treasury department to create a fund for nonperforming loans. and a warning on negative rates, saying they could have dangerous consequences. welcome to "bloomberg ." i am david westin with jonathan ferro and vonnie quinn. 70 will is off today. ahead of all of that this get, 30 minutes away, let's a market check for you. futures are positive on the points -- upy 60 by 64 points. in europe, italy, outperformance of 1.8%. withury officials meeting

bank executives to hash out a plan with bad loans and not performing loans. quickly,ard, dollar-yen, six-day losing streak. dollar-yen broke 108 today. treasury yields, up two basis points. down about .2 of 1%. let's get some first word news with vonnie quinn. -- with david gura, rather. david: secretary of state john kerry is in japan. seven decades after the u.s. used the atomic bomb for the first time in history, killing 45,000 japanese. with other four ministers of the group of seven industrialized nations. president obama will meet with janet yellen today, the agenda being the long-term economic

outlook. the meeting will focus on the state of the american and global economies. vice president joe biden will also attend. 15 former american bar association presidents are presidente push for obama's up in court nominee, merrick garland. republicans say they have no plans to move forward on garland's nomination. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am david gura. john? alcoa is kicking off earnings season today, and also reporting this week, the big banks -- jpmorgan, wells fargo, and citi. bracing fore what they think will be the biggest investing slump. matt: this is an s&p reported

index,s share, average gains or losses. the zero is the red line. you can see that we have obviously had a tough time since the recession. theg jump, and then this is new normal. this is what you hear about if you watch "surveillance." i think they have a mandatory new normal mention on "surveillance" every hour. this is really an earnings recession that we are seeing. the hope is that we can recover from this. as far as estimates are concerned, it will not happen this quarter. jon: as i said at the start of the show, we are expecting to upside surprise because of where expectations are. does that tell you anything about where we are going? >> expectations have come so low for the last several quarters,

but it does not necessarily mean anything. the more important thing is that for the last three quarters, analysts have expected that to worst quarter for the earnings season, and instead it keeps getting worse. the real point is to look out into the next four quarters and few earnings next seasons continue to be poor? we will probably see relatively low expectations, but it will probably still be pretty growth -- pretty rough. will we see improvement over the next quarter's? that is what i look for in an earnings season. david: quantify the current expectations. how bad are they, and what would be an upside in this not just for this quarter but going through other quarters? aggregate is for 8.7% year on year earnings growth, awful earnings growth. david: what were they last year? gina: right around flat for the

entire year. assume thely, we second half is significantly worse and the first half. progressively poorer, and this should be the low, according to analyst estimates. it should be low for the cycle. the components -- how those profits are come to -- that is what we will be looking for. will there be more consolidation? the: probably, because revenue line is expected to contract as well. you are supposed to see revenues fall on a year on year basis. trim expenditure to maintain some degree of earnings power in the current environment. profits on one hand, earnings per share on the other, they are not the same. matt: i have estimates. in a periodically

like now, they cover estimates down into the quarter -- i will not say they want to allow the companies to beat, let's be honest, companies almost always beat analyst estimates. david: it is called sandbagging. matt: i do not understand why analysts do not raise their butmates 20% to be closer, 2011, they have been coming into earnings season. the problem is, this is the biggest problem from our perspective, the biggest cut that they have made since 2010. the question is, is this going to allow managers, companies, executives, to beat earnings estimates if that is what you care about. in a more forward-looking sense, that is what you care about when you're buying stock. one of the reasons analysts

aggressively reprice their expectations through the first quarter is looking at the banks, saying this is ugly, then getting guidance from the banks themselves, saying they are not going to make much profit, then revising lower. it seems to us not terribly temporary. our estimates move down not only for q1 but for the entire year, reflecting a significant flattening of the yield curve. if nothing else, if you look at the flattening of the yield curve and you have to take your estimates back for the year, treasuries have not budged. that alone is impressing the net interest margins most likely through the year. you add on top of that, market volatility, which has not slowed down. it was a rough first six weeks, and tying that down has been difficult. you have a significant slowdown in capital markets as well. m&a activity has slowed significantly.

there are a lot of factors impacting the financial system, and the banks in particular have experienced the negative estimate revision as a result. david: if you look at the fourth quarter of 2015, how they go of a driver of s&p are the banks themselves? gina: this is the point we make to investors this morning. where last year and early this year we were intensely focus on the commodity-sensitive sectors -- with the negative investors on the next, it has become financials. financials are nearly 20% of the s&p 500. with the lack of momentum in financials added to the lack of momentum in commodities, that is why the look -- that is why the first quarter looks so awful. financials will probably remain something of an anchor. profits probably

account for 15% of gdp, so do we need to be worried if we miss by a few percentage points? gina: there is a lot of interrelationship, so you need to be worried about the overall trend of negativity. we are looking at a fourth quarter of negative results. that is a pity big drag -- that is a pretty big drag. i think you want to pay attention to the details to be the top line. we talk about commodities, and that has been the big anchor on the economy as well. if we can get a little bit of life in that segment, it can offset the results and the economy will be fine. the economy has not changed a lot, even though the profits have been negative, and i attribute that to the commodities being a cost for the economy at large. it depends on how weak earnings are going forward. at some point they come back together. to --hat is the best way

how do you play the domestic spending? gina: we play it through a combination of consumer technology and telecom. verymer discretionary is -- we're sticking with domestic services were company -- were companies still have pricing power. outside the energy complex, core prices for consumers are rising 3% year on year. there is some growth, there is some pricing power. it seems to be in consumer centric services industries largely. gina martin adams is still speaking with -- is speaking with us. up next, news of the central bank meeting in italy, driving european bank stocks higher come at least italian once. you are watching "bloomberg

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"avid: this is "bloomberg with the bloomberg business flash. a number of potential bidders for yahoo! -- "the daily mail" says there is no certainty that a it will take lace. take -- there is no certainty that a bid will take place. --elop a gain economies developing economies growth in asia -- the forecast for the region is being lowered. only marginal at 6.3% and 6.4%.

in 2015.ted 6.5% five years after occupy wall street protesters began a national discussion about income inequality, the pay gap is getting wider. wages for investment bankers, ies, wages rose 17%. for all other industries, wages rose 21%. jon: the italian treasury and central-bank officials will meet with bank executives to set up a potential fund that would tackle nonperforming loans. all of that, according to people familiar with knowledge of the talks. europeanis pushing up bank stocks, italian bank stocks specifically. 's bureau chief -- what me through what is on the table and whether the deal can be sealed in the next 24 hours.

>> 24 hours might be ambitious. we heard some comments from the italian prime minister, matteo .enzi he said this week is more likely that they will get an italian banking deal. that is an indication that we will not have necessarily a solution today. the meeting that will be going on in rome later this afternoon, i would think probably we will hammer out some more details. chance to your question more specifically, we do not have a lot of details right now. all we know is that this vehicle will try to address the two critical issues facing italian banks. one, how they can raise capital, find investors, and how they can resolve the issue of bad loans. i am interested in how the state becomes involved with

this. how are they going to achieve that? dan: so far what we know is probably the state lender will have a role. they might take a small stake in this fund. thus far, brussels, the e.u. has not really weighed in on this. i suspect that they want to wait to see the details as well before they make some sort of decision on does all of this constitute a bad bank, potentially violating competition rules. but so far i think the main part of this, the state involvement, is going to be the state lender. money: where does the come from? will it be open to outside investors as well? dan: yes, we will have private investors. we already have comments on the record from the ceo of italy's

biggest bank, unicredit. likely the number two bank as well. investment funds, pension funds are also getting involved in this solution as well. david: we have been through a version of this in the united states with tarp and direct investment of capital and things like that. why has it taken this long for italy to try to a dress this fundamental problem -- to try to address this fundamental problem? we have known about it for a while. dan: it is a great question. --re was a round of global brussels was very actively involved in those talks, and italy was forced to scale back their original intentions, which turned out to be a very elaborate complex guarantee mechanism for banks who wanted

