On more than 10 years after they on more than 10 years after they started. Mark the executive order the president signed tuesday night just before a state of the Union Address says the u. S. Maintains the option to detain additional enemy combatants at the Detention Center in guantanamo one lawful and necessary to protect the u. N. National security. Republican, and trey gowdy and chair of the House Oversight committee is not seeking reelection. He released a statement saying he will not be seeking any political or elected office but will rather be returning to the justice system. He previously investigated the 2012 terrorist attack in benghazi, libya. He brings to 64 the total number of congressional members to seek reelection. 46 number includes republicans. Usa gymnastics has confirmed the resignation of its entire board of directors in a tweet, he thanked him in the process of moving forward with a board of directors during the month of february and with the United States Olympic Committee requirements. Dr. Larry nassar involves. Undreds of female athletes the gymnastics is the National Governing body of the sport in the United States. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Julia live from bloomberg World Headquarters in new york, i am julia chatterley. Joe weisenthal i am joe weisenthal. Stocks bouncing off the lows after earlier gains. The 10year still up above 7 . Reins, the fede on chains the race today. Confident inflation will pick up. Social network set to report earnings for the First Time Since Mark Zuckerberg announced a major change to its news feed set up. And, in the cloud for microsoft, the tech giant set to report earnings after the bell this season. Continuing away from the software business, will continue to drive growth. What did you miss . Incidents and out rations Sexual Harassment and assault are prompting change around the world. One policymaker is answering that call that would define men for lewd behavior. The ongoing conversation about diversity in the workforce, we speak with marlene, minister for gender equality. Great to meet you. Come your planning to present a bill in france to tackle against women. Why is it important to start with men for lewd comments and rude behavior . Think it is the same thing. I think it is rape culture so it at the very beginning since harassment. Give us a sense of what kind of behavior you are talking about. T are you thinking of here it is ok. We all know what it is someone is following you. That is why we are presenting with the minister of justice. What kind of support do you have for other lawmakers in france . It is important to understand the president decided a make gender inequality priority. We are in this altogether. We will get to that shortly but i want to get a sense of how punitive it might be. Somewhere between 90 and 750 euros, is that right . That is it. Around 100 euros, it could be , with your home and family. If someone has to chase it down, you end up paying more. Talk a bit about what is going on culturally in france. Some women in france say the me too movement in the u. S. Has gone too far. You have celebrities denouncing it for becoming a witchhunt against men. Is adea think there backlash in france . I think it is complicated. You know, some think, even women, still terrorism can be something, when someone is telling you but it is not like that in real life. You are saying there is a huge distinction to be made there. Thebacklash against movement, has it gone too far . Lastly, the government said it is sticking by its budget minister despite rape accusations. S is surprising giving given the headlines in the swell of protests we have seen around the world. There are two differences. For them in the Prime Minister him, but his trust in we have Different Things feared in the u. S. , you have metoo. In france, it is quite different in some people are not as , it is an impact to say it. Got it. There is parity in the cabinet but if you take a closer look at the president and prime topsters, parity in the jobs. Top diplomatic or economic advisers. It occurred look like a discrepancy between what your Government Asks for and what your leaders do. How do you explain that . I understand but do not think so. , we he was the candidate womened the number of decided to note it. Our thanks to marlene, minister for gender inequality. Thank you for joining us. Coming up, julia . Julia thanks so much, scarlet. What the challenges are facing in 20 15. From new york, this is bloomberg. Scarlet no surprises from the Federal Reserve today, which announced it is leaving the funds rate unchanged while hinting at a rate hike in march. What are the Key Takeaways . Lets ask chairman of Investment Strategy and research at credit suisse. Joining us. For what was the news to you in todays announcement . The news was it was per completely predictable in the market one fast asleep as soon as it sought, probably as it should have been. Yellens literal swansong in the meeting. I imagine in the room, there was a certain amount of nostalgia from a policy perspective, the course is set. They reiterated it with the use of the word further. Rather action. Ok. In ameans coming soon direction we know. The fund rate will go up more because that is an appropriate thing to be doing. It feels like down to this and there seems to big knowledge meant about what we are seeing in markets. They are tracking higher, it seems. There is still hope, in normalization of what we expect, given everything else, that will eventually appear. It is a reflection of chair yellenss legacy. Fillets