ready to move ahead with greek negotiations after a tense few days of heated exchanges. planned merger between pfizer and allergan. the treasury department's taking tougher steps towards ending inversions. i'm jonathan ferro alongside stephanie ruhle and david westin. david: we have with us morgan stanley strategist adam parker. stephanie: we are going to be talking equities and we have to talk about francine lacqua's sit down with christine lagarde. we have got to talk about ncaa basketball. what a win, villanova. the team campton, new york city boy, dalton. you think we do not have athletes in this town? huge.

jonathan: no time to enjoy that in the markets this morning because it is deep red across equity markets. equity markets down in europe. 1.36% on the ftse 100 with a miners leading losses. s&p 500 futures negative. switch of the board to japan. dollar-yen, down by .9%. three years and a day since the kuroda experiment began. yields in germany. you have to go to two decimal places just to get one. to thesis points -- days where yields were around five basis points. wti down to $35.64. what is happening in the markets. stephanie: i want to give you a quick headline crossing twitter. really getting big and the

content game, far fiat -- beyond 140 characters. they will be streaming thursday night games. is this the kind of business that yahoo! wanted to be in? david: facebook was in discussions with this and they decided not to do it. stephanie: yahoo! wanted to be in this and but for is a meyer is using a different strategy, needs to up their game, and they are trying to do it on the field thursday nights this falls. now we are going to send you to vonnie quinn. vonnie: donald trump faces his toughest test in the race for the presidential nomination. polls show trump trails ted cruz. reduces chances of reaching the number of delegates needed before the last primaries are held in june. polls show bernie sanders with a slight edge over hillary clinton in wisconsin. his fundraising machine outra

ised clinton for the third month in a row. saying, it was one of the best finishes ever and the ncaa men's basketball tournament it north carolina down by three. marcus paige hits and off-balance three-pointer to tie it. villanova's ball and kris jenkins has a buzzer beater for the victory. it is the school second ncaa title. global news powered by our 2400 journalists around the world. stephanie: ther eyou have it. villanova fans feeling it. it's a risk off day. stocks declining and oil is dropping as investors reassess last months reaally. adam parker is here with us. adam, what is your take on sort of this, you had -- you are a seller of this recent rally?

adam: in the last couple weeks we had a bit of an inflection in our thinking, given the huge market rally. seven weeks ago i was arguing things are mixed, not terrible. now i am are green things are mixed not amazing. the fundamentals are the same. they are 4% earnings growth for the market but the differences price. the market is up a lot. there are some risks out there. stephanie: like what? on thene would be back dollar strengthening path. and more fear about the european economic trajectory. we have brexit in a couple of weeks. the contagion there. most importantly, economists in asia is forecasting the second half of the year the chinese economy slows down. if you get back on that pop process, we have seen with that can do to sentiment. i'm not saying, it's an apocalypse.

i think we are closer to fair value after a pretty big move. 1$ when we change our view -- we have got 1% from an all-time high in the market. just wonder what the shape of the year looks like. forget the year end. what is shape of the year look like? the earnings from q2 whthis year two years out. 12 months from now, i pay 16 times for that. you have to have some context. a lot of investors think my assumption of 4% earnings growth is too high. that is above the bottom numbers for this year. i think the question will be what do you expect from earning season? we did not get any huge negative pre-releases yet. i think and you're talking about is the same pattern we have seen. in line to weak revenue, bad

than expected margins. that's the formula sets the bar low for next quarter which we have seen 28 straight quarters this cycle. that is what you should expect. is that enough to get people excited? i don't think so. has been more multiple expansion positioning. question i'me getting seems to be when our going to be fully exposed such that i can pull away from this rally? david: what about the rest of the world? matt: i wanted to ask about the diversions in equities. it is interesting if you look at a longer-term picture. this is 10-year look at the msci, and the entire world without the u.s. you can see vista versions. even in the last two weeks, the stoxx 600 fell to a five week low. a couple days ago the s&p 500 was at its 2016 high. why is that?

and will it continue? been ourt has firm's preference -- the real reason is earnings. the price. europe'shink earnings have grown in five years. the u.s. has doubled. if you look at the composition of companies, the u.s. has a much better health care and technology sector, its banks are better marketed. can go down the line. a, nation of earnings growth and a relative safety of the environment, both. stephanie: when you look at corporate earnings in the u.s., 2015 was rough. what makes one think we are going to see earnings growth? forced m&a, and buybacks, what are we seeing corporate stew? -- corporate do? ams: earnings were up 6% ex-and a gp the wild the

financials and energy sectors. and energy, the s&p is around $119 last year appear to energy was $5.00 of that. so, you have seen that huge decline. the question is, what you expect out of energy and financials? price know what the oil is going to be, i can do a better job. our view is lower yields and lower world price and that will limit earnings for places that grow -- health care, select tech, consumer and financials. stephanie: how are financials going to get any better? there are no clear signs. there is not a bank ceo showing us a rosy picture. says wesche bank ceo are not going to make any money this year. not a good sign. adam: the case for financials is one they are having pretty good growth and shareholder return. two, the credit card companies,

that is an area we have a pretty good bet in the portfolio because the consumer is in relatively good shape. you see this stocks trading at nine times earnings. a lot of them are discounting much bigger default cycles that are likely to unfold with this environment. it is not just the big banks. the other thing would be if our firm is right, our currency strategy is expecting a strengthening dollar. if that is true, the bank is the one area that outperform spirit you can create an area with shareholder return and by that s currencyand then thi issue, have a little bit of a head start. particularly versus energy where it seems like every week there is a new deal to dillute shares. i can our to your question is really important. your question

is really important. i'm trying to break the market so ithree buckets, just don't get run over if we get these regime changes-. yields in germany down to nine basis points. how can you recognize -- can you reconcile that? strategy has been negative. the earnings are flat with five years ago. my view, we write this all the time in my european colleagues give me a hard time. you do not have earnings growth in areas of health care, of tech. you do not have a basket of consumer companies that have exposure to the u.s. consumer. the u.s. consumer dollars are still the biggest game in town. a lot of this is also e.m. exposure. europe has a lot more exposure. if you are risk on, and you think the commodity complexed is solved, then you buy it. there is still 60% deal capacity

in china. if you look at the longer trend, it is still pretty bad. i am not an expert on europe, other than -- jonathan: other than saying it is only good for vacation. adam: i just know i like vacationing there. it's cheaper than it was a year ago. david: that was a big endorsement. that's adam parker. coming up, despite some heated last few days, the imf's christine lagarde says she is ready to move forward with greek negotiations. our interview next. ♪

vonnie: here is your latest

bloomberg business flash. all of a sudden, succession plans and disney are not sort clear. no reason being given for the departure of cheap operating officer tom staggs. had problems convincing some disney board members he was the right person to succeed bob iger. tesla grabs the spotlight for taking deposits on 276,000 of it's new model. but when it came to delivering vehicles, the company has come up short, selling less than 15,000 cars in the first quarter. tesla blames apart shortage. now.han: to frankfurt tensions between the imf and the greek government have been growing. today, christine lagarde indicated a growing level of flexibility with greece.

in an interview with francine lacqua, lagarde said they want to help the company regain -- the country regain stability. madame lagarde: we continue to be focused on addressing the greek situation by negotiating in good faith with a two fold objective. one is to restore the financial stability of the country and to give it debt sustainability. number two, to equip that economy with the competitiveness, the productivity, the structural reforms that are needed for it to be independent. the objectives have not changed. the negotiations will continue. i have a team on the ground at the moment. we will continue to do so in good faith. francine: the transcript suggests the fund is a -- is willing to agree to a more lenient fiscal surplus. madame lagarde: everything has to add up. those are magic words.

if the primary surplus is lower because that is what the authorities and the greek people can deliver, then it means the debt operation needs to be a bit stronger or longer-term. it needs to add up. we hope it is not going to be done, we wanted to be done by long-standing sustainable measures that will last long after the imf has disappeared from the greek landscape. francine: at the moment, you're willing to play an active role in greece? madame lagarde: i have been invited by the greek authorities to engage our efforts through ve competent staff members to actually help the greek people. and we have to do a transparent, evenhanded job. we cannot cut a special deal on the side. we have to do the way we do it with all country because we are independent. we do it for all. francine: the anger or the animosity amongst the greek government towards the imf is

something we have in the past. is it unfair? madame lagarde: together with the greek authorities, we have gone through ups and downs. for sixeen a sageaa years. we will continue because we are therefore that people -- the people so the economy can strive, can be standing an independent. -- and independent. jonathan: for many other viewers, they're wondering why we are still talking about greece and why there is no conclusion. we need some event risk to get this over the line? is that what's it going to take, some playing to situation? problem is a goes back to politics. i was surprised that there was this leak. the conversation was the imf saying that they needed to be on the brink or some kind of event to push the eurozone members into granting debt relief.

