the dollar, especially as it relates to -- katie: there's a lot of >> there's definitely a lot of concern because we haven't seen that dollar bear market. if you are trying to invest outside of the u.s., that is important. romaine: breaking news here, the , nasdaq at record highs. dow jones reporting that best buy is open to probes into the ceo's personal conduct. we don't have actual details on this yet. they did appoint a new ceo. it is not clear if this is referring to corey perry or the previous ceo, hugh jolley. shares started to move significantly lower as we headed to the close. >> seen as a disciple, so it was very much like continuing what

he built up. incredible work, turning around best buy and positioning it as amazon came in and took a lot of market share. romaine: he did that, but the person standing beside was corey perry. we will let you know once we get more details. >> in the meantime, stock market closing higher. record highs all around. let's check in with our reporters as they monitor the different stories out there. >> i'm thinking about something ,ou and joe were talking about the week. we may have record highs, but there is some defense going on. the best sectors for the s&p 500, utilities up top, nearly 4%. even though we have all-time highs, the s&p 500 is coming on defensive sectors. real estate is up 2.5%.

rates are about flat. typically these would do well if rates were going lower. of the growthome sectors here, tech and materials. this is a long-term chart. utilities tend to do better at the end of the markets. to2000, the peak was closer the end of 2000. 500 peaked in&p october. the fact that we have all this strength for the utility sector is worth keeping in mind, although there's not a clear pattern as was the case back then. we have defensive sectors leading on the week while we have all-time highs for the s&p 500. >> i'm watching dave and buster's, scoring a win today. shares up more than 11%, their

highest since june 2019. this is a private equity giant disclosed its stake in dave and buster's. that includes shares and options. shares in dave and buster's have tumbled in the past years. that happened after a surprise decline in quarterly sales, which is a key measure of retailers. >> i'm taking a look at the fixed income space. if you want to take a look at a chart here, i wanted to measure the triple d space. that is the lowest rated debt within the corporate bond market. it is about 50%. the problem is, if there is any risk of economic slowdown, these are at risk of being cut to junk. guggenheim just the latest to think the party is ending for triple d bonds. kkr cutting their exposure to

this type of debt. thanks to taylor and everyone there. back to that news on best buy. shares are moving lower after hours. this is based on a report from dow jones saying the current ceo, corey perry, who took over in june, had an inappropriate relationship with a fellow executive. this according to dow jones citing an anonymous letter. they say an investigation has been started and the company has hired outside firms to conduct that investigation. they do not make any mention about a change in the status of the leader there. scarlet: and according to dow jones, corey perry did not address the allegations, but said she is cooperating with the probe. we will continue to keep you

posted. right now in after-hours trading took a bit of a dip here. it is just hanging onto a modest gain compared to this afternoon. still with us is katie and wells fargo senior global equity strategist scott read. i want to bring you back into the conversation and talk about something the treasury announced, the idea that they are going to restart issuing 20 year bonds. what does that mean for the stock market, if anything? >> i don't know if it really means anything. we know the fed is going to be accommodative. i think that is the thing the focus is on. it makes sense that we have low rates. they are likely to remain low. we wouldn't be surprised if they were a little lower at the end of the year. the way we see it, the treasuries taking advantage of

what is out there. if you can issue some longer-term debt at good rates, i don't think there's anything wrong with that. joe: we are off to extraordinarily fast start this year. 4.5%, is already up something like that. from an equity perspective, a lot of people were saying, diversification, international is going to work better, but so far it is big u.s. tech again. i'm curious how that plays out and whether people should diversify internationally or just stay with the trend. probably make some rational arguments as to why looking markets might interesting or developed markets might look into string but we are focused more on the u.s. we think the performance in the u.s. is likely to be better. we are keeping a close eye on

