credit suisse doing quite well. gains in some of the consumer staples. an tobacco is up. he is up. .ake a look at the losers side there are fairly few and far between. agricolee credit taking the most points away from the stoxx 600. credit agricole had its net income out that just barely missed its estimate. same with its revenue, barely missing. it is disappointing traders today. down 1.5%. thyssenkrupp beat the estimates. i will dig deeper into that german stock. let's talk about the fx story. the yen has climbed to a 15 month high as traders await key inflation data from the u.s. european stocks opening very firmly today in positive territory. -- tim now is tim graph graff. theve to ask you about effect on european stocks. that is a domestic issue. that is a mathematical issue. does it worry you that investors are running for the safe haven yen trade. tim: a little bit. over the last week we have had a pick up in volatility. it is some resemblance of conditions being transmitted in the fx market that maybe aren't as a parent and the global equity marke

it is a sizable benefit credit suisse will have from the tax reform.mportant to remember that credit suisse has a larger u.s. businessman many banking peers. it is probably one of the bigger beneficiaries. vonnie: what is said if anything about the two point -- the product that was right -- that the regulators are now examining? >> they said firstly they did not experience trading losses. i think the short volatility etm billy --redeemed, made maybe marketed to institutional thestors and he said investors were extremely clear but the risks involved in the key point is they did not really experience any trading losses. thesevenues with selling were pretty immaterial in the grand scheme of things. >> and it looked like he had done his homework on that and said that it was meant for hedge funds and not retail investors. how does credit suisse look compared to peers at the moment? >> the rebound is a long way. months,n the last six what we are seeing is it is time to deliver this year. we are waiting to see whether the strategy of selling structured produc

wi with credit suisse, what is the result of that tax overhaul? >> they said the impact would be sizable relative to other european banks to the tune of 2.3 billion swiss francs we saw that in the numbers today. that's the main reason that credit suisse posted its third annual loss in a row without the tax impact he said they still made and generated profits of 2 billion swiss francs, so going forward the underlying business has that momentum and going forward hopefully the market can look to -- look past these one-off impacts. the dta impact, the writeoffs onof some of these deferred writeoffs is very much particularly to the fourth quarter but going forward the fact they have to pay less taxes is a good thing for a bank's earnings potential. back to you. >> for more on the third consecutive loss by credit suisse and i would they're adopting a cautious short-term outlook, head to cnbc.com. >>> credit agricole saw net income rise 33% in the fourth quarter despite a 384 million euro charge caused by french and american tax law changes that have als

credit suisse credit suisse shares are lower in european trading. let's show you what they are doing. it will come believe me have faith right. tom, european banks, deutsche bank was quite a surprise. there was a moment of groundhog day for john cryan he said the restructuring would be material, but the third annual loss and investors do not like the pace of restrict suuctg at the bank. >> the outlook for european banks ought to be fairly good. an environment of slowly but steadily rising interest rates, you know, should be good for widening margins at the banks. the economy is picking up. but there's been baggage there that needs sorting out maybe you're right the pace is slower than people would hope for >> how would you approach the banking sector >> i think that if you look at the value or the growth trade, which is going to do well in an environment of an improving economy and rising interest rates, then you have to think that some of the value stocks which would include financials, would be the place to be i think with so much uncertainty, you

credit suisse reports. investors assess the banks turnaround plan. .e speak to the ceo ♪ anna: good morning everybody this is "bloomberg daybreak: europe." let's get to the numbers from credit suisse, this was powerhouse giving us their numbers -- the swiss powerhouse giving us their numbers. , 12.8%.uarter they say that is a strong start to 2018 market dependent activity. full-year dividend per share is 0.25 and swiss franc -- in swiss franc. also veryn trading much in focus, that is still 30% of this business, even though they have pivoted towards what management. -- of this business, even though they have wealth management. they had to liquidate the products related to vix. getting down the profit and loss 2.14 -- 2.1 3ss -- 2.13 billion, which looks to be smaller than expected. we will speak to the ceo tidjane thiam later. we will bring that to you in the 6:30 portion of our program. agricole got credit bucking the trading trend. that is an unexpected increase in their trading revenue. that has defined

