from world headquarters in new york. i am alix steel. the jobs report was solid, but it did contain signs of slowing labor growth ahead. stocks were higher and any fracturing information helped. in an exclusive interview, saudi arabia reveals they are preparing for a post-oil air with a mega fund. note miss my interview with john companyn he make the profitable again? alix: we are halfway through the trading day. let's go to julie hyman with the latest. it's a tough day.

been all of have these gyration in the markets and reaction to this jobs report. it's been puzzling in the wake of the report. it came in better than estimated. some of the internals are mixed including the right taking up. by0 now it's up three. it's been bouncing around in that range quite a bit as investors try to figure out what the fed's next move is. we are still going into earnings season. they say that's going to be the next big catalyst. it is health care that is leading the gains at the moment. consumer staples are doing well. financials, the rates are going to be positive for that group.

oil today is trading lower. we heard saudi arabia not just talking about that mega fund and they are not going to join a production freeze and lets everyone in lopez does. iran has said they will not join the freeze. as you know, that equals a down price for oil today. higherhe dollar climbed after the jobs report as well. : we are seeing this volatility in the market today. the dollar index climbed. right now, it's up only 1/10 of 1%. it is much better. gold prices, there are some gyrations.

1.7%, that's where we have gold prices. the 10-year note is swinging around quite a bit as well. shot up andields then coming down it, it turned negative one point. that is not what you expect with the dated today. right now, the yield is 1.78%. there's no telling where it's going to go for the rest of the day. let's check in with the news. ramy: we had to president obama. he says the nuclear pact with iran has had financial success. he spoke at the summit in washington. >> thanks to this deal we have seen real progress.

they have dismantled two thirds of its installed centrifuges. shipped 98% of its enriched uranium stockpile out of iran. iraqhave removed the reactor core and filled with concrete. , theey were to cheat breakout time has gone from three months to about a year. remy: they are seeing benefits from the deal but it will take time to reintegrate into the world economy. north korea fired another mitchell into the sea and try to jim navigation signals in south korea. tot was after the pledge work closer to prevent north korea from advancing its nuclear and missile programs. rescuers in india say there is no hope of finding any more survivors after clearing metal rods from an overpass the collapsed. 24 people killed and another 80 were injured.

with thecials construction company have been detained. ebola case has been confirmed in liberia. this is the first case since december. it comes days after officials said the outbreak no longer qualifies as an international health emergency. the outbreak killed 11,000 people in sierra leone and guinea. oural news are powered by 2400 journalists. i am remy in a stent seo. march that it is painting a strong picture. wages picked up last month. the types of jobs and income inequality is a concern. the chief economist made the case today on surveillance. year timeas been a 30

america, thess it'sng-class america, pitched hard. right onity looks all an individual level. it's less than it used to be. get better offns than they are. in a few years of good growth and jobs, it doesn't change that. francine: this goes back to what tom has been talking about, the quality of job creation. a squeezed middle-class in the u.s. and the u.k., is this a direct link to qe? the inequality comes greater and bigger because of qe?

>> i think that's a minor part of it. most financial assets are held by the rich. if financial assets are stronger rates,sult of qe and low that accentuates inequality and wealth. changes. technological it has eroded the earnings potential of the working class and the middle class. nothing has been done to upset that. they have better training. until that changes, the disc and tent that feeds the populism is going to continue.

francine: you see in the last three or four weeks central banks doing a lot more to help their economies along. economist thate believes the stronger pickup that would put growth in a more solid footing. this qe need to stop? is it working? >> it's not hurting. there are some minor official affects. had of the effects it has go to asset markets and stay in asset markets. it doesn't get transmitted to the real economy. they need some fiscal backup. those voices should become latter. without that, they will be margin players. ,: i think of william beveridge at the london school of

economics. the idea of mixing in employment dynamics with the real economy and the idea of frictional unemployment. have a new frictional unemployment where we just have to get used to a lousy year job economy? we can't aspire to better job formation? >> job formation itself in the u.k. and the u.s. has not a problem. it's the quality of the jobs being created. workages and conditions of to go with that are a problem. eithery think that until there is a major boost to capital expenditure in the public sector and the private sector. tom: can put policy do that? >> it can make a big difference in this country and this instance by taking care of the infrastructure.

the word shabby is a coffman. there has been 40 years of under investment. improve the educational performance in the secondary school level, which does not prepare many americans for the 21st century job market. islands of excellence in a sea of mediocrity. that was bloomberg surveillance. coming up, take a look at this chart. after some tough trials earlier this year, it's the breakout stock of the day. wennbergind out when markets returns. ♪

alix: this is bloomberg markets. you are looking at a rainy friday in new york. it does look pretty outside. it's time for the business flash. look at the biggest stories in the news. the big three automakers came up short with their march sales. general motors, ford, and chrysler missed estimates. sales were up. they were fueled by low gas prices. many -- meanwhile the sun rose 13% for the month. consumers kept up demand for the crossovers and sedans. volkswagen is feeling the impact of that omissions testing scandal. sales fell 10% last month. the vw beetle was the hardest hit model. it was down 40%. passatre recalling 91,000 sot

cars. bid values home retail at $2 billion. the grocery chains path was cleared. that is your business flash update. let's send it over to the markets desk. julie has the company movers. i might know what it is. does it have to do with my skin? nailed it. regeneron. julie: the stock is up 11.5% at the moment. it does have to do with your skin or skin in general. you see the stock on the bloomberg. it's up 11.5%. eczema.s a type of

the skin cleared. this is for people who have the most severe version of this particular illness. it has one blockbuster drug. it's an eye treatment. in accounted for 65% of the sales. regeneron has started working on some other drugs. we are looking at other biotech stocks. it's up 5.5%. this is going back to september. i want to point out some of the other performers on the week. this is the best performer on the week. that can't be right.

