soil. the prime minister's actions included expulsion of 23 russian diplomats. ihe -- it is -- on wrecks would like to express to theresa inspired. was >> russia's ambassador to the u.k. called the action a provocation. president trump has chosen larry kudlow to be his new top economic advisor. he called him a longtime friend.

andill succeed gary cohen does not need to be confirmed by congress. he can start right away. that perry says he has no interest in taking over the department of veteran affairs. kerry dismissed the report as fake news and said he plans to stay in his current role until the foreseeable future. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. ♪n the >> live from new york, we are 30

minutes from the close of trading there in the u.s. >> the question is, what did you miss? >> follow-up -- fallout from the white house. a regulatory tug-of-war. the financial watchdog testifying in the first hearing on ico. andrew merkel made in her fourth term. to she turns her attention challenges. of rexe ousting tillerson, present trump's administration is fast becoming a presidency of one. the prevailing question now is who is next?

joining us now from the white , thank you for being with us. is there a critical thing here that there is going to be someone potentially who could disrupt president trump's current trajectory? >> we have seen that the president is more willing and more likely to get rid of people whether ite with him is on foreign policy or trade issues. he got rid of his secretary of state and top economist, now there is talk that h.r. mcmaster -- oute out of the way the door. he feels he can do things his way and get rid of people who disagree with him. part because he wants

to follow his own thought process and get rid of forces in on veryadministration controversial issues. are maybe getting the full trump here question mark >> he says i'm very close to having the cabinet and officials around me. white house officials told us part of these changes are because of the president wants to have a new team in place before his negotiations with north korea and before the trade talks in north korea. has sat down with north korean leader kim jong-il and and the white house wants to have a teen in place. rex tillerson was not always on the same page.

he is negotiating with various of thees and he got rid national economic director and is bringing in larry kudlow and there is likely to be additional changes. >> are there any other reasons? it seems to me like present trump is making a lot of policy and there still remains a question of why now? >> you have to remember this has been a very turbulent time at the white house. there is the russian which istion continuing. now you see what has happened with the congressional -- democrats are starting to get some momentum. it is causing the president to

don't agreeple that reset hisnd tried to administration because of all the chaos and the turbulent he is faced. thehere's talk that education secretary could the next and we know that jeff sessions has been beleaguered getting a lot of heat from the president. let's talk about the numbers for her the president likes. what is the common thread? why have they not been able to questionbut thrive mark >> these are people that have a great rapport with the president. we know the president consumes a lot of media. people who have

been able to manage disagreeing with the president privately, but publicly coming to support the president and showing there's no daylight between remember whatnd happened in charlottesville where some of the president's aides were able to break with that publicly. people who cannot to defend them are people the president has continued to rely on and keep in the inner circle. president,defend the who are loyal to him, those are people who have been able to remain in the inner circle. >> tell us about the reaction down there to the election in pennsylvania. we don't know the results, but it doesn't really matter because

it was obviously a bad night for republicans. what is the fallout? record, we are hearing a lot spin from republicans saying the democrats who manage to clip the seats was someone who ran in favor of physicians that trump is supporting. behind the scenes, this -- there is worry this could be a sign of things to come in november. the but a slate of agenda -- legislative agenda has come to a standstill. this could be a harbinger of a democratic wave. >> when i think about the election, what extent

was the election about issues versus the referendum on president trump? is in line with some of the elections we have seen in virginia and alabama. we saw the president lose ground, but also democrats have been trying to get candidates to fit district and not get swept up into the national debate over things like gun control and abortion and things like that. that is what happened in pennsylvania. democrats were able to find a candidate who could run on local issues. >> joining us from outside the white house, thank you. coming up, plenty of

finger-pointing at the first ever congressional hearing. crypto advocates debated regulation. we talked to one expert who testified at the hearing. this is number. -- mrs. bloomberg. -- this is bloomberg.

