receiving subpoenas from robert mueller. approaching another term, the russian president seeks a fourth term as tensions grow between the kremlin and the west. and the end of an era. a chinese tycoon retires. and his son takes over his global empire. this is "bloomberg surveillance." terrific news flow. we are looking at the markets and politics. we are readjusting our bowtie. be onhe of the sis will u.s. politics but we will see if the market tightens up. all of these distractions. will we get back to what we do. the curve is flattening. yen. stronger japanese you really wonder where four rate harks -- rate hikes are in

2018. francine: first, let us get to the bloomberg first word news. denies aite house report that president trump is about to fire h.r. mcmaster. the washington post says the president has made the decision to remove mcmaster that according to the paper, he wants to make sure the army lieutenant general is not humiliated and a successor is lined up. muellercounsel robert may have crossed a redline set by president trump. according to the new york times, robert mueller has subpoenaed the 12 organization to turn over documents. the president has suggested that he be beyond the purview. in miami, rescue crews searched through hoping to find more survivors of a partially built pedestrian bridge that collapsed. four people were killed. nine were injured.

the bridge was built with an accelerated method. and a disagreement over the border between northern ireland and ireland is complicating brexit transition talks. according to european diplomats, the u.k. has significant ground to make up before next week's summit. if thethe officials says eu is not satisfied, it may add more conditions to a transition deal. global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. i am taylor riggs and this is bloomberg. tom: looking at the data right now. we are looking at bonds and currencies. futures do not give us the story. the curve is flattening. oil is not a story. on to the next screen. with a little bit of an issue. there is the story. the 30 year bond is one proxy

to 3.19ee, big news, up . that should be read on the screen. a lower yield by one basis point. i put a sterling ruble to dazzle francine. francine: i am dazzled. we are spending a lot of time looking at the stepping down of the chinese tycoon but european stocks drifting. we had a little bit of the lackluster session in asia and the dollar weakening as investors consider the trump administration turmoil. and we look at what the fed can and cannot do. for good measure, and it is the end of the week, i have put the yen at 105.81. we are spending a lot of time on u.s. politics so we wanted to show you a chart looking at european stocks. they are clearly in a tough spot

and you look at their u.s. peers and the asian peers. the stoxx 600 -- the overall trend puts it in the weakest position. we are looking at that. and looking at social media, we are talking to our radio listeners. our radiomorning to listeners. we have showed this chart many times. steeper yield curve. down we go with the curve flattening. and this acceleration on a long and wide axis. this is a huge deal. this velocity towards curve flattening. that definitely gets your attention. to say the least.

convexityconvexity is a jargon r accelerating. we are accelerating to a new level of curve flattening. the information flow may be linked together that let us try to pull it apart. in washington, on russia, in the united kingdom and in the u.s., president trump. we have two important guests this morning. stephanie baker is with us in london as well we have christopher weafer, senior partner at macro advisory. christopher, let me begin with you. what will you look for out of moscow in the coming days or do all of these decisions wait until after the putin election? christopher: i would expect some reaction before the election. sometime later today i would expect. theelection is sunday and president will need to respond to the sanctions imposed by the u.k. i would expect only a political reaction. in other words, an evil number

of british diplomats expelled from moscow. they will keep it at a political level rather than looking to escalate that which might be damaging to the economy and business. before the election, played up in the local media as an appropriate response. i think that is what we should expect. youryour expects -- thoughts on the strong language from ambassador haley at the united nations versus what we are hearing out of the president. it has been noted across all of america. was ambassador haley acting for the president or in her own capacity? stephanie: she has taken a much tougher line with her words then president trump has. and that has been a consistent theme for the greater part of the last year. i think it is consistent. and i think, actually, when you look at what the u.s. government in done vis-a-vis russia,

many respects it has been tougher than trump's rhetoric. he has been sending arms to ukraine. and him posed a additional sanctions. and the sanctions announced yesterday. there is a gap between trump's words and what the government is doing. francine: where do we go next? trump ist president going against dissent or is there a possible subpoena that surprised you? stephanie: i would have expected special counsel robert mueller to be looking. we reported that six or nine months ago that he was looking at the business practices. nt, we dobpoena ufro not know how broad it is. is this an indication that they

think they do not have everything? that they were not given all of the documents that they requested? or have they blocked them and refused to turn over documents? that is the real question. within thet upheaval administration and turnover of staff seems to be ongoing and in keeping with this reality tv show format of this presidency, keeping us guessing as to who is next and tune into the next episode. francine: what has surprised you the most? christopher: we are getting used to this good cop, bad cop position coming out of washington. president trump indicating one line and then we are getting actions that almost contradict that or official statements from officials. i am surprised with the departure of secretary of state tillerson. of you, icow point

think they will regret that. mr. tillerson is very familiar with moscow especially in his role with exxon. he understood the president and now he has been replaced by someone who does not have that experience and is known to be hawkish. itm a moscow point of view, is something that was not a huge surprise but something they will be slightly more concerned about. tom: this is from a day ago. -- always interesting. he really ramps it up on the -- timet and closes out is up. trump cannot have it both ways. if the president does not take this opportunity to show a bare minimum of leadership, he will be proving his most maryland -- his most virulent opponents

correct. stephanie baker, we are advantaged with your wisdom and tim o'brien's wisdom. does this affect the dialogue? stephanie: that is what robert mueller is looking at. we do not know how far back he is going. there were discussions between michael cohen, donald trump's lawyer of his organization, and some businessmen in russia about building a trump tower in moscow. we know trump has been trying to do business for years, since the late 1980's and moscow and has failed. the more recent -- the most recent deal from 2015 went nowhere. we just do not know. what i can say for sure is it robert mueller has a lot more information than we have. francine: what do you make of

the spy case in the u.k.? when you look at the relationship between putin and theresa may. christopher: that is a great point. the timing seems specifically odd because russia has been ramping up its efforts to prepare for the world cup, and the election. comes completely out of the blue and totally contradicts everything we have seen elsewhere on the ground. we are not going to get into speculation or conspiracies but it is odd. in terms of the political relationship, us gals position 2014 since the sanctions from the u.s. started, is to try to keep bad politics in one drawer and good business in another. when you talk to russian administration officials, they

agree that relations with the west are likely to get worse. particularly with the u.k. and the u.s. nevertheless, they are consistent with the view that they do not want this to make it more difficult for foreign investors to work in russia. they do not want this to damage prospects for economic recovery in moscow. we saw this in 2014. when there were very heightened tensions between the u.s. and moscow. in the end, the russian president ended the discussions specifically because they would be damaging. i do not expect this to change this time around. i believe they will keep it at a political level. tom: christopher weafer, thank you so much and stephanie baker as always, thank you. coming up later, i believe st. patrick's day is tomorrow. with the primen minister of ireland on bloomberg at 2:00 p.m.

