from bloomberg world headquarters, good afternoon. i'm betty liu. markets are bouncing around today. some gains in late trade. global equities are on the doorstep of a bear market. the recent run is over. with lowth we are on growth is ending. investors have to realize this path, which has served us relatively well, is ending. ofty: amid this backdrop sluggish growth, janet yellen is facing congress. what will she say as she faces lawmakers for the first time since hiking interest rates? foris the momentum over netflix, amazon, we will ask analyst keith if the so-called

stocks can get back to their winning ways. we are about one hour away from the close of trade on this tuesday. it has been an up-and-down day. we have been above the green on the s&p for the third time. julie hyman is at the markets. julie: a lot of bouncing around. we are indeed on the green. as we have seen all of this volatility. if you look at the course of the at theat we have seen s&p 500, if you look at the intraday chart, you will see all of the up-and-down, above and below the unchanged line several times throughout the course of the session as investors figure for marketses next and the economy. if you look at the sectors, material shares have been consistent today. we've got earnings from a number of companies.

part of that index coming out with earnings or forecast. health care up well and energy remains the laggard even as financials have been volatile in the session. financials had been underperforming. some of them are recovering. correlationlso no between oil and stock. julie: exactly. it looks like it was lower. inhas not been consistent the way it has in the past. after all, oil is down 4% today. theks are recovering at same time. we have seen a convergence. today talkingt about supply and demand. fundamentals not looking positive at the current time. gold prices are lower as well. less appetite for that sort of ven" although spot gold

has been holding up better than futures. the dollar, checking on that, you would think oil lower, gold lawyer, dollar higher. that is not the case. we have seen it moving dollar because there is still that sort of domestic economic pessimism, even if stocks are recovering. that is very much on investors' minds. betty: thank you very much. betty:a check of the headlines, mark crumpton has more from the news desk. the: voting is underway in first presidential primary and the big race for republicans in new hampshire may be for second place. donald trump should win easily. four candidates have a shot at finishing second. ted cruz, marco rubio, john kasich, jeb bush. bernie sanders is favored to win on the democratic side. he leads hillary clinton by double digits. later today, we will have a

two-hour new hampshire primary special. "with all due respect" begins at 5:00 p.m. loretta lynch says the probe into hillary clinton's use of a private e-mail server is free of outside and political influence. she says the inquiry is independent and is being evaluated on facts and evidence. the general counsel says the investigation is ongoing. has sent hisma final budget to congress. 2017 is for fiscal year packed with items the republican-led congress is sure to reject such as a new tax on oil and billions to give out of work youth summer jobs. he is also seeking to raise $2.5 trillion over the next decade through changes to the tax code. discussions that could see saudi arabia send special forces into syria to fight islamic state are taking place.

of theirs and some neighbors initially took part in airstrikes against isis. the partition patient -- the participation trailed off. germany says at least nine people were killed in the commuterrash of two train's. it took place in the southern state of bavaria. the area is not easy to get to, making rescue efforts difficult. tens of thousands of fans have gathered downtown denver. you're looking at a shot. they are waiting to start a parade for the super bowl champs. their win over the panthers on sunday gave denver its third championship in team history. the question, that man, peyton manning, will he be coming back for another season at the age of 40? global news, 20 four hours a day, powered by our journalists around the world.

i am mark crumpton. you are out to the game. betty: life is over at 40? mark: we were at each other. i was at an establishment that serves adult averages. you were at the game. thanks. it eased the pain. thank you. near: the s&p is lingering its 22 month low. our next guest saves the worst may -- says the worst may be yet to come. following to the 1500 range and joins us now from minneapolis. doug, more bad news. if it fell 1500, that is 300 and change endpoints. why so low? targetirst of all, price are not our forte. we look at current conditions.

