emmow -- memos of conversations with president trump. warner wouldn't say if comey accepts the invitation. the formerident detector will appear. the committee sent a letter to director andrew mccabe requesting notes or memos on his talks with the house or the department of justice related to the russia investigation. democratic congressman al green today became the first member of congress take to the floor and call for president trump's impeachment. siting obstruction of justice and circumstances around former comey wasor james fired. mr. speaker,cause there's a belief in this country law.no one is above the that includes the president of america.d states of >> congressman green previewed his action on the house floor

earlier tweet. saying it was the house's duty impeachment. russia's president vladimir putin blasted u.s. politicians he's for whipping up what calling, anti-russian sentiment. with a conference with the visiting italian prime minster. president putin defended president trump over criticism sharing classified information with moscow. >> what surprising me, there are intentions in the u.s. internal usingcal situations by anti-russian mottos and they don't understand that they are and in their own country that case, they are just stupid it.hey understand in that case they are very dangerous. putin said kremlin reviewed last year's presidential election. it's funny. they're increasing concerns because of seeming

unpredictability in american politics. the united nations secretary general is stressing the togethere of working with the european union to tackle the refugee crisis. during ane remarks address to the european parliament in france. the success of the u.n. will depend on what he uniteda strong and europe. global news 24 hours a day powered by more than 2600 analysts, over 120 countries i'm mark crumpton, is bloomberg. >> live from bloomberg headquarters in new york. >> we're 30 minutes from the u.s.ng trading here in the >> dow sinking more than 300 points from washington turmoil.

question is, "what'd you miss?." >> washington on edge, turmoil engulfed the trump administration on reports of the president asked former for fbi comey to dob the -- the probe into michael flynn. what can congress get done under this cloud? investors are more concerned the drama wille house derail the republican agenda that lifted stocks to record highs. >> now let's look at where the averages stand as we head close. the >> it is certainly a risk off day for the financial markets the u.s. and s&p 500 douane s& s&p dow down sharply. nasdaq down more than two percent. about 3.5%.own

this represents the worst sell off since september of last year. of course uncertainty around president trump, finally camping up to the financial market. we had calm spike multilayered event leading up to today. finally seem to be showing it. it is a bit of turning in confidence. interesting to see if it's a one day event. declines, these are some of the big points on the day. threee apple down about percent on worse day since november 4th before the election. the fear is, with all the drama in d.c., that president trump may not be able to put through and thateform program repaywill have a problem treeuate huge carn. company yesterday did have a analyst say, issue guidance some aggressive.calling

blue capital downgraded shares neutral. is the trump trade reversing? take a look at --s there a process chart. beeny suggest it has reversing. to the left of this pink line risk on, we have in white the s&p 500 rallying. we have the bloomberg dollar higher. bond selling off. right around beginning of the dollar, reallyhe taking a big leg lower, back close to election level. the s&p 500 in white ticking a leg lower. this is the stocks and also bonds follow the dollar. to see trulyrting the reversal of the rally. powerful. is finally, if you had any doubt whether or not it is a risk off day. look at the vix up 34%. biggest spike since september.

points. that's the biggest rally for bonds since july 5th of last year. since the brexit, yen is trading higher. its best day since july of last year. at gold also rally. on this bigbit off stock sell off and d.c. drama. >> we have breaking news. trump has been sent to rule out the israeli embassy to jerusalem. remember this is one of his plans.n long very controversial question. embassy,of the u.s. where would it be. it.p promised to move now according to a senior white house official, trump has to move that embassy to jerusalem. to avoidsire provocation that can drive palestinian away. comes away as he leave for the five city tour.

headed to israel as well. >> of course the news yesterday, gave the russians information that was reportedly came from his israelian intelligence. let's go to the conference where the latest drama from the white house is capturing the attention of the names in the investment community. bloomberg erik schatzker is standing by. >> thank you very much. teresa barger. pointed out, activism that has $3 billion in assets under management. nice to see you. >> thank you erik. >> richards was sitting in that seat earlier today. selloff we're seeing right now, 300 points on 1.5% as measured by the dow industrials or the s&p 500,

of the endeginning of the trump trade. he's right, -- let me ask you that question, is he right? emerging markets, we've itselfump trade reverse really throughout 2017. we've had more than four months straight inflows of foreign investment into emerging markets. reversing the november-december trade. selloff yen going back to the u.s. we've seen that reverse. >> if in fact, again, bruce is right and the trump trade is ending, what implications are there for emerging markets? as they only good in as much capital now tied up in u.s. new home?ds to find a >> i would take that in two parts. is that, the u.s. reform,if it's tax

rationalization of taxes, some business.ing issues on getting regulation down. that's all positive for emerging markets. other side, the emerging markets themselves, i believe are at an inflection point starting in summer of 2016. continuing nowy and to look at the prices now, i say, that trend is still in. it hasn't left. degree is that inflection point? the shift in paradigm influenced by what goes on here, u.s. policy making? time, not toos much really. we seen a little bit of a decoupling between the trade relations between the importance of trade between em's and u.s. started slipped from 2013 to 2016.

