approve a five-year plan for the economy in china. all of this volatility is weighing on the luxury art market. the head of phillips joins us later. hello and welcome to bloomberg . i;''m jonathan ferro here with david westin and stephanie ruhle. david: here with us, also, is josh steinem. stephanie: we have got so much to cover. asia up today. you get a little bit of news out of australia. asian markets like it. let's get you first word news in london. you.ine: thank it was a big super tuesday for donald trump and hillary clinton. each won seven states. e 1207now has 285 of th

delegates needed to win. ted cruz 13 states and marco rubio has 87 delegates. a verymp: i know it was tough night for marco rubio. he works hard. he spent a lot of money. he is a lightweight. herline: meanwhile in victory speech, clinton took what sounded like a shot at rumptrump. mrs. clinton: it is clear the havesin this election never been higher, and the rhetoric we are hearing on the other side has never been lower. trying to divide america between us and them is wrong. and we're not going to let it work. caroline: clinton has 1001 of the 2283 delegates needed to win. u.n. security council vote on

new sanctions for north korea has been delayed until today. the sages are aimed at punishing north korea for its recent missile launch. -- the sanctions are aimed. north korea would be banned from selling minerals. the world's largest money manager says leaving the european union would mean it risk for the u.k. with few rewards. the countryarns would have a drop in investment if voters decided to leave the e.u. predicts volatility and u.k. and european assets will increase before the vote. i'm caroline hyde. down we see futures here across the board. s&p futures off about five points. dowd joins off about 40 points. this is, even though there are a lot of green shoes, -- green shoots, a term that is coming back with bond yields rising,

and copper rising -- i want to show you oil. that is one of the reasons we are down. oil is off here in new york. 2%. $33.73 a barrel. the correlation between oil and stocks is strengthening again. if you take a look at my bloomberg. screengot the hs appeared you can click the correlation box. i have enlarged the box. back in january, we were strongly correlated with .96. we started to come down to .7 but we are rising back up. even with all the positive sentiment around the world, we have the correlation of oil strengthening. lower oil means that we see lower stocks. if we take a look at copper, you can see that we are at the highest level that we have b een since november.

this is the one of things that is helping to boost minors overseas. although, does not seem to be helping the ftse. the ftse is negative. you take a look at the picture in europe, the other indices are gaining. the stoxx 600 up only .2%. a fifth day in a row for stocks in europe to gain? lanhee: you have to go back to jonathan: you have to go back to october. only the s&p and u.s. is 66 points off the level we started. things are looking good, although the ftse is turning down. interesting because u.k. miners are gaining the european banks are gaining. it is mostly banks in southern europe that are showing big gains produce the credit ubs rising.and antander doing

quite well this morning. asian banks overnight -- big green arrows. the hang seng more than 3% and the nikkei in tokyo, big gains, 4% and chance. it has been a strong day for equities. the question is, will the u.s. followthrough? i think we need oil to turn around for that to happen. david: it was a big night last night, super tuesday. 11 different states. it was a big day, good or bad. one of the stories we want to talk about is donald trump. republican contest. if you have gone back the year, most people would not have predicted it. yet, as you look at the markets, it is hard to see a discernible reaction. josh, you know wall street and washington. is this because the markets has only prices in or are people waiting to sort things out with the convention? josh: anyone who thought they knew washington don't know anything about politics.

there is a disconnect going on between the insiders who spent their careers in washington and thought they could predict what is happening and those results we are seeing in the states. it is very difficult of predict. the second thing i would say, it was a difficult night for the republican party. you have to look at it and say they were looking for some sort of clarity even if they did not like it. you now have all these candidates and have an incentive to keep going. is waiting, kasich for ohio. we did not see any clarity coming out of it. as a result, the markets are saying, wait a minute. if the apologists cannot -- if the politicians cannot figure it out, we cannot figure it out yet. david: it's fair to see, correct me if you think i am wrong, there is nothing that last night that deterred trump from his march towards the nomination. ash: he has got to view it as good night. chris christie is back on stage after a rough couple of days. making him look pretty good in comparison to the few days he suffered. of movemente lack

in markets off the back of this, too many variables? my mind goes to the u.k. and i think about the brexit risk. the vote is june 23. we know who is behind it and intensive. the u.s. election, we do not even know who the nominees are. if you put donald trump against hillary clinton, most polls suggest hillary comes out on top. are there too many variables? josh: you are exactly compared to most local candidates, trump does not have a clearly defined economic plan to read you ask them, he says i am a great deal maker. i have done incredibly well. point, that is not an economic plan. the market goes in and says, ok, what do these candidates stand for? it is easy to decipher for bernie sanders. easier for hillary clinton. almost impossible to know other than his comments on trade what he would actually do if he became president, trump.

political risk is a big story not just in the u.s. but in the european union with brexit looming. financial institutions are concerned. the ubs ceo joined "surveillance." >> in general, in switzerland, a lowersed to lead with rates or negative rates environment. we have been taking action over the last couple of years to physically reprice our services, to reprice, the credit side of the equation because what's going on with negative rates is the you are right side of balance sheet is getting a subsidy from, you're subsidizing the left side, the credit. we are being clearly asking for higher rates for our clients. francine: do you think that

eurozone institutions are less ready? you have the swiss example. what does it mean for rivals, the side effects of negative rates are extremely difficult to judge. this isnk that something that also european banks have been started to get used to. a few months and quarters i would say. you can start to see also the effects of it. in order to avoid negative rates, some banks are conditionsd trade, that may also create future potential risks in the system, like in real estate and mortgage is. is veryi think there little way out of this, other than we price, as i mentioned before, the credit side of the balance sheet. and also starting to ask for fees on services that used to be

subsidized by deposits. deposit today is affecting the lower rates or negative rates environment and also making the proposition. also talked about overcapacity. are we going to see consolidation in the banking sector in europe because there has been so much pressure on your rivals? >> in general, the european banking system is clearly, has a huge overcapacity. the problem is to create the environment in which we learn from the mistakes of the past, that not every bank should try to copy the other, but rather, every bank has to find its own nextto lead through the phase. means focusing on what you stand for, what you are good at, by geography or client segment. tom: you mentioned what you are good at. it is his pleasure to speak to you. your history of working in the

trenches. as you look at a strategic path for for your bank, your competitors are slashing costs for the knowledge segment and investment banking. deutsche bank has some very strong language. what everybody wants to know on global wall street is how are you going to retain your intellectual and your trading and your banking firepower? what are you going to do in the next six months to keep that with? >> look, everybody, has to find his own way but if you look at our investment banking business, we focus much on what we believe in our clients believe we are good at. so, the investment banking business is -- the idea of one-stop shop is dead. i don't buy the story that when you hear people commenting on competitors exiting you are going to pick up market share.

i think there is very little to fullif you don't have the capacities and in certain businesses, the reality that no matter -- the capital requirements makes certain businesses unprofitable. therefore, i think you can retain investment banking expertise, but you need to pick up which segments you want to be good at. .tephanie: that was the ubs ceo josh, this is amazing. for a bank ceo to say you do not need to be one-stop shopping. that is the exact opposite message we heard out of banks a few years ago. i think an environment where regulators are requiring them to shrink their balance sheets. there are doing what businesses had to do which is allocate capital efficiently. they have got to decide where can they drive the highest return. when you're in that environment, you stop during -- doing certain things. the cost is too high.

whatever the reason is, we allocate some -- capital someplace different. stephanie: because of all that middle management, this never happens because people want to save their vertical. jonathan: the other difficulty for them is operating in a interest rate environment. this is key going into next week, the ecb talking about how to commit -- to mitigate risk, negative consequences from negative rates. look to switzerland, a multi-ti ered rate. there will be a lot of talk about that as we build up to the ecb meeting. this conflict where they have two responsibility. they are trying to regulate banks and reduce risk, and at the same time, they have an imperative to improve the economy. and push them to take risk. those two objectives are coming into direct conflict. no place more than switzerland. stephanie: there you have it.

next, we will look at china's latest reality check. moody's cut the country's credit rating. that is coming up right here on bloomberg . ♪

jonathan: we are talking about moody's as the credit rating agency looks to downgrade and cut the outlook for china's credit rating. joining us is bloomberg intelligence and josh. ti m, look at what moody's has done. it points out two important things in china. one is the debt orton and two -- the debt burden and the two is

the potential to reform. days ahead of potentially leaders meeting to discuss that five-year plan. what did you make of the moody's move? it: practically speaking, probably does not mean an awful lot. i think that is what the market told you over the course of the last day or so. the debt burden of almost 250%. you have to think about it is made up of corporate, made up of fovernment, made up o individuals. the lion's share is corporate. it's all domestic. international flows dno't matter. -- don't matter. so, rudy's kind of does not matter. josh: the chinese are not paying close attention to it. then the major holders of the chinese debt are either chinese institutions which are state-controlled. tim: it is a domestic market.

domesticarket -- it's to from the standpoint of what is going on with domestic flows versus international concerns, it is insulated. josh:, shall quiddity is there? -- how much liquidity is there? you have the same kind of thing on the debt side. tim: it is almost nil. individuals are much more oriented towards property, bank trust products. and bank deposits. they are not into bonds. thosean: debt and reform, two go hand-in-hand. we talk about the capacity that china has. when your reserve requirement stands at 17%, you have got space to breathe. you carry on cutting rates, you're feeding overcapacity in the system. it is not push it up.

