The s p down. 5 . The nasdaq little changed. The vix is little changed. 37, quite elevated compared to where its been recently, still at its highest since 2015. A lot of investors asking if normal the new after getting used to suppress volatility over the last year or so. 500 overok at the s p the course of the session. We did see that plunge at the open. Before it got closer to the unchanged line. Something interesting that our bloomberg charting team noticed today had to do with not just , whicholatility exacerbated the selloff, but also people taking money out of long volatility vehicles. This looks at the shortterm futures etf daily close and a vix shortterm etn daily close. One of these shorts volatility, one of these double long volatility. We saw money come out of both of those. The folks who were long volatility make money. Made money. We have the spike in the vix. Session,ack to todays in terms of what is holding back further declines in the u. S. Market, part of it has to do with largecap technology. Microsoft has been bouncing around. Apple has been consistently in the green after couple of its big suppliers reported earnings that were better than estimates. Amazon has held onto gains as well. That has helped pare the declines a bit. We have consistent underperformers a fiveday chart of these companies that have really helped lead the declines. Exxon mobil down for three straight sessions. That three days like the worst that october of 2008 threeday slide the worst since october of 2008. The fed will be sanctioning the Company Johnson johnson has been experiencing jitters as well after the talk of amazon getting into the Health Care Industry last week. Those shares down 10 . Julia a lot of idiosyncratic risk out there. Mark House Speaker paul ryan says republicans would favor the release of a second House Intelligence Committee memo as long as it is properly vetted first. Line was asked about the ryanic response memo was asked about the democratic response memo. He was adamant that potential violations of the Foreign Intelligence Surveillance Act be taken seriously, even if the new memo is made public. This matters to each of us as citizens. Is our government abused the fisa process which could complicate and compromise american civil liberties, we should care about that. Mark republicans on the Intelligence Committee voted to declassify both memos while democrats were only in favor of the classifying their own the classifying declassifying their own. Includes fullyear funding for the Defense Department that would set up a confrontation with the senate where the plan wouldnt have enough votes to pass. Without a bill, there could be a Government Shutdown after midnight thursday. Polands government has signed into law a controversial proposal to prevent blaming poland for crimes committed by nazi germany during the holocaust. Speaking in warsaw today, the president also said he will ask the countrys Constitutional Court to evaluate the bill, theoretically opening the door for parliament to amend it. Jacob zuma will not give his state of the nation address in parliament this week because of concerns that lawmakers would disrupt the speech. Parliament officials announced today that the speech would be postponed, citing the disruption, anarchy and chaos of past years in which opposition legislators heckled zuma and were dragged out of the chamber by security guards. President zuma has been under intense pressure to resign. 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 lets bring the conversation back to todays trading session. The dow swinging more than 900 points in just a 25 minute period earlier. That is the yellow bar. Joining us from san francisco, ben emons. Great to have you on the show. Talk to us about todays price action. Ben thank you for having me. Clearly, we are having a volatility shock. This concludes three things we knew this was coming, but we didnt know when. Now, we have to get prepared for the next shock. Conditions tightening is quite meaningful. What will Central Banks do here . The ecb is trying to figure out whats happening. All of that combined together, there is a balance in the market at the moment. Julia a lot to digest. How our user jesting protectors how are you suggesting investors protect themselves . They do that how best to do they do that . In you would think about case of high volatility, normally what does best is cash. That would be a simple way of doing that. Volatility,ots of the likelihood of the fed pulling back on rate hikes the market will start to assess the low volatility environment shifting to a high volatility environment. You need some Downside Protection and portfolios. That will change the bullish sentiment weve had over the past year. Scarlet we spoke to the vicechairman of Credit Suisse a week ago after the fomc meeting. He was observing that theres a lot of questions about the short volatility trade that was so successful over the last 510 years. In some loose sense, if you observe somebody in the market today, theyve survived the last 510 years, which means they have a short volatility strategy in place sometimes that is explicit. We call them volatility harvesters. Others have an implicit form. Some are more selfaware in this regard than others. Thats the critical issue. How do you unwind that in an orderly way . Scarlet you could argue that yesterday was not orderly. A lot of these etfs that bet on the inversion of the vix, they are suspended from