deadline. when you think about earnings going forward, people are talking about earnings. we need to see if that can actually continue. u.s.-china part of that. thelet: there you have closing bell, either way it is a loss. walmart, travelers and coca-cola of the only gainers in the dow industrial which loses 218 points. caroline: we have massive consolidation news, a deal being done in terms of suntrust and bbt joining forces, but it has been downdraft with energy companies. scarlet: energy leading lower, materials as well. pretty remarkable. generally just what we were talking about before, how long it has been since we had a day like this, feels very 2018. caroline: once again. it is two weeks this week.

been that long. feels like ages, longer than two weeks. the last time i saw this much red on the board. caroline: abigail, what are you watching? reporter: the 200 day moving average because yesterday there was hope for the balls, now not some -- the bulls, now not so much. the s&p 500 relative to the moving average even with volatility, then fourth quarter and the brutal downdraft, below the moving average turning into resistance, yesterday flirting with the 200 day moving average. now being rejected. when we looked at the chart yesterday we pointed out the rsi that has come down from overbought territory. now it is even more severe suggesting the downdraft could remain -- continue. reporter: on a day like were the

markets stalled, we get data showing retail investors are getting bullish on u.s. equities. individual investors came out with its weekly data showing the bearish sentiment, 50% of folks were bearish at the end of december, that has fallen to 23%, the lowest level since june. the percentage of investors bullish on u.s. equities of theed to 40% from 32% previous week. this is coming off monster gains in the month of january and to start february. maybe this slight bump in the market, it will turn sentiment back. we will have to wait until next week to see the next line of data. caroline: thank you very much. still with us is scott minard from guggenheim. we want to get your particular -- your perspective on equities. we have to go to credit.

what about rates and government bonds? we are seeing a search for a haven. scott: it depends on the psychology of the market at this point in regards to where the the fed's next move is. in herellen this morning speech made comments the next move very well may be a reduction in rates. personally i don't believe that. you always have the exogenous shock it could cause. now we have rates down from their highs, we are seeing housing activity pickup with isn data showing strength. we are seeing the straws in the wind telling us two things. the economy is very interest rate sensitive, one of my themes. is turning toowth we accelerate. it is not likely given the

shutdown in january we will have a clear look until second-quarter data. we might not have a handle until third quarter. joe: are you surprised we haven't seen more steepening in the pivot to dovish this? usually you see people get optimistic about growth and inflation, and we have seen a really big rebound in risky assets. in 10-year yield, new the bottom. scott: two things are going on. the one is the world is still short direction -- short duration. people need to extend their bonds, but if we go back to the idea that the fed may actually , the long endning of the market has every reason to start discounting the reduction in rates, because if the fed were to pause for the next year or so, but the market

believed it would reduce rates significantly in another year, long-term rates will drop and the yield curve invert. scarlet: you say when they see a revival in the economy, policy investors return to the yield. we think about how things can't go back to before 2008. what about two or three years ago? scott: in terms of increasing rates? we have learned a couple of lessons. one is the market is more sensitive to rates at these low levels than when the rates were higher. scarlet: does that surprise you? scott: i am slow, so you got to show me. a number of people have said things like the 10-year note is going to 6% and we need to get short-term to 5%.

the fertility in the economy a stock leverage -- in the economy based on leverage, and if you take rates up one percentage point, that is a substantial increase, 40% increase in rates. at 5% it is a smaller increase. that is the first thing. the second thing is to get geeky here, talk like somebody from the fed, maybe the neutral rate is a lot lower than we thought it was. that is to say the rate of interest which is associated with the economy, neither being expansionary nor contractionary may not be sort of a 3.5% rate level which a lot of people thought. maybe the rate is closer to 2.5%. her is no need to start raising rates until the -- there is no need to start raising rates until the economy heats up. this small increase could tip

the economy into recession. caroline: let's talk about the new dialogue particularly around the deficit and spending considering [no audio] [please stand by] political risk is real. i was surprised my recent visit to davos, how dismissive a lot of what i would call the aristocracy were. caroline: forwarded off. scott: one comment somebody said, we don't need to discuss this, it will not happen. that is something somebody would have said in 2015 about donald trump being president. scarlet: that might want them.