e.m. we are keeping a close eye on dm. but as you move further and further into this cycle, typically large-cap growth, the market narrows a little bit. we want to still lean toward those sectors. tech, financials, consumer discretionary. abigail mentioned that utilities were the number one performer this week, but if you look at the return on the week, i guarantee you utilities did not contribute the bulk of the return. real estate and utilities are about 6.5% of the market cap of the s&p 500. what has been contributing is tech, financials, industrials. when you say that utilities and defensive's are leading, not in terms of what the makeup of the return has been. romaine: katie, talk to me about small caps. they've had a pretty good start

of the year. there was also kind of a rare outperformance with small caps that beat out the larger cap space. >> they are down a little bit today, but prior that they were looking to challenge the broader s&p. they've had a rough couple years. they've underperformed the s&p for about three years running. fears, really recession the concern that smaller companies wouldn't do as well to weather a downturn in the u.s. economy like the larger firms. , theith the stronger data barnburner housing starts, it has really been to the benefit of those smaller companies. aboutcap etf's drew in 1.5 billion, which is the best weekly inflow since 2018. scarlet: perhaps a change in leadership there. scott, what is your take on

small caps? >> we've been underweight small caps for a while. you move later in the cycle, things slow down a little bit. are investors going to go for companies that have strong balance sheets, good access to credit, really good balance sheets, and can make some acquisitions, or smaller companies that have fewer products, no international exposure? it is a quality thing. we are underweight small caps. we like large caps over small caps. one way that could turn that tide, if u.s. growth accelerates and does better than the market expects relative to the international market, that is one way small caps could outperform. week we get netflix earnings and that is an example of a company that is both high tech and extraordinarily stretched balance sheet.

it falls into two buckets. will that number and the reaction to it give us a hint about the market's appetite or willingness to fund some of the dicey companies out there? into later move stages of the cycle, people seek quality. companies that have weaker balance sheets and things like that, in the end, are probably going to trail. if we are in the seventh-inning and there's a couple outs, more baseball to be played, i think what the market is going to move toward are the higher-quality companies they can count on. scarlet: thank you so much. scott and katie. that does it for the closing bell. "what'd you miss?" is up next where we will bully looking at deutsche bank.

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romaine: live from bloomberg's world headquarters in new york, i'm romaine bostick. scarlet: i'm scarlet fu. joe: and i'm joe weisenthal. romaine: the dow, s&p, and nasdaq are closing at record highs. deutsche bank trims bonuses by about 30%. breaking ground. a u.s. housing star surges to the highest in 13 years. and the president's impeachment

defense is going to include ken starr and alan dershowitz. and romain told us how u.s. stocks extended the push to new highs as u.s. and chinese economic data, low interest rates, easing trade tensions propelled optimism. joining us with his outlook is jeffrey. great to see you again. we were talking with scott about how the stock it may be in it seventh-inning with a couple outs, but when you look at the global economic cycle, are we in the beginning, the middle, the end? recovery, i'm its not smart enough to know whether we are in the seventh-inning or the for thinning, but when you have coordinated central bank easing, that is a certainty. you are basically saying, we don't want you to save money in banks. we want you to put money to work in investment.

we see it all the time. extra cash, but they are looking at riskier investments and buying equities. that is not just individual accounts. that is pension funds, sovereign wealth funds. at central bank activity. joe: one could make the argument that this sort of force barbell that people are pushed into, they have liquidity while also going pretty far out on the risk spectrum. .rguably what you are saying is there is no sign that that is changing. u.s., supert the low unemployment. who would have thought we would be in an easing cycle? people are saying, i'm pretty sure i've got a job. i may not be have you learned

about where the world is heading, but i'm gainfully employed. egg int my cash nest case things go crazy. i can perhaps afford to take a little bit of risk. nowre living in a time where the average american has more exposure to u.s. financial markets than maybe any other time in history. people don't look at how much u.s. equities are owned by pension funds. when is the last time we talked about pension funds underfunded? they are less underfunded than they used to be. move into their twilight years, there balance sheets if you include their assets have never looked better. there's a lot of reasons for the u.s. equity market to continue. election year. president would like to see that