saw that turn around last summer when sales were improving, margin compression was reversing, earnings per growth were increasing as positive revisions. we're in now to 2017, looking at eps growth of 19%. the world.best in good set up.y >> what about protectionism. what appears to be china's effort to fill the vacuum that administration might create and become the arbiter for global trade? >> two separate questions i think. trade -- the whole world is materialized. on the trade side, mexico was probably the country that was single most hurt in the so

trump trade. onir mexican peso took it the chin. the lowest point was at the inauguration of donald trump in january. back to where it was in october. everyone agrees now, all three countries we need to refine nafta. downhe temperature come tom 104 fever down homeostasis. like 99 degrees. diffuse.ink we have a two-page agreement with china. narrow. only two pages. that is not very threatening how narrow it is. that's separate from whether trade.ake the lead in i think that already happen. china is everybody's biggest trading partner already. the will continue as will intermediate goods going to china and finished in china and

elsewhere. they will be with us. very bullish on india why? >> there are two investments in india that i really haven't seen anywhere.out i think they are extremely important if you don't mind. one is formalization and other financialization. >> formalization of the informal economy? >> right. countries a lot of has a lot of informal. unorganized economy as manufacturers, distributors, retail. transactions are trackable and therefore taxable, in onx net is coming these unorganized companies that don't play by the rules. they don't pay tax, they don't al rule.the environment taxes will tighten.

opportunity for the listed companies to follow the rules, pay their taxes. market share. knows jockey underwear. 60% of the underware is sold in india. it's going to go away. >> what's that all about? >> financialization is really important. percent ofhan one gdp is represented in the stock exchange. tiny. you got 98% of all the money has in to the banks. it's all there. india's are millennial. between the ages of 18 and 35. 70% of household income. these are the guys that are in their prime saving years. putting money in mutual funds, pension funds, insurance companies.

allowed those has institutions to put more in equity. nowe are the guys that are starting to go into equity. they are going to move the domestic market forward. stock market is up 15% year to date? it sound as though, at least by your point of view, still under value. >> there's more to run in the exchange.ck when you look at the price earnings to growth ratio, you the indian stock market at about one and u.s. two.ng close to it's almost twice as expensive. for the earnings you get. emerging markets as a whole. how much more room is there to run there? >> a lot. that's better. they are priced earning to ratio is 0 0.7. u.s. equities is two and a half expensive for the earnings you get. for the emerging market as a

whole. it's a risk 2.5 times is not risky. i don't know, maybe something less risky happen in the last hour. to thank you very much. great see you. teresa barger with me here live in las vegas. back to you. >> great interview. i want to make the point, we were watching the stocks coming up. the worst day of trading in the of. major since september last year. when it's only down two percent. >> let's not get carried away. >> it puts in perspective the seene which we haven't sell off like this in a long time. trump is up, president getting ready for his first foreign trip but political him.s threaten to follow insight how u.s. credibility may translate overseas or issues of that is.ty this is bloomberg.

>> "what'd you miss?," president trump deepest crisis of his presidency thus far. thanks to report of memo written by former fbi director james comey. alleging the president asked him investigating michael flynn. "new york times" reported on the memo. they have confirmed the contents. but the memo itself has not surfaced. trumpollows report that disclosed classify information to russian officials last week. with the trump getting ready for day overseas trip, what is the fallout on u.s. foreign relations? ai alistair newton. on the lastcus part. the leak of sensitive information to russian officials. what does it mean for the rest the world that the president of is notted states reliable partner on the handling

of sensitive information? >> i think this is extremely important as far as u.s. allies concerned. including, of course, the other i's butof the five allies more generally. it will be great deal more over intelligence sharing going forward. let me turn that the other way around, i used to advise the then british foreign secretary on liaison with the intelligence agencies in the early 1990's. if we had done this with piece of american intelligence, heads would have been rolling in london. the americans would have been certainly threatening if not actually cutting off intelligence supply to us at that time. i don't think anybody is going that to the u.s. because it's too big and too important as an intelligence partner. is certainly a shaking of the confidence of key u.s. worldwide.