looking forward to that. this is bloomberg. ♪

♪ this is bloomberg surveillance. the career of one of asia's tycoons has come to an end. he has retired after amassing a fortune. his son victor will take over the family business. 89 and worth more than $34 billion. he began by sweeping factory floors in hong kong. walmart is in talks for a $7 billion deal. according to people familiar with the matter, that would put walmart in competition with amazon. the deal may push flipka

about $20tion to billion. and opening up the bidding for an asian unit. according to people familiar with the market -- they say the market could be valued at about a billion dollars. ways is shutting down its u.s. units. -- toys "r" us is shutting down its u.s. business. the s&p 500 is stuck in its longest losing streak this year and today it faces the additional complication of quarterly witching. with the coincides rebalancing of the as if you 500 so expect high trading volumes in u.s. stocks. let us get into the stocks with james evan. he is at ccla investment management. i have a chart comparing the stocks.

are you anxious about the markets? worriedf course, i am and big worries relate to the uncertainties in central banks. we have a lot of change going on in that front. the reality is that the numbers arestrong but the markets implying valuations are about to fall. and inevitably, you look at the credit markets. there is neither a heightened correction or a fall. francine: what will it take to come to a correction? james: sentiment needs to go down. it could be either a macro event or a micro issue. little bit ofaw a fluctuation on the back of the machinations from the white house with people being removed. are you worried? james: a staple framework is important in the market

valuation. always uncertainty regarding protectionism. tom: james, i look at where we are and the zeitgeist through the week is clearly worried about substantial and sustained gdp. have four rate hikes modeled into the u.s. economy. these do not dovetail, do they? argue that thed low level economic growth the u.s. has experienced, around 2%, should imply that we have nominal bond yields in the 10 are not there yet. therefor, it could be that the fed titans and the yield curve steepen's a little bit and we still have climates of low inflation and low growth. we may be heading towards

recession which would be calamitous to the equity markets. but what definitely price in continuous growth. tom: looking at the shift. on we go. better gdp. all boats rising. in the revenue predictions of companies? see companies themselves being much more optimistic on the back of the tax cuts and the jobs act in the u.s. we now have consensus of an -- of expectations for the s&p 500 to around 19 percentage points. the beginningrom of the year. arefor 2019, analysts looking for earnings growth in excess of 10. those numbers are dependent on decent revenue growth and that is inevitably coming from gdp growth. francine: let me bring you over to my charge. you can see some negative

momentum for european stocks. this is the stoxx 600. at --rious lines looking being looked at from social media. james: we do like your charge. francine: i take it all from tom. james: i worry less about the charts and more about the underlying fundamentals. dependence of the european equity markets on european central bank continuing to operate in a relatively easy monetary policy. the pressures are going to rise. francine: the pressures -- will they win? we are not going to see 100% inflation? think the pressure will come from populist politics. we know there will be rising populist agendas in economies

specifically like spain. all,look james, all in where we are in this market, i want to go back to the idea of gdp. what is your shop modeling for global, european, and u.s. gdp? james: we are expecting a modest increase over the 2017 outcome. , we areunited states expecting an acceleration from the trend rate of 2 but it is all dependent on the first quarter numbers. the other three quarters have always been reasonably strong. when i say always, i mean the last five or six years. for europe, i am not expecting a very material acceleration. james, thank you's much.

onto another story. the chinese tycoon has ended his career as hong kong's top business mogul. he has amassed a fortune. the 89-year-old chairman of ck hutcheson holdings and asset holdings will stay as an advisor to the group after stepping down in may. with us is bruce einhorn in hong kong. there is an ongoing briefing where he is talking from anything including the doctor to the fact that he would have been in favor of scrapping the term for theor president -- chinese president. how big a deal is this that he is giving the reins to his son? bruce: it is a big deal symbolically because he has for decades been the richest man in hong kong. really personified a whole generation of tycoons who in the postwar years built fortunes in hong kong and then spread around

the region. dayar as actual day to control of the company, he did announce back in 2012 that his son victor would be taking a bigger role in managing things so there may not be that much of a change when it comes to the management of the company. francine: when do we find out? how much do we know about his son and how he wants to take this company forward? bruce: his son, victor is 53 years old. the first of two sons. he is an engineer educated at stanford and he has been working at the side of his father for three decades. out of theely stayed spotlight. he has put his stamp on things more in the last few years including a large investment in australia last year. the biglso been behind investment in rail in the u.k.

francine: will the fund be more aggressive in investing in the u.s.? question.t is a good the company has largely stayed away from the u.s. for quite a while. they are an investor in some tech companies including spotify. but, when it comes to operations, there is not that much that they do in the u.s. in express ofe they did a lot of criticism in the late 1990's and early 2000's. u.s. said the company was too close to the chinese government. the company said at the time that there was no basis to that. ever since, they have not really been that active in the u.s. i do not think that will change that much under victor. francine: thank you so much. james bevan is still with us.

even towards the end of his career, he did not slow down on his dealmaking. there is a different person at the top -- will that make a difference in the attractiveness of asian equities? james: governance has always been an issue. thisigns are that transition or handover has been well-planned and therefor, business as usual. look at the idea of where the markets are. will you deploy cash today or do you have to sit on cash? james: tom, i am going to sit on cash. not a good time to diploid cash. i think it is prudent in the context of the downside of risks rather than the upside potential. francine: james, thank you so much.

chief and investment officer at ccla. christopher perrone will be joining us. i know tom has been working really hard on some of the charts regarding current sees and commodities. yesterday, we talked about cobalt. that interview with mr. verrone will be kind -- will be coming up at 10:00. coming up, we will be looking at the issues with russia. there is a lot of political concern and change at the white house. this is bloomberg. ♪ mom, dad, can we talk?