-- haunt them. scott: i think it will be a very real debate in the presidential election. into and i will divide it two, marginal income tax rates and welfare. and then monetary theory, we have managed to run huge deficits and by all this -- and buy all this debt, and it hasn't been inflationary. why can't we keep doing this? that will be a difficult argument to shoot down in mainstream america. joe: i want to go back to what you said about this -- it the concept of the neutral rate, questioning where it is. it is time to question these

fundamental premises. how do we know there is a neutral rate, some level where everything is nice and stable? how do we know the phillips curve which guided fed policy, the balance between inflation and employment is real? maybe we are not only recalibrating the parameters like 2.5% for neutral, but then we have to question the models and whether these are useful. scott: you are going right down the avenue which will be the bait -- the debate in the election. joe: i thought you would say destroy the american economy. scott: no one has repealed the law of gravity yet. will friedman, through his work, showed always -- milton friedman, through his work showed inflation is a phenomenon. you put out too much money, it

will become inflation. in the 70's -- in the 1970's we had staggered inflation. i think the policymakers are really misguided about how to get growth. axes andk tweaking monetary policy, that causes output to rise when no, these are cyclical. ofneed the four factors production, land, labor, entrepreneurship and capital. land is natural resources. b have plenty of. entrepreneurship we are very entrepreneurial people. the thing missing is labor. if you look at demographics the next decade, we will have zero growth in the labor force. if we don't find a way to increase the labor force and bring in more entrepreneurial

people which can enhance growth, we will be in a prolonged time of stagnation or low growth, and all of these policies washington is throwing around doesn't make a difference if we don't have the structure. scarlet: the models will all appear broken. scott: i am not running for president. [speaking simultaneously] [laughter] scarlet: thank you so much for visiting us. guggenheim partners german of investment, usually in southern california, visiting us -- chairman of investment, usually in southern california, visiting us in new york. this is up 17%. fourth quarter adjusted eps of four cents is much higher than the loss of $.14. this was the first beat on the bottom line in three years. good news for shareholders of that toymaker. that does it for the closing bell and good -- and me.

we will look at the economics of a ocasio-cortez' new deal. from new york, this is bloomberg. ♪

♪ caroline: live from bloomberg's headquarters in new york, i am caroline hyde. here is a look at how the stock market closed down on the day. the worst in a couple of weeks. joe: what did you miss? caroline: bb&t's deal to buy suntrust bank sparking [indiscernible] a new wave of consolidation.

climate policy overhaul. protest'a broke as you -- alexandria a ocasio-cortez's green new deal, we write down the economics. canada's crackdown, new york brakes on the cbd trade. billion merger in the commercial -- bb&t and suntrust agreeing to combine, shareholders will get $28 billion out of this, the rest in debt. to hear more about why this is being pulled off, here is allison williams who joins us now from princeton. on the surface it seems simple, you have relatively small banks looking to break into the big leagues.

is this the trend we are now going to have over the next year? think financially it gets you there. one of the benefits of the larger think is the budget to spend but they have to spend wisely and be competitive. the cost savings part of the deal in terms of being able to boost overall profitability, certainly we have confidence in them to meet those targets. we think this is the beginning decadeve over a sort of hiatus. there are three critical factors, two secular, one cyclical. this goes to what i spoke to before, technology is increasing the need for scale across financial services. we have seen it in asset managers -- management as banking. this is a change over the past year but having more clarity and since trump has come in, the

idea of a later touch best lighter touch for the smaller -- idea of a lighter touch for smaller banks. we are going into an environment where we expect lower get growth, you expect to see m&a in any industry. joe: what are some of the names people are talking about asked banks -- as banks that could find a partner? alison: i think we may see more. if you think of the selloff we had in december, banks rebounding, it may have gotten banks thinking more about deals they may have had on the table or have been pondering for months, quarters or years. we don't do stockpicking here at bloomberg intelligence but if you think about the rationale behind this deal, two sizable banks coming together to scale

