envelope that contains white powder. theeliminary test showed substance was not dangerous. wife haveor and his five children. authorities say they were not home at the time of the incident. under the budget proposal released today, the administration plans to cut the aboutl contribution to $738 million for the fiscal year. turkish officials are earning the united states to reconsider its support of forces in syria.

speaking today, the turkish prime minister says they will listen to reason. the statement came ahead of the visit by rex tillerson. -- both portraits were painted by artists who were personally chose -- chosen by the obama's. >> extraordinary care and envision -- and division -- and vision. >> the paintings were unveiled they which is part of

smithsonian museums. >> live from bloomberg's world , we are 30 minutes from the close of trading in the united states. it the doubt up more than 500 points. the u.s. 10 year yields at 285. >> the action is, what did you miss? hisresident trump unveiled proposal to fix the nation's infrastructure. how regulatory hurdles have

helped the process. -- he joins us this hour. party -- ion's ruling stocks are rattling 30 minutes into the close, but we are not there yet. >> a big rebound for the major averages. continuation for what we saw last friday. investors doing what they have .een trained to do we see big gains for the major averages, but moments ago, the s&p 500 had been on pace for its best day since november 2016, but falling short of that mark.

dip.tuesday, another it will be interesting to see whether or not this continues as the week progresses. in the bloomberg, we see all the sectors higher. tech right behind it. factors.ome of the right now, the rally is helping those factors and as we take a look at the 10 year yield, we points.s up 45 basis that also had an interesting effect on stock, but right now, the 10 year yields their highest of the year.

plus, can investors by the dip if we are in the normalization which is likely to continue? this here is the bull market over the last 40 years. -- not just 3%, but really 3.5%. if it happens, there could be more risk. today, certainly a rebound rally. rollout,he white house $1.5dent trump is pledging trillion of investments. joining us now, he is also the

cochairman of the global achievement infrastructure initiative. we have some form of proposal. what do you think is critical to unlocking infrastructure investments in the united states question mark >> i'm very encouraged by this. when i look at the plan overall, i think the permitting aspect is critical. aspect,at the royal shoring up the programs that already exist and finding ways to partner between the federal government and local municipalities. comprehensive.y it has elements we've been looking at four years.

>> you hear a lot from people about difficulty of new infrastructure projects. as you mentioned, it is one of the ones they met. while can be done at the federal level and how much of a bigger problem is related to earlier. >> what we have seen is a combination of different agencies. you have states, counties, cities. cases, we have seen other countries like canada come up with a way to move much faster for all of the

organizations. that is what i believe is at the core of this proposal that you saw today. >> talk about the regulation being an obstacle. mental --t bar environmental or local -- it can be environmental or local. how do you work with that? is there a way to work with that? a couple ofhere are different themes or concepts. one is the permitting. another one is the attitudes in the country. like pain oreel infrastructure is not something we are used to. i think those are some of the

things that this bill is going to open up and have a healthy debate about, but also this approach of who should own and operate infrastructure. i think this is going to open up a very healthy debate. if there are a lot of models use around the world and this approach is going to open up that debate where we can see different ways because the gap is huge. to $1.5the cap is up trillion. we will have a difficult time filling it with public sector money. great as it is to get private sector money, private sector cash once a decent return. how do you ensure that and how optimistic are you when we are talking about these bonds?

toyou think this is going new or is this something the menstruation is talking about? about pensioning funds. ofse are the same ones police and firemen that have these long-term investments than they can match up. there's already a lot of the funding out there and this can be one of the ways we can open up this discussion about where the funding is going to come from. they are already taking a lot of risk. one not take the risk and private activity bonds. much problem is the politics going to be?

callm not going to make a on the political front. setbackif you take a and go through all the different years, it is a very attractive approach to stimulating the economy. it makes our economy more competitive. our approachs up to infrastructure. there's a lot of benefit that comes from this. but the democrats and the public and have a healthy approach to infrastructure. i would hope that we could see some bipartisan approach. it might be difficult a while, but getting us out there and getting the public sector the one of going to the big benefits.

