vonnie: here are the top stories we're covering from the bloomberg and around the world. his coronation as the newest reboundings. markets inequities and treasuries in the dollar continued their slide. senate showdown. we go to washington, d.c., as lawmakers vote on dueling proposals to protect dreamers. and zuma no more. real estate with one of south africa's biggest banks as the nation's prepared to move on. we are 19 minutes to the close of trading here and in europe. we got a half hour into the open of trading. what is going on in europe right now? mark: yes, for the third day in led bytoxx 600 gaining industrial goods and services, chemical and retail.

coming after the biggest weekly drop in two years. seems like a long time ago the benchmark fell by 5%. a rise this week with end the worst weekly run since june. the two-day gain is the biggest since january 5. stocks are on the rise once again today. a bit of corporate news to tell you about. the biggest increase in a decade. it ended last year with a record order backlog, delivering more just than ever before. the company with a 1.3 billion euro charge against the military and hits and it said meeting 2018 target will be dependent on overcoming issues afflicting the latest jet. one-time items increased by 8%. 20% for thisy

year's figure as long as delivery targets and shares are up earlier as much as 11%. they are up a mere 8.7% today. this is standard life. it is moving in opposite direction. it is down by 9% today. lloyds banking group terminating an arrangement with this company in which britain's largest active money manager oversees over 100 billion pounds of assets for the bank. it says it is disappointed with the decision, which will affect the revenue on a performer basis. it will take a 40 billion pound impairment charge on the results. shares down by 8.5% today. let's look at the rand. south african assets have limited room for further gains as the resignation of resident zuma was already priced in. and on speculation his replacement faces a rough

challenge to reform the economy. that is according to analysts and investors. look at the dollar. the rand today rising to its highest level since february 2015 versus the dollar. yesterday, it has rallied 20% over the last three months. it selected its leader in mid-december. the next critical milestone investors say will be the assessment expected at the end of next month by south africa's plagues theg, which nation on review for a downgrade in november, but the rand had been surging in the last month. 30 minutes into the session in the u.s. how is it looking over their? julie: the sixth day of rallying. it is the longest winning streak

for the s&p 500 since january 9 but the largest spot day gain going back to october 2015. it has been quite a rally over the past several days. we get a look at just how big of rally has been. look at the five-day returns for the major averages plus the russell. the nasdaq gaining more than 6% over the past five sessions. the dow and s&p up. also take a look at what the u.s. dollar has been doing over the past five sessions. we have seen it go in opposite direction. it is interesting because we have been seeing rates climbed to the highest since january 2014, and yet we have seen the dollar go down here by about 1.9% in that time. back to today's session and some of the big movers we got in terms of their weight in the s&p 500. apple gaining after we learned through the filings that

berkshire hathaway had added 30 million shares to its stake. a 23% increase in its holding. brochure is now the largest shareholder of apple. cisco coming out with earnings. sales forecast in particular coming in ahead of estimates. cisco is returning cash to shareholders through buybacks and dividends increase. a $78 price target for morgan stanley, the highest on the street. the analysts looking at the push into oncology drugs favorably. finally, bowling up as well, gaining along with airbus after the company said its profits rise on the big order backlog. boeing has a big backlog as well. $421 billion worth. vonnie: the filings are fascinating. we will get to more of them later on. thank you. let's stay on the markets now as we go to equity recovery. joining us is the head of asset

allocation at boy investment management. -- boya investment management. it is a sea of green. can we trust this rise in global equities? >> that is a great question because what we are looking for is, is this rally going to be a broad-based rally or a failed rally? it is a little too early to tell, but what we are looking for is very big broad-based industry group precipitation. the reason we think about this is we go back to the selloff we had in 2015 into early 2016, markets fell, there was a big attempted rally late in the year november into december, but it was a failed rally because it was not on very broad participation. that was a clue you are going to go down, with you did integrate 2016. that is the things we are watching at and looking for.

