We were looking at volatility earlier. Taylor they are coming off the lows of the session, which is good news. We had seen stocks down. 6 . A much more improving picture. The nasdaq is the lowest, the worst performer. It has been off 1 for the month. This is an improving picture. I will take a bit of a different turn here carters and childrens place trading higher ee is news that gymbor filing for bankruptcy protection. There are reports saying childrens retail space is much better than the adult retail space. Childrens place is doing a lot better. Lets go over to gold, oil and gas. Haven as a safe yields lower. Crude oil still spiking a bit. It at the highs of the session after saudi arabia saying they will extend production cuts. Finally, lets look at the dollar index. A bit better on the dxy if seeingk against the yen, a weakness there, falling to the 109 level. That is your recap. Abigail the haven yen getting a bid today. Oliver volatility appears to be making comebacks. Could this be another sign that the trump trade is losing steam . Helps oversee 880 billion we got a bit of apex pop here a vix pop here. Is anybody hurting . David i dont think so. I would start by saying certainly with the pressure put on active management, im sure out a managers are helped bit. Its nice to see volatility in the level of the index and the dispersion within the index. We are seeing stocks the haven a different fashion, correlations are lower. Behaving in a different fashion. Weve gone from absurdly low picks levels to fairly low picks levels. I dont think its time to run for the hills yet. Vix levels low to fairly low vix levels. Vix people cite a low level, it is skewed. ,hen we think about vix obviously, you are looking at the actual implied volatility. Which to some degree will follow the realized volatility. Realized volatility has been low. You have upward pressure on earnings. Stocks are expensive. You are caught in the middle. It makes the vix low. Throw on the political risk, you still have a lot of hedgers on the fringes where skew shows up. Still buying those puts making skew show higher volatility in the market. Point, just to your lets check out whats happening the vix has been quite muted. The activity in that space has been gravitating a bit higher. I wonder about one specific strategy that has been popular, selling volatility. Not betting directly on the s p 500, but active managers saying thats hedge lets hedge a bit by selling vol. Either selling call options on the vix or Something Like that, will that be a strategy that can be maintained . In an environment focusing more on geopolitics . David it is certainly a strategy that has worked fairly well. Vix has been so low for so long. Expression, selling volatility is a bit like picking up nichols in front of a steamroller. The steamroller out there is the fed. , makinged volatility that short work relatively well. Central banks were always at the ready to step in when there was a potential problem on the horizon. ,s the fed begins raising rates unwinding the balance sheet, i would be less comfortable shorting volatility at this point. Game gets riskier if the fed is starting to take the punch bowl away. Other peopleard talking about that last week at a Technical Analysis conference. Volatility come out of the trump trade, the top,cials have led up we have the financials in yellow. And at the bottom, we have the energy sector. In white, the financials. More recently, theyve started to round down. Ing their worst month weve had a bond selloff and then rally afterwards. David what weve seen is the yield curve flattening that. Flatten a bit. We like the banks. Look at the managers across ancials and Bank Exposures in a market that is averagely expensive on average come its one of the few places you can point at and say this is demonstrably cheap and trading at global values. Something like a 30 discount to the overall market in terms of p e ratios. We like the banks. They are cheap. Ashave struggled recently , trumpld curve flattens is having much more trouble legislatively, maybe it is a worry that we are not going to get the type of legislative relief we would like. We would like the banks on pure valuation metrics. We think the earnings and the politics will take care of itself. Oliver good stuff. David lafferty, thank you for joining us. Lets check on the first word news this afternoon. Said u. S. Officials evidence clearly shows syria was behind the chemical attack that profit President Trump to order airstrikes last week. That review to suggestions by Vladimir Putin that bashar alassads opponents were to blame. Publicgence and solicitors documented that syrian planes carried out the april 4 bombing using chemical weapons. It members of extra missed cells have been arrested in last weeks deadly bombing in st. And killg, russia the 13 passengers and injured dozens of others. Russian trains and planes have long been targeted in bombings by islamic militants. The suspect in that stockholm truck crash admits he committed the crime. The suspect has been identified uzbekistan whose application for asylum was ridiculously. North koreas parliament convened in pyongyang today as the u. S. And south korea conduct the largest ever military exercises on the peninsula since the start of their alliance. The uss carl vinson Aircraft Carrier also headed to the area. The Assembly Usually meets once or twice a year. Focused on ind be Nuclear Launch a Nuclear Launch. