lisa: good afternoon. what we areis watching this hour. the global stock market rally marching on. the dow and s&p 500 extending their 2016 highs and day after fed chair jenny ellen sent stocks higher. sentd chair janet yellen stocks higher. lisa:'tis the season of job cuts as big banks around the world all ax positions. where will traders turn next? david: u.s. military's fight against ne islamic state. us.thornberry joins let's head to the markets desk were julie hyman has the latest. julie: this janet yellen induced has been continued with

less bigger than we saw yesterday or even earlier today. stocks down off the highs of the session, still hanging onto gains of .4% across the board. if you look at the s&p 500 across the day, you will see that fate that has happened as we headed into the afternoon. we've been watching the vix which earlier today touched its low for the year and then had come back. still down about 2% on the day. it bounce back from that low of the year. even though there is not much volatility now, we've seen a lot of buying of hedges that volatility is going to return and because they are cheap and they want that insurance. david: what parts of the market are the biggest drags right now? are down .25%es as we see rates rebounds today. we are seeing health care higher, but just barely.

energy is still higher, but has given up a lot of the earlier gains. tech and financials are doing the best in the s&p 500. at what hasa look happened to oil over the course of the session, that has been -- this is the price of oil in white. earlier today, it was having its first daily gain in five sessions. now, it is down five sessions in a row. this the bloomberg dollar index. as the dollar has come back, oil has gone down, dragging down energy stocks. it has also had an effect on gold prices. .3% -- goldtoday by lower today by .3%. the paris prosecutor says a french citizen arrested last week has been charged with plotting an imminent terror

attack. the suspect is accused of participating in a terrorist group with plans for at least one attack. he also faces charges of possessing and transporting arms and explosives and holding fake documents. the columbia senate will hold formal peace talks with the largest rebel group. the talks raise expectations for an end to a half-century of political violence. colombia's civil war has killed an estimated 200,000 people. with a garland met today pair of democratic senators come al franken of minnesota. >> the supreme court should not be political. , it creates athis precedent of making this, making

the supreme court political. more political. that is very dangerous. mark: judge garland also sat down with kristin gillibrand. the republican senate leadership refuses to consider the nomination. a mobile home park along florida's gold coast is being evacuated after a 60 foot wide deep hole opened to the ground. -- in the ground. wonder if the whole is a naturally occurring single. global news 24 hours a day powered by 2400 journalists in more than 150 news browse around the world. -- news bureaus around the world. david: new york stocks continue

to rally following janet yellen's dovish comments yesterday. developed gross says and emerging economies are flying a stall speeds. joining us now from los angeles is john gilson. what is bill gross saying? what is he calling for? john: he is calling for something to get economies growing and inflation, nominal growth is what he is talking about. he is saying all the efforts the federal central banks have done so far have not led anywhere. until running out of time the music stops and people go, negative interest rates come i cannot make any money here. they will give up on markets, basically david:. the deadline approaches. what is bill gross's deadline here? john: he said 2017 or else.

or else, he says markets will go south. lisa: how has this changed from what he's been saying all along? he's been pretty down on central-bank policy for a wild. does this reflect any change in positioning? 2017 date on that this. by putting the 2017 date, it is like come obviously narrowing the focus. that is next year. janet yellen speaking yesterday at the economic club of new york, she was talking about the rate of that increase. janet yellen: this assessment is only a forecast. the future path is necessarily uncertain because economic activity and inflation will likely evolve in unexpected

ways. criticismbill gross's here of the tools or how they've been deployed? the tools they been using, they've been trying to do the same thing over and over again and they have been ineffective. he did not recommend any new tools. he said japan, europe and the u.s. central bankers have not succeeded in getting real growth. unless we get real growth come investors are going to go somewhere else. they cannot put their money in their mattresses because of the currency control. lisa: there are a lot of macro calls here. positioninggross and his main janice capital fund? john: he is selling protection on a lot of different things. protection against oil falling too far, protection against various currencies, the euro against the brazilian

reality. -- brazilian real. he thing we can play this game ,or a little while, but in 2017 the game. because people will run out of patience or faith. will stop because people will run out of patience or run out of faith. david: when you look at what bill gross is saying, how much of an outlier is he? gundlach is also very bearish on the outlook, saying don't raise rates. real economic growth is not happening. basically what bill gross and jeffrey gundlach have in common is they are saying short-term interest rates at zero or negative rates are the leading indicator of where all kinds of returns are going to go. everything reverts to that low level. as long as those short-term

interest rates are really low, nobody is going to get any reliable returns on anything. they can take risks on emerging markets or credit, but eventually, that will come back to bite them. coming up in the next 30 minutes -- lisa: is it simply a question of spending more money on defense? usson mac thornberry joins -- congressman mac thornberry joins us. opportunity is the for bankers in these challenging times? lisa: financials rebounding after being the weak link yesterday. ♪

david: this is bloomberg markets. fbi islearning that the investigating a company to crack -- celebritene is an israeli company that is actually a unit of japan's sun corporation. breaking news about black rock. they plan to cut 400 jobs, 3% of its workforce. lisa: unusual news for them. expanding --uch an it has been expanding for so many years. it is unusual that they would be cutting at this point. david: we will talk to judy.

