Which we have not seen. Been 112 trading days since all three major averages fell by police 1 . We not quite there yet at this point. Stocks have been bouncing around a little bit in todays session on this downdraft we are seeing. Volatility is rising in stocks. But not stocks alone. This is as we see the 10 year yields reached 2. 71 . The selloff in bonds is strengthening as well. Here you have volatility months to date for stocks, the white line. Bonds, the blue line. Is the yellow. We have seen a surge in all three of them for the first time in quite a long time. We have not been seeing much volatility in this market as a general rule. Youging back to stocks, look at the landscape of what is declining today. It is a broad base selloff as you can see. Telecom and utilities are higher. Interesting those Interest Rates are higher even as we see those bond yields of those elevated levels. A are seeing as more defensive groups. On the flipside, the worst performing groups, energy, health care, and industrials. Those groups down by police 1 . Dig into it. Health care. That has to do with that announcement that it will be Offering Health insurance to its employees. There are not a lot of details on this plan. That is causing uncertainty and trepidation among investors in a wide swath of different kinds of health care stocks. What effects will it have on the industry . Willon this plan. That is causing amazon incubates business internally, and then perhaps offer it to others . Came out with earnings that Beat Estimates and gave a positive forecast is down 4 . Health insurers Like Unitedhealth Group are down. Express scripts, and the pharmacy benefit managers, are taking a hit. The drugmakers is lower today. Infecting everything within health care in todays session. Energy is the other under performer. Oil having its worst day, going back to december 6. Down 1. 9 percent. Energy64. 34 in the barrel. That is putting pressure on those energy stocks. Shery julie, thank you. Breaking news, apple is now said to be under probe by the u. S. Authorities over updates that slow older phones. We know for a fact that apple has apologized for having to slow iphones that are older with older batteries. They have offered a replacement 30 in late0, january through the end of this year to we are hearing u. S. Authorities are said to be probing apple over these updates. The stock is down 1. 4 . President trump set for his first state of the Union Address tonight before joint session of congress. He is expected to highlight his successes so far and look ahead to his next legislative priorities, including immigration and infrastructure. Joining us now from the white really, commence bloombergs chief washington correspondent. Kevin, what are we expecting from the state of the union . To seegoing to continue a combated President Trump, or could we see more bipartisanship . Teleprompter trump, as they are putting in. I think you will see President Trump talk in a similar town that he did in davos during that wellreceived speech by the international community. President ide, the going to be talking about five main key areas including things like immigration, as well as infrastructure, tax reform. Seenfrastructure, look to how democrats are on that point. There has been some criticism aout private investment being mechanism to fund this infrastructure reform. At least among the democratic caucus. Republicans are in the faction of that saying wait a minute, we are not sure we have enough government spending. Broadertheme theme is that President Trump wants to have America First strategy. Strength but, it comes at a time in the Mueller Probe casting a shadow over this administration. As well as key deadlines coming up. The president has to have Congress Passed some type of partial government funding by february 8. All ahead of the march 5 deadline on daca. From washington, the president heads to West Virginia where he will meet with leaders of his party during a retreat. You will be joined by human ambassador to the United States, nikki haley, as well as secretary of state rex tillerson, and Vice President mike pence. David take that first item, when he was a davos, the president said we are doing great. Look at how well the stock markets are doing. That is not complying with his wishes at the moment. He has had a couple of days of selloffs. What is going on in that building, are they trying to redo that speech . It will hard to say the stock market is doing great today. Kevin i was talking with sources who told me about how the president is preparing for tonights speech. He has been talking for the past couple of weeks with advisors, and with his team giving various notes and iterations of this. We should note one republican strategist put it to me, but really this is the first opportunity for the president to deliver sometime of some type of unifying message. Have theave he will entire countrys attention. To your point, we have seen selloff. This ase house pushes record high. I think the most mark market analysts are not anticipating too much fluctuation as a result of the speech. One of the things everybody wants to know is whether or not he