tv Bloomberg Markets Americas Bloomberg March 21, 2017 2:00pm-3:31pm EDT
scarlet: we are live from bloomberg world headquarters in new york over the next hour, covering stories out of las vegas, washington and paris. we are live at the ibm interconnect conference in las vegas throughout the hour, speaking with ibm's ceo and salesforce.com's ceo. release results after the close today. leon cooperman must face a trial on insider trading charges after a judge ruled that the fcc had a plausible case against them. but first, we want to return to equity markets where stocks are seeing the biggest selloff in. months. julie: the worst day of the year
thus far for the three major averages. for the dow, it is since mid-october. of 109 break that streak sessions without a 1% loss in the s&p 500. we have had this lackluster trading action in terms of volatility and movement in volume. it was the lowest trading volume of the year yesterday. volatility taking up and stocks are ticking down. we are seeing a broad-based selloff as well. only utilities and consumer staples are higher. financials steeply declining today, down 2.6%. materials come industrials, tech, discretionary and energy falling today. i want to focus on the financials in particular.
the flattening of the yield curve is starting to take its toll on the financials large and small. here's the financials xls down 2.7%. down 2.7%. evidence of the regional bank downdraft. they had been out performer since the election. re, it look at the k is down 5%. bank of the ozarks milosevic premier bank -- ozarks, pacific premier bancorp down sharply because they don't have the diversified income the bigger banks do. they are down were steeply today. let's check on treasuries, we are seeing yields lower. 1.26% on the two-year. there are different ways to measure the yield curve.
you can look at short-term bills. we are not seeing a steepening yield curve at the moment. let's stick with equities and dig deeper into the selloff. theve been talking about function on the bloomberg to measure the velocity of today's decline. oliver: you can see what is driving the market action today. green shows a sector or company that is trading at above average volume. 27% of the total volume for the s&p 500, trading at 119 percentage. you can click through and see all the companies in the green. let's talk about what's happening today because this is a big move. the trump reflation trade unwinds a bit. >> it blows up, this is what you get.
the bank stocks had such a high tear when he was elected. people were talking about, look, mr. trump will bring tax policy changes, we will see health care changes, we will see these economic changes that we want and a lot of our banks benefit from. now, they are starting to see people question the policy and and where his republican allies may or may not lie. there's also been some commentary from the big names as well raising some concerns. >> bank of america might be one of the worst down today. they are always linked more to rates. you also have morgan stanley down second-most among the big weks that we watch because had the president saying at a big financials conference in
london that fixed income trading may not be all that great, up slightly. scarlet: not reassuring. >> not what we would like to see because of the comp over first quarter in 2017 was not very good. oliver: a lot of people expected growth from a rebound -- let's talk about jeffries. what we can gleam from that smaller bank about the industry overall. >> not a lot of analysts cover jeffries. we do look at them to see what the bigger banks will be doing possibly in the next month. the big banks will be reporting asked month. trading surge in because they had such a bad quarter. fixed income and equities both good. we will see of the other banks
did well. in terms of investment banks, capital markets -- jeffries is a strong underwriting bank on the debt side. that is what renfrew much better than the advisory side. that's raining -- that is what rang through much better than the advisory side. oliver: bank of america the worst stock on the day. ceo is down at the ibm interconnect 2017 conference in las vegas. he is standing by with caroline hyde. much.ne: thank you very we are talking about the between your ai product and watson. >> this is really the best of both worlds. onesforce is the number
company managing customer information for more companies overall than any other vendor. -- we found a way to work with both of our companies together. the crazy hailstorms we had last week, we have managed five of the top five insurance companies overall. those companies want to know hail storm is going to happen. watson will tell us the hail is going to come and we are able to notify those customers and get that car in the garage and the rest is magic. ownline: you've built your product via acquisition and internal r&d.
