charge higher. inflation fears. 48 hours from the latest reading on inflation and traders fear the inflation they were looking for. and -- david: surely there is a risk that interest rates will spike. --x: mick mulvaney wants david: welcome to the bloomberg daybreak. monday.ppy they go wonder what this week's hold for us. -- david: wonder what this week holds for us. alix: there is a lot of discrepancy if we have actually hit the bottom. david: where are we going? scores, about the 2.5 hours until the open. at the futures moving their way up. -- equity futures moving their way up.

it is a broadly weaker dollar story but it is by stocks, sell bonds. yields move higher by two basis points. crude up by 1% despite the fact that opec again upgrades it's not opec supply forecast for 2018. checking in your safety traits, you get a feel for the market is. dollar lower. that is one of the changes. you wind up having a selloff over europe. the vix a little study. david: it is time for the morning brief. at 8:00, the white house is going to be releasing an intersection plan. at 11:30, the administration will post its budget blueprint online. -- $240 billion for six-month bill. first of all, markets, are they stabilizing?

the inflation fears. are they justified? we are going to get a hint when we get the cpi numbers. it's a straight spike. -- interest rate spike. a warning on the interest rates. abramovitz, just a look at positioning in the market. come inside the bloomberg. s&p net position's. you are looking at the vix. you can see the stock reversal. we start with a record high and we have seen a huge reduction in positions. is it over? gina: i don't think anybody can guarantee it is completely finished having its impact. however, considering the pricing we had on friday which was a just which was the majors swinging lower, i think you got

to take a little bit of solace from that. when you take a step back and look the fundamental stories, fundamentals price by two thirds. you're looking at an s&p -- it looks a lot better. say that the technicals are not going to continue to worsen in the short-term but the fundamental stories still intact. revenue estimate revisions still rising. we are looking at this as an opportunity to put money to work. david: there was a piece on the bloomberg the said the last two corrections went down to 15.5. did that help anything? gina: every correction tells you something different. another thing i like the site is everyone says this is a bond market. equities valuations is 60.5 times we had that in 2004 and 1997. the 10 year treasury real and

2004 -- treasury yield in 2004 was about seven. we are below three. everybody's suggesting that equity valuations are too high. i think some of these things are to each his own. 16.5 times in the grand scheme of things is incredibly attractive relative to industry. alix: this one quote really summed it up. it was by the head of sanford in bernstein's quant strategies. at the run of macro that is still strong and we don't have evaluation -- the big question remains in our -- remains is our valuations still too high? i think we have to wait and see what it is going to be. you're seeing volatility shoot up if you look the vix. if you look at this cboe contracts friday of credit, there is volatility inside their

that spiked up. you are seeing a certain concern. david: one of the areas we focus on is the cpi numbers. they are coming out on wednesday. let me put up a chart. where cpi has been through history and it shows where we are right now. 1.9. the blue line all the way over to the right which is not all that traffic. why are we so worried about inflation? lisa: there is a real tension right now. we are seeing yields rise. the current inflation expectations. are we seeing yields rise because of the increasing deficit and increasing amount of supply in treasuries? this is a big tension. could we see the interest rates spike upward simply due to the deficit? whatever happens with inflation. even if inflation does not pick up dramatically.

policymaker tolerance for asset market exuberance drops and inflation is at target. policymakers hands are tied. once inflation is at target, policymakers are more comfortable acting on asset prices that look out of line. is that what we are doing with? gina: i don't think inflation is on target. they have a bigger tolerance and we are expecting. policymakers, they're been frustrated that they can't get cpi to move to two and beyond. anything to suggest there getting traction encourages them there on the track -- there on the right check. i think there's something going on in the long and the bond market. not only are we seeing expanded supply but for the first time in this cycle, it is going back on purchases and striking the balance sheet. as much as we want to say this

is about inflation, this could be simply about demand and supply in the treasury bond market. you look at forecasters, they are expecting core cpi to be at .1%. we are in this big tizzy over inflation and we haven't reached 2% yet. you just read me a quote. i think it is broader than that. we are trying to suggest that something may be more than what it is. david: maybe. they are about to get some help on the fiscal side. we talked about mick mulvaney over the weekend warned about interest rate spike. >> there is a risk that interest rates will spike. there's concern what you saw last week when we started these while gyrations in the stock market. keep in mind that thousand point drop we had a monday was only the 99th largest reduction on a percentage basis.

david: lisa, what is driving this is this what you proposal that will come out this morning. we are going to put up an outline. it is going to be a fair amount of deficit spending. on top of a tax cut, you can see they're going to cut the deficit i three julian dollars. dollarsree-point shot -- by three chilly and dollars. -- by $3 trillion. lisa: and downgrading the u.s. given this deficit spending. there's this concern, what does this do to the bond market. mick mulvaney seems rather and bill of it -- rather and bill of it on this tax plan. question, where are the fiscal hawks? if the deficit deepens and you see that supply increase, how could interest rates not rise? and the question right now.

david: there is a chart that shows the deficit when obama came in. they narrowed the deficit. that's before you include a new budget agreement. a real issue for issuance. >> it is a real issue for the dollar. --is an important restoring and underreported story. the dollar rallied writing to that piece and over the last couple of years has sold off. that is a big part of the story. the deficit is widening. suggest thiss to is all about monetary policy. monetary policy drives currencies but the reality is we have a component to these outcomes that we cannot ignore. the bigger the deficit gets, the more pressure it creates on the dollar. it is pretty consequential. >> how you can have higher rates and a weaker dollar at the same time. lisa, good stuff.

gina martin adams of bloomberg intelligence, thank you both. the worst week for equities in more than two years. it could've been the worst of the financial crisis but have markets found their footing? does more pain away investors? ?- await investors we are going to explore the question next. this is bloomberg. ♪

alix: -- kaley cuoco this is bloomberg break break. -- have agreed to buy see rsa to expand its inflation technology services. the prices $6.8 billion in cash. took indynamics also

