coming up, we are good to speak to robert shiller, yale university professor of economics. impact of the volatility we saw last week of the resale investor and confidence? we will break it down with him. this is bloomberg. ♪ ♪ alix: stabilization, markets find their footing and charge higher after the worst week for u.s. equities in two years. installation fears, 48 hours from the latest rate on inflation as traders fear the inflation they were looking for. >> risk that interest rates will spike. alix: omb director mick mulvaney warns of highest interest rates -- higher interest rates. david: welcome to "bloomberg daybreak." i am david westin alongside alix steel. you get nervous from the budget director saying we will have an interest rate spike? alix: when you see the headline you are like, that can't be good. buy equities, sell bonds. s&p futures 28 points rebounding from that awful week last week where s&p was actually down the most since the financial crisis, but they rebounded by the end of the close on friday. as sellinglds, 2.88% persists and crude up by almost 2%.

our interview with robert shiller. what he says about the psychology of the markets right now.berg. ♪ markets.s bloomberg >> time now for the bloomberg business flash. toger king continues maintain its position as a restaurant brand. shares something today. burger king is holding its own against mcdonald's and other franchises well others like popeye continue to struggle. cuts andginning effects of the retail business. biggest bullet train system is getting better -- bigger. rail trouble has lost ground to cheaper flights elsewhere. will travelpeople by rail this week, more than the entire u.s. population. >> the s&p 500 its largest swing in history. >> people are playing psychological games. they are wondering when or other people going to self. that is very hard to predict. what do you do as an investor question mark i think it is simple. away from those things. >> you did not really want to own treasuries because they cap selling off. gold sold off as well. utilities got hit because of higher yield. if you need to rebounds, how do you do that question mark >> i think you can

we are marching back up towards the highs of the session and we have economist robert shiller.he guy right there. he is going to stay with a higher interest rates will mean for our economy and specifically your help. this looks better than 99% of the suvs out there. it's very modern... sleek. maybe the most impressive part of the all-new traverse... is what's on the inside. surprise! what are you doing here? i've missed you guys. i haven't seen you guys in so long! what's happening? we flew her out. it's a family car, we had to put your family in it! yeah, it gets 7 thumbs up! that's it. i'm calling kohler about their walk-in bath. nah. not gonna happen. my name is ken. how may i help you? hi, i'm calling about kohler's walk-in bath. excellent! happy to help. huh? hold one moment please... [ finger snaps ] hmm. the kohler walk-in bath features an extra-wide opening and a low step-in at three inches, which is 25 to 60% lower than some leading competitors. the bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. kohler is an expert in bathin

metric mine is one that looks at prices cyclically adjusted earnings and my new yale colleague robert shillerthat ratio is still very he will valted elevated byt it is higher than it was back in 1929 it was only higher in 1999 relative to where it is today. and there is still plenty of down side in that ratio from present levels >> stephen, i guess the reason that would become an acute concern in terms of level of valuation is if the world economy didn't have any momentum where it could somewhat grow into these valuations not fully but at least kind of keep them at bay do you not actually see this period of pretty broad global growth as continuing do you think it's a little fragile? what's your take for the rest of this year? >> i think it's very froth i'ag. momentum is a very fickle characteristic of any economy. sure, the trends on employment and earnings look great and gdp has been up at a solid rate for two to three quarters. but the savings funneldamentals, that's what makes or breaks an economy over the longer haul and the united states doesn't save, as you know, our savings rate of ind

country's top market watchers square on on whether it is time to buy stocks jeremy siegel and robert shiller and they're on opposite sides of that coin. >>> and one of the men caught in the middle of the storm of volatility, doug sifu is with us as well. it's a big hour of big names and we'll see you in about 15 minutes, jon >> sounds great. looking forward it to. thanks, scott. i want to hear more about the kissing cousins liquidity and volatility let's get to rick santelli >> back in '87, i guess my biggest memories are very appropriate today. now granted you didn't have some of the fancier contracts but in the end, the first recognizable issue, the first thing you notice is the fragility of the bid offer spread you saw it yesterday after we really started to escalate down in the down side of the dow jones industrial average, saw that instead of having 10, 15 point bid offer spreads which is in itself a little bit wide, all of a sudden it starts moving in 50 then 100 and 150 point increments very normal. that is the cousin, as i said, of liquidity what normally happens -- excuse me, volati