we will get her perspective in just a few minutes. i want to go to julie hyman at the markets desk for a bit more. julie: the 400 jobs that blackrock plans to cut here equal about 3% of the firm's 13,000 employees. this is according to people with knowledge of the matter. despite the cuts, the firm will continue to invest in higher and key areas and expects to end the year with a higher headcount. a company spokesman declined to comment here. we have heard from larry fink who earlier in the years had market swings might put pressure on companies to eliminate jobs. this could be a result of something like that. david: we will continue to

follow that story this afternoon on "bloomberg markets." this turns the controversy over defense spending. some on capitol hill expressing concern. among them, texas congressman mac thornberry. he joins us in the studio. welcome. what is the one thing you would like to change about how the u.s. is fighting islamic state? congressman thornberry: i would like to turn up the intensity of our effort. and, i would like to pay for the turnup of intensity. with the president has proposed to do is a lot more exercises in these eastern europe areas, more effort against iraq -- in iraq and syria against isis. extra patrols in the south china sea against china, but he has not asked her the money to pay for those extra activities. where does that money come from? in personnel, deferred maintenance and not training our people as much as they want.

while we are doing these extra activities, it really cuts the strength of our military at the same time. david: you sit on a very powerful committee. relationship like right now as you see between congress and the administration? congressman thornberry: overall, it is pretty good with the pentagon. you have professional leaders, top-level military folks trying to do the right thing for the country. our challenge is more and more of the strings are pulled by white house staffers. they never have to come answer to congress or testify. decisionsicromanaging in the field come even with troops who are in combat. that has really caused some problems. if you ask the white house, mother may i drop a bomb on the this guy, it makes our decisions not as effective as they could be. how much money would itsa:

take to properly fight isis? congressman thornberry: i will not say this is all we need, but the president should have asked for $18 billion more this year in order to cover the increased activities he has proposed. there is a mismatch. he has asked for more activities but did not ask for the money to pay for it. to bring that into balance would require $18 billion out of a $600 billion budget. wewe do not do that and continue to have those exercises and continue to turn up the heat on isis, where does that money come from? and maintenance and training that they need to save their lives. look at whatof us happened last week in brussels with some more, wondering where else it could happen. how closely is the u.s. working with our allies in europe?

congressman thornberry: european allies need to spend more to contribute to the defense effort. there's only about poor countries and nato that meet the two-person minimum threshold. nato thatuntries in meet the 2% minimum threshold. there needs to be more personnel sharing. the key thing, going back to your apple story, it is intelligence. the way you prevent terrorist i is by-- terrorist attacks gathering intelligence, finding findinguptime what -- out ahead of time what they are up to. you talked about the importance of technology, how outdated some of the equipment is. have ordereded to troops need to have in order to adequately fight isis?

what kind of equipment are they liking right now? congressman thornberry: we are not able to update their equipment as fast as technology changes or as fast as the threat changes. a major initiative we are pushing in the armed services committee is in both the house and senate to make our acquisition system more agile. e make sure the airplanes we build can be upgraded, their components can be upgraded as technology allows. that gets better technology into the hands of our war fighters faster rather than waiting again for a whole new system. we need to require that for everything we buy from the pentagon so that we can keep up with these rapidly changing technologies. david: the town hall meeting last night, donald trump was asked with the three main roles of the u.s. government are. he said security, security security.

