deposit cash. obviously this is probably a net benefit, but that can't help going forward. tom: things have calmed down, so let's take a quick look -- one of the ideas in the pulse of european banking -- this is one of the derivative instruments of deutsche bank, that morning was ugly. you really wonder if the rhetoric is puffing up this debate. what is the rhetoric out of deutsche bank another european banks?

how are they calming things? >> all deutsche bank's turn to calm everyone down by pointing out that it was just one report from one analyst and that the underlying securities haven't changed. it was just a crisis in confidence, which is why we have seen the price recover slightly. but a lot of ceos in europe are sounding a bit depressed -- they aren't seeing much of a way out. you have to remember that banks are largely dependent on their own economies for stability. francine: let's talk about the pboc -- we have the banks and the need for banks to communicate better. a lot of ceos and what was significant is that of force them to come out -- tom: where is barclays? francine: tomorrow. what are we expecting? that is the first time we get to hear him speak publicly. >> yes, this is his first outing as the ceo.

we are expecting quite a big one -- as he reported, they are going to get in and set of one of four divisions, which will free up a lot of capital but will also inhibit their future growth. we are also expecting to hear a little bit more about streamlining the investment bankers and get them a bit more focused. then we have that full year and fourth-quarter numbers which are not shaping up to be great. tom: thank you for the briefing on european banks. a lot of economic data out there. elizabeth comstock is general electric vice chair. a conversation on america's new industrial mighg. -- might. ♪

francine: here is will we are watching for the rest of the week. today, the u.s. energy information ministration releases its monthly report. production data is due out at 12:00 p.m. eastern time. super tuesday -- when

12 u.s. states hold their presidential primaries and caucuses. donald trump seems set to shore up his nomination. megan murphy joins us to discuss it. finally on wednesday, the ecb executive board will speak in both frankfurt and brussels. this comes a little more than a week before the much awaited ecb governing council's monetary policy meeting on march 10. this is after some pretty dire economic figures in terms of inflation. the chief u.s. strategist is still with us. we were talking before about european banks, and the fact that with this great financial experiment of negative rates, no good can come out of it, and they also have oil exposure. >> the real exposure in north america, and for all the damage it does, you see the u.s. in north america banks are much healthier than the european banks that are really being

beaten up by negative interest rates. there is a question from investors on what is doing more damage -- low oil prices are low interest rates. it's clearly the latter that is more problematic. your latest research is a terrific analysis of the arch conundrum. if stocks don't link to the economy and the economy doesn't link to stocks, with nominal gdp -- throughout the chart -- this is gdp, coming down, but now we are chronically down under 4%. what did you learn? >> there are a couple things. if you focus on whether this is good or bad for markets, it is a very different thing. cyclical stocks, industrials and the like, those don't do well in this kind of environment, whereas staples and health care and even new tech -- staples at 20uy

times forward earnings? >> if you have the kind of interest rate environment that we have, if you have a to point to gdp environment that we have had, the answer is that as much as it is expensive, it'll look attractive at 24 times. the market wants to go toward those models that can survive. francine: is there a real disconnect between were stocks are going in the economy? at some point they are at a crossroads. >> if we make an assumption that we are investing in the economy, there is, but you are investing in capital markets. when do markets do badly? they do badly in recession. short is a recession -- and we just put out the reports this morning -- if you were in the very last year of the cycle, you average something like a 20% return. even in the middle, you are doing nearly that. it really is a recessionary question.

francine: it could be markets that price in a recession. view,m an equity point of it just doesn't look that way. earnings were down 2% this quarter, but energy was up 4%. the average company beat estimates by 5%. which aren'tngs even in the zip code of a recession. same thing if you look at jobs data -- it is not pointing that way. tom: michael holland will be with us in the next hour. he carries around one of those l.l. bean canvas bags from 1954. in it are all his written annual reports. what are we going to read about a year from now? is there still going to be a mantra of dividend increase? it's so prizing to me that it has held up as well in this week environment, but yeah. companies that are not seeing the growth and are not investing