>> congress holding its first today. on crypto argues thathe fcc existing roles provide -- existing laws provide plenty of clarity. >> give a sense if this was the first congressional hearing on

ico's. open-minded and reset of, or is there a measure of defensiveness here? >> it is always a mixed bag. democrats and republicans who are skeptical and who are very excited about new technologies. one area where i think there are commonalities is these are complicated systems and there are a lot of moving parts. just the mere division between a and, that line is unclear. had hearings about crypto currencies before.

if a company wants to issue , is there still some ambiguity that they would still have to question whether they are doing it correctly? >> that is a good question. if you want to sell to american investors in the u.s., if you do and dol security filing all the filing and compliance there. if you follow those, which are claimed vanilla, i think you would be pretty safe. develop an release those tokens and they travel on

thepen block chain, is token still a security or is it no something different? we feel quite strongly that the token does not fit the test. that may stop you from doing the sale beforehand. i want to get your take on google banning advertisement regarding the coin or offerings. the coin was falling today in response to that. >> i'm glad it was falling because of that and not because of testimony. this have described between crypto currency and ico's. as far as google, and get off of

, they have to be very careful i think ifvenue and they feel prudent to remove certain ads from their platform because it hurts their ability on thepeople to buy ads same platform, that is there business. -- july >> a lot of areussion is where they within securities law. however, there was a letter from a treasury official that had to -- if you issue a token, it has value.

theoretically, you have been able to transfer value and make it easier to launder money. how big of a risk is this for insurers? >> it is important to be clear about what the law is. here's the deal. since then, exchanges for crypto currencies, they transmit money for people and that makes sense. that is why under our regulations, it is ok to mandate they have surveillance and those people willingly hand over information to a third party. if i invest in a

new token because i have an idea and i sell it to another person, then there is intermediary is. calling me a money transmitter is an overreach, both constitutionally and an interpretive standpoint. whatwant to go back to lisa mentioned about google. companies taking action into their own hands, the other matters as well. what is the appetite for following existing laws or other rules in other countries versus creating policy from scratch? hard to create policy from scratch and washington, d.c.

laws about them out back in the 1990's -- security flaws are kind of remarkable and this is not me speaking out as a lawyer. beis amazing that attests to possible enough to read the -- reach the concerns we have about tokens. i think the fcc has done a good job about implementing it. where the fall short, i think that is where they pick up the activity. at that point, it is a different kind of asset. , directorou so much of research at coin center.

volumeng up, trading surging in the stock of signet jewelers. we will tell you why next. from new york, this is bloomberg.

20%ignet jewelers falling in one day. the number-one driller boasting -- you and you have been about the pitfalls of this country. what happened here? >> they had the continuation of the credit transitions which made a negative impact on their largest division which is

sterling. >> the credit issues -- when he would go in, they would be the ones to offer it to you. >> you have the ceo on a three-year comeback plan, but i found the plan includes growing and tricking the country at the same time. of realize they have to. they are working on improving their mobile app, targeting millennials and while they are doing that, they are also going to shrink their store base.

>> we were talking about dick's sporting goods good and we were talking about the retailers. is sosome ways yes, there much competition that people thought they would not have competitions. , especiallyring with the credit being transferred, how much of this is toangover from too rapidly to easily. was whenk a lot of it the rates were rising. synchrony,ook at they were around 4% or 5%. they were being generous with credit and they see people not

being able to pay them back. >> they are going to be more tied to what the creditors want to do. >> it is interesting to know that during the transition, sales dropped, so credit is key to making the purchase. >> thank you. that has been the biggest one-day decline since november of last year. >> it is time now for the bloomberg business flash, a look at some of the biggest stories right now. they said they make false statements after claiming the labs can run multiple s on just

one drop of blood. from holding any company the recall covers certain for patients and cars from the 2014 to 2018 model years. picked off 2018 on a winning note. the sparrow company says a return to double-digit growth after throwing just 19% in the fourth quarter. >> china, we almost grew 30% and online basis, we grew 57% said those companies have put the company on foot for a record

year. i want to say most of the lookacts on the superstars better. >> that is bloomberg business flash. >> the market close is next. retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

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lisa: stocks are in the red after disappointing retail sales in february. i am lisa and for julia chatterley. scarlet: i am scarlet fu. joe: and i am joe weisenthal and if you are tuning in from twitter, we welcome you. scarlet: we begin with market minutes and another down day, this is the third day of declines and the nasdaq gave up its advance and now it is a second day lower after a seven-day advance. joe: it is starting to be a little bit of ugliness, not too bad, not much selloff in the s&p 500 and nasdaq, but getting real. scarlet: and disappointing numbers from retailers.