will take on the Russian Investigation had on. Head on. It comes hotly on the treasury departments release of the oligarch list as well as the announcement that there is not going to be new russia sanctions as of now. David kevin, thank you so much. Our chief washington correspondent he will be joining our special coverage of the state of the Union Tonight on television and radio. That is starting at 9 00 p. M. This evening. Shery coming up, congressman leonard lance, the republican will discuss what he wants to hear from President Trump tonight. This is bloomberg. Shery breaking news crossing the bloomberg. The os is said to probe apple over updates that slow the older iphones, investigation is being carried out by the u. S. Department of justice and the sec. Lets get Matt Robinson here thisus to explain what investigation is about. What do we know so far . Matt what the government is looking at, what kind of thisosures apple made over particular software update. Generally in these investigations, they want to know the message that was being sent and communicated to and also was, material accurate. They are interested in what kinds of statements apple makes about different types of updates. David how big would it have to be to be material . That is a critical language for the sec. How big to be material . Number two, how important is the mental state of apple . Did they know what they were saying was wrong when they said it . Matt materiality is always a squishy thing. You have lawyers talking about different aspects. What the sec is concerned with is if you make a statement, it has to be true. If you are making a statement, you are making that information material. In these types of investigations, these early stages, often times these investigations take years, this is just getting started, they was therested in what intent of those kind of disclosures, and what was going on. At this pointnow and in what stage of the investigation we are at and how long it could take . Matt this is just getting started. Disclosure was just a couple months old. Oftentimes in these investigations, it can take years. Two 230 is pretty common. Getting any sense of what took place is a long ways away. Shery thank you so much for that. Matt robinson with a latest on apple. What are moderate republicans hoping to hear from President Trump in his state of being an address tonight . Joining us from capitol hill is congressman leonard lance, republican of new jersey. And a member of the problem solvers caucus. The problem solvers are in favor of a pathway to citizenship for funding forsting border security. Congressman, it is great to see you again. Thank you for joining us. Verse of all, lets start with the state of the union. What do you hope to see when President Trump speaks tonight . Rep. Lance i hope the president will discuss the state of our union, economically, militarily, and diplomatically. Im looking forward to the president s address this evening. Shery what do you need to hear headed toward more bipartisanship and try to cap this huge divide we have seen in politics . Rep. Lance we have to work in a bipartisan capacity on making sure the government remains open. That will occur over the next several weeks. I think we should have a solution regarding daca, and that is why i have endorsed the proposal of the problem solvers caucus. I am a member of that caucus. I hope the president speaks this as he spoke in dollars. That was an inclusive speech. I hope and expect that tonights speech will be inclusive as well. David yesterday, we heard the president say he knows he has to reach across the aisle. He needs democrats to go along on the immigration issue. Has the administration reached out to you on your proposal . Do you have any reason to believe they might be your might be moving toward your approach . Rep. Lance i am hopeful that is the case. We will know more based on what the president says tonight. I believe the president is accurate that this cries out for a bipartisan solution. Moving from the middle out. I think the best policy in this administration and in this government, including those of us who served here in the legislative branch on capitol hill, is to work in a bipartisan capacity. Know, this is the issue that may shut the government down again. You said you do not think that will happen. How critical is the president s leadership. . Does it mean if it does shut down, it is his fault . Rep. Lance i dont think it was the president s fault when the government was shut down a week ago. I frankly dont want to cast blame because i want to move forward in a bipartisan capacity. Onceovernment did open up democrats in the senate recognized it was essential we retain the essential functions of government. And certainly, we should move forward together, moving in the direction of making sure never to the government be shut down. I didnt favor shutting down the government when barack obama was president , even though he and i are in political different political parties. Do you expect a fifth stopgap measure . Can aance i hope we measure moving forward in its entirety. But we will see. Perhaps there will be another continuing