-- we talked about china and this glut of infrastructure -- what they are doing as they are returning it. every other cycle, if you are a company that returned cash because it was a sign you didn't have the confidence in your business model, this is the first cycle where stocks go up. mentioned earlier that you don't think there will be any fiscal expansion in the u.s. depending on who is the next president -- >> i didn't say i didn't think there was, just that i hope there wouldn't be. whether it's an infrastructure bank or an expansion of our air traffic control system, the question is do we think the money,ent, given our will deliver a positive roe? a return on equity? vonnie: it's not as if it has stopped working, or is doing negative work. you don't want any fiscal expansion -- what happens? >> the reality is that when you

have demographics of an aging population and a glut of infrastructure coming out of emerging markets in china, it is keeping the level of economic growth in the low 2's and pumping more money in and doing projects you don't need to create more infrastructure. i don't think that low 2 growth is broken, i think it is the world we are in. trying to fix something is not the right solution sometimes. i think we are ok with an extended slow growth cycle. francine: are we selling the seeds for the next crisis? it's the first time in a long time -- this is, again, for me, is alarm bells. by havingely -- interest rates where they are, capital gets misallocated. part of what has happened with the energy sector is it's very easy to pump money into the ground. you see that with an increasing

leverage in china and the emerging markets. you see that with retirees or near retirees having to increase their saving rates because they can't retire. so there's a consequence for the policies we are putting in here. tom: i want to pin you down -- trailing on the edge of correction total return.what is your list ? >> i think we are in a low double digits -- tom: low double digits? >> i think the real story is that we are going to come down from this level of concern, and that will grow. with the 7.5% run we have had, that will continue for the next month or two. then i think we will be in a mid to high single digit environment after that. and: is home depot i lowe's -- >> if you look at them compared to the rest of retailers, they're not in the cross hairs

of amazon compared to others. i do think housing is good for them, but they are -- tom: try to buy three 4x6's off amazon. francine: [laughter] tom: thank you so much. an important research note from rbc capital markets -- a linkage of our economy. coming up, we want to get some sanity after the oscars. bear attackand, a to the washington and he rolled over in the bear jumped on michael holland. he will join us, here next. futures -8. francine lacqua is in new york. ♪

tom: the shanghai g-20 meetings disappoint. china's stocks slide.

global market search for a bid this morning. the comfort of blue chip -- to the old investor rules work in a new investment world order? and hillary clinton crushes sanders in the south carolina primary. we are live from our world headquarters in new york. monday, leap-day. i'm all messed up. francine is with us. francine: this is the only time askear that a woman cannot a man for his hand in marriage. tom: say that again? francine: it is the only time, at least in ireland, that a a man's hand in marriage. february 29.

tom: have you ever experienced this, the two of you? ok. let's save ourselves. we like that. to bloomberg first word news with vonnie quinn. in syriahe truce largely holding two days after it took effect. russian warplanes resumed attacks on the second day of cease-fire, and rebel forces fired artillery at government forces. u.s.-led to listen forces resumed attacks on islamic state, which is not covered by the truce. back-to-back suicide bombings at a crowded market killed at least 73 people. one in 100 others were wounded. islamic state is claiming responsibility. germany's chancellor, angela the country needs

help with refugees to avoid plunging it into chaos. greece's warning there could be a humanitarian disaster. warned tomorrow maybe the republicans' last chance to stop donald trump. he says trump may all but locked up the nomination if he wins big in the tuesday races. ted cruz is urging voters to turn to him. trump got a key endorsement from jeff sessions from alabama. the sixth time was the charm for leonardo dicaprio. bestn best order -- he won actor for "the revenant." global news to four hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am vonnie quinn. it was successful. tom: lucy nicholson from reuters nails it in "the new york

times." i did not know who anybody was. i do not know what else to say. dressed and winslet ralph lauren, and leonardo dicaprio. now 19 years ago. this is a great quote. tweeted tweetmost ever, the dicaprio win. tom: was it? the guy from "spotlight" needed help with his bow tie. --'s get a data check economics, finance, investment. futures at negative eight. euro-dollar stronger. on to the next screen, please. 16,639.

francine? francine: i wanted to show you european stocks. we have euro-area consumer pricing. this is one week before the ecb meets. china cutting the reserve ratio, trying to pursue growth. tom: let's go to bloomberg right now. ofdid this with john gall golub -- we did this with jon golub. the last 10 years has been better than the last 20 years. i know most of us, including me, do not believe that. and then back to the 10-year trend, and even above a 20-year trend in equities. it has been an appalling equity market. francine: look at that, compared to the 2008 level we were at.