jim sweeney of credit suisse will stay with us. cio cÁrdenas, the colombian finance minister. we also speak about credit rating agencies. this is bloomberg. ♪ tom: good morning, everyone. markets reversed. "bloomberg surveillance" in new york and in london. jon ferro would call it a witchy market, a lippy market. dell futures actually red on the screen, -10, and the vix at the 32 level. francine? justine: yes, tom, we are looking at some of the news in the premarket in the u.s. we have seen the u.s. and also the fedex, this is as, we understand, amazon may be beginning its own delivery service. we know when we shop on amazon that they use other delivery services. at the moment, we understand they are exploring a delivery exit, tom. tom: really fascinating. it will be interesting to see how they dabble on the boxes outside our front door. holding a record number of amazon boxes outside their door, francine, is james sweeney of credit suisse. how many boxes have been outside? james: probably 10. tom: francine, do they have come in the

as we have seen from credit suisse. but the positives for our banking sector are also very clear, aren't they? in relation to revenues on trading. >> trading might enter the profit area for these banks. when you get volatility in markets, it introduces trading. that is the ideal situation for the banks. the banks are trading a tangible value in europe. we on primarily 4% and we are trading at 10 times earnings. in the u.s., 18 times earnings with a 2% dividend. good value and very good beneficiaries of what we think will probably be a steepening of the yield curves. francine: do you expect, or are you worried that the volatility we saw last week in equities and the vix will spread to the credit market? geraldine: well, i suppose he activities to be effective to affect the credit market. so far, i would say the volatility is contained to the market. there is a technical element to it. we do not feel the need to revise our forecasts. we have been looking at valuations. they are as attractive lately. we have been recommend

credit suisse is the biggest holder of that note. they hold about 30%.ve come out reassuring the market, we will not have losses on this event. it will not have implications for the p&l. we have not gotten notices from investors say we have lost x y. suisse's announcement that they would buy the bonds back on february 20. the implication will be that people will lose a big fraction of their money. investors,e retail execution all investors. the question is how much have you hedge against possible losses. at the end of the day no one -- at the end of the day someone will have to lose money. for credit suisse we can say that they will not post losses on this trade. mark: what are the stresses that we see? we have had an redemption of one of theirs. there have been a number of etp suspended from trading? jan-henrik: yes. we have seen a couple of notes being suspended from trading. my assumption is over the next days we will see more of these announcements. banks havingswiss halted the trading and they are p. notes -- and there in -- and their epn notes. the

and shahab jalinoos of credit suisse is with us.ot to call you old. >> careful. michael: you have seen the political stuff come and go, do the markets care about any of this day today step in washington -- stuff in washington? >> they do not seem to, amazing how blasÉ the attitude of investors as. -- investors is. whether there is too much overconfidence, that is a factor. tohave to always come down the possibility that the markets are smarter than they -- some of the media, not bloomberg, but in overreacting to very ephemeral situations and separating bp wheathe chaff -- the from the chaff. if i am in a remote area and do not have access to the media, i come back and realize how much went on in the meanwhile that is not relevant and has been superseded. that is something you have to keep into perspective, maybe markets are correct and saying this does not matter. suckeduld be very much in by the idea we have had since the long bull market, nobody cares. francine: we care about surveillance. we will be back with gary shilling and sh

credit suisse confirms it experienced no trading losses.ere no trading losses from velocity shares. those are not actual shares of the etn's. it is the losses over the bank and they have not seen that right now. we need to be careful with the news flow. francine: we have to be very careful come of the story was basically related because credit suisse early this morning was one of the biggest share declines that was indicated around 6% lower. , butnow down to 2.5% basically they are the biggest holder of this velocity shares daily short-term. etf the etf. credit suisse saying they have not taken a loss, but they have a 32% stake in this product. for thoseeadline waking up in america is the vix going from 37 to 44 earlier. we will have much more on that with our steam guests. first, here's taylor riggs. global stocks selloff resumed hours after the dow jones industrial suffered its worst point plunge ever. the nikkei 225 lost almost 5%. the euro stoxx 50 is also falling again. we will have more coming up in a moment. there's a report that pre

