you have had two triple digit down days. i am curious to see if we are going to see twitter trump or teleprompter trump. david: all of the reporting down here is going to be teleprompter. by words are being written stephan miller who tend to be a little bit of a hothead. inx: here's what we stack up the markets. the s&p coming off its worst selloff since august and continuing today s&p futures down by another 12 points. it is now a story of broader dollar weakness. strong gdp out of europe. yields taking a break pretty much unchanged. there was some buying in the market. hit downtinuing to get 5.8%. i want to highlight some movers as well. a lot of action happening in the market. metlife hasn't set aside enough money to pay annuity holders. stock continuing to get hit premarket. there is going to be a buyout for this company. that is no longer true. that stock getting hammered. that stock now unchanged. take. time for first those equityry is markets fairly shaken by the selloff in bonds. second is state of the union address and that's when we hear from the president's plan for the economy as he moves forward. janet yellen's last meeting as fed fed chair today and tomorrow. i want to start off with the markets. take a look at this chart. it is showing the s&p dropped that we saw yesterday. the biggest since august. the bottom panel is that rsi. anything over 70 is overbought. are we freaking out about the selloff? >> i don't know if a lot of people are freaking out nor should they be. thing a look at one product that stands out for its i look at the s&p powershares low volatility high dividend. that's one run the above on the wrist spectrum. that had its worst day in over a year. big support for the market has been retail markets buying in. they are pouring into by the high-tech names. wednesday over a quarter of s&p companies by market cab report earnings and that's going to be rubber meets the road. profit-taking for a real genuine connection. alix: earnings revisions for tech is not as high as other sectors because they had a lower effective tax rates. i have to wonder how this is playing into the market. ther expectations that iphone demand didn't hold up. walk me through it. >> it is still a mixed bag. netflix did yesterday. you also had amazon. it's tough to say that the whole space is getting hit. as long as tech earnings hold up obviously that kind of -- isn't going to be the same and the that have been gettingh earnind the biggest earning revisions have not been taxed because they don't get the same boost. but they haven't been getting hit hard even this morning. nasdaq 100 futures doing just as bad as s&p which is to say not that bad. that have been getting fair point. we have a report that says amazon berkshire and jpmorgan will be firming -- forming a health care company. jpmorgan stock down by .2%. amazon was also slightly down. a really interesting development for that. amazon stock now moving modestly higher. david: my professional reaction is wow. we have heard for some time that apple might be moving into the health care area. when you put it together with jpmorgan and berkshire hathaway you can't have a much better pedigree to address the issues of health care in this company. will the three companies bring their scale and expertise to this long-term effort to pursue this objective through an independent company that is free from profit making incentives and constraints. the initial focus of the new company will be on technology solutions that will provide u.s. employees and their families simplified high quality and transparent health care at a reasonable cost. you have to think with someone like amazon in that market that is going to be a price game changer. that potentially affects the entire economy. we have talked to many people who are health care providers who said that tech could really bend that cost curve. 17% of total gdp is health care. if you really did get tech applied to health care it could affect the economy overall. alix: absolutely. when you have someone like berkshire hathaway and amazon teaming up you can not to think of those committees together because amazon is a high flyer. berkshire hathaway tends to be more tangible. investing in things that warren buffett can touch. an interesting union as well. david: warren buffett thinks he missed out on a big opportunity with amazon originally. he should have gotten in a at the ground level and he missed that. he has been more open now to investing in tech. he has invested in apple. alix: what do you make of the news? >> exact same thing as david. i think back to something that --eron kreis has pointed out amazon is a really expensive public good. we have seen the market caps they gain or that the acquired company gains generally is exceeded by the drop in the competitors and this kind of crystallizes. they are not trying to make a profit here. this is just something that should eat away at margins and revenues at other places presumably and when you team up with the likes of jpmorgan and berkshire to do this they don't have a motive in this industry but they have a lot of runway to succeed or fail and they are defining success differently than other companies in the space would be. david killed the one thing you can know is right now today their boardrooms around the country in health insurance and providers who are scurrying around saying oh my goodness what are we doing how can we respond to this how does this change our lives. change it really could their lives. alix: anthem and unitedhealth group all down by about 2%. it is still in the early phases. those that will be spearheading investment officer at berkshire hathaway. the managing director at jpmorgan. and a senior vice president at amazon. the ceos ofessarily the companies. nonetheless early planning we have managing directors and vps. unitedhealth group really had down by five and anthem off by 6%. david: he is one of those people that warren has tapped to be the future investment managers for that company so that's a pretty big name. he is taking this awfully seriously. alix: amazon berkshire hathaway and jpmorgan are announcing a partnership on health care. for their u.s. employees. they want to include -- improve employee satisfaction and reduce the cost. they're trying to bring their scale and complementary expertise to this effort. amazon stock barely positive in the premarket. archer hathaway