watson was already there. marc: we have some incredible ai technology. it is tightly integrated into our court platform that core platform called salesforce einstein. the opportunity for watson is to bring a general-purpose ai platform that is programmatic so our customers can extend and complement our solutions with what watson can do. caroline: you mentioned insurance companies. where's the low hanging fruit? where's the demand coming from? marc: you see it really in almost every industry. it can be much smarter. employees are able to extend their capabilities through artificial intelligence. , we are seeing salespeople being much more productive than ever before. they are able to know exactly when to call, who to call in a
paradise way. -- prioritized way. caroline: you have such global reach. you are announcing a partnership with aws and australia. geographically eating up the desire? marc: you see that across the whole world. software is eating the world. ai is really starting to percolate into that software across the world. we are seeing ai inside all of these different jobs and work strains. the advances in ai have far exceeded our industry's expectations. now, vendors like salesforce and ibm can extend and complement our solutions with this amazing technology. not just machine learning, but deep learning as well. coca-cola announced they will be building these coolers that have
cameras in them and the cameras are able to do real-time inventory management to know what is happening inside the coolers. trucks are automatically rolled to the stores knowing that they need to replenish those supplies. caroline: you mentioned disruption -- what does it mean for your bottom line and topline? whether it is einstein were watson, what does ai built into that? salesforce is already in the top five software companies in the world today in terms of growth. we just delivered a phenomenal quarter, the best quarter in tech. the for revenue hit $14.5 billion come up 28% for the quarter. a lot of that is being driven by ai and a lot of other major trends that we assign ourselves to barry early -- very early
come including the cloud and social networking and mobility. our customers are moving to those trends. we need to align salesforce to get growth. that is how we create extraordinary growth. crm is the fastest growing all of these enterprise software segments and will be the number one segment in the whole enterprise software industry by 2020 and we are the number one vendor in crm. we are uniquely focused and sales, services, marketing and analytic apps and comers as well. caroline: does the world realize how much this is going to make people lose jobs? marc: that is the $54,000 question. that's why i went to washington on friday because i'm focused on that issue. workforce will dramatically change over the next 1-2 decades and it will be grown a lot by artificial intelligence exchanges.
need to start retraining in new types of job development before this technology hits i called for a moonshot of 5 million apprenticeships in the united states based on the things we've learned from germany and switzerland. we can improve the quality of our workforce. i hope our u.s. government listens and creates that moonshot. caroline: do you think everyone can be retrained? marc: absolutely. there are so many vehicles to educate people. we have phenomenal opportunities, committee colleges and universities and a lot of workforce of element programs already. andommunity colleges universities and a lot of workforce development programs already. we are retraining them using salesforce. salesforce will create 2 million jobs and add $400 billion to the gdp by 2020.
we are really focused on creating these new jobs and getting people ready for salesforce jobs. creating platforms for that is so important, apprenticeships are the key. we just built a phenomenal new program called trailhead. it gives you one-to-one educational knowledge of how to work in our platform to get ready for these jobs. caroline: you are looking at hiring and growing -- does that remain the case? are the valuations right? marc: last year, i was super clear that i thought there was a window that was really open for m&a activity and we took advantage of that window and bought a phenomenal company, demandware. we delivered commerce solutions to so many companies like adidas
-- we got amazing private companies as well. year.has happened this the markets are roaring. the m&a windows have narrowed and because the windows have narrowed, i don't see us doing a lot of m&a this year. come back and discuss where your hiring goes and the push for more retraining. marc: thank you for coming here. it has been an exciting day. caroline: thank you very much, marc benioff. we will be checking in with you throughout the ibm conference. for now, let's check in on the first word news this afternoon. mark: supreme court nominee neil gorsuch said he would have no problem ruling against any party and that no one is above the
law. it a gorsuch called softball question and said he goes through cases "methodically and without any prejudice." from one in the process withime i was contacted expression of interest for potential interview to the time i was nominated, no one in the process asked me for any commitments or promises. this is the secondary of questions for judge gorsuch from the senate judiciary committee. -- the second day of questions. you can watch the hearings on bloomberg.com. the u.k. has joined the u.s. in banning laptops and other electronic devices on airplane on flights from middle eastern countries --
inbound direct flights from turkey, lebanon, jordan, egypt, tunisia and saudi arabia will be affected by the ban on laptops and tablets. phones larger than normal sized mobile's or smartphones will also be for been in. an incident of vandalism against the dakota access oil pipeline in south dakota -- there have been coordinated physical attacks. the lincoln county sheriff the province as someone burned a hole in the pipe on friday. harrison says it is not opposed to the idea of the international olympic committee holding an unprecedented double vote to decide which city will host the games in 2024 or 2028. as long as the french capital is awarded the 2024 games. the olympic charter currently states host cities must be picked seven years in advance.
paris and los angeles are the remaining bidders, but paris says it is either 2024 or it will not bid to host again. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. scarlet: we are continuing to monitor the selloff in equities right now. 25 members in the dow jones industrial average lower, four are higher. thatould mention as well sean spicer is holding his daily news briefing, including taking questions on today's equity selloff. reiterated investor confidence in president trump's agenda. that is available on the bloomberg. from new york, this is bloomberg. ♪
scarlet: this is "bloomberg markets." we need to get back to the equity markets, taking a closer look at the selloff in equities. one moving just on headlines, the maker of aircraft parts -- a democratic representative from california has asked the department of defense to investigate this company. this is a company that has been criticized by the short seller of citroen research who says the company's strategy is similar to leant, saying it
acquires other companies and then raises the pricing. shares taking a leg lower on that. transportation stocks generally lower today. the dow jones transportation seeing the transport index fell below the 100 day moving average. we of these momentum signals saw it go below that and pretty decided fashion today. what is selling off in transports? anything having to do with cars, rental cars selling off after a warning from allied financial -- airlines as well. a big downdraft in transports and industrials more broadly as well. this group is also taking a pretty bad hit today. oliver: great assessment there.