>> thank you. >> thank you. the recent volatility in stocks. is -- notable, this is bloomberg.

♪ >> volatility returning with

force the past week. the dow with its steepest decline on record and in this a .eek having traveled should investors get used to the idea that volatility is the new normal question mark he is the chief economist and he is with us from newcastle. thank you for joining. can we just returned to the old volatility regime question mark -- regime? >> charlie: one of the most startling assets of the selloff last week, they dide fact that not provide any protection that all. bond yields were flat. bit andn rose a little

that is why that had little bit to the volatility. >> what is your theory for why that is? you would expect to see knee-jerk treasury buying and what do you attribute that to? this is the $64,000 question. this is what you will be discussing for the next two to three. trump will be at a point time when the u.s. economy is very low. if you do that, interest rates will go up. arkets are pivoted towards

nasty story and that is what the markets are turning on. bond yields were still very sticky. that is a tricky environment for investors. point,curious, at this it is kind of unusual to see a pretty big stimulus. have you see that playing out? do you see potential for higher growth? >> we think inflation is going to go a lot higher. external deficit is going to widen significantly.

this doesn't matter whether the dollar is strong or weak, the u.s. will suck in those savings. this is what usually happens unless you get some very strong measures from mr. trump towards a deficit. if you get that, the euro will have to rise even faster. it is basic macroeconomics at work. markets talk specifically. you have a model comparing to futures bearing some other classes which suggests -- we have the chart showing the cap -- gap. just one model.

500.sically model the s&p what it shows most critically is are,bond yields is hardly stocks look expensive relative to bonds. had, idiscussion we just -- as bond yields go higher, they could all further and this is the dynamic we are in. suddenly, they start to play catch-up. is lookingt is what for us at the moment. >> as you say, a lot to watch over the next few months. thank you very much for joining

us. >> our stock of the hour is outperforming today as many analysts are not optimistic. >> we're looking at under armour. its shares are up about 4% right now. actually, they have gone up to 6%. the shares are outperforming the broader market, the matter which class of shares you are looking at and it is interesting, looking to the commentary, it is not terribly positive. the fourth quarter predicted to be break even. revenues expected to be relatively unchanged. that is not necessarily a recipe for the shares to go up, and again looking through the analysts commentary, fundamentals have yet to bottom.

they say under armour still in the process of resetting its business. basically saying things could get worse before they get better. a lot has been priced into this. >> there are a couple of different things that are going on when it comes to under armour. part of this is under armour explicit -- specific. a year-over-year change internationally and in north america. we have slipped into negative. it is now declining in north america and it is more exposed in north america than some of its larger focused peers. part of it is generally what is going on. >> part of that is where it has

put his and his -- energy. challenges toe have at the north american market. what can they say on this earnings call to generate -- >> there is the potential there may be more restructuring, or the numbers are better. >> as long as i can get half off at tj maxx. >> thank you. as we head towards the close, but take a look at major indexes. by 1.5%.ll up the 20 datewer than

average. this is bloomberg.

scarlet: we have got some big

inflation data coming up. get asking the question as far as yields are concerned, how high can 10-year gilts go? yields.ar we look at the net position of hedge funds and asset managers, the blue line, hedge funds. they hit extremes, and you can on asaks in what is going far as 10 year yields are concerned. i do know what the responding result is as to why this is going on, but you can see the extremes of the positions -- that means back and curves less appealing, but who knows, anyone has answers? please let me know. joe: e*trade investors jump into the pool, and it always works

that way, this is the latest data out from e*trade showing a massive spike of new brokerage accounts, and then we get the selloffs. scarlet: it always works that gary -- that way. this is bloomberg. ♪