i am not sure what the endgame is, buddy if you are the prime minister, of course, -- but if you are the prime minister, is it in your edges to have this advantageis it your to have this leak? christine lagarde wrote a stern sipras, saying we mean business. please do not do anything that jeopardizes our relationship. today she was a lot more diplomatic. did we forget about greece? i'm guilty of that. it's certainly back at the forefront of everyone's mind. david: there is a third party in this negotiation. it's also the bundesbank. i wonder, francine lacqua has christine lagarde,

sorry. explicit about debt relief. how much pressure is being put on the bundesbank? francine: i asked christine lagarde what she thought about debt relief. we know she is traveling. right after a interview she went to berlin to meet with angela merkel. this is the dance around greece. we understand from the transcript the imf was willing to be much looser in terms that they would ask if they eurozone countries, especially germany, would be ok with debt relief. we have not had a sign that is the case. although markets are interpreting it as the bundesbank and germany agreeing to debt relief. but this, back to what christine lagarde was saying, there are moving parts. the imf will do their part, but the books have to be balanced. you have to find agreement that clears everyone but make sure that there is sustainability on greek debt for the future.

stephanie: that is francine lacqua joining us from franklin. coming up o n , the u.s. treasury targeting corporate inversions putting into question the allergan-pfizer deal. those details next. ♪

jonathan: it is a risk off day in the markets. in fx, a stronger dollar store with the exception of one notable currency pair. dollar-yen down by .8%. a stronger japanese yen. gold up, yields down. down by five basis point to 0.0 9%. for the first% time since april 2015. stocks lower in europe and crude down 1/3 of 1% on wti.

let's cross over to matt miller for some of the big analysts calls. miners out of your. bank of america, merrill lynch upgrading e.u. miners to neutral. no longer saying sell. tail risks have receded from equity markets after a recovery in commodities prices. etf is up 39%. the big mindeers in europe getting smoked today is markets fall. glencore down 5.4%. rio down 3.5% here shares of goldman sachs and the red after snapping a five-day winning streak yesterday. three months after predicting goldman would put the end of 2015 behind it and stabilize profits, analysts are cutting projections again. analysts have2 -- 22 analysts

have lopped 94 cents. david: the treasury department dropped a bombshell yesterday. it is proposing new regulations about tax inversions that could affect the $160 billion deal with allergan and pfizer. rules takee es effect, does the deal makes sense between pfizer and allergan? sam: the deal only ever will make it if the companies could get their tax and version, i.e., go from the 20% tax pfizer is paying down to the 18% allergan is paying. and more portly gave them access to cash they had overseas. the reason for that is our population suggest this deal is really only accretive if there is a major buyback element to it. that buyback they need the cash for.

they need about $24 billion of cash coming in to make it work. it really would not work out. whether the know regulations would be an effect in time for them to know what the rules are? sam: i mean, look, you have got to big companies. there are advisors and lawyers and financiers, etc. we are almost 12 hours into the announcements of these new rules, and we have not had a response. this is very hard to tell. i cannot really give you a direct answer. what i can tell you is it does raise the risk that even if they say they are going to go ahead, it will unravel at some point in the future. david: have you had the opportunity at what other deals might be affected? this would apply retroactively back to september 2014. any earlier deals done? sam: right. part of the thing that changes in this calculation is that the treasury -- all those deals that allergan has done over the past

36 months or so will have to be unwound in terms of the calculations we are making for this deal. and what percentage of the ownership would be in the u.s. versus outside the u.s. whether it affects or whether it will have jurisdiction, i am not a lawyer, previously finished, done deal, i don't know the answer to that. but it raises the risk. of london.n the city thank you for joining the program. allergan getting absolutely slammed in the market, down 20% this morning. much more on that story. coming up, we will look at where krkr is finding opportunities in distressed assets. ♪

caroline: you are watching "bloomberg ." and you are watching a sea of red. equity futures are red across the board.

we are exactly two ours from the market open, hoping for a turnaround. wordsgoing to catch his in the moment, but here is the bloomberg first world news. arerter: european leaders taking a quilt a look at the scandal between shell companies and offshore investments. documents leaked show how the rich and powerful use shell companies to conceal their assets. a helicopter crash killing all five people aboard. no word yet on what caused the crash. witnesses say they heard two extra oceans. the president's legal cambridge congress. claims from state banks to cover up a deficit. a recommendation next week. global news 24 hours a day,

powered by 2400 journalists more than 150 news bureaus around the world. the store that keeps on giving. it just keeps snowballing here. it keeps getting bigger and bigger. >> i truly agree. let's get to a quote in panama. is isney washing is and bebal in scope and will not eliminated until banks and law firms and other enablers are held accountable and pay or facilitating such illegal actions. fines may not be enough. it may also be necessary to have the power to close down such businesses, creating the ultimate this incentive for such bad actors to break the law. i am not sure that is what we're going to see out of this. there will be selected issues like what we see here. >> this is the panda minium law firm that frankly, i have never heard of. they seem to specialize in tax

avoidance. >> which is probably why you have never heard their name. >> it strikes me, there are two things here. one, is the illegal activity and the other is perfectly legal activity, but when it is brought to the light of day, people might not like it much. a lot of countries may be saying, i am not sure our tax laws are working the way they should be working. >> we will have to see and again, it is not just panama. there are many other tax statements. is that over by france, right? jonathan: if i had known you were going to ask this, i would have gotten the map ready. i think you raise important issue, the reputational issues that have been entangled in all of this, whether they have broken a law or not. is perfectlyhis legal, but it is a reputation issue. many are coming on saying, we

are ready to go along with an election of a coalition partner, because it does not look good. >> a no-confidence vote was called for. >> but places like the cayman islands, this is part of their brand. they are attracting businesses to go there for that reason. when a hedge fund boost its headquarters to guernsey, they are not doing it for the social aspect. has always and it been there. i really don't know how this will play out, other than with a lot of embarrassment. we had an important interview today with secretary kerry. you have to believe that he is looking with this, and the attorney general, with every member of their cabinet. >> exactly right. my ensure they put together an internal task force. >> where the skeletons? >> exactly right. where are the better documents. jonathan: i imagine we will be talking about this for a while, tom. tom: you saw the prime minister's father.

>> there is a reputational issue for someone who is cutting the budget, or trying to. >> did you spend christmas in panama city? >> i did not. to getn: i am going stephanie out of this and we are going to talk oil. an opportunity to investors. among them is kkr. we are joined by the firm's global head of special situations, jamie weinstein. alex: good to see you. you guys have raised $3.5 billion in a distressed assets , particularly in the u.s. why the u.s. and why now? >> we think the u.s. is in the late stages of the credit cycle. we have had a significant boom coming out of the market dislocation in 2008 and 2009. as you get into the later stages of a credit cycle, you generally see misallocation of credit.

and as you come to the end of that cycle, you see a rise in defaults. >> we have heard many calling for a rise in defaults for a while. we've also heard other big guys on raising money for some kind of default cycle to happen. what will be the trigger for that? jamie weinstein: we are seeing it already. if you look at quarterly data over the last 30 some odd years, three of the prior four highs were in the year 2009. we have seen a significant increase in the default rate. a lot of it is concentrated in commodities, but it will spread into the broader economy. >> i want to go through the three ways you wind up getting involved. one is loans, one is a direct stake, and one is trading on the secondary market. what levers do you want to pull this time around? jamie weinstein: early in the lifecycle of credit, we're going to do more risky financing.

this is where we go directly to a company and provide fresh capital to it, usually in the form of a new loan to help them avoid a bankruptcy. as you move later into the cycle and you have more turnover of the original dwebt, he will likely see more distressed or control activity. >> does that mean you will be stuck with a lot of oil and coal assets? what do you do with them? jamie weinstein: we are looking for opportunities where we think there is a dream is pricing. if you are thinking about the energy and commodity related things, right now we think it is too early. those distressed assets do not yet reflect a much lower for longer environmental oil prices. >> you are saying energy is not yet distressed enough for you to want to purchase? >> it is distressed enough, but not cheap enough. >> when do you expect that trigger to be? thanks wilson rate -- banks will

soon reassess ther ir loans. what will be the trigger? jamie weinstein: it will be when the company is run out of cash. a have survived this long because the banks have given them extra time. they shrink it over time based on the value of assets in the ground. this tracking process has been slower than people imagine as oil prices came down. the other trigger is going to be when companies actually run out of cash. when will they run out of cash? when their hedges burn off. this will happen in 2016. >> and you part of energy is coal. i can't think of a more distressed sector right now. it is kind of a disaster. is it interesting to you? jamie weinstein: you have to distinguish between thermal coal and metal energy. they have both been lumped

together in the market, but most of the secular issue is in thermal coal. we have environmental sanctions around the world that are reducing reliance on some thermal coal. >> you avoid that? jamie weinstein: yes. net coal does provide opportunities. it is a global market and u.s. is a small player. australia is the biggest producer in the world. it has more to do with the makings of steel in the world. >> the other sector going through a huge shift is media. you saw that twitter won an nfl deal. are there secular versus cyclical issues in the media industry that do provide opportunity? jamie weinstein: if they were cyclical, i would say they provide opportunity, but so far we have seen singular. people are understanding how content is delivered -- it is

changing over time. a lot of the stress in the system happens at that transition moves and people's assumptions about what those businesses were worth changes meaningfully. and those are hard to predict over a long period of time. >> i think energy is a great example of regular, old radio station. we've been waiting for it to die for a while. but it hasn't. does that imply there is value even in some kind of structural shift? jamie weinstein: there absolutely is value. od example. go the company actually produces a good bit of cash, maybe not enough cash to support their debt. value ofan unlock the the company through a restructuring process. it can be a good business underneath, but is trapped by too much debt. we were involved with one company that had that same formula.

