the thank you vicks, the --g romaine: as we hear the closing bells here, we are still in they arenow, where pricing in not only the prospect of a deal, but the economy. if you don't want to miss out on any deals, how do you guard against that but prevent from the downside? alec: focusing more on domestic. the russell 2000, russell 1000 large and small has been a horse race all year, but we see small caps after taking a drubbing the last couple months have come on a little, as soon as trade resurfaced as a risk. they have a 20% international revenue footprint, versus a third for the large caps, so that is one way to do it. another is with sectors. materials, industrials, selective technology like

semiconductors, seen as very china-sensitive, those are getting hit the most. and then there's obvious places for more of a domestic bent. telecom, utilities, parts of financials, parts of health care. so investors can continue to try to tier it that way. caroline: we mentioned how earnings would be all-important trying to's -- to decide how much we see on trade. financial results just breaking, overall press statement. arts saysctronic growth continues. but this is a company looking for two new original ip titles, apex legends and anthem. romaine: we want to see whether this is a business model that can adapt to the new world. caroline: just waiting for more

earnings, not only fast from e.a. but also lyft. much wee, luke, on how will see the u.s. become once again a haven? we are seeing dollar up, money moving into government bonds, but really the outperforming stock market has been the u.s., the better place to put your money. talks,ee eroding trade does the u.s. become again the cleanest shirt? alec: that would be the playbook, expect some kind of repeat, and that's what you would expect. however, the extent to which that dynamic, a complete repeat, has not been priced into markets. one thing i noticed, the vix for eem, the msci emerging markets etf, the spread between that and the actual vix has come in. on a week where trade tensions

take center stage, which is worse for em, and of the em index china has a huge waiting -- weighting. if investors think that playbook will be used again, there's opportunity to put that back on. joe: waiting for lyft, and uber ipo's later in the week. today the nasdaq underperformed, tech getting really hit hard in the center of the story. but it has had such a hot year. so is there anything overall that changed with tech's position relative to the overall market? luke: easy to say we had a great year and this is healthy profit-taking. but when you have an easily identifiable macro catalyst like u.s.-china trade talks falling apart, it is hard. if that happened, it would have a disproportionately negative impact on areas like teach and you want to -- tech, and you

would have to gravitate more towards domestic defense. of would have to take a view how much damage has been done to the trade dynamic. pretty undeniably, there has been some damage, and the best the bulls can hope for is we get a deal that is substantive enough that enough bad news is priced in and the markets can stabilize. but it is probably naive to think we will just shrug this off and make new highs in a couple days. this is a potentially serious drag on global growth. romaine: and as we navigate what will happen over the next few days, earnings will play a big part in that. electronics arts -- electronic arts, adjusted eps at $1.31, beating the estimate. revenue beating at $1.36 billion, rising a little after hours. joe: interesting, some of the legacy video game makers have

not had the best run in the last year. so interesting to see a little bit of a bounce. caroline: mainly because it brought out the only real competitor to fortnite, apex legends. this continues a trend we have seen this quarter, companies beating low expectations generally. across the russell 1000, companies have been beating by 400 basis points relative to what was expected. the way china trade ties into this, it has investors worried companies' ability to continue to exceed earnings expectations could be threatened in a slower growth environment. romaine: luke, talk more about earnings, and what is being expected now and priced in for the second half. as alec pointed out, if there was major news -- caroline: major news on lyft, second quarter revenue, a beat, well ahead of $782 million expected. up 46% yeariders,

over year. the first quarter revenue -- and adjusted loss per share. romaine: not as bad as what people thought, so i guess for a company like lyft, that is good. joe: you have to start somewhere. you can't report good earnings until you have reported bad earnings. you have to start somewhere. alec: where were they priced? [laughter] romaine: depends on what you are looking at. this is a stock that has had pretty remarkably negative performance so far. talking about lyft, the ipo with uber. bring lifeo's

