scarlet: from bloomberg world headquarters in new york, good afternoon parent alixn. jcpenney's ceo talks about the comeback strategy for the retailer and scarlet. scarlet: what the central access about the economy if the continues to shine. central banks has about the economy gold continues to shine. let's begin with equities where the s&p, dallas, and nasdaq are following in tandem with global stocks. energy stocks leading a

decline. part, we are seeing that iran will not be joining any kind of reduction trees. they really want to reach the 4 million barrels a day export before they start any yetze-dried oil is off 3% the dow and the s&p are trading around neutral credl. red.et: the arrows are all look at valued pharmaceuticals, after the company cut its forecast and said that it risks breaching some of it to disagreements if it cannot get this deal in time. file by marche to 30 to avoid these issues.

you remember asian shares selling off earlier, to the fact that the doj did not do anything. rally over the past few days, that it i the clock is ticking. scarlet: they are just consolidating. now we got with first word news. illinois,, florida, north carolina and missouri all hold their primaries today. ohio has become the main battleground for republicans. recent polls show john kasich with a three-point lead over front run on donald trump. trumpet with a double-digit lead in florida. a big loss for the state senator could put an end to his campaign. hillary clinton is expected to increase her lead in the

delegate race. she is favored over senator bernie sanders and four of the five states. our two-hour edition of with all due :00 p.m. new york time. mark halperin and john heilemann will write down all the raises and take a look at what is at stake. do not expect to see governor kasich on the ticket with donald trump, no matter what happens in the primaries. john kasich told foxnews that there was no way he could ever team up with donald trump. predict that the trade embargo with cuba will be lifted under his successor. he traveled to cuba next week. he said sentiment in congress is building toward lifting the embargo. the human leader will take part in this plan meeting. -- cuban leader will take part in this plan meeting. i am mark crumpton, back to you .

scarlet: thank you. downward revision to generate u.s. retail sales numbers overshadowed a slightly better reading than expected for february. alix: joining us for some inside chief economist. it was this downward revision that was very painful. has the fed factor that in? they are on a softer footing, at least at the start of the year. the outcomet change of the two-day fed meeting. the set was already well known to be on hold at this meeting. however, it could tweak some of the language in meeting statement. that consumer spending was performing decently as they described it at the january fomc could be downgrading to express these

concerns. and then the question is the balance of risk. they suspended at the january meeting as they were waiting to reassess based on what was happening in the global economy and also in financial markets. i am not sure that they are willing to put that back in and say it is back to neutral, right where we were in december. they will not see downside, but they will say very nearly neutral. scarlet: they will massage the language a little bit. what reactions easy to the first that forks quarter gdp forecast -- reaction to the first quarter gdp forecast? >> consumers are treading water current quarter. there is a decent chance we can fall short of 2%. alix: thank you very much. tomorrow, we will have full fed coverage from bloomberg across all media platforms.

it begins at 1:00 p.m. in new york. sales raisingish concern about consumer spending. one retailer is coming back to life. jcpenney shares are up about 68% this year. alix: we spoke to vonnie quinn about the outlook for the company. >> the key for us as creating great shareholder value and shareholder return. if you look at 2015 we heard a 4.5% sales comp, which was best in the sector. byincrease our gross margin almost 300 basis points. we reduce our corporate overhead significantly, and we are moving in the right direction. it is less about trying to get back to a specific sales level, it is about executing well and creating an environment for customers to come and shop. we are making progress along those initiatives. >> do you have overall target?

