involved. people are a little bit afraid. i still think people remember how much money are lost. high prices,lly they get nervous about -- there has to be something lurking around the next corner. romaine: we ended last month and week some of the last weeks and months. the s&p up 0.7%. russell 2000. the joe: small caps, we are used to seeing them underperform. up 1.12%. romaine: let's dive deeper into the action with our reporters. i am on copper watch because once again, copper is started to slide

before the coronavirus reports really hit here in the u.s. china, the world's largest user of natural resources, so a tell on the fears around the coronavirus. we have been looking at a chart of copper over the last two weeks. the s&p 500 basically flat. this is a long-term chart. copper, you can see that copper underperformed stocks in a big way. copper coming out of the financial crisis really gained on stocks. over the last number of years, copper really underperforming. interesting signal perhaps for

the global economy over the medium to long-term. >> i have, and i on another commodity. oil. brent under pressure by 4%. behind by 3%. that following the action of the chinese markets. the extended lunar holiday. here, closely correlated. if you look at wti futures low.day, it fell right very briefly before popping back , thenght around noon closing right below. something very interesting to watch if that technical level

holds. >> the energy industry may have seen quite a few hits today but that did not stop pg&e from rising. one step closer to exiting bankruptcy. pg&e is offering overhaul at the board with safety experts to win real approval. question, is that enough for california governor gavin newsom? restructuring offered several steps but it still fell short of all of them. the most notable demand, giving the state the option to take over the bankrupted utility. shares have been on a decline the past three years since deadly wildfires. pg&e is planning to exit from bankruptcy july 30. romaine: alphabet earnings

crossing the wire at the moment. 1535, against nsp enough 1237. -- against an estimate of an 1237. thein coming in 20% versus 21% on the previous quarter a year ago. billion, well below the estimate of 7.8 7 billion. that the a little note company is reporting breaking out cloud and youtube results for the first time. maybe tells us something of what they want to highlight as potential growth engines. we will continue to watch those numbers. chiefwith us, city strategist, tobias. one of the things that has been

striking since the run-up we have seen, people piling into these mega caps. is there anything inherently unsustainable about their outperformance or is this what we can expect when there is able market? keynes said maynard markets can remain irrational longer than you can remain solvent. secular growth prospects, things like that. as the stocks go up, there is this element of price momentum that draws in even more investors. is ag to call the top dangerous exercise. in the late 1990's -- and i am not really comparing the two, but during that period, people

were starting to talk about warren buffett saying, if you extrapolate these trends, they will be the market in a few years. romaine: i think anyone being honest with himself and look at this and say, there is definitely a little bit too much there in certain places. ,f you are trying to strategize figure out where you want to be ,ver the next year and 10 years hattie you position yourself with this prospect? perspective10 year is a little bit different. you have to have sometimes an iron stomach to handle those things. romaine: or just don't look at your portfolio. daily: you do not get a

mark to market so you don't over trade. the other piece of this, you are bell. i'm going to take some risk and some defensive positions. we like semiconductors as a play in technology and cyclicality. i want some health care on the side. consumer services as opposed to consumer durables. joe: some headlines. chinas says q1 gdp in lowered by 2%. for the whole year 2020, shaving estimates on gdp concerns of the virus. 2019 was not particularly good for the u.s. or global economy. that trade inght some uncertain date -- some

uncertainty would go away. how do things look relative to how fast the market has run up? tobias: much of what happened last year is the inverse to what happened in the fourth quarter of 2018. worried in the fourth quarter of 2018 about the fed raising rates. by march or april, they had pivoted but everyone was worried about trade. none of these things kind of not stop -- knocked us off. wage growth has helped, an important element of the economy. gdp is the true consumer spending. bizarrely, it is still reported

as consumer spending. 52% is the right number to think about. capital expenditures have been supported particularly by technology. there is no reason for that to immediately drop off. we are still spending money on productivity enhancements with software. improvement, and that is not going to be there now because of the coronavirus. citiine: our thanks to chief equity strategist. after hours. lower they did miss on some of those bottom line numbers. they did breakout numbers for the first time for their youtube and cloud business. that does it for the closing

bell. "what'd you miss?" is next where we will be joined by paul krugman. this is bloomberg. ♪

romaine: live from robert -- from bloomberg world headquarters in new york, i am romaine bostick. joe: i am joe weisenthal. romaine: the dow, the s&p, and the nasdaq all closing in the green. the china trade deal

may give beijing flexibility due to the coronavirus follow-up. presidential hopefuls in the first formal contest. nobel prize-winning economist paul krugman joins us to discuss the fed, mmt, and more. joe: alphabet reporting earnings after the bell which miss analyst expectations a little bit. revenue is kind of the number that seems to be moving things. billion. in at $37.5 you can see the market reaction. romaine: you are talking about the traffic acquisition, 8.5 billion. eps came inumbers, a little bit better and

