rancine: asian stocks drop and investors expect more from the e.c.b. trump ups the stakes. donald trump leads two more primaries, berny sanders defeats hillary clinton in michigan. and u.s. bank shares are dragged down. tom, we o lord desai have plenty to talk about with

negative rates. tom: well inflation is there, and as we go to mario draghi. i'm really interested in talking to lord meghnad desai. we efforted the queen. she turned us down. francine: well, for now. tom: our team did not come through. francine: well. i have the newspaper, the sun newspaper. because i never read it or show it on air. now let's get to the bloomberg news. >> it was a stunning loss for democratic frontrunner hillary clinton. the polls show clinton leading by double digits. and clinton showed support for them. >> the people's revolution. that we are talking about.

the political revolution that we are talking about is strong in every part of the country, and frankly, we believe that our strongest areas are yet to happen. francine: meanwhile clinton did win the mississippi primary. she now has slightly more than half the delegates she needs for the nomination. donald trump tightens his hold on the republican race. he won the caucuses in hawaii. >> the single biggest story is what's happening in politics, what happened at the booth. i hope to republicans will embrace it. >> tech crews did -- ted cruz did manage to win a primary. for the second day in a row

iran has carried out a ballistic missile test. the country's news agency said each hit a target. hours before the missiles were launched the u.s. said they would investigate whether they violated the treaties. stated ong you know his country has the ability to that a nuclear war head could be affixed the tip of those missiles. and george martin was 0. the producer of the beatles and he has died. tom? tom: thank you for putting sir

george in there. extraordinary, fobalings. for all of us of a certain vintage, you remember exactly where you were when his albums came out. i could tell you when i first the sergeant pepper's in revolutionary time. currencies, commodities what a mess the market is. maybe mario draghi will straighten us out tomorrow. it is going nowhere now. brent is still above 40. that's big deal. and sterling has just gone straight up since francine's return. help me here, francine. what do you have? francine: i was struggling this

morning, tom, putting my data board together, because i want to show you my gold and my general and at the end of the ay the yen is the most positively performing currency. but there's uneasiness in the markets and we're just pinning all our hopes on mario draghi tomorrow. om: and iron ore explodes. let's wander over here, karen. and let's look at iron ore. and there's a explosion in iron ore. amateurs look at percent change, pros look at standard deviation which is the -- here we go up, the standard is two standard deviations.

iron ore yesterday blowing through that. got as high as 3.2 standard deviations. four is considered like a big deal. four standard deviation sincere like a medical chart where everything falls apart in finance. we didn't get there but boy we got a hunk of the way. two standard deviations. well above this morning. now lord decides with us and he knows his standard deviation along with his political economy. francine: i know he knows and we could bring a gold chart up to see how it is out there. this comes ahead of the e.c.b. tomorrow. this goes back to negative rates and what mario draghi can or can't do to disappoint the markets. lord meghnad desai is with us for the hour and from the house of lords. lord desai, we talk about iron

ore. we can look at gold. we can look at the risk and pricing and see that everything is off the charts. meghnad: the world has not yet admitted to itself that inflation has gone out of the system for more tan a medium term of five to 10 years. and we have central bankers desperate to get that up. so central bankers were trying to stop inflation put inflation is not out of the system. we are in a medium run period of growth and i think paws we can't ajust to it people are looking for returns and they are not finding commodities. equities are override. francine: lord desai, what are the -- this is bloomberg

intelligence. it's called supercore inflation and it tries to capture the prices of goods most closely related to -- in the economy. and it lookts like a gap. this is not as bad as the core inflation charts we look at. meghnad: no. this is very hopeful. it seems much worse than this. because the trend clearly downwards. but after five years of deflation roughly from second world war to last year, we had inflation every year. now suddenly, commodities dropped, and then our tech in a logical revolution is such that all other goods are falling in price, and we can not get used to that. we can't get used to the fact that steer was the eye deal

number or 2% is desirable. but look at the supermarket competition or competitions of supermarkets in the u.k. it's very fitting that the people who like good bargains. so let's welcome low inflation, and let's play with it. tom: lord desai, we've got rio draghi trying to make -- you and -- wrote an op-ed for the guardian where you said change isn't going to work and -- what's going to work right now? are we beyond fiscal stimulus as a requirement? meghnad: i'm glad you remember all these obscure things he and i wrote together. that was the only thing we could agree on at the time. what it is, we've got to find a way to get purchasing power

into the economy and not indirectly into the banks and bonds and things like that. now, if mario draghi could think of a way of giving every european or euro zone house hold a thousand euros, we could get somewhere. that would set the off -- that's real helicopter money. tom: i looked at where we are now in the two-mall and helicopter money, have we run out of ideas? if i look at your book of " marxist revenge," what's the idea that's going to help theorists like you solve the problem of economic growth? meghnad: well, interesting that now even after all this deflation and cutting and so on, fiscal policies should not be champions by -- monetary policy is.

but monetary policy the way we have practiced it so far has run its course and is no longer productive. so real helicopter money, out -of-the-box thinking. give the money to -- and you might see real quick spending. why not? when everything else has been tried and not working. francine: thank you lord desai. this tried back in the day by japan. coming up more negative rates to come from e.c.b. president mario draghi who will discuss with dominick bunning ahead of that e.c.b. decision, and that's coming up next. ♪

tom: good morning, everyone. "bloomberg surveillance." francine lacqua in london. i'm tom keene in new york. we will continue here on foreign exchange in a moment. right now our bloomberg business flash, here's rene. >> thanks tom. u.s. are trying a new tactic. according to the "wall street journal" the government is using a far-reaching law against bank fraud and is ooking into whether v.w. cheated tax laws. and a reported record $7.7 billion annual loss. breaking down the gas colby ower plants and' jan has responded by spinning off into a separate company that will be isted later this year.