tom: you bought here, vonnie bought here, and i bought about here. i have been killing it. shown in o'neill is with us. -- shannon o'neill is with us. truly an important day. i guess it is harvard and yell this morning. michael, wonderful to have you here. are we in a bear market? you would think so, reading the tea leaves. ironic withis leonardo dicaprio winning for "the revenant." we are involved in a bear market , for sure. tom: what do you do in a bear market? buy lou chips, you -- buy blue chips? you are always estimates sick -- you are always optimistic.

have a: you have to portfolio, a position in cash to get to this point. to be able to weather and also take advantage of opportunities in a bear market. buffett classic stuff. at this point when you have cash, as we do, you end up looking for things to do. francine: cash in what currency? michael: that is a great question. primarily the dollar. francine: so ben bernanke says we are at the end of the dollar run? michael: i have only been able to lose money playing currency, presume to survive, i would probably not keep doing that. the markets around the world right now are saying, why do they even bother spending taxpayer money in all these countries? they did absolutely nothing. more than that, they did some damage because their credibility

-- they said at least one of the things, we are not going to do competitive devaluations back to currency. what we are going to do is, before anyone can lower the currency, we are going to get the permission of the other people here. the first thing that happens is china devalues its currency a little more. vonnie: but the g-20 went easy on china. or this a response to that, did the g-20 already know that china needed to do so? i am hoping so, but china said we need to do more. this is caps off any. shannon, brief us on what emerging markets means to you. -- how do you petition emerging markets for financial stability and rule of law? shannon: there is a lot of difference. that this might be the decade to come out for emerging markets.

and in the long run emerging markets have the demographic, the glowing -- the growing middle class and things that are quite positive. but today you have to dissect them. a lot of them are powered by commodities, and we see right now demand falling and a huge oversupply across the board. those countries are not going to do as well. there are the ones linked, particularly to the united states. the u.s. seems to most -- the u.s. seems to be most stable. some of them which are not commodity producers should have benefited from the oil price because of production costs and others. a have not brought in the money because structural reforms were so late. shannon: that is the challenge for emerging markets. you might see the macro side look good, but the micro side, with the barriers and regulations and other difficulties in doing business

there are some of the challenges. have countries taken those on during the last decade when you saw some booms around the world -- and we are seeing that -- which ones managed it well and which ones did not. francine: should we be worried about big default in the emerging markets? it does not seem like oil is going anywhere. shannon: i do think we are going to see some challenges. you see brazil looking to recession. the government are hitting the edge as the bonds have gone down. a lot of people are saying this is the time to get into emerging markets. ask, is i was going to it time to get into emerging market debt. are there any markets where the making theply markets worth the risk? shannon: i would say from

venezuela right now. michael: one of the interest rates? -- -- what are the interest rates? shannon: there are some attractive rates there. there are some currency issues, back to your point. vonnie, the u.s. looks like the least ugly person in the bar right now. we have sort of forgotten about brazil. is money leaving brazil in droves? shannon: money has been leaving brazil, and that is a real challenge. there are some investors looking now that the currency has fallen , so i think there are some people looking for perhaps some value there. it is a country of 200 million people. it is mild today -- it is mired today in both an economic and

political crisis. until it resolves the political crisis, which looks to be many months out, it will not be able to take on economics issues. francine: coming up on bloomberg , mark mobius. we will be talking about china cutting reserve ratio, and what that means for investors worldwide. ♪

vonnie: i am vonnie quinn p here is your latest bloomberg business flash. barclays ceo jeff staley will try to convince investors -- he will make a presentation tomorrow. he is leaning toward maintaining the securities unit, without

major restructuring the business. of nissan --res before today, nissan shares had fallen 24% this year. valeant pharmaceuticals is withdrawing its -- the drugmaker has questions about its business practices and -- is being questioned about its business practices. that is a bloomberg business flash. we want to turn to politics from washington, d.c., megan murphy, our washington bureau chief. nomineelary being the at 95%, and trump being the nominee at 85%, is it over?