major averages are up --

i am julia chatterley. i am joe weisenthal, and if you are tuning in live from twitter, we welcome you to our closing bell coverage. scarlet: we begin with the market minute. groups finishing in the green, and the west performers were utilities, telecom, and even those gained a quarter of 1%. incredible volatility continues, and a lot of these and it closed-- more than 20 minutes ago. scarlet: this is the first time --y have been in the green that hasn't happened since

january 26, since by the way, they close at record highs, so it has been green all day long. groups, allindustry are higher, and we have general dynamics making a record at in reinvigorating its i.t. business. a firmed to buy csr plans of dollars, and you can look at restaurant brand international, the parent company of burger king, and last quarter day reported sales -- and the key metric for these companies beat analyst estimates. dollar general and dollar tree both down. the tax cuts hitting these dollar store chains under the president's budget, they would slash cash payment and substitute them with packages of food which would be one of the biggest shakeups in the history of supplemental, nutritional program, or what is known as

snap, food stamps. bonda look at government market, at the end of the day, unchanged on both. we had been higher at the end of the day on the 10 year, and what is most notable is that this is a big risk on day. scarlet mentioned stocks surging on the board, but we don't see further selling and treasuries. recent volatility last week, when we saw stocks selling and treasuries selling, we didn't see any selling with the pine, so some interesting cross correlations going on. julia: as far as currency is concerned, let's look at the dollar-yen, easing after the slipping of their u.s. treasury yields. the dollar is a catch high, the

loony -- falling government yields. falling to a two-month low, and should come up with a series of disappointing economic numbers, including friday's drop of canadian employment ranks. show of this chart, showing the changing expectations. ,ou can see that white line falling off a cliff in february, -- cap canadian dollars weakness as a result of that. a quick look at sterling, a two-week chart showing falling, and were slightly off. still being talked about as a sell on rally here. we have a whole host of brexit related speeches planned to watch for, and a look at the

dollar rand. we'll talk about this later on in the show, and you can see the gains since november of last year in the south african rand. committeexecutive assembling on monday, the hope is they can pressure him to resign and his deputy will replace him ultimately. that was agreed in december. saidkesperson earlier reports that he had resigned were fake news. look at commodities, finally, green across-the-board. oil is interesting because it was in a strong bull market and then it caught in the downdraft of market volatility and u.s. surging supply. to get back above $60 a barrel, but it is interesting to see which would oil goes because the markets are in a firmer footing, so that might help risk

assets. ther other hand there is supply story, and gold catching a tiny bit. and those are today's market minutes. scarlet: for more on today's market action, let's bring in cameron chriss. the s&p 500 dropped about 20 points in the last 15 or 20 minutes are trading -- of trading, and it speaks to the new volatility environment, we are getting used to a larger amplitude of moves. joe: the question on everyone's mind is, what does the bottom look like and what are the telltale signs? what are the things that people look for to say, this looks like a rebound? >> you are looking for some sort

of massive volume. at aly more looking technical formation of people selling, and then that selling being rejected. you had a bit of that through this little trend. rapidce of decline was so , it feels to me that if we get -- then you might start having people sank, was this the debt i have been waiting for? anecdotal anecdote for you, we had an old neighbor, an 83-year-old lady over for coffee yesterday, and she was like, i financial advisor said the market is going to debt, and here we've got it. we have the correction. ip?: did she buy the d

>> i did ask her, but it is retiredthat in a elderly widow is on top of this. highu look at last week's on tuesday, then the fear of missing out comes back, and you say, it is on sale by 10%, and i was scared then, now it is down only 5%, do i have to get something? put rates in perspective, because in the beginning of last week, in particular the shift -- the curves that we saw jolted investors to some degree, and the back end of last week, were pointing out that break evens andn't so many reasons inflation story, you pointed out with your chart. >> if we decompose the rise of 10 year yields, they rose by 45

