♪ alix: u.s. stocks closing mixed, oil first back-to-back decline in months. scarlet: "what'd you miss?" all eyes on the fed. this meeting is more important than it looks. candidates tax plan, we break them down. >> oracle earnings are out. we will see if the company is still on cloud nine. oracle results just crossing the bloomberg earlier than anticipated. third-quarter revenue $9 billion, less than analyst anticipated. looking to buy back $10 billion in shares. revenue,rter non-gap

adjusted earnings per share $.64, two cents higher than anticipated. revenue increased total $735quarter ,illion, a beat for oracle revenue a slight miss, $9 billion, anof $9.13 additional buyback. it looks like the stock is down ever so slightly. alix: let's begin with our market minutes. ,he doubt near session highs s&p 500 slightly lower ahead of the fed decision tomorrow. sales with a revision to january data not to encouraging. stockslook at individual

, apple supported the doubt by 15 points. look at banks, hit particular hard, but coming back. >> jeffries is always the bellwether of wall street, right? alix: the real story was valeant . the lowest level since 2011. pershing square lost almost $1 billion today. >> that's pretty amazing. scarlet: they options have been pointing to more declines. the point versus the call is pretty outside -- put versus the

call is pretty outside. year and two-year, not much change, people waiting for that big meeting. no one wants to get ahead of the fmo see decision, although no one is expecting a lot. the bank of japan kept a negative policy rate and did not boost quantitative easing. some people hoping for some kind of surprised. , they allcurrencies fell in tandem. alix: oil down 6% over the last two days. this is striking, because the s&p was relatively flat even with oil down. >> it feels like there is residual optimism left over from friday. scarlet: those are today's

market minutes. let's take a deep dive into the bloomberg. ofx: lots of different ways looking at valeant stock. is a bond due in 2025, that yellow line is the stock. the bond actually held up well for most of the day. wanted out together, then the bond jumped higher, kind of bazaar, trading at $.80 on the dollar, longer-term they tend to move in tandem, nonetheless the bond is still holding up better in some respects than the stock. mean?s that it short term stocks are freaking out? ok, you can be fined in 10 years? it is a very interesting type of situation. >> in a lot of places it is a debt market story. let's sic a look at what i have on the terminal.

outstanding debt, you can see that it has been an enormous increase over the years, currently $30 billion, all of that funded through the high-yield market, investors, because there's so much of it, so many investors hold it in their portfolio. are they going to be up to refinance that that? ?- that debt it is a classic rollup strategy. scarlet: the blue bar show the bond principal do all the way out to 2025. the pink portion is term loan outstanding.

you can also break it down by currency types. let's pull this menu down here. u.s. dollars.s in the yellow bar does indicate there is some debt denominated in euro. you can say all these charts and more on twitter. joining us as the head of citigroup's global currency strategy. scarlet: great to see you. you lay out what the fed needs to do tomorrow. what is on janet yellen's to do list? it is unclear. the market is well distributed in terms of outcomes. nobody expects them to hike in march. the question is how much emphasis do they put on april being open how much is it point to june?

a lot of investors have very different views than normally going into that meeting. who you're talking to and what are they saying? they're looking at this and saying it is pretty likely there's going to be a nod to .une idea of a significant pointing to april, a couple of hundred thousands of jobs a if there were not concerns and generate, then they would be hiking now. a small buts significant number of clients who think they're just going to wait. i think they're going to come in

relatively dovish on this one. it is too early to point to june. scarlet: i want to bring everyone's attention to one of the functions that has been popular as we lead up to the fed announcement. the yellow dots indicate fmo see projections. the green line is their average. you can see there is a big gap. alix: does that mean the dollar will rally? can be so removed from those market expectations. >> it gets complicated. they have been above the market for a long time. i think what will matter is whether they concentrate, and threemajority looking for

or more hikes, or they barely scrape through three, and a bunch of them would rather have two or less. takest think the markets the dots literally anymore. >> alex just mentioned the dollar. tell us how that plays into the fed decision tomorrow. more calm. somewhat there is no big dollar rally insight. question they are debating is how concerned they should be about the inflation numbers, whether they are bottoming and we're at the beginning of upturn in inflation. the second is how sensitive the u.s. economy is to the global financial conditions. , but theirets are up question is how much is that because the market has taken

away 40 basis points of yield. how confident are they that the u.s. economy is robust? again, i think april possibly, but more likely they stayed data dependent. alix: something we have seen is inflation starting to creep up. excite's faster, how quickly will they have to move to that longer-term equilibrium rate? >> that would be a real problem for them. if we had three months of 2% inflation in the middle of the year, the first thing they do is a victory lap. the first question is what is your equilibrium rate and how fast we you get there. i think that both they and the market will be less happy at getting to 2% inflation than

