this fits with the u.s. over rest of world performance. drawing to holding, a gunshot straight, but everything else is around the table in the minds of the investors. seen narrow markets work basically all of 2017. s&p 500 the dow and just off their low. nasdaq managing -- if: would not have guessed, the big story of the day was apple, the impact that would have on ships. 1.8% on thele down day, netflix up 1%, amazon up 1%, facebook up 7%. tesla 7%.

if you have those big game -- big names in the green. joe: netflix, the ultimate stock for people staying in their homes, probably netflix. romaine: let's dive deeper into the action. taylor riggs, what are you watching? theor: i am looking at chipmakers. the nasdaq is higher but the stocks is lower in part because of the impact they could have on the chip suppliers. so much of the discussion has been about the stocks -- the stoxx being overvalued. oxx p/ecan see, the st ratio still trading at 19.5 times. as much as we talk about the pullback and the fears about apple, it is important to keep in perspective how full some of

these valuations are as we head into some of the uncertainty with the coronavirus. >> i am looking at the traditional inverse correlation between gold and the dollar. as you look at this chart, typically, they tend to move in opposite directions. now, safe haven is driving assets higher on those coronavirus's. gold, trading over $1600 per ounce. that comes even as the dollar strengthens, having its best start to the year since 2018. -- since 2016. with that in mind, and those attempts to contain the coronavirus come april be interesting to monitor that relationship. >> i also have my eye on correlations.

the link between 10 year treasury yields and the s&p 500 is at its strongest in about four years. that means that as yields have dropped this year, so has the s&p 500. stocks and yields are telling the same story thanks to coronavirus fears. that has been defining risk assets. is case inket action point. the 10 year yield is down about three basis points. that is really why you are seeing the correlation strengthen. joe: thank you. still with us, bloomberg news cross asset reporter look how, dunn.ton's erin you were talking about the narrowness of this market, some of the challenges. are there any areas that you

like? sectors are cheap on a historical basis but have been cheap for a while. what do you think looks genuinely compelling here and in position for an upturn? aaron: i think the banks have had a nice run, but credit looks really good, consumer looks really good. opportunitythere is , in a cyclical recovery, that rising rates should accrue to the banks. unlovedone seriously part of the market is energy. did correctlyrket discount energy declines given what is going on in china. valuations since 1991 relative to the rest of the market look reasonably attractive. you have to buy the big

integrateds.- big i think one area we are finding turnaround stories is consumer. very good these days. romaine: what do you make of market sentiment? we have that bank of america-merrill lynch fund manager sentiment for february, people tampering growth expectations by a significant amount. despite that, you still see a lot of treasury buying. peace that together for me. definitely think you see in the retail space, pockets. you saw it in tesla. see it and virgin galactic you have seen it off and on with microsoft. that is definitely an undercurrent. if you want to make the crazy case for equities, you would note that the earnings yield, leslie real yields, the poor

man's equity risk premium, that has improved since the start of the year. the valuation case you could make is better than december 31. the fact that a lot of this so-called smart money continues to love tlt, you have seen gold breakout. people are trying to stay invested but also load up on defensive assets in case things go south. joe: when you talk to clients and investors, how do they feel about this market and their positioning, what they are most anxious about. do they feel excited to be participating in the stock market at these levels? vance, when we talk to clients, we get a lot of interest in value. a lot oflly driven by expectations that the growth areas of the market have

substantially outperformed value over the past several years. actually for one of the longest periods in history. a lot of investors are looking to diversify the risk, that there is a potential leg down. to interest rates accrue longer duration assets, and that is growth stocks. that is driving expansion in a lot of these tech stocks. i think people are very focused on not being exposed as much with that happening. romaine: if you are already sort of invested and overweight equities, how do you take that 13% gain over the past months and reposition or rebalance yourself in a way where you still participate in upside without being too close to that cliff's edge. aaron: i think that is the way that investors are looking at