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Oliver sean spicer is holding his Daily Briefing right now. The Trump Administration believes there cannot be a peaceful syria unless assad is removed from power. Theres no question that ivanka trump and other advisors weighed in on the president s decisions in syria. You can watch the briefing on tv. We will have all the updates on the righthand column. A great way to look at all the details for all the stuff weve gone into. Theres a lot. Abigail coming up, jobs, trade and taxes. More on the strategy session, next. This is bloomberg. Oliver this is Bloomberg Markets. Abigail earlier today, President Trump held a strategy and policy discussion with ceos from a wide range of companies. Taxes. Re going to reduce we are going to eliminate wasteful regulations, which weve already done 25 . Take a look at doddfrank. We are really doing a major streamlining and perhaps a limitation and replacing it with something else. Abigail for the latest, lets bring in kevin cirilli. Great to have you here. What came out of this that is new . Weve had a few of these ceo panels and discussions. Then i was speaking with House Financial Services committee earlier. Every time President Trump says we will walk back doddfrank, they dont get a heads up on that. They like what they hear. The chairman likes what he hears, but he doesnt have a sense of exactly when they are going to address that. They were unable to get health care and now, they are seemingly going towards tax reform. Some of the ceos in that meeting today have severe differences on the border adjustment tax. Oliver tax will be a big deal. We were able to speak with Stephen Schwarzman. Lets take a listen. Stephen i think you will probably have something. Of knowinga handicap how comprehensive and aggressive that will be as opposed to just a taxcut. We will see when we see. Very detailed. Oliver you look at the ceos in there, who will have the most leverage here . There are some big guys in the white house who are trumps Close Associates and then, theres corporate guys still in the markets. Kevin theres been discussion of internal fighting within the Trump Administration. I would make the case that when likeook at both folks , they arend powell more closely aligned with the gary cohns of the world. Wilbur ross is in that mix. A moreeems to be centralized version going on. Moresolation of nationalistic people like steve bannon. Abigail there is tension ahead of this. Vladimir putin is saying that orve seen a variation similar situation to this syria chemical attack before. It was a reason for the u. S. To invade iraq back in 2003. What do you think of that . Kevin this has been a complete rhetoric terms of coming from this administration on syria with regards to russia. It was just a couple of weeks ago whenever one was talking about whether or not President Trump and chancellor merkel would be able to get along. Now, it seems they are getting along and putin and President Trump are not. A lot of headlines coming out about moscows strategy this is the first test for Rex Tillerson. In dealing with russia. As you listen to the more conservative moderates in congress, people like senator john mccain, they like what theyve heard so far. Abigail theres the senate fbi investigation does this complicate things . Kevin yes and no. The folks who still have questions, yes, they will have questions. Many republicans and still have questions as well. This is somewhat of an illustration that they are taking a much more aggressive stand on russia than weve seen. Coming up tomorrow, President Trump and the secretary general of nato will hold a joint news conference. Bhp hires Goldman Sachs to fight off elliott. This is bloomberg. Abigail this is Bloomberg Markets. Oliver time for the Bloomberg Business flash. Childrens clothing chain gymboree is preparing to file for bankruptcy. The bank capital controlled Company Wants to reorganize its 1 billion plus debt load and may turn over control to lenders. Inses running more than hundred million dollars. Loreal has attracted bids from 15 private equity firms for its body shop division. Bidders for the next round have been shortlisted this week. And capital, the Carlyle Group all strategicring options. Pulsing ors Elliott Management is surprised by bhps premature rejection paul singers Elliott Management. Bhp has been working with Goldman Sachs to respond to elliott. They say the costs of the proposals outweigh the benefits. More, we are joined joe abigail paul singer was saying he surprised by the fact that bhp is brushing this off. What is going on here . Elliott has done a lot of their homework and bhp knows what they are doing as well. Is sayingike bhp weve already been looking at Something Like this for a while. Analysts have brought it up. Maybe if we spin off the oil and gas, you will get a higher multiple for those assets. Saying, are you sure you guys have looked at this . It might be the makings of and early start of an activist campaign that could go on for a while. Sure whatn, im not we will have to worry about with goldman. What is at stake for bhp management is the bigger question. If you are just talking iron ore and metals, those have not been the most attractive