alix: u.s. stocks closing mixed, the s&p clinging to a 10 month high as bankshares faded. joe: but the question is "what'd you miss?" a tale of two global economies -- which tail is the fed reading as it considers when next to raise interest rates. joe: and we will look at what could be one of the egg's stories to watch over the next five years. alix: and in an exclusivity interview with mary barra, she talks about how far that company has come since dealing with its ignition scandal. scarlet: we begin with our market minutes. looks like we were going to get to that record high. we got within 1% of that level and then with drew and since 2:30, it has been a straight line down with stocks falling more paring their losses.

the s&p and the dow running on gains by the end of the day and the nasdaq coming down from its highest level the sheer. we did have the dow above 18,000. still green but a little off the high. the upward trend continues. alix: and it started in asia with the hang seng passing its 200 day moving average, inching above that level. european shares rose the most in two weeks. u.s. stocks, chevron adding 15 points. that story holding up there. one stock that did not hold up is valeant. a really horrible day for valiant come its lowest level since 2010 comments worst selloff since march. bonds were really trading week, $.81 on the dollar, which is an earnings clobber. joe: one thing people were

buying today, government bonds in europe. going lower and getting close to zero on the 10 year and the u.k. held a 30 year government on option -- on auction and accepted its lowest year yield. bond buyers in the u.k. not concerned the brexit is going to be bad for u.k. sovereign debt. scarlet: that seems to be the safety trade. i'm paying attention to the indian rupee. the central bank left central rates unchanged. the chart shows the dollar you losing ground against the rupee. the emerging of markets, expectations the fat -- they would delay tightening. alix: i was looking at copper in the commodity market.

london, china and the u.s. all got hammered. no commodity was selling off this much. that was striking to me. diveet: let's take a deep into the bloomberg. alix: why was copper down so price ofs is the lme copper and it's forward curve. something really weird started happening to the curve here. so pricesckward, right now are more expensive than prices in the future. that is quite unusual considering the oversupply. what happened is you had a lot of metal being dumped on the lme. inventories rose 28%. inventory flowing out of china

into london because prices were higher. that is why you saw higher prices in london. the question is why were they pulling out of china? some guy just wanted to come in smash the curve or is there something fundamental happening leading copper into london? scarlet: that is a question we won't know the answer to for a while. we know these companies face more downgrades if the fed raises rates soon. we are looking at a number of downgrades by moody's. timesave downgraded three the amount in all of 2015. the dollar may hit them hard. i want to show you this chart so

you can look at it another way. the go function. them doing different quarters and the term loan principal. ofs is the second quarter 2016. then peaks again in the second 2019.of 2018 and it is going to be interesting. joe: i want to look at them economic data we got today. it's yet another way of looking at the cost of labor. it shows the cost of labor up 3.7%. tighteret is getting and the dotted red line is the fourth quarter moving average. the four quarter moving average

is at its highest level since 2008. this is one of the things we keep watching every month. we continue to get this constellation of other data that points to hire cost for labor. alix: our stock reporter joins us now. you were noticing what was happening with the rally today. trying to look for reasons why the markets were climbing higher. er: we had a wager seeing if we were going to make a new high but we did not. there is one chart i have then talking about all day. let me bring it up a third time and i will be done. it's an argument that maybe there is positioning that has more to do with what is happening in the economic front. we are looking at economic

surprise data, we -- it does not line up with what we have seen the past few weeks. it was going up ahead of all of this hawkish commentary. alix: this is what you are talking about. the economic surprise index and the purple line is the june high chances. white line economic surprise going up. everyone getting hawkish and one explanation has been that we feel good about the economic data and that's the version for the past couple of years, but then we have that jobless number. up, so youstill could either answer that it was just a fluke and 38,000 was nothing or you have to ask

questions about positioning. that is when we start looking at active managers. scarlet: i have that chart on our bloomberg. we have the short i is index, which is the blue line. oliver: the blue line there is short positions. it's the performance of funds with a short by an they did pretty well. is what hedge funds are relying on because they drew down the position where they have active managers whose shorts are rising, which is not brett isuse it -- h isnding -- breadt

expanding across the stock market. maybe it will be going forward if we hit new highs but those managers have to buy stocks. joe: let's take a look at this chart, the hedge fund equity indexed versus the s&p 500. when you just look at hedge fund performance, this is a brutal chart. funds: you can see hedge did what they are supposed to do. on the way back up, it has not worked because they were hurt so bad on the way down. what you are seeing their, the shorts are rallying and it is this cyclicality that has not worked. you have been talking about people having a lot of cash on the sideline and pouring into