to,ts, and you can put down the concerns oversupply. perhaps, in uptick in expectations for real growth. from that perspective it is not necessarily notorious in the medium-term for equity gains. our be concerned if rise in yields -- broadly speaking, inflation is in unmitigated negative for risky assets because the implications for the fed try to slow the economy down. joe: what are you watching next? what are retail sales, you -- in terms of clues in the markets or economics? cpi is they's cliche, the biggest number of the year. -- i think, it is

what is one to be interesting is to see how long this volatility regime persists. thatnk it is fair to say in 20 18 for the year as a whole it could be hired in 2017 because, it could be any lower. i also think that what we have observed in the last week or so is normally high -- abnormally high. how long is it going to take until we get to a happy medium of where we were last year and where we were last week? i think that is going to be a signal for people to feel more comfortable getting back into the market. should: one thing we note is that china will be closed for the lunar holiday. a big part ofeen the correction, but you have one part of the world closed for business, is that going to create nervousness and tension and prompt people to sell once

again, or are they going to take that as a confirmation to managed to hold where we are? futures the s&p 500 selling off at night, that is one source of selling of bonds and stocks eliminated. last night we had babies piece of data from china in terms of the new loans at the beginning of the year, which always wrap up at the start of the year. wrapped up to a record, which is interesting in the context of the chinese equity weakness we have seen in weeks, and it perhaps take a little to the narrative that authorities work content to tap on the brakes and see the economy to celebrate -- decelerate. a lot of that is directed by the administration, and you loans decreased to such a large degree and the expectations to a large degree, suggest that there are

concerns of a growth slowdown in china. it comes with the blessing of the authorities. julia: a bit specific as well they are really squeezing, it feels at the moment. cameron, great to chat with you. julia: coming up, high yields might not be all bad. this is bloomberg. ♪

donald trump, jr.'s wife

was taken to a new york city hospital as a precaution today after police say she opened an envelope addressed to her husband that contain an unidentified white powder. authorities say a preliminary test indicated the substance was not dangerous. trump junior and his wife vanessa have five children, and authorities say the children were not at home at the time of the incident. protesters gathered outside of the ukrainian president's administration building after opposition leader was deported from the ukraine to poland. was deported after reportedly being detained by armed and masked men at a restaurant in tf and rush to the airport -- in kiev. he was about last year and was backd to make his way to the country.

the reason may -- theresa may, and a vision of speech is outside of the european union, and preservatives are concerned and hardliners want a clean break. ofsouth africa, the fate jacob zuma is said to be sealed. has pressure to step down since he was replaced as head of the party in december. years in office have been mired by scandal, saying he has already agreed to quit. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. crumpton. this is bloomberg. amid the settling of the past week, one of the big stories is how well credit assets held up in the face of volatility.

couldor of credits benefit from the rise of rates, and he joins us now. before we get to where the benefits are, talking about why credit was so resilient in the face of some of the ego syncretic things going on in the equity market. >> i think it is part of two reasons, one is that credit is in the chain, and we are not seeing the universe take on the types of levering transactions that they took on the last cycle. i think the second thing is despite what we have seen, there is a large demand for income globally, and until that changes, until we see in the change in the rate picture, that is going to continue. joe: could it be as strong as long as the economy as strong? if companies are going to default, and they're not going out of business, is credit going to be safe?

>> i think that is exactly it. we can argue whether stocks are overvalued or undervalued, but look at instruments -- we went through a mini default cycle in the commodity space. you talk about late cycle, i'm not sure what that means anymore. the credit worthiness, we're not going to see defaults, so credit is doing very well here regardless of what equity markets to. do. scarlet: really get look at the earnings season, what you see -- when you look at the earnings season, what do you see? tech companies like apple and google or alphabet, not beating as much as people thought they would, so there were fundamental capitalists as to why they sold off. how does it translate to the

