as we see the market closed, closer to getting optimism? gina: i think we are getting closer. obviously, we had a phenomenal from december lows. we had a full recovery. back to the point where a couple weeks ago more than 90% of the index were trading above the 50 day moving average again. and we are taking a pause to refresh. i think the next leg higher more than likely has to come from some's litigation and the earnings outlook. there is a lot of skepticism out there that we can see a recovery in 2019 and 2020. tohave gone a long way watching out expectations the first half of this year, basically expecting an earnings recession to occur in the first half of this year but expect the recovery to come. investors are skeptical it will come in order to solidify the recovery. we need to see rationalizing expenses and improving the case in the margin story that exists in the consensus outlook. thelet: there you have

close. volume in theo dow is about when he percent higher than the 20 day average mainly because the growing part it is slightly lower than the average. given the fact that theresa may last that crucial president about, the question is if there is going to be another referendum. if you're looking for some kind of direction from the pound, expect some up and down. these are one week pound dollar option volatility. it has reached a high since -- highest since 2016. you have traders that sent over the next week, expect a lot of bouncing around. it will be a little bit messy as

we determine the fallout from this key vote. >> let's look at stitch fix. that is the apparel company that recommends things based on algorithms. the stock is up 25%. this came and 50% higher than the highest analysts thought. reporters at bloomberg talked to various folks and said it had to do with better customer retention and inventory management. what you are looking at is the mother of all short squeezes. of the flow on the stock prior to today was held by short-sellers. give hard saw them today. on the flipside, this is a big stock. the 23 or 24% of the shares outstanding are held by hedge funds. >> he doesn't think all of the

risks are priced into the market. at is in theooking other, the s&p 500. in blue, that is the big. there are option investors, with a caught flat-footed? in the summertime, we saw this .s it is a little bit more sophisticated than the vix investors. then look at this, the vix and putting one both protections for the possibility of some kind of pull back. skew index.on that caroline: let's bring back in

jena. -- gina. also aaron. the volatility might not be in the vix. you are seeing volatility in the market. you're starting to see the more usual measuring volatility come back to the floor? >> i am seeing on the vix. when you look at the vix bottom in 2017, they have been making a series of higher lows. what is happening in the bond market is their measurement formulas. if there is some complacency out there, i was suggested in the bond market, more so than the stock market. it is making this trend increase over time. part of what we characterize as the late cycle market in the

midst of an economic expansion is you have a market that normally has slightly higher volatility, at least spiking volatility and slower average monthly returns. that is that we have seen in 2018 and 2019. volatility,here is your average returns have been lower than they have been in the 2016 and 2017 periods. >> i mentioned that benign inflation number coming out. there is no pressure to move faster. can investors take that to the best -- bed? is there a short amount of time before it starts to perk up? gain is actually a wage and the spread between wage gains. it was pretty wide. it is only a matter of time with wage gains. a lot of that looks like it came out of health care, autos, stuff

like that. as long as the employment picture remains where it is and as tight as it is, deflation is only a matter of time. the fed has to look at that. yes, the cpi was low but you will have percolated inflation out there. as long as the cycle goes on and the market rallies, -- the fed will be forced to move. we know you look at value stocks. what kind of opportunity is ?here in the value sector is this a good time to pick them up? aaron: we really bought into the cyclicals. that is where the value was. as the court's progress,

i will that opportunity was there as it was months ago. i would say we have been de-risking that and lowering that and looking for other opportunities. i am not finding widespread value in the market. they are getting of sectors. one of those is financials. it really plays into the value at this point. >> the financials are out 2/10 of 1%. when you have pressure on yields continuing, countless you must respect for the bank? it has been the valuation argument in the market for two years now. these are the cheapest stocks by far. afortunately, unless you see young curve start to develop and long-term rates starting with a little bit higher, it is unlikely that this is a sector that can lead. there is overwhelming pressure

on the financial sector that we can't ignore. gina: it is the wrong stage of the cycle for the financials. when the fed has to start using is a trigger for the financials to start outperforming. we could have a situation that these risks. that could create an upward slope. until that occurs, it will be tough for them to perform particularly welcome the short run. adams,e: gina martin that he so much and aaron as well. that does it for the closing bell. we will continue to look at the reaction, the fallout from that college admissions scandal. hercules capital is up with my

percent on volume. that was humongous for what they normally get. normallyn shares traded. the ceo and large holiday was meant in that affidavit investigating the college admissions scandal. we will keep an eye on that. this is bloomberg. ♪

