♪ stocks closing lower today. joe: the question is, "what'd you miss?". scarlet: the ecb takes a step in this demo is program and european brooks best banks move. joe: and we look ahead to the fed decision in the u.s. next week, what is the tipping point for another rate hike -- rate hike? scarlet: in volatility in the region is evening. ♪ scarlet: we begin with our market minute, the late recovery shaved some of the losses off equity indexes, but could not get stocks out of the red. mario draghi unveiling the bigger than expected stimulus package, but then he backtracked. joe: it has been a remarkable morning, they unveiled the measures and we saw the euro fall, we saw a big rally in the

equity markets included, but by the time he got to his press conference and said some things that people were not crazy about, we saw it go the other direction. as you see, this is not a dramatic move. scarlet: european banking stocks was dramatic, no better place did you see the euphoria, then the letdown. a.m., thenfore 7:45 it peaked 15 minutes after mario draghi started speaking, but then it moved toward deflating, closing down at about .5%. joe: if you look at the german spread, we have been talking about the u.s., you can see a similar story. there was a lot of flattening. then at the end, after the announcement, you saw short-term rates pick up, but in the semi to the european bank stock rally

erased itself, it is essentially wereflat, so these moves reversing themselves after the press conference. scarlet: the one i was fixated on was the dollar, less than 90 minutes for the euro to reverse losses sparked by the ecb stemless package, but then after that it was off to the races, with the euro building all afternoon, up 1.6%, the question now is whether the trend has ended or is near the end. the dollar index was sinking to a four week low. joe: it did fall. weakness with the dollar. --d did do well, they like it like to the market volatility. the ecb having a solid day. goldl people getting into this year and it is having a fantastic start, and part due to the ecb move. scarlet: now we will take a deep

dive into the bloomberg and you can find all of the following charts using the function at the bottom of this screen. joe: one thing that the ecb did today besides the package, they really wanted to aim stimulus at the european banks. we've been talking about the ongoing weakness in the banks and what it means for lending. remember the cocoa bonds we were talking about. everybody has forgotten. i want to take a look at two of the ones that were in the crossfire, deutsche bank and another. you can see these instruments got as high as 14%. they have come in quite a bit. including further shanking of the spread today. if are yielding a lot, just over 10% each. they have come in a lot. he can see that they are trying to help the banks, they are buying with credit, strong corporate credit, tried to get the corporate channel flowing.

there is still a lot of work to do. these instruments have really eased. as the panic has scarlet: absolutely good i am looking at the commodities and in, appearing to be recovery, so that means drivers will be paying more at the pump. and the white line, think of that as the wholesale price. the orange line is the price at the pump according to aaa. there is a seasonal power, you tend to see these spike in early march. you can see it in 2014, 2015. so far, you have this seasonal rise, but you have not seen tons of a -- and according an expert, that sets up for a surge in the retail price during the second half of the month. that could be a big headwinds for consumers. drivers -- it will

omnimous foris --- drivers. right now, we are joined by a guest good -- guess. joe: it looked like the ecb unveiled the agency today. it announced a new tro and that it would buy investments for credit, then we got the press conference and all of the gains we saw in the market originally, they all reversed. what is your take away from the ecb's actions, why did the market react like it did? guest: if you look back at the last five big e-zines, counting today as the fifth over the last couple of years, the ecb i would argue in terms of market reaction is batting maybe one for five. i think that the bank of japan,

the easing moves to negative rates at the end of january, so a negative reaction with a lot of focus on how did we get this negative reaction? i think if you look back at all of these e-zines we have seen over the last couple of years, this is much more common. i would say that the hit for positive reaction is closer to 20%. today's impact should not really be surprising, i would argue. scarlet: we will dig a little deeper into that batting average of .200. if you look at a chart to show how three of the four e-zines -- easings have come, they have been associated with deflation. they were rising for in a while, so did the ecb way too long? -- wait too long? guest: i would say that for quite a while, the ecb argued

