carol: u.s. stocks rally into the close near session highs, the s&p 500 closing at the highest level this year. scarlet: but the question is, "what'd you miss?" we speak to a chief economist predicting no rate hike and down for the inflation forecast. carol: and emerging-market stocks re: racing losses -- erasing losses while everybody else is running scared. yellen scares -- says they will look at value. scarlet: and we lay out what is at stake for angela merkel. ♪ scarlet: we begin with the market minute, we rally into the close. everybody has second thoughts about yesterday's reaction to package, stimulus where it basically threw everything at the wall and said,

no interest rate cuts. it's averageopping for the first time this year, closing at its highest level of 2016. while to took people a see it through. scarlet: absolutely, you are looking at a couple of individual stocks that moved. carol: it is friday. look at tobacco stocks, there was selling pressure, and initiative from voters in california to raise the age for tobacco. this put pressure on those names in the united states. you saw this hit a vector group passing that pressure. scarlet: not getting involved, not lifted by the equities. if you look the treasury market, they have a third straight week of decline. increased odds of a june rate increase. little bit better than 50-50.

the 10 year yield approaching 2% -- e two year yield things have changed so quickly for italy. they are borrowing from investors. and they have a negative yield for the first time ever. the average was by contrast, if you go to november of 2011, the three-year yield was around 7.89%. carol: working its way around the globe. and it is fascinating to see what is happening and currency markets this week. third weeklyding a gain and there is a lot of controversy over in the government there, corruption scandals sweeping through. that includes the former president and what is interesting, there are calls for the impeachment of the current president. scarlet: she came out saying that he is not going to leave

her post, but we saw this playing out and maybe there will be changes, better things. hi, a high for this year for them. and you need to look at the euro. it moved up despite all of the moves by the european central bank, you would have a weaker currency. we did see a play out a little bit. scarlet: again, the second day. and in terms of commodities, oil rounding off their third week of gains, this is part of the risk on feeling we had today. gold come up only back from the one-year high. -- pulling back from the one-year high. still, it is a best performer for the year today. and copper is up. this is tracked over the last couple of years, and encouraging sign for copper. those are the market minutes. you can take a look at the

bloomberg, for this particular function, you can find it on your bloomberg by typing ins t ggo. and many can thank jamie dimon for turning the markets around, his disclosure of his purchase of j.p. morgan shares coincided with the rebound of s&p 500. the green line is the s&p 500, the yellow line is tracking the market value of stock purchases by insiders and banks. this is specific to banks. you can see the big spike on the far right, this is after diamond bought $26 million of shares in the s&p -- from jpmorgan. threerse, this happened previous times since the financial crisis, right here, and right here. twice in 2012. and early in 2010. we do not know how long this recovery will last. carol: those financials have really been lagging in the overall market. and other industry groups, if you will.

but when you have an insider buying it, it can provide support. scarlet: you can see all these charts on twitter. the chief u.s. economist at morgan stanley joins us on the fed's next meeting, that will be next week. you think that the federal reserve will hold off and lower the growth inflation estimates, why? guest: we say, what does the world look like when they put the december forecast together? what has changed and what will it imply for the forecast? they came into the year a little too lofty. they will have to bring that down. inflation is tracking a little bit lower than the estimates the just -- suggests it should be. and you know the plots that everybody looks at, this is probably also going to show a lower path for rate hike, because anytime that you change the forecast for growth and inflation, they change the path of the dots. scarlet: i am glad that you

bring up the. -- the dot plot. there is a function on bloomberg that will bring up the latest of those. you say that there is going to be adjustment? guest: yes. i am glad that you created this function, because it takes time to put these together. this is what investors are focused on. janet yellen does not want everybody to focus on the dots. she wants people to focus on their statement, were they said they are going to be gradual. that you cannot give materials to the market and tell them not to pay attention. everybody will be focused on the docks -- dots, which currently shows four rate hikes. wilie come down to three -- will down tol three tey -- they come down to three? or will there be more downward pressure on the dots, where