lower volume. this low volume rise in the market is brutal for the strategies. oliver: that's a good observation because there is no clear strategy that is winning out. if low volume, it is nice the market is jumping around, but as you can see, it is a little bit behind the s&p. s&p -- ught the scarlet: it is the strategy that is alix: winning. alix:hold and buy. the conclusion is at some point, hedge funds will have to buy which means stocks are going to go up no matter what is going on. basically if you have that short bias, they are just

starting to dip their toes in. bank of america said they move and unlessposition decline, they can catch up that way. of theey either by more stocks that are owned or try to get into these other rotations. scarlet: coming up, all signs point to an impending recession, so why aren't we there yet schumer we have some insight, next. -- o ♪

mark: i'm mark crumpton.

let's get to first word news. bernie sanders is not backing down. the associated press says hillary clinton has enough delegates to clinch the democratic nomination but senator sanders has not jumped on the bandwagon. states castsix ballots today and sanders hopes up multiple victories and convince superdelegates to switch their votes before the convention next month in philadelphia. the head of the transportation security administration says significant progress has been made shortening screening lines since earlier this spring. over the busy memorial day weekend, 99% of passengers at u.s. airports weighted less than 30 minutes and more than 90% weighted less than 15 minutes. >> we placed a strategic focus on the seven largest airports in the system. if you can prevent problems there, you can prevent problems

elsewhere. tok: the tsa is trying implement new technology that would speed up lines by 5%. an astronaut has been charged with murder. please say he is responsible for an early morning car accident that killed two girls in alabama. released after he posted $150,000 bond. two adults in the car suffered injuries and were hospitalized. theident obama welcomed prime minister of india to the white house today. leaders discussed climate change, security and commerce. it was his seventh meeting with president obama. the indian leader addresses a joint meeting of congress on wednesday. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world.

i'm mark crumpton. back to you. scarlet: "what'd you miss?" the global economy is not in a recession but u.s. corporate problem -- profits are falling. istead, the global economy holding up. let's ask the leader of the jerome leavy forecast center. why has it not spilled over into the global economy? david: it has, but not as much were quickly as we would have expected. u.s. profits from the third are it on, appearances is not going to have a wonderful quarter in the second quarter either. we are seeing slowing down. we see a slowdown in employment stagnation inen

sales but we have not hit the point with the vicious cycle starts to take over. joe: is it going to? david: i think it is likely to. i don't know what would prevent it from saying lower or sinking lower. creationhe wealth where we create more than we are wearing out and that's turning down all over the world. officiallyrkets, know, but expect -- but we suspect yes. we have seen our first down alix: seed that may more. what is going to be the trigger for that? that should lead to layoffs and less fixed investment.

what is going to be the turning point? david: it's a matter of seeing whether other parts of the economy, consumers, governments give in one way or another and right now, the emerging market is not being prompt up but it is being slowed by tremendously eager foreign capital to come by .onds at narrow spreads if that is jarred by anything, that would tend to accelerate problems very quickly. you mentioned employment as a lagging indicator. the employment rate is now at 4.7%. how much lower will it go if participation keeps deteriorating? we are due for a recession because it is falling

for the wrong reason? reaction tonk is the economy. we see this gradual acceleration in pay rates which, to some extent, is good. it's not good if it translate into rate hikes. fed raise rates in this environment? hike areof a june rate zero. it doesn't even hit 50% until december. joe: if you go back to before there werebs report, a lot of people ready to move again. do you think there is an unwarranted eagerness to keep things moving and do you think that is dangerous? david: the people serving on a federal market committee are really trying to be the best they can. they know there is a balance.

they know if the economy is going to come up, they don't want to leave it to overheat. on the other hand, they see a lot of problems. one thing that's not being ofked at enough is the state balance sheets generally around the world. tremendous levels of total assets, total debt to income. rates atise interest all, you are throwing matches into a pile of oil and rags. our view is this would be the decade of zero interest rates and that has been violated slightly, but i think we will till theed hold often next move is to take it off again. what we haves like

heard his reasons to hike. david: in terms of the wage rates, yes. in terms of slowdowns in employment, generally very spotty data and five federal reserve districts have their own activity and together, they have taken a sharp drop. they are signs this economy does have difficulties and i don't think they are misleading. , a worldcoming up where housing and construction are the main drivers of the economy. we look at data that suggests that could he a reality in just a few years. ♪

