charges today. manafort says in a statement not change hises commitment to defend himself over what he calls trumped up charges. would have the strength to continue to trial. estimate has regained control of congress, some american civil liberties and constitutional rights could be in jeopardy. the president made his comments in maryland at the annual conservative political action conference. >> they will take away those massive tax cut's and your second amendment. if you had a choice of one, what would you rather have? second amendment or the tax cut's? second amendment? s.x cut i'm going to leave it at the second amendment.

mark: he said no president has ever cut so many regulations in their entire term. greitensney for eric says the governor wanted to meet with a prosecutor prior to his indictment but she refused. he was indicted on one felony count of invasion of privacy for taking a compromising photo of a woman without her consent during their affair in march of 2015. the missouri rubble can hardy is calling it a political hit job. two car bomb explosions and gunfire have rocks molly is -- --ked somalia's cap will capital. 18 people have been killed in the blast. the interior minister warned of an explosive laden vehicle somewhere in the capital. news, i'm mark crumpton, this is bloomberg.

julia: live from bloomberg world headquarters in new york, i'm julia chesley. joe: i'm joe weisenthal. julia: stocks rallying, all three major indexes up. >> the question is what you miss? rick gates has changed his plea to guilty and is cooperating with robert mueller. donald trump has held a joint news conference with the australian prime minister malcolm term ball. -- turn ball. -- turnbull. and shareholders go hunting for

clues, the annual letter could offer clues on a succession plan. what'd you miss? an overall upbeat view of the economy and monetary policy, the report said the u.s. labor market is near or beyond full employment. asset valuations. this comes ahead of fed chair powell's testimony beginning with the house on tuesday. with us to discuss, the chief macro strategist -- more to discuss coming up, but can you describe the sentiment now for fixed income investors? challenge the bearish narrative? david: i think we could be going through a small change now, which is a respite from the

selloff we have had. we got through cpr, we had a sharp reaction. we have the fomc, which didn't reveal anything new but we had a bearish response. then nothing over the last couple of days. the bond markets rallied. i think we are going to settle down for a couple of weeks. the big shift is going to take a few months to get out of the way once we get three more inflation numbers to see whether inflation is picking up or if it is going to remain benign. joe: in terms of thinking of where rates are going next, if perhaps we have seen a change in the macro backdrop and inflation outlook, but we don't have the data to confirm that, and nothing that we have seen so far tells the story. >> i think that is the case. we are going to get next week inflation data, and

year-over-year numbers are not going to shift that much. we have had a scare which explains why ten-year yields approach 3%. at this stage of the game, if you look at different measures, said fund futures, sentiment measures, positions, the market has adjusted to the higher rate scenario. to continue we're going to need more information. the u.s. inflation data next week we are also getting german inflation data and there is a theory the ecb is driving the ship when it comes the globalhanges and bond market. how important is german inflation data and what that means for potential tapering by the ecb? david: very good. it is important, extremely important and all eyes are on it. the global interest rate scenario, we have all back. yields are higher. that accommodates a lot of the

scary news that we have going ahead. that doesn't mean we won't see andan numbers scare tapering moving forth by don't think that is going to be presented as absolutely new news. the cpr we have seen report yields have not done that much further off the curve. slowly adjusting. we need to see more concrete information to say whether that or be onto accelerate hold. i think the jury is out. about the bigtalk auction. lots of talk about the expanding deficit. the supply actually matter? david: if there is anything that keeps me up at night, and i have been more bullish on the bond market generally speaking, it is the supply consideration. 'se question is, this week

auctions went well for the most part. then we had to back up in yield to get them there. now when we start seeing even greater increases in auction trillion dollars, a doubling of treasury issuance come i wonder who is going to be there to buy it. that is a challenge to anybody. lisa: when the federal reserve was engaged in quantitative easing everyone said this is uncharted territory. here we are moving away from those policies. what makes you confident you can look at the traditional measures to determine whether the bulls are bears are right with bonds? >> anybody who has a brain on their heads is not confident because things are different. quantitivewas the easing here or overseas, it

takes us into new territory. the tapering of that is something we have not dealt with. with the use of the expanded deficits to deal with the recession, the increase, which is coming from something new, about the entitlements, we have an adjusted to anything like that. we are going to see issuance, government bond issuance, already at record highs. it is one to accelerate even further, and we just don't know. we could see interest rates should up not because of economic fundamentals or gdp, simple because there is no one there to buy the supply. fewactivity of the last days, i have a more benign scenario for the moment, a short-term one. the longer-term is a concern. moderatek we will have gdp going for the balance of this year. how we deal with supply to me is the great risk. you've also have the

addition of further and what further ultimately means as far as the economy is concerned. powell say anything in the short term that changed the rate of the market or does he play it down the line? david: i think he is going to play it straight down the line into the march meeting. we will probably get a hike out of it. arenew wants and subtleties something that we who fixate over one basis point move in 10 year yields, that gives us a thrill. for the general population, gradual or moderate, or modest, i don't think it means that much. atill say if you take a look empirical measures, fed funds futures or bloomberg's probabilities, the market and the fed are in line. that is the first time they have been aligned in this cycle over the last six months.