into the market? alec: individual ipo's i am more of a macro guy, but when they are as big as lyft, uber, they can speak to overall investor risk appetite. and i hate to keep going back to the u.s.-china thing, but the fed and china have been driving sentiment. when either of those sources is depressed, it has a follow-on effect on everything, including ipo appetite. caroline: but thus far we heard from uber, luke, that it will price at the top of the range and the demand is still there. we have to shout out to beyond meat again, shrugging off the selloff, up 8% on a day like today. sometimes these new companies -- can we really say anything is risk-off when beyond meat is soaring? we talked about the u.s. being a haven. the reason a lot of equity bulls think the u.s. can outperform, this is where the uber and beyond meats of the world

choose. this is essentially the only place you can get it. in a world of diminishing expected returns, the u.s. might offer the upside kick without the same broader political volatility your emerging-market might. romaine: and now lyft turned red . [laughter] onnks, luke,, throwing water the market. we also thank alec young for joining us today. as we take a look now at the earnings that have moved. electronic arts, seems to be the bright spot after hours here. expectationsngs on the top line and bottom line, shares modestly up. caroline: it was up 4%, now down about 1%. lyft coming off of highs. the outlook seemed good across the board. revenue in the current period $800 million to $810 million, well above estimated 780 million

dollars. sales of 2019, $3.3 billion, again ahead of expectations. first quarter sales, a 95% increase from the year before. joe: something to bear in mind with this, as we see the stock bounce around, analysts don't really have any idea yet how to wrap their heads around lyft. give it several quarters before people see the pattern. so anything relative to expectations is almost meaningless at this point. romaine: back to something that alec said. he talked a lot about the idea that essentially the valuations get shifted. it was a low bar for a lot of companies this quarter. but if you get in a situation where a 25% tariff drags on growth, suddenly below bar -- the low bar will move lower. caroline: some of the key numbers, whether lyft would be exposed to a china slow down but certainly would be exposed to a global growth slowing story. active riders rising, that was

the amount they wanted to see, and they wanted revenue per active rider, $37.8. when is your average ride $37.8? romaine: that is a lot of money. joe: for more, let's bring in bloomberg intelligence's senior technology reporter and nabila ahmed. nabila, everyone talking about this vis-a-vis uber, and what this will do for demandd. lyft had such an ugly market debut, so what is your sense of how this will impact? nabila: uber had a meeting in the last day to talk about how do priced the ipo, and lyft's performance was discussed. something that is weighing on their minds, and understandably so. but hearing from investors and is demand, it

oversubscribed at the moment. so they think they can get it at the top end of the range, between $44 to $50 per share. romaine: i know the ammo for most is to throw a bunch of cash out and grow market share. but the cost per ride, what do you make of that particularly in light of the competition? knokw abbot dow continues to be negative. lyft is right now a topline growth story. the numbers look good from eight topline -- a topline perspective, in line with how they grew last year. what i will be looking for is the commentary around subscriber growth and rider growth and how they will be able to increase monetization. i think what they are doing is trending in line with how they were doing last year. that's not what will get them to

profitability. so with that model, you know variable costs will keep going up in line with revenue growing, because this is not a fixed-cost model. so we want to see increased monetization of the rider base. i don't think that's happening yet. caroline: i want to draw our viewers lucky enough to have a bloomberg terminal to tliv, a blog about earnings. we have it going thick and fast at the moment, saying they are spending very happily -- heavily. tda, $1.75n wa -- ebi billion. net loss on a gap basis worse than all of 2018, so also of interest is that there is no market share mentioned. joe: another thing, these losses are mammoth, obviously. still, looking through the press release, adjusted net loss margins of -27%, really deep.

last year in q1 2018 they said it was 58%, ebitda negative margin, so i guess that is a sign the core business is getting a little better? mandeep: we look at uber, now that we know their financials. the average rides per rider is close to 11, including food delivery. theer person, per rider, average number of rides a rider takes when they are also subscribed to the food delivery service, over a month. lyft, close to three. it goes to show the gap. uber is able to monetize the rider base better because they got into food delivery and ramped up successfully.