assets in the past years. Bhp management is saying the oil and gas is what we see as the future growth. That is not the case with elliott. They are saying its better if you spin that out. You have this back and forth. Management is saying this is something weve looked at. Youd be taking away whenever a big cards for what were looking at for the future. One of our big cards. Abigail the bloomberg mining index, we see in why that bhp is underperforming the index in a big way. What do you think they will see is agreeable . Look at how successful this was you rolled that out. Theres other Big Questions weve brought up. The australian treasury would come out and say they have to look at Corporate Governance changes that happen proposed here. That is a weird element. Ultimately, it does seem like the early stages of a fight Mining Companies have been the focus of activists. You had carl icahn come into freeport back rent and say freeportmcmoran. Elliott has been on top of our these companies are starting to show its not the days of 2015 anymore. You are seeing prices move up in commodities. Earnings improving for these companies. One of the things that activist investors may be dont want them to do is go out and start spending a lot of it on m a. Hence the reason this is one of those focuses as well. How much have you spent on the oil and gas assets . How much is the market value weighting them at valuing them at right now . Abigail lots of moving pieces. Oliver still ahead, the commodities why zinc is falling after being a standout commodity performer last year. Thats still ahead, the commodities close. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Ways wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Abigail from bloomberg World Headquarters, this is Bloomberg Markets. Commodities markets closing in new york. We begin with gold. The metal is rising today. Up 1. 8 asg rally investors consider Global Securities risks, political of actors of elements in europe and the path of u. S. Interest rates. Oil closed higher. Saudi arabia is likely to support extending output cuts in an effort to boost crude prices. Chart on the a best zinc was the standout commodities performer of 2016. It prospered early this year, but its fortunes have taken a turn for the worse. On the brink of losing all of its games this year amid speculation that a supply crunch is easing. Investors turning cautious as output expands. We see this area of congestion and consolidation is starting to break to the downside, suggesting we could see zinc drop even lower. One of last years winners may turn into one of this years duds. Oliver prices we have not seen since the summer. Lets get more insight on the commodity prices. The bloomberg Daybreak Team talked with ed morsse. Theres actually as much bearish news as bullish news. On the bullish side, theres not much that could spill over into the oil arena. On the bearish side, given the parties involved, it gives rise to thinking whether the saudi government will see eye to eye coming into the next chance to renew the oil price the Oil Production cut next month. Its really about saudis and russia aligning. Syria is in the middle. What is the probability of a deal being extended . 80 we still have an probability. The interest to keep prices up this year is greater than whatever other point they are playing on. The price today is the price before the selloff in march. About the same price at the algiers meeting. Prices have been not going up. Uch above that cou bite and the production cuts hitting the itket this is the time takes to get oil from the middle east to east asia. Basically saw the potential in the back half of the year for brent to hit in the 60s. If we dont get a deal, you have a much more bearish case. Ed we do indeed. We will have the compounding of the physical markets getting much looser in the third and Fourth Quarter and we will have the Financial Markets getting more bearish. What is that price . Ed the price could be 45 without an agreement. We were there a few weeks ago. Ed it would have an impact around the world. It would have an impact on the current boom we are seeing in the u. S. Potentially even more in 2018. That would slow down the momentum considerably on the u. S. Production site. We did not wind up seeing that fall off. It shale has proven anything, it has proven they can still they are in a much better place now than they were two years ago. Whyd you think shale will be so much more sensitive to the downside . Ed we have a 50 magic number two get producers to lock in to get producers to lock and. They were running off remarkable you haveion pump costs going up and sand costs going up and labor costs going up strongly at the moment. Hiring in the Mining Industry up on friday. 