near or far covered. leaving every competitor, threat and challenge outmaneuvered. if he were to come in and in his first meeting in march -- in comcast business outmaneuver. that first meeting is very important, think back to's janet yellen first press -- janet yellen's first press conference. a rateere to delay increase, then people would be anding about the powell pop his next four years have already been determined. he has got to let the markets move. the profit for 2018. to write things like this is the .e are at 85% of the target will biggest drop in the dow ever last monday, that's -- tom: did i do that? francine: gdp close to the -- it was a small decline in percentage. your charts showed how much it d've had to fall to slowest pace in two years. u.s. inflation report will that perspective is important. depending onspectiveto your pot

be most closely watched. what will the figure mean for the fed? index move because it was pent-up stability for 18 months? good morning, everyone and welcome to "bloomberg surveillance." that. i'm francine lacqua in zurich. the this the we will have plenty more. first, let's get straight to anna edwards. good morning, anna. oskipping back in the equity you have markets for us. francine. morning, market reaction 2016 after the first rate hike in december italian economic growth, that we 2015 and the fed skipped in need to get to because we have march and they also took a rate the italian economy growing at 0.3% in the fourth quarter, which is below the estimate of move out of the forecast as 0.4%. well, so really, they signaled year on year we get a growth they were reacting strongly to rate of 1.6%. the markets. again, a little bit shy of the estimate. so, the italian economic growth story is slowing ahead of the

election, which could be an to assimilate good news slowly and interesting dynamic. overreact to bad news and that the final quarter of sets up the stage for the next 2017, leaving the growth phase behind france and germany. move forward in the market the general election is next we repriced the market and created this fear and the market month. let's check on the markets. the asian equity session was has to work through that volatility. pretty mixed. if you just look back, you just it had a general upward don't get episodes of such fear and then they etn's -- it's very momemtum, but it had two types. thoughnjured by the yen, important, technical it was a bit like the flash crash. it is stronger this morning. the dollar is down by 0.3%. that is this morning. up when those things blow up and we is pointing higher by zero move pastthat affected the creds point 5%. look at that cpi number later. it will be one of the headlines for the trading day. that the bloomberg first word news update. reporter: jerome powell has suggested they central bank will push ahead with gradual rate rises while remaining vigilant.

these were his first commentss s since severe volatility struck the market. the market is currently present in one quarter of a percentage hike by next month. the white house is considering potentialster as the vice chair of the central bank. the trump administration has been searching to find a replacement for stanley fischer, who stepped down in october. john williams and mohammed el-erian have also been considered. higher u.s. rates would be a problem in the short-term. and that is according to lloyd blankfein. he spoke to bloomberg at the goldman sachs' 10,000th business summit. >> the possibility of a higher interest rate will be problematic. but at which higher interest rate for the higher economy is about in the near term?

the shock of higher interest rates will be of immediate negative and the long-term success of the economy will be just that, a long-term success. but you have to take both of those things together. reporter: japan's economy eighthd for an economy in a row, but growth fell by 0.5%. a continuation of this expansion and the surging yen could create problems for the boj. 0.6%, driven by a strong increase in exports. the total trade made a positive contribution. the strong reading comes as euro area policymakers plan to wind down similarly. israeli police have recommended charging from mr. benjamin not netanyahu. giftseived a $280,000 in

from wealthy fence, including hollywood producer armand melvin and james packer. he denies any wrongdoing and claims he is the victim of a left-wing witchhunt. this would be the first for a sitting israeli prime minister. off ajohnson kicks series of speeches today. extracts released by the foreign secretary's office would say he is trying to stop brexit and those -- released by the foreign secretary's office say those refusing to exempt the record need to stop. the economic benefits of both are overrated. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm nejra cehic. this is bloomberg. francine: francine: thank you. the credit suisse chief executive says relatively is not

without risks. he's adopting a cautious short-term outlook. he spoke with me a little bit earlier on. week we have seen a negative impact on the bank advisory unit, though he could not be more pleased with the trade in the business. >> volatility means people have created opportunities. people see it as a negative. --ncine: [indiscernible] participation rose to 75% this year. we are sophisticated investors. we understand markets. andre actually trading more we have increased our trading revenues. amount,ake a similar 2/3ch has more than doubled,

comes from our work management. are there parts of the market where people say, i do not want to transact at the moment? >> it is hurting the primary market. we have seen the secondary market. the primary market issuers are reluctant to issue this. as things seem to be settling down now, -- we do not believe that what we have seen is a major disruption. the correction was unavoidable, i think. we look very closely at the credit markets during the situations and the spreads. the u.s. and the spreads have done well. we have not seen a contagion, which means the fundamental economy -- the fundamentals are heavy. we see an employment at a historic low in the u.s.

growth in europe is coming back and growth in the emerging markets is very strong. growth fundamentals, first, we are looking at the tax reform in the u.s.. we do not see a downside. francine: do you expect the contagion to credit the market? tidjane: we do not expect one. the underlying economy is so strong. there is a very low prospect of defaults or unemployment. we do not see any indications of such negative francine: activity. just -- we do not see any indications of such negative activity. francine: the volatility, does or moreyou close -- comfortable -- several things are helping. it is helping the revenue line, adding 100 basis points to our potential return of equity. that is a big boost. seen a few stores of

.perating leverage i [indiscernible] me a littlelk to bit about global markets. are you more or less happy about where it is? or do you think it could have done better, given the restructuring you have done? tidjane: no, we had the loss in 2004, which was expected. and we have seen a bit of a gap in revenue. profitability is at 118%. during q1 i could not do more.

we've had to risk so much. we have run the last six weeks without any major issue. we have had a very significant upside. so, i am actually very pleased. francine: well, that was the chief executive of credit suisse, tidjane thiam. and we have been talking about the one that took the brunt on the volatility. he wanted to look at the perspective that was issued at the time that this fund was put in place. they did say it was not for retail and it was extremely risky and should have only been used for a one-day trade. anna: he has done a lot of hallmark, hasn't he, fran? let's talk about what we have seen in the banking sector, so far.