up and put in the you race -- in the range of u.s. bancorp, but below the $700 million cap, you can see, erica, -- you could see comerica, someone else that could pick up to scale up. going further up the scale, the lookoutd be on for someone they could combine and make this kind of cut and become profitable. caroline: i was taken with the amount of lip service paid to digital, innovation. how much really cap these banks save by being focused on technology? -- can't these banks say by really -- how much can these banks save by being focused on technology? alison: it is hard for investors to know how much is this really helping, but in terms of the cost side of things, if you think about making a deposit on

your phone versus a branch, that is pennies on the dollar. if you think of that transformation, broadly for the industry, that gives you an idea of the help behind it. the branches coming down more broadly, sort of a deep branching because it makes because itching makes more sense. and the customer experience, being able to take a check and put it in your phone is a lot more saves time, energy, so it is positive. those are two small examples that are happening. it is hard to tell. , seear a lot of rhetoric this at the big banks, but bank of america, jp morgan and wells are gaining share in the core deposit is miss. that is the biggest proof. caroline: senior banking analyst

allison williams, thank you. let's have a quick look at what is happening in terms of skechers. we are seeing shares moving after hours. this is a company that continues to be impressing on the upside. we saw earlier in the week they did well with numbers. first-quarter earnings per share 16.5%, estimates, rising 70% to 75% first-quarter earnings. a big beat their coming off the mattel -- there. whyssive plunge, looking at the benchmark was hit so much today. this is bloomberg. ♪

joe: libor plunge, staging its biggest day decline in a decade, sinking to 2.9%. here with more, the paper , what is the deal? reporter: if you look at it from mid december around the fed meeting, you started to see as the language got dovish, started to see the forward rate contracts, everything forward-looking start to price out rate hikes. libor had been coming down. and on top of that you have prime market money funds, the flow of assets kept coming in, commercial paper amend increased. -- demand increased. catch up toing to

all of the unsecured funding out there. abrupt, why was this so at least for today? we are supposed to be transitioning away from libor because people don't view it as reliable. alex: that is what everyone is curious about. everyone is like, we get it, the direction is down. we understand. we don't understand the basis point move in this. it was erratic. it also makes the case why we need to transition to a secured overnight financing rate. someone was saying we know when so for is going to be volatile. it is tied to repo, you get volatility at the end of the quarter and my spirit libor is more erratic. -- quarter. libor is more erratic. it has been trending down on its own. everyone is like, what is this? somebody said, we need to get out of this benchmark. it is terrible.

we will see what happens. caroline: and you are hearing that debate. do we know where we might start to hear the actual regulators talk about the move? does everyone at the top need to have a powwow and say we are moving to a different one? alex: the transition is underway, and there was a meeting last night and someone spoke.e cftc he said i would like if volumes were more robust. he said we are going to get there. that is what they are looking for this year is about the , more volume sofer in the market. what they are afraid of is all of this language and everything will go into effect at the end of 2021, and the market will force everybody's hand, and it will be volatile. they want everyone to get to that new benchmark on their own without having to force.

downtrendve been in a for a while. this makes sense it would decline because of other things it would be connected to. there is something weird, probably because of construction. we got a weird step today. alex: last year the benchmark administration that overseas libor made a switch to waterfall methodology, so it is based.tion people say there must be more transactions underlying it, and that is what caused the move. people will pay attention to it. caroline: thank you. alex harris. now a look at the business flash headlines. woody allen is suing amazon for backing out of a movie distribution deal. they say the canceled based on 25-year-old allegations it already knew about. iny are seeking $60 million damages. amazon is it commenting.

also allegations of child molestation he has denied those claims. a french advertising giant [indiscernible] surprise reported a drop in fourth-quarter sales, but his [indiscernible] cuts in the u.s. that is your flash. all of it comes down to amazon consumer goodsel can go direct to consumer with this platform. joe: these advertising giants used to be the most cyclical. when the market went up, they went up. look at their charts, they are in a cyclical slump. we get these boring ads from amazon now. i want the next great slogan. will that come from amazon? joe: the algorithm could make it up. it could work.

