clear these up, there could be a big upside, which is keeping a we have the closing bell. closing near our session lows. we had stalled out. then we took another leg lower and the dow jones industrial average falling 238 points. these are actual losses versus earlier when we were meandering. romaine: some super declines in some of those in sectors like the banks, the financials as well as a lot of weakness. withit is weird because stocks selling off and with bonds rallying, you would not expect staples and utilities to be among the -- i don't get it. i don't have an answer. we want toght now dive into the action with our reporters. we are going to start with

abigail. abigail: the s&p 500 reversing a to a decline on the close. it let's check in on a favor chart, going back to late 2018. we see a range between 2600 and 2900. the old range had been 2800. the battle between the bulls and the bears. check out the bottom heading back down toward oversold territory. the could be some more declines. supporting the rally we are seeing for treasuries. >> one thing that is rowling

today as crops. wheat, corn, soybeans are up more than 2%. that is setting the agriculture subindex up nearly 3%, the biggest gain in almost two years. this index had gotten crushed a tradesh due to tension. the lowest since 1972 on a total return basis, the lowest since 1987. it has rebounded more than 9%. there's just too much rain in the heartland. parts of iowa, nebraska, south dakota, are under flood watch right now. that is making those spring plantings difficult. it is calling into question the quality of the winter wheat that was due to be harvested. bringing the conversation full circle, back to fixed income. i've been looking at the vanguard total bond market etf. last week it was $400 million. the most for any wheat going

back to february of last year. the demand is not new. we have seen it all month long. when you add up those bars to see the flow, it is over $1 billion. most for any month since although it back in 2014. when you look at what it tracks, it tracks the ag, tracking corporate, government, spending the gamut when it comes to maturities. it was called the default landing spot. as we see the fear trade come in, we see a rush back into fixed income. joe: thanks. the markets team, still with us, jim paulsen and luke. of thisyou make combination, utilities being down on a day when bonds are rallying? you think there would be a flight to safety. the onee best answer is

everyone hates. if you look at the start and say month and rebalancing, tends to be bigger on stocks than bonds. if you think today was rebalancing, pretty weak by standards. a lot of the places getting hit hard this month are the places that recovered. if you told me that stocks would be the and the quick the s&p 500, i would have told you you were crazy based on coming out of the gate. scarlet: perhaps a tactical there. jim, you featured a chart asking, does the stock market do well when consumers are confident. we are looking at notable games of the year. the nasdaq is up 15%. does a healthy financial market keep confidence strong? chart ofou look at the of stocks toce

bonds, overlaid over the consumer confidence index, they are joined at the hip going back to 1990. you can see the chart on the screen. i don't know which one. you tell me which one leads. it begs the question, does a stock market collapse cause confidence to come down, or do people lose confidence and then the stock market comes down? today on a dayng when the stock markets pull back a little bit and we are worried about the bond markets, we had a confidence taking us to the highs of the cycle coming out of the consumer sector. the national foundation of businesses survey had its index go up as well. problemour main primary is not fundamentals. stimulating with

money supplies, lower yields, fiscal stimulus. tradeis enough to offset negative impacts going forward. the problem and risk is if there is a complete freeze of confidence. economic behavior comes to a halt as people wait to see what is going to happen. i'm worried about a fear freeze. 0et's say the dow falls 225 points in a single day. that is what i'm worried about. i think if we avoid that, the upside is, i think we are building tremendous upside value . we are bringing the multiple town. we are bringing the competitive yields down. more policy stimulus. we are you racing a wall of worry which could lead to a major upside move if we get through this fear. joe: a lot of people talk about the trump put in the market

theuse he doesn't like stock market selloff. is it possible a big selloff could be short-circuited if it were to lead to a softening of trade rhetoric? more inclination on the part of the fed to cut rates? jim: i think that is possible. the rhetoric on trade does not scare me because it reminds me of a budget battle. often the rhetoric gets the the most hopeless right before an agreement is reached. that is what we have here. i worry about a miscalculation. could back off. what if it is too late? move thate a one-day scares everyone, even if they back off, it might not do any good. there is a risk of miscalculating how fast we could reverse the trade situation. i think that is the risk

