thinking we could be passed the highs of october not the lows of december. we are taking a breather here. clack the end of the five-day the s&p 500. we did not have to go too far back. a rollers how much of coaster ride it has been. the dow is down 20 points. as far as the sectors that led the decline, media entertainment. overall, not a very big decline. a true pause even the worst of it, the nasdaq was pretty modest. >> i am looking at volumes of by 10%. let's have a deeper dive into the action on the close. the s&pre talking about

500 and what to break it. the stoxx relayed over last year was a bearish tell on the downside to the fourth quarter. this chart may suggest that it is worth and watching the stoxx. 2015, both were trading higher. the stoxx p doubt. the stocks were lower. time will tell. >> i want to look at general obviously doing well today on the heels of a better than expected earnings report. let's look at it from a debt

perspective. this is a highly indebted company. it has a triple b rating. the bond price is rising. these are bonds due in 2043. one of the most actively traded investment-grade bonds today. there is a climbing back of the value of these fonts. general motors has more than exceed billion dollars of debt coming due. a lot of it over the next four or five years. if it's bonds keep selling off, the implied yield is rising with this company. headwind for its business structure. >> when you think of -- think 500, the run-up in the s&p we have a lot of people saying this is a classic risk on move. assetsf the haven

haven't really been unplowed the way they should have been given all of the risk on behavior we have seen. when you look at the haven assets, a lot of them have been underperforming the market in a way that does not match up with the trends that we would normally have. safe havens we have like you. -- yen. we have not seen that sort of outbound rotation in the haven assets. that you have gold which rose 3% in january and i've percent in december and it is at its highest level in quite some time area we are seeing a lot of lows into the gold etf's as well as repositioning of the other haven assets. strategists are saying keep an eye on this because it may be a bigger tail -- tell about what we have seen in equities. >> thank you. is our guest from

riverfront investment group. use of the market is exactly where it should be. what have you been doing with your portfolio? >> we were a little bit nervous coming into the fourth quarter. we have added in early january, small caps, emerging markets, even u.s. large caps because the pullback made it more attractive. >> talk to us about trade area that could be a catalyst to get us out of this market. what is priced into the market and what could send us in one direction or another? >> that is one thing that changed is we are now pricing in the u.s. and china will come to a trade deal. happen by march

because these are complicated deals. my guess is that the market is thinking that march comes and we kick it down the road because talks are productive. one thing that jumped out to me is in january, the talk happened in shanghai happened to be earlier than expected, they listed one day longer and brought the vice chair of china which was not expected to be present for the talks. as for the burner issues. there are the highest levels of government. think -- what about shutdown? >> i don't think the market cares. one, marketa second will be more concerned. they will figure something out even if it leads kicking it down

the road a couple more weeks. >> you added international. getting data out of europe, that has painted an ugly picture. frexit continues with no resolution in sight. how do you hold that into your analysis? about developed international, we are favoring you can underweight you. our view is there are a bunch of issues there.

>> fourth-quarter revenue up slightly. gopro, we are seeing revenues 377 million. want to look at that in terms of earnings estimates. revenues are slightly ahead of estimates. >> we are talking to go broke -- gopro's ceo tomorrow. it the you talk about big cap names are over. what has surprised you the most? >> the fact that companies had an opportunity to set the bar lower and they did not. things might be better than people expected. the good news is analysts said the bar lower. they are expecting zero year-over-year growth. it doesn't take companies much

to them to surprise upside. >> we have not talked about rates. the 10 year yield unlike the equity market, it has recovered. they are still languishing 10 year yields below 2.7 lower than they were for most of 2018. anything changing on that? it broke three and everybody said here comes four. >> number one, the fed is on pause. inflation data has come through that is pretty moderate. my guess is that you are going to see things go back to 3%. 270 is an important level. if we go about that, there is a good chance we go to the 280 level. that is frustrating a lot of strategists. the bond market is telling the economy is not good. it equity market is telling you it is good.

something has to break and i think it is rate higher. >> january is a nominal month for the 60th -- 6040 investors. is what happens after a risk off. then you get risk on and people put leverage back on. the market likes to humble you. paying trade for the market to go higher. there are a lot of people who did not get in and they are chasing a higher. you see when the closers are stronger than the open that is a real tell. >> do technicals become that much more important? 27422760 is knows going to be a resistance for the s&p. we will need some sort of event to break through the levels. whether it is trade, we will see.