of the 15-1600 is in line with the historic average bear market of 27.5%. 25%.00-1600 would be that is our thinking. 1600 would wipe out half of the gains of the move off of the october 11 lows. point forcommon historical bear markets. it would undercut a level we have talked about, which is 1700 on the s&p. you get down to long-term median valuations on the s&p 500. we look at six or seven things and say what if they went back to their long-term median dating back to the official inception of the s&p 500? if we did that, we would get down to 1700. we would cover some shorts. typically you have an overshoot

when you spend years and years overvalued and then come down. it is rare you would stop. the markets were overvalued, in your view. are they still overvalued? doug: there is a twofold answer to that. the broad market, we would say is no longer overvalued. we've got a domestic universe where we look at a lot of values. trailing pe's. things of that nature. basis of the median stock, you are somewhat on the low side of fair value. the issue is the s&p 500 is still moderately overvalued. it is because these big economically defensive stocks, i was just pulling up kellogg, campbells soup. the package food stocks. utilities. typical prerecession stock

market holdings that would hold up during economic tough times. i think those will ultimately give up the ghost and take up the s&p 500 in the fair value zone. we areets undervalued, talking about undercutting that 1500. betty: ok. how far are we? you say we are on the lower end of fair value. doug: for the median stock. betty: how far time lies are we in this bear market? more we could beat advanced in terms of time than in terms of price. 13% right, it is down now. we think it could be down 25. only about halfway. again, the value

line or may be the small caps, they are down more than halfway. the small caps are down 25% compared to the s&p. so you see a huge markdown. small caps, we used to favor large over small. i was a long-term strategy. now we are neutral. theaid we have deflated small caps, they will probably mark time with the s&p. remember, we peaked nine months ago. we could be three quarters of the way through this, or more. i don't know. typically when the big s&p 500 stocks, that are economically defensive, finally join the market in that official bear territory, the worst of the bear market is over and that is why it is so deceiving in the broader market. betty: let's say once those defensive fold and the markets go down another 10% or even more, according to what i hear

from you, that could actually tip us into a recession, right? it could tip us into further malaise. it could be self reinforcing. 2008.it certainly was in i don't think it is a great roadmap going forward for what to expect. have not officially called for a recession. we are in sync with the idea the deeper stocks fall, they're more -- more there is this negative wealth in fact and negative confidence that could send us into recession. that is why i say we focus on these downside price targets. 1550 and say there is more on the downside. we will see. we are not ready to pull the trigger on calling for a recession. we are spreading around enough room as it is. betty: thank goodness you're not

calling for a recession. thank you so much, doug ramsey. stocks have a ways to go on the downside. much more ahead. turning the so-called front page of the internet into a moneymaking machine. it's cofounder talks about the change he is making to the popular website and a look at the nasdaq. thisr in the first half of hour. ♪

betty: welcome back to "bloomberg markets." let's get a check on the markets right now. we seem to be powering even

on the dow, the s&p and the nasdaq. we have tried three times and we seem to be holding on to gains. the dow is also up 74 points. not quite into triple digits. once the 11th largest website in the u.s. 's users are known form organizing pizza swaps to demonstrations. while times have been tough, ceo steve huffman says the time for change is now. emily chang is sending by at the tech conference with the reddit founder. emily? emily: yes, here with steve huffman. he was begged to come back to the company last year when it was facing a tough time. there was a sense reddit needed

to be saved. it had lost connection with users. what have you done to change that? steve: a lot of it is doing the natural thing. we don't have to think hard about it. because i'm a part of the community. i was also angry at some of the things going on. emily: like what? steve: reddit hadn't built some obvious things. our moderators needed better tooling. a lot of community issues. tricky ones. that required attention. since i went back, the focus has been on fixing the pains. of low hanging fruit. we don't have to be that creative. emily: what about the less obvious things? what else is in store? steve: some obvious ones, building on mobile.