it pushes it lower. it is a problem. tim: it carries into what you had said. this weekend starts the national people's congress. they do it every year. so what? it is critical this time because this is when you got the ratification of the 13th five-year plan. blueprint, -- their roadmap for where they want to take reform in their administration. i think that is part and parcel of maybe the speculative fervor in the market today in china where the stocks rallied, is expectation you will see alngible substantive, fisc stimulus and reform measures coming. josh: the national debt is only the piece of the story. there is a problem of the municipalities where national control is much lower in a lot of the debt resides. tim: it's very true.

that is part of the problem from the standpoint of having government directives coming out of beijing, and the localities do other things. that haveare steps been taken from the standpoint of debt swaps and other things on the minutes of calories -- on the municipalities front. on the corporate front, the zombie front, the excess capacity you see in a lot of commodities and materials basis that they do have to resolve. and there is a big question, can they do that effectively? josh: off-topic. this report that china's consumption was down over 2014. a good sign for climate change. how much of that reflects a new regulatory approach to climate change and how much reflects the slowing economy? tim: an interesting question. part of this is the energy intensity of the chinese economy. like lowering, just economies always do when they hit a certain threshold. part of it is a shift in where

their energy sources coming from -- thermal is still the lion share. but one of the things you will see emphasize is the shift to non-thermal. it's solar, wind, gas. thank you very much for joining us. coming up on bloomberg , the u.s. government attacks apple on two fronts. did they puncture a hole in apple's argument? ♪

david: the apple versus the fbi debate is heating up. at a security conference yesterday, loretta lynch tried to shoot down apple's arguments. >> in the present we have seen how we do in fact balance privacy and security every day. until recently, apple

was able to comply with our request. and they have some of the stronger security out there. we have not seen that parade of horrible -- consequences in those cases. david: joining us now is tim higgins from washington. he has watched part of the hearing. tim, this was billed at the shootout at the ok corral. was it that dramatic? tim: there were some elements of great drama. tow wo giants going at it. the government is arguing that apple is creating forantless faces, havens terrorists and criminals and that we as a society shouldn't let one company decided that is where we want to have going forward. youd: josh, i want to bring in here. is this as big a deal as people are making it out to be? josh: i think it is a big deal. what you see for the first time is a clear example where the u.s. technological lead and the u.s. national security lead are

coming into direct conflict. the hearing is about which one is going to be more important. david: what i'm confused about as it appears that apple in the past has complied with request similar to those from the at the. why are they making a big deal about it this time? 2014, apple came out with new encrypted software that made these felons, they would not be able to get into them for the government. the fbi started making noise they were unhappy. this fight has been boiling under the -- until yesterday when it was out in the open in front of congress. 's interesting is in front of congress and the courts at the same time. who's going to win. josh: congress will defer. they will make a lot of noise in the interim. in the past, we've seen some fights were silicon valley went against other parts of the mainstream media. we saw this on privacy and piracy. this time, how long do you think

the silicon valley lobby is going to be? are they going to be effective from keeping congress from imposing limitations on them they do not want? tim: that is concerned of folks on the help. there is concerns about what kind of grassroots support will rise for apple. there is uncertainty from the last fight they had. yesterday was inducing to see the mood of what was going on. the mood was mixed. there was definitely pockets of support. some tough questions to them. david: thank you. later on bloomberg , apple's at 9:30 right us here on bloomberg television. ♪

david: you are watching "bloomberg ." futures in the united states down across the board. josh steiner is with us and we

are joined by megan murphy, the washington bureau chief. we are going to start with first word with caroline. caroline: thank you. in the. supreme court is case today that has the potential [indiscernible] hear arguments in the first major abortion case in almost one decade. it involves texas law that proposes stricter [indiscernible] about halfady cost of the 41 abortion clinics in the state to close. u.s. special operation forces have captured an islamic operative in iraq according to "the new york times." they say u.s. forces are expected to capture more of the islamic state but that raises questions about what to do with them. a new study says that london has been out new york and five other biggesto be the world's power capital. london generates more highfield jobs and is more internationally diverse than other cities.

news power 24 hours a day by more than 150 news bureaus around the world. jon: i'm surrounded by new yorkers so i will not comment on that and go straight to the morning must-read by josh steiner. we have been looking at why the taxpayers have commented on the taxpayer -- have commented. they are seeking leverage in the markets for short-term loans. a problem for governments and nonprofits that depend on the investment firms to manage their pension firms and endowments. what an industry under pressure. break that down. josh: that goes to the conversation earlier. you are coming out of the financial crisis and there were two huge problems. banks, --er leopard over leopard banks and the second was an underfunded pension plan.

we are seeing those two important policy imperatives coming to a head. why is that? the banks of had to deal ever their balance sheets, take on this risk because of love rituals, and they are not dissipated in the repo market. pension funds have an obligation to say cover funds for retirees and they're trying to drive them by investing in hedge funds and other institutions that required the use of the repo market to drive returns. you are seeing the pension funds not able to generate the returns they need. as a result of the second imperative priority which is lower risk on the balance sheets. stephanie: seen that it is regulatory changes that potentially put us in the position, if the market >>, if we seek structured credit and leveraged finance for a lot of that and all those who own the assets, public pensions pushed into this by zero interest-rate environment and regulations, who was going to be left holding the bag and left to blame? david: pension holders.

will they be able to pay the pensions they need to pay? josh: we have to differentiate between lack of liquidity and the underlying of security. in 2009, we had two different problems at the same time. like a acquitted in the system and the mortgage obligations were not very good quality. then't think we are facing same problem today. it is primarily around the quiddity. that's so much about the underlying credit quality with exceptions of the energy sector. tophanie: but we are going see more downgrades. we saw companies issued debt at very tight levels. if you can back to market. we saw loans been issued, things that we did not think we would see from a structural perspective came back to the market because credit was so cheap. josh: the bond market has a short memory, good news for issuers. as you said, a lot of the provisions would not come back quickly after 2009 came back, but this is a reflection of the underlying health of the economy.

is quitecan economy strong. unemployment rates are relatively low end as a result, as i said, certain sectors like energy, you have to be watching the credit quality and there were some aggressive issuance, partly in the contact of -- context of leveraged buyout, but a different set of issues for the moment the going into the financial crisis. and policies are doing this that, but factor in what happens in the sovereign debt market into this problem because yield is all the way up to 89 years in germany and pushing negative territory and you can get a 30 year with basis points in germany and that is a problem. josh: there was a hearing in washington yesterday on pension funds. there is legislation that was passed which allowed pension funds to go back and cut obligations to retirees. tolerably sensible move given the fact that they had these way underfunded obligations and better than putting it back on retirees haveut the right to be upset that they thought they had a firm commitment that enable them to

allow the retirement and now coming back partly because of the low interesting environment. pension funds cannot generate the returns or deliver. david: i will not change soon. it should be the public sector. when you take illinois, to pick one at random, they have a norms unfunded pension numbers going out and they have made promises. stephanie: that is not random. david: it goes to policemen, firemen, teachers and they have returnsumptions about that are unrealistic given the economy. josh: i think it is a question of return expectation and a direct question of, to fund them. going back to last 15 years to 20 years, if you are politician coming up to make a choice in investing in a school and highway are putting money aside for someone who will benefit 30 years from now. unfortunately, or with good reason in order to drive economic conditions, they made the choice to invest in services and goods where people can enjoy today. they did not make that choice to invest in the retiree's benefit for 30 years and that is a part of the problem. stephanie: where does that leave

us? josh: we will have to see some forms of restructured. in detroit, we saw the most pointed example of that and that is are retirees are suffering with the fact that the city was mismanaged. stephanie: does this affect the clady and underline markets? josh: there is no question. long time on a time, they have been talking about the problem of liquidity in the bond markets. stephanie: if this makes it harder to borrow things that there is a big short in, it is on the going to exacerbate the situation. josh: this is about the repo market, which is a way that investment managers of drive returns by swapping out their positions to get cash to reinvest. i don't think it is the biggest driver but it is an example. the reason i pulled it up is about the conflicting objectives, both that which well-founded. stephanie: if the middle guys or the intermediaries will not be what to make market if you

cannot borrow. josh: the question. david: we are going to turn to politics because we talked earlier. yesterday was super tuesday and the results are in with decisive victories. hillary clinton wide interleaved against bernie sanders, winning seven out of 11 states. donald trump also nabbed seven states and ted cruz had three and marco rubio with one. that was minnesota. i want to bring in macon murphy. murphy. start with the republicans. megan: we're left with a scenario that some in the in the establishments here, to crisis that the parties will have to t.ce down and decide have to what you saw last night across the board was this was an antiestablishment vote, not only for donald trump and winning seven states, but for ted cruz and marco rubio and they had a poor showing. marco rubio needed to win virginia. you'll havesota but to stare down donors and voters, and you will find it a difficult case to make that he is the candidate the establishment should rally behind when he has

proven so unsuccessful in sealing the deal. stephanie: you have members of gop establishment's trying to raise money to stop this donald trump train. can he be stopped? megan: it is a little late for the train to be stopped and they did not sort of contemplate that so many people -- so many people we talked to said he is a creation of the media, and people will discover he is a blowhard, but he has picked up on so many things that we have seen globally. he is picked up on economic angst, growing frustration, anger, hopelessness among particularly the working class and lower middle class of america. that is what he is driving. along with people consistently saying that donald trump has a [indiscernible] he pulled an average of 35% to 36% but he has polled much higher in states like nevada. south carolina came in at 35, so do? are they going to