and what we hope to see. we are back with patrick armstrong and the portfolio manager from pimco. patrick, volatility is a double-edged sword. as we have seen from credit suisse. but the positives for our banking sector are also very clear, aren't they? in relation to revenues on trading. >> trading might enter the profit area for these banks. when you get volatility in markets, it introduces trading. that is the ideal situation for the banks. the banks are trading a tangible value in europe. we on primarily 4% and we are trading at 10 times earnings. in the u.s., 18 times earnings with a 2% dividend. good value and

very good beneficiaries of what we think will probably be a steepening of the yield curves. francine: do you expect, or are you worried that the volatility we saw last week in equities and the vix will spread to the credit market? geraldine: well, i suppose he activities to be effective to affect the credit market. so far, i would say the volatility is contained to the market. there is a technical element to it. we do not feel the need to revise our forecasts. we have been looking at valuations. they are as attractive lately. we have been recommending to somewhat a reduced exposure to credit. but so far, when looking at fundamentals, there is nothing that would point to us that we need to change our forecast in any way.

geraldine, how do you explain the volatility we saw last week? same question to patrick. geraldine first. if you look at the mayhem we saw in the market, was it an overcorrection, was it just because we had information pent-up? geraldine: i think, in a way, we were waiting for more volatility, the low volatility we had over the last two years. it was unsustainable. and the valuation was somewhat stretched. so, the combination of a new market structure and examine on inflation was enough to shake that market. we will see what inflation number this afternoon will bring. but certainly, this is one of the curious case is going forward. then, what explains it to you?

does it seem to make sense? patrick: the equity selloff was not that volatile. we saw a 10% drop on u.s. equities. anna: but it was quick. patrick: the vix going up to 45. vix was the magnified more than you would expect on a 10% drawdown. i think we are moving into a new regime, where goldilocks is done and our markets are price for goldilocks. moving out of are that into a brand-new regime now, where the fed is not just supportive and stimulated and we are getting into environment when you are talking about normalization, but the output gaps are gone. we have to talk about moving to restrictive policies in the u.s. francine: we will talk more about inflation in just a moment. but is a good for active managers, patrick? patrick: it should be good, but

there is a lot of crowding with active managers. a lot of people have explicit short-vol trades. you can see why they are in tight situations, having 24 months. but anytime there is volatility and changes, it should be good news for the value added. francine: patrick, thank you. geraldine, thank you. both remain with us for this hour. up next on "civilians," it is up next onthe -- "surveillance," it is all about the cpi figures from the u.s. this is bloomberg. ♪

francine: markets, economics and finance. edwardsurich and anna is in london. we are watching one of the closely watched inflation figures in recent history. we are looking at the consumer price index numbers -- they are taking on a more important role it seems that every economist surveyed by bloomberg predicts a slow move. we are looking at one point and percent -- we are looking at 1.9%. impact could this have on the future fed thinking, as well as treasuries? still with us, patrick armstrong, as well as geraldine. geraldine, when you look at bonds and treasuries, how much higher can they go? isaldine: i would say pimco still very much attached to the new neutral. yes, inflation is going up and

that was expected for 2018. the question is, how far is it going? we think the fed will for the first time in a while, match the 2% inflation. maybe it will be a little bit over, but we do not see a huge shift in the paradigm. it should be a good magnet for the yield. francine: patrick, do you agree with that? case is wer best have treasuries around 3%. but i think there is a lot of potential, as we get significantly closer to them as we ar getting to your and. there are things that go together, as we are getting to your end. protectionist rhetoric from ,rump about retaliatory tariffs all of those things can create y forces, as well as inflationary forces. we are in an environment for

people are used to getting with it. and living i but we think they should lead to a steepening of the yield curve as well. i like the shorter portfolios. francine: that is interesting. i spoke with larry hathaway earlier today and he said there is a real risk that rates have to go higher. the administration movements are more stimulative than we think. how much of a risk do you attach to that scenario? >> i do not think you have ever seen it before where you will get such a fiscal flesh from an economy. the output gap is at its highest, and fiscal stimulus on top of this should fuel inflation. we are looking at small businesses and the second most important issue they are facing is if they can attract labor.

comingre a lot of things together, where we have ingredients for inflation, which could reach above 2%. francine: what kind of impact does that have on other assets? i have this chart here. it shows rising government bond yields and how they moved in tandem with equities for such a long time. ad now we find ourselves in different situation, where equities are taking a different view of higher treasuries. what would you expect to see in the broader world of equities and assets. if we keep seeing these treasury yields that plow on higher? >> i expect the market was expressing the fears he was just pointing to. the question is, is this fear warranted or not. this late inimulus the cycle could be inflationary, but we also have to think of productivity. it has got to be the key between those things and what role does that play in making inflation higher.

it seems there are a lot of capex cycles coming from corporate and a lot of it seems to be inflationary. we are in a relatively young scenario and we are cautious on our risk-taking for all of these reasons. patrick, if we see further dollar weakness, what does that mean for stimulus? it is stimulating and already stimulated u.s. economy. patrick: yeah, i think trump and the administration does have a weak dollar policy. they are running the dollar deficits on the current account as well. that should not make it too weak though. we think the dollar is oversold right now. i think you will see some dollar strength as risk aversion starts to repatriate the capital. that is offshore right now.

long-term, i think this will lead to a weakening dollar short-term. i would be surprised if we see some strengthening if there is a risk aversion event. francine: would you go along with that? do you think the risk aversion would boost trump's other forces, or has it been keeping it weaker in the short-term? e: at the moment, we are airing on the weakness of the dollar. we have seen the big moves from 2017, they are unlikely to repeat themselves. i wish we could have a little bit more stability because the euro is close to its value currently. francine: thank you so much. geraldine sundstrom states of us for the hour. we have plenty coming up on "surveillance." actually, we are talking, anna.

i will break a little bit earlier because we need to talk about -- i guess the cpi. if you look at it like this, you could have a print out, and going back to geraldine's point of productivity, i do not know what we need to measure, productivity differently, or if we ignore it. is the phillips curve back? we talked about that a lot during 2017 and that is something the fed has to wrestle with. on that subject, we have got jerome powell taking over at the fed. people are asking whether he will have to diverge are continue with janet yellen's policy. will there be such a thing in the market? >> i think the fed is trying to stay the course, business as usual. this correction is unpleasant. it is fast and volatile. but this new level of volatility that we have seen, it is almost normal.

and it is likely to stay. this is part of the cycle and people need to adjust their portfolio with risk management. it is worth taking. i would say by now -- francine: we do not know much about what he thinks, do we patrick? he has talked about continuing the policy and normalizing rates, but being aware of risks and financial markets. you could look at that as trying to tread a course through the middle and say nothing, or you could see significance in it. >> i believe that is nothing. the powell statement is public 10%. i would say we are short on powell as well. he has got the hike as well. he is going to pull the carpet away should things get too hot. he is not going to put his foot into place unless we see a significant curve down. francine: patrick, thank you. patrick armstrong stays with us.