expectation. also notable, the company is breaking out cloud and youtube revenue for the first time. for more on alphabet and the see youret's welcome portfolio manager daniel morgan. this modest selloff after hours. we know that over the past few months, big tech including alphabet, has had a big run. revenue seems to be catching attention. does this change the story much for the company? daniel: the ad revenue number came in $37.9 billion. i think the street was looking for $38.1 billion. last week, we had those facebook numbers. even though facebook is today 25% jump in ad revenue, it was a

little bit lower than what they had earned the previous quarters. everyone seems very concerned with a sequential slowdown in terms of growth and net ad space. i think that is one of the things probably weighing on the stock right now. romaine: interesting perspective. josette,breakout, as theirjoe said, some of biggest businesses. >> that is a pretty good number. we have to bury mind, as you know, that was encompassed in the ad revenue number. that was the fastest-growing segment. every time you going youtube, you have to sit through some 62nd video from advertising.

compete going to try to through the likes of amazon, .isney areas, one of the key can they grow that, and what are they going to do with it? now they are breaking it out, that is huge because we will start getting some growth rates. revenue, 2.6 billion. they are considered to be like a third player with microsoft and amazon dominating the space. did they do a little over 2 billion? i heard the number earlier. to answer your question, i think they are starting to get some traction.

they invested $25 billion last year to compete directly against microsoft as sort and amazon aws . their run rate a couple of quarters ago was about 8 billion. i think they are slowly starting to gain some traction. at this point, i think it is still kind of a two-horse race. romaine: let's talk a little bit about some of the regulatory and legal issues. i believe google lost its lead lawyer a couple of months ago. do you think this would be an impediment to future growth? daniel: i think the big impediment is like what we saw with facebook where they did a big charge-off to the ftc couple of quarters ago.

i think the big issue, how much money they have to decide in terms of increasing security, satisfying all these regulators. it is a very complicated case. i am sure you guys remember back when microsoft -- everyone thought they were a monopoly and they were kind of getting a slap in the hand and nothing really happened. it is too early to tell what the ramifications will be but it is something we have to keep an eye on. the biggest issue is how much they have to write off and how much do they have to spend to satisfy these people? joe: has anything changed overall? maybe ad revenue coming in a little bit slower than people previously thought, but there whereuarters in the past

these companies had little cups here or there. has anyone changed at these companies? is an oldcebook model, growing and revenue. probably still growing at 17%. online advertising is very, very good. amazon last week, there other revenue category, mostly advertising, it was up 41%. incrediblyeally buoyant markets for online advertising. for the tech bubble hit around 2000, that whole area was banished. it is still really, really good. but everybody likes to kind of throw darts at it. still very viable right now.

romaine: always great to get your perspective. coming up a little bit later on this program, nobel prize-winning economist paul krugman joins us to discuss his latest book, plus take some a lot of topics. this is bloomberg. ♪

joe: reports are out that chinese officials are hoping the u.s. will agree to some flexibility on credit -- on pledges in the phase one trade deal. the outbreak has threatened to

slow the economy. shery ahn joins us. already company commit its china made, it would be really tough. now, the situation makes it even harder. shery: what is happening in china right now, there is a lot of reason that they would want to start middle of this month. a release point for beijing could be disclosed within the phase one trade deal. or otherr unforeseeable event delays the party from complying with its obligations. basically, horrible things happen in your country, we can talk about it. we have not seen any moves are

any confirmation that this will happen. $32 billion of agricultural purposes -- agricultural purchases. oil demand must have been cut from china given what they are facing. romaine: tied into all of this is the idea of economic growth. be, apparently china might considering reducing its 6% target for growth? shery: it didn't mean too much. perhaps people have said, time to give up the target. still, they have held onto the around 6% growth target. perhaps this may be in the works, according to sources in china that are telling us they are seeing a big impact on the chinese economy. two thirds of the economy is

closed because provinces have just lengthened the lunar new year holiday. it would not be surprising if you saw beijing talking with the u.s. on changing some of the time frames for these commitments. so far, there have been tensions between the two. the chinese foreign ministry spokeswoman actually blaming the u.s. for overreacting to this virus she says the u.s. government has not provided substantial assistance. it was the first to suggest partial withdrawal of the embassy staff and the first to impose a travel ban. she said this was a bad example. a u.s. national security advisor saying that beijing did not really say anything in response to that.