guess we have a bit of a bug here. it's an experimental infusion to prevent main -- migraines. that happened earlier in the week. the stock surged. i can see looking at my terminal. now i am seen different stocks on the move. give me one more second. that is theick first one is see listed. of the parkinson's disease drug, it was reduced -- reviewed favorably by an fda committee. it should be up by 41% for the week. it looks like we have some technical difficulty. all of this has to do with these

various drugs that had good news coming up for these various companies. i got the mystery chart. let's be clear. julie: that's all right. that's ok. we do have some breaking news. elon musk in a tweet says the model 3 order is at 180,000 in just 24 hours. we will talk much more about tesla. we'll be right back. ♪

alix: elon musk is tweeting that --,000 model numeral asks model 3.

it's the future of electric cars looking bright. that revenue is not going to, right away. $1000 deposit. on the stock, we want to go to abigail doolittle at the nasdaq. abigail: it's pretty clear that the unveiling of the model 3 was not a sales that. there are ray reviews for the more affordable vehicle. it's a big reservation. 180,000 cars. most of those of inside unseen. people are really excited about this more affordable electric vehicle. that is a huge positive. theher positive has been guide provided back in february. that has tell -- help turn -- stock. stock did

i have not seen it either. i think they are too frightened to stick their neck set. shares of tesla had been down 40% on the year in early february. now, it's about flat area they had been higher on the year. that's a huge turnaround. very interested. this happened ahead of another upside. the stock to go higher. there is a huge short interest on it tesla. a lot of investors are not positive. they are not liking this news. the stock is up 1000%. that has not worked out. bullish inave been terms of taking it higher. thanks so much.

elon musk was hyped up last night at the rollout. 3 will doe base model zero to 60 in less than six seconds. we don't make slow cars. it's fast and it wants to bring tesla to the masses. it's what they are banking on. tesla isn't quite there yet. with an equity strategist morningstar. he joins me now from chicago. the the model 3 live up to premium a lot of people had it on it? david: i think that depends on your time horizon. they trade on a lot of option value. it's a long-term call option. it's a very important car. it's the next step in getting them down to the price curve and

getting that true mass volume they need. even by 2020, we're talking about 500,000 vehicles. that's not a lot compared to gm or toyota. alix: even if they get to that level, they are going to need it so much capital to ramp up production. where they going to find that? david question that's a question and no one seems to think of that did those factories are about $5 billion. they are going to need more assembly plants down the road. have plenty of access to the capital markets. barring some sort of event that froze the markets, i'm not concerned about that. do they have to dilute shareholders more. they're going to get money on the down payments.

per car.000 based on 24 hours of pre-sales, they've pulled in $180 million. they were not profitable they were selling cars at $100,000. david: they are still an automaker at the end of the day. it's all about volume. this is the next step to get there. i would like to see more cheaper models down the road with higher range. is ok.es that's still not a lot of range. they are doubling the supercharger network. there are going to be consumers that are afraid to take that plunge. we're not seen that yet. we tend to hear that they don't have any competition. it's a tech company and a car company. do you buy that?

david: no. i agree with elon musk. they are competing with every internal combustion automaker in the world. they are the best one around. they will remain that quite some time. that's terrific. 3 is going todel sell well. it's a great looking car. an electrics to buy car instead of internal combustion. we're talking about 90 million vehicles year. bmw and volkswagen haven't been able to do it. they are established companies. what makes tesla different? david: they are building a great brand. there is an elon musk premium out there. i don't think he is going to be ceo forever.

the secret sauce is the chemistry in the batteries. automakersnk many are going to take them up on the open patent area i don't think you can soothe them and lose face. range matters. who cares what the car looks like if you can't drive it very far. alix: thank you very much for the dose of perspective. chen will behn joining us. out.ompany's earnings are we will get perspective from him. ♪

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. a seriously huge

breakfast. those of the top stories on bloomberg.com. life from bloomberg headquarters in new york, i am alix steel. this is bloomberg markets. now for the first word headlines. y: wisconsin governor scott walker took the pledge last summer. he is not backing off from his promise to support the republican present shall nominee, no matter who he is. he spoke with with all due respect. take a look. >> i did not raise my hand. everyone else said, as i did, i

was not going to run as a third-party, i was not going to support anyone else. i hope the nominee, after ted cruz -- after tuesday's win is ted cruz. i am a man of my word. i have not changed in that regard. ramy: walker has endorsed ted cruz, ahead of next week primary. you can watch the full interview on with all due respect right here on bloomberg television. meantime, present obama to law school next week to push his nomination, merrick garland, of this up. he will argue for senate consideration of his nomination. minister and key cabinet ministers met this when they met over can be open the airport after

the terror attack that killed more than 30 people. police units are demanding systematic checks of passengers at a temporary entry area. canjudge says activists continue with the recall of michigan governor schneider. organizers of another effort to recall schneider kicked off a petition drive last month. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. alix: thanks so much. bloomberg -- blackberry reported earnings, and two trends are clear. software is booming, and hearts based is not. software surging far above estimates. how does the company plans a better commute for the

short-term? john chen is the ceo of black hair, and he joins us -- of blackberry. he joins us. congratulations, it is really impressive. i want to start with hardware. what is your solution? a secure android phone. i think the market is small on the high inside. i need to get directly to the enterprise selling and for the carriers' enterprise unit. we have not done that well in the last quarter. that is a major part of this allusion. we will probably look at the pricing a little bit. that is going to be something that we do in about a week or so. alix: you talked about the

carriers. sprint did not carry it, and verizon came late. it seems like the rhetoric on mid to lowis that priced phone. can you give an idea of what that might be. >> we are working on other devices and phones. we started with a very high end phone. we are probably going to need to come up with a middle range phone. i think it is a bigger market overall. we are looking to do that. alix: you have said the goal is to sell 300 units. take a look at this chart. the shows what your breakeven is. if the average selling price -- it is the average selling price versus how many phones you expect to sell. around here is the 3 million unit. if you go down the average selling price, you have to sell that many more phones. >> yes.