we don't have a mobile app. that is a no-brainer. are the fronts page algorithm. it has a long way to go. reddit has grown so much. we only had one community. now we have 100,000. the algorithms have not kept up. we can do a lot to help all of our users. emily: what about the harassment problem? i can imagine a string of people who are upset we acknowledge it. steve: those are tricky issues. i came back and i had a plan of drying a crystal clear line of what is acceptable and not. the lesson i learned is that is impossible to do. wherever we draw the line, there users. troll, bad

i've gotten comfortable with the fact like in the real world, there are things we are uncomfortable with on reddit. what is important is making sure others users feel like they are welcome. emily: there are thousands of users. how do you make them happy? steve: we don't have an obligation to make people feel happy, but not abused as a big one. policing behavior is something we are doing much better. content policy. the next step is to enforce it at scale, which is a technology problem. that is something we are comfortable with. actual comes to the tricky content, like the content we don't want to see, those conversations are much longer. emily: so thinking about the changes you have planned, how does reddit look differently two

years from now? there is the front page. users,we have a class of people who know how deep it is. they participate in many communities. then we have a bigger chunk of users. probably at any point, we have seen every english speaking user, but we don't always grab a hold of them. they come to reddit and then they leave. a bunch of users think we are the largest sports forum. there is so much more to it. the big challenge is exposing those users to all of the other they couldeddit than find a home. emily: how much are you thinking about monetizing reddit? turning this into a sustainable

business? steve: there is a short-term is about 20% of my time. it is something we should pay attention to. we should grow revenue. revenue is not going to make or break this company the next couple of years. we know we should be making a lot more money. it is not something we have thought about. what is really important to the business is engaging users. can we give them a home on mobile that is productive? can we acquire new users in different countries? that is what keeps me up at nine. monetization, we will do the obvious things. we don't need to be creative about it. emily: steve huffman, reddit cofounder. thank you very much. we are watching. thank you. betty: thank you, emily chang at the goldman sachs tech conference. much more next.

we want to mention there is some news about anadarko. trading is halted pending news on the oil company. we will await that. stay with us on "bloomberg markets." ♪

betty: that news on anadarko we , the companyabout cutting its dividends to five cents from $.27. the shares are halted. they did fall 4.3% before being halted. we will see what happens. we have seen a number of large cap energy companies trying to .onserve cash cutting the dividend has not been as common as other measures . we will see what told this takes on their shares. turning to options and joining me is kevin, the chief investment officer at recon capital partners. we have been looking at

volatility. this elevated volatility. it seems like it is not going anywhere. kevin: no. it looks like it is here tuesday. if you look at the futures market, ever since 2016, we have month contract the higher than the preceding month contract, which is interesting. 24 straight days we have not seen this since 2011. that was the sovereign debt crisis. that is when the u.s. got downgraded. if we go back and we look at 16 point six, we are averaging 23 right now. the nasdaq, those stocks everybody talks about. 26 for the year. which is unprecedented. is there a tipping point that indicates any kind of calm? kevin: no.

not really. we are getting mixed signals. anare getting off unprecedented time where volatility was artificially suppressed. we are just getting our firm fitting -- firm footing. if we go back to historical multiples, that is 18:45. julie: i want to get to microsoft, a stock that has been falling along with the fang shares this year. you actually are looking at buying the stock and there is an option strategy associated with it. kevin: right now we are looking at a conservative options strategy, where you sell a call against it. we are looking at about a 15% about $2.40. paid

that is great income for you. the stock is yielding around 3%. when you look at stocks you want for the long-term, they can actually increase the dividend and do buybacks and acquire companies. microsoft is one of them. goes down, you can cover the call and rewrite a new one. has beencrosoft volatile, along with these other tech stocks. kevin kelly, thank you. up, we will continue to watch anadarko and update you if and when it opens up before the close. more "bloomberg markets" is next. ♪

live from manhattan, you are watching "bloomberg markets." first to the breaking news on

