[closing bell ringing] alix: u.s. stocks gaining as oil reaches its highest level since december. joe: the question is "what'd you miss?" to an expertpeak uses the china currency devaluation is misconstrued. joe: -- nd one -- alix: square reports earnings for the first time. and whether they can gain a market share. u.s. talks resuming their advance. they gained as oil prices rose and we are looking at a potential eight year bull market. alix: happy anniversary. scarlet: where were you on march

9, 2009. alix: i have no idea. florida on a beach on vacation. i remember watching tv. scarlet: eight of 10 groups finished higher with energy leading the advance. the laggard was telecom. a quiet day, kind of like yesterday. at one point, we were higher and we eked out a decent gain. chesapeake was the best performer in the s&p. chesapeake is weighing the sale of some of its assets. it's where a lot of people are going for undiscovered shale, selling assets to pay for debt. it is a positive for the stock. joe: something i have had my eye on is that wild japanese market.

a yield on a 20 year bond jumping up -- it's off a really low level. it shows how wild the market has become. is it supposed to be that volatile? scarlet: speaking of low borrowing costs -- a surprise out of new zealand -- the key we getting crushed after the new zealand bank unexpectedly cut interest rates. the reason is it was concerned by a drop in expectations. speaking of commonwealth countries, the loonie climbed to a seven-month high. the loonie was in freefall falling to a 13 year low after the bank of canada declined to cut rates. since then, it has been on an absolute tear. verynot cutting rates --

divergent paths for two commodities. oil prices are really the story of the day. a three month high rallied over 4%. you have an inventory number, part bullish in part bearish. there's a pickup for the product demand, so you are seeing the getting bigger. scarlet: those are today's market minutes. let's take a deep dive into the bloomberg. you can find the halloween charts using the function at the bottom of your screen. alix: the commodity rally may not be that amazing for all the companies that have debt. stocks should rally significantly over the last few weeks but look at their debt to earnings ratio. for anadarko and

freeport. , meaning weit was can celebrate the rallies all we want for the stocks but at the end of the day, these guys are so levered until they can really dwindle this down, -- joe: they still have a lot of work to do. scarlet: freeport is still $20 billion in debt. but we have this risk rally we haven't seen it reflected in the longer term rates. a shot of the u.s. 10 year yield versus the atlanta fed gdp. is two point 2%. not wild growth but more robust and things were looking earlier this year. we haven't seen much of a bounce in that 10 year yield. about is this going to be the year interest rates rise and we have this rally and

pick up in expectations but still it is not translating into anything on the raise market. square has just reported earnings. the first earnings release for the company is a publicly traded company. the loss per share was $.34. that's what the effect of the deemed stock dividend. the consensus estimate was for a loss of $.14. we are not sure if we are comparing like with like there. plans to sell a new chip reader in the spring, so there's a lot of discussion about how it needs to expand its product marketing. , $374.4 million higher than anticipated. alix: our next guest is the head

of global strategy at around brothers. scarlet: we need to start with the -- we need to start with the unexpected new zealand cut. gran wheeler suggested he was in no hurry to cut rates. mark: i know the bloomberg more thanshowed expected but they derivatives was a one in three chance. the reason the new zealand saidr sold office that he it's good for further cuts and he wanted a weaker currency. i think the market is happy to give it to them. joe: here is something i find to be remarkable. with today's cut, the policy rate is below what it was during the financial crisis. zealand really need rates that are lower than they were at the deaths of the

it wasn't so much on the peripheral, so i think the whole world needs lower rates. world needs more stimulus and the imf is encouraging coordinated action. new zealand cut interest rates, china has not only cut reserve requirements but increased the budget deficit. i think we will see the u.s. raise rates in june but it phil seems to be on track in the u.s.. what does that mean for the reserve bank of australia? mark: we wouldn't expect the reserve bank of australia to follow the central bank of new zealand but they said they wanted to have a weaker currency. the new zealand cutting and dollar showing off and the trade weighted australian dollars getting even stronger, so i

