equities european extend the biggest selloff in years. fears of rate rises gripped the markets. trumps fed chair takes over from janet yellen today. will he continue on the right path? and, between a rock and a hard brexit. theresa may fueling her party's silver war. will she survived the crossfire? ♪ francine: good morning and welcome to "bloomberg surveillance." we have a pretty packed show for you.

we have the markets on the move. we also have some pmi figures. euro area january services pmi rising to 58. that was a little more than the preliminary 57.6. euro-dollar, 1.2462. europe seems to be powering ahead. stoxx europe 600, down some 3.8%. we saw that big selloff in asia. it is all about global market angst because of rising inflation. today is the day that jay powell takes over from janet yellen. it will be interesting to see what he makes of some of this. yield, 2.31.year we have an all-star guest lineup for you today. mark wilson of of eva, the largest insurer, joins us shortly. we also have to yield, 2.31. look at the future of advertising.

we also talk about the french economy with maurice levy of trackis, and we will treasuries and the selloff with john normand. let's get to the bloomberg first word news. nejra: in america, janet yellen has said u.s. stocks and commercial real estate prices are elevated. she made the comments to cbs' sunday morning tv show in an interview recorded on friday. >> i do want to say high. price to earnings ratios are near the highest of their historical ranges. if you look at commercial real estate, prices are quite high. is that a bubble? it is very hard to tell. but it is a source of some concern. the u.k., the hard choices of brexit have tipped

theresa may's conservative party into open warfare and it is not clear the prime minister will survive. mp's so queen on quitting the e.u. that they advocate leaving without a transition period. in sharp contrast, philip hammond once a modest separation, a view that has brexit backers calling for his head. angela merkel is allowing extra time for talks on renewing her alliance with the social democrats. a target date of yesterday for concluding a coalition backed came and went, extending the longest political stalemate since world war ii. party negotiators will resume discussions today. north korea is sending its highest ranking official in years to the south for the opening of the winter olympics. soul state news says the delegation will be led by the ceremonial head of state. south korean president moon jae-in is considering holding a one-on-one meeting with kim.

here's one for tom keene. the philadelphia eagles have won the super bowl after beating the new england patriots in minneapolis. stormgles produced a offensive game. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm nejra cehic. this is bloomberg. francine: thank you so much. it has been a good morning for markets, with equities extending their biggest selloff in two years as fears of interest rate rises grip investors. shares sank from japan to frankfurt. pointing to are lower open this morning. joining us for the latest is jordan rochester. avivawe will get to the chief executive officer later. there's nothing new and yet the market shifted. inwe had that big risk

january. that was one of the best weeks in quite a while. we are seeing a reversal of that move. a lot of it has been accelerated. .t was already in motion the big question is, is that to startin wages going profitability? there's three ways to look at it. first is the profit situation of u.s. firms. then is financial exuberance. the third is monetary policy. what is happening in equity markets is a little bit of the first. do financial conditions go from very loose to suddenly over tight? that is a bit of a stretch. we still got qe ongoing and japan. while the fed may be talking about raising rates more than

three times this year and next year, i think this is a bit of froth being taken out. francine: let me bring you over to my chart. i will talk you through it. it is a 10-year yield in the u.s. where does the 10-year yield end up and what does that mean for equities? >> we've been looking for 3%. we've been very bearish on rates for quite some time. we are looking for 3% probably by june. we are getting it earlier at the rate it is going. atkets have lived in a world 3% and 4%, so it is something the markets are going to adjust to quickly. a bit of a wobble, definitely lower to begin with, but i think the trend is intact in terms of risk. treasuries, that can be sustained towards 3%. quickly, a weaker

dollar would also mean that financial conditions are looser, more than we expect. our people not pricing that in? >> it has been priced in. ins the fed started hiking, financial conditions are looser than they were to begin with. environmente global , inflation and the dollar, loosen financial conditions. equities last year had one of the most pronounced rallies. we are seeing a little bit of a disconnect. we will see some discrepancy. last year, pretty much every global major market ended the year higher. francine: jordan, thank you so much. jordan rochester, fx strategist at nomura. joining us now is mark wilson. mark joined the company as chief executive in 2013. under his leadership, aviva's market cap has risen to over 20

billion, the largest insurer in the u.k.. the company manages more than $470 million globally. thank you for giving "surveillance" a little bit of your time. what do you make of the market movement? mark: it is rapid, but it needs to be put in context. the u.s. government giveth with the tax cuts, and now the fed taketh away with rate rises. the market is only affected on one side of the equation. the u.s. is looking pretty expensive. we are looking expensive. it is not a major correction. it may have a bit of contagion. it may have some buying opportunities as well. francine: is this the most unloved bull market ever? the bulld of like market or could it be the beginning of a bear market? mark: i don't think it is a bear market yet.

it can't go up that rapidly without correcting a bit. -- you go market by market and sector by sector, and a minor correction like this is healthy. francine: insurance overall --, you've had a tough time because of negative rates. this would be welcome, rising interest? mark: i like rising interest rates. the reason is, we don't have high guarantees. the products that we sell are better with higher rates. we reinvest when it comes off. rising rates are good for our profits. look sector by sector, market by market. francine: where do you see the biggest hiccups? talking about tax overhaul in the u.s., does it make your life more difficult? mark: it doesn't make our life more difficult. look at global growth. global growth is say 4%. that is the highest growth

globally since 2011. the instinct is, the gap is narrowing between emerging markets or so-called growth and much more markets. again, look market my market. i think there's some pretty good buys in developed markets outside the u.s. have a look at financials. are 20%,s in the u.k. 25% cheaper than the u.s. we are looking at that. francine: buying opportunities, but if they are discounted, does it mean investors are reluctant to invest in financials in europe, and why so? mark: they've been worried about political risk. i think brexit is fully priced in. the market hates uncertainty. from here on, you gradually get

more certainty. the market will correct itself. given backou've also quite a lot to shareholders. how much pressure do you feel to increase dividends and buybacks? --k: aviva has gone from we've been selling things. we've been shrinking our perimeter. we finished that phase. we've now got businesses that can go at least mid-single digits. a has been declining for period of time. dividends per share going probably double digit for the for seeable future. we now have this rather large , but it isn't burning a hole in my pocket. it has taken us a while to build up. but we are going to reduce debt. we're going to take 900 million pounds of expensive debt off

this year. that is 900 million. i'm going to do some tactical acquisitions. then we will look at liability. to spend in excess of 2 billion this year and another billion next year. francine: it is a good problem to have. is there a specific market, a country, or a segment that you want to beef up? mark: i'm not going into new markets. we want to build up the markets we have. we bought something in ireland. we bought something in canada. stuff touy some tech give me some skills i don't have. we are looking at a whole range of things at the moment. it is going to be accretive. that doesn't mean new markets. francine: what kind of tech are

you looking at? is the way i'm going to buy insurance significantly change? we like to think we are leading this tech revolution. insurance is in the stone age. it is time that we caught up. we are catching up pretty fast. now where wetage can do whole product ranges. we've gone from asking hundreds of questions to zero. that, we are picking up market share in just about every product line we have. we like this tech revolution. we might be a 322-year-old company, but i think we are a 322-year-old disruptor. francine: we will talk more about that, how you get all the data. mark wilson, chief executive officer of aviva, stays with us.

theresa may commits to leaving the e.u. customs union, heating up the civil war within her party. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance ." we will get back to the aviva chief executive shortly. first let's get to the bloomberg business flash. nejra: a south korean court has suspended the sentence of the samsung electronics vice-chairman after j wiley appealed the term. the sentence was cut by half to

2.5 years, although he is now free to go on for years probation. lee was the figure embroiled in the scandal that brought down former president par good hey. raise its bid for qualcomm as it tries to force its target to come to the table. according to a person with knowledge of the matter, the chipmaker is considering lifting its offer to $80 to $82 per share. rob, plans to announce the new bid this morning. the ceo dismissed an earlier proposal. representatives for both companies declined to comment. ryanair has launched a share buyback and announced a 12% jump in third-quarter net income. that comes as the airline seeks to reassure shareholders after caving in to unionization from pilots. >> we've retained our guidance for the full year, having seen our profit increase by 12%.

we are now guiding profits in a range of 1.4 billion to 1.4 5 billion. passenger numbers increased to 130 million, which is ahead of the 129 million we previously guided. nejra: that is the bloomberg business flash. francine: despite a disastrous election, difficult negotiations, and warring factions, theresa may has managed to hold onto her job. it was pulled off largely by avoiding too much clarity on what britain's divorce from the e.u. might look like. may has reignited infighting amongst her lawmakers. those seeking the most radical form of brexit have made threats. felt late last night when the prime minister's office said the u.k. would leave the customs union after brexit. for aoes that mean

company doing business in the u.k.? mark wilson is still with us. mark was part of a contingent of ceo's that recently met with the prime minister and chancellor. how did that go? mark: it was a good meeting. the tone was incredibly constructive. i saw a tone from the government that was pro-business, realizing they had to sort out business. francine: what does that mean for the customs union? what would you like from the prime minister? mark: firstly, we need to sort out the transitional engine, the implementation period. once you get that, you get more certainty. think there's way too much discussion on labels. hard brexit, soft brexit, customs union, i think the labels are totally irrelevant except maybe politically and headlines.

it is what we come out with in the terms that is the most important. francine: how is your business in the u.k.? if it is personal insurance, you live in the u.k., the pound level doesn't impact you at all, but you also ensure projects with money from abroad. have they been impacted? mark: they haven't. we do quite a bit of infrastructure. we like the u.k. i think the risk is broadly priced in. we are getting growth in just about every segment of the u.k. we operate in. annuities, wek are getting growth across the board. maybe in the time of uncertainty, people gravitate towards big brands. people may be being a bit more cautious.