trading. What does that do to confidence and what does that do in terms of having a knock on effect to the economy, if there is one . Ben what that does, people see the headline of the big drop in the dow. Because theres been so much attention paid to the stock ,arkets from the white house this is moving through the confidence. The index has seen a significant drop. Usually followed by slowness in the economy. The next few months may reflect what happened yesterday. Unwind the really short volatility position . You cant, really. Moreould have to do this or less disorderly. You were talking about the financial conditions index. This is the financial conditions index, there is big drop we have seen in the last two days. If you look over a fiveyear there is whatve everyone is paying attention to. Julia we are tilting to the downside the you expect to see further weakness . Its tough for people to gauge the drivers, the implications here. Do you this stage just stay out all the way at this stage . Seenthis bouncing we have is people trying to assess their position. The next number of sessions will be relevant to where we go from here. We knew this volatility would rise at some point, but we didnt expect it to happen this way. People are assessing. It does tighten financial conditions people will assess that, too. We are not going to see record highs for the time being. Ben emons from intellectus partners. President trump implying his policies are driving the bull market and the economy. Has smashed market one record after another, gaining a trillion dollars and more 8 trillion and more in this short period of time. Scarlet the administration issued a statement saying the longterm fundamentals remain strong. We are joined now by Stephen Moore from the heritage foundation. Its a bit confusing to me that the president mixes wall street and main street together. When the stock market as well, wealthy investors profit that doesnt mean the average person does well at the same time. Point. that is a fair what was interesting, the trigger for the selloff that started friday was the jobs report. We saw a healthy gain in wages. Too many people on wall street are areal wage gains problem for the stock market. If workers are making more money, they have more money to buy the products these companies sell. Up 6ock market is still trillion. He will deserve some of the credit for that. When the market falls, he has to take some of the blame for that as well. Scarlet do you think he will . Stephen i think he will keep his mouth shut about the market declining. If you look at every indicator had atlantamy we come out with a 5 growth forecast for the first quarter, we had this great jobs report on friday. What has been holding the economy back, in my opinion, is wages. The big problem with the under obama is middleclass workers didnt make any gains. Its a great thing that we are finally starting to see wage increases for workers. It is not being driven by government mandates. Its Companies Like walmart and others paying their workers more. Im really bullish on the u. S. Economy. Julia we are talking about the tightening of financial conditions do you see that translating into confidence in any way . Its risky when you have a president who continually points to it. He is politically tying himself to a bull market, which is dangerous. Stephen the markets certainly got ahead of itself. A little irrational exuberance over the last couple of months. Im talking about the market in general. When it economy, improves, the market has to go up, and vice versa. The stock market is a pretty good indicator of where the economy is headed. You dont have a booming stock market when the economy is collapsing. Its a good indicator of the condition of the job market, the condition of business confidence. Report shows really healthy increases in business investment. Julia does this have implications for jay powell and his relationship with the white house . Like anydent wont kind of tightening. Stephen talk about a guy who has been dropped into the frying pan. We dont know, frankly. He is new to the game, hes just taken over as the fed chairman. We will see what kind of policy he pursues. By best guess is that he will pursue policies that are somewhat similar to what janet yellen gave us. The big issue now is whether or not we have rate increases. The fact that the market has fallen reduces the likelihood of that. Im not afraid of a rate increase. Any signs of inflation out there would be squashed by that. Jon jones was saying there might we might be letting the genie out of the bottle. We dont see it in consumer prices. We are seeing it in energy, but not any other areas. Stephen moore. This is bloomberg. Julia welcome back to bloomberg markets. Learned c we keurig the ceo sat down with at hammond talk about the timing of this deal. The impression we had from investors is they are taking a longterm view of this. They are distracted a little bit in the background by whats going on on their screen, but this is a longterm play. Explain the mechanics here. You are putting together hat tricks and cold drinks hot drinks and cold drinks. Where does the growth come from here . Its a play on building a distribution platform. To be able to get to every point of consumption in the United States, you need a sophisticated distribution system. To do that, you need a blend of scale and growth. The beverages like carbonated soft drinks are very profitable but not generating