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that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. 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 near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. alix: good morning, -- francine: good morning, everyone. this is "bloomberg surveillance." we are waiting for news from the

bank of england that should cannot any second. i am not seeing anything on the terminal yet. we are keeping an eye on any impact it could have on the pound. let's get to bloomberg first word news. presidentssia's vladimir putin has barely campaigned in the run-up to sunday's election. a victory in his quest for a fourth term is all but assured. one critic believes the election could hurt putin. >> a significant part of russian society and the people abroad who follow russian politics will not accept these as reelections and putin's legitimacy will be weakened. taylor: jeremy corbyn warned against starting a cold war with russia over the poisoned spy. theresa may has expelled 23 russian diplomats and unveiled other sanctions against the kremlin. corbyn said it could have been

results of russian mafia like groups in the u.k. president trump's decision to fire rex tillerson has but the iran nuclear deal at risk. diplomats meet today in vienna to review the agreement. the president will decide in may whether the u.s. sticks to the accord. choice totrump's succeed tillerson, mike pompeo, has been a critic of the deal. the knesset trump -- vanessa trump filed for divorce -- she is cohead of the trump family real estate business. --essa trump was unnecessary uncomfortable with the scrutiny the trump family has. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you so much. we were talking about the financial stability report or

financial stability statement from the boe that just came out. u.k. banks face a tougher hurdle in the stress test and say the domestic risk appetite is up since november. from the capital buffers, this is basically the kind of health check on u.k. banks. the boe saying the doctor cyclical counter buffer will be at 1%. cryptocurrencies was the big thing. i know you were talking about mark carney in the big thing is that we need to keep an eye on cryptocurrencies and the boe rich ratings that cryptocurrencies right now are not a threat to stability. tom: i would say bitcoin has have a good week and you wonder -- tough week and you wonder what the government opinion will be in three weeks or one year. switch to something, bloomberg surveillance doesn't do enough of and that is commercial real estate. john leiby and company -- john

levy of richmond, virginia, and james bevan with us. ofook at the state commercial real estate in the united states. let's begin with finance, is commercial real estate leveraged up? is it as extended as it was in the middle of the last decade? no, there is nowhere near the leverage we had in 2006 and 2007 and i guess the answer is thank goodness. there's a lot of money looking to get in whether it's on the equity side or the debt side. there's a huge growth in debt funds interested in lending money to real estate thinking that they can get equity-like returns with debt-like securities. this is really not compared to 2006 and 2007. tom: in your report, and you are claimed for your -- you are acclaimed for your analysis,

there's exactly one a chart and it's a straight line up from the lower left to upper right good morning dennis gartman, the buildout of e-commerce. it's that 10% as a round number. how much is amazon going to have in 10 years or 20 years? john: we don't really know. we do know it's straight up and it has gone from 2 to 10. it may be as high as 13 if you cars, but asnd people build their backbones and we get gigabytes in data, it's going to be much easier to shop online than it is now and it's pretty easy to do it now. i think the line keeps going up and it does bring into account the decision -- discussion in ,he u.s. on amazon 2 or hq 2 the new headquarters and there's a real food fight going on for that real estate. francine: are we going to see more of those kinds of projects?

we also have jpmorgan building real estate in new york. john: the jpmorgan building is huge. the was built in 1950 -- 1950's. it's really outdated and if you look at all the real estate around grand central, you see a lot of infrastructure, 50, 60 years old. it's time for a redo. i think there will be more of that, but there will also be more governance -- governments looking to help with inducements and tax credits. tom: where does that money come from to build 70 stories at 270 park avenue or the next big project in london? andt sovereign wealth money are they lined up 10 deep like they are in a lot of other areas of? private equity? john: i don't think there's any question -- other areas of private equity? john: i don't think there's any question there will be people that would love to finance the jpmorgan building although they

could do that themselves. it could be huge insurance companies or pension funds, there is no lack of people that want to be in that location on park avenue by grand central terminal. francine: do you look at real estate? commercial? james: primarily in the u.k. each property is individual so sitting here in london it's easier to understand u.k. property market than it is in the u.s. where we know we will get things wrong. francine: brexit fx commercial real estate -- affects commercial real estate? james: it does. there are some excellent warehouse opportunities, particularly in distribution outside london offering very -- relatively high yields with reasonably rock -- reasonably long races -- reasonably long leases. tom: there's lots of empty spaces in new york and every

other city and richmond as well. does retail reprice down per square foot or will there be new uses for class a and class b property? john: it is interesting. there's always new uses for class a. class b is a different story, but we are already starting to see class a retail locations where e-commerce tenants are coming in and -- saying let us show you our product and you can order online. a big difference from just having one retail location after another. class e is different. we are seeing a number of class b malls repricing into food and other events. continuingstate has value and sometimes at a lower price. tom: what do you see on the west coast? francine and i cannot afford san francisco. we decided we just can't do it. does san francisco ever end? john: no.

and one of the things that doesn't seem to end is the inland empire, the warehouse district in essence of l.a. and long beach, it's inland probably 60 or 80 miles, but full of these huge what we call bombers or one million square-foot warehouses almost all of which are involved in the china trade. that business is incredibly active and everybody wants to be in the inland empire. francine: will malls survive? will we have malls in five or 10 years? john: i think we have a different kind of malls. class b malls are getting recycled. i think class a malls will survive. they are changing from apartment bowlingo food courts or outlays or movie theaters and in many of them, they are adding apartments. it is becoming walk to your event. i think there will be malls, but a different kind of mall then --