to stall bad loans. what else can i say? you have several different players involved in this, and my suspicion is that it is probably going to take a few more days of --mer -- before a former before a formal italian proposal is hammered out. sticking point, given that we are talking about 60 billion euros, roughly a fifth of the italian economy? dan: it is a big number, jonathan. italian treasury officials like to say that number is a gross number, not that, and it does not -- not net, and it does not reflect the rate of growth of nonperforming loans, which fell slightly in february. the italian version is simply that it is under control, but they are facing these requests constantly from the ecb and

regulators to improve the balance sheet of banks. so they are trying to find a solution that addresses both the concern of reducing this and atn of bad loans, the same time providing capital for the capital increases that they have requested of them. liefgreen in milan, thank you. well done. blackrock's ceo issues a warning over the central-bank's negative interest rate policy. coming up next on "bloomberg ." ♪

jon: this is dan "bloomberg

dow futures up about 55 points. italian banks are leading the gains. will we get a deal between treasury officials and bank execs to tackle the nonperforming loans? some optimism in the european equity markets. dollar-yet breaking a six-day losing streak. at 108.15. wti, down around a 10th of 1%. down around 39.66. let's go to matt miller with some of the big calls on wall street. anglo gold spiking ahead --the open after shares were following an upward revision to rbc's gold estimates. analyst richard hatch says anglo is supported by a diverse low-cost asset portfolio, with upside coming from diverse asset exposure.

maybe a little bit late for the call print anglo shares have already doubled in 2016, but i guess better late -- maybe a little bit late for the call. anglo shares have already 6, but i guess better late than never. a consumer recession is said to -- bothn -- to will markets are performing well so far in russia in 2016. up 8%, veryx is interesting call. vonnie: thank you so much. blackrock's chairman and ceo, larry fink, warns that the fallout in interest rates --

vonnie: most of us knew most of that. gina martin adams is still with us. with all due respect, if the instigatesan negative interest rates, they cannot be worried about larry fink, can they? gina: no. the risk assets in those countries are not performing as though this is a good idea. the japanese equity market, the european and we markets are severely lacking emerging-market assets that are severely lagging emerging-market assets. beneficiaries of risky assets in other parts of the world apparently, because the markets in those local markets are not saying this is a good idea. with thestruggle

validity of some of these experimental policies. that is the reaction the financial markets are giving. david: it is not just risk assets that are listed, but the fundamental economy. are we reaching a tipping point, where it turns out the negative and just rates are counterproductive? what he did, it drove down the stock market. to beso far that seems the case. and it is a bit early. europe has been going on now for a little while and has not really shown any improvement. the european stock exchange showed some improvement initially, and this year it has really struggled here it there is a little bit of a mixed message there. the damage to the financial banks, the damage to the in the financial system could potentially overwhelm the investors into risky assets, and

the financial system is inherently linked to the economy in these countries. between an inherently european and japanese banks and u.s. banks. it is a global financial system, so there is a lot of potential damage, and investors are testifying that they are more worried about the potential damage than the potential impact. david: thank you. always good to have you with us. coming up next, in addition to earnings, this week is full of economic data. next, we look at what investors should be paying to those retail sales outlooks. on "bloomberg ." ♪

♪ >> this is "bloomberg ." -- dreary, great city.

italian banks leading the gains across equity markets. dollar versus yen breaking a losing streak. abenomics on the trend. treasury market up two basis points. joining us from bloomberg radio is tom keene. also, a bloomberg utilities chief. let's get a check with first word news. >> authorities in belgium said the extremist who struck belgium plan to announce another attack in paris. there were surprised by the speed of the investigation and arrest an attack on brussels. authorities arrested four men in raids allegedly connected to the

brussels attacks including mohammed abrini created ukrainian prime minister is resigning after weeks of pressure. the move opens a wave. brazil is the point thousands of troops in the capital city. the government is helping to prevent violent clashes on the impeachment. the full house could vote in less than a week. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. vonnie: i will take it from here because we are getting breaking news. canadian pacific getting the word to end the merge. those -- they had a difficult deal.

remember the story? he is eager to make a deal. out is i would point canadian national and illinois central. it is built of monopoly game. canadian national did this with illinois central years ago. vonnie: we will keep an eye on it. seem to be moving in with premarket trading. >> you know where marvin gardens tom, i love it when you bring a morning must read. we keep talking about infrastructure. than we are spending more

we think. tom: justin fox from harvard business review -- this is an absolutely fabulous -- i will leave the first part. --ot put in a timeout chair transit systems found your cat in operating cost of four dollars to ride compared to two dollars. y havef the reason is the higher staffing levels. is hes great about justin has given all the academic research. avenue subway and why it is costing so much. current reason is current labor -- and thehe part of cost of building things. there is an array of possible

causes. tom: london or new york, which has the worst infrastructure? >> hard question. to make it happen. in the u.k., they want to make it happen. they shut down the troops. they won't let it happen. my question to you tom is how difficult would it be to make the service more automated to catch up? tom: across the country, there is a huge labor reality. pension,e retirement and health costs alluded to in your must read, that is not a footnote. if the health care and pension costs are being carried by the significantlyt is

-- that significantly impact the cost. vonnie: the other question is the candidates we see running, all four of them, would there be in infrastructure if any of them get in? -- tom: and the answer i think the answer is no. david is too young to remember this. the magic of the interstate -- it just ended and back to what it was before. david: i mated to michigan, so that is all i care about. [laughter] it to michigan, so that is all i care about. there is an awful lot going on this week. president obama is going to meet with chairman yellen.

how big a deal is that? >> it is less than a big deal than these reports say. they are talking about the longer-term outlook. they will be academic in context. not relating to the near twists and turns of monetary policy. we have initial jobless canes -- claims and consumer sentiment on friday. >> that is the first glimpse into q2. the broader context is out of all these data points, a lot of for q1e refining points gdp estimates. there is a real question of the momentum of the economy. we grew 1.4% in the fourth quarter. the atlanta fed said estimates degraded for --

we have on all the way down to just .1% for growth. a could easily go to negative depending on business inventories, retail sales, industry production. it is very hard to hit the fed's full-year growth target if you are growing .1% in the first quarter. we would have to go to .9% on average for the remaining three quarters of the year. that is something that has happened only twice since 2011. we have an unprecedented growth rates. >> i would have to have a triple scotch on my hand to do that on a sunday. david: i have managed a business for the fourth quarter comes in really badly and the cfo is calling you saying, how can we possibly make our numbers? isthat is what janet yellen asking herself. much depends on retail sales.

have had a negative must be changeable january and february. forecasters are only looking for .1% for march. that is a weak trajectory. at the consumer is not present -- >> they're going to really struggle. >> i have not finished annotating it yet. but i think the chart speaks for itself. matt: this is the atlanta fed gdp forecast carless talking about. we have come way down to .1%. -- forecast carl is talking about. we have come way down to .1%. >> there is a 12% chance the fed hits its two hike target. vonnie: the whole point about revisions are always --

2.9% is about where the word atlanta is. [laughter] [indiscernible] vonnie jon: we have chinese gdp. i don't know if that means the most for the u.s. economy. things transpiring in china, are things going to get better? gdp comes in with a say will come in. evidence need to see of the chinese economy making the transition and coming along at a decent 6% or 7% pace from export hike and led growth. there is no guarantee that the transition has to be a smooth one.

it is a fine line for the chinese to walk to accomplish the transition. fade, thenales you will have difficult seen significant gains without the consumer in 2016. david: that takes us back to the united states retail sales numbers. correlation is not great you seethe two, but if consumer sentiment slumping, it will be hard to envision that kind of improvement. tom: bonnie, help me here. we have imf meetings later this week. at the end of last week, carl, there was this idea of uncoordinated intervention by leaders. can we look for that in the hallways friday in washington? > wringingwill be hand of what they can do to stimulate global growth.