they claim to be. scarlet: we can't consider the fed's decision in a vacuum. , to what degree do you see any evidence of central-bank ordination in the wake of the g-20 meeting? >> ever since then, china has been stabilizing its currency and the yuan has been doing well. we saw the boj take a pass today. haveuld be the chinese stabilized interest rates and keep their currency stable that they will take care of emerging markets and their time zone. they have not admitted to any coordination, but it is possible there is some other understanding. what is the tipping point for the fed to raise rates again? to see thentinue

economy doing fine, they have to. the upturn in core inflation tells them that they have probably passed the equilibrium unemployment rate and were beginning to see some upward pressures, so a question of time and being confident that this is and that it is well in place and will continue to move in that direction. thank you so much. a quick programming note, you can catch our special coverage of the fed decision at 1:00 p.m. tomorrow. the rate decision is that 2:00, and janet yellen's conference at 2:30 p.m. is a bright spot in u.s. retail sales, the three charts you cannot miss. ,racle beating on earnings stock up 3%. ♪

mark: let's get the first word news. neither frontline are can win the nomination outright come of a donald trump and hillary clinton hoping to take big steps forward as five states hold primaries. ohio, recent polls show john kasich with the leader for mr. trump. polls show donald trump with a double-digit lead in florida, a big loss there for marco rubio, could put an end to his campaign. hillary clinton favored over bernie sanders in four of the five states.

don't miss a special two-hour edition of with at 5:00 new york time. we will break down the key races and let you know what is it -- is at stake. one man dead after a police raid link to the paris terror attack in a brussels neighborhood after one gunman opened fire on officers during the anti-terror raid. more tough talk from kim jong on, promising to detonate another nuclear warhead in a launch ae, will test ballistic missile capable of carrying one. retrieved ae treasure trove of sailors after the vessel drifted into iranian waters. global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. alix: "what'd you miss?" u.s.u dig deep enough into resales of data, you can find a

bright spot. total sales decline, setbacks and eight of 13 categories. we went to the charts. i'm going to pull up the first when you identified, the year over year dollar change on spending on gasoline versus everything else. the orange line shows retail sales without gasoline, positive, while the blue parts of the line show gasoline retail sales which have been consistent in being negative. gas, have to start with because last month that the percentage of retail sales that was made up of purchases of gasoline fell to the lowest level in 14 years, so this is great news for the consumer, and which you can see in that chart is that over the last year we have had these big savings in gasoline where consumers are spending less on gasoline and they did the year before, and that showing up in higher thating of other goods

aren't gasoline, which is what the yellow line show you, those red dotted lines show an average for 2014 versus 2015, a clear step up there, even though consumers are saving a lot of those gas savings, they're also spending it on other things, so that is good news, and that sort of brings us to the second chart i want to show you guys, which categories of retail sales that have sort of been taking share from gasoline as gasoline has become a smaller percentage of spending, these other categories, autos, building materials, home improvement, food services, restaurants, have all been gaining share, and so the interesting thing about all this, and as an aside, the fact that auto spending as a share of total spending has stagnated since september is probably the most worrying thing. the fact that these other

categories are gaining share is good come of because it is allowing consumers to spend on something other than gasoline, and were seeing that continue. those four categories make up half of total retail sales, but three out of the four of them aren't included in the control group, so sometimes those headline numbers are a misnomer. >> exactly. this is an amazing sort of fact of the way the data is collected. what we call court retail sales excludes automobiles, building materials, food services, restaurant spending. that are the categories are benefiting from this drop in gasoline prices, so these depressed headline retail sales numbers are more reflecting this other half of the economy that has not been doing as well, which is spending on things like apparel,cs, clothing, department stores, grocery stores, but if you look at the white line in this chart here,

this is looking at those four categories, autos, building materials, food services, and non-store retailers, online shopping, and you can see that growth in spending in those categories is doing very well, much better than the headline numbers suggest, and at ease even accelerating. it grew at the fastest year over year rate in almost a year, so that is great news. scarlet: are you telling us we should look through the headline numbers here? alix: a lot of people would have seen the news that came out this morning about what happened that powerhouse of the u.s. economy, the u.s. consumer. the headline numbers are way down heavily by the fact that gas prices have fallen so much, and so using less nominal spending, people are saving that money, so it's not a silly all going and other goods, so the total numbers come down, but even if you look at that so-called control group, the core retail sales, that excludes gasoline and all of the