-- as all you do is different kind of mall than four acres in all you do is shop. tom: you and i know this is a financial exercise. if you are john levy, it is the romance of commercial real estate and all you and i are worried about is the discount rates. as they bring rates up, what does that do to your investment and visibility in commercial real estate because it cuts both ways, doesn't it? james: it does. the yield becomes more attractive than the rate goes down and that's painful. on balance, we think real estate will weather the storm on the basis that it has already priced for the rate hike. we are not worried about the rate hikes that are already baked in the cake. we are much more worried about what happens if the economy slows because the demand side of property begins to diminish and then we have a capacity

challenge. francine: i have a viewer question. that is exciting. keep on sending them and you can log onto tv and send questions. this is from a person that says and theyour outlook on impact on activist investors? john: i think they are trading at a discount to direct investment, which is somewhat unusual. in the rate business, investors do not feel they have control of the ownership. my guess is that continues and as a result, there will be more mergers because people will want to grow bigger and bigger. right now they are trading at a discount and i think that continues. one thing i would like to get back to his james comment on leverage. as rates go up, this goes back you were saying, we actually get more and more secure in real estate because leverage goes down. if you are worried about real estate leverage going up, adding

money to the discount rate, it makes it more and more difficult to add that last dollar because you don't have coverage, as we would call it. james: absolutely. tom: thank you for the a firmer, john. james bevan with us today as well as james levy. our goal is to keep you briefed and get you into your weekend of reading for fed next week, you can do that on radio. karen moskow, bob moon, bloomberg daybreak: europe worldwide, this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." common francine from london and new york. let's talk about brexit, it's all about ireland and the border is still the biggest stumbling block to getting any kind of deal. the u.k. has significant ground to make up on the issue before next week's summit. chief joins usau now for more on the issue. good morning to you. we have any progress at all? what is the solution that the u.k. has put forward? put forwardhas not any solution that we can see and that lies at the heart of the

problem. early this month, the e.u. published what was called the backstop option where they had in great detail how ireland could be kept in the single market customs union if there was no other deal. in response, the u.k. would put forward some kind of counter proposal. all that happened was theresa may said this draft was completely unacceptable. there's concern she has yet to put forward any concrete alternative and that is the worry in the summit next week. francine: how is dublin viewing this? dublin has a certain amount of concern. next week, e.u. leaders will meet to talk about transition terms. of leverage. once theresa may to do is to put forward something they can call progress, whether

that being an alternative to the backstop proposal or details on what her -- illusions might be. what they haven't seen our a concrete proposal from -- are a concrete proposal from theresa may. selectmust admit that members of the keene family will tomorrow, door of -- 57th street in new york, it will be a select invitation as he celebrates another st. patrick's day. the president celebrated one with speaker ryan over the last few days. what does ireland want from president trump? very good question. i think we had some it did -- indications yesterday, ireland would be extremely susceptible to a trade war. we have seen concerned expressed

that irish whiskey could be caught up in an international trade war. i think ireland is keen that that would be avoided. in addition, it was interesting yesterday that president trump indicated his willingness to visit ireland and indicated the potential to visit the border reason -- region. i think the u.s. would like -- ireland would like the u.s. support worried -- support. coming to new york headquarters and do a live interview, so we will have the chance to ask him himself. francine: thank you so much, dara doyle. james bevan is still with us. i am sure you will tune in to listen to the tee shot. what would you ask him? james: i would want to know what other proposals there are that allow ireland to become -- remain part of with consistent

borders. whether that means insisting there is -- if britain once a firm border between mainland britain and ireland. that could bring down the main government. -- may government. tom: i look at this and ireland and it really comes down to the prosperity. they've got all that money coming in from american corporations. now maybe that the margin changes, is it going to be a new ireland? deeplythese are huge and important questions and i completely agree with you, the situation is very grave. i do think, however, we should not underestimate the e.u. support there is for ireland getting the deal it wants and ireland will not be abandoned by the e.u. and told to find its own workaround with the u.k. francine: thank you so much, james bevan stays with us. coming up, a conversation with the prime minister of ireland. look for that interview, 2:30

6:30 p.m. inork, london. they will be talking about brexit and maybe a little bit of euro. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. a former qualcomm chairman paul jacobs seeking funding for a buyout of the chipmaker according to financial times, which says he approached japan's softbank to be one of the investors. qualcomm was founded by his father and was once the ceo. saudi aramco is said to have gotten a cool response on its ipo from american investors. according to people familiar with the matter, investors have pushed back on several aspects of the deal, including the billion valuation. it saudi's indicated the offering may be pushed off until next year. is almost back to normal at deutsche bank.

the largest lender is awarding its staff $2.7 billion in incentive compensation. that's close to what it was in 2015 before the ceo started cutting back as revenue fell. that is your bloomberg business flash. francine: thank you so much. siemens health liners shares soared after the health agreement company's german parent raised 2.4 billion euros in the country's second-biggest public offering in almost two decades. james bevan is the chief investment officer there. when you look at this health care ipo, is it more symptomatic of what siemens is trying to do, is it that you, for one, would be interested in health care? james: i'm only interested in parts of health care, medical devices because i can see transparency and cash flow and new technology risk. i find biotech attractive and

typical to get right. we are steering clear because it's too difficult to know who to back. francine: what does it mean for the future? are there any components used in health care that would make the sector more traffic? -- more attractive? james: i think devices are attractive and they will be important and that's also from an investor point of view, i think it's better to deploy capital in areas where you have more certainty as well as probable forward return than a lying -- relying on a company burning cash coming up with something that can be monetized in a commercial framework. tom: what -- one of the great themes this week is transparency, knowing what you want to know about a company, whether it is this up roar in ,raud of theranos or broadcom do we know the accounting of our multinationals?

do you have a confidence in the visibility, just as one -- the decline of general electric, do we really know the accounting of these multinationals? james: i think there are pockets of multinationals that are very hard to assess and therefore, the forward return characteristics are hard to judge and therefore, this is certainly a second reason behind economic reason why we will only be supporting quality companies with transparency and why those returns and revenues will remain constant. allied with the premise that we should be supporting some of these company's reliable growth. not to be in complex companies are not relatively high-priced nonfinancial cyclical read in terms of the big trade between so farnd tech, banks won this year. this is the right time to be supporting tech, not banks. tom: james bevan, thank you so

much. we will drive that conversation forward on washington. kevin cirilli is scheduled to join us. christopher verrone will join us from strategic research partners to look at the fundamentals and discourse in washington and maybe to look at a select few trends and charts as well. what we are looking at right now, the news out of washington, maybe news out of the white house and of course, all the news we can out of london, the united kingdom, and reporting out of our moscow news borough -- news bureau. in new york, there is a beauty as we await saint patrick's day tomorrow. don't ask about my bracket. ♪ mom you called?

