Returns during the 2016 campaign. Two former white house chief of staff say President Trumps twitter have it has been distracting at best and destructive at worst. If you were there boss they would tell him to stop. Calls mr. Trumps tweets political gasoline. Says theonough president s tweets have the ability to walk back a lot of hardfought progress. Benjamin netanyahu he is brushing aside accusations of wrongdoing. Said it isia have likely to result in indictments. The Prime Minister insisted the probes will find nothing. Global news 20 for hours a day in over 120 countries. This is bloomberg. U. S. Stocks are approaching their session lows. A higher than average trading volume. Lets go now to julie for more. Here are the major averages. They are trading at lows. The longterm average is around 19 and a half. Still elevated levels here in the wake of the short volatility trade blowup. 2 see them all falling by and we are seeing it as a broad aced selloff. The action has not been favorable in a number of different ways. Stocks continue to make attempts at gaining and then do not make it. Several attempts to try to rally, which have not been successful as stocks fall to the near lows of the session. And these selloffs keep falling. There were only four occasions in which the s p fell. It has already happened four in not even a month and a half. There is also the question of volume. Here is a vat. This morning when there was not , when theice action declines were not as steep, volume was running below the 20 day average. Then justafter after 11 00 volatility took off and now we are seeing volatility at 25 above the 20 day average. This is another sign that it is not necessarily it doesnt prestage selling. It could be the exhaustion that some investors have been looking for. Finally, i am just going to refresh here, i want to get the latest numbers. There are only 39 stocks trading higher. Drags, the biggest stocks that are both the heaviest weight as well as falling today, you have facebook, amazon, then you have the financials as well. Jpmorgan the bank of america. That is where we are seeing laggards within financials. There are still some stocks rising even in this environment. It is not brought as we have seen on prior occasions but only 39 stocks higher. Great perspective. Lets discuss this in further detail. We are trading at session lows here for the u. S. Majors. Us, is there any sign as far as youre concerned of exhaustion points, what we seeing across markets . Not quite yet. When these big spasms of selling occur, there is this pattern that happens. You get a sharp rebound and then you test lows again. The market wants to see where the offers are. Tuesdayaday low from will be an interesting level. If we break through that we are going to get nervous. I have seen it being called a flash crash which i think is true but there is a distinction to be made about this crash compared to the 2010 crash. That exposed a lot of flaws in market structure. Caused a lot of stocks to go to one penny. There are some flaws in the structure of the market that have somewhat been addressed since then. Im not sure this had anything to do with market structure. Someone was selling big. I dont think it is productive it is notingers but necessarily a flaw in the structure. Program want to outlaw tradings that sell at certain times and pick up some volatility. Was earlier there volatility. In ways that perhaps imbalances or may have exacerbated the selling. Is that mondays news . Now we are onto something new . When you look at those Exchange Traded products, theres a great metaphor. They are like the visible tip of the iceberg. The norm is trade that exist that we cant necessarily see. Part of ity are the that you can see. There was likely a lot of other that weand selling dont necessarily point a finger at directly. How long that takes to shake out, it could be part of what is going on now but you look at the market last week before the big freak out. Volatilealitative to what we have seen going into that. You have this drop after the wage data was higher than expected. The mostople not just sophisticated computer hedge fund traders, but regular people thinking about that all weekend. Monday, who knows how many people made decisions that infected what we saw monday. Scarlet big selloffs tend to come on monday when people have time to reflect on what the data indicated. Everyone keeps coming back to this idea the economy is fundamentally sound, it is not much different than it was a week ago. A week ago people were buying on the dips. Where is the buying on the dips now . Good story about that today fundamentals look great. All indicators of recession arent there. That said, you have to secondguess that notion when you see this continued weakness. To get back to the short volatility trade, my kneejerk reaction would be to say that has nothing to do with fundamentals. Once that clears out it will be record highs again. But there is probably a guy sitting here in 2007 saying what do mortgage bonds have to do with the stock market . I am reluctant to bring that bell. Hasa i fear of missing out turned into a fear of washing out. Why would you buy on dips now if you could buy on a lower did ultimately at a better price . Is anything that surprises you and what we are seeing . Im talking asset prices in general, given the concerns people were voicing about the runup in risk assets that we have seen in 2018 to start the year. The surprising thing to me and one of the more alarming things, this huge volatility has not caused a rush in treasuries. You saw these two auctions where people were not buying with both this like you would expect in this environment. Keeping rates higher in the which is what started this whole thing in the first place. With 21 minutes to go in trading we are looking at indexes after session lows. For the s p 500 that is down 2. 7 . Julia why . Why are we not seeing people to buy treasuries . It is a great question. I wish i knew. You go back to the wage data and the idea the deficit is getting blown up at a time when Central Banks are stepping away. The tendency is to think rates are going to go up. Julia it is the wrong trying to be in. The dollar looks attractive. Also not the best news for the stock market. 