perhaps they come down to two expectations? carol: you had the european center bank this week, bank of japan on monday, and the federal reserve, how could they impact with the fed does? guest: i think that is the core question and you are going to hear policymakers talk about divergent and it will be the term for the year. when they raised rates in december, they really do not know that japan was going to go negative, or that the ecb would go negative. policy was very coordinated after the financial crisis, but it is not coordinated today. the governor, i love her, she is a great governor on the reserve. scarlet: why do you say that? guest: she tells it like it is. she says, look, the dollar is worth this much. this is going to be this for policy. she specifically says, diverging bank policies will make it more

difficult for the fed to raise rates and result in a shallower path for policy. if they want to go it alone, it will make it for -- harder for a video else -- harder for everybody else. we raised -- carol: far from it. i want to bring up something that you pointed out. it goes back to 2013, but it does show a spike in all of the different metrics you are looking at, jobs, sales, i mean, a colorful a rate of lines, but the big spike in prices and then after. we do not have the latest data just yet, but what will it likely show it how does the fed show this into a needs to do next week? guest: they understand the economyty can hurt the is not sustained. businesses do not hire when the environment is uncertain. and so they want to make sure

the volatility does not spike and is sustained higher. that is the kind of thing that they take into account when they go into meetings, because they have to feel extremely certain about the outlook, if they want to move rates today. and the world has become even more uncertain. any time that you hear the word, uncertainty, considerable uncertainty is a phrase that janet yellen has used, that means we are not quick to move on rate. carol: they are nervous and they want to hold off. when you look at things like gdp, what do you see? guest: i think what has been tough for investors, they are looking at gdp and when you look at headline gdp, you have these headwinds from the stronger dollar weighing on exports, the correction that is being led by petroleum products, it is an ugly chart. here is what the fed is looking at.

you take inventory out of the picture, not trade out of the picture, those are hampered by transitory factors. and the underlying private strength in the economy is there, it has been fluctuating between 1.5%-two .5%. -- 2.5%. and we know that domestic was inserted into a sense this week when they were talking about -- sentence this week when they were talking about this continuing at a pace, because they want to mention that they maintain focus on the domestic -- which remains resilient. scarlet: rather than commenting on what is going on overseas. the latest jobs report did not give a large wage growth. it certainly shows that we peaked for now and we will just muddle along. guest: what you see in the chart is the expectation for this

year. it looks like january was the peak. we have very easy year-over-year basis that euro that up and got some people a little hot and bothered about core inflation. again, i am telling you that this sound like an advertisement for her, let's go back to the governor again, but in her speech she acknowledged that base fx had pushed this 0-- base effects had pushed this up. we are in for another tug-of-war this year. scarlet: ok, think of for joining us -- thank you for joining us. carol: it wasn't just the s&p 500 that was rallying, next up casescuss the bullish for stocks. ♪

♪ let's get to first word news, services held this afternoon to remember nancy reagan. she is to be buried beside her husband at the ronald reagan presidential library in california. she died on sunday at the age of 94. donald trump had a news conference in florida today, here is his take on his relationship with the republican party. >> there is a disconnect between the leadership and the people, but the people are much more important, because they are the ones doing the voting did that is why i am here today -- voting. and that is why i am here today. [indiscernible] >> the last election they should have one.

it should have been an easy victory. much easier than the one we have now. afterhis comments came receiving an endorsement from ben carson. obtained islamic state references toa on men who carried out the november attacks in paris. security officials say that the documents could provide valuable clues into how islamic state learners followers -- lures followers. i am mark crumpton. miss? what did you the bank of america merrill lynch survey from earlier this year shows that fund managers went negative, which means that many were caught up guard when stocks began rally. the emerging market index climbed out of the red end is -- and is outperforming u.s.

