a terror risk is a big risk. the minus 10% correction you had couple weeks ago is not a terror risk. minus 20% is not a terror risk. it's a big risk. it's minus 25. if you stick to hedging that, you can make the cost very low. especially if you only partially hedge it. if you only partially hedge it, if you only hedge it for a couple of years. if you just stick to that. the risk mitigation plan that i proposed be part of your strategic investment plan should include the whole array of risk mitigation solutions talked about by pemco. it's a tiny little part. it's an easy part. you can do it extremely easy, especially now that you know where the exposures are. >> thank you. up next is david paige under general public comments. >> hello, everyone. there's been a lot going on lately. we got valentine's day today and stock market corrections. gung hey fat choi and also ash wednesday is today. february, every february. black history month, i wanted to say about the ash wednesday for those of you that know, you know it'

have de-risked in high-yield.y haven't participated in the massive run-up we've seen in risk elsewhere, more specifically in equities. is this a market for you -- and i know spreads are still really tight. but they have been most of last year anyway. is this a market -- for a lot of people, they had de-risked. greg: i think investors talk about the risking more than the follow-through, but it makes sense to take the risk down given where spreads are. the risk return is not in your favor. you have to pick and choose your spots. is high-yield in aggregate a screaming buy? absolutely not, but is there pockets of value? absolutely. the one area that has value, in our view, are the triple c's. jonathan: the opportunity cost of being in cash -- most people sat here and said it will be coupon clipping anyway. does the cash allocation make sense and if you have the dry powder now, is that going to work? bonnie: at western, we did de-risk in high-yield. it depends on what is going on in the equity markets because they are

still a good chance you earn your coupon and have risk if it is a risk off deflationary environment,r risk if it is a higher rate inflationary environment. based on u.s. treasuries. still a good chance you earn your coupon and have risk if it is a risk off deflationary environment, or risk if it is a higher rate inflationary environment. right now, it is a higher rate repricing leading to some stress in the credit market. i would put it as a bigger risk than a deflationary risk off, so i think there is a good chance you can earn your coupon but not as much value left in the credit this is it a market that is materially mispriced. jonathan: mispriced by how much? the reason i ask this question also, is what is the time arising for this trade? is this something that is going to have more sustainable upside? yields higher and yields higher again. lisa: i cannot make a promise. i think it is a structural yields higher and yields higher trade. if you look at the dependency ratios in italy and the demographic issues that italy is facing over the next several years, it is not a pretty story

this time, the risk is inflation. before, they were responding to inflationary risks. now, the market is reacting to higher inflation, the central bank put is not there, is it? greg: the central banks want higher inflation. the war they have been waging is deflation. think the inflation story quite frankly is overblown at this point. we are removing from this regime of deflation to slightly more inflation. i don't see it as a 1970's type of scenario. jon: i remember during this time last year that this was the trade this time last year. why did we get the reflationary enthusiasm? greg: the difference last year versus this year is last year, there was hope. investors were expecting taxes and other types of things. now, they are actually seeing it. it's a different point in the cycle this year versus last year. that's what the market is reacting to and that's why vol is higher, because of the uncertainty. this year is much more difficult. jon: it seems like easy money. robert, really appreciate your timing. bonnie wongtrakool of western asset management, rob waldner of i

or past risk. that is a completely different issue from ensuring that customers of wells fargo, who clearly have been wronged, that they receive justice and that wells fargo has been held accountable. . and again i would point out, you know this might not have happened if the cfpb under the previous administration had been doing their business. they should have caught this. but they didn't. instead it was the "l.a. times" and the l.a. city attorney. the cfpb was asleep at the wheel under the previous administration. and so again there is existing uthority, but if the regulators, had the director been doing his job, this wouldn't have happened. the evidence was there and it was simply overlooked. and we see way too many instances of that, mr. speaker. so, again, we want to properly calibrate one capital level, operational risk capital. that's what the bill of the gentleman from missouri does. and we should not be confused by the jihad against banks because banks ultimately are still funding the amer