it was very cash generative. doeses that mean iheart provide an opportunity? jamie weinstein: some media assets could. >> we had been waiting for e-commerce to come in, but we have been waiting for that for a long time. are we at that inflection point? jamie weinstein: i don't not if we are there, but we have been waiting for the amazon affect fo or years. it has been slow, but you know it has been happening. you know how many amazon boxes have shown up to your house. >> i know, i have a toddler. [laughter] it takesnstein i: time for the impact to be felt by those stores. that shift is going to happen. they will not just be the operators themselves. the owners of the real estate will feel that pressure, particularly in secondary locations. >> what is your favorite place to look right now? jamie weinstein: in the u.s. in

particular, relative to our activities in asia. is invested in europe and asia. it is a shift for us to focus on the u.s. in the secondary market, the opportunities of up and down with volatility. we are very focused on industrial businesses, retailers -- there are actually some technology opportunities -- and service businesses related to those opportunities. >> and the thing you don't want to touch with a 10 foot pole? jamie weinstein emerging markets. >> here in the u.s.? jamie weinstein: thermal coal would be an example where the secular change makes it impossible to revalue the residual on the backhand. >> the biggest risk you see right now? jamie weinstein: political instability.

the uncertainty around the election cycle makes the markets there he nervous. >> jamie, good to see you. much more coming up with kkr's h global head of special situations. what can happen when the fed eventually raises rates? what can happen to burst that credit cycle? we will be right back. ♪

jonathan: coming up at 11:00 a.m. eastern, u.s. secretary of state john kerry said some of bloomberg. -- john kerry sits down with bloomberg.

caroline: you are watching "bloomberg ." i am vonnie quinn. new u.s. rules could threaten that 150 billion dollar merger between allergen and pfizer. merges.s. company with a smaller firm. new orleansdge in has resulted years of litigation over the 2010 bp oil spill in the gulf of mexico. he granted final approval with a $20 billion settlement. the company will be paid over 60 years. costs will be around $53 billion. the rate of increase is going down in the first quarter. 4% is down from 5% a year ago. one reason? new apartments hit the markets.

last year they hit 20,000 euros, the most since 1988. reassertedllen has the u.s. central bank's gradual approach to raising interest rates. the question is, what happens to weaker companies who have loaded up on cheap debt when the fed eventually hikes those rates? jamie weinstein is still with us. jamie, we have seen a lot of high-yield companies load up. they are limping along. what happens when rates actually go up? jamie: when rates go up, some of the companies that have debt in their capital structures will feel some pressure from that. the initial rate move is cushioned by the fact that these loans have a wider floor. the initial rise is baked into their debt. they will feel the pressure on a cash flow basis. the bigger issue is, what does a

rate hike due to the broader economic issue in the u.s.? does this actually slow down the gdp growth further? jonathan: quite clearly, yields are at incredibly low levels, even treasuries. u.s. 10 year yields are described as lower. is that a system of low growth that is not good for high-yield? point?ne is at this jamie: it is both. the reason the base rates are as low as they are is we have very low economic growth in some of the parts of europe relative to where they should be coming out of a couple of recessions now. they are very low in japan. japan has had very low growth for 20 plus years. the u.s.'s growth has been ok, not great. it reflects the fact that central banks around the world are trying to stimulate growth. what does this mean for investors?

injured companies that need to access yield cannot get it where they used to get it. now they are forced to go to high-risk asset classes that can provide those yields. >> they have done that for the last three years and now what? we're looking at these energy companies that are suffering. what happens to these non-sophisticated investors? >> a lot of them have sustained losses on those energy assets. some of those energy assets, for example, have migrated out of the original holder's hands and into the hands of more distressed investors. a lot of that pain has already been felt. >> we know households have the leveraged -- have deleverage since 2008. are u.s. corporations more leveraged than they have been in the past? less: i think they are leveraged today relative to earnings than they were going

into the last recession. vonnie: you were betting big on the turn of the credit cycle. can you describe what that credit cycle looks like? >> what does it look like? it looks effectively like you will have the economic -- it always starts with economic activity. it starts with an earnings slowdown and cash flow pressure on businesses. basic industrial businesses demand locally. it moves into retail businesses. it will show up in the technology sector because they are -- whether they provide software services, they are providing capital goods to other businesses. they will feel the pressure budgets getgetccapex slashed. >> we have seen the fed responsive to what is happening to the market. what gives you the confidence that they at some point will hike so aggressively it will cause the kind of economic

implications you are looking for and cause the credit cycle to go bust? basingn't think we are our view entirely on what the fed does, because to your point, the fed has been very accommodative for a long time. we have been sitting around waiting for the fed for the last seven years. we have only seen one quarter hike and that is about it. it is less about what is happening with what the fed does and for about what is happening in the u.s. economy and frankly, around the world. there are some u.s. companies that feel pressure around the strong u.s. dollar. export driven economy, you are feeling the pressure. jonathan: what i want to ask you, jamie, you said to alex that the assets or cheap enough. is it the corporate leaders that have not realized this scenario? we have just started to see some of the miners and big energy producers/dividends in a material way. -- energy producers slash dividends in a material way. >> they are certainly feeling

the pain, but the issue is more, what behavior do they fall you? and if you're talking about oil and gas companies, they will continue drilling and they run out of their last dollar. they generally will not stop until they are covertly tapped out of cash. that has always worked out for them in the past, except for in the 1980's in texas. >> a lot of these companies don't need to get cheaper. who they are and the money they make fundamentally does not have to be along with what they traded the market. if draghi says they are going to start buying corporate bonds, that will push demand for corporate. absolutely true and less so for the deeply distressed companies, but it has shown up in the risk assets in europe. as the ecb is running out of room in the software markets and moving into high-grade

corporates, that is happening there. >> does that mean capital is being misallocated? because they are throwing money at these problems and as you said, corporate bond yields are going down. true.a word, yes, that is it does not mean that every trued they do is a poor allocation of capital, but marginals will be funded that would not have otherwise gotten funded. of these marginal shell opportunities that had very high costs. funded when they probably shouldn't have. that pressure on the market more broadly definitely slows down on the company's accessing capital. >> that does mean there is so much money in this that when the credit cycle goes under it is a huge wash out. >> there will certainly be a lot of opportunities. jonathan: thank you very much for joining this program. the market open. where are we?

an hour and 40 minutes away. the ftse 100 is up by 1.4%. the miners are getting absolutely hammered. the stop 600 is down four percentage points. the dollar yen is the story in the fx market, down .6%. decimalar yen, down two places. the yield just nine basis points and april, a 2015 low. ♪

vonnie: you are watching "bloomberg ." you are watching an extraordinary finish. with madness eneded the villanova wildcats beating north carolina, 77-74 with a

three-point buzzer beater. it was also wild finished with our bloomberg brackets. the 63 correct picks in his final profit and a total of 147 points overall, just edging out cliff of aqr. luckily, aqr is having a great year. we have 42 players taking part in our bracket, each donating $10,000, including our own mike bloomberg. our is going to go to charity. we will be back with more. ♪

vonnie: global growth concerns mount. the japanese jen jumps to a 17 month high. the penama papers puts new spotlight. we take a continued look on the

follow-up around the world. and a bloomberg exclusive with the argentina finance minister, alfonso prat-gay. live from when us eras for the first time in over 15 years. ares when ubuenos for the first time in over 15 years. here in new york city and 1:00 p.m. in london and 8:00 p.m. in hong kong. i am here with my partners jonathan ferro and david westin. david: with us for the hour is a real santos. she is going to explain to us, and whatnot, she is fluent in spanish. isn't that great? she can translate for us. jonathan: we're going to translate the political speak as well.

the versions, and jeopardy potentially. risk off feel running away in this market. dow is up. s&p futures are negative. the dax is down by 2.3%. the dollar-yen, a stronger japanese yen. and nine basis points is your yield on the german 10 year this morning. april, 2015 -- that is how far you have to go back to when yields were this low. i believe wti is down for a third straight day. let's get you up today on the news. vonnie: the dump the trump movement is hoping to gain traction today. lls show ted cruz is leading the primary.