diversifying into value there is a leadership of the market, that is tech. but i think there is a real big opportunity for leadership to change. i'm not saying value will substantially outperform growth but i think there is an opportunity for leadership to change. i think investors could be looking to diversify their risk. if you own a growth etf, you are heavily invested in a small handful of things. that is a risk we have been flagging for our clients. value, you get the potential to change leadership in the market a little bit. a few companies is really where the market has been focused. joe: i want to go back and talk about the gambling, a little bit of euphoria bubbling under the surface. microsoft, virgin galactic. there is this big enough to

really matter or is this a sentiment check when you get people going crazy with buying on some of these names? it was hard to believe or the idea that a bunch of people on message boards contributing to markets it was see the name they were going to buy and then you see huge spikes in volume. well over 350,000 traded today for virgin galactic. at the end of last year, it was the notional value, half a percent. clearly, there are people will -- people looking to make value bets. whether hedging underneath can drive the stock higher, that can be part of the story. romaine: everyone has decided about space. you are not decide that you are not excited about space?

-- you are not excited about space? you are excited about what's on earth. joe: there's a lot of exciting stuff. romaine: thank you to luke kawa and eaton vance's aaron dunn. that does it for the closing bell. "what'd you miss?" his next. this is bloomberg. ♪

romaine: live from bloomberg world headquarters in new york,

i am romaine bostick. weisenthal.e scarlet fu is off today. romaine: the s&p 500 falling from a record high as apple warns on sales. one of the largest companies in the world cutting its outlook amid a supply and demand disruption from the coronavirus. gold rush. bullion prices at their highest in seven years. reserves dwindled. how much further can the rally go? tech regulation. as the eu plans for tech oversight, facebook ceo mark zuckerberg makes his case in brussels for what the new rules should look like. runningna's economy is at just 40% to 50% of its capacity in the last week, with large variations across sectors. economists scrambling to answer the question, much of china is

back at work and how much remains locked down due to the virus. tom, this is really fascinating work that your team has done. looking in different sectors. it is actually jaw-dropping the degree to which -- i would not even say it is a slowdown. it is almost a complete halt. you can see it across data. several charts that your team made. passenger transportation in china. if we can pull up a chart, you can maybe describe it. it is extraordinary how much it is lower now versus a year ago. >> that is right. china is often criticized for lack of transparency, lack of timeliness on its data. in this instance, there is some really valuable numbers being produced. in particular, they are publishing a daily series on

transport passenger numbers. it is telling us that there has been a really sharp drop in the number of people traveling around china this time of year relative to the same period last year. around 85% drop. the reason that is particularly important is that this is the reason -- this is the moment where hundreds of millions of chinese people should be getting back from the new year's holiday and heading back to the factory. the ande equivalent of of the thanksgiving or christmas break in china. the drop in numbers is an indication that there are some serious problems with china getting back to work. romaine: speaking of factories, you flagged this in your reporting. what does the data show? tom: an important thing to keep in mind about china's economy is that a large part of it is still

industrial. a large part of it is still managed by the state. china'sle who work for state owned enterprises, in general, they live where they work. this is the more traditionally privileged group of china's workforce. they are not the migratory workers. what we are seeing here, in the heavy industrial sector dominated by state owned firms, and where the workers did not perhaps have to travel for their new year break, capacities come back much more quickly. mainyou that in one of the steel producing cities in china, capacity has come back close to its normal level. joe: you have another chart of copper two manufacturers. also, i would just like your perspective.

have you ever seen numbers like this in any country of a slowdown of this magnitude that you can think to compare it to? is a great question. let me speak briefly to this chart. two things going on here. the first one, the entire copper sector is running substantially below capacity. that is striking because copper is often seen as a kind of measure of the overall health of the economy. 50%opper is running at capacity, maybe even a bit less, that is an indication that that is roughly where the economy as a whole is as well. the second thing to take away is there is a big difference between the big firms and small firms. the big firms have got back to work or at least 50% of normal capacity. small firms are still a long way