52 how much more do you expect in 2017 . Ed we expect we will see another 700,000 barrels a day by the end of the year. That could be higher depending on how many wells there are. As drilling has skyrocketed in the permian the headcount on that is also going up. Sustains momentum Going Forward as well in terms of greater production. Inventoryre we in normalization with the weighting on the sidelines . Asia demand was pulling crude from the Atlantic Basin and making room for u. S. Exports. Where is that story now . Ed that is pretty much closed. Heavier, more sour crude going to china and japan and korea. We will see that coming off. We are seeing strong inventory now, it couldeek be in tomorrows data, we said should see a draw on crude. What normal is. The opec countries say a fiveyear average of the past. If you looknd at refinery requirements, we are not very much above what that fiveyear average is. We should be way above it. Need toers globally produce more crude, the amount of inventory they have to hold has to go up. That would imply well over 100 desk gettingls back to the fiveyear average would get us well below what we consider to be an appropriate norm. Oliver that was ed morsse earlier today on bloomberg. Oliver lets check the first word news this hour. School inlementary san bernardino, california that was the scene of a murder suicide yesterday has closed for the time being. District Officials Say classes at north park elementary are canceled for today and probably tomorrow. The closure comes a day after a man walked into his estranged wifes classroom and opened fire, killing her and an eightyearold student. He then fatally shot himself. A nineyearold student was wounded and remains hospitalized. The borderns toured with mexico near arizona today. Sessions visited rough terrain about 70 miles south of tucson. The attorney general has made Immigration Enforcement a Key Justice Department priority must saying will speed up deportations of immigrants who were convicted of federal crimes. China is naming and shaming local officials in the Biggest Campaign yet against air pollution. 6000 inspectors are examining pollution controls in the region around beijing. Officials who get called out for not doing enough could end up getting demoted or removed. Aphave a breaking story sites German Police who say one person has been injured following three explosions near German Soccer Team facility are promisingers to put on the most lucrative world cup ever. They are making a joint bid for the 2026 tournament which will expand to include 48 teams. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Ofgail coming up, shares United Airlines falling today after video of a passenger being dragged off and overbooked blaine goes viral. Overbooked plane goes viral. This is bloomberg. Oliver this is Bloomberg Markets. Abigail lets take a closer look at tech and transport. We are going to start with the Technology Sector here. It is down the most since three weeks, the longest losing streak in four months. What is driving that . Apple pulling down the shares on the Technology Sector. There was news this morning that they were switching up their supply chain. That is putting pressure on dialogue shares as well. They get 70 of their revenue from apple. Gives 80 gets 80 of the revenue from apple. Lets take a look at facebook and snap. Heading lower today on news that facebook owns instagram commands to graham came out with a rival product to snap that sends direct messages. That is putting pressure on snap. Facebook and snap are both up. To the switch over transports. You have the United Airlines video that emerged this morning. Nothing fundamentally has changed about United Airlines. I spoke with analysts at cfr a research. Things have changed at american airlines. American airlines reporting strongerthanexpected passenger revenue. Eating a bit of a relief there. Oliver the united incident demonstrates how airline bumping can veer quickly into confrontation joining us to talk through the fallout and the policy overall is george ferguson. Everybody has been talking about this. Lets talk about the general policy overall. This is something that goes on all the time, the concept of overselling. That . Stainable is airlines have been pushing up load factors to make their operations more efficient. They fill the airplane with more people. As you get closer and closer to , you they are near 85 now run the risk of having to bump passengers. If your policies dont keep up with the challenges of bumping passengers, you get into situations like this. It might have been better to offer money and clear people off the flight that way. Abigail what does this do to Business Travelers . Theres a lot of Business Travelers in terms of airline revenue. Does it change that segments perception of using the full carriers . George i think Business Travelers have to think about it. Situationend up in a where you get involuntarily bumped from an airline and you dont make a business meeting. , american and delta are the three big fullservice carriers. That is where they make their money come on the Business Traveler. Thent know how they do lottery, but my guess is they are looking at the cheaper seats to pull passengers from. If youre a Business Traveler and need one of those cheaper seats, you run the risk of not getting to your destination on time. That doesnt help business sales. Theres a big challenge for united to soothe this with their Business Travelers. Like we will be paying up for seats in which we dont get dragged off the plane. Look at the companies you cover will this make an immediate difference . It doesnt seem like united seemed terribly sympathetic towards this passenger. How do analysts take this . George i think the impact will be shortterm and wont be terrible. It will be limited. Passengers or flyers are pricesensitive. A slightlyr them lower price, you will get people back in the same airplane. They wont