curve is an and in the field. As the unemployment rates come the fed more broadly has taken the view that sooner or later it will manifest itself in wage pressers. The fact that it has not so far is the difference between science and religion. Details, details. But they think it will into course. The markets issue when all is said and done, when this started at 3 , of course they wouldnt be doing it. They started near zero. Until they get to a zone that is , their course is set. Question ill and broke the mold the mold. She pondered about why it had not gone up. I wonder whether she will try to break the mold in what she has established. What are you looking for . Tom keene i will reiterate that and accept that. Responsibilityic , to the degree it is all different, is to restore the standing of the Federal Reserve within the washington community. We live in a time when, for better or worse, there is a certain suspicion if you will of the agencies of the bureaucrats and so forth. The Federal Reserve is not immune to that. How does he do that . By being himself, i suspect. Very sober fellow in demeanor and so forth and i think it will go a long way. Lets talk about markets. What do you see when you look at the yield curve or shortterm rates or whatever. Does it differ from what you would expect or what you think the fed will do . I think the market is getting approximately to the three dots sort of idea. It seems sensible enough. One of the traditional patterns is as the fed begins, youll , and thed to flatten stock market tends to go up. Historically, the fed starts this tightening phase fairly near the recession and the economy is starting to get better. Defaults are coming down from recession highs. It is not where we are. The profit share is very high, getting a big boost. The question is will it be different . So far, no. The yield curve has been flattening, and the stock market has been going up. Will that persist . Mixed feelings. It is not an easy judgment. At this time, it is different and it is supposed to be dangerous. On the other times, it is sometimes different. Ityoure supposed to not say. Precisely, that is my point. This is the difference. A very different phase of the Business Expansion pair the other feature that is probably worth giving additional thought a deficit come country that needs capital from the rest of the world tends to find of the currency is weakening in the yield curve tends to and that is another wrinkle in this particular moment, it is unusual compared to past patterns with respect to the early phases. Fake cannot catch a break. Sentiment forange what is going on at this moment. Confluences,ny whether it is refinancing as a result of tax overhaul, the back a historic moment in terms of Monetary Policy and a retraction of that. Impact rates will as well. It is fair to say because of the behavior particularly of Central Banks taking risky assets on their Balance Sheets and weucing volatility have to absorb and deal with and so forth, one of the effects, if you do it for long enough, is in this environment, you have to be short volatility in some form in order to make money. If you observe so in the market today, and they survived the last five or 10 years, a short volatility strategy in place, that is sometimes explicit, people who literally sell volatility. Others have it in an implicit form. Thanare more selfaware others in this regard. But that is the issue. How you wind that in an orderly way . Like any other big environmental is really the case that everyone is in the same spot and climate is changing, so to speak. I think there is a lot of thought process about how to do that efficiency more than actual behavior in that direction. Volatility has inched up and all of these markets and i think that has tracked attracted the attention of investors as well it should. Neil. At to chat with you thank you for that. The for a look at some of biggest business stories in the news right now. Heresa may is in china speaking in beijing today, she shared her vision for trade thetionship future between nations. Our Global Partners for the longterm, we are committed to building a mature ties for peace and prosperity in the 21st century and i look forward to continuing this discussion. Led by a threemonthold bank. A shot in london, details firms such as bank of america and jpmorgan chase. Hsbc. The tech on tap today. Company declaring earnings include facebook, microsoft, ebay, and qualcomm. The corners speed is critical to the outlook Blockchain Technology and its business are interest to. Takeholders growth merchandise volume growth. That is your Bloomberg Business flash. I cannot help but smile. As many times. This is time for our stock of the hour. Were seeing eli lilly late leading down and it has nothing to do with amazon. A little bit of lingering overhang from yesterday. Asked the with earnings for the company. In particular, results from its animal house business. The problem is it is not doing very well. 6 in the First Quarter. The company had previously talked that the margins would take longer to achieve than they previously talked in the margin, the expansion of the business. I thought people were crazy with their pets these days, spending an insane amount of money. Here isis interesting of thehe kneejerk Animal Industry and in other words, people want the animals they are eating to have less fewerin them, to have drugs in them. The dairy supplement and the cattle, weight gain treatment, as jeff simmons says, it is because of the change in the u. S. Eating habits. Here. Fascinating results