caroline: this is bloomberg. ♪ omberg. ♪

mark: i am mark crumpton with first word news. president trump says he will not meet president xi jinping before march 1 deadline to avert u.s. tariffs on chinese goods. the president responded no when reporters asked if he would meet with president xi this month but he added they would maybe meet later. he told reporters last month he planned to meet president xi in late february, adding there was a good chance of striking a deal. a federal judge ruled documents related to last april's fbi search of michael cohen's home, office and hotel room can be made public. the judge said some parts will be redacted to protect ongoing

investigations. he has been sentenced to three years in prison for campaign finance violations and lying to congress. the president of the european parliament is warning of dire consequences if britain leaves without a deal. he spoke to reporters in brussels following talks with theresa may and the top e.u. lawmaker. concerned.ery [indiscernible] dealis the reality of a no . but should be very dangerous solution. he who is parliament like the u.k. parliament must endorse any deal by march 29 said lawmakers don't want to renegotiate the divorce agreement but stressed while it was impossible to change the

content, there was a need for continued dialogue with united kingdom. a u.n. human rights expert concluded saudi arabia underwent -- undermined turkey's efforts to investigate the death of jamal khashoggi. they described the death as a brutal and premeditated killing, planned and carried out by saudi officials. turkish investigators worked given enough -- weren't given enough time or access to conduct a thorough investigation. the first black manager in major league baseball and the only clear to win the mvp in both leagues has died. he was 83. he had been in hospice care in bel air. e had 586 career homers and won a triple crown. the commissioner said frank robinson's resume in our game is

without parallel. a trail blazer in every sense whose impact spanned generations. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. caroline: the consumer financial protection bureau is moving to loosen regulations on payday lenders. pay day, auto title and certain installment, they will have to determine a borrower's ability to pay high interest short-term loans. .his was the inaugural director he was the democratic nominee for the ohio governor's race once. welcome to the show. the ability to pay requirement could be put to one side. the criticism is it would reduce access to credit and competition

and how do you answer that? >> the criticism is it would be too onerous for the lender to decide if the borrower can repay. in the payday industry, the business model is to prefer our hours who cannot reap -- prefer borrowers who can't repay. they keep rolling over and pay long fees for a long time. the rule that was put in place does restrict access to credit credit so irresponsible that is predatory because it is not paying attention to whether the borrower can repay, that is the problem. the defenders would say people use this in emergencies, they can't get any other financing, people need to pay their rent, phone bill, this is the only credit available. what should be done for those people so they can get financing

but not done in a way that would be characterized and predatory. -- and predatory? richard: let's look at the states that don't have payday lending. they get by. it doesn't cause a crisis in their life they can't take out a loan at an interest rate between 400% and 700%. in some ways it leaves their financial situation more settled. they find other alternatives. the question isn't how can we get by without pay day loans. 100 million already do. the question is why do we need payday loans and such a difficult product for consumers to cope with? romaine: when you look at the changes that have taken place since you have left, what do you see as the future for the agency? it was good at the time, but depending on who is in office, the mission changes dramatically. richard: it is true of that

across the federal government. look at the epa for hhs. the bureau -- or hhs. the bureau is different but the mission is the same, and it is fulfilled. it is important for consumers in this country she -- in this country, you and me and families , to have somebody who will stand find them, protect them and make sure people treat them fairly. caroline: what do you think will happen now? will it be state by state action? in the u.k. there are protections so you can only have each time, youid can't double the amount you borrowed in terms of repayments. how do you see regulation going forward if payday lenders suffer criticism going forward? richard: i am familiar with the

archbishop of canterbury restricting payday loans. we have similar problems here. i think if a bureau roles this back, that would be subject to a legal challenge. back this, that would be subject to legal challenge. people have been very protective of systems and are not favorable with payday lenders. south dakota passed a measure with 70% of the vote in 2016 to restrict payday lending and colorado did last time. our rule was so important. it would set a floor across the country. it would be up to the states to protect their citizens and find ways to do that. joe: the former director of the consumer financial protection