think twice about this in a month or two. This video has gone viral in china. China is a key market for united. This was a passenger with chinese heritage. That is a Strategic Focus for puted that wont help passengers from china under airplanes. On your airplanes. That is maybe the biggest thing for united in this whole event. Oliver who knows how long the viral video will last . Us fromu for joining our princeton bureau. Abigail time for the Bloomberg Business flash. Credit suisse could be the first bank to have pay packages for executives and directors rejected under the fatcat laws after institutional shareholders recommended they reject proposals to pay 52 million in uite bonuses. Cs Goldman Sachs got the nod from iss for their executive pay plan reversing recommendations to eliminate a longterm cash incentive award. In hollywood, screenwriters are threatening to go on strike next month. That would cost the Entertainment Industry billions of dollars. The Writers Guild says payments to writers have not kept up with the digital revolution. Coming up, it could be one of the biggest ipos of the year. Altice taking the u. S. Cable business public. What he plans to do with all that cash if it happens. Is Bloomberg Markets. Abigail patrick drahis altice exploring stock market gains to create currency for further expansion. Joining us now is gerry smith. What is going on here . Why now . What would altice do with this money . Altice was formed through acquisitions of cablevision and k. Ddenlin with this ipo, they can raise funding to do other deals in the cable space. This been a lot of consolidation in the cable industry over the years. Not that many potential targets for altice to go after. Expressedy they have interest in is a Cable Company called cox medications. Cox communications. They have repeatedly said they are not for sale. Oliver is this decision more about taking advantage of the market that is having seismic shifts in terms of whos leading, who is merging the appetite for this type of media deal . Or is it specific to altice and whats happening fundamentally at their company . Look at the cable industry right now, theres comcast and charter and they have gotten bigger through acquisitions through the years. Altice is looking to be a bigger player in this business. The way people are watching tv is changing. A lot of people are cutting the cord. One of the things you can do to make sure you get the best rates for the channels you carry is get really, really big. The more negotiating leverage , thatve with programmers would be something altice is looking to do. They will try to do more deals in the cable space. A lot of the Cable Companies out there that are smaller than cox, there arent many, they have less than one million subscribers. Abigail what about the man behind the company . Patrick drahi is an interesting character. Most people in the u. S. Didnt know anything about him until altice acquired cablevision. The company has a reputation for cost cutting thats one thing he is known most for. They will be very aggressive after the ipo in terms of looking for more deals. Oliver will they have the ability to go out and pursue more deals . That is a big reason for the ipo, having more funding to do more deals. Another thing they might look at is wireless. The cable industry and Wireless Industry are increasingly becoming one in the same. Not just Cable Companies they deals with,o do there might be Wireless Companies they be interested in. Oliver lets talk about sports. Sergio garcia one the 2017 theers on sunday won 2017 masters. The first major in his career, 18 years after he was an amateur he spoke to vonnie quinn earlier this morning. A part of me feels like ive done it, im so proud, not only for myself, but for all my people whove been with me for so many years. Y fiance im not leaning back and saying i can relax now. I dont want to stop here. I want to keep going. For me, this is just the beginning. Its an amazing experience and an amazing feeling, but i feel like i can still go. Vonnie i do want to bring you back to the 18th. You hit a beautiful shot. What is your psychology . Play andr aggressive try to beat him out on the 18th . Or, do you think i will be safe and hopefully there will be a suddendeath . Hit aregulation, he pretty good shot and got very close. And ia really good drive was still being aggressive because i knew he could make birdie. Shot a birdie my if not, maybe i will have a winning buputt. We both missed. He didnt have a great drive. I had a really good drive. Point whereat that we were in the same spot. E still need to make birdie you dont want to think, ok, or is going to do it. You get surprised and he makes par. You dont want to get shaky. Abigail that was Sergio Garcia on Bloomberg Markets earlier today. Abigail coming up, what blackstones ceo told bloomberg about his meeting with President Trump. Tomorrow, a conversation with Christine Lagarde from brussels. This is bloomberg. Oliver it is 3 00 p. M. In new york, 12 00 p. M. In san francisco, and 8 00 p. M. In london. I am oliver renick. Abigail i am abigail doolittle. Welcome to Bloomberg Markets. Oliver we are live from bloomberg World Headquarters in new york for the next hour. Plus we will cover stories out of washington, moscow, and beijing. Here are stories we are following on the bloomberg terminal and