i think -- i really still that people like the phone a lot. i need to continue to focus on that market segment. it also might have a crossover effect. as i start moving to the midrange phone, it might help the high end phone also. there are a couple of things we could play with and work with. it is all very reasonable. alix: aside from the carrier, and moving down the price scale, is there anything fundamentally iv thate with the pr you need to fix? >> we have to upgrade the operating system, which we plan to do. other than that, they're not really major problems. it is just we need to get the product out to more of the

ier of the product base. alix: are you concerned about margin erosion? >> you always have to worry about that. this is a competitive business, and the margin always does a erode. we have to balance with volume and geographic expansion. we've launched in japan, and we will launch in mexico next week. there are still more countries coming online. the product is a very great products, and through that process, we get more people buying the product. alix: also, longer-term, i your goal is to drive th product home with the software. >> as long as i can make money with the hardware business, we have a lot of know-how. we aree quite a bit --

very reasonable brand. as long as i can make money, i don't intend to sell the hardware business. the software business, as you pointed out, is a very high focus for us now. alix: it is. m m a, may, assuming -- assuming that stays, what cap's in software do you think you need to fill? >> we are in multiple areas for software. data, messaging, and so on. one of the areas is security. we made a smart decision at the beginning of the year to do that to help companies and governments to monitor, and analyze cyber security threats, protecting it, preventing it. we are starting to do that.

one of the major areas is in the car industry. componentsa lot of for the connector cars. we have a brand that is a leader in the market. that area, going to try to add more investment in their in the next -- there in the next 12 months. alix: you are looking at $225 million of free cash flow, one of the general stats of black area. do you feel you have enough cash on hand to pay for transactions you need to make? >> we have plenty of cash. we generate cash every quarter .or the last eight quarters we spent over $1 billion in acquiring the company, in creating the most robust platform that we know how. we have $2.6 billion in cash, we generate cash. i think we have the capability to make acquisitions. alix: you don't need to go to

the debt market, or anything of the like? >> no, don't plan to do that. i may wante have -- to retire some of the debt. alix: actually pay down debt, as well as new acquisitions. this leads us to the third steam happening, and that has to do with apple and the fbi. has the government ever approached blackberry about getting into your phones? we have been in the business for a long time. we also have been very vocal in withrting the legal assets helping the government. i'm always a person that says we need to be a good citizen first, and business people second. i hope people appreciate that. i truly believe that. the government and us, we have helped in various cases in the company hass every

done so in telecommunications. we will continue to do that. alix: that is different from apple and different tech companies. have you gotten customer blowback? our systems are very secure. our customer knows that we do not have any backdoor, or anything of that sort. there is data that one could get if there is a subpoena. we respond 100% in cooperation with the subpoena. i actually do believe that as technology gets more sophisticated and encouraging gets more sophisticated, national security is more at risk. there has to be a partnership that we can come together with the government to do it right, and serve you and i in both andcity, both in privacy,

as well as our safety. it has to be commission of some sort that we need to get to. i'm glad it is now rising up to the top of the agenda of the nation, is not the world. i believe we need to get that whole collaboration done, the public-private sector collaboration. alix: the collaboration fell apart because the fbi was able to get in without apple. did you feel and as well as our any blowback from that because your servers are touted as being so secure? >> know, i have not gotten any blowback. in fact, many have suggested that you should use the blackberry server. i'm not trying to do a commercial, but we have not been cracked. this is not an invitation to crack, but we have not been. what would you want to say to apple ceo tim cook right now issue.encryption

>> as i said earlier, we need to put down our strong position, get together, and see how we world worlde technology to complement supporting the privacy agenda, are amendments, -- our amendments, as well as helping to secure the country. there's not going to be any business if the country is not secure. i think a lot of people know that. we have to get together and work it out. alix: my last question, take it back to black a business -- the last two years have been questioning, will blackberry make it on its own? under what circumstances would you be open to selling blackberry? >> we can make it on her own. we have cash on the bank, we have a strategy. there are some bumps in the road, like the hardware, i have to adjust to that. we will get well, there is no

problem with that. officer, i company have to share with shareholders. my concern right now is to get the company moving well in the stock truly effective -- reflective of our value. alix: i get you. thank you very much for your time. we appreciate it. john chen of blackberry. coming up on bloomberg markets, we will continue to dig into the data. we will talk with a chief economist. ♪

alix: you are watching bloomberg markets. i am alix steel. a big day for economic news here in the u.s. we want to start with jobs. march, jobs added in more than forecasted. meanwhile, the workforce participation may came in at present -- 50%. how will these signs impact the market and the fed? i am joined with a chief economist. what was the single most important data point you heard today? thehere is no question that employment report obviously dominates. unlike some of the other data, it covers all sectors of the economy. of course, the labor market is a

focus for the federal reserve. the fact that we are continuing to see ongoing resilience in the labor market, continued improvement, including in the face of global uncertainty, i think that is the most important take away. other news is good. in particular, the manufacturing data. above even,oing w in the sector which has really taken a hit in global weakness -- i don't think that should be overlooked -- overshadowed by the good jobs numbers. alix: there was one number that stood out which was the number of people who are part-time who would like to be full-time. that rose to 135,000. yes, it has come down significantly, but looking at