lets also talk about the tax rate. With regard saying to the tax law and how they keep things going. It is all relative. Max wrote an interesting piece and said basically it makes everyones health look bad because earnings came out and said its effective tax rate but only 13 to 2022. Part of that and various tax rate. Wasill be better than it but in comparison, whether it is fair or not, it has set the bar for the industry and does not look a strong. Uncomfortable data overall. Throw it in the mix. Julie hyman, thank you. We are relating facebook results. Theyre coming out after the bell. In the meantime, we have got the chart you cannot miss. This is bloomberg. Lets talk about the oil price. Not the price were talking about on a daily basis but how much production is going into it. Take a look at this. U. S. Oil production levels at the highest they have been in 47 years. It is the second highest on record. Weve talked endlessly about the contribute factor but this chart in the last two years in the last six and seven and eight months, and when you have got something that stands today that is only going up, up, up. Ais is important and you got hold of this. It breaks it down if you go back to november of 2016. The yellow line at the top features u. S. Production rising. Opec production, blue chart at those things together. You have got opec and u. S. Production relative net change. The joe facebook coming out after thisell and of course, will all be about mobile. Check out the breakdown. Oranges mobile, desktop hasnt really gone anywhere in years. Mobile is just a Straight Line up. We will look at that number and usage and forecast. Cannot wait to dive in. Remember when people were wondering whether facebook could get mobile right . So long ago. This is bloomberg. Thea u. S. Stocks ending stocks that 2. 7 . I am julia chatterley. Scarlet and i am scarlet fu. And if you are tuning in from twitter, we welcome you. We begin with the market minute. Looks at what cap the third day declines of u. S. Stocks, but low and behold we finish in the green. Of 2018 great selloff at least for now has taken a break. Scarlet it may even be over. Eye onkeeping an facebook and microsoft before they report results. We are looking at other Companies Making big moves. Broadcom surging after an upbeat earnings outlook. Expect up 40 from the year earlier and topping average analyst estimates. Ea and activision higher after activision its should say said the fiscal year forecast the analyst at summits estimates. Over 3 . Square moving another company jumping on the cryptocurrency bandwagon. Joe even though bitcoin is fading, companies associated with it doing well. Lets look at the bond market, not a ton of action on the surface with a twoyear yield inching a little bit. Ending flat but it was a back and forth day. We were at two point 75 a little bit after the fed decision but ultimately was 2. 72 . Today is no exception with dollar losses and emerging gains. Lets look at this chart once again, the u. S. Dollar being mnuchin with steven weighing in about the weaker dollar on the shortterm, and we that at what point does the u. S. Dollar weakness became a problem here . We have bank saying the rapid decline may in fact hurt developing countries by chipping away at their export competitiveness. Bute not a problem now given the divergence we have seen, it will ultimately become a problem. Just opening the question there, and another thing were looking at is the eurodollar reiterating that patience is needed with the level of inflation and be prepared for brexit outcomes. A fresh twoyear low for the dollar swiss, and pointing out as well, 3 10 of 1 . We had the bank of japan saying that policy is needed to reach the inflation target. Got to bear that in mind when you talk about markets overall. Finally in commodities, oil and gold green across the board today, recouping a little bit of those losses. Oil is up half a percent and gold is up half a percent. Earlier that chart hitting 10 Million Barrels a day for the first time in 47 years. Those are todays market minute. Microsoft lets start with the top line because that is something we can give you comparables for. 20. 92 billion analysts were 28. 3 9 billion. There was a loss of . 82, analysts were looking at a profit of . 86 but there was the u. S. Tax law change and as a result a charge of 13. 8 billion according to microsoft. We are not comparing bottomline numbers to the consensus estimate. Of different business segments, the cloud is an area they have been building that the growth is an. Of 7. 8 billion so it was higher than anticipated. The bulk of the business is very much personal computing. Of 12. 17revenue billion. Joe very important to specify the gap loss relating to the tax cut and jobs act. Tech companies have this cash to repatriate and pay a onetime fee, so there is not a economic hit. What you see, muted reaction so far to the data. Scarlet we also got facebook the results with fourthquarter earnings per share that looks to be a mess. Miss. Over 12of revenue, billion which is higher than analysts were looking for. The key number for investors is the daily active users, 1. 