are they going to choose to go against their own nominee for president, the nominee that voters are choosing -- and what is their strategy and plan b? a mitt romney? david: the question is can they prevent him from getting the majority into the convention so they can have a discussion? sure having the establishment on your side is good news. [laughter] absolutely not. josh: they were trying to rally but tromp, but his numbers went up. david: i don't think that is a coincidence. a lot of donald trump supporters feel that the elites got them into the jam they are in. say, we aret and against him and then they say, we are for him. megan: that is what we see. one of the biggest myths about donald trump is that his support is based in poorly educated -- it is not. he has stitched together a coalition and humans the highly educated, the people on on most

every income sector, except for the very, very affluent. in south carolina and nevada, the numbers are among every demographic. want are many who do not to admit that they support donald trump, but they do. yesterday, larry summers put out a piece and said, donald trump is a threat to american democracy. stephanie: it's larry summers thinks this, can return the table and say, it is the elite that got us here? megan: we are going to see this reckoning in the media, and the republican party, and it is that for far too long, this group of people, this ride sloth of american population has been broadly not paid enough attention to. we saw the strands in the tea party and the selection has been more about the fallout from 2008 third 2012. they are mad as hell. stephanie: now they have social media. could one make the argument that it is social media that has driven this? real living in a kim kardashian

-- we are living in the kim kardashian world and donald trump has said, screw you, and that has amplified. next? what happens megan: we are going to be looking toward michigan, the other big states -- from: michigan is one week now. megan: john kasich came close to winning vermont. he will hope that he can do well there and he will face huge pressure on people to drop out. he has not won a state so -- not won a state so far, but in less we see some catastrophic change, this is looking like donald trump is on his way to the nomination. on the democratic side, at one point is bernie sanders pullout and if he does, what is he asking the clinton campaign for in exchange for his willingness to stop campaigning so aggressively against her? megan: why would you pull out when you raised $40 million from

small donors in february when you have drawn together an unprecedented wave of enthusiasm voters?ng you are literally making him as the fund-raising mechanism, which has so long driven campaign finance in america, if you turned it on his head, he has a message to get out there -- income inequality, free college, nationalized health care, these are messages that he hiseves in and that supporters believe in and he will take this as far as c can prairie view has the money, why drop out when he can push her to the left? josh: to think he begins to changes rhetoric and talk about the issues or he continues to be as aggressive against her in terms of wall street? been tough on her on wall street but not on her e-mails, her past misconduct, so it wall street, i think he will keep hammering her. we all want to see the transcripts of what hillary clinton talked about with goldman sachs, jpmorgan, etc. i think he can hurt her on that issue and the is given a little

bit of the blueprint on where her weakness could lie on wall street. tophanie: if there had to be today, donald trump and hillary clinton? unless we seeely, something surprising. stephanie: and wall street goes where? [laughter] megan: they go with hillary. they do not like a predictability. i think the one thing with donald trump as they do not know what he is going to say and what he is going to do. one day, i love planned parenthood, one day, he doesn't. one day, -- stephanie: it is i love me. megan: and i have beautiful hands. jon: thank you for joining us. financial markets have collectors sitting on the sidelines. ♪

david: i am in the hp greenroom. bekovic, -- job chromic will joining us. -- joe will be joining us next. caroline: i am caroline hyde. one of the pioneers of the fracking industry have been accused of rigging drilling. they accuse them of orchestrating to keep the prices of drilling rights in oklahoma low. mcclendon denies the allegations. years ago, he was forced out of the natural gas company he founded. honeywell says sales will increase in 2017 at more than twice this year's pace. they are getting more space work

and the production of chemicals is expanding. honeywell has dropped the proposed $19 billion offer to buy united technologies. battle with mercedes-benz oversaw driving cars. the german automaker is developing technology that will let the driver check out facebook and watch tv while speeding down the highway. it will be available in four years to five years. mercedes-benz already has some drive technology in their cars. that is your bloomberg business flash. stephanie: the art world and auction house has been feeling the pressure of the global markets. global turmoil and concerns over so done in china, collectors seem to be sitting back. that was evident this past monday at the recent phillips art sales with 51% of buyers. phillips auction house ceo joins us now. welcome. help us understand. we often say the rich have gotten richer, but given the market turmoil, what are you seeing?

>> i think where entering consolidation. people have talked about the correction in our market that i don't think that is the case. the corrections indicate that 5 million years ago [indiscernible] great works of art do not come up often in the market and they tend to hold their value quite well. ofhink we are in a period consolidation after significant inflation as people sit on what they have got to watch what happens in the market over the next year or so and do not necessarily become discretionary spenders due to the market. turmoilhere seems to be in your business, the auction business, sotheby's, the one canicly traded company we track, their stock is down substantially and quite a turnover in the last few weeks. what is going on with auction houses and what is the business for the auction house? edward: i think they're trying to react to the extraordinary

change in pace. collectors are coming to the market and looking for essentially contemporary works of art. 18th to 19th century work is not sought out 20 -- as it was 20 years ago and the auction houses are trying to adapt their offices, their people to this fact. i think it is taking a while to do so. at phillips, we are specialists in the auction house. with thelly 20th-century category. but you know when elvia back in 2000, there was an investment and there was a whole lot of new talent brought in. it did not seem to work very well. is this a different move your making? edward: yes, i think that move 15 years ago or so was probably the right thing but too early. this extraordinary revolution in our market proved contemporary

be huge volumes available and they were competing directly for a relatively small supply and today, the volumes are such that a third player like phillips can enter and build a significant business. stephanie: he may have been early, but if you look at what has happened and what the estimates of the bees, are you glad to not be in that position? to have an activist investor coming in and shaking the model? edward: i'm glad that we are in a pretty good position and that we send out with a model that we are developing and investing into. phillips sales were up 34% last year. our first sale this year was up when he percent in london, so we are seeing significant returns. ofphanie: what do you make the sotheby's situation with an outsider coming in and rocking the place? edward: i think there are

obvious problems with profitability. if you have a business model like that, i think that is what is going on. he is shaking it up, look into the future and trying to reshape the business to affect the reality of the market and the habits of people today. >> the art market is correlated to what? the equity market, the real estate market, what are you looking for to understand what it is going? edward: i think the art market theeing driven by basically pricing of money, the interest rate. there have been huge amounts of money relatively cheap and they are wealthy people who are all collectors looking for places where they can get the return and enjoy. period of low interest rates and it has pushed massive amounts of money into our market as people have seen byces rise by 15% to 20% year. it has been a great place for

people to put their money and turnover pictures, but that is not the case now and it has changed. over the last year, there has been a significant change. david: thank you for joining us. coming up, we are going to have a tool coming up with -- duel coming up with a surprised dueler with matt miller. looking for to that. ♪ -- looking forward to that. ♪

jon: welcome back. recentwe are looking at u.s. economic data that could be pointing to a great hike. what are we saying? reason i brought this up is over at deutsche bank, the cheap economist says that if the fed is truly did it dependent, they should be raising rates in march. he points to a number of different categories or data points that should boost the rates for the fed.

see average hourly earnings has been above 2% since june or july of last year. irananufacturing turned yesterday and caused the big selloff in the bond market as it aroundck up -- turned yesterday and caused the big selloff in the bond market as it went back up. it has rocketed up to 2.2% and that is the core figure. it looks like inflation, wages and manufacturing are all good. jon: it is important but not the most important piece. it is what is happening internationally and whether that feeds into what is happening domestically. this is the upside price in the u.s. that is the white line. matt: that is a surprise index. in thewnside surprises eurozone are rolling over, so the one problem is can the u.s. the couple? and the second, if the eurozone

keeps the price on the downside and the u.s. keeps the prices on the upside and the federal prisoners does hike and the ecb has to do more, you have the fx market to worry about and that is a concern. #408 and joe g weissberg uses the other day. jon: you can find the story on bloomberg.com. stephanie: thank you. that is a warm-up for battle of the charts. thank you, josh steiner. that will do it for this hour. when we come back, we have a lot to cover. adp number out in just a few. ♪

stocks extend a rally into a six day. will it continue? ubs ceo talks about the risk to

prank -- two banks with brexit. donald trump wins on super tuesday and what does he have to say about party unity. ♪ welcome to the second hour of "bloomberg ." john: stephanie has been doing the cheerleading and we have made a comeback on the s&p 500. is the tought here thing for investors, it's not like we have been headed in one direction. 21st 200 pointhe move we have seen in the dow this year. if that is not with flash or vertigo for investors, it has been brutal. having a steady climb higher is an easier road than what we have seen so far this year.

we have a lot to cover. we have jason kelly back, our new york bureau chief. let's have some first word news. julie: the front runners now appear to be plotting the races they will run against each other. donnelly trump -- donald trump and hillary clinton were battling last night and both one. donald trump has 285 delegates. has 1,001 of the delegates needed and bernie sanders has 371. trump and clinton sound like they are looking forward to the fall. >> it's clear tonight that the states in this election have never been higher. the rhetoric we are hearing on the other side has never been

lower, trying to divide america between us and them is wrong. we are not going to let it work. >> i am a unifier. people will find that hard to believe but i am a unifier. once we get all of this finished, i will go after one person and that's hillary clinton on the assumption she's allowed to run which is a big assumption. i don't know that she will be allowed to run. julie: the next big day on my calendar is march 15 with primaries in five states. u.s. special operations forces have captured a significant islamic state operative in iraq. u.s. forces are expected to capture more on the islamic state fighters. that raises questions about what to do with them. american astronaut scott l.a. has returned to earth after a record-breaking flight for nasa. he and the russian cosmonaut landed in kazakhstan and spent