the tenure chart, we have a very long way to go. slag.t is one of areas of you notice, janet yellen talks about the hidden source of supply of labor. i have to tell you, in general, encouraged byty the composition of employment between full-time and part-time over the last six months. we have had twice as many workers added full-time versus part-time. the other issue, i think, with iss number that you point to it is not clear if we're just going to be running higher in category -- that there will just be more part-time work than because -- o be

whether it is a health care law, or whatever, companies have more of a predisposition to higher part-time and full-time. maybe ruvell -- because -- mayl to the level that we are used to seeing that number. alix: the other is the labor participation rate. if is the highest level in two years. what is your sense? is it because people are not coming back to the labor force or not leaving? >> it is because they are not leaving. that is af we think bad thing. you have demographics which would continue to suggest that people will be leaving the labor force. stability there is a good sign. i was encouraged by the uptick. expect a big uptick, but the numbers look good. from a biggerit picture standpoint, we thought it would improve.

strength in general over the last six months is good news. alix: thanks so much. we will be right back with more on bloomberg markets. ♪

alix: saudi arabia look to wean itself off of oil. they speak with bloomberg about creating the world's largest sovereign wealth for them. we start with china where they show the improving conditions

for the first time in eight months. manufacturing purchasing index level from the first part of 2014. the bidding war over starwood has come to an end. company with true their offer, clearing the way for marriott to buy starwood. they have committed to buying fidelity in the u.s. saudi arabia is getting ready for the twilight of the oil age. the company is planning to create the world's largest sovereign wealth fund with assets topping more than $2 trillion. with saudi arabia's crown prince over a five hour conversation about the venture and its scale. >> he has this session about

moving the saudi economy away from oil, and basing it on something new. this fund is an amazing thing. it is enough to buy google, microsoft, the alphabet -- the whole lot of them. all of those things could go into one thing, and it could still have change to spare. , property,dd land all these things. it is roughly twice as big -- or more than twice as big as any sovereign wealth fund. alix: for more stories, visit bloomberg.com. time now for the bloomberg quick take in which we provide ontext on issues of interest. audi arabia is now creating

$2 trillion fund to he wean country off oil. here is the situation. t oil is creating financial strain. as the kingdom burns through currency reserves at record rates. to bring more transparency and know-how into the country, the $350 billion stock market was in juneo selected funds 2015. here is background. kingdom was founded in 1932 and became the biggest oil exporter in the 1950's. when the arab spring began in 2011, the country issued a spending drive to ward off .nrest and create jobs

the throne of saudi arabia, one of the last remaining absolute to kinges passed solomon in 2015. while the country is becoming it's lifeated, challenging --ms companies run by princes, and their cohorts. how will the saudi public view foreign investor, particularly if they are women? that is your quick take. for more business stories, visit bloomberg.com.

alix: welcome to bloomberg markets. ♪ ♪

alix: from bloomberg world had cars in your, good afternoon. this is what we are watching -- the nation's hiring boom continues, the economy added bs in march. what will be the effect on interest rates question mark saudi arabia reveals plans to create the world's largest sovereign wealth fund that will eventually control more than $2 trillion in assets. they be weaned off their dependence on oil? a boston startup challenges fara nos in blood test but learning how challenging it is to come up with a painless and profitable business. let's go over to the markets desk. julie hyman has the latest on this mediocre -- what's a good word? julie: mediocre is a fair word

to describe today's action. report a and on other days it would not be as mediocre but on a job a, you expect more dramatic a reaction. instead, we have gains across the board but not large. you had a dramatic reversal. that's for the drama came from today because stocks opened lower across the board and have since turned higher. we are seeing the markets shake up the effect of lower oil prices which may be part of it. people are going for the jobs report to figure out the good and the bad. on the headline numbers, the overall number of jobs added came in better than estimated.the unemployment number rose which was not as positive in the report. this is the push and pull within the s&p 500. the stocks contribute in the most to the gains include reg

eneron after they had positive results for a treatment for eczema. is up and i strong performance in biotech and we have scenic come back in the large cap tech stocks. on the downside, a lot of energy stocks. chevron, andmobil, schaumburg j pulling down -- and schlumberger pulling down. at&t is also trading lower now. alix: thank you so much. i have breaking news -- hasge, the french company pursued a plan that started in 2015. they are pursuing deployment of that strategic plan after ending talks with bouygues. so they are ending the talks.

they are still pursuing strategic plan for the company. let's check in on the bloomberg first word news. much,thanks very president obama says the nuclear has had success. of itss dismantled 2/3 installed centrifuges and shipped nearly all of us and wrist uranium out of the country area the cut -- the president said iran is seeing elephants from the deal but it will take time for them to reintegrate into the world economy. greece is pressing at wood plans to start support refugees back to turkey next week. lawmakers are expected to support draft legislation fast tracked through parliament to have those returns start as monday. the operation would see refugees arrived on greek islands after march 20 be put back on both and

sent back to turkey. no school today for nearly 400 thousand kids in chicago. teachers who had been working without a contract since june are staging a one-day walkout. they say the strike is aimed at getting lawmakers to adequately fund education and other programs. for the first time in history, more people are obese than underweight and those of obesity rates are soaring. that's from a new study from a british medical journal that says the obesity rate has tripled for men and more than doubled for women in 40 years. the study says the problem is greater access to cheaper and unhealthier foods. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. alix: thank you. back to our top story, america's job machine is running steady despite a slowing global growth. employers graded 215,000 jobs