coming up, we talk about japanese jitters. we focus on the country's g rowth. and the surging yen puts a lot of pressure on the boj. we will also discuss on the possibility of somebody replacing kuroda, and his outside of the box thinking. i am not seeing a lot of copy on that, it seems he will get another term. however, we will look at what the boj can do next, compared with the fed and ecb. this is bloomberg. ♪

anna: economics, finance and politics. i am anna edwards in london.

jerome powell has suggested the central bank will push ahead with gradual rate rises, while remaining vigilant. commwill be his first ebt.-- his first comment. the market is currently pricing hike next month. the white house is considering loretta mester as a potential vice chair of the central bank. that is according to a person familiar with the matter. the troubled ministration has been searching for weeks to find a replacement for stanley fischer, who stepped down in october. san francisco been president john williams and mohammed el-erian have also been considered. would be aates problem in the short-term according to goldman sachs ceo. he spoke to bloomberg at the goldman sachs 10,000th small business summit. >> the possibility of higher interest rates at this point would be problematic.

but what is driving higher just rates in this economy? in the near term the shock of high registrants would be the in immediate negative and the long-term success of the economy would be just that, a long-term success. but you have to take both of those things together. anna: israeli police have recommended charging netanyahu with bribery and breach of trust. please estimate he received about $283,000 in gifts, including champagne, cigars and jewelry from wealthy friends, including hollywood producer armin motion and james packer. he denies any wrongdoing and claims he is the victim of a left-wing witchhunt. if the charges are filed it

would be the first for a sitting israeli prime minister. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. this is bloomberg. anna: thank you. japan's economy excited for an e ight quarter, but the pace of growth slowed by the most in a couple years. this stimulus program is getting harder to sustain. where are the yen and japanese assets headed? with us, geraldine sundstrom. have had really interesting comments over the past couple days and really interesting movements in the japanese currency. we heard from shinzo abe a couple days ago. do they choose from the boj governor. they have to speaking wish and read of a list of qualifications required. but does anybody really believe there are other candidates out there? something bloomberg has done previously, suggesting the market expectation is that credit gets another term.

>> that remains the same. given the move in the market, the alternative is for a more dovish person than the last of his person. the bank of japan is probably the most dovish and it has the most credibility. anna: risk off events really do help, don't they? this chart shows that move higher in the japanese currency, it shows the japanese weighted currency for the end. it shows the rising in and the strength we have seen the currency. as we said during the break, this is not necessarily the case during the height of the equity sell. but what does that tell us? >> i don't know what it tells us. i was surprised that we thought x at 40.

it keeps appreciating, slow and steady. i don't know what it tells us. i do think the policies in place have to stay in place. 0.5% economic growth with the global backdrop of the global economy growing at 3.7% with the monetary stimulus. and 0.5% is what they are getting out right now. they are not in a position were they can take their foot off the in terms of monetary stimulus. anna: the growth story is stuttering, but it is still growth. it is comparatively good with other economies. patrick: in terms of length, it is actually very good. 0.8% growth, and that is a disappointment. but the fact there is growth is good news, but it is not much. anna: does anybody trying to

fight the bank of japan on the 0% targeting on the 10 year or anywhere on the curve? they have got this yield targeting policy, haven't they? they keep saying they are sticking to the plan, but every now and again you since the market is testing them and with rates going higher in the u.s., you can sense w2hy. eraldine: over the past couple weeks, they have been walking the walk. gdp.n a sense, back to the i would not read too much into one quarter number. looking at the earnings vintage of japanese economies, they are doing phenomenally well and even though the and has appreciated a little bit, it has not had much .f an impact it has one of the strongest earnings in the world, almost 30% on the topix. i think this, if anything, would make the rather

encourage than japan. anna: where are we now? .0749 dollar-yen? we have seen a little bit of commentary from one cabinet, have a great? -- haven't we? do we expect to see more verbiage, more wording around that? geraldine: it usually does not have much of an in fact. the yen has been between 1.07 to 1.15, and unlike the euro, we have not seen a trend. i would say that as long as we ity in that ran gge, should not affect the economic backdrop. not bemoment, i would worried. anna: will the government step in and start talking about the currency? do they feel free to do so, given what we heard from the

cod-delegation in davos? isgrickrick: the u.s. dollar strong and it has been strongest the renminbi. i do not think it is at the point where they have to really talk down the equity. anna: so, it is just the weak dollar policy. the dollar, flat this morning, .8968. patrick armstrong and geraldine sundstrom stay with us. south african power struggle. to hang onuma tries as police raid to the home of one of his top associates. we get the latest. we are live in k-town next. this is bloomberg. ♪

anna: good morning, everybody. 9:39 now in london. to south african out. enca is reporting that police have arrested one of the gupta brothers and one of the family associates while conducting a raid. the gupta, who are close allies with president jacob zuma, and in business with his son, are being investigated for corruption involving state contracts. the newshas climbed on and that was the case a couple hours ago. that news comes after the c said yesterday they have told jacob zuma to resign. let's go to johannesburg. we have been waiting patiently for news following this story

with all of its twists and terms. has jacob xina responded to the anc -- has jacob zuma responded to the anc's decision? manus: welcome it seems as lefth president jacob zuma about one hour ago full that we have not had any indication from his office, nor any indication as tohe anc itself whether he agreed to resign. we are still awaiting news on whether or not. anna: they are watching jacob zuma. what has this done to the overnight currency markets? it seems as though -- it is not just president jacob

zuma who is feeling the pressure. they seem to be clamping down on the people that he may have thought were his closest allies. as you mentioned, the gupta family residence being rated this morning. the government is not holding back on clamping down pressure ma president jacob zi zu to resign. anna: that is the past four today. we are waiting to see how he responds to that resignation call. where does this move of further forward? what are you hearing? reporter: what we know right now is the anc's caucus and parliament is currently meeting. they might be discussing a motion of no confidence, which was scheduled to be heard next week. opposition parties have approached the national assembly saying they want that motion of no-confidence debated this week.

though,resting factor is that the finance minister did say during an interview with cnn that the anc is ready to force president jacob zuma out of the presidency, even if it means voting him out with a 62% majority in parliament. they wanted jacob zuma out immediately. anna: thank you very much. still with us, patrick armstrong and geraldine sundstrom. let's turn our attention. we are looking at the south .frican story we cannot get away from what the dollar is doing. bonds are contracting with the u.s. dollar. real yield is around 3% right now, which is an attractive risk premium, given the strong global backdrop.