investors face. i woulderr on buying risk. one reason utilities may be underperforming is there's been talk recently about how overvalued they are. do you really want to buy one of the most overvalued assets? later this week we are inflationet the fed's gauge. is that going to change the market? joe: it's good. the most contrarian trade one could ever think of is a secular return of inflation. one thing i was looking at is the five-year inflation gap against inflation averaging over 3% over five years. it costs nine cents. they are near their lowest level. they have been as high as 300 during some of the bigger moves in oil. even during this cycle. anything that gets the market mind toward something that hits

stock bonds could do damage. we are so far away. every inge has in -- scarlet: we will see how that comes out on friday morning. we want to thank our guests. that does it for the closing bell and for me. "what'd you miss?" is coming up next. we will speak to a pioneer of modern monetary theory. he's been called the father of it. we will talk about that because it is catching on with progressive democrats. from new york, this is bloomberg. ♪

romaine: live from bloomberg in new york. caroline hyde is off today. joe: here's a snapshot of how u.s. stocks closed today. the dow jones down about .9%. the s&p following and the nasdaq down about .4%. the question is "what'd you miss?" romaine: david is leaving a void. and a debate with a pioneer of modern monetary theory making the case for mmt. strategy shift. saying goodbye to thousands of small suppliers in an effort to cut costs. stocks kicking off the week in the red. a columnist joins us from washington. thanks for joining us.

what is your dominant theory of this bout of volatility? we are not very far off the all-time highs. it is not a huge volatility spasm. after a very smooth start to the year, may has not been the best month. >> hi, joe. not moreised there's volatility, to be honest. when i look at the uncertainty going around, and that is not here. i have noted before last year was rocky. nowad two corrections and markets are wild again. it seems we have to live with this environment until we get some things worked out. the top of the list has to be the trade disputes. there are other controversies. at the: when you look market, is there a case to be made, people at said this market is actually cheap by some metrics. do you think that is something

that is plausible? >> i think this comes down to earnings. the earningse projections for this year and next year are realist tick, sustainable, etc., there's really nothing to worry about. it looks as if the valuations are reasonable. the problem is earnings have at unbelievable rates. the question is where there will be reversal. if there will be, by any measure that takes into account that reversion, valuations go from high 20's, mayo be low 30's. all of a sudden you get a different picture. ine than at any other time recent memory, everything comes down to your view of earnings. shape, yourin good of nothing to worry about. if you think they are high, there is a lot to worry about. that stood out

today, basically all of the risk assets were in the red. it actually closed green on the day. you wrote a column a week ago saying contrary to what people have said, emerging markets might do better in a trade war. why is that? why is the conventional wisdom on the fallout for em not correct? nir: people are looking in the rearview mirror instead of the windshield. when i lookecause at and break down the individual components of where returns come from, it seems everything -- favors emerging markets. they have lower valuations, which means there is a possibility of expansion. even if you assume valuations go nowhere, it is hard to imagine a scenario where the growth rates are not higher over the next

cycle than the u.s. that should translate into higher returns. keep in mind the returns in the u.s. have come from the .xpanding valuations in early 2009 it was 12 times. now it is close to 30. that is a tripling. i don't see that continuing. emerging markets look like the u.s. stocks looked in 2009. there is room for them to go on the same journey the next decade the u.s. went on. one other column you wrote this morning, one of the storiesd dori's -- today was about the departure of david tepper, moving on to his next life and sports. you lamented this idea hedge funds titans like him are a vanishing breed. i think it is a blow

to hedge funds. i have to say. we have to put this in perspective area david tepper, his record puts them in the pantheon of investing. well within the conversation for mount rushmore. even though investors have not had access to him in a long time, he's been closed for a long time and now he's going to retire. the fact he was there and he was doing what he was doing inspired others to try to find the next david tepper. that has been the game from the beginning. with david leaving and others whose track record is not as good, leaving the game, i'm not there.at inspiration is even though it has been difficult to find the next tepper anyway. thing that separated

