>> we are coming those highs. >> we took a leg lower. advances trimmed as we head into the close. 500,e 11 groups in the s&p six-game, five declined. netflix is due to report tomorrow. helpingix has been drive things higher. with respectsread to flexing its pricing power. we will see once we get those numbers. >> let's dig deeper into the action. >> i'm looking at the housing market. big topic. a

we got the national homebuilders index a little higher today. there was a rebound in january after a selloff in december, giving relief, that conditions may not be as dire as thought. 56,index is now 58 from a but did miss expectations. present, future, and perspective traffic did increase. come back into my terminal here at gtv . sincege rates down .5% november. mortgage applications giving a boost. there is increased demand for housing as long as affordability come back. so economists are saying look for a second wind in the 2019 waged-half as you get

gains and lower housing prices. >> let's look at that 2600 level on the s&p 500. this is a chart we looked at last year because of the volatility at the beginning of the year when the major average of the s&p 500 state above that 50-day moving average. below end of the year, that average, lower, lower, then broke below that range, but now still below the average, but back near 2500. the question is whether this will break to the downside. this earnings season will be ever so important. >> thank you. i'm looking at inflation. forward breakeven contracts, you rbound --or

moribound. it has bounced back but we are still low. if you look at a twitter post put out yesterday, jeffrey netflix talked about raising, and his favorite breakfast place. are there fixe costs that have been rising. dit is an important thing to watch. >> we got netflix raising prices by 18%. still with us is the head of withays equity strategy

your call for the s&p 500 to be at 2750, a reduction from the previous 3000, have we gotten all the negative pre-announcements we have heard from companies? apple, fedex, samsung, that is all out of the way. investors reacted to it quite positively. >> it is different. if you look at the preannounce from apple, ups, the gain was because of the growth. financialse from the is about the numbers. that is the key thing. it is the divergence. more fiscal risks to be judge us that by the markets. theresa may will be making a statement at 10:00 p.m., that according to the bbc.

we will be watching out for that thestatement after she won vote of confidence. let's get back to our guest. witho you advise clients such a barrage of risks? any of them really systemic, apart from china? >> it is tricky. it is the u.s., brexit, and things are completely -- you don't have a framework to analyze it most clien say they are worried but don't know how to deal with it. , so they are ignoring it for now. .ou sort of ignore it that is when people start reacting to it. how does that tie in with the economic expectations? it seemed like everybody was running for the homes on expectations we are were heading for a recession.

has that picture really changed much over the last month and a half? >> the initial selloff in september and october was fear of recession. if you look at the stocks that ,re more exposed to the u.s. december was a broader selloff. one, it was outflows. mutual fundsretail significant outflows. sentiment from retail became bad. the liquidity was awful. the market debt for s&p futures has never been this low, even adjusting for volatility in december. it was very poor. that exacerbated the moves. december was not about a fear of recession, at least the way you

would measure it, cyclical companies. >> you have a price target for the s&p of 2750, a 5% increase from the current level. how do we get there? how messy will it be? will we revisit lows before we come back up? >> it will be choppy. 3000 if easily go about earnings surprise to the upside and these political risks abate, but you could have a call that a recession will not happen this year, but you can't completely discount the possibility. if that were to happen, you could retest the lows. >> it seems like we brace ourselves for more volatility. our clients looking to hedge that? >> they are not.

if you look at the level of the vix, it did not react. months down 18% in a few and it barely broke 30. part of the reason is the leverage in the system in the bond complex has come out because of the short volatility etf's. that has reduced some leverage. the professionals are not buying options. if you look at the value of the puts to calls, it has decreased. professionals in some sense are trying to fade this move. december,er hand, in it was a different segment of investors who bailed out. >> a lot of people were looking for signals out of the debt market, the credit market, potential pain elsewhere so what are you seeing? that thereern is

will be an increase in rates. burden fort companies would increase. our analysis shows that is true for small caps and high-yield markets. for large-caps, it is not a problem. even if spending costs go up 100 basis points, earnings would be a affected by 50 basis points. , it is true.s our recommendation is avoid smalls relative to large caps caps.- >> there are some headlines on the political front. the president is planning a meeting with the top aide to kim jong-un. he is expected to meet him this week according to officials.

