Im Francine Lacqua here in london. We saw a huge plunge in the markets overnight in the u. S. We saw quite a lot of pressure on the nikkei. 1. 6 . 600 now down i will show you a chart of the stoxx 600 in a second, you will 3 , downit was down 4 , and now it is kind of stabilizing at down 1. 6 . 37 can see the vix index. 32, now we have not seen that level for a while. Eems to be finding we focus on the selloff with the chief Investment Officer. We discuss oil prices in our interview with the ceo of bp. We talked the vixs historic spike. We focus on the markets, we also have quite a lot more throughout the program. Lets get straight to the bloomberg first alert news. Heres Juliette Saly in singapore. Juliette the president of the minneapolis fed says he does not think a financial crisis is imminent despite the turmoil. He made the comments in an exclusive interview with bloomberg. If they are pricing in a lower young term yield, that could be leading to higher valuations. I dont see a financial crisis on the horizon, but we are paying very close attention to it. Juliette even as u. S. Stocks plunged yesterday, today trump praised his recently text recently passed tax overhaul. When i signedp the tax cuts six weeks ago, and set off a tidal wave of good news that continues to grow every single day. Companies were announcing thousands and thousands of new jobs and enormous investments to their workers. Robotte the socalled advisors struggled to deal with the market crash. Glitches are a setback for a sector of the Financial Market industry that has boomed as people become comfortable making Investment Decisions without speaking to human beings. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am Juliette Saly and this is bloomberg. Francine becky so much thank you so much. Global equities have continued their heavy losses. The dow suffered the worst point plunge ever. Indices are lower this morning. However, there is also some signs of the clouds lifting. U. S. Futures turned positive and though the marketeer in europe are not as low as they were 15 minutes earlier. Joining us now is the chief Investment Officer at ccla investment management. Let me show you what we are think across the board what we are seeing across the board, it is a sea of red. What is the reasoning of this . Our markets anxious that the u. S. Is overheating . There is a follow over to learned about Interest Rates and bond yields. Francine how long can this continue . We telegraphed it quite a lot, do they not watch this show . They should. There are a lot of people who are into the market with Exchange Rate it funds. The Significant Fund flows will drive markets down. To Equity Investors is that corporate earnings numbers are immeasurably better than many have expected. The rise that we have observed has involved a relative reduction in the valuation. The earnings numbers have been rising faster than the market numbers. Francine it seems that the Market Correction was so fast and so volatile, they are unwinding on positions, and why did markets take those positions . Will react with extreme speed because there is now so Much Technology engaged. Francine algorithms. Algorithms and stop losses. This to me is about selling of Exchange Traded funds. Francine is this a correction . Is this the start of a bear market . This is most definitely not the start of a bear market. I say that because the fundamentals are exceptionally supportive of equities and prices beginning to decline. We have strong Earnings Growth hardly. Any inflation there is no evidence that which numbers will necessarily feed through to the difficult. Francine let me bring you over to the map. Europe is down some 2 across the board. They are now down 1. 8 . Let me bring you over to asia where we saw a significant meltdown. The nikkei down 4. 7 . Are you buying at these levels . Absolutely, i am selectively ng. D buyi it is often better to see where prices settle and then buy in the upturn. People are selling and prices are getting marked down. It is very easy to get stomped over. Francine talk to me about that industry groups. Insurance is losing the most. Are you buying any of these industries . I certainly think that the Financial Services community would do much better than slightly bind bond yields. In europe we have had relatively bnp. News from bmp i anticipate that Companies LikeCredit Agricole are wellplaced. We had pmi numbers out last week for the Global Economy and i see nothing on the horizon that tells me we are going to have a recession. For me at the moment, no sign of a recession and therefore no cause to anticipate a bear market. Francine what about overheating . If you have severe overheating in the u. S. Economy . What does that do to the market . We said so many years that the u. S. Market is at stall speed. Now we are up to 3 . This is an economy that is going well, where the corporate earnings numbers are strong, and there is still very little inflation in the system. Francine let me bring you back to why the markets are freaking out. James markets are freaking out because the wage numbers are better than expected. Saidrs ago, janet yellen she thought wages were going to about 4 . At theare to look employment cost index, including benefits, it is around 2. 5. This is not an economy that in wage terms, is overheating. Francine do we need to get used to more volatility in the market . Volatility like the kind we saw in the last 24 hours . Investors will say they clipped the dividends, they are not really worried about the durations of price. That is the strategy that you have to have in this very nasty market. Francine is there a cycle that this happens again intothree 3 months . In 2 the next big thing will be the First Quarter results, where we will see some of the real benefits of the tax cut coming through. It justifies the higher levels of the s p 500. Muchine james, becky so thank you so much. Billionaire investor Paul Tudor Jones says that inflation is about to strike and it could force the fed to speed up its hiking. The asian markets tumbling. World stocks are seeing the biggest threeday slide since 2015. You can see that u. S. Futures are bucking the trend and they are gaining some 1. 