i think that is necessary in the u.k. as well. 45% of our business is outside the u.k. that affects earnings as well. the last 12 months -- francine: is there a danger that the bank of england and mark carney raise interest rates earlier than expected, squeezing household incomes, impacting the insurance industry? mark: raising rates is good for savers. that makes them more competitive. i think what the bank of england should do is look at it -- the fact that they are considering raising rates is positive on the u.k. economy. i don't think they should do it yet. there's still too much uncertainty. they should wait. i don't think they should do it now. also talkingare about coalition building in germany. how is your business in germany?

maybe there's a little bit of complacency in the market. do you see strength in europe? mark: we don't have a business directly in germany. the guarantees are too high. the structural status, i don't particularly like. europe has seen growth across the board. the growth rates at the moment are similar to hong kong and singapore. we quite like where we are at the moment. we are seeing strong growth in poland, turkey, italy, some good growth in france. all those markets are growing for us. francine: if you look at the next 12 months, do you look country by country and some of the policies you have to implement, or do you look at it more holistically? strategy, but i look at market by market, not region by region.

region, asia or europe or north america, i think that his old school. as you see growth rates converging between emerging markets and mature markets, in mature markets, there's always really fast.ing tech in the u.k. is growing faster than insurance business in asia. i look market by market, segment by segment, and pick where we are going to grow. francine: where is it most competitive? mark: it is far more price competitive in asia, china and india, then it is in the more mature markets. a lot of people have exited the mature markets and chased growth elsewhere. when you have a large position in some of these mature markets, you can get appropriate margin. as a business, we spend an extraordinary amount of time looking at how we price this.

in the digital space, we can produce products 30% cheaper than we could before. francine: that means what, i go online and say, this, this, this, and you say, your policy can be this much? mark: you go online. we used the data, find out how big your house is, we can give you a quote without any questions at all. it is cheaper. we use ai. our expenses are much lower. your price is going to be much lower than it has ever been. margins up and prices down. francine: only the algorithm? mark: it is all about artificial intelligence and big data. we have close to 600 data centers, people that sit down all day building algorithms. that may not sound fun to you, but these guys love it. you get all this massive amounts

of data. when you combine that with other distribution, like in china with tencent, despite what the press are saying, things like jpmorgan and berkshire hathaway, which is an insurance company, and amazon, there weren't the first. francine: we will talk about health care later. are you managing to get one customer for all the insurance or all that? mark: then you've got asset management over top of that. for the next decade, what you composite, once they've got all those wrapped together, if you can do it simpler and cheaper, that will change the market. francine: thank you so much, mark. weevil talk more about these disruptive.

can a joint venture between amazon, jpmorgan, and berkshire hathaway fix health care? we will also talk to the publicis chairman, maurice levy. we will also be coming back to the markets. we had quite a big selloff. the global slump seems to be deepening. dollar seems to be studying. treasury yields creeping higher. kind of like moving sideways at the moment. the dax down 0.4%. this is bloomberg. ♪\

economics, finance, and politics. this is "bloomberg surveillance ." let's check in on your markets. it has been a down day across the globe. there's a little bit of a freak

treasuries are doing to interest rates. the stoxx 600 down 1%. it was earlier down 3%. studying a little bit. we are also seeing movement when it comes to dollar. the dax down 0.4%. i'm awaiting figures out of the u.k. pmi figure just coming out. let me bring it up for you. my terminal isn't updating as it should be. of 54.2.d i don't know whether it is having an impact on pound. now onto disruptors. news broke last week that amazon has teamed up with berkshire hathaway and jpmorgan to change how health care is provided to their employees. could trigger a radical

shift in the broader injury. it is the first big move in after months of speculation. the company revolutionize how people shop. can it revolutionize the health care space? mark wilson, chief executive officer of aviva, is still with us. aviva, a health insurance business with 31 million customers. maurice levy joins us on set to talk about the ad business. thank you for joining us. you took issue to the fact that we called it amazon and berkshire as one of the big disruptors, but you said there were many other jvs that disrupted in the past. mark: not just health care, but insurance is in the stone age. you've got a mess of regulatory that of regulation, and slows everything down. you've got big capital

requirements. you've got a market that requires a lot of technical specification. things like amazon and berkshire hathaway tying up is not a surprise. it is no different to what we've done with tencent in asia. we've got the big distribution platform, our technical expertise, our algorithms, and you combine them and you can disrupt the market. francine: are we fully aware of the space some of these disruptors can take place? you were one of the first ones to tell me that twitter is like the third-largest country in the world. maurice: and everything is going to be disrupted. since uberization, as i call it, happen, you can expect that most businesses will be disrupted. it is up to the ceo's, the boards, and executive committees

to take the right steps early on , and sometimes be too early, but it is better to be early than to be late. as you mentioned, everything has changed. the behavior of consumers has changed. the way they are dealing with --ir banks, with their everything is changing very fast. you need to adapt. francine: do you worry about facebook or amazon just launching an insurance company? what would that do to your market share? mark: there were plays by google in singapore. a lot of them try by themselves. i think the new future is partnerships. it is not like uber. uber, you change it. if you get an insurance contract

wrong, you go broke. i think partnership is the way of the future. the same time, you are looking at big disruptors. i don't know how many times a day you get asked to advertise something that is off the beaten track that could change the way we work. maurice: if you look at the way we are advertising, there is already a sea change compared to what was happening 10 years ago. think we will change even more dramatically in the future. first, the big data, which you mentioned already, which will change the way you are addressing the people. target verycan precisely every small group of people with a precise message, which is what is leading to marketing precision. and how you can give to each target group exactly what this

target group is expecting from a brand and from a company. intelligence,ial bigbig data, the fact that media are no longer exactly fulfilling the role they were fulfilling in the past, all this is leading to a sea change in terms of how you are addressing the consumer. mark: we break down our customers into 457 sub segments. [laughter] .ark: and we target them our media campaign, we've gone from 90% on tv to greater than 50% on social, and we target those segments. we then contest them segment by segment. our marketing campaigns are something like five times more efficient. it is a change in our industry. maurice: the way we can approach

these segments, we can enrich them with the information that we are getting from that behavior. we can not only have all the algorithm helping us to understand exactly how to communicate, but we can also get the insights which are helping us deliver the proper message. change which is quite and we are just at the beginning. francine: maurice levy, people now listen to bloggers may be more than billboards. how do you adapt and make sure you are at the forefront? maurice: we have been changing the way we are operating since more than 10 years. acquisitionith the

to target small groups and to make sure we are addressing the right audience. we have to continue to change our own organization, continue to invest in digital, and in different skills and different talents. this is what the new ceo of publicis is doing extremely well. if you look at what we are doing , we are happy to work for aviva and we are extremely operationnd our media with the leadership of steve king is making some very impressive progress in the way we are addressing those issues. if you look at the way we are breaking down the talent and skills of people, there is much

and muchhe old guard more of the geeks and the people who understand how to communicate on social media and how to communicate with the bloggers and the influencers who are playing a very important leadingich is sometimes to the fake news, because they are not as strong and as well equipped as journalists. clearly we see that the world is moving very fast and we have to transform ourselves. francine: mark, when do you think you will price the first driverless car? mark: we are doing it now. francine: what will it cost? [laughter] mark: we started a partnership with tesla in canada. it was -- 320 years ago, we were pricing insurance for horse and

buggy, and the drivers were the people we were ensuring. then we moved to cars. now we move to driverless cars. accident rates go down. insurance premiums go down. employ, they are data scientists. fromead of design is gaming, call of duty. how much do you spend talking to regulators? they are also, post offices are .rialing these robots how much can you actually price it without the blessing of regulators? mark: what we're finding is regulation, particularly in the u.k., is designed for face-to-face distribution. we are working with them,

saying, what regulation do we need? the regulators say, we know our regulation isn't right. i'm seeing some real change in approach. francine: what is the most exciting thing you want to price? can you price a trip to space? mark: we can price anything. comingot something out called aviva plus. it is subscription insurance, zero questions, no charges. francine: maurice is hooked. maurice: i would love to have mark's point of view on what happened in the u.s. the rightieve strategy, and do you believe this can happen in europe? mark: i think what you find in europe is partnerships more than mergers. you are finding companies like us buying technology skills and startups.

insurance companies have big pools of cash. maurice: i agree with that. francine: thank you so much. mark wilson and maurice levy, stay with us. earnings season passes its halfway point. we look at how companies are using the trump tax cuts, and how bullish should investors be about corporate america? this is bloomberg. ♪

francine: this is "bloomberg surveillance."

key focus this earnings season is the impact of president trump's corporate tax cuts. companies are going to make a lot more money. 75% ofn announced companies have raised profit guidance. wall street expects u.s. firms to increase. that is more than five times the projected growth in 2017. executives are making plans for the future, including investments in infrastructure and technology. maurice levy, the chairman of publicis, is still with us. levy, thank you for sticking around today. what does the u.s. represent? you saw the super bowl. millions and millions of dollars. can europe ever rival the revenue that comes from advertising in the u.s.? maurice: the u.s. market has been always the leading market

on the world. it has an effect on the rest of the world. situationhat the of the companies is much better is probably a way to see some hope to recover the advertising market. for the time being, we don't see a correlation between the fact that the profit of the companies is raising, and there is no single client who called us and cuts iisten, with tax have decided to invest more in marketing. when ite they will, but is something which is unknown. francine: is there a lagging time? maurice: there is lagging time and there is so much pressure. for the time being, they are addressing the key issues.

first is to make sure they are investing for the future. the second is obviously to try to share the profit. we have seen some evidence of this. third, we will try to get the best of the consumption in the market. for that, i think we still have to wait. soon.eve this will happen we will probably have to wait for the second half of the year. francine: when they talk about advertising, has it changed significantly? is it still billboards? is it much more digital? maurice: they have changed dramatically. bloomberg is one of the beneficiaries. you are highly digitized. and radio is still

the same level. print has gone down dramatically. tv has stabilized. it is not taking advantage of the growth. most of the growth is going to digital and mobile. mobile is now the number one medium. or digital,nternet call it as you like, represent a chunk of business which is bigger than tv. francine: what kind of mobile? maurice: everything you can imagine. from apps to messages you receive, to video, two connections which are built because you have given some education and people are relating to you.

