from bloomberg world headquarters in new york, good afternoon. i'm carol massar. full the dollar plunges ahead of first quarter earnings. how to play the volatility trade and which markets to avoid. the daily mail throwing his hat into the ring. which company is a top contender and what it all means for marissa mayer. we are one hour away from the close of trading. you'll take it off this hour. is what has been happening for most of the day after a strong start.

volume running below the 20 day average. see some support coming from areas that have been the nubbin new york. we've gotten financials. it has been the lagging group. so there has been a decline and a lot of negative stuff going into that. it is the underlying commodities that are higher. i mentioned with going on in commodities. we are seeing oil and gold trade higher. in the classic inverse trade we tend to see. carol: that is the overall macro view. what about the big movers? >> under armour and morgan

stanley coming out making comments saying wholesale clothing sales were down 2% in the first quarter. .luggish footwork also hurt the company reports earnings in are watching specialty pharmaceutical and biotech companies that have been very volatile stocks helping to encapsulate that. and adex all by 1% with energy.de chesapeake energy pledging additional assets to maintain access to the line of reddit. .alling on the heels by 89%

carol: let's get a check of the headlines of bloomberg news this afternoon. mark: president obama meets with janet yellen this afternoon. the white house says the meeting will focus on the state of the american and global economies as well as wall street. >> the president has been pleased with the way that she has fulfilled a critically important job as it relates to making policy decisions, not just on the u.s. economy, but the global economy. in the important regulatory responsibilities that they have. mark: seller clinton calling out donald trump for not

appreciating the diversity of his homes date. she said it mr. trump is from your area and doesn't seem to respect diversity. senator ted cruz is campaigning in the state of california. appears scheduled to before an evening appearance in san diego. the recent decision to move funds to battling ebola and the zika virus is not enough to get the job done. the principal deputy director for the centers of disease control and prevention at the white house. >> if we reach the point where the stopgap money runs out, hopefully it will never happen but will have to start reading other account.

mark: they say the mosquitoes that carry the virus are present in 30 states as opposed to the 12 originally. local news 24 hours a day powered by our journalists and 100 -- 150 news bureaus around the world. carol: let's turn to the credit market. corporate bond etf's have been running strong in 2018. about 5% since february. is maybe the what worst order for profits. it is an interesting time. i think we're trying to look at corporate earnings and get an idea of what to come.

what does it save you about the health of our corporations? >> it is a mixed story on the credit side. bond prices are at consistently high levels. it makes sense because it is interest rate linked. corporate america has been following -- borrowing like mad. earnings have rolled over. the reality is the quality is not that great.

>> they're working down some of the dead that had higher rates but a lot of companies are money to do things like buybacks. will we look back and say this is not smart? >> it was smart strategy couple years ago. it is advanced and pretty difficult to tell if you are the main company, the main buyer and you're buying at a relatively high price point, it will be hard to recognize meeting gains and dramatically improve the bottom line over the median term. carol: is this where we should we based on will have leading up >> this cycle is last in a long time and will continue to last a long time, a direct result of policy.

negative yields in europe and asia. the corporate sector broadly has been direct beneficiaries of that. corporate's themselves are taking cues from policymakers and making the right short-term decisions. they can utilize that and help their earnings. leverage is pretty high by historical standards. carol: we would like to see a company borrow money to invest in their business. we're not seeing that. >> nominally, capital spending is still lagging. i think the biggest challenge is places like europe and asia are there's not much capital spending at all.

and those central banks are pushing as hard as they can to incentivize companies to lever up. and it's not really following through. borrowing is that can make sense for a short time. carol: does it make you nervous? >> it does. we have a pretty cautious stance. we're telling people to be cautious. lend to companies with pretty stable cash flows. we haven't gotten too excited about commodities just yet. and we still like the banks. the banks of been pretty consistent from a credit standpoint. it's interesting that you bring up banks.

as the outlook going some negative on bank? expectations have come down dramatically. banksk if you look at from a credit perspective, i like to say it is good enough for credit. decelerating because of the global backdrop. speaking, there's plenty of capital. it's plenty to pay bondholders and that's what we're trying to focus on. we are in an interesting environment, looking or any help we can. what would you want to leave and -- investors with? >> we are in that cycle.