an -- in march. rages rose more than forecast while the jobless rate crept up to 5% as more people enter the workforce. these headline numbers seem to be good news on the surface but is there trouble lurking in the shadows? jim paulsen at wells capital management joins us now from minneapolis. you had a note out yesterday talking about the threat of in some ways,d the job report confirmed that for you. >> yes, i'm a little worried about that. we are seeing evidence, particularly over the last year or so, where the core costs in the united states economy whether it's wages or core consumer prices or the pc core deflator, are starting to rise by the most of this recovery and most sustained advance. while that is happening, you are seeing real act 70 come down a

little bit. alix: hang on for a second because we have a chart that shows that. real growth is slowing while wages keep accelerating. it really proves your point. in early 2015, wages were up. stagflation is showing the idea of stronger nominal growth and rigor -- and weaker real growth is turned to show up across the economy. it is showing up with real personal consumption, slowing is the pc deflator. it's showing up with slower job creation growth as the wage rate rises. and it's showing up and weaker of labors they share income rises, reducing profit margins for corporations. alix: we have that chart as well. it's talking about profit margins fading. we tended to think of wages

first but the impact in the companies are quite severe. let's pull that chart off and the threat is that the higher inflation for companies will slow job growth down the road. >> that's right, to some extent, companies are already starting to feel that pinch of higher labor costs. were already near postwar highs to begin with, they don't have much ability to raise them further. but of labor costs start to go up, they will suffer some margin erosion. what scares me about this a little is we have had a very byk growing recovery historic standards, about 2% real growth in this recovery, the weakest in postwar. what has made it palatable to some degree is that inflation has been so low and because of that interest rates have been low. even though laborers have only gotten 2% wage increases which doesn't sound very good, you

must recognize that inflation has been virtually nonexistent and real purchasing power has been growing fairly nicely. if you change that dynamic for the first time, you start to have core cost rising. even if we get a little faster nominal growth, the final results of that on the overall real outcome might not be nearly as positive as hoped. yellen is trying to raise the inflation rate and i think you better be careful what you wish for a little bit in that regard. alix: do you feel that scenario could ring is into recession? >> it's possible. if you start to raise inflation and attack real purchasing power on the consumer side and labor side at the same time you attack robert margins on the corporate side, necessitating a much quicker exit by the federal reserve to try to stop it down, that could lead to a recession. we are nowhere close to that at the moment but i am concerned

that the fed is so patient and so dovish in the face of a very broad-based evidence of rising core inflation. alix: what does that mean for the markets? you wrote a piece last week with the bunny market market hopping along not going anywhere. there is a chart really illustrate your point showing the s&p 500 is not seen a new high in 10 months. that is the longest streak outside of a bear market since 1995. what breaks us out of this range? we tend to think in terms of holes or bears but the reality -- bulls or bears but we have had a large number of honey markets whereny the market does not make much progress in either direction.

they typically occur in the latter parts of economic recoveries. not necessarily the last year but the last several years. i think we are in that. where we are is, i don't see a recession imminently. recessionl not have on a sustained basis, we have used up a lot of the things that create a bear, we have already used up the undervaluation. we have had a tremendous earnings advance and we are into the mature part of the earnings cycle overall. now where inflation and interest rates will have to finally start to increase and we will lose the fed as supporting the market. i'll think we have a sustained bull market left either. alix: to take the other side, when the numbers were christ, in these seconds -- were crunched, in these numbers, it was quite intense, about a 24% gain over the next 12 months.

this year, i have had a range between 1800-2200 on the s&p 500 2200going from 1800 up to will be a heck of a return if you time that right. i also believe we may end the year at 2050 which is flat. when you look back, it looks like it did not go anywhere. it doesn't mean there are not opportunities at times to maybe have some spectacular returns. we have had very good returns in february and i -- and we might still see 2200 this year. over the next year, we could still be in a roughly flat market. alix: part of the rhetoric is the earnings recession. you had a stronger dollar and weaker oil. many analysts are calling for the trough in earnings in the first quarter. do you agree? >> i do. i think we will keep going higher and go to new marginal

new highs in the market toward 2200. one reason is the deflationary scare is ending. not only is core inflation going up, we have bottomed out oil and tips and inflation expectations rising again. removing deflationary risk rings back a more aggressive approach of the stock market and earnings are likely to pick up again because the bad negative impact of falling oil will lessen and the impact of the dollar will lessen. i think we are also seeing a pickup in growth around the globe. we've got really good jobs and i is some reports and a better i is some report out of china and recently out of europe. if you get a global pop in growth, that will create excitement. i still like the negative attitudes of most investors thinking this is an ongoing bear market trap. maybe we have to break out the new highs to convince everyone it's ok and then maybe we will

run into trouble again. alix: let's put your theses together. betterly, slightly growth is going to help inflation in the u.s. but it has the potential to wind up hurting jobs and profitability and consumer spending and that is a risk for stocks, is that fair to say? >> yeah, i am all for real growth but one of the ways to get there is to keep inflation relatively modest, in my view. that requires that the fed start to re-normalize interest rates. i think we are probably growing 2.5%. we already have 2.5% core inflation. we may be close to 5% nominal gdp growth. there is no way that a sub 2% treasury and almost 0% short range is a sustainable economic environment. lend itself to ending this prematurely a must the fed starts to normalize interest rates. markalix: a pleasure to talk to.

up, after last year's collective slump, base metals have shown signs of wanting out but most are lower again today. we will check out they are starting the second quarter. saudi arabia reveals plans for a $2 trillion mega fund, will it help wean the kingdom off of oil? we will explore. if you work in silicon valley are spooked about trump, canada wants you. we will look at the latest recruiting tool. ♪

alix: you are watching bloomberg markets.