---risk-return profile? if >> there any point it can take you off and shift the curve? >> putting together these diversifying strategies, ideasly you are coming up with something that is giving you potentially not much of a dimunition in return. we worked on a strategy for a large investor that combined an alternative risk premium strategy to generate returns with a certain amount of -- which was like a trend follower, designed to do well in sell-offs inspect a certain amount of long options to protect against the things that the trend follower essentially could not. and i think those kind of things can make sense. but you really want to -- tune it to what your portfolio is and what your risks are. right? and i think that it is clear that if you try to hedge away all the risk, you kind of hedged away most of the return, too. right? and somewhere in the middle there has to be a balance. but by having multiple different ways of diversification, each of which potentially address difference risks, you're hopeful

have de-risked in high-yield.yield have not really participated in the massive run-up that we saw in at risk elsewhere, especially in equities. i know the spreads are really tight, is this a market that for a lot of people, they had the -- de-risked? greg: i think the investors had talked about de-risking, then the follow-through, but it makes sense to take the risk down given where the spreads are. the risk return is not in your favor. you have to pick and choose your spots. is high-yield in aggregate a screaming buy? absolutely not, but is there pockets of value? absolutely. the one area that has value, in our view, are the triple c's. jonathan: the opportunity cost of being in cash, you are missing out of a massive run-up in january. most people sat here and said it will be coupon clipping anyway. does the cash allocation make sense, one. two, if you have the dry powder right now, is it time to put that to work? bonnie: at western, we did de-risk in high-yield. before this event. so i think right now, it depend

-de-risked?st: i think the investors had talked about de-risking, then the follow-through, but it makes sense to take the risk down given where the spreads are. the risk return is not in your favor. you have to pick and choose your spots. is high-yield in aggregate a screaming buy? absolutely not, but is there pockets of value? absolutely. the one area that has value, in our view, are the triple c's. jonathan: the opportunity cost of being in cash -- most people sat here and said it will be coupon clipping anyway. does the cash allocation make sense, one. two, if you have the dry powder run now, is that going to work? bonnie: at western, we did de-risk in high-yield. before this event, so i think right now, it depends on what is going on in the equity markets, because they are correlated. if you look at who holds high-yield, 30% of it is in retail. that has doubled since 2005. you can't just say they will operate independently. for us, we would like to see more stability in the equity market and

are the risks -- are de-risked in high-yield.haven't participated in the massive run-up we've seen elsewhere, more specifically in equities. i know spreads are still really tight. but they have been through most of the last year anyway. is this a market -- for a lot of people, they had de-risked. greg: i think investors talked about it more than they actually derisked. but it makes sense to take the risk down given where spreads are. the risk return is not in your favor. you have to pick and choose your spots. is high-yield and aggregate? absolutely not. are there pockets of value? absolutely. the one area that has value, in our view, are the triple c's. jonathan: the opportunity cost of being in cash, for a credit investor, is a different scenario. most people saying they will be coupon clipping anyway. if they have the drive out of that now, is now the time to work? bonnie: we were at the camp of derisking. at western, we did de-risk in high-yield. it depends on what's going on in the equity markets because they are correlated.

the risk is that it doesn't.folks here in these owners really want to grow into grow you have to hire talent. talk a little bit about how you think about talent and what you look for when you hire people. which are to figure out what are we going to do.o.na there are three categoriess with small businesses access to capital. how do you get the right people that is a little bit of functioning our people will trained. and that is something that government has to sayia access to financing community banks have to be bulked up. and lower taxes and everything. you can't have excessive regulation. the media to spend a third of your time filling out forms in talent and educational things. for me when i look for talent obviously smart and can learn. more than people knowing what their job is. if someone doesn't know something they can learn it. are they going to be able to learn more and grow. i really like this person.t what was the risk that they take. they can operate the machine. if the world moves on. they're worthle

once again the market is confronted with the entire risk-off or the shutdown that risk resurfacing. let's not forget about the data. retail sales numbers out on thursday if there's any sign of an inflation rearing its ugly head, that could really feed into the bond market that could feed into higher ten-year yields, and that negative feedback loop continues. asian shares closed sharply lower, tracking major u.s. losses nancy hungerford is in singapore. the nikkei was hammered. 21,000 looks as though it could be threatened if we see the same scope of declines tomorrow out in asia, is this seen as a duck and cover moment or a buy the dip? >> well, i have to tell you, so many guests i was speaking to in singapore are saying it could be a buy on the dip moment, though they are waiting for more weakness to filter through a lot of uncertainty as it is reflected in the steep falls on this board behind me the nikkei 225, we closed about 4.7% lower for the second straight day the nikkei almost moved in lock step with the percentage move on the dow jones industrial average this did improve fr