to see whatll have happens tomorrow with trump poised for big wins. whether marco rubio is a candidate, if that is successful and not, we will see how they can pull through in suburban areas and see if he can gain the momentum he needs to consolidate his candidacy. , inie: many gop strategists am sure, with sleepless nights tonight and over the weekend. what is the strategy to change the outcome? megan: the republican party is in crisis right now, and they have let it go on very long and they are coming in very late with an attempt to stop the trump juggernaut. it is kind of baffling to think about this. they have had a void of leadership and support, and coming in behind the candidate they want to advance. now they are looking at a super tuesday map where it is possible that donald trump sweeps the table of states. if you are an establishment

republican right now, these are very uncomfortable times. is there even a chance that the republican party actually splits? chancei think there is a we will see a very different kind of republican party moving forward. we have senators openly saying they will not support donald trump if he is the nominee. we have people calling for a figure like paul ryan or mitt romney to run down tickets. so that they can point to someone as support. as was really a crisis of this establishment wing of the republican party, and how they are trying to get this party back. writingan, al hunt is 24/7.-- let's talk about the

happened of clinton-trump and with all of your expertise, is just -- as jeff sessions calls it, it is a movement. how does a movement moved to the center? is every -- as every conservative how always has. do you consider the movement moving? megan: the movement that donald trump has built is built on this, what you have been talking about on your show, this economic angst and anger, that people have not gotten a pathway to the future that they want from boosting wages, boosting job opportunity. deprivedp economic areas of america, that is where he is strong support from, and that is where this movement comes from. this unsavory element of that movement is some of this rhetoric we have seen among immigrants, among -- donald trump yesterday refusing to overtly disavow himself from the

ku klux klan, an endorsement from david duke very whether this is a movement that will fundamentally change republican politics remains to be seen. there are elements of it that people reject. tom: shannon o'neil is with us from the council on foreign relations. how does this play abroad? we talk about europe or francine's london. how is this going on in the united states of america, and how does it play, let's say, from el paso south? shannon: not well. forld trump had words mexico. two weeks ago, the president -- the former president of mexico stepped forward and use expletives to describe what he felt about the wall that would be built by mexicans. as aexico has seen trump

candidate, not yet the nominee, not yet president. they are very cognitive about staying out of u.s. domestic politics, and that that is the best way to go, particularly mexico and surrounding immigration issues. vonnie: what is fascinating for me is that the hows have not come out yet. over the weekend, chris christie came on the weekend news shows and basically endorsed trump but does not say how. fromwe are a long way lifting dog years on "meet the press." michael: the market is not going to do well with this kind of uncertainty. we have no clue where the leadership is taking this. francine: i'm looking for the research note as to what happens to stocks when trump wins, if he wins. tom: it was a fascinating weekend, to say the least. we will continue this discussion

tomorrow. i'm going to travel to washington. what a perfect time to speak with alan on negative and just rate. house, jasonwhite furman. ♪

francine: welcome back. this is what european stocks are doing, and underwhelming is the word of the day. that is what investors in markets think of the g-20.

and we had the worse than expected consumer prices, falling the most in a year. it does not look like the ecb can touch it. co-year german does better than it was pretty look at the german -- the german two-year better than it was. here is my morning must-read. it is on a theme that we should talk about more. i have been a failure on this -- venezuela matters. kahn.t tom: shannon o'neil is with us on this informative note. what is the desperation level?

i cannot get a handle on it. what is the level of desperation? what does it mean for us? shannon: it is really high. when you look at the backup -- at the back of the envelope calculations, what they probably need to pay debt to buy food, medicine, and other things, is $50 million. how do you make that up? it is almost impossible. tom: mexico is close to us and so is cuba, but look at venezuela -- how close is venezuela politically, economically, to us? shannon: a lot of its oil is refined here. sit go is owned by the venezuelan government. i think the real question for venezuela is, it touches many other american countries -- ecuador, peru, brazil -- so what

happens politically, what happens on those borders where we have a lot of other issues? colombia is trying to resolve its decades-long war with the guerrilla group. there are a lot of geopolitical ramifications with venezuela going down. francine: these are countries under extreme pressure because of the price of oil that may be more relevant worldwide. coming up this morning, an important conversation on the new general electric, jeff immelt possibly the ceo of the year last year. barbara comstock to join "bloomberg ." ♪

vonnie: i am vonnie quinn. in iran, president rouhani and his allies in the new parliament can focus on rebuilding the economy.