businessthe bloomberg flash, look at the biggest business stories in the news. elon musk says there have been 180,000 reservations in the past 24 hours for the new taz left model three. -- the new tesla model three. they revealed the vehicle yesterday in california. he is hoping the new vehicle will expand his customer base and bring sustained profit. deliveries will begin next year. private equity firm silverlake says it's buying a minority stake in ancestry.com. andusband loves that site it's valued at $2.6 billion including debt and the company was taken private. in 2012. the firms will retain a majority in the stock. s&p says worries over the global economic growth and financial markets will weigh on the u.s. economy this year. the agency is cutting his gdp growth estimates from 2.7% - 2.3%. they say a 15-20% chance that

the u.s. slips into recession in the next 12 months and expects the fed to raise rates twice this year. that is the bloomberg business flash. it's time for my favorite segment, let's go over to the markets desk where we check, metal market. julie: we are looking at gold today which is seeing reaction in the wake of the jobs report. we are seeing less of a demand for safety today with stocks rising, more of a risk on environment and gold is falling. it fell after the jobs report came out showing better-than-expected job growth. the unemployment rate is a little higher but it's a decline of 1% for gold prices today. after the minors, we are seeing them fall as well as they tend to do. as we have talked about, the first quarter for gold was the strongest performance going back to 1986 and investors have been

biding. combines the fund flows of andtwo largest gold etf's we have seen a surge there with flows at the highest point back to 2009. we have seen demand for gold go up. let's take a look at the performance in the first quarter, year to date. do we have a chart? today'sgo, even with dip, we're seeing a 15% gain year to date. we tend tominers, see more of an outsized move whether it's to the upper the downside. of year today performance, we have seen them perform better than gold itself. they performed worse going into this year. we are now seeing a big snap act. alix: that has not always been

the case. they tend to have3 times exposed leverage to the metal. you could feel the heat last year. julie: definitely. alix: thank you so much. find out how saudi arabia plans to whether the oil crisis next. ♪

alix: turning to a bloomberg exclusive, almost eight decades since the first saudi oil was discovered, the king's-year-old son is looking to transform the world's biggest crude exporter into economy for the next era. we spoke about the in-depth conversation with

the deputy crown prince of saudi arabia. >> it's a five-hour conversation where he sketched out his plan for the kingdom. an abstention about moving the saudi economy away from oil and basing it around something new. this is a $2ll trillion fund. it's enough to buy google and microsoft and the whole lot of them. could go intogs one thing and they still have changed to spare. into that fund will go aramco and they've already got savik and they will and property in its roughly twice as big or more than twice as big as any other sovereign wealth fund. it's understandable given the volatility of the oil price. he has already cut all the subsidies. they are moving on to other

things. it's a rather dramatic plan in terms of the economic transformation of the country. weaned on the are robert lacey books. understand that this is a generational change. tone in yourhat interview and if it is a generational change, where are they having? >> there is something of a generational change. his father is king. you have the crown prince. there is an element of a group of mostly young reformers around thewho want to push accelerator in terms of change. from will be some people the religious side who will be suspicious and worried about this. there is no element whereby saudi arabia has to change.

situationstuck in a and now they really needed it. tom: i'm sure you were raped by dh and our teams on the oil dynamics of the middle east. -- i'm sure you were briefed by and our teams on the oil dynamics of the middle east. what is the level of sweat in riyadh? >> most of the revenues have come from oil and the idea of setting this up as an investment fund will change. , it's look at arabico from going to be a producer of the oil to becoming the world's biggest refiner. they've got that clearly in their sites. they want to push that out and in the end, the plan for aramco is to be a huge energy company

so goes across the whole parameter. this is a fairly dramatic change in the industrial makeup of the country and the oil market. part we learned was that saudi arabia would not participate in oil production freeze unless iran did as well. this chart highlights the dynamics between saudi arabia and iran. the white line is saudi arabia. iran will not cut until it exports 4 million barrels of oil per day. much more coming up on bloomberg markets. we are looking at currencies, can the dollar rally to sustain itself? ♪

from bloomberg wealth headquarters in new york, welcome back to bloomberg markets. 3other update on the model

with elon musk tweeting that orders are around 198,000. he says he thought it would slow down but the model three order count is now at 198,000, recommend ordering soon as the weight time is growing rapidly. deposit, tesla has made $198 million today. let's start with headlines. we go to president obama nuclear is saying the pact with iran is a success. he spoke at the nuclear summit in washington, d.c.. >> thanks to this deal, we have seen real progress. already iran has dismantled 2/3 of its installed centrifuges and shipped 97% of its uranium stock while out of iran. it has removed the iraq reactor

core and filled it with concrete. if iran were to cheat and build a nuclear weapon, the risk has gone from 2-3 months to about a year. ramy: the president says iran is starting to see benefits from the deal but it will take time for the iranians to reintegrate into the world economy. north korea has fired another short-range missile into the sea and tried to jam gps navigation signals and south korea. the u.s. hours after and japanese leaders pledged to work closer together to prevent north korea from advancing its nuclear and missile programs. the u.s. government program to help poor people pay for internet access will start this december. the fcc has voted to expand its phone subsidy program to include the internet. digitalent to close the divide between those who can go online and those cannot. this weekend, you can see birds flying north or if your own gps

does not work him is likely because of a storm on the sun. a minor geomagnetic storm alert has been issued for saturday by space agencies in the u.s. because of three holes across the some that are now pointing at earth. forecasters say this can confuse the migrating animals. it could be as far south visible as main or north michigan. that's interesting stuff. global news 24 hours a day. i'm kind of freaked out about that story. the dollar got a nice boost after the better-than-expected jobs report. it strengthened from a nine-month low but since then has fluctuated like the rest of the market. that comes after a few weeks after the biggest drop following the fed march meeting. perspective, we are joined by the senior currency strategist for rbc capital markets. thanks for joining us. what is your call him a dollar? >> while we have been looking at