net, a bigbout sick decline are today and the biggest decline -- which tells you how often have been by 20%. disappointing results of their. re. we also want to focus on boeing after their ceo said the company is working through hurdles for increased production targets. losingo interactive almost 4% with competitors assessing threats of online survival games. joe: this is where you ask if i play those games? and i don't have time to play those games, sadly. [laughter] more flattening today because of retail sales data is not great. two year yield flat on the day. 2.82% andeld down

earlier in the year it was steepening, but on the yield curve we resumed the flattening that we saw back in 2017. was: in currencies i looking at the dollar because big story is the weakening trend and if it will continue, and it did but it was not dramatic. attention, the blue line representing the bloomberg dollar spot and the white line indicates a measure of u.s. political risk and you can see the potential political risk in the u.s. has risen according to this one measure. the u.s. dollar has declined and going to the big question, what is driving the weakness. is it the uncertainty of the white house? commodities, very quiet with oil picking up. gold down a little bit. and those are today's market minutes. scarlet: we are now joined by

benjamin segal, great to see you. i want to get a sense from you on the data we have seen of late. retail sales are disappoint ing. is there reason to think the u.s. economic growth story is more unsteady and less reliable and more wobbly than we thought? benjamin: when you have unemployment at such a low level whether it is companies looking to raise wages, cutting into profits, i think there is a fair amount of policy uncertainty and investors are rightfully taking a cautious view relative to icy outside the u.s., the risk and reward trade-off is overseas. joe: i want to bring up breaking news moments ago with larry kudlow going into the white

house, he is known as a free trader but he is saying things as china has not been played by the rules. he says china has earned a tough response on trade, taking the white house line more on this front. from a international perspective, how concerned are you about a possible trade war or escalation? benjamin: i don't think it is good. a lot of companies have significant revenues and businesses here in the u.s., and a weak u.s. is not good for anybody. the reality is the u.s. economy used to be 40% of the global economy and now it is closer to 20% of the global economy. whereand that in a world the u.s. is separating itself from the rest of the world, i would rather be that a percent than 20% and gain the initiatives if the policies going anti-trade on the margin in the u.s., i think you see

much better policy momentum in france and in china, and japan. speaking of policy risk in the u.s., lisa showed a chart of political volatility to the dollar. to what extent would you attribute politics to some of the movers we are seeing? benjamin: it is tough to say -- the net result is that one of the interesting things is a weaker dollar is increasing growth estimates for u.s. businesses. from a cosmetic perspective, u.s. earnings growth and dollars is exhilarating because the dollar is weakening whereas the euro and sterling and yen earnings growth is decelerating. it is deceleration for a good reason because those countries are stronger and investment outside of the u.s. in a starter currency begins to look pretty competitive versus the u.s.

even though growth is decelerating. lisa: you are a portfolio manager, when was the last time you changed your allocation? benjamin: we don't do it in a significant way, we do it stock buy stock, with incrementally adding japanese names and incrementally shaving some of the winners we had intact to favor more cyclical businesses. lisa: is there something you are looking for that could potentially up and your current asus and cause you to make a khasi to make a sudden shift? we have exports are in china in china. thinks in the policy level that could affect those businesses. in terms of the u.s. you have a big economy. it is an important economy for

global businesses. i think there is relatively little that can undermine the ongoing strength and i think even if you get a negative on trade, some of the positives on tax rates even out. think global business, i there is relatively little. manager that is little that can happen in the u.s. that will have a transformational impact in a market where we are already underweight. scarlet: and the president talks about trade he is concerned about the trade balance and how the u.s. has a negative trade balance. as you look at non-us companies, trump has made clear tariffs will be on imports. but companies are free to build, create, and invest in the u.s. you seek momentum to do so the like that is that a valuable proposition to both operations here and invest and spend in the u.s. because of the lower tech

space -- tax space? benjamin: if terrorists are going up on raw materials -- if are going up in raw materials, the auto sector already has and of good manufacturing operations here and out of the anybody wants to be strong-armed into making an investment that in four years or eight years from now might look like a bit of a white elephant. i don't think people are making significant investments on that basis of current policy. joe: global synchronized growth is a term with heard of a lot this year, is it applicable or somewhere the momentum is flagging? benjamin: i think the u.s. economy is late in the cycle and you may see a boost around tax reforms and certainly from a weaker currency, but i think