allmoderate candidate won 30 elementary seats that were up for reelection in iran. political deadlock in ireland. the country's two biggest political parties won 50% of the vote in friday's election. that means there could be a first-ever coalition between the former enemies. saying no to the european union could have an unfortunate side effect for the u.k. allolas spurgeon is urging to vote in favor of the european union. >> if the rest of the u.k. were to vote to leave, there is a real change that could lead to a second referendum of scottish independence. of 2014,n september scotland voted to reject independence. they before super tuesday,

state department is releasing the final batch of hillary's e-mails. her republican opponents have called it a risk to national security. north korea says a u.s. college student has confessed to what officials are calling a hostile act. he is accused of taking down a propaganda sign. all of this is happening as the u.s. is pressing for more economic sanctions against north korea globa. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world,, i am vonnie quinn. tom: this is maybe the most important equity conversation for the first quarter, michael holland with us from holland and company. -- 400,000 employees, a let's go to -- a --

the single best chart, which lays it out for you. the basic idea of united technologies regressed back one million years. it is way below its tendency, 130-something out. themillion miles from premium pricing. michael holland, this is about a venerable company stumbling. and a smaller honeywell comes in and pounces. do you give him high marks for attempting this acquisition? michael: not really. the european regulators a decade , something very similar was tried. they said no debt. this is no way it is going to happen now. this is a little bit of spinning wheels. francine: the ceo of united technologies came out and said this is not going to happen. we have learned with history that megamergers are extremely

difficult because there is usually a class of cultures. michael: but in this case there is no reason to discuss it because european regulators have already said it is not going to happen. tom: one of our great interviews out on podcast was peter armen stern. honeywell, 200 basis points, and you tx is in some form of restructuring. your experience is that these kinds of mergers are good for would have toutx make some tough decisions? in this case honeywell is the preferred brand, and they might help. it is possible. tom: peter armen on friday said the key distinction is the honeywell board. do weill go and say really need this distraction? do you agree with that? michael: absolutely. having said that, honeywell, why

would you do this? francine: valuations. it is cheap. if it is cheap, is that not a good enough reason? michael: cheap sometimes is very expensive. cheap sometimes can screw up your base business. tom: did you pay your bill this month, michael? michael: twice. tom: holland can get this, you can get it, too. this is the insatiable demand to see my lousy charts. even holland can steal the chart from me. vonnie: is there something else after?ybe they can go michael: there may be something less questionable. if you look at utx over the last three or four years, they have had some real tumbling at the top. there are probably other places

for them to go. they would not be spinning their wheels. can you give us a few examples? shannonmichael: i can't. francine: it seems that -- the only real appetite is from chinese company's trying to buy either u.n. companies or -- either european countries are u.s. companies. ofhael: you have a lot people, consumers as well as people running businesses, who are hesitant to do anything. it is happening in china, the u.s., and europe. people are not buying things, so that is -- the valuations are very compelling. tom: to make this work for all gdp low, guysal want to go out and acquire the revenue they cannot grow. i am looking at the revenue .rowth of single digit this is not home depot.

$58ets to go out and buy billion of revenue. michael: that is what he should be trying to do. at the right price and the right target, one that works. utx work?an't is in regulation alone? michael: it is like the a little bit pregnant question. there isthing as a little bit pregnant. ge has the same challenge. seen ae: we have not huge megamerger like we have in the past. shannon, is there anything in these emerging markets linked to the fact that corporate debt is getting so much more expensive that could see consolidation? shannon: i think you could see consolidation right there. you have already seen that in the industry around the world. you see consolidation between latin america and south america

and all around the world. you are starting to see consolidation in other consumer sectors, and we will continue to see that because there are a lot of companies that have a lot of cash and are searching for low valuation. michael: dow chemical, it took them a couple of years to figure out that they could get the regulatory problems, and that they could get together on a board level. tom: this is important. the overlap here is much greater than dow-dupont, right? vonnie: it would be a much bigger company. it is going to the point that -- tom: can i rip up the script here? connecticut is a small locality east of -- south of new york city. michael holland, what the hell is going to happen to connecticut if kote goes in there and synergizes -- i know you love that word, francine -- drives you nuts.