to risk parody. here is around rising rates.st interest rates were rising on thursday and friday. yesterday, the tenure actually reasserted itself as a risk off vehicle. it started to rally as the selloff got worse. from a risk parody standpoint, want.s actually what they so i think the question mark on risk parody is if the 10 year starts on rise and yield again. >> that's something. >> exactly. if inflation rears its head, issue.comes an >> what are you and sarah watching this morning? all these other e.t.n.s as well. the vix was at 37. to luke that the vix is now at 45? >> i think that accelerates or the potential that we do have -- shutdowns. >> based on the indicative value at last close. i'm looking at that. i'm more concerned about the effects based on who was holding these. >> thrilled that you came in 9:45 before his usual entrance into our world headquarters. coming you, luke, for in 10 minutes earlier than usual. uke of bloomberg and brewings of j.p. morgan and dean of macro risk advisors

the higher rate repricing leading to distress in the market is a bigger risk than a deflationary risk, so i think there is a good chance you can earn your coupon but not as much value from a year or so ago. >> you may be thinking about the credit and focused on what is happening on peripheral spreads and what is more remarkable is the likes of it -- spread is still tight, does that make sense? to me, never made sense but you get the protection of the european union or the ecb. when you look at the of economies of these countries, which are rather own a tenure at 145 or a u.s. treasury at 280 today? it goes up and down the line, it offers great protection, currency protection, market protection, at some point that will crack. >> lisa, your thoughts? you want to be italy or germany? >> there is an election coming, and before the french election french yields sold materially, i think the market is forgetting about that. i think italy has it participated in the selloff in rates last few weeks. this is it a market that is mispriced. >> mispriced by how much? is this something that is going

nick: absolutely, you take the periphery risk and high-yield risk in europe.han: thank you, you are all sticking with us. i want to get you a market check in with treasuries have been this week. twos, tens and 30's. on the front end, we retrace some of movement of the previous week. yields are back up 12 basis points, relatively unmoved. 30 years is down by four to 3.12%. still ahead, it is the final spread on this program and the week ahead. featuring minutes from the fed, the powell era begins in the central bank. this is "real yield". ♪ ♪ jonathan: this is bloomberg "real yield." it is time now for final spread. in the next week, monday is president's day in the u.s., stock and bond markets are closed, european prime ministers will vote for the ecb's next vice president. we will also get minutes from the fed and bank of england. governor mark carney will be addressing parliament committee. still with me, jeff, kathleen and nick. about the amount of issuance coming from the treasury, specifically t-bills into next week. kathleen, will feel be the insatiable

risk assets are waking up. everything prices off of the risk-free rate. whether it's high yield can whether it is tied together. other risk assets are going to have to adjust. >> how long does this take? it can be painful and shock a lot of people. in general what do we know about how long this takes? is some moreere mullahs asian left. in some areas, a lot of defenses, they have gotten hit on the chin and you concert looking at those asset classes to start getting into them. i think they are getting attractive. these have been probably overdone a little bit. credit hasn't budged much at all. >> why? the economic backdrop is pretty good. earnings have come in. the backdrop is supportive. there is not much supplied coming in. lot.nk that that is a there is less cushion now. there are meager spreads over treasuries. the same goes for high yields. do you have any cushion to be buying these now? there is it really credit risk per se. here. has not moved julia: you have to be sure there is a problem here. ultimately we can continue to here.from you said we sho

that is also mitigating any risk. we understand that you have extended talks with an investment company to sell your stake in the united arab bank. it is valued at $280 million. run us through your thoughts on when you see that closing, and what you would do with the capital. >> we have extended it for a month, which means they are interested in strong discussions happening right now. if we successfully conclude it come up we will deploy our capital into our strongly growing qatar business, and also turkey. turkey has historically underperformed for us. and we changed the team, see an opportunity there to grow the business into a significant contributor in terms of profits over the next three years. that will need capital. that is helped by the strong linkages between qatar and turkey at the economic level, too. yousef: just briefly, as you look to the remainder of 2018, are you confident or do you expect that all any progress in resolving the ongoing standoff with the rest of the gulf? frank, i do not have a crystal