below that. that is a pattern we are seeing playing out, where the big firms can get the regulatory approvals, they have the support systems in place, and they can start working again. the smaller firms are facing a much larger challenge. coming back to your question, have we ever seen anything like this before? i haven't. but there is one reason why i am not sort of succumbing to pessimism at this point. china can go to extremes on the way down. they can quarantine an entire province, force hundreds of millions of people to stay at home. but they can go to extremes and the other direction as well. as chinese policymakers decide it is time to get people back to work, i think we could see an extreme move in the other direction as people do head to the factory and office pretty quickly. romaine: our thanks to tom

orlik of bloomberg economics. coming up, walmart reports fourth-quarter earnings. why the lackluster holiday sales were not enough to drive down the stock. we will ask robbie from bank of america merrill lynch. this is bloomberg. ♪

joe: one of today's stock is, walmart. they report lackluster holiday sales in the fourth quarter, but they ended up nearly 1.5% on the day. for more insight, we welcome an analyst from bank of america merrill lynch. ratingreiterated his buy and he has a $140 price target

on it. what in your view led to the turnaround? >> you mean with the stock. to: what caused people initially say, bad holiday quarter, that five minutes later, they like it. up 37%, well was above our forecast. if you look at some of the other retailers, target was a little bit later than expected on the e-commerce i. i think the second thing is 2.5%rt did guide for same-store sales this for school -- this fiscal year. talk about retailers, it is the set up or you can buy online, pick up in the store, do whatever you can do. walmart you would think would be best positioned for that given its warehouse structure, given

its brand structure as well. how well are they competing with target on that front? robby: they are competing very well. i think walmart said today that they want to build the world's greatest omni-channel organization. you look at their numbers, nine begin dollars in total revenues, gaining a lot market share. clearly a market share gainer. target is doing well also. there are many other retailers that are not doing so well. i think the market share is coming from a lot of the last position players in the u.s.. e-commerce looking better than expected at least for me growth and declining losses perspective. some of the typical excuses for the physical store weakness. one thing they said today, there was not a hit product this year.

is that a common thing that sometimes there is just nothing things -- nothing people are that excited to buy. robby: it happens. they were not the only retailer who sells toys that said that. they actually did better than i figured they might after target reported disappointing results in their toys business. romaine: obviously to build up the e-commerce site and make this more seamless, you have to spend a lot of money. there is always a sense that amazon has been given a pass on spending. mark have that same sort of leeway with investors? robby: if you look at how performed, but if walmart's capex , they are seeing

expenses in the shift to digital. net result ofe the flattish abit -- flattish ebit margin and net x spending. joe: it did not seem like the risks of the coronavirus got discussed today. does that surprise you? if there is a company that you would associate with lots of inexpensive goods coming from china, walmart is one of the names. could that emerge if we see supply-side disruption? could that become a part of the walmart story that concerns you? robby: it could. walmart said two things about coronavirus today. number one, they have not seen

that there indicate --ld possibly be what could they do to kind of blend that? robby: i think walmart and other larger companies have an advantage from scale. one thing we have heard from many in the supply chain is that if you are a main partner with a factory, you are probably better smaller one.e a romaine: let's get a check of the business flash headlines. almost $4.5d at billion, all cash transaction with a 23% premium to the

closing price friday. it creates an active management investing giant. agreed to sell its rsa security unit to a consortium headed by private equity firm stg. rsa is probably best known for its software tokens that generate random codes that enable access to corporate networks. a credit rating for macy's down a jump. they say the trajectory is weaker than prior expectations. earlier this month, macy's said it would cut about a quarter of the expectations. that is your business flash update. coming up next on this program, gold continuing to shine. why the commodity is getting his moment in the spotlight. from new york, this is bloomberg. ♪ sometimes your small screen is your big screen.

and with the xfinity stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. download your dvr'd shows and movies on the fly. even record from right where you are. whether you're travelling around the country or around the house, keep what you watch with you. download the xfinity stream app and watch all the shows you love.