credit world? >> the credit market tends to be more value-based, so companies can disappointed earnings yet have no problem repaying debt. the economy question, credit tends to do best when growth is ok but not great, is what happens when it is great as companies buy back a lot of shares and make acquisitions and spend on capex. analysts have come on and said not to invest in high yields, whether european are u.s., you were making that judgment call, and dressing despite the fact that credit help pretty well, investors should be rotating from equities into high-yield credit because they have the same characteristics in many ways, you have a greater downside protection in high yields. explain the two things. -- that's no question

is not a connection that most investors always make, but i do agree, we are on the more expensive side, but the same reason, the mathematical instrument, terms are going to be lower than normal, but it does mean you are going to have a high selloff. you'll get large credit selloffs even when equities fell off. joe: what is the best way to get exposure to credit? credit is not perfectly correlated to rates, in fact, and you go to high yields, you are inversely correlated. the triple c's, they have to highest default rate, and our are up since the equity selloff has begun. you can actually get the best of both worlds. you are not susceptible to rates going up, but treasury is going up, sorry. ofdit doesn't have that type rate sensitivity.

the junk realm tends to have little if any correlation. julia: what is the downside? >> a recession would be a downside, downside to be, volatility spikes in rates. that tends to also be self-correcting. and inturns over a lot, the high-yield space, not only coupons to reinvest, but that average high -- 20% of your portfolio. but spike is bad for bonds, it is actually good for bonds, if you have a long-term horizon, your returns will be higher. scarlet: what keeps you up at night? is the blow of another edp? another exchange it product, or derivative? >> i get concerned about the liquidity environment, that is not a new thing.

the market is based on not everyone runs to get liquidity at the same time. if every deposit shows at the same day, they have a problem, but that herd mentality is a worry i have had a decade plus. the environment were companies take more aggressive actions to benefit their shareholders, which they can to do during solid growth, that is a worry down the road. julia: how much different is liquidity today versus precrisis? >> liquidity started to deteriorate back in 2002 or 2003 were there were consequences of transparency. it took larger risks than they used to, and the financial crisis has gotten worse -- there are fewer broker dealers that left capital willingness to take risk. we can sit here and complain about it and cry about all we want, but it is not changing.

what you have to do is adapt to the trading environment, build and liquidity tools and go about trading differently than you used to. scarlet: thank you so much. coming up, apple has a new strategy that involves squashing the bug. this is bloomberg. ♪

scarlet: apple plans on unveiling new features as part of its annual software upgrade, but an important update is not been included. that is because they're focused on quality in response to criticism that some of its software has become kind of buggy. hair with a scoop is bloomberg's apple reporter.

mark, tell us what apple is planning on including and what it is not including. mark: what they are including his improvements to facetime and emoji's, and do not disturb will be a new system in place of accepting and rejecting calls under location, where you are, if you want to answer your phone or not answer your phone. a new tool for parents to monitor certain apps, so lots of stuff there, and features like enhancements to the ipad and mail application will have to wait another year. there is another development with apple versus google, and google pushes updates whenever they want, and apple has set rules there is ous he said, bucks can rollout. when people look at apple software, where do they see the bloodiest areas that -- buggiest areas that this is a problem?

mark: people are starting to recognize that the apple culture is marketing driven, whereas google is not. apple wants to come on stage every year and say we have 200, 300, 400 new features coming to apple software that are going to be part of the new iphone and get people to upgrade, and a mistake that we are this far ahead of google and android. you see android updates over the years have been smaller in scope, smaller in focus, whereas apple is doing so much across the entire system. people are noticing box, you you saw features that were supposed to launch in september with the iphone, the ability to spend money and i message, and the ability to sync information through text messages, but the apple text message feature coming out in march or april will make it six months delayed, and the cache

feature of spending money through i message came a month and a half after it was supposed to. apple is looking to avoid that with this upgrading strategy. there's a level of comfort that they don't have to always forced things, and you point out, 90% of users already downloaded the last two updates. -- they can android be a bit more comfortable with it. mark: apple is at the point where they can only hurt themselves. doing something bad and putting a bug out there is worse than doing nothing. they are not the underdog anymore, they have to 90% update cycles. android is only at 30%, so apple is at a point where if they have a negative side, only the negative side is going to be cared about. this isrom new york,