categories that are benefiting from that drop in gasoline prices, so you really are seeing a much different picture if you focus on the parts of the economy that are doing well. it is a bit of cherry picking, so on the other hand looking at the core retail sales, it is you are focusing on the war sectors. -- focusing on the worst sectors. alix: you like to look at restaurants and bars. if you're feeling better about the economy and pocketbook, you can go out and buy a beer and lobster. you will not stay home. right? >> absolutely. some secular considerations, a shift away from people spending a grocery stores more in favor if eating out, and that might be a cultural change, but we've also seen a big ramp up in spending

at restaurants, which clearly had that cyclical component to it that suggest that the consumer is still feeling pretty good. alix: thank you so much. oracle just announced an additional $10 billion buyback, but the wear of a slowdown in buybacks. ♪

scarlet: i am scarlet fu.

buybacks are more important than qe's. easier for u.s. companies to repurchase their own shares. the fed bond buying program lasted only six years. we have a chart that shows it all. corporate buybacks are a huge source of demand for equities. 2.6 trillion dollars between 2008 and 2015, the purple line, more than qe, which is the orange line, the fed purchase of treasures, $1.8 trillion. investors should be more with buybacks than the end of qe. >> those are big numbers, quite surprising. if buybacks where this important to the equity market, what happens if buybacks rollover?

the first is rising yields, more expensive to borrow. this is how much high-yield is, aaa, and right around highs of 2013 in terms of high-yield, so if it is more expensive, why we spend the money? negative yields could be helpful, but that something also potentially negative about the growth of the economy. scarlet: a lot of companies are pouring money cheaply to buy back shares. >> visit the other side of the equation other than the debt story. there are two ways, one is the other isds, your cash pile. let's take a look at the chart. seen people talking about a potential earnings recession in the u.s., having a knock on effect to the equity markets. there is a big

financing gap overall, the pressure on corporate earnings already visible. what you have seen as the last three quarters have seen that cap consistently negative since before the financial crisis. may be investors don't care as much about buybacks anymore? they're not necessary are looking for something different. the s&p the dividend aristocrats have earned more. more in favor of dividend paying stocks. >> the other thing to think about, companies are buying back their stocks, we don't have as many shares outstanding, people chase after those in the premium goes up. scarlet: what is the tipping point for the federal reserve?

a chief u.s. economist tells us. ♪

mark: let's get the first word news. ,resident obama reversed course the administration withdrawing the plan to open much of the southeastern atlantic coast to offshore drilling for the first time. coastal communities and environmentalists had opposed the plan, so did the pentagon. john kerry will travel to moscow to discuss the russian withdrawal from syria and the latest peace talks. the sooner opposition says a russian withdrawal will help the peace negotiations in geneva. the surprise move announced yesterday by president vladimir putin, russian forces pulled out of syria today. a changing of the guard in

myanmar, the parliament has elected a close aide to aung san suu kyi to be the next president. aung san suu kyi is the democracy activists whose party swept to elections in the decades of military rule. the metro system shuts down for 24 hours according to nbc news, metro officials need to inspect as many as 1200 pieces of equipment in washington dc. yesterday a cable problem caused delays on the system. global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton. u.s. markets close lower before the federal reserve announcement. let's look ahead to asian markets. paul allen is in sydney. good morning. >> good morning. come will be no surprise

expecting declines today on the x, the nikkei, and looking closely to new zealand. will behe big stories the closing of the national people's congress in china, ending with a press conference , lookingpremier closely for any comment around the state of the economy, policy objectives for the year ahead. when the national people's congress open, there were strong comments about growth and we immediately saw the price of iron ore spike the next morning, so we'll be watching for anything similar this time around. scarlet: iron ore has retraced pretty much all those gains, and that's added to pressure on the aussie dollar. >> that's right. while the iron ore price declines won't be welcome, the dollar certainly is. central bank is signaling a willingness to

continue easing, and were looking closely at the u.s. federal reserve, expecting confirmation that the willingness to proceed with raising rates will go ahead. that's all i have for you from a very wet and gloomy sydney this morning. "what'd you miss?" economists not expecting any action from the fomc meeting. including our next guest, good to see you. what is the tipping point for the federal raise rates next? >> good question. further improvement in the labor market. unemployment rate continues to come down, so it is a matter of time. >> we are seeing the employment rate get very close to the fed target. the big question seems to be inflation, right? what we sing there? >> inflation is also getting

close to the fed target. their target is 2%. we are getting closer. wages have been hit or miss. i think they'd like to see that pick up more. inflation getting closer to their target. still some concern about inflation expectations, market-based measures and survey-based measures, probably giving them a little bit of caution for tomorrow and the next few months. i think we are getting there. it is taking time. scarlet: in the meantime everyone is looking at the options in terms of telegraphing investors on the market what its options are if things get worse. fedrmer minneapolis president had an interesting take, getting ahead of uncertainty. >> if the fed can convince people it is willing and able to take rates into negative territory, it might action be able to raise rates faster and higher. would you think of that?