questions around profitability remain. uber is not profitable, nor is uber eats. but that scale, and engaging with the writers on a more frequent basis, is a better sign for uber. romaine: was this sort of the pitch uber was making to investors, the idea they are not just a ridesharing company but our this platform? caroline: and they talked about expanding a platform to logistics things, scooters, talk ed about being a one-stop shop for all transportation, and mass transit as well. not really sure how they could do that, but they talked about that, and they said they are the cars what amazon was to books, how they are pitching themselves to investors in meetings they have had in london, new york, boston, san francisco, that was a line they repeatedly used. joe: i get it that people are buying the stock, it will do fine. but do people really buy they are to cars what amazon was to

books? nabila: last week we had the head of tech banking at jefferies saying that the companies are coming to market so fully valued, you will not get the returns you got with amazon, google, facebook, you just aren't. [laughter] just not going to see that exponential, massive growth, because this will come to market with an $84 billion valuation. uber, you will see a share price even if they price at the top? uber should have learned after what happened to lyft. you will not see revised pricing in the case of uber. the fact they came out with six to seven times is probably

reasonable for a company of this scale. everyone agrees uber has scale and the platform. joe: what do you most want to hear on the call? riderp: how they expect growth in the next couple years. and if they are gaining market share, you want to see acceleration, gaining market share from uber, because it is a duopoly at the end of the day. romaine: we should have ratings for conference calls. this will be one of the most interesting calls of the earnings season. gh want to thank mandeep sin from bloomberg intelligence and bloomberg's novella ahmed. we will keep talking about the markets. we had a pretty -- nabila ahmed. we will keep talking about the markets. we had a pretty crazy day, but recouped some losses. we want to bring in alisha living, a portfolio -- alician

levine, a portfolio manager at mellon joining us by phone. you saw the action and reaction today. how much will carry over into the next few days, if we don't get some sort of sign that he trade deal is a done deal? alicia: hi, everyone. yeah, ugly day today. news is the cause for the decline, and i expect this to continue the next few days. the original target date of may 10 i think is no longer achievable. and in general, it was a little strange we had a target date for trade negotiations to come to an end. that whole thing was a risk. i think this continues for a while. we are putting 2019 and 2020 earnings at risk here. the market moves lately have

been predicated on two things. one, we had a quiet fed, quiet global central banks, and two, earnings were not as bad as expected, and we could expect earnings acceleration into the end of the year as the economy strengthens, and if we have a trade deal that removes tariffs. hi, caroline. caroline: i asked alec young this, i will ask you. if we don't see any respite by friday and tariffs are imposed on china, how much further do we fall? alicia: looking at it technically, the risk is probably to 2800, the first stop./ ultimately we have a deal with c they cannot agree about intellectual property transfer, tech sharing of joint ventures, things could go on longer and the market is more at risk. i tend to see this as a

short-term issue that you have to let play out. i would be cautious about jumping in too soon. all about thes it fed? everyone has been focused on it since sunday night. what else do you think is driving markets? marketswhat's driving right now is that markets all vulnerable, and they are vulnerable because they are trading at 10 year high multiples and five-year high multiples. and on top of that, let's face it, earnings in the first half of the year will not be so great, maybe slightly better than expected. so the direction is the right one, but it is not that great. you need to have the global economy kick in to drive s&p earnings for the second half of the year. so if you continue with the trade war, you put earnings at risk. so it is not simply about trade. it's the way u.s. corporates

import weakness from overseas through their topline. romaine: i want to bring in bloomberg across asset reporter sarah ponczek. you heard what alicia said in regard to earnings. things were looking up, but is there a real risk here that the earnings expectations will be revised downward if by friday or by? monday we don't have some deal? sarah: there is a real risk. if you think about right now, executives filtering through to guidance and analysts putting in forecasts. right now, they have tariff levels at 10%. if you see those rise to 25%, or more goods being taxed, that has to be filtered through to guidance and the new forecasts. ubs estimated we could see eps estimates contract 5%. looking at growth expected this %, so looking at flat

growth for the year. there is a big risk with earnings, and acutely where the risk is when we talk about trade. caroline: alician, you mentioned the fed. an interesting take from one of our opinion writers, saying this of chicken between china and the u.s., but a game of chicken between trump and the federal reserve. at what point would be fed have to move back in to support the see growth story if we weakness, predominately from an erosion? ? in trade dealsalicia -- erosion in trade deals? mellon havet bny been on the record saying we don't foresee a rate cut this year unless there really is a disaster. i don't think the game of chicken with this administration