iraq has revised plans to tap into international debt markets. and a planned sale was halted because of those iraq thought was too high. francine: now we have to talk about the currency markets not because of what's happening in the u.s. but also because of what is happening in japan and refugee crises weighing on the euro. from their office right here in london, dominick bunning. great to have you on the program. is there only one way the pound can go? and is that because of fears? >> well, there's only one way to go and that's down but it's pretty uncertain that's the way it's going to go. until the third. until then it's going to be vol tile. until then we think stable

stays and -- rallies. francine: so you expect the found fall off zphriff and what does that mean to europe? i know it's speculation but we should model it. dominic: yes. i think if you do get a break it's only partially priced in. our calculations expect 9%. that's the political risk premium and 1/3 the chart so if it goes to 100% you're looking to another 15% downside in sterling. tom: with lord desai here. dominic bunning, what i want to know the long-term decline of the euro. moving to it a tradeway to blend if i look at tradeway to euro it's amazing the gradual

persistent depreciation. do you just assume that's a structural part of the european model? dominic: yes. look at the european cycle. we will be down for a long period of time. compared to where we see rate hikes and the rest of europe's partners. this will need to change i think before the euro can structurally rebound on a picture basis and when we think about it tactically we don't think the e.c.b. can deliver that much and we think the euro can rally around that. tom: i can't figure tout belief on the street on what the euro will do. even was on their way to 1995. dominic: well, we have never had a recall. we are thinking long-term fair

value for the dollar is around the 120 area. that's very long-term and we think in this current environment the e.c.b. has promised to do a lot and the market consensus thinks it can do a lot and we think the euro can bounce back during this ear. francine: and what can happen? dominic: i think the yen can hold on to its gains. we know negative rates are on to big drivers of currencies. anything other than a normal rate cut. we have always had negative rates are negative nothing big. the e.c.b. is doing qe. things are ok. in the end it will weaken but i

think that's the driver at the moment, not the rates picture in japan. francine: thank you dominic. lord desai, how do you view the currency rates? we were talking about currency wars and the fact that it's a rate -- meghnad: obviously, the whole trent of the euro which mario draghi is doing is getting the depreciation of the whole euro, because the only way to get it. in instances, i still believe that it is a bigger manipulated policy because the overall claim is inched down. very low growth rates. a very warm welcome but to the euro zone. i don't see how they are going to get out of it. in the long run. the demographics are being solved. and solving the demographics

but reluctantly. but i don't see much play for the euro zone. francine: thank you lord desai. we will talk more about the melee lord desai is describing. ♪

tom: good morning, everyone.

"bloomberg surveillance" on economics finance investment with francine lacqua in london. francine, we are all political right now. next tuesday is florida, francine, which is a huge deal. francine: tom, how does it feel in the u.s.? i read the headlines this morning and i guess if u a u.s. moderate this morning you will be having a headache and second thoughts on where the -- goes next. tommy john on this bernstein is minute in translating for wee amateurs about what's going on. he always has a twist to immediate analysis. here was one thing about mr. trumps' very good night. he said trump would lose this any remaining candidate in any head-to-head matchup. we will then get the chance to test that assuming the gentlemen from ohio and florida drop out of course if they lose their home state.

winoing isn't working. lord desai, what does turnout mean? as mr. trump mentioned last night, the turnout is extraordinary. meghnad: i think what people always think that the so-called middle of the road moderates, people are very much afraid with both established parties. and they are trying to get out of that bind and express their anger. and donald trump has captured their anger and the vigilance of the press against them shows has touched a nerve which has surprised the establishment and when someone like mitt romney tries to claim the middle ground, you know the middle ground is not where you're going to get the votes.

so i think donald trump has to be taken seriously and he may just turn out to be republican candidate, and if we don't study him, we don't know what will happen. francine: how surprised are you to see this on our air. the queen backing -- buckingham palace denying this put up next it had preliminary cases for the euro and ackry moan yuss and ugly at westminster and we will debate that with lord desai next. ♪

tom: good morning, everyone. "bloomberg surveillance" in our next hour, is it the end of the bear market? this is a huge debate on the street. we've got some important guests

to drive this conversation. for francine lackaway in london i'm tom keene. francine: thanks tom, it was a pig night in presidential politics. berny sanders upset hillary clinton in the michigan primary. polls hinted delinquent on the had a double-dinl it lead but won in mississippi and now has delegates lf the needed for the primary. and donald trump has the republican side. iran may protect a response with its second day in a row of testing ballistic missiles. it said the missiles both hit targets. hours before the launch the u.s. stated it would invest

investigate whether that violated the treaty and the pentagon said the leader known as omar the chechen was among those targeted and one of 12 fight terse u.s. designated as a global terrorist. and judging europe harshly if it fails on the refugee crisis. they took aim on hungry and check slovakia. they are trying to work out a deal with turkey to stem the flow of refugees and in the u.k. the national health service faces a shortage of family health doctors and older practitioners are leaving the profession and not enough new ones were being trained. global news 24 hours a day pouffered by our 2400 journalists.