think you will see they will have to cut rates not just because of what new zealand did but also because the us trillion dollars very strong and they are not fully adjusted. alix: this brings back the theme of the virgins. everyone saying the virgins can't last because we're going to see a stronger dollar. you look at the spread between two year yields and for japan and can see the virgins is there. mark: the premium the u.s. pays over europe and germany, new multi-year highs. i think the story has a lot of legs. give it to the federal reserve and they pay you 50 basis points. the swiss national bank's take 75. but there are some conflicting things.

years, maybe it is time to buy european stocks and give up the euro. joe: what is it that worked? we are coming on one year since the start of the ecb doing qe and i think a lot of people assumed pile into u.s. stocks. it hasn't worked so far. it -- and when will mark: if you have a headache and take two aspirin and say five minutes later the headache hasn't gone away and take more and keep taking more, some like the aspirin isn't working. there's a big lag time with monetary policy. joe: i get that there is a debate over whether the policy will work, but because of it being an easy mode versus the

fed, that idea hasn't really worked. mark: when you look at the aggregate level, you are right. they changed the rules at the bank. you have to bail in the senior bondholders. i think that's due to a lot of people and i think the idea of the week growth in europe is curtailing demand. alix: in terms of does it actually work, he looked at japan and so japan went negative. if you exclude the japanese trust banks, you have the divergence does it deliver anything? mark: many of our clients ask about this. i thinkconvinced and there's still more things that can be seen and i think the ecb

has to get ahead of the curve. scarlet: speaking of what the negative interest rates have done, it has pushed rates much lower. this is the white line -- down, down, down. for puttingo joe this one out. this is the divergence story we should be talking about. joe: what do you make of japanese long-term debt trading at these levels? mark: it is mind-boggling to me and is like what you are saying earlier with the volatility. downa look at the 10 year, 10 basis points. how can you have interest rates so low? ben bernanke wrote a piece and said part of the reason we have

low interest rates is because we have low growth. onis strange to see this bloomberg television, but i think the world has too much money. when the price of oil is low, we say there's more supplies than demand, but you have very low interest rates and you have to find a way to distribute this surplus of capital we have and there's no place to put it. alix: thank you so much. up, is theming services industry taking over china? our next guest wrote a 20,000 word blog post on that. a check of square shares in late trading -- the company reporting earnings first time as a public company with an adjusted loss of $.20. stockscluding the deemed dividend.

♪

mark: in california, the final goodbye for former first lady nancy reagan is underway. her body will lie in repose at the ronald reagan presidential library in simi valley. she will be laid to rest friday next to her husband on the grounds of the library. a federal appeals court judge has withdrawn his name is a possible nominee to the supreme court. he told senator bill nelson he is not interested in the job. jordan would have been the first cuban-american justice. republicans are promising to lock anyone president obama nominates, saying it's a job for the next president. in another sign of mounting

tensions with north korea, the u.s. is deploying three b-2 stealth bombers on a training mission to the asia-pacific region. the bombers are capable of launching nuclear as well as conventional weapons. the north threatened preemptive nuclear strikes after large-scale wargames started this month. the bangladesh central bank is trying to recover 100 million it -- alleged stolen from it from chinese hackers. the country's finance ministers consider adding -- considering suing the u.s. bank. global news 24 hours a day covered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. the national people's congress targets for china in 2016. after their annual meeting, they hope to accomplish a real growth target of 6.5% to 7%, expand its fiscal deficit run last year and

m2 growth will grow 13%. a theorist andis financial strategist and a professor of finance at peking university and a senior associate with the carnegie endowment for international peace. a sincere pleasure to have you here. are these the right steps chinese to be making considering the amount of debt they have? michael: you can get any growth level you want if you've got debt capacity and are willing to use it, however unproductively. the problem is we are continuing to do it and so debt is growing at least twice as quickly as debt servicing capacity. short-term, ebay need to do that is part of the adjustment process. over the long-term, beijing can't continue doing it. your recent opus post on