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it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. ♪ this morning the yield curve accelerates its flattening. the yen strengthens.

how are four fed rate hikes even possible? should they stay or should they go? general mcmaster, could you stop buying human resources morning? haley and assador tinker, a taylor, a soldier comments by -- soldier, and spy. i'm tom keene in london. , did we have any idea what the prime minister or foreign secretary will advance today on these delicate issues with russia? francine: for the moment we don't. we are still expecting and waiting for some possible retaliatory measures from russia. everything really hinges on the timing. we are two days away from the russian election, the prime atister does into next week

the brussels summit, where she hopes to clinch some kind of transition deal. tom: right now with your first word news and everything on those russian elections, here's taylor riggs. taylor: vladimir putin has barely campaigned in the run-up to send a selection. a victory in his quest for a fourth term is all but assured. one critic believes the election , onceactually hurt putin russia's richest manh until the country stricken -- man until the country strip him of his oil company. >> putin's legitimacy will be weakened. taylor: in miami, rescued euros -- rescue crews hope to find more victims of a pedestrian bridge that workout -- that collapsed. it was built with an accelerated construction method that was supposed to reduce risk.

president's decision to fire secretary of state rex tillerson has put the iran nuclear deal at risk. powers meet today in vienna to review the agreement. the president will decide in may whether the u.s. sticks to the accord. president trump's choice to succeed tillerson has been a vocal critic of the deal. vanessa trump has filed for divorce from donald trump, jr. the two have been married for more than 12 years. they have five children. she is a former fashion model, and he is head of the family real estate business. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thanks so much. interesting nuance in markets today. let's go to equities, bonds, currencies, commodities. yield lower, and curve

flattening 1.47. that's a huge deal. a breach of 50 would be the second time this year with further curve flattening. out of 17. we are watching the breakdown from new yen strength. ,terling-ruble could dazzle francine. francine: i'm blinded, tom. european stocks drifting. this follows the lackluster session in asia. the dollar weakening. can, are, i and i trying to figure out exactly what the implications of continuing personnel turmoil in the trump administration means for their asset classes. i am looking at oil and gold. there's not much of a bid as yet. the big mover this week, for the measure, you can see

yen around one of five -- around 105. tom: the that banner i think is really important on euro area february consumer prices coming in a little light. that is sort of the trend this week. where is the inflation? it is really interesting what that means. is that a surprise to you, francine? francine: it is a surprise. we are trying to figure out exactly what the future means for the ecb and mario draghi. it is pretty much in line with estimates. if you look at consumer prices, they have not been rising, which makes people feel a bit richer. if you are the ecb you want a real way to pressure and real cpi to be sure you are doing the right thing and start to get rid of qe. tom: that goes into next week's huge fed meeting. right now we continue the party on international relations and

fractious politics. , after being in pennsylvania, is holding court in washington. in moscow, our emery hold as as well.ur emery hold reports from originally "the washington post" stated otherwise. everyone in the intelligence committee is operating -- community is operating olivia something that anyone could go at any time. tom: do you believe the president and his staff dictated to ambassador haley her strong yesterday, or was that unilateral? >> a little bit of both.

yesterday, or was that fromwas without question the president's standpoint when he specifically noted the incident going on in the u.k. very aggressive rhetoric, but it with the president responding to russia basically in real-time. the sanctions put forth yesterday, according to folks on capitol hill, they agree -- they were greeted with a sigh of , saying itemocrats is about time. still, those sanctions, there's still a lot more room for this administration to put pressure on russia, particularly with their international relationships around the world. case in point, saudi arabia. nothing about this would impact the saudi race -- saudi relationship with russia. francine: when i keep on hearing is the fact that rex tillerson is no longer in the trump administration is actually quite

worrying for russia because he understood russia, understood the complexities. anyou feel that there is understanding in the white house that they need to address this? >> there's no question that secretary tillerson, given his private sector experience and dealings with russia and the private sector, did bring part of his experience, and it is part of the reason he was brought onto the administration, an understanding of that particular region. that said, the sources i talk with suggest that cia director mike pompeo brings with him a new set of experience, notably as a former congressman and in the intelligence community. i don't get the sense, to be quite blunt, that folks are concerned, that people don't understand the geopolitics in russia. i will say that yesterday's round of sanctions particularly with regards to who was targeted

is being interpreted as an understanding on behalf of the administration that bob mueller's investigation, while expanding in scope come apart to bit the in ministration feels are accurate because a lot of the folks sanction yesterday were wrapped up in the mueller probe and their indictments. tom: thank you so much for your work this week. she is in moscow, where i guess it is not that cold for an election, which i guess is not that big a deal because i believe mr. bruton will win -- mr. putin will win. anne marie, what is the response of the media in moscow? what is the response of the people in moscow to all of this news flow out of london and washington? reporter: there is no response. it is very soft and muted. russia new these sanctions were coming after with the u.s. said about 2016 meddling. they said we knew this is coming, but we are going to

moderate because we don't want to completely shut the door of the white house. what moscow is talking about and what the foreign ministry is talking about is what they're going to do in terms of retaliation with the u.k. theresa may kicking out 23 russian diplomat back to moscow in one week's time. they are about to retaliate on that. we have not heard just yet. sergey lavrov speaking in kazakhstan this morning said of course we will retaliate, but it is up to president putin. it is unclear if they will go further, the president putin has not campaigned for this election, and 10 pick -- and today he actually is. today he is in st. petersburg talking about health care, a domestic issue that matters to the people of russia. they are muted on sections. likely be the response he deals with when he takes on his fourth term monday in the kremlin. , ascine: when he does

election,when the will it be a different term under vladimir putin this time? is he trying to get people under him? is he thinking about succession, or will it all be an affront to the west? reporter: everyone we are speaking to in moscow is saying this next six years is a transformation and a transition government. what putin needs to decide is what happens after 2024. many think, could he change the constitution? he could do what xi jinping did in china. otherwise he is likely to identify a successor. one person even told me he could do that in 2020. i spoke to a guest earlier today who compared this new plan on the inside, the technocrats looking at the economy that is a slave to oil, what they're going to do to bring more technology and diversified on -- diversify

of theoil, so it is kind two sides within the kremlin we are going to see over the next six years as he prepares to serve out his last term. tom: they he so much. greatly appreciated -- thank you so much. greatly appreciated. daniel tenenbaum is with pwc financial crimes. how can you have a title financial crimes unit partner? what is a financial crimes unit partner? >> anti-financial crimes. we don't want to spur it on or anything. tom: you are in the trenches of this back and forth. when a grizzled pro like you sees the media football we just heard from mr. cirelli, how do you synthesize it into the financial world? guest: this used to be a lot easier. it used to be you couldn't do business with cuba, libya, iraq.