meanwhile, exit polls will show whether hillary clinton is winning over younger and working-class voters. polls show bernie sanders with a narrow lead, but he needs to get 64% of the remaining delegates to clinch the nomination. a newspaper and china says a powerful force is behind the leak of the penama papers. the paper says the u.s. government stands to gain the most. the documents include details of the holding of the president's brother-in-law. another of those mentioned is the president of iceland. the prime minister refused to resign, but today he said he will call elections if his coalition partner agrees. david? david: global stocks fell as investors took a second look at last month's rally. 600 thing to a

five-week low. gabrielle santos is here with us to explain this. this morning, there was risk off. i said to jonathan, why? what happened? what did i miss? >> i don't think there is a specific reason. we can point maybe to tax inversion, maybe to something other, but i think it is more a consolidation. we came a long way in the first quarter, in the second half. >> we went down a long way. >> we went down a long way and then came back up a long way. it was an indication that things were not as dire as they seemed, but they are not perfect either. there are many uncertainties that remain with us and we will have to deal with them. what is it that we thought was the case in january and february that is not? >> the crucial one for us is the conversation around a u.s. recession. we don't think the u.s. will

break through and return to that 3% growth it used to have decades ago, but it is going to .5%-2%n that sell at growth. that is the change that we think is permanent. jonathan: what do you make of the magnitude of the move? 2.83%, and move of 283 points in the dax. as david said, it is hard to find a catalyst for the magnitude of the moves. what story does that tell you? >> that tells us investors are still very skittish. canlittle piece of news attribute to the move and oil prices, for example. it shows us how skittish investors are and how easy it is to flip one way or the other. the volatility will remain with us for the rest of this year. >> if it is, what is to say we can't flip right back to where we were in january and february? >> the message we want to get

across to our clients, which are long-term clients, is that we want to look through some of these big moves, three present moves in a day, or even if we do get another 10% correction, the fundamentals will take hold in the medium-term. that is that we should focus on. we should not change our allocation based on these daily moves. >> will determine what happens here? what are the two or three major factors that determine where we go? >> they are the same ones they were talking about last year, starting with the major correction in august last year. that is stability in china, stability in commodity prices, and more stability in of the dollar. as long as we continue to see these stable variables, it could go a long way towards calming those recession numbers and instilling confidence back in the markets. >> mr. millie? >> i just noticed something weird. it looks like investors are getting into the long end of the curve. .s gm

the biggest moves we are seeing in g 10 debt, is in the u.k. 30 year, the german 30 year, the dutch thirty-year. i wonder what you make of that, if it is interesting to you. >> the big implications we see from a lot of these moves in at the european bonds are the effect we continue it t expecteo continue having on our shores. we have already seen some large inflows into u.s. treasuries and u.s. investment grade bonds. as a result, we do expect our yields to remain low, given they are there he appealing if you compare them -- they are very appealing if you compare them to some european yields. >> i was going to use this for battle of the charts, but i backed out. >> that is really unfair. >> the tenure japanese debt is

in white. and the 10 year treasury is in blue. every move the japanese make, they get less and less traction each time. you also see u.s. yields tracking. >> i think that is a sign of a lot of inflows, right? it would look quite similar if we had for example, the german boom as well. a lot of those investors are looking at their very low yields and choosing to move over to our shores, to the u.s., to look for a little bit more yield. of 1.7 istreasury horrible. but for them, that is very appealing. those are the moves we will continue to see. there is a lot of opportunity still if you are a u.s. fixed income investor. income am a u.s. fixed investor, where is the number one place for me to be right now if i want the best deal and a some liquidity? >> the liquidity part is an

issue, but the u.s. high-yield is an area where we see a lot of opportunities. we're not talking about wading into the energy high-yield, but i think high-yields are still so high that they are not justified by the continued growth in the u.s. that is an area where you can find field. maybe you can find more spread compression outside of the energy sector, of course. >> keeping with the markets, christine lagarde sat down with bloomberg and discussed what about global economic environment concerns are the most right now. >> what we fear is this sort of their he new mediocre -- is this sort of very new mediocre new jobs, nono high inflation, still high debt. all of those things that should

below that are high. you know, continuing that trend. we are calling for policy actions. >> our own francine lacqua was the one who spoke with christine lagarde and she joins us now from frankfurt. francine? francine: hello, stephanie. interestingy conversation because i had 10 minutes with her and we where one of the few television channels to talk with her. i asked her about the risks. i asked her thoughts about brexit. she says, if you look at growth, it is going nowhere. in fact, she says in the last six months if you look at volatility in oil, if you look at some of the financing structures, she thinks there are more downside risks than there were back in september. we talked a little bit about chair yellen. she said with relief that the u.s. is not ready to normalize, but what she was really pushing is the fact that we need structural reform. she said, we talked about it.

a lot of politicians had put it in place, but they were kicking the can down the road. she was making the big point that we had to be sure that the emerging markets are strong enough not to wear western economies too much down. >> she talked about structural reform, she talked about fiscal, and she talked about monetary. but in her job, does she have any influence over structural reform or physical? -- or fiscal? francine: no, unfortunately, david, she doesn't. unless they are actually intervening in a country providing loans. what she has seen is a little bit of a barometer. she is a little bit of an alarm. when she thinks she sees things that are going the wrong way, she says, hold on, guys. this is going to be a problem, which is why it is though interesting to look at the imf's global outlook and look at their projections. the annual spring meetings of

the imf will be next week and she will give us a little bit more figures on the downside risk. david, if you look back in the last four weeks, but even month and a half, we have had several bank policies from the ecb. we had governor kuroda trying to do his bit. we had some negative rates in european companies. it is amazing when you see everything that has been thrown on the monetary policy, that global growth is going nowhere. the projections for global growth -- it would be too soon to see the effects on the economy, but you could see economist say, because of all the central-bank action, the world will look better in six months. and we are not having it. bailey bright spot that lagarde told me is the u.s. was concerned by recessions. everything around the u.s. is not looking that rosie. -- that rosey.

jonathan: i remember a big headline in bloomberg. we were told for a long time, hikes would be gradual. and now looks like they are about to run things hot and things may not be gradual. concern isthe imf's the impact on the currency, the huge appreciation we saw on the dollar and the pressure that was basing on emerging market countries. especially, i would say in certain regions that are dealing with depreciating currencies high inflation and low growth. that is a terrible recipe for them. by think you are right in the sense that the fed is not only focusing its policy on u.s. development and that is very dangerous as you mentioned, if inflation does run hot and we have to hike rates too quickly. we would much rather see gradual, but a little bit quicker rate hikes from the fed. muchhan: thank you very

for joining us. we need a translator, she is going to stay with us. up next on this program, the so-called penama papers draw outrage from around the world and train new spotlight on the wealth of global elite. ♪

♪ you are watching "bloomberg ." here is your latest bloomberg business flash. the company that limits your

cell phone to 140 characters. this is according to a person familiar with the matter. the leak is using digital rights to restock their cable tv subscription. tesla grabbed the spotlight for taking deposits on 276,000 of its new model electric cars. that when it came to actually delivering vehicles, the company has come up short. they delivered fewer cars than expected in the first quarter. job has madegy san francisco one of the most expensive places to live in the u.s. tech jobs in san francisco fell 5% in february. one problem may be the median monthly red, $4500. they are now attracting software engineers to launch a cheaper lifestyle. >> shares plummeted 21% in late

trading monday after the u.s. treasury department released rules that would limit it was companies being able to avoid paying taxes by issuing debts to their foreign parents. we are joined now. zach, could this pose a real risk on the pfizer-allergan deal? >> absolutely. the treasury is going after serial converters, companies that got bigger by doing a bunch of inversion. they aren't up a can of to take the country the size of pfizer out of u.s. taxes. that is exactly what allergan is. they think allergan will now die. >> you are an inversion expert. this possible new rule will be backdated. what will it do to companies that have really been in this space before? >> the new rules are not going

to go back and try to unwind deals that have closed, but they will look back at allergan and if they, over the last three years all of these deals you did to get bigger and bigger, those don't count when we do the math on the pfizer deal. it is likely that the pfizer transaction, because of this, will end up with pfizer's remaining u.s. company and there is no way pfizer will want to do that. >> it is also income stripping. it is also the big longs that are being made with the tax deductions. >> that is something the treasury has been talking about doing for a couple years, but people wondered if they were ever going to actually do it. it is not clear how much that will affect pfizer-allergan in particular, but it will have an impact across all foreign acquisitions in u.s. companies. subtly, they will be able to strip all of the profits out of the u.s. and put them in a lower tax jurisdiction.