obviously, taking extreme measures to isolate people within the country itself and millions of people are still on lockdown. and right now, lots of airlines still not flying to and from china. cvs is cutting three directors from its board. at $68 and 2018. they said, with the bulk of the integration complete, it was time. fortisding unit at generating more profits than ever. it is up to about half of the profits. you lend the money to the dealers, then to consumers who buy them. unit forrelying on the

outlays on electric and self driving cars. the super bowl win could be worth as much as $7 million a year for quarterback patrick mahomes. that is what one advertising agency estimates he could make in additional income. he was already a household name and face. he says the super bowl ring could make him the most marketable player in the nhl. coming up next, nobel prize-winning economist paul krugman will join us. this is bloomberg. ♪

>> let's get the first word. managers adam schiff completed his final argument in the impeachment trial today. he called trump a man without character or a moral compass. that thed constitution's framers said they gave you a remedy and you can seen asernie sanders is the likely winner of the first major test of democratic presidential contenders. the iowa caucuses are tonight

and eight new emerson caucus paul has sanders winning, followed by joe biden. elizabeth warren is in a virtual time for third at 14%. between u.k.ttle and the european union resumed today. british prime minister boris johnson clashed with the chief negotiate -- the chief negotiator during trade talks. johnson rejected the deal, saying that u.k. will thrive even if negotiations fail in prime minister narendra modi -- if negotiations fail. indian prime minister narendra modi says protests are a distraction. thousands of taken to the laws to granttest

immigrants except muslims. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. romaine: alphabet shares moving lower in after hours. the reported revenue that came in a little bit lighter than what wall street was expect. let's go to san francisco where taylor rate is standing by. taylor: i think there are two conflicting messages here. increased financial disclosure, they had been waiting for this. justify said this could a re-rating and the stock, that if you really start to break out these high growth areas, how

could the company respond? i got off the phone and they said, we have listened, we hear expandedwe have now our financial disclosure. fourth quarter cloud revenue came in at $2.6 billion. youtube revenue for the last quarter, $2.7 billion. youtube is over $15 billion, double the rate it was in 2017. analysts on one point here are really happy about the increased financial disclosure. on the other side of the break -- the other side you mentioned, about the operating revenue and margins. what is going on on the right side of the balance sheet? she said frankly that they had

been looking for investing, building out the search business as they look at hardware. she did not mention this, but i would note that traffic acquisition costs are up, meeting the ad costs are rising. they are investing to support earnings per share growth. trustd not translate into and privacy. are you -- i think maybe we can read through the lines a little bit. riggs,anks to taylor earning us the latest on alphabet. switching gears, we are joined economist,gman, the

columnist for the new york times, and author of a new book, "arguing with zombies." thank you for joining us. why did you write another book? what is the purpose? largely a collection of previous writing. pulling stuff together. it is an election year. the zombies are running wild. time to gets a good that stuff out. thatn the idea is an idea idea is an idea that can't be defeated by evidence. fight -- ambie fied political body right

now. moving the world to these austerity measures was largely on the back of a misinterpretation of the role debt played? in 2010, still mass unemployment. shifted toerybody say, debt is the problem and we need to do austerity policies. course, nowing, of we did a 180 and we are having a-palooza under trump. is: what we don't have inflation. i think a lot of people would have guessed, if you are running seeillion deficit, we would

some upward price pressure. degrees aside, to what should the federal reserve for economics profession re-think spending and inflation? send -- on the spending side, before the crisis, if you ask economists the multiplierht of government spending would be, 1.5. on the demand side, it has worked very well. it is a clean little secret. surprise is the labor market. weyou had asked me, wouldn't be seeing inflation at 1.5? i would have said yes.

no relationship, that can't be right. 95% of adults were employed, surely we would see upward wage pressure. less good idea of how full is full employment. the fed has been consistently wrong, thought we had no slack and it turns out we did. romaine: we talk about the fed missing some of its targets, is this a function of them getting it wrong or is it more about implementation? they did a't think bad job in practice. they had easy money would we needed easy money. it is not clear there is much

more the fed could have done to boost the economy. i am a qe skeptic. aboutd need to think their analytics but i don't think they have screwed up to bed on actual policy. it has not been able to generate inflation in terms of consumer prices on a sustained basis. but, those prices are a function of low interest rates, low nominal rates. how much of a link is there between these valuations and the approach to the federal reserve? and so prices are high are asset prices. it looks like a lot of corporate

profits are actually monopoly rents. the low interest rates, are they somewhat wrong? this is only a problem if you think they low interest rates are inappropriate. we have a world that is awash in savings with no place to go. our interest rates are insufficient to keep us at full employment. rates, that isn incredible. romaine: you don't think there is a need to move rates back a little higher? actually makes things worse. you don't want to bring the inflation rate down further. fed -- maybe the something like thousand bubble.

even there, it is a little bit hard. for us to say the fed should be raising interest rates, that doesn't make sense. joe: how does economist take an exaggerated shock like the -- ex theous shock like coronavirus? day: i just wrote the other about the coronavirus, starting with a boneheaded remark by wilbur ross. is it good for america? no. we have this world of supply chains. it can be highly disruptive. but itt know that yet certainly looks like it could be.