works just yet, because there etus, have to be an imp and he would have to see that filter through the u.s. economy before the fed would cut. so i don't think it is as immediate as some people are thinking it might be. i think the fed is really on pause, when they say they are on pause. investors, isnd this what they were talking about today? sarah: absolutely. we opened today 1.6% lower, gradually climbed higher, but the argument was that yesterday, it was taken as posturing and negotiation. what flipped the switch was lighthizer coming out yesterday after the close and saying, no, friday 12:0 1:00 a.m. this is going into effect. traders no longer saw this as a negotiation tactic, but as something that is actually real-life, something that actually will take hold on friday. yes, there are still some out

there saying it is not friday yet, things could change, this could be part of the negotiation. but today looking at the selloff, many people looking to trade said that is the reason. romaine: at the close you saw some people brave enough to buy the dip. we should point out, last year we had some big market swings, 2% or more. one this year, and we were going to get one at the end but be buying at the end averted that. ,arah: we heard this has been a that any selloff you see will be shallow because there is money waiting on the sidelines to come in. an rbcay i spoke with analyst who said, look, we have not seen money going into equities, but have seen large inflows into fixed equity and bonds. doesn't mean the cash is just on the sidelines. it might be in bonds, which

means we might not actually have the amount of cash people believe we have sitting on the sidelines, waiting to be deployed at any moment. joe: alicia, here is the question. it's great the trade war stuff is creating volatility and risk for the market, but getting out of the market also creates quite a bit of risk. it's not obvious there's an asset class somewhere that offers a better alternative, so how do you position yourself? should -- how should an investor position themselves in terms of this news? alicia: because the news will have a real effect on corporate earnings going forward, i think it's ok to sit pat right now and see what exactly unfold with china, what kind of trade deal there will be. selloff, buta huge we think that markets are

vulnerable. look, the bond market appears to be less risky. appears to be, because it looks like central banks everywhere handcuffed. so i can understand why flows are going into the bond market, because it doesn't feel like a huge duration risk. and if the bond market is right and the equity market is wrong, you'll get something for having that duration. so i can understand why that is positioned right now. we still like equities. we still think you need exposure. i just don't see the need to jump in at this second. very hard to call the bottom. caroline: do you think you should be jumping into a new ipo this week? [laughter] that the ipop's at arere -- ipo's th coming are at much higher valuations then in the past and the public investor has to be much more careful.

that is all i will say. caroline: thank you very much, joining us by phone from bny mellon, and our very own sarah ponczek from bloomberg. let's turn to ipo's. lyft is reporting first earnings as a public company. joining us for more on the ridesharing company and the outlook for others is tim sullivan, who invented in lyft at a $1.8 billion valuation. congratulations. the company is still worth far more than that, about $17 billion. what do you make of the numbers? thet enough to stay some of execution it has had in the public market? tim: i think the numbers are great. obviously the number might be unexpected, but adjusted ebitda decreasing, revenue up practically 100% year-over-year, and some of the other metrics, active riders incredibly strong,

are signs the company continues to execute extreme the well in a space that is just beginning. a $1.2 trillion transportation as a service market, and lyft is probably in my opinion the best team out there to execute an efficient business and financial model. not that uber isn't doing a fantastic job, but lyft is taking away market share hand over fist in the u.s. joe: lyft is starting from a smaller base, which helps with market share. arewhy do you say they better positioned, operationally, to outperform uber? tim: uber has traditionally taken the position of being a leader in a very disruptive space, and that has cost them dearly. luckily they had almost zero

difficulty in raising capital, which led them to new markets. some of them worked out, some of them did not. but it has enabled lyft to draft off them, learn from mistakes and create efficiencies of scale that uber is learning from lyft on now, so kind of turning around. but uber hasn't had the luxury of being in the wingmen seat. they have always been the leader, and it has cost them dearly. but by the same token it is also paying off, potentially going to be a $90 billion company in a couple days. romaine: will they be a $90 billion company based strictly on ride-hailing? what is the future for lyft? think transportation as a service has always been lyft's goal, and managing the data associated with door to door transport, whether that's