happen. we are giving that central bank a bolster. romaine: let's talk about some of the specific issues. we had the signing of the phase one trade deal. we've seen over the last year and a half or so is sort of this decline in spending, tamping down the ceo sentiment. do you think that with the first phase of this resolution that we will see an uptick in that sentiment, and long term, are we going to expect fundamental change? >> great question. ceo sentiment has probably improved. by am large, it looks like people are laying down their arms for the time being in the trade war. we are not going to roll back tariffs. we have significant amount of

goods and services under tariffs. the trump administration has said it is going to take up situations with europe. europe has to go through brexit. that not so hunky-dory ceo's can stop worrying. good on the whole, but phase one is a very narrow set of agreements. it is better to have it than not to have it, but it is not like we are waking up and -- i don't think you are going to see this mass spending. scarlet: i would like to hear what your clients are doing. are they getting ready to spend? would they be looking to buy their companies, to build out their facilities? how are they planning to put the money to work? >> it depends on the industry. i do think that corporate balance sheets, people have a

lot of capital. there's concern that asset prices, the value of people's equities, is high or maybe overinflated. i don't know when that goes down. everybody knows that private equity has money to spend and corporate clients have money to spend. generally speaking, that has to give. those private and public market valuations reflect that there is a lot of cash on the sidelines. i think people will be tactical. that is really the watchword. if there is an asset you have to have, you can demonstrate significant growth or take out significant cost, you should do that. are takingnies advantage of it. backlog has never been bigger. to continuewant

this conversation. we have to take a quick commercial break. sticking with us, jeffrey solomon. from new york, this is bloomberg. ♪

joe: we are back with jeffrey solomon. thanks for staying with us. just in the break we were talking about the j.p. morgan health care conference in san francisco. what did you take away from that experience? >> we've been on a tear for the last 10 years. i think everybody is always worried that is going to end. we've seen some amazing

companies, a letter financing. seeing,nce that we are the commercialization of that science, is really picking up speed. it in a very obtuse way, but i'm looking at companies that can really drill in on how we deliver personalized medicine, gene therapy. it is an incredible revolution. we will look back on this time and say this is probably the biggest single advancement in modern medicine may be in our lifetimes. scarlet: you are clearly excited. it reminds me of how people were talking about cannabis not so long ago. it is a little different, but that bubble has burst. long-term, i know that you are optimistic because you believe it will be legalized federally. what happens in the meantime? >> i think there will be some consolidation.

it is really a tale of two cities or geographies. outside of the united states, capital is abundant. companies u.s., those , a lot of folks couldn't do it. when you look at the u.s. operators, they are doing pretty well. they've had their legitimate business models where they drive returns on equity. they had to put it to work judiciously. larger non-u.s. players have chosen a path towards global domination and trying to build massive brands quickly. that has to get rationalized. there are well-capitalized players out there. the better capitalized you are, the more likely you are. there will be winners. there will be losers. but this business is not going away. cannabis is a global phenomenon.

if you pick the right kind of companies, you are going to make money. romaine: we've been talking about apple being an all-time high, qualcomm, a lot of the chip makers. a lot of this seems to be predicated on the rollout of 5g. are you seeking opportunities there with maybe the cloud companies? of the things that is unleashing this ability to do personalized medicine is the fact that we have the cloud. we have cloud computing and massive amounts of data. that is an enabler. is changingow tech the landscape in our industries. there is a time to be done. not just in the buildout of 5g, but i would think any services that require or that utilize broadband capability. what we are seeing over the top

is incredible. it is going to continue to change the way people consume media. i think we are spoiled here. we've seen other parts of the world that aren't quite at 5g. when you think about global rollout and global consumption, we get it here in new york, in the united states, and we stream on any device. i just think there's a huge tailwind behind that as well. joe: investors and corporate's want to know what to sell to the burgeoning population of people who are younger than those of us at the table, millennials and gen z. how do you see the big things that everybody is racing to, whether it is media or consumption trends that are targeted around this group of