michael: ge moved to connecticut because it is an attractive environment. it is low in taxes, attractive to businesses. in 2014, the governor comes up with a venezuelan proposal to say we are going to do retroactive taxes to get rid of our problems here. jeff immelt at ge said, retroactive taxes? the following day he had multiple proposals from states around the country to move ge's headquarters. little-known fact -- the u.s. -- boston had the best proposal. boston is a beacon of attractiveness. you are in no way

impartial, michael. the city on the hill, the hub of the universe, is an attractive place to do business compared to connecticut, fairfield, connecticut, where ge moved. tom: a huge story for connecticut. i am learning. ," ing up on "bloomberg will speak with mark mobius. that is at 8:00 a.m. in london, 8:00 a.m. inone -- new york, 1:00 p.m. in london. ♪

i am vonnie quinn. let's get your latest business

flash. chinaople's bank of reduced the reserve ratio by 50 basis points, approaching a 15-month low now. there is new concern about deflation in the eurozone. consumer prices fell by the most in a year. it is addingn -- to pressure on the european central banks to expand economic stimulus at next month's meeting. the euro traded below $1.09. 80 her atually 1.08 amazon already sells more than 4000 everyday items in u.k. that is the latest bloomberg business flash. francine: less focus on argentina. michael holland with holland and company, shannon o'neil with the council on foreign relations.

default,after the today is the last day for holdouts to accept the offer on defaulted debt. will they? shannon: i think they will to one of the big steps is that a judge will lift the injunction against argentina. lifted, given that argentina repealed a couple of flaws in congress, it looks like there is a political deal made there. francine: this is the first time that a head of argentina came to davos in 20 years and he clearly wants to get reforms going and attract investment. is this a huge deal, or does he have a lot more work to do? shannon: i think it is a huge deal. he does have a lot more work to do, and he has taken measures to rationalize the domestic economy. it needs to borrow to cover deficit to grow again, and this

deal will allow them to do that. tom: i was having a beverage of my choice on friday, which i know is a surprise to you, and a guy came up to me and loves the show, blah, blah, blah, and he says the election of the president is a huge thing on the streets. here is the depreciation mess, almost the devaluation here in the junk condition. how do you turn that vector around to pace with strength? shannon: part of this graph is that there were two currencies, and official currency and a black-market currency. he came in and said that they have to unify those currencies. tom: did he? shannon: he did. that needed to be done. , and thoseflation are his challenges today. but you have to unify the currency to get people to engage in the end, me -- to engage in

the economy. tom: how do they get the rule of law back? shannon: he came in campaigning on economic change as well as security, so those are his two big issues, and we have already started to see this government begin to take on corruption issues. and this last year they went after the former president. francine: he is looking like ebola goal child of latin america right now, but as an investor, why would you go into argentina? would you not wait a couple of years to see if he can push what he promised through? shannon: the promise argentina has today is, if you talk about brazil and venezuela, they are overloaded with debt and these challenges. argentina has not been in the market for years, so there is no consumer debt. there is space there. there is also over $200 billion in foreign capital.

some of that comes back in you can see a boom in the economy, reinvesting in infrastructure, real estate, other types of issues, real basic issues. vonnie: venezuela tenure is yielding 26% right now. what would argentina be if you'd evaluate? shannon: -- if you devalue weight? michael holland, will you go long on venezuela come along on argentina? michael: we continue to go short with venezuela because we have made a lot of money there, and we go along on argentina -- and we go long on argentina. emerging markets are tiptoeing into argentina on that basis, because the direction looks good. you can make a lot of money there. tom: continuing this conversation, shannon o'neil and michael holland. bloomberg radio, coming off the

blue school conference in new york. michael feroli will join us from jpmorgan and the blue school. michael feroli on janet yellen's new terminal value. futures negative five. "bloomberg surveillance." ♪