6 we shall see. Coming up, mondays implosion raising lots of questions about the other Exchange Rate of products that use derivatives. What is next . This is bloomberg. Scarlet the short volatility hangover may not be over yet. Concerns raised that other problem children are lurking. Before we get to other problem children, x iv is still trading as well even though Credit Suisse said it would wind it down. Julia this is the quark and how these things work. They will terminate and be liquidated. For now you can buy and sell them. Joe anyone trying to catch the it bloodyare getting hands today. Scarlet what lurks beyond exide the . Everybody starts to think about what else that could be problematic going forward. One of the obvious things is products that are derivativebased. 400 or so Exchange Traded products in the u. S. Have derivative elements to them. They dont hold that much in assets. Scarlet but they dont need to. Whats these are designed as trading tools. That is the whole problem with these things. Retail investors buying them and trying to make a buck out of them. Were juste people getting in and out but there was some form of retail participation in this. How big is the retail exposure to this . It is incredibly difficult to estimate. Israll the typical estimate 60 retail 40 professional in the u. S. When you look at these particular products they are designed for more specialist investors. Harder to buy . You can get a popout that will say here are more information about this products. Are you sure you want to buy . They spell itf out but they try and educate investors they are taking a risk. You are free to buy that product. Scarlet i just wanted to point out that it is pretty high for an etp. 1. 35 amid that is incredibly high for Something Like an Exchange Traded note. It reflects on is incredibly complicated. It is not an s p 500 fund. That is very straightforward. For an Exchange Traded note have to pay up for that. Joe i remember 2016, everyone freaking out about junk bond etfs. It is never made sense to put them in this liquid wrapper. It turned out to be fine. But from time to time you get these scares. Is there any evidence any of these would have systemic affects or do people mostly think the investors in these funds my get blown to bits, but it doesnt seem like they had any real spillover . To mikes point, it is hard to tell what is going to have a systemic impact on a market. It was interesting looking at how the stocks interplay with one another monday. Stocks fell. There was a sense as volatility was rising that was pushing down on stocks. Whether ecp is themselves are going to have a sustained impact is less certain. They are a small part of the volatility market. The derivative side is a small part of the Exchange Rate. There are small things but they do not act like any extreme market strategy. Not even extreme like we saw monday. They dont behave the same way. You have to differentiate the two things operate very differently. You have a credit obligation. There is an issuer behind it. You have all the usual terms and conditions. Which is what we saw here. It is normally controlled by the funds. Whylet it would explain the short volatility etp is still around. Now, im going to put you on the spot. In terms of complex products we knew it was complex. Are there any other you can similarlyhat were complex that forced people to think of everything to make money or lose money . They are more complicated than a stock. You have to understand the holdings and understand how those holdings are held. When you look at the Exchange Rate of product market, you have 400 products. That is not to say they are necessarily bad but you need to understand what happens. Housewives operate. Have to do your hard work homework. Joe could you make the argument everything has worked fine . It was going to do . Suchone knew there is no thing as free money. They have not taken any hits. They were able to manage exposure. It seems like you make the argument this product did what it was supposed to do. It is the correct argument to make. Buyer beware. That is what was talked about after the financial crisis. The risks were spelled out. If people dont read them you have a real difficulty. That could be one way they look at it. They normally go for disclosure have the model and leave it up. O brokerages sophisticated investor comes to mind. After monday they may be nursing some wounds. Scarlet lets get your check of where the major indexes stand. You can see we are at session lows. 830 points. The best performing group is utilities. This is bloomberg. Julia we are less than 10 minutes away from the close of equity markets. Abigail has the details. The selloff today we are seeing intensifying. The dow s p and nasdaq down 3 . Down 900 points, clearly on police for the worst day since monday. The volatility we saw last week with the major averages posting their worst week since the beginning of 2016. Continuing this week into today, we have the declines on the uncertainty of what is next for investors. Into january leading to this, the repricing of risk with rates rising. Shock that the complacency is gone but this has to mistreated the certainty that started higher. It made a little bit of a ,ecovery and now at the lowes the s p 500 in a technically tight spot. The mediumterm buyers out of do toward 30 2300. I was mentioning repricing. Very interesting here what we are looking at. 500 go up here . We have the 210 spread widening as rates have gone higher. The inverse relationship here between the s p 500 and the 210 spread. Investors are not liking this. A repricing of risk weighing on the risk assets and stocks today with a big stock selloff. Scarlet we are going to stick with the charts. When we look at the very is. Etrics, this is interesting the stock market may be in the middle of a selloff but when you get past this, it is about the economy. You want to look at the new york fed monthly recession indicator, the white line derived from the spread between threemonth treasury builds and 10 year notes. The latest reading for february is at 4. 