stocks. is normally in london, but he is here today. thank you for joining us. markets?ng guest: the survey that you just showed, the data from february looks similar, that ever but he came into the year knowing that alla is going to implode, commodities are going to zero, that will pull emergent markets down with them -- emerging markets down with them and you need to maybe own the dollar and u.s. tax. -- text. it has been a horrible year for the average investor. carol: does that mean it cannot get worse? guest: the appeal now is that nobody owns it. there are serious problems for china. we have more commodities coming on stream and so the market really is putting up with all of

this. investors reload out , there isut of tech still going to be an opportunity. is int: the on that, what favor for buying emi now? guest: the beginning of a very long and tough. time, they were running deficits. we all heard about the five countries of the biggest deficits of us suffer the worst. now this has moved into balance, there are star countries like brazil, which we will talk about later, that has moved into unprecedented services. scarlet: you can see that in the chart. guest: the growth picture is not great, this has come by imports, which people seem to be hung up on.

it is not really matter. all big balance payment adjustments come on the import side, that is true of ireland, spain, greece and portugal. that is the same if you have the asian crisis in 1997. this is a forced correction, live within your means again. carol: i want to ask you about how important central bank policy is right now, because we have spent a lot of time that testing -- digesting what the ecb said yesterday and we are looking for to what the bank of japan will do on monday, how does that play into what is happening with the emerging markets? these are often tied to the dollar. guest: we are clearly in currency wars. but in the end, it is not true. s will that the mexican hike rates to prevent their money from falling any further. and brazil, malaysia, lots of other countries that want

everybody else to win a currency war, but the market is trying to lose them. emerging markets, we still have inflation. , i think from a monetary point of view, this is a much better job to be a central banker, then he developed world central banker. scarlet: talk about turkey, this has gone a lot of -- got a lot of accolades as an emerging market to watch. big success or benefit, it has been oil. that really got them out of jail. scarlet: it looks better. guest: it does look better, but the banks in turkey are quarreling like mad. since the financial crisis, they have had debt. so far, they have been able to roll with that without any problems. we have been monitoring it. it is still going into turkey.

mosturkey is probably the probable. vulnerable. we like the country that have adjusted. therts are created because price of commodities have dropped. we are looking at those who have adjusted on the other side. indonesia is one where they have lost progress. ,hey have double-digit yields but they are moving in the right direction. india has been very popular for a long time. i think the shine is beginning to come off india. it looks delicate. credit growth is slow. was a speaker today saying that indonesia will grow faster than china, but those in india have lettuce -- let us down.

what are the promises that they cannot keep? guest: structural reform. the great strength of china is being able to invest in infrastructure and india lacks on that front. they have consolidated to a descent degree -- decent degree, but we've not seen a lot of progress. i know this is something that we hear about in china as well, but this is more pressing in india at the moment. is sticking paul with us. we will discuss brazil. scrambling tois stay in power. and we will look at brazilian markets. ♪

♪ carol: "bloomberg markets", the brazilian president is fighting to stay in power. they are extending the third weekly gain, the longest rally since november credit and on a the 28th.sis since timee back with paul, last you were on, you are very bullish on brazil. how do you feel right now? guest: so far so good. the great thing about brazil, people are talking about the spiral, the numbers getting worse, that makes the fiscal numbers worse, it all deteriorates. but when you have a spiral like that, he can go the other way. this is rallying and that brings down that cost, people get more confident, interest rates come down.

what we would love to see is a little bit of growth, because the growth position is dire. we are looking at a contraction of about three. -- 3.5%. carol: you need the government to be stable though, don't you? guest: well, they have corruption scandals. if you notice, the corruption scandal, every time we have a new headline, in most countries as the president is sucked into an impeachment, you expect things to fall apart, but the local markets are cheering the process on. this is a move away from political paralysis. but they are counting on you change of government, as well. scarlet: it could be paralyzed for years. guest: nothing could really be worse than what we had before. if you have paralysis, you have paralysis, at least if the corruption thing goes further, you have a chance of changing government. there are risks. there is radicalization that