francine: now the queen embroiled with mark carney testifying from the treasure committee. let's get a look at what this means not only for the future of the country but for the politics of the country. with us is lord desai and rob. rob, great to have you here. because i wanted to show this, "the sun." this has been talked about in every corner of the world. this has opinion deny bid buckingham palace and nick who was first talked about in the story but this feels acrimonious. this feels mean. rob: it's an interesting time. what's partly going on is the idea of this referendum when david cameron first posted downstairs three years ago is that it would settle divisions within the party but surprise, surprise, it turns out into a

pig argument that exposes divisions. perhaps the divisions will be settled after june although it seems unlikely. bureau we've got a split in the cabinet and a different side sort of weeding people out. but the brecks it debate -- francine: it argues that the queen privately said that the said -- rob: she said she didn't like the direction europe was going and didn't understand why they made their decisions but that's view many across europe would take. and it doesn't necessarily mean you want to leave the european union. it just means you think there's a take on it that's odd. tom: go ahead meghnad, please. eghnad: it showed the brexit

people, the betting market is more against them. this is a very desperate thing for them to try to involve the queen and this is panic. panic in the brexit courts. tom: lord desai, i'm going to put you in a group with paul degar and select others that at catholic university that actually understand continental europe capitalism. what would happen to your england land in they left? meghnad: if we left? tom: yes. meghnad: i think we will have to re-invent ourselves back to the 1960's or 1970's, and try out a very different strategy than what we have done so far. i think it would be a very choppy ride, at least 10 years and maybe some of us would be

prosperous. we have good power and culture and education and good arts. we got all those things. what we don't have is many valuables. but that's all right. tom: your book unfortunately doesn't go back to 1703. is this really a discussion about losing scotland? meghnad: i think scotland should now realize that the oil prices what it is is not worth going for it. but even so, england has been for a long time the hub of economic evolution. it can re-invint itself. but lit take time. francine: i think we have something from the telegraph from peter dom in each yak. euro skeptics will -- to take britain as the new, a view she has privately expressed that would ask the queen to show

support of the campaign ahead of the vote. we know in this country the queen tries not to talk about politics and although she didn't -- she mentioned the uncertainty. does this mean that politics, this will get almost so -- rob: i don't think so. first of all, i think david cameron in some ways quite cleverly set his own sell-by date. so we know he is going by 2020. so there isn't what we experienced with tony blair or gordon brown that if we don't doing? , will he go on forever. so by saying he says he will go by 2020, by him that means by 2019 that kills the argument that we need to throw him overboard now or he will never go. it's hard to see how you stay

up losing the referendum. we spoke about whether he can stay after a narrow win, lit depends on how narrow, and we will tell you next year. meghnad: i think there's a formidable candidate. boris doesn't exude an image of responsibility. no matter what is said. and the rate has con formed people that he is not a serious politician. i'm sorry. he is a very likable person, a very popular person, but to be prime minister, you need more than that. tom: lord desai, you are a voice for a lot of people in the united kingdom. they are not fancy, they are not elitists. you have been a consistent voice for asians and minorities would you please explain to me

how they feel about brexit. i'm sick of talking to elites we've an angle. meghnad: well apart from them, there's no other question about . rope tom: very good. meghnad desai with us. we will continue our discussion with lord desai. with his scoop on the queen overnight. a source only bloomberg can do. coming up a conversation with an important financier, wilbur ross. gab yelle ross and company always interesting.

hey, maybe wilbur ross on br exst exit. stay with us on "bloomberg surveillance." ♪

francine: i'm francine lacqua here in london. tom keene is in new york. we are looking at the markets and brexit and u.s. politics but first let's get to the bloomberg chase with narrowa. >> thank you. the largest clothing retailer reported its largest profit. owning eight chains saying net growth was boosted by online sales. alibaba plans to start syndicating a loan forasmuch as $4 billion, and china's largerest online retailer plans

to fund m&a retailers. u.s. bank stocks fell after citigroup joined its rivals with a warning on trading revenues. it says fixed nbling will robably drop 15% making 2016 the fourth year trading has fallen. that's your bloomberg business flash, francine, you have more on this. francine: yes. because we have to look at the implications for what citigroup says as mario draghi meets with the e.c.b. tomorrow. joining us with more is bloomberg's michael morris, he heads our u.k. financial coverage. you know citigroup michael like the other. what did you make of the remarks? it sounds like a profit warning, right? michael: yes. i think there may have been

some hope that february was a little bit better, but with citigroup coming out this close to the end of the quarter and saying they are down 15%, i think hope has been a little bit dashed, and this is typically the best quarter for the trading businesses. so being down 15% is going to be a lot to make up over the rest of the year. francine: but michael, if you look at the rest of the debates and monetary policy and where the yields are, it's going to be more painful going forward for the banks. when do you see a turning point? michael: i think a lot is based on the rates in the economy. banks, a lot of it is out of their hands which is why they are so focused on the cost cutting. you heard them talking about we are going to have to change the way we price certain products based on the negative rates. tom: reporting that they are

down on the timeframe and on the collapse of retail branch banking. where is that debate within the united states? what inning are we in, in eliminating five banks on every corner? michael: i think it's still airly early innings on that. all the ma lynn yals don't show up on brafpbles yet we have steen branch numbers coming down fairly slowly. jamie dimon has talked about going into new brafpblgs. so while there's trimming, there's now growth in others and i think there's still going to take some time for the consumer to drive that conversation. tom: what's the level of fat they are cutting? i mean they make reductions. and i guess it's easy to do

that. but at a point after the seventh reduction, what are you reducing? michael: right. i mean, at this point you're trapping some businesses. you're really, and they seem to be cutting from the top end rather than the bottom end tore shape of the pyramid at a lot of these wall street firms has started to change. so this is not just cutting the fat anymore. these are significant changes for the way the business is laid out. francine: lord desai you were talking and you've done extensive research on negative rates. at what point does it become to the debt ment of the banks? japan tried it, you know, around a month ago, and the three-tier system should have made it not too painful on banks but actually stocks sold off quite a lot. meghnad: i think all painful. three tiers, whatever it is, as soon as you get into negative rate territory, ultimately you

don't know how the behave. live in - people who zero rates, i think negative rates to me actually shows that somewhere monetary policy has now reached its limits, and you have to invent new ways of reviving the economy through the -- sorry, tom. tom: but we are going to talk about this next. lord desai, your theme is you need profits to make capitalism work. are we deprofiting banking? meghnad: yes. i don't agree it's profiting. francine: are we making them like utilities, right? so they really don't make any money anymore, so it's very difficult to translate it?