resolution. The house of representatives has passed all 12 appropriation bills and did so before the beginning of the new fiscal year on october 1. I think that is the blueprint from which we can move forward. Be a moving forward, will keefe issue when it comes to the midterm elections in november. And how every and every candidate does it we heard from new jersey, representative romney fairly has an, that he has announced he is retiring. You voted against taxcut because you know it will hurt your constituents. Your constituents can differentiate you from the gop and President Trump . And are you planning to run in the 2018 election . Be alance yes, i will candidate for reelection. Imed is appointed that congressman freely highs and is not seeking reelection. He is a tremendous member. I represent a district that is highly educated and sophisticated. I will be judged based upon my record on capitol hill. I am confident my views are the views of the overwhelming majority of the residence of the district i have the honor of serving. Finally, looking forward to tonight, what is the one thing that if you could insert into these remarks, you would insert . Not just happy talk or coloration, but some down payment from the president and the republicans on true bipartisanship. Rep. Lance true bipartisanship means we have to fund the government for the remainder of the fiscal year. I want to hear from the president of the United States that he intends to work with anders on both the house senate, both republicans and democrats on this issue. I think it provides him with an opportunity to do so. I would urge my democratic colleagues to come to the table in the spirit of bipartisan cooperation. David many thanks. Really helpful. Congressman leonard lance, republican of new jersey. Still ahead, she has been a policy advisor to Hillary Clinton and barack obama. Neera tanden is here to tell us where the Democratic Party is here now that it is in the minority. Shery fallout continues among u. S. Indices are we are seeing the dow fall more than 380 points. Under that over. That pulldown see being led by united health, Health Care Shares slumping after news that amazon, berkshire, and jpmorgan are getting into the Health Care Services in the industry. Were seeing the s p 500 going down for the second consecutive sector. The s p 500, defensive, like utilities. The nasdaq is also losing ground. We will have more on what is happening with the markets. Live from new york, this is bloomberg. Shery this is Bloomberg Markets balance of power. Im shery ahn. David im david westin in washington. Hesident trump says understands he needs to reach out to democrats on issues such as immigration. Will democrats be receptive to his overtures, and what, if anything, can democrats and republicans find is common policy ground, even if they can never agree on politics . , during her career, she has served as a Senior Policy Adviser to the president ial campaigns of barack obama and Hillary Clinton. We welcome her here. Neera great to be with you. David lets start with a question a lot of people are thinking about. We had a Bernie Sanders running to the left, i was around for the Rainbow Coalition after michael did caucus lost. It was the move to the center. Had the deal that went to the center. Does the Democratic Party go to the center of or to the left . Think this is an interesting conversation. But really not where the conversation of the party is. There are obvious cleavages between the center and the left. Where the real energy is, because of the presidency of donald of donald trump, in opposition to his policy, to what he is doing, but also to his attack on progressive accomplishments. Act, berniele care sanders who had been a big proponent and who is a big proponent of singlepayer, and who has in the past criticized the Affordable Care act, rallying to the defense of the senators thattwo trump won by a lot. That really united the party. Will be cleavages within the next president ial run. That is a far, far place from where we are now. Most democrats are basically trying to uphold the of how bush months. Not just from the obama administration, but previous administrations. David that sounds right. Thus far, a lot of what they have heard from democrats as they are against trump. You have to be for something as well. Things they of the said is, here are some new ideas or . Where are those ideas coming from . Where are those ideas coming from . Neera that is hard for anyone to break through this environment. Senators like brian schatz and chris murphy have put forward ideas to get universal health care that are not exactly singlepayer. They will, this year, be putting forward ideas about jobs in the economy. How to get jobs and places that really have been left behind in the economy. I think you will see more of that. But, it is a fulltime job for democrats who are right now in congress, that is where the opposition is, to protect basic issues like, lets not throw 20 Million People off health care care. That is consuming. The taxcut debate was consuming because the agenda is controlled by donald trump. I absolutely believe the democrat who