could be troublesome. at the moment, the markets are cheering for the investigators. carol: what do you expect to happen? it is getting hotter and hotter. guest: we do not know, we need to watch very carefully. i think like all foreign investors, anything that moves away from paralysis, whether it is under the current president, under a new workers party, under anybody else, we need to step away from the paralysis. scarlet: and we need to step away from the confines of emerging markets and look at the broader picture. what is the tipping point for the fed to raise rates next? guest: wages. if we have wage rises, that is when you have proper inflation coming to bed and the u.s. market here is -- inflation coming through. the u.s. market here is doing fine. brazil,hen it comes to

this is an internal debt crisis and it is different from the last time, when emerging markets got caught up in a debt crisis. how did they solving internal crisis? guest: inspire confidence. i do not know how you do it. the brazil has the highest interest rate on the planet. they are paying above inflation. everybody else's pain negative rates -- paying negative rates. that means to be reversed -- needs to be reversed. it is hard to do in a recession. carol: thank you. scarlet: come by next time you are in town. carol: will the fed hiked rates next week? that is coming up next.

ohio governor john kasich is getting some support for his campaign for another person still in the race. marco rubio tells voters the best way to be donald trump is to vote for john kasich. mr. rubio: he has a better chance of winning in ohio than i do. way to stop donald trump, that's what you should do. mark: bernie sanders federal

lawsuit to secure the rights for 17 your old's to vote in tuesday's ohio primary is on the s to vote in tuesday's ohio primary is on hold. republican john houston "acribed the lawsuit as last-minute political act." president obama is appearing at the sxsw tech festival in texas. today, the president is scheduled to headline a democratic fundraiser in austin. apple is looking for a one-week delay in filing its response to the u.s. justice department in a case dealing with unlocking an iphone.

the case over the san bernardino shooter should be argued before it files its case in brooklyn. apple says there should be a full airing of the related issues. news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. give you a recap of how markets closed on friday. the first close above its highest level this year, the 2016 high. also topping the trendline for the year as well. looking at the best-performing groups on the s&p 500 that we saw today. financials at the top, which we group that has lagged. energy equities were also one of the out performers. and that makes sense. very much risk on as everyone

seems to have second thoughts. they got over their initial trepidation of what the ecb did with their explosive stimulus package. they decided it was ok to go back into risky assets. miss?at did you a critical two weeks for central banks. a stimulus package and the bank of canada decision to stay rates. next week, it is the bank of england's turn to announce policies. will we see the or increased coordination? director of strategy from deutsche bank joins us here in studio. what will we get? do you feel there will be any coordination? >> most likely not that much. bank of japan will probably go more aggressive. the question is if they will want to follow in the footsteps of the ecb. they might eventually.

most of the central banks discuss what they are going to do. it happens with regular frequency. there is a good chance the fed will be less aggressive than we expect and also that we will probably see the doj step in at some point. we talk about coordination, do you think they had an idea that the ecb was going to go that far? it's necessary in an international environment. sort of coronation effect. it doesn't mean it's not happening -- coordination effect. it doesn't mean it's not happening. they certainly can surprise us. >> bank of japan certainly did. >> you should not underestimate to surprise us.

in terms of coordinating, they may be doing it, but we don't know. time,ferent points in they have a necessity to make sense. >> i am glad you brought that up. it seems like the bank of japan is more apt to surprise investors with these moves. lookingral reserve is to do everything but surprise us. a sense, is the money master of the universe, and everything else is connected to it. they need to be predictable for everybody. it's so predictable and low risk. because it's well-managed, pretty much everyone else is just a satellite around it. carol: does a give you confidence that the central

banks are bailing out everything and we are not seeing policy makers and lawmakers do their jobs? >> coming from a central bank, i must remain neutral. are seeing is the side effect of the central bank becauseo do too much other people are not delivering. but you need structural reforms in terms of taxation and distribution of wealth. it's a more complex economy. scarlet fu: as long as they don't get that support, the central banks are left on their own to do the heavy lifting. the bank of canada declined to cut interest rates. thebank of china allowed yuan to strengthen over the dollar. reaction from the ecb. it could try to devalue the current c. but it has not done that for quite a while.