a lot of growth. Is to take advantage of the ability to build an infrastructure around those businesses to layer in faster growing segments. You werent able to build this Distribution Network standalone you bought that at work. People underestimate how challenging it is to get distribution in small outlets. Were not just talking Grocery Stores we are talking about convenience stores, gas stations, point of consumption that is distributed all over. Thats where these new coffee brands were built. Does this put you in more direct competition with the likes of coke or pepsi . Its a 200300 billion dollar category. I dont see that as direct competition with anybody in particular. We will come in and carve out a piece of that cou. What about internationally . The powerhouse Investment Group has a Huge International business. Are you guys going to take this company overseas . Theres room to grow there. These are two companies heavily focused on north america. We are taking both of them together and creating a Scale Company of 11 million primarily in north america. No immediate focus to go outside of this market. Theres a tremendous amount of upside in north america where we have the skill and expertise. Scale and expertise. Ceo ofhave been the Successful Companies you now have a small Shareholder Base to answer to. What are the benefits of going public again . They have their pros and cons. Having a Public Company is a nice element when we think about m a in the future, to be able to create some transactions that allow potential partners to participate in the upside. That is primarily the reason we did this. Will we see this company use their Public Market currency to do more m a . M a is a bit different. You dont have to make a pullout acquisition of the brand. You can enter into a partnership with a low commitment on both sides upfront and see how it develops. I would use the dr pepper snapple it was an allied brand they distributed and then they eventually acquired the whole brand. We will be busy putting these two together first. Scarlet this is bloomberg. Scarlet this is bloomberg markets. Equities are says experiencing a normal Market Correction and the selloff isnt being triggered by issues of u. S. Financial instability. Im not overly concerned about the market volatility. I think the fundamentals are quite strong. I have checked in with Market Participants this morning before i came to make sure there was orderly market activity, clearance functioning, no systemic issues. Im happy to report that i got the green light. Scarlet no systemic issues. We look at equities right now dow opened lower by 250 points. Than it rallied 367 points. Right now, it is barely lower. Julia consolidating around these levels. Tumbling for a seven straight session in a row, suffering the biggest slump since the aftermath of the brexit referendum. From new york, this is bloomberg. Scarlet from bloomberg World Headquarters in midtown manhattan, this is bloomberg markets. We start you off with gold. Yesterdays gains. The selloff in equities has calmed for now. About asian stocks, syncing with american equities. Sinking with american equities. Down by almost 2 in the case of aluminum. You had yesterdays usda report s are up almoster 7 from last year. Finally, u. S. Oil is projected to climb above 11 Million Barrels a day does december. This december. There has been a commitment to production cuts. Julia wall street under pressure today. They are to play 1 billion in profits ahead of estimates for the Fourth Quarter. Lets talk about whether oil is at the right price. Newsere was geopolitical that the dollar was week, which drives the oil price up. Weak, which drives the oil price up. Lets talk about the company in the metrics you were posting. We have a framework, 30 gearing. We are around 27 . Gearing feels fine. We are going to stay disciplined within the capital framework we have. We offering cash flow this year. I think we are on the right track. You are generating a lot of cash. Does that seem sustainable . Would it make sense to raise dividends for shareholders . B we listen to the shareholders in the third quarter. People take their dividends in cash or in shares. Quarter, we bought about 340 million of shares. We keep talking about the Buyback Program going forward. You expect to continue generating this amount of cash, assuming the oil price stays steady . Outlook for us last year, we laid out a fiveyear plan. 2018, we have a line of sight through the end of the decade. Looking to generate much higher levels of Free Cash Flow through the end of the decade and beyond. Tight. X is very you are pushing down on cost. What would it take you to shift into growth mode . Do you feel the pressure is off when you need to kind of push ahead . Capitolyou look at the we have spent, we have been in growth mode. In six Major Projects 2017. The are trying to balance our obligations we are trying to balance our obligations. It is a part of what we do. See permian onshore, rig crews, but boradly, broadly thinking that kind of inflation has been pushed low for a long time . Further fewer are there fewer bounces back . No Major Oil Companies are off to the races against a spending. The are coming back down. We are coming back down. There is a chased by rig crews. And then you will see some influx in prices there. Julia lets get a check on the headlines with bloombergs first word news. Mark officials in taiwan say at least two people are dead and more than 140 are injured after a magnitude 6. 