companies have recently reached their second-highest level since 1888, according to nobel laureate robert shiller's "cape," or c-a- p-e, an acronym for "cyclically- adjusted price/earnings ratio". cnce a share of stock is, in theory, a share ofpany's profits, a high p.e. or price/eaings ratio means a high stock price, relative to profits. using the s&p 500 index, an average of 500 majorompanies, shiller's cape has had three dramatic peaks: the roarin' ¡20s; dot.com boom, and last week. and even though the index dropped almost ten percent at it's still above the ratio in october of 1929. so on a day like today you may be wondering: how low could the market go? well, fit peak on shiller's chart came in 1929 promptly followed by the crash of '29 and the s&p inx bottomed out in march of 1933, having dropped by more than 80 percent.la a sidrop from last week's peak of 2867 would drive the s&p below 600. the dow, below 5000. and what's been the average price/earnings ratio over the entire 129 years? about half of what it closed at today. but before you panic, the highest shiller peak ever was about 40% a

but i read robert shiller who says american shares are the most expensive in the world relative to corporatenings. whether we're talking the president, his sons or this morning ivanka trump is tweeting about the strength and power of the stock market run. how risky is it for this administration to hang their hat on the value of stocks? you and i both knowing how irrational the markets are. >> look, i think it's bizarre political strategy. the one thing we know about the stock market is it fluctuates. it will have periods where it goes up, it will have periods where it goes down. if you take credit when it goes up, you're going to get the blame when it goes down. so this, like so much of what president trump is doing, seems to me short-sighted. look, it's a tragedy in a way, stephanie. our country has everything. we've got the best natural resources. we've got the best workers. we've got the best technology. and university. we've got universities. we've got the best political system. we are the country that people from all over the world want to come to. we just have to keep it together in a

coming up on bloomberg daybreak: europe conversation of laureate of yale, robert shiller.bloomberg." ♪ taylor: this is "bloomberg surveillance." in the u k, barclays operating unit faces criminal charges over its controversial capital fundraising at the height of the financial crisis. this area accuses barclays of unlawful financial assistance that has to do with the $3 billion loan the bank got from cointreau008 step former executives in the bank holding company had already been charged. barclays says it will defend itself. pension fundy firm making a joint bid for specialty chemicals unit. that is according to the financial times. mt says the pension fund p[gg be a minority: besser alongside apollo global management. the akzo unit can be valued at more than $12 billion. the new deal will ensure airbus gets producing its a380 superjumbo for at least the next decade. emirates signed a contract for another 20 of the double-decker planes. $16deal has a list value of billion. last month airbus have the a380 program could be terminated if there was not a new sale soon. that is

dow still down triple digits, down 150 right now with us now is robert shiller, professor of economicst yale university and the head of u.s. equity of b of a merrill lynch savita, i know you crunched the numbers, and your group is taking stock of kind of the technical and sentiment backdrop and all the rest of it where does it all boil down right now? we had the market seemed to price in a lot of good news in january, and is this just a giveback phase >> yeah. no, it's a great question. i think sentiment has basically been driving a lot of the gains we have seen over the last month. and we've kind of cut in half the january gains, which were pretty robust. so i think what's comforting is the fact that earnings are actually coming in pretty well, and guidance is coming in pretty well what we worry about from a numbers basis is that a couple of things seem to be changing. so one, obviously, rates that was the big surprise over the last let's call it five days but, you know, in addition to that, there's also this potential for a big reversal in the dollar, which i think has been maybe a b