i also worry that the fed is starting to put rate that rate hikes back on the table. fedonday, the cleveland said we are not going to rule out if the economy comes in strong that we might continue to hike rates. more earnings for us to digest. they are seeing a fall and after our trading. rating came in line with analyst estimates. it a record revenue and profit in the first quarter. adjusted earnings before tax depreciation and amortization and it does 87 million well ahead of expectations. chipotleo have reporting results. comparable sales for the fourth quarter rose 6.1% higher than expected for half percent. as for the quarter was

dollars 72. analysts were looking for a dollars 39. >> all about the price increases which our producer might not like for. >> thank you so much for joining us. that does it for the closing bell. next, what'd you miss. this is bloomberg. ♪

>> i'm caroline hyde. a i'm romaine bostick. >> i'm joe weisenthal. the question is what you miss. >> hot bonds. demand for corporate bonds to the highest level of the year this week. >> a dovish turned by the federal reserve is fueling a rally in junk bonds. leverage loans are still sagging. more on this i want to bring in

the cio a family management corporation. let's start with a credit. jump funds doing well, leverage loans lagging. on or what are we seeing a credit markets? >> there is a portion of it that is risk on. you government environment in december when there was near record low issuance of high-yield bonds to january where risk on has exploded. it has nothing to do with fundamentals. it has been the rhetoric of the fed pivoting and of the market. in terms of underlying fundamentals, earnings are good. coverage ratios are strong. defaults on leverage loans are under 1.5%. >> talk about the default rates and coverage ratios and the ability of these companies to cover the massive debt load that i have. >> that is a great point and

something that is asked frequently. if you look at the leverage loans market, it is transformed itself over the last decade. in earlier days, it was more syndicated think that there was more coverlets and esoteric and over the years, as it has grown in popularity, it has become more like the high-yield market and that covenants are not as prevalent. interests,nvestor one thing that peaked the interest is that the fed was starting to raise rates. a productwere wanting that would protect them from rising interest rates. what hit them was they were in the loan funds but what happened was in the floating-rate it was the credit aspects. credit spreads low out. earlier we had on an analyst

with wells fargo. he was warning about the risk of falling angels. the triple b area of credit. is that something you are keeping an eye on? >> i will take the other side of the argument. draconian fun to play scenario and the headlines are better. if you look at the underlying fundamentals, triple b's are large. leverage loans are past 1.1 trillion now. the high yield. overall, the fundamentals are very strong. prices this year have recovered only half as much as they fell in the fourth quarter. i think it represents an interesting opportunity for buyers. >> i want to broaden it and talk about the fed and the selloff we

of 2018.e end does it make sense for the fed strategy to burst many bubbles along the way? in other words not do dramatic tightening but induce a little bit of risk off so it would prevent some gigantic imbalances in the financial market? fedf you look at the minutes from december, they mention the leverage loan market and that they had concerns about the growth of it. those concerns are validated in the fact that the market has exploded. it is become a popular product and there are risks underlying that. looking at the underlying fundamentals, the fault rates are very low. coverage ratios are high. recession,t of a that can change because earnings fall and coverage ratios can fall dramatically. the fed is doing a great service to highlight factors like this and to have the many bubbles

being popped. it is healthy for the market to be functional. >> how much confidence do you have in the transparency of the debt markets right now given this -- shadow marking lending. ? liquid until very they are not. what tends to happen when things freeze up is the people on the sidelines are looking to buy or looking for good deals and the people who are looking to sell are holding out for a price that might have existed a month ago. there is always some time that needs to flesh out the true marks are. is a normal part of the debt market. we are going to see, it's not going to be a lot of volatility with what is happening with policy and an unknown path.

that is going to be a typical part of what is going forward. if you look at where we are now, the fed is on hold. inflation is fairly benign. fantasticonment is for yield assets area whether that is leverage loans, segmentss, mlps, other that have an opportunity to do well over the coming months. >> it is great to hear your perspective. meanwhile, let's look at more earnings. metlife coming out with numbers that were helped by u.s. business. if they managed to weather the tougher markets. the is did u.s. profits in the fourth quarter. a 38% gain in their adjusted earnings. market conditions were challenging in the fourth quarter they say. >> coming up, a war of words.