what makes us more comfortable is the policy uncertainty. the relatively high unemployment in europe which means i can get labor at lower costs and the central bank what not try to exit as soon from an easy monetary policy in europe as we are in the u.s. -- that policy backdrop is an incremental positive outside the united states. lisa: what is your contrarian view? the cyclicalhink market in europe, i think japan values has moved up a lot and i think the ability of continental europe leaving the u.k. to one side and the ability of continental europe and european businesses to cut costs, raise efficiency, and narrow that

valuation gap with the u.s. peers. that is what we are looking at is the biggest opportunities to accelerate earnings. and narrow the valuation gap. if you add those two together, i think the outlook of continental european businesses is more interesting than the u.s. lisa: thank you so much, benjamin segal. scarlet: we are awaiting remarks from president trump will be participating in a roundtable session on tax cuts and reform at a boeing factory in st. louis, missouri. he is accompanied by steven mnuchin. boeing executives will also be on hand. we'll keep you posted. this is bloomberg. ♪

mark: i am mark crumpton with first wrote news. the white house is what it on a short-term immigration bill to republican lawmakers. a person familiar with the matter said president trump can offer new protections for young undocumented immigrants in exchange for border wall funding. the president seriously insisted on a agreement that would and chain migration and the visa lottery system to applicants from certain countries. the white house has confirmed that larry kudlow as the president's pick to succeed as head of the national economic council. in a statement the white house press secretary sarah sanders announced that kudlow accepted the position and his official date will be determined soon. it is an election that will be a bellwether for the battle of who will control congress, and now

it is too close to call. in southwestern pennsylvania, conor lamb has a lead of a few hundred votes over republican rick saccone in a special election for congress. still haveee ballots to be counted and paul ryan says democrats showing in the election is a wake-up call for republicans. >> they did not have a primary. they picked a candidate who can run as a conservative ran against the minority leader and on a conservative agenda. will have primaries in all these other races and primaries ring them to the left. mark: i am mark crumpton. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. scarlet. scarlet: thank you, mark. to st. louisu where the president is on stage and will hold a roundtable discussion in st. louis, missouri at a boeing facility

that will discuss tax cuts and tax reform. a victory for the republican agenda. lisa: interestingly, boeing has been similarly punished of the concept of potential retaliation by china against the u.s. with respect to trade tensions and tariffs. it will be interesting to see if he addresses this here. pres. trump: i want to thank secretary mnuchin for being here. flew from a different direction, and this is very important. and to the president and ceo of the missouri chamber of commerce, thank you very much. you are doing a great job in missouri is doing a great job. it is a great place. i want to thank my friend dennis, and they keep telling these countries, yet the buy american.

i want you to buy american. we help people and countries and give aid to countries. i asked where you by your equipment? we buy from other countries. what about buying from the united states? we haven't been doing that. and now they do it. and we also make the best products. [applause] if we didn't make the best product i would ask them to do it, but we make by far the best fighter jets. the best there is in the military world and the best anywhere, and we are coming back and doing it more so than ever before. i want to say the f-18, one of my favorite planes, is a work of art. you look at the workers and the talent that went into it. we look at different versions of it. it is spectacular. it is a beautiful thing to watch. a few years ago this plant was

in serious ranger of shutting down. seriousplant was in danger of shutting down. it is doing better than it has ever done before and i am proud to say we kept it open, keeping thousands of americans employed in st. louis, missouri. a great place. the state of missouri was very good to me. [applause] think josh is doing a fantastic job. i can tell you he is working hard. we are going out of our way and asked congress to fund 24 brand-new f 18 jets and that is the latest and greatest stealth. a lot of things on that plane people don't know about. it is a new version of the working on 24re

brand-new wants and we are working on price and maybe we can work out a good price. [laughter] otherwise we are going to buy them from somebody else. [laughter] but it will all be in the united states. what do you think dennis? boy make a deal? >> will find a way. [laughter] pres. trump: it is wonderful to be back in this great state and push all of the historic tax cuts. this is the first place i announced we are going to be asking for massive tax cuts, and everybody said it would not happen. hasn't happened since ronald reagan to any scale, and didn't come close since then. not only did we get it passed, but bigger than anything that has passed in the history of our country. phaseow we are going to face two, will help companies and it will be special.

kevin brady is working on it with me, the congress and senate is working, and unfortunately on the original we did not have a single democratic vote. and now they are regretting it. two will be aase big incentive, and a tremendous incentive for the workers. six months ago i promised would main street bring roaring back, we help wall street, main street, everybody. all of that money that went into the pockets of people, thousands of dollars each. they are very happy -- we created 300,000 jobs in february. that is a number nobody believed. [laughter] [applause] we created 3 million jobs since

election day and if somebody said that was going to happen, they would have said that is not possible. i wouldn't have said it. you would have lost all credibility and running but we created almost 3 million -- and it is going to be over 3 million jobs since election day. nobody would have believed could happen so we are proud of it. new jobless claims are down to a 50 year low. -- nobody has seen that. at ass claims went down record pace over the last year. since the election day, they are now down to a 50 year low. a typical family in this area earning $75,000 a year will see their tax bill slashed in half. they will take all money, they can spend it or save it.