oliver: this is "bloomberg markets." time for the bloomberg business flash. saudi arabia an oil company wants to raise $2 billion in a new bond sale. the sale the first step in the plan by the energy giant to tap markets with $10 billion. the bonds could be privately placed with investors as early as the second quarter. raiseddi government
$16.5 billion in the biggest ever emerging markets sale. chipotle shares climbing the most in six weeks after first quarter sales were predicted to easily beat. in science made the call based on multiple data sets and proprietary models after studying same source sales during february in the first 10 days of march. bebe could become the latest retailer to hedge its -- launching a turnaround as an online brand. bebe wants to close locations without filing for bankruptcy. the computer operates 170 boutique and outlet stores and has no significant debt but lost $200 billion over the last four years.
you guys are always having me pronounce the female fashion brands. scarlet: julie was telling us earlier about how the dow transports has fallen below a key technical level. taking a look at the index within, if you look at the , fedex was the heaviest weighted constituent of the dow transport with a 13% weighting. it is up by .5%. if it weren't for fedex, the dow transports would be down a lot more. it is already down 5% this month. days.only gained five oliver: still have become ibm's ceo on how her companies is best company is looking to be leader. ♪ the biggest week in tv is back.
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grace and frankie, hemlock grove. season one of... show me house of cards. xfinity watchathon week starts april 3. get unlimited access to all of netflix and more, free with xfinity on demand. the dinosaurs' extinction... got you outnumbered. don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here. something for everyone is awesome. find your awesome with the xfinity stream app. more to stream to every screen. oliver: this is "bloomberg markets." scarlet: we want to turn to retail because nike will report earnings after the bell and investors will be paying close attention to what is said about
future orders, especially in north america. joining us now, the retail and apparel and -- analyst for bloomberg. looking at the earnings trends for nike. expected to report 5% revenue growth and you have to go all the way back to second quarter of 2015 to see double-digit percentage sales growth. is this the new normal for nike? >> these are the reported numbers. they take into account the fx effect. it did slow down the last three quarters. they had a lot more competition in north america. oliver: you have to look through the stronger dollar situation for them? >> it has been up for a while. there are fundamental issues with the company as well. oliver: investors are looking at the stock pretty favorably. i'm looking at technical
measures, 50, 100, 200 day moving averages. there's something here that investors very much like. even how investors are viewing the company and where they will see growth -- it looks like they are on a rally -- the company has grown a bit? >> take a look at the last 18 months, nike for many years were the only player in this category. in the last 18 months, we had two companies, under armour and adidas taking chair from nike. -- share from the key. investors are getting more confident about my keep pushing nikeation forward -- pushing innovation forward. that might explain some of the optimism. scarlet: when concerned people have is inventory as well. a lot of brick-and-mortar apparel goods companies like sports authority struggling. what does that do to a company like nike? >> a company like nike which
plans their inventory nine didn't have ait lot of inventory out there when the sporting goods retailer went bankrupt. it hurts your margin. that should be done this quarter. investors will look more towards the next six months. oliver: when you say taking back chair from under armour and adidas, i'm thinking shoes and clothes. nike has other option products here. -- offshoot products here. >> it's very much about footwear. , theyou look at adidas have many models that they can remake and sell them. nike is all about innovation. this weekend, they have the vapormaxx shoe coming out. it is something we have to look
forward to. scarlet: everyone has been wearing the dan smith by adidas. vapormaxxd they pin to any athlete? >> they are focused more on innovation. scarlet: what is adidas doing right? >> they have all those models that are classics. every generation comes back. and regrow those models give them a modern twist, putting them out there with new technology like the boost outsole. scarlet: thank you so much. nike will be reporting earnings after the market close. let's get a check of the headlines on the first word news. mark: president trump has a warning for house republicans,
pass the bill to replace the affordable care law or risk losing your seat in the next few years' elections. the president telling more upbeat. -- sounding more upbeat. >> we will have a real winner. a great meeting, terrific people. they want a tremendous health care plan. there will be adjustments to it. republican leaders have made several changes to the bill, including limits on medicaid enrollment and an accelerated phaseout of some taxes. saystrade representative he wants the united states to promote a stronger bilateral relationship with iran. haveso said he wants to additional negotiations with taiwan and address outstanding problems such as market access for certain products.