$2.8 billion of debt. comcast may make another bid for 21st century fox two months after fox agreed with a deal. according to a person familiar comcast originally offered $60 billion which is hires -- which was higher than disney's successful bid. four years ago, blackstone -- for a record price. the firm may get the chance to own the landmark again. blackstone has had talks about the bidding. this sale is being overseen by china's government. that is your bloomberg business flash. alix: a lot of the damage last week was attributed to some risk parity unwinding, as well as ctas. let's see how they did. the yellow line is the s&p but

the blue line is the salient risk verity. -- risk parity. the index also got hit as well. what do you do if you're a multi-asset strategist. terry simpson joins us. what is the trade? terry: i think we have to step back. a lot of our clients are asking us, why haven't you guys adjusted your positioning? we do understand short-term market volatility but at the same time, fundamentals are still supportive. we think we have a big shift in volatility regime change would cause deterioration fundamentals or should the macro volatility. we are not seeing that from a we got it where synthetic to what happened but you have to step back. alix: is it a cell rally? rally?t a sell terry: we understand it has been

pushing higher. it shows lower risks. we have had this adjustment and clients are saying we are going to more fiscal easing was may be accompanied by monetary tightening. step back, those fundamentals show strong. we urge clients to the cast work. they couldn't tell me how many strategists were involved in this last week -- david: tell me how many strategists were involved in this last week? there were a lot of huge funds tied its assets. some of the risk parity trades they were rebalancing automatically. terry: some systematic trading strategists that added to the turmoil last week but at the same time, you had some individual investors saying maybe we should take some profit at these levels. comingo has some buying at the telling of the week and saying maybe i should put some cash to work because what has

changed? what happened two fridays ago, -- as we gottion into the letter part of the week, that developed into a fiscal easing story. there was a significance shift. that was the bigger story we saw a lot of the pressure shifting higher in bond yields. alix: in the short-term now, what do you buy? typical we still like equities. -- terry: we select care -- we still like equities. that is come down about 12% or so see you got a d rating. better valuation and that argues for putting some of that money on the sidelines to work. we want to remain diversified but the cheapness that we saw over the last week and i have does present a nice opportunity.

david: the selloff seem to be indiscriminate. is that your take on it? you can't even figure up with sector to go into. terry: some of that was the idea that people sold in the skimpily across the border. -- across the board. financials were still hit as well. telecoms held in but people saying should i take it these levels. that creates competencies. alix: listen well aware in terms of credit markets. the story on monday was it was an isolated to u.s. equities and the vix because the credit market was pretty well contained. the story changed as the week went on. you can see spreads moving much higher, particularly in the high-yield market. where is corporate credit and credit is good value now? terry: one of the things we saw last week was in the credit market. what you are showing is the cash bond market.

it wasn't surprising that the derivative market sold off first. don'tonds and how yields trade everyday so it is not surprising that derivatives sold off first. you saw some this whitening out in ig. we look at it and said we expected some of the sap and. these are not levels that they are saying is practicing in the like owning up in quality -- up and quality. high-yield have gotten extremely rich. high-yield spreads, valuations look a little more fair now. david: what do you make of washington. what are the fundamentals that shifted? sooner or later you start to talk about billionaires in a gets money.

we saw in terms of equity flows, three deviations moves. really significant. most investors had a -- how does this is the fact we are going to get a tax cut and maybe some inflation. start on a lot of inflation, that really worries -- washington does need to get careful. they are trying to rewrite the economic textbook. we got this back in the mid-1960's, they created a lot of significant inflation. relating the cycles. investors are saying we are going to repress the markets for that. alix: terry simpson is sticking with us. opec is switching at the -- switching estimates. oil is up on the day. this is bloomberg. ♪

alix: oil prices are up despite the fact that opec raised price

for growth for a third month in a row. the worsteek for oil we've seen since 2016. joining us, javier blas. opec's upgrade is forecast again p oil prices are up. our oil prices a worse for fundamentals right now? javier: the prices recovering a bit from those -- no surprises here. we will need to get the market a bit more time today to digest the report by opec. catching up with reality. we knew on the market news that usa was going to be coming storm are that opec. opec is just catching up with the market. alix: how much catching up do we need to see from investors? come inside the bloomberg and you see managed money versus the crude price. i have to say i cannot believe we are still around record lanes

despite the selloff. javier: the market and balloons heaven putting a lot of impact on the strength. you look at the opec report and we have and not opec increase $1.4 billion a day. that is not enough to fulfill all of the incremental demand that opec this year around $1.6 million a day. that is the global increase in demand so far stronger than what shale oil in the u.s. is going -- yound that is what need to stay long in the oil market that really takes a lot of the fact that you have economic woes. alix: big banks say goodbye because of that demand and it really needs to shake through. thank you so much, javier blas.

terry simpson is still with us from blackrock. let's take a look at the energy space. oil price is now $54 a we see the high-yield's coming in, 6.4%. it feels like we saw a bit of a shakeup but compared to 2016, nothing. terry: basically the fundamentals of the oil market are very strong. wti as wellucture, as brent they still remain intact. that is significant for the fundamentals but in the short-term, you can have these kind of big tactical swings. we could try and explain it with a stronger dollar has week -- higher dollar and -- strong dollar last week. at the same time, the fundamentals are still supported. last week was a big scare for supply. basically with the eia projecting we are going to have 11 million barrels of supply in the united states that pulls forward from year. and we materializes

don't get the demand, this gives a lot of investors. they see we made a lot of money and maybe it is justified in going to take a little bit of profit. we think you fundamentals are so strong. that is telling us the fundamentals are still good. the code shale seems to bring us -- bitcoin shale seems to bring us -- terry: as we talked to our energy team, we think about looking at some of the companies and say are they being disciplined? the conversation there stress this idea. -- and the conversation, they're stressed this idea. we saw produces hedging. that was going to come online but this bigger supply estimate that we had for more than 2 million barrels a day in 2018, that's more than 10 million barrels a day in 2018. we have been trying to think about opportunities within equities.

we are staying away from -- we can adjust our data to the commodity within equities and debt up and down depending on what spot commodities are doing. david: terry simpson of blackrock will be staying with us. coming up we are going to talk of that budget. president trump presents his budget request for the 2019 fiscal year. he is presenting his long-awaited and for such a plan. we will get into the details of both of those next. live from new york, this is bloomberg. ♪

>> this is bloomberg daybreak. i am alix steel. you're just waking up to the market. it feels like a good day. you can see hundreds of point swings in the dow at atomic close.