>> if it's unlikely this event diminishment of intelligence sharing, what kind my --crete ram ramifications we will see. >> it's for the u.s. thelligence agencies to get message across. this sort of thing just can't be allowed to happen. meaningr how well mr. trump may have been in his actions. to get, he is trying russia to assist in the struggle against islamic state. it does seem to be obsession with him. it's in his best interest to keep going down this track. in his best interest with overseas partners. of course, there are lots of stories out there about which sourced this intelligence. it is likely, he is going to be sitting down with the leader from that country if you look at

full scope of his talk. that could be some interesting exchanges. i would like to be the fly on the wall. >> what can they say to him? it's on the surface, they'll be playing this down as we've seen from different countries. they are saying nothing. but behind the scenes, what do say to president trump? i think a lot of people ask this question. to can say something president trump that he'll his behavior?nge >> i'm afraid i can't answer question. it's one that's been exercising me as a political analyst since year whens time last it became clear that trump was a serious contender for the presidential election. i've written two papers under leopards don't spot. their you will be running the risk that he will revert to what is fairly well established behavior

shooting from the hip. is something as long as he's president, american indeed, those who not allies of america, are going to have to continue to live with consequences. be about ther you talk consequences. we seen countries like north korea to capitalize on the distractions in the u.s. will we see other more stable countries governments attempt the same? put the words conventionally stable to one side for the moment. overf the concerns i have the focus on north korea, which theustified but not to extents in my view of worry about potential military action against north korea. i don't think that is on the this stage. my concern is that north korea from the issue of

iran. iranian presidential election on friday. i don't believe there's no coincidence that trump making first overseas visit on that day. to tel-aviv. there's a greater risk of rising tensions in the gulf region around the iran question. the trump administration is with iran hawks, jared kushner influential young is close to netanyahu. whoever wins are the election in friday, i think we can assume that iran will continue to do things which annoys the americans. aspirations and presence of iranians harassing warships. >> we'll have to leave it there. >> quick look across less than ten minutes to go in the trading day. dow down over 350 points.

theyear yield way at bottom. 111 on dollar yen and gold up two percent. this is bloomberg.

>> u.s. stocks at their session lows now. of come little bit back. >> called it. you tweeted earlier. >> i did. we had this 5:00 p.m. daily bombshell becoming such a friend. -- trend. >> of course, one thing we as well, what seem like there's a lot for june rate hike. anymore.ch last week, 80% odds gone down to based index rates. market.to face the bond real concern with the markets.

ofgest move since september last year. now we're talking less than a few percent. >> gold up almost two percent now. that safety is certainly in favor. >> this is bloomberg.

♪ julia: what'd you miss?

volatility awakens. tumbling more than 300 points. acids with thes 10-year yield the lowest since the brexit vote. i am julia chatterley. scarlet: i am scarlet fu. joe: i am joe weisenthal. if you are tuning in live on twitter, we want to welcome you to our closing bell coverage. scarlet: we begin with our "market minute." we talk about how this is a risk-off moment. when you look at the actual numbers, they are not large by most measures. off by 1.8%. the hundred 70-point drop. -- 370-point trumpet nasdaq is off by more but you expected to be in this environment. julia: i used a keyword, "turmoil." relative.

joe: by 2017. scarlet: well said, well said. this is a pretty broad-based retreat. as a globalt it selloff, and here is where we look at the all-country world index. this is a way of looking at the decline in global stocks. this first red arrow points to the open of european trading could it is kind of middling along. asian stocks up on the day. european stocks dropped on the open. this leg lower is when european stocks opened. afterglow. attended a bit of a comeback, but right now closing at session lows. in terms of individual names, a lot of concerns about whether trump can get his agenda taken care of.

here is the look at how asia closed to not much of a movie there at all. also 2000 off by 2.8%. beneficiaries of the trump trade after the election. let's go to the individual names. obviously, a lot of concern about tax reform on the calendar for this year. goldman sachs and the financials are big laggards here. off by a quarter present, as is forward. pressure on the government to do something on tax reform. target a rare winner in today's trade. earnings and same-store sales beating analyst estimates. joe: plaxico the government bond market. lots of action -- let's look at the government bond market. lots of action there. hike is not such a

lock anymore. two-year yields down to 1.24%. 10-year, little more sensitive to growth. long-term expectations, inflation, big move down. 10t's take a look at the 2 spread, popular measurement it is completely erased the big spike up since the election. we really like to see a steeper yield curve. that is basically gone. that tells you a lot. inflation trade basically dead. julia: some kind of correction. already the voices are coming out and saying, pay, you can sell stocks in particular for a reason but you don't do it for trump-related reasons. let me give you what is going on in currency land. dollar weakness here.

flight to safety, obvious one gaining. dollar-yen, quarter shy of 2%. similar moves as expected. let's give you a look at what is going on in the euro. session highs -- show you the six-month, just to give you a sense of the acceleration on the back end of day. .cheduled tomorrow this as well we have been k and hisbout with eri guest just to give you a sense of the losses. we have not talked about that. relative,e up to the i would say, strength. resilience is the better word, not to confuse people.