said to eat the u.s. economy. our next guest says the need for housing in the next five years will be so big that it will take workers and capital from all other sectors from the economy. he's a portfolio manager at new river investments. how much more housing growth are you predicting over the next five years? guest: i think we are looking at a 10 or 15 year cycle. if you look at the house -- the last time we had a big secular housing boom like this was the baby boomers. they were settling down when inflation was really high in the 70's and it cycle lasted a long time. now, millennials are looking at that same time. you and i will be old people by the time we are talking about housing anymore. scarlet: there is a shortage of construction workers. joe: that is what it seems to be distinct about your call and getting a lot of attention.

lots of people have argued that housing would be a driver for the economy but you take it a step further and talk about how there's going to be so much activity in the coming years that it's going to suck capital and labor away from other industries. talk about the knock on effects. guest: we have talked about structural imbalances in the work force when the economy was weak and can we get manufacturing workers to learn to code? it wouldnow how high have to get for us to hit hammers all day. there's only a certain subset of the workforce willing to do this work and you're going to be pulling for manufacturing, agriculture and truck drivers. how many people will do we have willing to do those jobs and how much demand will there be? scarlet: does immigration solve that problem? it could, but try going

to congress saying we are looking for more hispanic construction workers. rate oft's the current wage inflation in the construction industry and how much do you see it accelerating? guest: i think the numbers are understated and the reason is for 30 years in the u.s. economy, the way to get ahead is to cut prices and cut wages. environmenthave an where does time to raise prices and raise wages, we don't have a quarter where we are used to doing that. there's a lot less out but then when if we had a different management team. alix: how many actual bodies are we going to need to add to meet all this demand? orst: right now, 500,000

600,000. up to arobably need million more than we have today. joe: when i read your piece and you talk about these knock on effects, what are going to be the clinical ramifications? there's so much anxiety about millennials -- can they afford a home? what's is going to do to society? andt: illegal immigrants, set of going into agriculture, they are going to go into construction. in the central valley in california, if you can pick enough crops, you are complaining about not being able to find enough workers. .he same thing in the midwest if manufacturing workers are going to go to the southwest to build houses, they cannot stock up in indiana or illinois. i think it's going to be far-reaching.

coming up, an exclusive interview with the gm ceo. ♪

mark: i'm mark crumpton. let's get to first word news. nancy pelosi has endorsed hillary clinton for president. the california democrat held off on a formal endorsement but finally made her choice public today when her state holds its presidential primary. first trump has lost his endorsement today. kirk said he could no longer support trump following the remarks about a judge's mexican heritage. house speaker paul ryan is proposing an overhaul of the nation's poverty programs aimed

at uniting republicans divided by mr. trump's candidacy. he will not translate these ideas into legislation since the major points would not be enacted under president obama, but the idea is to set the stage for the future if a republican should become president. europe, russia and the united states have lifted sanctions linked to iran's nuclear program, but restrictions on dollar denominated trade are still in place. the chinese president said his country and the united states should develop bilateral relationships on the basis of mutual respect. the comments were made during a meeting with secretary of state john kerry. kerry: what i heard china intends to

remain open, to stay open, to open up even more than it is today and it does not see that these laws are going to be applied in any way whatsoever that affects the ability to open up and do business and for people to feel confident about what they are doing here. the chinese president said he was looking forward to meeting president obama at the 20 summit in china. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. back to you. scarlet: let's get a recap of today's market action. the s&p and dow managing to close even as they pared losses in their final 90 minutes of trading. the s&p did get within .5%.

health care and financials were the biggest drag. another big story, valiant cutting its 2016 earnings forecast. the new ceo aimed to reassure investors that he could stabilize the country, but there are doubts about the country's -- the company's ability to write itself. >> look at these downward revisions to guidance and the average selling price pressure. overseas, there is excess are looking atou marriott weaknesses and the question you have to ask yourself is are these guys going to be able to avoid a bankruptcy? is the probability of a bankruptcy minimal? the answer is no. let's get some insight from jury armstrong. you've been covering them all day. they have this conference call and they have a history of

conference calls that markets don't seem to like. what happened today? guest: let's look at the last eight months when this started and the stock was trading at 260 plus dollars and is now at about 10% of that. time, it has been scandal, political pressure, where's the ceo and these non-core questions about their business, just getting hammered from outside. how is have not seen is valiant the is this performing. the answer is not very well. you took a look at the guidance cut under their operating structure after those problems last year and saw sales in it a lot of key categories were down by significant double-digit 10 they had to cut on revenue and