tough words for u.k. brexiteers. ♪is is bloomberg --

quite a career from at&t to launching virgin mobile to the current position as ceo of payout. down with him on bloomberg big decisions to talk about the importance of democratizing financial services. >> even here in the u.s., there are 70 million adult that are underserved today. 10% of theirout disposable income to do basic

transactions that the affluent never think about. cashing a check, paying a bill, sending money to someone they love, getting credit area for those who are underserved, that is incredibly time-consuming. they stand in line for 30 minutes. it is practically a part-time job to manage and move their money. money froma transfer one form of currency to him another -- to another, it costs them money. over $140 billion last year was spent by those underserved here in the u.s. on predominantly unnecessary fees and high interest rates. >> that was the ceo and president of paypal. later tonighthat at 9:30 p.m. eastern. >> let's do a recap of earnings this evening. metlife beating estimates on the bottom line here.

a tax overhaul. volumes with a 38% gain. then chipotle up 6.6% on a source salesame growth. expecting 4.5% increase. then sewn us moving lower in after-hours trading. retiringto do with cfo as well as other disappointing numbers that came across during the earnings work. meanwhile, the eu president took a slight but you can't campaigned for brexit. made it seem like the divorce would be easy. his book at a press conference in brussels with the average prime minister. whathave been wondering special place in hell looks like

for those who promoted brexit without even a sketch of a plan have to carry it safely. >> special place in hell. he went on to tweak the same thing. theresa may is heading to brussels tomorrow. it all started off with a difficult phone call with theresa may. now he is right about the risk -- brexiteers not letting her move. >> this is what the eu is worried about that if they do give concessions, she may not be able to get anything for her party area they are worried about the brexiteer wing of her and he thinks they don't have a credible solution to brexit. >> from the eu perspective, how worried are they about a hard

pain? versus the >> they have consistently said that we are preparing for this eventuality because it is the sensible thing to do. they don't want a hard brexit area it will hurt certain economies. the irish to hurley would suffer from a hard brexit. the u.k. will come off worse. they are banking on the u.k. pulling off all stops to avoid a hard brexit. perhaps they think the u.k. will cave in the last minute to avoid one. >> what about the member states potential thathe they might call for something of compromise? we heard of angela merkel's spokesperson today. >> angela merkel made remarks about creativity last week.

>> i have to cut you off. i'm so sorry. thank you. this is bloomberg. ♪

i'm mark crumpton first word news. president trump says he expects to be able to announce next week with the u.s. and coalition partners have reclaimed at 100% of the territory once held i islamic state in iraq and syria. he spoke at the state department. the president said islamic state is holding onto fewer than two square miles in the middle of the euphrates river valley. european council president took a slight today at brexit backers in britain. wondering what special place in hell might be reserved for those

who had no idea how to deliver the country's exit on the eu. that did not sit well with conservative mp. recall anyone insulting members of this house and the government and the people of britain in such a way. respondns are open to to such a completely outrageous insult? >> former u.k. independence party leader tweeted after brexit we will be free of unelected eric and holies like you and run our own country. sounds more like heaven to me. macedonia took a big step toward becoming the 30th member of nato. in a move that marked the end of a long this you with greece over , natonia's name secretary-general and met macedonian foreign minister led

in a session protocol signing ceremony at the alliance in brutal -- brussels headquarters. the last five years were collectively the world's warmest on record. that is according to u.s. science agencies. andnational oceanic atmospheric administration and nasa said the key message is the planet's warming. the agencies that global temperatures from 2014 to 2018 averaged 1.5 degrees higher than the time. of 1901 to 2000. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 overalists and analysts in one hundred 20 countries. i'm mark crumpton. this is bloomberg. andenator bernie sanders former goldman ceo are fighting over stock buybacks. that is after sanders announced

that he plans for legislation to restrict corporations for buying back their stock. sanders responded by criticizing that the use of money from buybacks and called for increasing wages for american workers. abernathy is the vice president of research and policy at the roosevelt institute a left-wing think tank. she joined us to talk about this. it seems like the underlying argument that they are trying to address or make is one about addressing income inequality. i wonder whether addressing or attacking iraq in and of themselves is going to lead to the solution they are trying to solve? >> i think they are talking about income inequality but they are also talking about how to