>> however, a rising rate environment, if you were to rise too high, could become challenging. the emerging markets could grow because they contain the global the bestich remains case of what was forecast, but this could become a challenging market for the emerging markets. anna: i get the defense, like in many parts of the world, if we see the u.s. rates rising. that could create a more positive story for em. this could be all about constraining inflation. geraldine: very much so. the fed needs to rein in inflation. that is the dangerous environment. enjoineding market is global growth. but in 2018, we have stepped up our global forecasts. that growth is actually coming into emerging markets while the

developing market has seen a little bit of a slowdown. francine: patrick, what is the biggest threat to synchronized global growth. that was a mantra in 2017, and even into davos week into january we were talking about in globalrength growth would upset equities? patrick: there are two issues. protectionist policies, with the u.s. and china is trying to engineer a magic trick where they will get rid of excess credit and maintain their growth at 6.5%. because that is so difficult, that is definitely a risk. i think they probably will achieve it. anna: are you concerned, geraldine, about china? they do not want to risk growth falling too far and of sitting the population any further. geraldine: they have had good growth from infrastructure and consumption. in china, the savings rate is

extremely high. without too much credit, they can sustain a relatively healthy function pattern. of course, the real estate is an important part of this equation. patrick, in terms of trade, you mentioned that was a threat to global growth. trump see the administration delivering as much on trade, as they talk about trade. because after davos and the announcement around washing machines and the linike, most people are asking, is this it? patrick: exactly. they have started very little policy this year. is, is this a continuation where things get larger, or is this the end of it? we will see with nafta discussions, that is the big

one. we expect 2.5% this year and if leaves nafta, we think the u.s. goes into a recession. anna: would you go along with that? that trade could become a significant risk for the market? geraldine: it is definitely a risk and a risk for inflation. this would push up inflation and have an effect on growth. that is why we would recommend inflation protected treasuries. anna: we are talking about cyclical trade. we will see if that is the way he moves. i think it is the middle of april when he decides what to do. that is one of the stories people are talking about a lot on capitol hill. patrick armstrong and geraldine sundstrom both stay with us. boris johnson gives a valentine's day speech to unite the country behind brexit. will his words move complaining remainers?

that is our summing up. bel the remainers impressed, or will the divide deepen? ♪

francine: finance, economics and politics. this is "bloomberg surveillance ," and i'm francine lacqua. anna edwards is in london. let's get straight to the bloomberg first word/with nejra cehic. hi, nejra. reported ait suisse smaller than excepted fourth-quarter loss, 5.2 billion francs, ahead of the estimate of just over 5 billion francs. the ceo warned investors of the downside of volatility after wild market swings had a negative impact. speaking about the company's goals. at 85%.arget is if you are at cost, we are at 75%.

bet are: s kky and paying less to show premier football matches through 2022. they combined 4.6 billion pounds over three seasons, combining 25.1 billion pounds in 2015. sky with a 16% less per game. that signals a more rational approach by broadcasters after years of inflation. painful 4017, but still has managed to grow. they released sit let financial -- they released select financial information to investors. uber still us $4.5 billion on sales and $7.5 billion over the 12 month period. that's it for the bloomberg business flash. francine: thank you. all we need is love, and the united kingdom.

that will be the message of boris johnson, who is due to speak at the top of the hour, whose address has been pitched to remainers. exit-foess warned against blocking the will of the people. we have heard have in this week about the future of written outside of the eu. -- the future of britain outside of the eu. let's get straight to our london bureau chief. david, thank you for joining us. what exactly is boris johnson's aim? is he trying to unify, or tell the remain earthers, it's too late? david: we have not heard from him for a while. we have got this series of speeches coming up, up until theresa may's on saturday. we have seen a little bit of

content released before hand. if they are trying to really on thise remainders side, maybe boris johnson is not the best person to do that. he still blames them for tipping the boat for claiming out with what he claimed to be untrue claims about the amount of money going into the nhs revenue. he is famous for having the phrase of having his cake and eating it. that has been his policy, why be ridiculed by the other side and people like michelle barnier and the european union. he is one of the people in the cabinet who cannot get away from the headlines. he is very much the headline celebrity in the cabinet. by putting him out front, they are grabbing the agenda again. theresa may is trying to show that the government has a policy, has a negotiating stance. of course, we don't really know what that is and the problem is, the cabinet has not been able to

agree. as you say, wew will hear from prime minister may later on this week. and just like in florence, we see boris johnson out before her. this time it is sanctions. patrick, what influence does this political to-ing and fro-ing -- what do you brace for over the next couple of weeks? patrick: theresa may has made a promise that we will get more clarity on brexit. idle think we will get that. she think that is in her best to get cleart guidelines, but we are a little over a year away. we have recessionary forces, higher interest rates, higher sterling. and maybe even a labor left

leaning sterling. that might be the best case for the u.k. followingwe will be that speech from the foreign secretary boris johnson, starting in a couple minutes. david merrick, our bloomberg london bureau chief. also, thank you patrick armstrong and geraldine sundstrom. ext, coming up net "bloomberg surveillance" continues with tom keene. we will be speaking to a number of great people on the foreign exchange market. hans redeker, for example. we will be talking dollar dynamics. this is bloomberg. ♪

francine: credit suisse cuts its losses. shares in the swiss bank jump. we speak to the chief executive. the japanese yen rises to a 15 month high. the trajectory will become clear after today. the rand extend gains. check in with johannesburg and jacob zuma. i am francine lacqua in zurich with tom keene in new york. we will talk a lot less three, volatility and everyone is looking at the cpi numbers. i have not seen it like this for at least a couple of years. and then i look to the head of the elections. and of course, japan and the yen are hitting the stocks. tom: absolutely and combined with what we saw from the u.k. yesterday, i agree inflation from america will be closely watched.