that this was the way to think about and measure, basically progress on the target. and the decline was a big concern. you can see from the chart that the very first moved to negative rates, the expectations were flat. rates wentone, where further negative, that sparked basically the next leg down. especially if you look at the december meeting, it caused the move down. i would argue that this is coming from an indirect impact, coming from the ecb's impact on the euro, therefore the dollar, therefore oil prices. joe: people say that basically, this is about central banks around the world, they are out of ammo. are they really out of ammo, or just using the wrong ammo? you think that negative rates on

the consumer, but is there something they could be doing instead? guest: i would say that the meeting today shows very clearly what mr. draghi wanted to show, that the ecb is not out of ammo or instruments, they threw the kitchen sink at it. we will wait to see what the impact will be, but i would repeat or reiterate my point the witches we have had -- which is we have had five of these and one of them has been positive. you would hope the number five would be positive, but it might be time to start questioning whether, if you do in experiment and it produces the opposite reaction, it is time to start to question whether or not you are doing it the right way. scarlet: and the ecb takes action and of course it is not to the desired reaction in stocks, whether it is emerging markets, or the u.s. market. guest: the one line is -- the

orange line is european stocks, so you can see again, the vertical lines with major policy action, you can see the first one, the european stocks go down. the blue line, u.s. equities, they are highly correlated, c can think of this as the anchor -- so you can think of this as the anchor. they underperform. whether you are talking about expectations or just talking about confidence, impact or appetite, these meetings have had a negative impact. if you think about today, you should not be surprised. joe: ok, so that is interesting, but the eurozone needs help in some way, inflation is diving, unemployment is sky high, there is risk that they could have another recession since the crisis, should this be more on the fiscal policy makers? what should be done?

guest: i think that, a good way of thinking about it, if you look at the u.s. recovery, once you have a recession or financial crisis, that puts in motion recovery. if you look at a chart of the u.s. market recovery from 2009, you'll see that the labor market recovered in total hours, rather than in payroll. it is a tight clear channel and all of the various policy initiatives that monetary policy carried out in the u.s., had no --act it i would argue that impact. i would argue that europe needs to wait. they had a downward trajectory. even all the flexibility that the u.s. has and all the monetary policy action that the thattook, i am skeptical the way to get there in europe,

i would say that we've had -- i think that the diagnosis that inflation is low, that is wrong. if you think about inflation and break it up into services and goods, in the u.s. for example services for inflation -- it is running a 3% and has been rising steadily for the last nine months. scarlet: last question, some it all up -- sum it all up, is mario draghi independent and all independent? atst: i would save you look all of the various initiatives that have taken place and the extent to which they have been positive, or negative, from direct impact or indirect impact , the dollar, the oil prices and high-yield, i would argue that

it is time for the central banks to take the hippocratic oath, we do no harm first before we get impetence.nse -- scarlet: thank you. joe: he is a doctor right? here is something else you may have missed. the tight at mario draghi war -- wore today, it was the same 2012, maybe this is a sign of how big this thing is. scarlet: what is the tipping point for the federal reserve to raise rates, next. ♪

♪ >> let's get the first word news. president obama welcomed the canadian prime minister to the white house today, the two leaders looking to join forces to combat climate change. u.s. and canada issued a joint statement, the green to reduce emissions from oil and gas by as levels by%, from 2012 2025. the approval rating for the president is at a three-year high, according to the latest survey. the president is doing better than predecessors, george w. bush, at this point in his second term. the commander overseeing the missile system for the u.s. has that north korea can send a missile within the range of the continent. he told the senate panel today,

assess that north korea has the ability to send a nuclear weapon today. attack is of such an that low probability. opposition leader has avoided a showdown with the military and has decided not to nominate her to become the next president. .lobal news, 24 hours a day i am mark crumpton. continues tosure build in the u.s., but the next guest says, do not fret. the head of the said meeting -- ahead of the fed meeting, what is the tipping point for the fed to raise rates? guest: core inflation is tipping