it is something which is quite complete and complex. we see also the possibility of addressing the right method at the right moment at the right place. are is almostyou as important as knowing who you are. the advertiser to send you the right message at the right moment. there is a dramatic change in the way we are advertising, because we know much more about the people and we can be more relevant to them, and avoid intrusion and waste. questionalways a big mark for advertisers. how much has the relationship between a brand and a customer changed? you say you need to relate to the brand.

this is a question of trustworthiness, it seems to be in a market oversaturated with things, that link is more difficult to have. maurice: that link is complicated to have and it is essential. otherwise, you have a relationship which is just based rational, and as people can make a comparison on price immediately, and they are confronted with a lot of offers, if you don't have an emotional aspect and relationship, then the brand will fade and lose market share. it is critically important for the brand to sustain that relationship, and there's many ways to do it. there is the hello effect which can be created through tv advertising, which is still

needed, and we don't believe this is going away anytime soon, and there is the precise marketing that you can build with precise targets through messages which are relevant to each target group. that is something which is becoming more and more scientific. we can deliver a very precise message. this is probably the revolution of tomorrow. building big data is essential. francine: thank you so much for joining us. the chairman of publicis and he's staying with us. up next, france's threat. local leaders are demanding more autonomy. how much of a headache could the island become for central governments? this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance ." mario draghi presents his report to european parliament today. he will probably say europe has recovered in terms of growth,

but sluggish inflation requires stimulus. french president emmanuel macron begins a visit to corsica, with a local government is making demands for greater autonomy. they also said they could change their minds if macron doesn't meet demands for special status. how worried should we be about corsica and the possibility of a more divided europe? maurice levy is still with us. i want to globally get a view on whether macron has been good for business. young french president that travels around the world trying to bring france back to its glory days, as it impacted your share price? as our share price has i consider that it is much more than -- with industry, rather than with macron. but macron has done a lot of things.

any measure, before , the fact that he has been elected has been seen by the french as well as other countries as a dramatic change of france and a shift to modernity, without doing anything. since he has been elected, he has done a few things seen as extremely positive for the economy. reformst thing was the on the way you are hiring, recruiting, firing, and this has been a very positive move. removed thet he wealth tax is something that is seen as very business friendly. today, not only is he seen as a

formidable president for france, but also as a european leader, thanks to the fact that brexit is making the u.k. out, and angela merkel has some internal thelem which is re-creating balance in the power of france and germany. effectall, the macron has been positive for france and i do hope that now growth will follow, as well as further reforms. francine: thank you so much. you will have to come back. "bloomberg surveillance" continues in the next hour. tom keene joins me out of new york. this is bloomberg. ♪

francine: the selloff stevens.

you're the in equities extend the biggest selloff in two years. fears of rate rises grip markets. trump's fed chair takes over from janet yellen today. will he continue on the right path? and, between a rock and a hard brexit. prime minister may insists britain will leave the customs union. will she survived the crossfire? good morning. this is "bloomberg surveillance ." tom, a lot of time will be spent looking at asset classes, why the market fears a rise in interest rates, the timing with jay powell starting today. tom: i think the jay powell story has been underplayed given what the markets have been doing. bitcoin is softer. bonds priced down. the first day of a new fed chairman, that is a big deal. francine: let's get to the bloomberg first word news. here's taylor riggs. taylor: not all members of

president trump's party won the investigation into collusion with russia to end. the president says the controversial republican memo vindicates him, but three republican members of the house intelligence committee sent a memo does not undermine the need for a special investigation. there's speculation that theresa may will not survive the conservative party civil war over brexit. one potential rival is jacob recent of, a lawmaker who has urged quitting the e.u. without a transition period. may has held onto her job so far by avoiding clarity. in germany, there's an indication that angela merkel may be close to a deal on a coalition government with the social democrats. a sunday target date came and went. merkel will allow extra time. the social democrats are holding out concessions on labor rules and health care.

is ready to reduce oil production. the country's oil minister says iran can raise daily production by at least 100,000 barrels. opec and producers such as russia meet in june to decide whether oil prices are high enough to abandon their oil cut agreement. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thanks so much. equities bounce. not like friday, but nevertheless, futures doing better now versus an hour ago. dow futures at -71. there's the curve steepening. nicely steeper from where it was a week even 10 days ago. 18 -- let'surement, repeated again, 18.03, 20 is 10,age, we've been at

everything is fine. it will be interesting to see where that statistic is the end of this week. 3%.ear bond way over the response to that pro-and anti-bitcoin was absolutely record-setting. francine: i'm looking at a selloff. european equities falling. u.s. futures heading lower. global stock markets seem to be extending the biggest global selloff since 2016. treasury yields creeping higher. i also put in pound for good measure. we did have some pmi figures. we are figuring out whether theresa may can hold onto her job. tom: let's check one measurement of the carnage. i did not expect to see this. this is the 30-year bond. this is the price. i looked at this moving average

point. we are down 6%. you've now$100,000, got $94,000, which is about two years of coupon within this decline. i would suggest three years of coupon is where people start sweating. we are not there yet, but there is a 6% decline in the price of the 30-year bond since the end of december. francine: what i'm looking at is more short-term. the $2 trillion treasury bill market where the u.s. government turns for short-term funding. showing. this is the difference between a coupon that is due in august, the blue one, compared to the one that is due in march. i will push it off for everyone on our radio london dab digital.

screenight across the for equities as global stocks continue the biggest selloff since 2016. shares sank from tokyo to london. futures also pointing to a lower start. joining us now is john normand. marcus ashworth, a columnist for bloomberg gadfly, fast-paced commentary about corporate and financial news of the day. that was a good intro. we have to move fast. we can't speak to marcus for very long. why the sudden angst in the market? >> just sort of a reality check. investors are realizing 2018 will not be a smooth year. unstable,on is policies could be more predictable. francine: why now? we finally had an interesting inflation surprise. average earnings coming out stronger than expected.

it is the second surprise in three or four months out of any indicator. data an interesting new point. francine: marcus, how much will they reprice from now? >> i think it is a little bit overdone. u.s.s been held back, the 10-year and 30-year yields. it has finally popped. as john is saying, it was a long time coming. i think the u.s. market has the weird notion that potentially a -- iflat u.s. yield curve think we've worked out that is not happening. the fed is going to be hiking at least as much as the yellen said would have been. yields can go a little bit higher, but i don't want to get scared until we see two things, 3% or more 10-year yields, and 3.3% on the 30-year.

tom: great to have those single point touches. 20 basis points away from that in the 30-year bond. john normand, as you put together your research, what were the levels of correlation you saw in markets? our markets in sync, or are there interesting anomalies to the correlations? john: the most interesting breakdown is the one between stock and bond prices. we usually think of these as moving inversely. if stocks are falling, bond returns offset that. what was interesting last week was the reversal of that correlation. bond prices are going down, stock prices are going down. this is early days. if this were to persist for a couple months, then you could see a much more high volatility selloff.

i think the required condition for that is more inflation surprises and it is a bit early in the cycle. francine: this is the 10-year yield, john. you can see, 2.63%. it is one of the lines we saw. where do you see it going? john: if the cpi report gives you another upside surprise, you could see 10 basis points more. the limit on treasuries is that almost three hikes are fully priced already for the fed. you need an important new signal from the fed to get the 3% level to break. that is why this next fomc meeting is so important. if the fomc does respond to stronger growth by adding a fourth. to the plot, then 3% could easily be broken. francine: marcus? >> i don't think it is going to happen.

i think the fed is going to calm things down. the first thing he wants to do is get a level playing field, unless he has some agenda. i think he's a study as it goes kind of guy. i think around that 3% level in 10-year yields is where it should be. steadily, we can build some value. then i think the fed will be fine for the next three months or so, and perhaps later in the year, things steady up again. we've got christopher on in the next hour, who is superb at trend-based charts. it is amazing to me when i look , we barelytrend was come back to the middle tendency. we barely rolled over at all. do you have a sense of where

support is in stocks, in bonds, in foreign exchange, even in commodities? weakness of the dollar has created such havoc, let alone qe before it. relying on previous measures is a little bit tricky. i don't put quite as much weight as i would have on these levels. central banks on much more in control. i think the markets believe in what they've been doing. the central banks can influence and will influence. tom: john normand, do you agree there's been havoc with the dollar? john: to the disappointment of the dollar, meaning you've had a big increase in u.s. rate relative to other countries. the dollar has been going down

for the past couple months. it actually hasn't been as disruptive as one might have expected given what has happened in bond markets and rate volatility. tom: john normand, thank you so much. marcus ashworth, thank you for joining us. can't say enough about the show friday. huge response over the weekend. we drive forward that conversation. christopher verrone will join us on the trend-based construction of markets. if you are on global wall street, can't do better. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. jay yg electronics heir

lee is free to leave prison after he was detained in a bribery scandal. a high court put him on probation for four years. he was the highest profile businessman caught in a probe that brought down former president park geun-hye. broadcom is trying to force qualcomm to come to the bargaining table for what would be the biggest technology deal ever. the chipmaker plans to raise its takeover bid. qualcomm has dismissed an earlier broadcom offer as not being worth consideration. ryanair is making a surprise investor payout after caving into pilot demands for a union. the discount airline has launched a $935 million share buyback. ryanair is trying to reassure investors that it will stay europe's biggest low-cost carrier. that is your bloomberg business flash. francine: thank you so much. jay powell has been sworn in, is

to be sworn in, as the chairman of the federal reserve today, succeeding janet yellen and inheriting an economy in the third-largest expansion on record. amid the uncertainty, a stronger-than-expected jobs report suggested the central bank could speed up its rate hike schedule. still with us, john normand and marcus ashworth. john, we were talking about the market reaction to this. what do we know about jay powell? he seems to be a prudent kind of chair. john: i think that is the right way to characterize his voting behavior. the interesting question going forward is what kind of economy does he inherit? he's also inheriting the inflation profile. whether it was yellen or powell,

you probably still would have seen a more hawkish fed this year. what is morecus, dangerous at the moment? acting too quickly? >> the danger of overreacting is probably the most important thing. inflation has been remarkably tame. all of a sudden it could kick in quite sharply. i think it was market expectations. that still hasn't fully been priced into the u.s. yield curve. i think that is something which we've got investor expectations to realize. one thing we have to be careful beenhe japanese have buying a lot of u.s. treasuries unhedged.