we talk a lot about international relations and the placement of the trump administration across all of the world economies, francine. tom, now let's get straight to the bloomberg first word news with taylor riggs. in israel,rting prime minister benjamin netanyahu denies he is guilty of any wrongdoing and insists he is the victim of a witchhunt. police recommended he be indicted for bribery, fraud and breach of trust. they say he traded his influence for favors. it is now up to the attorney general to decide whether to charge them. south africa is waiting for jacob zuma's next move. the congress says he needs to quit. if he refuses, the anc could seek a no-confidence motion in parliament. as francine mentioned, the report today on the consumer price index takes on greater importance after the market plunged. the data could show inflation is

both subdued and firm at the same time. there is concern the jittery financial markets could be rattled by any sign that prices are rising faster than expected. and republican senator bob corker is reconsidering his decision to retire. a spokesman for corker is listening closely to people from his home state who wanted to run for reelection. a is a strong critic president trump, who called him a coward for not seeking a third term. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i am taylor riggs. this is bloomberg. francine, tom? tom: thank you. futures are up by 10%. the dow is up 118. the euro is unchanged. the yen strength is still there, at the 10-6 handle. the real question there, about

the supply of american shale oil, coming online. the vix went down from 26 to 23.9. yen,ve a 1.06 print on a few hours ago. now, 107.47. nymex, 56 by 59, 1 hour ago. the nymex, 56.9, one hour ago. this is textbook. course.like teaching a here is the 200 day moving average. this is 1929 and here we have 1989. we have beautifully set up the beginning of what is called a pennant. it is not a big -- it is not a pennant. normal dow adcting very after a plunge here.

technician would say, a good distribution after all the trauma of eight or nine days ago. francine? francine: there is quite a lot going on in the markets. investors are waiting for the u.s. cpi report. that has been one of the main things people have been looking at, apart from yen. the japanese currency has been surging -- touching the 15 month high overnight. this of course, is what it means for the dollar-yen. one analyst says the yen might be the all weather currency play, despite whatever meeting comes from the u.s. economic ewport, due out at 8:30 n32 york time. if cpi is false, the dollar will reconfigure and the yen will do ok as a result, one economist argues. we are looking at the impact of the end and cpi with hans

redeker. hans, i do not know if we want to go into the yen story right now, but let's focus on cpi. what are you looking at four cpi, and what does it mean for fed policy? hans: the asset to watch, what is happening to other cost factors, such as oil. we have seen oil declining from january highs by about 13%. you consider what is the potential affect on the potential break even. we should not forget that despite the threat of a cyclical related inflation upward pressure, inflation really is a big story. last week it seemed to affect the market. think there are the google

upward pressures on inflation and you still have structural downside pressures on inflation, too. such like digitalization. relevance ofhe today, cpi is over dramatized by the markets. i think we should not be overly concerned about that. francine: right. is nervous market because of what we saw last week. as you rightly say, it was the data on friday that pushed the equity. effected did it affect the credit market? hans: i think the real story of here is the global economic growth momentum. we have to think about moments that will impact the global demand. my view is we are getting into the developed world and in many other places, we are getting the capex to pick up, which by the way, has a bigger multiplier for economic growth. the capex needs to be funded.

this funding is a major issue for change. it's driving the u.s. dollar lower. when you look at the real reason lower, i.s. dollar is would think most of that is related to the capital ability in the united states of america. people are looking out for funding. then, you look, for instance, at the markets, when they are issuing bonds in dollars, in hard currency. 9% of that is down in dollar terms. i would advise when the emerging markets are capital hungry, they are tapping u.s. markets, not tapping the yen market, not tapping the euro market. why is that? they have a limited capability in japan and limited capital in the euro. you need to make a differentiation here, the cost of capital, versus the availability of capital.

the availability is always more important. tom: that is a great summary. if we are dollar centric in our analysis, how do we play the dollar? jason, bring up the chart. this is the dollar index. this is just beyond elegant down here. the strength of the dollar and the davos rebound, where we rolled over again on weak dollar. hans, what do i do if i have to position for this? dollar? play a weak correction.l that a you need to take that into perspective we've seen massive spikes of volatility in other marketplaces, such as bonds and equities. then you look at how much volatility did this affect? then you look at three months vol and euro-dollar is still

low. that say to you? this is really important, what mr. redeker is talking about here. we have not seen the vol -- hans, what does that say to you? hans: actually, that tells me that the global growth cycle is still the main force in the fx market. so, when you look at the correlations we have seen -- you see the dollar-yen is going down at the same time the differential for the same currency pair is going to pick up, 10 year real yields, they move away from what the fx market is doing. the truth is, that is a liability related flow. accentuatedthe flow. i am saying that whether you are raising the dollar liability, that is the end product of a multi-month planning process. if you are looking at capex, you

plan, you implement, and then act. in between, you have six month. that means it is a much more stable flow than the asset flow. and this flow is hugely negative for the u.s. dollar. that is something to consider. if the 10% equity market declines and it breaks the global growth cycle, do you really believe that with the current dynamic taking place? i believe 10% in the equity market is not make a difference. you need a much bigger decline in the shale market in order to interrupt the liability flow, which is dollar-denominated. francine: ok, hans, we will get back to hans redeker from morgan stanley. he expects a bigger correction. coming up, an exclusive interview with goldman sachs' president. this is bloomberg. ♪

taylor: this is "bloomberg surveillance," and i'm taylor riggs. it is a good news and bad news situation for uber. there was six to 1% sales growth in the first quarter with to put billion dollars, but for the year, they recorded a loss of $4.5 billion. thefinancial report shows company keeps increasing revenue and making progress on cutting losses. in japan, toshiba has brought in theutsider in the wake of accounting scandal and downsizing. capitaldirector of cdc

partners. toshiba is in the process of selling the memory chip after billions of dollars of losses in the nuclear energy business. that is your bloomberg business flash. francine: now let's get to south africa. it is crunch time for jacob zuma. police raided the johannesburg home of the gupta family, close allies of the embattled president. our reporterw is from johannesburg. is jacob zuma on his way out, or not? well, certainly the hascan national conference recalled him from his position, which means you need to resign. or he will face a motion of no-confidence in parliament, which will be the quickest way to take them out. today to gived

his response to the recalling of him as president of the nation. it was said to have happened at 10:00 p.m. local time. now there is no scheduled press conference as well. the word is he will give some sort of announcement today. hat happens ifw jacob zuma decides not to go quietly? you talk about a vote of confidence. with that be damaging for the south african economy? reporter: it certainly will be. it will be probably the ninth motion, or the ninth attempt at removing him from office during his tenure. of course, every avenue has been taken apart. the only difference with this one is -- it would be that his own party would now not support him. he's more than likely to exit office. the african national conference has a new leadership and a new president as well. has a deputy

president, so the motion of no-confidence is the most likely avenue. the question then becomes, what happens from here? tom: there is something missing from all the reports from here. so, i will ask a dumb question and i say that with respect for the people of south africa. is this guy a dictator? are the elements of dictatorship to mr. zuma? arabile: there are a few. i suppose somebody would like to think something like that. they would help the african national conference would rule until -- he said he hopes the african national conference would rule until jesus comes. say, according to some characteristics, there is a leaning towards being a dictator of sorts. right now he is very cruel in his position.