because of the violence of the selloff, it is important you broad-based participation. very important to watch over the next week or two. vonnie: what about correlation? traditional correlation is back one to one. it seems like we may have recovered that correlation of old. barbara: correlations can wander through time. we think about correlations on a one-year basis, big asset allocator is. you want to make sure that correlation does not break down. it tends to break down under periods of prolonged stress like 2000, 2007. when you start to see the correlation breakdown in those longer-term basis on a rolling one-year basis, that is a bigger warning sign. we do not see it now, but the big takeaway for us as we are at the point in the economic cycle where the returns tend to find out a bit for equities and they

are more volatile. we likely have seen the lows of volatility for the cycle. does not mean returns cannot outpace funds, which is an easy thing with rates continuing to back up, but even as rates begin to level off, the fundamental for equities are still very much there. mark: one of the most recognizable as of this correlation breakdown is in u.s. rates versus dollar. is there a level of the u.s. 10 and start dollar bold to breathe a huge sigh of relief. some maybe suggesting it could be 3%. barbara: that is a great question, mark. what we are looking for when we think of the dollar, it is being driven by medium-term fundamentals to a bigger budget deficits in the u.s. are really contribute to the slide down in the dollar. couple the dollar tends to go up or down, it tends to overshoot, so we see more weakness for the dollar. in the long-term the next 1, 2, 3 years, we see the dollar

continuing to drift. mark: the correlation between higher u.s. rates than e.m. does not end well for e.m. assets, but they had a stellar 2017. what is to tell us we are not going to have a stellar 2018? barbara: you just have to look at the way they are behaving in the recovery. e.m. have been leading it up about 6.5% versus 4.5% for s&p 500. remember this. it is very important to think about the context of where they are in the cycle. the u.s. economy is clearly in late cycle because the unemployment rate is already below. you have much more slack in the emerging markets and for a longer-term investor like we think about how badly the emerging markets have been bruised from 2000 to 2016. they had vastly underdeveloped the performer markets. they were only able to deliver half of the returns, so we think

the emerging market place you want to be over the next five years. vonnie: when you read that some of my great value has an $18 billion short fund, does this give you pause? barbara: i think you have is a very interesting story. as the emerging markets, it has lagged significantly behind. one thing we see in europe a structural reforms. you are seeing in the french economy. there is a better story to europe that necessarily must people get credit for. europe has been a living boy for this entire rally since 2009, but i would say europe does not have the same sector composition as the u.s. you in europe, you have to bet the financials will be able to do well. rates going up is very positive for the financials. you have to be aware of those when you are thinking about the sector composition outside of the u.s. vonnie: so ray's bet --

barbara: i would never comment on someone else's position. it is about what is on the other side of it. we have been positive on europe for all of 2016. excuse me, 2017. we still have a positive disposition to europe for this year. vonnie: what changes have you made given the market turmoil, if any? barbara: a very good stock to bond mix. opur bond positions -- our bond positions tend to be good during the markets selloff even though they were both selling off last week. equities fell significantly more. for us, we are still bargain-hunting in europe and the emerging markets. we think that is a great place for us to be over the course of the rest of this cycle. we'll see a recession transforming over the course of this year in the u.s., and we can probably push it out too late 2019 or early 2020 depending on how much this gives

a boost to overheating for the u.s., which it does not. we overheating -- which it does not appear to be overheating. the unemployment rate was double. it was almost 8%. 3% does not necessarily scare us. vonnie: all right. thanks to barbara. let's check in now on the bloomberg first word news. taylor riggs has that. taylor: started in south florida, a 19 numeral former student has been charged with 17 counts of premeditated murder after the deadliest school shooting in the u.s. in five years. police say he opened fire at a high school a semiautomatic weapon and was arrested one mile away from the school. he had been kicked out of the school in the last school year. 15 wounded survivors have been hospitalized. president trump will speak about the shooting at 11:00 a.m. eastern time, and you can watch