4 earthquake struck islands on the east coast. Several buildings are reported to have classed or tilted up. There are reports of people trapped inside a hotel. Says theambassador entire world can see that north north korea is attempting to do. The whiterea accused house of exacerbating the situation. To north korean influence has the north korean influence has not changed. The what i would call Charm Offensive is fooling no one. The International Community should be highly alert to the u. S. Ambitions to put the whole world under its control based on andamerica first doctrine, a trumps estate of the union theess trumps state of union address. Mark the Winter Olympics begin this week in south korea. 412 migrants died trying to enter the United States from mexico last year, an increase from 2016. Overall crossings have fallen sharply under the trump administration. The increasing likelihood of arrest tends to drive migrants to seek routes that make it harder for them to get help if needed. Global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. Up, the shortg volatility trade. Talk about xiv. The latest, next. This is bloomberg. Scarlet this is bloomberg markets. Julia it is time for our sector spider report. Igail we are looking at the Utilities Sector etf. Xlu is down 3 , in your session lows. Near session lows. About the worse s on the year. It is merely in a bear market. Market, its a bear worst year since 2008. The reason this matters, strategists and investors look hasee whether or not this really bearish period, even if there is other bullish action happening. The xlu, there is a highyield component to it. Lets look at the bloomberg. This is held flat. High. P 500 gone sky this is suggesting highyield is leading the s p 500 index. Lets look at the chart. Thats jnk. A big piece of the selloff into 2016 was the highyield selloff. This suggests maybe we will see a bit more selloff for highyield. Scarlet this is something we will be keeping an eye on. Utilities is one of the worst performers today. Thank you. Fallout still plenty of among Investment Products that bet against volatility. Including xiv. And resume tolted several times in the last hour. Lets check in with bloombergs cory johnson. How much money is at play in xiv . There have been conflicting reports. There was an upward spike in vix yesterday. How much money are we talking . Last weekas trading at 141. There were billions of dollars lost in this trade yesterday. We dont know how much of it was hedged. This is a consumer facing product. Saw this legitimately as the chillax trade. When volatility surged, i am calm and collected. And i will take the money. Line, you the orange would see. Further out, a little higher. It was lower in the more recent term on the left. Yesterday, we saw the white line, a huge surge in volatility. And the month after. With volatility so high, that triggered something within xiv that allowed a Credit Suisse to pull the plug. Julia i was looking down the list. Horizons. L sorts of redemptions. There were a host of products out there. They found themselves in a difficult position. Cory the position of losing 95 of your money overnight was the special clause. Wouldnt ticker at the opposite. th there wasnt this clause to make it go away. But there was a clause that allowed it to expire to zero. They said it would go to zero over 20 years. This was truly a black swan event. I talked to one of the owners of who said they tracked this to the crash of 1987 to see the surgeon volatility like this. Surge in volatility like this. Shock that no a one reads the perspectives of new Investment Products. Suggestionthere any that new investors didnt understand what they were getting involved in . Blackrock has been calling for greater regulation, and spelling out the dangers of the leverage involved of investments products ioon the vix. Cory i know that to be the case. Carry withidnt drinking heavily last night, but they definitely thought about what they were doing and why. This is not happened before, going all the way back to 1987. Common thoughts were, what was i thinking, why did i do this . 15, itd the vix above worked until it didnt. Scarlet people were saying they couldnt log into their e trade accounts. Vanguard and fidelity were affected as well. Did this exacerbate the situation . Cory there was a moment in the last hour of trading when you could see the trigger. The xiv traded on something viv. D xi you can do a twoday chart. You can see in the last half hour of trading the xiviv completely falls apart, really in the last hour of trading. That is when it fell apart. You couldnt get the vanguard to trade for some investors. That is when vanguard fell down on the job. It is 1 00 in washington, 6 00 in london, and two a. M. In hong kong. Julia Credit Suisse was involved. Lets talk about the Price Performance over the past couple of days. What are they saying about this . Croy cory there was no trading losses and the product worked as they said it was going to work. I dont know if people realized what that was going to look like. The unprecedented surgeon volatility was possible surge in volatility was possible. Julia thank you for joining us. Lets look at the Bloomberg Business flash. The are talking about some of the ongoing instability in the s p 500 can be traced to valuations in the tech sector. The question of how to value Companies Like apple, amazon, techbet, and other big firms is central