-- the dow i the time it closes. dax moving higher. overall it is a broadly weaker dollar story as particular at asset classes. -- as we take a look at asset classes. the trade by equities sell everything bonds like. three basis points. 88. are we going to be talking about 2.9 today? the vix relatively stable. 3% the level that most people seem to be watching. we have reached that. what happens to the s&p market? now a more bullish tone coming to the market despite opec upgrading supply forecast a set of opec. david? david: we have kailey leinz here. reporter: the trump -- mike pence

says the u.s. is ready to engage in talks on kim jong-un's nuclear weapons plan. and moon joining -- keep putting pressure on of korea. germany's chancellor is defying critics in her own party are she says she's determined to serve another full-term. she facing backlash against last week's coalition agreement. and president trump's budget director wants about interest rates spiking because the u.s. will post a higher deficit this year. sayslini -- mick mulvaney higher deficit is possible overtime. he called the deficit is a very dangerous idea but it is the world we live in. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. leinz.iley this is bloomberg.

david: we are going to talk a little more about that budget. we are going to put up a slide. will we know this far about the budget but it will cut the deficit by 3g and dollars. they are going to pay $200 billion over 10 years for if the structure. still with us is terry simpson and joining us is shawn go hard. this is what we know. do you know more about it than we do? part -- is a part of the budget process. we are seeing it increase spending. opioid spending, basically his political priority is to signal to republicans and democrats where he wants his white house. david: mick mulvaney is one of the most forces deficit hawks. he even said he would not have voted for the budget bill that came through last year at what has happened?

sean: at barclays we wrote a piece. this'll deficit hawks, everybody wants to spend money somewhere. they'll want to spend money. it is remarkable that the republican white house and senate to see such large increases on discretionary and nondiscretionary spending. i think in the end, the president's budget will go forward but what the goal is is to starve the beast strategy and cut taxes down to the level of revenue. when you get below deficit, you can argue -- this budget signals that they want to cut in terms of domestic spending and now a republican congress can go forward. we have to cut domestic spending. david: we have seen that there is for. we saw that theory on the reagan administration. they really want to walk the price is right up in the bond market. shawn: i think you need the

financial markets respond and mulvaney's comments are beginning to show that people in the instruction thinking about this. alix: fairpoint. unicredit had a great note to talk about just that. expansion of the bigger deficit when the economy is it full throwment is risking to -- increasing vulnerability. shawn: everyone looks at our economy is been the strength of the world. at the same time it doesn't mean we can't just have -- not just have claimed balance sheets. adding these trillions of dollars to the deficit is a growing worry. was thation last week presentation what the markets were telling us. they go mick mulvaney with -- telling us. david: mick mulvaney would tell us it is going so fast, is there any reason to believe that is shawn: you need extremely large amount of growth for a

balanced budget. david: terry, what does this do to the bond market? terry: it started to pay attention last week. what you are good to see is more pressure. when we think and blackrock is is idea that the bond market how is this going to affect the real economy? you could ask growth but this is not the policy you would be taking the stage of the business cycle. alix: you mentioned real yields earlier. we're looking at this as the real yield we are 1%. when does that start to -- terry: the pressure will be does it hurt financial costs are different corporations? how does it affect consumption at the household level? again realhigher yields, they can be if you

double -- a feedback loop. you cannot be doing some of these policies without repercussions. we are going to see how this plays out. it does look somewhat nerve-racking. david: have we seen out of congress what we are going to see at this point? are they going to put that pencil back down on the desk cannot do anymore? shawn: we have an election coming up in november. everybody is beginning to think more about that. the spending deal does show some bipartisan cooperation. maybe they can see a way forward. i'm not optimistic on infrastructure to get this massive plan they talk about we leverage the private sector 41 on every dollar. -- four to one on every dollar. maybe we see some level of cooperation that could happen for now.

david: let's talk about infrastructure a bit more. said.s what they >> the biggest impact to cost schedule and delivery is the regulatory morass that we find ourselves in the united states right now. >> when we talked to state and local leaders, they want private capital and the infrastructure. they want new what supply, new micro-grids and upgrades to the airport. we are waiting for framework to make that happen more rapidly. >> when we think about our emphasis or, we got to go back to the 1930's, the depression era. since then, not much has changed. the way we execute projects and the way we work together is very similar to the way it has been done over the last 50-60 years. other like other -- unlike other industries, we have not used

technology digitization to drive technology in this industry. >> we cannot have an america first strategy if we continue to place in the structure last. a stumbling block for the continued growth of the economy we don't address it right away. >> epa estimated we need $700 billion just to keep the infrastructure and the situation it is now. to improve it would take you to more. take the first thing that was mentioned and i was speculation. it is not just money. there is a lot of bureaucratic problems in getting if such a belt. we can help to killing that up. are they right? -- we can help to clean that up. are they right? shawn: you make enough structure bank. there's a lot of different ways to do this. one other comment that was said before in terms of the last time he saw a major intersection push, world war ii.

how do we move tanks across the country? how do we land plains in the middle of the united states? alix: we still have the problem of the budget deficit situation. wrapping it all together, terry, you are of the elk -- of the ilk to buy the dip. andy: where the opportunity where the nice attractions? the front end is looking attractive. we are looking at opportunities there. we are not saying the selloff is done but we are try to find -- we make it more that. david: shawn golhar, thank you for being with us. terry simpson will be staying with us. coming up, radel euro of said short on european equities and four years later, blackstone

combine -- next on is buying back the hotel is sold for price. you can tune in to our comments -- into our colleagues, tom keene and jon ferro. you can hear it on new york, boston, washington, d.c. come all across the united states on sirius xm radio. live from new york, this is bloomberg. ♪

reporter: this is bloomberg. i am kailey leinz coming up, robert shiller a professor of economics at yale university. ♪

now to your bloomberg business flash. and inching glitch has forced airbus to halt some deliveries of its popular a320. india's indigo airlines have suffered three in-flight engine shutdowns. barclays operating -- over its controversial capital fundraising at the height of the financial crisis. the office accuses barclays of unlawful financial deficit has to do with the $3 billion loans that the bank of qatar in three -- in 2008. barclays says it will defend itself. more problems for the embattled movie producer, harvey weinstein. new york state has sued him for creating a hostile work

environment. that could make it harder for weinstein to sell the studio. weinstein's lawyers say many of the accusations are without merit. that is your ebf. -- that is your bloomberg business flash. david: we are going to turn to wall street. first up, the tables have turned . blackstone's sent in a bid for assets scored big one a few years ago. quadrupling the short, ups is bet against european stocks. finally it is with greetings using for deutsche bank but they are not seeking seasoned recruits. alix: terry simpson of blackrock. i love this blackstone story. i'm going to sell you the wall of the story and then i'm going to buy it back and make a ton of money. terry: this is one of the big stories for blackstone. hilton which is at the center of all of this because it water for

such a prominent name. hilton is one of the most successful prominent deals ever. john gray, the successor really made his name. there are other deals but hilton was really the deal. although for story was sold and chilling down there on park avenue. i walked past it everyday and there is nothing going on. after making a ton of money. almost $2 billion. david: there's a government arbitrage going on here. you guys are investing way too much money outside of china. we don't like that, shut it down. >> this is tied to what is happening with hna as well which is the other big chinese real estate buyer who is from blackstone and bought a lot of the stakes. it is amazing this shift that

china is having with some private equity assets. terry: blackrock, where a large return business. conversations across private equity is that you have a lot of money. you have a lot of money sitting in alternatives but doesn't want to sell. causing higher returns. our capital market and are public equity markets and bond markets, those lovers are high for the next five years or so. a lot of institutional investors are saying if i can get it from the traditional world, i'm going to stay with the assets. that is why this company is looking to buy back. maybe they have cash and are looking to put this to work. david: the second backstory is radel euro in bridgewater. we knew they were shorting european stock but now they are quadrupled their bet. them.is one of