scarlet: good way to put it. joe: when the dollar drops, you see commodities rise across the board. metals, doing the best actions today. wellhas been doing very lately. it looksd oil gaining look at the one-week chart. very strong. , 3.3% forine up gold. that is the face of the moment, turmoil by 2017 standards. let's take a deep dive into the bloomberg. functions of the bottom of the screen. on: i am looking at the list trump's approval and disapproval. to the extent that this is a

reflection of prospects for getting legislative action -- who knows that is what is going on -- that is one theory for the selloff. the yellow bars at the bottom shows the negative cap the -- gap. 15.1 points underwater. disapproval at 5%. see if youu want to want to rally congress run your agenda. this tension between washington and congress -- how much do they care about the events of the last week? joe: that is the huge question. scarlet: breaking news -- cisco reporting results, beating consensus estimates five two pennies -- by two pennies. on the outlook from a little bit like. that is why cisco shares are down it after-hours trading.

analysts were looking at a drop of 1%. toterms of the drop of 4% 6%, there is a correction here. analysts anticipating a drop of 1% for fourth-quarter revenue. keep in mind, we have cisco ceo joining us on "bloomberg daybreak: americas" tomorrow morning to give more context on the numbers. julia: let's go to las vegas, where the latest drama in the white house is capturing the attention of the most powerful names in the investment community. erik schatzker is still there and is joined by troy gayeski. take it away. erik: thanks very much, and troy, great to see you. you are a bit of, i wouldn't

say, an odd duck relative to everyone else i talked to. troy: thank you. erik: no no no, i'm trying to draw the distention. you allocate your strategy as opposed to individual securities. i've been asking people how the turmoil in the white house spilling over the financial markets affects the way they are thinking about investing. does it affect the way you are thinking about investing? troy: when you think of the potential progrowth policies that could come out of washington -- regulatory reform, tax reform, infrastructure. you can count on regulatory reform. tax reform, maybe, maybe not. structure, over -- infrastructure, overblown in 2018 at the soonest. more details will emerge. in terms of the basics come we have a good investment process, good security or theme, that

could do better if you have tax reform. .hat is a good place to be erik: but still to find -- troy: still do fine without. we expect them to still be muscular in the financial services area, and to a lesser extent, energy. you don't need it necessarily saxophone or infrastructure to do well there. -- tax reform or infrastructure to do well there. erik: how much concern have you discerned among participants at the conference here about what has come to the white house the last several days and how markets are reacting? troy: the starting point is volatility has been extremely well. pushback, is a revenue neutral, fiscal stimulus? unclear. one of the reasons of volatility isains so low -- today

nothing to run around with your hair on fire, but it is more evidence that the markets are pushing back even further, if not discounting completely, 2 or 3 --, sorry, one or two of the major progrowth blanks. some concern but nowhere near panic. erik: coming into 2017, there was a lot of excitement about equity long-short and global macros. both of those strategies had not performed well -- in some cases come disastrously -- could once again generate alpha. , like i talked to before, hope springs eternal they were positioned to inflation prior to the election. and they were taking significant losses as markets moved to the other way. then you had the expected outcome, the trump victory.

they made the losses back. instead of using their head and taking some of the risk off, they kept it on. the dollar has weakened, the yield curve is flat. is a tough space and it always will be and it is hard to find those things. long-short, you have those big issues -- you know longer have it -- you no longer have the .nformation edge correlations have come down , but it is hard to add value picking stocks. idiosyncratic risk is not that important, and the big trends are still in your face. we have no exposure to those spaces. and we get plenty wrong. % to the line biased regional bank funded. erik: will the conditions ever return to favoring long-short or

have the markets made it a dead-end strategy? troy: we hope so, but again, where is the information edge? you had the information networks eliminated because of a few bad actors. but you had some information edge. now that is nonexistent. someone else with deep pockets has to drive a security price in your favor if you are to make money. that used to be the active management community to they are a shadow of once -- what they once were. at some point they could turn, but when? erik: all that has been soaked up by passive it instruments. troy: there is no final arbiter of idiosyncratic risks. in theory, idiosyncratic risks should become a large enough to determine it. -- large enough determinant. but when?