to what is going on in the equity valuation world. I dont have any better idea than you. Julia some companies in the continue torket talk about fixed income markets. Central banks are looking to tighten Monetary Policy related to inflation. They are dealing with highyield debt versus safer benchmark bonds. Been delivering bond deals ipo as it prepares to bring home billions in overseas profits. Over 200 billion in cash flow was invested in corporate debt. That is your business flash update. Eceo coming up, a ceo resigns for allegedlys conduct. A Company Needs to keep going. He stock price has recovered this is bloomberg. Scarlet the search is on for a new ceo at lululemon. Suddenly afterd accusations of unprofessional behavior. The stock had been on the upswing. We are joined by a reporter for bloomberg news. We know this is not linked to the financials of the company. It is not the operations or finances. There are multiple individuals involved. The company is not revealing more details. Getting 5 million to go quietly. He was assigned and not fired. Resignede was he and was not fired. He did a lot to turn the company around. He helped them expand much more aggressively in international markets. Sales in ain mens much bigger way. He was pretty important. People are generally very happy with his performance there generallylly were happy with his performance. Scarlet what are you hearing from analysts . Led guess,y, who takes over on an interim basis. Three current executives will be reporting into glenn murphy. I dont think there will be any major missteps. People see it as an opportunity for them to look for an international ceo who can take the company to the next level. Sure the can make products they are creating are relevant to demand. There is some concern about the level of management turnover the seeing. Ng we are follow the guidelines of your predisaster and not try to do Something Different in this case . And not try to do Something Different in this case . They should have their Fourth Quarter targets before they make any big changes. Their Fourth Quarter targets before they make any big changes. But we will see. Claims he resigned because they he didnt fit in with our cultural values. Since re all gas there are allegations the company doesnt have a positive culture to begin with. Said that theyee culture allowed her to be assaulted by her manager. It has a cult following. Be known for the Healthy Lifestyle are, positivity, integrity. When people said it doesnt fit with our values, what does integrity mean . People who love the brand are going to say, i paid 120 for your clothing. Tell me more about what your values. Scarlet those are a lot of buzzwords. But without backing it up with anything, those are just buzzwords. Lululemon made a comment when he was talking about customers. And they received backlash for that. Julia financially . Absolutely. Basically, i pay a lot of money for your pants, how dare you judge me. Customers, has will but will they keep them loyal customers, but will they keep them . Julia next, we look at private banks. This is bloomberg. Julia it is 2 p. M. In new york. 12 00 p. M. In san francisco. 8 00 p. M. In london. Scarlet welcome to bloomberg markets. Are live in bloomberg headquarters in new york over the next hour. Here are the top stories we are covering. The dow and nasdaq are up 1 . Getting the deal done. At theior chairman sullivan and cromwell talks about how market volatility may impact mna. For its latest the results. The other one out for from the close of trading we are one hour from the close of trading. Lets get a check on markets. Seeing gains, because of the enormous swings in the market. Both on the downside and upside. Stocks are reaching their highs of the session. We will see if things can stay that way. The dow and nasdaq are leading. The s p 500 index gains 9 10 of 1 . Not as much as the major averages. Averages. Ajor reportedly registering with multiplatform shipping companies as a potential shipping shipper. Indications amazon might be developing a delivery option of its own. Fedex numbers were down. They have recovered. Amazon has been in green frothy day throughout the day. Skyworks and micron both supply apple, with other clients. Skyworks with earnings that beat estimates. Announcing positive numbers and a new cfo. G. M. , the latter seeing demand for crossover vehicles. Chipotle shares are rising. It had a turbulent year. We wille watching be watching to see if there will be support for a further rally. The are seeing selling resume it seeing selling resume in the treasury. 2. 7 . Saying we were seing seeing stocks go down, bitcoin has been bouncing all over the place. It is rising again. When you look at volatility in nonstock markets, we have not seen the spike like we saw yesterday. The jpmorgan global volatility index in yellow. The move index in blue. That shows bond volatility globally. The move index has not seen that kind of a spike. There are a few interpretations of that. Reassuring we is havent seen bond market volatility matching stock market volatility. However, we have to continue to watch to see if we do get a delayed spike in that bond theet and if it indicates stock market selloff has more to go. Scarlet lets get a check on the first word news with Mark Crumpton. Plans tosident trump release his infrastructure proposal next monday according to a white house official. Generatedent aims to 1. 