a former army commander who else negotiate peace in northern ireland is that. martin mcguinness was 66. he denied allegations that he took part in terrorist activities during the time known as the troubles. he was the chief negotiator for the ira's political arm. he eventually became the deputy leader of northern ireland's power-sharing government. dylann roof has been sentenced to .7 months in prison for failing to report a crime and lying to the fbi. to 27 been sentenced months. roof killed nine people at a charleston church and told meek of his plans a week earlier. meek lied to the fbi about knowing of roof's plots.
global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. oliver: let's get a quick check on the markets with today's equities selloff. slightly paring gains since the last hour. s&p down a bit more. the two-year yields going down a little bit. you can see the same thing in the 10 year. the fifth decline in the past six straight sessions. gains and utility stocks and consumer staples. this is bloomberg. ♪
oliver: this is "bloomberg markets." billionucted over $13 of business in 2016, making 17% of the company's revenue. this puts the tech giant at the forefront of the clout market. interconnect's confidence. caroline hyde is standing by with ginni rometty. caroline: i'm joined by ginni rometty. you've just been on stage. we have 20,000 customers, partners here. engineers, developers. they are all here about the cloud. what sets you are cloud apart from the competition? 20,000 is00 -- ginni: eight jampacked number -- is a jampacked number. the ibm cloud is a platform for
new business. there's three things that distinguish it. one, it is enterprise strong. it is enterprise strong and you have to prepare them for the future and there's two more things about our cloud. it is a data first architecture and it is cognitive and its core. -- at its core. there's the global this and you have to be able to pack innovation in all the time through the pipeline. we announced blockchain in production on the ibm cloud. 10,000 transactions per second. what we are doing with walmart and all the banks. wealso announced quantum, are the first quantum computer available on the cloud. you cannot do this on your premises. with enterprise strong, you have to have security that is better
than anyone else and a presence around the world. when it comes to data first, it's very different from the other clouds out there. you have to be able to protect the client's insights and not distribution them. -- distribute them. they take data and it's how they monetize it inside distribute in it. -- distributing it. we can give them data control and tell them for sure that data is not intermingled with someone else's. the insights from it were not monetized. they are yours. the third part that this thing wishes us is this idea that it is cognitive at the court. what is different about watson, ai is a small piece of it. it is trained in industry and domain.
of all the data in the world, 80% of it is not searchable. 20% of the world's data is on the internet. that is where the greatest value is and that is what watson has been trained to deal with. everyone will be confident of. -- cognitive. caroline: where are you winning? marc: today, i was -- ginni: today, i was joined by the ceo of at&t. and h&r block. watson is doing your tax returns. guest prepares doing tens of millions of tax returns out there. salesforce -- we are putting salesforce -- watson behind salesforce.com. caroline: you have services in australia. you invest winter that your cloud is available globally? ginni: we are 50 different data
cloud centers around the world. as of last night, 20 countries. we announced a new partnership in china. this is the best enterprise strong clout in the world. -- cloud in the world. everyone will connect clouds together. part of being enterprise strong as being hybrid. you can connect clouds a cloud or clout to private -- cloud to private. you want to share data and applications across all these things and that is what we do. cloud at the moment is 17% of your revenue. where do you want it to be? ginni: we see lots of our clients moving their businesses onto the ibm cloud. we do 97% of the largest banks in the world. we run 80% of the airlines. you take a look at all the of the telcos, 90%
of the credit card transactions come through us. the ibm cloud is about helping them come into the future world. you see that in our global technology services business. many people said that business is running services for other people and it would go down. it has not. it has been growing and it has a heart to that which is then doing cloud. they will build many new things on the cloud. have regions they keep other information -- they have made investments in data. we have to the hybrid cloud environment and the success of the cloud. caroline: will the revenue you are garnering the cloud exceed -- ginni: you mentioned 70%.
$13.7 billion, growing 35%. our cloud, our analytics revenue , watson, mobility security, that is what we call strategic imperatives. that has been growing at 14% last year, $33 billion. 41% of ibm. ofplement it by the world franchises. those are really important businesses. together, we are growing in the places we are investing to grow and those other areas we are moving with the market here. caroline: china was fascinating. you just got back yesterday. talk to me about the partnership . you always have to be a partner with someone in china? ginni: we will be a partner in the cloud, but we have many businesses in china. we were one of the very first,
we've been there over 35 years. very well established, very well-respected brand. we are partners with the banks there. they are some of the most sophisticated financial operations in the world and require values that are unbelievable to manage. we will partner. wanda is one of the most successful private companies in china. great attitude about agility and scale and wanting to move forward. they have a huge business that will also be on this cloud. it will be a customer of the cloud and a partner in the cloud. it will be a great footing because they have a big ecosystem in addition to the clients ibm has. those coming together. i look forward to that being a successful partnership there. caroline: do you have a view on how big you want china to be in terms of your revenue stream? ginni: it is an important part.