wins the campaign, which is a far, has to have ideas about how the economy can grow and grow for more people. David your organization does a lot of the groundwork leading into a president ial campaign. A lot of the thinking. What are the differences, i recall, bill clinton, al gore come out from what the government should do and should not do. When you take infrastructure, jobs, health care, as we saw today with the amazon, berkshire, hathaway, what is the theory that you have about what government should not do as well as what it should do . Tora i think we have rethink the contract for the 21st century. Comes fromot of it the 1930s and 1940s. , or howit is contract we get the economy going, it is based on laws that were made for a different time. We have to rethink what the individuals and what individuals of the society at large. I think one of the challenges we have in this economy is that people dont have the benefits or Economic Security they have had in the past. I think we do have to offer more Economic Security. Also, figure out ways to ensure competition. This year cap will be putting forward ideas on how to ensure america is truly competitive in the 21st century. Inking about what kind of Environment Investments china is making in its people, International Competitors are making in its people and how we do that as well. Governmentpoint that cant do everything. There are market failures that government should solve. If you look at as compared to other countries, the amount we in investing in education, children, our social human capital, it is far less than other countries. Forces likehere technology and globalization that inherently destroy jobs . It doesnt matter whether it is government, they are just going away. It is not the good old days of the industrial revolution. Neera those days are gone. I think there is a fatalism in the United States that technology and globalization get rid of these jobs and there is nothing to do. If you look at the u. S. Versus other countries, canada, parts of europe, japan, some of these countries have grown their the United Statesmiddleclass if these same trends. We should learn how they have done that. David thank you so much. Good to have you here. Neera tanden the president and ceo for the center of American Progress and former adviser to Hillary Clinton and barack obama. Up next, joshua bolten, former chief of staff to the president of george w. Bush. Ofry here is another check the major averages as we continue to see that selloff among u. S. Equities. The dow falling almost 400 points. The s p 500 is also done more than 1 . More than 100 days since we saw the Major Industries falling more than 1 . This is bloomberg. This is Bloomberg Markets. President donald trump has often touted the stock market as a reflection of his accomplishments. Justere with the details, in time for the state of the union. Julie to be fair, we closed at records for the major averages. It is a sharp selloff by recent standards. Averages,major simultaneously. This has been increasingly rare. A turn in sentiment that many investors have been calling for, we saw indicators get too stretched levels whether it is evaluation or momentum, or even rests on the major averages. All of that snapping back to some degree in todays session. Lower, the dow trading the most going back into 2016. All of this means there is enough to get volatility unsurprisingly. Here, seeing a spike above 15 buth is not that volatile by the standards of the past year is unusually volatile. Paradigmo remake the because of the lack of big price swings we have seen. In terms of what is going on, some of the big drugs include apple. Add to that a government probe of the Company Practice of slowing down phones when the phones are older. Unitedhealth Group Following as well. The big drag is this news amazon, jpmorgan and Berkshire Hathaway are adding to their employees. Stocks, as we have the selloff in stocks, we have the selloff in bonds as well. That, we have not seen level going back to spring of last year. Definitely this is something that is on investors minds. Shery big moves today. Now for bloomberg first word news headlines. Mark Steve Mnuchin today told the Senate BankingCommittee Russia will face new sanctions following the publication of a list of russian billionaires and ties to vladimir putin. Secretary mnuchin did denied delaying the release. Yesterdayhouse said no new sanctions were needed. The intent was not to have sanctions by the delivery report. The intent was to do a thorough analysis. Hundreds of pages. There will be sanctions that come out of this. Mark some are upset the report was not immediately accompanied by fresh u. S. Sanctions to punish russia for meddling in the 2016 president ial election. Opponents of the military campaign in syria haggled sergey lavrov. Syrias main Opposition Group calling it an attempt to take over the role of u. N. Led talks in geneva. The kremlin sought to take the lead while also reinforcing bashar alassads regime. The federal Communications Commission says an employee who sent an alert warning of a Ballistic Missile thought an actual attack was imminent. The fcc says