bloomberg. ♪

new york city police say a nasa trump, the wife of donald trump, jr., as well as vanessa's mother have been taken to a hospital as a precaution after mrs. trump opened an envelope that contained unidentified white powder. the preliminary test shows the substance is not dangerous, and investigators say the nasa trump opened the letter that was a just her husband at the couples midtown manhattan apartment. --mp junior and his wife say president trump unveiled his vision of rebuilding america today with a budget proposal that includes $1.5 trillion to

upgrade the country's roads and bridges. i submitteding legislative principles to congress that will spur the biggest and boldest infrastructure investment in infrastructure. it will generate an unprecedented 1.5 trillion dollar investment in american infrastructure. paul ryane big or pays the proposal saying it is right for the president to make and for such are a national priority. with schumer criticize it the potential to burden governments. powerals of puerto rico's company said they restored power to most customers hit by a blackout overnight after a fire at a substation. it was the latest setback for the island which a to recover from hurricane maria and from years of deteriorating infrastructure. 400,000 power

customers remain in the dark five months after the category four storm struck the island. israel's attorney general has asked police to the late the recommendation into two corruption allegations against prime minister benjamin netanyahu tilde supreme court as the petition against them. please reschedule to present their findings last week, and netanyahu has denied any wrongdoing's. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: a recap of today's market action. it was up, although cameron told us that index did lose momentum heading to the close, which we are seeing in base that stocks close lower. nonetheless it was green for trading and the nasdaq and the s&p and dow, and the fact they did not the kind that anytime

today is the first time it has happened since january 26, just when the s&p and dow closed at record highs. joe: that is my favorites that of the day. scarlet: a critical moment for south africa, the governing african congress party is looking for jacob zuma to resign. vice president of africa analysis joins us now. great to speak with you, are we likely to get a vote of no-confidence on jacob zuma as many in the opposition party want? >> that is a great question, and maybe not. if the ruling congress can't compel jacob zuma to resign ahead of the vote, the opposition will not need to proceed with what they have demanded. many actually are observing closely today, this conclave session within the african

national congress and whether jacob zuma will come out of that with his job intact or not. anc does in fact vote to depose them, is that compel him to leave his job? >> it does not require, and that is the thing with jacob zuma. very wily and strategic politician, and you don't get o be president for 10 years without being very clever and capable politician. to question, this he actually have to resign if the ruling anc asks him to? no, he does not have to. he will have to take a look internally if he has the support base and confidence in himself to withstand this internal call within the anc and potentially face this humiliating call of no-confidence within the parliament. julia: does he have enough allies to do that?

that he optimism here is going to be able to take over -- and my understanding is if zuma refuses, august can be asked to get a national order to vote him out of office, and that would clear the way. and my right? -- am i right? mark: you are right, it is an open question whether the anc members of parliament will vote with the multiple opposition parties to call on the president are compel the president to resign. you are very much correct and that the investor community in south africa and watching south africa has a high degree of confidence for the presumptive president. markets are jittery but optimistic that when that transition comes, it will improve the business environment, the socioeconomic

environment in south africa. but those markets are on hold and on positive to see the outcome of today's national executive committee or in the coming days of how well the anc sensitive,s very difficult, complicated transition. hearing what to come next should he resign prematurely. julia: clinging on to power here, do you think ultimately -- it is going to be a drawnout process? mark: that is very tricky to answer. zuma has survived longer than many commentators and analysts and even members of the south african government have expected. he is a very capable survivor. that balance of power within