>> live from bloomberg's world headquarters, i am caroline -- ,

joe: i am joe weisenthal. >> the s&p 500 was up. theresa may suffers another defeat. we analyzed. the eu joined the global backlash against the 737 max eight. and college criminal conspiracy. celebrities, coaches and chief executives are among the dozens charged in the largest commission scandal ever. -- admissions scandal ever. joe: we begin with another defeat for theresa may. let's go there now. >> theresa may had her deal

defeated. we will go with a no deal brexit. probe brexit caucus, a harlot for the caucus within the party. he thinks they will vote for a no deal brexit. that is unlikely. guy: it is likely to signal an extension of article 50. what could have and theresa may can take one route which is call a general election or seek someone else to run the conservative party. or she may hold onto votes to try to figure out where in the parliament behind me there is a majority for a particular outcome. that could be a second a newndum, that could be deal. she could take that vote to the eu leaders summit.

that would be the 21st for the 22nd of this month. what there is a majority for. we allow is the time at extension to be able to make this happen? that could happen relatively quickly. culminates -- it could culminate in this. joe: has there ever been an that there has been a majority in parliament to do anything? mps this is where a lot of will have to decide what they will accept. i would love that but i will take this. that is where you have to see the kind of story carry around. i would love to have a second referendum. i would like to have a no deal brexit but i will accept this. i think mps have got to the point where they are on theresa

may still. they could have a series of options. will one of those people go across to answer accepted. -- accept it. caroline: we think he so much for reporting from a semester for us. westminster for us. it is wonderful to get your perspective. you should -- you expect some sort of july past the deadline. can you tell us how that affects the pound? >> it is relatively minimum at this point. of two mayct a delay 22, just before the new election , there is also the hard brexit growth that would have his legs cut out from it really soon.

tien: it would move back to the 135 handle. habitss a hard brexit laced about from under it? -- joe: have his legs come out from under it? if you don't agree with me, we will all part of the have that is something you to remove to make life difficult. it is a positive development. that means you have to get a more moderate type of agreement going forth. the odds are that by may 22, we will have no deal. aat means we may have to have second referendum. joe: do you think the eu will make this harder on the u.k. and on theresa may or potentially providing some sort of compromise?

sebastien: they have always gone for something differential and special. they are paying the price right now. that, the eu could be impacted by a bad deal. there is incentive for both groups to be relatively moderate. the eu will try to go in the direction of the u.k. to try to get a better deal for them. whether they get enough votes to pass his heart to say right now. -- is hard to say right now. caroline: we see nissan motor company saying we are going to be reducing what we produce in the attack. what are we likely to see in terms of the economic effects? is interesting because the pound keeps being weak.

how uninvestable is the u.k.? sebastien: if you look at investments and cars and the like, they are slightly disingenuous. agreements you do or don't have, it doesn't matter. nissan has there is little to play with. this is about politics. the u.k. economy exactly doing pretty well. it is of relatively attractive asset, given now with the uncertainty. particularly because there is a lot of uncertainty. every once in a while, it appears a present headline will move on market outside of the pound or the u.k.. deskimes you can collect connect a headline to something

going on in global stock markets but regardless of how this turns out, is this an isolated u.k. market story or could it cascade into something bigger that affects people who haven't been paying attention to it? bastien: if you do get a hard brexit, that will affect france, ireland and germany. it will be significant. whatever they do will be a bad issue. be anythingve to that was produced in the u.k.. waseissue anything that produced in the u.k.. which look at island exports a lot of his agriculture to the united kingdom, they would be in very dire straits. you can imagine a very negative scenario. it is a tell scenario but it is we would ever

reveal. it is because the united kingdom has not prepared for a hard brexit. i have done almost nothing because she never believed in it. joe: we will leave that there. that was sebastiean galy. coming up, pushing back against boeing. arecies around the world suspending flights on the boeing 737 max. this is bloomberg. ♪

caroline: quick check on the latest headlines. the exporting goods has scaled back on sales and now it is moving even more weapons from its shelves. it will be dropping gun gear in