anadarko. the stock has reopened. stock fell the promptly, almost 6%, after the news they are cutting their dividend. they are preserving their cash. to five it from $.27 cents. that is a $.22 cuts. that was larger than the 14 expected. analysts that is why it is in the red right now. let's continue with a check of the headlines. mark crumpton has more from the news desk. mark: the white house plans to appoint a new cyber security official. the move is an effort to strengthen the response to such threats. this comes with a $19 billion increase in cyber security funding that is included in the 2017 budget proposal. in new hampshire, candidates are

looking for those last few votes in the primary. hillary clinton was outside a polling station in manchester today. polls indicate she will probably lose to bernie sanders. donald trump is expected to win big. the real fight could be for second place as ted cruz, marco, john kasich, and jeb bush look to gain momentum. coming up we will have a two hour special with "all the from new hampshire at 5:00 p.m. new york time. replacing those lead contaminated types influent will cost $55 million, according to the mayor, who announced it will start next month. counsel met with reporters. to investigate what possible crimes there are, from anything to the involuntary manslaughter or deaths that may

have happened, because of this poisoning, to misconduct in office. we take this very seriously. donating $3l motors million for health and education services to those affected by the water crisis. the number of uninsured americans has dropped significantly in eight states. those statessays include arizona, california, colorado, florida, and kentucky. the rate of the uninsured was 9.1% in 2015 as compared to 14.4% in 2013, before obamacare. global news, 24 hours a day, powered by our journalists around the world. i am mark crumpton. thank you so much. at less than 30 minutes until the close of trade.

abigail doolittle has more from the nasdaq. whipsaws asot of the index continues to flirt with the possibility of a bear market. we reached out to a managing director who is in the flow of things to see what he thinks about the possibility. he says we are in a bear market. people are going to have to come to terms with the fact the long bull run is over. distinct to 2016, we have seen the disappearance of the tip buyer, the pension funds who would step in and by the dip . in the absence of that, it is likely we will see a lot of volatility to the downside for some time to come. specific to the nasdaq, he said

high multiple stocks -- we take a look at the momentum stocks. netflix, amazon, big multiples, all of those are some of the worst performers. where is an investor to hide in this environment? one relative winner could be apple. thank you so much. that is exactly what we want to talk about with our guest. staying with the nasdaq, almost in a bear territory as abigail talked about. it is down nearly 18% from the summer high in july. keith terry has a more positive outlook. especially when it comes to the fang stocks. he joins us now from the tech conference with a bullish outlook. ofn i take a look at some these momentum shares and i look

at the nasdaq, which is almost in their territory, i'm curious, what does that tell you if we do hit a bear market? look, we have been through these before. for a lot of investors around the internet space, these cycles happen. to august, february of 2014, october of 2011. these are all profitable companies. make it going to through this and ultimately are going to be valued by investors on their ability to continue to grow. the fundamentals are not changing a lot for us. there are some things in the market that are impacting valuations in the short term. betty: were they overvalued in the first place? necessarily. when you look at internet companies, you look at the cash, the returns they are generating,

they do deserve premium multiples. what you have seen is the entire market multiple come down and of course whenever that half is, higher valued companies are going to decline more rapidly in the same way they will increase more rapidly. we have been through this before. shall pass. in the passing phase. with the momentum stocks, netflix, amazon, are they going to have their day in 2016 again? where will that be a 2017 story? with: it has a lot to do what is going to happen with the overall market. that is not my world. who aree macro guys willing to call that for you.

we have to make sure they are positioned in the right names and if you look at netflix and thatn, those are companies are significantly outgrowing their competitors. they are taking share, expanding margins, they should be as they come out of this heavy investment phase on the global rollout. of the names to own in internet, amazon is at the top of the list, along with google, paypal, and we will consider netflix in that group. it largely because those ,ompanies are outgrowing profitable, delivering high returns. that is where you want to be. betty: i'm amused when market fluctuations happen people think about new acronyms as investing strategy. forget the fang stocks, now you've got the vagal stocks. maybe alibaba.