around the world. Stocks are falling in the vix is trading at its highest levels since november. Concerns about geopolitical tension are on the rise. Tensions,ng of those meeting with the president , bloomberg is told trump will break his promise to label china a currency manipulator and will likely circle back on health care. We will have more on that ahead. Brands like tommy klein and Tommy Hilfiger join us. Apparelof the Largest Companies oppose the president and stays competitive despite an industrywide slowdown in retail space. More than an hour one hour away from the close of trade. Off,little bit of a risk that is true. We have seen quite a recovery. These were down as much as. 6 . Really coming off the lows of the session. That is good news. Leading the losses is the nasdaq. We have seen the tech sector get a little beat up today, apple on news they are switch switching up their chipmaker. Concerns of apple pulling down a little bit on the tech sector there. I want to switch to oil. It has posted its largest gain since this year. We saw here a huge spike up to 63 a barrel after saudi arabia said they are agreeing with those production cuts and holding firm to those. After that news, a big spike up in oil and that has continued to hold. A good news for oil. Lets take a look at the financial sector. Looking at some losses here. The financial sectors, you will see wells fargo on the news not the stock i back, the clawback in bonuses i should say, that is what i meant. Be yields that, may higher should be good for banking revenue. That brings me to my net my next chart. 7615, the correlation between yields and financials. It drags down yields with it, but there has been a tight correlation for the past year and that is something we are looking at as you see yields come in a little bit off the risk trading were talking about. Oliver a busy day and markets. To focus on the Retail Sector coming out later this week at a challenging time for the industry. Bankrupt are going said to right and jim prepare a filing any day now. Trumppence is proposed order tax, and the situation could get even worse. Joining us now is the ceo of a , manny,pparel company thank you for joining us. Mixed signals in the Retail Sector. A disappointing Holiday Season last year. What are you seeing . To look at it geographically. The United States has been the toughest lost overall. Toughest loss overall. The calvin klein business overall. Our results in north america have continued to be good. Moving across the pond to europe, we see announced andy performance there and Significant Growth in the club in the calvin klein business and asia driven by china, really outperforming their. We are seeing a good start to the First Quarter overall, but clearly the u. S. Market is that . Why that is interesting, especially hearing about expectations. Manny there is a lot of uncertainty here in the United States, notited existing anywhere else. I do not know if it is the drama , but overall, that has clearly been the tone coming out of the Fourth Quarter into the First Quarter. We are about two or three weeks later this year on the holiday than last year. A lot of noise. On balance, yes, the u. S. Market clearly over stored in the United States. Your opening comments were on point. Oliver that is a great transition to what i want to hear from you. E saw this in groups efiling and Interest Payment coming up, that will be much be the catalyst for that. For better or worse, it is part of a string we have seen in retailing. Is your company poised to go companys . Companies . Those two companies are just not in our wheelhouse. I do not want to buy a turnaround. The last thing i need is someone elses problems. We have brands that continue to grow. We will look for acquisitions but the kind of acquisition we are looking for his first and foremost of the brand itself. Oliver these Companies Going or severestructuring we rethinking of strategy, that is not manny i can say that unequivocably. Tremendous pressure. Most of the retailers you touched on our specialty apparel retailers, category driven. That does not interest us at all. By the same token, you are seeing Department Store sector under a lot of pressure as well. There, it is a story about count, the doors that are today borderline profitable but as you look at trends, i do not think those stores can survive longterm. Abigail speaking of the mall, we have seen a shift. Btv ake a look at g 10 , aent stores, fraction back then, and now we see a total reversal. Your brands can be sold in birth both venues. What are your thoughts . Manny i think as ecommerce is a big piece of the future for artment store sectors come for the Department Store sector, they are all online businesses. Macys. Com, the third or fourth largest apparel. Com site. Us, we are agnostic about where we sell. Create consumer demand for our brand. The consumer really tries to drive them to the appropriate place. Great job presenting brands online and in the store. Oliver lets look at what is happening in the retail space right now and how it is affecting the bottom line. I want to look at a function on bloomberg. The red line is looking at trailing, white line is looking at net sales. At highs have remained reached in 2014. There is obviously a cap gap. Manny that is totally german by currency. One of our strengths is the fact we are geographically more diverse than most of our competitors. Just about 50 of our sales driven out of the United States and 60 of profits outside of the United States. When the dollar has gone through so wethening and we hedge offset a portion of it, on a Constant Currency basis, i know 20 . Ont get paid, up the challenge we face is with the strengthening dollar. That headwind cost us about 1. 