2 . This is bloomberg. Francine economics, finance, politics, this is bloomberg surveillance. Im Francine Lacqua here in london. We saw a huge market tumble. Sincelloff deepening yesterday, however in the last 40 minutes or so we have seen a little bit of a turnaround when it comes to u. S. Futures. They were down some 2. 4 percent, apart from the dax, which is still one of the biggest losers. A lot of the stocks are losing less than they were 10 minutes ago. You can see the ibex down 1. 4 . Lets get straight to the Bloomberg Business flash. Heres Juliette Saly. Bnp paribas income came in at 14 3 billion euros in the Fourth Quarter, in line with analyst estimates. The french bank is coping well with low rates. Thef you look at the markets in general, you see a pickup when you look at volumes and all of that. However, we still have a low Interest Rate environment, so that weighs a little bit on the top line. The cost of a risk is lower than what you expect. That is why domestic markets, the bottom line is a 5 . Juliette bp has dodged the disappointments that have afflicted other oil company earnings. They have reported annual profits of 6. 2 billion. Oil and gas output rose following the start up of seven new projects. It is the highest profit since the start of 2015. We have been in growth mode, six Major Products it projects since 2017. Weve got the assets running at 90 availability both upstream and downstream. The company is operating and firing on also wonders on all cylinders. According to the ceo of the worlds top independent energy trader, he says he remains optimistic about crude. I think the markets have done remarkably well in terms of the runup come it has been much stronger than we thought. Lots of reasons, which obviously we can talk about. Good performance from opec, not fantastic performance yet from u. S. Crude, all sorts of thinks. I think we are having a bit of a pullback right now, but overall i think we are slightly more bullish. Juliette and that is the Bloomberg Business flash. Francine thank you so much. Lets talk inflation and what Jerome Powell has to contend with. Minneapolis fed president says he does not see another financial crisis on the horizon. The central bank is paying very close attention to the markets right now. He said the acceleration and u. S. Wage growth does not yet support faster rate hikes. We need to see what is going to happen with inflation. We have are 2 inflation target and our maximum employment mandate. Some signs sometimes those are a seesaw, trading off of each other. Jerome powell is very wellequipped to take this on. Him sayinghat was the market is very wellequipped to take this on. Hedge fund manager Paul Tudor Jones says it is about to appear with a vengeance. It will cause the new fed chairman to accelerate interestrate hikes. The events that have transpired so far this january making him feel more convinced than ever of this repeating history. Is warning of dark clouds on the horizon, so how does this play into the market no doubt market meltdown . Of. Us now is the ceo thank you both for joining us. Peter, let me take off with you. The market meltdown, they are not listening to neel kashkari, are they . I want to sort of put things in perspective here. The last i am the last to say that this is not important. It is very important. I would caution against everyone just. Ys it is a small dip on the other hand, we have to recognize that the underlying reasons for why the market has started to price in higher central bank expectations, have not gone away. I think what we are currently , it is a correction that might deepen a bit. We have to see where we go from there. Francine why has it been so violent . The move up, particularly in the u. S. , has been quite violent. It has not been over the same very short amount of time. If you look at the amount of increase is that we have seen, it has been quite something. I think the correction has been violent because the way up has been violent. Francine if you look at the markets, does it mean that valuations go down and you will find better deals . As you know in the private markets, it is different in the reaction to volatility. Is a very severe fall off and we will see the reactions in the coming days and weeks of the market. For us, definitely, the Immediate Reaction is to say, oh, we made have may have the opportunity to negotiate with the fed. Good for us to step out step back a little bit. The general trend, the general pressure was immediate right action best reaction of the private equity player was. You know that an Investment Firm like us, we are always investing. It was a very Good Opportunity to sell, now maybe it will be a better opportunity for your investments. Francine i want to ask you about currencies. We have a viewer that wrote in and he says that this pullback may be the spark back into active management from passive investment. Do you think this could be a trigger points . I completely agree that active management now has more opportunity. The fund flow, particularly in big institutional and smaller retail, it is passive. It is a very tricky game. I dont see inflation rising. This feels much more like 1987 when there was macro issues. The crash in 1987 became an excellent longterm buying opportunity. Francine would this move it be our skeleton in the closet . It is quite possible, but i would