meghnad: we may find a different way of doing what banks do. because maturity is a simple thing. for example, all mortgages can be run by insurance companies rather than banks and deposit banking is going to become obsolete because if i only need to put my money somewhere to withdraw it, i don't need branch banking. so we make things much more spatialized than they are. so maybe the banks have reached its limit and we need reduce the sizes almost down to nothing. francine: a lot of people think in this country we should reduce the size of sbingse that they don't run into trouble and have to be bailed out. come up we will speak to the former chief economist at 5:00 a.m. tomorrow in new york and 10:00 a.m. in london.

we continue the discussion on negative rates and the role in banking in the economy. ♪

tom: we provide data checks because we care.

we are waiting for mario draghi tomorrow. maybe we'll see some movement there. nymex crude brent crude out $40. maybe the elevation of oil has some persistencey to that. we will talk about that in our next hour. formed opinions of the possibility of still being in some form of bear margaret. he is meghnad desai. we have talked to him over the years on bloomberg economy and "bloomberg surveillance." and profit is the foundation of capitalism. right now we hook at that with lord desai. do we have a risk, lord desai, of taking our profit away with slow economic growth? an you link the dirth of animal spirit we see worldwide into a profit threat? meghnad: absolutely. as we are -- you know my view.

we are in a downturn and will be there for another five years. the thing is we have to get used to this new climate of low -to-negative inflation, and we have still not learned how to deal with it because a lot of institutions we built were based upon that idea of moderate growth and now there's a world in which there's not going to be inflation to compensate for all those other things. so especially financial institutions, they have zero inflation and it's a real challenge of how to make profits within that. tom: i want you to respond to money illusion and slowing in our economy. when we look at american productivity, it's flat on its back. we use this chart yesterday with dominique and productivity is going nowhere.

how do you respond as an academic to those who say we are miscounting productivity and it's actually much higher? meghnad: i mean if productivity is much higher and then you have to explain why -- growth should be much higher. so it's very straightforward on that. what we have is we have growth of employment. we don't have growth of productivity and i think we are waiting for the next big explosion of material innovations and until that happens we are not going to get that. francine: that's exactly where i wanted to go. that's exactly why productivity is going to catch on. at the end of the day it's productivity that's hurting and also regulation? meghnad: well regular salacious particular to a generation of technology. if so, technology has to catch

up and change. if we are waiting for artificial intelligence, when that bunch of innovation finally hits us, that will transform the economy, and we are waiting for that. we are at the end of a long cycle. francine: is that the only time lit take a back step? or are we waiting for central banks to take a hit and say ok, we don't have to put up helicopter money? meghnad: well central banks feel responsible. it won't work. francine: how about a mandate? meghnad: well the idea that they need a two-inflation disappoint bananas. they need a much lower target and get the economy used to zero interest. tom: within this, lord desai, do we just assume more mergers and combinations?

i mean, i don't know which jai normous merger we're going to see, but it certainly speaks of the late 1930's, isn't it? meghnad: they are just buying old capital back and forth. and money is cheap, money is far too cheap so they are buying that and that's what mergers and acquisitions are all about and it's shown mergers don't for-profit shareholder. they profit the management. hey don't for-profit shareholder so it's make nothing capital. tom: would you agree with the good professor that a little inflation would go a long way? he is the one who led the charge on impuding more inflation into our system? meghnad: i think it may be but he is not going to get it. he is not going to get it, because real forces are very strong and monetary policy is not going to work. tom: lord desai, thank you so

much. very much appreciate it. olivierparation for blanchard tomorrow. and really looking forward to talking to strategists about the challenges of calling a bottom in a market. of course jeff goodlock out on this overnight. is a dukey and degraph. really looking forward to this in our next hour. he 10-year yield up 1.7% and really elevated this morning. from london and new york another hour of "bloomberg surveillance." ♪

tom: sanders takes michigan as trump takes the republican establishment.

it is on to florida. marco rubio must draghi will tao as he and the ecb are the only adults on the european continent. and the bull market -- there is no capitulation, get over it -- no capitulation in sight. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. march 9. francine lacqua, the queen spoke she was like, "let's leave the european union," right? francine: it is outrageous. from what we understand, that is buckingham palace. she is being dragged into the brexit debate. anything to sell newspapers. thank you for the political review from the united kingdom. with the rest of our first word

news, here is nejra cehic. nejra: thanks, tom. it was a stunning lost for -- it was a stunning loss for hillary clinton. bernie sanders defeated her in the michigan primary. at oppositionay to trade deals and clinton's support of them. bernie sanders: the people, the revolution, the people's revolution that we are talking about, the political revolution that we are talking about is strong in every part of the country. frankly, we believe that our strongest areas+++

win the mississippi primary. she has 1221 delegates, slightly more than half of what she needs for the nomination. donald trump tightened his hold on the republican race or he won primaries in michigan and mississippi, and won the caucuses in hawaii. donald trump: this eagle biggest story in politics today is what is happening at the booth, the tremendous number of people coming out to vote. i hope the republicans will embrace it. nejra: ted cruz managed to win the idaho primary. u.s. vice president joe biden said that iran breaks the terms of the -- if iran breaks the terms of the nuclear agreement, "we will act. row, theecond day in a iranians launched two missiles. the news agency says they hit targets 870 miles away. hours before they were launched, the u.s. said they would investigate whether the tests violate resolutions. a warning for kim jong-un.