125 stores. sales in stores have made it lower today. eb taylor had a better-than-expected quarter. it improved inventory management. it has more room to grow. is wrapping up initiatives in the u.k.. candidate is getting worried about the fangs of dave mckay. he told investors he is concerned about baseball, amazon and apple that getting into banking. those companies are already inserting themselves in between the banks and customers. joe: boeing and the faa are facing pushback. boeing 737 maxygen has been suspended by most of the european agency -- european union safety agency as a precaution measure. they are increasingly isolated

after expressing confidence. in london, it is being called a rebellion against the faa. we have bloomberg's justin to talk about this. when you wait us out and you look at what is happening around the world, europe, asia have either grounded his plans or done some major restrictions to their flights. thataa seems to be saying there is nothing to worry about. this is relatively unprecedented in recent history. justin: it is. it is an astounding situation. what happens in these cases is that there is a natural deferral to the faa. and also, the united states and the judgment on airbus. this is really unprecedented.

>> as you mentioned, this is a historic review to the faa. is there a subtext of declining american soft power that there is a political element here? countries feelr comfortable -- what these other countries feel comfortable disagreeing with the faa like this? justin: you're not the first want to have that thought. many people think the trump and ministration could be coming forward here. if you hear from a lot of the people at the faa and pilots here, there is a case where there is no data or evidence that there is a safety issue here. numeroushas flown

months in the united states without any incident at all. i think what you touched on there is definitely a case where that could be some type of antipathy to the trump administration. caroline: what does seem to be clear is boeing is trying to take action. they're talking about changes to software that seems to be at the heart of the problem. if thatwe will find out helps confidence but that is a good first step. part of the problem is we don't have any concrete facts coming out of the investigation in ethiopia just yet. that is what is driving a lot of the uncertainty. they're taking a precautionary posture. those who say that there is no -- to react in this way would be really irrational way to go. caroline: thank you. brexitup, all present --

options are back in play. france is weighing in now saying that is preparing for a no deal brexit. dealy that any no brexit needs an alternative strategy. this is bloomberg. ♪

mark: i'm mark crumpton with bloomberg's first word news. british prime minister theresa may's brexit deal was rejected once again by parliament, throwing the country deeper into political crisis in raising the prospect that the divorce will be delayed or even reverse. prime minister steele, which was renegotiated late on monday night, was defeated, although a large margin, it was less than the record 230 vote margin she suffered in january. members of parliament are expected to vote wednesday to take a chaotic no deal option off the table. a democratic congresswoman said

she still intends to introduce a resolution this month for the impeachment of president trump, even after nancy pelosi said she is inclined to avoid doing so. says having that resolution over the president could motivate him to abide by the constitution's emoluments clause and other ethics guidelines. >> this is to hold him accountable to the rule of law and the constitution that i took an oath to uphold. i think it is really important that every american in this --ntry has transparent transparency to the office they hope. it doesn't mean we are voting on it. it means we are beginning the process to look at some of the alleged claims. mark: in an interview with the washington post that was published yesterday, speaker pelosi said that impeaching president trump would be divisive. she added "he's not worth it."