say that the majority of Fund Managers have positioned themselves and anticipation that there would be a pullback. At this when you look kind of market movement, is it some whats encouraging somewhat encouraging . Right now after 18 months of equity, it is the equities that are moving. I dont know if that gives us any confidence really, because at the end of the day, if we have very ambitious moves, there is somebody who is on the other side of it. It doesnt matter where that is, in the bond market, and the affects market. Francine is it necessary to go back to a kind of more normal market . Just pull up a chart of the u. S. Equity market over the last couple of months. The increase that you are sink, we can name that you are seeing, you can name a thousand reasons for it, it is very steep. If you compare it to the european markets, they have not been following to the same degree. We have seen the recent height already earlier before the u. S. Can down. Francine that is the s p 500 for you. Enemye this going up bring it back to 2012 or maybe 2013. I dont know whether it looks completely different, but whether we should worry about the fact that we have not had this kind of correction for some time. A pullback in the last 24 hours you could argue was necessary, given the chart, bring it back to 2012. When you look at the absolute levels, the valuations, the valuations have been very high and now they have came back. We will have to see where they end up. They most likely end up in an environment where they are in a bit more reasonable a little bit more reasonable. The underlying economic fundamentals remain healthy. I dont want to belittle this, but i also dont want to judge this before it is over. Francine james, if you look at this is what youre saying, the fundamentals are strong, but do the fundamentals justify this kind of regulation valuation . 1200 to 2300. We live in a world of very low inflation and Interest Rates. I expect both of those factors to persist. The participation in equities. I do think that the corporate earnings numbers justify higher market levels. We had a very strong run at the end of the year. We have the tax cut and jobs act, leading to a shift in the way analysts were forecasting earnings at the s p 500. When you look at the quality of the investment that you can make. When you look at the quality, when you look at the innovation. At , theok fundamentals have never been as good. Fundamentalglobal terms, we do not see any change yet. It is incredible, when you look maybe there class, have been flows of capital everywhere, but when you look at that asset class called innovation in europe, we have not seen a huge cash going. It is not an asset class. Francine would you say that the markets are complacent . Is that a fair way to describe them. I certainly think to some degree. If you look at the volatility indices, and the equity market or the bond market, they were at extreme lows. That certainly is an indication of a little bit of complacency. Inflation is supposed to be one of the catalysts here. We been debating about whether inflation goes through the roof , but ifcome or not you look at that inflation in the market, it is still very low. If we have just a little bit of an increase in inflation, it is relatively easy to beat the market expectation. Francine we sought a selloff, but we always we saw a selloff, but we were always told by the fed that we were expecting rate hikes. Where the markets not think it were the markets not seeing it . What were the markets not seeing . It is not only about the fed hikes, necessarily. Valuations were relatively high hadnow just because we have a relatively strong u. S. Payrolls at the end of last week, i think the argument is a very convenient one, to say now we have inflation, and now the fed rate hikes. Francine thank you so much for joining us. This is bloomberg. We use our phones and computers the same way these days. So why do we pay to have a phone connected when were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And now, get a 200 prepaid card when you buy an iphone. Its a new kind of network designed to save you money. Call, visit, or go to xfnitymobile. Com. Francine economics, finance, and politics, and today we do markets from all angles. This is bloomberg surveillance. I am Francine Lacqua in london. Followingn has been all the action on a down day across the globe. The gmm function highlighting the move across the asset space. On the equity markets, we are off the lows of the day. Yesterday, the stoxx 600 fell as much as 2. 3 . We are half as bad as earlier, so we are down roughly 1. 6 . The equity decline is down in greece by 2. 5 . The dax, 1. 9 lower. The biggest drop since after the brexit referendum. Currencies, the bloomberg dollars spot index is little changed. The euro isction, the best performer against its g10 peers. The other eight are falling against the euro. This is those currencies against the dollar, all rising except for sterling. Money moving into the haven assets, the Government Bond market across the european space. The only commodity that is rising today is spot gold, up by 1 5 of 1 . All other commodities are falling. Citigroup says investors should increase exposure to industrial metals. They say this sock racket stock market route presents an opportunity to move into raw materials. This function tells you what is happening it is going to come. Here we go. I want to show you our wonderful grr function. Vstoxxto show you that function first, this is volatility. This is the europe volatility gauge. We have seen a big spike today, up as much as 33 , the biggest increase since august 2014. This is an important chart because it shows the last two spikes in volatility on the vstoxx. That was ahead of the French Election and breat