♪ will request more from that exclusive interview. >> consumer prices in the u.s. making it unlikely the fed will raise rates soon. cannot miss. scarlet: all the asset classes or range bound. it looks like the smallest move

so far this month. oil prices and go places all decline. and oil prices all decline. alix: one area of stocks is the and small-cap stocks broke above the 200 day moving average. is thaty breakout, and an indicator to where the market could be headed. meanwhile, global government debt markets, lower yields. that is the japanese 40 year yield plunging to a new low. i want to look at ireland.

they had a 10 year bond auction today. ireland still doesn't have a government. yieldhart is the average on 10 year bond auctions in ireland. that continues to plunge to a new low. ireland borrowing money at its lowest level ever this white not having a government. the singapore dollar tumbling in value, the u.s. dollar tumbling. singapore's bank unexpectedly shifted gears, adopting a neutral policy, the first time since the aftermath of the global financial crisis. what does this mean? one of the most trade sensitive economies is telegraphing a gloomy outlook for regional trade. scarlet: there was some movement

and commodities. alix: gold coming off by $16. natural gas won the biggest losers of the session. i did want to highlight led, a similar story to the russell 2000, broke above the 200 day moving average and trending above that line. the breakout we have seen, can you trust them. alix: in the last couple of

weeks, you have seen a move up in that index. when it moves up, that a short covering. come are we looking at a short squeeze in the market rather than moving with directional fundamentals? joe: that is a gigantic move. much bigger than the overall rally, the general market rally. scarlet: and back to the highs of the year. joe: i'm looking at inflation. we've been talking about signs that inflation is on the rise. today we took a step back. i have some different ways of looking at inflation on my chart. all taking lower, headline inflation, that purple line dropping down. core cpi trying to get a look at things outside rent. that is lower. the cpi services without energy, taking lower. ticking lower.

the trends lately have been out. scarlet: i'm taking a look at brazil's leverage. brazil is a good example to much leverage and markets. there was called out for worrisome sovereign debt, the blue line, and corporate leverage, the white line. the white line, the debtor asset ratio, a record 42%. something to keep in mind. fundamentals still not so great. is johnining us today

from wells fargo. thank you for joining us. wells fargo was considered a bellwether of the housing market wells fargo has become a barometer for how falling oil prices are affecting the big banks. the oil loans in particular amount to 2% of our loan portfolio, the only portion of the portfolio where there is a lot of our row or distress going on, so it has a lot of focus by a large number of people. i would not describe it as overshadowing the rest of what is happening in the loan or folio or results overall. we managed to produce $5.5 billion in net income on higher revenue, both interest and noninterest income, growing assets, growing deposits. we also did it in spite of having set aside reserves for

oil and gas loans and taking some losses in the portfolio, so the results are still happening at a very high level, even though we are working through oil and gas issues in the portfolio. this is what a ubs analysts said about investor perception of wells fargo. >> most people don't really think about the fact that they will be underwriting some of these credits that might be at higher risk. alix: how do you respond to that. >> we've been in the middle market lending business for a long time. most of our energy business is middle market lending. in theal net charge also high 30 basis points, which is close to an all-time low level

of losses come in spite of the fact that some of those are in the energy space. putting reserves up and taking charges off early in the cycle the fact thef negative results are flowing through, and in spite of that, producing $5.5 billion of net income and great returns on equity. it is the beauty of having a highly diversified. there are a lot of other levers going on at wells fargo that are producing strong results despite of what is happening in the energy space. people have said housing should remain a tailwind. joe: where are we in the housing cycle. i think housing is getting

stronger. prices are appreciating, but still affordable. we have a better jobs picture month after month. that is helpful. we have new household formation happening at a better level than it had been recently, and so our dissipation as we will see more housing purchases, including first-time home buyer purchases, and were still at a very low part of the rate cycle, for some people refinancing is still a big opportunity. a finished the quarter with $39 billion pipeline of mortgages that have yet to be closed, so it is a busy time. the spring is the big purchasing season for people who are in tending to move. your bread and butter is still housing, but five years in the future, how do you expect you will change how you lend to energy companies down the road in the next cycle? >> energy is a cyclical business. several cyclical