clearly, asia-pacific has been a big help to credit suisse.to move down a towards the mediterranean, $.32 per share. commerzbank, as well as another one with reinstated dividends, are they right to be shorting italian banks now? have twon: you interesting points. one, the dividend. the other, italy. italy, specifically there is an election coming up in a matter of weeks. at the moment the polls indicate that there is no clear party likely to have a majority. indeed, it is likely that there is not even a coalition group that will have a party. in which case, it is conceivable that the five that are pulling the highest could be invited to try to form a government. i don't think the market is prepared for that. the northern league, i think those headlines would be uncomfortable. in the short-term, i have sympathy with some concern around italy and europe. however, in on the dividend point i think you make it interesting, those companies raising the dividend. what we look at over the next couple of years, current european return is around 120 basi

why is it good that credit suisse had no skin in the game?ey did have skin in the game. certainly, they have exposure that they then have to hedge a broad definition of skin in the game, they still have some. they have some risk they have to take care of. involved.till sort of, whats, obligations do the banks have when these things blow up, as they did yesterday? david: and what about potential reputational risk? nomar apologizing that people lost their shirt. they lost 96% of the value. a good question. i think some of these banks respond to their stock price. one reason credit suisse came out is because trading in europe was getting hit pretty hard because of their exposure to these products. that is one reason they came out, to make sure the stock price has a floor underneath it. we already heard about some people putting together a lawsuit against credit suisse yesterday, so that's an early stages. there is certainly reputational damage year. david: thank you, a terrific piece you have out there. alix: joining us now is mark critz nagel,

david: you point out this is good news for credit suisse shareholders.rt the bank, but what about their reputation with their clients and customers? is a good news to say, we sold do these we did not have exposure, but you lost your money? n-henrik: i am not saying it is great news, it is a matter of perspective. for clients, obviously, a bad thing. no client has said, we suffered a loss of a certain size, probably retail investors will be involved. what i am hearing from people in the market and institutional investors and hedge funds and the like, they have probably been hedged against. these potential losses. at the end of the day, someone will lose money and we can ask this question later. i think you can look at it from various perspectives. i think what credit suisse once toavoid is having -- wants avoid is having bad headlines over its global markets units. i think that tension is not so good, and nothing they would have liked ahead of this. david: thank you, that is jan-henrik foerster in zurich. alix: one thing they will not like is this chart.

why the focus on credit suisse?ecause of the collapse of two inverse exchange traded products. as the vix was spiking, these products were falling. , credits these products suisse was a big colder of these products. there is no material impact so keep that in mind. on to the earnings, we got ep down by the present. not a bad move. all of those resulted in market selloff because of disappointment. or in terms of profit. we haven't seen that today. a better picture coming out of bp. a falling market. a host of natural disasters that really impacted on this is this during last year -- on this business during last year. matt. much.anna, thank you very still with us, steven major. gonorrhoeae,eter -- peter, let me start with you. you call this correction, just a couple weeks ago. how far do you think we are going to go? is it fair for me to call it correction? does it pick up again? peter: sure, it is a collection. we were down 12% in the s&p 500 futures before the rebound. think ite can go, i depends on the receipt in t

all of those people are suddenly faced with credit suisse saying they are terminating.ia: does that mean they lost money? inthis product went down 90% the space of the day. it will be liquidated later this month and people will get whatever the prices were at that point. investedo is actually in this product? sophisticated investors, or mom and pop, retail investors? whot is difficult to know owns these things. if you look at the bloomberg terminal, you would be left with the impression it is sophisticated people. that is what it is aimed for. however, talking to a number of retail investors, it was not necessarily the case. there were forms online talking about how xiv was making people a huge percentage every year. people were piling into this. were: while the markets complacent -- you've done great reporting on all of this -- but while the markets were complacent, people were making crazy money. that inverse volatility index was making so much money. >> monday, when volatility started to spike, people were saying, markets have been calm for a long time. now was a goo

the credit suisse ceo tidjane thiam saw that market volatility would give the bottom line a boost. --atility means that people see it as a negative. it creates opportunity. but the people we work for will see that as a key part of the strategy and that it is really working. they understand markets. and recognize volatility as a part of trade. we are increasing our trade revenues. if you take asset management -- 16 billion euros -- two thirds of that come from our national connections. >> are there people saying they do not want to transact at the moment? >> we see a lot of activity in the secondary market. but the primary market issuers are reluctant to issue volatility. things seem to be settling down now. we do not believe that what we have seen is a major disruption. the correction was on unwinnable in-- was unavoidable equities. investment grade -- has held up very well. you have not seen a contagion which means the fundamental economy is healthy. unemployment is at a historic low. company earnings are going up. we do not see a downside scenario in this economy. >> did you expect