5 trillion in spending on roads and other public works. Come 200 billion would from the federal government. The rest would come from the private sector and state and local governments. 45 billion a year is how much the pentagon is saying that the afghan war is costing american taxpayers. Thisp Administration War is now in its 17th year. The costs are now significantly lower during the high point of the war, when the United States had as many as 100,000 soldiers in afghanistan. The price for american taxpayers past 100 billion a year. Calledkish president has on the u. S. To withdraw its troops from a syrian town. Threatsident renewed his to expand its countrys military Operations East of the region, currently held by u. S. Backed Syrian Kurdish fighters. The president said turkey would thern to predominately predominately arab territory to its real owners. Rex tillerson met with the peru president during his official latin american tour. And said hislerson meeting encompassed a range of issues, from trade with north korea as well as bilateral security. Discussed our joint corporation on trade and National Criminal organizations, our commitments to disrupting alyssa drug trade, illicit drug trade, and narcotics trafficking. Tour of the region will continue in columbia. Been dominated by concerns about growing political and economic chaos in venezuela. Global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. Global the recent equity selloff has left emerging markets scarred but standing. This is the chart. Haveingmarket nations lost more than 750 billion in the past week. Brazil is much higher. Sharper than what we are seeing in the United States. Red indicates losses. Russia declined quite a bit. The hsbcined by private chief Bank Investment strategist. Etf has gained more than it lost yesterday. Safe havenel like a for growth in this environment. Emerging markets historically have been a volatile volatile place to invest. As digital platforms are becoming more modern economies, these markets are becoming a lot safer to invest in. We are also seeing more transparency. If you look at the emerging bonds market, it is now a trillion dollar market, which it was not a decade ago. Scarlet there is a lot of technical pressure on equities from the short volatility trade. Was there any such trade like that in the emerging markets world . Emerging markets arent as broad as the developed markets. Structuralseeing reform issues in the emerging markets. Volatility is up in developed markets and around the world. We are seeing inflation, wage rates, interest rates, all of those factors. The key thing from emerging markets is going back to the fundamentals. Those issues. On there is a certainty of growth in china and india. We are seeing infrastructure spending. And in the digital world. Julia we have a great charge. Great chart. It shows you the vix volatility surge and the ratio of emerging markets and pine volatility. Implying volatility. They know it was derived from the u. S. Markets we know it was derived from u. S. Markets. How do you manage the risk at this point . Asia is a particular favorite. Managing the risk is about choosing where you are going to go. You have to look for the recalibration after what is happened has happened. Are calibrating for slightly higher inflation and interest rates. Growth is still in the 2. 5 range. Managing that risk is managing where the growth is going. We see equities do well in higher inflation. Real estate, sometimes gold does well in that environment. The focus is on the equities, which we think will outperform credit and the stock markets. Scarlet when we talk about china, would it be based in hong kong . If you want to invest in china today, it is a global proposition. Itsne belt, one road, touching 65 countries. By land and by sea. It is structural. They are trying to become more one with the world and build infrastructure. If you are building a Digital Infrastructure in china and jobs, you are creating wealth, lifting the economy, and you are more productive. It may be deflation. Scarlet thank you for your time. Well the recent selloff hit the mna sector . This is bloomberg. Julia this is bloomberg markets. Scarlet it is time for the Bloomberg Business flash. In on lowghing volatility and declines in the stock market. Lets go to a Senate Banking committee hearing. I cant say. We are supposed to look at the functioning and Systemic Risks. Was there anything that happened yesterday that gives me a different view of Systemic Risk today than the day before . So far, no. Traders snapped up hedges against credit losses after the equity loss rippled in local markets. Were smashing the threemonth high that was set yesterday. Cow for some of the worlds biggest automakers. A 17. 3 billion dollars charge in the Fourth Quarter after some assets lost value. Ford stayed flat. Rose, so didt toyota. Restating saw a favorable impact of 1. 2 billion. Mercedes saw a favorable impact of 1. 