theays the country has ability to make nuclear warheads small enough to be put on missiles. the country has conducted four nuclear tests since 2006. globaglobal news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am nejra cehic. tom: let's get through the data here quickly. we have two esteemed guests with us this hour. a churn to the market. crude, 40.30 -- brent crude, 40.30. the vix says it all. 18.67. , help me here. save me. francine: european stocks gaining 0.7%, rebounding after two days.

much forpecting too mario draghi? i want to show you again the best-performing currency this week. after we had some cringe-where the data -- some cringe-worth y data. pros look at standard deviation. bloomberg doesn't nicely. iron ore -- bloomberg does that nicely. or are two standard deviations, which is where you are looking back, eczema out of units, the units.of -- x amount of the tip at one point was 3.2 standard deviations. before a rare occurrence things unravel. we saw a massive surge up in iron ore. all of that is a precursor to speak with jeffrey degrasse, he of michigan state university.

his mantle at home, he had to get it re-supported. buy six -- his two -sixes holding it up. markets so distorted, witness the space shot move in iron or, that the average guy cannot play? think that is true. there has been a shift in etf's, the lack of liquidity in the big banks. the correlations swing harder now, but to say there is no opportunity to make money is stretching it. analysis trend-based still work where you say i'm on a trend and will make my bed until i get off the trend? does that traditional format work given the new swings and volatility? jeff: it works better if you

look at the returns from trend work versus me reversion. we're finding that trends are still the better way to play the market. tom marco: i never give my opinion. i'm doing it now. he is right. francine? nejra: -- aancine: do you need to wait little bit longer? jeff: if you are going to play from a fast money intraday perspective, it is more difficult. but if you are looking out a month, a quarter, to maybe a year, we still see there is opportunity to be a trend follower and use the trends to your advantage. francine: how much do you look at market psychology, and how much is that difficult to pick? i was raised looking at these markets saying technical levels, if we go below this then there is no technical support. but these are fears, emotions

which three or four years ago we did not have in the markets. jeff: be careful with that. we had emotions throughout the course of history. one of the things that we look at -- the hardest part is, when when the trends have gone too far? understanding when people discount the trends into affinity, you want to move the trends to the other side. overall, you follow a trend until it tells you different. tom: we will do capitulation later in the hour. a must-see chart from jeff degraaf. i am 0-7. jeff degraaf has called apple every time at the bottom. there have been seven bottoms instead began. jeff degraaf has made a fortune in apple. this is a moonshot chart. everybody is a genius. i understand tim cook is a genius. but in the technical world, it is hard to maximize a return on such a moonshot because you do

find the bottom. jeff: you do not want to be greedy. there is an example of following a trend, staying with it, and maximizing. tom: do you agree that the single biggest mistake in modern technical analysis is everybody is too short-term? look at bigger charts, and that is how you have the courage to stay with apple computer. jeff: it is very hard from a practical standpoint, whether it is because investors are focused on quarterly returns or your consultant is focused on quarterly returns. but i think that is absolutely right. the jeff degraaf goes after consultants, francine, a bloomberg exclusive. francine: how do you look at trends when it comes to politics? we have the u.s. election, brexit. it can go either way. to stay away from

the political end of it. we have a great men on board does most of our work there. it is sort of beyond what i do. tom: what is the biggest opportunity right now? what is the single biggest opportunity? jeff: the single biggest opportunity is -- one of the things about trend is you have signal.e out noise from what we are seeing in energy is simply noise and not a signal. tom: so you agree with jeff currie at goldman sachs on the fundamentals side. what is the distinction of that noise faking out the markets? jeff: people looking at the senate's changes and saying, my ,od, we are 30% off the bottom but if you look at it the right way, it is nothing. it is noise. center --g up, the

the senator from vermont surprises and stuns with a victory in michigan. was it about a strong senator or a week secretary? we are going to look at that. megan murphy has given us great perspective on the american political derby. -- 75 in new york today. i guess there is no excuse to go to florida. she will find a reason to go. megan murphy next on your political derby. ♪

francine: i want to show you gold. tom keene found me duration and also a great banner. jeff degraaf is in new york. we are talking about trends. is this the money chart of the year?

when we talk about signal versus noise, the moving gold from our perspective is a signal . it is not perfect, it is not a lot, but the probabilities are favorable that gold has churned. silver has not confirmed it, which is pretty unusual. the other is if you look at the , and whether we have had too much of this buying in, and in the near term it has gotten ahead of itself. for the most part we think it is a turn. must watch this morning on technical analysis, and in london, here is nejra cehic. nejra: u.s. prosecutors are trying a new tactic in their investigation of volkswagen and emissions tests cheating. the government is using a

far-reaching law against bank fraud. volkswagen has admitted cheating on tests to determine whether diesel powered cars polluted too much. germany has been shifting to renewable energy, and e.on has with a separate company that will be lifted later this year. talk of a takeover bid for burberry was a false alarm. hsbc disclosed that it held 5% of the company. all of this according to people familiar with the matter. that is your bloomberg business flash. tom? tom: thank you so much. she is in washington where she has looked at the oddity known

as michigan. she is megan murphy, and she joins us now. let me cut to the chase. did mr. sanders when, or did the secretary of state lose? which is it? megan: it is definitely a win for bernie sanders. i do not know if you want to call it a loss for hillary clinton, but it shows weakness in her campaign that her campaign will not want to see heading into ohio and illinois. with whitess working-class voters. bernie sanders did shift away from the african-american vote in michigan. that is a demographic he needs to do better with. tom: how well does clinton campaign and adapt and adjust? 's mrs. clinton getting a huge turnout -- is mrs. clinton getting a huge turnout of her supporters or not? megan: if you look across the south, she has won with stunning margins. but there is an enthusiasm gap. she is study -- she is struggling with young voters.