4 billion, analysts were looking for one point four one billion, so that appears to be a miss among active users. Facebook is trading lower by 3 in afterhours trading, a sluggishness trailing performance that we have seen in 2018 because of the announcement Mark Zuckerberg made about the way they will present information on users news feeds to encourage more engagement. Strong year for facebook but also a hard one according to Mark Zuckerberg. Facebook isnt just fun to use but good for peoples wellbeing but reducing time spent on facebook by 68 million hours every day 50 million our reduction every day. Advertisers, critical questions to be asked. Scarlet that talks about the scale of facebook. It is pretty much matching the consensus estimate. Lets bring in David Kirkpatrick take give us a deeper look at the numbers. He is the Company Founder and ceo and author of the facebook effect, and every quarter we bring you on to talk about facebook and do not get out of the park. This quarter they are acknowledging a struggle. I was thinking the great aikens line that is the great the great Charles Dickens line. Placeok is the de facto because of the extraordinary target ability. The last year to have gone through an extraordinary shift to be viewed, even now on wall street as a dangerous place that is harmful for society. I am not the slightest bit surprised in the earnings per share because if they hadnt shown a decline in earnings and Earnings Growth this quarter, they would have been seen as hypocritical because how much Mark Zuckerberg has been saying that profits will be hit because of the scope of efforts we have to make to fix these problems. In a way it is a demonstration of the seriousness that he is willing to see profits drop. Joe something worth noting is aat microsoft is also getting head related to the tax cut, not at the same scale, some the seven cents a share julia after our news we are seeing a facebook is down shy of 3 . We have this letter from Mark Zuckerberg two weeks ago and stocks fell and erased those losses. Can facebook slow down its business even if they wanted to . It so powerful that even if it tries it will still have incredible traction . David even if it has fewer page views, they can raise the price and 50ers per view, million hours per day based on the changes made deliberately. I think it can do a lot of things to tune down how people see certain kinds of information. Theyre trying in a variety of ways to tune up socially responsible information and tune down what they think might be socially responsible information, which they seem to have more than they realize. I think they can do a lot of things because they are the of the world, and advertisers will flock there and pay higher prices. Julia Bloomberg Intelligence Senior Analyst is joining us now give us your take on this as far as the numbers are concerned. The engagement 50 million hours every day, reduce time by facebook followers. Now the bigger question is how much of that engagement drop translates to revenue. We think the pricing at increases and instagram revenue is getting started. Both of these should offset them while they transition to more valuable time spent on the platform versus a lot of content that used to float in the platform by thirdparty players. Advertisers looking at this, users will be less engaged, but facebook is one of the two largest players in town. Do we continue to give our money to these guys, because we dont have the risk that our ad will pop up again with something we dont like here . You look at the market share of Digital Advertising that facebook has, it is about 24 , and these numbers are in excluding china. We believe the ad pricing should reflect this change and eventually advertisers will see these changes, but the transition. Brings happiness to earnings and Earnings Growth potentially. Scarlet i want to ask a quick question which is the instagram property and other platforms which include messenger. Facebook might be less good socially people might not want to be on facebook, what about instagram and messenger . Can they develop those platforms and bring out more revenue and making up for the kleins and facebook itself . Declines. E interestingly, even though instagram has a lot of issues, it is not generally discussed as the same socially dangerous platform that facebook itself is. In a way they have an incentive to push more traffic towards instagram which is somewhat a neutral thing. To monetizetinue that platform, and young people are heavily using instagram over facebook now. Scarlet that being the case, it is frustrating for investors that they dont break up too much information on instagram, we are guessing. They dont, but i think it will soon start because the numbers will be very high. Joe on the question of people turning on facebook is some of this groupthink . Are all the elites and intellectuals anxious that this is so bad for society . Populare still companies and industries and how they are pulled and people Like Tech Companies is some of this, it is the cool thing to think . Yes, but i think there is tendency from the pundit class to condemn facebook, because however it might negative it might be, there is still enormous positives that facebook behavior brings to society. We cant throw the baby out with the bathwater, but on the other hand there are real major problems that come with facebook manipulation by governments and bad actors that are global. That is real. Julia will come back and talk about microsoft earnings. From new york, this is bloomberg. Mark i am Mark Crumpton with first world news. A charter train carrying dozens of gop lawmakers to a policy retreat in West Virginia struck a garbage truck enrolled virginia. White house confirms that one person was killed and local Officials Say others were injured. Full dont have a understanding get of what happened, but it was a train hitting a truck going at a pretty good speed. Well have a full report as to what it looks like. The driver of the truck was