that is something that is going to hurt them both ways. there's a chance they may get out of them ahead of year-end. there's a chance this could overshoot a bit more. hopefully things will calm down. talk to me about financial conditions and weaker dollar. if the dollar continues on the trend of weakness, how much does it add? john: it would offset the tightening that comes from higher rates. you need to add to that the stock markets are declining. finally the fed is getting more pass through from higher interest rates. it is extremely early days in terms of an equity markets correction. i think financial conditions are pretty much unchanged. we are one month away from

another birthday for chairman alan greenspan. he joined us on fed day. it was really interesting to talk about failed old models. is there any chance that a banker guy like jerome powell can bring new theory to the fed? does he have to go back and rely on the tried and true models? john: i'm not sure that he would bring new models. most of that is probably coming from the staff. i'm not sure there's a need for a new framework. for a while, people were doubting whether the framework was the right one for calling inflation. now that wages continue to step up, now that core inflation is firming, probably the fed feels like its toolkit is useful. on friday wetom:

saw wage growth. is it a single point where you need more information or did you raise the flag and say, wait growth, inflation to come? >> i would love to say the former, but probably the latter is the truth. this has been a while coming. finally we're going to start to get things. it doesn't have to be all repriced in one go. i think the treasury market needed to reprice. it needed the curve to steepen. things have gone a little bit worse, but i don't fundamentally understand why the dollar is so weak. that is creating some slightly weird effects. notenk it is important to the difference between what is going on in the u.s. and what is happening in the major bond markets. they don't need to go up in yield as much as the u.s.

they have a problem with over strong currencies. think we need to be careful that this u.s. selloff is quite pertinent to what is going on. tom: marcus, you set us up beautifully for the next half-hour with john normand. the banks take their separate paths. marcus ashworth with bloomberg gadfly. we continue with john normand. neel kashkari of the federal reserve bank of minneapolis, will he dissent at that meeting? stay with us. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom, talk about possible trade wars and research notes. jpmorgan's john normand looks at what a trade war could do. he says once a decade, the trade conflict is labeled trade war because it involves a high-profile sector. him now. back to john, what is a trade war in 2018? john: first of all, the u.s. choosing to put tariffs on a particular item which is significant to a major trading partner. francine: solar panels are washing machines? john: unlikely to be that.

it would have to be something that constitutes a decent share of u.s. trade imports and it would have to be matched by retaliation from china. there's so many missing pieces in that equation. i don't think it is a major issue for equities right now. francine: what does a trade conflict do for the markets? is it automatically a selloff? john: if you have an announcement of trade sections -- sanctions against china, you will see risky markets selloff. i don't think it would persist. it would require some retaliation. that is guaranteed at this point. for clients who think this is more likely than not, even if they don't feel like it is going to happen, i feel like the best hedges are in currencies. francine: which ones? john: the yen and the euro. if we have a trade conflict, it is likely those go up more.

just the general rise in volatility that leads to some deleveraging. it would be much more hazardous to hedge this through equities or emerging markets. the business cycle is still supportive of those assets. francine: thank you so much. john normand of jpmorgan stays with us. be sure to pick up the latest issue of bloomberg businessweek. this is bloomberg. ♪

tom: good morning. tom keene in new york. francine lacqua in london. kevin cyrilee will join us in the next hour. what an eventful weekend in washington. we'll give you a full brief at

that time. right now, with our first word news, here's taylor. taylor: janet yellen says u.s. stocks and commercial real estate prices are high, but she stopped short of saying those markets are in a bubble. the former fed chair also told cbs news she's disappointed president trump didn't nominate her for a second term. safety investigators in south carolina say a fatal passenger train crash could have been prevented. two people were killed and more than 100 injured when an amtrak train crashed into a freight train. a switch was locked in the wrong position, sending the amtrak train on the wrong track. economic momentum in the euro area rose in january to the fastest pace in almost 12 years. that led companies to add the most workers since the turn of the century. europe's expansion has been helped by a pickup in global trade and ultralow borrowing costs. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries, i'm

taylor. this is bloomberg. francine: thank you so much. the prime minister of georgia attended davos this year with the aim to place his country on the international stage. he predicts the economy will grow 5% this year and is aiming for a higher investment grade rating with the international credit agencies. meanwhile, georgia's free trade agreement with china came in last month, making it on the initiative. the country already has free trade deals with the e.u., turkey, and european free trade association. joining us now is the georgian minister of finance. minister, thanks so much for joining bloomberg, and welcome to our london offices. give me a sense of what georgia needs to do at this point to make sure that the international rating agencies keep on side with it. >> well, generally the strategy of the government of georgia is to make georgia a regional hub

for finance, logistics, trade, and tourism. and in order to achieve this goal, we have developed a very comprehensive edge to address these priorities. and, of course, one of the main priority is to be in the top list of the very well known international rankings. for example, a week ago, we were named in top five countries in terms of open budget. according to the world bank, we are number nine in terms of ease of doing business. we are number nine in terms of low tax in the world. integrate elps us to georgia in the world economy in the most efficient way possible. and you rightly mentioned that the free trade regime are due to china results in countries, turkey, helps us a lot in this respect. francine: will your economy grow at 5% this year?

how achievable is that? >> so last year, our economy grew almost by 5%, which is twice more than you can say our neighbor. so making georgia regional hub, of course, is a long-term strategy, but however, we observe that we already create and bring the very positive results for our economy. so according to i.m.f., during the next three years, georgia will be the leader in terms of economy growth in the region, which consists of 31 countries. francine: when you break down the growth and where it's coming from and things like that for your country, how much does the free trade agreement from the e.u. and with china actually impact your economy? >> so it actually impacts a lot here, because the size of georgia economy is not large. so our main focus is to integrate georgia in the world economy in the most efficient

way possible. if you look at f.t.i. for 2017, it was all-time high. and we have the same edge this year and the coming years as well and create as much as possible. historically, we've been very successful in investments in the major energy products crossing georgia. however, we are very happy to see that another step of the economy, like hospitality, financial services, and, of course, transportation and logistic, we see a very serious interest from american, european, and asian companies as well. i would like to mention the deep sea project, which is on our shore, which is a major infrastructure project in the region. we should be a game changer for transportation sector. tom: minister, you are 3600

miles from beijing and only 1200 miles from moscow as well. i get the idea there's a silph road, which i don't buy, because you've got to go through tehran, but there are airplanes. how are you going to develop your economy and relationships with china? the map is extraordinarily difficult, so what is the to-do list for georgia with beijing? >> well, i mean, apart from airplanes, we have very efficient way to do the transportation for the cargo crossing casspi an sea, using ferries and many other modes of ransportation. georgia is a gateway for so-called eight landlocked countries to do trade. so we are the shortest link from asia to europe.

and definitely the structure, which we are developing in georgia, is not only to serve the needs of region, we are thinking about the wider region, including china. if you look, for example, at the trade level between china and turkey, it is almost $30 billion, and we are the shortest link to this. tom: right, minister, what do you need from the united states, given the unrest on the turkish southern border, the ageless battle with the kurds, all of the battle of georgia in the direct region, what do you need from the united states right now to get political stability to drive forward your regionalization? >> well, we can say that georgia is becoming an outlier in the region. and of course we need more investment from the united states of america, and we are very happy to see that there's

a growing interest from very big corporations in america to start their business in georgia. and while investing in georgia, we are not speaking that they're going to have an expo sure only on georgia, the south market. it's very wide region. our free trade agreement covers european union, china you mention, and other country, and this is a population of more than 2.5 million people. francine: let me bring you over to the cross we're seeing on your currency. tom, i guess it's one of the crosses that we don't look at very often. tom: got that right. francine: after sinking below 2.70 to the dollar late in november, is the worst for the currency over? >> well, of course, i mean, this is one of the largest challenges for our economy, the uctuation of our currency, which is related to the rate in our economy, and we have a very

comprehensive and long-term plan to address these challenges. so if you look at the neighbor countries, you can immediately notice that this is one of the most stable currencies in the region. and we have the policy to decrease the right of our economy. we have the expectations to say the flak situation rate will be significantly lower. francine: minister, thank you so much for joining us, the georgian minister of finance joining thus morning here in london, tom. tom: very good. coming up -- from morgan stanley, we'll hear from a policy strategist at morgan stanley. we'll do that on radio in the 7:00 hour, a little bit of policy in washington under discussion. stay with us. from london and new york, this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. let's talk aboutity leave. we're months away from the general election in italy, and it seems that the berlusconi factor may be stronger than what polls predicted. what does this mean? the so-called shy factor, which underestimates voting intentions for right-wing parties and a new law that favors coalitions, may give berlusconi's bloc a new seat to form a government. that's from one of the leaders tied to the pollster. the current projections show the former prime minister is only two percentage points away from a majority. still with us, john norman of j.p. morgan. i guess when you look at political factions, there seems to be a blanket of certainty in europe that we're not going to get, an election in italy,