she is best when she is the underdog. we will see a media cycle where this will be all about bernie and his chances to get back in this race, and that is when she does best, when her back is against the wall. francine: does it mean that the nomination for the democratic nomination is not a done deal, or are we reading too much into michigan? will have to do a lot better to close the delegate gap. he needs to win by bigger margins. last night is significant. if he can take this momentum into ohio, into illinois, where the demographics are similar to michigan, including missouri, and he starts to bring up the margin, we will see this go into july to the convention. he has momentum. no question last night was a stunning upset. the biggest polling mistake we have seen in a long time. francine: and donald trump is moving into -- moving closer to victory. where do u.s. moderates go?

megan: that is a good question. they are in real trouble. marco rubio had a dismal showing last night, finishing fourth in michigan and mississippi, taking zero delegates from either state. john kasich is banking on ohio. marco rubio continues to bank on florida. as a two-man up race between donald trump and ted cruz. anybody at this point looks like they are in the way. what did you learn last night with the size and scope and scale of florida? how did senator cruz approach florida? megan: in florida there is a huge amount of early voting at play, and ted cruz is not expected to have done well in early voting. some of those votes will go for marco rubio. some for jeb bush. it will be difficult for ted cruz to play anything but the spoiler in florida to try to knock marco rubio out.

but trump still has a large lead and a lot of resources in that state. tom: megan murphy, thank you so much, in washington, district of columbia bureau chief. jeff degraaf is with us. he does technical analysis. he does not follow politics. i know you will try to stay away from politics into the charts. the reach here is the american economy. you have the privilege of working with neil dutta, and arch optimist. is he still optimistic about lousy 2% growth? jeff: i think he is. his biggest concern is the impact of the markets on fed policy. how important are the financial markets and stability to the direction of the fed? tom: just so you know, i hear his 10 year is at risk but he has put out some important charts recently on the american economy. we will come back with jeff degraaf, look at oil, and an incredibly important chart of what has not happened in the

market. what will happen. ross.berg ," wilbur look for that on "bloomberg " in the 7:00 hour. we are with jeff degraaf. it is "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." , technicalg charts

and fundamental analysis in this half hour. right now, the "morning must-read," noah feldman always smart for bloomberg view. he is brilliant on law and legal. he looks at the immigration challenges, and as you wonderfully have done, the real tangible challenges for your europe. tom: francine lacqua, discuss. francine: it is a difficult one because we saw a small victory for angela merkel, who has been up front that she wants to help immigration and refugees, but she has had backlash. angela merkel is the one person who has held europe together. she has been helping greece,

portugal, and spain. if she were to be less popular because of her stance on immigration, then who comes next? be in crisis, and the markets are underestimating that. tom: give us an update on the fear stories. the swedish rape stories, coming nes -- wherean o does that stand? when we talkn about brexit, immigration is at the forefront. it is quite difficult not to , thethe headlines headlines that are in -- therate politicians, in u.s., people tend to either vote to the right or left when they are scared. i believe macedonia, which

14 americans know where that is on the map. macedonia has shut down the path from greece. where are the migrants going? francine: the migrants at the moment seem to be stuck at some of the borders. they are hungry. we need to remember about the numbers. germany is saying that they could absorb a million people. coming intros, especially because of the wave of refugee migrations. we could see a lot more coming to our shores in the next couple of months. i have read the numbers saying 20,000 a week. they are trying to find a way into germany. it is the countries that grow, that attract immigration. tom: where is the political constituency to inform a nation to 20,000? did you say per week? francine: a week. it is bad for a lot of people

that we hear, these are desperate people that make perilous ge journeys. tom: that was fabulous. , thank you soa much for joining today's show. coming up, we are going to do something really special. we are going to blend fundamental and technical analysis to roughly the same outcome. that is very cool. jeff degraaf with us, and dan suzuki will join us. watch forg to be must global wall street. stay with us. ♪

tom: good morning, everyone. tom keene in new york. francine's on assignment right now and we will see her tomorrow. dow futures up 77.

let's get to our bloomberg first word news in london with never a che hedge. nejra: it was a big -- with they were a che hedge. polls indicated hillary clinton had a double-digit lead before election day, but she won in mississippi and now has more than half the delegates she needs for the nomination. for the republicans, donald trump won in michigan, mississippi, and hawaii. ted cruz won in idaho. ted cruz has 347 delegates. the u.s. has come out with a warning to iran after a test fire of more missiles. the arabians launched two had the phrase "israel must be wiped out" written on them. joe biden held a news conference with benjamin netanyahu in jerusalem. if it turns out iran broke the nuclear agreement signed last

year, "we will ask." -- we will act." the russian army plans to bolster its presence next year. nato has been working to determine russia in the wake of vladimir putin's intervention in ukraine. in france, union railroad workers went on strike to protest francois hollande's labor proposal, which would put an end to the country's 35 hour work week. the man who produced the beatles has died. george martin helped turn the beatles into musical revolutionaries. he produced album such as "sergeant pepper's lonely hearts club band" and "abbey road." he was 90. good morning. global news 24 hours a day,

powered by 2400 journalists in more than 150 news bureaus around the world, i am nejra cehic. tom: it is absolutely impressive what george martin did i would go back to " rubber soul." what he did in the studio and with technology was absolutely revolutionary. he completely changed the dialogue. to change the dialogue in economics, finance, and investment. "surveillance" is all about. the deathute in from star of fundamental, dan suzuki of bank of america merrill lynch. this is a very good thing. i want to go and let's settle this right now. 's happy jeff gundlach

face, and also an important idea from jeff gundlach on the probability of exiting a bear market. both of your skeptical. let me start with you. why is jeff gundlach right? dan: i do not think it is unlikely that we will exit the bear market. s&p, at theat the low as well, down 14%, 15% -- we come back through the correction phase. dan: i think we will see higher highs, i think it is just too early to call for those highs now. i think a lot of the rally that we have had is justified given the inflection you have seen in the data. but looking forward, there is still some headwind to the ,arket, particularly credit which i think will continue to tighten. we are still at the cycle lows.