killed. Mark amtrak says there were no reported injuries to crew members are passengers. Hillary clinton says she should have fired her Senior Adviser after Sexual Harassment accusations in 27, clinton admitted allowing birds to keep his job, and she says if she had to do it over again, she wouldnt. It was recommended that strider be terminated, but she instead demoted him, talked his pay, require counseling, and separated him and the victim and threatened him that he would be fired if he did it again. Russian president Vladimir Putin has agreed to excellent efforts to establish turkish observation post in syria. Said that a syria press Conference Held in the russian city of sochi was an important achievement. An agreement was announced to draft a new constitution for syria. The moon puts on a rare show today, super big and superbright. In 35 yearsrst time that a bloom own sync up with a supermoon and a total lunar eclipse. Most of south america and africa were out of luck for the eclipse. Hawaii and alaska had the best few along with the canadian yukon, australia, and asia. This trifecta will not happen again until 2037. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Scarlet a busy day with corporate earnings. An update on late movers. We have earnings from facebook, numbers didnt meet analyst expectations, and microsoft beating earnings and revenues after the tax law change but you still see it down by 1 . paypal is down by 1. 5 revenue a little bit ahead of expectations, it is an outlook that sees q1 eps of . 54. Estimates have been . 53 solid, not incredible. Tat stock is on a tear hough. Qualcomm thirdquarter adjusted revenues coming in at 6 billion the estimate their was five point nine 3 billion cap earnings and it includes a 6 billion charge relating to the tax overhaul. The consensus was . 91, so it was beat, and i just a quarter range we are talking about is . 65 to . 75. They also announced an expanded relationship with samsung. Going to beis withdrawing its intervention of qualcomm here as it relates to the dispute over pricing with apple. Samsung a potential partner, apparently withdrawing their intervention and qualcomms appeal. Complicatedis a love triangle. Qualcomm by dancing around in after hours trading. Lets dive into microsoft results. When you look at the numbers here, there was a loss when you look at the bottom line, but you have to account for the charge that the company is taking with regard to the tax overhaul. What are the numbers that are getting investors disappointed with results . Hi, can you hear me . Scarlet what do you think is going on . I think the numbers, almost all of them are higher than what people were expecting. I was encouraged by actual growth in the Cloud Platform it has increased more than the last quarter. Topline beat, bottom line beat, cut numbers good, the expectation may be a little higher, but i dont see big holes here. Joe the cloud gets attention because it is the future, but personal computing is up versus estimates. Revenuevity in business they look like they are firing solidly. The more interesting thing in the call is the chip failure and what that could do to drive when those sales in the second half. That is going to be farmer interesting in my view because over 50 of Business Computers still run prewindows 10 and the lot will be slowing down because of the intel chip issue. Julia i want to talk to you 120 billiontimated dollar cash that microsoft has overseas and shortterm investments. I dont see details on what theyre going to do with that, when or where it are going to repatriate that foreign income. What do you expect in Capital Expenditure . Offering amazon cloud the sheer size and revenue, do you buy that call here . Microsoft has become a de facto number two at this point. Anyone who doesnt want to use amazon, whether retail or you dont want to bet your house on amazon, you will go to somebody else, and that window right now is microsoft. They have a lot of cash and can expand the cloud too far more than what they have right now to close the gap with amazon. Scarlet good stuff, a quick take on microsofts results. Back in thering event kirkpatrick David Kirkpatrick, and the intel chip problem, might be a problem or benefit i should say . David a huge benefit for microsoft. Scarlet are the repercussions from an intel hardware problem . The Biggest Issue was with cloud servers and the issue of memory being vulnerable is most problematic for computers that are shared by multiple users. Computers ine facebooks clout data centers, which are gigantic, would be affected by this problem. Anyone running in the cloud is affected by it. If you have windows 10, your steadily,ll work whereas if you had earlier operations step fix itself, it is not a perfect fix. It will really slow down the performance of the device. Joe i want to take a quick look of the terminal on facebook the more investors look at this earnings, the less excited they are. It is important to emphasize the company is still growing like crazy, and everything where talking about is relative to incredibly high expectations. In terms of future growth of this company no one denies it will keep growing for quite a while. What are the big areas right now . Global revenue. And excitementes for Digital Advertising is still a very early phase industry in many countries were facebook overwhelmingly dominates internet access. Many countries in the world, being facebook is tantamount to being on the internet. It is much more in many of the countries they operate i think there is gigantic global opportunity. Scarlet