filed in whateen is been described as the biggest college admissions scam ever prosecuted by the justice department. among those charged, hollywood stars felicity huffman and lori locklin. -- lori laughlin. charged 60 people nationwide with participating in a conspiracy that involves first, cheating on college entrance exams, being the acd and second, securing admission to elite colleges by bribing coaches at those schools to accept certain students under false pretenses. prosecutors say parents spent up to $5 million -- 6.5 minute dollars to guarantee .heir children's admissions in venezuela, the attorney general says opposition leader juan guaido is under investigation for an alleged attack on the country's power grid. venezuela has been hit by

crippling power outages over the past five days. tosident nicolas maduro try blame the u.s. and is now targeting guaido. secretary of state mike pompeo announced an evacuation of the u.s. embassy in caracas. global news, 24 hours a day, on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i mark crumpton. this is bloomberg. as mark was mentioned, the u.k. parliament has shut down prime minister theresa may's brexit deal. a reporter from brussels. we're hearing from and particular, saying a brexit extension needs an alternative u.k. strategy. the key negotiator for the saying you need to start getting a no deal plan in place. should they be worried about

that? >> yes, very much. i think the vote today confirms what has been the real concern here in brussels. one is that there is no majority there is nothing brussels can put on the table that will deliver the brexit they want. reaction from the e.u. really captures the mood here to step up no deal preparations and also a stark warning to the u.k., a no deal brexit is a default unless we have something you can replace it with. that means the positive majority, none of which seems to be the case at the moment. joe: theresa may make this point after her wrote failed that europe is going to want to see something new. something she said struck me, which was that maybe a second referendum could be part of it. is there any feeling that the door has been opened slightly to a second referendum and ultimately may be brexit not

happening? maria: right, and that's a very good point. she is right, the e.u. will tell you we want to know why we should extend this, when it could clash with the european elections. not alter the democratic order of the european union. in terms of the options available, i would say yes, a second referendum is still much on the tape -- very much on the table. in brussels, many officials are unconvinced, to put it mildly. anything, another general election, you could have the u.k. decide to pull back or revoke and therefore cancel brexit. maybe the e.u. will agree to grant an extension. if they want to step up the preparations, it would be better prepared by the summer than they are now.

>> now turning to the bond market, the billionaire money manager and chief investment officer of double line capital has been speaking about his total return bond fund on his periodic webcast today. her to talk more about it and brian.t down for us is the headlines are moving on this and he has gone through some of this already, comments about the economy and the fed. one thing he talked about is the equity market is basically already in a bear market, according to him. what do you make of that? >> recession looks like a 2020 story. it's kind of interesting, is not entirely out of consensus. there is a feeling -- equity investors are happy with how they start the year so far. it seems to be steady as she goes. the question of how long this could last, if it's just short-term, fed fueled

enthusiasm, it's very much an open question. joe: the interesting thing today is we saw this rally, 10 year yields falling below 2.6%. with all the talk about rates going higher, it has not happened at all. >> it raises an interesting question because there are those who say growth will below, which means that yields will be low. jeffrey gundlach has talked about this on past webcasts. hit the lowve not in 10 year yields. , at a time when stocks are up is a pretty interesting phenomenon. onoline: it's interesting the day we get cpi that we are here in this concern being reflected about asymmetry or symmetry in the inflation targeting, saying basically 2% has almost turned into a flaw for the fed. what is he really worried about?

>> i think the concern is over going to shift inflation expectations. there's the feeling that expectations are what is keeping inflation so low. behind thereally get idea of prices rising that fast in the future. if the fret -- if the fed is trying to actively shift the focus of the general population and say expect higher inflation in the future, it will be interesting to see if the data shows that going forward. romaine: what do you make of the factor of $1.5 trillion worth of bond sales potentially coming down the pike at some point? brian: it doesn't matter, the market will absorb it entirely. it's pretty wild. u.s. investors are able to step in, japan has been reducing its treasuries holdings. itsa has been reducing

treasuries holdings. yet somehow, someway, these things will get done. the lowestclose to they've been in all of 2019 except for a day or two after the equity market declines. joe: you can catch highlights and analysis of jeff gundlach's .ebcast using live a criminal conspiracy to get kids into elite schools caught up with them. that's next. this is bloomberg. ♪

caroline: time for a look at what stories are training across the bloomberg universe. two former goldman sachs backers

and their role in the scandal. the fed has ramped up its investigation into how goldman -- iphone transfer going from bad to worse, according to longbow research. a story shows much of its weaknesses over the past few months have been related to weakening demand for the iphone, particularly in china. tictoc on twitter is reporting the world wide web is turning 30 today. the founder has submitted a vague but exciting proposal for a free space for everyone to share their knowledge and ideas. follow all the stories on your twitter.or tictoc on operation varsity blues.