it seems the highest ruling party of the african national congress does not even want him in congress. it seems one would think that way of him. tom: very good. arabile gumede, thank you. hans redeker is with us. hans, if i bring up the chart of the dollar-rand, it is a really interesting chart, folks. here is the lehman lows. here is the crisis of 2008. there's the weakness off of 2008 and the recovery. and then, it has been pretty good over the last two years. hans, can you go along rand, looking for rand to move 11, 10, 9? hans: we are longer on the rand. we came up three month ago with a story, which was based on our observations that we made in

south africa. the political landscape was on the change. our political analyst did a fantastic job in understanding the dynamics within the african national congress. we are now within a situational flow where we think the new guy is coming in, and they will do a much better job. we will see if the delivery comes. normally in the market base we had a week and see position. once he knew the answers, you wait and see. i believe that might start in about two months time. tom: hans redeker, thank you so much. let me tell you about our next hour. we are looking at international relations with the trump administration. john will join us from rbq economics. the new inflation.

john on the new fed. from zurich, from new york, this is bloomberg. ♪

francine: good morning, everyone. this is "bloomberg surveillance ," with tom and francine. we are in zurich because we spoke with the chief executive of credit suisse, who shares are trading higher after a loss in the fourth quarter. speaking to me a little bit earlier, tidjane thiam says the

markets have had a negative impact on the bank's advisory unit, but he could not argue with the performance of the trading businesses. people see it as a negative, but actually, for anybody, it creates -- francine:t if you have the right trade. tidjane: you will see that was a key part of the trade. it wentticipation, from 50% to really working. they are sophisticated investors. they understand markets. they have the ability to trade. we are actually trading more. we have increased our trading revenues. it has more than doubled this year. from ours comes international customers. that connection is very strong. francine: is there a price in

the market? a place where people do not want to transact at the moment? tidjane: we see a little bit in the secondary market. but the primary market issuers are reluctant to issue. so, things seem to be settling down. we actually do not believe what we have seen is a major disruption. a correction was on the way with equities. we have looked very closely at the credit markets during those situations and the spreads. the investment spread has done very well. but you have not seen a contagion. which means the fundamental economy, the fundamentals are healthy. we see a group in the u.s. the group in europe is coming back and in emerging markets, it is growing strong. we looked at the tax reform in

tehe u.s. we do not see a downside. francine: do you expect a contagion, or is it too soon to say? tidjane: we do not expect one because the underlying economy is so strong. consumption impacts the market. we don't see any indication therefore, for something like this. francine: just coming back to your turn on capital, well your target ranges between 10% and 15%. the volatility, does it make you closer? tidjane: several things are helping. but also, that reform is adding 100 basis points to our return on potential equities. that's a big boost. so, then, it's the two stories increasing the earnings and closing the sre. in 2016 andllion

$1.9 billion in 2017. after that, you can see the e ffect. francine: that was tidjane thiam , the chief executive of credit suisse, speaking to me earlier on. it is also interesting to talk uput the etf that blew less rake and he went to get the perspective. hans redeker stays with us. coming up on "bloomberg plentylance," we have more not only on the market volatility, but we delve into cpi, and we speak to the "affairs magazine" editor. this is bloomberg. ♪

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. tom: good morning, everyone. "bloomberg surveillance" francine is in historic speaking with -- is in zurich speaking with the leadership.

cusp ofr on the average. never average, here is first word news with taylor riggs. taylor: the trump administration is signaling progress in talks of the north american free trade agreement. downplayed theer chances the u.s. would withdraw. he said talks are going well, but he has been critical of canada's stance on cars. president trump moved in the so-called dreamers program has been blocked by a federal judge. a judge in new york ruled the given accurate't reasons for ending the plan. russia is accelerating the military buildup on islands claimed by japan. in that is an attempt by japan's prime minister to persuade russia's wetter mere prudent to settle the dispute. russian troops held exercises on

putin russia's vladimir to settle the dispute. we are not even a week into the winter olympics and nbc is already claiming victory. the network is attracting 24 million viewers a night in the u.s. to its coverage. that is down 6% from the sochi games, but it's enough to make sure nbc doesn't have to give sponsors additional airtime for free. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thanks so much. klaus hessberger is at jpmorgan. he has a fancy title, cohead of strategic investors group. what it's really about is the llions ofion that gaji dollars being raised in the investment space. with us as well -- of morgan

stanley. you with us, ive want to know what the internal out 5, 6, 7, 8 years does with of the wall of money that continues to change assets, do you assume irr has to come down? klaus: we have seen funds reacting to this. number one, they have set up more low return funds and you have seen this across big asset managers. secondly, it has come down, but all the funds are getting more fundstive we have seems -- where they buy us at in france today and in germany. we have seen funds trying to be nominative and find the right assets. tom: what is the effect of the wall of private money and

supposedly information smarter money? what is it doing to the public markets? seen the return of public to privates. for example, if you go to last year, 6 out of 10 in europe, some of you remember starter -- we have seen net a couple of years ago taken private. much lookingpretty for bigger assets and newer opportunities and therefore, the public market is a good target. in zurichriend is today. -- is moving his platform from london to zurich. his private equity going to be based out of london or will they find a new geography in the coming years? earlierhey are based and jpmorgan -- everywhere and jpmorgan reacted a long time ago.

spain, paris, italy, and london. we are where our clients are and we help them find the right opportunities. on the industry side, to your question, what we have seen is -- the big focuses on the sector side, theye asset are not looking at the best at your. divestiture. stillher area we are digging is the industrial side, some of the big corporate in europe, but also the u.s. starting to divest some assets into areas where private equity are focusing, doing the work, doing the outside in work and trying to differentiate to

create returns. francine: is there a concern private equity scales up too much? we saw some of the private equity firms having a lot of restaurants in london. there are too many of these restaurants. i will not name them, they now have to close them. is scale a good thing or has it become a danger? a good -- onk it's the one hand, it's a good thing if they are smart because with the scale, they don't have to team up anymore and teaming up if you go back to 2007, 2008 where we saw big transactions where you had sponsors working together, nowadays they do not needed anymore so you see one or two teaming up. it makes them more flexible. i think as you saw during another analysis, there's probably a concentration to them, but there are others who , foro target niches

example. some focus on the technology celtic -- sector and others on health care. francine: do you think private equity fund raising will change when rates started normalizing by central banks? klaus: i think it's a fair question, but on the other hand, i know we are talking about rate rises, but we are still very low. we have seen in crisis -- increases by 30 bips, but overall the spreads are pretty low. -- n't see they will still put money in the private equity funds and classes . i still see continuous trend, but there has been an all-time high last year. total number i believe is a trillion dollars available for invested,s has to be that i still believe money will flow into private equity. tom: what happens if that money is not invested?