that here on bloomberg tv. it is another sign that inflation is picking up in the u.s.. wholesale prices higher things to energy costs. a growing number of economists expect the federal reserve to step up the pace of interest rate increases this year. the reason, $300 billion in government spending package that they see lifting economic growth and inflation. bloomberg survey the economists this week. 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. vonnie: thank you. coming up, immigration showdown. senate lawmakers are getting down to business preparing for a series of critical votes aimed at solving the persistent impasse over so-called dreamers. a live report, next. this is bloomberg. ♪

live from london, i mark barton. vonnie: from new york, i'm vonnie quinn. this is "bloomberg markets." the u.s. senate is now open for business with a major showdown on immigration about to get underway we lawmakers are preparing to hold procedural votes on dueling proposals to protect the so-called reamers. we are joined now by kevin. -- dreamers. we are joined now by kevin in washington. the proposal did not get a great response from washington. what are we likely to see today? kevin: yesterday, president trump and his administration very much distancing themselves a bit from the bipartisan proposal and suggesting that more work needed to be done. i want to pull up a tweet from president trump that was posted just in the last couple of

minutes in which he says he hopes lawmakers get some type of an immigration deal to be done to allow jobs to be created for the company is coming back. republicans and democrats in congress are working hard to come up with a solution to daca. they should be considering a solution of merit-based immigration so we will have the people ready, willing, and able to help all of those companies moving into the usa. we'll have to wait and see what the ultimate deal is, but different conversations in the house and senate. vonnie: what votes are we looking at today, kevin? will anything emerge from these notes? they are the procedural as we understand it. kevin: yes it will allow a debate to be on the floor with regards to immigration, and the house would have to move forward, and i can tell you that just from talking with folks in the house, there is a lot of distance that they don't feel the versions of the senate are

talking about our conservative enough at all. mark: can we talk about trump's surprising viewpoint yesterday? $.25 pere supports the gallon increase in federal gasoline and diesel taxes. how is that going down? kevin: this is something the president has floated for quite some time, even as far back as last year. about a week and a half ago, i interviewed the chairman of the house transportation committee bill shuster. he supported the gas tax as well and has been a strong supporter of it. it is a very divisive issue among republicans. several republicans have come out and said they are not in favor of that. bill shuster said he has been trumpeting the idea of a potential gas tax as a mechanism of raising funds for transportation, but like i said,

that is a very divided issue, particularly senate leadership was against it. mark: yes. back to the immigration issue, kevin, mitch mcconnell and chuck schumer saying they want to wrap up the legislation this week. how likely is that looking? see?is the soonest you can kevin: i can seekevin: them getting this done by next week, but the attention will return to the house. that is where this thing is going to get real interesting real fast. vonnie: kevin cirilli, thank you. kevin: thank you. stephenill ahead, schwarzman weighs in on the recent market volatility. this is bloomberg. ♪

mark: this is "bloomberg markets ." i mark barton from london.

vonnie: from new york, i'm vonnie quinn. mark: right. it has been a big week for blackstone. john gray was tapped as the steveated heir justo schwarzman. today, steve spoke to bloomberg. he spoke to jason kelly. normal,nk it is pretty and if you look at the world, the developed world will probably girl around 3% -- grow around 3%. % or less..25 multiply that for 12 months, and what do you get? you get stock market performance if you just annualized that somewhere in the 80's to 90% with 3% growth. that is simply ridiculous.

stop that have to kind of compounding or else you have almost a whole year's performance in one month. what is going to happen in that scenario? will, got to go down -- well, got to go up and then down and then up. a volatile world is what should happen at the end of the day? not hour to hour the way television works or traders work or day-to-day or week to week. i think with the economy looking so good around the world, , and ithave an up year cannot be hugely up because we already did huge last year. it will find its way. jason: to using more dealmaking this year or less in terms of private equities specifically? stephen: just generally, usually have more deals when the markets feel good and people are

