the tech sector takes a beating this week but overall analysts still making the bull case. welcome to the jungle. amazon loses $53 billion in market value wednesday after report president trump is "upset with regulating the e-commerce giant." the white house says there is no truth to the story. shareholders get whiplash. tariff toetapping. everybody waits as the white house lifts tariffs on specific chinese goods. welcome to "bloomberg daybreak: americas." i am julia chatterley. with.ve me to deal let's take a look at what is going on in the markets. call it the wild market west yesterday welcome to the jungle today. you get my drift. are we there yet? we are almost there is where looking at the month-end -- almost there.

we are looking at the month-end. theerent price action in united states yesterday, choppy, no selloff into the closing. no increasing volume. these things were reported on a day by day basis. this is a performance for the stoxx 600 now, higher by .3%. three sessions of gains. the autos, some m&a potential there. know, -- renault, nissan. this is a look at the futures right now. i will reiterate that. equity futures down by .4%. the nasdaq gained in the spotlight yesterday. amazon under the spotlight and getting most of the heat, higher by .6%. record supply in the u.s. bond market this week. you get the 10 year, five basis points. concerned about that auction yesterday.

for the bloomberg's first take, we're joined by gina martin adams. guys, happy friday. let's talk about technology. technology,auge of this is a broader s&p 500. it is important to look at the difference because it shows the different tenure of the market -- tenor of this market. it is the vix before the nasdaq. hundreds early in trading when we were really in the throes of the selling. we had that gauge above the vix by the most since in over 13 years and it goes to show almost again, that very technically different on the set up in february, but still a very localized problem. not something we are concerned about. earnings power throughout the broad gauge it where not as concerned about the global economy -- broad gauge.

we are not as concerned about the global economy. julia: with everything, you can take your pick on a daily basis. i got a chart. it is probably too complicated. the white line is what we are seeing in terms of the tech volatility. you got the blue line showing the relative volatility. this has been the trade that has lifted overall markets. the tech trade. right now, very much in the hot seat. gina: even though tech is the crux of the weakness in the i am at how broad the weakness actually is. widening ted spreads and libor haspreads and the juncker damage -- and the yield curve has damaged that sector.

it seems to be most cyclical sectors. when you get to the point where below 50% of names on the index are trading above their average, there has been an indication of a much deeper and weaker condition. a deeper weakness for the s&p 500. we are not there. luke: i have been dying to talk about this. in 2017, the performance of qqq was a better indicator of the decline line in the s&p 500 on whether stocks will go. we are starting to see brent matter more. just another point that shows you translated into a new trading regime. julia: it is not unusual the last days of the correction. your biggest winners really soft artist. hopefully this is the final phase.

evidence that we are at least entering the final phase. julia: when someone says to me, look, we are bottoming out. you are saying the evidence is we are starting to get it. gina: invest -- investors are capitulating on the tech. find the bottom and move forward. julia: how important is holding this? important. the most it is everything. julia: we've got a quick second look at that but i do want to while you are absorbing the fact that we bounced off those gains, talk about analysts. the president very much putting this front and center. one of the darlings is netflix and amazon. --wants to regulate

gina: this is another thing within the fang dominoes that continues to fall. i am stunned about how sensitive the market is to policy news this year. if you think about 2017, we ignored every policy headline, every geopolitical risk. it was meaningless. now that we have passed that tax reform period, we're much more in tune with what is happening in washington. coming outheadline of washington impacting a single stock. julia: jeff bezos just watching that share price yesterday. you can see it, the divergence in performance. on the year to date, amazon has been a real winner. fangswhen you look at the , the only two that are positive this year are netflix which is up 50% and amazon which is up over 20%.

to think about, we are concerned about tech right now. ,ech and consumer discretionary those are the only two sectors that are positive. more evidence of the final capitulation. julia: does q2 save us? gina: we saw that play out in the fourth quarter earnings piece. the biggest tech company started releasing earnings in the fourth quarter, it was a trigger point for market weakness to emerge. going forward, i suggest the index needs some catalyst. earnings could be the catalyst. it is not lightly to be tech and discretionary. -- is not likely to be tech and discretionary. the possibilities for the rest

of the index are probably more promising while these segments continue to suffer. julia: what about a catalyst over some kind of resolution or ratcheting down of trade tensions? the possibility of trade tensions, we are awaiting the u.s. administration to talk about what products they are going to stop tariffs on from china. this is another angle. today -- the data today. you have your pick on where you want to go. luke: on tariffs, i see the chart up. the break even curve in early march coming in as much as you would like to derived or infer a solid in the -- solid information, it is fully inverted in only march when we were getting started on the steel tariffs and very worried about that. people were worried about short-term price shocks.

that is fully normalized. that is a sign that a lot of the weakness that we are seeing has been focused on tech and banks. paul krugman was on bloomberg yesterday and said so far this is a phony trade war. this is nothing. until we get more, it seems like fitting to be led -- to be worrying less about it. julia: that makes perfect sense, the lack of it. gina: it is one of many things. it is important to watch. it is unlikely we get a major inflation break in the short-term. there are inflation pressures. if you look at inflation expectation, it has been rising. it is not about the tariffs which came into focus. it is something else.