this comes as the will be a meeting with mike pompeo on friday. a lot of discussions as we get closer to perhaps some kind of deal as the president has been talking about with north korea. >> i want to draw your attention to see csx. billion, below4 estimates. eps coming in two cents above estimates. >> some other breaking news. , beating estimates. still beating on both fronts. >> that does it for the closing bell. .p next, consolidations from new york, this is

bloomberg. ♪

♪ >> i am caroline hyde appeared joe weisenthal is on assignment today. >> the market in the green. coming off highs amid a pro. -- probe. >> the question is, "what'd you miss?" >> theresa may won a vote of confidence, but now faces negotiating a brexit deal.

bank earnings, goldman sachs and bank of america surge. paying up for a payments giant. one of the biggest financial mergers in decades. let's return to the u.k. news. theresa may has survived a confidence vote. the bbc is reporting the prime minister will take a statement at 10:00 p.m. london time, 5:00 ..m. new york time let's bring in our reporter from london. what to expect from the statement? >> we have not had much intelligence about what is coming, but expected to be reiterateive of the comments we heard, but made more so for the

general public. also, setting out the steps ahead to talk with leaders of the other parties, including the labour party. theo we have any sense that other folks in parliament are willing to work with her on the level that they weren't willing to do prior to the votes this week? >> the reaction from other , why didn't you reach out to us before this point? what we know is the welsh nationalist party and the scottish nationalist party have met with theresa may this evening. it is the labour party she needs to get on side, and jeremy corbyn will not be meeting with her tonight. he set out strict preconditions around her dropping no-deal before he will open talks with her. on whatch is predicated

the eu might or might not allow, right? uncharted are in territory. we hear the eu is thinking about whether it might need to extend they come, and whatever is agreed by theresa week will motion next have to be excepted by the eu. >> for those folks who are not in the u.k., can you give us an idea of what the sentiment is like now that we have gotten past of these boats? votes? >> it is a sense of frustration among the public. went to a place that used to be the heart of the world's pottery industry and voted for brexit, and people can understand why the politicians are not delivering on what they

asked for? the politicians are supposed to be working for the people, and they can't understand why there is a deadlock. on the remain side, people help the deal was not acceptable there is frustration, anger, and maybe even embarrassment that the country that'll must create a democracy is now in this position. >> many want to move on coming get on with it, let's have a deal and move forward. there is the looming concern or hope for many that there might the a second referendum. what do you sense on that? >> many people want to move on, but the country is at a crossroads. they don't know which direction to take. ,ome people want a no-deal others want a second referendum, and theresa may hopes she can move on with her own deal. >> great analysis.

we thank you for staying up with us in london. meanwhile, we anticipate that speech at 10:00 p.m. , we get the take on the firstdata deal. earnings coming out. down on earnings. they are expecting a continued dynamic market for 2019. shares down 2%. they be on eps in revenue a little bit. york, this is bloomberg. ♪

>> time now for look at what stories are trending. reports from the fed that claim high student debt is weighing down millennial homeownership. 22014 cane from 2005 be depend on student debt levels. the average load doubled in the same time. themberg.com looking up investment of $100 million a year with the hope of unseating starbucks. cashless.s are is cooling super

bowl preparations. expecting 100 10,000 people to depart the day after the big game. it is already seeing the longest delays in the country, which could get worse. these stories all on your terminal, bloomberg.com, and on twitter. provider of financial plumbing for u.s. banks has agreed to acquire firstdata $422 billion. kkr will own 16% of the combined company. here to talk more is an analyst. this deal struck me hard. , butnly the purchase price the assumption of $17 billion in debt. two companies --

together, are we getting a better product. >> it is a great question. if you think about the price they paid, which is well below the all-time high of theto, it tells you this was not that great of an asset. it is cheap, but not everything cheap is great. that is one of the criticisms , there talking about revenue and cost synergies. these are reasonable assumptions, but those two companies don't overlap from a product perspective. how is this going to be a better company in the future in terms of cross-selling? it will be a tough uphill battle to get these two companies to generate one unique culture. i am skeptical. >> some analysts are liking the synergies and 29% premium, and