>> we have come up with these very complex tax policies. what don't they just drop the corporate tax rate? >> that is a good argument and jack lew said yesterday, we have to do tax reform. democrats and republicans are not close to a deal here and obama's administration is saying, let's do something. republicans are thing, let's just wait and fix the fundamental problem. >> a lot of people are painting this deal as strictly an inversion. i'm wondering if there is another reason pfizer might not want to get with allergan. you can see the sales growth over the last five years. pfizer has gone down from $60 billion in revenue to $14 billion in revenue. could it not be that there is an actual business case behind pfizer's purchase of allergen? >> i think they're always what

they business case, but the question is, at what price? >> if pfizer buys allergan, but has to remain a u.s. company, you are not just giving a potential u.s. savings, you costsbe adding in new the allergan would not have to pay on its own, but now has to do because of pfizer. >> isn't it your duty to shareholders to find the best case scenario for profits? >> it is what they are supposed to do. >> nobody is questioning that they are good people, but the treasury has the right. >> obama is questioning that. >> i was about to say. >> the treasury has the right to change the rules. it is really a question of who gets to do what. the treasury can change the rules, but not the tax rates. congress has to change the tax rates. >> i think corporate america, just like banks, has said, just

tell me what the rules are and i will play the game. and what they really mean is, i will figure out my way around the game. frustrating for a company. is it does not matter if the treasury can defend these rules in court, but pfizer can't take the risk. they won't do the deal if they think it will be an issue. treasury can reinterpret all day long and companies have to go along, even if they don't think the government has a leg to stand on. >> it is a proposed regulation. it is not done. they put it up for comment and they get comments. what is the time on this? >> if pfizer tries to go ahead and do the deal with this risk of potentially having the tax problem, they don't even get to take it to court until after the deal closes. we are talking years and years and years from now. there will be some kind of drilling from the government as to whether the treasury has the authority to do what they are doing. >> does the deal have an expiration dates? because i am guessing they are

going to try to sit on this former clarity. pfizer's tax counsel was up all night trying to figure this out and i am sure they will be talking to people at the treasury today. at the end of the day, big companies like this don't like to spend years with uncertainty like this. >> in a normal election year they would say, we will play out the game until we get a new president, but all the candidates are against inversion. thanks for joining us. will stay withs us and later today, don't miss my interview with the gregarious state john kerry -- with secretary of state john kerry. ♪

jonathan: coming up on "bloomberg ," an exclusive

interview with alfonso prat-gay. for thebe live bloomberg argentina summit. this is important because you look at what is happening in brazil but the day larissa. is this a government people want to see post rousseff? >> i think 100% it is what people want to see. i am very skeptical that we are getting close to that in brazil. over the last few weeks we have seen brazilian assets rally tremendously in expectations that we will get the impeachment and as a result, we will have a like a iness mockery brazil and i don't think that is a given. there is some headline risk therefore brazil still. but argentina specifically, it is such an exciting story. in latin america, we have so many negative stories to speak about. argentina is a step of the right direction in terms of real business friendly policies

opening up the country. i think it is a great example for other countries in the region. >> when the new president came in there were great high hopes. looking at who he is appointing, is he appointing good people? > >> absolutely and what is most impressive, if you look at the first 100 days of his team's term, they have done a lot of the things they said they would. they let the currency float more, they removed export taxes. . it is really impressive. jonathan: coming up, the exclusive interview with argentina's finance minister. ♪

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we have a real risk off feel. the bond market has yields rallying. the dollar yen is taking the headlines. it is coming down to an october 2014 low. let me bring this to you now. slightly wider than expected. the previous month was revised to $149.9 billion. the trade deficit in the u.s. is rising 2.6% in february, up to $47.1 billion. just looking at that, it speaks to at the moment, it speaks to the u.s. strong domestically and weakness abroad. we have seen this in many economies. >> i think what we are in for with the first quarter gdp in u.s. is doing to see those

forces at play. it is exports subtracting a lot from growth. it is investments a little bit weaker as a result of those global concerns. as a result, growth is unable to break through to a higher growth rate. we are stuck in that suckeb optimal 1%. it is still not a recession. that is a bit overdone. >> but if it is not a recession, we continue to be almost in a can kicking mode. global concerns around the world are not going away. political uncertainty here in the u.s.. what catalyst will have corporate ceos today saying, i am going to spend big? >> it will have to be the continuation of the positive domestic stories. we need to be able to see concepcion growth continue -- to see consumption growth come in at a stronger pace. that will feed into better earnings for the rest of the

year. what we do have is a crisis of confidence in the u.s. as a result, the is keeping consumption a little bit pressured. >> the how do we get the confidence back? the president of the united states says the economy is booming, look at this recovery. but at the same time, look at the popularity of candidates like donald trump and bernie sanders, who are representing that faction in america who says, we are not doing well and we need change. >> you are saying that discontent manifest itself in the political process. we believe, not to speak ill against them, but that the federal reserve has a lot to contribute here. hiking rates is not just about cooling inflation and slowing down the economy. it would also be a good confidence boost and a late some of those beers around the labor market -- and alay some of those beerfears around growth. dependent on the

international community than we have ever been. you are saying we're nothing profits because of a week ak international economy. >> last year was a tough year for earnings. it was not just the strength here, but the weakness abroad. factor, that strength in the dollar, is one we don't expect to see to that same magnitude this year. that will provide a huge amount of relief. globalot just about growth. that currency aspect is huge. >> we're going to give you a little bit of first word news. vonnie: for the first time since the u.s. began pulling out of iran, u.s. military funding is on the rise. the budget has risen 7%. that is still less than half the u.s. figures. philippines and indonesia show double-digits in response to china's aggressive move and the

south china sea. gajudge merrick garland meets with two more senators today. on thursday, president obama will go to the university of chicago to argue for senate consideration. the senator of new hampshire says she is planning to meet with garland next week. you know that wall donald trump wants to build? he has found a way to make mexico pay for it. he says he would cut off and mexican by immigrants living in the night in states. all of this was in "the washington post." global news for the four hours 24 hours a day, powered by 150 news bureaus around the world. >> i want to look at some of the calls made by major analyst

today. let's bring in our own friend matt miller. we can talk disney, allergan, twitter. >> we can talk about anything, but i think the allergan-pfizer deal is the most interesting. the u.s. took a tougher stance to limit tax inversions. the pharma deal as in jeopardy. the deal is trading as if it were 95% dead. they make a lot of exceptions and say it might be salvageable. citi says the deal is likely to break. the treasury's action could deal.the l o end of the >> they lowered the price target from 370. you are seeing a major move here. agin, this does not have to do with fundamentals of the company

and what they are selling. this has to do with tax treatment and what they will do around that. >> absolutely and the sentiment on that here in the u.s.. theren, by the way, says is an opportunity here that the share should be bought on weakness. it has been a tough 2016 for pharma. allergan is down 11% so far this year. it will change drastically of course, because the shares, as you can see -- well as you said earlier, are down 20% premarket. int would be 35% drop 2016. pfizer is only down 5% this year. apple shares are in the red in the premarket as well. that might have to do with one of the top-rated apple analysts who was on bloomberg surveillance this morning. he said the inversion rule is a threat, the suggestion of a rule. it could hurt earnings by 15%.

wile enters the year here th 2016 highs down any premarket. >> thank you to our own matt miller. we still have gabriela santos with us. the one thing i do want to point out, though. settles, ift this allergan deal trades like it is dead, we will get back to fundamentals. it may be a buying opportunity. we will watch that, not just throughout the day. this story will continue and when you take out the inversions and the tax treatment, you do have to get back to fundamentals. we are now going to take you live, where our own john is speaking exclusively with

alfonso prat-gay at the argentina summit. >> as opposed to a source of concerns for investors. we spoke philosophically about what we are trying to do. why should investors be looking at argentina? >> argentina has been out of the loop for a number of years now, at least four years. when you look at the macroeconomic variables, despite last year's net increase, you look at the last four years and there was barely any gdp growth. there was no employment growth outside of the public sector. there was no investment to speak of. not just from external

investors, but even from local companies who were just trying for adle through and wait better beginning. maine rearranging the reasons why those ste agnations and inflations took place before we take office. we have taken a number of pressures that will take time to settle into the system. and this is why we are confident that by the end of this year, hopefully early in the second half of the year, many of the measures we have taken will fall into place. and that inflation will have fallen by then. hopefully, by the third quarter of this year we will have seen a activity, economic

which is already showing in some sectors, but again, it is too early. we do not need to get too carried away. disseminate when we have the opportunity. happen ingoing to just three months or six months. we have got to be patient. >> you mentioned economic activity. economists surveyed by bloomberg wrote that next year it would rebound to 3% in argentina. is that a real forecast, do you think? in general, what will drive? >> i think it is realistic. hopefully, it will be more than that. andill drive growth generally speaking, the wiki will look at this from an economist's perspective -- the way you would look at this from an economist's perspective, the

last four to six years have destroyed the economy's potential. economist's like to look at the gdp potential, which is a very difficult animal to put your hands on. but if you are able to do that, it is quite obvious that the potential gdp has been falling for the last six years or so. we believe that the many measures we have already put into place, for instance, you don't need to ask for information if you want to export. you will not be forced into asking for permission if you need to inport. -- need to import. you don't have a space that because young you are not endorsing every single decision by the government --

we're not doing that, of cou rse. we believe that we are unleashing significant potential that will come into the system, as i said before. hopefully, early into the second half of this year. drive thes that will long run cycle, you know what the factors are. argentina has massive potential on a relative and absolute basis on energy, for instance. not just the traditional energy. and gasraditional oil energy, like shell, but also renewables. eggse putting a lot of our in the renewable basket. we just approved a new system of optioning for the upcoming wind energy companies and solar

energy companies. when you look into those sectors, it turns out that the northern part of the country is one of the best areas in the world for solar energy. there is probably no other place in the world where you have got this amazing combination of record winds and very few populations. you don't even need to worry about the visceral contamination. thirdly, energy will be a significant chapter. argentina used to have its own needs in energy. we are now importing more than we export. there is no reason why we would not be exporting more than what we consume. and that will happen with time. this is a very important chapter in the administration and it has to do with and the structure. infrastructure has been defeated

over the last 15 years, just out of noninvestment. this is what makes most of our producers, particularly the small to medium-sized producers, around the country looking better to with their competitors countryd tharound the less competitive with their competitors. our projects for the next year, starting this year, but it will be around $20 billion a year. >> are you referring to government spending? for foreign and domestic spending? >> it is both. we are actually sending out a ttp launched to congress in the next few weeks.