it is the general improvement in economic conditions driving a bit of inflation pressure. how that feeds through to the final consumer is a big question mark for investors. it is important to watch in regard to s&p 500 margins. if they cannot be passed on to the final consumer, it will show up and margin pressures. that is an area of concern for investors. julia: chicken or egg. that, gina martin adams. thank you to you. stay with us. in the next hour, a conversation with the u.s. secretary of commerce, wilbur ross. more on the volatility that we are seeing in these markets. is going to tell us how to play these markets. from new york, this is

bloomberg. ♪

julia: this is bloomberg daybreak. i'm kailey leinz. futures trading giant, cme group, has reached an agreement to buy any expert. -- $5.5 billion. comments the chicago-based company operation. it offers derivatives on many of the same things. something is is in closer to buy a stake in swiss re-that would buy the swiss insurer out. according to people with knowledge, masayoshi son's company is talking to buy a 20%

stake. it would buttress the mobilephone carrier with healthy cash flows. softbank declined to comment as a swift free -- swiss re official was not available to comment. it is offer goes ahead set to approach $50 billion which make the japanese company the biggest coming takeover. a shrinking population limit opportunities at home. that is the bloomberg business flash. taken the markets have the world on a ride. we are talking about the s&p 500 hovering just above this average which is the pink line

that you're looking at. here with us now is sebastien page. gina martin adams is still with us. great to have you on the show. sebastian, talk to me about what you are seeing. what does it tell you and the billion dollar question here, does that 200 moving the average hold? sebastian: even with this recent volatility, we are in a higher volatility regime. firstrted around the way over those three days, the vix jump 24%. julia: we remember it well. when most of the spikes like that, it barely -- is very really goes away. you cannot predict market returns for the next month based on this month's mark return, but you can with 6% correlation. expect more volatility as investors, the question right now is will we get paid to take

risks this year. we are taking away from equities. we believe in the role of equities in the long run for investors part of a diversified portfolio but we have sold some of our equities. overall from a total portfolio basis, we have a neutral risk for file. we are taking some risks in the market but in other places. that: gina, come in on point. gina: we have been watching both ot very closely. -- watching volatility very closely. it is important to distinguish the nature of volatility has all been on downside days. one of the things you see is upsides start to improve. you start to see big updates on higher volatility. .e haven't seen that it is one of the things we're watching to confirm that maybe that moving average test was a low.

-- was a lull. ?ill we get that going forward it is something we should watch for carefully. sebastien: we focus a lot on the vix but there is more to volatility than the vix. as investors we care about exposure to loss. your point about of cyprus is downside volatility is important. we have been looking more at realized volatility recently, because the vix has become distorted. people are trading instruments on the vix directly. that distorts it as an indicator. juliette: something that is implied versus something that you see -- julia: something that is implied versus something that you see. go back to what you are saying about the adjustment in terms of your portfolio. you pulled back a bit on equities. from what allocation to what percent? give us a sense on what that means in practice. take 60% stocks, 40%

on portfolio, we would be 2% to 3% under equities relative to bonds. julia: that makes sense to me. gina, talk to me about this trade we have been talking about. the rotation potential for growth the value stocks. it could ultimately be the catalyst. gina: if this is a normal correction, it should be. especially given the growth sign. what you normally see, paradoxically, you rotate into value when growth prospects improve. it sounds very counterintuitive. we haven't seen a very strong rotation into value yet. it is one of the things we are watching for typically at the end of a corrective process. momentum stocks really turning over. growth prospects continue to drive forward and stocks recover. we have only seen a little bit of this. ,e did identify last week

energy stocks relative to the broader index. investors have started to get rid of some their momentum in growth exposure. one really strong sector last week despite all the carnage was energy. perhaps this is a rotation into value. the financials are not performing well at all. suggests that is a correlation between stocks and bonds entering this makes. we need that to normalize in order for values -- sebastien: we are neutral between u.s. growth and u.s. value stocks right now. in every meeting we debate the question. julia: on the fundamental basis? sebastien: we look at violations and fundamentals. momentum is a strong -- is a small consideration. all else being equal, i would

say we like growth stocks for the longer run. when economic growth is low, it may be counterintuitive but growth stocks tend to do better. facebook earnings are significantly up. the things are out earning of the stocks. it might feel like the stocks are expensive, but in evaluation basis, they are not that expensive. other factors will drive the performance and value stocks. the reflation trade and also rising test financials aren't important part of the value sector. julia: investors are going, i am not sure i am willing to pay up. we are going to talk about this endlessly. we have to pause. gina martin adams, thank you once again. sebastien page will be staying with us. renault under in news that it is in talks with nissan.

we will bring you more details next. from new york, this is bloomberg. ♪

juliette: nissan and renault are holding talks. david welsh joins us now. great to have you in new york. talk to me about why this is more likely than the rumors we have had about this alliance turning to a merger in the past. david: the chairman of the two companies, he has wanted this to happen for some time. he is going to be there for another round in a few more years running the company. it is something he really wants to get done. no is doing well these days. -- renault is doing well these days. they are going to have to exchange for something in a new company. julia: renault owns 42% of

nissan. you've also got the kicker which is the french government ownership. talk to me about how we get around the french government and whether or not anything has changed? david: you have to have both governments sign off on this. the french government would cash out their stake. that is it of the things that is being negotiated. the japanese government has to sign off on this because right now they can fully regulate nissan as a japanese company. you got a french board and a japanese board. julia: what is going to make a japanese government happiest? to what extent does this need to be watered down? david: where is this company going to be domiciled? they will have to headquarters. is there a master and slave

situation? these are the thorny things they are tried to work out. it is not about the shareholder basis. the companies are operating together. operationally, they are more together than they ever have been. it is really a matter of the government of the two countries agreeing that this is a good deal. julia: i will ask the question why. why would a merger be better than an alliance? history glittered with situations where we have seen a merger not working as well as the alliance. david: is a good question. -- it is a good question. in this case, there is a risk that they would separate because you on 45% of another company, you just on go to your broker. renault as a5% of

, and they are so intertwined in terms of engineering. this is sort of a new occurrence, because just five is ago, they had a lot of separate engineering going on. -- just five years ago, they had a lot of separate engineering going on. it as aas well just do viewpoint. it is about the two governments letting go. julia: can they do it? david wells, thank you for that it coming up, just for that. coming up, the u.s.-china chase back. this is bloomberg. ♪

juliette: this is "bloomberg daybreak: americas." i like david westin are off today. let's get an update. the stoxx 600 higher by .3%.

s&p futures despite some of the choppiness that we saw in this session yesterday, we are according -- where come to the court and. u.s. futures -- to the quarter end. we continue to watch what we see in the tech sector p.m. amazon, facebook, tesla, very much in the spotlight for traders. 2.77, the year on the level. higher inlar yen terms of the level one. the level overall down, .2%. take you back that 1.6% that we saw yesterday's trading session. little bit of easing. let's get an update on what is making headlines outside of the business world. >> theleinz is here at leaders of north and south korea have agreed to meet face-to-face on april 27. the meeting will be the first such meeting and 11 years.