the anc, not to mention the balance of power within the south african government and parliament as a whole, is shifting from being evenly split between supporters to more into the cap of his opponent. hea has been be careful, if wants to survive longer and take that risk, it could all crash down all around him. it has been stated that zuma has no guarantees, no guarantees of immunity from prosecution. that is exactly what they are equally calculating. there are risks on both sides. scarlet: a lot at risk here, but talk about how meaningful south africa's political trajectory as to the rest of the continent. nigeria is the biggest economy in south africa, but perhaps more influential, to what extent

do foreign investors view africa's prospects through the prism of south africa? africa has been the largest economy, the most diversified and most developed and the best economy in africa. has a larger gdp, but that fluctuates depending on the price of oral as well as their domestic oil production, which can be impacted by domestic concerns, notably militancy in the niger delta region. to your question, many external observers look to south africa to set the stage of africa's global prominence. not all african countries except that, and many other african countries are trying to emerge leadershipngs of the that south africa has established over the course of many decades. when it was the only player internationally representing africa -- but, the economy and investors looking at south

africa will be reassured, at least the perceptions that they will be reassured when the day , will take over the leadership. there will be a breath of fresh air and hopeful confidence in the renewed leadership of the african national congress. mark. thank you so much, up, the etf's responded to last week's selloffs in ways that may not surprise you. this is bloomberg. ♪

last week's equity selloffs had investors scrambling and etf tracking the vix volatility of short-term futures, so inflows of over $500 million despite losing more than 80% of its value on february 6. begin etfs, let's reporter, this is retail money find back, hoping for opportunity. this etf getsaw hammered last week, and s&p reports must value in one day, and people are pushing money back into these funds. we don't know where the money is coming from, it could be retail, -- so we willxiv

see where this money is from, it could be hedge funds. julia: this is one heck of a debt. say, maybey as you lightning doesn't strike twice in the same place. it is this safe place to be now. >> there was talks about back,term debt, and where a look of the sentiment of where the market is right now. up,stocks are creeping back and volatility seems to settle, and people start to think, maybe the worst is over and perhaps it is a good time to trade again. scarlet: this is a chart that shows the inflows, and that is against the vix. my question to you, explain svxy still alive?

isthe key difference exchange traded notes and funds. notes, and they have the rights within the term and perspective to accelerate in the event he see a massive move in rock volatility -- massive move in volatility. mechanismis a defense -- svxy is a different mechanism. clearly from early on, it is going to keep trading, and it is going to benefit from inflows. flowand what about long etf's? the lock volatility etf's have been a slow motion train wreck that are arguably much worse if you are going to the long exposure. scarlet: particularly if you are leveraged two times.

is the interesting thing about etf's, derivatives, and when you look at futures-based etf's, you are accepting that future for returns. if you are paying more, it is coming out of your portfolio, and that makes a significant difference and eats into the curve. it is returning a good amount in a daily basis, but if you look at a monthly basis, that return is destroyed. scarlet: that brings us to the point that this is meant to be a daily product and not something you buy and hold onto. there are professional traders who can go in the morning and come out in the afternoon. >> exactly, it is designed to help investors know that it is not for a long. time.od of julia: or layered over a corporate bond portfolio.

outflows rather inflows, because if you look at the tech related etf's, they are incredibly steep. qqqt was a bad week for two , they lost $4 billion, the most since the dotcom bubble burst. 23 billioned losing -- and the commonality between the two is that they often use trading vehicles. sitting on the sidelines and waiting for the come to return, and you can look at where the inflows are going, some are roducts. s&p 500 pod scarlet: rachel evans, thank you so much. a reminder that you can hear about the etf industry every p.m.sday at 12:30

coming up, a discussion of the market psychology. p.m. this is bloomberg. ♪

julia: traders are bullish on u.s. equities despite american stocks been the most expensive in the world. money is flowing into a short vix etf's despite some of them importing last week. yellowcs professor at and the 13 nobel laureate discusses market psychology today on daybreak america. >> people are playing a psychological game, they're wondering when other people are going to sell, and that is very