china, you see two models there. the largest state owned enterprises or just large enterprises and trying to empower entrepreneurial segments. you do need to look at those two markets differently and support them both. we were certainly strong in the enterprise market and now, we served them with the cloud and suit the entrepreneurial market -- serve the entrepreneurial market. caroline: comparing it to the u.s. tech pattern, you have phenomenal plans. ginni: this topic about talent havey country i go in, we this discussion. it is the main concern. the workforce in front of us means a different set of skills. we are talking about here in the
united states how to build these kinds of skills. they are new collar skills. you have to have a curriculum in technology for almost any job. china has that challenge as well as every country in this world. whether it is germany or the united states, building this new set of skills. that is something we been really focused on, something we started many years ago with pathway to technology school. these are public high schools in conjunction with the community college. they turn it into a secure high school with a curriculum that businesses will hire from. school.ear high they are employable. grassroots, viral. we have 300 other companies to
come in with us. what we do as a company, we give a curriculum and then we provide mentors. all of our employers are happy to mentor these kids. and i've 40,000 kids already hired hundreds of my own. this is a model that is scalable across the world. caroline: is the administration helping? ginni: the current administration understands and sees this workforce develop and as an important thing. i'm very pleased with the focus they are putting on this and it will give us a chance to scale schools like this and other models. we can scale them through a public-private partnership and we have to work on apprenticeship and credentialing. those three things are a recipe that will really help prepare for the next era. caroline: it's been wonderful having so much time with you today. ginni: thank you. caroline: the president and ceo of ibm, ginni rometty.
oliver: that was caroline hyde. scarlet: let's check in with julie hyman. julie: even though health care is being debated hotly in washington, we are not seeing that much affect on how to best health care shares -- much affect on health care shares. down with the overall drop that we are seeing in markets today. --doesn't seem to be stood to be specific to the debate. a split trade today. biogenic is up after it won a challenge to a patent. the appeal board rejected an bassidity bid by kyle those shares are up, bucking the downtrend today. down.lly and amgen
if you look at the other health care movers we are watching , toin this industry companies where analysts say there would be an effect from the latest revisions to the ahc a. these and stocks are down, but not down by that much. investors are waiting for a more complete, final version of the bill. see.r: lots of wait and , the judge says the sec has a plausible case of insider trading against leon cooperman. we will discuss that, next. this is bloomberg. ♪
oliver: this is "bloomberg markets." a judge in philadelphia said the sec has a plausible claim case against the founder of omega advisors, investor leon cooperman. they allege that the billionaire received $4 million in illegal profits. joining us is bloomberg's personal-finance reporter. we heard about this a while back and now, we are getting an update. >> the case essentially was filed in september by the fcc -- s.e.c.. one of the first steps yesterday was an early setback for him in the sense that the case could move forward. members of my team talked to mr. cooperman last evening and he passionately vowed to fight it and said he looks forward to proving his innocence in the trial. scarlet: cooperman was very aggressive in pushing back
against these claims. >> exactly. a lot of hedge fund managers have over the years decided at certain points that they lost a lot of assets and turn it into a family office. lost --n's firm cooperman's firm lost half of its assets. they said they would move forward and prove innocence in the case. oliver: this came as a surprise to a lot of wall street investors and observers who see him as the traditional value type investor. is it having a knock on effect for how willing people are to give him their money? >> one of the things we saw last year was that pension funds and retirement plans did pull money. that is something pension funds and retirement plans are under pressure on. if there's any claims of run --ng that's wrongdoing claims of wrongdoing, they may be under pressure.