they like what firstdata brings to the table. explain to what these products are and how they will affect things. >> sure. square has disrupted the marketplace. the call today talked about square eating a disruptor. would have no one said we see square. now they are saying it on the conference call. the smaller banks are starting to get worried about seeing square elsewhere in the so that is a defensive move. just because you're getting a product, it doesn't mean the usage and the retention is the same. do?hat does clover

is the overall ecosystem, the stickiness and the innovation, and that is where square is ahead of the entire industry. i view this today, i think the deal is a great deal, a great price, but it is a defensive move more than offense of move. >> talk to me about the space, including square. of analystsa lot and strategists saying payment processors are one of the safer bets going forward no matter where the economy goes. what is your view? howfiservs of the world, paypal fits into that. 2019,you think about there are three big themes where you want to be.

one, in the company that has overweight e-commerce, and the company's worldview. that is a big theme. that is a safe place to be. regardless of the economic environment, you get that shift from brick-and-mortar to e-commerce. the other place is where companies are focused on europe. that is square is making strides , and also worldpay. is the leader in europe. legacy. the square looking great because they are innovating, and worldpay is looking great.

the processes are steady businesses, so always a great place to hide if you are looking for steady businesses. >> some great perspective on where to be. always great to get your perspective. thank you. a quick check of the business flash headlines. nordstrom felt today. analysts lowered their price targets after it gave a disappointing update to sales. it has fallen 35% from the peak. ford is appealing to wall street after the automaker missed profit estimates. jim hackett responded to criticism is moved too slowly and shared too little about restructuring plans. some analysts were disappointed they did not provide forecast for earnings. reveals ancitigroup unflattering figure today.

the details are next. this is bloomberg. ♪ this is bloomberg. ♪

>> at the top of the hour, theresa may will make a statement. even as the prime minister voteved today's confidence , she saw power slip away after inmakers demolished or deal a crushing defeat yesterday. to prime minister promised hold talks with leaders of opposition parties and other lawmakers starting immediately to find a way forward. schumer took to the steps

of the capitol with his democratic colleagues to showcase some of the workers suffering during the partial government shutdown. it is day 26 of the shutdown over president trump's demands for $5.7 billion to build a wall along the mexican border. >> i want president trump to look into these faces and see what he is doing by using these awns in anmen as p extortion game to say, i am going to hurt these people and less i get my way. mr. president, president trump, look at the pain and suffering you are causing. >> senator schumer added he only has three words for the president, senate republicans, and mitch mcconnell, "open the government." citizensers and two were killed today in northern syria. u.s. central command said one civilian was employed by the

defense department, and the other was a contractor. the names are being withheld until families are notified. islamic state claimed responsibility for the blast, which killed at least 16 people. the white house says comments by steve king about white supremacy are a born. serve a hockey senators sarah sanders is -- congressman king was quoted by the new york times as includingg terms, when white nationalists and white supremacy became offensive. about his remarks, he said he is not been following it. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. stocks of the six big u.s.

banks are higher following investors looking past bond trade slumps. goldman sachs leading, up over 9%. bank of america up over 7%. us now fors joining a look at what happened. i want to start with goldman. the best day since 2009. the best post earnings rally since 2008. trading was down or missed estimates, equity trading missed estimates, investment backlog went down, and we have the 1mdb scandal. why the rally? >> going into the end of the year, the stock was lunging, down 34 -- plunging, down 34% last year. all we needed was to make sure there wasn't bad news. it wasn't bad news. thehad good performance on

investment banking side, especially the advisory business, where $1.2 billion in in fees is more than in the past. on the trading front, which has been miserable across the board, and when you listen to these executives, there talking about an economy that is still strong. big ones have bounced back. we have seen good market conditions for that. economy is that an still strong, everything is going in their favor, which is why the stock is rally. >> soapy now. one analyst saying in many ways he liked the transparency coming from david solomon on the call. what about bank of america? they showed some solid results. also talking positively about the general economy in the u.s. >> same story.