we are optimistic in terms of 2018 and beyond. >> credit suisse shares trading over 3% higher after ad in the fourth quarter. the market swings in the past week have a negative impact on the advisory unit of the bank but he could not be more pleased in the performance of the trading businesses. q4,y biggest satisfaction, the start of the year has been very strong. we indicated numbers. global market revenue is up 10%. q1 last year was very strong for us. up more than 10%. french franc posted a fourth quarter revenue that beat estimates. field by tax cuts. especially in the u.s. the lender reported a 7% trading decline in terms of equity and fixed income. smaller compared to the drop of some of its european or us. -- some of its european peers. how do you describe the first few weeks of 2018? volatile for the beginning of the year compared to the end of 2017. we say that volatility wise, one of the reasons for the slowness and the return of volatility is offering opportunities for banks like ourselves to help our clients. we see good activity since the beginning of the year. >> better

an etn is technically a debt obligation, in this case from credit suisse.d to run into trouble because the index it was tracking moved so much over a short time that credit suisse decided it would wind up the product. anything that pours money into the fund -- carol: hold on a second, because this is important. by winding the products, it goes down to zero? >> anyone that comes in the previous weeks or months, 500 million floated in. a record week for the product. all of those people are suddenly faced with credit suisse saying we are accelerating and terminating. julia: does that mean they lost money? >> absolutely. this product went down 90% in the space of the day. it will be liquidated later this month and people will get whatever the prices were at that point. julia: who is actually invested in this product? sophisticated investors, or mom and pop, retail investors? >> it is difficult to know who owns these things. if you look at the bloomberg terminal, you would be left with the impression it is sophisticated people. that is what it is aimed for. howe

virgin australia sliding in sydney after credit suisse cut the stock to neutral amid prospects of the stake in the airline being sold to the balance sheet concerns. was continued for the hna group. let's check in on the wider market on the terminal. we are mostly seeing declines across the bond space. it is a mixed bag for currency so far as the dollar is steady following the selloff in the wake of hawkish fed rhetoric. the korean won is lighting about .25% despite the boost in the trade figures this morning. overall, it is looking like a decent start for asian markets. haidi: decent, we will take it. let's get the first word news with stephen engle in hong kong. fbi director christopher wray is said to have told the white house he is against the release of a classified republican memo alleging bias at the bureau and justice department. he thinks it contains inaccurate information and a false narrative. the memo deals with the alleged russian meddling in the 2016 election and is being reviewed by the national security lawyers. while china's great firesale is ready to go. indebted guam

julia: credit suisse was involved.alk about the price performance over the past couple of days. what are they saying about this? croy: -- cory: there was no trading losses and the product worked as they said it was going to work. i don't know if people realized what that was going to look like. the unprecedented surgeon volatility was possible -- surge in volatility was possible. julia: thank you for joining us. let's look at the bloomberg business flash. the are talking about some of the ongoing instability in the s&p 500 can be traced to valuations in the tech sector. the question of how to value companies like apple, amazon, techbet, and other big firms is central to what is going on in the equity valuation world. i don't have any better idea than you. julia: some companies in the continue torket talk about fixed income markets. central banks are looking to tighten monetary policy related to inflation. they are dealing with high-yield debt versus safer benchmark bonds. been delivering bond deals ipo -- as it prepare

inversed piece and the underlying volatility index the fear index they call it the vix meanwhile credit suisse reported a third consecutive annual loss last year's losses primarily attributed to the new us tax reform law which cost the bank two billion dollars. the japanese economy has not yet another record by logging a twenty eight year growing streak growth for twenty eight years my gosh the japanese economy the experience to recovery based upon excellent exports and large local demand. some investors an economist are concerned that the u.s. economy might be getting too hot to handle and the above expected january consumer price index report the c.p.i. has raised those concern the report combined with recent market meltdown which saw the year over year of stock market rise cut by more than ten percent into correction territory wall be taken into consideration when the u.s. federal reserve meets to consider raising interest rates in march we'll keep an eye on it. and gold has gained closing up two point one percent yesterday to one thousand three hundred thirty five dollars in trading at com