he has vowed to prove his innocence. he is the old-school stock picker fighting for their way of life on both fronts in terms of due diligence and a lot of hedge funds are moving toward computers. oliver: very interesting stuff. thank you for the update. we will be following it. coming up in the next hour, we will continue to cover the u.s. equities selloff. they have pared back from the 1% decline. this is bloomberg. ♪
>> we are alive from bloomberg world headquarters in new york for the next hour, covering stories from san francisco, new york, paris, and beyond. weeks due to volatility, stocks are under pressure today, financial companies taking the biggest hit as bonds continue to strengthen. marathon day of questioning for neil gorsuch. he told senators that he made no promises about how he would rule on cases and wasn't asked to do so by the president. president trump with gop leadership today as the group pushes to get their obama care replacement bill through congress. we will hear from one of the most vocal critics against the health care plan, congressman joe kennedy, from massachusetts. check in a closer those markets. exciting markets today, julie hyman? julie: volatility traders must
be very happy today. relieved after the 109 session streak of no pullback from the s&p 500, we could, could see it today. we have thwarted with a 1% drop. a 1% drop.with all averages are having their worst day, at least this year, for the dow and the s&p it looks like the worst since october 11. for the nasdaq, since september. we are seeing an uptick in 8% above the average. heavy volume, uptick in volatility, and overall risk off tenor to what we are seeing. take a look at the bloomberg year, i'm going to refresh the screen am looking at. -- here, i'm going to refresh the screen i am looking at. last time we have that 1% drop in the s&p back on october 11. here is the 109 sessions in between. it looks like again today we could see that streak broken. what does this reflect? looks like a rethinking of the
so-called reflation trade. are we going to see reflation? are we going to see a big uplift in the u.s. economy? today we are seeing a broad-based selloff in u.s. stocks. underpinning what's going on today, you have technical questions, as several averages fall below very is moving averages. you also have overbought , onings, i should say various subsectors of the u.s. market. so, the financials today are the biggest selloff. this is a group that has done the best since the election. it should be pointed out, down 2.7% today. heaviest selling is concentrated in the cyclical or economically sensitive groups. the banks are taking the brunt of it today. banks, regional
banks, those that are really dependent on the yield curve, , keycorp,st margin huntington, and bank of america. there is a single stock that is falling quite a bit. besides the bank it is the worst performing in the s&p 500. we talked about this a little while ago. the democratic representative asking for the department of defense to investigate this maker of aircraft parts. it has been alleged by citroen was short the stock, and as oliver confirmed for us earlier, is still short the stock, saying that the company strategies to buy up other companies and raise the price. finally, outside of stocks today, the risk off tenor is also certainly being seen. we have got buying in the treasury market pushing yields lower with selling in the u.s. dollar and bank of america saying that the bullish position in the dollar has nearly evaporated the positions put in-place post-election. the bloomberg dollar index, by
the way, is nearing its 200 day moving average. finally, crude oil, also lower today, below $48 per barrel, once again. ofver: finally, a little bit volatility in the markets. thanks so much, julie hyman. joining us now is casey matthews, chief investment officer at umb bank. normally in kansas city, but joins us today here. >> good afternoon. scarlet: a 1% pullback, we may or may not see that. what do you make of this? is the significant in any way, given that it comes at the tail end of a weaker time for the s&p? >> i don't know if i would make a forecast on any one day's information. what i'm thinking is that you are in no man's land. we had a lot of promises regarding fiscal stimulus from the new administration. the market reacts to that. but we are not going to get new
information on earnings for three weeks. and you won't get information on the first quarter until the end of april. so, right now for the next three to six weeks, you are sitting and waiting for new information to verify what has been happening. , that mightget it be the catalyst for the correction. we haven't seen a 100% correction in 110 days. that might be the catalyst. the president needs to get something done before the midterm break. oliver: what i think is interesting is the postelection case to provide stocks is that people think there will be this trump spurred trade infrastructure, stuff losing -- loosening the regulations. saying that you can't plan based on what's going to happen with legislation. i get the vibe, but those people are doing the same thing, looking at trouble with health care. saying, you know what? this is a dog fight for health care and it might be the same
situation for financial regulation, all that type of stuff. how do you sift through that as an investor? kc: looking back at the election, the market priced in what could have been, if you had a different result. the market was discounting that. result fromferent the election than expected and the market was repriced. now, i think that earnings drive the vote. sooner or later, 18.5 earnings, beginning of the year we were 17.5 times. we are committing a little bit of a financial bubble. if we get decent first-quarter numbers, the bubble doesn't pop. expecting 15% earnings growth of 2017. another yearll see of 12% returns or so. of aet: so, little bit financial bubble. what about asset classes question mark do you see it in, for instance, sovereign debt?
credit? kc: great question, you do see an irrational bubble, last year, in sovereignty -- sovereign debt. interest rates, excuse me. last year we had 0% fed funds and a 100 3510 year yield, yet the economy was growing on average 2% the last six years. an irrational bubble that the fed is deflating, not popping. at ar: just a look here chart between the yield curve for the two verses 10, the five versus 30, since the fed hike last week. both have moved downward. this is not what a lot of investors want to see when they expect rising rates of environment. kc: and that's why you see the selloff in the banks, today, perhaps. the expectation brings higher rates, a steeple year curve -- steeper yield curve, some think very different. when and see what the fed does.