bikes, scooters, electric cars, autonomous vehicles. that is what the market is and what lyft is executing towards. caroline: before we go to uber and the new ipo this week, what i am interested in, in the recent release they haven't articulated what the market share is for lyft. in the s1 they said it was 39%, but many looked at uber's filing and said that seems a little exaggerated. why not be more transparent about the market share they believe they have in this latest report? tim: that is a great question. i cannot answer that. i was looking forward to seeing that number. obviously it is not in it, but it will potentially be in the mdna, which i haven't seen yet. joe: the view is that basically it is all about top line, all about rider growth. to this point analyzing companies, is that the only

thing we should be looking at? if you look at some great companies like salesforce, that, square, and other have focused on top line, sacrificing profits for growth over many years before they became a profitable entity, i think it makes sense. but it is obviously not the only metric to focus on. a bunchare going out on of pioneer projects and doing things just to create a huge topline that will never flow to the bottom, it does not make sense, but that is certainly not what lyft is doing. caroline: i know you are an investor in lyft, but we have to talk about uber later in the week. what do you anticipate, in terms of valuation? they think they have enough demand to go for the top end of the range. could it be exposed to some of the brutality of the market we tim:seen with lyfttiml --

there is a lot of excitement around, and there should be. it has been a long time, and a massive organization. but also a massive amount of dilution as they raise capital over the years. as an investor, i would be concerned about the opportunity for upside at this point. one last question. caroline: one last question. you are in a lockout period. when you can sell, will you? tim: absolute li na. in fact, as -- absolutely not. in fact, as the stock goes down, i am buying more. caroline: we have to return to not only the story of the day, lyft, but the market selloff. joe, what was the key index, asset you were watching that took you most by surprise? joe: it is interesting.

one thing we haven't talked about is the yield curve, which is rapidly flattening. the portion of the curve that briefly inverted, if i pull it up. tonow we are not back negative, but below four basis points. basis points,7 daysn the mid-20's a few ago. that is something we will talk about if we see the risk off move continue. romaine: over at blackrock, they termsalking it down in of losing productive powers. a slew of earnings after hours. lyft is pretty good, but electronic arts, papa john's, plantronics, match group, mcr,

so you still have upside earnings narrative in the market. caroline: and we need to keep remembering where we are falling from. we all feel like a 1.8% move on because wehuge, have been so lacking in volatility. joe: we are up 15% on the year for the s&p 500, and our earlier guest says we could lose half the gains, bringing us to 7.5%, which would not be the end of the world after a very fast start from the start of the year to may, 7%, people would take that. even if we get hit more, still a fantastic year. caroline: joining us on the phone is the chief global strategist at needham and company. how much further could we fall if by friday we see tariffs imposed? michael: that's a hard question to answer. but to help contextualize, in q4 we dropped almost four points

from september to the december lows. trade,s powell, part was . point,w, one p.e. be a75 points, wouldn't bad guess. one way to also think about it, what can trump afford politically? a 5%, 6%, 7% drop off of the highs this far from 2020 if he will in his mind achieve some important policy goals and beat up on china a bit harder here? i would suggest he would. because again,, the market would still be up handsomely for the first five months of the year. is 95% art, 5%

6% dip, but ther -- a 5%, after a breathless rally, there's usually some profit taking and selloff anyway, even if the trade news was benign. there's always something to hang your hat on, for some people taking profits. romaine: i just want to point out we also have an interview later tonight on bluebird markets asia, joined exclusively by the chairman and ceo of jp morgan, jamie dimon. he's at the global china summit in beijing. it will be interesting to see what he has to say over everything from the last 48 hours. michael purves, back to you. you say it is normal to have a little pullback, selloff, profit-taking. but what is the threshold where