i do think the idea of three hikes this year is probably right. maybe there is a risk for more. i think he will play a very straight line. ader, one of the most accurate forecasters. thank you. julia: the guilty pleas are stacking up and robert mueller's investigation and doesn't look to be slowing down anytime soon. what this could mean for paul manafort, next. this is bloomberg. ♪

julia: what'd you miss? back to breaking news. rob box filing for an ipo by goldman sachs, it will list on .he nasdaq under dbx

alex joins us now from san francisco, what more can you tell us about this ipo? what about valuation? alex: it is highly anticipated. this document gives us the nuts and bolts on the financials. those are some of the things i look at first. i did report revenue of one per one billion. that was up 31% from the year earlier, which is a nice juicy growth rate for a company that does claim it is at scale with 500 million registered users. it is still posting net losses of around $112 million in 2017. the company did continue to say what it has said in the past year, it is cash flow positive. when these documents come out it is not only the financials that , it is alsook at

how it is positioning itself. dropbox is coming out with a letter from cofounders saying they are working on a path to an enlightened work environment for teams which brings back some of that old tech vibe as this fire sharing -- filesharing company begins to move into the ranks of apple, dropbox and amazon. joe: what does this tell us about the ipo market? conversationennial , source of consternation. what do we learn big picture about the inclination of companies go public in this environment? back i was just looking him in january we had $8 billion in new listings. for these months for there is more than 6 billion there was a big gap. dropbox is one of these names we , these bigaiting for private tech companies to get out the door. everything i am saying is it is chugging along. dropboxhope that

continues that trend as they hit the public markets in the next month or so. julia: brilliant. alex, thank you for that. third guiltyss? a play and new key witness for special counsel robert mueller. rick gates, described in the filing by mueller as paul manafort's right-hand man changes guilty -- changed his plea to guilty. live from cpac, great to have you with us. guilty to?tes plead what pressure does that ramp up on all metaphor? rick gates, paul manafort, previous trump campaign chairman, pleading guilty today, signaling he is willing to cooperate with bob mueller's investigation. the question becomes what information will he hand over to the authorities?

paul manafort releasing a statement saying he maintains his innocence despite his top business partner suggesting he is guilty. rick gates was charged with a financial dealing dating back to 2008, 2009 has financial ties and failing to disclose tax back for several years. that of course becomes the question about whether or not he will provide new information to the authorities as this case moves forward. , a major are at cpac conservative gathering. what is the talk like there? do you have a sense of how much this ways on president trump? kevin: president trump speaking here earlier today making no mention of russian nor the investigation, just alluding that his former democratic challenger hillary clinton, saying the investigation is coming full circle. a visiondent outlining of school safety proposals that could get to congress next week.

i asked mark meadows about gun control legislation and getting it through congress, whether or not he received assurances from paul ryan to get it to the floor. take a listen. >> i don't know they have given assurances march is a viable timeline, but it is. something this serious, if we can get the right legislation, being able to debate it right away, it is something we are all prepared to do. a senior source to the senate judiciary committee which tells me it is operating under the assumption mitch mcconnell would opt to bypass committee structure and bring gun reform directed to the senate floor, keeping with that march timeline. there is a bevy of other public local policy agenda items ahead of that, such as daca come immigration and other policy items.

today, best western, wyndham rent a carional companies, all cutting ties with the gun lobby, the national rifle association. julia: to what extent do you think this moves the dial? this collective action, particularly where you have shareholders putting pressure on companies to say we want to cut ties, it feels like a sentiment shift. >> it does. i put that direct question to representative mark walker, a republican chairman of the public and study committee. i said is this time different? he believes that it is. all republicans i have spoken with today make no mistake the option of banning any type of weapon is essentially a nonstarter, any type of bipartisanship that could emerge. on the issue of consensus, some key areas have emerged.

raising the age limit of pirate -- purchasing a firearm, increasing funding for mental health, bolstering the national background check, banning bump stocks, this is the key issues that have emerged as a potential to get something done. as lawmakers are pointing to buy march. julia: great work, kevin. lisa: time for our stock of the hour. that is herbalife. ,erhaps you have heard about it shares are higher putting in a new record high after a mixed earnings report. what do we learn here about who is right in the battle? here foris something the bulls and bears. they beat earnings estimates and a pretty solid weight by about 30%. something for the

bears, they gave more details on a management shakeup, the current president is stepping way to be the cochairman. company veterans are going to be copresidents. that is the news. if we hop into the bloomberg and take a look at the real story, the stock is higher. earlier it had been lower. it is a longer-term chart. in blue, year-over-year revenue growth. debtn see in 2009 the stop . it is when the market started to regain. as years of revenue growth, the stock is higher. this is the first quarter of year-over-year revenue growth. something for the bulls. has neverhort premise been so much about the business model and whether it is profitable, but whether it is legitimate and whether regulators would come down with a hammer. what is happening with that?