>> it is provocative. he has always been known for being a little bit out there, so there is something to be said about the fact if the fed had been more stimulative that we would be an a better place now and could raise rates faster. right now, where we are, given what you said, getting closer to target, whether we need a lot more stimulus, and that's why the talking about raising rates. if you look retrospectively, he makes a fair point that mort's demise in the past would have meant a faster rate hike now. scarlet: so much of a is looking at what happens overseas. and ecb waited too long before they decided to give investors a turn. alix: that's a good point. let's talk about the fed and whether or not it exists in isolation. the ecb did something really clever, went to the domestic

credit easing channel instead of the fx channel. >> the fed does not exist in isolation. we are not an island. that is clear if you look at the past 18 months. delayed their plans because of the strengthening dollar. if you look at the broad trade weighted dollar, stable for about three months, making things a bit easier to stick to plans. i do think the situation outside of the u.s. now -- right now we happen to be in this calm per iod. alix: the big question in the market is, why is the yield curve flat. is it domestic or international? would you think? >> i think this is an interesting point about the influence of foreign banks on central-bank policy. it is strengthening the dollar.

that holds the fed back great on the other hand, probably pushing down the yield curve, making conditions are more still attempt. there is still some conflicting in funds from central banks. the one thing about the yield curve i think is that it probably doesn't take too much comfort is right now it is signaling inflation expectations , question credibility about getting back to the 2% place in target, so that something they're going to be leaning against in their communications and probably interactions as well. point, if yield curve we saw a surprise move by the --, could we have >> a surprise move by the fed would be a problem. paper tantrum would be interesting. if anything, there's a concern -- i would have a concern that longer-term yields would go down

and inflation expectations would come down further. >> this element of surprise is interesting to me. the bank of japan uses it as a tool. the ecb has also used an element of surprise as well. how come the fed doesn't under janet yellen? trying to they are follow a little closer to what's considered best practice in monetary policy, transparent, communicate what you're trying to do, and not have each meeting be a big event. if they can tell the market what they're trying to do, the market should do most of the work for them. ideally inngs should a perfect world be a non-event. we can always read what the fed is thinking. alix: what is the number one question you have for janet yellen tomorrow? isday comes back to what giving them confidence on the

inflation outlook. they have been saying it is about labor markets improving. is that still the case or are inflation expectations coming down and they need to see something more than just that? alix: thank you very much. you can catch our special coverage of the fed decision at 1:00 p.m. new york time tomorrow, coverage across all platforms. with miss our interview the former fed president on thursday. scarlet: the races on for the gop candidates and five state primaries. next, we dig into their tax plans. ♪

scarlet: i am scarlet fu.

it is time for the bloomberg business flash. oracle reporting earnings that topped estimates, more cloud-based services. , to since better than estimates. oracle says sales of cloud products group 57 percent. sales,nspecified asset les moonves says cbs plans to hone its portfolio. cbs will explore options for its radio division. scarlet: raising a first $2 billion, the silicon valley venture firm plans to use the funds to invest in startups. pre-existingting

partners to recommit. a loss of one dollars a share or more in the first quarter, still coping with the fallout of outbreaks. they had predicted a breakeven quarter. that is your bloomberg business flash. scarlet: "what'd you miss?" out incans duking it winner take all primaries. be digging into the financial impact of each candidate. today, we focus on tax reform plans. bloomberg intelligence released fresh analysis. let's start with donald trump. in this way he is like the republicans, advocating tax cuts. >> the biggest of all the republican candidates.