confident in prospects for the own business. you seldom by somebody else's business if your business is having trouble, so as business confidence remains high, you'll probably see more activity. mark: steve schwarzman, chairman and chief executive officer of blackstone speaking earlier on bloomberg. vonnie: time now for the latest business flash, a look at the biggest business stories in the news right now. 2012,e first time since for the maximum have to tap out bailout funds. they posted the fourth quarter loss of almost $3 billion and will lead $312 million from the u.s. treasury. the new tax law forced freddie mac to write down the necessary tax assets. peter teal is drastically scaling back his ties to silicon valley. according to "the wall street

journal," the tech world's best-known conservative is moving his home from san francisco to los angeles. he also may resign from facebook's board. he had a dispute with another facebook director over his support for the trump campaign, thiel's that is. president trump has given confidence to pharmaceuticals. buffettlion -- warren has given confidence to teva pharmaceuticals. it has been hurt by the recent slow in u.s. generic prices. that is the latest bloomberg business flash. mark: still ahead, a bloomberg exclusive. henry joins us next. this is bloomberg. ♪

vonnie: that was reporting from by bloomberg.

i vonnie quinn. mark: in london, i am mark barton. this is "bloomberg markets." vonnie: the south african rand is stronger by .8%. the south african chief justice just confirmed sarah bosa as the president of south africa in cape town after parliament officially elected him as president. we got word yesterday that former president zuma stepped down under extreme pressure from parliament to do so. we will speak to the ceo of nedbank a little bit later on. investors around the world are waking up to the prospect of and interestion rates. jason kelly joins us for a look inside one macro playbook.

jason: i am here with henry mcvey. it is a very interesting world out there right now. it is nice to be with you. volatility, you can't get away from it. how does this play through from your perspective. what does it mean for investors? is thatur view at kkr we have entered a different investment regime. in 2016 china was slowing and you wanted to get long-duration and stay in the u.s. we think that we are at the cusp of interest rates bottoming, starting to move up. not in a wildly aggressive way, but clearly there is a signal from the fed that they need to do more. we are adding stimulus to the u.s. economy when unemployment is at 4%. deficit atowing your

that point. we are increasing the deficit and investors are taking notice of that. week inpened last relation to volatility funds that had been overly aggressive, there is a regime change from monetary stimulus to fiscal stimulus. starting with the u.s., we think that that will be something that transcends and goes global. we're talking earlier, and he said that this level of volatility feels normal. do you agree, or is this an aberration? later cycle you get more volatility in the equity market. what changes is your losing the cover of the federal reserve around interest rates. we have had the fed protecting us for quite some time. they are now changing interest rate policy. we have not seen that in europe. we are seeing hints of it in japan. to me is thathave

there is a shift in monetary policy that will probably lead to more volatility. we are seeing in interest rates, not necessarily in credit. it is more about changing the risk-free rate than the conditions of corporate's around the world. a lower tax rate in the u.s. probably makes the corporate profits stronger this year. jason: credit is a famous you have been writing about consistently for more than a few quarters. it feels like there is a fundamental shift in the appetite for credit, especially private credit. where are we now? henry: generally we would argue investment grade credit is expensive. we traffic more complex areas of high-yield and private credit. globally, in india we see real growth in asia in this private credit. access to credit

quickly. these transactions are complex. maybe we will partner with a firm like kkr that can help. the started the financial crisis in the u.s. was the banking system contracted. we took the equivalent of five morgan stanleys out of the system. folks had to provide capital. that has become a more mature business. we see growth in the u.s. and in europe. we are spending more time in asia where we see interesting opportunities in the emerging markets as well as participating in areas such as australia and developed markets where there are interesting things as well. jason: as you alluded to what is going on in india and china, china seems to be at a rather fascinating moment right now. whether it is the broader economic story or specific stories of what appears to be of real estate asset.