hawaii has been testing alert capabilities in the employee mistook a drill for a real warning. The worker has been reassigned to a job without access to the warning system. It was sent to cell phones and radio stations in hawaii leading people to believe the state was under nuclear attack. Gymnasts assaulted by larry nassar on capitol hill in support of legislation that requires governing bodies for amateur athletics to report abuse claims to law enforcement. Changes and send it back to the senate for approval. Most of all, i want to thank whobrave Young Athletes have come forward and spoken about their personal experiences of sexual abuse. Thank you for shining a spotlight on this or when this crime. Mark the legislation extends the statute of legislation statute of limitations. Sometimes children do not realize they were abused until years later. Im mark crumpton. This is bloomberg. David thank you. The constitution requires the a report to deliver congress on the state of the union. Tonight we pull here the first report from the president. One of the few people who have seen the state of the Union Address from the inside, as chief of staff to george w. Bush. Lets talk about this tax overhaul. You were involved with that. Business roundtable was. These bonuses that have been given out are causing analysts to reexamine what effect it might have in the economy. Is that what you have anticipated . Exactly what we anticipated. One of the reasons why companies were supportive, it is good for the whole economy. We did not pursue it in order to get more share buybacks or dividends. We pursued it in the interest of especiallyeconomy, millions of workers who work for Business Roundtable companies. What youre seeing is a down payment on that in the form of bonuses and wage increases made possible by the tax reform. The most important benefit from the tax reform is in the competitiveness of u. S. Companies based in america. These bonuses sprang up. The president said he was surprised. Is that right . Not that there is anything wrong with that. Was it really spontaneous . I dont remember any talk during the time advocating to get tax reform done. I dont remember anyone saying im going to announce big bonuses. What i do know is almost our 200 ceos said if tax reform gets done i will invest more. I will hire more in the United States because it makes me more competitive here. To that extent that is what we were talking about. The additional investment that could be released from a lowering of the corporate rates and from a shift from a worldwide system to a territorial system of taxation. David do you have a sense of how much of that is Capital Investment and how much is in the workers . That does increase the cost for companies. Do you have any sense of how much is capitalism as opposed to workers . That is a good question. Economies will be trying to parse how much. We do know a lot of studies have shown when you give a , thatation a tax increase flows through to the worker. Ultimately to 75 flows through to the workers. David tax increase. It flows through two increases for the workers. 75 . Nows a whether it is and an enormous amount of the tax benefit that was just enacted will flow through to the workers. Seeinguses that you are are only a down payment on the benefit that will exist over the long run. Could they be if President Trumps rhetoric on trade turns into action this year . Big risk. We have been enthusiastic about many policies the Trump Administration has pursued. Also, on the regulatory front, unwinding the most unnecessary burdens, all of that has released the animal spirits that you are seeing reflected in a robust economy. A very strong stock market. That is all to the good. The one thing the Trump Administration can do it this point to undermined the progress that has been made is to make a major misstep on trade. A withdraw risk is or failure of the nafta negotiations. What about the preference for a weaker dollar . It will help some businesses making them more competitive but it will increase import prices. Stent dont in my talk about the dollar. Im going to stick with that with the Business Roundtable. The dollar should the appropriately valued. The United States has florist through most of its existence. Strong dollar. Our companies are well positioned to compete with a real market based value of the dollar. Reform,ocused on tax keeping an open International Trading system that will help us stay competitive. David josh will be staying with us. More perspective on the state of state of address on the union night. This is bloomberg. Shery welcome back. This is Bloomberg Markets in new york. David im david westin in washington. Josh bolten, he is still with us. The past. About lets talk about the future. For the Business Roundtable, what do you hope comes next . Celebrationl be a about successful tax reform. We are going to want to hear the president talk about the agenda Going Forward on regulation. There is more work to dismantle the unnecessary regulatory burdens that have built up over the years on business. They have been doing a good job of dialing back on those burdens without undermining american