christine lagarde has hinted heavily there will be downgrades to the global growth forecast. april 17, those meetings, well decide the price of oil. i didhe opec meetings? not even think of that. >> negative interest rates are not looking much a viable policy tool. david: take is that to retail sales, what can we expect? is looking at .1%. that is not a good number. you will have two dramatic swings in both directions. gas station sales will be up, but motor vehicle sales were down sharply in march. that is a troubling omen as households are not willing to spend on things my cars. >> the times of london today says -- >> you are really ripping it up

right now. >> i don't understand the threat to prime minister cameron. , itthreat to mr. cameron will be reviewed as well. what did you run over the weekend about this uproar in the united kingdom? vonnie: i learned a rich man made a perfectly legal investment. everyone is in an uproar because he is a rich man. the rules are not being applied fairly. this is a great top area -- this is a gray area. >> do you think the labour party has the same issue? he was really thrown under the bus. keene, thank you.

coming up next, the clash over privacy rights between apple and the united states government is not over yet. the new fight that is -- the new fight that is brewing on "bloomberg ." ♪ "bloomberg " "bloomberg ,"

the green room. coming up at 9 a.m. -- 9:00 a.m., luke ellis on where he sees opportunity in real estate. ♪ i'm david gura. standard chartered is looking to sell assets to asia.

the london bank is talking with for $1.4 buyers billion of stress loans. they are preparing its balance sheets. chinese conglomerate h&h has gay group holding. the price -- $1.5 billion. it was just the latest in a global operations group. be turned to -- plans are in the pipeline for 35,000 high-end properties. demand is weakening thanks to higher property taxes and something commodities. that is the bloomberg business flash. jon: the fight between apple and the u.s. government is far from over.

the clash continues. the government announced plans .o sue the company apple maintains it stands that unlocking phones will be a chilling attack on privacy. for the people who thought this was over, it is not. >> not even close. but only is there a phone in brooklyn, there is one in massachusetts. the government still wants to that theyhese iphones feel are essential to fighting kerry cases. each one is slightly different from a slightly different flavor. wantedbernardino, they to get past the security system. in brooklyn, it is a very simple matter, the government says they can do in minutes. take us into the motivation of the parties. this is not a terrorist attack, this is a drug dealer.

top trying to take this up so it goes nationwide? > >> they are telling us they are not trying to set a precedent. in boston, it is a gangster case. it is likely the judge, which is in brooklyn, that previously ruled against the government, may rule again. there will be appeals further up , and maybe some kind of president will be set. in brooklyn, it could say something to the second circuit with all of the cases they are fighting. in the san bernardino case, is apple going to look for the fbi to tell us how they got in? said, we arerector trying to decide what to do because if we tell apple, they

will shut it down right away. is that useful for us? apple says they are not going to fight, but their security is constantly being upgraded. for the government, it has a 20 link time frame in order to use whatever technique develops. hasn't apple said they wanted to know who the government has been talking to to open these phones? >> the company has been identified, but not by the fbi, but others. government'sut the argument. previously they said, apple we have to have you. companies won't want their name spread around. >> a goes both ways. if they are really good, maybe they get more business. vonnie: other civilian cases pending? >> civilian?

the case said was in boston was because of the clu saying it is a matter of privacy. we should not have the same going on behind the scenes. let's bring it out into the open. over. there are a dozen out there already. >> i always love it when you come on. it is a treat for me. coming up, the yen's puzzling surge explaining one theory. that is coming up next on "bloomberg ." ♪

vonnie: you are watching "bloomberg ."

yields.ing gap in real matt, can you walk us through what this means for investors? low --his is i.s. and mo.s isism you can see were inflation levels actually are. down here, i put u.s. and japan. inflation levels are in blue and the japanese inflation levels are in green. i can maximize the screen and you can see the japanese inflation is coming down. it is great to look at it graphically. u.s. inflation is rising. that is one of the reasons we see this theory being developed as to why the japanese yen continues to strengthen in the face of negative gdp.

jgbuse the real yields of is getting tighter and tighter and it spread to the real yield of the u.s. 10 year, it makes it more attractive. that is of course the yield when you take inflation out, or in the japanese case, which soon maybe deflation, you can get back to a positive yield for jgb. vonnie: people are buying begin to they can buy jgb? it is not dissuading them from buying the yen. they see the real yield as being closer to zero, where as the real yield of the u.s. treasuries is closer to zero as inflation declines. you can see, it gets tighter and tighter and tighter. vonnie: this is all about inflation expectations. but the japan central bank is bringing rates negative, that

the way down on u.s. treasuries as well. -- s the idea matt: there are a lot of different theories as to what is driving began stronger and stronger. one of them is this is a bet that the japanese central bank is not going to continue with its negative yield policy. the doj to put their money with their mouth is. the balance sheets are 19% of gdp, what is left to buy at this point? the conversation of the balance sheet has been diminishing returns. japan, the are doing a times.

those is go stimulus? but the argument is that a stronger yen is not all bad for the economy. if you are looking at lower commodity prices at the yen buys more for a buck, that is great -- matt: for them, but for us is tough. i have been trying to buy this aluminum gas tank but the price continues to rise and rise. jon: thank you very much. stay tuned to "bloomberg ." coming up, look ellis on a strategy.

♪ jon: abenomics under pressure. italian bank stocks rally. officials in italy hashing a plan for nonperforming loans.

alcoa kicks off what it is forecasted to be the worst earning season since the financial crisis. ♪ jon: a warm welcome. this is "bloomberg ." >> we will be talking about yahoo! and oil. it is a big week for oil. investment creditors from edward jones. let's get a check on a traffic -- let's get a check on the markets. >> futures are so positive. up 53 points. the green you see a performance and italy.

italian banks pushing higher by 1.7%. well executives get together and hash out a deal to tackle those nonperforming loans in italy? dollar yen at a six-day losing streak. will be breakout? -- will be break that? two basis points. wti down. falling for the 15th time. is that supportive of higher crude prices? ura.s cross over to david belgium, the extremists had planned on launching another assault. they were surprised by the speed of the investigation and arrest

an attack on brussels. authorities arrested four men in raids connected to the brussels attacks, including mohamed abrini, the man in the hat of the brussels airport. in india, rescuers are attending to hundreds of people after a massive fire killed hundreds of people. the unauthorized display -- senate leaders argue the blockade is injecting a brand of politics that materially hampers effective operations of the judiciary. republicans said they have no plan to move forward on garland's nomination. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. i'm david gura. jon: thank you very much.

a company earnings pieces kicking off. joining us, steve and kate. let's start with you, steve. and expectations get much lower? seen things get this bad? knows when recessions come? , therespect to u.s. stock bloom is off the rose when it comes to earnings. talk: kate, i want to about the quality of earnings. we had been talking about the overall level in the disappointing expectations, but i am told that the earnings we

are looking at, they don't take into account -- there have been a lot of right things? earnings andner operating earnings. ' forecaste analysts use operating earnings. but, heart of the quality issue is, we have oil where earnings will be down, not because of low operations, but low oil prices. i would not take the quality issue being sold a right down to ping site that. you have to look at what is driving the underlining point. vonnie: matt miller has a chart. matt: the truck that i showed you guys at 7:00 -- the chart i analysts and00 -- down the expectations, or nbc

leasten sent -- or at they have been since 2011. of can find a wealth earnings information. that we have been in an earnings recession. this chart shows you actual ,arnings up to this line here and then the forecast. you can see over the past three quarters, four quarters, we have had a drop in sales over the last three quarters in earnings. more drops tot come in this quarter and the second quarter. they are forecasting growth in the second half of the year. as you know from the previous chart, they will bring the forecast down rapidly unless we have a turnaround in the economy. steve, what you think about that? steve: the analysts always to overestimate earnings and

then have to bring them down. secondly, the fundamental issue is this -- part of what has driven corporate earnings in the u.s. over the last couple of years has been expanding profit margins. i think the jews is out of that lemon and the ability to drive margins higher -- i think the juice is out of that lemon and the ability to drive margins higher. we have to look at topline growth. david: we have to get back to topline and overall growth. they have continued to focus on efficiency. everybody would legacy topline sales growth. we will continue to see some improvement in earnings even with modest topline growth, which is what we have seen so far.