leaders of the two nations which are still at war have only met twice since the peninsula was divided in 1948. it could set the stage for similar meeting between kim and donald trump. in the u.k., detectives investigating the poisoning of a former russian spy and his daughter when he came into a nerve agent at their home. specialist have identified the highest concentration of the toxic substance on his front door. that comes as friends said they should be allowed to die. u.s. president donald trump has said he will replace donald shulkin with rear admiral ronny jackson. his ousting comes amid a wave of resignations. it follows the department -- the departures this month of gary cohn, h.r. mcmaster and rex tillerson.

global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. julia: we're waiting on details on what donald trump plans to target with billions of dollars worth of tariffs on chinese products. it could affect chinese -- china's technology sector. joining us now from washington is nicholas lardy. sebastien page is still with us. great to have you with us. what are you expecting in terms of the announcement when it does come from the u.s. administration, whether it is tariffs on products or a crackdown on chinese investment within the united states? nicholas: i think it is going to have both elements. there will be tariffs on a substantial chunk of imports from china. i think the administration will be even stricter on chinese acquisition from high-technology

companies in the united states. they already have authority in that domain through this committee. they are going to strengthen that and in the interim the president will use his own authority to block transactions. julia: what we have seen from the chinese is a minor retaliation. it is specifically to the tariff on aluminum and steel. beyou expect the response to a bit more regressive -- tariffsve? nicholas: if are imposed on $60 billion of imports from china, it will be larger than the retaliation with seen so far. the retaliation missing so far is quite modest. it covers 120 -- 120 products. the total value is $3 billion it

in the context of a bilateral trade relationship in the hundreds of billions of dollars, this is a teeny amount. chinese retaliation was very judicious, very balanced. if we go to the $60 billion level, i think the response will be much more robust. juliette: if we're only just julia: -- julia: is still peanuts if you compare it relative to the scale of the outstanding deficit between the united states in china. in terms of symbolic moves, this will be a deliberate penalizing of china here. at some point, china has to stand back and go, we will be modest, we will wait and see what happens. back with moreme firepower. nicholas: that is absolutely the case. there may not be much terror

revenue because when you increase the price of an important 25%, the market may disappear completely. it could -- the trade volume could go down a lot more than the tariff times come of the goods that are being subjected to the tariff. the revenue might be small. the chinese will retaliate in a much more aggressive fashion but it is when to take time for this to play out. they have not -- u.s. side has not announced the list of products that will be subject to these tariffs, even after they do that, there is a 60 day comment. period --ay comment 60 day comment period. companies will be trying to make a case their goods should be -- it should not be covered by the tariffs. at first they have to announce the list and then the 60 day comment period. it was not going to affect for probably a significant period of

time. this story is going to be with us for a while. julia: do you think this is a negotiation tactic from the u.s. ? ratcheting up the tension is a way to bring chinese -- ring the chinese to the table. -- bring the chinese to the table. at some point, they will work it out. nick: there been hints. secretary mnuchin has been negotiating with the chinese to try and reduce the trade tension. it could be the announcement of the tariffs was a negotiating strategy. it is difficult to anticipate what kind of concessions the chinese can make that would come even close to satisfying the demands the administration has put forth. i would not hold out a great deal of hope that these

negotiations will head off the tariffs. it is more than likely will see the tariffs. julia: sebastien: what do you make of this? you -- best in, what do sebastien:, what do you make of this? exclusions are flying left right and center. we are being too complacent about the prospects of the deal. sebastien: i do not want to downplay it but some of this is negotiation. nafta is in limbo. section 222 on steel and aluminum has been rolled back. now we're talking about real one where we are applying 25% tariffs on 50 or six he billion of chinese imports. it is not big. no one wants a trade war. the u.s. does not want a trade ward. china does what a trade war.

it is better markets. how will the president react to getting a punch in the nose by the s&p 500? no one wants this to degenerate. part of this negotiation, start with an extreme position, you take control and then you roll it back. a lot of these are rounding in the grand scheme. julia: politics matters for the united states and it matters in consolidatesinping power. he cannot sit on his hands here and not react surely when it is a direct hit from the u.s. administration. >> i agree with the premise of the question. the key thing on the 301 is this action tariffs will be directed

entirely against china. no other country is affected. the national security tariffs on steel and aluminum supposedly were going to apply globally. countriesa number of that seem to have negotiated exceptions. the chinese give a moderate response to steal because they were not singled out. on the 301, they will be seen without so i think the retaliation will be significant. julia: have to wait and see it do you believe -- and see. do you believe the treasury secretary we see progress has been made? nick: well, if there is progress, he probably is not in the position to disclose it. i agree, they are time to head off adverse market reaction by making it sound like they're making progress.

as we saw in the korea case, the renegotiate of the three agreement -- the korea agreement, the koreans made a few concessions but they are not automatic. how much leverage we got from threatening to impose tariffs on steel from korea is not clear. they gave us a little bit and we -- and then we imposed a quota. julia:, we shall watch this space. -- nick, we shall watch this space. we will be discussing issues with wilbur ross. we have earnings for the full quarter from constellation brands. there are seeing their eps coming in at nine dollars. $9.59 so pretty much midrange.

there, $1.74 so an improvement relative to -- expectation. 74 share estimate with 64 so an improvement overall on expert tatian. net sales, $1.77 billion. we are a touch better there. customer some brands beating constellation- brands beating expectations. wall street be is next. you can tune in to our colleagues, tom keene and jonathan ferro from 7:00 until 9:00 a.m.. lisa abramovitz joins the competition from 9:00 until tender clock a.m. uber surveillance can be heard in new york, the bay area,

washington and across the united states on sirius xm. do not forget to tune in from new york. "bloomberg daybreak: americas." -- from new york. this is bloomberg. ♪

keeley call i'm kailey leinz, coming up, wilbur ross. ♪ julia: we turn to the wall street beat. first up, crypto countdown. multimillionaire this is hurdle as regulators crackdown on crypto. the maroonlacements,

is hiring in favor of automation. --ide the trials, frederick are taking on leaks in washington. --ning us now, [laughter] this is for global television. fantastic to talk to you. >> we are so excited. julia: talk to me about crypto. huge growth in his company. now it is kind of unraveling. >> this seems like this is a nice read out on the terminal and getting a lot of attention. it feels like a story of our time. so the rise and fall. this guy is a coder turned crypto billionaire by zone description. -- by his own description.