earnings. the picture that investors are getting is that maybe this is not quite as profitable company. maybe this is just a mediocre drug company. alix: one analyst i spoke to said it could potentially go to zero. is bankruptcy being talked about? guest: one of the things we put a story out about is the way they cut their guidance is right on the knife edge with their financial covenants. cut guidance twice this year and are flirting with where their financial maintenance numbers are on some of their debt. that's not a great place to be in. that own these loans and bonds say you have to make a

certain amount of earnings compared to what your that levels are or else you will be in breach and defaulting on these debts and allows loan holders and bondholders to say you have to pay us back and you have to pay us back now, which is a company ending type of event. up cutting their guidance lower, that is not good for them. they really do have to turn this business around and avoid breaching those types of covenants in place. scarlet: "what'd you miss?" , brown-forman is slimming down to better meet the global demand for american whiskey. they have already sold off their southern comfort brand. in the 2015 slowed

count year -- calendar year. that's a big drop off from the annual rate of 4.2%. it declined during currency trends. look for foreign exchange to an increasing role. they had made a shift to sales outside the united states which are the blue slices of the pie. the united states once made up 50% and has fallen to 43%. toskey is now second only vodka when looking at volume in 2015. whiskey could even surpass vodka this year with its boat -- which bodes well for them. in the process, brown-forman has made southern comfort thendable, selling them to maker of fireball for $544 million in january. you can see how southern comfort has lost market share.

that justified their decision to focus on higher strategic primaries. report earnings before the opening bell on wednesday. alix: investors in general motors are gathering for the automakers shareholder meeting and gm has come a long way since bankruptcy and a government bailout. mary barra took over in early 2014 and as her tenure began, a safety scandal proved a challenge. she was asked about it in an exclusive interview. the first couple of weeks when you took over, you were hit with the emissions scandal, if i could call it that. did that ironically help you change the culture in a sense people knew it was broken? mary: the year prior, we had worked to focus on the customer and building relationships and excellence in everything we do.

as we manage through the ignition switch recall, it allowed us to demonstrate we were living by our values and working to build relationships with constituencies we did not have but should have. we were driving for excellence and we regularly talked to employees through the whole term of that and it really help us said,hat we meant what we that it was not just words on a page, but they were how we wanted the company to behave. that grounded everybody and gained commitment. david: are you past the ignition problem at this point? mary: i never want to forget it because it's important we learn from it and that it never happens again. there are many things we have improved since that time and continue to improve, but it is something we cannot forget because it was a serious, tragic

situation and we need to be committed that it never happen again. david: what's the most important thing not only that you learned but gm learned from the problems? mary: we put in a program called speak up for safety where we encourage everyone around the globe that if there is something you are worried about, raise it and make sure it is answered. if we have all 200,000 plus people making sure nothing has been overlooked or missed, we actually have people celebrate the things we have corrected because of it. job has gotyone's to be committed to making sure we are the safest company. david: volkswagen is going through their own difficulties with emissions fraud scandal. when you first heard about that, how did you make sure you did not have that helmet gm.

that must be the first thing you thought of. mary: we went back to look and make sure we understood how that happened. we checked and work able to nothing thate have senses a cycle like that. anythingou see happening, you want to make sure it's not something that could potentially exist in the company and we were able to verify it does not. there's a statement coming out saying that there el.ld be a problem with op are you confident you can say you don't have that problem? mary: we are confident -- i think what people don't understand is the very equipment you have on the vehicle to make sure you are performing from and omissions perspective is sensitive to load, temperature,

a variety of factors and you have to constantly be integrating and balancing it for the system to work and it is very complex. sometimes people don't understand it or choose not to understand it. alix: that was an exclusive interview with gm ceo scarlet: mary barra. scarlet:we will speak with one economist who says a job guarantee would be much more effective for solving the problem of economic insecurity. ♪

joe: "what'd you miss?" universal basic income has become the buzzword of the year, but crafting a policy is harder than it sounds. megan mcardle writes policymakers trying to craft a

ubi and that with him palatable choice. -- an unpalatable choice. new idea --st has a a job guarantee, where the government would guarantee everyone is going to have a job. our guest joins us now via skype. whye your argument against they government for the sake of alleviating poverty or protecting against technological job change give everyone a check to meet their basic needs. why is that not a good idea? guest: there are a lot of different puzzles for basic income. the one i object to is precisely the one that divide space income grant to everybody irrespective of income level, irrespective of whether they work or not and a living wage.