which will be disruptive for the markets. do you agree? john: i do agree, because it looks like none of the polls are trending to an anti-e.u. party leading an ex-government. i think if you're looking at geopolitical risk from a systemic perspective, that's all that matters. if you have a coalition government which is slightly looser on fiscal policy, that can be an issue, but not for global equities or even the euro. francine: what does that mean going forward? is there a danger -- the election goes off, but reforms are very slow, that they offer tax cuts, and we can't really afford it, and then we wake up in three years, and it's all over. john: there's no doubt in three years' time, if we're in a recession, that european sovereign markets are going to get crushed. but that's not going to be a unique phenomenon for italy. a lot of markets will be in trouble in a recession. but the point to keep in mind is that even though italy has much better fundamentals from a

budget perspective now than it did five or six years ago, the debt to g.d.p. burden is still significant, and so there's this huge, open question around the next recession as to who would fund an extremely indebted sovereign, and that's where you could get geopolitical risk wearing on sovereign fundamentals and giving you a big event in markets, but that's other. tom: i don't want to get new trouble with j.p. morgan, but the academics are so important. what is the appropriate euro for germany? what is the appropriate euro dollar fority sflee those are two different numbers. how far apart are those numbers? john: what euro level could still still growth in germany, i think if the euro of 1.35, it's no material value for a lot of the other activity indicators. and it would keep inflation pretty much, you know, where it is. i'm not sure italy requires a meaningfully lower euro in the sense that that country is

still growing above trend. if you ask what level of the euro would push growth so far above trend that debt to g.d.p. began to move down rapidly, you would have to look at a substantial depression in the currency, and this would be something beyond 20% or 30%. but i think the issue is whether the level of the euro is a constrain on growth in any part of europe, and to me, every country is expanding above trend. whatever problems those economies have, it's not related to the level of the exchange rate. tom: there's a nice walk-through on southern italy in the f.t. today. does j.p. morgan look at italy as more polarized economically than it was 10 years ago or 20 years ago? john: probably more so than it was 20 years ago. i'm not sure it's that dramatically different than it was 10 years ago. francine: john, when you look at euro level, you know, at

what point does this become a concern for mario drag snow they're kind of on a good cause. all economic indicators are, in certain cases, a bit stronger than expected for the eurozone. but if the euro keeps on rising, at some point it will start hurting growth. john: right. my guess is you would need the currency to be at least 10% stronger in trade weighted terms to reduce growth by a few tenths of a percent act point. but you still have other factors, such as corporate profits and expansion, which are supporting growth. i don't think a meaningfully stronger euro is a make or break issue for growth. it is going to be a big driver of inflation. if inflation fails to pick up, it's, to me, very unlikely the e.c.b. is going to be tightening in the first part of next year. they would still taper, because that's driven a little more by a sense of stability in the real economy. but they would delay that first hike, and i think that in itself can be a cap on the euro, because part of the reason the clients are getting long on currency is because they think rates could move up as early as the first part of

2019. tom: this chart is fascinating, sholes the polarity of italy, the idea of -- and i'm going to print out, lombardi, is that how you pronounce it -- going rom 4% and down it goes. and this is calabria. is that right? francine: i've never heard lombard knee english. i'm ashamed to say. but yes. tom: no, we don't say lombardia, we say lombardi. i didn't put venniss here because i butchered that. the difference is stunning, between 22% and 6% in northern italy, call it milan. this is milan in the boot of italy. those are immense distances. francine: and it goes to the south-north divide. i guess the pivot points for some of the major parties, is actual that will they want to break away, because they say, well, we don't see why we have

to spend so much money for, you know, one of the regions that is not paid as much. we see it with corsica and possibly with italy. are you worried about the recessionist movement? john: they have existed in europe for hundreds of years. i think the issue is whether or ot a movement would succeed in actually executing that agenda. and the euro, to me, is a big constraint on movements ever gaining very much momentum, because the price of sovereignty from the national government is the loss of any kind of financial stability, because it also requires leaving the eurozone. and this, to me, is analogous to the situation in catalonia. if one wants to be european more than one wants to leave spain, then you have to significantly reduce the odds that one would ever leave spain. they're similar situations. tom: we say good morning to all of you watching in italy, particular until lombardia. mr. normand will continue with

us. data check, very important. let's get through this quickly. futures, negative seven. dow futures, negative 131. markets still on the move and weaker with yields higher. run to the next screen, please. let's see where that v.i.x. is, almost up a big figure. francine? francine: yeah, this is what i'm looking at, it's definitely a selloff, but we're seeing a little bit of stabilization when it comes to the dollar. then you can see the german two-year minus .56. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." let's get to the bloomberg business flash. only two companies have submitted bids to buy pfizer's consumer health business. it's a deal that could be valued at $20 billion. according to people familiar with the matter, glaxosmithkline have made nonbinding offers. they say pfizer will let the two companies do due diligence before making final bides. tesco has named a new person to be in charge of the brittish and irish operations. that creates a strong number two to the tesco chief executive. wilson engineered the sale of

booker to tesco, the u.k.'s biggest retailer. and the retail apocalypse in the u.s. has claimed another victim. the company operates about 260 stores, sell clothing, it's been struggling with declining small traffic. and that's your bloomberg business flash. francine, tom? tom: just want to touch on this and say thank you to professor rabini for joiningous friday. bitcoin this morning, further south, instead of lower highs and lower lows. this chart is textbook. maybe we'll touch on this in the next hour. what you need to know over here, i'll put this out on twitter for radio london and all, but we're really touching on new lows in bitcoin this morning, well under 8,000. it will an mazing to see. but really, a shout out from francine and me and our entire team to all of you, the lovers nd haters of nouriel

bitroubini. i appreciate the intense discussion over the weekend. francine? francine: yeah, tom, we're back with john nor manned, head of cross asset fundamental strategy. do you look at bitcoin? i know whether you like it, don't like bitcoin, or whether it becomes something else with time. john: i don't like it relative to government-issued currency the. i understand its novelty value, and i understand its usefulness in a few circumstances. but as long as it will never be legal tender, i fail to see how it's ever going to be a challenge to government-issued currencies. tom: i believe john, pound sterling is legal tender at least until we get to friday. give us an update on the j.p. morgan call on pound sterling getting the huge plunge off brexit, and boy, we've come back, haven't we? john: it has come back, because i think expectations around brexit have shifted to the idea that the transition is going to be smooth. and if it is going to be smooth, then you can count on some bank of england rate normalization over the next

year, and that gives us a lift to any currency that's cheap. we're still not positive on long termment we only have the currency going up three or four cents this year versus the dollar, pretty much tracking the euro, and the idea is that because, in my mind, there's a lot of uncertainty about what fed arrangement will look like, i don't think you can have a whole lot of confidence around the bank of england outlook relative to the fed or e.c.b. outlook. it would be an owner of the currency. tom: let me show enthuse chart. this chart is sterling dollar, the number of dollars per pound sterling. we flip the reciprocal and look at euro sterling as well. but john, i want to ask you about trade-weighted sterling now, really those 1992-ish levels. can trade-weighted sterling even have stability here, given all the back and forth with dollar and euro? john: it can edge higher, because sterling is probably going to keep pace with the euro over the next six months, as the bank of england, and if

it edges up, that's all you need for it to move up in trade weighted terms. i wouldn't put sterling at the top of the list in terms of currencies that will generate high returns this year. i just don't think the central bank path is really firm enough to earn that sort of standing. francine: i have a chart here, almost like tom, but we brought it back to 1993. does it touch 150 by the end of the year, john? john: i don't think so, if the fed is tightening four times. francine: ok, what it tightens three times? john: if the fed tightened three times, it could do it, because three hikes is almost in the price already for the money market. it's really about pricing in that fourth hike from the fed that can give the dollar a bit of a bounce at some point over the year. tom: john, excuse me, i still got the plague, we had the minister from georgia with us, off the black sea and caspian. where is an outlier currency, a more obscure currency, where you can make money this year?

i don't want to you talk about the lari, but where are we quickly here, a currency where we could make some money? john: i don't cover that many small currencies, but if you ask me what major currency clients are underinvested in, it's the yen. i'm still surprised that investors still seem to be short that currency when the bank of japan is making noise about shifting its target. tom: terrific briefing. john nor manned, thank you so much for guessing our monday started so smart. he is with j.p. morgan. one of our most popular guests in the next hour, christopher bar own on the trends and charts. stay with us. this is bloomberg. ♪

tom: this more than, the selloff continues, the never-ending meltoff has ended. in this hour, we go to the

charts. we consider support, resistance, and the technical analysis. chairman powell, let me show you how to log on to your bloomberg. and winning, well, after the memo, the president is winning, the eagles are winning, i'm not sure if prime minister may winning. maybe she's winning. i, of course, have francine lacqua. good morning, everyone. this is "bloomberg surveillance" live from our world headquarters in new york, i'm tom keene. of course with francine. francine, is prime minister may winning? with the zeitgeist this weekend, i know you didn't watch the eagles win. is prime minister may winning on this monday? francine: i know theresa may has been compared to many, the history, historic figures, to many people in the past, but i don't think we've ever heard her compared to tom brady. that's quite an analogy. she, once again, as is often the case on monday after the sunday papers come out, her leadership is being put into

question, and so she had to give something to her party saying we will not be in the customs. i know it's another tough week for theresa may. tom: it's interesting to if he. it's a big, big deal, folks. right now, with your monday brief, a big deal with our first word news. here's taylor riggs. taylor: tom, francine, not all members of president trump's republican party not the investigation into collusion with russia to end. the president says that the controversial republican memo totally vindicates him, but three republican members of the house intelligence committee say the memo does not undermine the need for a special counsel investigation. there's speculation the british prime minister, theresa may, will not survive the conservative party's civil war over brexit. one potential leadership rival is jacob, a law maker who has urged quitting the e.u. without a transition period. may has held on to her job so far by avoiding too much clarity on what the british divorce will look like. and in germany, there's an