years fromision two now, five years from now returning money to investors because there is too much money? haven'to be honest, i seen this. we are pretty busy. all funds are targeting specific ideas. you raise a valid point. i don't see the problem at this stage. they have enough assets available in the public and also on theet, but -- side and my colleagues from m&a have seen a lot of cross-border transactions and there will be assets coming out of this. im: that is right where wanted to go. are you boxed into only megadeals that are transnational transactions or can affirm like jpmorgan do what it does for years and go down market and bring small businesses in as a bolt on transaction? do you just give that up because of the wall of money? klaus: no, we are covering both

sides. big clients, we are looking at the size of the situation. smaller ones, we worked with various sponsors last year because we have global and european setups and if my office private can work with a equity guy in italy, we make resources available and it helps them develop the next situation where they can -- large pe funds. it france,f you look milan, spain, greece, and germany, where do you see the private equity space being bigger in the next 12 to 18 months? klaus: all those places are even -- very busy. even north africa or the nordic region. the good news is you saw -- in france after the election. germany has finally got the coalition government. you see italy as a place were lots of private equity has been active in the past. there is no clear trend where

they try to the french it and cover all the regions and try to find the right effort for those guys where they can follow the strategy. there's probably no clear trend to be seen. last year you saw a lot of con directions -- transactions out of poland. on,e's still stuff going but italy, france, germany. nordic regions. it's across the whole spectrum. tom: klaus hessberger, thank you so much. breaking news out of south africa, mr. zuma is in the -- the fourth president of south africa, 75 years old and his treasurer general is saying there will be a no-confidence motion tomorrow against the president of the south african republic. this is something that has been widely anticipated and we have seen it with dollar rand strengthening, certainly strengthening through the end of 2017. i'm going to mark that as the

middle of november 2017 and we've got modest rant strength right now. -- rand strength right now. a no-confidence vote tomorrow with mr. zuma. notmend that motion, but the substance of that motion.

♪ francine: good morning, everyone. this is "bloomberg surveillance ." andand francine from zurich new york. let's get to brexit and is a big speech in 20 minutes or so from the foreign secretary boris johnson. that will be the message of the hetish foreign secretary and

is trying to give an olive branch to remainders. that is crucial because we have not heard from boris johnson for quite some time. the secretary will deliver the first in a series of high profile brexit speeches from the cabinet this week. we are back with hans redeker. when you look at the pound, first of all, does it move on the back of what boris johnson says or does it not because he could be sacked any minute? i'm trying to figure out the relationship between the foreign minister and her -- prime minister and the foreign secretary. hans: -- stalling over the past few months and a lot of that has come on the back of what we saw on the u.s. dollar, the general trend to weakening off u.s. dollar. there's a little bit more. when you look into the u.k. colony -- currently running at a deficit, the significant part is due to the income balance.

we are seeing dividend and coupon payments are getting higher. that definitely has lent support to sterling. on top of that, what is the outcome toward the bank of england has been debated recently, sterling bringing up pushhikes or earlier to them as well to higher levels than originally assumed. as a -- there are very big questions in the room here and that is about investment weakness, the gross potential of this economy, and what are the long-term consequences it will have on sterling. i believe it's investment spending -- long-term investment spending does not pick up, you will have gross coming in lower and i cannot get too optimistic on sterling. francine: how much lower? are we talking about growth to a point where it looks like a recession or slower growth than expected?

gross is nearly booming, so we have outlook of about 4% of you compare against u.k. situation of about 1.5%, the gross potential of this economy does not improve. one of the reasons why the bank in an earlier -- entered an early rate hike cycle is the have to consider monetary policy in the context of slower growth potential of this economy . when you run a lower potential of gross inflation can pick up earlier. that is what the bank of england is reacting to. when you look at that, what it means for cable, dollar and weakness is very likely to dominate. i believe in it comes to eurosterling, eurosterling may have some limited upside potential from here as the euro is much better positioned than sterling in all aspects of asked -- fx markets.

francine: do you think the boe will actually hike in may and how much downward pressure will that put on consumers? the: we have to look into structural debt. especially the increase of nonmerit secured debt in the u.k.. nonsecure debt has gone sharply up. if you do an analysis of interest rates and how that will --e an impact on household you do see the balance sheet in the u.k. household is going to be affected quite significantly within an environmental interest rate and that i think is going to keep gross in this country subdued. of course, all of that is happening within an otherwise very strong global environment. this global strong environment is as well providing enough liquidities to fund -- when

global growth is going to weaken, than the real hour for sterling is going to come and i believe then you will have a down move in sterling on the broader scale. francine: to what kind of level? downward movement? hans: if you look into eurosterling, then we could see a movement back up to about 92, 93 quite easily. , thank you soker much, greatly appreciate it this morning. we are watching the news in south africa. brief offer needs a the bloomberg. we would like to give you that, too. how about an intraday chart of south african rand? today we see and other leg down. for me to get up and paint this, let me do that in yellow. here is some of the news flow. maybe mr. zuma saying i am going to stay and over the last eight hours, down we go, stronger

south african rand this morning and we break to new lows with a .o-confidence vote tomorrow there is the treasurer of south africa continuing to make this announcement, explaining to the people these challenging times their 75 president. we will continue to follow this through our africa desk and johannes berg and cape town as well. stay with us. this is cape town. -- this is bloomberg. ♪

taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. at&t is -- surprise witness for the upcoming trial over the government decision to block the deal to buy time warner. the phone giant wants to have the justice department antitrust chief testify. at&t could be seeking to show the government decision was politically motivated. twitter's ceo is deflecting speculation the company could be a takeover target. dorsey cold the goldman sachs -- told the goldman sachs conference there is