340 days above the space station which is the longest single spaceflight by an american. global news 24 hours a day, powered by her 2400 journalist in 150 news bureaus around the world. a look at futures, we are down across the board. not huge losses but red arrows getting son we are close to what the s&p 500 looked like at the beginning of the year and other indexes are rallying around the world. we have been talking about how we are only 60 points away from being even. we are 65 points down right now. we have oil dragging on us today and the correlation is getting stronger. stocks in the u.s. turned lower. is trading atiate $33 per barrel but we have had strong economic indicators. i is set cause a real selloff in

treasuries. caused a real selloff in treasuries yesterday. in asian equities, big gains overnight in asia. index isee the nikkei up 4% as was the shanghai in china. let's take a look at the yen. this has been another haven where people have gone to hide. it's getting weaker and weaker the last couple of days against the dollar. john: the yen goes south and bond yields go north in europe and equity markets in europe continue their march. futures are slightly negative in new york city. equity markets in europe march on. mark barton joins us from london.

a five-day winning streak, what do you make of it? mark: we are up as much as 9/10 of 1%. we have not had a five-day winning run since you are back in london on october 9. you are not even thinking of going to new york. appetite for risk increases and european equity markets. this is a special chart of the stocks 600. i am looking at the 50 day and 500 day moving average. yesterday, it crossed above the 50 day moving average and it closed above it. are is important but we below the 200 day moving average. stoxx 600 has fallen by 9% since we were last above it. based in london, this is your chart. tos shows the stoxx 600 back

1998. we have risen 12% since february 11. sinceg back over history, then, gains of 10% or more in this small time were followed by advances in five out of the seven instances they happened with median three-month increases of almost 10%. investors who held on for a full year ended up suffering losses for more than half the time. this chart goes to you, john. the euro is falling for a fifth consecutive day against a pound. that is the longest losing streak since july. maybe sterling was oversold some are saying. last wednesday, the euro rose to 79p.

bbba is predicting 68p and the only currency in the world that has fallen against the pound this year out of the 31 we track is the argentine peso. john: euro-sterling does not matter to me much anymore. i want to understand this. as we get data out of europe, it's not reassuring. we've got inflation data that was not reassuring and the brexit, why is the stock market going up? mark: you've still got qe. qeiota druggie will push the button next thursday. --mario draghi.

stocks were oversold and they are cheaper your relative to the u.s. and the earnings look better. look at the economic surprise index in the euro area versus the united states. they are going in the opposite direction. what is interesting about this chart is over the last year, the u.s. has been below zero which means that data has been missing estimates for most of the last year. the european surprise index has been above zero. it has only been since the beginning of the year that we have come below zero which means that data is missing estimates on average. you would think with the data missing, why are stocks rising? it's down to super mario. david: that's next week it mark: next thursday. matt: monsanto is cutting its ongoing eps view of the year.

it now sees full-year eps at 4.40 to 5.10. they are taking a significant hit. robbins, one of the best-performing hedge managers in this decade, one of his favorite is monsanto. matt: we will watch that carefully especially as the market opens. i noticed that you are talking 600 coming upcks through the 50 day moving average. this is a look at the s&p 500. was pointed out that when the 50 day moving average comes down below the index, the that is may be of a bearish signal, a sign that the market is exhausted after a strong run-up. you might want to think about that. why have stocks rebounded?

this is a lovely charge. january, look of at the sectors that have rebounded. basic resource companies were oversold. it fell to a 12.5 year low. since, what has happened basic resources are up by 33%. since that day, anglo-american shares of double. we have seen a real rebound in basic resource stocks and oil stocks as oil as come up. not just down to super mario. beatenectors are so down, eventually you would see some pickup. >> there is a good story about this today. earnings are not looking great. you mentioned monsanto. the signs coming from the ceos

especially the ones in the u.s. and the global ceos are not overly optimistic. may have some trouble ahead for us as we start to hear more detail from earnings calls. is that your sense? is that why we see a rush to consolidate? there is an industry rushing to get together and a lot of the m&a is defensive. absolutely true and when i was in berlin last week talking to the private equity managers, they are licking their chops a little because they are seeing opportunity for these companies who may be a little week or maybe looking to trim here and there and that's what private equity does very well is picking off these orphans or these pieces of companies that maybe they feel they can make more money on. the ceo says i'm doing great

things and maybe things are not so bad after all. john: they've got to deal with political risk as well. thank you for joining this program. ceo was speaking on "surveillance" this morning. is inthing that impediment to this globalization that is good for the financial system and the global economy worries me. extent you would see that, it worries me. let's see how it comes out. there is no read a mama nation -- there is no read in nomination risk. denomination risk. huge on the agenda

especially among dealmakers because banks have to worry about different things. that is at aing level of risk around uncertainty. you talk to the private equity guys and the bankers. one of the interesting elements who ising to guy hand talking in these grandiose terms around this leading to war or all sorts of really terrible things. not as ay concerned deal maker but as a statesman. he is talking about in profound terms. stephanie: our own in-house economies to wade in. he says weakness and strength is the story. the president of kansas city southern rail said we are in an energy market depression and

industrial and manufacturing recession but somehow am of the consumer is doing ok and that's why we have this mixed picture. >> and that's why i think earnings will be interesting. we will be able to go a level down and hear from not only different sectors but people who sell into different parts of the economy and get a sense of what they see from their own customers. john: the big question about the adp data but geographically, can the u.s. really decoupled from the rest of the world? butalked about it in 2012 10 we be talking about that again? >> it seems absurd to decouple. the talk about the correlation between oil and the u.s. stock market, i think we learned that things are not easily uncoupled back in 2008. stephanie: if you look at why the market is rallying it's because the chinese thanks promised more liquidity and the

ecb meeting is march 10. it's a sentiment that central bankers are going to hug and kiss us and make us feel like things are ok but fundamentally, that does not matter to markets and we are interconnected. absolutely, the smart investors are starting to look at it and say this monetary policy driven global market strategy is something that may not work. adp employment change in the private payroll added 214,000 jobs in february. we were looking for 190,000. that is much better than the survey. if you chart adp and nonfarm it's a bad indicator. nsp don't even go the same direction a lot of the

time. nfp are inange and white and they track fairly close to each other. it's another upside and that's what matters. as we go into the federal reserve meeting later this month, anticipated data is important. will the economy develop in the way we anticipate? you will get a breakdown of the events and research and the logs -- amber blogs. is theu will see economic forecast of 2016, real gdp, 2.4%. and unemployment of 4.7% and that's their best case scenario. through the numbers, real gdp at 2.4% and unemployment at four point 7%,

it's not unrealistic to think we can hit those numbers. stephanie: expectations for a .ebound seem big we've got the jobs number coming out and even those who don't care so much aboutadp care about the jobs number and we could be getting a strong jobs number and the market likes that. >> it's the idea that we would all love this steady upward climb but the market is proving that it's always much messier than that. we seem to be taking two steps forward and one step back. stephanie: the market would love to say that december is an aberration. that would be positive. david: if you look at data from the u.s. over the last 10 days or so, it's been a surprised almost everyone. cpi and housing and retail and now adp -it's not huge but there has been a consistent drumbeat

of it being better than we thought it would be. even the manufacturing numbers last night. john: even a push back and bonded numbers. matt: we are not seeing a lot in equities. this is the 10 year. we can see how well this is holding now. we are holding up at 1.85 percent. to see the gipt individual ticks, buys and sells and you can do that. and theook at the euro trade bear, it's a liquid market but you are not seeing a huge move in the euro or stocks. it's only in bonds. for some reason, the u.s. futures market is not want to budge this morning. it's also because we see the markets slow down a little bit. remember how important friday is and is a pressure that we see an hourly wages.

thee see wages higher, forecast was only .1% so rising wages will change consumer sentiment and when the behavior changes, we talk about oil prices, them being down, that will help so many industries and we have not seen that. when you see that, we will say things truly rise. back to the u.s. consumer. it's the largest economy in the world and of u.s. consumers can hang in there and the jobs and may helpp coming, it the global growth. cannothe federal reserve hike and tightened rates in a vacuum. the bank of japan and the pboc and the others are easy. tested 100,e have

the first time was back in march of 2015. janet yellen batted it back down so we know they are sensitive in the effect channel. >> it absolutely is. your point is dead on about the fed. it cannot operate in a vacuum. that raises a huge amount of questions about how aggressive they can be especially in this year a where jenna yellen -- been janet yellen has saying outright what her plans are and she said that she is playing so far out with her strategy makes a market like this even more difficult with these mixed set goals. x question goes back into corporate earnings. david: many more u.s. corporations earn overseas. as the dollar gains against foreign currency, they are affected in dollar-denominated earnings that go down.