to follow on what you are saying, incredibly high expectations. Were looking at a chart of facebook in white, the red line shows the estimates for the First Quarter, which is next year. Point,ded up to this ratcheting up higher until Mark Zuckerberg told everyone where purposely taking it down to address other concerns. Julia do you think those concerns are overinflated . But gomillion ahead. Julia do you think that is steady now . Do you think this could change as time goes on . David it could very much change because we are still at an early phase of facebook trying to adjust its ecosystem to accommodate the very different kinds of critiques that it is facing. This issue of addiction is real and it is going to be a factor in itself. Isitical in interference a global issue, and one of the things i worry about is the degree of which governments in undemocratic countries are using facebook for propaganda and the way that is dam managed has not been addressed nearly enough and that will affect their image in their page views over time. Julia a great article on Bloomberg Businessweek. Scarlet facebook is the internet for many people. David kirkpatrick, thank you as always. Another quick look at earnings, as facebook losses in after hours is accelerating. Qualcomm shares also lowered by almost 1 . R. Ypal another big decline julia more to come from new york. This is bloomberg. Mark government prosecutors have decided not to retry new jersey democratic senator Robert Menendez on corruption charges after a judge threw out some of the accounts last week. The first trial of menendez and it in a hung jury last november. Was charged with trading political influence for gifts and campaign donations. International is condemning President Trumps move of keeping Guantanamo Bay present cap open. Open. P this is a disgrace. People have been detained for over a decade without any prospect of any fair trial. Now president is proposing to increase that number. Before the state of the Union Address, President Trump signed an executive order directing the pentagon to keep the present open while reexamining the military policy on the tension. Which worksnations with Palestinian Refugees says it places faces a major challenge following the Trump Administration decision to pull millions of dollars in funding. As you are well aware, we are responsible for the provision of assistance and protection of 5. 3 million Palestinian Refugees. The live in syria, jordan, west bank this is a community that has declined by a total lack of political horizon. Mark the eu policy chief urged the u. S. Not to go at it alone for efforts to make peace with israel and the palestinians and warned that doing so will end in failure. Leader has been the government says they launched an investigation into the inauguration as the peoples president. President saysan his home was attacked overnight in what he calls an assassination attempt. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Scarlet lets get a recap of todays market action. The s p 500, the nasdaq, and dow managed to go up, there was a dip in trading, but stocks and it in the green. I should mention that the s p 500 yesterday and the previous they declined quite a bit, and the dow had its worst today lost since before the president was elected. Nevertheless for the month of in its, the s p closing best since 1997. Joe well see what happens when the new month begins. Scarlet in afterhours earnings, facebook shares are up beating microsoft on the top line and bottom line, and the cloud higherthanexpected. The stock was trading near record highs. Joe paypal is another one of these redhot highfliers in this up in afterhours. This quarter is fine, but the up. Ook is at cap it julia the estimates slightly line, inbeat on that terms of the adjusted eps, . 98 for the First Quarter and . 91 was expected. A 6 billion charge as a result of the tax overhaul, and there was a charge from a European Commission fine as well. Whether its interesting on this one is they have expanded their relationship with samsung, and something as a result will be withdrawing its intervention of qualcomms appeal over concerns over apple over charging the qualcomm tax. Samsung a potential partner in this concern is apparently withdrawing interventions in qualcomms appeal. The plot thickens. Lets move on, President Trump delivering his first state of the Union Address talking trade, taxes, and immigration. Tying prosperity to his presidency. Is a new trump this american moment and there has not been a better time to start living the american dream. To every citizen watching at home tonight, no matter where you have been or where you have come from, this is your time. If you work hard, if you believe in yourself, if you believe in america, then you can dream anything and be anything. Together we can achieve absolutely anything. [applause] great to have you with us there was a lot for americans overall, whether the market a republican, to celebrate and what the president was saying last night. But democrats look deeply displeased, what do you make of it . The president had a lot of high notes and what he believes his stewardship of the economy has brought. Debbiets look like downers sitting there with our looks on their faces as a president talked about the stock market reaching alltime highs, job numbers being growth good. Dont want to be cheerleading a president that the majority of them disdains. But they risk looking out of touch and that is where they ended up looking at. How manyi look at people ended up watching, and i was on the platform of the