there's a lot more nuance now. i think the russia example, russia has been an example for years with the sanctions that were imposed three years ago, so this is really nothing new. ,he designations yesterday while the hill is reacting positively, they are reacting positively because the trump administration is taking steps to punish russia for election-meddling.. but to be clear, those people were already designated. they don't have assets in the u.s.. it is a little bit flustered. tom: can any of this work without a leader, a president in president trump, who really doesn't want to go there? 's got to have a top dog saying this is what we are doing. guest: to give the in ministration some credit, a lot of the folks within treasury have been working fairly diligently and how they are ratcheting up sanctions slowly. what everyone is really waiting for was the oligarchs list that was essentially the list of the richest people in russia. bifurcating that between good

and bad oligarch, those that do have holdings in the u.s. or might put a pinch in some of the advisors to put, that is -- to that is what people are dealing with now to deal -- are waiting for now to do with those that have connections to putin. it doesn't look any worse than it has been over the last few years. a some reports coming out of russia this morning that they want to keep an open dialogue even though the response for what happened yesterday is to add additional americans to a blacklist. thelar to my comments on russians of the u.s. list that don't have dealings in the u.s., the americans that will be put on this list are not americans that would necessarily be dealing with russia or even visiting russia. right now i think it is a bit of a tit-for-tat move. none of it is really moving the needle one way or the other. francine: what will it take to move the needle in sense of two

countries having worth relations, or do you think they can do a more comfortable foundation? guest: there are still calls from the government to go after oligarchs, more wealthy advisors to present putin and get closer to the -- president putin and get closer to the regime. the goal of sanctions is to force a change in behavior. the original sanctions were to force russia to hand back crimea to the ukraine, none of which anyone really thought would happen. we are in this area of uncomfortableness for quite a while until any sort of dramatic change, but i don't think it will be meeting the terms of the stated objective, which is the return of crimea. tom: i look at, say, james dimon, brian moynihan. could their financial institutions and leadership that has to deploy international banking to london to moscow, to

europe, pan american banks actually do business in moscow, or is it fraud? guest: american banks can do business in moscow. having done is this in moscow myself, it is not the most comfortable dealings. hordern gavearie us a great report their. what is the reality in moscow? it depends on the perspective of the people behind these organizations. i work with some large russian conglomerates that very much want to be global players. they recognize they have to comply with the sanctions against russia from the u.s., from the eu in order to be able to maintain their level correspondents. tom: we have some headlines coming out right now. francine, you got them off of london desk? francine: this is going back to

the spy investigation of the fact that theresa may she would expel 23 russian diplomat's. the kremlin now saying that russia may retaliate for the u.k. expulsions at any time. really surprised this is taking so long? they are making it simmer. guest: the u.k. actions were more directly tied to the nerve agent that was deployed against an alleged russian spy and his daughter. i actually think the response was somewhat timely. the u.s. response was more tied to the 2016 election-meddling., theseagain, a number of were already sanctioned. seizedma administration russian compounds of the u.s., so i think the u.k. response was somewhat quick. tom: interesting. a lot going on here. again, news flow through the moscow news our

bureau and from london as well. who knows what we will see out of washington. the paulsen will speak to republican representative out of minnesota. everyone in that view has a better bracket and me. everyone in that view got buffalo. i think arizona. what is that about? ♪ >> bloomberg television is brought to you by invesco. why invest in average? go to invesco.com/hig hconviction.

♪ taylor: this is "bloomberg surveillance." top tycoons has come to an end, retiring after amassing a fortune from building skyscrapers. his son will take over the family business. is 89 and is worth

more than $30 billion. walmart is in talks for a $7 billion deal to become the largest investor in india's iant, bute g walmart income edition with amazon in one of the world's most promising online retail markets. the deal may push flip card -- flipkart's valuation to $20 million -- $20 billion. toys "r" us is shutting down its u.s. operation. the company has said information on the asian unit has possible buyers. that is your bloomberg business flash. francine: taylor, thank you so much. now let's talk about the markets. investors are staying pretty cautious amid some of these conflicting reports to donald

trump may or may not remove his national security adviser. joining us now, ian jefferson and christopher own -- chris fer on. that's for joining us. when do markets finally set up and notice political changes? >> i think the market is reflecting that right now. we had the big drawdown in early february. the response off those lows, i would describe it as tepid at best. i think you still have about 20% of the s&p down below this february 8 lows. we are seeing with the response from the market a very tepid response. i think that is a reduction of all the concerns that are still out there. i want to get to you on the economic side of things in a second. we have a million charts looking at correlations broken down in almost every asset class. will we ever get back to the new normal? >> i think this is the new

normal with lower correlations among different asset classes. we have seen this really for the last 18 or 24 months, going back to august 2015. that was the peak in correlation. it has come down since. what does that tell us about the environment? asset selection matters. we see it at the sector level. if you look at the difference between banks this year and staples this year, there's a lot of diversion. tom: i want to get into the debate as we go into the weekend readings. ian shepherdson, here's what's happened in the last three days, five days. there's a real whisper of doubt about persistent economic growth. rate hikes, which seems to be consensus, how can we get to four with the curve flattening that verrone is looking at or with stronger japanese yen? >> i think the markets are very

much focused on the wrong thing, looking at the three-week retail sales numbers. those things will reverse. we had a big run-up in retail sales in the fourth quarter after the hurricanes. a huge buildup of building materials. reversion looks like we getting, but it is not. tom: jerome powell is going to tell us he is doing cointreau rate hikes this year -- doing cointreau -- doing four rate hikes this year. >> no, i think he is going to wait until june to tell us. tom: chris and i never agree on anything. the only thing we've got here is the two cents spread rolling over. this chart doesn't agree with the gentleman from britain. come on, it is rolling over. that is a doom and gloom chart, isn't it? >> a flattened curve is not the same thing as an inverted curve. we are at 52 basis points this morning.