who drives the stock up or down in your favor? erik: what do you like? troy: 2 of the themes that are occurring is if you can find was to profit from inventory really -- regulatory relief, that is one, and and easy hasn't in europe -- and enthusiasm in europe. one of the things that everyone agrees in washington, and there is very few -- republican, democrat, senator, white house, trump white house, regional banks are overregulated. erik: they need more room to breathe. to the credit of the obama administration, they were already moving in that direction . the question is, how do you play that? erik: for you come that is a

good question. troy: if you can play the ceos of trust-referred securities backed by the banks, we think you have meaningful upside with less downside. , and it fits into the broader theme of regulatory year -- the second one would be europe. europe is europe. disappointment is part of investing in europe. europe has been a galactic disappointment or a disaster since 2010. you are filing in a situation where you have good economic data,, better inflation qe still in play, and last but not least is slows -- flows. you have finally stabilized and turned up. bete not making a wild beta

. if ever there was a time, probably in the next 12 to six months. erik: equity or credit? troy: the ecb policies worked. on more are focusing event-focused managers in the mid-cap space in particular. it has been a crappy environment apologizemy french, i -- but now you are getting into a situation where the environment has improved. erik: great to see you, man. gayeski, that is troy portfolio manager and senior manager at skybridge capital. this is the skybridge conference. that is going to it for me from vegas today. i will be back tomorrow with an all-star lineup of guests. julia: vegas, how exciting. scarlet: let's get the recap of the cisco third-quarter results. pretty much better than expected

and in line when it comes to the top line. it is the outlook that is disappointing investors. cisco is looking for sales to drop at least 4%. earnings per share will be on the lighter end of what analysts anticipated. this is bloomberg. ♪

mark: i am mark crumpton. time for "first word" news. a senior white house official tells bloomberg news that president trump has decided not to immediately move the u.s. embassy in israel to jerusalem. mr. trump promise to such a move during the campaign. visit israels to the white house says he is fighting a provocation.

the president is taking aim at clicks and naysayers after more than a week of negative news coverage, beginning with his sudden decision to fire james comey. in an address to the u.s. coast guard officers at the commencement ceremony today, the president urged the graduates of 2017 to "fight, fight, fight," when life presents them with adversity. president trump: look at the way i've been treated lately, especially by the media. no politician in history -- and i say this with great surety -- has been treated worse or more unfairly. mark: the president made no mention of mr. comey in his speech. german chancellor angela merkel says of future cap on immigration from european citizens to britain would come at a price to u.k. relations with the eu. it's after prime minister theresa may insisted that

britain must leave the bloc single market to eventual immigration. germany is reaching out to migrants, long considered an eclectic group of voters, as if use of for elections in september, where chancellor merkel is seeking a fourth term. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. julia: breaking news from halliburton this afternoon. a leadership transition -- the ceo is stepping down. he is going to retire next month, replaced by jeff miller. just a transition with the ceo. jeff miller set to become the ceo on the currency over ties next month. peteroming up, we ask zeidenberg, the man who prosecuted scooter libb become what he thinks could be in store when it comes to the comey-flynn investigation.

this is bloomberg. ♪

scarlet: what'd you miss? let's get back to the store that has washington really, a memo written by former fbi director james comey that alleges donald trump asked him to drop an investigation into michael flynn. while the contents have been confirmed by bloomberg and other news organizations, the memo itself is not yet surfaced publicly. where do we go from here? let's talk to someone who has been involved in a high-profile prosecution. peter zeidenberg, he'll prosecute scooter -- he helped prosecute scooter libby. he joins us from washington. thanks for joining us. great get your perspective on a day like today.

does what we have seen and heard so far constitute obstruction of justice, and if not, how might you go about proving it? peter: well, i think it is pretty close. it is not one particular fact, it is a combination of the facts. when seen in, nation, you are getting very close to obstruction of justice count. joe: peter, we have not seen the gym comey memo yet, but presuming it comes out, an presuming it has been accurately characterized by the reports come with that memo itself, one person's characterization of a conversation, count as a smoking gun? peter: well, it is not the memo. it would be the testimony of jim comey that would be the smoking gun. the memo is corroboration of the testimony. julia: peter, according to reports, that memo was given to an aide, who suggested comey

didn't believe it was a direct threat in a meeting. afterwardsnt is that if you have the memo and comey's statement afterwards and they don't agree? peter: well, it may be relevant. i don't know that it is dispositive. the question is ultimately going to be for a fact finder later. comey's opinion about it is not the dispositive question. it is what the facts layout. to be clear, when i was referring earlier to other

if he is thought to have overstepped the boundaries, the remedy is impeachment. , i there, the question is think, a little bit different, and that is whether he abused his office, abused his authority, and whether he violated his oath of office. you look at the same facts but

through a slightly different lens. julia: how do we get there? you say we are very close to that line, perhaps over that line, as far as obstruction of justice or criminal intent. i understand what you are saying about the sequence of events look very worrying. what gets us over that line from the comey to the smoking gun? peter: i think a lot of it is going to hinge on jim comey's testimony before congress. i would imagine there is going to be 50 million people watching the testimony. if not live, they will be watching tapes of it. i would also be willing to guess that gym comey is going to come off as a very formidable witness who is very persuasive and credible. on the other side, you have someone who is documented lies repeatedly. the list goes on and on. between the 2 of them -- scarlet: we're going to have to

leave it there. peter zeidenberg.