the profit taking turns into some kind of prolonged downturn, even a correction? how do you factor in that political risk? michael: developed market political risk is one of the toughest things to conceptualize, sort of the new theme for the markets to contend with. to answer your question, first of all, if you look at things like the nasdaq or xlk etf i nstead of straight shot higher, when you se up -- see upchannels breaking and signals rolling over, that will get the attention of swing traders and people who will play momentum to the downside. i think it is important to recognize that things like tech onat led the market higher, a relative price ratio or relative valuation radio to the broader -- ratio to the broader

market since the last 7, 8 years, it has never been higher. the relative valuation of most tech stocks to the spx has never been higher. there should be some normalization of relative valuation here, and that could mean a lot of selling a very strong earnings stories, but were they overbought coming into the trump headlines? i would suggest that they were, and that's one reason why i also recommend that as my preferred etfet hedge, the xlk because of the relative valuation and the successful rally it had so quickly. joe: joining us now for more, mike regan, editor for bloomberg's markets live blog. mike, what was the most interesting thing you saw? kind of straightforward, a selloff, but what stood out?

mike: people are trying to separate what is the fundamental driver. obviously the lighthizer news last night started everything, and where does systematic hedge funds come in reacting to the uptick in volatility and start deleveraging? but it is difficult to sort one from the other. obviously, if volatility picks up, that will cause treasuries to sell, fundamental investors, in addition to the programs. i don't think you can really separate and say this is just a hedge fund phenomenon, given the reaction we saw after the opening of futures sunday night after the trump tweets and the headline about robert lighthizer last night. so that's clearly the match lighting the fire. willuestion is, how big the fire burn because of these computerized strategies reacting? joe: i have not heard many people blame the quant. [laughter]

people have been restrained with quant bashing. everyone expected it yesterday and it didn't happen. caroline: someone had to do it. [laughter] ,et's get to michael purves still on the phone with us. atted your take on the vix, $19, recently $21, but many are looking at the inversion of the curve, which happened today. last time that happened was just before the q4 selloff, and the other time was just before the eddon, when itmag spiked to a massive high on february 3. are you worried about vol atility shooting higher? michael: i do think there's a real scenario here with all the assets moving around us. vix, on the short-term, the spot, first month contract might be sticking higher than what it might normally be at.

part of that is simply because of short positioning, net speculative positioning, has been pushed to record lows just last week coming into this. they work, i look at numbers and history of this. short positioning on the vix is not a volatility catalyst, but what it does do, if there is a catalyst like trade, it certainly magnifies the volatility. there's a lot of shorts on the vix side that need to be covered, as it moves higher. that will create a lot more short-term drama. i would also suggest that for all the stuff about the dark side of how the trade dialogue can unfold, and obviously there's some very interesting scenarios on the downside to consider, the vix inversion has been relegated pretty much to the short end of the curve. not seeing the back end move that much, the interpretation

being that the violence will be over in a matter of weeks and it is not a big structural trend. it really cannot be at this point, because we don't know what will happen on friday or next week as well. romaine: mike regan, let's say friday or monday we learned that we do have a trade deal, or we are making progress, what happens? mike: i would assume we get a rebound. i think that would overwhelm any other factors in the market. that's more i think intriguing. when the market is going up, you ignore the blemishes, and when it is going down, you focus on them. looking at ism services and manufacturing, both of them are pretty weak, near two-year lows. the more this patch continues, the more people will look at things they have been ignoring like that. joe: thanks to mike regan of bloomberg's markets live and

michael purves of weedman. spot, biytcoiight approaching $6,000 on many exchanges, as more institutions seem to be embracing them. spencer, thank you for joining us. obviously there's a big conference coming up in new york, the consensus conference. is this just people expecting a bunch of press releases and stuff, trying to get ahead of that? spencer: we could get some impact. but it is really a bigger story. people think we have found the bottom, and there's a number of catalysts looking on the horizon. the elephant in the room is facebook. romaine: ok. explain that? spencer: sure. we have seen public reports of what facebook might be working on.