>> he doesn't have any traditional means of drawing is money. >> he doesn't have a home where he really lives. >> but he is a to be in dollar worth human being. just he is a $2 billion worth human being. >> you get into the whole idea of what is crypto? the big existential regulatory question because he's dealing with governments in the same way that a lot of these crypto folks are. >> and, what is platform does is essentially allow anybody with a entry, as barrier of far as the amount you can trade. this can be easily used for money laundering or hiding dubious business practices. this is going to come into the crosshairs. julia: where regulation concerns and hacking concerns, volume dropping 80% from the peak.

>> he tried to open an office in japan and was not able to. governments are starting to take sides and it feels like on being or or sbeing pro, anti- keptimistic. sometimes we feel a little bit robotic. this is also getting a lot of reads on the terminal in part because if you're an up-and-coming banker, you're looking at this and saying can a robot do my job? i hope not. julia: he can but it can but -- it can but not as well. issa: just lisa: they are planning to save about $560 million over the next five years by moving more of their work to

cloud computing and other types of computerized systems. the question here is, which aspect of banking can you get rise? just can you computerized? what about your tech stock? are the jobs migrating and the traditional finance grad doesn't have the experience necessary to fortify the bank in a way that he needs to going forward in the modern era question mark -- modern era? >> you maybe hiring fewer humans but more likely you will be hiring different humans. julia: you will not deal to pay them or if you are nomura. difficult, shall it be replaced by robots someday question mark -- robots someday?

, slightlyin d.c. different story but fascinating. >> this jumped out at me because insider trading is something that has plagued wall street for a long time, to the point where it is fictionalized. the season premiere of billions this week. this is the new twist. the source of investigations and prosecutions moving to washington, where information, just like every where else, it is currency. lisa: somebody these to work for the centers of medicaid and fundsre was paid by hedge to give them information. they are cracking down on him for being paid for passing along that information. this gets into very great territory. to >> whatritory constitutes insider information.

julia: thank you to jason kelly and lisa abramowicz. we will tell you how that is come along. i'll he said because i love you. [laughter] check out tv and interact with us directly. i'm going to give her a hug now. from new york, this is bloomberg. [laughter] ♪

julia: the countdown to brexit is on one year from today, the k

is scheduled to leave the eu and the brexit transition deal is due to start. many points of the deal are yet to be defined. joining us is emma ross thomas. great to have you with us. the timeline of what is needing to be done. the back end of this is the -- is that there are many details to be hashed out. emma: the competition is going to be turning to the future relationship. what is the trading relationship that will replace the closest possible relationship which is dissing go european market. -- which is the single european market. what brexit will look like and to be honest, a year from brexit, it is still not clear what exit is going to mean -- what brexit is going to mean.

what imports and exports are going to look like. whether the city of london is going to be able to operate as it does now. probably not. over the next few months, there's two ways you can go. theresa may will focus on deliver the- divorce and figure out the other details further down the line. that will be problematic for some lawmakers who really want to scrutinize where the u.k. is heading for this and all on this big divorce deal. it could be that theresa may focus on getting the u.k. out of the eu. there is a detailed discussion about what the future is going to look like and in parliament, there seems to be a majority for keeping relations closer and theresa may would like. what you will hear, the customs union banded around, is the u.k. want to stay closer?

well see quite detailed the u.k.out how close will remain to the eu and there might be more concessions for theresa may as she seeks to keep the country hide her. just the country behind her. the last few weeks or rhetoric andbeen about uniting delivering a brexit that everyone can get behind. julia: uniting would be a great idea. whether it is the trade relationship, all of the work is still to be done. investors, they don't see a great reason to invest in the u.k., whether it is the ftse -- and the pound tells an important story. off in thet drop bloomberg pound index. creeping higher. the bank of england plays into

that. what are people saying about the prospect of investing in the u.k.? is it sit on your hands for now? emma: there is a period of uncertainty until the end of this year. the transition period has been locked in. provides time for businesses. people are not going to know the final details of what the uk's relationship with the eu is going to be. that has huge implications. that is not going to be no until well after brexit in a years time. julia: emma ross thomas, bloomberg's brexit editor. coming up, wilbur ross. this is bloomberg. ♪

♪ >> the tech sector takes a

beating this week, but overall, analysts still making the case. welcome to the jungle, anderson loses $53 million in market value wednesday after reports that president trump is "obsessed" with regulating amazon. the president tweets this morning, kind of bashing them. the list of tariffs on chinese goods, comment from wilbur ross. welcome to bloomberg daybreak. alix steel and david westin are off today. i'm going to change my tune every day, which i guess is my prerogative. the prices did change, and i wanted to make this point yesterday. we did not see the selloff into

the close that we've seen for the past several sessions. you can take your pick, tariffs, .echnology the epicenter of some of the broader nervousness that we saw, the nasdaq underperforming. amazon in the spotlight, tesla, facebook. take your pick. this is a look at the futures, 4/10 of 1% higher for s&p futures. -- i'm showing you the level, relatively unchanged. 1325, third quarterly gain, a feat not seen since 2011. in halfr -- the highest a decade, giving you a sense of some of the broader nervousness in the market. -- 64.34.4/34

let's get an update on what is making headlines outside the business world. marks exactly one year until britain's scheduled union. from the european theresa may will spend the day touring the country to gauge the mood of the nation, but she will not like what she hears. a bloomberg investigation that included 133 interviews found that divisions have only hardened since the referendum. venezuela, at least 68 people have died after a fire corrupted during a riot at a jail in valencia. as it began,ted but the reasons were unclear. the fire corrupted during the unrest. have the capacity for about 50 detainees, but prison overcrowding is not uncommon in the countries detention facilities.