one of the things to worry about, if it is a significant negative shock, we don't have a a lot of cushion. japan has zerof room to cut interest rates. romaine: is there not a central bank policy response that would be effective? bernanke still thinks that quantitative easing and do a lot. hadfed funds rate really not much room to fall and it is still an open question whether the other stuff they do as real traction. krugman will be sticking with us. this is bloomberg. ♪

romaine: still with us is paul krugman, distinguished professor at the city university of new york. ,e is the author of a new book "arguing with somebody's." in iowa right now, there are a lot of folks who would say they are fighting for a better future. ands like bernie sanders elizabeth warren. then you have people like biden who maybe want to do things anymore practical way. worried by any of the candidates.

i am a pretty progressive guy myself. if i could leave the magic wand and get us a single-payer, i would do it. i don't think it is politically possible. sandersice, if bernie or elizabeth warren become the nominee, they what have to limit their goals because there is alyssa much you can get, so they doing a more moderate program. but the democratic party has moved left. i think the actual policies presented by centrist democrats or leftist democrats would be very similar. joe: a lot of people think trump is a good chance of getting reelection. traditionally, times, good

economy tends to favor the incumbent. to take thet were white house, as you look at the economy overall, what do you k ul the urgent thing to address? i think we need to enhance obamacare. we can get another 15 million people insured quite easily. my next priority would be children. america has the most stingy, inadequate childcare policies. it is not a lot of money. a relatively small amount of money spent early on children would do a a lot to enhance america. romaine: when you talk about these programs and how you pay for them of there seems to be this debate as to how you would

justify paying for them. last week, we spoke with stephanie kelton, who has been moving some aspects of mmt. think a lot of people are looking at policymaking through the mmt lens. i think we are trapped in a framework where every policymaker is expected to lay out a clear blueprint for every policy item on their agenda, how are you going to pay for it? romaine: do we still need that sort of pay go framework? mmt, the weird thing about i can't really think about what it is. what she is saying is similar to what mainstream economists are saying, similar to what larry

summers is saying. have comebly, they out with cases, we need more fiscal stimulus, we need to worry less about the debt, but they would say they have been saying that for a while. i have been telling people for years that worries are greatly overblown. joe: let's talk about something that definitely the next president will have control over, nomination of the next fed chair. there was a discussion of whether obama could have filled vacancies on the fed board more aggressively. trump-pence said he regrets his has said he-- trump regrets his choice of fed chair.

powell, and the framework review, is there something you hope they get with that? paul: powell raised rates early but that was fed consensus. institutional failure. i still, the fed is one of our institutions that is still functioning well, still has smart people, comfortably minded. being that are flaky appointed to the fed board. reached have we sort of where we giveoint carte blanche to whoever the

next president is? paul: i was saying not long ago that the cult of fed independence had gone too far. change in the administration and of all the people that you would ever want and tellonetary policy do, it would not be high on the list. now we have some very strange people on the executive side. joe: let's go back to the rate hikes. bernankeyellen or would have made the same decisions. anetheless, next time we have downturn, is there any way to avoid repeating some of the same institutional failures, the

reluctance to cut rates early on, the number of people who said we need to raise rates. the market expectations were totally wrong. remove fromay to always that dna that makes them want to cut rates? paul: this is a problem. i think the problem is that central bankers tend to hang out with bankers. i am not sure exactly how you change it. it is not clear that appointing more politicians the fed board or more political hacks to the fed port will solve that. for years now, people like larry summers said the fed should not raise rates until they see the eyes. in inflation's

krugman, distinguished professor of economics and the author of a new book. this is bloomberg. ♪

romaine: the u.s. holds his first contest in the 2020 presidential nominating cycle today with the iowa caucus. withore, let's go to iowa david westin. we are only a few hours away from knowing the results. what are we expecting to find out? >> we will find out who the democrats in iowa think should be their candidate for president. itis the first, which makes the most important in many respects.

let's be honest, we have at had afour people -- we from polls with one result, another call today with another. we don't know yet. of the winter, what is your big question? the headline, wins the caucus, but what is the next thing you are curious about? >> comes in fourth. toticularly when it comes elizabeth warren and the former vice president, if either of them were to come in fourth, it would really raise questions about retooling their campaign. joe biden has been the leader since the beginning and elizabeth warren at that big surge.

joe: be sure to stay with bloomberg for complete coverage of the iowa caucus starting at 10:00 p.m. eastern. romaine: "bloomberg technology" is next. joe: this is bloomberg. ♪

to "bloomberge markets." coming up in the next hour, coronavirus fears. potentialof the deadly virus crop up. investor insights on how to deal with uncertainty. how companies are dealing with the virus. apple t