it can go on for a while longer but we're focused on return of capital. return on capital is nice but in late stages, you want to get your money back. it really has to do with staying attached to your highest quality payer. u.s. financials are in pretty good shape. broadly speaking, those sectors are nice and stable cash flows and not a huge amount of borrowing requirements. carol: make you for that. head of credit strategy at wells fargo. earnings kicking off today, does not look too pretty. can investors when the volatility trade? names are running circles

around the biotech sector today. and the yahoo! bidding more eating up -- heating up. what can a deal look like and as spell trouble former is a myra? mayeruble for marissa ? ♪

>> you're watching bloomberg markets. we're pretty much near the lows of the session. of about .3%. the nasdaq about a 7.5 point game. the dollar falling to a nine-month low.

it is time for a look at some of the biggest business stories in the news right now. goldman sachs will pave $5.1 billion in mortgage-backed securities. the allegations as high-quality bonds, the fifth multibillion-dollar settlement reached with u.s. banks over subprime mortgages. says tests revealed issued with the third row of seats. they are advising drivers not to have anyone sit in the third row seat while the car is in use. tesla is constructing new seat acts and expects to replace them all within five. a senate investigation into drug pricing after j michael pearson failed to appear for a deposition.

the plan to start legal proceedings against pearson, he is still under subpoena to appear for an april 27 hearing. that is your business update. let's turn again to earnings season. expectations of the lowest level since the aftermath of the financial crisis. is there a light at the end of the tunnel? she spoke earlier on bloomberg markets. and a that there could potentially be a light at the end of the tunnel given oil prices have come back out. the dollar not being as weak as it had been. sorry, not as strong as it had been. it could help earnings moving forward.

>> the trend is to back out the energy company results because it makes it look a lot different. is that still instructional? is. think it if you look at taking out energy, we see some impact on these big exporters. companies that derive earnings from out by the u.s.. and that weakness will play out in a positive this year. >> earnings season, the lack of volatility in the market. hedge funds are just getting crushed right now. what are the expectations for volatility?

>> i think we're likely to see that picking up. >> the strengthening of japanese equities and global equities, they broke through all these different levels from 111 to 108. it is having repercussions throughout the market. chart, ally cool function on the bloomberg here. >> both of those have seen a combined here today out low. these numbers are kind of

bananas. investors have been investing in japan for the last three years. high-quality investments in the u.s.. i think investors are getting cautious. strong, i think they're worried about earnings moving forward. >> if foreign investors pull out of japan, does that mean the >> you have seen a shift in investor attitude. embracing the idea of ownership and equities.

>> you have money leading japan and going to the u.s.. we have seen money come out of europe. is it evaluation or fundamental play? >> a little bit of both. selloff, theree is some attractive valuations. cancompanies that sustainably increase dividends and grow dividends, lots of cash on their balance sheets. >> how would you call that in? >> some people are looking at smart data factors. at dividend payers versus dividend growers, i prefer the ones i can sustainably grow dividends.

>> that was heidi richardson. still ahead, the daily mail is reportedly hopping on the merry-go-round with other potential suitors making bids. we'll discuss that next on bloomberg markets. ♪

julie: jim, for a while, he has been talking about that we will see a return, probably, to a volatile environment. you are looking at maybe a reversion to that kind of activity also? >> our technician made a note this morning that on the s&p

500, it's as narrow as they have been since last august. we're probably approaching a decisive point. our thesis for a long while has been an elevated structural floor. suppressed down below 20. getting long in the tooth. squeeze the volatility approachingt, we're decisive moves. julie: since you have had this position for a while, you're certainly not alone. as a cost you money while you have been waiting.

can you buy yourself time? >> the early ones in april, we have time. in our role, methods of part of hedging. it's not for free and these event can be delayed. we see it in broad volatility related metrics, we're still of the view that the structural floor is in place. >> we're going into a busy time of earnings. >> universal banks will report this week. financials worst performing sector year to date, the earnings are expected to be down almost 16% year-over-year.

earnings estimates of been revised lower. have analyst kept up with what itpened in these businesses? is two months out and we're looking at earnings but we want to capture the next couple of months. $.37, it has about 830 delta to it. convex if thend market moves lower. we see 10 to 15% of upsides. julie: it will be a busy week for those financials. we will be right back. ♪