him from other big-name managers is that he thrived for several years post crisis. another names could not find to get it going post 2009. what did he have in your view? people say the next tepper. what allowed him to click? nir: such a good point. when you look at his track record, he was fantastic going the other way, everyone talks about being contrarian. you look did it when at his performance. not only in the financial crisis. wasperformance showed he defensive during the bust and loaded up on risk assets in 2003. he followed that same claim book -- playbook. it is not as though everyone could see where risk asset prices were. could actually buy

an big quantities when it mattered. that is what makes his record extraordinary. most of the volatility came on the upside when he was making his big that's. you get this idea in your response of active risk. this idea he was out there taking risk. we are ine in the age now with these managers, even though late out their strategies, they are following the herd. what has changed in the environment where we get relative lack of risk-taking now? nir: a couple of things. one thing we have to of , the activehe risk risk, has not paid off in about a decade. the s&p 500 has been difficult to beat. anyone taking active risk has not been helped by it. that includes a lot of the elite managers.

some of whom have fallen from grace in recent years. have less of a stomach for it. we have to consider in the golden age of hedge funds, it was a different era. investors are more savvy now. they are skeptical. you really have to persuade them an active manager is worth the higher fees and giving them license to take risk. i think that is a harder sell. romaine: nir, thanks for joining us today. coming up, mom-and-pop suppliers in the hot seat as amazon considers purging small-scale merchants. what the move could mean for the e-commerce giant. tomorrow don't miss our interview with the ceo. that is tomorrow. this is bloomberg. ♪

lookne: now it is time to at was stories are trending. jamie dimon said it was a responsible for wells fargo to announce the departure without a succession plan in place. alan parker took over as interim ceo in march and a search for an executive is ongoing. onomberg.com has a story mackenzie bezos, pledging to give away half of the 37 billion dollar win phone she will receive from her divorce. she is one of the new 19 signatories who promised to donate more than 50% of their wealth to philanthropy in their lifetime or their will. tictoc on twitter is reporting the 1967 state law allows disney

to build its own nuclear power plant. the park has instead turned to a solar farm toth a produce enough energy for two theme parks. you can follow the stories on your terminal and bloomberg.com and of course on tictoc on twitter. amazon suppliers in fear. thousands of suppliers and vendors watching to see if they purchase small suppliers in favor of major brands. the possible move would increase --enue and position avenue amazon with walmart and target. it lets look at the story with our reporter. spencer, thanks for joining us. amazon has two main business models.

it serves as a marketplace online for third-party sellers. basically they are selling -- suppliers, it is not going to buy stuff from you anymore. sell it yourself. spencer: exactly. this planning goes back to -- last fall. amazon was looking at the sales revenue for all of its smaller vendors to determine which ones were worth maintaining a relationship with and which ones it should push to its marketplace platform. the main objective amazon is salesis as it is online slow, it wants to not have to add that many people of its own employees to manage its web store. to theing more vendors marketplace side, amazon ligh tens its own load.

it is no longer paying amazon employees to oversee all of those sales. it is up to those vendors to do it himself. how are these vendors, they going to prepare for this and how much time are they going to have to transition? spencer: how much time is a great question. i have no idea. many are fearful this could just drop. amazon will tell them you have to do business this way. some have already prepared for this shift. there are millions of merchants on marketplace now. a lot of them do well. some vendors have hybrid arrangements where they sell some products wholesale and others a cell on the marketplace. it is going to be the biggest struggle for the folks who have been locked into a relationship with amazon for a long time and are going to have to learn how to win amazon shoppers one

customer at a time. it is a different way of doing business. joe: it makes sense. why should amazon carry the inventory risk, pay for their packers and shippers. why would there be any doubt to push as many vendors as possible to the third-party market? spencer: they have to find the right mix. when you think about those big brands, procter & gamble, sony, there's these must-have items. having a vendor relationship ensures you have adequate supply because you are predicting the ofand of euro customers -- your own customers. you just have a more active relationship with those critical vendors. in terms of why they are doing this, it is turning the knob. what is the best mix? spencer, great skill. thank you. coming up, some democrats using

an economic theory to push back against fiscal hawks. we will talk to the godfather of mmt. ♪ ♪