what if you go on their website, there are all these happy, healthy looking people, you going to the business opportunity there's all kinds of language about how you will be refunded. it is not clear to me what has been made of that. right now that short bet is losing considering we have a stock at a record high. julia: thanks for that. crashing supplied. venezuelan oil shipments plunge amid official sanctions. we have the charts you can't miss. this is bloomberg. ♪

remember treasury secretary steven mnuchin's comments when he said we can see wage gains without saying a significant boost to inflation and there was skepticism? mnuchin policies will raise wages without inflation, and we are going to expand the buffalo

art museum without making it bigger. but it can happen. the keyword is productivity. look what happened in the 1990's. down, if youding bring in higher salaries you see greater productivity, technology and machinery the companies can resolve this. then you don't get higher inflation. held interest rates steady even the wage growth accelerated. now, what are we seeing? productivity which has been on the decline for years, and reversals. we talked about this on the show already. potentially we can see that once again. joe: we have forgotten we can have great times. we can have great prosperity and

higher wages. in the meantime, global synchronized growth, everything things do seem good but keep an eye on europe. cresting aay be little bit. we had some pmi's, not as good as people thought. surprise indices for the u.s., we're seeing eye divergence. -- we're seeing a divergence. this is oscillating all the time. it is something you want to keep an eye on to see if any of this slide a little bit. >> is that the strong euro finally biting? lisa: i am focusing on adding insult to injury in venezuela. venezuelan crude, you can see the week ended february 16, the smallest amount of crude imported to the u.s. trump

venezuela since 2010, 100 74,000 barrels per day as report steepen about the pain and suffering in venezuela according report showing people are too hungry to be able to show up at work and are collapsing while they are trying to get crude out of the ground. this highlights how that is trickling out and it is going to turn into economic worries -- woes. joe: unbearably grim. lisa: absolutely. julia: good to highlight it. it has been a pretty choppy week. right now, we do seem to be ending on a high in the united states. for the dow jones with the nasdaq outperforming 1.6%. a brief flattening as was mentioned, as far as the 10 year is concerned. whaty more discussion of

is next for markets. it is going to be busy. a couple of minutes until the market close, this is bloomberg. ♪

♪ julia: "what'd you miss?"

stocks rallying into the close. all three major averages up more than 1%. stocks at session highs. i'm julia casserley. lisa: i'm lisa in for scarlet fu. weisenthal. if you are tuning in on twitter, we want to welcome you to our closing bell coverage every weekday from 4:00 to 5:00 p.m. eastern. julia: we begin with our market minute. let's give you a look at the performance of the individual majors here ending the session at session highs and not seeing less wound we have seeing the last 4 sessions as we go to the close. treasuries advancing. the dollar slipping slightly. stabilization, let's call it, to finish the weekly session. technology, that is where we go to the individual movers. lisa: yes, let's take a look at the biggest performance. stocks of amazon and netflix really leading the charge. both at record highs. not really any news driving that

. perhaps just a return to the good old days were goldilocks rained and people do not worry about a market freak out. hewlett-packard enterprise also at a record high.this one was driven by news . they reported surprisingly good earnings yesterday. sort of surprising given the their spin off with hp was regarded with some skepticism. so far, seems to be working. is a stock wem are keeping our eye on with a jump the highest since december 2016. y? we think -- why? we think they are going private. joe: let's take a look at the bond market. as we are talking about a goldilocks they in the market, some flattening harkening back to late 2017 one stocks went up every day and the curve would flatten every day. 10 year yield down to 2.87. two year yield down modestly to 2.24. julia: the rand relatively

unchanged for the dollar on the session on friday but on track for a weekly advance. against all g10 fears, up over the past -- peers, up over the past five days. the to year yield toys for a second straight weekly increase as well. let's take a look at what is going on elsewhere in the world. some weakness in kiwi dollar. you can see that 7/10 of 1%. large sales going through against the greenback. weighing on that cross in particular. let us show you what is going on in the dollar sweden, rising 7/10 of 1%, the highest since january 11. relative weakness there versus the u.s. dollar. just wanted to give you a great sense what we are seeing as far as emerging markets are concerned. this is a snapshot on friday's

session. ands for the brazilian w south african rand and riyal. joe: oil gaining a little bit on some lower inventory data. oil has not moved a lot lately, still in the low 60's. gold selling off by a touch. those are today's market minute. julia: for more on today's market minute and action we are seeing over the past week, matt joins us now. we look at the snapshot of the afternoon trade phenomenon -- fade phenomenon. >> once guys like me start talking about that for a pattern, you know it is over. surely enough. obviously toging close on such a strong week. close with such a strong they like this. as silly as it is, i think the big number of 3%, the nominal

yield was spooking some people. why other than it is a big scary number. lisa: is this a race story -- rates story? michael: it is definitely a big part of the story. there is tension between the tax cuts and the buybacks. keep the market going. one of the charts are brought you that was interesting is the tips yield. joe: right here. michael: a lot of people have been talking about this. morgan stanley had a no doubt about it early. the yield is not really blowing out. his staying within this range it has been in. this is the past few days.if you track that the past few years, it is in this range for a long time. so, you know, i think the notion there is a higher nominal yields are sort of a concern that inflation will accelerate. joe: that is not necessarily the scariest thing for the stock market. michael: as prices go higher,

considerably sales and earnings can go higher. but the tips yield, if the real rates were going to go higher, you have a higher yield to discount future earnings on. that is when people get scared. i think people are happy to see that stay in the range. joe: extra important now to not be lazy and talk about higher rates, but to decompose the source of whatever is driving those rights? michael: yes, to some degree, i think.we saw steve mnuchin talk about it overnight . kind of ridiculed a little cap saying higher wage inflation might not necessarily lead to higher overall inflation. that.is some truth to look at the 1990's, the productivity boom we saw. whether there was a big like that this time is difficult to believe. it is not out of the realm of possibility. julia: neil, who comes on the show quite frequently, tells us there is a reason to be optimistic. what about volatility? we have seen that retrace again as well. michael: it has. another interesting chart i got