businesses. this one is adding right now. i'm sure when we come to the other side of the cycle, that will be the best time to be lending, because asset prices termse cheaper, lending will be more lender-friendly, as opposed to becoming more borrow-verrilli, which is what happens later in cycles, so my sense is that those things will happen naturally, we'll probably have lower leverage points to begin with, and hopefully we in the industry will learn from reveals at the margins itself as we got there a number of workouts at this point in the cycle. comparison, one quick point, and commercial real estate, which is also a cyclical business, we had the low in connection with the financial crisis, and we are continuing today to experience net recoveries in that portfolio, so you charge things off, set aside reserves, and a little bit later, he recover reserves and end up with net recoveries on the workout process. that is the nature of lending into a cyclical business it, and

energy is like that. what do expense reductions look like in year six, year seven, of aggressive cost cuts across the industry. where is there still scope for significant reduction in the wells fargo business? always looking at our operations and making sure they are streamlined, putting common things together, getting more standardize, taking advantage of different parts of the country, if that's appropriate, in order to find different workforces that have less con titian. that's less competition. that has less competition. we done it in travel, and how we consume electronics, market data, with a variety of things, where we are always trying to improve to get the most efficient outcome based on a aggregate purchasing power. we are a big customer of everybody we deal with. alix: thank you for joining us. scarlet: coming up, a tightening

job market and cooling of consumer prices, what does that say about u.s. growth and where do equities go from here? we will connect the data points, next. ♪

word let's get to first news. a conservative leader in the house of representatives is a ng republican party officials not to change the rules at this summer's convention. houserdan, head of the freedom caucus, told c-span that primary and caucus results show the republican voters want an anti-establishment candidate. trump's campaign manager

won't be prosecuted on a misdemeanor battery chargers after prosecutors determine there was not enough evidence of convicting him for forcibly grabbing a female reporter. a top treasury department official is arguing against new legislative sanctions on iran, even after it's ballistic missile tests. republicans in congress have criticized president obama for failing to punish iran for repeatedly defying diet ballistic missile test ban. forsearch for continues survivors in japan after an earthquake. a management official says two people were killed and 45 injured. ,ome houses and walls collapse water supply was cut off.

japan's meteorological agency says the quake was centered in a district 74 miles southeast of the nuclear plant, the only one operating in japan. officials say there is no threat of us anomaly. a no threat of global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. scarlet: today's economic data bullish for stocks. initial jobless claims at a 43 year low, and lower inflation is a good recipe for equities. good to see you. joe: explain. why was today bullish? >> the low level of jobless claims tells you that all this recession was just grossly irresponsible. i hope you invite the people who were calling for that back your to shame them.

there is absolutely no chance the u.s. is in recession. on top of that, inflation is moderate, which means the fed can go slowly. given the changes we have seen , they're going more slowly. i think are trying to allow the global economy to catch up to where the u.s. is. the fact that inflation is still below target, i think that gives the fed breathing room. joe: it's great the economy is doing fine and that inflation is still cool, but as her at problem with the framework we have for thinking about inflation when there is such levels of layoffs? it seems like the labor market is tight and the economy is doing well, and when it looked like inflation was picking up, we get this setback. what is going on there? think the trend for inflation is still higher.

those components tend to move much more slowly. thember, we have seen dollar come down, oil prices and commodities generally come up. again, for the equity market, that will push up her expectations in the second half of the year. that is typically a proxy for the corporate profit outlook. i think the profit outlook is brightening up. i don't want to make too much of one number. if the unemployment rate continues to fall, which i think is likely, the bias is further ing of that relationship. scarlet: what is the fed more inclined to do? towardsnk the biases accommodation.

i don't see the rationale for raising rates in june ahead of the brexit vote. i think that potentially represents a systemic risk to global financial markets, and why take a chance? to me givensince the risk management approach the fed has put themselves into. won't move also right before the election either? change, policy will maybe it won't, but it is not as a big of deal. that september is a reasonable based k's. i think the markets will be in a better place and allow the fed to go. we've had the emergence of the new york tracking data. they are tracking different things. york isis .1% and new

over 1%. had you reconcile that kind of disparity? >> all models are wrong, and some are useful. alix: are you in new york believer? >> i think you can take an average of both. i don't think it is some sort of competition between the new words at the new york fed and atlantic competing with each other. it's not about that. it is about trying to present a framework by which you can have -- a we can see high-frequency way of tracking the economy in real-time, and i am sure both are useful. all models are wrong, some are useful. my sense is that both are useful. joe: you have been generally optimistic about the economy for a while, bullish positive on stuff. are you concerned at all. you say there's no particular urgency for the fed to raise rates, but at some point in the

medium-term future the fed will have to do a more rapid series of rate hikes than the market is expecting and that will create some problems. >> i think that is possible. i don't think that's worth trading on right now. i do think there is a firm undertone to the u.s. economy, markets are in recovery, new home sales are doing well, and if the equity markets continue to what they have been doing, they're some risk to the savings rate and consumer spending. the only thing that will it celebrate -- accelerate at this point is an upside surprise out of the global economy, and i don't see that out of japan, europe. we've seen some stabilization, but i would not characterize the global economy is going off to the races here. i think that keeps the fed on this gradual course for the time being. alix: good to see you. hank you for coming in. tables: coming up,

turning for canada's biggest banks after tumbling last year, now benefiting from the commodity rebound. we have the chart that you can't miss, next. ♪

scarlet: i am alix steel. i am scarlet fu. we are in the thick of the u.s. bank earnings season.