>> this was something we do they were shorting italy because of the election. this is much more widespread across the eu, $13.1 billion. xdr are you short european markets? -- alix: are you short european markets? >> there are issues that need to be dealt with but we are not sure to the extent. alix: i wonder how much of that is macro-based because of the italian election. they are going to converge around the same time in the beginning of march. everything goes well. how quickly yes to buy back the shorts. >> it is a huge bet. it is one thing we have been thinking in hearing a lot about from people in this more turbulent and volatile market. you are seeing some the big hedge fund managers take some big old swings. which is what they get paid for.

alix: if you are a college kid and listen to this program and you need a job, go look at deutsche bank because with the equity business, they are going to undergraduates instead of seasoned rivals to get the talent pool up. jason: i like the idea that college kids are up early watching us on bloomberg tv. i love the story because you got in the sky came out of retirement at 45. deutsche bank -- alix: i worked for someone who retired at 38. jason: this is a company that has to be rebuilt. while there is a lot of talent on the street. there are a lot of very seasoned people. labor is cheap when you're coming out of college. this is a story where you can help fix something that needs to be fixed. david: is this a sensible move to make question mark you don't

need -- move to make? you don't need to veterans anymore. terry: i'm going to get a lot of slack if i go back to blackrock. you are not taking over yet. you are thinking about growth for the future. that is one thing that this company is focusing on. the clock, we think -- at blackrock, we think about different different disciplines, sociologist, disciplines. we are financial firm but we are big technology companies well. we think where is the industry evolving. alix: but, there are a lot of people who have not seen that kind of volatility because they were in college in the financial crisis. if you are at a equity trading desk and all of a sudden you see a spike of the vix to 50, they are going to be like i don't know what to do right now. jason: they will figure it out.

that is why the children are the future. suisse is like we don't need all your help right now. jason: it does feel like -- broadening out a bit -- in terms of what is happening on wall street, it looks like it is going to be a very interesting year for talent. week,bbatical story last as you say, you have done some work around what is happening with bank of america and talent. the technology story is one that is really important. david: there's a geographic story with brexit and all the spec is with their stories. the whole weekend i was talking about there is a huge crunch right now about international schools in france for it. these big bankers are coming in and saying i want my kid in your schools and there's not enough spots. if we are going to have

financial center hubs, we are going to be the first wants to go there. one of the things we are seeing in europe but in terms of the brexit situation, -- it's the can be debated. alix: yes, i will take a sabbatical unpaid. i wonder if that is going to work. i will take it now instead of getting fired later. terry: your out playing golf while your buddies are getting hacked. david: terry simpson, think you for spinning some of sign with us. comcast is said to be considering another bid for 20% of fox after the company agreed to a lower price deal with disney last year. we will have more that. alix: is going to bloomberg terminal, go to bloomberg go -- go to tv . check it out. in the markets, looks like a

rally underway. the futures market, the dow jones up by triple digits. s&p up over 1%. it is a broader, weaker dollar story. buy stock and sell bonds. markets can the equity hold in light of that? oil getting a boost. not stabilizing after the selloff last week. this is bloomberg. ♪

david: alix, this is what i'm watching. can cast and disney and it is 20 century fox. disney announced a deal for $52 billion. there were rumors that comcast wanted it but 21st century fox did want to do it. now it sounds like comcast is back in with $60 billion to try and take it after all. alix: who do you think wins that? david: i don't know. this is stephen burke and bob iger. they know each other well. i don't know how much of this is .eal in drinking box chain alix: if you are fox, who would you rather be with? would you rather be with robert iger? david: being with disney is a pretty attractive place to be. that is rumors. it was rumored that the partner

really want to be in business with disney. alix: you can't have a at&t in time warner merger come through. david: we are going to get a decision by sometime in april or may. alix: antitrust all day. coming up, we are good to speak to robert shiller, yale university professor of economics. what is the impact of the volatility we saw last week of the resale investor and confidence? we will break it down with him. this is bloomberg. ♪

♪ alix: stabilization, markets find their footing and charge

higher after the worst week for u.s. equities in two years. installation fears, 48 hours from the latest rate on inflation as traders fear the inflation they were looking for. >> risk that interest rates will spike. alix: omb director mick mulvaney warns of highest interest rates -- higher interest rates. david: welcome to "bloomberg daybreak." i am david westin alongside alix steel. you get nervous from the budget director saying we will have an interest rate spike? alix: when you see the headline you are like, that can't be good. buy equities, sell bonds. s&p futures 28 points rebounding from that awful week last week where s&p was actually down the most since the financial crisis, but they rebounded by the end of the close on friday. as sellinglds, 2.88% persists and crude up by almost 2%.

david: let's find out what is going outside the business world. ask fordent trump will billions in a new spending bill to build a border wall and fight opioid abuse. the white house comes out with the budget proposal today, but it is likely to get little traction in a republican congress that has its own spending priority. the trump administration is signaling a policy change on north korea. vice president mike pence -- ae-in agreeoon j to pursue dialogue during the winter olympics. the u.s. will keep putting pressure on north korea. london city airport has been closed after the discovery of an unexploded world war ii bomb. it was found in the river thames. british airways and sitter jet -- city jet were forced to cancel flights. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120

countries. this is bloomberg. alix: equities, futures in positive territory after stocks closed the worst week in two years friday with corporate credit spreads finally starting to blow out well. have we hit the bottom? no. model -- fed model says it's looking at the yield on the 10 year and on the s&p. the current earnings yield and the ratio is the bottom panel and that dotted line you see is typically the average where we reside. it seems to imply the earnings yield has more upside for the s&p, which means more downside for equity prices. joining us is peter borish and tom mortimer-lee. if you take a look at the fed model, first of all, happy monday. do you think we need to rerate 10-year yield even higher? peter: the evidence is indisputable and the question is

where are we in the cycle? we are very near the ian of the cycle. in this business, a day is a very long time. we are sitting here friday morning in the world is coming to an ent at friday at 2:00. here we are monday morning -- generally speaking, we are not going to have a situation where every day bond yields are going up. think in a situation where we are having a supply and demand dynamic, it's possible bond yields are going to go up, stocks are going to go down and that the economy as a whole is going to slow because we have tremendous uncertainty with regard to policy in washington. i very much agree. i don't think it's going to be up straight line, but we are in a vulnerable position. we are vulnerable to bad news. he talked about the inflation numbers coming out wednesday.