from michael, he is talking about all the occasions when the 40, is a veryve rare phenomenon when it happens, . common in the financial market -- when it happens. common in the downmarket. you see the very colorful circles when the vix has spiked over the last few years. -- abouve0 about it it. to me aboveink this suggests -- it. howe, i think this suggests we have been talking about the tail wagging the dog. more from a basic sense, when you have one of these freak outs in the market where the vix spikes above 40, it will take a

wild to recover from that. people are wondering whether we will test the lows we saw a couple weeks ago. joe: i know they hate it when you blame them. do they get credit for the market rallies? julia: exactly. lisa: good point. michael: i have been seeing a lot of notes. angie about today saying a great time to start trading volatility again. lisa: that is what i was going to ask you.are we seeing people kyle back in or has the leverage been squeezed out? michael: i am not it has all been squeezed out. a lot of people are looking at the near-term vix futures worried that another spike higher in the near-term futures means it can happen again. but, you know, i doubt we will see the extreme short-term volatility. they definitely were ahead of

themselves and way too crowded. be surprising to see that reverend dr. that type of situation. joe: the curve is still -- the near term is more volatile. michael: right. joe: not the total volatility regime we have seen before. michael: the worry is if you are short volatility, you will have to keep buying the late months to catch up. julia: great. thank you so much for that. coming up, is private equity overrated? we will dive into the current state of the industry next with the author of an article making waves. from new york, this is bloomberg. ♪

mark: i'm mark crumpton with

first word news. broward county, florida, school superintendent said teachers returning to the high school today are doing their best to be strong a little more than a week after a gunman killed 17 people, most of them students. the superintendent also weighed in on whether teachers should carry concealed weapons, something advocated by president trump. >> i am totally against arming teachers. you know, it is not just about me. go talk to teaching professionals on whether that makes sense. if we want to do something, spend money on adding more school resource officers and law enforcement personnel out there. ask our teachers to carry guns, to me, that is an easy way out. mark: also today, rick scott proposed that all individuals purchasing firearms be 21 years of age or older. calls to boycott the nra are

growing louder with twitter users across the country demanding that a variety of companies cut ties with the gun group. the online furor comes after the nra's leaders attacked the media and democrats, claiming the fallout from last week's florida high school shooting is being politicized. companies that have already old end partnerships with the nba include first national bank of omaha, and apprise rentals, and hertz. in new delhi, india, and canada today, exchange of agreements in cooperations in every of security, trade, and higher education. at a joint press conference with counterpart, canadian prime minister justin trudeau called india a natural partner and trusted friend for commercial cooperation. >> a renewed economic partnership must create jobs and help families get ahead.

we have thets, responsibility to set the parameters for economic relationships to flourish in a way that benefits everyone, not just the wealthiest few. mark: prime minister trudeau has come under criticism during his trip to india over canada's perceived softness on sikh extremism. the associated press is reporting that a casino mogul has agreed to pay for part of the u.s. embassy jerusalem. the trump administration is considering the offer from the but thatn mega-donor, lawyers must first determine the legality of accepting private locations for the project. the state department announcing today that move will take place in may. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg.

lisa: "what'd you miss?" overvalued and overrated. is this the current state of private equity? heardxt guest, daniel, about that wrote about this in a recent article for american affairs -- wrote about this in a recent article for american affairs. he joins us from seattle. thank you for being with us. i want to start with their background because you worked at bain capital, bridgwater. you are a graduate of harvard. you have been in the industry. what led you to studying private equity and frankly this piece that a lot of people would think would be a takedown of the premise of private equity? daniel: i think there are really three things that people need to understand about private equity today. the first is there was an overwhelming consensus among institutional investors about private equity, that it is basically the holy grail of investing. a recent survey suggested that

50% of institutional investors believe that private equity will outperform by 4% per year. another 45% think it will outperform by 2% per year. the second thing you need to understand is that those expectations are wildly off. private equity has not outperformed the public equity markets since 2010. in fact, on a one year and 35-year basis according to cambridge associates's data, it underperformed by 4%, 2%, and 1%. that institutional consensus that private equity is going to isperform the public equity driving the purchase price is higher and returns down. having studied this for seven years, i felt it was important to write and say these expectations are crazy. private equity will not deliver those returns. it has not been delivering those returns. public equity investors need to look elsewhere. lisa: what would you say to

private equity managers who say, look, we go in and help manage the company's. we make sure they do the right thing. therefore, we provide alpha that is independent of the market cycle. havel: first of all, they not provided all over the past three years, five years, or one year. in fact, the 2015 private equity vintage has outperformed. there is not a lot of evidence right now that they have generated alpha in the postcrisis era. in fact, operational improvements, which is the big claim of alpha drivers, if you look at what private equity firms do when they buy companies, there is no big systematic change in operational metrics what you see is a significant.increase in leverage operational metrics. what you see is a significant increase in leverage. joe: how do you determine there has not been very much? daniel: i looked at every company.