take 10h and it would years to get back to get to that level. what level are you targeting? different.ness is if you go back to 2011, consumer -- consumers were shopping in a different way. on the channel was a theory. for us we are going to create a strategy that will allow customers to shop the way they want to shop. we are positing a sales target at our goal, we are setting a growth initiative. we want to grow for 2016 between 3% and 4%. more importantly we want to create a straw, sustainable shareholder return. there are 11 companies out there that have revenue less than $20 billion. we are not trying to get to an artificial target, we are trying to get a great return for our shareholders property, and

consistent growth year-over-year. we think we can do that. as a reminder, we grew 4.5% last year. growth ingeting 3% 2016, and we have growth projections color to that in the next three years. >> you are ahead of the curve in trendsg, but consumer are changing. how do you adjust? be very into him to consumer demands. as an example, we lost our first fast fashion brand. private design team, and we will have different styles and different collections that will change the route the season. this is the first time we have tried to do this and it will shorten the design, manufacture and delivery time, virtually and half. we are seeking feedback from

customers and trying to understand the legal cost and with their looking for. excited about the early test of these brands. this is something our customers requested from us. this is going to be designed iscifically for a woman who size 14 and above and we think we can design a brand that is going to be flattering to her and something that she is going to be very excited about wearing, and fashion that she can really go out and enjoy shopping at jcpenney. we are excited about designing our clothing based on the feedback of our customers. the likes of macy's and others are taking a look at .urning their properties would you do that? >> we are looking at our entire

capital structure. as a reminder, we paid down almost half $1 billion in debt in 2015. we have goals to pay down at least that much 2016. we had announced a sale and lease back of our facility in plano, texas. it is a strong market, we want to take advantage of that. we are leaving no option off the table. our goal is simple, we want to bring our debts and down, we want to drive shareholder revenue, and we will take all options to make that a reality. >> will you be selling more stores? means, if that is the right decision for our shareholders, and if it is the right decision based on how we serve our customers, we absolutely will. at the end of the day, we have over 1000 stores for which gives us 1000 distribution points where we can get our customers product.

shop, can come in and cash and carry or credit transaction. -- every yeard a we take a detailed look at our store portfolio. it is an ongoing evaluation. as i said earlier, our goal is to leave nothing off the table. returnsto create rich for our shareholders. that was marvin ellison, the jcpenney ceo. scarlet: gold futures are heading for their biggest three-day loss. is this a good time to get in? ♪

scarlet: you are watching bloomberg markets, and it is time for today's metal bulletin.

julie: we are taking a look at nickel and nickel miners today. this is norrell, which is a russian company. it is rivaling the largest nickel producers in the world. you can see that they are down a little bit today, not heavily traded. the company cannot with their latest profit report, ebitda down, which was in line with report straight the company -- with reports. prices have been falling over the past several years. there were down 42%. we are actually seeing them down once again today. another chart that is interesting is chinese imports of the metal, which is searched in 2015 because of the falling price.

we saw stockpiling of nickel occur in china. uses fore largest nickel, actually the largest industrial use for nickel is in steelmaking. that is one of the reasons that china has been stockpiling the metal. i want to look at the steelmakers and see how they have been trading as well. if you look at the steelmakers today, extrapolating from nickel, you see declines across the board. to be fair, many of the steelmakers have had a good run from the lows of the year, partially because the recovery generating a commodities, partially because of the tariffs on imports of steel to the united states. scarlet: thank you for putting that in perspective. heading forutures the biggest three-day loss since early november. thiset: strategists say spells opportunity for investors. this into perspective for

us, we have a fed meeting taking place right now. they will come out with their announcement tomorrow. they mayhange, though change some language and therefore cast a little bit. bugshat extent do gold ca care about this? >> what you have going on right now is the short-term trend and a medium trend. the short-term is that the fed could come out tomorrow and say things are a little bit better than we thought, we may raise a couple of times this year. higher interest rates would help the dollar and that would hurt gold. that is why you have seen gold down of the past few days. gold box will point out that if the fed does nothing and says we are not going to raise for the rest of the year, we can cross the dollar and gold will go higher. then these gold bugs think, that is going to crush the rest of the world. trillion witht $1

the other currency. goal.akes people rush the goldbug think they win no matter what. alix: does china matter more to goldbug at the end of the day? >> yes. they are the largest importer of gold. a lot of people, they fear that haveina, if they significant problems, it will hurt europe and the rest of the world. china as the number one thing to look at for them. they are looking at this is a big buying opportunity. alix: is there another metal out there that could benefit no matter what the fed does? >> not really. if you look at base metals, if china goes down that will go down with it. we have seen iron ore losing .lmost all the gains