and credit suisse the way that fund works is it is hedged on a daily basis by credit suisse so when the market closed much lower and the bank had to hedge they centrally bought additional volatility. in the form of volatility vix futures and ultimately draining the assets in that fund causing that front to open around one hundred dollars a share close something like seventy dollars and end up at five dollars after the close now i think that the professionals in the market and many sophisticated investors who had allocations to these funds knew that this was a possibility i think as always with these high volatility events no one quite imagines the actual moves that occur a lot of people have correctly pointed out that while the percentage move in the markets was significant we had more significant moves where the vix had not moved as dramatically as a did on that day and in fact that finra and others are investigating exactly what happened specifically around the close and what happened with vix futures generally speaking though i am not against the leverage products or inverse products

kits but credit suisse which offers some such products including one which lost more than ninety eight percent of its value earlier this month overnight and is being closed down defends the category of exotic exchange products e t p s and regulators appear to be investigating the volatile trading of the products including leveraged and inverse the tepees and the underlying volatility index the fear and x. they call it the vix meanwhile credit suisse reported a third consecutive annual lost last year's losses primarily attributed to the new us tax reform law which cost the bank two billion dollars. the japanese economy has not just another record by logging a twenty eight year growing streak growth for twenty eight years my gosh the japanese economy has experienced a recovery based on excellent exports and large local demand. some investors and economists are concerned that the u.s. economy might be getting too hot to handle and the above expected january consumer price index report the safety has raised those concern the report combined with recent market meltdowns which saw the year o

the are two of them out there that plunged yesterday. .ne of them from credit suisse credit suisse decidedding altogether. another is a pro shares inverse vix etf. it has resumed trading, down something like 84%. vonnie: there's only $3 billion or $4 billion in these -- algorithmic traders are trading. there's a retail aspect of what hedge funds are doing. day traders -- are having a field day. >> getting the ups and downs of the market. the longestded streak without the s&p 500 falling more than 5% from a peak. now, the market is trying to find a bottom. you saw the index down 9.7% from its record a week and a half ago. whichite at the 10% level generally signals a market reaction -- correction. mark: are we in a new paradigm given the period we've seen without a notable percentage decline? >> that is the open question mark at this point. it's a reasonable want to ask --en how long the trading how unusual the trading has been. -- can the market move up you have seen the market move up -- we are more than a year into president trump's term, things have happened or not. we have an economy t

weboth volume and pricing last year.at soft we are optimistic in terms of 2018 and beyond. >> credit suisse more than 3% higher. the market swings in the past week have a negative impact on the advisory unit of the bank but he could not be more please. we are optimistic in terms of in the performance of the trading businesses. year hasart of the been very strong. global market revenue is up 10%. q1 last year was very strong for us. front -- posted a fourth quarter revenue that beat estimates. especially in the u.s.. tradinger reported a 7% decline in terms of equity and fixed income. smaller compared to the drop of some of its european or us. how do you describe the first few weeks of 2018? atcompared to what they were the end of 2017, we say that thetility wise, one of slowness and the return of volatility is because of the opportunity for banks like ourselves to help our clients. expected a better than increase for 2017. the swiss asset manager saw inflows of almost 6 billion francs beating estimates. results -- one part of your business in particular -- what has been driving that? demand

the -- part of middle east research at credit suisse.hethero talk about this is a healthy correction or whether we should prepare for a deeper slump? >> we believe this is healthy. highlighting the risk we see, a little bit of a pullback given the scale we have has occurred.this we think it is part of a healthy correction. we need to careful with what we invest in, but we remain exposed overall. a lot of the s&p 500 index index targets for the entire year were met in the first week of january. we are seeing the selloff in stocks in tandem with the selloff and bonds. that can be painful for a lot of investors in particular. does that worry you? fahd: the timing has worked out to be that way. it took quite a while for u.s. treasuries to yield to levels we were expecting them, because we have seen inflation take a lot longer to pick up than we anticipated. the spread has definitely been affected by that. the movement in bonds was a bit more overdue than what we have seen in equities. the chart.'s look at to your point, what is happening wit