i think that bodes poorly. tom: when you look at the chart, the 10-year price, we typically look at the 10-year yield, or you look at the spread market between the two asset classes, what do you see? jeff: i see recession. tom: can you call recession off that? you have the flattest yield curve since 2008, and with spreads,have corporate which have improved in the last three weeks. but overall, three weeks ago we said the 10-year yield has gotten extreme. what we saw was panic buying of bonds, and we thought we would come back up to 2%. i am actually very disappointed in the way we have been able to rebound from that. it has not been anywhere new the type of acceleration we have expected off of that. what looked like some kind of

stress of the system off the bond market. overeaction of the 10-year the last three weeks has been pretty poor. i would add to that the reaction of financials, which were at the time the most oversold group. this liquidity dearth -- there are technical articles now about the bedding and the repo markets, the short, short-term markets, and the need to find 10 year bonds and all that. i do not want to get into the needle all that, but the fact is there is a liquidity dearth. defined that. are probably seeing the tightest financial regulations we have seen in our lifetime, and that has implications for the markets. we are starting to see that price in. it started as a credit phenomenon, but if you look at any measure of liquidity, whether it is trading volume, what have you, you are seeing a premium put on companies that have greater liquidity. that is a pretty bullish

indication for u.s. stocks, which are probably one of the most liquid asset classes. tom: the trends right now that we see -- there are so many stocks doing fine, but there are so many more really struggling to get a bid. the percentage of issues with the 50-day moving average above their 200-day -- a very simple definition of trend is less than 30% in the s&p 500. you get under 50%, where talking about less than half. tom: is that an opportunity for you? dan: i think it is opportunity, but you have to look at what has gotten beaten up and why. i think there are some real fundamental headwinds to these markets. in particular, if you look at companies that have unsustainable levels of leverage, it is not an opportunity to buy. i think it will get worse. tom: do you ever look at charts? dan: i look at bloomberg.

tom: do you ever look at fundamental analysis? jeff: absolutely. , folks,s is a joke within the industry. there are groups that are technical only and groups that are fundamental only, and usually they get a lot of names on the resume. the pros like mr. suzuki and mr. af blended all in. heimann that from john as -- and others. we are going to come back and continue this discussion with an important oil chart, and our single best chart. even dan suzuki will love that. you will love adam posen, "bloomberg ," in the 7:00 hour, on the fed meeting of march 16. this is "bloomberg surveillance." ♪

tom: could wednesday morning, everyone. let's get right to it, are bloomberg business flash here here is nejra cehic in london. --ra: they will's largest the world's largest clothing retailer posted a profit. 15%net income rose last year. -- china'sns to largest online retailer plans to use the money to finance m&a investments. among the banks taking part, citigroup, goldman sachs, jpmorgan, and morgan stanley, deutsche bank, and credit

suisse. u.s. bank stocks fell after citigroup joined its rivals with a warning on trading revenue. first quarter revenue from fixed income and equity trading will probably drop 15%, making 2016 the fourth straight year that trading revenue has fallen in what is usually the industry's strongest quarter. with us, degraaf is and dan suzuki from merrill lynch, as you look at the blending of technical analysis and fundamental analysis. nowhere is that more interesting than the hydrocarbon market. nat gas and oil. i guess it has a rebound. jeff currie at goldman sachs making a lot of news yesterday, really pouring water on the file of oil, up, fire up, up. maybe not. these are the oil stocks, not the commodity. they have done really well over 25 years, and there is some

blending there, and they come over as well. this is a long chart showing percentage change. jeff, the fear in her -- jeff, the fear here -- and maybe you would say not so fast on oil, but there is that dreaded range bound in the middle. think range bound is the best outcome. if you look at the relative performance of that chart, it is abysmal. go back 50 years and look at energy. it is a loser. in a long. of time -- over a long period of time, you are better with some -- tom: what is your call on your oil? jeff: i do not think we get through 40. the curve is telling you that you have forward selling taking place. we have not had what i would look at as capitulation. it seems like it is out of bounds, but we have not seen it.

i think it will be a teenager by the time it is done. tom: under 20 by the time it is done. of suzuki has the advantage working with francis: launch at merrill lynch. dan: he thinks we will get close to 50 in the next few months, i think by june. i think from a seasonal perspective, you are going to see seasonal demand pickup. we are about to go into driving season. we are basically trading, the futures are trading for the may contract right now. it is looking through the inventory build, and looking at may, which is when you will see positive indicators. tom: how do you as a strategist oils or the small oils? how do you play a francis: blaunch?oa

the stability of the bigger cap names, the majors in the s&p. they might not have as much as a high upside, but i think from a risk reward perspective, they move up. tom: are they bear market charts, or are they so stable? jeff: when you get into a bust phase for any sector, the highest quality names will hold the best you are seeing that with exxon chevron. if i am wrong and oil is going to 50, where you want to be is not in those names. you want to be in the lowest quality names because they will have the biggest rebound. when we look at the behavior of what is working in energy, high quality versus low-quality, it has not been as dramatic as what we would think. in other words, if this were for real, we would expect the lower