2 billion. Julia lets go to an analysis of the tech sector. We talked to the senior chairman of sullivan and cromwell. Ed hammond joins us. Great to have you with us. If this prospect is on a more basis, does that play into the decisionmaking process when you are looking into the mna space . Rodge those who think they have crystal balls usually wind up with shattered glass. This is a function of a lack of certainty. The more volatility be have, it have, itpen we would dampen m a transactions. Volatility would work, uncertainty wont. We are left ones with are the ones that should be done, rather than building on fanciful predictions and analysis. I call this bt are of the 52 week high the tyranny of the 52 week high. I am not sure a selloff would be all that helpful. It might shake out a little bit. I think overall it would not be a positive. This year is the strongest start to the year since 2000. What is the Regulatory Environment of the product . How can we execute some of these transactions . Rodgin particularly in the Financial Institution mna space, i will liken the analogy to baseball. How many strikes you get before you are thrown out of the action, you struck out and cant do any more deals, and how large is the strikes down . Strike zone . People see a Regulatory Regime that doesnt change the basic fundamentals, but will not no areer be a one strike, you out. It will reduce the strikes down. The Regulatory Environment will be more conducive to mna. You have the regulators of horizontal and vertical mergers with bonds, with at t and time warner. Is that a chilling factor . Rodgin not too much. Are seen as oneoff transactions. The focus will continue to be on the horizontal, not on the vertical. Ed there seems to be so much about your reception coming into the u. S. Needs legislation really to be enacted to provide some element of certainty. Said, we should have a government of laws, not men. If you have laws so oapque indeterminate that its men who determine them, that is a problem. I dont see this as particularly a political issue. Julia the potential future regulation of bitcoin. What do you make of the bubblelike activity we have seen . Maybe regulation is needed, although it might be too late. Rodgin there is still time. Senator warner made an astute observation about the need to treat regulation holistically, and not treating it as this or that or something else. But if we dont get on this quickly, it will become beyond regulation. Scarlet what kind of appetite is there among companies that want to get exposure to blockchain, given the uncertainty of the Regulatory Environment . Rodgin it is a constant theme. Uncertainty is a negative. Dimon saying he didnt think there would be any crossmna between banks. Rodgin i think we will see a revival of bank mna, but not at the top of the house. The additional surcharge imposed is a major hindrance for long scale mna. Cohen and ede hammond, thank you. This is bloomberg. Julia this is bloomberg markets. Scarlet a quick check and equities. We have recovered off our lows. We want to highlight this, given what we saw yesterday. We have a pick up in the recovery. The s p 500 index index is up. The dow adding 1. 5 . The nasdaq in the green. Julia Consumer Discretionary and industrials are gaining. Lets get to options insight. Here. Kelly is julie, we were so dazzled by the gains in the stock market that we forgot what to do next. Options is now the story of the market over the past couple of days. Kevin, we saw a little bit of thetail exacerbating dog yesterday when we saw all the motility trades closing. Volatility trades closing. Stocks go to the highs of the session. What is going on . Kevin we to see that unwinding. One ways you want to see the capitulation know when to see the capitulation is to look at surrounding sentiment. Through theut vvix, the volatility of volatility. We saw it close higher than it ever had before yesterday. Date, whereugust 24 you sawat its highest, it head to 212, but it closed below 170. Yesterday we closed at 177. Once you get to that capitulation event, when there is nothing changed in the market, in august of 2015 we had vix40day moves in the up. Scarlet and yesterday it had its biggest gain on a percentage basis. Lets talk about the skew index. Kevin everyone buys tail risk protection. That starts to come off as the year has gone on. Has gotten better, so people are taking it down. They are not as worried about the markets. It traded around an average of 134 last year. Yesterday, 129. Today it is up 126. Skew. He skill is the drastic episodic event over . Equitiesat we saw in coincides with the blackout period in purchases. What is the trade like in that in particular . Think about this as a buying opportunity. This gives you an opportunity to get into the names that could start to announce how they are going to increase their purchases, with strategic mna. If the economy wasnt doing well, you can see all of this activity. You wouldnt see all of this activity. Julia a click a check of the market now. Plenty more to calm. This is bloomberg. Mark i am Mark Crumpton with first world news. President trump said he would welcome another Government Shutdown if democrats refused to meet his demands for immigration overhaul. Meeting with Law Enforcement officials at the white house, President Trump called for tougher policies for the influx of criminals in the United States. President trump if we dont get gangf these loopholes members, we are talking about ms 13 and other gang members we dont mention. We will do a shutdown, and it is worth it for our country. To see a shutdown if we dont get the stuff taken care of. Republican congresswoman said at the meeting that a shutdown wouldnt be necessary because bipartisan support exists for a crackdown on violent gangs, but the president interrupted her saying that we are not getting support from the democrats. Taiwan say to people are dead and more than 140 injured after a 6. 4 magnitude earthquake
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