on or risk off.ng well today, outperforming. during the two-week stock selloff a few weeks ago, the francine lacqua drop in a big -- the fang stocks drop in a big way and now slightly down from the peak. a lot of volatility for the fang stocks. 6708, a one-year chart of the maryland index -- merrill lynch index. an area of congestion. dip, welle the overbought. maybe suggesting this will go to the downside. when we connect this to the nasdaq 100 futures seen as a proxy for the fangs, we will see a similar chart. an uptrend over the last year into the congestion. over the last year, a gain of 20% but the congestion could result in a pullback. -- gainingctive way even if there is near-term volatility. partner at silver pine capital and a derivatives expert outlined a long-term trade idea. in the money and call spread on the december futures contract where you buy the 6650 strike calls and sell the december 6700 strike call. typically to a 57% return so long as that futures towards the end of the year,

take the capital markets risk off the table. what happens when you raise equity, your dividend burden goes up. if this does play out, there's a scenario where if they to raise equity they will have to cut the dividends at the same time it's already too high of a burden you're adding to that burden by issuing equity it's a bit of a box they're in >> is there any risk >> i think he's done everything. he's learning. case in point being the insurance charge they took the degree to which they guided power and the power market coming in weaker in the last quarter here he's learning stuff on the ground i the not think his creditability is on the line yet. i like what they're saying i think they're taking a measured approach around what they know. ultimately, the equity value doesn't mean there's a higher equity value here. i think they have to take care of bond holders first and comes at the expense of the equity holder >> i haven't heard you mention the pension liabilities yet. how significant of a concern is that given the environmen

em has a history of risks, but they deal with their risks, and they wash out the debt.tina is a great example. the gdp of argentina is a lot -- the debt to gdp of argentina is a lot lower than the u.s. so yes, it has had some over time persistent problems. where it stands today is a much better position. that goes for much of emerging markets. jonathan: kathleen, your thoughts? kathleen: i think it is an important time for investors to pay attention because you see the spreads on top of each other, but then go back to the fundamentals. because where are there better fundamentals? when i hear fiscal looseness, that is bad for the u.s. so if they are on top, i want to go with the asset class where there are better fundamentals. i think that is em. i would buy the dip here. jonathan: so let's talk about credit over in europe, i am not talking about corporate credit. i am talking about sovereign credit. many people are looking at italy and spain as if they are credits. we had a viewer send in a question on the bloomberg terminal, try to understand why the spread is not wide

whether it is a systematic risk. >> had he you talk about risk on, risk off gold doesn't serve its purpose. >> gold i know nothing about other than it's shiny and malleable. >> you know the argument, bitcoin should be worth some percentage of gold gold in inflation, volatility, it's not working. >> of all the things in the marketplace, gold is the only thing i can't talk about gold is the only thing i never -- >> karen, i love your point, though, because gold hasn't moved up. >> right. >> apparently there is all this fear and terror in the market but no one has been buying any gold. >> how about the fact that the krel correlation between the idea that people have been trying to diversify their portfolios in some way or another. >> right. >> bitcoin, as we talked about on this dsk you don't want it to be 50% of our portfolio but maybe 3 or 5%. as that continues to grow that in turn puts bitcoin that much closer to moving with the krelg of the market itself. >> right and when people ask is there a lot of speculation in the equity market we said no. however we saw a lot of speculation in the

still a good chance you earn your coupon and have risk if it is a risk off deflationary environment origher rate inflationary environment. right now, it is a higher rate repricing leading to some stress in the market is a bigger risk than a deflationary risk off, so i think there is a good chance you can earn your coupon but not as much value left in the credit markets as we had a year or so ago. jonathan: if you are at the federal reserve, you might be thinking about what happens with credit. if you are at the ecb, you would be more focused on peripheral spreads. what is more remarkable is the likes of it -- spread is still tight, does that make sense? kevin: it's never made sense to me, but you get the protection of the european union or the ecb. when you look at the economies of these countries, would you rather own a 10 year at 145 or a u.s. treasury at 280 today? it goes up and down the line, it offers great protection, currency protection, market protection. at some point, that will crack. jonathan: lisa, your thoughts? do you want to be short in italy or spain? lisa: definitely