value in twitter remaining independent. that is because twitter can work on every device and every platform. chipotle has lost customers due to a string of foodborne illnesses. the head of taco bell will be the next ceo. chipotle has often derided the kind of fast food taco bell sells. that is your bloomberg business flash. tom: thank you so much. two themes with hans redeker of morgan stanley. let us begin with a strong dollar, or maybe it's a weak andar policy of mr. mnuchin now we have a fiscal overlay. we have tax cuts and the new budget is proposed and signed by the president and even the new president budget over the last few days. what does that fiscal overlay do to dollar dynamics? hans: this is obviously a fiscal expansion within an economic it's actually not

textbook-like. when you compare the current policy with the previous republican president bush and at that time and 2004, 2 thousand five when it was implemented, there was a lot of hope that would boost u.s. productivity and it did not. the question is, is this a similar kind of -- the dollar performance is going to depend on one thing. is this fiscal policy going to increase the growth potential of the u.s. or will it lead to a one-time -- lead to a one-time demand push? twin deficitwith a problematic and you all know that is not going to work well for an exchange rate. when you look at the size of his fiscal -- keep the economy strong and growing, you will not have the domestic savings generated to

cover the fiscal deficit. the account deficit of the united states on the rise. that -- tom: please, continue. francine: that needs foreign funding -- hans: that needs foreign funding and it needs the right conditionality to join the united states. that could either be a weaker exchange rate or a much higher yield. we would put our money on a weaker tom: exchange. tom:that sounded like the ghost aboutphen roche talking twin deficits all long, long time ago at morgan stanley. --ant to do a little i would love to ask this key question everyone is asking. you have a u.s. a mystic economy doing well and you are suggesting we will see a more tepid international u.s. economy with less net exports. how do you wait dollar dynamics -- weight dollar dynamics into

that international component? is it a big part of import and export dynamics or is it a secondary or church year he issue? -- tertiary issue? hans: i think it's a most important part. when the u.s. dollar is weakened, any dollar cycle can confirm that in the past, you have the weight of capital pressing international markets whatou have to consider are the trade implications of u.s. dollar weakness and it's obviously going to work in the favor of the u.s. at the same time, you have a global growth cycle which is going to stay supportive. if you see spending picking up, you will have everybody in the world going to benefit from that. that's going to be ok up to the moment where there is availability of additional funding that leads to miss allocation. that is later in the cycle. tom: are you suggesting we will revisit through the dollar

weakness that we saw in late january at davos? will we go through that dollar weakness? hans: yeah. that was less than 10 seconds. reallyis is really, important conversation. we hope to have this out on all of our digital product. hans redeker with a real clinic ofthe dan asked -- dynamics american trade. one of the themes of the next hour will be with gideon rose, ford affairs magazine. john ryding will join us from already q economics and we will will goconomics and we to south africa. this is bloomberg. ♪

♪ tom: this morning, continued japanese yen strength. the stock market finds stability

and the vix continues to improve from 27 to a better 23, on the edge of average. governor carney in london, he must write a note to the chancellor on britain's 3% inflation in america this morning. critical inflation data at 8:30 and retail sales as consumers spend more and save less. we consider america's a liberal -- relations inner and an angry president. this is "bloomberg surveillance" live from our headquarters in new york. i am tom keene. francine lacqua in zurich with a conversation with credit suisse. did you ask on the vix? did the vix, but conversation? was 85% ofeah, that the interview. imc happy you listened to all of it. -- i am so happy you listen to all of it. img am kidding, i know we listened together.

-- not expecting volatility to affect the credit markets and we spoke with -- about this etn they had to shut down and it was interesting to hear -- saying i wanted to know exactly what this was, so i wanted to read and get perspective myself and it was never meant to be for retail investors, just short-term like one day impact of hedge funds. tom: it will be interesting to see how this plays out and the vix comes in, but the headaches for many of these etn's continue. in new york city with first word news, here is taylor riggs. starting in south africa, the ruling african national congress will take the next step toward forcing jacob zuma out of office. parliament will vote tomorrow on a no-confidence motion. call forred the anc's him to quit. his nine years and power have been marred by allegations of corruption. isjamin netanyahu denies he

guilty of any wrongdoing. police recommended he be indicted for bribery, fraud, and breach of trust. they say he traded influence for favors and it's up to israel's attorney general to decide whether to charge him. 's today report on the u.s. -- today's report on the u.s. -- could show inflation is subdued and firm at the same time. there's concern financial markets could be rattled by any sign prices are rising faster than expected. republican senator bob corker is reconsidering his decision to retire. a spokesman says he is listening closely to people in his home state who want him to run for reelection. he's a strong critic of critic -- president trump, who called him a coward for not seeking a third term. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries.

tom: from stability in the markets let's go through equities, bonds, currencies, commodities. futures bounced nicely, dow futures up 110. accrued oil am watching as it breaks through $60, that's american crude. mixvix 23.47, that's a big move over the last 48 hours from . 27 level down to 23 complacency relative to the 50 vix we saw in the heat a week ago. print-yen with a 106 earlier this morning. a little bit of weakness, but nonetheless, stronger yen and i had to do oil twice on american oil because that is a stunning number. where are we in the equity market? we need to see a picture of stability and we do that with the dow jones industrial average was little bit of history involved. the 200 day moving average doesn't need any discussion.

--e is the 1929% of public equivalent. right now, we've got a little bit of an elegant -- what the technicians would call panic. that is stability, centered tendency at about -8% off the move. there's a little bit of market gyrations. this is a real joy to have us -- with us through the hour, we look at international relations with gideon rose. john ryding is with us of rdq economics. this day oftoday on an important inflation set, which i am sure he will tell me is not the case and of course, on a new fed chair. were you surprised by the market gyrations? greenspan says markets matter. markets do matter.

last monday, we were writing the note about the challenges over m, the equityr market was going to face and between paragraphs three and four of writing, the market a 1500 massively with point drop in those 10 or 15 minutes or so and the vix is very important. perhaps contrary to some isple's thinking, a high vix the signal you want. when you get above 40 -- we have gone back and look at every episode since the crash in 1987, when the vix gets above 40 in all but one of those episodes, the equity market shows positive returns over the following three-month period. as a signal all of a sudden even though the equity market faced challenges, the price point for the challenges changed, the fear level changed and when that fear level is high, it's actually a good entry point. there's only one instance, the financial crisis in the fall of 2008 when the vix took longer to

turn the markets around. tom: how does jay powell the ele are in control, it's got to be baloney. there's a lot it move.