we are still seeing lower commodity prices and lower inputs in some cases. that is not across the board. we are seeing struggles in some sectors. that is why the earnings growth forecast has come down so much and are so negative. it is weakness in other sectors leading to the overall weakness and earning expectations. vonnie: will we see a lot more dividends? >> we have been seeing dividend increases at a slower bait. -- at a slower rate. i don't think we will see dividend cuts except by energy companies. we are going to see fewer increases in the amount of the increase will slow down. that is not great news for stocks, but not that news that is suggested. two david's point, the

struggle for topline growth -- the way you look at things, has it been a big enough repricing for you to look at the situation and say, we can see through this. i want in. of diversified companies, the answer is, yes. opportunity to add those, especially if you got a longer-term perspective and not looking at the next few years, but the -- not the cap the next few weeks, but the next two years. with respect to banks, the question is, how do they make money? you have the regular term requirements, which makes a harder return. the value investors will say, some of them -- you have to believe they are worth book value. the other side is the bite of a

company is what he can earn on it assets. business, the banking is really tough. >> matt, you something on bank earnings? matt: you can see, banks he are in white and earnings are expected -- you can see bank earnings in a white. here we are looking at drops in the current quarter for diversified financials. you see it getting worse into the second quarter before recovering in the third. david: i want to go beyond the banking sector if i could. going back a couple of charts, matt, it looks i get was telecom, consumer discretionary, and health care. is that consistent with your analysis? >> yes. the u.s. consumer continues to

spend. that is an area where we are seeing sales growth. it is helping those companies. that, plus health care spending and telecoms have been strong so far. those are areas we expect to see earnings growth, despite the fact that in other sectors, we are seeing year-over-year decline in earnings. vonnie: when you think about alcoa- when you think of -- the first, sost everyone pays attention to it because it is the first. it is less of an indicator than the rest of earnings that even the financials are which are one sector. they are reflecting the fact if we are not seeing loan growth, then we are likely not seeing economic growth which is tied to earnings growth later on. >> thank you very much for joining this program.

coming up, the parent company of daily mail is in talks with? . minutes from the open in new york city -- one hour and 19 minutes from the open in new york city. ♪ "high flyers," "bloomberg ," "bloomberg ."

♪ >> this is bloomberg's business flash. overstock.com, the ceo will take leave of active -- absence to battle hepatitis c.

occupied wall street protesters -- adjusted for inflation wages 1990 compared to 2014. bloghion and entertainment had the best debut of any asian public offering. shares rose more than 700% on the first day of trading. indulged -- the ceo found the blog in his bedroom. >> what is the big deal? canadian pacific railway has decided to end efforts to barge -- efforts to merge. in an interview, he discussed

the potential merger. >> i am not worried about my legacy at this point. that is not what this is about. that other people think it is. that is not what this is the -- that is not what this is about. our first obligation is to the shareholder, ok? that is our responsibility. we are not going to take our eye off the ball. >> joining us is jeff mccracken. , the shareholder. but he says it was for the cp shareholder. what changed his mind? jeff: the doj came out on friday and said, they wanted to create trust that would run the organization after a merger to get through to the regulators. that does not make any sense and

not be in the benefit of norfolk southern. a deal thattrike even if they cut norfolk southern shareholders to get on board, it looks i regulators would block no matter what. they had been scrutinizing these mergers more harshly. , never made much progress. what will he turn his attention to? >> they can look at something my kansas city southern. that is another opportunity. right now, it doesn't seem i care is an easy answer for canadian pacific. one was high on their priority list. there are other small railroads that probably won't get as many cost savings, which is what they are looking for.

kansas city is probably the next option, or the one they will try to do in the next months or years. >> a lot of deals have been broken down and the last few weeks. what do you make of that? scrutiny has gotten greater in the markets focus on these deals. volumes are down substantially in the first quarter. when you have markets this volatile, it is hard to get buyers and sellers to agree on what the right price is. >> if this continues, looking , the to earnings season advisory fees they would earn on some of these ipos. do these stories keep going around in circles? >> i don't think 2016 will be a strong as 2015. january and february, the market was up and down.

that did not help anyone looking something to buy or trying to figure out the right value. we are going to see deals take up. most of the difficult announced or ones in the pipeline. vonnie: news of another potential deal. the daily mail saying it is in hopes -- giving a bid for yahoo!. this was out of the blue. time has been rumored. we reported on thursday and mentioned verizon. verizon is the front runner. most of us assume that verizon is the most likely to pick this up. disney and comcast have looked and moved on. the daily mail might pair up with some -- private equities running around trying to find a partner.

we are not even into the first-round bids yet. they were supposed to be monday, the 11th. there are 40 or more parties swimming around trying to decide whether they will bid or not bid. there will be more certainty next week on those who will put money in. this is a $7 billion to $10 billion assets. world youthis is a know well. from media and m&a. what do you make of what the bit is going on. twos surprised to see people stepping up. steve: this is a very tough asset. it has certainly not been run well. the question is can it be run well? what is the role of yahoo! in the modern world? ages, we needed that kind of portal, but today, we have apps. what is the role of yahoo!?

the advertising model has shifted. it is more performance-based advertising. but it is noteff, a trophy as said. >> what do you make of the companies going after yahoo! y?rrentl two very different companies going after daily mail. >> verizon has aol. they brought in tim armstrong and got aol. what they would want to do is and remove a lot of heads. they would hope that the customers they have come a pair that up with yahoo! and a. daily mail has done well online. they would want to get this media access and boost their

scoring and get more eyeballs coming into their pipelines. it really feels site this is a verizon thing. but before i am too declarative, let's get the bids in first. jeff mccracken. coming up, a rocky oil at an all-time high. that is next on "bloomberg ." hertz.ut shares of cheers already down 31% in 2016, almost down 10% in three markets. ♪

innie: timeout for futures focus. crude sinking lower. outputid it has raised

to a record. a -- g us is joe, a massive move. perhaps a little that of a disappointment after last week's rally. surprised that we did not go through with conviction. right now, the futures complex and the nymex is not showing there is expectation going into the september expiration that we will get about 42. vonnie: is it a stretch that nobody thought a rack which moved to a record -- iraq moved to a record. put out a starting to forecast. you saw that russia is exported now.

european and asian countries will see relief as far as crude coming to the market and will see price pullbacks bike we saw in the states. what is it -- what is we useting, the contract in north america, that contract has some interesting place. last week, we saw a bigger drop. that is raising eyebrows. vonnie: joe to that, we have to leave it there. steve, oil been produced at a record. are we going to see any move? >> it certainly would matter if they did something. but i am not too optimistic about that. we have too many people who want oil too badly. they could never agree on any

kind of production cut. it would be a freeze without output at all-time highs. what you make of that? steve: the supply/demand gap is not that great. it was nothing liked it was in the 1980's when prices collapsed. even getting a freeze, and having demand growth is part of why the market is looking at this $40 plus pricing. stable be staying with us. john nicholson joins us to talk about his interview. that is all on "bloomberg ." ♪

show me movies with explosions. show me more like this. show me "previously watched." what's recommended for me.

