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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: dot Com, the Radio plus Mobile Act and on your radio.

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Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow.

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Speaker 1: The Bloomberg Futures Report, brought to you by Interactive Brokers

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Speaker 1: slash CME Group. The first of bullishness that lifted US

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Speaker 1: stocks yesterday is fading within the next future of signaling

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Speaker 1: equities will slide for a third time in four days

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Speaker 1: amid renewed skepticism over global growth. We checked the markets

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Speaker 1: every fifteen minutes throughout the trading day on Bloomberg SNP

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Speaker 1: e Many Futures down twelve points, Dow e Many Futures

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Speaker 1: down ninety nine, and now is dock he Many future

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Speaker 1: is down twenty two That acts in Germany's down three

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Speaker 1: tenths per cent. Tend your treasury up not thirty seconds,

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Speaker 1: the yield one point seven two percent. Now I'm x

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Speaker 1: screwede oil down one percent or thirty six cents to

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Speaker 1: thirty thirty eight. A barrel coll Max Gold is up

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Speaker 1: one point four per cent, or sixteen dollar seventy cents

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Speaker 1: at twelve forty forty announced the euro a dollar thirteen

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Speaker 1: forty seven. The end one oh eight point two two.

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Speaker 1: That's a bloomberg business flash. Tom and Mike Caramelsco, thank

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Speaker 1: you very much. Well. As we have been noting on

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Speaker 1: this program, the forecast, consensus forecast of analysts is that

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Speaker 1: during the first quarter earning season, energy companies will report

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Speaker 1: a one hundred percent decline in profits. It is the

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Speaker 1: bank reset month when we're going to see a number

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Speaker 1: of credit lines pulled in. A number of energy companies

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Speaker 1: will probably have to either go bankrupt or get bought up.

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Speaker 1: And oil prices back down in the thirties after getting

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Speaker 1: into the forties. So that's a good time read Morrison

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Speaker 1: says to be optimistic about what's happening in the industry.

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Speaker 1: He is the head of the Energy practice at pt WC.

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Speaker 1: He joins us, Now read to you say, recovery has started.

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Speaker 1: This in a little bit like the old Warren buffet,

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Speaker 1: blood in the streets, uh, the darkest before the dawn

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Speaker 1: kind of philosophy. We need to take a look at

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Speaker 1: in the time it takes to bring a new will online.

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Speaker 1: We're not talking about hours, we're talking about months. And

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Speaker 1: when you look at the fact that the last year

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Speaker 1: companies have been drilling new wells and then the production

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Speaker 1: levels have flattened out, demand continues to increase, you can

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Speaker 1: just look at that inventory level that's in storage is

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Speaker 1: going to be depleted and we don't have the new

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Speaker 1: wells coming online, and so that inflection point is going

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Speaker 1: to cause the price to start to walk up. But

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Speaker 1: it's gonna be slower than historically happened. Slower than historically happened.

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Speaker 1: But is it uh? Is the price going to rise

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Speaker 1: enough to make buying shares of energy companies worth while?

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Speaker 1: It's It's certainly something that we have a lot of

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Speaker 1: confidence in because when you look at the primary thesis

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Speaker 1: of buying these energy stocks, it's not so much for

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Speaker 1: the exceptional growth you get from a high tech sockets

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Speaker 1: for the dividends. And these old companies have done a

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Speaker 1: good job of maintaining some fiscal discipline, they're able to

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Speaker 1: produced the cash flows that investors are expecting. So I

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Speaker 1: think that's going to continue to be the case. Read

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Speaker 1: what's different about you. It's not biold Cell. At PwC,

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Speaker 1: you do fabulous work on the action behind the behavior

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Speaker 1: of oil companies. You look at these beleaguered people and

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Speaker 1: you say some are incremental, some are transformational, and some

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Speaker 1: are going to reinvent the business. My basic tone off

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Speaker 1: your research is the industry still has a lot of

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Speaker 1: heavy lifting to do, exactly because the actual muscle that

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Speaker 1: exists in these companies has been focused on two primary parts.