stephanie: unlike other countries, in terms of the u.s. decoupling, a reason we could potentially is because our economy is not dependent on commodities. we are not dependent on oil and we could have a slump in one sector and be ok a mets different from other economies. john: the u.s. has changed remarkably in the last 10 years. they are producing more oil and we have to factor that in. the usb economy is more dependent on the consumer. i go back to a conversation at the start of 2016, the domestic economy is one thing and the s&p 500 is another. what happens there matters to the economy. we still cannot really break down what will happen in 2016. stephanie: isn't it up positive given how much we produce? you've got regions in the u.s. that are so adversely affected by oil prices being down but we are no longer subject to the

whims of opec because we have our own game. that's the reason why they have been able to hike -- why the fed has been able to hike 25 basis points. the fed has a different economy to deal with and it's a domestic versus the international which is a man named fisher at the federal reserve. it's a look at what's happening around the world. are on the wednesday after super tuesday in the middle of an election and if we are talking about a consumer driven economy, this is a consumer that is pretty riled up right now politically. we are seeing the fruits of that and we saw that big-time last night. stephanie: we cannot predict the future, maybe matt miller can give us some futures and focus. the: oil is declining from highest closing level in eight weeks after a surge in u.s. crude stock compounded the global glut.

aspite a 29% rally since february low, crude prices are down 9% year to date. joining me now to discuss the next move of oil is alan knuckman from chicago. the inventories rose 10 million barrels or so. what are traders saying about the idea of supply rising faster than demand? >> i am impressed by the fact this is rally continues to hold in the face of that kind of fundamental news. that was triple what the market was looking for. if you look at the inventory glut, there is 500 million barrels, the highest levels in's 1930 but the market is still holding. we had been trading between 29-36 for the last couple of months. we may see a autumn breakout like in the s&p 500 highly correlated. a push above 36 will shake up the shorts and that pushes it to

$43, believe it or not. matt: does the correlation between oil and stocks make sense to you? it seems like a lehman brothers moment. these high-yield blowout could cause the same and a problem as we had a man housing market? >> we have been talking about that for months of the market reaction is most important and the fact that the oil has found some stability. often timesnt that when the market looks its worst, that's the time to be a buyer. looking at a double bottom and them we are back up to $33 where it was at the 2009 low so that can be views it as a positive. againstbeen moving up -- with a stronger dollar. that's impressive. we had a bottom base technically. there are a of things to be positive about as far as oil. you are a big auto guy.

i was in detroit last week in car sales are fantastic and they are getting cash bonuses from gm. you have to look at that them a long term and that will be helpful. that's another segment of the economy that is getting better. oil demand is increasing. right on about cars sales, the greatest month last month and a month before. thank you so much. stephanie: now a little bit of power go, donald is speaking in palm beach. fire, peoplet of will find that hard to believe me, i am a unifier. once we get all of this finished, i will go after one person and that's hillary clinton on the assumption she is allowed to run which is a big assumption. i don't know that she will be allowed to run. stephanie: the unifier.

it's interesting that yesterday you had some of the biggest money in politics. you had holsinger, todd ricketts and made whitman -- and meg backan saying they will and anti-trump packed. he is not unifying them. i don'twould say is need them and i don't want them, they are the establishment. stephanie: when will they say this is our candidate? david: they are thinking about it. coming up, we take a look at the free market. thank you jason for being with us. ♪

>> you are watching "bloomberg ." the brooks brothers ceo with us over the next 15 minutes.

julie: a powerful earthquake as hit parts of sumatra island. the quake triggered an release or not me warning for provinces tsunami warning for provinces in that area. justices will hear arguments in the first major abortion case in almost a decade. the case involves a texas law that imposes certain requirements on abortion providers. opponents say the law has already caused half of the states 41 abortion clinics to close. the world's largest money managers is leaving the european union would mean big risks for .k. u the firm also predicts the volatility in european assets vote.ncrease before that

let's take a look at monsanto. the company is cutting its full-year profit forecasts because of a price drop on its service side products. now, they see port 40-510. -- 440-510. it is cutting its own view. the shares down 4.4%. a big drop therefore monsanto. -- there for monsanto. i want to look at zynga. the cofounder will step down again as ceo. jeffries put out a note saying he is a natural fit to lead zynga, turning their focus to ward growing their mobile

gaming service. stephanie: the company struggling -- back when farmville was the name of the game come it did well. he's making another move. gameshis company needs is to do more. jeffries and says the new ceo is a good fit and as a result, their shares are up 6.5%. this company had a miss, but a full year eps for the fiscal year 2017. 259-271, even the full-year view misses. of -- ross estimate

stores skinning, boosting its dividend. ross stores and t.j. maxx, that shipped to the discounters is where we are seeing the consumers move -- that shift to the discounters is where we are seeing the customers move. >> that's right. ross stores has had six years in a row. underpromise come overdeliver, they've been consistently doing that. you know who else beat on come store sales was abercrombie and fitch. sales up 1% versus the estimate for a drop. stephanie: the store that sells clothes but advertise men who don't wear shirts. fitch uprcrombie & 7.7%. this store has had a real

fluctuation. we've seen times when it was incredibly popular, then totally out of fashion. it has been at the whim of the teen attitude. stephanie: or a very outspoken ceo. >> it is a combination of both. abercrombie is getting their act back together again, driven by the hollister brand. abercrombie, the brand itself is still struggling a bit. negative comparable store sales for the fourth quarter, but hollister was up by 6%. they've had a great run. the ceo was promoted to take over the whole company in terms of being the chief merchant for the business. good things are in store for them. they do have some headwinds because of their national businesses. they're getting hit with currency. they were building flagship

stores all three european capital cities. $50 million, not an insignificant amount. does a very important part of their business and was part of their growth strategy. -- it was a very important part of their business and was part of their growth strategy. when you look at companies that do not have that international exposure from a retail perspective, they will be the winners? exactlyay, that is correct because they are not facing any of those headwinds, they are losing the upside in revenue. when you go global, you have the whole world to attack. not facing any substantial currency issues right now. stephanie: that seems to be the direction retailers want to go in. sports authority filing for chapter 11, there issue has been they have no online presence, they don't have a growth strategy.

in a category that has been the biggest success story among apparel. joe: there's no excuse for that to happen at this moment in time. sports authority, it has to be a failure of execution. david: they filed for bankruptcy today. in 2006, it was bought by private equity. since that time, dix has hasreds of -- dick's hundreds more stores. joe: it is management and the occasion. a phenomenalne job, their margins are terrific. if you are in the sporting goods area/fashion sporting area, you have to hit a home run at this point. it is not fathomable that these guys can have such a hard time. stephanie: this was a 10 year

that come a spin out out of kmart. office depot, borders and sports authority -- office depot currently down 87%. borders no longer exists and here we are with sports authority. this could be more about leonard green. s, heuy who runs dick' knows the business. joe: the interesting thing is what happens next. step up to the plate and by the balance of the business -- buy the balance of the business? there is a good opportunity for them to pick up revenue and really shine. david: you also have modell's. stephanie: they are more apparel. joe: they've done a good job of repositioning themselves.

they greeted boutiques within the store, done a nice job. they have been conservative in the past, they've grown at an appropriate rate. that would be a big, big step for them to take on the whole business. stephanie: do they have that kind of money? joe: mitch modell is a great operator. it is family owned. arrange foro financing for a deal like this would be out there. it's whether he wants to take the risk at this point in time. i could see him taking on some stores. i don't think he needs 300 stores. david: somebody raised the issue of suppliers. armours ofnd under the world. the they're getting $.20 on dollar. stephanie: could you see their suppliers getting hit? how big is sports authority? could we end up seeing that in

the numbers? joe: i don't think so. the size of the players you are talking about some of the big athletic footwear people, they will not feel it at all. stephanie: $.20 on the dollar does not feel good, though. joe: that is the rate they sometimes trade at. >> coming up, the cofounder of chesapeake energy gets indicted. we have the details. futures slightly negative. ♪

matt: coming up, battle of the charts. we will hear from apple's attorney on "bloomberg ."

the cofounder and former chief executive of chesapeake energy has been indicted. he was governments as he orchestrated a scheme between two large gas companies to not bid against each other. just pictures trading down -- chesapeake futures trading down. we have the personal story and the company story. stephanie: they are intertwined, which is how he got himself in this pickle to begin with. >> he is an evangelist of the revolution. he built the company from nothing into the second largest producer of natural gas in the united states, only behind exxon. he's been the public face of this gas revolution for so long. to see him facing these charges

now is an interesting turn of events. stephanie: if you think about what happened in 2013 come a him out of the company, the company he built with $50,000 20 years prior, what does this mean for aubrey? he was the pinnacle at one point. >> he left chesapeake and meekly started another venture and has been buying up assets in argentina and australia. -- immediately started another venture. he's gotten backing from a number of private equity funds. blackstone has given him money. there are people who still believe in his message and what he is capable of doing. stephanie: if they believe in his message -- that he met blackstone is among the best of the best. blackstone is among the best of the best. >> he is fighting this and say clearly that the feds are

accusing him of something that is common practice. never has anyone been accused of using -- colluding in this way. jonathan: here is the company story. the company does not expect to face fines related to this matter. just because taking significant steps to address legacy issues. taking significant steps to address legacy issues. even the issues with debt, this is not good. >> chesapeake has its own problems to deal with. they're talking about legacy issues. they've been distancing thems elves from everything operated. -- aubrey did. sank 50% in a single day on a report that they