let's bring in the head of emerging asia economics resource at credit suisse. expecting a 25 basis point move today. given the route we saw recently, the meltdown, why? think the signs that growing andhas been probably hitting capacity constraints has been there for a while. we have seen that in the deterioration, currency weakness. now, the inflation growing reafd that point. partly, yes, it is to do with positive changes, but if you look at the details, it is saying inflation is quite broad-based. core inflation jumped up from 3% to 3.9%. i think actually, we have not seen the full change in terms of this coming from policy changes and tax reform. when you put that together with all the signs we see, it is probably being paid to be seen ahead of the curve and preemptively put a stop to this, touch a break on this, rather than being behind the curve. haslinda: will a rate hike in still confidence? they want to reign inflation, it has to keep the markets calm. sanitarn: yes. there is two issues. there is the timing of doing it and the pace it is delivering the

. >>> other stocks to watch, credit suisse reporting its third straight annual loss on a writedown related to the u.s. tax law. that loss was smaller than expected there was strong revenue from the wealth management business credit suisse is upbeat about its future as it enters the third year of a restructuring plan >>> baidu posting better than expected fourth quarter results from its strong search business and they confirmed plans to list its popular netflix like platform in the united states. >>> metlife said internal failures that resulted in it not making payments to thousands of pension recipients goes back to 25 years that problem which was revealed in december, has prompted some investigations and a $70 millio charge in the fourth quarter that charge along with the hit from the u.s. tax law changes dragged down metlife's fourth quarter earnings by more than a third. those shares are off by 1.5% >> twitter ceo jack dorsey is downplaying havenrecent speculan that the company could be a takeover target. dorsey says he sees value in twitter remaining ichb in. rumors about a potential d

quote, material impact, but credit suisse appears to hold about a third of the etn.ource familiar with the matter told me the exposier is inflated chris swit down marginally at the open compared with as much as 7% in the aftermarket yesterday. most of wall street participants i've spoken with believe that these types of products are contained, that they have a low likelihood of actually posing a systemic risk to the rest of the market however, it has drawn attention to the exchange traded notes and they tend to have a bit more leverage blackrock put out a statement this morning urging more regulation of etns guys >> leverage, when it works it's a drug when it doesn't, it kills you. >> it's brutal, absolutely >> thanks, leslie. >> thank you >>> so coming up, interactive broker ceo thomas peterffy with more on this extreme volatility. don't move people don't invest in stocks and bonds. they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investin

this was a credit suisse exchange traded note.had reports earlier they were considering buying it back because of the rise in volatility, so this was a bet against volatility. now the bank is confirming we will fight back this note in the next two weeks. the implication of that is that investors will lose money. >> the stoxx 600 worst day since june 2016. down about 2.4%. big drop, far cry from the drops in asia and the u.s. >> it is a global contagion. we have gotten ourselves into a momentum market, all it takes is a little prick and the air comes back out. >> an about-face for volatility today. the vix tumbling after its biggest spike ever, but the spike already did its damage. >> right now we have not had a normalization in the vix curve. if you look at the second to first month futures spread versus the s&p 500 index active contracts, that is what it is tracking today. we are trying to get this normalization and volatility. it hasn't worked yet. we are still working on normalizing and we are not there yet. >> what a differenc

we just put out a report over at credit suisse which says as greats decline, stocks actually go up. and a higher bar across our problem but economics pushing stocks higher which would tend to coincide with rising rates. >> i'm glad you brought that up because i was looking the that note it's certainly contrarian versus the other commentary that higher rates go, the more you'll see the u.s. equity potentially tip over i guess sort of based on your report, i mean, we're coming out of a decades of unprecedented massive monetary stimulus. how much does that skew the ewages he equation here? >> a lilt bit. but the reason we've had really low interest rates forget about what the fed is doing, it's all about the barring rate for companies we've had roughly 2% gdp for the last decade. if you go back the last 15 years, it's been 3.5 it's weaker for that but while the economy is still in good shape, we do expect it to grow 2.5% >> even if the rates do go up for correct reasons because growth is picking up, don't we have an equity market that still has to sort out exactly how it should be valu