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Speaker 1: Point is the drilling and exploration side, and then secondarily

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Speaker 1: as the completion and production of those wells. And they

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Speaker 1: really sized themselves for an exceptional amount of drilling and exploration,

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Speaker 1: but as the prices dropped, they haven't had the demand there,

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Speaker 1: and being physically prudent, they pulled back in those areas

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Speaker 1: that they don't have the need for. And so that

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Speaker 1: drilling and expression side is getting a lot of attention

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Speaker 1: right now, and so the heavy looking house to come

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Speaker 1: is gonna be on that side. And then interesting when

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Speaker 1: you get into the production side, there's a lot of

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Speaker 1: nickels and dimes that are still available to be leaned

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Speaker 1: out in the process, and that takes a lot of

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Speaker 1: re engineering of the workflows it takes a lot of focus,

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Speaker 1: and that is what the companies are doing right now.

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Speaker 1: The companies are doing that. And I don't mean that,

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Speaker 1: you know blow. I mean, let's say it's Houston and

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Speaker 1: that what will happen to the price of oil in

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Speaker 1: reaction to their actions, and what will happen to the

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Speaker 1: equity market of hydrocarbon stocks in reaction to their actions,

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Speaker 1: is they shift from incremental to transformational changes. It's going

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Speaker 1: to be one of those things where they're not gonna

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Speaker 1: have access to as much capital to fund the drilling

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Speaker 1: programs and expect to be self funding through that cash

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Speaker 1: flow side of things. But there's going to be certainly

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Speaker 1: winners and losers in that process. But those that are

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Speaker 1: proving that they can readjust their portfolio leaning things out

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Speaker 1: are gonna get rewarded. As we look at the I

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Speaker 1: read that we firmly believe have started. You've got a

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Speaker 1: note that suggests a fresh round of mergers and acquisitions

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Speaker 1: to begin. But then you say or not, Yeah, it's

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Speaker 1: one of those things that's a little bit schizophrenic. But

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Speaker 1: you look at all different types of marketing, be the

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Speaker 1: housing market or whatnot. The bid ask spread right now

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Speaker 1: is a little bit too wide for the deals to

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Speaker 1: be consummated. But as you guys are mentioning, the redetermination

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Speaker 1: process that's going on right now actually has a consequence

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Speaker 1: for the covenants that sometimes the decision making is not

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Speaker 1: necessarily in the hands of the management team, but it's

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Speaker 1: a discussion between those that holders and the management team

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Speaker 1: that have very clear implications for asset sales. And that's

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Speaker 1: what a lot of the players who are looking at

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Speaker 1: this are waiting for that trigger, so that stress point

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Speaker 1: is going to be a lot higher going forward. Well,

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Speaker 1: how does oil factor into that? I mean, what's the

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Speaker 1: correlation of the caution you have, the caution you have

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Speaker 1: on oil? What is the correlation uh, the you see

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Speaker 1: to that to the price of oil. It gets into

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Speaker 1: the calculus used within the redetermination process. And what they

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Speaker 1: do is they take an average to take a barrel,

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Speaker 1: and they look at what's the cost to produce it

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Speaker 1: takes thirty dollars, and then they look at the last

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Speaker 1: six months as the average price for that and they

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Speaker 1: look at that value or that delta, and then that

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Speaker 1: comes what is your calculation? And what has happened over

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Speaker 1: the last eighteen months is that the last six months

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Speaker 1: calculation has had the benefit of a higher price than

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Speaker 1: today's price. Now we're in the inverse. So that barrel

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Speaker 1: that's in reserved and now being reclassified as a economically

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Speaker 1: possible oil coun barrel, now that's not a asset you

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Speaker 1: can put on your books. And that delta and the

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Speaker 1: calculus within that is what is happening. Yeah, yeah, Mike,

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Speaker 1: I think this is just critical, the basic idea critical

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Speaker 1: that we see um a calculus word used as a

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Speaker 1: complexity here. There's a complexity here. Yeah. Look, we'll continue

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Speaker 1: the conversation with read Morrison and uh dive more deeply

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Speaker 1: into that in a moment. Yeah, we'll do that. Read

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Speaker 1: Morrison with us with p W Uh see is interesting. Um.