they told us three hikes. and 40,, three approximately, the flattening will be negative for banks, but we have to watch the data at this time. scarlet: how is it affecting businesses and consumers? kc: i don't think it will have a big impact on businesses. lower interest rates didn't impact business. you didn't see lending growth take off. actually, in the fourth quarter, looking at industrial loan growth, it was flat. plan ratesidn't care came down as far as business, what impact will be have when rates go up? one quarter of a point here and there, talking to our clients and business, i don't think it will have a meaningful impact on business. it will be the spoiler. especially if you get this overlay of fiscal stimulus, which right now is a strategy of hope. but once we get the copy data,
it will improve margins, improve --ditions for business, concrete data, it will improve margins, improve conditions for business. tell us about your interaction with your clients since the election. there's a lot of talk about what will happen with capex. a lot of surveys out there about business sentiment and expectation. when you talk to small businesses in areas like missouri, kansas, are they feeling the good spirits? and are they going to put some of that money to work? yes, they feel good about the business environment and future of business conditions. the real issue is, what will they do with capital expenditures? it's a real wait and see game. right now it's this promise of lower taxes, lower regulation. when they ask -- can you to find that definitively? no one can. until business owners understand what those things will do to their business and their bottom
line, sit on their hands, you don't see capital -- oliver: don't expect a big ramp up at the first quarter of this year. kc: they need to know. they need to know how it will affect their bottom line and then he will see spending. scarlet: nothing just yet. kc, thank you so much. mark crumpton question mark mark: judge neil gorsuch says that he will not weigh in with his personal views on roe v. wade or any other high court his confirmation hearing. you're looking at a live shot from capitol hill. he was asked today by senate judiciary committee chairman charles grassley to discuss roe , the case of legalized abortion nationwide. >> decided in 1993, precedent from the supreme court that has been reaffirmed. the reliance interest considerations are important
there. and all of the other factors that go into analyzing precedent have to be considered. it is a precedent of the united states supreme court. in 1992 -- reaffirmed and in several other cases. presidentiala campaign donald trump that his supreme court nominees would be roe would," and that "automatically the overturned," once he made an appointment. more, simply type tv on your bloomberg terminal. the united nations general assembly held a moment of silence and diplomats gave speeches today, paying tribute to the russian ambassador to the u.n., who died suddenly last month. diplomats from the u.k., u.s., and around the world honored the veteran diplomat here in new york. he had been russia's envoy at the u.n. since 2006 and the longest-serving member of the security council. a new report says that cash that
flowed from russia throw money laundering network ended up passing through some of the world's largest banks. "the guardian" newspaper review documents indicating that $20 million was moved out of russia over four years. citigroup, bank of america, hsbc, and ubs, are among the banks the money passed through. hsbc says they are taking steps to protect systems from illegal transactions. global news, 24 hours per day, powered by more than 2600 journalists and analysts in over 20 countries. i'm mark crumpton, this is bloomberg. oliver: mark, thank you. representative joe kennedy the third is saying that the republican health care plan is an active malice. this is bloomberg. ♪
♪ this is "bloomberg markets," i'm scarlet fu. oliver: and i'm oliver renick. one of the most vocal critics of republican health care plan is representative joe kennedy, carrying on the legacy of his great uncle, ted kennedy. david spoke to him recently and asked what happens next as congress builds up to the key vote. take a listen. kennedy: i don't know if anyone knows if the republicans have the votes for this yet. i know they are confident that they will get them. we'll see. as to my own plans here, i think it's critically important that everyone understand exactly what this bill is going to mean for them and their families before republicans call for a vote on it erie look, david, candidly,
there's not a lot of press reports saying that the bill is going to between and modified. only 36 hours notice. i haven't seen text of this bill that we are supposedly voting on , which should give you the biggest pause as wondering whether this is a good bill or not. passing an overhaul to a $3 trillion per your industry on a bill that you don't have the confidence is going to withstand the vetting of the american public is a pretty strong indictment of the power of that legislation. this is him and that my republican colleagues should be proud of and willing to stand behind and they are not even willing to disclose it to not only other lawmakers, but the american public, to understand what's in it on the monday before we have to vote on it for thursday. david: the house speaker called his bill and of mercy. you called it an act of malice. saying it's not focused on the human side of things. rep. kennedy: look, health care
at its core is about how we treat people as a society in the time of need. i think that what is separate about health care from a most everything else we deal with is that at some point, every single one of us is going to need some help. whether that is with the birth of a new child, the onus of a loved one along the way, or the passing of a parent or family member. alongness of a loved one the way, or the passing of a parent or family member. when you hear that the objective of this bill is to take health care away from 24 million people, 14 million people next year, and to strip, even for those that it does continue to ensure, a big portion of them, access to things like maternal care and wellness prevention, access to opioid and addiction treatment, all for the sake of passing a massive tax cut on to the wealthy, this is an health care reform. that's not who we are. this is a tax-cut. i think