train this morning and listening to people around me and have them didnt know there was a state of the union. They thought it was tonight. There is a distinct absence and engagement among some people. Or hurt theed president s agenda that so many people are fed up with the drama in washington . I dont know that it helps. The reality is that a lot of people have a view of the president and it is difficult to reset your view of the president. People who are supportive of him to beome continue supportive, and people who are opposed will continue to be opposed. The big issue there is going to be how much pressure is placed on members of congress to act. Act andpressure to press for results, and democrats resist in many ways, so the dynamic is the same as it was before the speech. Julia counting down to the midterms, it feels eminent that those parties at this stage we reported that republicans outstretched two to one, is there a platform for the party versus what donald trump has . The Money Matters a little bit to Fund Effective campaigns around the country. That money will be important in building infrastructure, those things are important. Overwhelmingly what them markets are going to look at what americans are going to look at is the state of the economy and if the economy is growing and if people feel like they have good opportunities and if there paychecks are growing. That are pocketbook issues drive elections in america and the reality is a Midterm Election is a relatively low turnout. Decision, a big one will be is the economy doing as well as it seems to be doing today . We spoke with Alan Greenspan earlier today and he sounded in alarm that the u. S. Government deficits will continue to climb. He indicated that he was surprised the president didnt specify how he will pay for all these different initiatives that he proposed such as infrastructure. Where all the fiscal hawks of the party . I think theyve all flown away. To the extent that there was this dynamic discipline, i think that has gone out the door for now. If you look at a trillion and a half dollars for infrastructure, that is 50 more than what the president proposed. Was no effort to rein in spending on entitlement programs, reforms to social nourity or medicare, discussion on medicaid or the Affordable Care act. Ont know if that fits it deficits are an issue come but if you ask american people, that is not an issue that is top of mind. The state of the economy and Health Care Continue to be prominent issues. Lonnie, thank you so much. We have news coming to bloomberg, the rnc has formally announced Todd Ricketts steve ynn step down from his position. We see this thread continuing. Earlier today a billionaire investor set down with an exclusive interview and came to the defense of his friend, steve wynn. Think the president has a modicum of liking for me, so he wouldnt give me a titanic to jump on immediately. Steve wynn is one of the greatest businessman, and what he did for the rnc raised a lot of money, and he is a firstclass human being. He is caught in the synonymy that we are all dealing with an part of it has some personal i ams to his divorce, sure. Guy who runs one of the best female oriented operations in the world. 40 of his executive force are women, two of his past president s are women, and i can tell you bring his personal friend that he is a firstclass gentleman and i havent seen a taint of any of this, but it is par for the course. There is no choice, being within the umbrella of a perceptive problem, he had to do the right thing and resign, but there is a lot of great people who can pick up the pieces. That was executive chairman in an exclusive interview. Coming up, is volatility making a comeback. Joe and get involved in the conversation. Send me a tweet. This is bloomberg. Julia is time for our weekly segment chart where we bring in the topic missions to look at in the charts and bloomberg functions. With me is mark newton who is been on the streets for 25 years, and over those 25 years you have seen a ton of different markets, and where talk about how interest. In this is. The complacency and volatility, what does it tell you right now. Seee are starting to signals and correction might be around the corner after a monumental rally that weve seen in january. We know the market has been overbought, and sentiments have been bullish and we see a break january, and you see this pullback in the last couple of days breaking this entire trend. The s p had been up 200 points, but we gave back 60 and short order. The is a concern because market has been going straight up and we have seen a few signs of the sectors start to roll over, and those the first concern. Semi conductors even stocks like apple had fallen 5 over the last 10 days. Utilities outperform technology over the last week, so that makes you scratch your head. In the third is deterioration and you see your advances, and the combination of those makes you worried that the market could be about to show a minor correction. Ultimately, a minor correction, does that take you to the blue line . We see some of the earnings after hours were negative and toe stocks are down two three percent. Fromargest trend line is august, and it is not asking a lot given how optimistic and exuberant people have been in recent months taking that the worst is behind us and the rethink is up up and away. It is a reality check now. Abigail you also have a chart of the vix, it has been standing out for the last week or two, and i love your chart. Is interesting, you look at the index going back to 2015 and you see the