how does that play into the market? china our view is that crash from 2011-2015. a lot of people were handwringing, will china fall apart? we have a lot of businesses in china. you saw nominal gdp went from 20% to 6%. to 12%. has rebounded that is a good environment for growth. whether you do business in china or not, you need to know about china. global growth, including the immediate trading partners, is 5%. we need to focus on that. we have been active helping chinese companies go abroad and also recently focusing on technology within china and a move towards consumer experiences. there is a huge growth in the middle class that has been interesting for investment opportunities. jason: you think that there will be things in china? henry: when you think about

china, you think about having a fire extinguisher and gasoline and putting it on the fire. it is hard to have the stable policy right now. urbanize theng to economy. they know that they had too much credit growth and are tightening financial conditions. there are other things they are doing around urbanization and increasing the real population's gdp per capita that is leading to positive things. on, ase clearly focused the u.s. moves towards a u.s. first policy, china's focused on consolidating power. jason: energy is something that you paid a lot of attention to. everything,st including real estate. how did that play out? henry: we raised our waiting in eighting in energy.

we think the dollar has peaked. from a micro standpoint, we are seeing a meeting between the buyers and sellers. a lot of public companies want to show growth in the permian basin's, selling off less productive assets to feel that growth. that has been good for us. that is an airy we have been invested in in the energy structure fund. jason: before we let you go, what is the mood of the institutional investors your talking to now? are they confident, worried, if you can generalize. henry: a lot of people had capital returned because markets have gone up on the equity and high-yield side. they are cautious about valuations. we share some of that conservatism. the most bullish thing in the market is that like of late 1990's there is bifurcations

where we are seeing things priced for perfection look incredibly expensive around stocks. on the other side, commodities and complex a jewish and set we talked about in real estate, energy, and financial services, they are priced at interesting discounts. last year was our first year in 41 years that we deployed more capital in asia than in the u.s.. that is probably worth noting. jason: henry mcvey, it is great to be with you. we will let you get back to work. back over to you. vonnie: thanks for a wonderful conversation. still ahead, matches fashion ceo mixc jerome how he is ing fashion with technology. this is bloomberg. ♪

vonnie: race is "bloomberg markets." -- this is "bloomberg markets." i'm vonnie quinn. mark: i am mark barton. from the runway to digital. changing the way fashion is tapped into the nearly $320,000 market for personal goods. planning an ipo. -- matches fashion chief executive officer, ulric jerome.

know the name, gucci is among them. thank you very much for joining us today. how is business? ulric: it is good. the opportunity is massive. industries a big industry. 9% is done online. you can imagine the potential. 25% will bethinks done online by 2020 five. the growth is massive and we are extremely well positioned to benefit. mark: you want to be the number one luxury fashion commerce market in the world. how do you achieve that? close to our customers and selling the story behind the brand. it is understanding how the customer behavior has shifted over the years. what the customer wants is to be inspired.

we are a luxury platform where we create and have a strong fashion point of view. carry a strong andtion on the cite for men women. vonnie: one of the earlier competitors, like a multi-operand i, how do you -- andi, how do you distinguish matches fashion and stay in business? ulric: we have been in business for three years. you name some of the players out 15%e, and we have only a crossover of products with them. our curation is very different from them.

i think that we have the highest average best to guess online because we want to focus on luxury positioning. the positioning of the product and the point of view, the storytelling. half of our website is produced by content. the way we merge them together is technology. andre a pioneer in fashion luxury and tech overall in the digital space. vonnie: fashion has a lot of headwinds at the moment. how do you maintain margins or increase margins? it feels like people can order anything they want, send it back , you are responsible for returns and packaging. even amazon is finding it difficult to make money on clothing. how do you do it? ulric: we don't find it difficult. amazon youlk about

talk about mainstream fashion. we are in a different world. luxury fashion. headwinds, if you look at the of the beautiful results. there's a lot there for the customers with a luxury position. we want to make sure that we make it easier for the customer. when you make it easy for the customer, they come back. the loyalty of the customer is really important. 65% of our business is existing customers. our top 5% customers have a return rate of 97%. that is something we work on every day. the opportunity is how do bridge the gap between physical and digital every day. , we are the first company in the world and luxury to release on demand.

this is what we're working on every day. vonnie: one of your major focuses is speaking at the retail forum in tokyo. the asian consumer, more broadly, we literally heard mcvey talk about china and spending on experiences, how important that is. ulric: 95% about her businesses online. 80% is outside of the u.k. the u.s. is becoming our number one country. asia is a big part of our business. australia.t includes you look at japan, the opportunity in south korea as well. china, for now, is a small part of our business.