if we get a high number, we will be down again. really, the reappraisal of value in the stock market -- that is mostly led by perceptions of inflation and higher bond yields. i'll think which seen the top of bond yields yet. david: what is the consequence of that? and stockates go up prices reprice and then we are fine and start growing again or are we talking about maybe going from a bull to bear market. paul: it depends on what happens with inflation and what signal the fed gives. it will have to raise rates, that is a challenging -- if the economy slows, the market is going to have to price in a much slower rate of profit increase than it has done so far. alix: the bulls will argue this, saying the fundamentals are still good. earnings were strong and been revised up for 2018 at a pace we haven't seen in years. what is your argument against that?

peter: first of all, i love the f word, fundamentals. they are fantastic, but backwards looking. we have to be forward-looking. because of the momentum, everybody is revising earnings up. we have a situation where we will be going back to what is old is new, which is crowding out. we have record budget deficits and zero discipline on the fiscal side and now we have a whole new monetary regime under chairman powell that seems to want to raise interest rates where we have had a leveraged economy where people have borrowed margin debts at record highs. all those things have to come. it's going to be a liquidity squeeze. i agree with everything just said by paul, which is we could have issues, but it will not be inflation. the irony of markets is it going to be deflation because it's supply and demand for money and we are running out in the sense that that is where interest rates are going. david: talking about the

fundamentals you question a little bit. if you look at the consumer, the households, ppi and things like that, we have tax cuts coming in, earnings should keep going up, shouldn't they? is there any reason to believe consumers will stop buying, people will stop earning the way they have been earning? peter: we have seen wages go up, i don't think that's particularly bad. if you look underneath the surface that retail demand for clothing, the article you just had over the weekend on bloomberg, yuki -- you see arele changing -- there totally dependent. household savings are at record lows dependent on the equity market. if that goes down, it will be a quick and rapid change of behavior. alix: let's look at fundamentals . if you take a look at the investment grade and high-yield market, the spread, yes, we did see the spread blowing out, but nowhere near what we saw about two years ago. plus, moody's saying default

rates could move down to 2.2%. that doesn't seem to -- seem to me like a world we should be afraid. paul: it looks like a rerun valuation -- it looks like a revaluation of the equity market. if spreads were to blowout a long way, than i would be really worried about this economy. the question is, is this the start of something? i think it's a sign that the days of boom, boom equities are over and we've now got more risk in there. people who experience this increase in volatility are not going to buy -- going to be low for ever again like they did a few weeks ago. alix: we see retail coming into the inverse products? paul: yeah, but i don't think we go back to where we were. the world has changed and it will continue to change. we had initial claims last week, the lowest for nearly 50 years. this is a sign of overheating.

economy is not finished growing, nobody is saying it will slow down straightaway, but the warning signs are here that this economy has to slow below 3% probably before the end of 2018 and two methods that can come about. higher bond yields and lower stocks. david: how will we know whether this spreads beyond equities or has it already? bond yields have gone up some, but 2.8, even 2.9 is not a scary high number. peter: it is not an markets move far faster than leading indicators relative to the real economy. what is amazing to me is the sentiment notion that we have had this very rapid pullback and that everybody goes and history is great and i am very good at it. i can predict yesterday almost as well as anybody so we had this 10% pullback and you go, we are off to the races again. you are looking backward from that lens. the reality is that we have tremendous -- everybody under

obama, there was uncertainty, you knew exactly where you stood. we have a new policy today coming out with regard to infrastructure, we just had record tax cut. if you look at volatility post major tax cuts, a goes up significantly. you can go back to kennedy, reagan, bush, the year following is far more volatile because markets have to reprice themselves and businesses have to readjust. alix: what are you buying? what do you hedge? 3 to 6we are actually traders. if you look at the low in january of 2016 to where we were here, if you have a normal 50% -- that takes us down to 23.50, we think -- 2350, we think that is a resting point. alix: then we have a market.

that is what we learned in the last hour. peter borish, paul mortimer-lee, both of you sticking with us. inflation risk ahead of key data on wednesday. real yieldyear tip over 1%. what does that do for your portfolio and what does that mean for the fed? this is bloomberg. ♪

♪ >> this is bloomberg daybreak. defense contractor general dynamics has agreed to buy c sra. the price is explain $8 billion in cash. that represents a 32% premium.

it general dynamics will assume $2.8 billion of debt. a has lined up one of the biggest debt commitment levers to fund -- broadcom has lined up one of its biggest debt commitment ever. agreed to buy 100 alien dollars of credit facilities affiliated with silver lake -- rejectm seems poised to the offer. a new deal will and sure airbus keeps producing its a 380 server -- superjumbo. they signed a contract for another 20 of the double-decker planes. last month, airbus said the program could be terminated if there wasn't a new deal soon. that is your bloomberg business flash. david: still with us our peter borish, quad group chief investment strategist, and paul mortimer-lee. we want to talk about the ego data coming up, starting wednesday with cpi data in the

united states and retail data and thursday we get jobless production,strial manufacturing and friday we have u.s. housing starts and university of michigan sentiments. you, peter,rt with because we are both from michigan. what do you expect to get out of this? cpi is the big one, right? ater: it is, but it's always little bit backwards looking and if you look at where crude has come down from 66, it's popping a little bit today. we do not see inflation really taking off and cpi will be lagging relative to dpi and i think the michigan sentiment will be ok, a little less because the volatility in the stock market. i think the sentiment figures are more coincidence, which is what is going on rather than leading. as i said before, we are more concerned about -- you just saw