quality names to absolutely trounced the high quality names. it has been ok, but not nearly what we expect. tom: how do you pivot or reassess the mix of energy to institutional investors? they have a benchmark on energy. it, are light, they are at they have to bank much energy. where do you want to be? dan: in terms of positioning or -- tom: positioning and percentage energy in the portfolio. dan: energy's weight has gotten decimated relative to the rest of the index. if you look at positioning, people are at record under relative to the benchmark. people's positioning is way underweight. have a long-term horizon -- if you look at the valuation measures, which do not really matter in the next year or two but do matter in the long term. prices in the sector are at

all-time lows. tom: the other view is the short, the bet on oil going south, south, south. are we done covering the trade where oil springs up, iron ore springs up, copper springs up? get backt is where you to your range and you may have helped set a low, but remember, this is different because it appears to be maybe jointly a demand and supply issue. 2008, 2009 was a demand issue. when you get supply issues like the late 1990's, the early-mid 1980's, those are long, drawn out processes. we have not had the bust yet. tom: the idea of the inventories really have not cleared. that is in every single research. then suzy q with us and jeff suzuki on the oil -- dan is with us, and jeff degraaf on the oil market. this is a huge deal, a lack of

capitulation and catharsis on the market. radio,8:00 market on john writing will join us. g will join us. in economics, "bloomberg surveillance." ♪

"om: "bloomberg surveillance from new york and london. foreign exchange -- the yen stronger, back down to a 112 handle from 113. euro-yen showing stronger yen, weaker euro, 123.30 two is getting to be a big deal, as we see the yen go in a non-abenomics direction. really interesting, maybe the quiet before the storm. full coverage across all of bloomberg tomorrow, of mario draghi's meeting and press conference with the ecb. right now to "bloomberg surveillance" and jon ferro. jon: two birthdays we have to celebrate. one is the seventh anniversary of the bull market. march 9 -- you remember it

well -- the most unloved bull market ever. you do not see much euphoria. about 2%e talking upside, 20% down call -- 20% downside. birthday, 12 months since the ecb stopped buying sovereign debt. performer is the out of the last 12 months. that is not good news because if qe was working, if growth and inflation aspects had improved, you would expect a selloff, not a rally. "om: jon ferro, "bloomberg coming up on bloomberg television. today possible best chart is from jeffrey degraff. let's bring it here. standard & poor's 500 with capitulation. the blue arrows are some glorious capitulation from another time. away from this chart, jeff agraaf, is calling that

capitulation or a non-capitulation. what mechanism do you use? skew.we use things like in the options market we look get put ratios. we want to know if people are freaking out, period. there are different ways to measure that. we look at how the sell side is reacting, downgrades, etc. tom: within the options market, can we go mathy here this morning with dan suzuki and jeff degraaf? i think we can. we have variants, skew. does the mathematics work in the new world like it worked in the world that you and i studied? jeff: it is behavioral. i would argue that the one consistency over time is behavior. things change, but the way we act is very similar. tom: we will bring the single

best chart back here. bring up the vix chart. dan suzuki, this chart mentions a lot to do. there are spikes in fear, in sweat, they be not skew. where is the catharsis, dan? dan: volatility is being understated by metrics like the vix. if you look at the number of days with huge swings in the market, it has been quite high this year. volatility has been pretty high. you get a lot more spikes and you have historically, so you are getting an understated measure when you look at something -- tom: that is not the sweat you and i are trying to gauge. the ultimate catharsis of blood in the streets has not happened. why not? jeff: for two reasons. this is a slow-moving train wreck. similar.2007-2008 was it was a slow-moving train wreck as we got into it. i do not think it is as easy because of the economic data.

it is harder for people to point to that is the problem. when people can say china is the problem or citigroup or whatever the case may be, once it hits the headlines of "the new york times" and "the wall street journal," people can react in a similar way. there is no consensus. tom: this is the single best chart. with the of you bloomberg terminal like daniel this is the secret sauce code to get this on your bloomberg terminal. a shout out to jeff degraaf. dan suzuki, i look at this and it says to me we are in a range. what gets us out of that range if you have a long-term optimism on the market? dan: profits come through. part of the reason we have been in a ranges we have no earnings

growth. last year basically a flat year, this year looking like a flat year. you will see some signs that you will start to see -- tom: x oil, do you see profit growth? dan: you do. the problem is looking at this year, we are looking at tech's oil growth to decelerate a little bit. so it is a little bit of a mixed bag. now haveour clients the catharsis jeff degraaf has observed? dan: i think they are concerned -- i think they are confused. people were very worried about recession six months ago, which is why we think the market is pricing in a 40% chance of recession. as the data has gotten better, people are pricing it out a little bit. but they are still not fully committed to this. vix, what isxy of -- jeff: i am going to skirt that

answer, but -- tom: do we allow skirting of the answers on a wednesday? we are skirting. jeff: volatility is a function of the equities on the system. if you take a triple b spread on one axis, volatility on another access -- volatility on another axis -- as credit deteriorates, volatility goes up. tom: this has been great. jeff degraaf in the technical world, dan suzuki in the fundamental world, with merrill lynch. ," adam poseno> will darken the door. that is a good thing. on "bloomberg surveillance," olivier blanchard will join us from the peterson institute. ♪

>> happy birthday. today marks the seventh anniversary of the bull market. does it have any legs left? history could say yes.

don't let the rally pull you. he joins us to explain why. house isfor the white far from over. will the republican establishment finally get behind mr. trump? jonathan: welcome to "bloomberg ." stephanie ruhle is off today. david: wilbur ross, welcome back. we have a lot to talk about. it was a stunning loss for hillary clinton. bernie sanders defeated clinton in the michigan primary after polls showed clinton leading by double digits. sanders hammered away at his opposition