. all is the middle people look at. a lot of people are looking at silver as well as writing on gold coattails. scarlet: easy, andy cinko for iron ore as well. ken. you to alix: tomorrow is the day. we will find out where a mainstay investment is putting his clients money. ♪

scarlet: this is bloomberg markets, i am scarlet fu. alix: i am alix steel.

we want to give them get what is going on in the markets. nobody wants to take big positions going into said wednesday brady of the dow off by about 20 points. morgan stanley coming out positive on apple and apple computing 13 points to the dial. scarlet: we should mention that it was comes to volume participates in, you're not seeing a whole lot of activity. volume in down stocks, s&p is off.and nasdaq speaking of apple, they are expected to file their response to date to the government second filing over f encryption.er th scarlet: bloomberg west anchor emily chang spoke to a key

player in apple's flight. >> what we have seen is what they do -- is they do not understand the technology they are asking the courts to order apple to degrade. applies the same encryption standards everywhere around the world. does not treat china 80 differently or any other country differently than it does the united states government. no country in the world has ever made a request like the one we are seeing from the justice department and the fbi in this case, asking apple to write software to degrade and eliminate encryption protections that protect the security of iphone users. apple is acting totally consistently. it is the justice department and the fbi that are acting like no other government authority has the power to do what they are doing. that is why we also strongly we have to draw the line in terms of the law.

apple cooperative the government, and it did in the san bernardino case. it is very important to cooperate with law enforcement, but this is a new thing. this goes far beyond what the government here has ever gone, or any government around the world. so the president is on the side of the government as well. absolu capital for taking absolutist view on this. he said there should be kind of compromise. why is that not movable? president'she comments and saw some of the coverage of it, and i think a lot of people think he was arguing for what we all think of as a backdoor into the security, a backdoor that would allow the government to break down in christian -- encryption in the devices. but his government has been very supportive of these encryption

issues. ashton carter said that encryption is vital to our national security. we have heard from former cia administratorser where they feel that encryption is important. they the main message of president was we need to have this conversation. president obama is someone who will listen to all sides of an issue. apple wants to engage in the way. when called for a commission to study these issues. the general counsel testifies before the congress was martin richard chromate. comee process that should out and their resolution to address these issues of law enforcement and data security, not a court proceeding. ae government is going on very important policy issues and asking the court to resolve it.

it is not for the court to resolve, it is for the american people through their elected representatives to decide how to do this issue. we want to talk a little bit more about these companies. with mcdonald's there has been a huge turnaround in their fortunes after they introduced all day breakfast. their valuation, the price-earnings ratio that is the white line. it has increased relative to the russell 2000 restaurant index. same-store sales got put to an end after they introduced breakfast in october. same-store sales recovered and pe is now higher than the pe of the 2000 index. alix: it is very hard to be able to transfer. a different heat and

intensity to go in for her than an egg. i'm taking a look at a great chart from bloomberg news, looking at a return on equity. here they took a non-bank bitda, divided by net worth. we are at the lowest level on record since world war ii. 2008uld be a lot worse for eggs were included, but nonetheless it is a start teacher of the biggest problems facing corporations right now. scarlet: this goes all the way back to 1950. even 2008 is pretty off to the right side. coming up on bloomberg markets, valeant is having an especially bad today with shares following the most on record. one activist investor speaks to us, next. ♪

alix: from bloomberg world headquarters in new york, welcome back to bloomberg markets.