broadcom $100 billion of debt, how do you solve the debt crisis by continuing to issue more debt? paul, you you agree, are not very concerned about inflation at this point? paul: i am quite concerned about inflation. we have seen wages move up and prices be more solid. this week's numbers i think will be solid .2 on the core or maybe .3 on the month. the year on year will come down because last year, january was the only month that saw .3. from march to july, we head into a really challenging period. -1 on a year on year basis . it's guaranteed to go up over the summer and probably reach that magic 2% by july. alix: we are seeing that rise of yield -- real yield. they are over 1% or touching one percentage at this point. there is a story in the market

that the fed has the markets back when inflation is below target. as we creep higher, they no longer have the back because they need to tackle asset price inflation. paul: they do. the fact this real yield is moving up is not coincidental. what we are seeing globally is activity accelerate in the second half of 2017. this tells us the equilibrium real rate is going up and that means the fed is a long way behind the curve. by july, were going to have 2% core inflation, under pointed -- unemployment on the floor and fed funds will be 125 lower than where the fed says the equilibrium is. we are at the definition of being behind the curve. we are hitting and exceeding targets in terms of unemployment and inflation and we've still got a long way to go. david: i want to inject one possible element. we are not sure this fed is the same under janet yellen. we have a new fed, new members

and a president who has not been shy criticizing officials when he doesn't like what they are doing. peter: i'm not going to touch the president because i always do fine i am a democrat. we always find it's not a bad thing. most people like to have raises, so i do not see why it is so inflationary to have a wage increase when asset prices are going through the roof and measured inflation wasn't going up. we are going to have a readjustment. we have had many, many more economic -- go to the owners of assets and less to the workers. we will have now more going to workers. that's the way markets should work. therefore, it's not a kerley inflationary, it's price adjustment and we will see that through the acid stock. -- asset stock. alix: come inside the bloomberg, you are looking at speculator short position for the two-year and the 10 year. you can see some sort of short

covering for the two-year, i can zoom in. there you go. the 10-year has not seen that. potentially we still have more rerating to go. paul: i think that is likely. one thing we must not forget is global quantitative easing. the fed is running down its balance sheet, the ecb in a january stepped down from buying 60 billion onto 30 billion a toth -- $60 billion a month $30 billion a month. there's a lot less cash coming out in central banks into the markets. where does that benefit and the answer is the long end? i think that's quite a long way to go. there are the u.s. factors, but we must not forget the european factors. neil brainard said for every 10 basis points the german bund rises, the u.s. treasury 10 year goes by five basis points. bonds are trading at 75 basis points and they should be trading at 150.

i think there's quite a lot of international influence that will push up bond yields. alix: where are you short on the curve in one word? peter: we think if the economy slows, this bounce in the steepening of the yield curve will stabilize, so we will push on the other side and go back towards flattening. alix: more than a couple words, but you got it, it was good. peter borish and paul mortimer-lee, sticking with us. president trump is hours away from issuing his plan for starting the nation's infrastructure. more on that next. this is bloomberg. ♪

♪ david: the white house is about to roll out its long-awaited infrastructure plan. originally told it would be 8:00, now we are told it will be 10:00. it's already facing hurdles in congress. president trump is tweeting about infrastructure "this will

be a big week for infrastructure after so stupidly spending $7 trillion in the middle east, it's time to start investing in our country." still with us is peter borish, quad group chief investment strategist and paul mortimer-lee . i almost made you president, peter, congratulations. peter: i am not going to go there. david: and adjusting move by the president basically saying don't worry about us spending a lot of money because you already spent a lot of money in the past. peter: i want to say we have a bunch of troops still in the middle east and afghanistan, so i hope all those that are serving do not feel like they are serving stupidly. with regard to infrastructure spending, i look at it is just like -- management. it doesn't matter until after the fact and if you are a good risk manager or trader, you try to look ahead of time. we know what's happening with regard to our country in terms of infrastructure crumbling. we see that all the time,

unfortunately. our train derailment has also led to that. we need to do it, but we don't sensehe consensus or any of shared sacrifice. the gas tax hasn't gone up since 1994. the usage on the roads are obviously way higher. we need to do something, we need to have leadership and we need to have a sense of joint sacrifice, which i don't see from either party right now. david: if this were a company rather than a country, you would make a very different decision about capital investment versus -- if done wisely, would increase gdp over time. paul: i think it's clear more infrastructure investment would vastly benefit the u.s. the question is how do you finance it? as you said, we have had the tax cuts and that leaves less for

infrastructure. i am not concerned this number is -- convinced this number is going to be a big knockout. i think there's -- they are going to expect a lot more money. i'm not sure that's going to be forthcoming. my guess is whatever the plan is, it will fall short of $1 trillion in terms of implementation because there has not been enough left over from the tax cuts. alix: what i do keep hearing is private -- private equity raising money for infrastructure funds and closing funds worth billions of billions of dollars. is that a potential for the private market to step in? paul: it is and if that works, it's very much to be welcomed. alix: but you do not think it -- it will be enough? 2019 the budget deficit in is probably going to be over 5% of gdp already, which is crazy at the top of the cycle. where will the budget deficit go the next downturn? it's going to go to some

extremely big numbers. i don't think fiscal policy is being responsible enough. david: you mentioned a really important point, the federal gas tax which goes into the highway fund, basically. couldn't we pay for a lot of this? we have an increased that in years. peter: that is correct. if you go back to your point with regard to private infrastructure funds, they are not doing it for free. there is going to be an implicit higher cost to consumers whether it is through transportation at thes or you look privatization of parking in a number of cities or these private toll roads, it is an implicit tax hike for those who are less wealthy. it is regression area. the whole point of public infrastructure is to make things more efficient. if we could craft it and say it's a tax cut for the rich because their time is more valuable and that they will be moving faster, than we would

have more benefit. we just have to catch everything in terms of tax cut for the rich and it will get through congress. david: peter borish -- alix: peter borish and paul mortimer-lee, always great to see you. coming up, we speak with robert shiller, yale university per -- professor at economics looking at the ratio he basically invented. does -- what has the selloff done for market psychology for the investor and what can we expect going forward? this is bloomberg. ♪

alix: this is "bloomberg daybreak." a sigh of relief across global markets today. it dow jones futures up by 285 points well off the highs of the session, recovering from the worst week in u.s. equities

since 2000 16. european stocks getting a boost, the dax up almost 2%. is it a broader, weaker dollar story? the action is really in the treasury market. 10 year yield moving higher by about 2 basis points. we are seeing a bear steepening as you seek selling on the back and then the front end. bund yields move higher by about two boys -- two basis points. crude up, that's what you need to know. david: from news outside the business world, we turn to kailey leinz. kailey: president trump may struggle with the promise to spend a trillion dollars to fix the country's crumbling infrastructure. the plan today commits the federal government to spend $200 billion that would be used to spur local governments in the private sector to come up with the rest of the money. they and call that switch. investigators are trying to figure out in russia how a passenger jet crashed not long after taking off from moscow.