there are 390 private-equity deals bond auction public debt as part of their financing, which meant they had to provide financial for pre-and post acquisition. i look at how the financials changed. what was the difference pre-and post -- pre and post float? -- flowed. i think it makes sense. julia: you see a boost to the internal rate of return here, the interest rate on the debt becomes a component of the edi b da of the business. we are talking generically at this stage. are there private equity companies that are outperforming? daniel: there certainly are. there are firms doing a great job. i think with those firms tend to

have in common is they are buying a significantly lower prices than the broader equity market. if you look at what is going on in terms of the crisis, 9.5 times ebita at the height of the precrisis boom in 2007. they came back to 9.5 by 2014. ebita.now up to 11 times at those valuations, 50% higher than firms were paying in 2007 and he did not become market by much in the 2007 year vintage. firms, it isy almost impossible to make money buying at those valuation. there are firms that can find much cheaper deals were great price discipline, but those are few and far between. julia: who are the underperformers here? who are the out performers? daniel: in terms of price discipline, two of the standouts who areo and no tree the folks buying things cheap.

broadly, almost anybody else in the industry is buying expensive. there are other exceptions. lisa: all right. one of your former colleagues at bain capital? daniel: you know, i think that a lot of folks in private equity know that these things are true. they know it is a much more difficult environment. if you look at what the ceo of blackstone or apollo or carlyle are saying in their press conferences and public statements, they all agree that valuations are very high. difficult deal environment. simultaneously, they are raising more money. lisa: what do you think investors should do with their new dollars instead of private equity? daniel: so i think if you want returns,rivate equity you have to do what the private equity firms did when they make those returns, which is to buy small companies at cheap valuations and use leverage to do that. i think there are great opportunities in the public equity market to buy, leverage small value equities, and get returns that look like 1980's or 1990's but it will not happen in private equity. lisa: daniel, thank you so much

for being with us. really fascinating article. i recommend people read it. up, the rise and fall of -- the chinese government takes control of the deal on legal conglomerate. what that means for private equity, next. this is bloomberg. ♪

lisa: "what'd you miss?" with the temporary takeover of anbang insurance group by government, buyers are eyeing k properties from new york to california acquired in a global shopping spree by anbang. from oracle might want to bring in bloomberg's executive editor for global television, jason kelly.

thank you so much. i am surprised at this. i was surprised to see this news because i took a triple be worrying about a decline in commercial property values given this potential fire sale by anbang, they have picked up on high prices. but instead, people are excited. jason: in part because you have this huge competitor that seemingly is on the sidelines. at least for now. ins had such a magnificent some ways affect on the whole commercial real estate market for a long time. joe: put it in context. how much of a player at its peak was anbang? jason: so they went on a $13.4 billion buying spree. the property that everyone knows obviously is a walled off her .tory a -- the walder many of us walk by it every day. nothing is happening with it. lisa: makes me sad.

jason: what we hear is blackstone may end up buying it back. a lot of buyers are right there. lisa: at what price? not $1.5m guessing, billion. joe: what do we know about the decline of anbang? so it is basically being wound up. jason: it is being seized. the interesting back story to this, of course, is that there are big questions as you know about hna as well, which was the this, whichayer in was the other likely buyer for a lot of things that were sitting out in the commercial real estate space as well. knowse of china, we do not a lot of what is going on to be honest with you, but what we know is it is having a big effect on the buyers and sellers of real estate come especially in new york. julia: one can make the assertion that china is overseeing anbang for the next year, that they would want to sell off assets. how do we know they will keep hold of them?

jason: it is absolutely possible that they will keep hold of it. certainly speculation out there for the people doing the deals and candidly have a lot of connections that we do not have into the thinking of the chinese government are under the impression that there could be at least if not fire sales -- julia: sounding people out in the industry to see where the buyers are potentially. lisa: that is interesting. i wonder if you have agent of the chinese government negotiating with blackstone to sell the waldorf-astoria. who is in charge there? jason: it is entirely possible that is true, and it gets more competent when you think about blackstone's relationships in china. steve schwarzman with the strootman scholars obviously has invested heavily in china himself. china is invested in blackstone. joe: in addition to the waldorf-astoria, what else has anbang most notably been active in? jason: active across the world in commercial and hospitality. there is not much they have not touched and have not looked at.

one of the most interesting deals they almost did but did not do was starwood. they were involved in the beginning and ultimately pulled out of that. again, it had such a market of fact on driving the price of. lisa: are there other chinese conglomerates that have been leveraging up and purchasing property that people are targeting as the likely next subject? jason: hna is really the one everybody is keeping an eye on most notably. not only in real estate, but also a big holder of deutsche bank. that obviously has the attention of wall street in a totally different way, especially given the issues that deutsche bank has been under. lisa: so this can set a precedent as far as what china wants to do with potential liquidity concerns. are we going to see fire sales, or is this going to be a behind-the-scenes change in ownership and leadership? jason: absolutely. a key state to watch because of the magnitude it has had on the market. julia: share prices of those

involved in deutsche bank really interesting if they are forced to sell down as well. . fascinating -- fascinating. lisa: i think it is interesting when real estate has come under pressure with the rise of interest rates. the u.s. just had their worst start to the year since 2009 so put this into perspective. a really interesting time. a juicy time. julia: steeper opportunities. joe: a little reverse qe. when the money was rolling out, it lifted everything, and now we see a tightening. lisa: the fact they are tightening can be a de facto gift. thank you so much to jason kelly, bloomberg's executive editor for global tv. up, markming zuckerberg admitted that time spent on facebook was down following changes to its news feed. now a new report from pivotal shows how much consumption has dropped for the social network. we will show you those numbers come in next. this is bloomberg -- numbers,

next. this is bloomberg. ♪ retail.