appropriate risk. we take risks all the time flying an airplane as a calculated risk. we need to do the same for processes. i look internally to the dod at-large. the good news is we are starting to see change and things are happening. >> punctuation i'm not. i can't stress that enough. over the past maybe 15 years or so, the organization in my opinion has drifted away from risk management to risk amelioration. we are trying to get risk out of the equation. i can get you 20 risk. i can afford it. we have to become true and get back to the game of managing risk. it is not going to be perfect and i don't mean to talk cavalierly. that is not what i'm talking about directly. we have to deal to quantify the risk, and manage the in order to get the best effectiveness and efficiency out of what we are doing. i think we've strayed away from madison enterprise and we need to get back there. >> any idea how to do that giving your perspective on things as an investor you are constantly managing risk in your portfolio. how is it that this industry grows quickly enough to meet the

that would lead to more impeachment risk. but u.s. risks are underpriced. vonnie: in the u.s.europe? tina: amongst global investors. this has been true since trump took office -- the focus of -- of the focus is trump would do andbusiness agenda items not other things. the tax cuts provided a huge boost and overshadowed other risks coming down the pipe, for example, results of the mueller investigation. chief: tina fordham, global political analyst at citigroup, thank you. this is bloomberg. ♪ ♪ this is "bloomberg markets." i am vonnie quinn. that's get a quick check of the markets. we are about an hour into the u.s. session, and the s&p 500 1%. about one quarter henry schein down about 10%, leading the s&p lower. under armour up 15%. rcebergen up about 9%. the vix at 25.7. this is bloomberg. ♪ retail. under pressure like never before. and its connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corpora

it is credit risk in europe or credit risk here in the united states. lisa?ther one of them, treasuries. jonathan: kevin? kevin: i will stick with high yields. jonathan: eric? lisa? lisa: neither one of them,eric:s well. jonathan: guys, it has been great to catch up with you. thank you very much for revealing some of the work you have been putting on in the last couple of months. lisa hornby, kevin giddis, and eric stein. that does it from new york as the selloff continues in equity and treasury. we'll see you next friday at 12:30 p.m. new york time. 5:30 p.m. in london. this was "bloomberg real yield." this is bloomberg tv. ♪ scarlet: i am scarlet fu and this is "bloomberg etf iq" where we focus on risk and rewards offered by exchange traded funds. ♪ scarlet: doing good but not getting much love in return. investors are urging companies to be more socially responsible and focus on good governance so why aren't flows backing up the rhetoric? with the bull market in full swing, we cannot help but to look ahead to the next downturn and ask, how much money would

risk,an powell: it's a not a near-term risk. we are now in the process of normalizing our balance sheet and tricking it -- shrinking it. we are moving back to a more normal level balance sheet. we will be there in 3-5 years. >> one thing that always puzzled me is this target 2% inflation rate. over 20 years -- if you had 100 bucks 20 years ago, the purchasing power went down. can you educate us about this 2% target? $100 20 years ago at 2%, it might cost $150 today. chairman powell: this was a big debate which was settled around 2% as opposed to zero for central banks to aim at. it has become a global standard all around the wrote. banks are aiming for 2%. it gives us more room to cut real interest rates. if the interest rate -- if inflation is zero, interest rates would be in the 1-3 range. when a recession comes, we would have little to cut. having 2% inflation oils the wheels of the economy and give central bank's more ammunition. it has become the global standard. it would be hard for any bank to diverge from it. >> the gent

taking risk. if nobody sees risk on the horizon that's when i get worried. >> markets are very dangerous. you don't see that because evaluations are at high levels, and credit risk looks like it has disappeared. it hasn't. we have to make sure we are prepared for the next market correction we don't know when it will happen, but it will happen >> we now know when it did happen >>> shares in nova soozymes is after missing profit expectations revenue was down 1% with ebit down 4% for the fourth quarter the firm increased its dividend to 4.5 crowns per share. >>> and statoil reported it will raise dividends and capex in 2018 the norwegian energy producer posted a 4.5% jump in its dividend capital expenditure will rise in the fourth quarter earlier we spoke with the statoil ceo and asked him where he sees oil prices in 2018 >> when it comes to the world market, there is always uncertainty in the market. i think there's a lot of uncertainty going into this year, coming from almost $70, i think we have s