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Speaker 1: Note out in the Washington Post just a few moments ago, Uh,

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Speaker 1: Jeff Emilt really attacking Bernie Sanders, apparently Sanders at the

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Speaker 1: Daily News that g E was one of the companies

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Speaker 1: that's destroying the moral fabric of America and Mr m

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Speaker 1: L taking extraordinary exception to that. I'm no surprised there.

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Speaker 1: Many would consider Mr mL to b CEO of the Year,

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Speaker 1: if not the crisis, for what he's done saving industrial

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Speaker 1: ge from new York, Bloomberg Surveillance, we are kind of

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Speaker 1: This is Bloomberg Surveillance. Good morning. I'm Terra in Moscow

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Speaker 1: along with Tom Keene and Michael McKee and the Opening

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Speaker 1: Vale brought to you by the University of North Carolina's

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Speaker 1: world class Master of Accounting Executive Development in NBA programs.

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Speaker 1: Visit UNC dot E d U slash business and stocks

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Speaker 1: are lower at the open. The SNP five hundred down

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Speaker 1: four tenths per cent or eight points to eight. Dow

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Speaker 1: Jones industrial average down half per cent or eighty six

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Speaker 1: points to seventeen thousand, six hundred thirty. Then as dacts

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Speaker 1: down six tenths per cent or twenty nine points to

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Speaker 1: forty nine one ten, your treasury up eleventh thty seconds.

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Speaker 1: The yield one point seven one percent yield on the

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Speaker 1: two year point seven zero percent. Now I'm ex screwed.

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Speaker 1: Oil down one cent or forty six cents to thirty

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Speaker 1: seven thirty A barrel co mix gold is up one

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Speaker 1: point six percent or nineteen dollars thirty cents at twelve

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Speaker 1: forty three and ounce. The euro at dollar thirteen forty six.

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Speaker 1: The n one oh eight point one zero, Tom and Mike,

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Speaker 1: thanks so much. Good morning everyone. We're gonna get a

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Speaker 1: one oh seven any moment on other yen as it

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Speaker 1: takes a new leg down. We'll get back to that

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Speaker 1: in a minute. As Karen mentioned, one point one zero

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Speaker 1: eight point zero zero on yen, it is convex stronger,

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Speaker 1: to say the least. That is a stunning retest to

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Speaker 1: what we saw at five this morning. Speaking of stunning retest,

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Speaker 1: David Wilson joins us as we look at the equity markets. Indeed,

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Speaker 1: let's talk about some analyst costs to start tom You've

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Speaker 1: got the rising shares down one and a half percent,

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Speaker 1: The largest US wireless company was or to hold from

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Speaker 1: buy a Jeffreys and too the equivalent of hold from

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Speaker 1: buy a Sanford Bernstein. Now, both these firms had been

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Speaker 1: recommending verizons since at least fourteen so a bit of

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Speaker 1: a turnaround in their views. Twitter's down one and a

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Speaker 1: half percent. Projections for the social network's user growth this

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Speaker 1: year and next were cut at Morgan Stanley, the firm

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Speaker 1: most have produced its twelve months share price estimate by

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Speaker 1: two hours to sixteen dollars. And did you know Morgan

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Speaker 1: Stanley is Twitter's large as shareholder, with a six point

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Speaker 1: seven percent stake, So the firm getting hurt by its

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Speaker 1: own call today. Uh Yahoo down one a half percent.

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Speaker 1: Japan saft Bank hasn't held any formal talks with the

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Speaker 1: web portals management, according to technology website Rico, the report

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Speaker 1: sighting unnamed people close to the situation. The New York

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Speaker 1: Post reported this week that soft Bank president Nikesh Aurora

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Speaker 1: was in discussions with the board. Uh eBay down two

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Speaker 1: and a half percent. The online marketplace of sales fell

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Speaker 1: two tenths of a percent in March at sites open

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Speaker 1: more than a year, according to data from by Channel Advisor.

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Speaker 1: The decline followed sales growth in February of nine and

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Speaker 1: a half percent. Valiant Pharmaceuticals up eleven and a half percent.

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Speaker 1: The drug makers lenders agreed to waive a default and

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Speaker 1: ease some restrictions on more than eleven billion dollars of loans.

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Speaker 1: The creditors gave their consent after Valiant accepted a one

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Speaker 1: percentage point increase in the interest rate on the debt.