most of that is pretty private, but we know they have a large, serious team working on some sort of a public blockchain effort, a payment system. so to put this in perspective, usersn went from zero 10 years ago to somewhere between 30 million and 100 million. and facebook has billions of users. so facebook is significant from a global perspective, global scale, and if even a small percentage of those users trickle into crypto, we will see a doubling or tripling in the user base of crypto over the next couple years. so the theory is, whatever facebook comes up with, some sort of stable coin that would be heavily regulated, partnered with existing institutions. but your theory, or the possibility, is it would be sort of a gateway drug so to speak, and i don't mean that pejoratively, just in the sense that it could introduce people to the idea of digital currency and downstream effects could be

better for some of the, what we know is cryptocurrencies. spencer: that's exactly right. you call it a gateway drug. i might call it a steppingstone. a familiar formfactor, someone might understand, facebook has made it really easy to adopt this digital asset. once you own it, people can start owning bitcoin, ether. some percentage of the user base is likely to do so, and i think that will be a dramatic catalyst. but the more important thing, it lit a fire in the pants of every major financial institution in the u.s. we have seen e*trade and td ameritrade rumored to be bringing out brokerage, fidelity. so across the board a lot of the institutions that so far said we will wait and see if this is actually disruptive and if it will impact, facebook is catalyzing them to take action sooner than later. caroline: interesting that you see that. why, then, we see bitcoin as

the biggest player, most legitimate from many viewpoints, on a tear. but today only it is up and the rest of the crypto space is lower. ethereum over the last quarter was up 8%. why don't we see a fire underneath the entire crypto space? spencer: for one, bitcoin is t he one asset that really found its fit, as digital gold, and new dollars primarily enter through bitcoin. i think that is the best place in crypto. but i think longer term we could see some of the other assets benefit as well. it seems to me in the few years i have followed the space, the things people get excited about rise and fall. pure one point it was

currencies, then in 2017 the and's and various -- ico's various derivations, and in 2018 stable coins were big, and now ieo's? what is the next thing people will get excited about? what are people talking about now, a new area that will get people excited about crypto? spencer: listen, i think it is bitcoin. it would be better for me if i can say that i have a better bitcoin, something that will beat it, but you have to acknowledge a winner when you see it. awareness,rand distribution and technical development, we think it is a winner. longer-term, we think people will coalesce around bitcoin as a protocol. we have lightning network built around bitcoin for faster and cheaper payments, and a range of things. caroline: everyone was thinking

winnerm would be a considering the smart contracts that can be built. you said facebook was the elephant in the room creating a stable coin. the first mover in that space was tether, now linked to concerns with the exchange it works and perhaps having covered up hundreds of millions in losses, what is alleged. . from your perspective, how much has tether been a help or hinder in the space? tether'sregardless of past controversy, it has been helpful serving as a liquidity bridge from crypto exchange to crypto exchange, a very important function. the reason most stable coins had trouble unseating tether despite concerns about its backing historically is just because in the trading space, liquidity is king and tether is the most liquid stable coin by far. could facebook take the crown?

absolutely. it has a user base unlike anything tether has seen. , smartck to ethereum contracts. there are now a lot of competitors out there. are any of these things being used by anyone in a meaningful way? spencer: some contracts on ethereum are being used. in regard to potential competitors, following the space for many years, it feels like groundhog day sometimes. a few years ago there were all these competitors that were supposed to kill bitcoin, and now we have all these competitors supposed to kill ethereum. in both cases i think the challengers are overstated. i think bitcoin is the leader for programmable money, and et hereum is a more expressive

smart contracts platform, and it remains to be seen if that is a really meaningful differentiator over the coming years. romaine: blockchain capital partners spencer bogart, thank you. back to what's happening here in the markets, bringing in john. john, this was a pretty wild day in a lot of respects. what do you actually think is sort of the thinking, i would think, behind what we think the administration seems to be thinking? john: you want me to tell you what is going on in donald trump's head? [laughter] thank you very much indeed. along they already. i don't know, but i would point out that given the immense turnover there has been in the administration, lighthizer and navarro have been ever-present and are still there. one of the two or three biggest signature issues was being tough on trade, and it shouldn't