in reality, we have more business in south korea and thailand and so forth. asia is very strategic. the customer behavior is very interesting. a lot of the customers are streetwear oriented looking for pieces that can make a statement. , because theting way you interact with that customer and the global offering we are offering everyday. vonnie: we were talking about far fetch.looking at the ipo are you? . i won't comment on this we are doing very well and have a good momentum behind us. mark: what is your valuation? ulric: i'm not going to comment on that.

thank you, very much. chiefmatches fashion executive director. we will speak with the chief executive of nedbank. this is bloomberg. ♪

mark: from london, i am mark barton. vonnie: i'm vonnie quinn. this is "bloomberg markets." mark: the global stock rally is continuing. us for more is the fx strategist. some of the older ones are returning? what does this tell us? kit: we are exiting from an extraordinary period of low

volatility and very low interest rates that gave us that. andre pushing things around trying to get used to the way it was before. mark: the dollar is falling because of the deficit, correct? people have got something more interesting with their money than invest in dollars. the money is flowing out. we lasted this in 2005. it ended badly, but the dollar was falling. you can see some parallels. it is not new. it just has not been seen for more than a decade. vonnie: where is the bottom? kit: for the dollar? it is not one million miles down. the dollar is now a few percentage points above the

long-term average in real terms. we are taking out and overvaluation rather than making .t assuming that we overshoot a little bit we have a little bit further to go, but the euro averages 129 in the last 10 years. basisalue, the simplest of all, is 134. we traded really one to 150 for most of its existence. i cannot work out how we see 140, but somewhere in the one 30's seems likely at some point in the next decade. vonnie: what is the correlation between u.s. treasury yields and the u.s. dollar and maybe the euro question mark we are seeing the 10 year 2.889. kit: it is not a very strong correlation at all. charts so that there is a better correlation between the slope of the curve than the yield at this particular point in time.

the dollar was suffering from rising yields elsewhere. your seals popped higher in the dollar did not get a lift at all. confused is probably the best way to think about it. since november 9, 2016. is dollar-yen a good reflection of the true value, or should we look broader? weighted yene against the dollar-yen chart, and see that that was not nearly as to maddox. it strengthened a little bit, but it is not -- not nearly as dramatic. it strengthened a little bit. that might be important for the bank of japan. mark: is there a level? is there a speed of rate where they might be concerned, might even counter intervention?

some are saying 5 yen over a couple of days? control.s more losing japanese foreign-policy where we have seen sharp moves in history, the trick is to not fight it when you can't win, but let some of the energy be pushed back the other way fervently. somewhere between 100 and 105 per dollar-yen. he wants to get the market stretch and get back to 110. i think that is more likely than fighting on the way down. what emerging-market currencies are jumping out at you as potential beneficiaries for the dollar weakness? , onethe ones that benefit of the big themes of a weaker dollar is stronger currencies elsewhere because we have a global synchronized economic expansion. tells us that most of the time emerging-market currencies do not mind how u.s. yields if it is associated with

stronger global growth because they win. the one with the big current account deficit and dependent on low rates elsewhere suffer the most. now, the south african rand is popular, the mexican peso can do well. juckes will be staying with us. next.the close stocks are up for the third day. it is off of the ties of the david still up for the third day. the closes 34 minutes away. this is bloomberg. ♪

mark: it is 11:00 a.m. in london. left in the trading day in europe. i am mark barton. i vonnien new york,

quinn this is "the european close" on "bloomberg markets." ♪ mark: here are the top stories. stocks are holding on to gains in the u.s.. european equities are rebounding from the worst of this month's correction. africahakeup in south as president zuma steps down. what it means for the market and economy. president trump is scheduled to speak on the tragic florida school shooting. we will bring you that as soon as it happens. trading with 30 minutes away from the end of the thursday session. rising across the european equity space led by greece. we are up for a third