why not compare them to canadian banks? the white line is the bank index, which tracks 24 money center banks and regional banks. down more than 8% this year. the blue line is commercial banks in canada's benchmark index, up about 6% this year. from 2014 to22% mid february of this year because of those loan exposures, but now that oil has recovered, using them get a nice want up. investors are now shifting their outlook on lender's ability to weather the downturn in crude. joe: everything is coming up canada every day. alix: it's true. everything. we need to go there and do a show. joe: i want to look at those initial jobless claims. this is my favorite way of looking at.

52 week moving average of nonseasonally adjusted jobless claims. another new post crisis low. i would do this every thursday and tell it stops. that shows you how steady the job market is, how low the level of layoffs are now. alix: it is so steady, that the klein. that feeds into my deep dive. consumer spending and how it is better than the sales number said to us yesterday. this comes from bloomberg intelligence. here is thene broadway did trade dollar index, and it is inverted, so as it goes down, the dollar is rising. theorange line is expenditures in the u.s. by nonresidents, so foreign nationals coming over here and buying goods. a stronger dollar, you see foreign sales taper off,

and vice a versa. we are not seeing that this time. we are seeing quite a large gap here. as the dollar got stronger, you would have thought you would not have seen the tourists buy as much stuff, but actually retail sales for domestic buyers are better than the headline retail sales, because eventually this foreign buyer is going to go down, come off, because of the stronger dollar. we have not seen it yet. so we are the ones holding up retail sales, the u.s. domestic consumer, so things are better. apparel sales were doing well when the dollar was weak and foreigners could spend their hard-earned currency on clothing and shoes. now we are seeing a lot of sales and furniture. alix: you will not have much of europe come over and get a couch. up, an interview with dennis lockhart, his thoughts on a near-term rate increase, that is next. ♪

get the first word news. the obama administration issuing new regulations on offshore drilling that would require oil companies to develop plans for keeping a close watch on distant deepwater drilling operations with real-time monitoring that pushes down to two officials on land. the new rule come six years after the deepwater horizon disaster illustrated the potential damage when things go wrong. hillarycratic party clinton's campaigners planning to sue arizona over voting rights. the washington post reports the lawsuit will be filed friday and focuses on last month's presidential primary.

in some cases, thousands of residents had to wait as long as callingrs to vote read the internet is central to economic prosperity, john kerry told a washington meeting of the world bank that governments aren't taking full advantage of the opportunity that connectivity affords. secretary kerry said internet axis must be included alongside other key infrastructure. unacceptable it is that in 2016, 3 out of every five people don't have internet poors, and that in countries that figure can top 95%. china issued its annual report on human rights in the united , saying money and family connections are corrupting american politics. china's state council information office awful -- also cites gun crime and excessive force of -- use of force by police.

global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton. .carlet: thank you, mark let's get a recap. little changed for the major benchmarks. this as the s&p 500 stays near a high. jobless claims at new lows. inflation, sop in we continue to monitor earnings reports. the dow is still at a fresh nine-month high. volume has been so weak. , yet theen very quiet dow is at its highest level since july 20. scarlet: we are range bound, but at the higher end. .oe: that hadn't occurred to me

it feels that we are going higher, but the fact we are in a range doesn't hit. kathleen hays spoke to dennis lockhart today in chicago. stilld while there are enough fed meetings for 2-3 rate moves, he will not advocate for one this month. >> i don't know what the committee will decide. i know there will be a range of opinions on whether to make a rate adjustment. based on what i have seen recently, i will not be advocating a move in april. >> are you and a camp that says it would be not only acceptable, but good, for inflation to overshoot its target for a while because it has undershot for so long. the implication is more caution and even longer before the next interest rate increase. >> i would like us to have a