refuted. they already have a significant aubrey's timefrom when he was buying up land as fast as he could. stephanie: thank you for joining us. his real estate investments depend on a healthy american wallet and appetite. he manages a multibillion-dollar portfolio of properties. welcome to "bloomberg ." before we get into the american consumer can explain your business. you own the underlying land for property. and you lease it. >> our business is quite simple. we own the land and improvement and long-term lease the properties back to operating companies and tenants. taxes,e responsible for

insurance and all costs associated with the property. ours is an income stream paid on it.price we paid to develop we are organized under three categories. entertainment, movie theaters, retail, restaurants. recreation is our skiing in the water parks, top golf business. we have an education sector, private schools, schools in early childhood education. the largest part is our entertainment segment. which we started off as primarily focused on movie theaters and the resilience of that category and we have diversified from that over the years. david: what does your point of you tell us about the american consumer? doubt there is softness in the economy concern pockets. demonstratings

some strength and resilience. we are the beneficiary of a lower gas price. people are going out, entertaining, spending those consumer discretionary dollars. -- we record years continue to see strong participation at our top golfs. the consumer is still spending. our malls competitors for you? >> we have a lot of properties at malls. we are an anchor property at the mall come a generating foot traffic. we work hand-in-hand with the mall. how sensitive is your business to recession? >> everyone's business has some sensitivity to that. when we look at the numbers, we are countercyclical. we are in the lower end of consumer spend -- people will

forgo -- maybe we will not go to yankees games for $100 a ticket, but we will send our kids to the movies and participate in these lower and entertainment options. your stock has done pretty well. what accounts for that? --ld give to your success what gives you your success? >> we consider ourselves knowledge-based investors. we have people who do a bit of everything. akin to an index fund. we use specialty knowledge, understanding my professionals are highly involved in their industries. we are much like a portfolio manager and we are making select, knowledgeable bets where we understand the risk and know how to underwrite them. these are growing industries. even though people talk about what's going on, there is the

move to ask for an chill -- experiential retail. people want experiences, not more stuff. they want to have memories. we are seeing strong growth in all of our fundamentals. david: top golf, which i'm fascinated with. a new deal with pga. >> there's always been this perception of traditional , the skill level, the cost, the amount of time. top golf is bringing entertainment focus to the activity in making golf far more approachable for new players. you do not have to spend four hours, you can spend one hour. you can combine an overlay of food and beverage, which is growing the pie. the pga sees that as a way to grow their traditional golf. david: where do you expect the

most growth geographically? >> it is population trends. you are seeing the sunbelt as high-growth. notwithstanding some softness in texas in the oil patch. we are seeing positive growth in the sunbelt area. david: greg silber, thank you for joining us today. coming up next, the battle of the charts. we will have a special guest challenger to matt miller. ♪

stephanie: you are watching "bloomberg ." time for a little battle of the charts. mark barton did get hauled away. what do you have for us? matt: the spread between the 10 year and two-year to show you that we have reached the steepest level since 2007 here. arecally when you

flattening out, it is not a great sign for the economy. when you invert and go below zero and turn it over, you had recession. here is a recession, here is a recession. a lot of people were read about this last week -- worried about this last week. we are still flattening here and that is a concern. central banks around the world want to change this. they want longer yields to be ander than shorter yields not a flat yield curve and every time this yellow line goes down lower, that means we are getting closer to a flat level. stephanie: i guess we should give you a grade. a b? jonathan: i've got my own chart this morning. we will talk commodities this morning. you know about the oversupply in the oil market. we are waiting for an equilibrium between demand and supply.

the late 1990's, goldman sachs on my side this morning. if you want crude prices to go higher, the most important ingredient, not just the balance between demand and supply, but the climbing inventories. crude did not start going back inventory20's until rolled over. in 2014.on barrels that could take years. matt: we had another 10 billion barrels yesterday. my chart is much better than john's chart and can be accessed #btv 333.omberg g delete the number and 412.3

we will see how many hits each chart gets. matt: this is a good time to point out, if you want to send me or jon a chart, we love to see what clients are looking at. just to send it to me. stephanie: i will give it to you, matt. i'm thrilled that you are here. because itke jon's gives me a historical perspective. matt: does this not give you a historical perspective? >> i think i have to go with jon. stephanie: talk about an upset. hillary is my producer or

has been my producer until today. stephanie: i usually go with matt. today, jon wins battle of the charts. in the next hour, we will be speaking to ted olson, counsel for apple, talking about their fight against the fbi. david: i want to ask him why apple should not have to give this to the u.s. government. stephanie: we will get to that in the next hour. you are watching "bloomberg ." much more to come. ♪

jonathan: hillary clinton and donald trump emerging as the party front runners. should investors pay attention? perhaps the 15 year weight in argentina was worth it.

in argentina was worth it. witht miss an interview ted olson concerning apple. hello to you all. this is "bloomberg ." david: we just had a very exciting battle of the charts. jonathan winning. a dramatic moment. we are joined by gerardo rodriguez from black rock emerging markets group. we get started with a market check. let's take a look at futures, down across the board right now.

even with all the positive action we are seeing around the world. and with a recovery we have seen in the s&p. futures down six points, dow futures down 52. if you look at the s&p year to date, we are almost back to where we started. still a drop of 3%. february was a good month for the s&p. take a look at the reason you might want to be bearish. come seen so many bolts out the last couple of days, today, we are seeing some bearish reasons. the stock is overbought in the short-term, that is reason for a selloff. bank of america saying the eps forecasts will be lower than they previously expected. you take out energy come you can see that we are in an earnings recession right now, still down for the quarter.

luiz saying a bear market has unfinished business ahead. this is something that we are hearing more and more. here is the s&p 500, the number above their 200 day moving average. we were much higher in the beginning of 2015. a substantial drop in the beginning of the year. we have climbed back in percentage terms. 43% now. not yet half of s&p 500 members above their 200 day moving average. take a look at oil. this is the reason we are dropping today. the correlation has gotten so tight. tot texas intermediate down $44 a barrel even. i will make up the hs chart for

you and show it to you later. we are still very correlated at 0.8. barrel even. julie: some measurements have the magnitude as high as 8.3, causing widespread destruction. this quake happened several miles out to sea. the quake could cause a synonymy. -- tsunami. will heare court arguments in the first major abortion case in almost a decade. the case involves a texas law that imposes strict requirements on abortion providers. some say the law has already the 414 half of abortion clinics in the state to close. scott kelly has returned to earth after a record-breaking flight. in theent 240 days

international space station. david: time now for three stories that matter to markets right now. number one, super tuesday. hillary clinton and donald trump emerge as the odds on favorites to capture their party's nominations. clinton boosted by women and black voters while trump tap into blue-collar anger. when youemember a time have to candidates this far nhead a quarter of the way i who did not get the nomination. >> it would be unprecedented, certainly. dide's been no nominee who not win iowa and new hampshire. i was involved in the battle of -- charts earlier the season

that marco rubio number is exactly why he is in such an issue here. we were looking at how the market is not pricing in any volatility in november for the election. you've got florida, this winner take all come and 99 delegates. that is rubio's homestay. >> he's down double digits in most polls in florida. thiss already had independent super pac saying they will put in $20 million of anti-trump and advertising in florida and other states. those attacks have not shown to be effective. david: it's not like people have not been spending a lot of money. they've been spending a ton of money. >> what i find fascinating about marco rubio was the turn he took over the weekend.

he says i will take the high road, make this a battle of ideas and then we decided over -- weekend stephanie: desperate times call for desperate measures. i think they expect it from trump, but with rubio, they were surprised. we are talking about people running for president of the united states and they are talking that way? stephanie: there are so many people who are shocked that those tactics do so well. look at donald trump's numbers. if you cannot beat them, join them. >> i think this is the issue. people are looking for certain candidates to fill certain expectations and he lost the moral high ground when he went down to that level. it created an opening for john kasich in some respects.

david: ohio is also winner take all. that is john kasich's home state. where is he in the polls? >> he is winning in the polls and he is counting on michigan as well. david: that's a lot of delegates. >> can he hold onto ohio? i'm not sure. he looks like the adult in the room. --n you see him mashed up matched up, his technique is very different. stephanie: i have to move this into markets. are the markets focused on this? >> the markets have been late to react to this given the extremism over the debate we've had on the republican side. there's been this believe that this can happen and people are beginning to realize we are very

close to it. yesterday, larry summers wrote an interesting piece on this. serious people are starting to look closer into these because in a context in which economic , therey around the world is a break in confidence given the extremism of the debate, that will not be good for the u.s. economy and for the global economy. jonathan: i watched make this morning in europe at three clock a.m.. she still has not slept. -- 3:00 a.m. i got an e-mail from black rock about the brexit. it is easy to pinpoint the risk around brexit. it is negative for sterling and in the short-term, could be -- we have this presidential race approaching in november.