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mark: i'm mark linton with first word news. florida gov. rick scott today proposed a tightening of his state's gun laws. governor scott announced the plan following public pressure in the wake of the killings of 17 people last week at marjorie stoneman douglas high school in parkland. >> we will require all individuals purchasing firearms to be 21 or older. let me repeat. we will require all individuals purchasing firearms to be 21 or older. there will be exceptions for active duty and reserve military and spouses. national guard members and law enforcement. mark: governor scott also called

for a trained law enforcement officer for every 1000 students at every school in florida by the time the 2018 school year begins. former trump campaign aide rick gates today played guilty to federal conspiracy and false statement charges. gates initially said he was not guilty in october when he was first indicted by special counsel robert mueller. robert mueller continues to probe gates's longtime business associate paul manafort, who now faces revised charges after today's plea. 15 people are now confirmed dead at least 20 others wounded after car bombings and gunfire today in mogadishu. inpected al-shabab militants the somali capital. both civilians and armed forces were killed. in pakistan is going to be placed on a terror financing monetary list in june.that is according to a person

familiar with the action being taken by the global financial action task force. the movement is backed by the united states and its allies. it may hurt pakistan's access to financial markets. global news 24 hours a day powered by more than 2700 journalists and analysts in more i'm markcountries. crumpton. this is bloomberg. julia: let's just recap today's market action. u.s. equity markets holding in the green, actually ending the session in trading at high. we saw the s&p 500 posted biggest gain in almost three weeks, extending trade particularly to the end of the close, and then reversing a four-day pattern of seeing a saloon to the end of the session. we saw a retracement of 10 year treasury yields. investors continue to dissect the policy report in the minutes this week. jay powell is testifying next week.

to end the week. pivotal is highlighting how much consumption has retraced facebook since making changes to its news feed. the media giant lost 4% in aggregated time spent despite an increase in users. joining us now from portland, oregon, with more is the pivotal research senior analyst, brian. great to have you with us. explain with the data shows in terms of conception habits for the likes of facebook, but also some of the other big players like twitter, snap as well. brian: sure. now it is not that surprising to point out that facebook has lost usage, not in the least because facebook itself described a 5% overall decline in usage among its user base, which is now 15% or so higher than it was a year ago on a global basis. we don't know how many of those users are fake.

what the data i am showing is and what i have seen the last few months using data from nielsen and the digital content ratings front is that in the 18 plustates, adults were seeing a decline in consumption in aggregate of around 4%, but with around 6% , which isusers slightly different than what facebook is saying they are seeing, but this is based on a panel across the entire population so it will be different from what facebook is saying, but that equates to a -11% decline in time per user, similar to data we saw her october, september, and august. and that it raises the question, is facebook making changes to its algorithm the have caused those declines? or is it making changes to the old because of those changes in consumption? in other words, is the data for

the people are getting tired of facebook or that they are feeling it is toxic or that it hit peak facebook? joe: is their own choice. mark zuckerberg has talked about potential declines in engagement, and maybe it is fine. is there anything in the data or competitor data that may gives more insight into what is driving it? brian: no. it is a really subjective assessment of what is going on. anecdotally, i think we have all heard from people who are getting really tired of facebook last year. all the noise around fake news, the feeling around the product, the alien trust barometer that came out earlier this year reinforced this point of view. people reduce their consumption. facebook in the comments they made at the beginning of this year were in response to that so their focus is clearly on the long run and improving the platform. lisa: i am looking right now i facebook shares ending the day

at $183 and nine cents. -- $183.29. is declining user engagement baked into the share price? how much would it have to fall should the trend continue? brian: that is hard to say. investors have completely looked past so many problems that are hitting the company. in a substantially with position now than it was 18 months ago. there is no way these stocks should be worth more than it was at that point in time. there are other reasons, mostly because they have not been performing in terms of their revenue growth. it is possible to generate revenue growth despite declining usage. see the whole television industry for quite a long time. and so as long as they have pricing power, which they do, as long as they have tactics to improve yield, which is to say prioritize the better spending advertiser at the expense of the worst spending advertiser, there

are many tactics they have to support revenue growth. and so it is not clear how much of a decline you can see before it would definitively impact revenue growth. i think the bigger issue is that advertisers start to pay more attention to the metrics cited here. it could turn sentiment negatively towards them and possibly in favor of other digital publishers. julia: that is a critical point here because even if we have less time perhaps spent on social media, facebook argued that the quality of that engagement is improving. if you can sell that to advertisers and they keep spending money with you, they can still monetize the resources they are providing. what is the flaw in the data here? what could potentially not be captured in a data being collected and that you are analyzing? brian: there is plenty not being captured in the data. engagement,ak about it is a very subjective thing, right?