malala yousafzai is excited to --back in pakistan after during a meeting with the pakistani prime minister, she said she will continue her campaign. she was only 14 years old, already known for her activism, her taliban gunmen entered schoolroom demanding to know who she is, before shooting her in the head. global news, 24 hours a day. powered by more than 2700 journalists and analysts in more than 120 countries. i just mentioned the president had been tweeting on amazon. he tweeted this morning, i amazon long on before the election. unlike others, they pay little to no taxes and use our postal systems as their delivery boy, and are putting many thousands of retailers out of business.

we did get the denial yesterday from the white house, suggesting concerns he is trying to put more pressure on amazon, obsessed with the words that axios used, caring little about primitive data as far as facebook is concerned, but honing in on amazon and wanting to crack the whip as far as taxes are concerned. right now, higher by 4/10 of 1%. dominant in price, yesterday, with losses around 5%. we will talk this through, two stocks getting back on the ground. i'm giving you a snapshot look at the european stocks, not seeing u.s. futures limping .oward the end of the quarter it has been tough for equity investors. joining us is the north american head of -- and bill smead.

you have an interesting sheep analogy. talk me through it. >> the sheep have been grazing on almost nothing but technology. the specifics have shown in the last year that 60% of the gains are coming from four or five companies in the s&p 500 index. sheep get into a green pasture and grays, and unless they are to another-- pasture, they keep down to the roots and end up with diseases all kinds of problems. that is what happens with momentum stocks. momentum investors sit there and grays, and the momentum is great. .hey don't stop grazing the great thing to watch with facebook and amazon is to think back to 2000 when it was cisco and microsoft and intel, the

leaders of the tech sector. and started to go down people bet and bought constantly .ll the way down are people going to capitulate quickly or sit there and grays -- and graze for a long time? julia: re: saying this is not a huge buying opportunity? the history of the united states and other markets is that when stocks get priced to extremely high price earnings ratios, i would call that anything over 60, and when amazon is well over 300 on a trailing basis, it qualifies. disney in 1972. i mentioned cisco in 2000. you get to a high price-earnings ratio, and your problem is, even

if the company underlying the , everything they want to do, it did not stop disney inm being an 80% decline or 73 and 74, and 10 years in purgatory, or rca going from $500 to five dollars, and never getting back to $500 25 years later. theanalysts are looking at underlying business and saying there is nothing wrong with amazon's business, and they are absolutely right. that price,is, at history would argue there is no chance to succeed over five to 10 years. julia: mark, it feels like whether you are a bond investor , you are watching some of the volatility, and it is what we are hearing from bill -- that the tech sector is going to continue to be a problem and the underpinning of the equity

markets are concerned. how concerned are you? >> the point i would try to make here is that the markets are .oing through a regime change different things are happening in the equity market, but if you try to unpack the global story, you are seeing more volatility, consistent with less central bond buying. you can see the balance sheet moving toward a more neutral stance. this is alongside a market that is starting to recover from the financial crisis, so we are seeing demand-side pressure coming on the global economy, up ticks in inflation, the markets not accustomed to dealing with higher inflation. you have these global forces oneing together, maybe brought valuations in global equities with less central bank bond buying, coupled with the sheep effect. andee people herding

crowding around certain trades, which drives momentum. when something changes in a regime, whether a driver or data point or narrative, when things start to change, positioning moves to the other side. thatoint i would add is alongside these other things, we are seeing volatility indicators across different markets, more stress in the economy at the same time we are seeing more geopolitical tension and focused on trade and things that create a lot of uncertainty around the economy. what we've seen is a positive reinforcing narrative moving towards something that is more negative. when we look at the fx market in the short run, this is positive for the dollar because some of the news cycle stories we've seen this week is the measured response from china on u.s. tariffs, and some of the side

effects is positive for the dollar in your own end because it is part of -- in a year on and -- on-end. julia: gentlemen, do not move a muscle. i want to point out what we are seeing in amazon premarket in light of the president's tweet talking about the lack of taxes amazon has been paying, and that they continue to be a focus, following the axios report that the president is allegedly obsessed with cracking down on some of its practices. we have seen gains, down 4/10 of 1% in premarket. we will continue to watch that. from theaiting details white house about the chinese products that will be hit with u.s. tariffs. tariffs will target the high-tech industries that china is hoping to dominate this

century. joining from washington is wilbur ross, u.s. commerce secretary. great to have you with us. to floatu don't like around the president, but can you give us any clarity in terms of what to expect in terms of tariffs on chinese products or restrictions of chinese products in the united states? >> i'm not going to get ahead of , i think his announcement will be forthcoming. the purpose of the whole thing the problems we've found with intellectual property rights. forst technology transfers, forced partnerships, that kind of thing. forst licensing, cyber security breaches, all sorts of problems that are designed to penetrate the property rights of american property -- of american

companies. business is say a lot of the technology they use is sold within china, and actually, tariffs on the incoming goods is not going to crack down on what we've seen. >> i don't think that is quite true. there are codes and things embedded in high-tech situations that are not that easy to get from the outside or by designing backward from the finished product. the chinese would not be requiring all the massive technology licensing and technology transfers that they do. so the fact that they are doing that speaks for itself. message we is the are trying to send to china at this moment? , look, the united states is preparing for a possible trade work? or we are ratcheting pressure and want you to come to the

table? >> i think it is something quite different. in terms of the steel and aluminum tariffs, the message was, we are trying to protect those present day products. in terms of intellectual property, the message is we are trying to protect the future. the intellectual property of today is the important finished product of tomorrow. so the message is straightforward. we don't mind competition that is fair and square, regardless of where it comes from. we do mind competition that is based on violations of fundamental intellectual property rights. to give you a feeling of how important this is, the u.s. patent and trademark office, also part of the department of commerce, sometime this summer, will issue its 10 million patent

