precrisis, we had a breakdown of correlations and didn't have this risk on and risk off, as it shouldwe are living in this new normal, and i think the transition is difficult. now, how do you carry? you buy long rates, and that can be difficult to create random price action. scarlet: we talked about this new normal, higher rates, higher volatility. can it look like the old normal that we have seen before the crisis? we are starting at a lower base, and there are still qe in the system and is not going away. there is a lot of research that maybe it is lower than it was precrisis, and i'm talking about a move away from the last eight years to another normal, and it probably isn't precrisis because like at productivity and demographics. we are not where we were in 2003 or 2004, and we have to worry about the cycle and if things turn around and like a lot of money at the problem when we don't have a problem, there is going to be a lot of fiscal support your. julia: we had a tax overhaul in the united states and we are potentially going to see a budget proposal. it is going to add quite si

is this back to the good old days of lloyds from precrisis days? long recovery but it has recovered quite strongly. as you say, a landmark achieved last year, which is back in private hands finally, after the government bailouts during the financial crisis. the numbers are all looking pretty good. income rising profits rising, and costs under control. a bumper pay—out coming to shareholders as well post a lot to like with the numbers. there are still bills to pay for ppi. is that anything as we should worry about in terms of extraordinary costs? ppi is the main one. that has been ticking overfor a long time. what we had last year, a new deadline was introduced of august 29 and that has prompted more people to claim. there was a prompted more people to claim. there wasa campaign prompted more people to claim. there was a campaign fronted by arnold schwarzenegger, run by the sca, which has also encouraged people to claim more and lloyds has had to put more money aside. as we move towards the claims deadline in august of 2019 they will probably tweak

hedge fund a return toling for the kind of volatility that was perhaps a little more normal in the precrisiseriod or the years middle east subsequent to the crisis -- the years immediately subsequent to the crisis. that they can never make as much money as they did back then. they want more trading going across their desks because the more trading there is, the better they view -- the macro traders want to make money on their positions. they are largely directional in their bets. theme of who was positioned -- i can't find the story, but a great story on a lot of the people you've been talking to in the last month warning about the event we witnessed in the last seven days. how many of them were trading where their mouth was? erik: that is a good point. radel yo came out yesterday to lio came outa yesterday to say -- we had a conversation in davos. he and josh friedman come to mind. people who did expect we would see a backup and yields and we would see the equity market begin to trade down. just happened a lot faster than anyone expected. that's exactly what radel you io saidsterday -- ray

not going back to the speed and end goal of what happened precrisis.also did not want to talk himself to a specific path of rate hikes. there is a lot of uncertainty still with brexit. , what wouldsked happen in britain did not get this tradition of agreement between the u.k. and the eu? ubs says it is predicated specifically on getting that transitional deal. mark carney says that could cause a reassessment if we don't get that. a lot of uncertainty still around brexit and the bank of england will have to stay fluid and responsive. that was the message. alix: thank you. david: for initial reaction to the press conference, we welcome our international and policy correspondent michael mckee. also with us is jurrien timmer. talk about inflation, accommodation of the speed limit and demand. michael: the bank of england seems to be taking the position that it will be a smooth brexit, that they will be able to withdraw without of upset to the economy. sterling has fallen after the affectinge, which is inflation. at the same time, global synchronized growth

julia: how much different is liquidity today versus precrisis?quidity started to deteriorate back in 2002 or 2003 were there were consequences of transparency. it took larger risks than they used to, and the financial crisis has gotten worse -- there are fewer broker dealers that left capital willingness to take risk. we can sit here and complain about it and cry about all we want, but it is not changing. what you have to do is adapt to the trading environment, build and liquidity tools and go about trading differently than you used to. scarlet: thank you so much. coming up, apple has a new strategy that involves squashing the bug. this is bloomberg. ♪ scarlet: apple plans on unveiling new features as part of its annual software upgrade, but an important update is not been included. that is because they're focused on quality in response to criticism that some of its software has become kind of buggy. hair with a scoop is bloomberg's apple reporter. mark, tell us what apple is planning on including and what it is not including. mark: what they are

that still leaves your balance sheet twice what it was precrisis area. you expected to stay there, and deal not expect the demand for cash to wayne as interest rates rise? wane asd for cash to interest rates rise? >> when we shrink the balance sheet what goes away is the reserves. so that 2.2 chilean dollars in liabilities, you have to add on what the equal demand for reserves is and it is probably going to be leased several hundred billion dollars no matter what we do. so that's how i get to two and a half to three. >> thank you, for appearing here. this is an important part of communication with congress. i would like to follow up on representative rice's line of questioning about the dangers of default. and i'd like to repeat as thanks to you for being involved in educating members of congress about the necessity of taking seriously our payments on principal and interest. and there are really two different defaults. there are defaults driven by fundamentals, when a country does not have the ability to repay its debts. you think about iceland where the