we want to invite the private sector, the externals, to be part of it so you can get a sense, when we talk about wind last programs that were approved by the previous administration and the fact that they were approved, it is kind of a trademark on the freedom administration. but yes, those projects were run $110.ces of around we have just come up with a program around $58, or whatever the unit is. i keep forgetting what the unit is. but there is massive room for improvement if we do our homework. and of course, getting the issue is a significant element to that. for infrastructure and for energy, the financial cost is

significant. we have got to do that before we -- every culture, every business, we need to sort of push the value at it and buy across the chain. we need to do a lot more of exporting finished progress, rather than primary goods. [speaking spanish] >> you mentioned holdouts. there are negotiations over that component. i think many people are very interested in that. we you give us an update -- all know that congress settled

with the creditors. [speaking spanish] [indiscernible] it to buy you can't wa the bonds, that we have to it until the court make the decision. that has been basically, the rule of the game every since. that is what our law says. that is what judges say. but then, there is always the court of appeals. so, there is a hearing on april 13.

luckily, it was not on april fools' day. we would have liked that hearing to have taken place in iran. and when i say "we," it is not just us, but also the holdouts. that was not the case, but it will happen when it will happen. once that is out of the way, we will issue the bond and therefore, everyone will be happy that you will have your own share of the bonds. >> is funny that you bring that up. i would say that the appeal is surprising. april 13.s court is the deadline is april 14. >> the deadline is for one group of holdouts. not for all of the holdouts, just for one group. it's not a deadline. it is a strike, basically.

it is option day, if you will. it is their option to stay in the deal or leave the deal. it is their option, there is nothing we can do about that. >> is there a chance the whole deal can fall through? >> penalty why that would be the case. i don't know why the holdouts would decide to hold out. well -- >> we have done what we were required to do. we have agreed on the terms. we pushed the law through congress. englishdo you say it in -- it is a horrible work. w-- horrible word. we repealed the loss we needed to repeal and we are ready to go. >> is there any mechanism you

need for an extension, for example? >> again, you guys know about financial options, which is an option we don't have. we have given the option away. i mean, i think it would be the wrong decision to exercise the option, but it is therir court. he said when the two conditions are met, the conditions being the loss that is needed and those guys who have a current agreement that was signed before paid february 29, once we for these fines, the injunction will be removed. it is very clear to me what the value of that option is. >> is there any chance you would use america? >> i mean, we can't pay until

the court of appeals ratifies what the judge said. so, once the court of appeals ratifies, we will do what it takes to pay. but, i don't know. i don't think we will be able to issue a bond in one day. however, he will have some discussions in new york and washington next week, taking advantage of the spring meetings. we want to get involved with investors. i think by the time we are ready, it is going to be very quick. but we don't dictate the times. we have done as much as we could and as i said before, no one would have thought that we, in this summit, would be discussing this particular issue. not person probably would have mit if they hadi

thought so. >> the russians have agreed to a settlement. what do you plan to do about them? will you pay them at the same rate? >> the ones who have not agreed yet? the offers are open and this is the big difference with the previous regime. the offers are open. there are lots of discussions going on. with -- isome issues keep learning new terms. thee are some issues with statute of limitations, which is notsome bonds have or have prescribed. i don't think anyone would want us to sell something that is not

prescribed. you would not do it if you were in my shoes. that is the only limitation. we said it even before we took office when secretary caputo sat down. we want to pay. >> that is the bloomberg executive editor with alfonso prat-gay, argentina's minister of the economy. while we were watching that interview, we saw quite a big headline across valeant. the adhoc committee completed its review. this committee was put in place in october, when valeant separated. it was that same committee looking at c compensation and management. it seems after this internal review, no additional issues have been found. we are seeing stocks surge 60%. -- 16%.

e stocks are trading like the company has been left for dead. as ifompany began trading they were going under and news like this is a very big positive, at least for them to chug along. >> the market was anticipating that there would be more things coming. >> without a doubt. >> the question now is, what happens to the $10,000? >> they will file that on april 29. extraordinary about this, if this is true and there are no additional issues found, it speaks to the argument that mike peterson has been making for months, that the company is not good at communicating. if that is the case, it is absurd that they have gone through such a ride. >> they are also not great at earning money. >> there you go. >> here is a look at the sales

growth. it has been incredible. the earnings-per-share has dipped. you have to imagine, if they are taking the two will away, the one told they were using, which elsey a cheap drug no one has and raise the price by 1000%. >> the company is not good at making money, but you have to put it into a framework where the shares are trading. they are not good at making money, but it does not deserve to be $180 a share, but maybe it looks good at $50 per share. >> if you look at this chart representing the life of valeant, that puts it here, as opposed to what it once was. it has been an incredible roller coaster ride for valeant. >> 17%, the shares are climbing this month. >> we are up 12.6% premarket.

up about to present at this point. this morning. just a glimmer of good news. -- i thiknk itt is going to be ok. we're going to continue to watch this. remember, bill ackman is really cleaning up, potentially. >> coming, an exclusive with the co cio. and a special thanks to c gabriela. ♪

asand risk off today investors flee to haven assets.

joining us this hour, steve kuhn of heinrich for management. -- of pine river management. we are just under 30 minutes away from the opening bell in new york city. this is bloomberg , i am david westin. stephanie: here with us, steve kuhn. , great ton a while have you back with us. bearish today.

energy stocks getting hit hard. , down byn to abenomics 6/10 of 1% this morning. dollar yen going back to october 2014 law. lows. down.ude those are your market moves this morning. let's go to first word news. >> deportations to turkey, and most refugees have applied for asylum. no transfers were planned for today. donald trump faces his toughest test it the race for the presidential nomination. he trailed ted cruz going into

the wisconsin primary. polls show bernie sanders with a slight edge over hillary clinton. sanders took in $44 million. dayal news 24 hours a hour-by-hour 2400 journalists and more than 150 news bureaus around the world. stephanie: thank you. it is time for the three stories that matter most to markets today. managers warning about global growth. profit estimates are being cut again in the $160 billion pfizer, alec and merger may be at risk. .e have a lot to cover

we have three main risks for global growth this year. take a look. >> we believe that these three change ofthat are traine business models, the lower commodity price, and the tightening of financials as a result of new monetary policies that has just begun, and more probably will come out to as the three key factors. that is on the economic front. somep of that we see also very concerning geopolitical threats. stephanie: this is the fear around the world. that is why so many investors have been paralyzed. there is this wall of worry. economic and geopolitical concerns around the world have investors parallel. do you find that to be the case? >> it would be hard to think that we found equilibrium or balance in the world economy would you talk about the german tenure on -- 10 year bond yield

around the world. that does not seem to be a place of equilibrium, of where things will find balance. stephanie: in the beginning of this year, one of the reasons people were so concerned is they were comparing it to 2008. s areundamental better than they were then? >> it is more difficult today to greaterlative to 2008, imbalances, but it is there. the inefficiency of market is growing, not shrinking. david: what is causing that? since 2008,last --

we've seen the rise of index funds, we have seen verizon etf's -- the rise of etf's. we have seen the effort by the desks to find mistakes and markets. the searches for inefficiency in markets has been decreasing for years. that that has led to the lack of equilibrium in markets. last lousyso why the years? and everybody worth their salt ran to the buy side, why did we not see by side perform? where there a phase are times hedge funds have a challenge because hedge funds themselves are not doing well. sometimes the introduction.