fixed income trading, miserable, like every other bank, but had good performance on the retail front. improving loan growth, improving net interest margins. they are saying everything looks good. all the catalysts are there for this to continue for a while. there are dark clouds to do their a shutdown, the trade , but they say that is still not affecting economic fundamentals. >> let's talk about deutsche bank. there is a lot of speculation, less about earnings, but whether the company will combined with another bank. what have we been learning lately? >> deutsche bank has been a problem child for a while. we're seeing an interesting split and merge. everyone is trying to figure out what is the best solution to this problem. the german government wants a national champion, to merge deutsche bank with commerzbank,

so you have a true german powerhouse. regulators are not so sure about that idea. they would rather they combined ,ith some other european bank but not necessarily another german bank. the reasoning is two wrongs don't make a right. weak bankscombine two and hope you get a strong bank. that is the diversions we are saying. they are hopeful there is a solution around the corner. everyone is clearly working to find a solution. >> great to get your perspective. meanwhile, breaking news, aurora is doing a convertible bond issuance of $250 million of senior notes due 2024. the shares not moving too much this isurs considering

only a billion dollar company. >> apple, a story breaking on the terminal. hiringill plan some reductions. this is according to a story by , basicallyeporters saying tim cook made the disclosure earlier this month in a meeting a day after he wrote that letter to investors about recent struggles. it is citing unidentified people familiar with the matter. >> meanwhile, let's get back to the bank story. citigroup released a report today showing median pay for women is nearly one third less than four men. -- for men. people of color earned 7% less than their white colleagues. this,e a deeper dive into

we have our guest with us. great story. woeful.ers are withuch of this is to do who holds the top jobs? >> that is what this number is about. it is an unadjusted pay gap number. it shows who holds the highest paid positions, and for citibank, it is mostly men. it is not surprising to see the gap. it is showing women are not getting to the higher levels. this is something citigroup has struggled with. that is why they are trying to get ahead of it. >> why is this data being released publicly? >> they say they are committed to transparency and want to change this and put out targets over the summer. at the same time, a shareholder

proposal was filed pressuring them to release it. they got banks and big tech companies to release some pay data, but they want this big global raw number. citigroup got ahead of that proposal and said we are just going to do it. they are withdrawing the proposal because they are satisfied. >> it is something the u.k. started. they were forced to do it. when was a pay dispersion you factored in various forces. only 1.8% of executives and senior management. >> this has been a problem with banks losing black talent. it has been a problem for eight years running. , andknow it is a problem specifically have targets for increasing black diversity at the company, in addition to gender targets.

they know it is a problem. that is why they released a number for non-white employees at u.s. headquarters. >> 40% women and 8% black employees to be in the head jobs projected for 2021. it is a great story. thank you. let's get back to that breaking news. hiring reductions amid iphone woes. tim cook told employees the company will avoid a hiring freeze, but they have been selling fewer iphones than expected. this is according to people familiar. he came out earlier this month in the meeting. >> are reporter says tim cook has not determined what positions will be affected by the scale backs, but he did single out the artificial intelligence team and that they would continue to add employees. >> this is a cut in hiring. it is still a relative growth

story. there are concerns. >> we knew that. we will get apple's earnings and a couple of weeks. it will be interesting to hear more. >> this is bloomberg. ♪

>> let's bring you up-to-date. let's than 15 minutes, theresa may of the united kingdom will be making a speech outside number 10 after winning the vote of confidence. many expecting she will reiterate what she said to the house of commons after she won, that she will reach across the aisle and looking at the other

parties. that will be coming at 10:00 p.m. local time, 5:00 p.m. new york time. news,k to apple, breaking a big scoop, apple will curb hiring amid iphone woes. it is citing unidentified sources familiar with the matter , saying tim cook made the disclosure earlier this month to employees come the day after he released that letter to investors about the company's recent struggles. they are going to reduce hiring in some divisions. it did not say which divisions. appleory does say artificial intelligence team would add more employees, so that gives us insight into where

the future lies. here to talk about that is the author of the story, mark gurman , from our san francisco bureau. can you give us more insight into why apple is making this decision? >> after the iphone sales woes earlier this year announced to investors, tim cook held a meeting. session of questions and answers and he disclosed the reduction in new hires. people does apple higher on a quarterly or annual basis? >> they hire thousands of people. it is unclear which divisions will be impacted. the artificial intelligence will not be impacted. that is a big growing area for apple. impacts,ikely to see