cohorts? decade, let's say that 70% of the consumption will be millennials and gen z. if you look at when the global wealth transfer occurs, it is probably not for 30 years. that is a long time. here's what we know about millennials. believe wedamentally live in a post-truth world. they are going to consume the news they want to consume and make their own determinations as to what they think is authentic. historically media told us who should be influencing. now millennials choose influencers and they have the ability to influence. very different consumption patterns. when you think about building your global brand, you have to recognize some fundamental shifts in consuming patterns. solomon, thanky

you so much. this is bloomberg. ♪

>> i am mark crumpton. the impeachment trial of president trump will transform the senate into a somber chamber for a most contentious matters to be hashed out behind closed doors. chief justice john roberts will preside over the trial while senator sit silently in their seats. no talking or debate is allowed in the chamber during the trial. pressrs, staff, and the are forbidden from carrying phones and other electronic devices into the chamber. arguments will be televised, but discussions on the most sensitive aspects of the trial will be in closed session.

secretary of state mike pompeo is breaking his silence over alleged surveillance and threats to the former u.s. ambassador to ukraine. in interviews, secretary pompeo says he believed the allegations that marie yovanovitch would prove to be wrong, but that he had an obligation to evaluate and investigate the matters. he claims he wasn't aware of the allegations until earlier this week when congressional democrats released documents from an associate of president trump's attorney. nato received its first high-altitude drones today, the first part of a fleet of five. the drones stationed in sicily are capable of flying almost anywhere in the world. nato officials say the unmanned aircraft will fly at 60,000 feet, almost twice as high as commercial passenger jets. drone -- [indiscernible]

>> the secretary-general added the drones can support nato's missions to fight international terrorism and can be a valuable tool in dealing with the consequences of natural disasters. a new york city jury has been selected for harvey weinstein's rate trial. the defense demanded a mistrial because one of the jurors is the author of an upcoming novel involving young women dealing with predatory older men. the request was denied. >> we got the best jury we could get under the circumstances. obviously not happy with what happened. that was a ridiculous decision. it was clear that one of the jurors lied and omitted

important information that could be integral to this case. from that standpoint, i think that should have been handled differently. otherwise, we will be ready to go. >> prosecutors accuse weinstein's lawyers of systematically trying to keep young women off the panel. the defense saying it didn't want jurors too young to understand the way men and women interacted in the early 1990's. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. joe: the u.s. treasury will start issuing twenty-year bonds, expanding its roster of securities. the new bonds will likely draw more than domestic global funds. here to break it all down is bloomberg's alec harris.

thedoes the treasury decide length of bonds? is it based on demand or their own cash funding needs? >> a little bit of both. treasury was talking about issuing a 50 or 100 year bond, and the committee which is comprised of wall street institutions said, we think you are better off looking at a 20 year. they said, we think you are better off looking at a 20 year. when you are looking at longer-term demands, that is where most of the demand is. not so much in the fifty-year part of the curve, but the twenty-year part. you have a healthy base there already. scarlet: it makes sense. my question is, if i bring back the 20 year bond, it will be the first time since 1986.

why did they take it away to begin with? >> it seemed to be a demand issue. but make no mistake about it. our deficit is growing. issuescurrent crop of stretched to its limit? are we going to have a problem with financing? we already are. it is soto gdp levels, insane. but they need to find other instruments. that was the other thing the secretary said. creating, butre is this going to raise aggregate demand or steal some thunder? >> that is an excellent question. we have to wait and see. the 10 year will continue to be that benchmark.

we have to think about where the demand is for the 30 year. are we going to cannibalize a little bit of that? it remains to be seen. we have to see. the dealers are talking about may. if you are thinking about first half of the year, that will probably be the earliest. on: you mentioned liquidity the 10 year. when the treasury makes these decisions, how important is the for them that the issue be liquid, that there be demand for it quarter after quarter? really great question. when they were talking about the 50 to 100 year, that is where the pushback was. demand is here now, but what do you do? austria can come in and issue a