we don't know the substance on either side and we still don't have the ability to narrow down what we have to deal with. >> people do not think this in thesm in policy process we have seen right now is going to withstand a fierce campaign once you select the contenders on the two sides. people are waiting. we've been waiting for a wild. nobody thought we were going to get to where we are right now. -- we've been waiting for a while. stephanie: i'm paying attention to what is going on here and it is china. outlook cut by moody's. the markets are shrugging it off, focusing on yesterday's better-than-expected u.s. manufacturing data. asian stocks rallied and european stocks on track for a

five-day winning streak. positive news on australia's economy. the ucf as a positive sign that we are beginning to shrug off china? , thewe saw china sweating markets fell apart. >> something interesting is going on around china and it is related to the g20 meetings we had in china last week. we are talking about china as a normal economy that has normal challenges. it has significant challenges, but we need to talk about china in a context in which they knew better and the china case is different. it is not different. it has a problem of excessive use of leverage, overcapacity in sectors, credibility issues on the government side. it is good that the whole dynamic of western finance has been to bring china to the side of the table, putting them into and subject them to

western standards in terms of transparency and policy behavior. what we saw yesterday in terms negative outlook for moody's is what happens when an economy has challenges. it is very good that we are talking about this. it will force chinese authorities to deal with these issues. , we get: the big point the credit data out of china in january, huge spike in new credit. they follow that by cutting the rating. historically, we've had example after example when you have a credit fueled economic boom, the only way to keep it going is introduce more credit. as soon as you start time to over.e it, gdp rolls are we at the tipping point for china now where they have to

swallow the whole reform project and start pushing credit out again? , what problem with china one has to recognize that the shown amazing reform willingness. they want to do many things that are contradicting themselves. if you want to reform come if you want to clean up the excess capacity in some sectors, fuel the you cannot credit growth and your growth estimation is to be lower. ease on the to monetary policy side and guess what? the laden outflows on the capital account side are increasing and that brings challenges in managing the credit. when chinese authorities need to do is be able to make a decision in terms of a trade-off of

different policy objectives because they cannot achieve everything at the same time. jonathan: number three, how to use to me like economies? -- stimulate economies? made with a negative interest rate. we spoke to the ubs chief executive. in order to avoid negative rates, some banks are over .xtending credit in real estate and mortgage is. aboutan: we are talking them taking too much risk, but that is the point. force the banks to take more risks. know thetary policy regulation at this point in europe? >> we need to find an alternative route. all these unorthodox monetary policies are starting to lower

rates than to zero, negative stop thisneed to competition for the next creative monetary policy idea and go back to basics and try to the table ands to bring structural changes to the table as a way to accompany a see monetary policy edge can rebuild confidence. what is driving the slowdown in the global economy is the lack of confidence. the businesses are not investing as much as they could. credibility has been detracting from confidence. the g20f you read what said, they said we cannot do this with monetary policy alone. the u.s. is not alone. congress has their own ideas.

gerardo: you're right. is to do it out through monetary because we don't have to go through congress. the more you do it, the less incentive there is. it works. that's why the coordinated action is required for the current challenges we are facing around the world. i always compare this election to the matrix. you can continue to take the blue pill and stay in the matrix or take the red pill and come into reality. much do you think the u.s. political risk is impacting confidence? gerardo: uncertainty around policy can explain a big portion of the reduced confidence that leads to lower investment. that is related to the issues on the electoral level dynamics in the u.s..

the last thing we need right now is an additional elements that would create uncertainty and uncertainty is not good for business decisions, especially in the medium-term. this experience haitian on the monetary policy side -- experimentation on the monetary policy side is only creating more uncertainty that come at the same time, reduces business , which is no good for global economic activity. jonathan: there are the three stories you need to know ahead of the open in new york city. toronto rodriguez is staying with us. -- gerardo rodriguez is staying with us. olson.hang speaks to ted a quick check on u.s. futures. slightly negative. s&p negative six points. ♪

stephanie: this is "bloomberg ." julie: a sign that the labor market is still strong, countries added more jobs than expected last month. adp research institutes has private employers boosted payroll by 215,000. the government comes out with february jobs report on friday. the medical products distributor has agreed to buy the pharmacy chain for $2.2 billion. they will expand their presence in canada. they operate 473 retail pharmacies. sonsanto cutting it fo

full-year profit forecast. latest your business flash. matt: let's take a look at the railroads to macias x a big gainer right now, up 2.5% after it reported a canadian pacific takeover interest. x a big gainerg gaine right now. stephanie: hunter harrison put in that piece -- bill ackman needs this. matt: he's going back and forth and going after csx. let's take a look at chesapeake. an interesting story, to say the least. aubrey mcclendon being indicted.

has had its own issues with $15 billion of debt. it has less than a $10 billion market cap. chesapeake has really had issues, the drop near 90% for the year. stephanie: a big negative for carl icahn, one of the largest holders could matt. a steppingceo of zyng down. ceohanie: mark took the seat again last april. what have we seen since april? the stock down 25%. they are in a world of hurt. not as new people are playing -- not as many people are playing their games. ♪

david: this is "bloomberg ." gerardo rodriguez joins us this hour. this is the time to get into local de denominated debt because the yields are good and the price is so low. india and indonesia, have you taken a look at those? gerardo: absolutely. in general, you could make the argument with emerging markets -- they have underperformed over the past four years. they certainly look very attractive now. you have to be careful because the fact that things are cheap perform from them here going forward. you have to be careful of the catalysts to make these asset classes perform. you are referring to local

rates, one has to set a currency from local rates and that is the new standard when you look at these asset classes in the emerging world. the fastest-growing asset class. are is growing currencies these global factors related to a strong dollar and commodity prices. that may continue to be challenged. there are ways to separate the currency dynamics from interest rates. when things are looking really, really interesting. of what we were discussing before, the low-inflation environment, potential negative rates around the world, the u.s. treasury since the 10-year note below 2% making some of these markets really attractive at six or 7%. we think of a global portfolio and you are looking for diversification, you want to buy

these types of high carry local rates that will not only give you additional return, but also will provide diversity. jonathan: i'm looking at the yields, the premium between local currency and dollar-denominated, north of a percent. -- 8%. maybe there is a reason for that spread as well. up next come emily chang will lawyer, tedle's olson about the tech giant's battle with the fbi. slightly negative. ♪

jonathan: welcome to "bloomberg ." we are 20 seconds away from the opening bell in new york. quite a 24 hours for european

and global stocks. the stoxx 600 getting back to negative territory. the dollar yen a little higher. german bond yields pushed higher by four basis points. let's see where we've opened up. matt: let's take a look at the s&p right now and the dow and nasdaq. futures were pointing down, but we see the nasdaq -- the s&p coming down, the dow jones coming down a little bit. not huge moves, three points on the s&p. we still need to gain 65 back before we get to the beginning of last year. 32 points on the dow jones industrial average. let's take a look at the imap. stocks up 11.3% in the last five days. speaking to the massive

volatility, the swings we've seen this year. you wonder why february was such a difficult trading month for investors, take a look there. matt: other european markets are up. the asian markets just crushed it. here in the u.s., we seen every industry group trading down, led by financials. financials are the biggest worst, the least whatever you want to say. energy, utilities, materials all coming down. let's take a look at those energy and materials. , we've seen a strong correlation, down 1.7%. -- gas down again today, 168 1.68. falls.ries rise, price jonathan: you've been a bit

sarcastic with me there. some commodities fall, the price can move up. jonathan showed us that in a chart earlier. you see gold rising today. this is not a supply and demand story. february, gold was up 10%. we are up 20% year-to-date. silver rising in tandem with it and copper having a great day today. miners to rise. let's take a look at the 10 year yield, it has been on fire as investors sell off the debt, getting into riskier assets. they are doing that today. let's take a look at the individual stocks moving today. we talked about abercrombie & fitch and their ceo. beatompany has managed to

on eps and sales and, store on compsa mile -- beat p store sales by a mile. tivo and monsanto are losers. says puts out a note and they want joy global to cut their forecast because the consensus is moving down for the full year. stephanie: we have to turn your attention to apple, the encryption battle between the fbi and apple is only intensifying. apple's general counsel and the director of the fbi appeared in front of the house committee yesterday, defending their sides on whether apple should indeed unlock the san bernardino terrorist's phone. emily chang is standing by with ted olson. emily? emily: thank you so much.

ted, thank you for joining us today. great to have you with us. scope for a technological or legal middle ground? congressink that should consider the alternatives. our elected representatives are put in that position to do that, think about solutions to these difficult problems. that's what this debate was all about. the government does not have the authority to require apple to to disables iphone the characteristics that it put into the system, which is what its customers wanted. there is no legal authority for that now and one judge has already held that. there has to be some discussion about how to solve this problem, if there is. you cannot conscript a private company to do something that changes products.

we have civil rights that prevent that sort of thing. emily: i spoke with loretta lynch yesterday who said the middle ground is support. let it be decided on a case-by-case basis, as it already is in the judicial system. would that satisfy apple under any circumstance? ted: i'm amazed that she would say that. it would not solve anybody's problem. you might have won court going one way and another court going another way. the fbi director himself yesterday said that this is a problem come one of the most difficult problems or the most difficult i've ever faced as fbi director. this is something that congress needs to debate one way or the other. if you do it on a case-by-case basis, you will have different outcomes in different cases in different parts of the country. the director says they have 12

or 13 other cases in which they are trained to do this in federal courts. -- trying to do this in federal courts. five iphones he wanted into. multiply that by every jurisdiction in the country. a case-by-case solution is no way to go about this at all. i've spoken to security experts who say they believe there are technical alternatives here that do not involve building a master key to all of our iphones. the former head of the national security agency told me he doesn't buy apple's argument that this is the only technical way. are there technical alternatives? ted: there might be technical alternatives. the director yesterday when asked about whether he had consulted with other branches of government to try to solve this problem so that the government would not be forcing apple to redesign its product said we have talked to everybody who will talk to us. what does that mean?