what matters to one advertiser in terms of the consumer's use of a platform will be different for a different kind of advertiser. what facebook is able to do is they have tools to sell to small businesses, to developers, e-commerce companies, large brands, and other kinds of advertisers. the point is they have many different kinds of advertisers they can sell to. even if usage falls, it can fall 10% more and another 10% and it would not necessarily make a difference. joe: what about other properties that are not braided as facebook? and it still seems like instagram is totally crushing it. tsapp. what point in the offset weakness in the core product? brian: to be clear, instagram is doing well as his whatsapp. they are both less than a 10th of the size of facebook. people focused too much on the

use.e and da these are mass appeal products. how many specific users is not going to drive what advertisers budget. twitter, snap, they are niche platforms. that is all you need to know in terms of the users and thinking by the advertising budget. facebook instagram are much more of a mass offering. the problem is you need to look at the time spent. it is the best objective measure we can use. when you look at it, instagram is about a 10th of the size in terms of person hours. 160 million people times three months whereas facebook's 200 million people times 18 hours. that is a huge difference. thanapp is smaller instagram, but what is not captured is the international data. whatsapp is much bigger outside of the u.s. than it is in the

u.s. julia: got a little bit of a kardashian smacked down for snap by kylie jenner this week. what it is statistics say about snap and the engagement they are getting? brian: snap's data is actually pretty good. i think that may surprise people. i have actually been reasonably impressed with the data i have seen from them. remember, i have a sell rating on it. i think the stock is overvalued. investors are not trading this based on fundamental valuations. the data has been decent regarding users, time spent with users. those are all very positive things. we do not have current enough thatto see what impact they have made to usage, but i would give the benefit of the doubt to the companies that say they are trying to also look ahead to the long run and trying to anticipate what the product needs to be doing in a year or two years from now. as long as they are constantly

testing and assessing, it is hard to affect the choice. lisa: as long as kylie jenner does not tweak anything else out. thank you so much for joining us today. julia: she still loves them. she did tweak that. lisa: a little vet. -- bit. we will take a look at what warren buffett might address. joe: and a reminder. subscribe to our new weekly podcast on itunes. it is called "what did you miss this week?" the most interesting conversations for the week. it is a perfect thing to listen to over the weekend. on this episode, you can hear our conversation about what alaska's general fund can teach us about the prospects for universal basic. this is bloomberg. ♪

lisa: "what'd you miss?" warren buffett sends out his annual letter to berkshire hathaway shareholders tomorrow morning. some items investors are looking for them to address include succession process, tax overhaul, and berkshires health care initiatives with amazon and j.p. morgan. let's bring in our guest, u.s. finance reporter. what do you think will be the biggest headline from tomorrow's release? >> i think if we get any hint at succession, everyone will be all over that. he will have a little taste of it in january. he promoted someone to vice-chairman a. a lot of analysts had them at the top of their lists, but they cemented their positions, so any hint about what it means for these two to have larger

expanded roles, if it means other people will step back or other people will take stuff on, that is what we are all racing after tomorrow. joe: what about politics? warren buffett is never shy to speak out, and it is a lot of political stories you can weigh in on these days. does that say mica likely thing for him to talk about? katherine: for sure. tax reform will be a huge point. he has employed berkshire will benefit greatly from this. we will be looking particularly from book value, a measure he really likes to focus on. analysts have expected that to increase by a lot. quite a lot. 37 billion. --will also be looking for if he does touch on the political environment in the u.s., that is a huge thing. he has been careful about how he has worded it.he praised immigrants .

he said he would not take credit for stock market jumps. but he never sort of calls people out that much. any kind of just we get about -- the politicsbout is huge. julia: we have every little detail about what that means and aile the fed looks at nonprofit, the believers amazon will go to something far bigger. katherine: totally. we have few details about it. we don't know how it will be structured. that will be a huge thing. we know todd combs has a huge role. that is speculation. doesn't point to how this came about? we will be looking for that. lisa: one other thing that people are focused on is the more than $1 billion of cash that he has sitting on his book. he is now one of the biggest owners of treasury building the

u.s. what does this say about the view of the current market? katherine: he sort of implied he does not exactly want this much cash to handle. he likes putting money whether it is investing in different stocks or buying companies. he did a huge deal a couple years ago. we have not seen anything that massive yet. any indication on what he is going to do with this war chest he has been accumulating will be huge. joe: the letter comes at an interesting time for the market as we have seen volatility lately, concerns of changing the economic regime with the fed and inflation. in past letters, does he comment on the current market environment? what is his style with that? katherine: totally.he has talked about valuations are high .he will talk about that interviews . sometimes he will allude to it in a letter. he also talks about the economy.

it is good to know he is generally bullish on the economy. election was going on, he said economy was going to grow. bear, but ittal will be interesting if he delves into any aspect of the market. julia: brilliant. thank you. we shall watch with huge anticipation. now some breaking news crossing the bloomberg as well. president trump said to want global tariffs of 24% on steel imports. that is a bloomberg scoop. it follows the recommendations delivered by commerce department last week to protect broad limits on imports of commodities on national security grounds. this has been a trump campaign promise to revise the long -- s teel gaining from this protectionist agenda. showing you the after-hours performance of u.s. steel, higher by 1.7%.