china, one thing you talk about is no country in history has smoothly transformed from this fueled, investment fuel economy to something more balanced and sustainable. what are some historical analogues we can look at when you say no country has ever done it? what are some analog that might give us a guide to china is currently facing? michael: probably the most obvious is japan in the 1980's. it went through a long and difficult adjustment which is sous -- which it is still going through. another example might be that people forget in the 1950's and 1960's when there was the issue with the u.n., we look back at that as evidence of the buffoonery of the soviet leadership. the soviet union was growing so quickly that paul samuelson said they would overtake the u.s.

probably by 1984. growtha very similar consumption and massive flow of money into investment. there adjustment in the 1970's was sorely -- was sort of bailed out but that just postponed it. scarlet: is a hard landing for china's economy over here? michael: the options are either a very long landing of aggressively lower and lower growth rates and nondisruptive processes or if they maintain what we would call a soft landing, growth rates at 6% or they can do that for a few years and they run out of debt capacity.

that, at all costs, they must avoid. joe: talk is through the essence of your theory. you argue in your recent posts that china is running up against its debt capacity and the only way to deal with that is to transfer the wealth of the state owned enterprises where all the wealth is to the household sector. explain why that is necessary and why it is politically difficult. michael: this is not new. we have 30 of these investment miracles but the problem is this. investment is misallocated i massive scale. you are investing in projects that generate $60 million worth of value and don't recognize the loss, so you're overstating your asset values and income. as you do that, the debt urban continues to rise, so the risk is you run up against the capacity. you've got to bring investment down if you want to address --

to address the debt burden. but if you do that as a major source of demand, you have to find alternative source of demand and you can't count on the current account surplus. so there's only two other sources of demand. if you could read channel capital in to the private sector, that might work. no one has been able to do that quickly enough. in the current global environment, it is unlikely. the only other source of demand is consumption, but the problem with consumption is china's not the chinese hate to consume or love to save. the problem is the chinese andin chinese households retain one of the lowest years of gdp ever reported. so you better raise the share. scarlet: michael pettis is joining us from london will stick with us. we have some breaking news.

volkswagen, it's group of america unit says it's ceo will be leaving by mutual agreement. they have named an interim ceo. we will be back with more after this. ♪

joe: "what'd you miss?" pettis,ack with michael senior associate with carnegie endowment for international peace. -- i asked onion twitter what people wanted to ask you a question that came up his i can't china just monetize all its debt? why can't the people's bank of china print a bunch of money and

deal with the debt load? michael: effectively, that is what they did 15 years ago when they did solve the last debt crisis. printing money doesn't create wealth, but it transfers wealth to the central bank. the question is where to the wealth transfer come from? the answer is straightforward. basically monetizing the debt means transferring that from household as savior -- as savers to the government in the form of debt repayment. if you want consumption to drive growth, you can't take wealth away from household sector. that is exactly the wrong thing to do. joe: i want to talk about the u.n. you wrote i'm far more worried about how other countries might interpret the rapid decline the

rmb accompanied by what seemed like other surging capital outflows. contrary to some of the muttering out there, i don't joe: what are we all getting wrong? people think currency wars. why is that not what is going on? beenel: china has expanding the domestic money supply. when you expand the money supply, one of the consequences is a weaker currency. the chinese exports haven't in doing so badly. they are down, but everyone's exports are down in the chinese share has actually expanded. you don't get a sense in china that the export sector is in crisis. what you get a sense is that debtors have real problems repaying their debt. that's the cause of the weakness

in the currency. if you are the head of the pboc, what would you do? michael: probably resign. the rim be at against the dollar, you would see depreciation. if you look at it against a trade weighted basket, it hasn't declined that much. i think what they are trying to ,o and the governor said this by maintaining value of the currency, he's trying to rebuild currency. i don't think it's going to work, but i think that is the strategy. thank you so much. fascinating discussion. alix: polls in the u k show the be close.e will