we are going to talk about the fixed income fund today that i'm going to comanage for the last eight years. our annualized return was 24% a year. 2008 iss given to us in worth about six dollars today. that is over 10 times the return of the s&p the same time. but last year was our first negative year. we last about how far assets. -- lost about half of our assets. stephanie: what are investors telling you? >> is partly a function of the fact that hedge funds have not had a great time. we have been talking about that for the better part of the year. that is part of it. think, people have short memories. one thing i want to talk about today is, technically hedge funds, after a timeout doing

incredibly poorly to incredibly well. was a terrible year, but he did well in 1999. they did poorly, and integrate into thousand nine. these seem to be reverting, not trending. the managers you should invest in our those with a great track record who had a bad run. great set of people to believe in. i'm a great fan of david einhorn n investor in a person. fund, trading at a discount right now. i love that. i love betting on him in general. investors in the fixed income

funds that i managing, have one of the best record records of the last eight years. we had a challenging year last year but had an amazing team. one of my oldest friends, when this deadliest and most rational people. -- the steadiest and most rational of 19. my team. stephanie: we will come back to this commitment to get to the market moving stories. hittingertainty florida's investment banking machine. the steepest decline among major u.s. banks, which start reporting earnings next week. i want to go back and ripped up the script entirely. markets are inefficient.

there is a cliché that they can stay irrational for longer. which market is the most inefficient with what is happening right now? >> we could argue a couple different markets. the commercial mortgage-backed securities market, we have not seen any real weakness in actual rent or anything in the major city buildings. s securities are much cheaper, implying a 2008 scenario. i think that is a mistake. that is one thing we're taking advantage of early and fixed income. david: i am puzzled by this. there was a story, maybe it was a myth, that with more information, that we have so much information that would make markets more efficient. you are saying they are less --icient for how can that be

efficient. how can that be? stephanie: that is subject airport report. it is so hard to find advantage. inefficienthere are -- inefficiencies in the market that they now, but it is more challenging to be on your front foot. investors want to put money back into the fixed income funds because we have an amazing track record that is a great opportunity. stephanie: hedge fund fees were not as high as they are, what big?mption be so often, hedge fund that investors are mad at hedge fund managers. 1%,hey were only asking for what investors give them more latitude? >> yes, they was. stephanie: so what they --

should they go lower? idea goingful forward with the lower fees, an idea that would benefit everyone. friends is anr amazing person who helped me comanage the fund. are running atner special opportunities fund which takes advantage of this. stephanie: it is hard to raise money and the environment. every person we talked to says i want to have long-term locked up money. private equity has done so well because i have long-term locked up on me. will we see a shift? 1% and three-year lockups? we still have high fees, at almost no lockups at this point.

ucsf done so well because people want daily liquidity. is a friend larry powell seasoned hedge fund investor. lot of free coffee in the lobby of his building. discuss a lot of things there. this would be a great thing to move for with for industry, and it would benefit everyone. stephanie: i want to go back to see mbs for a moment. their arguments to be made that trade is over. distressedbuying right after the crisis, that frontloaded the returns. there is nothing left. >> there is a lot left right now. default rates that we do not see until after the crisis of 2008. there is incredible opportunity. , your valuee is investing, sometimes you buy

something you think is worth 100 and you buy it for 70 and it trades at 16. if you get reductions that you never get that 100. that is a challenge. people have to have faith. if someone hasn't proven ability to do well. -- has a proven ability to do well. sharpe ratio of over two. the odds of that happening randomly are the number of stars in the universe and i think we have a track record of being able to find inefficiencies, but we will not be right every day things that we buy that are trading at $.70 a dollar, sometimes they go to $.60 the next day. it does happen. one has to have faith that the manager has the ability to do i havend with my team true faith in math. david: those were going to be the three stories, but john made

this sensible decision to rebuff the script. good decision. there will be much more ahead on bloomberg . later today i will be speaking with secretary of state john kerry. ♪

jon: this is bloomberg. we are about 14 minutes from the outside here in new york. s&p 500 futures -17 point. red.tse 100 deep in the the dax also down. a real risk off field in this

market, switching of the board. dollar yen, three years to the to the the autonomic -- day of the abenomics experiment beginning. german guilt lower by four yields lower by four basis points. it is insane. investors are getting into the yen and the yuan. you need safe haven if you're going into negative yields. it is an amazing move. jon: the question for this program, germans nine basis points? i'm excited to hear what he has to say. i want to tell you the analyst calls we are watching right now. the magic kingdom is the tragic kingdom this morning. disney shares are in the red after the surprise departure of

the chief operating officer. it is a move of succession that had been planned, as he has been seen as the successor to bob iger. no longer. now this is added uncertainty and risk, and we will hear about it a lot today. tesla shares pulling back this morning as well after a three-day run. stephanie: this guy loves teslas. >> iona tesla. order?id you put in an >> not yet. $1000 apiece to reserve a model three. but the shares are pulling back today. they are down today because he came out and said production was

not as fast enough to sell model s like they wanted to. but they're looking forward, not backward. say tesla is week. and expected. they have basically got so far ahead of the rest of the industry technologically that it is difficult for them to produce the cars at the rate that they had expected to. of thoseld have fewer problems with the ball three, or that is what they are going to say. when we come back we will get more from steve kuhn. we will hear more about those specifics.ficiency ♪

stephanie: if you are sitting on

a trading floor, turn up the volume now. at pine river capital joins us for an exclusive. for more than eight years this to led the fixed income fund analyze life today's returns of over 24%. out of 97 positive months. you are an extraordinary investor, best in class, and you are changing your tune? >> i am. i am searching for the narrow gate, trying to take a new in life. i have been influenced by a number of different people. brother, and maybe most importantly by the reverend pastor tina carter. stephanie: using investing is for sinners? >> it does not mean that at all.

hedge fund play a vital role in making markets more efficient. for marketsrole that the journalists play for our country. they keep them honest and that is an important role. is an amazing role with way -- with how social media is. maybe the audience will give me a break on that one when i explain what i'm about to say next. i have offered to my fellow mytners that a transfer economic interest in the firm, which is now a $14 million for to the geithner foundation -- firm to the pine river foundation. foundinglor was the force.

stephanie: can i ask? it is an extraordinary effort you have crushed it for years, but not last year you were down almost 5% last year. finding the narrow gate in changing your vision, or it is hard to make money? >> times it is easiest to make money it is what it is hard to make money. i am not leaving because i do not think the markets do not have opportunity. and i'm certainly not leaving because i think they do not have great returns. given the importance of this announcement today that i will be reducing my role, it forces me to get that message out. stephanie: why wouldn't you want to get your track record back? such a rough year last year after doing so well. redemption, why not

stay, get that money back to make some money, and it makes the move? why leave during the tough time? >> i'm leaving the funds in the hands of people who are the most talented investors i know. together they have created $3 billion in profits for the phone. when i had said to people's eyes might be remembered in hedge fund history, but if i am it is because i helped them. they were integral and all of that. they have already created $3 billion in value. they are early candidates with the hedge fund hall of fame. jon: i think there will be some cynical viewers who say this is about wealth protection. what would you say? going forward is

every dollar i make will be going to charity, and maybe the dollars that are already made. matt: how do you make those dollars? >> over half my net worth is in his fixed income funds that i'm reducing my role in. i have a stake in the team. i put my money where my mouth is. role, i willuce my be eating the 50th. the have always been eating coo -- i have always been eating the cookie. our china fund efforts, our rate efforts, i have had money and all of those. matt: we have to take a break. stephanie: we will be back with more. ♪

jon: this is bloomberg . looks like david westin and stephanie ruhle are with us as well as steve kuhn.

just moments away from the opening bell. up to speed.u futures going into the open much lower. they'll about 100 points on the dow. -- down about 100 points on the dow. there is the valve. we go across assets. the dollar yen this morning, 110.49. three quarters of 1% down. double-shifted on the yield. we went below 0.1% in today's session for the first time since april 2015. let's go to matt miller. matt: the dollar yen is hurting me because i'm trying to buy an aluminum gas taken japan commanded killing me. let's take a look at these assets, starting with equities. should be pointed out that

the u.s. is coming off of the 2016 high. two days ago were where the were, oil the major indexes are crushed a five-week lows. so it is rougher in europe than it is over here. let's take a look at a bunch of the asset classes that are likeg markets and it seems we see the correlation come off here. but it is moving back a little bit. kreuz took a dive on friday. gold is coming back of now, --oming a haven tried to back now, becoming a haven trade. right now, 220 seven, down 18%

at the kickoff of trading this morning. pfizer of 1%. twitter, disney, stories we need to touch on. twitter has won the right to stream the nfl. workot sure how that will in the 140 character limit. it does not make sense to me where i would see that feed. , down right now 2%. the ceo of steps out. he had been seen as the successor to the ceo. the board was not giving him the right kind of feelings, so he split and investors are concerned about the succession plan now. jon: thank you.