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mark: i am mark crumpton. president trump is back in washington after four days in japan. he met japan's new emperor and held discussions with prime minister shinzo abe about north korea, iran and trade. the president and first lady went aboard a japanese destroyer to visit troops. he gave a memorial day speech to hundreds of members of the u.s. navy's seven fleet. outgoing parliament president antonio to honey said it really must work with brussels to while its public debt also adding it is distancing itself from the e.u. he spoke to reporters in

brussels where he responded to a question from maria. achieve goodant to agreements with european union, it is a possible thing, but we in italytudy the debt is the most important problem. make it not so isolated. mark: italy's deputy prime channel held a radio is waiting to see if brussels imposes a penalty over italy's failure to rein in debt. the irish prime minister said the u.k. should heed recent european election results and support an irish border agreement. speaking to a journalist in brussels, voters in northern ireland elected european parliament politicians in favor of the e.u., going back to the -- who back the backstop.

there was a growing risk of the u.k. would leave the bloc without a deal. , this is thego possibility of the british for minister to repudiate the withdrawal agreement. there is a possibility there may be a new british government that might follow a different course, more european course. can't predict either of those things. --an say the european a high european union and ireland will stand for no hard border. the u.k. is scheduled to leave the e.u. on october 31. it is deadly that one of the deadliest climbing season of unknown everest. there have been 11 deaths. experts blame having too many general anderest in too many inexperienced climbers. at 1.150 climbers were tethered to a safety rope waiting to get to the summit. 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 am mark crumpton. modern monetary theory is having a moment, sparking debate on the idea. here is what -- the ietf. here is what critics have said. >> the idea that deficits don't matter in their own currency is wrong. >> you have to shut down foreign-exchange markets. how do you? people will be trying to fly out of the currency. >> monetary theory will take care of this problem. >> it is garbage. ,> if you can create money vince of huawei and argentina would be the best in the world. we want a stable system, lower taxes, free trade, less

regulation and want to not hinder business is so they can grow. idea we keepne the printing money and somehow that will create growth? the fact that people are taking it serious is disturbing. otheroining us with the side of the debate, a modern monetary theory pioneer, author of the seven deadly frauds. one of the founders. not going to ask you what you think of because i know you disagree but i am curious because you have been promoting this idea of a rethinking of how we think of deficits over 20 years. how striking is it that at this moment everyone feels they need to opine on it and file on? -- pile on? >> i see a statute of honor, up to 24 hours -- 25 years, and the force of logic has got it where

it is. romaine: i understand why people are talking about it. is it something you think could be implemented on a real level? it is not something you implement. when you understand how monetary situations work, you have different policy options. off the list. that is what is happening. they are realizing policy options are there. about thisurious because the idea of implementing, i think when mmt there is a description. this is how it works in a country that has its own currency. then there is the prescription and that includes a job guarantee and these days a lot of the advocates are pushing for a green new deal. are they separable? just refer to the description or have to encompass

all of it? >> all of it. stephen: you say it is just a prescription but it also shows you a base case for now. when you are at that, you can make changes. you have to have a base case. becomes obvious is when you understand the monetary system and what is called the transition job, a base case for analysis which you can then change if you wish, do it or not. romaine: if you were to go down this road, you are kind of shifting some of the responsibility for management of the economy away from the central bank and more towards -- orgislatures ordered the fiscal policy. isren: interest rate policy backwards. higher rates are actually expansionary and inflationary. lower rates -- the government is a net payer interested in the economy.