all people on board were killed. it was on a flight to the city of force -- orsk. angela merkel is the fine critics in her own party and says she is determined to full -- served and other term. some say she sold out to social democrats in order to extend her 12 years in office. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. alix: over the last two weeks, the s&p 500 saw its largest swing in -- momentum history. -- 57 day rsi swamped -- 50 basis points. what does that mean if you are an investor and waking up today looking at the markets trying to figure out what to do? robert shiller,

yale university professor of economics and cocreator of the case schiller index also invited the -- ratio and there's a lot of work on investor psychology. great to get your perspective today, thank you for joining us. robert: my pleasure. alix: i have my friend calling me up saying should i be buying stocks? walk me through the psychology right now. robert: it's some kind of mass psychology and to some extent it's world psychology. interconnected. i think the thing that comes most to my mind is there has been a widespread conviction that markets are overpriced and due for a correction. people were waiting just before last week for a sign, is this

it? when is the correction coming? we have had our correction and ,ow it becomes very ambiguous what next, whether this will turn into a bear market or whether it will stabilize and go up. alix: jpmorgan had a note out that said we can blame last week on cta's or risk parity. look at the investor confidence in equity market if we come inside the bloomberg. this is consumer confidence expectation of a stock increase before the selloff at the end of january. it was around record highs. does retail come in and start to freak out? what stabilizes them? robert: i have been doing surveys of investors both retail investors and institutional investors since 1989. i don't do these daily -- up-to-date surveys, but the expectationst is for stock price increases have held off.

the big change is that people think it's overpriced. that is almost the definition of a bubble. if you think the market is still priced to go and you are hanging in for that, that's a bubble. the question now is is the bubble over? is the bursting over? are we satisfied? a correction, which is supposed to be something good, i guess. it depends on your perspective. are we done with this cell spirit or not? -- sell spirit or not? i think it's an open question. david: let's talk about whether things really are overvalued. you had a piece out talking about the stock market and one of the things i found most sobering is we always -- there's a very low correlation, some of it is negative with what they are going to make in the

future based on what they made in the past. how can we get our arms around proper valuation? robert: i guess it's an investor education. it's been like this for over 100 years, it's hard to change, it's hard to get past reliance on history and it's hard to arember that earnings reverting. when they go up, it's not the sign of a brilliant new era that will be going on for decades, it's probably the sign it's about the turned down, that's the problem. david: what does that mean for investors? betterat mean you are off investing stocks that have disappointing earnings rather than one analysts tell us will do really well? robert: there's a substantial -- there is substantial literature on earnings and individual stocks. i cannot summarize it quickly. get an invite are's -- advisor

that knows behavioral economics. on the aggregate basis, it's --d of simple that people you have to avoid doing that, i suppose. even so, people even knew -- they were even suspecting the stock market would turn. ofs not just patterns earnings. they are wondering when other people are going to sell and that is hard to model -- hard to predict. what do you do as an investor? simply, one diversifies, rebalances, stays away from fad -ish things. alix: what investors might rotate to did not hold up. you did not really want to own the treasuries because they kept selling off and gold sold off as well. you need to rebalance, how do you do that? robert: i think you can rebalance across sectors and

stocks and countries. i don't has been -- know about this morning, but it has been the most expensive stock market in the world. that is not a reason to avoid the u.s., but i think it is very much time to consider whether investments and u.s. stocks have become overbalanced -- too much. david: if the united states has been the most expensive stock market for some time, even though markets are broken, or there was some underlying cause of that the markets were reflecting -- is there some underlying cause that would make equities in the u.s. more valuable? robert: well -- i wish i could speak authoritatively on that. there's something about american capitalism, maybe, that is enjoying a renaissance right now. i hate to pin it on donald

trump, but maybe he is part of the story. the u.s. is looking so -- oflist now and it just course, the boom in the market precedes donald trump's presidency, but maybe it was the atmosphere. i wish i could be precise about these things. alix: it's ok, you are a professor, we understand. we want to take a look at the vix, hitting 50 last week and the shakeout in the inverse vix. he jpmorgan had a report that retail investors are still going back into inverse mix etf's. why? robert: i cannot tell you why they are doing it, but the thing was very low.-- in other words, markets were not volatile until last week. that was part of the feedback that encouraged the opinion that markets were not close to a top.

that is really wrong because historically -- i have studied major bear markets in history going way back into the 19th century. volatility has tended to be not turningen low until the point. then, suddenly, volatility shoots up and the market collapses. beatility doesn't have to high for markets to crash david: . finally, professor, is it possible our models are out of date? models on behavioral economics and the assumption of a person making a decision, when we have trillions of dollars in tradedd other funds largely by computers on algorithms. is it possible that analysis of individuals is out of date? robert: it has been out of date, maybe. it has been talked about being out of date back to 1987. the biggest one-day drop in

stock prices ever was october 19th, 1987. at that time, people blamed it on computers because we already had program trading. it wasn't computers that did it. in a sense, maybe it was because the programs maybe hadn't figured on such a big collapse, but now, recently, computers are much more advanced than they were in 1987 and yet, we had a very quiet and placid market. i tend to think it's overextending to blame this on computers. i think it's people who did this and people program those computers. david: that is terrific. thank you so much, professor shiller. coming up, eric zinterhofer, finding partner at searchlight capital. we will talk about how tax

report is shaping the dealmaking he is making this year. you can tune into tom keene and jon ferro on the radio from 7:00 to 9:00. surveillance" and be heard all across the united states on sirius xm radio. this is bloomberg. ♪

♪ kailey: this is "bloomberg daybreak." i am kailey leinz in the hewlett-packard enterprise green room. coming up, jim messina, former deputy white house chief of staff.