50 or 100 year bond whenever they want. it is a great question and one that we have to see how it goes. what treasury seems to forget is that just because they can issue at these levels doesn't mean the market will remain unaffected. is the the reason dealers were sitting on all this debt. that is the other side of this equation. very quickly, do we know if the treasury has reached out? >> there is a treasury borrowing advisory committee. get some sortably of inclination on what they are thinking when we get the minutes from that. harriserg's alex keeping us up-to-date on the new bond issued by the treasury.

coming up, more cuts for deutsche bank. this is bloomberg. ♪

romaine: time now for a look at what stories are trending across the bloomberg universe. a hedge fund set up by a former investment manager which has more than quadrupled its assets , sandbarlast year asset management, which started trading in 2018, had about $130 million in assets a year ago, and surged.

story on aom has a snow storm headed to the northeast. it will be the first time since december 2 that new york has gotten more than an inch of snow. it follows a weekend when temperatures reached into the 60's fahrenheit. this season, only 2.7 inches of snow has fallen on manhattan's central park. and bloomberg has reported that starbucks is planning to open more stores in lower income neighborhoods. there are plans for 85 stores by 2025 in these communities, bringing job opportunities, although many are concerned the prices will be too expensive for the residence to afford. you can follow all the stories on your terminal and on bloomberg.com. joe: deutsche bank is cutting the bonus pool at its investment bank by about 30%, deepening pay reductions after a hectic year.

--e with more is how surprising is this news just in the sense that we talk about bonuses being cut all the time and it is deutsche bank? >> both good points. we've seen deutsche bank undergo a massive restructuring. not surprised they want to pull this letter. but still, you've also heard deutsche bank say they are targeting revenue growth. how much can they really cut before they start to lose top talent? scarlet: where exactly are these cuts coming from? haveu are a traitor, what you got to look forward to? >> very good question. the bank is looking at about a 20% overall cut to pay. it seems like the investment bank is probably going to feel the brunt of that.

toy are working on a 30% cut their bonus pool. it will be interesting to see how that shakes out. one thing our sources did tell us, and this was a really incredible story, just that they are starting to look at the top and bottom performers and making sure the bonus cuts don't come equally, so the top performers are hopefully making what they deserve and the bottom performers are getting a little less of that. romaine: this has to affect morale. the cuts have been going on for a while. you wonder how much more is left in the tank for them to do without causing damage. >> there's a really fine line that deutsche bank has to walk. it will be interesting to see how they handle it. they've made ambitious targets for cost-cutting. pay is a big portion of that.

so how can they pull that lever? scarlet: what else have they indicated in terms of where they can grow their presence? in what areas is he investing in? >> this is a really interesting story. you are looking at the fixed income division. equities was the area they said for a long time. seen some.e now has joe: i want to go back to deutsche bank bonus cuts. sometimes you hear they don't want to cut because they have to retain top talent, but if everyone is cutting at the same time, it is not like there's tons of places to go. >> it is interesting. fixed income was really a blowout quarter. cuts arey since these coming right to that division. it will be interesting to see if the other banks can pick up a

few top guys. it is something the banks are always looking at. scarlet: we know that the traders will be asking around for sure. the latest on deutsche bank and bonus cuts. now let's get you a quick check of the latest headlines. max isubled boeing 737 facing another hurdle. software will require additional work on the plane. the 737 max has been grounded since march. itsill continue to shrink north american business. demand from producers is dropping off. still, it is confident it can keep cash flow improving this year. marriage made in marketing heaven. netflix and ben & jerry's teaming up for a new ice cream flavor.

it is peanut butter ice cream. there's even a nondairy version for the lactose intolerant. the companies hope you will grab a pint or two or three next time you binge watch netflix's latest. very dangerous. cream to the ice housing market. housing stocks surging to levels not seen since before the housing crisis. up thisus to wrap week's economic data is jelena of bloomberg economics. what do you make of these housing numbers? >> just calm down. romaine: we are really excited about this. joe: we can't contain ourselves. >> a lot of this jump was driven by warmer than usual weather. the way it works is that housing