surprise anyone he is still trying to stand tough on trade. my best guess is that in part this is about straightforward domestic politics that he feels empowered, and should feel empowered, by a strong market at the moment. we can argue all we want about how much is his responsibility versus obama's, but he hasn't messed it up, which gives him some room to get tougher. you also have to bear in mind, all of last week he was most concerned about jay powell and the fed, feeling very aggrieved they were not cutting rates. you only have to look at my home country, caroline's home country, what has happened to rates since the brexit referendum, nothing. the bank of england has a worse inflation problem then we have to deal with in the states, and at allraised rates because of extreme trade uncertainty thanks to brexit. if you create more uncertainty

over trade and more conditions, the fed might feel obliged to cut rates and thereby engineer a the economyboom in to get us through to the election next year. so if we wanted to decide donald trump wasn't being manipulated by vladimir putin, but in fact of putin-esque skills manipulation and game theory, i am not sure we want to skip it -- speculate that. but if we were to speculate we an, bond villain style president, that is what he would have done. caroline: you mentioned the political forces. what joe tweeted out that caught my attention, we talked about if he gets more geopolitically trigger happy and things are not looking so good at home, the

word impeachment being banded around by one ms. pelosi today. michael: i think he's happy for them to be talking about impeachment, but let's not get into that today. caroline: are we going to see a jacking up of international tensions while there are these concerns at home? michael: it is a classic gambit. bill clinton had that brief, dog" came"wag the out, it is a classic leader gambit to start a foreign conflagration when things are getting fiery at home. what people were not expecting, thechat response from chinese authorities. you don't expect an approved chinese source to tweet back at donald trump saying, don't even think about that. all havehe traders

to get on wechat? michael: it was almost like he was in a dispute with one of his contractors in new jersey and someone tweeted back at him, don't even think about it. a nice economy you have there, shame if something were to happen to it. people were not exciting the p, and plainly u that response was seen as the chinese being feisty or than -- than expected. romaine: it seemed the narrative for a while, the actual impact of the trade disruption was not as severe, and didn't really show up on the corporate balance sheets, income statements in the way we thought. why so severe this time? michael: we are talking about taking tariffs to a level. a very interesting chart from if they, the tariffs

happen would bring the total proportion of tariffs the americans levy larger than several emerging markets, like brazil and china. at the moment, china is a more closed economy than the u.s., so if the u.s. goes through the retaliation, the u.s. total terrace would be higher than china's. that is quite a big deal, plainly taking us into very different territory than where we are at present. joe: backing up, big-picture. caroline mentioned, we are still up a lot, just looking at stocks, still up massively on the year. so couldn't we all be reading a little too much into all this? it is like, we are up 15% this year still. michael: i certainly agree with that. ultimately, i ran a few of the ratios before i came on. looking at price to sales, we were at the highest barring the 2004,aks last year since

and at price-to-book we were the highest since 1999 on the s&p 500 coming into this week. i never saw any particular reason why people should have thought that the trade position -- we were absolutely set up for the market to step on a rake, and this has not been that bad of a selloff. ix is below $20. if he actually does what he tweeted he would do on sunday on friday, i think, i don't think people would rate the chances of that much more than 20% at the moment. but if that really happens, that will be a very big deal. caroline: and it could get a lot uglier for europe. the stoxx 600 had their worst day in five weeks, and they are arguably much more exposed to china. michael: i don't think there's any argument.

germany is much more exposed to china, has much more to lose and starts in a weaker position than the u.s. does. caroline: we want to thank well-roundedhe conversation. >> a much bigger surprise and turnaround than anything we have seen in the market. gue,line: premier lea watch out for that. [laughter] joe: i thought all the excited tweets were for our show. [laughter] caroline: who knew? michael: there were no american teams involved. sorry. [laughter] romaine: i have no idea what anyone talks about. caroline: we will educate you. it is football, not soccer. that's all for our special edition of "what you miss?" romaine: we will stay with markets coverage, up next on "bloomberg technology" in the u.s.. have a great evening. this is bloomberg. ♪

♪ ♪ emily: i am emily chang in san francisco, and this is "bloomberg west." coming up, an upbeat earnings report for lyft, its first as a public company. the ride-hailer beat forecasts, but spending also ramped up dramatically. melinda gates opens up. we talk about her new book, where she is putting her money, and what she thinks the biggest priorities for tech