highest. the target is 2%, we are at 1.7%, and janet yellen said that is holding down by a quarter and a half point. we are already above it. --e question is, what will to tip and why haven't they set a higher already. joe: are they estimating the risk of where you think the fed could go? guest: not in the short-term. i do not think that they will hike next week. volatility in the market has not subsided and they have given no hint that they will move. this is not priced in. june is a totally different story. by the time we get through the summer, wage growth will be approaching the 3% mark, which they said back in february --

what he didn't say is that 3% is the right that they did not want to see. we will get there soon. the pressure is building. scarlet: of course, the fed does not operate in a vacuum. easing mean that the fed will have less of a need to tighten? guest: well, we did not get a big drop in the euro, well it reversed. the pressure is so different, the inflation picture so different, and of course a massive structural problem in the euro, we have to get used to the idea of enormous beverage between what the fed is doing and what the ecb is doing. joe: people are always blasting the -- most people agree that the rate hike is unlikely, but many people are always criticizing the fed about being behind the curve. but if inflation is rising and

the unemployment rate is where, at the level of full employment, could this be an example of, how do you guys claim to be independent if you are not raising rates with inflation where it is? guest: i am baffled. i think collectively, they seem to be terrified of getting it wrong, in the direction of raising rates, but then it reveals they have these heavy fractures in the economy. that is the fear. my fear is the longer they leave it, the more they will have to do and the bigger the risk is for lenders. that is the thing they want to avoid. triggering an unnecessary recession. at this stage them a denial to the- states, denial point where you cannot deny it anymore. scarlet: if you look at the latest jobs report, the wage growth was not impressive. guest: there is a big technical problem in their favor, it turns out that every few months when the calendar falls in a

particular way, we get them undershooting wage numbers. so, in the next couple of months , you will see a reverse and the true trend is probably north of 2.5%. that is a significant change. the pressure that pushes it will push it further. i am looking at 3% by the end of the summer and maybe 3.5% by the end of the year. joe: we will have to have you back to see how it turns out. there is a view -- it does look by various measures, whether it is wages, services inflation, that there has been an uptick lately. what is the rush? why not wait longer? for so long, people have been calling for inflation. in 2010, it rose above the fed target. wast: what pushed it down

obamacare. we had inflation, just structural changes in the business, but that is unwinding now. really 20% of the core -- rent is going crazy. and stocks are not falling very much, despite a strong dollar. so the pressure is starting to build and remember, this policy works with a very long lag. what will happen tomorrow to the economy, nothing. for the rate hike to work, the pressure will build, that is why they need to get a move on. scarlet: the central bank telegraphed their intentions very clearly, what about using the element of surprise as a tool? it has been done in the past. what about the fed, should it have a surprise more? guest: i would love for them to do it next week. the fed as an institution is reluctant to deliver surprises. scarlet: it did.

guest: that was a long time ago. i would love for them to do it, but the chance is low. joe: how much better is it to raise rates gradually, rather than to hold off, and then do a more accelerated hike? do we need to slow the economy down now, so that we don't have to do it six months from now? whatever we do today, it will slow the economy down in the second quarter, and it will set the scene for things to slow down next year, by which point we will need it. when it starts to move, it does not really stop until the fed gets in the way. joe: think you so much for joining us. scarlet: 3.5%, he said? joe: we will check on that. scarlet: coming up, while dividend paying stocks in the s&p 500 are getting by back stocks. that is next. ♪

♪ scarlet: "what'd you miss?", why dividend paying stocks are more favored, and rewarding through buybacks. dividend payers do better. investors like to push companies and companies off -- often off to buy back pain since last , the bluedividend line has done far better than the s&p 500. and the buyback index, the purple line. joe: is there a theory for why that is? scarlet: i do not have one, but it is a case of investors favoring companies. joe: they should be the same, the dividend and buybacks should be equal. this is interesting. scarlet: perhaps it is boosted