expedia. do you subscribe to that? heath: no. i'm going to leave the acronyms to somebody else. it was not last year. it's not this year. >> where would you see growth this year? the ones we would be in. you've got to look for companies that are growing. particularly companies delivering that growth with high returns. google, iat the top, think there is an opportunity in cashdin, given the return in that stock and paypal is interesting given the multiple it is trading at relative to the growth they are delivering. which is accelerating

topline growth, that is interesting. twitter is reporting results tomorrow. you think they deserve a bigger market cap. heath: we do. twitter is a powerful platform. you think about who and how twitter is used. there is a lot of value. the fact you have seen the management turmoil over the last couple of years and you still have a platform with 320 million viewers, being engaged upon the way it is, looking at the super bowl as an example. ,ook at any political activity the u.s. election, as an example, that is a platform that is going to be worth more. the company needs stability and it has not had that. betty: thank you so much for joining us. us from the goldman

sachs tech conference. still ahead, janet yellen facing congress tomorrow for the first time since the fed hiked rates. and we've got some big earnings coming out after the bell. disney, panera bread company and solar city. ♪

good afternoon and welcome back. i'm betty liu. a quick check on the markets right now. we are losing steam. the nasdaq has turned red. are in thetelecoms red right now. materials and health care are leading the gains. it is time for the bloomberg

business flash, looking at the business stories. they will pay $80 million in the it failedttle claims to properly account for certain expenses tied to a rebate program for customers who bought monsantoller, roundup. booked revenue from the discount program without recognizing all of the costs. pushing for faster development of a vaccine. the drugmaker already had developing a vaccine. developlans to infrastructure to develop the ka.cine for use against zi . jpmorgan fortapped the latest high-profile hire to work with the top management team. compton is expected to start in

may when he will report to the ceo. bloombergur business flash of day. janet yellen will testify before congress. it is her first of look appearances raising rates in december and a lot has changed since then. there are fresh economic uncertainties here and abroad, heightened market volatility. for more on what investors might hope to hear from her, we are joined by the head of market structure and technology at greenwich associates. good to see you. i know you talk about market structure as it relates to the bond market. is going tot yellen say anything about volatility? kevin: she can't not talked about it. volatility has been a tour easily volatile. viewed to remember the fed

is much more long term. the spikes that come and go are much more short-term as opposed to indicators of any macroeconomic change. betty: easier to dismiss? kevin: i think so. they are watching the markets closely. longer term. this is something they will put aside. do the regulators understand the liquidity issue? kevin: they are trying. i'm not sure they are there yet. they have requested information from the market participants. have a laundry list of questions about how markets function and what is defined as the liquidity. they are trying to get a grasp for what this means. liquidity is in the eye of the beholder. you could ask 100 people, half would tell you the markets are fine. the other half would say there is a big problem.

prepared.e market is this has been talked about a long time. it's important to clarify liquidity has changed and his different since the financial crisis. dealers have limited balance sheets. the likelihood of a crisis is limited. telegraphed. investors are aware. banks are aware. it is turning into a -- turning into a crisis seems -- betty: because they have tools to stave it off? kevin: regulators are looking to hold more cash and be more liquid in the event of any kind of market blip. the same is true for the brakes. holding capital. taking less risk. it does not seem possible for an issue that is so well known a crisis could emerge. betty: are there pockets where we could see a liquidity crisis? kevin: it has been debatedkevin:

whether january resulted from a change in the liquidity profile. the market is unsure. conversation we have had is volatility should be good for the banks. there is more trading. that is how they make money. in this case, this volatility has been bad is how they have called it. the market is unsure of what is happening. rather than trading more, people are backing away because they don't know what to do. betty: you have been a bloomberg all day talking about this report you have talking about banks trying to preserve fixed income revenue. ? how are they doing that? kevin: a lot of talk about electronic trading, u.s. treasuries, slots. no question that is happening. we are finding the relationship