ongoing, symmetrical pattern of lower highs over time. Of see constrictions volatility, and over the last few weeks it has been interesting in that volatility has held up very well even though the market is going up. Of a patterneakup since the end of 2015, and it means Something Else is going on. Buye is a big rush to volatility at a time where people got complacent. This breakout will carry us out to the low 20s, but it is a myeeyear decline thinking is that it could be very important. Abigail a spike higher, and relative you have another great chart that i have not seen before. Thank your for the education, the stands out because we have this happening while stocks have been climbing until recently. Many people know tom mcclellan, and this is the index, andummation it is advances versus decliners. Out, evenee this peek in the early part of january, notmake a lower high, it is keeping up with the broader market, and all of a sudden it gives you a warning sign. On monday andcked had a 60 point decline in the s p, and it gave advanced warning that Something Like that could happen. My thinking is that it is important to keep an eye not but it wentme from being flat last friday, without the market was at a was update, and then it declined. Monday and tuesday was negative on the downside, so it is a big concern and warning bell. Abigail belichick or could be a correction or pullback in our it looks like there could be a correction or pullback. Julia we explain the dangers surrounding funds that have raised more than 350 million so far this year. This is bloomberg. Scarlet a popular etf now risks closure. Hasalternative harvest etf 350 million raised this year and is doing well late performance wise, but what exactly is the problem . It could be the federal law. Rachel, tell us what the problem is here. Custodian who does not want to be a custodian anymore, and that sounds very but what a custodian does is they are responsible for holding the assets for an etf. Legally you have to have a custodian to offer an etf, so if the custodian is leaving that role and decides not to do it, then they have to find someone else. Not obviously, marijuana is legal in the u. S. , so does that mean controlling shares of companies who are operating legally in their jurisdiction are not allowed . It is a legal gray area. Theyre not Holding Companies in the finds of u. S. Law, so they are trying to avoid that i Holding Canadian companies if ,ou look at broader companies perhaps they might have in thc or interest the active chemical in marijuana. There is legal wiggle room there and the custodian, from what we to decide, is trying whether that legal wiggle room is enough to take a risk. Julia if they decide to pull out, typically you give 90 days notice, and they try to find another custodian. What happens to investors if you are in Something Like this and they dont find a custodian and they shut down as we alluded to . Then what . Happen in a liquidation, liquidations are common in etf land. We have over a hundred liquidations last year, the etf will have to give notice to shareholders, some to liquidate and those funds, shareholders divvy of the acid value of the funds, minus costs. Scarlet they give for that story thank you for that story. Well get an update when there is new developments. The etf industry has something for everyone, including those tuning and to this weekend super bowl. For fans, we have an etf for you. Upon us,he big game and etf is looking to draw fans to its funds it tracks companies that sponsor a half broadcasting rights with professional american football, baseball, basketball, and hockey leagues. They have 70 names and range from papa johns and h r block, because theyre equally weighted, it means exposure to smaller names across industries. They have gathered 4 Million Dollars in assets, Trading Volume is low, so limited volumes are recommended for fans, and just like the super bowl, it is a pricey ticket. I think i am the biggest sports fan of the three of us, julia, the super bowl. Julia it is my first super bowl party. Scarlet who are you rooting for . Julia i dont know. [laughter] joe coming up, what you need to know about tomorrows trading day. This is bloomberg. Scarlet some earnings after the bell. Dont miss this, coming out at 10 a. M. Eastern time tomorrow. Joe i be looking at initial jobless claims. This, and dont miss apple and amazon reporting earnings tomorrow. Joe after week tech earnings, the pressure is theres a little bit with facebook and paypal. Scarlet that does it. Joe have a great evening. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Alisa im Alisa Parenti in washington, and you are watching bloomberg technology. Here is a check of your first word news. A charter train carrying dozens of lawmakers to a republican policy retreat in West Virginia struck a garbage truck in a rural virginia in town today. One person was killed and several others wounded. Lawmakers said the fatality appeared to be someone on the truck. The chairman of the House Oversight Committee Trey Gowdy is not received not seeking reelection. He says he is returning to the justice system. He chaired a Panel Investigating the 2012 terrorist attack in benghazi. His announcement brings to 64 the total number of members of congress not opting to seek reelection. And cnn reports President Trump wanted to know where special counsel russia investigation was headed and asked his deputy deputyl asked if attorney Rod Rosenstein was, quote, on my team. Moon puts on a rare cosmic show today,
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