if you start off with a zero rate lessee like in japan and you raise rates it is like basic income for people who already have money. i have heard a lot of arguments on basic income but i have never heard it described to people who already have money. e-government is a large net payer of interests. when the rates came down after 2008, the amount of interest expense that was cut was $400 billion a year. i think a lot of the mmt people were critical of qe. they had it siphoning off interest rate, interest payments to the private sector where it was helpful to essentially a quasi-arm of the government. warren: the first time i was critical was in 1997. these people were going to point out why it was not going to work. and there were people from the bank of england and everyone agreed. it is different now because we

have had 30 years of seeing it doesn't work. we have had 10 years of seeing it in europe and here. it has gotten more attention because it has become obvious interest rate policy doesn't work. they are saying our models are broken, forecasts aren't happening, we need to look at monetary policy and leaving out the interest channel. why do you think they are gravitating to your prescription? we agree the current system isn't -- saying -- theyt never had control. it is like a child with a car seat and steering wheel. we have this drunk behind the wheel, we want this kid that is not connected to anything. it opens your eyes to see we don't have an option. congress has always been driving or the automatic stimulators. the fed has never been driving. this fiscal policy versus

monetary policy, the most salient thing now in macro policy has to do with trade. trump's make of policies on trade and if he goes down this road, what is your ramifications? warren: he is undermining our standard of living and getting no pushback from the press. if you send someone -- you are trying to get the best possible price. here we are complaining about china, canada because they are not charging us enough for lumber. this makes it worse for us. joe: is there any strategic argument to say yes, we will not get as good of a price, but on the other hand this is a technological arms race, and could those two proceeds the short of -- sort of short-term demand? warren: you try to get the best

possible case. if you are a good shopper, you try the lowest possible price. if you keep a high demand in the economy, people are displaced, there is plenty of other people looking for them. if we have strategically important items they have to be addressed directly. if we want to make sure we have domestic production of steel, we should source all of it domestically. we can source the strategically important items without worrying about getting the best prices for everyone else. aboute: talk to me inflation connects in this. warren: we recognize the currency as a public monopoly. it is a little technical but the price level is a function of prices paid by the government when it spends. when the government spends, it is not creating inflation until

it pays more for the same thing. that will happen if you bought so much that you brought up productive capacity for sale and then you are going into inflation. let me say exit spending from cost inflation and i could do it if you put me in charge, i could spend a lot. sinceg and financing 2073, i have never yet seen inflation caused by overspending. it is always caused by something else. withy has 25% inflation 10% unemployment. it is not overspending. let's talk about the green new deal. ers say we can do more because of fiscal -- it looks like we could run up to hard resource constraints particularly for things like labor costs of retrofitting buildings and other sort of

infrastructure demands. how do you build in safeguards to the law so you don't run into inflation or if we do, we mitigate them in real-time? >> we have to have this based on inflationary applications are not the size of the federal deficit. it doesn't matter. we will do medicare for all, how do you score it? it will be inflation reduction. joe: you think economists and the cbo are able to come up with dollar predictions on the impact of a policy, retrofitting, the impact? give them specifics, they have the resources, i have no reason to think they can't. 2% for 30 years. that is without changing any of the requirements, leaving

everything in place. it can't be overspending if the inflation forecast is 2%. this is absolutely fascinating. he is the author of seven deadly innocent frauds of economic policy. this is bloomberg. ♪

joe: painting frenzy. the number of food delivery companies with high valuations showed the industry hope for serving up growth. touting its author divisions to hungry investors ahead of its ipo. amazon shrunk appetite after investing in roof foods. this will heat up. joining us with more is leads

rogan, founder and ceo of -- there is so much investment in this space. people think there is this to some pot of money company that will get a few pennies at every time we order intake out. what explains the enthusiasm? >> here it is. take the rideshare companies, business, every other businesses are all platform companies, they are marketplaces. some of them are marketplaces for services, so there is this massive shift in the economy. every market business is getting -- this is just the next one. and right now, the market size is x, but these companies are betting on it being 10.