scarlet: let's start with the headlines on bloomberg first word news. mark crumpton has more from our news desk. neither from water can win the nomination for u.s. president outright today, but donald trump and hillary clinton can take steps forward as five states hold primaries. hasthe republicans, ohio become the crucial battleground great recent polls show governor john kasich with a slightly over donald trump. meanwhile, those polls show donald trump with a double-digit lead in florida. a loss there for the state senator, marco put an end to his campaign. senator -- hillary clinton is expected to increase her lead over bernie sanders. do not expect to see john kasich on the ticket with donald trump no matter what happens with the primaries. he told foxnews there was no way he could ever team up with donald trump and do not miss a two-hour edition of with all due respect night at 5:00 p.m. new

york time. mark halperin and john heilemann will break out all the races and what is at stake. two police officers were injured when shots were fired and anti-terror raid in brussels. dallas won his third straight iditarod title, in the last four years. ofwon in the record time eight days, 11 hours, 20 minutes and 16 seconds. this race was marked by violence. on saturday a man on a snowmobile ran into two musters and iskilling one dog now under arrest, accused of targeting the dogs.

back to you. thank you. we are giving a close eye on shares of valeant, having their worst day ever, falling over 46%. mike peterson pledging to restore investor confidence in a call earlier today. >> our team has been working hard, and we have to deliver on our commitments. the world has changed to some degree since december. but we have to do a better job. we have had some underperforming businesses that is totally -- on us. we have to earn my credibility. we have to meet or exceed this guidance, and i recognize that. scarlet: david neuhauser joins .s now over the phone he had a short position on valeant and he added to it today. last week you said there could be more shoes to drop. is this what you had in mind. >> good afternoon.

this is more shoes to drop. this is more like an animal drug -- anvil dropped from a building. to the position again and again. this is a hedge for us. this is a position we put on last fall in october, describing the trade we had with both glencore and valeant. at this point in time i would say that things look fairly worse than anybody believed, and it is very unfortunate. flipside, some are digging in their heels, saying that the underlying business franchises are worth multiple i want the current market price is now. -- of what the current market price is now. when you hear that, how do you interpret that? >> that he is wrong, and he has

been wrong. these are very intelligent, a student investors -- a student investors. he is wrong on this. this is a broken business model can . the business model they adjusted companyhey built this is gone. the cost of capital for them is high, their leverage is massive. the products that they acquired and looked to grow has been coming down, not up. even their strongest products are slowing. the inventory is growing. and then when he or others come out, and this is in no disrespect to him, but you cannot defend a company in which you have tremendous leverage, and you are viewing that the company will sell aspects to pay back leverage and you will

shrink the company. know, when things are dire, you cannot get the valuation that you need for this business. i think they're in a very troubled position, unfortunately. scarlet: broken business model. mike peterson says he is not doing any major asset sales, but smaller businesses to a down debt. do you think he can hold to that? >> i would hope so for shareholders, but the problem is what is that valuation going to find? they need to stabilize the business at this point. they have not. even from shareholders who thought there was value in the company when they were at a 20 dollar market cap. there is no clarity. this company cannot see in front of its face in terms of what it's learning trajectory could be. is a very challenging situation that they are in today. alix: thank you for your time.

energy companies are struggling to survive under a mountain of debt and are dealing with yet another debt problem. market set,he on they are turning to distressed investors. we want to bring in lease of ramallah and -- lisa abramowicz. this is my favorite time of year, bank redetermination, adjusting loans. lisa, what are some options that companies might have? ofyou have a growing number distressed investors that have committed people to analyzing all of the capital structures and management teams of particularly upstream energy companies. as far as committing some funding to these companies. but it will come at a price. it is not necessarily going to be at a price that other

bondholders of those companies, as well as other lenders or equity holders are going to like. there is going to be a lot of shakeout in the next six months, and will be interesting to see. alix: i am getting a sense of that now. check out this charge from bloomberg. you tru pointed this out to me. they are trading at $.12 on the dollar, from eight cents earlier today. what does this tell you? people holding the unsecured bonds do not expect to be paid back at all. maybe in a bankruptcy process something from the company, but they are not expecting to get their money back. they are the poster child for what is happening in the oil and gas space for those who have these credit lines where they announced about a month ago that they were going to borrow the full amount of the credit line with that because they had a bond maturity coming up, they just wanted the cash.