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let's check in on the market -- the market. in italy, up by 1.63%. -- finally has shut a plan to tackle those performing lows with -- optimism for returning banks. it, -- break a new 17 month the japanese yen. nymex, w t i crude, dropping last week or a record. but they finally freezeout, is that even bullish for crude? that is the market situation. we go to matt miller. matt: we kick it off with breakfast, specifically general

mills. after are in the green natural and organic segments of general mills are being underappreciated by investors and the analysts expect better growth this year. price target was raised by two dollars. a buy rating on general mills is kept. check out the bloomberg, i pull up the anr function. you pull up this graph in the corner of your screen. you can see something interesting happening with general mills that you don't often see with analysts. the white is the actual priceline, the yellow is analyst estimates. normally, analysts estimate prices way above the price of the actual stock. right now, the stock price has risen above analyst asked him -- estimates. shares of public that taking higher this morning after

pivotal research upgraded the stock. the analyst raised his price target to $970 from $800. the expect out of that to sustain double digits. jonathan: i find out so much about your life from markets. the gas tank i'm trying to buy in japan, you can only get these gas tanks from one guy, it takes about six months to build. cap'n crunch is my second favorite breakfast cereal. jonathan: let's get some first word news. barack obama will meet with federal reserve chair janet yellen to discuss the longer-term economic outlook. the white house says the oval office meeting will focus on the state of the american and global economies. joe biden will also attend.

hillary clinton is stepping up her criticism of donald trump. purdue campaign says she is the candidate tough enough to stop him. atul start running in new york city ahead of the primary on april 19 -- adds will start running in new york city ahead of the primary on april 19. vote for the take currency. global news 24 hours a day. to a morning must-read, bloomberg editor in chief john nichols wife sat down with the managing director for the cover story of bloomberg markets -- she said it is usually when something goes through a massive rices that eventually, it bounces out of it and onto a new plan to know. joining us now is john nichols.

the tone seems to be that things could be fixed quite easily, but they are not being fixed because we are not in crisis mode. john: if only there were a crisis. organization that -- it's likecrisis one of matt miller's cars, you have to go to the edge of the precipice, nearly go over to get the investment. intend tow do she simulate a crisis, if you like? john: the problem is the world is quite good at simulating crisis. come towards her and the europe and expect the one that is imprinted on her brain because she had that right from the beginning. the crisishistory of

is always the thing were goes all the way through at the last moment, it just comes back and they kicked the can down the road and it never quite solve things. she has sat there, watching this for a long-term -- longtime. david: you had a discussion about the sort of reforms she would like if there were a crisis. she took you through what you would like to see done. john: all things to do with capital and bank. some places are looking to consolidation, so she has moved the imf away from being this tough doctor. i think she learned that from greece. in greece, they impose incredibly harsh conditions and they shrank. david: she basically admitted it was a mistake. john: yes. a very difficult time and she talks a bit about and idea of fiscal safety

that by itself is quite revolutionary biggest back in the old days, of the imf, you would meet these people that the the only -- fiscal space, there will only be there until it's gone, they will question all of that. vonnie: it feels like also snooze open some eyes in this crisis. john: her view of the world is, it has to get worse before can get better and you see more of these crises coming towards you and some have the impression that she desperately wishes the --iticians would act actually saw things and they take it all the way through relevant dispatching up the euro crisis. you look at places like brazil

and these emerging markets and may have these opportunities to do reforms. you are up late in asia and tune into bloomberg go, bananaal bunch that says comes out with a growth forecast later this week, why should that mean anything to me, constantly behind the curve? john: they are the lender of last resort to the lenders of resort.enders of last somewhere behind that is the ims and they are the -- you have to rely on them, you looking greece and the other markets and you will have to look at a lot of emerging markets and she will be there, so she remains a very important person. i know exactly what you mean, if the markets -- the kind of grown when they hear the word ims. david: you mentioned banks and reserve requirements.

one of the things i found fascinating was she sees the increase capital requirements as being a way of severing the time between sovereigns and banks so they don't have to jump in, but at the same time she express reservation about how fast the banks -- and one equipment interview, in banks, it has taken longer than it could have do to the financial sector players themselves and the reluctance for this interest in capital, have tier one capital rightly get-go. john: you look at what is on theng in america, whole, banks agreed to these things quicker, they do a lot of lobbying and got the thing through. in europe, banks have been part of a slow process about reforms, so what is happening europe is the banks fundamentally have not gone through the same degree of writing of loans in doing things that americans have done, even american remake the case to wall and.t very hard that would slow down the whole process for point is that that

may have been slightly better rules for the banks will than when they started with -- for the banks than what they started with. jonathan: let's go back to greece. a recognition that something went wrong, that they did not do the right thing because of the same time, the prime minister's history driving a wedge between his government and the imf. the imf is such a convenient living boy or whipping girl, but it is just very convenient if you are a populist politician, to go for the imf. they sit there and it's -- in its history, it does have these examples of coming. in and bossing people around. one of the reasons why we now have china supporting an asian investment bank is because -- the things they remember is that in the 1990's when people from the imf came around and lecture

them and these were the same people who were in charge of the .merican economy which had vonnie: its vonnie: own problems for the first time ever, they have real competition, the imf so they have to play nice. what is this fiscal space she is talking about? of countriese end which could expand should and eventually you go to germany. germany is the archetypal case. mrs. merkel would be extremely skeptical. dome -- theye differ on this, lingard guard is very much from the school of if

you have the room to expand and the rest of europe needs expansion, please do it. --kel has this habit of whenever people talk about the punch ball, she thinkseople will just -- gravitate around it but nothing will actually happen. david: something exit from your interview was she is fairly nuanced about this. when money is cheap, they should be borrowing and investing, but when it's saudi arabia, they should cut their expenses so they can invest in road. it is different from country to country. john: the truth is, you can the imf of say eight years ago, it .s a very different thing admit that the world economy needs to have a bit of growth in it. jonathan: through the interview in full, please use the function

hdlv . sayingup, mr. yan, japan's currency may rise beyond 100 in late 2016. ♪

vonnie: in the hcc -- we have look ellis -- ♪ david: -- in its second-largest shareholder is joining unions opposing management bonuses.

-- planning to propose a voluntary 30% cut. the w is still reeling from its diesel emissions scandal. developing economies in east asia are holding up according to the world bank which is low the rain -- lowering it was forecast for the year for the region, only marginally. ease ans set to estimated 6.5% in 2015 -- 2016. the boss is running things at the box office. have the boss taking in $25.3 million. hollywood will have an eye on the final figures which are due out, later today. jonathan: new course this yan.ng from mr.

let's take a listen. >> really aggressive easing of monetary policy, the yen has depreciated and has now come 110.to toward 90 over 80, then some problem would be created, that around 100, no problem. said a fresh yen 17 month high. john nichols way, and the question, they certainly need mr. yen back on the table. i think they have had a good run and there was an element behind it of an experiment that was tried, and maybe was not pushed hard enough. they created the fiscal space.

and yet, fundamentally, the number of reforms not quite at up. the first lot were very effective in minute gradually ran out of steam. i think it is too early to say it is gone. very little has changed for japan, it is not all going through. one of the things i think is interesting as there is not much left that they can do all stop john was making this point earlier, they already own so much of jgb's. this is a show of how much the bank of japan owns of all japanese debt. it is at 33%. the yellow line represents how much other people own of japanese debt. this hascrease this, to decrease the once you are the own a third of your country's debt, how much more can you possibly buy? all of those years, the

commanding heights and the stakes in owning companies, you own a herd of your company -- of your country's death -- debt. , therei want to be fair was a huge looming problem call demographics that he was facing with aging population and diminishing workforce, isn't the one movie could make immigration -- one move he could make immigration? john: at the immigration is one of those things with the japanese are still fighting against it, wrongly, i think. you have a very old economy and you need young workers. you don't even done -- to the guesswork. if you discuss women more involved, which they have tried, that would make a difference, but the really difficult it is all of those old-style japanese industries and they still have not really deregulated.