the last time they went for negative rates, they were trying to push the currency lower. scarlet: but they are not targeting the currency anymore? >> they are not. in fact, it could go the opposite direction. targeting the currency makes sense until we reach about 100. from 100-130, it becomes very about whether this is necessary. ofol: what kind opportunities does this present for currency investors? >> of the continues to tighten, we might get a positive trend in the dollar. so predictable because fears are starting to add the out of the market, starting with china. they were able to stabilize their situation. as it happens, we will probably

see more diverse flow into the markets. scarlet: next week, we are getting all these central banks. after they talk, which will be the favorite trade? euro?n or the >> probably the euro. want to fund themselves in dollars. the dollar is still the major funding currency for emerging markets. the euro is secondary. side, inside -- the yen it will take some time. it is happening, but not enough. injured in a the trudeauuse, -- justin is at the white house. we should ask you about the

canadian dollar. >> currency is an expression of economic relations and the economic relations between canada and the u.s. are far more important than the currency. is both countries being one policy with two economies. cycleserlying economic are so interdependent. they have to find a common solution in terms of currency. havee case of canada, they enough oil that it makes sense to have an independent currency and independent monetary policy. so much.anks scarlet: stakes are high for angela merkel this weekend. german voters go to the polls. ♪

scarlet: time for a look at some of the biggest business stories in the news right now. a real estate investment company announced a sales gain and fourth-quarter profit that beat estimates. the chairman's main hedge fund was up more than 3% this year from february. it's lumped about 20% in 2015. about 20% in 2015. is working with ubs to find potential buyers. the portfolio includes companies from around the world and its corporate venture unit. fantasy have players who transfer their accounts to draft

kings will maintain access to their full balance for withdrawal. as for the $100,000 fantasy hub alleged to charities, draft andkings is covering that as well -- pledged to charities, draftkings is covering that as well. germans go to the polls this sunday. this will be the biggest electoral test of angela merkel's third term. nina scheck was b communications director for open europe. germany. here is on how likely is it that the afd will win seats and meet -- maybe even control some of the states up for grabs? >> all three states are five the 5%- are far above threshold needed to get in. they are not going to be the largest party in any state, but

it's very interesting because this is a party that looked to be over and decimated as a political force this summer. it is tremendously, symbolically important for angela merkel in a country like germany, where the cardinal rule is to never be to the right of angela merkel. you suddenly have this fundamentalist, anti-immigration party doing very well. it's a political avalanche in the germans fear. scarlet: the leader of the afd is a german born scientist. i am curious what this means longer term for angela merkel and her party. is she totally losing momentum at this wind? >> yes, ever since the migration crisis started, merkel, who won

the last election with a simple photo of her hand showing that you are in safe hands with mrs. merkel, we have had 1.1 million people coming into the germany in the past year. and --y economic writer economic migrants? are they refugees? the german people have not been able to express their fears. they feel merkel has lost control, that her politics on this issue have not been right. one third of germans say they would consider voting for afd. make no mistake. merkel is definitely fighting for political survival on the migration issue. an issue,hat wasn't if this hadn't happened this year, where would merkel be? always been issues around the eurozone crisis and so on.

but given germany's position in europe, merkel -- let's not forget that until a few months ago, she still had approval ratings up to 70% at times. that has slid tremendously, but it is still 50%. let's not forget the compared to other european leaders, merkel is doing well. .he's very machiavellian potentialpped all successors on the head. even if she were to do part from german politics, it's not clear who would take her place. let's say that afd picks a seats and makes a splash in the election. would that cause merkel to backtrack on her refugee policy? >> if you look at what is happening with her refugee policy, she has already backtracked. the solution she is pushing right now is that all migrant refugees, is, economic migrants, get setback -- sent back to