artificially and not a result of -- joe: i want to talk about one of my favorite economic indicators. has come up a lot lately. one of my favorite you look at, the 52-week moving average of nonseasonally adjusted claims pity can see why it spikes -- claims. he can see why it spikes. the pink line averages out every year. once again, we got a report this line hit thepink lowest level since the financial crisis. there is no recession that you can spot looking at this economic data, this is such a steady improvement at the rate at which people are getting laid off and filing for jobless claims. you expect to see this rates -- rise. but it continues to go lower. was saying abody

few weeks ago that this was the goto number for people in their assessment crowd. joe: we are rising earlier in the year. as you can see, this, even the seasonally adjusted is well below expectations. it is just not happening with terms of deterioration. scarlet: do we have full employment already? joe: it seems like we are getting more of the inflation side. scarlet: there is a 3% wage inflation. coming up, when and how china decides to ease monetary policy again. that discussion is next. ♪

mark: let's get to first word news. an budging on is the republican's decision to block the supreme court nominee by president obama this year. the iowa republican says democrats were only criticizing the strategy to score political points and that efforts to change his mind won't work. a short time ago the u.s. far the leading -- latest legal salvo in the dispute with apple. prosecutors reasserting claims that unlocking the iphone of one of the san bernardino shooters is legal. for marchis scheduled 22. a solemn anniversary in japan.

it is the fifth anniversary of thatarthquake and tsunami devastated japan's northeast coast. this week the japanese coast guard resumed underwater searches for some of the 2500 body still missing. the disaster killed more than 18,000 people. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. ecb's aggressive easing and start a big up and then down before ending unchanged for the day. let's look ahead at asian markets opening in just a couple of hours. david is in sydney. david: there was a time when you could expect that sort of central bank action. index looksnd, the to have broken a nine day rising

streak and is down about 8.5 points at the moment. australian index futures are also looking down. areapan the nikkei futures looking to give up all their gains from yesterday. not a great deal of economic data out of asia today but we will be watching india where there is also some possible bad news. industrial production data it's like it's heading down for the third consecutive month according to economist estimates. not far short of $1300 an ounce, what does that mean for the region? david: we will be watching in australia. some of the big gold miners tend to do pretty well when a lot of other people do badly. in terms of other results from the housebuilder in

china that had a hostile takeover bid, we will be watching for annual results from them today. scarlet: china may soon ease again. giving the pboc room for more supportive monetary policies. when and how will they act? joseph, thanks for joining us. what is the next move from china policymakers? the news coming from the ftc meeting, trying to add a little more stimulus to the economy. as you said, scarlet, with the currency stabilizing a little bit and the pressure coming off it will allow them to ease their rates a little bit. sometime soon within the next

order were looking for another rate cut. scarlet: how much can re--- can we read into the latest numbers? february was a month when the currency markets were off because of the holidays. >> you don't want to over interpret that one month of february. coming off to really big drops in december and january. ist has been more important just getting the growth numbers to stabilize. the meeting we just had signaling of growth target in the 6.5% range. we are looking for that to happen this year. and don't underestimate the amount of fiscal impulse coming here, particularly coming from the local government level. a lot of resources freed up there, infrastructure spending is starting to pick up and that stabilization growth will do wonders for the currency and

broader financial markets. are there any signs yet of stabilization, or just something you expect to see? >> you can see rail construction projects which are really starting to pick up. all anecdotal information. we will wait until we see the key activity numbers, the january and february average data on saturday. even then, you don't want to over interpret it. we may have to wait for the march numbers before you can start to see the lunar new year effect. scarlet: given the concern over ,ccuracy of the chinese data what do export orders tell us about china's economy? >> some of our fears around the global economy, it's asian trade in general. the asian trade numbers have

been pretty ugly for a couple of months. we're seeing we numbers not only from china but the taiwan export orders are week. posted week february readings. overall global trade looks to be stepping down. indexrchasing managers for the manufacturing sector has lost some momentum as well. bet is one thing to concerned about. on the flipside, i would say that the actual industrial production numbers we are getting in the developed markets are very positive. u.s. posted a strong number and all across western europe, we are seeing strong numbers. scarlet: this reminds me of the conversation we had yesterday about eking university. the most meaningful reform is don'tina to transfer stay enterprises to household. joe: there's more we can do with monetary easing but there is