tom: good morning, everyone. a forex report. morning --ighur this excuse me, stronger, stronger, -- the yen is weaker this morning -- excuse me, stronger, stronger. ongerger yen, str dollar. francine: they were looking at yen when they went into it. they had a data check. coming up is "bloomberg ." david westin, what do you have today? david: we have beth comstock, the ge vice chair. you will be talking to mark mobius, franklin resources, about emerging markets. and we are joined by dale stafford, and he will talk about

all the fluctuations in the markets and what the central banks are doing. that is coming up next on reallyerg ." tom: looking forward to the ge discussion as well. right now we're looking at japan. we go over to bloomberg very quickly and look at the eight nymex. -- at the abenomics. move.s the successful hide this, as you do. phenomenal success, and then 112.well, down to francine: we should spare a thought for governor kuroda. he is considered one of the greatest thinkers in central bank. i do not know if it was a mistake or if he was just trying it out to see what the experiment would look like. tom: michael holland, where are ?ou on japanese blue chips are they as blue as our blue chips?

michael: i do not think so. francine's comment about one of the greatest thinkers in central bank -- it is like an oxymoron, isn't it? bashine: it is so easy to bankers. but they are trying. michael: i agree. but the key right now is they have lost the confidence in the markets. francine: they have lost credibility? michael: yeah, credibility. vonnie: it only happened recently. tom: where i want to go with this, we have an number of countries doing negative interest rates. you cannot talk about a negative rate analysis to some them all in. michael: blue chips in japan are different than in the u.s., or in great britain. the conflict of negative interest rates, if you ask most people -- they are like, duh. if tomorrow you ask alan

greenspan, what is the history, he will say there is not a history. there are no data points. so back to what are the central bankers doing, to francine's question? they may be totally successful. francine: and stanley fischer is absolute about it. tom: he gave support to the idea. negative rates filter into all emerging markets as well. it is not a discrete market economic space. shannon: money is cheaper than cheap, so where does that money go? does it stay here or go into emerging markets, and how does it inflate the economies or not? toncine: should be go back communication? that is the big theme. if a central bank does not do enough, mario draghi in december, markets tank. it is hence you lose,

tails you lose. -- it is heads you lose, tails you lose. it is of a larger movement. it is like the irish elections. there is an antiestablishment, people at the top movement in people's heads, that none of these people can get this stuff right. there is third little credibility going, and that is why the markets are so afraid. markets comehe into line pretty fast when things change. expectations in the u.s. were not as low as they were. michael: we use the phrase, liquidity is a coward and at the first time -- at the first sign of trouble, it runs away. but the opposite is true. i would hope we get to the asset bubble, because we do not seem to be very close. the idea of pushing money in the markets has not been working here. francine: how much of a liquidity prism is there?

we do not realize how big some of these guys are, from qatar, kuwait, having to pull money out of the markets. michael: they have been hurting. , the wealth funds have been pulling money out, starting with china. it has been depressing prices around the world. today -- youkerman touched upon it earlier as well. what is the boring you need to be in? michael: you love to talk to me about boring, don't you? the boring right now has to do with the quality dividend paying blue-chip stocks around the world, beginning with the u.s. they have been doing well. jpmorgan, pepsi coke -- pepsi, coke, all of these companies. i think it is possible that just the opposite may happen. tom: michael holland, thank you

for the briefing. shannon o'neil, thank you so much pitch is with the council on foreign relations. "bloomberg " is next with an important conversation with the vice chair of general electric. tomorrow i will be in washington, super tuesday, a conversation with the former chairman of the federal reserve system, alan greenspan. we are really looking forward to speaking with him on negative rates. and jason furman working a tactical battle at the president's white house. important guests tomorrow from washington as well. futures negative for, dow futures -36. ♪

david: china's central-bank pushes the -- euro area weakens with consumer prices turning

negative, adding pressure on mario draghi for further stimulus. new technology is helping to reshape an old business. general electric vice chair beth comstock on the innovation that is changing the company's future. david: welcome to "bloomberg ." i am david westin, here with stephanie ruhle and jon ferro. trying to stanley things right on the heels of the g-20. fascinating, isn't it? china follows up with a rate cut, and then euro's on inflation -- euro's inflation comes up. only game in the town remains the only game in town. matt: but when you see china cut the reserve ratio, all this does for the market is signaled that