the dollar in a short range trade, with the developments of the recent weeks, the march fomc speech, it looks like the range trade will extend longer. is it a range trade or does this turn into a cell the dollar story question mark people are beginning to talk about shanghai with a time of conspiracy theories. making parallels to the plasm recorded 1985 to weaken the dollar. alix: so you keep the pressure off the u.n. which means the government does not have to do a huge devaluation. do you buy that theory? >> what we saw in 1985 is different to what we see today. the parallels have been drawn a little bit too far. on in china does affect the u.s. so when the u.s. mixed policy, it has to take that into account. china is in a difficult situation because they are trying to manage this transition to the exchange rate but there is a lot of dollar-denominated

debt and people had this view ebyi wouldem appreciate. it does not mean the fed will let the u.s. overheat. you will see more gradual pace of a hike. alix: as the dollar drifts downwards, it really hurts the euro and the yen. it highlights that the yen trade how much moreen, upside you feel there is to the yen question mark >> short pound come along anything is the trade. aussie selling has been moving a lot. if you look at stirling, it's a story about the u.k. referendum and what happens there. if you look at dollar-yen or are seeing ayou bit of moved to the top side.

that's where i think you will see policy makers from those countries step up and say we are not out of the picture. they are not going to be but theble from here range trade is ok for everyone at the moment. alix: if the yen and euro top out here, you think they will be ok with that? >> when we think about the impact of the euro, for example on the global economy, not a lot of support is coming. it's a story of domestic demand in europe that has been driving area growth. then they are looking at what it means for inflation. importingdanger of inflation. we are talking about a range trade between 1.08 or 1.17. inx: we have seen big moves currencies like the mexican peso. how much upside you feel is left their? an environment

where policy are trying to stabilize things and don't want to tighten policy rapidly in the u.s. and then we still see policy in europe and japan, you may see carry trade's come back in and that's what we are seeing with money going back into emerging markets. then you see more money going into the higher yield places. alix: great perspective, thank you very much. next, canadian technology has chosen a mascot for its latest campaign to court silicon valley talent. we will tell you the latest recruit pitch next. ♪

could slow down for business travel and deutsche bank likes domestic airlines that are less dependent on the corporate travel. switching over to automobiles,

we got march numbers from a number of these companies today. many of them missed estimates. posting advances that missed analyst estimates and toyota posted a surprise decline. the annualized selling right adjusted for seasonal trends might have been no different from one year earlier. analysts had been predicting 17 -- 17.3 million. the other big auto story is tesla where we keep getting updates from you on must. he said we will have to revamp the production plans for the new vehicle because we are getting so many orders. -- hetest number he treat tweeted was 198000 and the shares or hanging onto a gain of 3% but down from the highs of the session. the big news in hotels, china's with drew its billion-dollar takeover for starwood which leaves the door open for marriott to complete its takeover offer. one analyst said buying starwood

continues to be attractive for marriott but is now less accretive because the price has been increased. not only are those stocks down but the hotels -- but other hotels are as well. controversial the blood testing company, is attracting a new challenger from the heart of biotech in boston. has a promising blood extraction device meant to make the procedure easy. -- takesnology take a on decades old needle draws, the results are anything but painless. we visited the company to check out the device. off, what is the problem these companies are trying to fix? what they say is the problem is that a lot of people hate needles. especially kids and older folks. and people who have a hard time getting their vein found. they think people are avoiding

blood test because they are afraid of needles. to lacking the diagnostic tools the doctors need to find diseases. alix: what new device is this? >> it's called cap 100. -- tap-100. it creates a vacuum over the skin and sucks of the blood does not take a huge amount of light out. teaspoon of what you would get in a normal blood draw. it is painless and just enough for some of the basic diagnostic tests. alix: how this company compared to faraanos? >> they are going after analytics but they say they want to make the process not only painless but they want to analyze tiny samples of blood. seven cents wants to make the front and painless. a are relying on old analytics but they are the same and that they think people hate the

current product out there so they want to revamp the process especially the painful beginning. ceo aboutspoke to the the potential human error in collecting the samples. important partan of this but once you have done this once, it is highly intuitive. it's always the same process. we believe that most people will adapt fairly quickly. we also do human factors analysis and demonstrate that anybody can use these devices area alix: did you agree? >> the first tested not work. they tried this on my upper arm. what they got was less than 100 microliters and they could not run the blood test. we did do a second test but it's not intuitive and they are still working on the adhesive. they want to file with the fda for the product approval by april.

if they are running into those kind of mistakes like not drawing enough blood, that could be a serious issue. they said it was rare. alix: once they start undergoing the f da process, how quick does that work? they would hope to get approval by the summer. they only need to draw out about 10 microliters or less and that's less than a needed on my test. they just need to prove that they can get enough lied to run civil test. alix: can we expect more companies to come out on the market like this? it seems like we're igniting some tech and health care the same time. >> the real issue that many companies find is that tech has so much less regulation. the fda is a strict monitor and this is been something a lot of companies like theranos have encountered this when i try to make it moves. alix: thank you for going there, that was great.