neil: was the volume enough says credit suisse we're getting rid of this thing? it was volume enough where it obviously sucked in a mum -- number of traders. you're ultimately right i don't believe the that it added up to volatility that we didn't need it. you don't agree. >> volatility so fast for any long term investor it will not make-or-break their -- not that they day trading, market down one day and they sell out of the portfolio in the next. if things move faster that is the way of technology. complaining about it is complaining about progress. neil: i live to complain. here is -- we always think we come up with something smarter in every incarnation that will shield us from market forces. in '87 it was portfolio insurance. i guess after nine or the big falloff in '08, mortgage-backed derivativeses pool those and protect yourself. you can't. i'm wondering whether this will be a little footnote after this, we have another such event? i believe in terrance's point it is not the whole game but an interesting sub story to the game? >> i think it is interesting

credit suisse, on tuesday decided it would wind up the product to so anybody who had -- carol: by windingoduct, you can say it can go down to zero. rachel: right. this is what we saw. anybody who had come into the note over the previous weeks or months, in fact those who had come into the week before this happened, over $500 million flowed into this note. all of those people were faced with credit suisse saying we are accelerating this note we are terminating. julia: does that mean they lost money? rachel: absolutely. this product went down 90% in a space of a day. that will now be liquidated later this month. and people will get back whatever the price was at that point. julia: who was actually invested in this product? was it sophisticated investors or was it mom-and-pop? as we talk about, the retail investors invested in is to. rachel: it is difficult to know who owns these things. if you look at the holders on the bloomberg terminal, you'd be left with the impression it was very sophisticated investors. that is who it is aimed for. however, talking to a number of retail investors, it

which we saw for example with credit suisse. k at that chart, does it mean more is to come? does it impact credit? >> i think there's two issues. because the underlying economy remains strong, the data remains strong. , change in monetary policy there is still upside in equity markets. europe is so much cheaper than the u.s. in the u.s., we went ahead of ourselves based on the tax plan, and what people are not considering is you cannot have the strongest economy over the last 20 years, make america great again, but run a twin deficit. this accounts for about 6%. eventually it is going to cost a lot of money. the whole world is long u.s. dollar. as a result, yields inevitably will go higher. the fed will have to tighten because it will have a higher rate of return. when everybody holds dollar, you can't push dollar for everybody. francine: will we make treasuries great again? are you happy with bond sales? >> we are hedging towards the 3%. deficit doesn't justify a 10-year 3%. francine: thank you so much. stay with us. we will hav

shift in monetary policy going back to normalization of rates that could cause an upheaval here >> credit suissea lot of focus on it, down 4.3% in terse of whether tms of whets likely to adjust its path based on what markets are doing, how likely is that european markets, ecb, they have done a version of this dance before, 2010 to 2012, when they made sure they will do whatever it takes to stop the markets falling out of bed do you think that's likely that if markets are selling off, mario draghi would assess his plan for the economy and adjust it to keep markets supported or not? >> i think that would be his instinct the problem is, unlike the fed, there's much more politics in europe than in the u.s. because of the german question germany overheating, they have a budget surplus so the big engine of europe is pushing very, very hard on draghi to basically continue the path of tightening the rest of europe, which is much more concerned about the market pullback. next year draghi's term is over. the head off the bundesbank is set to take over it's very political now in europe and draghi's task is

another sign credit suisse is under pressure to cut costs, the bank has told some teams and switzerlandw is the ideal time to consider a leave or sabbatical. they say the said of the swiss universal banking unit wants to cut jobs by the end of the year. john paulson is moving to the stymie office, he shot to fame with a that the housing market would collapse. relocate to 1133 the avenues of the america. l.l. bean's lifetime guarantee is no longer, starting today the retailer is imposing a one-year limit for most returns. they say at the us and fraud doubled in the past five years totaling $250 million in losses for returned items. their 100% guarantee had been in place for more than one century. that is your business flash update. we are seeing the selloff accelerate. vonnie: any surprise, the dow jones down one point percent and the s&p 500 is down. at some of the movers in the s&p 500 with expedia down 18%. it is a broad selloff that individual stocks are really -- julie: companies out with earnings with negative reactions, perhaps that is being exasperated by the overall selloff whil