vonnie: he could go down in history as one of the great japanese central bankers that turns it all around or presidents, i bet because we won't know before 2030 or so if this works out. also, a stronger yen is not necessarily all bad, particularly if you own most of your own that. it is only really beginning to be getting nasty for those exporters with the goes down to 80 or 90. that. is where it separates off. where it is at the moment is, just merely a bad signal. will if you speculate what happen if the yen continues to strengthen to. the exporters, you get a chart that looks like this this is as plc and you can take any company and look at their supply chain, we have taken toyota and you can see that all of their suppliers

with the exception of microsoft have a one month change that is very much in the red. this is not to suppliers, this is their customers as well, and here are their competitors, all in the red because with the stock market, it is a game where you try to look at what happens in the future and put a price on that, now and this is a one-month price change chart, this is why the japanese equity markets is the second worst performer. in the world of developed markets. only italy has done worse and of course they have italian banks so they will be pretty poorly. jonathan: looking at that chart, i just wonder whether you need foreign investors life -- to buy into something. coming to new york, in september 2013 and saying buying abenomics, they have been selling it for 13 straight weeks. does he need the world to buy into what he's trying to do? john: you need this element of

foreign investors because at some point, they will buy the story that japan is finally dealing with these problems or they will turn around the other side and say look at this space was incredibly leveraged with last demographics and it's got some fantastic companies with some pretty useless ones and i think born investors at the moment are looking a little bit nervous at japan and that is a problem for all the reasons that matt said. check out his interview with resting the guard. i will take on matt miller and i need your help. vonnie: decant lobby before hand. -- you can't lobby for hand. -- before hand. ♪

jonathan: matt miller fresh from

his master's trip, ready to take on david westin. bloomberg editor in chief will help us judge who wins. matt miller, begin. don't come back from the masters fresh, i am still recovering. i saw you walking last week with a skateboard. matt: this is my chart and we've been talking about this a lot, but i think it's the most important thing in the markets today is what's going on in japan. equity investors have been taking money out of japanese investors for 17 weeks in a row. the white lines here are outflows from equities. people are just pulling money out of their. the red line here, japanese government bonds. the yield has come down to

negative as we all know, you are getting paid absolutely nothing to invest in those bonds, and yet the yen, i have inverted it, yen strength is climbing, climbing up to the highest level since 2014, even as these two things are happening. thisi want to do with chart is try to get clients to write in and tell me why they think is happening. why is the yen getting so strong? i want to talk about tomorrow, which is earnings. line right here is historic, s&p earnings, overall. this yellow is biotech, the only one that up warned the s&p. everything else dragged it down. oil exploration is the lowest one, so it just that biotech is pulling earnings across the board. vonnie: you got my vote after that hitch -- pitch.

jonathan: i got matt miller's. david weston is a very much winner. the point is at the green line of the estimates that you see, continued strength of biotech earnings and oil not coming back. jonathan: thank you very much special thank you to the editor-in-chief here at bloomberg. coming up next, the man group president. do not miss that interview. ♪

vonnie: earnings season kicks off today and expectations are low. rally, thetinues its

highest against the dollar since 2014. man group is moving into real estate. if president joins us. itst's president -- president joins us. ♪ vonnie: we are 30 minutes from the opening bell in new york city. look ellis, president of man group, the largest publicly traded hedge fund, posting $78.7 billion as of december 31 of last year. jonathan: a cool a you and. -- aum. let's get you up to speed on what's happening in markets. dow futures up about 78 points. the outperformance in italy at

the -- as the bank stocks leading the charge, can officials in italy get together with executives and hash out a plan they can tackle those nonperforming loans? such of the board quickly, abenomics under threat appears to be the headline. crude, factory 40 books a barrel, big move on friday, over 6%, we headed north after we fell for the 15th time in 16 weeks, although this building up to that meeting. the situation in markets, let's cross over to david during. david: secretary of state john kerry is in japan were a visited the memorial to hiroshima's atomic bombing. makes john kerry the

most senior official to travel to hiroshima. in a paul says half of the u.s. obama's of president job performance, the first time that's happened since 2013. a survey finds him with an uptick across a number of issues including the economy. 15 former american bar association president's are joining the push to urge republicans to president president obama's supreme court nominee, merrick garland. republicans say they have no plans to move forward on garland's nomination. global news 24 hours a day. time number three stories that matter to markets. today, we talk about earnings,

and canadian specific and standard chartered dumping more than $4 billion in assets in asia. and an official kickoff of earnings season. analysts forecast the worst quarter for corporate profits since 2009, led by painting energy. luke ellis, we turn to you. we've heard all of the projections. do you think it makes a difference how the markets have priced it in? luke: you can assume that the markets of always got things priced in, there has been an enormous calling -- the index is bouncing around, not really going anywhere. it'll be great to get back to single stock and earnings and hopefully we can concentrate on the proper job of picking stocks. jonathan: this is just a big rate and we are not looking at the underlying companies? it's about how they do

relative to expectations, they have been trying to manage things as they do in every quarter, but you are looking for surprises on the upside and downside. vonnie: what about the strategies and we'll would be the winning strategy -- and what would be the winning strategy? luke: we kenexa concentrate on stocks as opposed to that big shift in momentum we saw in the otherwise, i, think it is -- continues to be a the cta'sonment for take advantage of what's going on in the macro picture. you need the diversification to get these discretionary macro guys. david: does that mean we should be looking at the ones were the expectations are low because the chances about arming are better? everybody is used to the earnings management that goes on nowadays, so i think it's not absolute lows in absolute highs,

it's really looking for guidance, mrs., things were the market will be pushing things very heavily for missing in this environment, we have come back quite a long way in the past cointreau or five weeks, that means there is a lot of room for pain on the downside and is more of an opportunity on the short side of the in just individual earnings development. luke: jonathan: people talking about -- jonathan: people talking about an earnings recession off the back of it, does that resonate with you at all? luke: we've clearly got a lot of pressure on earnings, we have a lot of pressure on the outside of the u.s. or markets, make the banksou look miserable, that is really bad for confidence, really bad for borrowing, company borrowing, and then you get a weakening of the economy.

we have to get some confidence back into the banks and you can see the markets leading the world, you can see japan leading us down because of negative rates. it is clearly a big problem in japan and the banks are under performing and dragging the rest of the market down. annual letters shareholders saying that this is not good, native consequences to -- deficit to try to weaken them versus a big negative interest-rate policy in the eurozone in japan? you have to draw that line? -- do you have to draw that line? problem in japan is, the central banks have gone to negative rates and the reality is, there is no chance that banks in japan are going to get negative rates of her clients, so you immediately set off that problem. if you are sitting there as a

company or looking at rates, you 50 whether you get to borrow basis points or zero, that is not going to change your decision about actual investment decisions. they could've create a concern about confidence and cop -- four poordence is always bad -- confidence is always bad. david: does that tell us that mario draghi was quite clever in going with the tro approach? that is encouraging banks to make loans. luke: it is good and he tried to do with negative interest rates is try to do something to support the banks in the most direct way he could find. at some point, they will all end up buying shares in banks to support them, but the reality is -- i don't know, personally i think negative interest rates are flawed policy for big economies.

bigs talking to some of the banks and pamela was out there. -- while i was out there. rates, i'm note sure i want to borrow in the environment and that is the impact you don't want to get, we have seen the gangs strengthen -- the yen strengthen and the euro strengthened. . vonnie: the second thing we're -- ing at is the canadian said thisacific's ceo earlier, with no clear path to a merger at this time, we're turning all of our focus to serving our customers and creating long-term value for shareholders. not to stick with the bins is turning out to be a that of a trend, there are knowing the

torah groups. does it continue. we are in an environment where regulators 12 -- ministering to affect things and there are some very good returns ofbe had and the number mergers out there is still a lot and it is a pretty attractive strategy as long as you're careful about what deals you get involved in. jonathan: considering how many deals have gone under. what industries would you go to play the strategy? couple ofe's a industries you would avoid, health care being the obvious one, thanks to the obvious one -- banks being the obvious one. you are looking at things which are big enough that you can put real money to work, but not so big that the regulators are going to have it unopposed. david: there has been so much

merger activity that some industries have gotten very consolidated, so it's also hard to do one more. got a look at industries that are relatively less concentrated. a merger were you go to cointreau players to three players is always going to be difficult. think consolidation done among the smaller's and hospitals -- luke: you can always find things and smaller financials, their infinite banks out there in the u.s., so there will have to become -- consolidation. financials at the moment is under so much regulatory focus that everyone of those deals is going to have a lot more risk that something in a industrial area. jonathan: to number three, standard chartered looking to sell leased $4.4 billion of assets in asia. latest attempt by the lender to repair the balance sheet.