. there is no country on earth that has ever issued anything remotely like 10 million patents . that is the key to a lot of america's success, technological leadership. we cannot afford to have that stolen or strong-armed away from us. julia: i understand. i feel like this strong-armed, the aggression is coming from the united states to take action. the debt is the carrot? >> we are not strong-arming. what is the plan to make a deal? what about the caret, at the same time? what is the plan to make a deal? >> negotiation should be done in the conference room, not the press room, but you might want to take a look at the recent arrangements with the republic

of korea. we have found there were lots of problems with their exports to us of steel and aluminum, so we included them on , 25%ist that was to be put tariffs on steel products from the republic of korea to us and 10% on aluminum. then we went into negotiations, and the outcome of the first, they -- agreed to a 30% reduction from the average steel exports they were spending -- sending to us during 2015-2017. that amounts to 1,200,000 tons reduction. that is approximately what we reckon would have been the outcome had the tariff's been put in place. what we were able to negotiate

was something that is more agreeable to the koreans yet had achieved exactly the same achievement -- the same purpose as the tariff would have. and it was coupled with improvements in our central asian views of the republic of korea in terms of automobiles. it doubled the quotas we can , from 25,000 cars to 50,000 cars without tariffs. sounds like progress, but china is a different story to south korea. i'm glad you mentioned the conference room. you, of anybody, knows how to make a deal here. i ask you if the treasury secretary who spoke about progress has plans to go to china and get in the room with the right people and hash out a deal? there have been plenty of before and during,

and presumably after current events. there's no lack of discussion. what changed is the positioning of the united states. i don't think it should discount the korean situation at all. people were screaming and yelling before the deal was made , oh, well, korea is going to blow up. the trade with korea will blow up. it will ruin american agricultural exports to korea. all of that turned out to be unfounded. i think it's some point, critics of the administration, the same who said we could not grow at more than 1.5% percent --julia: i have good information -- chinese do not understand from the united states, and how you manage to hash out a deal. you have to understand the

cultural differences and what diplomacy requires in addition to announcing these measures. goyou agree it is right -- to china and talk to the right people to get a deal rather than having an apparent face-off as we seem to be having? we had a big conference between the u.s. and china mar-a-lago almost one year ago. -- in a meeting between the middle of the summer. another huge one including presidential visit to china last fall. there are people going back-and-forth all the time, telephone conversations all the time. there are written correspondences all the time. there is no lack of communication between the united states and china. julia: can i ask you about europe? the eu trade commissioner has

said that between the two of you, you said you would try to get a mandate to thrash out a broader trade deal with the eu. can you get the mandate from congress to agree a broader trade deal, and how is that different from the transatlantic trade agreement that was being attempted? the earlierall, proposal for an agreement between the european commission and the united states was never completed, and i would judge it , atmore or less 50% done the time the negotiations stopped. you will notice, when the president was elected and inaugurated, he terminated transpacific deal. he did not terminate the other one. deliberately, overtly, as a message that we are open to discussions with the

european commission. he has signaled that several times since, at the g7, at the g20, and at very -- at various public addresses. the idea that there is a willingness to engage with the european commission is nothing new. that has been a long-standing objective. what has provoked the recent discussions is the imposition of the tariffs. the 25% on steel and 10% on aluminum. the president has suspended those along with those to several other countries, temporarily, in order to give us a fairly brief time during which we can negotiate some settlements that will reduce overall trade tensions. this is a logical continuation from our point of view of a series of overtures that have

been made for a long, long time. i ask whatlly, can your message is to investors, consumers, those who are perhaps worried the united states is willing to go all the way on a trade war. that the deal with china is what this administration is planning. >> i recommend that investors act rationally. by that i mean judge this administration by the actual performance that it creates. don't judge it by some sort of hallucination about some bogeyman out there that could be a problem. i think people are altogether too hysterical, and i think that calmness is going to be a much more useful investment tool than hysteria. don't trade on the rhetoric, trade on the deals?

>> what i'm suggesting is that exercise, oh, there will be great inflation from the you perhaps saw in my prior presentations on tv, one fraction of a penny of a can of beer. a fraction of a penny on a can of soup. a fraction of a penny on a can of coke. something under 1% on the price of a car. these are not economy-wrecking ideas. these are very small things. in total, the total amount of tariffs, if you assume they will fully pass through our economy, something under one half of 1%. big deal. this economy is not so fragile that one fraction of 1% is going to upset either the market or the economy.

so i think people can easily blow things totally out of and i think rational investors don't act that way. i think rational investors work try toe numbers and think through, what are the real implications, not some wild fantasy. julia: i think investors are hoping you are right. thank you for joining us. wilbur ross. we are watching shares of amazon. the president tweeting this he has, reiterating stated his concerns with amazon long before the election. unlike others, they pay little to no taxes to state and local governments. use our postal system as their delivery boy and are putting thousands of retailers out of business. an intensification of the concern here. pre-market, amazon shares down 4/10 of 1%, choppy price action.

we already saw it losing ground by 5% yesterday. just suggesting a reiteration of what axios was saying yesterday, the president upsets, they said, with cracking down on amazon. plunging toh -- their lowest level in less than one year as questions swirl drivingheir autonomous system and production. another thing to keep in mind, the company debt. teslas -- has plunged after a downgrade, adding debt problems. joining us is molly smith, corporate finance reporter for bloomberg news. tell us about the debt rather than the equity. to thes largely due fatal car accident in california. most debt investors will say there's concern about a downgrade. either buyers who can't --

you've got some forced selling action, and on the other hand, people probably looking to get out of these since they got them . granted, this is not the best time now that they are down to $.88 on the dollar, but the downgrade added to more concerns we have been hearing about tesla. the persistent negative cash flows, when is that company going to be profitable? a whole story about this. it is really quite fascinating. they raised cash in august last year at 6%, below 6%. what were potential investors telling you about what they wanted to see, what interest they wanted to see to give these guys money again? those bonds, most people would tell you it was something of a miracle. 5.3% -- most investors i

would talk to now would want more than double that. at least a 10% yield for bonds do in 2025, and even at that point, that is only to get them somewhat interested. not even enough for a lot of people i talked to. molly smith of bloomberg news, thank you. go read the article, because it is fascinating. we are minutes away from the key inflation data. here's a look at the dollar ahead of those numbers. moving around, lowered by 1/10 of 1%. the fed critical measure of inflation coming up. ♪