it is a risk management tool.be used as an investment vehicle. >> what is it look so quickly? from 17 to vix went 38, the value of the instrument went down. there is no prospect of recovery, so that is why we close it. even when vix went back, the value will go back. once you hit the bottom, the structure of our -- means there is no recovery. when the conditions were explicit come it will be trading until february 15. investors will be paid on fedora 21st -- february 21. all of that was laid out in the literature. manus: tidjane thiam there with francine lacqua. the correction of the market was unavoidable, according to him. simon french is panmure gordon this morning, listening to tidjane thiam talk about the market. what are the other great swans you in swans for 2018? simon: we don't think it translates into the room economy until later. i think he was spot on in terms of rising gilts and rising inflation -- rising yields and rising inflation. you start to get an inflection point. -- in thisabout environment wi

you should be long risk parity models all the time but 5% of the time, risk parity has zero hedge.r se, the hedge is having cash in the u.s. -- >> what is a decent portfolio at the moment? risk: right now, if i was parity, 25 percent cash, 25% fixed income, 25% equity. points, but you have 2008,igh drawdowns in because they are not hedged. 95% of the time exercise doing this. you will it crew going forward, but what is slightly concerning me ae is that it seems to lot of the houses that traditionally sell risk parity are now venturing into more out for based bets like we have seen one fund manager shorting europe aggressively. in particularly in italy, that could be hedged against something else but it seems odd that this is not an alpha play. the dynamic of the strategy is changing day by day, but problem here is it is a strategy that works 95% of the time. the 5% you are not getting it, you are not getting from a 50-50 portfolio either. guy: we will leave it there. dani burger from our qantas team, -- quants team. this is the central bank governor denies accusations of taking bri

>> well, it's a risk it's not a near term risk i would say. let's, i just would mention of course that we are now in the process of normalizing our balance sheet and shrinking it and so we're moving back to a more normal level balance sheet and i think we'll be there in three, four, five years. >> one thing that's puzzled me is that target 2% inflation rate as a layman and looking at this, and the suggestion seems that's benign you mentioned about 20 years if you have 100 bucks 20 years ago and 2% every year, the purchasing power went down can you educate us about this 2% target because my count, $10020 years ago at 2%, it might cost about 150 bucks today. >> so this was a big debate which was settled around 2% as opposed to zero for central banks to aim at. it's now become a global standard around the world. central banks are aiming at 2% the reason why that was pickeded over is is that it gives us more room to cut real interest rates. if the interest rate, if inflation is zero, then interest rates would be in the one, two, three range and wh

at hedge funds risk goes down adventure capital risk goes down at bitcoin risk goes down not up because it moves countercyclical that's a really good important point that actually adding this part folia reduces the risk because you're diversifying in a non correlated out. and this point will be written large amongst the many thousands of hedge funds out there they've got a huge buying power huge and they're going to be coming in here stumbling around on a market that doesn't have a lot of volume for those guys and they something's got to give and that something has to price right the price is got to go up the howlers are going to feel bad make it make it a so easy making this money go four hundred thousand dollars now i did the math quickly in my head wow are sitting here the compound rate of return we're talking about is one percent a day and like that number yeah you know what i'm actually i just made that up because it was going to run not that far today it's not that far off and here's the funny thing so on twitter i'm out actually on twitter too at mark use go and take a lot of gri

olga: well, the central bank mentioned some major risks of inflation, and those risks include instabilityces, which may affect the ruble, and that may affect inflation. but those midterm risks -- they bank,ways on the central so russian policymakers are watching. as of now, they decided to stress the growing uncertainty on the global markets. mark: thanks for joining us. olga tanas, as the s&p erases its gain and heads for its worst week since 2011. vonnie: we are taking a look at a one-week chart a moment ago of the doubt. what we want to point out is that the dow turned negative on the day, taking a precipitous drop, actually. .6%, 2% move in the last hour or so. %.e s&p 500 is down .25 looking at what is leading to that -- walmart and boeing are down more than 2%. we see some stocks higher. nike is a raising its gain. up almost 3%. still ahead, more markets. here are the majors. this is bloomberg. ♪ vonnie: let's get back to the breaking news on the markets, which has turned negative. the major averages are down, and for the dow quite substantially down. i am not going to ask you what