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thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. carol: you're watching bloomberg markets. start with a check of the headlines. mark has more from the news

desk. mark: as hillary clinton leads bernie sanders, a large advantage among minority voters. 46%es clinton gets 48% to among nonwhite primary voters. 62% 22% among african-american, hispanic and other voters. corrupt and crooked is how donald trump describes this election process. he said the person who wins the most votes, not the most delegates, should automatically be the party's nominee. we should've won a long time ago. he faces the possibility of a brokered convention in cleveland. the ship is part of the burke

class and will be built in maine. it is expected to enter the fleet and 2020. the former chairman served in the senate from 19 some denied to 2015. in many parts of the country, it's more expensive to send a four-year-old the daycare than an 18-year-old the college. the cost of sending a four-year-old the daycare is higher than in-state tuition in 23 states. and in 43, the average cost exceeded 10% of median income for a family of war. back to you.

it looks like the nasdaq is at its lows right now. nasdaq,olatility in the now slightly red. this reflecting a battle or tug-of-war between biotech and big tex. we have the index down more than they are balancing out some of the health care weakness. one of the biggest drags is and oh international. plunging on an announcement of one of the companies key pain drugs. did you sell pain drugs including percocet. down sharply,ock 70%, and we take a look at a five-year chart. selling has been so strong that

they have succeeded in pushing them down to long-term buying support. we have to see how this one plays out. >> what is helping out the >> seagate technology shares are sharply higher on a bullish review. they believe seagate could move up by 20% over the next 12 months. and "ampleg earnings." bullish factors there. we do see the possibility the up.rs will push shares it will be a real battle between the buyers and sellers.

carol: another suitor is throwing its hatton to the yahoo! ring. in talks for a possible bid for yahoo!. they join us now from san francisco. nice to have you here with us. what you make of the daily mail >>ng interested yeah co every day it seems like a new suitor might be coming in. they are thinking about trying to own yahoo! and you think about it and take a step act. a programming world they've been able to build. not surprised to see them come in and see the news reports. think we'll see what happens

april 18 in the initial bids are due. >> 205 million unique visitors that could go to daily mail. >> their global audience is close to a billion users. it's hard to build that scale. it is awfully hard to lose. other companies come out here. carol: they say it makes the most sense for verizon and aol. how far will they go? >> we will see what happens, for sure.

limb goingt on a after their mobile video strategy. carol:have always been thought t makes sense to put them together. they will turn themselves around and get back topline growth and stability. verizon makes a lot of sense because avail well. others might actually make sense. >> how far should verizon go? doesn't make sense in terms of what they want to do down the oad?

givenverizon is serious, aol in june or july, it probably makes sense. is very hard to build from scratch and probably makes a lot of sense. >> there are certainly setting a calendar or timeline here. >> their moving forward with their agenda. adding the board realizes they need to do something just given the way financials of been trending the last couple of years. i think they are in a pretty good spot here. we'll figure it out. having the board realizes something has to be done. did yahoo! miss an

opportunity at some point that there could be a different outcome or was this expected considering how the company -- made some of the moves it made? >> hindsight is 2020 but some of marissags that when mayer came in, she focused on mobile and video. she had made a slew of acquisitions. perhaps back in 2008, they would've seen the shift in mobile sooner. had multiplehas management and it's good to see some stability. the internet is moving so last. is when online advertising growing 20%, something drastic

has to happen. maybe if they had been able to ,ee this and invest accordingly yes, but it is really hard to tell. >> do you blame marissa mayer? tough inherited a really thing to begin with. there's a lot going on here. doing a great job and sucking out a lot about dollars. carol: we've got to run. in queue joining us from san francisco. president obama and janet yellen meeting behind closed doors. it could be the trigger for the fed to change the action in the coming months. ♪

carol: this is bloomberg markets. it time for a look at the biggest business stories in the news right now. airbus lost in order for the ocean carrier that had planned to fit each plane with 840 seats, making it the highest capacity seating layout in the history of aviation. double-deckerhe planes in 2009. according to people familiar with the matter, the outgoing ceo will step aside and keep another role at ferrari.

ceo was alsosler chairman of for ari. jimmy page and robert plan are to court to defend their songwriting credit to the classic stairway to heaven. they lost their bid to avoid copyright trial and the jury must decide if they ripped off the opening riff of a band named spirit that once played concert. and that is your business update. this is a chance for the two to trade notes. there also discussing the economic reports. editor joerg weisenthal is here to break it all down.