>> welcome back. i'm julia chatterley in for alix steel and david westin. let me give you a look at how futures are performing. the s&p futures are high by some

3/10 of 1%. the nasdaq futures are the , the tech sector higher by 5/10 of 1% after losing ground in yesterday's trading session. remember, it is month-end, quarter and. -- quarter end. let me take you through this right now. we were watching what is going on as far as pce. the call coming in at 0.2%. 1.6%, in liner, with expectations. 0.1% --ey expecting also a revision. it was 0.1%, that is a little weaker. personal spending data, 0.2% for the month of february, in line with expectations. 0.4 -- continuing claims data

, in line withk expectation. upward revision to the prior time. 24, theweek of march expectation is stronger. 230. -- for the initial jobless claims. quick look at the markets, some choppiness. slightly higher, a touch higher for the u.s. dollar, tracking higher. let's get some context for some of these numbers. still with us, bill smead and mark mccormick, and also joining me is carl riccadonna. good morning. numbers --ess claims

the fact that next friday, when report, --march jobs potential winter weather in fact, but i don't think it will be to material -- too material. i don't think we will see unemployment rates breakthrough -- percent. i think we could get a three handle on the rate there. slogtion on a very slow higher. last year, a lot of forecasters said we were too dismissive of the soft patch -- i think we are setting up for the same mistake, but the rebound in inflation will be much more gradual than forecasters are anticipating. ,ulia: in terms of a mandate unemployment continues to say dive. >> we have had full employment.

julia: on the inflation side, it is a bit more of a challenge. >> not quite there, a key reason so many folks at the fed are talking about for -- about further gradual increases. this is not a fed that needs to rush. they can just backfill those rate hikes in particular. incomingaway from the spending data, spending numbers are just not there for the first quarter. sales. back into retail disappointing, telling us consumers have tripped over their feet in the first quarter. i don't think it is a reason to raise the alarm bells. lower tax rates were slow to paychecks, ands'

we've had a lot of bad weather. economistte to be the blaming the weather, but we had an extreme january and march. you don't buy a car when there's two feet of snow in the lot. what quarter one is taking away, quarter to will give back. julia: mark, thank you for being patient. on the one hand, we've got the fundamentals and the broader economy, and the jitters. what does it mean for fx markets? things in the context of the data we've got today, decent numbers in terms of inflation. the story for the dollar is that inflation is improving, but it is not necessarily a good sign for the dollar. -- a lowerback to , not allowing them to time policy to directly.

inflation ist gradually improving, whether the fed wants to tighten inflation through -- the point i would kind of look at in the short run moreat the u.s. -- has had impulse than the g10. this comes along with the generally high levels of so the u.s. dollar funding markets are getting a little tighter. you have a story and a narrative building for q2. u.s. data looks better than the rest of the g10, but not going great. relatively good. higher dollar funding costs making it more challenging to fund dollar funded carry trades, and most of the -- that came from euro zone are seeing a slower data response. we are setting up for a dynamic aboutthe dxy can bounce

3% early in q2, but it will be focused on euro/yen. -- pick up in u.s. inflation and better u.s. data, keeping the dollar bloc on the back foot. , --a: pushing forward flying in the face of what we've seen for q1 and prior. farmer, grocery, retailers in your top pick. >> i would like to take a long duration investor look and bill my economist friend out who was just on. , 76largest population group million millennials, are moving from being by themselves and spending on personal spending on themselves, to getting married and having kids, and preparing to buy a home. i think 2016 was the first up

tick and homeownership in quite a while -- up tick in homeownership in quite a while. household formation in the united states, and the pressure on borrowing and implements will contribute to the inflammation -- the inflation that mark was hinting at. a bird in the hand is worth way more than two in the bush. in a 30 year declining interest rates and a 30 year decline in inflation, people were more than happy to bet that you one musk could make money 25 years from now, and discount that to today. are beginning to reverse the process that has been going on for 30 years. shelby davis -- shelby: davis said what you got rich on the last 10 years is what you get poor on the next 10.

grocery stores would love to have a bit of inflation. it is a nice day to be able to operate in that environment. this lower unemployment will have a lag effect, and once the youkicks into gear, when get the inflation genie out of the bottle, it is hard to put back in. when it rears its head, american households have one main way to defend themselves. homeownership. that, oh, i renters love renters -- i love renting. when inflation comes, you want to cap that rent. julia: when you talk to me about bailing out carl, i got excited. he sat up. where's the bailout for carl? he's not having it. i don't like anyone having my

back. looking out for me. he brings up an interesting point. if you look at the underlying mechanics of what is driving inflation, rental pressures have been a core part of that. if mr. snead is correct and we are seeing a big change and to depress rent, a term we've seen for the last couple quarters. that is one more factor saying the risk of some upside overshoot in inflation really does not materialize. >> we were speaking to -- who said he thinks the valuations at this stage, given the macro environment, you know europe terms are expected a little longer than what stephen was saying in the short term. all is the deal now, given the price action we are seeing in the short-term, ratcheting up

, how should you position yourself into q2? >> you want long dollars. it is more of a position trade. we talked about the sheep and the crowding effect. the way we are measuring the fx market is you need to break it out in different regimes. look at the drivers of short and medium-term trends. there are more about sentiment and positioning. there is valuation models you can look at, but u.s. data is doing relatively well. the market has been sitting in eight short dollar trade for quite some time. backe seeing our position to something called neutral. it is missing the story that libor rates have exploded for the u.s., challenging dollar funded carry trades. at the same time, u.s. data momentum is outpacing the rest.