[applause] and now the banks are getting stronger and a lot of good things are happening. they will be getting interest on their money, and that is ok to if you don't want to invest in the stock market. people were putting money in the bank and not getting interest and that really hurt a lot of families, especially families that saved. people saving all their lives and for a long. time, there were not getting interest in money. another are getting interest in money. for the year, and more than that from election day. it is something great. a lot of people are very happy. families in missouri will save more than $4 billion in taxes. that is just for this year alone.

$4 billion right in missouri. millions of workers are getting more bonuses, higher wages, and more take home pay. if they want to work your, they can work here. dennis, if news for they want to go some place else, they can go someplace else. people can go and work where they want. people don't want to leave boeing, but just in case they want to -- i'm not sure dennis wants to hear that, but the fact is they have four or five or six job offers whereas before they had none, so that is special. we have a great group of people and great business owners and employees in the firm. we have a lot of tremendous people. what i would like to do is quickly go around the room and say exactly who you are and what you do. i know you all love bowling and missouri, but maybe we can start

with the chamber of commerce. missouri, and on behalf of all employers, welcome to this great state. your regulatory relief and the work on health insurance and igniting the debate on infrastructure has been very helpful. there's optimism around those two things, but the tax relief in particular has missouri coming again. the story that impacts the missouri chamber, we hired a 22-year-old fresh out of college last october, and this year as a result of tax relief, she will $954. thank you very much for that. we hear stories like that from all around the state. pres. trump: and a great job you do at the chamber. thank you. >> i am the chairman and ceo at

hawthorne bank, we are a public the trade community bank located in missouri. bank with1.4 billion 348 employees and 21 banks in central and western parts of missouri. as a result of the tax relief, we were able to get thousand dollars bonuses to all employees, a $500,000 bonus to part-time employees, and in addition we have a profit-sharing plan. in the future our employers -- our employees will do to benefit with what you did in your leadership role to get that tax relief and i thank you very much. pres. trump: the banking business has been a tough business and but regulation and problems -- we want stronger regulation but we wanted to make sense. as you know, banks are doing much better now and they are able to loan. it bipartisanne,

bill that will hopefully be voted on shortly on dodd-frank. it is an important amendment for smaller banks and community banks. is going to be a special bill to you. are you following that? i thought it would pass today. pres. trump: it might pass today, it might pass at this meeting. [laughter] it is going to be popular for smaller banks, that they needed. it. we are honored. you will be able to loan money to great customers. thank you very much. my name is kevin thirst and i work at dynamic fasteners and we sell commercial fasteners and power tools to the commercial industry with a primary emphasis on metal buildings. is, i am a nerdy

engineer. i am out of my element in this room but i am appreciative that i got invited. pres. trump: you have a very good company. i am marybeth hartman and i have a union highway construction company that is very small and we have 30 employees. immediately upon you being my homeas president, life as an employee changed. i started operating in a way that tax cuts would be happening, and they did. forslated into an upgrade my foreman, i spent half $1 million on new agreement this year which is something i was always afraid to do. everyone received -- union employees received good benefits packages and they give them an additional three weeks for r vacation.