seen a lot of candidates in this campaign saying the military is too small. equipment is out of shape. do you agree with donald trump? congressman thornberry: what i described a few minutes ago is saying essentially the same thing. more and more of our military but we have not provided the funding to pay for those things we are them to do, is we have fewer people for the fourth you're in a row, our troops will not get the pay raise the law says they are entitled to. we are not buying as many new systems. yet, that is who we count on to keep us safe and protect the freedoms we enjoy. david: are you optimistic things will get better? congressman thornberry: i don't know. we are at the end of the obama administration. i hope however the campaigns come out, there is a bipartisan consensus that we need to do

better by our military. stand by them because they are sure standing by us. i'm watching and listening to see how the presidential race -- i will try to work with whoever wins this deal. david: thank you very much. accomplishments -- congressman mac thornberry. a judge says metlife should not be designated as a too big to fail institution. up 4.3%. more "bloomberg markets" coming up after the break. ♪

lisa: this is "bloomberg markets ." david: julie hyman has a check on company movers. julie: i'm taking a look at shake shack. 5%is down about eight point

year-to-date. today, it is rebounding. the stock was upgraded to buy from neutral. it is down about 8.5% year-to-date. new store impressive growth performance outside of manhattan in 2015. he says we could see 2.5% to in% lift from chicken shack 2016 as it expands more into chicken sandwiches and not just burgers. we are also watching insurers. there is an underwriting improvement at aig. now that he has a higher level of confidence in the quality of the expected underwriting improvement that the company's goal is to improve its underlying loss ratio over two years.

he says they can achieve that. metlife winning a big victory against the u.s. government. the u.s. has labeled it too big to fail. one of only four nonbanks to get that designation. metlife has been battling that name in court over the past couple of years. today, a court ruled in metlife's favor. they are now up about 4%. insurers, ag about huge victory for metlife today. what are the wider ramifications of this ruling going forward? joining us now is elliott stein. what are the biggest applications? elliott: it has industrywide applications beyond just metlife. metlife was one of four non-bank too big to fail's. they were the first to challenge it in a suit. others had challenged it but not going so far as to seek

litigation. what this ordered us today, we don't have the full opinion. it is still under seal. we sort of see the final outcomes. she is rescinding the too big to fail designation. david: what was the argument? elliott: he made a lot of arguments. successes inr repealing dodd frank rules. he made a few different arguments. some were structural and some were more sensitive. metlife could not see the process, it was not transparent enough. he made an argument that the

structure of the financial , onelity oversight council of his arguments was fsoc is not independent enough. we will know more once we see the opinion. where he did get some traction is the fsoc did not properly assess metlife's on our ability. -- vulnerability. david: still ahead, commodity . more "bloomberg markets" after the break. ♪

oh, hi! micky dolenz of the monkees here, getting ready to host the flower power cruise. (announcer) we're taking the love generation to the high seas and reliving the '60s. we'll celebrate that unbelievable era with the music that made it so special. there'll be over 40 live performances featuring eric burdon & the animals,

micky dolenz, the monkees lead singer and cruise host, the 5th dimension, the lovin' spoonful, rare earth, spencer davis, three dog night, and many more! imagine enjoying all that great music on the fabulous celebrity summit, leaving fort lauderdale and making ports of call in jamaica and the bahamas. you'll be back in the days of bellbottoms, peace signs, and so much more, with special theme parties and 20 fun-filled celebrity interactive events. cabins are filling up fast, so come on, relive the era you remember so well. the flower power cruise, february 27th, 2017. let your freak flag fly. don't miss the grooviest trip at sea. david: from bloomberg world headquarters in new york, this is "bloomberg markets." lisa: mark crumpton is at the

news desk. mark: to minneapolis police officers will not be charged in the fatal shooting of a black man last november. one of the officers is white, officer's race has not been released. clark was reaching for the officer's gun when he was shot. his death led to massive road test. -- protests. , presidentland obama's choice for the supreme court commitment met with two more democratic senators today. al franken of minnesota and kristin gillibrand of new york. the senate is obligated to hold hearings on the boat, according to gillibrand. -- hearings on a boat. -- hearings on a vote. has happened with every other nominee that has come before him.

to havee normal process advice and consent by the senate for a supreme court nominee. it is our constitutional duty to do our job and vote on this domination. mark: republican senate leadership conceded -- refuses to consider his nomination. virginia governor terry mcauliffe vetoing legislation aimed at protecting opponents of same-sex marriage. the measure would stop the state from punishing religious groups who refuses services related to gay marriages. republican supporters say it would protect those exposing their religious beliefs. texas under ted cruz leads donald trump by 10 points in wisconsin's primary. trumpeaves trump -- leads -- on the democratic side,

bernie sanders has a slight edge over hillary clinton. wisconsin holds its presidential primary on tuesday. news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. david: commodity markets closing in new york. gold falling today, wiping out this month's gain. signs of a strengthening u.s. labor market, a rally in oilties curbing demand -- settling slightly higher at $38.32 a barrel. part of the selloff due to a rally in the dollar. lisa: many speculating on when natural gas will find a bottom. ward says we are way past that point. david: ward provides some

insight on to dollar natural gas and where the industry goes from here. >> if you go back to 2008, i would have said we would not go below six dollars natural gas. >> what is so surprising? much we were able to produce out of different types of reservoirs. sandstones. the amount of production that could come online with more than anticipated. production keeps rising as that rig count has kept falling. how do you explain that huge discrepancy? tom: as the area has infrastructure coming in, the wells are very good and you can bring on more natural gas out of the east. the story about natural gas is actually about demand.