2 , below the 20 threshold that is usually. Rossed we are no near those levels. According to andrew that shows there is a low risk of a recession and justify an optimistic view on stocks. Adjusting to that but the Recession Risk is low. Everything is fine. People are hating it is too good. Across different indices, but we , at the top is the implied volatility of the nasdaq. Normally the nasdaq is more volatile. Nasdaq, there has been a major flip in recent days. S p 500 has higher volatility. Which suggests some of what is going on is about volatility products themselves. That is what people are trading. Focus on that. It could be part of the explanation of what is going on scarlet . Scarlet the market close is next, we are at session lows. This is bloomberg. 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. Stocks, the dow leading 1000 points at the chatterley. Am julia scarlet i am scarlet fu. Joe and im joe weisenthal. Scarlet we begin with the market minute. U. S. Stocks weekend and the dow is settling down. At least 1000 points off, so it is reminiscent of monday were stocks took a leg lower. Had some interesting afterhours action lately, so well see what happens now. Forget individual names, lets look at sectors. When you slice and dice to sectors, everything is lower. At 1. 4 loss of household products, which is the best performing products. Of can look at it in terms 11 groups, the more traditional way of doing it, and united utilities, the best performers down 1. 2 . Financials and Consumer Discretionary at least losing 4 , so incredible moves there. Momentum indexes lose towards the close or accelerated vix moving saw the higher, now up 26 . Become accustomed of doing it because of this trigger within the perspective that at 80 ,s it will close 35. The vix is approaching julia and the worst week in more than two years over dollars. Dred billion story crucial part of the is monday where we had the big downwardnd we saw moving in rates, and today very minimal. We have been lower and higher, but the equity portion of your of your portfolio got slammed. Currency,s look at the swiss, the yen, and as you can see, both of those gaining relative to the u. S. Dollar. Sterling, we had the Government Bank of england saint u. K. Interest rates may need to rise at a super rate. In some ways it is good news because they have upgraded forecasts and it is a repricing of u. K. Yields. Pulling sterling down later on in the session, and a quick check of currencies, how em is weming relative to will come back to this and show you some of the levels of commodities. Joe lets take a look at oil and gold. It was a couple of weeks ago people were bullish on oil, and finally oil is getting caught up in a lot of the industrial commodities in the overall volatility. Now it is showing up below bit more, and gold catching up a bit as it sometimes does there is a lot of volatility, up. 4 . And that is todays market minute. We dont like to slap the correction work, but what we are seeing from markets we have officially had that for the 500 extending losses to her percent on the day, and 10 is january since january. Joe correction is good, right . Scarlet it is healthy. Selloff, thisday is healthy, right, is what everyone was looking for . When you are on the dingdong highs, that means they want to go down and go back up to the highs again, and what you plan to have when things are looking great is one you should probably execute when things go a little awry. Then you see a big fat number. Everyone says i wish id bought at october or november levels, but it gets harder when we are on the way down. Of thosespeaking levels, this is a threemonth chart of the s p 500, and we go up, and in a span of nine days, we go back to levels of november. Joe the stair is up and escalator down . Re are the did people where are the dip people . Maybe bitcoin . It is like a roller coaster, psychologically, you are supposed to be buying when crying and selling when yelling, and they are starting to cry a little bit. You have the guts our wherewithal to pull the trigger . You probably should. Julia a lot of money is being but is the market close, there anything that surprises you about the moves we have seen . We saw a steep rally particularly in the beginning of this year to that see a ball back pull back. It is jarring. It is jarring but it shouldnt become too surprising. You can have volatility being one way, if you go up fast, you should expect to go down faster. Julia the government is saying this is small potatoes. Small potatoes . I sign image on twitter of a guy with a massive photoshopped potato. I think the signs are quite strong. Qualcomm sport has rejected the revised proposal from bought and says the offer materially undervalues the company and that qualcomm is offered to see whether broadcom can address these deficiencies. The board of qualcomm has unanimously rejected the broadcom proposal saint it materially undervalues the materiallysaying it undervalues the company. One of the things getting a lot of attention, and people thought as encouraging, we havent seen much spread from the equity selloff of other asset classes. We are starting to see some of that, right . I think a little bit. Futuresalysis today and is extended when compared to the last couple of years, and it is quite interesting word the currency positions have been hit, and the short volatility so then hit, commodity complex, oil, copper another one and that has gotten slammed. The one exception is the fixed income market. This large indebted short in the fixed income market, and with the exception of pain for a couple of hours in the beginning of the week, it has been pretty resilient. Nth going up butrates the curve is deepening as they go up, and that is relatively rare. In arates are going up tightening cycle, you expect the curve to flatten. Risk is this inherent withinicing pricing. Here isbut the theory that when you have a secular increase in volatility, you try to hold onto the sacred cow. Julia and it isnt sacred anymore. Gets lede sacred cow to the slaughterhouse and maybe we know that the bottom is in. Even though most cherished positions gets closed and maybe one d