the $25 million plot to get your kid into college. today u.s. officials charging dozens of parents on the university coaches, and an admissions counselor in a sweeping criminal conspiracy that help kids get into some of the countries top schools. x these parents are a catalog of wealth and privilege. they include, for example, ceos of private and public companies, successful securities in real estate investors, two well-known actresses, a famous fashion designer, and the cochairman of a global law firm. based on the charges unsealed today, all of them knowingly conspired. laurent's bring in janet and tyler callan, who joins us by phone. tyler, i want to start with you. how surprised argue that this is going on? an elite professor at university. tyler: not very surprised. i think it is a sign that we as

americans do not respect ethics or the rule of law within higher education. it's a very cynical result. it shows where treating the law as conveniences that we throw away when we wish to. so it is a big negative. romaine: i'm just going to take the other side of this for one second. everyone wants to get the kid into college. every parent will do what they can to get their kid into college. what exactly is the crime they are being charged with? heard of people making donations, but there was bribery, there were people cheating. there was the creation of fake sports profiles to make it seem like this kids were on sports teams. admissions directors typically have spots for athletes, and it was just a whole conspiracy that involved many intricate networks of people changing tests, arranging for kids to go to certain test sites because they just actors, and it was very coordinated effort like we've never seen before.

caroline: coordinated, clearly concerning. tyler, i want to get your perspective. i'm going to throw my u.k. experiences in here because there has always been long-term criticism of oxford and getting a significant proportion of students from westminster. it has always been a criticism here. how shocking is it, and what changes do you think might be made to the u.s. university system? tyler: it is already the case that you probably can get your kid into a top school by donating, say, $5 million. actually, i think that's ok, if we make other changes, if the schools take that $5 million and use it to find the admission of some number of lower income individuals. i'm fine with that trade-off, but they are not doing that. they're keeping entering class

is pretty small, and it becomes an engine of elitism. joe: do you think this is just the tip of the iceberg, and we will find more examples? is the whole system rife with it? janet: yes, i think you found the upmarket. with high profile people who are willing to pay what it took to get their kids into college, we will see what comes up next. i guess the main thing i want to know is, do we think there will be some sort of lasting change out of this? there are probably a lot of elite folks that might be shaking in their boots, but he year from now, or just going to find another backdoor way to get our kids into college? think there will be a lasting change. keep in mind, the schools are already selling admissions. illegally, selling admission for a lower price,

it's the rate busters the law is going after. that's the funny thing. if anything, these indictments will strengthen the status quo. caroline: what makes me sad is how many female soccer coaches and volleyball coaches seem to be at play here. i suppose is not surprising that some of the female sports could be ushered in on the sly because if you are a top soccer player and you are male, it's probably been a little hard to sneak them in. do we know which colleges will be most in the limelight here? do we know whether it's girls or boys and if they are aware of what has been going on? janet: in some cases, the students had no idea that their parents had heard someone to fix the tests afterwards. not all students who were admitted went to the schools. caroline: but you pay that much

and you didn't go to that school? admissionsink offices will have a hard time looking at this in justifying what comes next. there is also a federal trial going on in boston about harvard and their own admissions practices. so there is a harsh light, and things are going to be watched, and we will see what happens. thinkyler, do you eventually this culture or attitude that one must get their kid into an elite school, top-rated -- or top-rated state schools, will inevitably break, and it cannot persist? the importance of getting into the school either from the parent site or the employer side, is that about to change? tyler: i don't think it will break in our lifetime. it's not going to go away. interesting, perhaps

we will just be sending all our kids to online tutorials. your, it's great to get perspective, and janet, we thank you for your perspective. a quick check on the latest business flash headlines. new york city landmark chrysler building which is being bought for about 1/5 of what it last sold for, could be transformed into a hotel. two firms agreed to purchase the for 150 $1kyscraper million. significantly less than the $800 million that was paid in 2008 for a 90% stake. deutsche bank is facing stiff resistance to a merger with commerzbank. german regulators are worried and a representative said it would threaten thousands of jobs.