poor, good times or bad, that is the proposal i object to. number ofsal has a serious macroeconomic defects and political defects. let's starte is with the political -- the proposal is all proposals are sold as a replacement of multi-programs. the referendum in switzerland illicitly argues that it has to be paid out of a current welfare program and i think people thought for what it was. trojanessentially a horse that was going to get rid of a program and replace it with this particular branch. that is one concern i have with this basel. then, there's the macroeconomic

effect. the one i am concerned with is that this is a strange kind of fiscal policy. plan that has no countercyclical features. it attempts to replace targeted, pacific welfare programs with one universal grant to all irrespective of the macroeconomic condition. if you notice, a lot of macroeconomic programs fluctuate through the business cycle. even social security and medicare have cyclical features. not only does a gut the welfare state, but a gets the automatic stabilizers. joe: let's talk about what you propose as an alternative. you like the idea of the

government protecting people from losing jobs. you say the government should offer eight job guarantee. everyone who can work does work. how do you do that? what i am proposing is completing the safety net adding an employment insurance program. jobs,eople who lose their who lose income from work have income from unemployment insurance. not adequate to replace income they have currently lost but many of them actually want work. people who tend to experience the most carious forms of work. we are talking about a safety peoplet captures those

in a public employment program that provides them not only with a decent income but on the job training opportunities and an opportunity to do something for the public. tell us about emphasizing the social importance. explain the significance of that part. >> the accounts of surveys in various some way -- various employment programs and incomes, it's not the most important reason they take up these jobs. they take up the jobs for dignity, because they are part of a community. work is very important to people. most of us define ourselves by the work that we do, so income is important, clearly. beingipating, working,

part of the community or mainstream society is very important. this is one dimension that is not well recognized by basic income advocates. workdea is to opt out of where survey after survey says people want to work. joe: the associate professor of economics at bard college. thank you for joining us. alix: amid all the hoopla of the payroll report, you might have missed comments from charles evans. we will discuss them, next. ♪

scarlet: i'm scarlet fu. "what'd you miss?"

charles evans comments about inflation. he spoke before the u.s. jobs report was released. takecharles: it's going to inflation a while to get up before it's a checked it. what if we thought it was more important to get to 2% inflation sooner and solidify expectations which have been lower that are below our 2% objective? there might be some value to think about holding off until we got core inflation up to 2%. joe: that comments might have gotten lost with the focus on the job number for but our guess says this is an important speech from an influential that number. explain why we should be listening. guest: charlie evans has been influential over the years, notably with the adoption of the evidence rule in 2012 inch was a statement the fed put out that

that we are not going to raise rates until the unemployment rate drops to 6%. that seemed important guidance. was maybeid on friday we should go back to the they haveeven though gotten out of forward guidance, they are raising rates and maybe they should not raise rates until core inflation is actually at 2%. to 2% fors it getting a long time, so that is significant. joe: how big a departure would that be from current policy? guest: it would be huge. we only see core inflation ending the year at one when 6%. under his plan, the fed may be on hold for several years. that would be a much easier path to policy. joe: the jargon on the screen,

the break even -- what's the significance? guest: this is where charlie is coming from. maybe we don't want to mess around with this. now,hart showed that right in terms of looking at people on the market committee to see risk to their inflation or cast tilted to the downside. wea world like this where have these risks and the outlook is not necessarily that great, maybe you should make a commitment not to raise rates until you get there. joe: i want to talk about the parallels between this and the evans rule. charlie evans, the strategy is set out a number that is clear. something super simple.

communications aspect is a lot more straightforward. how do we communicate that even with inflation below our target, we are trying to reduce rates. tighteningpresents a bias and what he is proposing is maybe we shouldn't even have a tightening bias. that tong to be taking the fomc meeting with him and raising that is pretty significant. joe: thank you for joining us. we talked about the speech a lot of people miss. scarlet: what you need to know for tomorrow's trading day is next. ♪

scarlet: the final read tonight

for the first quarter. alix: china imports and exports around 9 p.m.. joe: and jolt out

mark: i mark halperin. john: i'm john heilemann. with all due respect to the find attached to the super tuesday from the past, sayonara. >> the final super tuesday. >> the last so-called super tuesday. like the last super tuesday of our lives. last superthe tuesday. it seems like it has been going on forever. part three.sday >> another super tuesday.