with us is steve kuhn. stepping away from the hedge fund world. we need to get some final thoughts on markets. market inefficiencies, i have been looking at the markets, and it is not called the widow maker for nothing. it has looked inefficient for a long time. inefficient that with inflation growth going nowhere? >> this is one of those trades, is a trade i actually love. this is a trait that i love for trades a widow maker -- a that i love that is a widow maker for many hedge funds. why i love them is that this is a trade that 90% of the time you are wrong, but if you're right of good choices.

it takes bravery to be in a position like that. i think it is a good choice. stephanie: when you think about all the global risk, the global economy from the geopolitical economy, is that fear of missing hasof these take risks that so many people sitting in cash right now. it does not seem like a good time to invest, just a time to reserve. ? a lot of people want to hang on to what they have business it to get rid of substantial risk. as you said, you have geopolitical risks. the markets are confirming that -- forming that off

because you put your money somewhere. money seems to float to the safe havens. lacking in is not risk, but it is seen as a safe haven. stephanie: is the answer to go the way of danger miller, investing in your own money? i was on the air with you three years ago and we talked about buying bonds that have been back down to far. sometimes it is a lonely place to be a contrarian. but it is valuable to have contrarians. they can do well for longer. on, and toe coming some you are getting the -- pitching the fixed income. thehow does this go to

investors? >> is not necessarily our biggest risk, not a big risk at all. what you have to have -- investors have to have faith in you. they believe is your outing him -- they believe in earning that power. jon: we have is a rational grind lower all the way out to 10 years do you have any reason that this world is bigger years days with us for longer? break hard, and it will bring bad. but first the time being central

banks are printing enough money to buy all of that the countries -- by all of the barnes that the countries are issuing. tons of volatility are often the best time to make money. but to investors have the confidence to put the money in the market right now? they are suffering the 2008. >> i think there is amnesia about 2008. people are starting to forget. it shows up in where people for their money. people are putting their money and what is expensive, was popular in stephanie: what is expensive? >> growth stocks. are priced at nosebleed levels while a lot of other assets, other figure markets bonds areing-market cheap. quite sh

today. >> boring is beautiful. i got it e-mail saying that a lot of white warren buffett has outperformed us is that he is lying boring -- buying boring companies. matt: i have to break in, with breaking news. stephanie: valeant refuting their accounting practices and they found no issues. refile. go ahead and >> biggest news is they say there will not be anymore restatements, and they will file their earnings, financial reports by april 29. part of why the markets are

reacting so positively is that this is the ceo search. and if they were not ready, and they continue to be delayed, and there was questions and a debt theyiations, then perhaps will have a harder time finding a replacement ceo. there are some interesting points of view. the point over there turning over responsibility for the completion of the filing and the investment of internal trolls and mediation. this to be more -- there still could be more to this. immediately connected to bill ackman, someone who a lot of people have opinions about. impact ino you see trading activity when it comes to big investors? stocks thatut

comprehension with community, how much of a single aspect is there? >> a great predictor last year was how much was held by hedge funds. it was a negative predictor because they would see them with redemptions, and that would be a factor in a lot of stocks. stephanie: explain that again? >> the hedge fund world has a short hedge fund horizon. tradere making the profitable today, this week, this month. any year is extremely long-term, a month is long-term. in a trade is crowded with hedge fund players, who was loser on the other side of the trade. everyone gets a winner and a , except for those in

the market that have a long valuation orientation. he winds up with the pricing be out of whack. stephanie: i'm guessing that they went they have been easy hedge fund regulation. again, i believe that the thirst for market inefficiency is a valuable one. i think supporting the not only lead to good returns, we have not been right every day, but our pine river fund has been doing well for 14 years. we have eaten the s&p by because we have always believed that

being the right side of value is a hard place to be. >> basically my view on regulation is very similar -- simple. when have the regulars have done a great job of running the business better love business owners? ? aephanie: we have to take commercial. staying with us. you're watching bloomberg ok

matt: i am matt miller interview hp greenroom. do not miss david westin's

interview with u.s. secretary of state john kerry coming up at 11:00 a.m. eastern on bloomberg television. it is time to go to abigail doolittle. she is live from the nasdaq where she is taking a closer look at tech companies moving in early trading. >> hello. cisco systems are trading lower after being downgraded from neutral to buy. challenges over the next three years limit margin expansion and few catalysts can move the stock tire. -- higher. the sellers could just push cisco lower in the weeks and months ahead. one other stock moving in the , soaring onection the news that the ceo and the president, leaving abruptly.

for new looking leadership direction. stephanie: thank you. alone by ross contrarian views here. by low, sell high. [laughter] a shocking one. walk us through this. >> human nature, evolution has conditioned us to one more letter has treated us well. what has treated us well as things that have given us joy and profit. it is hard to sell them. evolution has conditioned us to run away from what causes us paying. that is likely to be cheap. buying low means to buy what causes you pain. selling high is to sell it gives you gains. it does not work every time. but being willing to take

contrarian views as you profits. it is not an easy way to invest. david: warren buffett would agree. but he tends to love something and lebanon war and love it more -- and love it more and let it more. he does not sell because he loves it. really have to sell anyway. he buys things for keeps. in the business of investing a portfolio where you need to sell something in order to buy something else, what should you sell? you should sell something that is expensive. it has two interesting attributes. one is likely to massiv -- likely to be massively profitable, and it is also going to be disappointing future because of how expensive it is. of smart for you is seeing a flood of money going to quality strategies, profitability strategies, low volatility strategies.

one attribute of all of this is that they are all trading relatively higher valuations than they have in the past. stephanie: i hate it when our guests say the same thing. [laughter] >> i agree. another factor is the cocktail party factor. if you go to a cocktail party and say you're invested in google or twitter, people will talk to you. portfolio i have a for insects, people will walk away. stephanie: all of these investors estimate private investment in companies like snapchat because they have that fear of missing out. but things have gone so overvalued in the places we are in a market where you have a fear of getting hosed. have we rushed to much into these cool areas? jon: i have never heard that before. stephanie: welcome to new york.

now you could get messed over justse you say what did i five? -- buy? they don't make any money. >> the downside on these is more or less limitless, and the upside is that they get more expensive that does not sound like a save and sensible thing to do with your money. are terrified of market stocks which are trading at 10 times your average earnings. you can alone half of the worlds gdp for ted leonsis to recordings. or you can buy one of the very popular trending stocks for multiple sales because there is no learning ratio. jon: you are stepping from investing. we need to explain this on this table. if you had one piece of advice

, in thistors out there risk off field, just step away, is this what your betting on? >> absolutely. sxsw festival, and what was amazing was the actual reality dominated. .ou could not get in samsung had a booth to give people a virtual reality experience, and people were waiting in our long to get in. is so many things it can do. there was a gentleman who said that virtual reality is the ultimate and the machine. if you look at the videos he has made, maybe you have talked about this before, it is amazing. it puts you in the shoes of

-- in a way the that film cannot. kenya wasing to go to a project. i want to help them film what they are doing. show people what they are doing. they'll change hearts and minds in a way that no other media really can. stephanie: you'll have to come back with that. jon: fear of missing out with these things. stephanie: thank you so much. what a conversation, what a day. river.uhn from pine ob from research affiliates. and a quick shout out to a classic last night. buzzerva winning at the buzzer.inning at the

we will have more on that coming next. ♪

stephanie: a wild finish for wildcats atwell test i' the buzzer. what was in your special sauce? they were in your backyard. hometown,va in our and our whole family was so excited for the wildcat, and unbelievable execution by the team last night we are psyched, and i am particularly happy for networks teaching entrepreneurship, which is my charity that we dedicated this way and two. thank you to bloomberg and congratulations to the network for teaching entrepreneurship.

stephanie: does anybody know that you are playing for or hundred 20 grams -- $420,000? they willtty sure know. we were on cloud nine last night and they deserved it. i was jumping around with my wife, who picked them from the beginning. we were so excited and so pumped out. i felt like the jets won the super bowl again. stephanie: what is the foundation going to do with all this money? >> i have been part of the network for 10 years now. when i launched my books at the new york stock exchange in little over two years ago i was with these young entrepreneurs. basically you take high school kids like i was with dreams and a business plan and fund their ambitions and give them a shot to take that dream to market and really be the winners that they

are born to be in this world and not let money stand in their way. it is an unbelievable honor for me to represent such great been soeople that have behind this unbelievable group of young entrepreneurs for teaching entrepreneurship. i want them to lose the winners dream. stephanie: you needed to get the most text. you did. mike bloomberg. mike bloomberg. that will do it for us. ♪

>> it is 10:00 a.m. in new york, and from bloomberg news in new york, i am betty liu. mark: and this is bloomberg

markets on bloomberg television. ♪ betty: we are going to take you from new york to london to são paulo in the next hour. we are half and outreach of trading session. stocks are lower following the downturn in global equities. the highest levels of the year. investors waiting to see what will be released in the latest fed minutes. they are out tomorrow. and in analysts take on the risks facing the global economy, and why she says she's ready to move ahead with negotiations after several days of exchanges. betty: the first element is begin to fall in iceland. a look at the law firm at the center of the panama