already massive overcapacity so monetary easing can keep down the banks. there are a lot of unoccupied apartments and infrastructure that's built that is not being used. what ultimately does it accomplish if more easing on the local side or central-bank side, what is it really doing for the economy? >> so it's a glass half full, glass half empty way of seeing it. for near-term growth and just trying to stabilize things and will push the credit overhang down the road. this will just create more problems. the overleveraged that exists in china right now will be a long-term challenge for many years to work out of, but in terms of the near-term and they it isn'tspending on, things like inti apartment

buildings anymore. there are positive things to be spending on whitewater treatment plants, cleaner coal technology, environmental issues are a big problem in china. torastructure building out build up the middle parts of china. these are all positive developments that are warranted in terms of where fiscal policy could provide some stimulus. scarlet: is a hard landing versus soft landing debate driven by consumers and services rather than export driven like it previously was? >> a hard landing story is less applicable in it -- an economy where the state -- every financial crisis in history has been about funding dried up. smell bad assets and everything falls like a house of cards. in china you don't have that because the government will continue to backstop and rollover all the bad assets. that doesn't make that assets

suddenly good, it just means you will take a long time to work off those bad assets. think japan in the 1990's rather than the u.s. post lehman. joe: i want to revisit a topic we talked about last time you were on the show a few months ago. why the economy is coming down and gas prices are lower. >> at the time i sheepishly said one way you could get out of this puzzle is that you could start to get data revisions. low and behold, a month and a half later we come back and you have seen those data revisions. part of it is not good news, it's because income has been revised down. that's what we got in the second gdp report for the fourth order. then just today we got the service data that's pushing consumer spending up to 2.6%. that is lowering the saving rate as well, something a little more consistent with a household

facing disrupted fundamentals. scarlet: coming up, south africa's finance minister has a his list on how to fix nation's economy. that conversation is next. ♪

scarlet: it's time for the bloomberg business flash. the biggest electric utility in kansas is in the early stages of exploring strategic options that could lead to a sale. westar energy is talking with 20 -- potential financial advisors as it evaluates the possibilities. market calendar for march 21.

that's when apple is expected to unveil a smaller screen iphone and an updated ipad. a person familiar with the matter said apple will introduce an iphone with a orange screen similar to the iphone 5c. ongoing amid apple's legal battles over privacy and encryption. it's a first for police cars. doorsill soon be offering on its police interceptors -- reinforcing the doors, designed to stop a 30 caliber bullet fired from a high-powered rifle. that is the bloomberg business flash. "what'd you miss?" the finance minister of south africa has no easy task ahead of him. his number one priority is restoring confidence in south africa's economy, avoiding a potential credit downgrade, and a recession. five years between 2009 and 2014, there was a very

good team with very high level dependability and continuing to reinforce the message that the country's finances are in good hands, that we intend to be prudent and we will demonstrate in fact what we say in words. and builde will try the right kind of consensus to get other players to focus on growth as the key issue. we change the denominator, we change everything else. scarlet: where do you see the growth coming from in 2016? >> first we need to solve our energy problems. getting high levels of confidence within our own economy. infrastructure

investment that is planned in the energy sector, logistics, housing, and other areas of utilities as well. on ensuring that we focus concrete action to deliver on our plans and take on some of the strong structural issues. joe: there is anxiety about another downgrade coming imminently from moody's. are you concerned about that, and what is your case that you deserve the current credit rating that you have? we met the principal agencies in london and the other two are waiting until june so we have a lot of space. week movies will reestablish their fact basin

talk to south africans face-to-face. i am hopeful that we are able to actually do that. we have decided as a country and as a government that doing the same all things does not get us to where we need to get. we need to do something different, something that not only surprises the market that begins to energize our own people as well. scarlet: is the government still considering it eurobond sale before the end of march? >> we are in the market for a billion dollars. needs.ll satisfy our --ally these take place joe: emerging markets around the world have seen their currencies rise as economy slowed down.