canada's sexiest to boil down to blackberry. here is john chen -- canada's tech scene used to boil down to blackberry. here is john chen. >> as long as i commit money in the hardware business, we have any reasonable branch. as long as i can make money, i don't intend to sell the hardware business. the software business as you pointed out is a very high business for us now. alix: oh, how times have changed. our neighbor to the north are pulling at all the stops to leeward tech talent and have recruited a mascot and that's donald trump. examine howonto to this is a recruiting tool. leap's a little bit of a , i would have to say. there is a running story up here right now. a lot is being made of the idea

that there are americans seeking to come to canada if donald trump becomes president that they would move up. breton island ran a campaign that started as a joke but gained momentum in which they offered refuge to americans who would like to move to canada in the event of a trump presidency. apparently, they were flooded with semiserious inquiries. sortable which is an advertising startup has run a campaign using tromp, i think we can show you a picture, but it shows trump and it says thinking of moving to canada, sortable is hiring. all joking aside, this is consistent with the mandate of the new government in ottawa. interested in is diversifying the canadian economy and tech would be at the pinnacle of what he would like to achieve. we are seeing the federal politicians and their political

agenda getting a boost from the private sector. alix: how many workers in reality do you really feel will come from the u.s.? spoke to the author of the story. the mayors of canada are claiming there are 300,000 canadians now who are working in silicon valley. that seems very high. if it's true, we in canada would like them back. the mayors are jumping on board. they are trying to make that happen. there is a contingent of canadian mayors who are going to california next week to try to sell the canadian sector. it will be interesting to see how they are received is usually the brain drain go the other direction, we tend to use our tech companies especially when the canadian dollar is -- when the u.s. dollar is strong like it is now. the mayor of toronto has been saying that our country embraces diversity and that it has a political culture that is

slightly less divisive. which is a canadian understatement for you guys are a little crazy right now. you could say it's smug but we will see how it's received. alix: thank you very much. still i had, our investors could be too focused on oil and one analyst is the attention could wind up hurting them and he will explain. ♪

alix: welcome back to bloomberg markets. , warning for investors defaults are set to pick up a nonenergy related names and that's the assessment from the bank of america merrill lynch credit strategist print non-commodity spreads have been 85% correlated with crude prices

and that is heading in all-time high. he says all the attention on oil could wind up hurting investors. he explained why. >> i think the big problem in the market is that everybody is so focused on oil that they have not paid attention to what's going on in the noncompetitive -- the noncommodity it it's as bad as we have seen in many years. worsthas never been the year over year in the. for the last four quarters ever in the history of the high-yield market. what are you looking at other them this question mark >> we look at leverage levels. you don't the fall because of leverage levels. you don't not default because of low leverage. we also look at things like asset impairments, debt to asset values, the amount of tangible assets, hominy write-downs -- how many right downs.

when you look at that data, impairment went through the roof, debt to tangible assets is at all-time highs. the data does not look good. where is the risk of it's not energy and commodities? >> there is risk in any company that has required cheap financing in order to fund a growth through acquisition strategy. alix: there are quite a few. >> absolutely, and this has been a strategy that is not specific to health care or tack. it reaches pretty much all sectors. from my perspective, it's not or sectors companies you want to own comments which type of companies you want to own. -- ownwant to earn larger company's exposed to the u.s. economy, you want to own companies that have grown organically and not relied on cheap debt financing. these are the type of companies you want. >> do you worry about companies that have issued lots of debt to

issue share ibex? -- share buybacks? >> you have absolutely seen that. a tremendous not of issuance. grown by 110% in the past seven years. it took 20 years for the credit markets to double in size relative to gdp leading up to 2008. in the seven years since, it has doubled in size again. its phenomenal growth in much of that growth has been fueled by cheap that and the buying back of shares returning to capital shareholders. alix: what will the trigger before investors to say this is bad? >> what we are looking for is what i call catalyst to capitulation. >> that's syria's jargon. >> a little bit of a alliteration. one catalyst to capitulation to be a major default. alix: like a big guy question mark >> like a big company, not

even high-yield lichen and run type of event. most likely due to fraud and as investors and analysts start paying more attention to the underlying counting and fundamentals of corporate, i think they will potentially find things they don't like. we have seen that with valeant and vw. a chinese missed at the be an issue or a policy error with the u.s. significant outflows or a growth scare, any of these good be reminiscent to what we saw beginning of the year. what was the biggest take away from that chat question ? >> bank of america/merrill lynch is known for his bullish out look and he didn't hold back. one thing i thought was interesting was his thoughts on the timing of a potential turn

in the credit cycle. that seems to be the big? . question. what we need to know is the trigger point. maybe the idea that we get a corporate scandal and that sends the whole artifice tipping over. that was interesting. alix: we will move on to today because they were going to drill down into emerging markets. it's a killer end of the quarter currency wise as well as the indices but it's not holding up as well today. tracy: the first quarter has been amazing but the first day of the second quarter, not so much. we had stronger-than-expected payroll data out of the u.s. which might be making some people a little worried that maybe a rate rises on the way sooner rather than later. we are seeing emerging-market weakness return stocks and currency today. is how much the rally will continue if at all.

alix: absolutely, we will talk to sean newman from invesco. his call is that emerging markets have been so hammered because there is so much corruption. commodity prices blinded investors to the fact that there was corruption. he says certain countries have taken control of their finances like jamaica. stay with us, i will see you later. in the next hour, governor scott walker of wisconsin will join us with his thoughts on the presidential race. you don't want to miss that. ♪

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. ♪ >> it is 2:00 p.m. in new york. alix: welcome to bloomberg markets. ♪

>> from bloomberg world headquarters in new york. matt: here is what we are watching. stocks higher on this first day of the second quarter. star -- strong reports boosting the market. consumer and health-care stocks leading the game. lisa: crude oil erasing it gains for the year. the saudi arabian crown prince says it will cease production if iran follows suit. in a close interview with the prince, including his plan for a $2 trillion mega fund. matt: tesla unveils the model three. gm, ford, chrysler all missing estimates. toyota posted a surprise drop in sales as the auto market.