soft landing around 2%, and then sustain something around 2%. that would be the ideal world. overshoot for a limited considering what other benefits that might have for the economy, it could be an acceptable situation if we get above 2.5%, i would get a little nervous. point that another is important, because the committee has reiterated its position that our attitude towards inflation is symmetric, that is to say we think the cost to the economy of a shortfall in the inflation are equal to the costs of the economy of an overshoot, so we are not viewing 2% as a ceiling. i think that suggests that some tolerance of overshooting 2% would be except double. >> not to cut it to finally, but

modelsnow -- i remember were suggesting we would get to target, but they have not gotten there. you even said you wanted to see hard evidence that you are hitting the target rate is it more important now to see inflation up to target before you say it is time to raise the rate again? >> i think it is more a matter of direction and tangible evidence of a real evidence that we are moving in the direction of target than waiting to hit target. i think continuing to normalize interest rates, whether you're talking about unemployment or talking about inflation, it does not require the ultimate achievement of the objective. it is a question of you can forecast, you can see, that within a reasonable time you are going to get to that objective.

yourirect answer to question is, no, i don't think i have to wait for inflation to be achieved. to that question of three interest rate increases this year. if april is off the table, are you less likely -- is it more likely to interest rate increases this year? that third one, maybe not? isremember, the committee making its decisions based on the data. bet ever unfolds is going to based on how the data involved and what the data tells about the outlook for the economy. i would just make a couple of simple points. first, i did not say april is off the table. i said i would not be advocating. is a live meeting. i don't know what the committee will decide in a couple of weeks. going to strongly

advocate for a move under these circumstances. the calendar, there are enough meetings remaining this year that if the to suggestuggest appropriate policy, to have three moves. i don't know. two moves, three moves, both are possible at this stage. it would depend on how the economy evolves. if we see in the second quarter a strong rebound from what appears to be a weak irst-quarter, then i think for one will say we are back on the track that i anticipated, the first quarter can be to some extent dismissed. >> if not, then what? quickly. >> caution in patients. janet yellen has stated that very clearly, and i line up with her on that kind of way of thinking about it. alix: that was an exclusive interview with dennis lockhart,

joining us from chicago. chinese policymakers shift priorities and want to see a steady trajectory and growth. does that mean more leverage and opportunities to invest? that discussion, next. ♪

scarlet: i am scarlet fu. it is time for the bloomberg business flash. according to people with knowledge of the matter, a move comes after several money --agers in the tutor fun dor firm in investor's asked

to pull more than $1 billion. serious talks to buy a package of assets according to dow jones. citing people familiar with the matter, business were $7 billion, companies trying to appease antitrust regulators. scarlet: microsoft suing the u.s. justice of department to stop the government from forcing it to turn over customers e-mails and other data to law enforcement without their knowledge. doj --suit means the names the doj and loretta lynch. that is your bloomberg business flash. its currency weaker by three months. government is using the old playbook of heavy-handed stimulus and doubling down on leverage, and that results in

short-term growth. will we see any evidence of this short-term strength of growth and china's data dump tonight? a number isng always difficult. as a trend, chances are quite high that we see a resumption of growth. we've been talking about how is the result of significant leverage in the system. we will be surprised of the next couple of quarters. joe: is what are they are doing sustainable? or is this they can get a boost in now or stem the decline, but ultimately something bad will happen in the long term? >> i've been enough in this a boomy to know that

does not typically follow a recovery. we know it happened after 2009 2010. how large is the runway? did they have the ability to handle that kind of leverage? think the answer is yes. i think the runway is longer than we think. for multiple reasons. this is a close capital economy, and the ability to control capital outflows is strong. the household sector is under leopard, the government sector, so the ability to leverage that part of the economy is significant. is it doubling down? yes. as we have seen in the last few weeks or months, a huge rally in emergency -- emerging markets. maybe there is something fundamental going on there.

youlet: what metric will be using to track the growth coming through? unfortunately, reading chinese economic activity is like reading tea leaves. we will be looking at all the indicators they are throwing at, the pmi, fixed asset investment come off whole basket of data to assess whether growth is picking up or not. that are already signs this is turning around, and i suspect we will see more of it. scarlet: there is that modest growth in gdp we have been seeing in the last couple of weeks. it is already starting to see that in the high-frequency data. joe: there are signs the data is stabilizing. the other night, singapore

leading to a selloff across asian currencies. as that assigned, the fact that singapore felt it had to move to ease that there is still a fair amount of headwinds. >> i actually see, guess what? partly economic stability out of china and the fact that chinese can afford to ease as aggressively as they have coupled with the fed easing significantly putting downward pressure on the dollar. maybe we should be cutting interest rates. sought in indonesia, india, singapore, so i take it more as a breathing space being offered rather than weakness. how much breathing space to they have before the window closes? >> unfortunately that calendar is full. brexit will cause is concerned.