over in italy, officials are said to be meeting with executives of major banks to discuss solutions for those institutions in nonperforming loans. very hard to take an equity sector to get a read on the general economy. banks are a big red flashing light for you. actually, i think that's what's happening with the banks is causing the week this in economies, not the other way around. the starting point is the pressure on the banks where predatory pressure and earnings pressure and interest rate pressure -- they have to cut the balance sheet and that creates weakness in banks and that in and of itself creates weakness

in the economy. jonathan: which of the policy response be? -- what should the policy response be? luke: trying to avoid giving -- i think they have to look at things from the point of view that we need banks which are healthy, positive, willing to make loans and people want to take loans from the bank. policyn: if that response changes and does not adjust, that means you do not ?ook at the banks luke: there are always winners and losers amongst things, that there are easier places to invest. david: those are the three stories that matter to markets right now. the president of man group will be staying with us.

not -- much more ahead on bloomberg go. the daily mail is making a play for yahoo!. the british newspaper is in talks to join with potential bidders who would carve up yahoo!'s core business. any bid from the daily mail would be only made in conjunction with a partner. ♪

david: bloomberg business flash, growth in developing economies is holding up despite conditions and a slowdown in china into the world in which is lowering its growth forecast, only marginally. hertz is cutting its revenue expectations for the year, the

company says the rental car market is suffering from excess capacity. for its previously projected growth, up one and a half percent. puerto rico is releasing -- to payreditors regardless of economic growth rate. it would allow puerto rico to $1612 to 16 billion -- billion on its debt load. doubt futures are up 69 points -- dow futures are up 69 points. the banks are leading the gains. yen, 60 losing streak, a novelty in the green. that point uprom 2/10 of 1%.

1.74 -- 1.74 percent on the seven year yield. barrel. to $40 a we cross over to matt miller for some stocks to watch ahead of the open. matt: we kick things off with apple, several different things on the world largest company, upcoming earnings will be on the low end of its guidance and following quarters may even miss estimates. rbc is saying the new iphone as he is selling well, that is the direct vote and apple could sell 15 -- 15 million devices in 2016 without cannibalizing more expensive iphone sales. you can see half a percent in the premarket trade. valeant is also getting conflicting calls.

concerns thatrice pricing concerns as well as william trend. these all says they are turning a corner and the most concerning rick factors -- risk factors have been alleviating subsidies on valiant and keeping the buy although valeant is down more than 66% so far this year,. under armour is under pressure after morgan stanley cut its price target in half the $32 from $64, now the lowest on the street. the analyst says under armour is losing apparel market share for the first time in three years and saw this in running footwear trends to wait on future quarters, also may be a concern that -- coming up next, man group's president is with us on how his firm plans to invest in real estate, despite prices hitting new highs.

♪

david: luke ellis, president of man group is with us, the largest topically traded hedge fund. it has been pretty rough on a lot of hedge funds, the last few months, tell us what's going on. luke: you have to be a little careful of looking at the headlines. the really big hedge funds have very high-profile characters ahead of them and they make great tv. as we've seen, they made a couple of rather dramatic mistakes in the last few quarters, all of them punished by the market. real returns are not that bad, though it was not a great quarter, the reversal in the stock market and momentum are people on the short side, that was bad in the first quarter, but actual terms are not that bad and they are doing quite well. 15% andyou were down

your stock is limping along, 75% of your revenue comes through is this a and -- statement, is your stock price a statement on the business model of hedge funds? luke: i don't think so. honestly, i spend little time worrying about the stock prices on a day-to-day basis, we are trying to run a business, five years forward and the answer is that there is lots of opportunity to grow the company on a five-year basis. asset management like any other part of the financial industry is under pressure, there is no question. we have to keep moving and keep delivering performance for our clients and delivering interesting things that they want for their money and if you do that, then you can grow the business on a long-term basis. vision -- the general

tone around hedge funds is that these big red -- these big rock stars have made some bad calls in the last 12 months. is that affecting hedge flows in general? luke: we might be the largest hedge fund business, but it's not one single big hedge funds, and one of the things you believe in is shutting hedge funds early, there is no question that anything that is supposed to be about returning has a capacity strength, you cannot have something this enormous and be about -- what we 40 or 50 different individual has fun -- hedge funds, none of which we love to get that big and you can deliver some decent returns.

-- in an environment of zero on bonds, zero yields or whatever you guys know the numbers, and enormous percentage of bonds are globally known negative yield. yield.a negative people are looking for something other than bonds. i just cannot buy bonds, i cannot own bonds. david: you manage a lot of different funds and as you say, you will shut them early if they are not performing. luke: the thing is talking about was stopping inflows when they are performing well. the performance remains david: are you making change in its -- changes in your funds faster than normal? luke: i think if you look at individual position levels, what

you see is this type of market where liquidity is fairly flaky. what it means is you either need to run your portfolio with very little macro risk or direction, as little risk as possible and try to make it out of security selection, or you need to be very patient, and the people that are getting in trouble are the ones who are trying to pull the market -- call the market one way, one week and then suddenly change the next week and that is for the hard, especially in this market, you are basically -- vonnie: where are the flows going and what strategies are they going to? talk being careful not to about us specifically because we have our quarterly earnings out on friday, so i want to be careful on these things but it is clear that after the back of last years returns and returns

still flow without question, what you are seeing is flows towards strategies because they have been outperforming for a while and flows toward more market neutral strategies and flows away from the big sort of -- theofile event driven jonathan: -- look ellis, president of man group, thank you very much. next up, the opening bell on bloomberg go, we count you down to the opener. across the board and a strong rally in italy. ♪

jonathan: this is a bloomberg alongside david gura and vonnie quinn.

more from our guests in just a moment. futures are up 67 points. s&p 500 futures up around eight points as the bell rings in new york city. by ftse 100 in italy is up 1.8%. dollar yen is the one to watch. about a quarter of 1%, snapping a six-day losing streak. saying they can do more, some verbal intervention. stringing together a strong two-day rally. the open, about 30 seconds in, let's go to matt miller. across the board, not unsubstantial, .3% on the s&p 500. 4875, the biggest

winner of the group. function,k at the mov it will show you the winners and losers. norfolk southern, one of the biggest losers today after that deal fell through with canadian pacific. apple, one of the big winners today, adding index points, so it is moving the needle on these markets. so youlook at the imap can see the industry groups moving today. all 10 groups are gainers, but you can see i.t., with apple, there at the top. materials and consumer discretionary also doing well. what is interesting today, in the currency market, john talked about it a little. what i'm looking about here is the one day trade against the

dollar. the little bit of japanese weakness against the dollar, but dollar weakness against all the other major currencies. the dollar is not strong today, except against the yen, which had been on a tear. take a look at this performance, date, look- year to at what the japanese yen has been up to. strength against every major currency but one. can you guess? is the onlyn real one that has done better. compared to the rest of the currencies in the world, only zambia has done better against the japanese yen. interesting look at currencies there. vonnie: thank you so much. rally, littley

changed, but the currency has reached a 17-month high. so will we see more appreciation? is currencyow strategist sebastien galy. john was saying it is one big currency trade in the markets. does the trade get stronger? probably. the yen remains a relatively cheap currency. in terms of policy, they could go more negative on the interest rates. they may lose some credibility doing that. it will be a tough loss, but mostly, they could get lucky as the u.s. is proving to be better. what we are seeing now is short covering. this is just a partial correction, not too much to be concerned. it is hard to reconcile what is happening with the currency and the rates

market. i have heard so many different reasons for why the japanese yen has gotten stronger over the last couple of weeks. one of them is looking at the differential with the u.s.. how do you look at that? the domestic market in japan is looking at the actions of the central bank and is beginning to lose confidence. everything the central bank wanted to have happen is not happening. as the equity market goes down, the banks go down within the equity markets, currencies get stronger, so the japanese are pulling money back into japan. as a domestic investor, you are bonds,ged to buy u.s. they have a 2% better yield the japanese bonds. that is good for a move in four weeks. coming back to your home currency is in for -- important, if you think it will increase.

mentioned the relative weakness of the yen. people not in markets every day, like we are, might think of the yen in more longer terms. this is five years. this is the incredible strength we have been talking about. imagine, that is only at 2014 levels. 2011, we were looking at fewer than 80 yen is what you could get for your dollar. are right to bring it up, but if you look at where what weulus started, have a raised is everything from late 2014. that is over 12 months of qe, jawboning.