it's a growing expense for automakers and is coming at a time when car sales are slowing. bloomberg has learned that ford expects health care costs for its 56,000 hourly workers in the u.s. to top up billion dollars for that the best for the first time next year. it could be a sticking point in contract talks between united auto workers and the big three automakers. thatcher business flash update. romaine: we just want to recap some of the comments coming from jeffrey gundlach, holding that webcast. he was talking about the federal debt and federal deficit, saying is shocking, the debt growth we've seen under the trump presidency, given some of the promises he made during the campaign. he also talked about the equity markets, saying the stock market will be negative again in 2019, and also talking about the 180 degree turn, those are his words, by the fed are responsible for the recent run

up with hat in equity prices. up, china one of the first to ground the boeing 737 max. that's coming up next. this is bloomberg. ♪

romaine: now to asia ahead, countries around the world seemingly following the lead of china's aviation authority in restricting boeings 737 max. let's bring in shery ahn to talk a little more about that. int a couple of months ago january we are hearing about this trade deal potentially in the works and china was basically pledging to buy all these u.s. goods, and of course airplanes would be a huge part of that deal. do we know if this will affect that, whatever deals progress had been made? shery: the easiest thing china can do is buy more u.s.

products. we have heard from the boeing ceo talking about potentially these boeing jetliners being part of an eventual u.s.-china trade deal. is and earlier there economic opportunity for airplanes to be part of the ultimate deal and help further close the trade deficit gap. boeing had expected china to buy than $1ts for more trillion over the next 20 years. at this point, we still don't know what is going to happen to that. we are really getting very little information about where we are going on the u.s.-china trade talks. ambassador saying there's about 120 pages of documents where they are negotiating what they will include in this agreement. joe: we were talking earlier about this historic review from the faa, which said the 737 max is safe and all these other countries are grounding the plane for now. china was the first to ground it . is the regional influence such

that other asian aviation authorities just kind of have to go with this call? shery: you are right, china grounded i believe 96 aircraft that boeing carriers operate. it was the first to do so. i believe the regional influence would be more on the precautionary -- cautionary side of things. we saw the same with the boeing dreamliner in the past. not only asian countries coming boeinggrounding these 737s, but also the european union doing the same thing. but we have seen these moves overnight from the asian economies. we had indonesia together with china, of course they had their own disaster with lion air. we also had south korea, malaysia, singapore jumping into the fray. because of the lion -- what do october

we know in terms of what ambassador lighthizer has been saying in terms of a deal there? are hearing from ambassador lighthizer who giving testimony in congress talking about the tariffs on chinese goods still being open, that they are still an option for the u.s. of course without a final deal, you can't take that leverage completely away. there has been so much speculation recently about potentially all these tariffs on $360 billion of goods on both sides being lifted as soon as there is an agreement. for right now, what we are hearing is that this is still on the table. caroline: great to get your perspective. daybreak asia is that 7:00 p.m. eastern. another day, another brexit vote. u.k. lawmakers vote on legislation to leave the e.u. at the end of march. joe: i will look at economic data at a: 30 a.m.. data,e: and more economic

the numbers for u.s. producers press index for february also out at 8:30 a.m. eastern. joe: have a great evening. this is bloomberg. ♪ you.

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emily: i'm emily chang in san francisco and this is "bloomberg technology." musk on the defense. he claims that sec has violated his constitutional right to greece feedback coming down on his tweets. plus i'm a boeing facing a global crisis as more governments around the world ground is best-selling 737 max jet after a second deadly crash. and our exclusive and wide-ranging conversation