has he consulted with the nsa? able to help but not willing to help? i don't know the answer to that question. the experts at apple, which designed this iphone, say there is not another way to do this except to give the government what it wants and redesign the system to break down the security system which is what people haveions of relied on when they bought the product to begin with. they're depending upon the security that apple built into the iphone and the government wants to destroy that. if the government has figured out a way to get around that forcing apple to redesign the iphone, they should do something like that and the government officials involved in this should be asked that question directly. emily: is there a middle ground? it's has like apple is saying

there isn't. ted: there isn't a middle ground that i know of. apple to go to work for the government. allownstitution does not the government to constrict private citizens to invent products or change products they have invented in order for the government to look into the product or cause the product to do what it wants. that is a very significant thing. the government has considered issues like this in a statue called the community assistance to law enforcement act. it specifically exempted companies like apple from having to do this sort of thing. congress might consider some of these things. if you are asking bloomberg or fox or the wall street journal or apple to redesign their programs to supply assistance to

, the government does not have the power to do this except in the most exigen y circumstances and the government has not demonstrated that those circumstances exist. this would break down the phone -- the government has said it's about one phone. it is a precedent they will use another cases. this is a very, very important point, once you cross over that line, there is no limiting principle that the government has articulated. one of your arguments is that it would cost apple engineers for weeks to do this. apple is the most valuable company in the world, it has thousands of engineers. if any company had the resources to do this, isn't it apple? ted: apple could do it. it could not devote a segment of

its engineering program to do something like this. what is the limit? how many people? the same thing being asked of apple could be asked of a smaller company. it is the principle that the government doesn't have the right and there is no legal authority that gives it that right to require a company such as apple to redesign this program. it is not just redesigning the program or putting engineers to work to create a product that the government wants that apple did not design and specifically avoided designing, it is asking apple to create something that it does not have to do, to create a new product. all those apple iphones out there with tens of millions of people, programs they bought it -- themand security securities of they can keep ,heir most intimate information

that is kept private now. the government is asking apple to undo that. it is important that apple would be required to supply engineers and resources to the government's desires, but more beortant that they would required to damage a product that millions of people rely on. emily: donald trump is closer to ever been being the republican nominee. he is calling for a boycott of apple's products if they do not do this. he says he will force apple to manufacture in the united states. what do you have to say to donald trump? ted: the presidential campaign, people running for office and donald trump is no exception, take positions that attract attention to them. the american public and the public all over the world that rely on the finest products ever informationly them

to provide ease in conducting sortslives to provide all of answers to their own problems, they are the ones that will decide that apple's product is living up to what is promised to be an apple is keeping the trust and resisting intrusions on the trust that it has for the people who have placed that trust and apple to design a product they depend upon. that is the important thing. pressed, whatrs does apple actually want congress to do? what is your legislative strategy? what you want congress to do? ted: congress should do its job. consider the various different alternatives, the impact on citizens, balance the concerns of law enforcement, which we respect -- apple has cooperated in every single way with the government except for

redesigning the iphone. congress needs to consider what the logical resources exist -- technological resources exist, what can be done by the government without requiring citizens to change the products they make. there should be hearings and expert testimony. they may have started yesterday. testimony from the director of the fbi for whom i say i have the most enormous respect, he is a tremendous public citizen -- to have testimony from him, the head of the nsa and other security agencies, testimony from experts who worked in the private sector and testimony from law enforcement. let's have this debate. the director has asked for this debate. tim cook has asked for this debate. let's have that debate. i cannot predict where it is going to go, but we should have the discussion and we will see

where it takes us. emily: loretta lynch shut down the argument that this violates the fifth amendment. "apple is not a target in this matter, we are not alleging that they have done anything wrong." ted: apple has first amendment rights whether it is accused of doing something wrong or not. apple has been very, very helpful in this and every other investigation. they've gone as far as they possibly can, but apple has a you have aity when first amendment right -- i'm surprised at the attorney general that she would suggest that people accused of doing wrongdoing have first amendment rights. you have a first commitment right and no one is accusing you of having done anything wrong. apple has first commitment

rights to protect its product ,nd avoid government compulsion avoid changing the design of and it has the responsibility to protect the integrity of the right of privacy of all the people all over the world who have depended upon apple to protect the privacy that they use with respect to these phones. you can imagine what it's radical government can do with ofividual privacy individuals wishing to communicate with their neighbor and private. we are talking about the rights of apple to make sure that it's itone has the integrity that carefully built into it. all of those are constitutional rights. everyone has civil rights in this country, not just accused people. emily: apple is arguing that its

responsibility to its customers is greater than any responsibility it has to the government. there is another argument to be made that apple may not even have an iphone if it did not benefit from the government's own investments in technology, everything from gps to the internet. aat if the government made condition to benefit from all that investment that apple would have to comply with legitimate law enforcement requests? ted: it reminds me of the 13 commitment. the united states government made it illegal to have slaves. that is obviously an overstatement. the government cannot conscript private citizens. the government cannot say in order for you to use technological information that might have been produced and put into public domain by the government, you have to agree to work for the government, that does not work.

i don't know where that could possibly come from. is a force of great good for this country. apple has used its creativity, it's technological wherewithal and resources to develop products that have changed our lives and made us more free. where would we be today without inventions like the apple iphone and its various iterations and the ipad and other devices that have made us free? the reason why apple has done that, the reason apple has been is theful in doing that constitution that gives incentives to inventors to provide creativity that exists in silicon valley that has made the economic energy, engine of this country so successful. that is free enterprise. that depends on our rule of law and consistency by the government and the various civil

rights given to all citizens, including companies developing products we all use. olson, thank you so much for joining us. chang withas emily apple's lawyer, tim olson. -- ted olson. the 15-year-old up of argentina to its bondholders is over. ♪

matt: this is "bloomberg . tomorrow, roger altman of ever core. -- this is "bloomberg ."

tomorrow, roger altman of evercore. vonnie: the u.s. 10 year yield, we will be speaking to a big hillary supporter, talking about super tuesday and whether hillary should spend her money now and target donald trump or wait for a bit and target a generic candidate. timill be speaking with about the massive run-up in gold. stephanie: thank you to vonnie quinn. story thatk about a made one hedge fund manager quite a bit of money, the 15 year wait seems to be worth it, it has hold up between the argentinian government and bondholders ended monday with a big agreement. -- a big holdup. they will make four times their principal.

katya, walk us through this. how much has paul singer made? atya: he's making four times the principal amount of the vase that he owns, but he did not by those at par, face value. we are talking about what he actually bought them for, which we don't know. it is way higher. assuming where bonds were trading around then, $.30 on the dollar, you are looking at an annual irr -- stephanie: this is a risky move, to go against the government. this movie is unprecedented. the way the interpretation has been learning a lot and new rules have been established. -- this move is unprecedented. a is good to go back to normal function in the economy.

argentina has always been a great emerging economy. unfortunately, it has been disconnected from international finance and we are just about to witness this reconnection in the country with the international financial world. that is good for argentina and the rest of the world. how much did it cost and is he going to have to pay legal fees? you answer one half and i have a lawyer who can give us a figure of how much this would cost. david: tens of millions of dollars. a lot of money. why doesn't the country rewrite these sovereign debt loan agreements? gerardo: the whole process triggered significant policy changes, not only in the design of collective action clauses in sovereign bonds, but also the in the clause that people thought was of no use in

sovereign bonds. that was the way in which the whole process unraveled. david: nobody was paying much attention to that fine print. there are hundreds of pages negotiated by lawyers making hundreds of millions of dollars, but they were never enforced. a: they are not written that way anymore. the leg which is very specific to these contracts and the enforcement is specific to argentina. the judge's 85 years old, he's been doing this for the last 15 years of his life. he has a bone to pick with the attitude of the argentine government towards u.s. law, respect for u.s. law, respect for creditors. it is a one off in terms of how they decided to remedy this. jonathan: there is a history of default here. what is the risk we talk about again in 20, 30, 50 years?

gerardo: sovereign defaults are as old as civilization. the use of leverage and having to do that, that has gone with -- a history since the problem here with sovereign financing is you don't have any laws that protect sovereignty from creditors. at the same time, creditors cannot get their hands into sovereign assets. is aovereign restructuring struggle between these two realities and the rules have been written as we go along in terms of dealing with sovereign defaults. the argentina case was very specific because of the type of behavior of the previous government, it will be used as a precedent for the next sovereign default restructuring.

we will have many. this case and the interpretation by the judge will be used as a precedent. it has triggered an improvement in the contract design so we can better deal but the next sovereign default and not have to wait for 15 years. jonathan: thank you for joining this program. that does it for "bloomberg ." tomorrow, we are joined by the ceo of the new york times, the ceo of adidas and the chief executive chairman of evercore. ♪

vonnie: it is 10:00 in new york. welcome to bloomberg markets. >> you are watching bloomberg markets.

♪ vonnie: we will take you from new york to london in the next hour. a result we are watching, a historic super tuesday for hillary clinton and donald trump. the front runners strengthen their grip on the party nomination. apple versus the fbi, both sides face-off before congress. now the attorney general of the u.s. and apple's top lawyer plead their cases as the world waits to see if the battle will change the face of security and privacy. vonnie: michael peterson just back from medical leave, -- understand the performance of valeant.