productively allocate capital. we have run our economy for the last if he years on the idea that shareholders and the eeoc and large operations were the most effective players at allocating capital in our economy. what we have seen and there is a lot of research out there that we built an economy that has been very good to firms and their shareholders but they are not thoroughly investing that money in productive activities which includes wages that is also the kind of investment the gross the economy. >> there are a lot of criticisms of this idea to limit back. thatf them is the argument corporations return money to shareholders through dividends or buybacks not because they want to avoid giving that money to employees but they don't have the demand that justifies increased investment into their

own company so the critics would say why not favor solutions that would boost demand? or require businesses to compete and require businesses to make capital investments rather than make spend on it does not benefit the company. >> that is a great point. answer is it has been 40 or 50 years of policy changes that have led us to the current dysfunctional high profit for low-wage investment economy. it is going to take a lot of policy changes to get back to a functional economy. this takes aim at the balance of power within firms. it reduces the ability to funnel money out of the firm for less productive enterprises. powero need to increase

within firms and countervailing power inside terms. more would be investing and they had to compete for workers or consumers. there is so much market power in the economy that they are able to funnel money to shareholders. do you think we would realistically get through? is there hope for this bill? in terms of the next two years in the current legislature, i cannot speak to the specific but i would be surprised if anyone expected much of anything to get through. this bill would not be one that i would imagine would be at the top of the list. administration,

you would see a whole range of bills and packages that together would look to rebalance power within the firm. that includes things that would shift the idea of maximizing shareholder value to a greater stakeholder approach. increase the power of competitors to compete. for extremeeturns ceo salaries that encourage the kind of market manipulation that we haven't talked about. all ofd need to include those different pieces. >> do you think there is a way to address those topics outside of the legislative and regulatory framework? are there natural market forces that would push us in that direction? in terms of natural market beces, one piece would having a larger labor union

presence which in some ways is group butlegislative we have done so much to decimate the power of organizing the that is hard area also, competition. it is not saying we need the government to demand we can't do this. we do need government public action to enhance competition in our markets area that would then force firms to invest to innovate or compete in product markets. >> i want to ask you a question that is broader than buybacks. why is it that the democratic party are feeling so confident these days about opposing left-wing economic ideas whether it is much more aggressive graduated taxation or wealth senator schumer writing an op-ed with 30, not something you would have asked acted a few years ago. what do you think it is about

this snowman politics were they feel comfortable proposing more radical ideas? >> i think that what we have seen is a lot of the economic hasence and the policy caught up with where a lot of average people have been for a long time. since the financial crisis, it has been clear that the economy has not been working for average americans. a lot of the assumptions that have guided our policymaking for the past order to 50 years are that shareholders would allocate capital effectively. would lead to more investment and growth economy. workers would benefit when the corporation did well. we have seen that these assumptions have nothing to do with the reality. it is a lot easier for politicians to say this is completely made up whereas for

decades, you had economists like many of my peers say if you were to introduce this regulation, you're going to kill the economy. >> we had just had some technical issues. the point was made. up, wisconsin steel with foxconn. some.indeed disastrous as this is bloomberg. ♪

one surprising in the earnings

season is chipotle. fourth-quarter earnings came in above expectations. sales came in at vix percent. analyst estimates were at 4.5% .rea >> its turn our attention to foxconn. they are agreeing to build a facility in southern milwaukee. the 49 people familiar with the matter say it is not the case. >> i am sure you have heard a lot of noise about this factory. missing are the

actual workers. it is just south of milwaukee. they say it is very different on the promises the president trump and others had made. they have been hired as hourly workers and attempts. there were promises of jobs that never materialized. articleoint out in your that foxconn has a pattern of this. >> going back years, the red flags are glaring. everywhere from indonesia to brazil to india. even pennsylvania, they talk inut investing $30 million creating 500 jobs. in each case, they always never live up to their promises. in the case of brazil, they were ofking about almost hundreds

thousands of jobs and that did not come to fruition. it is a major question why that wasn't more of a red flag went wisconsin negotiated with the company. >> we spoke with senator ron johnson earlier today and we have a clip of what he said. the environment keeps changing. there is lots of uncertainty. what businesses want is certain and stable environment as possible. markets change. apple reported less demand for their products. that affects the equation. in general, all the incentives that were given were perspective. >> did things really change? >> that is the talking point for anyone defending this project. they will not pay the subsidies if they don't create the jobs or invest. the issue is the state has already invested money in man-hours and the local counties