the return of a hawkish fed. accidents in china. shocks, i think we still have reading space here. , if not months quarters. joe: what is your take on brazil right now? it has been one of the surprise leaders in the market. a lot of people were very negative. it has had a huge surge. how important is continual revolution of the political story to the brazil rally? >> crucial. unless you actually get political change, and the point is ins that an endgame the offing. endgameknow what that will be. it is playing in real time. does occur, you

can unleash a virtuous cycle of higher confidence and growth, capital flows returning, and this has been quite cheap and any violation sense. a valuation sense. is this a buy the rumor sell the news kind of thing? would hate to be a political analyst in brazil right now. clearly a new election is better. it is hard to make a prediction. we are being very cautious. s us cautiously long. and in terms of sizing magnitude. we in termsre are

of the impeachment rally, the beginning, middle, the end/ cycle that a virtual could develop here if the endgame is attainable. let's assume the political endgame is sustainable and there is a complete paradigm shift. , cuttingous cycle interest rates, payments their capital, this would be a big story. i'm not making up anything new. it is already playing out as we speak. this could run for longer. scarlet: i love the graphic that just came up with the timeline. to be determined. thank you so much for joining us. coming up, three must see u.s. inflation charts. one may prove that janet yellen

was right all along. we will discuss. ♪

alix: i am alix steel. "what'd you miss?" thee charts about inflation could prove janet yellen right. you come to us with three charts that may support janet yellen. -- inflation versus medical services inflation. what does that tell you? those are two component seven flechette and that kicked into higher gear. core inflation made that move higher. , 3.5%,k at the chart

3.3% in medical care, apparel movement positive to negative. janet yellen, congratulations. this is the second big call that janet yellen has nailed recently, and they are both connected. the uptick and labor force precipitation and a downgrading on core cpi. for the fed to be forecasting and to be forecasting the unemployment rate to not fall, that either means that productivity has to go up or labor force participation has to go up. the fed said it would be the latter, and they were right. cpi diffusion indices, the number of subcomponents that have gone up year over year, why is this a useful way to look at

inflation? this gets at the heart of what inflation is. inflation is a general rise in the price level. this shows you the components where the six month annualized rate of change is higher than the year over year, so inflation accelerating in those components. you see a notable downtick in both those recently, so inflation is less of a worried than we thought it was based on the data we have just received. it this way is a way of avoiding rent or medical care that good throw off the whole thing. we want to get whether this is a general trend? >> exactly. central bankers aspire to look through the variables, inflation, energy, shelter, areas that have been exploding. you want to see a lot of components moving higher, moving

the same direction, and that chart shows you that not so many are. scarlet: it shows that it is moving in a narrow range, so it even with the fluctuation, it's not moving a lot. alix: that is a good point. the last chart has to do with wage growth. you are looking at overall wage growth as her d atlanta fed wager tracker. tell us what you see here. >> there are two big things. the first one gets at something that has been mentioned before, over the past year, you would have to squint, but the overall ore has been equal to greater than the rate for a college degree. the labor market tightness is a cute at the lower in.

the labor market is doing bernie sanders'work for him. the second point is that this is not go too far back in history. we only it does have really had a much higher rate of change for wage growth during times when bubbles were inflating, so it makes you wonder, is this is as good as it gets? scarlet: thank you so much for bringing up the three charts on inflation. up, what you need to know to gear up for tomorrow's trading, next. ♪

alix: what did you miss? you have china industrial production, retail sales, 10:00 p.m. you will want to see that. you would get a read on the consumer and the industrialized part of china. >> tomorrow is friday, you can definitely stay up for that. earnings report tomorrow at 8:00 a.m. eastern. look for double-digit declines. as well as investment banking fees. u.s. data nice tomorrow. the latest university of michigan sentiment tomorrow at 10:00 a.m. eastern how people view the rising stock market and the latest on industrial production. >> inflation expectation will be key for the fed, what they looking at more. >> another survey data has been so mediocre. concept toa flawed begin with. that is what they are focused on . thank you for watching.

we will see you tomorrow. have a great evening. ♪

mark: i am mark halperin. john: i am john heilemann. we're looking forward to the art is no talking points and rebuttal. -- art is not talking points and rebuttal. ♪ mark: happy gotham city debate dave, sports fans. john: we'll cover the brawl between hillary clinton and donald -- and bernie sanders. announcers in florida