but for have software or engineering divisions where they have people working on so many things that they don't need additional people. it is unclear how short-lived this will be. >> apple open new offices in texas and california. with a be affected by this? >> those will not be impacted. tim cook says there are plans .or those offices apple isternal forces trying to navigate continue. their foot on the pedal in terms of stimulus. will we have to wait for apple's next set of earnings to get more clarity in terms of the future of sales when the numbers come eventually? >> i feel like the earnings results they announced at the end of the month will be in line

with what they forecasted, so 84 billion dollars on revenue, 10 $20 billion on the services side. it will be interesting to see their guidance for the second quarter. >> great scoop. we thank you. chart,le, time to smart where we dig into the streets top technicians. is our market analyst. i love having you on the show. we had so much crazy volatility for the s&p 500, now to the upside. let's look at the s&p 500. >> it has pulled back to the uptrend line, and now it is having a rally. it has gone back into the thattance, the breakdown

supported 2018 trading. this is right near the 50 day moving average. , you practically had a 50% retracement of the decline. it could go further towards 2800, which would be the point rallies stopped, and you could go back to the high. the question is are we looking at a bear market rally or something that can move through. i don't think that is at all clear. if you look at the bottom panel, this is where in october we got a monthly momentum sell signal. these are structural sell signals. if i walked back in time to march 2015, that is where we got the sell signal. the price was still in the high level. for aained on the sell

year and move back to a buy in september 2016 at the same level it gave you the sell signal. it would have avoided all the ups and downs that occurred in the process of defining this ultimately is a new trend up. , ok. following that let's look at the industrial sector. , we arendustrial sector looking at it from a relative strength perspective down here. you had a breakdown, broken the trend, but the relative strength , how the sector is performing relative to the s&p 500 is still in a downtrend, so were not seeing the rotation that one might anticipate if this were going to be an new advance from some of these underperforming sectors like industrials,

materials, energy. we don't see it yet. >> bearish signals and relative strength. now let's look at oil. it is another risk asset that could offer confirmation one way or the other. >> we anticipated lower levels when we saw the support break. we did not anticipated going to $42, where it has stopped, and that is a support level in place through the past two years. you are in a range between $42 $54, so if you break out threw $54, you might see another run, but $49 has to hold to change the perspective. we do have a monthly momentum sell signal down there, so it would not hurt until it comes up here with the last buy signal right here. we are watching this carefully. >> these charts are a little

cautious. >> yes. >> thank you for joining us. >> my pleasure. >> caroline? >> we thank you. coming up, looking east, where beijing plans to expand credit markets. this is bloomberg. ♪ ♪

>> standard chartered is forecasting china will overtake japan is the world's second-largest bond market this year yield by corporate issuance. i am fascinated. wasought corporate debt going to be reined back. instead, a big reveal this year. >> we got a hint of this towards the end of last year when they

tweaked some rules when it comes to issuance five top lenders. this comes at a time when they were trying to beef up financing. now, standard chartered is looking at this bond market growing to $14.5 trillion this year. trillion, just more than a quarter of the size of the u.s. market. >> when we put this into perspective, this comes after this big stimulus by the pboc into the market. >> the pboc deputy governor talked about tax cuts for the chinese economy, but also the biggest one-day in jackson of onuidity, 516 billion yuan wednesday, coming on top of the five rrr cuts we have had.

what it means is a boost of liquidity for the financial sector. it seems the focus has shifted to growth. no wonder you see all these analysts saying getting to the chinese bond markets for portfolio managers, saying we bondssee these lawns -- be one of the good diversifiers for the portfolios. we have yields falling, on a monetary easing. trade talks develop positively. >> the corporate bonds, who will be taking these? >> the chinese government would hope foreign investors would get involved. the take-up when it comes to chinese domestic assets by foreign investors has not been exuberant. you might not blame them given

the declines. they do want to wean private companies off of relying on bank lending. expecting corporate bond issuance will surge, government bond issuance likely to stay steady the issue, and loan style back a little bit overall. >> fantastic. thank you very much. meanwhile, theresa may is set to make a statement minutes from now. there we are, live shot of downing street. >> have a great evening. this is bloomberg. ♪

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♪ welcome to daybreak australia. we are counting down to asia's major market open. >> here are the top stories. survives a no may competence vote and reaches out to political rivals. the labour party refusing to talk. apple telling bloomberg hiring may be cut. >>