they maxed out their credit line, and then within weeks unless that they were going to do their coupon payment on their debt, appendix learn strategic alternatives. they are not the only one doing that. you see a handful of companies, all in the last two and a half months ground all the cash they can grab and then within weeks say we are negotiating with our creditors and we're not make king this coupon payment as scheduled. scarlet: this is not the first thing for a determination go round since oil prices began plunging, but the last time around, we do not see that much damage. am i wrong? jamie had jpmorgan's dimon cannot is a we are committed to our clients, and other bank ceos say similar things. they do not want to create for bankruptcy in these companies. they really cannot cut certain exposures.

if all of those companies did draw down on their energy line, that leaves less for the banks to cut from, because once these companies draw down on their lines effectively have financing for three years. typically, that is the timeframe. that will lock them in. saw last year that a lot of banks did not want to be the bad guy. they wanted to give companies time to write other ways to address the capital structure. then he saw the oil drop below $30 a barrel, and able in the industry said that was a mental reset and everybody said this time it is different. coming in this year, last fall, we saw this cut by 5% or 6%, which was a lot less than people expected going into it. and now they're pushing 20%, and we are companies that say they have a $4 billion borrowing basis. 35% cuts.

the mindset may have changed. banks that were willing to be patient, don't want to be the bad guys, i think we'll see a lot more, if the company has $300 million on the bond basis, they will cut it. they say we will not push you over the edge, but we will make sure you cannot borrow anymore. try to how they will encourage some asset sales and try to push the company and into restructuring. >> i would be interested in knowing how they are risk basis ofthe different companies. at what point are those investment-grade companies be downgraded, and when will they have a risk your commitment? repercussions. thank you very much. good to see you.

coming up in the next 20 minutes of bloomberg markets, herbal life shall that $700,000 in security costs in 2015. candidates -- canada's oil producer has been a citizen on a pile of cash. scarlet: and how janet yellen should approach interest rate increases. ♪

scarlet: this is bloomberg markets. alix: it is time for the bloomberg business flash. the biggest business stories in the news right now. herbal life spent almost

$700,000 last year on security for ceo michael johnson. this came after bill ackman began accusing the company of being an illegal pyramid scheme. it also spent an additional $33,000 on other top executives. herbal life has denied the allegations, and last month it had it is in talks with the fcc on a potential resolution. scarlet: timothy walberg is getting a raise. his 2015 pay package will be $93.5 million, which is a tenfold increase from the previous year. they received stock options, and restricted shares. the federal reserve policy makers are gathered right now in washington for the first of a two-day meeting. they are expected to keep the benchmark interest rate unchanged, and monitoring how

recent turbulence in global financial markets has affected their forecast for unemployment and inflation. look for full coverage across all of bloomberg's media platforms tomorrow at 1:00 p.m. eastern. daniels news conference follows at 2:30. that is your business flash update. hyman has been checking in on valeant and one of its big investors. julie: you will just talking regards to herbal life. bill ackman, and his big short in herbal life, but his long is it valeant. not a good day for bill ackman or the other high-profile hedge fund holders of this company. a record one-day drop. take a look at the bloomberg to show the top holders. this is based on filing, so it always comes with a disclaimer that these investors

may have changed to some degree. square and it on march 9 when it added 14 million shares to its holdings, bringing his holdings to 9%. looking at valeant, i also wanted to look at some of the other top holdings at pershing square. how to dot to know this, you can message me directly. top holdings are trading lower today, not just values. -- not just valeant. canadian pacific and some other is holdings that he has, it not just valeant today, he is on quite a losing streak withholdings today. if you look at his publicly

traded vehicle, which is listed europe, you will see that over the past year and has followed by over 50% as we have seen weakness in his underlying holdings. scarlet: thank you so much. near record levels of cash on hand is keeping can this oil producers in the comfort zone. are riding out there worst time ever with a combined six point or billion dollars in resources to continue investing and manage their debt. alix: hamlet joins us now with more. it is a very different story than here in the u.s. were companies took on so much debt get into shale. what did producers do that was so different in canada? >> first of all, the amount of leverage that canadian companies got into was not .llowed like in the u.s.