bureau, thank you. there is a new deal in washington, and is green gray we .ave the details -- it is green we have the details on alexandria ocasio-cortez's climate change resolution. this is bloomberg. ♪ oomberg. ♪

joe: democratic representative alexandria a ocasio-cortez and ed markey have unveiled their green new deal in cutting emissions and intervening economically. they spoke to reporters earlier today. >> that is why we should do it and we need to save ourselves and save the rest of the world with us. that is why we should do it. that is why we defined this

scope to be so broad and cover hints of because we are outlining the green new deal and in the spirit of franklin eleanor roosevelt we have the green new deal project. roosevelt, we have the green new deal project. thisi want to bring in person and a former economic adviser to the bernie sanders this person and a former2016 campaig. thank you for joining us. when people ask how this will be paid for, the response is no one worried how world war ii will be paid for, so we can marshal the money and resources to defeat the nazis, certainly we can do the threat ofack climate change. world war ii also involved changes to everyday life, cutbacks to how people were living. marshaling the resources here to fight climate change requires similar rationing of things people expect in their everyday

life? >> you are right. they did do those kinds of things during the buildup to world war ii but the answer is no. what they are laying out is a program to build a cleaner, safer, more prosperous america. this is an exercise in belt tightening and everybody has got to made significant cutbacks for the good of fighting the war. but i would say one thing they worried about paying for what were to somewhat a really famous booklet at the time, actually called "how to pay for the war." people were worried about how to pay for the war but back then the question was how do we transform the economy away from one oriented around producing for consumer goods toward one around producing for the war? the point of the project was to phase in this new economy to

transition to in a way that would create an inflation problem. that is the sensitivity we have to approach the green new deal with. romaine: how do you sell this? the original new deal, that took a salesmanship on a gargantuan level and he still came up short on a lot of his proposals. how does someone like alexandria ocasio-cortez, a freshman marshall this, forward? stephanie: 94% of democrats are already supportive of a green new deal. 64% of republicans support a green new deal. the question we should be asking is how do we bring members of congress to where the general public is? caroline: you do a wonderful twitter humid day -- twitter q and a where you give your

answers are how we would pay for this deal. i am interested with the ,isibility -- feasibility of it the route to passage great what could get through? -- passage. what could get through? where might the compromise being? -- be? stephanie: i don't start with the compromise but where we know the goal needs to be. we know the end game. we know from the scientists who drafted the panel on climate change, we know from this administration's own white house we have 12 years. the clock is ticking. so how do we build more support in the house and senate? you have nine senators cosponsoring this resolution for a green new deal, 64 house members signed on.

so how do we build to that thatd swell of support exists in the population? how do we translate that to and create thels urgency needed to where we need to be? joe: in the outline there is also a jobs guarantee which you and other advocates of modern on a teary theory -- we may have lost the feed -- we still have stephanie? we still have stephanie? we have you back. sorry. in the outline for the green new deal, there is a jobs guarantee which you and others support, why does it make sense to if it is -- is it

difficult to fight if we are adding on these other sort of efforts to stabilize and make the economy fare? -- fair? stephanie: i don't think so. the job guarantee is popular with both sides. the idea is 12 years we have a that it is all hands on deck. including federal jobs guaranteed is a way to include anyone willing to help us fight this threat to have a job to be given a role to play transitioning the economy off of fossil fuels, sustainable energy and through the transition, to we hold harmless people working in jobs in the fossil fuel industry, the coal mines, natural gas and fracking so those folks can have the guarantee of an alternative employment so they are not hurt in the process. caroline: it seems as an

outsider looking in during the previous midterm elections health care was the number one talking point. it never made sense to lead on this crusade. adding green energy to that [indiscernible] stephanie: but leave the green energy to whom? we know climate change is happening, for a number of decades. climate -- the private sector has not solved this problem and has no plan of action. yes, we have a health care crisis and a climate change crisis. we have -- we could go down the list. affordable housing and other things. it is a holistic approach that addresses a broad range of problems in the u.s. economy including how to guarantee health care, to ensure opportunity for employment, and at the same time make sure the planet remains habitable for