they all received at least $500 at christmas, some of them as much as 2500 depending on their ranking. the biggest thing i thought, for 10 years my employees that were union were very concerned about their pension fund that have been underfunded for 10 years. when i talk to them last week, they are now at 94% funded with the expectation they are going to be 100% funded by 2020. we are big supporters of years in our company and we are grateful for the work you have done, and you only just started. thank you for everything. pres. trump: thank you very much. and you had your best year? >> my best year. pres. trump: that is what we want to hear. thank you. headquartered in kansas city,

missouri. thank you for your leadership with the tax reform. once the passage -- was perfect timing. our executive team gave all of our employees $8,000 bonus and was perfect timing right at christmas. gratefulmployees were during that time. i had many great stories such as , and repairs to automobile vehicles. thank you for your leadership. pres. trump: thank you very much. >> i'm the chief executive and he runs half of our dress railroads and we are one of the nations largest railroad spaced in kansas city, as our name implies, 7000 miles and 7000 employees. the tax reform was wonderful for

our business and company. i am you understand the railroad industry is hugely capital intensive. our company spends 24% of revenue within capital assets. infrastructure equipment. in addition to the tax relief, the immediate expensing of expenditures has made it possible for us to continue to invest at that level and create jobs and grow and serve our customers. one of the success stories recently that you are over -- you are aware of his u.s. deal, chad and his team serve that plant and we are starting to move freight out of that facility and create jobs for them and for us. we greatly appreciate your leadership on tax reform and greatly anticipate a new modernized updated nafta. pres. trump: we are working on

that and u.s. still is opening a plant because of what we did recently with the tariffs. and they announced they are opening a plant. how big of a deal is the expensing? the railroad business must be a phenomenal thing for you. >> it is. we estimate over the next three years a combination of lower tax rates and expensing is going to create for our company well over $100 million of additional cash flow that we can use for reinvestment to create jobs. it is a big deal. pres. trump: i always said that to me expensing will be the best thing on the bell. a lot of people do not talk about it, but it is very powerful. have a lotvest and more jobs and is going to be a great thing for companies in our country. we have companies moving back into the united states and that is one of the reasons. thank you very much. >> i am chairman and chief

operating officer -- and we are the primary electric divider of the kansas city region. as a direct result of tax cuts we are working with regulators in kansas and missouri to reduce costs by $100 million. we are also in the process of finalizing a merger with a fortune 500 company in our region. $100 million that will flow back, and so our company year-over-year will be able to hold back $100 million that goes into the pockets of folks. i can also tell you from an economy perspective, regulations and a sluggish economy has slowed our ability to grow and as a result. the cause of increase in customers we are excited about the opportunity this will happen community and customers.

pres. trump: and now it is a whole different ballgame. >> it absolutely is. >> thank you mr. president for the invitation today. i am an i.t. manager at the boeing company and i have a great job. [applause] pres. trump: you are not leaving? >> i am not leaving. [applause] inoticed an increased amount my take-home pay and what that means presently is an opportunity to reinvest or invest my daughter's college education and give her the opportunities that i had. in high school i joined a u.s. army reserve in order to pay for college at alabama state university. the skills and experiences that i learned in the reserve were invaluable and actually paid the way for job opportunities here at the boeing company. asay i proudly serve boeing a proudly served in the u.s.

army reserve. boeing is a company that invests in veterans like me, two people, at the community. thank you. [applause] on.. trump: come , my name is kevin baker. the bank has 1200 employees serving 325,000 clients in nine midwestern states from minnesota to texas. the texan from give us a unique opportunity to reward associates with $8,000 for all full-time employees and $500 for part-time employees. the bonus create a lot of excitement. scarlet: you are watching president trump's roundtable discussion at a boeing factory in st. louis, missouri. plenty of local business representatives thank the missouri chamber of congress.

and of course boeing's chief executive taking center stage. lisa: we should also mentioned they were discussing banking regulation and the vote on dodd-frank bill is continuing but the senate has enough votes to advance the dodd-frank release bill. now something discussed in the meeting, so that the note. scarlet: and the president made reference to it. we'll keep a night on development there in st. louis, missouri. let's get back to markets. if you look at how indexes by 250 the dow is off points, it is the third day of declines for u.s. stocks. for the nasdaq, it resumed the clients because earlier it bounced back and look like we were going to get a comeback. joe: one thing to remember it othertperforming the

indices. scarlet: angela merkel was sworn in, and another grand coalition maybe the business establishments preferred option, but the chancellor's main is less secure than years past. claus, angela merkel can return to running the country and making sure relations with the rest of the eurozone is intact. what is number one on her to do list? >> i think number one on her to do list is to get her cap get ready because we are still seeing some of these positions being filled. there are two major issues that she faces. one is to figure out where she stands in terms of international relations of russia and the u.s. where things are changing a little bit. i think we're going to see some

new suggestions in terms of defense spending and defense policy. she will also have to face up to the french suggestion on how to reform the eurozone. government is amendable to some of these ideas but it will be something that has to be discussed. she is first of all, chancellor again in the country has a government. joe: what specifically on the reform front can you see the merkel government getting an alignment with france? i think a euro's own budget is doable. i think a common budget among countries that are only in the eurozone, which will probably be a form of structural funds or fiscal transfer, or unemployment insurance.