now tear bloomberg business flash. -- now to your bloomberg business flash. -- million dollar bet against simmons. bridgwater disclosed the decision against the largest engineering company in a filing. simmons hasn't commented. it shares are down 6% this year. a private equity firm in a dutch forion fund -- making a bid -- would be a fund pggm minority: investor alongside apollo global management. the unit could be valued at more than $12 billion. disney has increased ticket prices at its theme parks. the world's largest entertainment company also said it would introduce 6-day to getting -- ticketing. that is your bloomberg business flash. david: if you are in the market to invest in companies, what

does turmoil in equity markets mean for you and what is it mean for those investing in tech and media and telecommunications? all of them are down along with everyone else, but not as that is some three to are down somewhere not quite half way down a group of areas sectors. we welcome a man who knows -- like few others, eric zinterhofer. -- he is with the company particularly well-known for deals in the media and telecommunications. we start with a question about what is the market roiling -- how does it affect you as you look at deals? eric: we are looking at things over 5, 10 years. sometimes these periods of the volatility create opportunities. david: have the prices been a bit rich for you? eric: generally. we are at record highs. historically, this recent

volatility is nothing compared to the last nine years where we have had a zero interest rates and all-time high evaluations -- valuations. david: you recently announced a partnership with lion tree. tell us about that. why did you think that would advantage you and them? why is the sum bigger than the parts? eric: what we both saw is when we looked at high growth confidence, they are caught between going out and fundraising. on the one hand, they do not want to raise debt because they are putting all their cash back into growing their business. on the other hand, sometimes raising equities -- they get caught up in these adc-round type modes where they have to increase money and if they don't, it puts pressure on them in the marketplace. what we see is there are companies that have rogan revenuesnd have real and business models are successful and they are growing rapidly.

we do not really see how some of these founders and early shareholders need to unnecessarily dilute themselves. we are kind of conceiving of an instrument that would generate somewhere between 15% and 20% returns, which is less diluted than equity would be and it has six -- fixed returns, but it's -- those companies can go out and continue to grow without diluting themselves. david: how did the tax laws affect your business? it's just the caps on interest that would affect you some? eric: not as much as you would think. if you look at the math around it, the lower corporate tax rate offsets lack of interest to deductibility. overall, it has raised valuations across the board and it has been good research around that. david: give us insight into how you look at the world from your point of view.

do you look at it as content versus distribution? do you look at it as tech versus old-line? do you look at it that way? eric: we tend to look at it as really how disruption is affecting different sectors and that is not just true for content or distribution, it's true across the world. in the content world, companies like netflix, which are spending $8 billion a year on content are totally disrupting that part of the ecosystem and traditional cable networks are affected by that. on the other hand, distribution is affected as well because of over the top and other trends. david: talk about the disney 21st century fox deal and comcast maybe -- to buy. what is that about? eric: i don't necessarily need and -- no how strong a hand comcast has three to from a regulatory standpoint, we have to see how this at&t-time warner deal lays out. if you are when he first century

fox, i am sure your looking at that closely. david: that trial next month, is that in the back of your mind that maybe there will be a shift in the regulatory approach? eric: i am going to be watching it very closely. everybody is speculating. there is -- there are antitrust experts that would say at&t would prevail and others that say the government has a strong case. depending on how that plays out, it will definitely affect this whole 21st century fox transaction. much, erick you so zinterhofer, founder and cofounder of searchlight capital. alix: jpmorgan says equities are unlikely to fall much further. more on what they are buying. the bloomberg terminal, check out tv and you can watch us online. interact with us directly. check it out. this is bloomberg. ♪

♪

alix: what i am watching his equities. it's a rally underwent in futures, can it hold up in the session? -- saying equities are unlikely to fall further. i want to take a look at what happened last week. as we look at grr, it will show you the sectors that got hit the most. energies down 9%. telecom, 6%. health care, 6%. i am wondering if it will be a buy the dip or sell the rally. david: it shows how indiscriminate it was. normally you would think -- what selloff fastest and defenses would sell off the least and it didn't happen this time. alix: i find interesting, too, you have higher yields and financials did not benefit from that. david: one of the fascinating things is did we want a steeper yield curve or a flatter one? alix: and now do you buy

financials? we are joined by -- what are you buying today? >> i think you should be buying first for the market, europe, and financials. financials didn't fall as much .s typical this time around, they outperformed the market on the way down, so they will be the base group initially. if the yields keep moving higher, financials are a buy? . alix: are we at the bottom of the equity market? justv: we think it's technical, not fundamental, the only way the equity market keeps falling as if the growth starts to disappoint. this is where people are complacent. everybody is worried about bonds. disappoints -- we don't think so, we think higher bond yields would be taking in the market --taken in the market

stride. david: -- possible inflation after that 2.9 number came out with wage growth. mislav: the issue. beeninflation has always and always continues to be an indicator in the cycle. later on, inflation picks up, but i would say cannot be too concerned because if wage growth is picking up, that will allow the up cycle to look more fundamental, more sustainable. as people get paid, topline growth is stronger and corporate pricing power is stronger. i would be concerned about the bond yields higher than now, but the initial move up in inflation, we think equities are inflation hedge. alix: talk about the equity that and how you are positioned in europe. -- quadruple his short on european equities, yet you are

overweight. watch me -- walk me through that rationale. mislav:npl as a share of total loans has been going up and up all the way through 2009 and inflation happened last year. thenpl's always follow labor market. the labor market is turning for the better. now you have the next three or five years in improvement, these markets are cheap and never have growth forever -- euro gdp was very weak. 2.9% gdp this year. it's the wrong time to be short eurozone now. alix: what indicators do you watch to tell you the rally we are seeing is not going to last? mislav: if there is a contagion then ie credit spreads, can say the upside is going to be short-circuited by the -- in

the bond yields. we do not see that. also, the shape of the yield curve is still steep and we are waiting for it to get inverted before getting more bearish. you never, never have a downturn in the u.s. with real policy rates below 2%. we are still out negative, so we still have time. alix: thank you, jpmorgan global equity strategist. coming up, the open. barry bannister and david of cumberland advisors will help break it down. equity futures off the highs selling off the margin. yields well off the highs of their session as well. the open is next. this is bloomberg ♪ .

jonathan: from new york city, i am jonathan ferro. this is the countdown to the open. ♪

coming up, global equity markets find a firmer footing. u.s. futures positive after the worst week in more than two weeks. -- two years. treasury yields grind up the fresh four-year highs. and the administration unveils its spending plans. 30 minutes until the start of a brand-new trading leak in the equity markets. back just offng session highs, up 23 points on the s&p. we call it 9/10 of 1% into positive territory. euro-dollar back to 1.2245. yields creeping higher once again. close to 290 early on. what a couple of weeks we have had in financial markets. here is what market participants have been telling bloomberg about recent