as demand has continued to increase, that will allow prices to recover. alix: everyone is waiting for that one natural gas rights that will help rebalance the market. do you think there is such a price? tom: it is happening now. a five or six bcf increase per day in demand. not since 2011 and 2012 and 50 years beyond that death before that -- and 50 years before that have we had so little demand for heating in the winter. that mean the decline is more to be did to demand --

attributed to demand? tom: the only reason that will prices ist supply and demand. demand is picking up more. the weather always comes everything. -- trumps everything. what is trumping everything now flatat supply is thing come actually decreasing at a time that demand is increasing. the resumede see decline? tom: i do believe we are at the bottom. >> how fast can cruise get back crews get back online?

tom: in my career, starting in 1983, we have since the 1980's the same cash flow as x majors. of 2015,urth quarter we outspent cash flow nearly two times as an industry. point, reserve base lending today is contracting. we know that. capital is becoming more scarce. that makes it much more difficult to spend unless we quit spending, declines kick in. most people will think they are more than -- they are more than what most people think. x: the debt profile of companies will be no problem going forward, but it takes a while to get there. what is the new source of funding in the meantime?

is it going to be pe or forced m&a? tom: as we know, the bankruptcies in process, the new source of funding can be from -- you he discussed discussed or people moving down there to live within their cash -- their cap x to live within their cash flow. as companies decrease their cap x budget, production goes down and prices go up. alix: you have access to capital, you are always open to a takeover. are you also on the lookout for acquisitions right now? tom: we have developed acreage of our own. as others are more constricted with their capital, we've been

and to buy some leases develop some areas in northeast oklahoma that appear quite good. that, go toore of bloomberg.com. coming up in the next 20 minutes, more on the breaking news that blackrock is cutting about 400 jobs. firingsrecent round of is impacting more out. out spot microsoft competitors when it comes to artificial intelligence? a look at the nasdaq, up 26 points. more "bloomberg markets" coming up after the break. ♪

david: this is "bloomberg markets." are followingwe this hour. the world's largest money manager, blackrock is cutting about 400 jobs, 3% of its workforce. sabrina joins us. put these cuts into context for us. there's been no shortage of reorganization that blackrock. how significant is this one? sabrina: it is very significant, the biggest layoff in their entire history. in 2013, they cut 300 people. that was more performance related. much of this cut was driven by market volatility. ,n the beginning of the year which kind of caused them to take a look at their business. lisa: do you have a sense of where they are cutting?

it is hard to say right now. it sounds like it is broad-based across many of their businesses globally. that is pretty different from the last cut also. bringoint is to redirect, forces to other areas like uts and infrastructure. etf's and infrastructure. in addition to credit suisse announcing an additional 2000 cuts wednesday. let's get your reaction to this news. sabrina says this is unprecedented in terms of the size of this cut. >> it is not surprising to executives.

anything in fixed income or commodities or currencies is being hit. what happened to credit suisse is going to be happening everywhere. they have a history they have to take care of. they are reacting sensibly right now. they tend to be very managing this management consulting -- they will make changes to make things better very quickly. lisa: a lot of people who have left or been cut from financial services have thought of wealth management investment firms as a haven. does this turn that logic on its head? blackrock is not necessarily a one-off. management is not extremely concerned right now. we still see it jammed with hiring and people moving around. everybody has some kind of wealth. every firm has tried to get into wealth management.

it is a moneymaker for all the firms. what we are looking at here is when you really look at the volatility of the market, you are saying that is really what is hitting everybody. 'sw is the credit suisse handling it? that is where wealth management keeps going because people are saying i want to do something with my money, what should i do? the key moving their money or they keep it and take advice. david: we looked at all the cuts we've seen come all the big cuts we've seen in the financial services industry recently. we're talking tens of thousands. that leads to a lot of people paying on your door. that's banging on your door. how willing are people to make a change in terms of the kind of work they are doing? lisa: 30,000 job cuts in the past year. -- you do havee

to reinvent herself. that either means what are the best qualities i have, how can i put it into another area or product? do you go back to school for technology? technology is something that is everywhere. about how many cuts we are having and how bad it is in investment banking. synthetic is hiring. -- sytec is hiring. the get the tech firms. of the peopletion getting laid off will actually find employment? >> i think they will not find the same employment, most likely. they do find similar employment command will be at a totally different kind of firm. it will be a smaller firm.