>> i don't get the impression we should be reading too much into this. it's not weird for the president to meet with the federal reserve and it certainly makes sense for him to want to get perspective on things. good timing for them because there's a lot of interesting data. carol: the white house press secretary said the president was pleased by the way the janet yellen did her job. independent the fed should ultimately be. will have him on the show, andrewmer yellen advisor 11. it kind of seems like a middle path between the way the current fed is and a lot of critics want to reform in terms of auditing the fed. they are proposing to make it more transparent.

make the ownership structure more clear. bid -- hybrid public-private entity right now. that makes sense, certainly an election year. i know we get a couple of different reports. it is pretty widely accepted that of the two mandate the fed has, the inflation one is dicier. measures by lots of different ways. that trend continues with the cpi report and it will be harder for them to say they are hauling behind.

carol: this economy has evolved and changed dramatically. >> at any given time, people are always able to point to their favorite measure. look at rent in new york city for health care. or look at the gas prices. right now you can slice inflation in a lot of different ways. be going theto same direction. retail sales are keeping the economy going. you have to care about retail sales. how can you not? the tracker tries to real-time track the economy.

there are reasons to not be too it's hard to be optimistic about the economy if you're not optimistic about the consumer. another one that i like to look the small business optimism. of ofare always a lot interesting things like availability the effect of regulation on taxes and business carol: anything to change their tune? always find acan reason to pull off. but if inflation were to consistently come in at or above

target, it would get more creative about there's the -- excuses. there's also ppi earlier in the week. enough to keep us busy. about 12 minutes away, a check on measure averages. we're definitely well off the highs of the session, 1.5 higher. call it flat. we're pretty much at the low of the session. pressure on the dollar falling to a nine-month low. this is bloomberg markets. ♪

carol: markets closing in 10 minutes from now. did you call your bearish friends? julie: when stocks opened this morning, we had a conversation about bearishness about earnings. lo and behold, it here they are. lower as avenues are we head in the public earnings after the close of trading today. over the course of the day, they managed to work lower and lower. we kind of drifted in this range in the middle of the day. had more of a downward trajectory. sent out and financials are hanging on to gains but everything else has turned red. health care is joined by some of the more defensive groups.

and then there's all: that we've been talking about today. the fact that stocks are down, out: isn't. there are going into the earnings report today strengthening. the banks are out with earnings. jpmorgan on wednesday. wells fargo turned negative. citigroup will round out the banks on friday but relative to the rest of the market even though there's been a lot of pessimism. perhaps judgment earlier in the day, have we seen the negative earnings priced aso some of these stocks? you can see, it's not the case at all. let's dig into the market action as trading wraps up.

earnings, wesed on had that earnings cycle. >> is part of a phenomenon where the expectations it lowered and lowered. story.resting she is looking at a bank of america index that tracks whether analysts are lowering earnings estimates or raising them. and they were going straight down meaning they just kept lowering them further and further. it's finally picked up a little bit in recent weeks. that third index, if you look at circles, those are win the innings hit their bottom

2008 and 2001. there is a little bit of a pickup, the lowest since 2009. much stock you can put in it right now. there has been testing along the way but it is something to keep an eye on. carol: it is kind of a relatively new thing. >> data going back and looking at those instances here to see if it provides any indication. people would be more comfortable if there is a longer history to look at. >> we know financials have been beaten on.

>> a drop of earnings-per-share and it gets worse. stanley, 42%. goldman sachs, sprint. a lot of it is the story of the markets this year. it caused a lot of deals to get postponed. m&a is down, ipo's stopped for a while. they tend to trade less when markets are volatile. a lot of people look at the banks as a canary in the coal mine. they hit a new low versus s&p 500. it's kind of a bad omen for them. it's nice to see the banks outperform a little bit.

those big trade coming into the year. assuming interest rates will go higher and it never happened. someday, it is bound to happen. is that the slump they've than in going to continue? there are signs that it is coming around on trading. got to run, thank you, mike. ?hat did you miss the market close coming your way next. the major average in four minutes. little lower on the nasdaq in the s&p. this is "bloomberg markets." ♪

scarlett: we are moments away from the closing bell.

u.s. stocks closing lower this afternoon. the dollar tumbling to a six-month low. breakingdo have some news concerning italian banks. financial institutions have agreed to set up a fund for banks launched by an asset manager. this is a big deal for banks for the italian banks. they have a lot of bad performing loans on their books. they're coming together to try to find a way to take these nonperforming loans off the books and support them in some capacity. institutions agreeing to set up a fund. is some there anticipation that some kind of deal would come together because before european markets close, we saw