i would argue there is skepticism perhaps in that minor rally we are seeing. talking about 24% steel import tariffs. that is my view. lisa: i will say they will retaliate. julia: watch this space. the best relationship china has had for us for many years except for trade. watch this space.from new york, this is bloomberg . ♪

julia: "what'd you miss?" an ireland north of guam with a population of around 48,000, what is critical is a little note that it is a u.s. territory. in this week's bloomberg businessweek, a look at a chinese company who operates one of the most successful gambling operations in history on that tiny island.

it dwarfs anything out of vegas. we sat down with matthew campbell for the details. take a listen. it is the capital of a pretty obscure american territory called the commonwealth of the northern mariana islands. you look for guam and go up to the right on a map. it is an impossibly remote part of the world. 14 time zones from washington. quickest way to get there from the mainland of the u.s. is to go to tokyo and double back. in is a place where the use u.s. dollar, u.s. mail. federal law extends their. this is part of america. >> talk to us about 2014 and what happened then. >> the big issue in the mariana islands since the second world war has been finding an economic purpose. numerala part of

that has no natural resources, industrial base, nothing to sustain the economy. there was a big industry starting in the 1980's, really, which became enormous in the 1990's and 2000s. that eventually collapsed. what that meant was the marianas were desperate for cash because they were in a really serious financial crisis. what they did was a lot of options jurisdictions have done is they look for a casino. >> always the economic answer, isn't it? >> it is. it is always about the money. the casino led to some pretty unusual events which are still unfolding. >> talk to us about those events and the company's imperial pacific international. >> imperial pacific was called first natural foods. they were in the frozen foods business. they recently got into the casino business relatively recently. controlled by a mother and son from mainland china.

they have certain connections in macau, which is the gambling capital of the world. in 2014ned up there with amounts of money that this place had never seen before. this is an island where the best hotel is a hyatt from the 1970's. the airport is tiny. 50,000 people, if that. all of a sudden, you have billion has from mainland china spending large amounts of money and moving a large amount of money into the island's economy. >> they spend billions of dollars in development and brought billions in. >> they promised to spend $3 billion now in terms of development. what became remarkable about this casino is as soon as gambling began, actually a temporary facility, not the casino which recently opened, the numbers were absolutely astounding. the likes of which they have never seen them before.

julia: you can read the full story in the new issue of the magazine available on newsstands and online. "what'd you miss?" breaking news crossing minutes ago that president trump is set to face a specific steel and aluminium tariff. for more, i wanted to bring in sarah mcgregor who covers u.s. economic policy. no surprise this is what the president favors. how likely is it? give us the details. sarah: jennifer jacobs has broken some news that trump was telling confidants he is considering basically the recommendations given by the commerce department for steel and aluminum experts -- exports. last year, the commerce department released its recommendations, saying aluminum imports pose a threat on national security grounds, and

its harshest level of recommendations were a 24% tariff on steel imports and some .7% on aluminum. -- 7.7% on aluminum. president trump is thinking about that as one of his top options and increasing aluminum tariffs to 10%. lisa: president trump has righted himself on being a good negotiator. how would you can say this is a political overture to certain people because in the story it says there is a special election on march 13 in pennsylvania, and he does plan to make an announcement in pennsylvania in the upcoming days about potential tariffs. trying to parse out how much is this is political posturing and how much is what he intends to do. sarah: pennsylvania is one of the states that one would think is a blue-collar state and that this method of really harsh tariffs would play well in so

there is that aspect of it. make aas time to recommendation for steel and aluminum. this is weeks away that he needs to make a decision on. it is clear these are the options he is considering right now. this is his thinking right now. historically speaking he has seemed -- right now. historically speaking, he has seemed to waffle and change his mind on issues. we do not elaborate his political maneuvering, help with the special election in pennsylvania, or mother he will change his mind before the deadline. joe: obviously, steelworkers are classically what people think of perhaps as come supporters. -- trump. trump supporters. tell us about the lobbying going on behind the scenes by these other industries that stand to lose out if the price of steel

rises. sarah: yes. obviously steel and aluminum producers in the u.s. for a long complainingtrump that china is dumping these medals in the market and driving down prices and making them uncompetitive. on the other side of that, there are still consumers and aluminum consumers in the u.s.. think about your beer cans, your cars. they are warning against this saying this will raise the prices. on top of all that, we have people like trump's different and people from his own republican party saying this will not play well, it will up and supply chains -- upend supply

alisa: i'm alisa parenti in washington, and you are watching "bloomberg technology." let's start with a check of your first word news. president trump took a victory lap before an admiring crowd at the annual conservative political action conference. he also warned the u.s.

constitutional rights will be in jeopardy if the democrats regain control of congress. president trump: they will take away those massive tax cuts, and they will take away your second amendment. by the way, if you only had a choice of one, what would you rather have? second amendment or tax cuts? go ahead. second amendment. tax cuts. second amendment. i'm going to leave it at the second amendment. i don't want to get in that battle. alisa: the white house says it is currently reviewing recommendations from the pentagon about transgender service members in the u.s. military. the president proposed banning them last summer. he also tested the pentagon to come up with a plan to handle openly transgender soldiers. former term campaign eight rick gates pled guilty to conspiracy charges.hetatements pleaded not guilty in october when he was first indicted by spec