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Speaker 1: Win Resorts up eight percent. The casino owner held his

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Speaker 1: first investor day in Las Vegas yesterday and discussed plans

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Speaker 1: for a lakefront resort in its home city, among other things. Afterward,

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Speaker 1: Telse Advisory raised its ratings to the equivalent by from hold.

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Speaker 1: We do have some earnings out UH. Canagra Foods just

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Speaker 1: up three tents of or percent the fiscal throw quarter

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Speaker 1: profit and revenue, beating analysts average estimates in the blue

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Speaker 1: Bird survey. Today, we've heard from CarMax to use card

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Speaker 1: Dealer it's up one and a half percent. UH. Their

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Speaker 1: profit in sales for the fiscical fourth quarter beat projections,

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Speaker 1: and bed Bath and Beyond up four percent the home

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Speaker 1: first She's retailer declared his first really different. Then tb

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Speaker 1: and a half cents a share will be made in

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Speaker 1: July and the fiscal fourth quarter ornieres and sales beat estmates.

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Speaker 1: David Wilson, thank you so much, Michael McKay and Tim

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Speaker 1: Keene and Mike. We got two things to talk about, Yen.

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Speaker 1: But first a lot of history tonight, it's fore fed.

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Speaker 1: Chairman meets great. They won't talk. I mean, I don't

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Speaker 1: think Paul Woker is gonna lean over the panel and say,

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Speaker 1: Cherry Yellen, are you gonna you know, is it a

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Speaker 1: live meeting in April. No. They'll stay away, probably from

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Speaker 1: current monetary policy, although you know, you could envision questions

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Speaker 1: about uh, the environment and how difficult it might be

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Speaker 1: to make policy now compared with other periods of time.

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Speaker 1: The one thing which will be delicate is the word measured.

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Speaker 1: And I don't mean to associate that with Chairman Greenspan,

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Speaker 1: but just the idea of going up in rates to

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Speaker 1: a more restrictive policy, or heaven forbid, we ever get

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Speaker 1: to a point where we're actually gonna pull them down again.

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Speaker 1: Did measured work I think is a fascinating focus to

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Speaker 1: go provoker, to go to go back further, Well, I

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Speaker 1: mean you got to remember that the FED has changed

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Speaker 1: its method of running monetary policy over the years. I mean,

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Speaker 1: initially the FED was set up to run the discount

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Speaker 1: window UH to discount represented at the FED by banks

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Speaker 1: and used the discount rate for many many years. And

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Speaker 1: Paul Volker came to office and changed that to the

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Speaker 1: money supply, in part because he wanted to get away,

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Speaker 1: not he didn't want to have to publicize the fact

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Speaker 1: that rates were so high. Then under Alan Greenspan, you

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Speaker 1: go back to a policy regime, but this time with

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Speaker 1: FED funds, so so many different changes. We have a

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Speaker 1: print on the end. One of seven nine was the

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Speaker 1: interday low. Right now we're back up and it's a

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Speaker 1: nighttime in in Tokyo, so um be interesting to see

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Speaker 1: whether the folks at them off are working late and

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Speaker 1: want to do some intervention or not. This reminds me

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Speaker 1: Mike McKie, Mark Chandler, Brown, Brothers Herriman, who is very

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Speaker 1: eloquent about looking at currency pairs versus that blended trade

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Speaker 1: weighted I am FI concept. Well, it depends on what

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Speaker 1: you want to find out do you want to you know,

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Speaker 1: do you do you want to know what the price

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Speaker 1: is to exchange your currency for yen because you're doing

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Speaker 1: business you need to pay a loan, or you're just

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Speaker 1: you know, gambling, betting, or do you want to know

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Speaker 1: if you're an exporter or importer, what your cost is

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Speaker 1: going to be and how that's going to impact the

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Speaker 1: overall economy leggings stronger. Just as one example of the

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Speaker 1: complexities here is yen one, which is the South Korean

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Speaker 1: juan as compared to the Japanese yen, and it is

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Speaker 1: not made a new leg up of stronger yen that

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Speaker 1: occurred let me get my cursor out here, that occurred

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Speaker 1: in March earlier this year, March third, roughly of this year.