historically when you are in that range, you have about another year before the curve inverts, and another six months before big problems. i still think we are looking at time here, and i would also note the spread right now between two-year and fed funds is the steepest has been this entire cycle. --ill give more worry it more worried if two-year yields start to go down. francine: how worried about you -- are you about inflation? >> not very. we have some very unfortunate data coming forth. the fed knows that, the market does that. if its the fed will see is some real deterioration rather than just some mathematical inevitability. that is a story for down the road. it is not going to happen in the next few months. we got the shot, the scare in january with both the wage and cpi numbers.

i think federate numbers were more indicative of the way we really are. it is not a scary scenario for inflation yet. that is why i think the fed can hold back from adding that fourth. next week -- the fourth dot next week. tom: bring up this chart right now. chris verrone, here's fed funds. this is the steepening you are talking about. why of that chart? >> with two year yield is trading in excess of fed funds, -- fed funds, policy is still supportive. your forward as the returns tend to be well above average. when that ratio flips, things tend to be more challenging. tom: i am not on this cover. maybe i should be. come on! this is cruel and unusual punishment.

this is like a human resources violation. a terrible "bloomberg businessweek." about? this old wall street, new wall street. "bloomberg businessweek." ♪

♪ good morning, everyone. "bloomberg surveillance." here is taylor riggs. hasor: vladimir putin

barely campaigned in the run-up to the election. term isy for a fourth all but assured. one critic believes the election could hurt putin. he wants that she was the richest man. >> a significant part of russian society and people abroad won't thatt the we elections putin's legitimacy will be weakened. taylor: in the u.k., the labor party leader warns against starting a new cold war against russia over the poison. prime minister theresa may has andlled diplomats sanctions. the attack could've been the fault of a russia like group in the u.k.. president trump was a decision to fire rex tillerson puts the iran nuclear deal at risk. viennats meet today in to review the agreement. the president will decide in may

whether the u.s. sticks to the accord. succeedt trump's to tillerson, mike pompeo, has been a critic of the deal. for nasa trump has filed from divorce from donald trump, jr.. they have been married for 12 years and have five children. she is a former fashion model business.f the boo she is uncomfortable with the scrutiny it has attracted. this is bloomberg." global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries." i'm taylor riggs. tom: across the bloomberg, tiffany sales, a little light this morning. later. do more on that just west of minneapolis, no one cares about the ncaa brackets. they are in shock as duluth east hockeydinah in boys to a

. we speak to the congressman of the third district of minnesota. congressman, hockey matters in minnesota. .hat matters is tax cuts are you going to get a second round of tax cuts? >> many of us are excited to have larry kudlow come in as the economic advisor. we will look at a series of tax reform. we will not wait 31 years to reform the tax code once again. we just went through modernization has -- that has led to wage growth and job growth in the u.s. you to link in your good economic report of a few days ago with minority views on the southwest pennsylvania. you are in a contested district, a horse race district in this nation. when you look at pennsylvania and mr. lamb, and when you fall

in your economic report, what is the to do list for eric paulson for the first tuesday of november? >> the to do list is, i never take my election for granted. and othersinnesotans want to see elected officials talking about what they can get done. it is focusing on where we move next after tax reform, and making sure we are promoting economy and bringing jobs and keeping them here in the united states. some of us have concerns about the tariffs that have been move forward. we want to look at not a broad sweeping effort, but targeted. we have the secretary of congress coming in and the trade ambassador. francine: good morning from -- london. what what lessons can they take from the special election? are always unique.

you cannot take voters for granted. you have to turn out your folks and talk about a positive agenda. one of the lessons is, stay focused on what matters locally at home but also talk about water efforts for improved jobs. do you worry about citizens being disillusioned with republicans? not necessarily. most folks are pretty happy. the economic report which was annual shows we have had steady job growth, not since the the first but also in two months we have had special bonuses, a raise is going out to employees. we're for a way -- 401(k) investments. people feel much better about what is happening in their own pocketbook. that will be good going into the election. tom: this is what happened when

erik paulsen is running the show. you have an economic report with a scatter chart and politicians doing a scattered out chart. you have to be kidding me. charts, and the republican angle, you have to work with a 1.4 or $1.5 trillion chronicand even deficits a few years out. are you going to grow your way out of those deficits? companies are reinvesting back in the united states and changing course of action, and we have to grow our way out. we weren't going to go with the obama 2% growth. it is up to republicans to focus on the other side of the ledger, the spending side. .e need growth above 3% we have to focus on the spending side. larry kudlow will focus on that. tom: can larry kudlow tell the

president he has to act like erik paulsen? nobody believes that will happen. how will he get that into a guy who has never done a fiscal policy in his life? rep. paulsen: larry kudlow will bring more stability. we want stability. we want to make sure some of the president's policies are talked about. jobs act, weand want to make sure that is the message. we don't want to focus on other issues that are sidetracking. he will have his hands full. it will be a key component of his job. easti mentioned the loose east, what are you going to do with the tariffs to help the people of the iron country? we want those jobs in the united states. i do think there is a concern

about having tariffs backfire on the broader sector of the manufacturing sector. to one company that uses a lot of aluminum and steel. they have $100 million benefit from the tax reform that we passed, but they could be hit with $40 million and $50 million with the tariffs. that is an issue. the concern the president has to butect the jobs is right, you have to make sure it is the supply chains that matter. tom: erik paulsen, thank you so much. ian shepherdson is with us. the heart of the matter is you out of grow your way fiscal challenges to come. and is the track record history on that for republicans and democrats? ian: not a lot of actual reality . there is no way they will pay for themselves. growth has improved. tom: what happens when out one

or two years? ian: we will probably have to have a shift in policy back. i would expect after 2020 we will see some attempt to rein in spending and a reversal of some of the tax cuts, depending on the shape of the next administration. tom: is that enough of a shock to keep you played out 24 months? ian: we have to go back and look at 2003 and 2004. when we had tax cuts then, it was a move in the market. you had 150 basis point move and 10 year yield coming off lows. we have seen yields come back. we think that is temporary. we think you are looking at 350 because of the growth. i would also say that when you look at what sectors worked, it was a risk on type of environment and the 2003 2004

phase -- 2003-2004 phase. francine: where are they right now? ian: let's say they are seven out of 10. model. at the risk thisappetite throughout corrective phase has been pretty good. tech has outperformed and banks have out performed. the first correction in two decades that banks have outperformed. consumer staples have been bad, utilities have been bad. this has not been a risk off or safety trade these last six weeks. this is fun. i love having two top-flight guests from different worlds. robert moon and karen, coast-to-coast radio london.