turkey. what she cannot do is publicly admit i was wrong. what she did in the summer is make a statement that any syrian who arrives at germany's borders will be offered protection. critics argue that she gave a massive incentive for people to journey across the mediterranean. because of her politicking and positioning, you won't catch her saying that publicly. ourl: i am curious, for audience, the financial audience and investors, the implications of these elections, what could that mean for them? >> it's a big shift in german politics. earlier, thered was never the cardinal rule of german politics, the unspoken rule that you never have a party to the right. this is unsettling when you have

caused a huge ruckus because she said that migrants should be shut out at the border. this is happening in germany and this rise of the populist, and taste bush meant, far right -- antiestablishment, far right party is not unique to germany. we also see it in the scandinavian countries. place in taking germany. and this is, nationwide, looking to be established as the third-party. it's a political revolution. having said that, german politics is all about consensusbuilding, so the mainstream parties would disavow the afd from having any real power, but it shows that on many issues of european politics, germans are starting to become more skeptical. carol: fascinating to watch, that's for sure. scarlet: the rebound in oil

prices is real according to a former pimco ceo. ♪

carol: i am carol massar. what did you miss? an optimistic outlook on oil. it was shared earlier today. a month ago, i said you cannot justify oil prices being so low on the basis of supply and demand. the problem was the market was .ot finding its feet now the market has found its

footing and we are getting supply destruction. i think the rebound in oil is real. it will remain volatile, no doubt about that, but we are seeing the bottom forming. had someone on recently to talk about this and he predicted where it's going to go. let's play a little of that. oil probably did hit the bottom when a jiggled around $30 a barrel. on a given day, given the amount of speculation, it could go anywhere. i don't see it going much below $30. is oil the symptom or the disease? we spend so much time on oil. the it really underline fundamentals of the global

economy in growth? is thereason why volatility that comes with low oil prices. 3%-seven percent moves daily and oil have become common. oil is a widely traded commodity. thatu get 3%-7% moves in commodity, it tells you that the system is becoming less stable. look at the volatility of oil because it gives you good insight as to how stable are the global markets. opec go in theat bloomberg, you can see there is an oil production tab up in her. click into it does appear to tab uplled over cash -- in here. click into it and it does appear to have rolled over. of thes like most

members outside saudi arabia are just going to produce as much as they possibly can. they need the money. grexit i agree. but i think that's where they are. this is maximum production. there are certain issues, will libya come back? what will happen to iran-iraq? but for most members, they are at maximum output already. >> so they can breathe at those problem.o >> of course they can. that statement has no value. they can't produce anymore. of course they can breathe at this level. the incentive at opec is to produce as much as you can. why? because you need it or because you are contributing market share to saudi arabia. produced the has maximum and driven out high-cost producers. >> central banks are really struggling with inflation targets. >> this helps. to go back to mark's question

about what has happened in the comefive weeks, oil has back. talk of a recession has to kleins and currencies have supported inflation in europe. -- talk ofclined, the recession has declined and currencies have supported inflation in europe. things have changed, but they are still tactical. they are not structural enough for me to say with confidence that the ecb will no longer worry. carol: that was mohamed el-erian speaking earlier today. what youcoming up, need to know to get ready for next week. ♪

scarlet: i'm scarlet fu. .hat you miss? don't miss this a data dump. we get to see both sides of the chinese economy, the manufacturing and consumer sides. february does include the volatile lunar new year. looking at data points in china all the time. also, don't miss this bank of japan decision on tuesday. the fed on wednesday. the bank of england with a rate decision on thursday. scarlet: the climax will be the federal reserve meeting. carol: i am curious to see what kind of q they take from the ecb meeting yesterday. good point.

a special thank you to carol massar for stepping in today. joe weisenthal is back on monday. have a great weekend everybody. ♪

mark: i'm mark halperin. john: and i'm john heilemann. with all due respect to ohio, it's all about florida right now. i am here on the beautiful coast of west palm beach, florida. mark, our friend is having a john kasich town hall. he wants a rock, paper, scissors rematch. the sunshine and buckeye states are two of the five states avoiding on -- voting on