how much do you see your fate being under your control and how much are the macro forces, the slowdown in china, whether the fed is going to continue tightening our strengthening the dollar, how much influence does it have? >> it's a matter of concern. for the first time after the great recession, we are seeing the two major economies in the world moving in different directions. sentiment in the specter of the emerging markets is taking us back to the -- to 2013. thirdly, the emerging markets once again are victims of very volatile financial flows in the world as well. regardless of that, we know there are things we have to sort out in our own country. joe: that was our conversation with south africa's finance minister. scarlet: be sure to catch our

network special, the africa bears ally, it weekend starting saturday at 6:00 a.m. in new york and 3:00 p.m. in london. we will dig into the numbers, next ♪

household wealth increased almost $87 trillion last quarter. here to dig deeper into the report is matt with three charts. , econ quarterly report nerds love it. you have taken a look into it to find some interesting things. one thing that caught your eye was corporate funding and how much corporations are funding flows to the bond market right now. >> obviously this has been a big story for several years but we really got some good numbers for today. this chart shows that 20% of u.s. company that is in corporate bonds and it's the

highest we've seen since 2004 as a share or refunded. howust goes to show dependent u.s. companies have become on the bond market. joe: what is the reason that the bond market as opposed to loans have become such a big shareholder funding? >> there has been a lot of interest in a low interest rate environment for higher-yielding debt. that's been something that corporations have been able to take advantage of in capital bond market. the fact that the share of total debt outstanding rose in the fourth quarter implies that market conditions had not really deteriorated to the point or companies need to start tapping banks for loans but that may be a risk going forward market turmoil comes back given how dependent companies have become on the u.s. bond market. scarlet: and to what extent do banks make more money by arranging these bond sales, given the low interest rate

environment. >> that's a really good question. investment banks are having a heyday. joe: you were looking at how so share of corporate debt. >> it's a question of who owns all the bond that the companies have been issuing. this is kind of scary if you're concerned that market liquidity and financial stability. what we have seen is that mutual funds have just been gobbling the stuff up. mutual funds now own 20% of the corporate bond market, almost three times as much as they did in 2007. this has come at the expense of household that unless of a share of this market. the household category includes hedge funds. so you can look at this like a lot of these bonds don't even traded all. there are maybe some issues with

liquidity, market liquidity and financial stability concerns. scarlet: the titles are misleading because mutual funds would almost be helpful. a there is a little bit of work in interpreting the data. you need to be careful when you're looking at the investor category but it is interesting and shows they are still exposed. joe: and you're looking at who owns u.s. treasuries. what do you see their? >> it's pretty interesting. the rest of the world category in the low of funds report which is this , you can think of that as foreign investors. their share dropped in the fourth quarter to the lowest since 2007. the whole story about foreign investors owning all the treasuries is receding of it. the two categories it did increase their share of the treasury market review as

households, the hedge funds, and pension funds. this, interesting about you households increased their portfolio allocations to the highest since 2010 and pension funds increase their allocation to the highest since 2004. if you think about portfolio balance effects of on buying, pushing people into riskier assets, this is an example of how that is unwinding now. house --that is households that include hedge funds? >> yes. thanks for breaking in all down. ♪

scarlet: i'm scarlet fu. "what'd you miss?" cpi due outpanish at 2:00 a.m. eastern time tomorrow. this comes after mario draghi denied that the eurozone is in deflation, but conceded that inflation will be negative for several months. joe: also tomorrow i will look at the u.s. import price index that comes out at 8:30 a.m. eastern time. much deflationg in the goods sector. we will get a sense of how much of what we import could theoretically be cheaper due to

the strong dollar. scarlet: that is all for "what'd you miss?" thanks for watching. ♪

>> the pride of miami, marco rubio. .ow rubio takes the snap he drops it. rubio passes to his fans, just out of reach. here's the handoff. it's a fumble. he is wide open. one final chance for rubio to save a game. can he do it? basically not even filling the end zone.