will the central bank cut rates if britain leaves the eu? ♪

is meeting with former rivals for the republican presidential nomination this week in miami. politico says the former governor may be considering an endorsement ahead of the states primary. he is planning to meet with ted cruz, marco rubio, and john kasich. no meeting is scheduled with donald trump. abc news and washington post

poll has hillary clinton with an advantage over donald trump. jong-un says the country has the ability to make nuclear warhead small enough to fit on ballistic missiles. the united states and south korea are challenging the claim. pyongyang has conducted tests since 2006. global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton. u.s. stocks closing higher on the seventh anniversary of the bull market. let's look ahead to asia markets. we are in sydney. good morning. >> good morning. had in new zealand we have a surprise move from the reserve bank, cutting becky cash rate by -- cuttingints to

that key cash rate by 25 basis points to 2.25%. it has currently fallen more than one cent. the new zealand index is at a record high. in asia, futures are up 11 nikkei futures are up 110 points, so they're looking to a strong day here in asia. we will also be watching the , settingntral bank their weekly policy rate, and an auction of japanese government five-year debt. in japan we have negative yields , so interesting to follow that. scarlet: there are reports of alibaba signing off on a $3 billion syndicated loan. isn't the chinese economy looking a bit shaky for that? >> that is the case. there are different sides of the

economy there. the airlines were performing well yesterday, cathay pacific, spring airlines, the mainland airlines doing well. that's what were looking for from today in asia. alix: "what'd you miss?" what will bank do if their exempt -- there is a brexit? there can be short-term in thetions for activity united kingdom, and therefore pressures on prices. potentially countervailing forces, lower levels of activity because of the uncertainty that affects investment and household spending. our nextording to

guest, the boe would need to take immediate action. thank you for joining us. explain your call. clearly the bank of england is looking, i think, at the only remotely comparable experience back in 1992 when the forced byund was speculators out of the exchange rate mechanism. announcement,ing comparable to what a brexit would mean. 15%ell the pound drop against the dollar and the deutsche mark following the announcement, yet the bank of england felt no need to hike rates, in fact it cut them all , and theo a yearly low pound ended up stabilizing, so using that as a guide and taking

into account the fact that there is a complete absence of inflationary pressures in the u.k., even without taking into account the uncertainty of a brexit vote, we think not only at andhey add liquid after the referendum, but would also be forced to cut rates. alix: you believe they would cut rates back to zero and remove all chances of a hike in the future. two venture have into negative rates? , howevera possibility the bank of england is skeptical about that possibility. the impact we have seen from ratesl banks for negative has been limited. it starts to have countervailing , which on bank profits discourages bank lending, the opposite of what negative rates are intended to do, so i think

seeing negative rates is quite high. joe: it didn't seem that long ago that we were having this debate about could there be an argument for the bank of england to hike before the fed. obviously that did not happen. now the market is not pricing in a bank of england rate hike for over three years. expectations adjusted so dramatically, and as that makes since to you that the boe would be on hold for so long? >> frankly those expectations have been weighing, even before the referendum became headlines, so we cannot blame it all on the fear of brexit. i think the bank of england to doy is not going going

the economybut with growing at a steady 2%, unemployment at record lows, and wages, why there is no inflationary pressure from wages, they are growing consistently. this is not a macro economic that is consistent, so i think we are seeing some rather dramatic market is pricing, especially for the the next sixrates, months dominated by the expectations of the referendum, but 2019 is too long to wait. scarlet: let's talk about the euro and ecb, you forecasted that the euro would reach parity with the dollar. how far will rhetoric from mario draghi take that tomorrow?