up local risk of it.relevant, but i think the likelihood is that we are going to see this past. even if we get a nasty outcome or unexpected outcome, i think markets will take a wait and see view before we see -- how risk looking at reversal pricing, how the market is hedging this. i am trying to figure out whether anybody is free cap. i have two big political events at the same time. i have the voting germany, which we don't know which way it is going to go. then you have this italian election in which everybody seems so conflict. does this fit together? derek: when you go to previous political ovens in europe and you had big market moves, it was related to existential risks. guy: if i am an italian candidate, i am taking a lesson from marine le pen. shift i think the rapid towards a referendum on the euro , i don't think that is going to materialize weekly. when we get the election results, when we get the german spd vote. what is the worst case scenario initially? it is potentially gridlock in italy, g

they could their risks significantly. that's why they judgement was made. >> so that decision was the de-designation for -- [ inaudible ] didn't happen. >> again, the decision on met life had nothing to digdecision recommendation that relates to a legal case that had nothing to do with the risk riskiness and metlife could indeed be subject to designation in the future. the issue was more a legal issue. >> and prudential? >> prudential, again, would follow the same issues. >> okay. i guess the question is, can you kernel that the council is still functioning and still actively looking at companies' financial products and assess their risk to the financial system. are they still working? >> absolutely. >> okay. thank you, mr. chairman. >> thank you. senator cotton? >> thank you, mr. chairman. thanks you, mr. secretary. senator brown started his remarks speaking of a swiss ski resort. i presume he was referring to davos where the president addressed the world economic forum last week. to my knowledge, in davos, all they do i

of significant flight of capital risk."ino: there is a risk, but we have been here for 20 years, and we have never seen anything like what we have been saying the last couple of years. this feels like a new paradigm. yousef: up next, the region's leading shopping mall company says that the introduction of vat has not led to consumer confidence. we hear from the ceo next. this is bloomberg. ♪ yousef: welcome back to "best of bloomberg markets: middle east." majid al futtaim, the region's leading shopping mall, retail, and leisure company, released their 2017 earnings this week. group revenue increased 8% to $32.2 billion. the company describes a challenging business environment. i spoke to group ceo alain bejjani. alain: i think the question is what has not been challenging? [laughter] alain: we were very happy with the performance in 2017. we have seen very good growth in our top line. we have seen very good resilience. 2017 has been a year of volatility, as we know. i think one of the most important things has witnessed th

this is an ongoing risk management thing. i don't know how we can get to the bottom of it, but that is a big, big challenge for all of us, and it got to be for treasury, is it not? >> it is and it's one of my top priorities, senator. what should we do first? should we worry about the financial system? sure. should we worry about our electrical grid? sure. we also have to worry, first of all about national security and the implications of penetrating through cybersecurity, do we not? >> that is correct, and that's why we have a process across all of the different agencies that were focused on this and homeland security's responsible for the overall coordination. we are responsible for looking at the financial sector and dedicating a lot of resources to that. >> how do you think the economy will continue to grow. i like what i see out there. we feel it, people have confidence. do you feel like it's going to continue to move forward? >> i do and the president is determined to enact legislation that moves forward on a sustained e

they viewed portability as a proxy for flight risk. what we know now, that leads us to our group of people who have substantial defenses, it is a horrible proxy for flight risk. we have people who have citizenship claims, married to u.s. citizens and they have a petition. they're going to win their case. they're just waiting for the dhs to decide their petition. they get 10 months, nine months. we have alternative supervision now gets extremely extraordinary high appearance rate by immigration testimony. whether you have the flight risk, it seems like the due process law in demore. >> and thinking about demore again on the timing issue, demore makes a big point of saying how short the time frames are. at the top end, only five months. but this case was six months. does that mean your proposed remedy, a six months line doesn't fit with demore given we sent demore back and he continued to be detained. the court decides the claim to be argued. my position is i concede the first six months, it only became constitutional for that time perio