16 per share. That completely reversed itself if we go into 2017 and 2018. A bit of a tailwind as we get half. He second the underlying strength of both brands and the business itself continues to be very strong. Abigail what about President Trumpss proposed border tax . I am guessing you may not be a fan. Manny we are clearly looking for a change in the way tax reform. It is clearly necessary. Tax is athe border major problem, a direct tax on the consumer and a hidden tax. Out. Is not a lot of data a 20 increase, a 20 price increase, the only alternative we have is to turn around and increase prices on the consumer. With the consumer representing two thirds of the economy, we just dont think it is a good idea. It is a job killer. You touched on it. The pressure the retailer is under, this is a direct hit into the retail industry, the largest provider of jobs in the u. S. Private industry. I think the last thing we want to do is put that under more pressure. I am not sure why a store managers job making 75 thousand dollars per year is not as important as a manufacturing job that makes 50,000 per year. The last thing that will happen in the United States is coming back to the United States, that is not an industry that we want to compete in. I dont think we want to compete with lowwage countries like the angle , vietnam, and egypt. We want to compete with germany and japan for the high wage manufacturing jobs. Center where we are already paying a duty, we are paying almost 250 million per year, 14 on the cost for product. Now to add another 20 on top of that to over 35 , it just makes no sense to me. That is why the whole proposition is losing a lot of its momentum. Great conversation, manny chirico. Great to have you on and talk to you about every thing going on with texas. Lets get a check of the headlines with mark crumpton. Mark u. S. Secretary of state Rex Tillerson is in moscow with a mexican with a message. Mr. Tillerson they have signed the chemical weapons accord themselves, the syrian government, and the russian government had signed that accord. Made thessad has russians look not so good. Mark secretary tillerson was meeting with foreign ministers. Only the second woman to hold the top job, said it was a alsoday for alabama and one of opportunity to achieve replaces robert, who pleaded guilty and resigned on monday. Monda says he isn hopeful open to talks with kim jong un. He says south the great south korea must negotiate with ki m. Mark waslice say wounded after three explosions hit a bus carrying members of the soccer team to a home game. Officials say he has been taken to the hospital but has not been seriously injured. The game has been postponed until wednesday. Danger inere is no and around the stadium. Global news 24 hours a day powered by more than 26 hundred journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Abigail . Abigail coming up, we will hear from Stephen Schwarzman. The potential repeal of obamacare. That is next. This is bloomberg. Oliver this is Bloomberg Markets. He says he continues to be disturbed by what happened. He then goes on to say he is launching a review and will have that done by the end of the month, a bit of a departure from his comments yesterday in which he said the passenger had become disruptive and belligerent, though he still says he will take a close look. Abigail a bit of a turn there. Earlier today, President Trump listed a doesnt brought a dozen ceos is to the white house are also there, ceo Stephen Schwarzman, at of President Trumpstrategic policy forum. Up with him and asked him when the white house will put forward more details on tax reform. I am not sure because it is complicated. If the numbers were easy, someone would have rented it and sent it to you. To a comp was something in that area, there has to be something taken away from other people to have that revenue to finance the tax cuts. There are a lot of different ideas and a lot of different people both in capitol hill and in white house. The white house. More deliberate, logical approach been trying to Pass Health Care in 17 days. That is not going to happen, which is good for everyone. I also think there will be a circle back on health care, in ago, itrds, three weeks is dead and gone and has difficulty being dead and gone. Innk there is work going on the house, how long that will take, i dont know, but people are talking and ultimately, they should be able to get something out of the house whether it goes to anyplace place in the senate, that is your call and anybody elses. Do you have the sense they will hold up . It would be better from a scoring perspective if they could do that. I think that is in the land of the unknown. Prudently, you would plan for that not to happen. Is a huge bonus that would make life easier for tax reform. You have spent time with the president more than once. You you come away from the meeting with a sense of optimism . Gary said at the end of the county