scarlet: the post qe normal one not look the same as the precrisis normal. it will not resemble anything that people before 2008 will remember. erik: right. one of the scary things, as we returned to normal, is that we are going into this world with much higher death -- debt as gdp.particularly we are back to the same debt to gdp ratios we were at in the middle of world war ii. that is not normal. julia: how do you make money in this transition to a new, new normal? tok: you have got to stick your plan. that is the problem most investors have. they have long-term financial goals. and yet they have put in place short-term investment strategies. of the growth rates we are seeing, it has been a greater earnings season. this is all really good. you have to be able to get back into the market. don't try to time it. when you time it, you have to be right twice, went to get out and get back in. scarlet: when they go back in, what are they looking at? erik: from our perspective in the u.s. market, which we are more favorable towards, you have to be looking at the fi

if you look at what is going on in terms of the crisis, 9.5 times ebita at the height of the precrisis007. they came back to 9.5 by 2014. ebita.now up to 11 times at those valuations, 50% higher than firms were paying in 2007 and he did not become market by much in the 2007 year vintage. firms, it isy almost impossible to make money buying at those valuation. there are firms that can find much cheaper deals were great price discipline, but those are few and far between. julia: who are the underperformers here? who are the out performers? daniel: in terms of price discipline, two of the standouts who areo and no tree the folks buying things cheap. broadly, almost anybody else in the industry is buying expensive. there are other exceptions. lisa: all right. one of your former colleagues at bain capital? daniel: you know, i think that a lot of folks in private equity know that these things are true. they know it is a much more difficult environment. if you look at what the ceo of blackstone or apollo or carlyle are saying in their press conferences and public statements, they all agree th

as a prices are back up to where they were precrisis levels. sign of runaway inflation.back to this question of how durable is this selloff going to be? a one-off or something the start of -- or the start of something much deeper? >> are the inflation concerns in the u.s. as well as elsewhere overblown? one of the game changers has been the big tax reform and tax cut at the end of last year. that might start feeding through to the animal spirit. we do hear a lot of anecdotes through our own reporting that reporting labor shortages because the job market is so tight and wages are going up slowly. early indications that inflation in the u.s. is picking up. when you factor in the impact of the economy for tax reforms, there is the reasonable case to make that inflation might accelerate faster. i don't think there is any sign of panic. kathleen: the same question for both of you, but i want to start with mark, because from friday u.s. trade, monday u.s. trade, the fed is going to do for hikes. four hikes. to -- that's going to be better stocks. week stocks are going to slow

we're trading 12% to 15% below precrisis peaks largely because property taxes are crowding out home priceslitical price for that. francine: greg, back to the -- sorry, go ahead. greg: could we get reform in illinois or reform in guns? if norway can win the olympics, anything can happen. francine: ok. i'm glad i'm not norwegian and don't know how to take that. greg, if we go back to what we're talking about, the mueller investigation, how fast is robert mueller going to go? greg: i think quickly. i think kushner and donald trump jr. are vulnerable to an indictment. the president's assertion he's been indicated is ridiculous. this is really getting deadly serious. i think the issue of trump firing mueller is still on the table. tom: greg valliere, thanks you ery much and mr. jack albin. wal-mart has broken off a new weakness off an interesting earnest report. this is the 15-day chart, the ugliness of the market. you see we've given it up and back to february 14, back to a valentine's day pricing, wal-mart blowing out all those valentines i didn't buy. stay with us. this is bloomberg. ♪ tom:

but that still leaves your balance sheet roughly twice of what it was precrisis era? do you expect it again to stay there and, do you not expect the demand for cash to wayne as -- wane as interest rates rise? >> right now we have $2.2 trillion in non-reserve liabilities. so that is to say, when we shrink the balance sheet, what goes away is the reserves. that's, that's liability that goes away. so that 2.2 trillion liability should add on whatever equalibrium demand for reserves is. it will be at least hundred billion billion no matter what we do. that is how i get to 2 1/2 to three. >> time for the gentleman has expired. recognized gentleman from illinois, mr. foster. >> thank you for appearing here this is important part of communication with congress. i would like to question the dangers of default. would i like to repeat his thanks to you congress about the necessity of seriously our payments on principle and interests. when a country simply does not have the ability to repay the debts if you think about iceland, where there were debts banking crisis of gdp, no wa

. >> that still leaves your balance sheet twice what it was precrisis era. and do you expect it, again, to stay there? and do you not expect the demand for cash to wane as interest rates rise? >> we have $2.2 trillion in nonreserve liabilities. and when we shrink the balance sheet what goes away is the reserves. that's the liability that goes away. that $2.2 trillion liables you have to add on whatever the equilibrium demand for reserves is. so that's how i get to 2.5 to 3. >> the chair now recognizes the gentleman from illinois, mr. foster. >> thank you for appearing here. this is an important part of communication with congress. i would like to follow up on representative royce's line of questioning about the dangers of toilette. and i would like to repeat his thanks to you for being involved in educating members of congress about the necessity of taking seriously our payments on principle and interest. and they're really two different kinds of defaults, driven by fundamentals. when a country simply does not have the ability to repay itself debt. if you th