president trump pardoned or granted clemency to 10 convicts today. among them, former illinois governor rob mccoy of edge, who was -- rod blagojevich. he also part of the former san francisco 49ers owner convicted in a fraud scandal. the president has issued more than two dozen pardons or commutations since taking office. slappingd states is sanctions on a unit of russian oil giant rosneft.

campaignt of the u.s. leader nicolas maduro to step down. >> it began weeks ago and continues to mount. i would not say that any individual step can be calculated to bring an end to the crisis, but i think this is a very significant step and i think you will see companies all over the world in the oil sector now moving away to dealing with rosneft training. mark: senior administration officials warned today that anyone in the world doing business could also be sanctioned. saysnited nations government forces must allow humanitarian aid into conflict

areas in northwest syria. speaking in geneva, the u.n. human rights chief added that it was cool beyond belief that civilians are living under plastic sheeting in freezing -- it was cruel beyond belief that civilians are living under plastic sheeting and being bombed. u.n. secretary general antonio guterres had this reaction. >> to see the syrian people suffering so much is horrible. what we need to do is to do everything we can to stop the suffering of the syrian people. mark: secretary-general gutierrez also called for an immediate source -- immediate cease-fire. 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. i'm mark crumpton. this is bloomberg.

romaine: some breaking news on blue apron. delivery mealod kit company. the company is saying it is considering a range of options. obviously struggling with issues it isales growth and evaluating a range of options including a sale. joe: gold continues to rally. havenhe coronavirus, safe assets continue to look attractive. joining us now with our outlook is standard chartered bank precious metals analyst. gold over $1600 an ounce, highest level since i think early 2013. do you begin to think about the fundamentals or put a price target on here -- on it from here?

>> factors and support on the downside. most importantly it is the upside risk. the last time we saw this move higher above 1600 was when we saw another negative shock to the market. this time, we are again seeing that safe haven buying. but we are looking at is whether investor positioning is overcrowded. we don't think tactical positioning is stretched in we don't think etf holdings are overstretched? romaine: what about the correlation with the dollar. we saw the dollar index rise, we saw gold rise. what do you make of that correlation? >> very interesting. different markets are sending different signals. the markets are suggesting coronavirus impact could be transitory and other markets are suggesting it could have a

longer-term impact. when it isth benefit a flight to safety but at the same time -- get real yields, when they depressed, also gold rallies in a volatility spike. is what we are seeing now with gold more about general anxiety, elevated volatility, or more about this relentless march lower in the long and of the curve. which de facto makes the implied yield on gold which is zero relatively higher. suki: at the moment, we think gold is really looking at what the global impact is. the flight to safety seems to be short-lived if we think it is a short-term negative stock. once it has an impact, that is when real yields become more important. for the moment, the market

trying to shift its focus to where real yields might end up. we think we might see treasury yields edging lower. romaine: talk to me about palladium. i thought the appeal would be that it had some link to global growth and manufacturing. friesen rise seems to be just more speculative, more haven buying. is a completely different story when we are talking about the precious metals complex. the palladium market is vastly undersupplied. we saw markets last year being revised up and we are expecting another huge deficit this year. we have seen subdued supply growth, strong demand across the auto sector, which has mean that the palladium market is undersupplied. joe: what about silver? is that ever going to become a thing again.

i remember like 2011, people were going crazy for silver. little bit ofn a a confused state. investor demand and industrial demand. at the moment, industrial demand has been lackluster. also, investor interest just is not in as strong. tactical investors have preferred to buy gold rather than silver. the silver is a little bit stuck in that has not seen strong investor demand, but there is gold'snough to see it on coattails. romaine: we need the old days of kodak. the priceout not only going up, but at the same time we are seeing reserves come down. at the same time, that is not necessarily translating -- or i

guess it is translating into something positive for the miners because they say they are not writing the same wave that investors on the speculative side might the writing. gold the cost of producing is still relatively low. we have seen equity market outperformance when it comes to the gold miners. in terms of production, that could be relatively more subdued going forward. we tend to think of gold as driven by more of the macro picture, but it will be the underlying price. romaine: our thanks to standard chartered bank precious metals analyst suki. regulators, please, seems to be the message from mark zuckerberg, reducing his tone. we will discuss why. that is coming up next. this is bloomberg. ♪