there are a number of top companies that are not and are in this happy position. energy, as well as imperial oil and others, all of them combined to that $6.4 billion on cash on hand. many of them have gone through people discuss to jews, they have made sure to do cost-cutting. most of them have been dividend cuts, and they have that equity raises to put themselves into this position where they are not takeover targets themselves. senate, all of the ceos seem to believe they're in for the long haul and they are readying themselves for a difficult time ahead. the cash at suncor, half of that will be used up by the expansion that they are in the middle of at one mind alone. and imperial and synovus, and less of that cash can be deployed on their technology. scarlet: thank you very much.

coming up on bloomberg markets we will ask ucla economic professor roger what he thinks the fed should do. it is a little bit out of the box. ♪

alix: welcome back to bloomberg markets. scarlet: here is what the federal reserve should do. the u.s. interbank should embrace interest rate and aggressively by more assets. alix: this is according to a distinguished professor of economics at ucla and a visiting scholar at the u.s. central reserve bank of san francisco. he joined us yesterday to talk about why the fed should take this action. >> if the fed meeting on wednesday was to raise normal rates, that would almost certainly have a very bad effect on the economy in the short run, because i believe markets would

turn, well was fall, and that would generate in a session -- a recession. hand i'mu look at raising rates as a qa program that prevents that from happening, i think we can get back to a situation where we would like to be long-term, which is having right around 4%, 5%. without having big reductions in economic activity. bench marks of the is whether they can do that in the forecast. this is our function that allows you to see the fed members projections of where the fed funds target rate will be. as of december 16, the yellow dot wrote likes with these -- reflects what they believe. the red line is what the market actually expects them to be. is a big gap.

joe: that is one of the main areas people will be watching. week the ecb cut into negative territory, but the thrust of what they did was more on the asset purchase side as opposed to rates. mario draghi said there might not be that much more on the right side. thinking, that the jews is not from assets -- that the real juice is not from assets? from 60 billion euros to 18 billion euros a month. i think that is the right direction. the other thing if you realize is that asset purchases by central banks are global, and when the bank of england stopped its asset purchases, i was talking to people at the time, we think the fed stepping in and carrying out

these asset personages is a good substitute for what we are doing . maybe it is the heart of the sc -- sec to step in. the creative part was where they the rate they are paying on reserves, at the same time, in order to be able to borrow at privatee, the banks could have as much liquidity as they wanted. but you only get a negative rate on what they were borrowing if they were willing to lend it out to the private sector. iat is a creative new move have not seen before and i would keep my eyes open for how that works. alix: 20 you think the tipping point would be for the fed to raise rates again? >> that is a good question.

the difficulty is we're not dealing with one person, we are dealing with an entire open market committee. some of them are going to look at many different way than others. you're going to need strengthening in more than one part of the real economy. inflation expectations, for example, well below 2%, which is the fed target for inflation moving forward. i think you should be looking for that to move up. there are other issues here. industrial production seems to be moving in that it territory them and i would like to see that moving up again before the fed raises rates. but you will see arguments for the fed half to raise rates in june. i do not think they will raise on wednesday. alix: today on what you miss, strategists.th scarlet: don't miss former minneapolis fed president,

coming up on thursday. alix: coming up tomorrow, full aterage on bloomberg 1:00 p.m., and 5:00 p.m. in london. ♪

>> welcome to bloomberg markets.

david: good afternoon, i am david gura. >> software training in a narrow range today. investors are awaiting janet yellen and a fed decision 24 hours away. david: more warning signs for investment banks. revenue trading plummet 82%. tuesday, it is super part three in the race for the white house. donald trump looking for a knockout victories in florida and ohio. hillary clinton looks to extend her lead over bernie sanders in the democratic race. we are two hours from the close of trading. let's go over to the desk where we have today's laggards.