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which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. mark: i am mark crumpton. it is time for "first word" news. with the controversies running president trump, one democratic congressman from texas took to the house floor today and urged colleagues to take action. green: i live today, mr. speaker, to call for the impeachment of the president of the united states of america for obstruction of justice. i do not do this for political purposes, mr. speaker. i do this because i believe in the great ideals that this country stands for. greencongressman

previewed his action on the house floor with an earlier tweet, saying it was the house's duty, as he put it, to take up impeachment. israel he officials are trying to downplay any damage caused by president trump's disclosure of classified information to senior russian officials reportedly provided by israel. defense minister lieberman tweeted today praising "the deep, meaningful, and unprecedented security relationship between israel and the united states." the president will be heading to israel next week. a senior white house official today telling bloomberg news the president has decided not to immediately move the u.s. embassy in israel to jerusalem. mr. trump had promised to do so during the campaign. irish prime minister enda kenny ofs he will retire as leader the fine gael effective midnight tonight. in an e-mailed statement, he ass he will continue to act

meter until a successor -- as leader, until a successor is chosen. his resignation, which was expected, sets off a leadership race between social protection minister and the housing minister. the soldier granted clemency by president obama after being convicted of espionage for getting classified government materials to wikileaks was released from arkansas military prison today. private chelsea manning served seven years of a 35-year sentence at fort leavenworth. previously known as bradley manning, she said she wanted to expose what she considered to be the u.s. military disregard of the effects of war on civilians. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries.

i am mark crumpton. this is bloomberg. scarlet: let's get a recap of today's market action. red all around him if you are looking at risky assets. dow losing 373 points at its session lows. treasuries rallied the most since brexit. volatility makes a comeback. can you believe it? julia: we've been talking about it all week, haven't we? willing it, almost. for more on the turmoil engulfing the trump administration and the impact on financial markets, let's bring in matt malia of miller tabak. ey of miller tabak. we are trying to be measured in response to the moves despite them being some of the biggest in months. do you believe investors should be protecting themselves for more downside here? mark: well, what i make of today's action is there has been a change. some people are saying this rally has been holding up nicely

only because of earnings and because of better numbers on economic growth around the globe, and that we didn't need trump's new proposals to take the market higher. i don't think that was the case. i think people are saying, hey, it is ok that he gets pushed out a little bit. it was ok as long as it came early 2018. now with the new scandal, possible scandal coming up, that pushes everything out further. not only that, it may end up watering down a lot of those proposals from which is selling the market has not been pricing in. joe: but, matt, it seems every day there is another headline that suggests that the legislative calendar could be in doubt, that the trump administration might not be as effective as people hoped. what happened today that didn't happen yesterday? for: well, i mean, instance, your previous guest was talking about getting very

close to obstruction of justice. he is obviously a very experienced washington lawyer. when you go closer to that line, people have to step back and say -- i guess, all the talk we have heard recently is about timing. now they are talking about how much he will be able to get past. let's face it come this whole thing is emboldened in his two tractors and adversaries from whether it be in the senate or the house. they can fight much harder and if public opinion starts to turn against him, he may have a tough time getting the deregulation moves he has been talking about. it is a bit of a game changer. scarlet: i will double down on julia's effort to stay measured on the market selloff. the s&p 500 has been going up to new highs the past week. inside the bloomberg, if you a just for fluctuations of the dollar, the height in the s&p is further back. it was march 1, in fact, if you account for the moves in the dollar.

bottom line, yes, u.s. stocks appeared fairly rosy to they are holding your the highs. but it is not doing as well when you look under the hood. what is the most important thing for investors to prepare for? what kind of downside do they need to brace themselves for? end: this very well may not up being as that is watergate, but that doesn't mean we can't get a pullback or correction of seven to 10%. we have had at least a 7-10% correction every single year since 1995. whether this starts that of correction or something else does, the odds are very high that this takes place. it is very important for investors to have a plan in place in advance. he may not happen until now or later in the year. panic when going to the pullback takes place. stuff at prices

selling at the lows. julia: investors, when they get cash in the drawer, have been putting it to work. do you think investors at this stage, even as we had to summer, will be more willing to sit on cash? mark: i definitely think so. it may change, it may turn out that comey doesn't have this memo. however, with the s&p bumping up against 400, if you are an institutional manager and you think china is going to blow up or north korea is going to become a problem, and you are bearish, you have to be putting money to work in the marketplace come because it is pumping up against highs and the market has had such a good year. now that we have pulled back 40 points from that level and we had these new issues hitting the fan, people have more of an excuse to maybe not that all the money to work immediately.