>> it is hard to judge the impact because so much has been priced in. mario draghiat was surprised the markets with a further rate cut, expansion of the quantitative easing program, but measures to relieve the banks from the impacts that negative rates will have. announced, that would remove the main barrier to further cuts into negative rates, and that would seriously push the euro down, which frankly is just about the only significant outlet for growth that we can see in the eurozone over the next year or two. alix: what does that end up doing to euro-sterling? sterling has

replicated the european rate of 0.5%. we expected to retrace that rate. scarlet: i want to talk about brexit once again. tensions are running high before the referendum. we know their role be a lot of back-and-forth between now and june. vote, whatottish will be the impact for currencies and asset classes? >> the short term will be the stabilizing. in the medium to long term, it is possible that the u.k. will reach an agreement to remain in the european economic area as a half member of the european switzerland,d, both have done that. and economicy impact will be quite muted.

brexit,the case of a cooler heads will prevail and in the month afterwards will realize the change will not be quite as dramatic as everybody is pricing now. we could see it recovered from the initial drop. scarlet: thank you very much. china in, discussing terms of what is happening in the next day. will also discuss the effect of china on global markets. is there a recovery and oil? all that is coming up. ♪

scarlet: i am scarlet fu. it is time for the bloomberg business flash.

shares of square or arising after the company reported fourth-quarter revenue that the estimates. results show digital payment will continue to grow in the face of increasing competition. sales climbed to $374 million, but square posted a loss of $.34 per share. chesapeake energy considering a of shaleoldings holdings known as the stack. the natural gas giant is unloading assets to pay down debt. volkswagen ceo michael horn is parting ways, leaving to pursue other opportunities. his the parter is effective immediately. he had been with the automaker since 1990. that is your bloomberg business flash. "what'd you miss?"

itsmay have hit bottom at $30 a barrel. about theith him price of crude and white markets are moving along. >> you go around the world and there is no big engine driving the economies at 800 miles per hour. it is not there. i was just in china two weeks ago, and things really are slow there. there is no question about that. they export a lot of their problems because so many of the companies export to china, so it spreads around the world in a pretty rapid way. the u.s. is not going to grow at any rapid rate, europe is certainly not, where is the big machine to drive rapid growth? i don't see it. i think we will be ambling along , one statistic good, one bad,

just like we have been seeing. get into what is fundamentally driving the markets, let me ask you about the technicals. we cvs and the rising in the face of outflows, and that has been a pattern with bull markets. everyone wants to get in, then you climb this wall of worry and the market capitulates to the outflows. what do you make of these massive outflows we have seen since the beginning of 2013? >> markets in general have three phases to them, the innovators, the imitators, and the incompetence, now are getting towards the incompetence. -- buybacks has been what has driven this bull market, which makes sense. the retail money is not just there. are what is

underpinning the market, how long can that theme last? for a long time. what is causing the buybacks, tremendous liquidity, low interest rates, and shareholder activism. activists are playing a role in every boardroom, whether they are knocking on the boardroom door or not, so people are much more conscious of not sitting on excess cash, trying to do something to help shareholders, and they divide their opinion between increased dividends and increased buybacks. wonder whether the lack of enthusiasm in the market may help the market. instead of an irrational exuberance, buybacks are rational decisions. >> there is truth to that. in china before the big collapse of thenghai, 80 percent new brokerage accounts were opened by people with less than

a high school degree. that does not suggest sophisticated buying. assets, that's where you have made a lot of money in the past. there are a lot of distressed assets, particularly in the commodity sector. bottom, do you see signs of forming a bottom? >> i think oil did hit the bottom when it hit $30 a barrel, but on a given day, given the amount of speculation, it could go anywhere, but in terms of where is the real level, i don't see it much below $30. $30 is a pretty painful level for a lot of folks, and especially a lot of sovereign debt, but we think as the iranian oil gradually gets absorbed later this year as u.s. shale production finally goes down some, then we will next have to deal with the excess