these are the underappreciated facts that the fundamentals are good, but the market is leaning in the wrong direction. as dollar-yen moves back from 10 wait to 110, and euro changes to 121, 120, the dollar bloc currencies massively underperforming. i think the story is that it is a good story for the dollar at the start of q2, but this is reinforcing a narrative where the strategic dollar bearers would just get better -- to sell. great setup for q2. bill smead, mark mccormick, thank you guys. carl, wrap it up for us. the dollar point, the legacy of qe was dollar weakness. i think it is a real risk with tax policy. the reversal of qe, we could see dollar appreciation doing heavy lifting for the fed. finally, the dollar has

been going nowhere fast. i'm going to come back to you on that. last trading day of the first quarter. the worst quarter for the s&p 2016.nce the euro stocks have the worst quarter since early 2016. what should be we -- what should we be watching? and as you commute in, you can tune into our colleagues from 7:00 to 9:00 eastern tonight on the radio -- ben lisa abramowicz joins the conversation with tom. bloomberg surveillance can be heard in new york, boston, the bay area, washington, and across the u.s. on sirius xm. ♪

>> this is bloomberg daybreak. hour, up in the next half gene munster, loop ventures co-founder. ventures cofounder. reform and the first stock market correction in over a year, and the return of volatility. anding us is the founder ceo of estimized. -- market,see volatility, readjustment of leverage. what are you seeing going on in the market, at least as far as eps is concerned? were very good,

but i think a lot of people baked the tax reform in there. 18,ou go forward, fy counter year expectations. up,re still going to take but as you come around in the calendar year, and everyone is looking forward all the time -- are getting tough. people are already saying, the tax reform was a one-time surge. the interesting thing about q4 numbers was that everything we saw coming in, revisions to the estimized data set, surging upward. they all crashed numbers. looking at things like enterprise tech, small and at the ceod looking of salesforce, where he comes out and literally says he has never seen an enterprise

technology upgrade cycle like this one. it is obvious the economy at strong andcredibly you will get the spending on technology from these middle-market companies out there. now, all those companies like workday bluepot, numbers out of the water. retail that was left for dead came back and had good numbers. julia: the president tweeted this morning, laying on the pressure on amazon. another 5/10 of 1%. yet the numbers did really well. i wouldn't pay any attention to what the president is saying. julia: [whoop] that they've done studies on whether the president has long-term impacts, and he does not. amazon blue numbers out of the

water. aws revenue,at the another signifier of strong enterprise technology spending. it blew those numbers out of the water. go daddy just said they are moving their stuff over to aws. that business is on fire. it also signifies incredibly strong performance from the consumer, and we look at stocks like invisible line, -- invisal ign. julia: in a prior life, you were a quant. talk about what you are seeing in the finance -- in the markets, and the structure of the market. you have a lot of statistical arbitrage trading going on. what is interesting is you look at what rentech said -- you never hear them talk.

what happened was the market had run up to much, some of those version models got out of wet. why talked -- got out of ack. thing younkers new don't see often, and it speaks to the fact that discretionary managers have to be paying attention to the strategies the stat arb guys are using. julia: welcome to the new world. leigh drogen, estimize founder and ceo. warning signs for q2 after the break. we are watching shares of amazon. i know he said to ignore the president, but i can't for now. "i stated my concern with amazon long before the election little localtaxes to state and governments, use our postal system as their delivery boy

putting retailers out of business." this is a layer on top of the axios report that the president is obsessed with cracking down inamazon's 5% losses session. right now, 8/10 of 1% lower. another stock to watch closely in the session if you didn't already have enough to do. as you can see, 7/10 of 1% lower. initially rallying early premarket, a tweet came from the president and back down it goes. we are watching tech sectors, volatility. the last trading day of the week, of the month, of what has been a pretty tumultuous quarter, and it is a long weekend. ♪

into we prepare to head the second quarter, markets are preparing for potential headwinds after a quarter of what has been volatile price action. joining us for a look at what to expect is mike reagan. great to chat with you. the message is to enjoy the weekend, because q2 could be another ride. >> once volatility is

reintroduced to a market like this, it tends to linger. i don't think anyone is very comfortable that we will revert to the low volatility we saw last weekend. there's a lot of economic data softening globally. seems like we can adjust the chin straps for now. not just volatility in the tech sector, broader volatility and the realization, not just the expectation, of that volatility. talk to me about what is going on here. >> these daily swings in the market have gotten bigger. that influences -- people are looking at the recent past and sort of betting that we will ignore it in the future. the volatility gauge for the nasdaq 100 is the one that is blowing up. move on and talk

about whatever else is going on in the markets. we can look at what is going on as far as the flattening of the curve, particularly in recent sessions. talk me through that. >> it is becoming front and center of investor concerns. hasave eight strategist who been able to create a recession prediction model based on market signals. the old curve is one of the belowt, and you can see 50 basis points, the lowest since 2007. he uses the 110 curve that uses an same -- if you want to be alarmist, you can say the odds of recession are increasing. still low. the odds are very close to zero. two years, mainly because of the -- theing of the curve, odds within two years. julia: what about whiplash?

we were talking about inversion of the your curve, and then inflation was back, now -- a financial crisis. how you trade in these markets, i have no idea. the 10 year ended up five basis points tied to two. a lot of signals from these markets. >> you've got to look back on the positioning. the heavily -- julia: good luck in q2. purves, kevinhael giddis.

>> i'm jonathan ferro, 30 minutes until the start of trading. this is the countdown to the open.

♪ counting down, wishing march was over already. u.s. stocks on track for the biggest month of loss in over two years. amazon stock dropping after the president suggesting it does not pay enough tax. in theweather somewhere, bond market. rallying at the end. -- of 1% onp to one third the s&p 500, up nine points. -- u.s. a little bit dollar getting up to 123. 21 -- 123.21. is the recent selloff in tech making all the headlines, leading stocks to their worst quarter since 2015. wall street searching for answers. >> the