year, maybe not august, for tax reform. Do you have a sense of optimism that by the end of the counter year, we could have something from congress on tax reform . Think we will probably have something. It is just a handicap of knowing how comprehensive and aggressive that would be as opposed to just a tax cut. We will see when we see. Fair enough and certainly true. One thing you care about is china. Ou have been to china a lot did you come away with a sense of how things went . Saturday is the deadline with a possible designation of china as a currency manipulator. Stephen i would doubt that that would happen. The meetings in florida, moller maralago, or good meetings. I was there for some of it. President trump seemed to establish a pregood relationship. Because thereant will be a lot of issues that will not be easily decided but need to be decided by both parties. I think the chinese have a , that they on this are aware this is important, it is important to the United States, there are other important things like north korea and the two countries are bound, and we have to come to good outcomes. To do that, there ultimately need to be tiebreakers in each of the two countries. That is delegated to the president of those countries. Despite whatever system is used to get to the final set of individuals have a sense of trust and understanding each other better, in the chinese system, that is important. In our system, we have learned it is also important. Abigail that was Stephen Schwarzman with david westin. Coming up tomorrow, a conversation with Christine Lagarde live from brussels. Look for that at 6 30 a. M. In new york, 11 30 a. M. In london, and 6 30 a. M. In hong kong. As it inches back andrd trading about 42 . 60 per stock today. This is bloomberg. Abigail this is Bloomberg Markets. Joining me is kevin kelly. Great to have you here. We finally have something really to discuss here. The return of volatility. The vix at its highest level volatilityyear, high on the rise, what is going on . Kevin you can see tech is the in the sector in s p last 30 days with s p 500, we have seen it go from applied volatility at 10 all the way to 15. 4. Earnings coming up with that, and you are seeing the second largest sector in the s p 500, the financials next week, we will see bank of america, jp morgan come out. The implied volatility, so we have the two largest sectors of the s p 500 implied volatility going up in earnings. Aspects,e fascinating people focusing on those sectors, if you look at the 93 xv, itlatility, the vix, v is flat, about 15 as well. Trading in par with the vix. People are worried about the longterm volatility for three months, they are worried about volatility. Sector, the weakness continues, the whole thing could potentially unravel. What are your thoughts . Could there be more of an unraveling for the banks . Trades,most of the everyone is putting on protection and you can see because applied volatility is picking up to the 22 level, that is extremely elevated because we have not seen deregulation, we have not seen growth policies, the yield curve is not backing up the banks, especially for the net interest margins because of the rate hike. At the big look money centers. Jpmorgan, bank of america, Goldman Sachs have not traded as much as the regionals which actually need the fiscal policies to back them up. Abigail before we get to your trade, with return to volatility, what are your clients asking about the most . Everyone is focused on longerterm volatility. Is that because of guidance from management, or because there is actually worry on the longterm horizon because we dont know what will happen during earnings are not met,rnings what will happen longterm . Abigail you love paypal why . Kevin a great name. If you missed out on the move of amazon services, you can go to paypal. All the startups as well as ecommerce. The reason uber was able to grow overseas is because they used the ecommerce platform. You want to buy the stock and sell the 47 call. Abigail thank you. This is bloomberg. Attention homeowners age sixtytwo and older. One reverse mortgage has a great way for you to live a better retirement. Its called a reverse mortgage. Call rfree information kityour with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money and more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home. And heres the best part. You still own yohome. Call now take control of your retirement today mark it is time now for first world new first word news. Evidence clearly showss was behind a chemical attack that last week. The siege that refuse Vladimir Putins suggestion that Bashar Assads opponents were to blame. Intelligence and public sources document that syrian planes carried out the april 4 bombing using chemical weapons. Than 100 prospective candidates have signed up so far on the first day of registration for irans president ial elections according to the countrys official news agency. Registration will remain open until saturday and any Iranian National can apply, though the Guardian Council normally does not approve women for the formal candidate list. Termble to run for another , the election will be held in iran on may 19. China is calling on the United States to stick with the Paris Agreement on climate change, saying it is willing to discuss policies that President Trump said he will scrap