inventory, so it's probably 2017 to be well into before you see any kind of sustained uplift and oil, but i don't think it goes to $10 or $15 on a sustained basis. uplift,us into that assume it is 2000 17, what are we talking about, $100? $60 after theor inventories have been brought down. over $60, a lot more can come on stream, a lot of shale comes on stream quickly. low oil prices are taking a toll on the companies that produce drilling and exploration equipment. ge oil and gas is responding and how it will do business with iran. ♪

alix: i am alix steel. "what'd you miss?" oil prices resuming their climb. of ge oilrg, the ceo and gas spoke about how low oil prices are affecting his business. be prepared for the slowdown we've seen, for the magnitude we have seen, but we have taken the actions that are necessary. one of the things we say is we don't control the price of oil, but we execute and control on the aspects of outcomes for our customers and make sure we return to our shareholders as well, so we have taken the necessary actions, focused on reinvestment back into our products, standardization, making sure we can help during difficultthat is

within the industry, which is going to a big down cycle. >> did you see an immediate slump or stagnation in orders in drilling and exploration equipment? drilling has come down significantly. we had the benefit of a back log working through, and working with our customers on new opportunities, and also seeing how we can make sure some projects go forward. the name of the game is to drive productivity for our customers by standardization and also by offering new novel solutions. a just announced a deal couple of weeks ago with a diamond offshore to help them as wel and ourselves make sure continue to be on drill rigs, and those are some of the novel approaches, entering into a contractual service agreement and fan and sing to make sure we can remain competitive in the industry. >> has oil bottom? what is your outlook for prices? >> i wish i had a crystal ball. london's focus

on where the price of oil is going. where we tend to focus on is what our customers are telling us, staying responsive to them. volatilehe price is and we have to stay focused on the productivity and cost action, and also the future as well, because we do believe in the macro trend, and the macro trends says that energy is going to be required by the increasing population, so we have to make sure we are ready for the upturn when it comes back. production is coming down, so we are making sure we are ready. >> is iran a customer? you took a trip to iran, the first u.s. oil executive to do so after sanctions ended. is their business to be had in iran for ge oil and gas? >> i with their on an exploratory visit as the nuclear sanctions came off here and we wanted to understand what is the situation in iran, and we are

going through an analysis of seeing how we abide by the u.s. ines and play in a ron -- iran, and that's what were going through at the moment. we want to understand the business, how we need to be ready for that opportunity if it arises. >> you need to be ready for m&a opportunities with the weakening oil price. there must be some good opportunities out there. ge we have a diversified portfolio, so we have capital we can allocate into a number of different areas. oil and gas is one area we are looking at, and we will be opportunistic, look at the returns is available and the opportunities. if there is something that fits into our portfolio, we will take a look. a great portfolio in the upstream, midstream, and downstream that is very competitive. news on breaking

the company's american ceo, michael horn, is stepping down after mutual agreement. jamie joins us from detroit with more. was this a surprise? >> it is, especially the timing. when the scandal broke, he was seen as one of the people most broomed.o get ro the dealers rallied around him. felt a connection, felt he was finally making some progress in getting them the suvs they needed to compete, so with their support he was able to keep his job, but just recently another executive was brought in over him, and maybe that had something to do with the move, but they agreed today very leave to that he will

pursue other opportunities. things looking for volkswagen sales wise now? i know they had some rough months. have been stabilized in terms of their brand and people coming back into the dealers? defining trait of volkswagen, other than prices were high and quality was not outstanding, was the best selling point they had were these diesel engines that were almost as clean as a hybrid and way more fun to drive. it counted for about 20% of vw brand sales. they can't make that up, so they have been doing the best they can given that, but not that great. scarlet: thank you so much. coming up, what you need to know to gear up for tomorrow's trading day. ♪

scarlet: i am scarlet fu. "what'd you miss?" the ecb.not miss joe:

you're watching qvc. up next, the donald j trump collection. eaks?ere are the st he said, where is the state company? if you want one, we will charge you about $50 a steak.