momo is poland

romaine: time for a look at what is going on across the bloomberg universe. donald trump pardoned the man who owned the san francisco 49ers football team for 23 years and pleaded guilty in 1998. the pardon was announced by a white house spokesman who did not explain why the president issued the pardon. a story on elon musk, who called billionaire bill gates "underwhelming." on's electric car had been mixed. they used a combustion engine for the high-end version.

quicktake by bloomberg has reported that millions of people could be sitting on hundreds of millions of dollars worth of gift cards. -- millions of dollars in gift cards and store credit are floating around the united states. $60 worth ofs have unused credit. you can follow all the stories on your terminal, on bloomberg.com, and on quicktake by bloomberg. making a shocking announcement earlier that it would be letting 35,000 employees go over the next few years. the ceo spoke earlier to .loomberg about the company >> we are shrinking in areas where we think we have clear underperformance and a lack of long-term sustainable competitive advantage. equally in today's plan, what

you see is significant investment in the parts of the business where we do have competitive advantage and we can grow. i think we are absolutely doing both of those things. >> it definitely was an interesting comment from one of the shareholders. it laid the options as binary. what you're saying is you are balancing those two sides of the coin. are you happy that you are getting the balance right? think this is the right thing for the bank to do, the right plan for now. we definitely are looking to invest $100 billion of risk rated assets, around $14 billion to $15 billion worth of capital in the next three years in parts of the business which are performing well, particularly in asia. we think it is the right balance. it is coupled with a cost reduction program and

organizational simplification to allow us to speed up the pace of execution. we think it is a great plan. >> just to pick up on the risk-weighted assets, i would say you are probably at that moment of getting into not bad asset prices and a hunger for yield. just a little bit more on that before we go. >> unsurprisingly, it is in parts of the business, the markets business, global banking and markets. i think we are intending to domesticallyf focused customers in europe and the u.s. on the global banking side. we also are going to exit international customers who are not producing acceptable returns. i think we will be surgical and ruthless in targeting parts of the business where we are not generating acceptable returns.

>> finally, on the u.s. business, just characterize for us what that is going to look like. we know the numbers but what are you trying to achieve. >> on the retail side, we are getting back to where we think we have core competitive advantages in servicing the diaspora population in the u.s. and international customers. what you see is a 30% reduction, praise -- from merely focused on the east coast and focusing on the west coast. side, global market reducing our presence in the u.s. quite material re--- materially and looking to concentrate that business into london. romaine: you were just listening stevenson. ewan shares of settling operator intel set rose today.

urging them to reject a compensation offer from u.s. regulators. they want more money for giving up some of those airwaves and that auction. the company had considered filing chapter 11 bankruptcy. a shakeup at dupont. the chemical company has removed the ceo mark doyle and its finance chief. mark green will run the company. he oversaw the merger with dow chemical and the subsequent split into three companies. dupont is in the midst of an efficiency drive. cut renault's to jump. firstt just posted its annual operating loss. that is your business flash update. zuckerberg calling for more regulation. after years of the facebook ceo

lobbying against it, he is now pleading for new rules. for more, let's bring in sarah miller, executive director of the american economic liberties project. also, cochair of freedom from facebook, progressive groups who brought the idea of breaking up facebook into the mainstream. thank you for joining us do you put any stock when a tech ceo goes to government and says, please, more regulation? >> no. we have seen this before. we want to see basically government take what mark zuckerberg is saying and largely do the opposite. it is a roadmap for what we don't want to do. they are trying shape the narrative and lay the parameters. if you look at the white paper facebook put out a few days ago, it does not talk about antitrust or digital advertising. things, it tries to push