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Speaker 1: But we forget it's not just dollar. Yen is the

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Speaker 1: global litmus paper. Well, you have to remember too that

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Speaker 1: we're talking about different regions that compete in different ways.

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Speaker 1: The Japanese are certainly in the market competition in Asia

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Speaker 1: with China, with the South Koreans, and so when China

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Speaker 1: moves things or change things, Japan is one of the

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Speaker 1: countries is affected, and that currency pair is going to

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Speaker 1: be affected if there's not news in the United States.

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Speaker 1: You know, it still could move on China. There are

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Speaker 1: two abbionomics legs, one out of the autumn of twelve

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Speaker 1: up to the mayor June of thirteen, and another leg

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Speaker 1: August of fourteen up to the beginning of two thousand

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Speaker 1: and fifteen. We are now back to that nascent August

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Speaker 1: of fourteen. We've basically given up much of the second

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Speaker 1: leg of obbionomics. Well, what you want to look at

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Speaker 1: is the ultimate goal of obbionomics, which is to raise um,

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Speaker 1: the the inflation rate. And while there have been some

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Speaker 1: uh slow but steady efforts to you know, some signs

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Speaker 1: of progress, they're just not getting there very fast and

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Speaker 1: it's not working. I would emphasize well for those of

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Speaker 1: you that are not sophisticates in this market, that the

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Speaker 1: dollar is still range bound. This is very much a

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Speaker 1: yen story d x Y that blended dollar index of

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Speaker 1: our old trading partners. It's weaker going into this year,

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Speaker 1: but nothing like what we're seeing in the end dynamics.

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Speaker 1: And you see that again with euro yen, which is

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Speaker 1: three surveillance cups of coffee ago one two, that's a

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Speaker 1: whow statistic point seven five. This is really most interesting

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Speaker 1: on Japan. Oh, of course, there have much more on

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Speaker 1: this in the coming days into the weekend. Right, let's

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Speaker 1: check in out with Michael Barr and get the latest

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Speaker 1: world in National Mike, Tom, thank you very much. Belgian

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Speaker 1: prosecutors have made a public appeal for any information leading

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Speaker 1: to the capture of the so called man in hat

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Speaker 1: suspect that was seen at the Brussels Airports suicide bombings.

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Speaker 1: Photos released by prosecutors show the suspect leaving the airport

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Speaker 1: on foot. Belgian federal prosecutor Eric Vandersyite says authorities are

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Speaker 1: asking anyone who might have taken pictures of the man

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Speaker 1: on the March twenty second attacks to come forward with information.

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Speaker 1: The airport's suicide bombings killed sixteen people. Secretary of State

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Speaker 1: John Kerry is in Bahrain. Kerry is meeting with Middle

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Speaker 1: East leaders to discussed several issues, including the civil war

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Speaker 1: and Yemen. We're trying very hard to get Yellen. We're

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Speaker 1: working hard to try to end that war. Meanwhile, carry

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Speaker 1: has broken the record for the most traveled Secretary of

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Speaker 1: State in US history. Carry has traveled at least one

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Speaker 1: point zero six million miles as Secretary of state passing

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Speaker 1: Condoleeza Rice. France and Germany are holding a joint government

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Speaker 1: meeting today to discuss, among other things, the refugee crisis.

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Speaker 1: French President France while Land and German Chance Anglo Merkel

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Speaker 1: are attending the meeting in eastern France. Global News twenty

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Speaker 1: four hours a day, powered by our dred journalists and

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Speaker 1: more than one d fifty veaus from around the world.

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Speaker 1: I'm Michael Barr. What's great about that is he tried

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Speaker 1: to book two business class tickets to Rome with his

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Speaker 1: Frequent Flyer miles and he got crushed. He said, I'm sorry,

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Speaker 1: Mr Secretary, there are no seats. I mean, that's the

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Speaker 1: way it is for me. I mean, what do you do?

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Speaker 1: You just you can't use the miles anymore for what

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Speaker 1: you want to use them for. Good morning, Secretary, Carry

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Speaker 1: Bloomberg Survens coming up. We're going to check in with

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Speaker 1: Bloomberg Reserve editor Peter Elliott's time for us to get

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Speaker 1: some dining advice. No wonder everybody is hanging out at

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Speaker 1: the food court upstairs.