indication that chancellor angela merkel may be close to a deal on a coalition government with the social democrats. a sunday target date came and went, but merkel will allow extra time for the negotiation. the social democrats are holding out for concessions on labor rules and healthcare. and iran's ready to boost oil production if opec decides to lift limits on output. the country's oil minister says iran can raise daily production by at least 100,000 barrels within five or six days. opec and producers such as russia need to decide whether oil prices are high enough to abandon their oil cut agreement. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. tom: thank so much. we're going to do a couple of data checks to keep a breast. markets deteriorate right now, new lows, negative nine. dow futures, negative 138. the euro not part of it. oil not part of it. but bond markets on the move

with significant cuts deepening. the v.i.x. i'm going to get, to that's a big number, 18.26. there's the carnage of the dow on friday. bitcoin breaks down the new lows. maybe we'll touch on that in the hour as well. francine? francine: i'm look agent european and asian equities. they fell. u.s. futures heading lower. global stocks extending their biggest selloff since 2017. treasuries actually stabilizing while the dollar weakens. tom, my bloomberg is very simple looking at cable, and you can see pound currently 141.06. tom: love this. francine: and possibly her troubles ahead. tom: yeah, really shows a deterioration over the last decade of pound sterling. my chart to get us started here, a chart by christopher verrone. let's go to the bond market before we go to the v.i.x. 30-year bond, i take it right off these two moving averages, which are arbitrary. they're not climbing moving averages. they were down 6% here as well on price. and i would suggest,

christopher verrone, that two-year coupon, and get a bond market where you lose it. are we in a bond bear market yet? christopher: we are. i think at the very least the bull is over here. 30 is on the way to 350. i can say 10 is probably their way to 325. this is a change. i think the equity market has been telling us this for really a number of quarters. last year, when the utilities didn't work, i thought that was a very important signal that this bond message was starting to change. tom: here's the message. here's the most important chart of the day right now. we'll do it again later in the hour. if you're part of global wall street, this is all that matters. we have had what people feared, a jump up in the v.i.x., towards average fear of the last 20 years. re's the agony of 2008-2009, the agony of the shutdown in 2011. everybody fears that all the bet is to sell and when the

v.i.x. finally lifts up, that gain gets crushed. were they crushed like the new england patriots? christopher: yes, i don't think everyone fears just yet. it's still very benign here am we haven't seen the type of stress you often see at the end of the selloff. i still think we're in the beginnings of this move. tom: where's your level on v.i.x.? christopher: 22, 23. tom: ok, francine? francine: what's the catalyst for this, chris? christopher: well, i think we've done 200 training days since the last pullback. i think you can say we're simply due. when you look at 9 internals on friday, it was bad, but it wasn't climactic. 20-day lows on the s&p, we're about 30%, typically good bottoms take shape when half of the s&p is making a new low. so we're not quite there yet. francine: all right, but again, does there need to be another trigger or catalyst, or is it just sentiment that will

continue to turn sour? christopher: investors are certainly unease, given the velocity. we've had about a 40, 45 basis point move in the first three, four weeks of the year. i think that certainly has people on edge. we don't think that move is done. we think they're on their way to 325, so i think ultimately that's probably a source of stress as we look out through what is typically one of the weaker months, february. francine: ok, 325 for 10-year, you know, what does that mean for equities? chris: i think longer term, i'm not sure it's a game changer. if you look historically, it's really been the level that has meant a lot for stocks. structurally they're still very much with us. i think tactically, we're going to have to adjust to the reality that they're up here. tom: i want to go over this, and of course, we have a value add for you at "bloomberg surveillance." here's the great play of the

eagles, where they came around here, did the trick play, and the guy came around like this, and the quarterback was way out here, number 9 for the eagles. he was outstanding yesterday. but down here, seriously, chris, is your 23 level on v.i.x., we've come this far this fast. what if we get to 23 this week? chris: it's certainly possible. remember, markets can correct in price, and they can correct in time. i don't think we're through this with enough time just yet to call it. tom: do you feel there's enough of an institutional vet in the quiet of the market to sell, where there's going to be a carnage at a certain level? chris: i think at some point there will be a washout, there will be blood on the street. we're not there yet. i think the put call data is going to be key here, and i think credit will be key here as well. neither are yet stressed enough. tom: agreed. the bond markets are not stressed enough. where's your level on the 10-year where you get stressed? chris: i'm in the 3 and a

quarter camp. i think he was right. but higher before lower. tom: christopher verrone here are markets on the move. we'll do more data checks here through the hour. kevin coming up next, and yes, kevin, i know he's in the studio right now. it's why i wore my green tie as well. coming up later today, across all of bloomberg, the dissenter from minneapolis, neil on the new chairman in washington. this is bloomberg. stay with us. ♪

taylor: let's get the bloomberg business flash. in south korea, samsung electronics is free to leave prison almost a year after he was detained in a bribery scandal. a high court suspended lee's sentence and put him on probation for four years. he was the highest profile business figure caught in a corruption probe that brought down former south korean president. brood com and trying to force qualcomm to the bargaining table. according to a person with knowledge of the matter, the chipmaker plans to raise its keover bid for around $120 billion. qualcomm dismissed an earlier offer. and ryanair is making a surprise investor payout after cafing in to pilot demands. the irish discount airline has launched $935 million share buyback, plus ryanair is trying to reassure investors it will stay europe's biggest low-cost carrier. and that's your bloomberg

business flash. francine, tom? tom: thanks so much. markets on the move. we got futures right now. let me turn to the bloomberg and tell you negative 11 on s&p futures. dow futures negative at 161. bitcoin is really down testing the lows, seen on friday. testing the highs and lows of washington is our kevin cirilli, our chief washington correspondent. after an historic weekend in washington, first, kevin, let's talk about the business at hand, and then we'll talk about a small football game yesterday as well. kevin, i look at the f.b.i., and i'm reading as much on it as i can. what does the director do this morning? what does mr. ray's goal managing down to the agents, and just as importantly, what is mr. wray's call managing up through the d.o.j.? coip good morning, tom. over the weekend i spoke with several top republican lawmakers about whether or not they still have confidence in mr. wray as a result of the nunes memo that came out on friday. now, so far, hardly any

republicans, and no considerable republicans are calling for mr. wray's resignation. despite that, president trump expressing frustration with the f.b.i. now, as of now, there's no signs that president trump will fire christopher wray, but there's no question about the intense political fallout from this memo, which democrats, of course, say is nothing to see here. tom: there's a number of ways to go here, but what i found fascinating was the response over the weekend to the president's tweet. obviously the whole memo blowup. let me ask you an open question. which of those republican responses had the greatest interest to seven kirilee? coip senator james lank fomplt he's a republican from oklahoma, a member of the senate intelligence committee. i interviewed him at the west virginia retreat in a press

conference setting. over the weekend, he tweeted, look, this is someone who's a die-hard republican, someone who thought that the memo ought to be released, has concerns about the security of what the intelligence community was saying, a bit apprehensive in not releasing the memo. but his bottom line, tom, was russia is trying to divide the united states and trying to undermine the bedlock institutions of our country. for a republican to make that case, someone like senator lankford, i thought that was really interesting. and then you have people like senator mccain, as well as senator flake. but senator lankford really stood out. francine: kevin, what will we talk about in washington, d.c.? first of all, good morning, and congratulations on the super bowl. what will people shift to? is it once again the debt ceiling? i think the deadline is march 8. kevin: yes, so we've got february 8 for the debt limit,

which is just a couple of days away. and then we have march 5 for daca, for immigration for that deadline. you know, over at the retreat in west virginia the other week, you know, a lot of the republicans were a bit confused as to why they weren't talking about budget battles and deficits, because that's just a fight that's around the corner. everyone is predicting there will somebody type of longer term deal, francine, and we've seen not much, hardly any market reaction around the potential of a government shutdown. and quite honestly, a lot of republicans looking to bypass another partial government shutdown. francine: when you say they were surprised it hasn't shifted to the debt ceiling, why hasn't it? is it people are distracted, or is it something more underlying than that? kevin: great question. i think the rank-and-file republicans, francine, were a bit frustrated by that. they didn't really understand why they weren't kind of hammering out their points of

differences. i think they use that gathering, that retreat, to kind of set more broader schemes on a host of other issues, but still no concrete plan yet as we move forward on the partial government shutdown. tom: final question. do you have half a clue what mr. mueller will do this week? do we have any idea where his investigation is? kevin: we really don't. we really have no timeline. all we have is sort of where they're focusing their interviews on with regards to the bob mueller probe. it looks like it's nearing its completion, but, you know, look, i can't stress this enough, whether you are in favor of the nunes memo or not, it greatly politicized the investigation, and it's an incredibly polarized time f. you're outside of washington, if you're just following this from overseas, it is an incredibly polarizing time here in washington. tom: well said. kevin, we got through it without talking about -- i wore this for you, kevin, today.

kevin: thank you. i appreciate that. tom: kevin cirilli is our chief philadelphia eagles correspondent. kevin: thank you, go, birds! tom: christopher did not watch the football game. i want to go to bitcoin. bring up the charts. this is happening in real time, and the basic idea is we're about ready to go through a lull. i want to you help bitcoin lovers and bitcoin haters with what a set of lower highs mean along a trend. what does that mean to a chart guy like you? chris: it means we're not ready to own it yet. think goes lower before it ultimately goes higher. the trend is clearing down. we're down 60% from the highs not long ago. until it stablizes, you can't touch it. tom: critically here, can you institute a short trade on bitcoin here, or has there been so much of the trade done that you just have to wait for the opportunity to reassert a

short? chris: i think you can press a short here. the trend is down. tom: what do you mean press a short? that's massive jar began on a monday. stop it, chris. chris: you can be short here, let's say it that way, but you have to be very mindful of your stocks. you can't be dogmatic about this. if it starts to go the other way, you have to think otherwise. francine: how does it stabilize? does it stabilize once it's regulated and not before? chris: i presume it will stabilize beforehand. remember, despite a 60% drawdown, bitcoin is still above the 200-day average. look to it as a place where this ultimately shakes out. tom: i got to come one this chart? go ahead, francine. i'm making a new chart. francine: yeah, but chris, you're right. on the longer moving average, but then the rapid, you know, the decline was so quick, that it almost looks like it's falling out of bed. chris: and as was the rapid ascent over the last number of months.