they are already doing, enshrined into regulation, would actually help to entrench their market power. of the prnot take any seriously. at this point, not a lot of people are. romaine: there is this issue that zuckerberg and others brought up, this idea that you don't really have, at least in any structural form, regulators that have set the terms for the way a lot of these social media companies operate. rather than just saying facebook should police itself and its own content, the argument for the company, create some sort of regulatory structure and we will follow it. what should that look like? approach that looks at competition, market structure, and also regulation. you need to keep the structural separation at the front of the conversation. they are all monopolies,

specialty facebook and google. they make their money off of monopolizing digital advertising, which is obliterating legitimate sources of news all around the world that really needs to be at the center of this. they don't want to talk about market structure or the roman appellee power. you see facebook start to react by spinning these regulatory approaches. last couple of years, thanks to your efforts and others, there has been more discussion in the u.s. about eventually doing something on regulation or even antitrust. in europe, clearly they move faster on this stuff, the regulators are more aggressive, they take stronger action. does anything matter in the end? every once in a while, we will get some headline about some judgment from google or

something like that. then it seems like nothing ever really changes. is there anything they are doing or could do that would meaningfully change the rules of the game for these big companies or, in the end, to the end up ?peed bumps that they write off >> i don't think so. where they are going, we see antitrust investigations both in the u.s. and in europe also. we have state attorneys general, bipartisan, 50 looking into antitrust violations from google. these take a little bit of time, but i think we are really seeing a reawakening of questions and policy that look at structure, look and power in a way that we i think for a long time that is understandable as the conventional wisdom. we have not seen antitrust actions since microsoft.

but i don't think that is necessarily a safe bet to make. this is a really important time to be having this conversation. romaine: picking up the cue from europe, obviously a lot of ripple effects across the world. this time around, you are already starting to see pushback from the trump administration that the u.s. would tax internet companies. just looking at the political tea leaves in washington, do you think if we got some kind of grand plan out of the eu on wednesday, that the u.s. political environment is set in a way that it will be willing to piggyback off of that. >> i think there is so much happening across the spectrum and we are looking to the eu for leadership. he did mention the tax they are proposing. i was a little bit nervous about that tax as well. revenue, google $130 billion.

astronomical amounts of money that they are making here. it is understandable that you would have governments that want to say, let's pay. they are very good at avoiding taxes and finding lots of creative ways to do that. i do think it is dangerous to place special taxes on monopolies. what we want to do is break up those monopolies. we don't want to create them as a dependency, a dependent revenue source for government. i have some concern about that it is probably a different type of concern then they trump ministration has. i think they should be paying we should not create a dependency on these toxic business models. romaine: thank you, sarah miller. from new york, this is bloomberg. ♪

joe: now, asia and.

the coronavirus rattling outlooks from cupertino to singapore. downgrading for the year as a threat about the threat of outbreaks way on trade. we don't know how long singapore and other countries will be under intense threat of virus. but we do know that it appears that will be serious stimulus applied as they come out of it, including fiscal stimulus. shery: singapore, hong kong, china. president moon jae-in of south korea also hinting that stimulus measures would be coming soon. more measures to support the economy as we continue to see the outbreak. the singapore showing their biggest budget deficit since at least 1997. for the next fiscal year, they are planning to spend $4.6 billion, which also includes

$800 million just fighting the virus. they have more than 70 confirmed cases. romaine: there were commitments in the phase one trade deal and people it would be hard for china to meet those commitments given the fallout of the coronavirus. shery: we have seen signs from beijing that they will follow on those commitments. we have seen them lift some of these. we continue to see the signs dot they will continue to the stimulus as well. joe: don't miss this. the fed releasing its minutes tomorrow at 6:00 p.m. eastern romaine: the number for u.s. housing start at 8:30 a.m. eastern time joe: this is bloomberg. ♪

taylor: welcome to "bloomberg markets." i am taylor riggs, with paul allen in sydney. ♪ coming up, beijing buys the -- the world health organization says quarantine measures gave the rest of the world several weeks to prepare for the coronavirus. u.s. stocks fall after apple cut its outlook for the second time