a huge amount of them will get hired. the question is, what skills do they have that are high rebel in a different kind of setting. rable in a different kind of setting? is stiller thinks it the way this -- the world of bonuses, the world of people making a strong area money -- extraordinary money, there's less of them. people understand bonuses are no longer expected. it is something you actually have to earn. david: imagine that. a lot of these banks are cutting tens of thousands of jobs all at once. how do they do this without cutting entire slices of their business? >> they think about the cost. the most expensive cost his people. that is the only way you can

stop the bleeding. by getting rid of your people. don't forget, back in 2008, they got rid of a lot of people back then. not learn their lesson that it costs a lot of money to hire. it is not going to be a lot more because then -- in three or five years, a lot of these barriers come back. they have to rehire these people again or these people leave must are their own firms -- start with own firms, competing the large firms. leave ansee people open up their own firms and three or four years, they are in good standing. people are not going to get employed, but there will be another period you will see things starting. is that linkal

between wall street and silicon valley now? .learly, there is some interest how difficult is that transition to make? >> it is amazing how much it has become the norm. years ago, no one from silicon valley would consider coming to his financial services. it's one of my specialties. when you talk about cyber security, when you talk about the best technology, every product in technology and financial services is technology. if you have people who know financial services but don't know technology, we will not have the best products. if you get guys from google and bring them with their incredible mind, they can learn what product needs to be made. we are seeing a huge difference

in the shift of financial services going after technology and people coming out of google -- school saying do i want technology, where do i want my future to be? we see it being taken from technology. david: good to talk to you today. coming up on "bloomberg markets ," microsoft holds its annual developers conference. this year's focus is on artificial intelligence. microsoft shares of 34% for the year. -- up 34% for the year. ♪

david: this is "bloomberg markets." time for the bloomberg business/. lockheed martin has won in order

for as many as 12 or ships -- .loomberg business flash lockheed martin has won an order for as many as 12 airships. cuts on the way at boeing. the company plans to eliminate about 4000 jobs in its commercial airplanes. 1600 workers have elected to leave boeing under a voluntary program. david: a partial victory for carl icahn who has been battling aig over a decade. he wanted aig to focus on return on equity. he says long-term investments will be based on shareholder return relative to peers. that is your bloomberg business flash lisa: update.

microsoft developer conference is underway in sentences go. -- in san francisco. address, he said robotics could change computing. joins usry johnson from san francisco. i cannot shut you down. cory: did you see the story last week? kind of amazing. they created the spot that wo uld automatically send out tweets and within two days was turned into this racist, profanity spewing machine. machine learning can be influenced by non-machine to want to influence it.

it also shows you that microsoft is a serious player in artificial intelligence. coming out of the university of washington in seattle, you have some of the most advanced machine learning scientists in the world. both microsoft and amazon drawing from them to create these products that are in the cloud and the machines wayselves are learning the to fix their own problems. anything about what amazon web services is doing, the most important business in all of technology, microsoft's azure business which is similar in the office fueled by 360 platform is a serious business for microsoft. listen to what socgen adella -- nadela had to say today. >> last week, when we launched

-- it is not up to this mark. so, we are back to the drawing board. reactivatentinue to ande-incubate in china japan and learn, why do the social box their work differently? cory: a rather informally dressed ceo. lisa: it's silicon valley. cory: the kicks and short sleeve shirt? that's aggressive. upsurge. on the a big change from what they used to do. thinking about licensing software, not just selling boxes of software. not having the big annual software sales event. having constant iterations of things like ai bots that get better every time.

besidesat are their use entertainment? cory: we talked yesterday to matt mckellan in seattle. he talked about were this will go. matt: in the future, any application that is successful will have to be intelligent. microsoft is all over this trend. that is a big emphasis. cory: coming to you soon, artificial intelligence. david: tune in at six got p.m. eastern time for "bloomberg west ." ♪

>> it is 3:00 p.m. in new york. welcome to bloomberg markets. ♪

carol: good afternoon. here is what we are watching at this hour. --. stocks gains as crude 3.5 rally. can the dow and the s&p extend their 25th dean high. -- 2015 hi? gh? is the fed on the right track? tim reid discusses his career beginnings and where it all went wrong in malaysia. we are one hour away from the close of trading this wednesday. let's head to the markets desk where julie hyman have the latest. we had a big rally and now we have lost some of it. >> look slick we are hanging onto these