$11.5 trillion impact over 10 years in his plans, corporate taxes, 25%, individual taxes across the board, reducing capital gains. the one thing he doesn't want to do is increase the carried interest tax, earned by hedge makes them the lone republican in that area. >> what individuals may be impacted the most? it will be important to multinationals, apple, ge, microsoft, companies with a lot of cash offshore. have $2.1anies trillion offshore. his rivals onnd the republican side want to repatriate that money, one time bring it back and reinvest it.

that initially will be a big tax bill, but they will benefit from lower rates going forward. >> let's talk about trade. this feeds into the tax question. a prettyump does have aggressive trade policy outlined what is that mean? net-net trumps trade policies are probably more negative for business than they are positive. of visasthe numbers for highly skilled employees will have an impact on technology companies who rely on that additional employment to keep the revenue growth going. on china's cut back imports. if he feels the chinese manipulate their currency, he wants of 45% import tariff on those goods.

.oods get more expensive imagine all the goods that we enjoy going up 45%. cut back on muslim tourism, so all pretty much negative urine it does negative. we have to talk about ted cruz, $8.6 trillion. alix: it was still increase the deficit. can you walk us through his plan? >> his is the most aggressive and unique, moving to a flat

consumption-based tax, 16% on corporations, 10% rate on individuals. he has a very aggressive plan, very big change. with you agree with the philosophy or not, it will be hard to get that through congress. >> were talking about these things as if they will happen. there are two big questions, who wins the election and what will congress do about that. go, theret tax plans is only one area where i can see there being some coalescing. congress has been trying to pass tax reform for the last several years. one area is on the international side whether starting to coalesce. u.s.is an effort to make companies more competitive and stop them from moving overseas, all these inversions you have been hearing about. there is a plan that both sides agree on, lowering the corporate

tax rate below 25%, the second ,s repatriated -- repatriating and a territorial tax system, where the earnings that corporations are gaining abroad are taxed abroad and the u.s. does not touch them. alix: thank you very much. you can find bloomberg intelligence analysis on the terminal. the sure to watch a very special to our with all due respect tonight only on bloomberg. scarlet: fed x reports earnings tomorrow. online a look at how shipping has changed its business. that is next. ♪

scarlet: i am scarlet fu. "what'd you miss?" some analysts tempering their forecasts for fedex. rate ofvenue grew at a revenue grew at a rate of 6% plus. e-commerce was a key driver. clear that this is a straight shot up. they expect this trend to continue, sales at a 10% compounded growth rate, four times faster than the overall economy. managementitability, targeting operating margins of 10% over the longer-term. business, the white line, surpasses that 10%, though

you can see margins have declined in each of the past three years. the reason why is because e-commerce boosted demand for less profitable services. growth in the business-to-business sector could be under pressure. one thing investors will be watching for, the proposed acquisition of tnt express. it should boost its market share in europe, where it has trailed ups and dhl. that transaction is expected to close this year. fedex reports earnings after the close on wednesday. alix: thanks, scarlet. joining us now is a senior freight, transportation, and logistics analyst. is thing that caught my eye

fedex's relationship to the slowdown in manufacturing. >> about 13% of revenue is there freight business. that gets lost in the shovel, -- , and has been hurt by the manufacturing recession we are currently in. we's -- not are only are we seeing tonnage come down by lack of demand, but also a deceleration in rate increases, which is something that could hurt margins for that sector. also, some of the theness-to-business and ground segment, also impacted by the slowdown in manufacturing. alix: i used to be a transport reporter. i was interested when i saw amazon was planning on building .ut its own air network what impact would that have on fedex? ,mazon is 5% of their revenue

eventually amazon is going to be eating part of fedex's lunch, but the reality is that fed x is eating at a buffet. they will benefit from e-commerce. they will get business elsewhere. it is a huge growing business, 10% through 2019, and that will drive growth. huge bars of transportation. pepsi, walmart, they own their own trucks, but they are a huge buyer of trucks and capacity. torlet: i want to go back something that was a huge tailwind for fedex. the international priority shipments. that has dropped off because of the slowdown overseas. talk to us about the company's plans there. >> we have seen trading down in

mode, getting more deliveries taking longer and less costly delivery modes. people are not even using air and going ocean. is aower cost and feel promotion to air, so it could benefit from that, which could be a good thing. also, the growth area for fedex is not only e-commerce, but what is going on in europe and their acquisition of tnt express. they are starting to turn around their business despite europe being weaker than the u.s.. seeing great growth there. they will leverage off of that and be more competitive with deutsche post and ups in europe, and that's where the growth will be longer-term in addition to e-commerce. alix: thank you very much. a reminder, you can find bloomberg intelligence for analysis of fedex on the terminal. coming up, what you

need to gear up for tomorrow's trading day, no. ♪ -- trading day, next. ♪

scarlet: i am scarlet fu. "what'd you miss?" this.do not miss u.s. chancellor of the as checkers speech. exchequer speech. day, theow is fomc

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