supply-demand the picture of the market. buy to dip strategy is one of the best strategies people could have had for years. you advised you have a plan in .lace for the 7-10 dip what would it take for that to no longer be successful? mark: you mean, turn into a bigger decline? what worked and what are the conditions to not be the smart move? mark: one of the things, whether it be because of what is going on with trump or some other reasons -- we need the structural changes that donald trump is talking about. whether you are democrat or republican, we rely too much on central bank liquidity or monetary policy to hold up the economy, for too long. we need these changes.

that is taught -- the u.s. fed is talking more hawkish on raising rates. the ecb is talking to bring back -- talking tapering back. if we get them at a much water down pace, that will be a bigger problem and could lead to something worse than the 10% pullback. joe: matt maley, thank you very much. julia: earnings news from the owner of victoria's secret. they reported first-quarter adjusted eps, estimates of $.30. a touch better on the eps estimates. the revenue absolutely as expected. to $.4 billion for first-quarter revenue. that to $2.40. .ignificant improvement

investors liking what they are hearing. scarlet: not all bad news in retail. coming up, how is the gop reacting to president trump's deepest crisis? this is bloomberg. ♪

julia: i am julia chatterley let's take a deep dive into bloomberg and look at stocks of highly taxed companies. and what you can see since back in the election, the outperformance of companies that have high tax rates. they are hoping that with

deregulation, tax changes from the donald trump administration, that these guys would be the beneficiaries. that is the white line. when you look at what is going on since the middle of may, we can see a significant underperformance with a higher tax rate. real concern that the government is not going to be able to follow through on tee times -- key -- t tax reforms tax reforms. joe: one of the clearest ways to assess the agenda. house speaker paul ryan insisted that the comey chaos were not get in the way of the gop agenda. walk and chewwill gum at the same time, we will keep doing our jobs and advancing our reforms that we were elected to advance while we do all these other things in our responsibility. that is what we will be judged on in 2018. joe: joining us now from capitol hill, sahil kapur, bloomberg

national political reporter, an davison, bloomberg tech support it. you had paul ryan saying that they can walk and chew gum at the same time, the cliché, and that voters will judge them on the policy. do you buy that? sahil: it is a sober philosophical tone by speaker ryan, i would say. in the midst of the trump turmoil from the president and the white house escalating beyond what we have seen so far. the speaker has been good about dismissing drama from the white house as a day-to-day thing, momentary thing that will fade, and not something he has to worry about the today he took a more somber tone and said that we need to get the facts on the latest revelations involving the fbi and what the president may have said a former director comey. this is casting a cloud over the republican agenda, which was already not in great shape, given the drama and divisions in the party. now they are facing a situation where republican leaders on the oversight committees are to many

information from the -- are demanding information from the trump administration. this is serious stuff that we have not seen before. scarlet: the gop has an ambitious agenda. the one that and investors care about is tax reform. how far has the white house gotten? laura: really all they put out publicly is the one-page plan. they say they will work with has and the senate sometime this year, but they are a long way away from that. 50 pages of ideas, a blueprint, but there is all these details services.al none of that has been figured out at the level you would need to pass something in the next couple months. ahil, what we heard from paul ryan today is that the conversations are still happening -- tax conversations,

health care conversations. are they still going on or are they being staggered? sahil: julia, the health care compositions are going on in the senate. republicans are working to craft a bill they can pass. they rejected the house version. hatch, chairman of the finance committee. he was not committing to passing a health care bill by the august recess. he said tax conversations are in preliminary stages. the house this week's kicking up a hearing on tax reform. it is just fun to be a discussion. don't expect decisions be made. i have used in this analogy before, but tax reform is like an airplane that is not taken off, has no fuel, and republicans are disagreeing about the design ideas. it is very early. joe: speaking of the design ideas of the airplane tax reform plan, laura, there's is this huge debate about whether it will be revenue neutral or just

a big cut. which to you seems like a more plausible path? laura: as days go by, the tax cut seems more likely. andre in mid-may now there's lots of drama swirling the white house. it will take up time, whether or not paul ryan says it will. julia: for we just heard from the conference was two things, invest in europe, and take stocks where there will be benefit from deregulation. do you think we will continue to seek immigration from the government, even if we don't have big splashes like health care and tax reform this year? laura: that is easier to do come easier to pull back revelations. -- regulations. the anti-version rules, those sorts of things, those could go away. julia: [indiscernible] scarlet: important for markets, funding the government. that is something that needs to