that's what makes me and so any others so upset about what this bill is. it destroys that essential promise that we make as a society to each other. david: would you acknowledge that there are problems with the affordable care act as it is now, more the could be done to fix rising costs or straighten out the lack of competition? rep. kennedy: absolutely. look, no piece of legislation is perfect. that's part of the legislative process. you have to test it, tweak it, improve it. the a formal care act falls squarely in that category. i come from a state with a 3.4% unemployment right and 2.8% uninsured rate. we are an example of if there is bipartisanship to make it work, you can make it work pretty don well. that being said, i acknowledge the fact that i sat through a committee hearing for 28 hours, listening to reports and complaints from my republican colleagues about how this law is struggling around the country. i hear those stories, i don't
discount those stories. there is more that we need to do to bring down costs for small businesses, make sure that people can afford premiums and deductibles, bring competition to those states, absolutely. but you cannot ignore the fact, and this is what got me so upset during the hearing, in the audience was a staff member of mine, and in turn, who got cancer when she was 19 and relapsed when she was 21. the affordable care act saved her life. i was at a business roundtable meeting this morning and one of the executives came up to me afterwards and said that i am another story as to why it works. i got devastatingly sick when i was 27 years old. i just bought a house. i would not have been able to do that without the aca. how come they can hear my stories, too? why are they ignoring the stories of my constituents that are better off because of this law question mark david: when you walk around capitol hill, do you get the sense that they are open to or willing to compromise? they might is -- not be saying so publicly, but are open to it question mark rep. kennedy: --
open to it? rep. kennedy: not yet. obviously, the federal position -- provisions of their -- are there, staying on until you're 26. not being denied because of pre-existing conditions. no more lifetime caps, that's staying. some of the delivery system reforms enabled by the affordable care act are in place, which is critical to getting those cost increases down, to get wonky with you. billther than that, this eviscerates this rates the central promise and premise of the affordable care act in trying to extend access to -- access to quality, affordable health care around the country. my republican colleagues, i said a number of times during that hearing, there is a commitment to making this work, i'm more than working -- willing to work with you. but i have yet to find a single health care policy expert, politician or otherwise, who has said that one of the central
core challenges with our health care industry is that we pay healthrs who provide care through medicaid, that we pay them too much. in fact, what we need to do is cut $1 trillion out of health care access to families that are working paycheck to paycheck? that's just not true. that's not what is wrong with the system and that is what this will does. it's a complete bait and switch by my republican colleagues to eviscerate the promise of health care for folks working paycheck to paycheck and giving access to tax cuts for folks who don't need it. all right, that was part of our interview with representative joe kennedy the third. shares are up right there on the year. this is bloomberg. ♪
scarlet: time now for options insight with julie hyman. julie: joining me today is kevin kelly, the chief investment officer at recon capital. glad you are here today, because finally there is an uptick in volatility, it's not huge, but what do you think set it off today? all the best that people have taken on out of the money, it is extremely elevated. as it comes of it has happened buying down market, or hedging the books. as we see it's -- see a selloff today, we are not getting an uptick in volatility, so they have not hedge themselves, primarily. an interesting aspect of what is happening right now. julie: will this keep going?
that's one of the interesting aspects. it's typical for around what , people have been hedging for the last week, the week before, because it has been so compressed and low outside earnings season and we know macro events have really moved markets. people have an hedging themselves and benefited from it. looking at microsoft here, looking at buying through a covered call. how does that work? kevin: it's a safe and conservative strategy for investors. what you want to do is go by microsoft so that you can collect the yield on the stock that they have been increasing order over order, and what you can do is so far out to october, 67.5, you will generate a 4% collecting $4.50
here, sort of and at the money covered call, reducing your cost basis. it's a very conservative play to keep that premium no matter what . if it goes up to $67.50, you have collected that and made it through the market, which as we can see is starting to turn more volatile. julie: all right, got to leave it there. kevin kelly, think you some much. scarlet: thank you. coming up on "what'd you miss?," we dive into the technicals of this market selloff. we will also be covering aftergs that are due out the bell. the dow is off by 187 points right now. this is bloomberg. ♪ live-stream your favorite sport
at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. mark: i'm a market crumpton. time now for first word news. president trump at a warning for house republicans during a closed-door meeting to discuss the gop affordable health care
love replacement. riskthe bill, he said, or losing seats. the not so cryptic morning came one day after gop leaders made changes to the measure aimed at willing undecided republicans -- ooing undecided republicans. the house votes thursday on the legislation. the european union is signaling that it intends to keep it is prime minister theresa may waiting. the eu leaders insist they are prepared to begin talks on brexit, but they have canceled plans to hold a summit on april 6 to agree on the outline of their negotiating position. the meeting will be held until april 29, eating into their two-year bargaining. the world bank is lobbying for an increase in capital despite trump's cuts in foreign aid. the world bank president tells bloomberg that without a capital increase, the organization will have to step act from