of time that credit suisse decided it was going to wind up the product.p the product and go down to zero? >> this is what we saw. anybody that have come into over the previous few weeks. this is a record week for the product. all of those people were suddenly faced with credit suisse. >> does that mean they lost money? >> actually, this product what about 90% in the space of a day. that will be liquidated later this month and people get that whatever the price was at that point. >> who is actually invested in this product russian mark was a sophisticated investors or mom and pop as we talk about? a retail investor. >> it is difficult to know one's these things. if you look at the bloomberg terminal, you would be left with the -- that is what it is for. number ofg to a retail investors, it seems like that was not necessarily the case. the reforms about this, talking about how excited he was making people use percentage every year. people were piling into this and putting all their savings. lostspoken to people well thousands of dollars. >> you're done grea

don't miss yvonne's exclusive chat with the credit suisse representative. that's next.berg. ♪ does seem on the high-end in terms of the stock market. maybe this tax cut will lead to stronger earnings growth. this volatility we have seen in the marketplace is not unprecedented on a historical basis, but it is new for investors to deal with. it has been basically a rising tide. the trigger, at least in my mind is what is the fed going to do with rates in 2018? are they going to make a mistake? this year is the central bank year. >> this is momentum investors jumping off the train. they were riding it up, and they throughsoon as it goes from a 2%, 3%, they have stop orders in. exactly what you got. it went up too far from a too fast. >> plenty of analysis on bloomberg television on the u.s. market selloff, which handed the dow the biggest loss in 6.5 years. asia-pacific investors bracing for a second day of heavy losses after the frantic selloff in u.s. treasuries rallied with gold for some of these haven assets. i am pleased to be joined by credit suisse vice chairman, jo

guy: credit suisse talking about the fact that mid-caps in europe -- or small caps are a by relativeing to talk about those smaller and mid-cap stocks when we come back. the computer software provider seeing solid growth across all regions last year. it is up by nearly 8%. take a look at the charts on your bloomberg. it is up by nearly one third. ftsi is the line to plug in. this is bloomberg. ♪ guy: 53 minutes into the session. let's talk about that made cap movers. podesta is a company out of the u.k. that is trading strongly. take a look at the january-february charts. rising. special dividend coming through. the stock is up 8% this morning. since the start of the month, of over 25%. limited, down by 3.54%. it has a capital day coming up in a couple days. it has been cut to a cell. the dividend remains something of an issue. effect that could be the to shareholders. dart group, the company coming out with a positive statement. one of the reasons why the travel and leisure sector is trading so strongly. one of the stocks we are focusing on his reckitt benckiser. falling around 3% t

all of those people were sayingith credit suisse we are accelerating this note we are terminating.es that mean they lost money? rachel: absolutely. this product went down 90% in a space of a day. that will now be liquidated later this month. and people will get back whatever the price was at that point. julia: who was actually invested in this product? was it sophisticated investors or was it mom-and-pop? as we talk about, the retail investors invested in is to. rachel: it is difficult to know who owns these things. if you look at the holders on the bloomberg terminal, you'd be left with the impression it was very sophisticated investors. that is who it is aimed for. however, talking to a number of retail investors, it seems like that was not necessarily the case. there were chatting forums about this online, talking about how xiv was making people a huge percentage every year. people were piling into this, putting all their savings. i have spoken to several people who lost thousands of dollars. carol: that is what is really tremendous. because while the markets were complacent, yo

is no material impact to credit suisse. the crash to xiv was mirrored by pro shares xvxy which also trays inversely to the vix >> leslie, what does any of that mean >> the best way to look at these things, they're like a bond, an obligation, a note this is not an etf they get bundled into the same structure. this thing did exactly what it was designed to do it actually is in an orderly fashion wiping itself out. you bet that therewould be no volatility well, it came back, you got wiped out. i think it's important we don't let the government get involved here telling us they want to protect us as investors with these instruments. if you own this, you don't know what you own, you got burned, it's a good thing. you learned something important. >> though, that sounds a little -- i agree with you, but it sounds like ten years ago, when people didn't understand what cdos were >> if you don't understand what you own, you deserve to go to zero >> to be specific about what you owned here, you owned -- >> the idea that we would never