stocks usually drop in the month of december by an average of 12%. this time around, they rose. that prompted such a big increase on a seasonally adjusted basis. they believe that housing is going to do better. it is doing better. it is contributing to gdp growth. skeptical this will be an amazing boom in the housing market. joe: let's say that because of the seasonal adjustment we are not going to get this massive surge. there has been the story that played out for a while. setting everything else aside, we have a short it of housing in the u.s. there is the secular trend of needing to build more houses than there are. is that the story you believe will still underpin a long-term

rise? >> absolutely. the structural picture is actually benefiting the housing outlook. we have more and more millennials coming into the age where they will own a house. the structural demand will continue to strengthen. housing a shortage of in the market. in that respect, i think that new housing segment will benefit more than existing home sales. scarlet: interesting. i wonder, when you look at the housing numbers, from your perspective, the banks were talking about mortgage as well. what did you take away from what the banks toldthat square up wie seeing in housing? basically interest rates were low.

mortgage application and housing demand. the signing of the trade deal environmentrisk on will probably push long-term rates higher this year. that will result in slightly higher mortgage rates. scarlet: because the fed doesn't need to do as much? >> just because of the overall environment. see a little bit higher rates. joe: big picture, one of the things people have been concerned about is with policy rates low, the fed is out of ammunition. when you look at housing overall , prices gathering steam a intle bit, is this evidence this particular sector that the moves we saw in 2019 or the

hikes we saw in 2018 still have quite a bit of juice to them? >> but if you look at movement in rates, we never crossed that trough that we reached in 2016. ,f mortgage rates went lower that would probably cause a boost to demand. because a lot of people already refinanced at lower rates and a lot of people purchased houses at those rates, we will probably not see a massive impact. romaine: our thanks to elena. let's switch gears now. suggestions,e some joe. i know you spend every waking moment of your life on twitter. did you think something was wrong? joe: i thought it was perfect.

romaine: he held an event in houston and invited some celebrities on stage. elon musk was there. scarlet: elon musk who has 30.7 million followers. romaine: and asked what we should do to make twitter better. he said, get rid of the -- is that a thing? that het i suspect is tweets and then a thousand people show up in his mentions saying to buy bitcoin. -- for most ofy us, i don't think that is a big issue. interviewe had the with our canada affiliate where he basically talked about how he liked the tweets, saying they showed emotional authenticity, and that is what dorsey seemed to think twitter users should have. almost gotusk also

himself in serious trouble thanks to twitter. i don't know. scarlet: be careful what you wish for. from new york, this is bloomberg. ♪

romaine: president trump's impeachment trial kicks off. the president has named alan dershowitz to represent him as well as ken starr and robert ray. -- sheth the latest is joins us from washington. you've got robert ray. he is most famous for his involvement in whitewater. most of us know ken starr. dershowitz has been a celebrity lawyer for years. what do they bring to the table here with regards to trump? >> a lot of star power and the president is looking at this as not just how he's going to

represent his case in congress, but to the american people. he said that he wanted to use the senate trial to make sure that he presents a robust defense and clears his name and addresses what he would describe as the targets from the house prosecutors. he is seen the cases they've made against this impeachment trial on tv, acting as commentators. he would want them to make the same kind of argument in the senate trial. that is compelling not just to the senators in the chamber, but to people watching at home. joe: barring some unexpected event, his acquittal in the senate is more or less guaranteed. so it is really about these big names appearing on tv. >> right. that is going to be an interesting thing that we see play out. there is going to be a deadline saturday, monday, and tuesday

for trump and for house prosecutors to submit trial briefs in response to each other. we are going to see the first opening salvo from trump's defense team. remember, the trump administration barred officials from participating in the house process and blocked some documents that have been requested by investigators. scarlet: first appearance of a lot of stars there as well. thank you so much. coming up, don't miss this. u.s. equity and bond markets are closed on monday. it is a federal holiday. joe: and i'll be watching the doj. romaine: and, the ecb gives its rate decision on thursday. scarlet: and davos next week. romaine: and a reminder to subscribe to our weekly podcast on itunes. this week you will find our best content each friday.

so enjoy. from new york, this is bloomberg. ♪ here, it all starts with a simple...

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