be sorted after the august recess. is that a done deal? can we count on that even with all the drama? sahil: not a done deal. it is something that republican leaders want to do. they have no appetite for a government shutdown. they had to extend the deadline bite one week, which gives you an indication that this is not an easy thing to do even when they control the levers of government it funding the government is something they will have to do by september 30 and they will have to extend expiring programs. and then they have the debt limit increase coming up, a vote that republicans really hate to put on the table. question how much capital republican it is -- republican leaders will have to pass the ambitious project. the calendar is not on the second time is not on their side. the drama from the white house does not help. scarlet: they will have to walk, chew gum, and maybe jump rope at the same time. julia: time to whip up

confidence in deregulation can even if we didn't get the debt ceiling. scarlet: there are always things to look at. coming up up, walmart is one of the few stocks to hold its own during the decline. we will dig in to its numbers one day before the earnings release. this is bloomberg. ♪

scarlet: i am scarlet fu. what'd you miss? walmart seems to be making headway on 2 critical fronts. maintaining cachet on the prices and the online business. it has walmart gaining on target and amazon. let's look at walmart in "numbers don't lie." the world's biggest retailer

reports earnings before the thursday opening bell and investors will be seeking clues on its fight with amazon to e-commerce sales gained 29% in the fourth quarter, while global numbers have dragged down the total figure. fueling the online growth spurt ,s the acquisition of jet.com who started now has walmart's e-commerce -- whose founder now heads walmart's e-commerce unit. the law, walmart's brick-and-mortar performance in the fourth quarter posted the biggest increase in more than four years. u.s. comparable sales rose 1.8%. it is not just competition from amazon. target is looking to turn itself around with lower prices. what you will see is the gap between walmart, orange line, and target, the white line. target wants to close the gap and walmart wants to keep it pretty why did when it comes to walmart earnings, analysts per share on96 revenue of $117 billion. they are forecasting 1.3% gain

in same-store sales good target reported numbers that it's comeback is taking hold. walmart reporting quarterly numbers before thursday's u.s. opening bell. julia? julia: speaking of retail, earlier today, erik schatzker sat down with nestor bruce richards. he weighed in on the opportunities in retail and the credit markets. bruce: when it comes to the credit markets, the credit markets are rather stable. we need to see a pretty significant selloff in the high-yield market. erik: let's talk about that for a moment. bruce: if you look at the default adjusted -- if you look at the nominal yield can you are talking about 5.5%. erik: you get interested at what point? bruce: a couple hundred basis points. we are a long way from that did

you have sectors that are un a lot of the stress right now. it is just the retail sector. you have certain retail bonds that are trading at par and equities are off 30%. .ake a company like macy's it is more of an equity earnings story than it is a debt story. then you take a company that 40%e -- sears comstock down year to date. down 40% the stock is year-to-date. it is an ending story but also corporate story. it is 10 times leveraged -- thank you. we think that over time, it will be forced into bankruptcy and we will probably end up in liquidation at some point. we don't think it is an ongoing -- erik: those stories are stories you like, whether it is the high degree of leverage -- bruce: those are stories in the higher market that despite tight

high-yield spreads are playing out, and will present opportunities later when you differentiate what companies are ongoing business concerns and have good equity valuations. erik: why later, why now? bruce: i think the bonds will go down significantly from here. equity't want to buy because it will be scratched and some of these cases, and that will become to equity, and that is too early to buy -- j.crew, payless recently filed. we have a whole shopping list of the riskiest retailers, and which ones will be ongoing business concerns, and which ones will be more radioshack-like, more blockbuster video-like. the big trade people are talking

about in the markets recently was this whole trade where -- erik: death of the mall trade. bruce: what has turned out to be the case is the bonds have traded lower by a couple points but the cost at least that much, you have made no money on that. the one. to connect from that trade a few months ago was don't short the malls necessarily, don't think they will be worth a lot less necessarily. they could be repositioned in a lot of cases. the thing to short was the retailers and those are getting crushed. down 30 to 40% year-to-date. ♪

scarlet: what'd you miss? yen stronger versus every currency. joe: i'm looking at how the markets so

alisa: i'm alisa parenti, and you are watching "bloomberg technology." let's start with a check of your "first word news." president trump last out at his critics today --

president trump lashed out at his critics today. says no politician in history has been treated worse or more unfairly than he has. a senior white house official tells bloomberg that president trump has decided not to immediately move the u.s. embassy in israel to jerusalem. trump had promised such a move during the campaign and visits israel next week. the senate judiciary committee wants the bgi -- fbi to turn over any memos and -- the letter was sent to the justice department and the white house today. --umbia's president and and nobel president peace prize laureate meets with president trump tomorrow. sanchez