bloomberg daybreak: europe morning briefing. live from new york, again, everyone had buffalo in the bracket except me. this is bloomberg. ♪

♪

this is "bloomberg surveillance." gain and fourth-quarter profits with earnings per share coming in at $1.67. the company reported sales of about 1% below estimates. the company also reaffirmed the highert here in shares in premarket trade. former qualcomm chairman speaking -- seeking funding for buyout of the chipmaker according to the financial times which says he is approaching softbank. qualcomm was founded by his father and he was once the ceo or this week, president trump blocked broadcom's attempt to buy qualcomm. has a call response on its ipo from american investors according to people familiar with the matter.

investors had informal meetings and they pushed back on several aspects of the deal, including the proposed $2 trillion valuation. they have indicated the offering may be pushed off until next year. the bonus pool is almost back at normal at deutsche bank. even as the largest lender awarded staff $2.7 billion in compensation, close to what it was in 2015 before the ceo started cutting back as revenue fell. that is your "bloomberg business flash." tom: this is one of those times of year where you can set the watch with the story from deutsche bank. for the of the talk year-end bonuses, if they don't deliver the bacon, they lose the talent. francine: we have heard that over and over. they are concerned about talent leaving european banks and u.s.

.anks here is let's talk brexit it is about ireland. the border is the biggest stumbling block. diplomats have said the u.k. has significant ground to make up on the issue before the summit next week where the british government hopes to get a deal on the brexit transition. ian, let me go about you. want to ask you about labor costs. they are rising at the fastest space in more than two years. what does that tell us about composition of u.k. and what does it mean for mark carney? ian: the labor market is tight compared to the u.s. this is part of the discussion at the bank of england about the potential rate increases. you have to set this against what will be a period of weakness for the economy. we know that household finances are under pressure.

we're tightening fiscal policy. itting it all together, and inflation to fall in britain this year. the bank of england needs to tighten as much as markets. i don't think that the hike is a done deal. i don't think it is the certainty the markets think it is. the economy is beginning to feel the drag from brexit because the uncertainty is becoming overwhelming. i am struggling to see when we will see any clarity. when we do see their tea, it is not obvious -- clarity. francine: when are you expecting clarity? -- should and can we the base case assume that we won't know what brexit looks like until the 11th hour? ian: absolutely, this is the way

it goes with elections. there will be an extended transition. -- transition period. most of the trade with europe will remain more or less the same. that happens, the better it will be for the economy. having no deal would be horrific. that is why companies are holding cash. of theris verrone is one best in the business. let's go to the chart, this is sterling. down we go. this is a stronger u.s. dollar, weaker pound overtime, yet with a big bounce there. it backed up on the trend. maybe 145 is the best you do it when you look at the long-term set up, i would be surprised to watch is can the u.s. dollar broadly mount some type of a stand as they move

into the second quarter. getting back to what ian talked about with respect to the u.k., i would note that u.k. stocks are heavy now. when you look at irish stocks, they are heavy. i think the iron he has been y has been that italy is up. i wanted to show you the euro pound. what does that chart tell us? let's bring it up. i think when we look at eurosterling, i am in the camp that euro strengthens here. i would look at euro-yen, which has been an important carry that has come in recently. tell ushese stories do a lot about risk appetite. there is reason to be tepid here. good.ery

there it is on the chart. long-term sterling and short-term. ian shepherdson and chris around .ith us -- ireland, minister of there is something about tomorrow. east 57th. this is bloomberg. ♪

♪ tom: amazing new slogan out of ,ondon and out of new york francine lacqua and tom keene let's have fun with single best chart. bitcoin loaded at 1000. i but in at the top 1000. the top 1000. at we have moving averages. havesorry, chris, what we here. have two high polls you can look at this in a number

of technical ways. this is not a trend of chart. when you look at bitcoin, the most important thing you can say is this is part of the story of the market right now. tom: so you will link this into the rest of the market? chris: i think we have to. if we are going to see risk assets improve globally, i find it hard to believe that can happen with it coin at least not stabilizing or turning up. i think the 9500 level is key. the delicacy here is what will governments do and the politicians turn to central bankers? which central bankers are critical in the confidence over this event? ian: i think all central bankers are worried. bitcoin fails the first test. the technology is wonderful and principle of ahe

currency with no state behind it is fundamentally worried to the central banks. you bought in at 20,000, you've lost a lot already. francine: if it becomes regulated, would it not take the form of something that could turn into a currency or asset class? ian: -- chris: who is going to regulated? who is going to take ownership? it is a global network. it cannot be regulated by a single central bank. it is hard to stay that a bunch of banks would regulated or that would be acceptable to holders of bitcoin. they are stuck in a regulator no man's land, and that makes it not an investment but i gamble. gambling can be fun, but it is not something for widows and

orphans. tom: with all of this and where what does cash mean to a technical analyst? there is so much back and forth. we are at the first recalibration. what does a guy like you do with a discussion of cast over the weekend? chris: with the two-year yield, cash has more meaning today than it has in years. 225 today. now you consider is there competition for some of that capital that has gone into groups like utilities or staples ? that is reflective in the stoxx. -- in those stocks. tom: i want you to recapitulate why trump gdp 3% is fiction. ian: it needs growth at four

plus sustain for a long time. it is not realistic. tom: do you do a bracket? ian: i don't know what a bracket is. francine: i am bracket lists. i can't do that. layouup. is a they will continue with the spirit have a great weekend. up. said all week, lawyer ♪

♪ >> national insecurity.

the white house do know is that general mcmaster will be replaced. markets don't react well to more white house turmoil. a decadefference makes. 10 years after j.p. morgan but stearns, investors say they have doubts about where things are headed overall. .nd growth without inflation on a meetings with fed and g20, the question is whether we can grow the economy without raising prices. the new economic advisor says let it rip. welcome to "bloomberg daybreak." i'm david westin. you let it go all morning. let's get caught up on the markets. dax is having gains of more than a half percent. futures basically flat. the u.s. dollar weakening against the yen