invested $130 million of their own funds. has committed to related road projects. he was talking earlier about how difficult it is to higher in the state. 13,000is talking about workers added to the talent full. wage subsidy. that makes no sense. >> he should know because he was a leader in manufacturing before he was a senator. out more about this in the latest edition of bloomberg businessweek. >> time for smart charts. >> joining me today is an analyst from oppenheimer. we're talking about the s&p 500

seemingly stalled in the middle of this sideways trend. the. >> i think you have to own stocks. there is more work to do. the key for us is that has been a good start. we are on the road to recovery. there is a big decline in fourth-quarter consistent with a bear market in a secular. the only thing that was missing was additional duration. we never got it, we got this the reversal. we have to assume that this sticks as long as you are about 2600 area that was the breakdown level from 2018. it was a failed breakdown. you are back below it and i think that is the key floor. are up againstwe the 200 day moving average.

i am open for sideways consolidation, but i think i really like what is going on underneath the surface area and the new york stock exchange advance decline or line breaking out. there has been a lot of participation under the surface on this move higher. that is why we are exercising the bigger picture recovery. >> above 2600, you are cautiously optimistic. let's bring the stocks into the picture. >> it is not only broadening participation, it is the right participation areas of the , it has been index a great leading indicator. here is an index that the head of the market ahead of the first quarter of last year. it started to break down over the summer ahead of the market. now you are seeing the recovery first area the stoxx big break

out over the last couple sessions making a higher high completing this facing process above the 200 day moving average. i think you are going to see improvement in semis leading to improvement in tech and improvement in the overall market. >> looking at china, the longer-term part of this chart went down and then up. could you see something along those lines of more of a consolidation phase? i think this is the key level here. 1275 let's call it. a former resistance, these are the peaks then become support on the way down. as long as your above that breakout level, assume it holds. >> turning to china, the shanghai composite closed for the lunar new year but fx i up and going. >> we are seeing improvement in the u.s. and overseas as well. i, theares china etf fx

weakness ahead of the rest of the u.s. market. china peaked january 2008. never participated in the summertime rally last year. then broke down in the summer ahead of the weakness in the u.s.. now you are seeing a mirror image. price. indicative of the , we soughts decline making higher lows. now we are breaking the trend line with a big pickup and acceleration. that is confirming this bottom. >> we appreciate you smart charts. >> coming up, spotify gets serious about podcast. we will have the details ahead. this is bloomberg.

♪

podcasts are music to spotify's ears. they acquired gimlet media. it's not the only purchase they made. why the sudden focus on podcasting? long-term margin expansion for spotify is going to rely on mixing in more non-music content. they have a fixed cost structure with the labels. to take $.70 on the dollar for a subscription. podcasts they may be up to get a more beneficial structure area think like a serial podcast.

that is the thinking this spotify has in place. >> how much of this is an effort -- where you have to have content that no one else has? >> it is a very different unproven model. we will have to see. investors are looking at this and say this is a wait and see story. can they come out with a popular podcast that draws people in or not? maybe it's a live sports. those are the sort of things they are questioning. it is very uncertain right now. the moment music is coming into the labels and any move that spotify makes to change that is going to be challenging for them. labels will pull back and give them fewer things to run with.

>> you know the company once and margin expansion. talking about exclusive content, the person that comes to mind is a lot of money that they will have to throw at the artist or creators to keep this exclusive. can that margin expansion live in the same universe? >> if there is 20% of the listing on spotify becomes non-music, it is conceivable. you want to think about the number of hours per day the people spend listening to audio content. under monetized compared to video. they do have a good opportunity. look like what they are planning to spend in 2019.

earmarked. a lot of subscribers can do well at that. >> thank you. spotify, streaming saved the music star. what once was considered a death sentence is becoming a saving grace. we are finally seeing record labels actually getting more valuable themselves. >> it is so easy to stream. with napster, it was easier than buying. now, i would not even know how to buy music. if the consumer trend is moving here, you embrace it or get killed by it. >> meanwhile, the bank of england tomorrow announces a

decision followed by a news conference. >> twitter reports its fourth-quarter earnings tomorrow. >> tomorrow u.s. jobless claims are out at 830 eastern. this is bloomberg. ♪

this is bloomberg technology. coming up, press play. spotify makes too big podcast acquisitions opening a new front in competition with apple area was, game over. shares of big game makers take a plunge is the fortnight phenomenon to blame? president trump and