in germanyliticians would like it, but if the amount is small enough i think it would probably be something that is doable. i don't think it will happen, euro bonds always comes up in these kinds of discussions, which i think is probably a step too far at the moment. specificallydget to the eurozone economies is doable. lisa: the smoke has cleared and we have a fourth term of angela merkel. taking a step back, how much power to she have given her troubles getting to office this term? how much clout does he have to not only the goucher brexit but any potential new trade deals with the u.s.? is she in a strong enough position? i think she is in a

fairly strong position because she has the rest of the eu. she is in a match last stronger position and out be surprised if she is chancellor throughout the period. --rlet: wide you say that why do you say that? claus: i think the social democrats leader had to step senseand i think it makes for merkel halfway through her back in her own time. i don't think it will be a massive surprise because they have competent people. i think that it is probably where we are going in terms of angela merkel's future in germany. she did come out of the elections weaker than she went in. ground,y lost a lot of

in the grand coalition was the only viable alternative that could happen effectively. scarlet: claus, thank you for joining us. we speak toup, michael purvis and get his thoughts on the continued surge in abolishment -- bullishment. retweet funnyt, memes that i see. scarlet: including comments. [laughter] joe: this is bloomberg. ♪

joe: recent futures positioning data continues bullish in the backs and what levels might be compelling signals for the strength of those asset classes, but our next guest says things are changing. joining us is michael purvis. wrote interesting stuff on volatility positioning lately, how are things position right now based on recent patterns and what would that say about volatility? we see this trend of vix positioning going extremely short to now quite aggressively long. positioning,t vix the short or long side, it could be a helpful signal to go the other way. everybody will go from one side of the shift to the other side of the shift.

positioning,to vix the signals before the financial crisis when there wasn't q a and interest rates were not a dominant part of the picture -- the positioning signals were much weaker. my argument is that if we are normalizing on the macroeconomic side, these positioning signals will normalize and become less effective. the idea is ife, you go in the post great financial signals than volatility is going to come down. but in a different monetary policy regime and they are no longer doing expensive easy policy, than it might be myopic to look at most crisis signals? it will beactly, less effective in these conditions where rates are going higher, particularly if we go to 3%. joe: we have a chart and it

looks at vix positioning and tenure positioning -- 10 year positioning. michael: the vix positioning and treasury positioning -- and the 10 year yield which is the green line. with is interesting to note is how all those lines are moving together as the rate bottom left in september. there's two things to take away, the first is from those trading vix futures, they were not caught off side by the regime change. they were looking at what they were doing and were looking incredibly bearish. i think the other thing is that correlation is eight intuitive understanding, as yields go

higher, image the cost of equities are going to be higher and means that the spread 10ween dividend yields and year yields is much wider and therefore there is a chance for broader. joe: so there is an intuitive link. the charts show they move together and is yields go higher, suddenly some boat cases and stocks become tenuous and makes the case for higher volatility? michael: connecting back to the first discussion, it is an aggressive assumption that the vix will go 10 or 11 or the trends we saw last year, unless the 10 year and the rest of the treasury market goes back to those 2017 conditions. i think that is an aggressive assumption with three rate hikes being priced in. joe: an argument you here is that qe is volatility suppressant and is sucking volatility out of the market.

you buy that and visit another way in which a wind down of extraordinary policies brings new life into volatility? michael: there is a whole bunch of other charts you can produce that would show the advent of global qe was a great volatility smotherer. that lower stable great condition as inflation and rates budget to higher levels -- the volatility floor has to go to a higher space. joe: the affect we see, a different shift in the fed's main concerns. the concern was deflation are disinflation, and that was the signal. now there is believe the fed is concerned of upside risk. what does that do for portfolio management? michael: part of the question is what philosophy are we going to see with a regime shift?