erased in a couple of months, which you cannot dismiss. i wonder if this is the beginning of a drought -- downtrend. do we carry on erasing stuff from 2013? i think we can move on a downside in dollar yen, but once there is negative yield in japan, they will look for price movement to get their returns. then you see currencies moving significantly. massively, and now it is strengthening. it also means it will squeeze itself quite hard at any given time. the next trigger could come at a better u.s. data, and then we would be back to the original story with dollar yen. or perhaps this move from the boj was working better than expected. vonnie: talking about emerging markets more broadly, brazil

specifically, what does this say generally, iss the road to the commodities boom over? particularly because they just got beaten up so much, if you look at emerging-market debt, they got beaten up a lot. the currencies were a big part. we would be relatively constructive on emerging markets. vonnie: q4? >> these are big moves that we have seen over the years. they could go the other way. even within the brics, those are four different economies. markets become

emerging once they fail, which has happened in the past few months. otherwise, others are getting closer to scale to economy. you can see some of the elements of that in brazil. thankfully, it is starting to stabilize and go the other way. fundamentally, this is all linked to some extent to the dollar, and that is being withdrawn back into the eurozone. they have also part from the way they set up their currency policy. the political story is fascinating. look at the political story in britain. luke ellis, you are never getting away from this process. the brexit question. you do not watch the stocks day in, day out, but what does this you?ke -- debate mean for uke: it is clearly a much

closer race than people expected , a lot of confidence to begin with, that the vote would go in favor of staying in europe, and here we are, the latest full says 50/50. generally, people think they will come good out of it, but the fx market is clearly pricing , 50% we go back up to 1.55, in the other 50%, down 1.30. fx will be the biggest move if we get an event. my own personal view is there is very little to gain by a brexit and there is a lot to risk, so why bother? the answer is, if the u.k. leaves the european union, we will have to follow all the rules. it's been incredibly hard story for politicians to get across. matt: i am going to bring up the

function that shows that. brexgo. a lot of information on the possibility of a brexit. we have some news stories, some dates coming up. ofput together a composite everything that we could find. the green is those who wants to remain in the eu, the blue are those who want to become more independent. those who want to remain, that has fallen in recent rolling. 40% -- nowdeveloped we are at about 40% each. the people who want to remain in the eu, they have lost a little steam here. vonnie: [indiscernible] i think the market is already pricing in a potential brexit.

it is already partially priced in in some spots. having said that, look at the bowls in england. they have proven to be extremely inaccurate in the past, whether it is an average or median. questions regarding their liability. the record in england and the somewhatbeen inconsistent. you.: thank next, we are going to talk about plans to invest in real estate, despite prices hitting highs. ♪

matt: coming up at 10:00 eastern, the managing director of armored wolf, john brynjolfsson on the latest with the movements in the market and inflation. this is bloomberg . a battle is bearing over executive compensation. a german newspaper reports he is planning to propose a voluntary 30% cut. the w is still reeling from its diesel in emissions scandal. the founderm says and ceo is taking a leave of the -- absence to battle hepatitis.

trans is sending oil through the keystone pipeline. work was shut down after a leak and spill in south dakota. about 17,000 gallons were released. transcanada has not released estimates on cleanup costs or repairs. thank you. let's take a look at some of the stocks moving at the open. ertz global holdings plunging to a six week low after cutting their own guidance. the car rental company warns that are earnings and car rental revenue will come in below estimates, citing pricing pressure. they expect full-year revenue to go from flat to dropping 1.5% compared to a previous estimate of growth. we told you this morning, canadian pacific was pulling the plug on its push to buy norfolk southern after the carrier ,ejected several proposals

backed by bill ackman. saidcanadian pacific ceo there was no clear path to a friendly merger. is upesult, his company 4%, norfolk southern, down 2%. under armour suffered its biggest drop in two months after morgan stanley cut its price from $64,half, $232 now the lowest on the street. losinglyst says they are apparel market share for the first time in three years. thank you. abigail doolittle is live at the nasdaq looking at a couple of stocks moving in completely different directions. abigail: good morning. alphabet shares are trading higher after an upgrade from pivotal research. the analyst is making the call ahead of the company's earnings report later this month.

he believes business trends are positive for the first quarter, expecting 16% year-over-year revenue growth. he has also raised his price target sharply with a long-term ascending channel, suggesting that google could trade toward those levels. direction,he other .n sus therapeutics revenues are likely to miss estimates by as much as 30%, citing a decline in prescription volume. nevertheless, they expect to remain profitable. a stunning amount of short interest on the stock. thank you. we are back with a luke ellis. one thing the man group has been looking at is investing more in real estate. talk to us why. about,s we have talked

the strategy of the firm is to keep adding investment themes that diversify the list of .fferings we have for clients at the moment, clients are investing inainst bonds, but people have a need for yield, so they are looking for something with stability, long-term confidence, but not , particularly government bonds, considering where we are. this is the conservative end of the real estate spectrum, not the highly leveraged structuring stuff. basically it is there to give long-term investors a yield-like return. david: how much money do you expect to raise for investment? luke: we do not have a target. any time you set price targets in a fragile business, you end up doing stupid things.

theme, wegh-quality are happy to get them on board, and we will go long and steady. it is a five-your decision. vonnie: 4 billion is your largest. we will make sure the team is only investing when they can find quality returns. about: are you talking reits, commercial real estate, residential? high-end commercial real estate in direct buildings. this team is very much about helping clients by actual buildings, if you like, rather than looking at the debt side. vonnie: in the u.s.? they have looked globally in the past. at this point, the

potential acquisition. is it easy to set up in-house, or to acquire the fund, if you want to push further into real estate? we try to stay disciplined about new teams and acquisition. we have to believe in the returns, and that they are attractive for our clients. the second thing is we have to find people who believe in the same thing we believe in. and then we need to be disciplined on price. the reason most acquisitions and mergers do not work, they make deals based on overaggressive assumptions about the future. we will continue to be disciplined on price. we are relatively indifferent to buying businesses. it is a time to market question given the opportunity. where is the money coming from, mostly china, other foreign countries?

if you take this real estate offering, it is about going back to our core client base, which is a global client base, at the larger end of the institutional market, where we have our core client base. a lot of our largest clients do six or seven things with us. this is just bringing another thing to them to look at the menu. thank you, luke ellis. we appreciate your time. betty liu and mark barton will be on markets. is johnirst up brynjolfsson. he has some pretty sharp views on where the bond markets are going to go, and why he thinks there is a price turn happening in equities. we will talk to him in a few moments. then at 10:30, david cameron

will be speaking about his link to the panama papers. he released six years of his taxes to show that he did not directly benefit from these offshore accounts. covering, theere daily mail bidding for yahoo!. it seems like this group of companies continues to grow. how is the daily mail going to pull off this acquisition? we will dig deeper into that. at 12:30,ing up later paul murphy will weigh in on loans to the energy sector. ♪

david: bank earnings are kicking off this week followed by bank of america. one of the things i took away from luke ellis is that all roads of growth go through the banks. jonathan: it is the banks that leave the economy. i thought it was interesting. a big week in terms of high frequency data. gdp figures and then the boe decision on thursday, the imf spring meeting seeking off in washington. china gdp expected to come in at 6.7%. that is one to watch. you're on year is 6.7 compared to 6.8.

i know they always deliver what they say they will, but janet yellen says that is what they will be looking at. david: second-largest economy. japan, not so much. jonathan: dollar yen is the one to watch, for sure. let's get you up to speed on what is happening in the markets. ♪

betty: it is 10:00 in new york, 3:00 in london, and 1:00 in hong kong. i'm betty liu.

mark: this is bloomberg markets. betty: we are going to take you from new york to london to hong kong. we are a half hour into the trading session in new york, stocks are fallen, european markets are higher, but our investors repaired for what is being forecast as the worst earnings season since the financial crisis? mark: canadian pacific railways ending its push to purchase norfork southern, saying there is no clear path to a friendly merger. the move coming after the justice department said it opposed the takeover plan. betty: a new player in the bidding of yahoo!. the daily mail is interested in the news media properties. the company's