hard to model and predict. what you do as an investor -- it is simple. away from one stays lavish things. >> what i find striking the last week is investors might rotate to didn't hold up. you didn't want to hold up to treasuries, it sold off, and utilities got hit because of higher yield, so if you need to rebalance, how do you do that? >> i think you can rebalance in sectors across stocks across countries. the u.s. has been -- i do know this morning, but it has been recently the most expensive stock market in the world. i think that is not a reason to avoid the u.s., but i think it is very much time to consider if your investments in u.s. stocks have become overbalanced. if the united states is the

most expensive stock market for some time has persisted, even if markets are broken or there's underlying cause of that, is there in underlying cause that would make u.s. equities more valuable compared to four and equities? well, i wish i could speak authoritatively on that. there's something about american capitalism -- that is enjoying a good renaissance. i hate to pin it on donald trump, but maybe he started the story. the u.s. is looking so and there is a boom in the market which proceeds donald trump's presidency, i wish i could be precise about these things. >> it's ok, you are a professor, so we understand. let's talk about the vix, debate

shakeout of the inverse fix etf's. retail investors are still going back to those inverse vix etf's, why? >> i can't tell you why, but you think about the vix. words,very low, in other markets were not volatile until last week. that was part of the feedback that encouraged the opinion that the market was not close to the top. but that is very wrong because historically, i studied major way back into the 19th century, and volatility has tended to be not high, even low, until the turning point, and then suddenly volatility shoots up. and then the market collapses. so volatility doesn't have to be

high for markets to crash. >> finally, professor, are our models out of date? am behavior economics and person making decisions, we now have trillions of dollars in big etf's and other funds that reportedly traded largely by computers and algorithms. is it possible that that analysis is out of date? of date, iten out has been talked about being out of date going back to 1987. was ongest one-day drop october 19, 1987, and at that time people blamed it on computers because we already had programmed trading. was it computers that didn't? in the sense maybe it was, because the programs hadn't figured such a big collapse then.

now, recently, computers are much more advanced than they yet we had a and very quite market, so i tend to think it is overextending to blame this on computers. i think it is people who did this and people programmed those computers. shiller, yale professor. scarlet: it is now time for the business flash. made a billion dollar bet -- against the biggest engineering company. the number of companies quadrupled to more than $14 billion. blackstone sold waldorf-astoria hotel for a record price, and now the firm may get the chance to on the landmark once again. blackstone has held talks about

bidding for the waldorf among other assets, and the cell is being overseen by the chinese government. --tacart not rolling over the san francisco start up tells bloomberg today it raised $200 million in a new funding round and the money will help defend against programs like amazon's to our delivery from customers. whole foods is a shareholder of instacart nato that was signed before it was acquired by amazon. studios "blackle panther" superhero movie which features a majority of black cast is estimated to really and at least $155 million in the u.s. when it opens this friday on presidents' day weekend. and that is your business flash update. i didn't even know what it was. joe: i knew what was.

what you need to know about mars trading day. this is bloomberg.

scarlet: u.s. stocks closing higher and we should mention the dow and s&p closing higher and staying in the green all day

long for the first time since january 26. coming up, texaco reports results tomorrow. for an economic data january out tomorrow morning. will be interesting to see pricing data. and don't miss this, our interview with goldman sachs ceo. that is at 3:40 p.m. eastern. that does it. joe: have a great evening. this is bloomberg. ♪

>> you are watching bloomberg technology. president trump unveiled his vision for rebuilding america today with a budget proposal that includes $1.5 trillion to upgrade the count trees --

country's roads and bridges. >> i submitted the biggest and oldest researcher investment in american history. the framework will generate an unprecedented 1.5 21 $.7 trillion investment in american infrastructure. >> new york city police say by trump opened an envelope that contained a white substance powder. the senate kicked off debate on immigration today, the fate of so-called dreamers, young undocumented immigrants facing deportation is at stake. president trump once money to build a wall that limits