i think we are tiptoeing into it. you mentioned the fed, but the other part of the equation is what our friends and the other side of the atlantic at the ecb doing and how they normalize it. a more powell takes decidedly hawkish stance, than the overall volatility condition is linked to what is going on in europe and japan. mario draghi has a much more difficult task and more likely dovish thanally hawkish. thank youel purves, for joining us. oil: coming up kumal trading is getting boxed in and a big move coming. three charts you can't miss. this is bloomberg. ♪

scarlet: it is time for our weekly segment with abigail doolittle are we look at m that charts -- we look at in-depth charts. the theme this year is volatility and we had three bearish reversals and you have a chart with the title that i thought is so creative thought provoking. the tax cut bubble. are we in a bubble and visit bursting? bursting?it yet the nasdaq and the dow industrial average and if you look at the bursting of the credit bubble, this is what it looked like. abigail: the divergence? >> absolutely, the nature of the

dow, as opposed to the nasdaq, 100 capitalization means that when stocks are priced for perfection and thinks they're going wrong with individual stocks, this is much harder to ignore in something like the dow industrials. abigail: and we were chatting earlier that tax cuts back in 1929 -- you think this is similar to 1929 in terms of tax cut rally? there were huge tax cuts and 1924 and 1926, and in 1929, even after the stock market beat. those who think we can't have a bubble here because we have a big tax cut -- i would say we have a bubble here because we have a big tax cut. abigail: so you are bearish. what kind of correction are we looking at? the timeframe suggested

if we are picking here now, you are looking into 2021. it could be substantial. it could be ugly. abigail: say it, what is the percentage? walter: the longer-term risk is a retest of 2006 loads i 2021 or 2022. abigail: that would be a significant correction. root assetis the class, i love your chart of long-term range, can you talk to us about what you have here? years down, eight years up, you can set your watch to it. troughs, thisd are forecasting in terms of technical tools. if you work this out, eight years down, where does this

long-term downtrend line meet? eight years from this high. you are talking possibly as low as 62 for the dax index. abigail: and that would be an all-time low. walter: if people are bailing out of treasuries is a higher interest rates and bailing out of the stock market, they are going to be bailing out the dollar assets and looking to move out of dollar assets into other currencies. abigail: speaking of dollar assets, you have a great chart on oil and talk about this range going on if investors were to come out of oil and a dollar denominated assets, is it long-term or near-term? walter: behind this yet the largest long position in history by several orders of magnitude. saw, inks like a whip

behind it yet massive speculative links, and we haven't had a high since january 25. they are hanging over the head of the crude market, and what is the position and how long will they sit out and endure a whipsaw? they are here to make money, and if this breaks these prior lows, we could be seeing a multi-your heat and crude oil. abigail: it is impressive, there could be some big moves ahead for financial markets, especially stocks on that stock bubble. thank you. scarlet: it is time for the business flash and a look at the biggest business stories.

disney reorganizing to senior executives -- strategy had kevin maher potentially in line to , which has toer make operations and international media networks under its umbrella. a former equifax executive is facing charges of insider trading. prosecutors announced that a grand jury indicted him for selling off almost a million dollars in equifax stocks after the massive data breach was publicly announced. he allegedly received information in late august alerting him of the breach of the company did not disclose it until september 7. and that is your business flash update. joe: coming up, what you need to know about tomorrow's trading day. this is bloomberg. ♪

scarlet: u.s. stocks falling with the dow off more than 200 points, on disappointing retail sales numbers. lisa: up and down. scarlet: coming up, don't miss this, our exclusive interview with steve schwarzman at 6:00

p.m. eastern followed by justin trudeau of canada at 6:30 p.m. joe: in tomorrow i will look at my favorite indicators that cannot at 8:30 a.m. eastern time. lisa: and don't miss this, brought some their first-quarter earnings after the bell and we will talk about snl over again. scarlet: that does it. joe: have a great evening. this is bloomberg. ♪

mark: i'm mark crumpton. you're watching "bloomberg technology." cruz, the former student charged with killing 17 people at a florida high school last

month, remains silent during a court appearance today, so a judge entered a not guilty plea on his behalf. prosecutors filed formal notice of their intent to seek the death penalty on tuesday. sbi's acting deputy director tells lawmakers the bureau missed critical tips on its public access line prior to last month's school massacre in florida. -- fbi's acting deputy. >> we received an emailed tip from a person in mississippi, who indicated that a person unknown to him posted on his youtube channel the following text -- "i'm going to be a professional school shooter" from a person named nikolas cruz. mark: students across the united states took a stand and took a walk to protest gun violence. organizers hope it will be the biggest demonstration of student .ctivism yet in