think about it as a company where they put air mattresses on the fort. they didn't think they would put out houses but as you supply and demand on the marketplace there are different options. investors believe delivering food from a restaurant, we can deliver from a lot of other places. romaine: they are selling convenience, the idea some of us just don't want to go out to pick things up for ourselves. do you not see it as something sustainable? that service in and of itself isn't a or there are too many playing -- -- isn't sustainable or there are too many layers? lee: this is a demographics issue. you put enough high earning millennials, generation y, generations the in enough much

abolishing areas, close enough on fine and you get a lot of demand for all of these things. it will not wane. it will only grow as our country and everywhere else becomes more compact. joe: you have a restaurant that and door -- and everyone else. are there any sustainable advantages for these companies and is there any off -- any profit or will they nickel and dime each other to death? leigh: we will be in the same experiment for ridesharing were you have uber and lift, they are burning cash to get market share. it is a market share war. you look at softbank which is an investor in both uber and doordash and they are burning cash to have both of them fight

over market share which is interesting. romaine: i was in a restaurant that had all of those stickers and then a sign that said don't order from any of these places. leigh: put aside the whole what a restaurant is now and here is the most interesting thing. look 5, 10 years down the road. if you get enough of these delivery companies that are successful, which is arguable but let's say one of them figures out the economics, the future will be ghost kitchens which is the bundling of a restaurant. typical restaurant in new york city is growth margins but if you have high volume 1 --, delivery app on top, more profitable. joe: and travis kalanick. , thank you very much.

romaine: alibaba is said to weigh a $20 billion share sale with a second listing in hong kong. why they are looking to raise more cash when it already has $30 billion on hand. this is bloomberg. ♪

china's huawei caught in the crossfire. in an exclusive interview with tom mackenzie, with the founder and ceo of huawei on accusations the company got to where it is today through id theft and government support. take a listen. it is likely the u.s. steals our technology. now we are leading them. when we have a government background, kpmg can order it. you can ask for a report from them, right? this unfounded conclusion may not be right. we are leading the u.s..

if we were lagging behind, trump wouldn't need to make efforts to attack us. he attacks us because we are more advanced than them. if at a moment of national crisis the government came to you and said we need your help, we need your cyber skills and access to your network, because it is for the good of the country and government, the chinese people, how would you respond? we would never restore any backdoors. we would never do that. we serve human beings. we don't serve intelligence services. why should we install backdoors? tom: what are the practical steps for denying that in china? that.have never done a german newspaper said they could not find any backdoors inhuawei's systems. -- in huawei's systems. in the u.k. we were under the

greatest scrutiny. under strict scrutiny it was like we took off all of our clothes to prove we have nothing to hide so the u.k. agreed to use our equipment. that was part of our exclusive interview with huawei founder and ceo. you can catch more of that in a bloomberg television's sister -- special connected and contested here that is friday night :00 new york time. york time.:00 new alibaba is exploring a second listing in hong kong which could raise $20 billion. to hear more what is behind this deal, shery ahn. why does alibaba need $20 billion? shery: exactly, when they are sitting on $30 billion of cash. they can do it. they have been competing with smaller startups. if they list in hong kong it would mean draining some of that

support from those, diverting cash from their press -- their competitors. they could also establish closer ties with beijing. they are the pride of china and are listed in the foreign exchange. it could happen. and potentially hong kong investors no alibaba and trust the firm. even if you see downside pressure you are already seeing, losing 20% over the past year, not just alibaba -- this chart showing tencent also, taiwan semiconductor, anyone around the trade tensions now losing ground. if you live in -- list in hong kong retail investors could go for you. joe: why hong kong and not the mainland? the shares are too small. they couldn't digest it. we are talking about the second $20f they list and raise

billion, their second-biggest would be half of that. billion, ae was $10 shanghai leg of the anbang. they tried to do list in hong kong in 2014. it was restrictions and regulations. they are over that. restrictions have been relaxed so now they can go. joe: for more on this story and others, don't miss daybreak australia and daybreak asia starting at 6:00 p.m. eastern. we will have more on alibaba next on bloomberg technology. don't miss this. bank of japan governor kuroda speaking at an event in tokyo. romaine: and our interview with the ceo and cio of pimco tomorrow. that is all for what did you miss. bloomberg technology is up next in the u.s. joe: this is bloomberg. ♪ ♪

♪ emily: i am emily chang. this is bloomberg technology. facebook leadership under fire. the ceo mark zuckerberg has too much control? one person trying to change the power dynamic. nellie bob is considering a mega deal that will bring china's largest constant -- open a closer to investors. a second public listing. huawei founder and ceo