i think it's too early to say this is finished forever. this is a really, really good shakeout after an exceptional move. 200-day ultimately is where this bottoms and where it shakes out. tom: "bloomberg surveillance," you're getting technical analysis. we're going to come back to another data check as markets are on the move. i'm going to have the 50 and 200-day moving average. i'm loving this! this is what do you when you get ready for a week on global wall street. christopher verrone with us. let me tell about you an important and timely interview this morning. he is the senator from delaware, of course, christopher on the federal bureau of investigation on the president. oh, yeah, a government shutdown. stay with us. this is bloomberg. ♪

tom: marblingts on the move. more data checks as well. francine lacqua in london. i'm tom keene. negative 11, negative 12. dow futures negative, 168. on to the next screen, please, where we get the v.i.x. yields higher. this has all happened in the last 90 minutes with the v.i.x. 18.38. bitcoin down to new two-day lows, friday, monday lows. francine? francine: yeah, this is what i'm looking at. this is very much a similar board as yours. it's basically showing the selloff. stocks extending the selloff. it's a classic writeoff. despite a disastrous election, difficult brexit negotiations, and warring factions within her conservative party, theresa may has managed to hold on to her job largely by avoiding too much clarity on what britain's

divorce from the e.u. might look like. any had not of plans has reignited the infighting amongst her lawmakers. their sway was felt last night when the prime minister's office said the u.k. would leave the customs union after brexit. joining us now is bloomberg's u.k. government leader, to talk about brecks ate. good morning to you. look, every monday, after the sunday papers come out, we say does theresa may keep her job? does she not? how different is it this time? >> the honest answer is impossible to say. you know, i don't think anyone wants to put themselves out there and say she's going to be gone. but we're looking at someone who literally might need a little push to just turn the tide, and it could be any number of factors. it could be an angry speech. she's basically at the mercy. the narrative has been she's been able to hold on because there's a delicate balance, brexit on one side and the pro, and having a blank slate has meant she's able to somehow

hold it together. we've kind of reached the end of the line there. francine: who's going to take her job? with the conservative party, infighting within her own party, if they push her out and put in someone who may be less popular, does that not trigger the possibility of a general election, which the conservative party may lose? >> exactly. and that's part of the narrative that's keeping her. the problem is not getting rid of her, the problem is who comes after, and there isn't a consensus. there's also tremendous favor, and any torre will tell you, we will lose, so it's been that fear of colvin that kept everything together. but whether that is actually tenable for the next four years, or even the next year, is the big question. tom: flavia, what is the relationship of the newspapers to all of this back and forth on brexit? it seems from a distance that they eat up and made in the internal politics as a cynic almost to just sell newspapers. is that true? >> i mean, look, no one loves

this as much as the british newspaper, and you've got the telegraph, and you know what side of the equation you're seeing. and it's sort of been part of the charm of reading british papers, you know, there's an element of gossip, and you don't know how much to believe. there's also some, you know, proper old-school house of games type sort of plotting going on behind the scenes that's undeniable. francine: thank you so much. that is bloomberg's u.k. government team leader. coming up, we'll be sure to pick up the latest issue of bloomberg business week. this week, we take a look at the great mirage of general electric. this is bloomberg. ♪

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. tom: good morning, everyone. "bloomberg surveillance" with markets on the move. francine lacqua in london. i'm tom keene. futures neglect 1if610 right now. deterioration in the last hour. let's get to our first word news. here's taylor riggs.

taylor: tom, francine, janet yellen says u.s. stocks and commercial real estate prices are high, but she stopped short of saying those markets are in a bubble. the former fed chair also told cbs news she's disappointed president trump didn't nominate her for a second term. safety investigators in south carolina say a fatal passenger train crash could have been prevented. two people were killed and more than 100 injured when an amtrak train crashed into a freight train. a switch was locked in the wrong position, sending it on the wrong track. economic momentum rose in january to the fastest pace in almost 12 years. according to ihs market, that led companies to add the most workers since the turn of the century. europe's expansion has been helped by a pickup in global trade and ultralow borrowing costs. and philadelphia is celebrating its first super bowl victory, a come-from-behind win over tom brady and the new england patriots. nick foles passed for 373 yards

and three touchdowns, including the go-ahead score with little more than two minutes left. then the eagles defense still had time to make two final stands to hold off the patriots, 41-33. foles was named the game's most valuable player. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: where was the defense? i mean, come on. taylor: tom, i know you don't watch tv. i'm a cord cutter. i don't watch this. tom: amazing how innocence had all of this over different platforms besides normal cable tv. taylor: it's past our bed lime. tom: well, you got that right. come, brady, do something! yes, yes, no. ok, there it was. francine, there it is. francine, does this get any traction in london? francine: well, this is the underdog, right? philadelphia erupted in celebration after the 58-year

jinx. this morning, we woke up in europe, and you kind of look at these things and feel for them. it's like, i guess you could say births time, right? disappoint there, folks, your football analysis for monday from london and new york. let's save ourselves, b.n.p. paribas had a view of equities, mr. verrone with us. bring up this chart right now. i'm not going to put this out for twitter. it's too complex. but this is the reality of the life. he looks not only at the v.i.x. and all this fanciness, but he looks over here at the cross skew s, the delta and the and a bunch of other stuff. here's skew. the v.i.x. is a hugely important deal. let's start with the why. why are pros glued to the v.i.x.? chris: i just think the v.i.x. is something something you have a long history of. it's a smple expectation of one-month volatility across the

entire surface, and it's something that tracks it very closely. it's a great indicator. if you want to look at what the market is doing now. tom: we talked to christopher verrone earlier. we've gone from 10, 11, 12, out to 18 on v.i.x. his single point is 22, 23, where the tension clicks in. where's your point where the v.i.x. tension clicks in on that ginormous sell trade? >> i think there's something different fundamentally about v.i.x. now versus six months ago, and we published a note this morning where the key difference with it now versus then is the fact that that community of investors, which was predominantly a hedge fund-driven community, looking at futures to see that, that positioning has been cut. that has been replaced by short v.i.x. positioning in the products, which, you know, if you think about the hedge fund community, you're operating on losses, generating trades, so when the v.i.x. pops, those rades are quicker.

>> a sign of unease? stewart: if you look at skew, especially the way we calculate it, the call and put. what we've seen, on the rally, this here has been the upside, and that's actually flattening the upside skew. this is a beautiful window, folks, with how we talk and how the pros talk about it, all i want to say, francine, there's four cross moments, and i have been told i will be shown the door at bloomberg if i mention kertosis, so we ain't going there. we'll do variants and skew, and i flunked the exam, but we're not doing kertosis ever on "surveillance." francine: i'm going to break that rule. talk to me about it kertosis. >> well, it's really the

jumpiness of the distribution, and i'm not this. you can think about it as the very far out of the money volatility. and, so you know, if you're thinking about the 10 delta or the five delta, on that basis, we're actually seeing those are very well priced, as in those are very expensive relative to history. the volatility of a normal day is low, but the risk tends to be extremely high. tom: quickly? >> tell me why this is trading through the third month v.i.x. or the fifth month v.i.x. >> another interesting thing about the v.i.x. is that, if you think about the rates curve, the slope of the curve is actually proportional to the level. any time it spikes, we'll see the curve flatten and invert. the curve is too flat, meaning that short volatility trades do not look attract up. tom: are you keeping one this? francine: i'm taking notes. you're doing your nails, all right.

i'm taking notes for both of us. you talk about what looks cheap right now. where do you see value? >> it's interesting, because although walls have picked up, they're realizing, as in they continue to be lower than their implied levels. the question is, what's going to revert quickly, and we think that overall, the f.x. and rates complex looks cheap to the equities complex. so on that basis, looking at euro dollar, looking at kind of front end and treasury futures, relative to, say, s&p, which on a carry adjusted basis does not look as cheap as other assets classes. francine: ok, let's talk in english a. part from euro dollar, what else? >> treasuries, we've look at certain e.t.f.'s, such as i.e.f., these are treasury linked e.t.f.'s that trade options in the u.s. market.

if we look at those relative to s&p, we say, yes, they are elevated as well related to recent history, but they're not as expensive as the s&p is right now. francine: is there anything, other than the cole mine, or is there something you're look at to tell you that it's turning away from kertosis? >> the one thing we're really focused on, and i think it's interesting, if you look at spillovers is the u.s. high field space. if you actually look at last week, there was an outflow from the major yield that was really the largest since may of 2016, and if that continues to spill over, if that continues to have an impact, we've seen it happen in november of 2017, if it happens again, i think that can be something that would cause a broader spillover into the u.s. market and a further pickup involved. francine: chris, what do you see as the canary in the coal mine? >> i'm trying to reconcile the out flow, and the resiliency from the underlying. high yield credit was actually ok last week.