future generations. one of the things that would be required would be retrofitting lots of buildings to run on more sustainable energy. do we have the capacity now, the spare labor, the people trained to retrofit buildings to do that in the next 10 years without generating significant deflation? stephanie: that is the kind of question we should be focusing our energies on now, to use a turn of phrase. do we have all of the people equipped and trained to do that work? probably no. can we ratchet up quickly the number of people that can be brought into the labor force through an part of a federal job guarantee program and additional ? vernment spending, hiring a combination of training, upscaling and bringing people in

to the labor force, we have the capacity to do that. romaine: stephanie kelton, professor for the center of social justice at stony brook university. to keep this going, the green new deal isn't the only policy prescription. some are questioning if american capitalism is broken. losing stock are with some people across the spectrum. peter coy.k more is you have compiled a list of things that are supposed to fix capitalism. suppose we say it is broken. what are the main ideas that people are saying would fix the problem? project -- a project involving a lot of people contributing ideas. we are not here to judge which is a good or bad what. joe: what is the answer?

>> we picked ideas from the left and right and some that don't fit on the political spectrum. one happens to be what stephanie finished talking about, monetary theory, which is the idea you don't need to worry about government budget deficits unless you reach the point where the government is consuming too many resources through its spending and causing inflation. and the absence of those are not a concern. joe asked the right question at the beginning with stephanie which was world war ii, we had to ration and make choices, hard choices. pitched -- people say there is a free lunch, we can get rid of the global -- we are at 4% unemployment right now. it is not like there are engineers sitting on the sidelines waiting to go to work. joe'someone says

socialism hour on bloomberg because we talked to a lot of people like stephanie kelton opposing things like tax cuts and limits on buybacks. what are the ideas from the right you said? who should we talk to some people don't think we are so biased? peter: shaun donovan in believeon, people who the high tariff walls -- you can argue if that is a conservative idea, but it is the idea we are hearing from president trump. the idea that if we have higher tariff barriers and counter subsidies with subsidies, we will have a stronger domestic economy. another is a libertarianism, the idea that first of all, the gold standard, getting rid of occupational licensing, overly

strong patent protection, zoning rules, things which government is interfering with the private sector's ability to grow. i would argue technology, antitrust laws are too strong. it is harming company ability to ability -- companies' to innovate. caroline: you can check out how capitalism can be saved. this is bloomberg. ♪ ♪

caroline: the chemical crackdown. this cbd chemical is the newest craze for moisturizer to what you eat. new york city is cracking down on cbd infused edibles. here with more is christine. i was in a place yesterday and there they were, cbd brownies. >> the crackdown is not complete

andnew york city and maine ohio are cracking down on these. it is operating in a real gray area now. the farm bill legalizing hemp derived cbd, but they say it is not approved for use in food and drinks. legal but not legal. of restaurants are already selling these products. it feels like regulators don't know what they should be doing. joe: why is itjoe: so popular? it doesn't do anything. >> that is debatable. i was talking to a researcher who said the only clinically proven medical use for cbd or therapeutic is for very rare forms of childhood epilepsy. everything else, pain, anxiety, sleeplessness, that is anecdotal

or based on studies done on animals but never on humans. the dosages required are higher than what is available in these products. there is a lot of questions about what they are treating if the claims are even real. romaine: who is shutting down the stores? federal agents? >> it was local in new york. romaine: they are doing that in concert with the fda rules? >> there is a lot of confusion. the fda approved these drugs for the childhood epilepsy but said for will watch closely false marketing claims around cbd products. they have said very clearly even hemp derived cbd can't be used in food and drinks. in states where cannabis is legal, it is like, why can't we? we are putting thc in, why not cbd? it shows the lack of clarity. caroline: you brought clarity to

us. thank you. that is all. romaine: bloomberg technology is up next in the u.s. joe: this is bloomberg. ♪ ♪

♪ emily: i am emily chang in san francisco, and this is bloomberg technology. twitter's first full year of profitability, but the company surprised investors by reporting daily active users for the first time and it is smaller than snap. we will hear from the cfo. -- we check in with a talk the tech ipo pipeline. postman is the first is the t