safety, health or morals. The most Important Initiative the president can talk about is on infrastructure. The are concerned about crumbling infrastructure. Beenhat the tax code has dramatically improved to support u. S. Competitiveness the next thing we need to improve to support competitiveness is ensure we have the infrastructure, the roads and bridges. We are keen to hear what the president has to say about that. We dont have the details of the plan. There seems to be a difference between democrats and republicans. Federalreported as expenditures, the rest from private funds. The democrats, Chuck Schumer said they need more investment. Do you have a view on that . Can we really getting get it done . We probably need more than just a small down payment from the feds. The notionortive of of private Public Partnerships and the ways government money can be used to leverage investment in the private sector. It is probably going to take more than that. The Highway Trust Fund is essentially bankrupt. Up. Needs to be sure it the short out. A short hip but a longterm basis. Tax seems tol gas be almost a third rail. Is there any prospect we could increase that to Fund Infrastructure . Rail is an electric third and politics. It is most visible to every average voter. Politicianstandable are concerned. Something like that needs to be done. A sustainable Funding Source into our infrastructure investments. Health care. Big companies. Amazon, jpmorgan saying they are create a nonprofit. Applying technology and costsaving. How big an issue is this for your members . 17 of gdp. It is a big issue. We asked what are the cost pressures that are at the top of your mind, top of your worry list . Quarters, the answer has been regulation, overwhelmingly. With the advent of the Trump Administration approach on regulation, regulation has slipped to number two. Surprisingly health care in the latest Quarterly Survey came in dead last. There are big problems in the u. S. Health care system. Ofticularly taking care uninsured population and those who dont get insurance through an employer. Where our businesses are employer,hrough their that system is working pretty well. We need to figure out how to how to make the system more efficient. Buckt less bang for our than most other countries do. Dont know much about the amazon merger but, it is exciting somebody is going to look at innovative ways to do that. Of americasdpoint largest employers, the system is working well and we are going to be in a position of arguing lets sustain that. Julie david if this were george w. Bush, what would be your one concern to make sure it goes right . The president s mood. In the white house that i worked in, which is i have an intuition there he different than the white house we have today, the state of the union would have been locked in a couple of weeks ago and we would have been doing refinements and tweaks, working on major initiatives. The white house i worked in it would be locked down. It would be that the president is well rested and able to present his best to self. How it goes in the Trump Administration i do not know. Thank you for being here. You dont what to miss our state of the Union Coverage on tv and radio that starts at 9 00 eastern. Quick shery a quick check of the markets. Down 1. 4 . We had lots of news related to health care. , reducingartnership health care costs. 500, down 9 10 of 1 . We will have more after the break. Shery President Trump always has his eye on the u. S. Stock market. Today the major average is selling off. Surpassing the 400 point mark before bouncing back a little bit. Doolittle joining us with more. It is going to be pretty amazing. Relative to the selloff it is the first synchronized selloff my having their worst day of the year. Last week the nasdaq. We are seeing more volatility for the three major averages. Indexe the Semi Conductor down as well. A part of this could be repricing a risk. A lot of investors and strategist talking about the idea we could see market selloff. If we hop into the bloomberg and take a look at a threeday chart , we are going to see a significant climb back to levels seen in 2014. Yields pressure stocks when they arrive unexpectedly like this. Up, thatar yield back could create more repricing of risk. Shares of apple down 8 from the recent highs. They report on thursday. Thank you for that update on the markets. Coming up, our special state of the Union Coverage. This is bloomberg. Its 11 a. M. In new york francisco, 2 p. M. In new york. Im scarlet fu. And im julia chatterley. Welcome to Bloomberg Markets. Scarlet live from bloomberg World Headquarters in new york over the next hour, your other top stories where covering. We are covering. Caution in the market, investors slashing into the red across most asset markets erie of the since august. E jeff bezos, warren buffett, jamie dimon, teaming up to offer health care to their employees. Then you have apple incorporated, the iphone sales cycle may not be so super as the older models draw scrutiny. All right, there is a selloff underway. When i say selloff, lets be real. Trumplooking at president , celebrating i guess his election victory