what we watched is the spread between junk bond yields and investment grade bonds yields. that is our bell weder for risk. that is still relatively contained here. ultimately we get more concerned about equities when there's a big problem in credit, and i think it's too early to make that case. tom: ok, we're done here with kertosis and skew. bring up the next chart. this is how mere mortals look at this. this is the v.i.x. and we talked earlier, from going to 910 up to 18 where we are right now, rising today. mr. verrone is up here at 212,2, 23. where are you on a single point where we get in stability as indicated by v.i.x.? >> if you think about the long run average as being 20, we've been well below that the last few years. and part of the reason we've been below that is the predominance of quantitative easing. i think there's an environment where we break out of that, clearly we could have a higher v.i.x. on average, and, you know, we see the shots up to 40 or 50, even 60, that tend to be

short, but extremely violent. tom: and how much of a bet right now -- and this goes to -- we make jokes about it, folks, but this is really important stuff to pros, the dynamics of the distribution of potential outcome and also the greek letters, the key greek letters, gap a, if there's gap, you lose money. acceleration, you get killed. how close are we to a gamma event where this brutal move, as trichet would say, these brutal moves become money losing for a lot of people? stewart: i would say the interesting thing about last week, it does not seem, at least according to our indicators, to be clearing. tom: and that's what you said as well. stewart: not there yet. positioning is still in the 90th percentile. tom: this is really important, francine. francine: it is. go on, stew. stewart: i would say an s&p below 2700, a v.i.x. above 20 or 25. tom: ok there, it is. francine: ok, can the s&p reach

that level without a catalyst? so can it reach that level just on market sentiment? stewart: you know, i think that's what we saw at least on friday. there was a dollar positioning squeeze. our asian f.x. strategists were out the day before saying that asia f.x. relative to the dollar was 9 right pullback. and on that basis, there tends to be rezz cool volatility in the days after an event like friday. so if you actually look at the last 12 times since 2002, i'm sorry, since 2000 this has happened, in an event where the bond was off, the s&p had an average return that was positive. however, the few days of that week, so say, the first few days of that week, it was actually still negative. so we're probably still likely to see a j curve type effect in the s&p over the course of this week. tom: this is fabulous. stewart and christopher, what you just got there was a window into how pros talk when they

see the market movement. my key lesson there was the idea that we didn't clear the markets friday, and that there's still a real bet there out there, and we've got to get to a point where the fed begins to clear. we're not there with the futures in negative 13, dow futures negative 2. you need a morning briefing? in philadelphia, robert moon and karen moscow, they do that. stay with us. next, we are kertosis free. ♪

taylor: this is "bloomberg surveillance." i'm taylor riggs.

only two companies have submitted bids to buy pfizer's consumer health business. it's a deal that could be valued at up to $20 billion. according to people familiar with the matter, glaxosmithkline and rucket have made nonbinding offers. they say they'll start due diligence before making final bids. tesco has named booker group c.e.o. charles wilson to be in charge of its brittish and irish operations. that creates a strong number two to tesco chief executive dave lewis. wilson engineered the sale of booker to tesco, the u.k.'s biggest retailer. and the retail apocalypse in the u.s. has claimed another victim. bon ton filed for bankruptcy protection from creditors. the company operates about 260 stores and sells clothing, home goods and furniture. it's been struggling with declining mall profit. and that's your bloomberg business flash. tom, francine? francine: taylor, thank you so much. let's talk about m&a. broadcom plans to raise to

around $120 billion, according to a person familiar with the matter. broadcom is trying to force its target to come to the table in what would be the largest ever technology deal. the chipmaker is considering lifting its offer to about $82 per qualcomm share. we're with stewart of b.n.p. paribas and chris verrone of strategist research partner. chris, let me start with you. if you look at m&a broadly, do the markets actually point to symbiosis, are we going to see more consolidation overall? chris: i think we are likely to see more. i think the tax deal is a big reason why. when we compare current levels, it's not even close to what we saw in 1998, 199, 2000. i think the excesses that are often there at the end just simply are not there yet. the premiums large enough. the deal values are not large enough. we still have time to go i think before it's reflective of uphoria in this environment.

francine: does more m&a point to a healthy market or the contrary? chris: i think to a point, and i think we're still at the point where more is not bad yet. there will be a level in which the euphoria sets in. i think it's way too early to make that case. when you look at dollar amount, deal value, number of deals, we're not even close to what we saw in 1999. not even close. francine: all right. why? chris: well, i think the catalyst deal has not been there yet. the public markets have clearly been quite good. what i'm curious about, does the tax deal start to change that? do the corporations have enough cash where the catalyst to do a deal starts to rise? i think we start to see the very early signs of that, but it's not euphoric yet. tom: let me bring up a chart here right now, very straight forward. we've shown it a million times. i call it the depth chart, to speak the bears. we're back to the 1920's. the philadelphia eagles began here in 1933. up we go. expansion.1999

we're here with an extended exuberance right now. financial engineering is about use of cash. do you at b.n.p. paribas see any amendment by corporations to what to do with cash, or is it business as usual? chris: quite honestly, i think it's business as usual. we're starting to see that, m&a, buybacks, some increased investment, but we haven't seen the pickup in investment on the structure side, and that's probably the largest swing factor, which is, you know, more related to the oil price rather than the tax deal itself. i think that those companies as well have guided to say that they are focusing on shareholder returns as opposed to continued expansion o. that basis, we're likely to see more buybacks, more m&a. tom: what do you say about this when you look at industry sector charts? do they tell you more of the same? chris: at this point, the spots where the deals have been prevalent have been semis. i would anticipate that

continues, especially in broader tech. but when you look at the big picture, when you look at the long-term chart, it's hard to find examples of excess yet. i believe at some point we will get there. i think it's too early to make the 1999 call yet. tom: you're driving the market downward. we're negative 200 on the dow here in a moment. are you acquiring shares this morning in this two-day pullback? chris: no i think this will shake out lower. the long term health of this market is intact. 80% of stocks are in an up trend. when trends are favorable, you step in and buy weakness. i just think it's a little too soon yet. tom: ok. francine: do you wait for it -- chris, i don't know when it's not too soon. you calculate it on a percentage correction from now? what's the buy signal? chris: we look for signs of stress. i'm not overly concerned with levels. i'm concerned with evidence of stress. i want to see people get uncomfortable. i think we need to see put call spike, more stock probably make new lows. i think v.i.x. probably has to go up. that would be the evidence that this is starting to clear.

tom: folks, i tried, but francine is so based. there you go with stress. stewart, help me here. are we getting jumpiness or kurtosis that indicates stress? few stewart: in the equity market on friday, we did not see signs of panic. the market was surprisingly quiet, despite the fact the stock price was lower. tom: see how question that, we got kurtosis in two back-to-back blocks? francine: really impressive. tom: thank you. francine: sorry? stewart: volumes were too low on friday. it did not have the climactic feel. in terms of a climactic purge of price, too early to make that case here. remember, it's been 402 trading days since the last shakeout in the market. even good years can have big drawdowns, and i think that's probably an appropriate case as we look out for 2018. francine: thanks so much, sorry, stew, go ahead. stewart: one interesting thing to think about on the buyback side has been the earnings

period, companies have been in their buyback blackout period. so generally four, five weeks before earnings are restricted from buying back their own stock. last week was busy, so let's see what happens. tom: francine, i'm looking at bitcoin, we'll come back and talk about that, because they're having a blackout period. if you bought bitcoin in 1900 right now. stay with us. worldwide with markets on the move, this is bloomberg. ♪

tom: markets on the move. nowhere more than bitcoin. let's do a double single best chart. i'm going to show you the long term right now on bitcoin. this is a chart way up. and as chris verrone said earlier, 200-day moving averages, come on down to 6254 is the 200-day moving average. francine, you look at it more short term. francine: you asked me to pull up a very short term, kind of two-day-trading for bitcoin, so this is what we have right now. 7588, you can see there was a little bit of a blip on friday, but then the steady decline going forward, certainly in the last four hours or so, tom.

tom: very good. christopher verrone with us, and stewart warthen. how do you do a chart that explodes higher where you don't know where support is? how do you find support if you don't -- where it's out there in quicksand? chris: we actually do have history here. this is not something that's six months old. you have years of history, right? when we look at 29 hundred-day moving average on the bitcoin chart, it's a level that hasn't been visited in eight months. tom: agreed. chris: i think you're going to see it. remember, we overshot on the upside here. the move from 5,000 to 20,000 was the excess. we are ridding this market of that excess. i think it shakes out lower than here. tom: your colleague wrote in the economist about bitcoin. does it have an inafrican-american sick value, or do you agree the value could be closer to zero? stewart: to paul's point, it was really interesting. if you look at the currency financed mentally, which is something you often don't do, you don't really go back to the basic that frequently, but as a unit of value, a unit of

account or a means of transaction, he does not think that it's there yet. or at least that's what he wrote. i think that's a good point. it's very' very nascent market, and we have yet to see the utility. tom: quickly, go ahead, francine. francine: stew, will it ever be there? is it time or is it ever in question that it will get to it? it could also be dead in the water. we don't know. stewart: you know, i think that's the million dollar question, one that i'm not qualified to answer. but as a jury, i would say it's definitely still out. tom: chris? chris: shortly in this discussion of bitcoin, we forget the other value that may be out there is gold. it gets not enough attention. gold is getting better. i think it's attracted some of the attention away -- tom: are you long gold? chris: i am. it is bottoming. tom: he want you guys to come back, and we'll talk theta here. let me do a exchange report. i look at it on the access,

thank you for teaching me that. euro dollar, 124.51. no question foreign exchange mirroring the markets. it will be interesting to see where that yen goes during the trading session with u.s. futures negative 13. dow futures negative 188. a foreign exchange report, and we say thank you. we've got a fabulous week for you. don't forget, on washington, forget about the memo, forget about the uproar over the weekend. maybe government shutdown on the calendar for thursday. budget battles on thursday as well. stay with us all day. this is bloomberg. ♪

>> i don't want to say too high

but i do want to say i. -- say high. >> when you look at the internals on friday, it was bad but it wasn't climatic. typically good bottoms take shape with half of the s&p is making a new low. >> healthy correction. do you still want to buy the dip? a potential powell. markets likeort his predecessors? buyout bonanza. broadcom raising its offer for qualcomm to $120 billion in the largest tech deal ever. it is confirmed. >> well done. >>.com is looking at final and best offer, $82 a share.