investors have with their sales folks at the banks are critical. that is how information is passed and how the biggest most , sort oftrades happen through those personal relationships. of course banks need to ensure they are providing best execution. that said, those relationships are critically important. betty: kevin, thanks for joining us. head of market structure at greenwich associates. we will bring you more coverage testimonyellen's tomorrow and thursday starting at 10:00 a.m. eastern time. much more ahead. the close of trade is moments away. a pretty choppy session. we are pretty much flat on the markets. ♪

toty: welcome back "bloomberg markets." i'm betty liu. julie hyman your market check on some of the movers today. julie: anything could happen in the next 10 minutes. the s&p is barely up. the dow is barely down. the bouncing been around session. take a look at the dow as one example. and below the unchanged line a number of times. now it is happening again as betty puts it. some of theat movers within the dow because there is not a lot of rhyme or reason. here at the company's doing better today. 3m, mcdonald's, contributing the most to the gains today. on the downside, we see stocks ibm, large-cap tech

has been selling off. walmart. not a lot of patterns. it is not cyclical versus defensive, for example, which we have in on some days. oil prices putting pressure on some of these stocks. it has taken a turn for the worst. earlier it was holding up well. now down about 4% on forecasts talking about supply remaining ample this year. goldman sachs said we could see a volatile year for oil prices. also want to check on the dollar today. we have seen weakness. here is the euro, rising versus the dollar. the 10-year, we are seeing buying of it, sending rates lower. 1.73%. there has been a little bit more election in the rates market.

even as equity investors are vacillating today. betty: they are flip-flopping. julie hyman at the markets desk. for more on this tug-of-war in this market, i want to bring in all of her. we had doug ramsey on earlier who said we are halfway through this their market. a little bit of a relief. the bear in the north, he calls himself. betty: exactly. what are people saying to you? it is: the relief rally, not putting confidence in two people. some are saying if you want an have that on, you deutsche bank saying they are going to buy some bonds and do a credit repurchase program.

what happened today was we got in this morning and there was talk about deutsche bank, financials, people really putting arms in the air wondering how bad the situation is. as that has settled, and people got sober about it, you saw the financial index rebounded a little bit and as you pointed out, financials and tech companies, the biggest losers. a third of the benchmark index. if you look at financials, it is clear they are following the same path. betty: they are sensitive to interest rates. interesting, now nobody, 0% expect a rate hike in march. not even subsequently. oliver: it's crazy. even in 2015 when people started to think maybe the fed would go in september, there was a sharp drop-off. comical.st

at the beginning of the year, it has gone down to zero. the market's perception is so out of place with one of the fed has signaled it is going to do. you really see that because of nhe financial, as gary coh pointed out, they see it as a proxy for the economy, because of the interest rate situation. you've got a lot of people going into those companies so now the banks have become a proxy looking at yields, they are very tied to the yield spread. proxy forbe a interest rate expectations. oliver: exactly. so you see volatility. betty: is anyone expecting yellen's testimony will be market moving? the potential. a month ago i would have said

no. it is back to that scenario where we had a report this afternoon that said the fed may policy and that helped as well. people are paying attention to monetary policy. betty: all right. oliver renick, our stocks reporter. that is it for "bloomberg ."rkets here is a look at how the major averages are trading. just a few moments into the closing bell. they are trying to snap their losing streak. not so successful at this moment. ♪

>> we are moments away from the closing bell. i am scarlet fu. >> i am joe weisenthal. "what'd you miss?" >> i am alix steel.

♪ stocks closing lower, oil at $28 a barrel. joe: the question is "what'd you miss?" economist say it is a real possibility. >> want to profit from volatile markets? one thing you should not be doing. >> all eyes on twitter tomorrow. facebook and snapchat making growth harder. market minutes, a third day of losses. the nasdaq, fifth the klein in seven days. -- fifth decline in seven days. nasdaq underperforming. faded andoon rebound lost steam. joe: a lot of anticipation for janet yellen tomorrow.