and jpmorgan not going anywhere. anthem, cigna unitedhealth getting hit in the market. really huge news. i want to bring us back to washington and the state of the union. when the things we are going to be looking at is infrastructure. even before the president addresses that we have chuck schumer. coming out and saying and the washington post this morning only a plan with direct investments can properly addressed scale up the challenge we face. initial indications are that the present proposal will rely on capital from private companies and states and localities. let's talk about infrastructure. this is really a flight. -- fight. republicans are more towards the private funds. if you do that it's going to be really hard to have a bipartisan infrastructure plan. democrats don't want to give president trump a win. they see themselves getting back the white house in four years. check outs to just the president and don't let any of his priorities get through. president trump isn't really reaching out to them and saying let's work together. he is saying here is the plan and democrats are saying we weren't involved in the process. david: give me a sense of why this would work at all. he only wants to hundred billion dollars from the federal government. to the state and local governments really have that much money to chip in? he wants them to bear most of the burden. >> it's unclear that they do especially with the changes in the tax plan. states are really worried about their revenue. they see themselves having to raise taxes. it gets politically very tricky and lots of republicans especially in states where they are free drawing district republicans are on the downside. look at north carolina, wisconsin. politically a lot of these ideas are good ideas until you have to get reelected. davison, good to have you here. she is going to be on capitol hill all night long with us. you're going to have a coffee party and take some naps later in the day. we are also looking at the fed meeting. janet yellen's last big meeting. this is something that's going to come up and it is breakevens. the five and 10 year breakevens are over 2%. how is the fed going to be looking at this today? >> they are going to be happy. it's definitely a market improvement. it allows them to potentially reference improvement in marketplace measures expectations whatever they want to say. i think goldman flag something that might be interesting as a hawkish spin on this meeting. they expect the risk and inflation outlook to be upgraded from not roughly balanced imbalanced. they would take that as a hawkish signal. the fed getting more convinced in the come back. justng more optimistic leaves yourself more room for a downside surprise. alix: fairpoint. davidson -- luke and laura davison. we want to update you on that breaking news from earlier. jpmorgan and berkshire hathaway hathaway will be formed a company to provide health care for their u.s. employees. it is not yet clear if this will be accompanied just for their u.s. employees or a standalone company. it says they will be free from profit-making as well. have insurers taking a large hit in the premarket. this is bloomberg. ♪ alix: amazon jpmorgan and berkshire hathaway will create a health care company to provide insurance for its u.s. employees at a reasonable cost. the company will be free of profit-making incentives and constraints. joining us from london is michael houston. what are your thoughts on this? it's a very interesting development given how health care is such a touchy subject over there in the u.s. and all this talk about price gouging. i think amazon venturing into this particular market will be very good for driving prices becoming more competitive. potentially is this amazon's attempt at becoming more socially responsible in terms of the way that it treats its employees and driving down health care costs in the u.s. market? much more competition is exactly what the market needs. alix: it's a great point. you have to wonder what it minds of -- winds up meaning for the inflation story. this could have a real impact on lower health care costs. >> absolutely. in the short-term it's not going to have that much of an effect on inflation. we are still digesting the announcements. i haven't seen the actual transcript of the announcement but i think in the long term in terms of health care given that it is such a large part of the u.s. economy that can only be a good thing for u.s. consumers. alix: when you take a look at deal activity in the space healthcare services deals have been down the last few weeks but pretty high in the fourth quarter. if you take a look at premiums as well you have to wonder what this winds up meaning for deals in the space. >> yes indeed. athink if we do see significant decline in some of these health care providers because their margins start to shrink as a result of this and it's premature to draw too many conclusions. i certainly think over the course of the next 12 months we could see some m&a activity in this particular space. they say they are in the luminary stages. this is all comes in light of the selloff of the s&p. at the s&pe a look dropping the most since september. the selling comes within an overbought condition environment. what do you attribute the today weakness to? we are at the end of the month. we have had a very good month. sincest start of the year 1987. there is an element of money coming off the table ahead of the month and obviously we had the federal reserve. there's a distinct possibility we could see a significant upgrade to inflation forecast given the number of companies that have come out in the last and announced bonuses and pay rises. that could potentially push wage costs up in the payroll states later this week. the potential rising inflationary pressures if you look at the total yield on the s&p 500 it's around 1.78. u.s. yields are well above that at the moment and that has been a little bit of what i would call yield compression across which is prompting a taking in of profit u.s. stocks which have had a really good run. alix: the 2.7 on the 10 year. does that make you nervous? taking in u.s. stocks which have had a really good run. does it make you want to sell? >> i think it's more a case of the inflationary data that we've seen. once we get the fed meeting out of the way and this weeks payrolls numbers out of the way and particularly the wages data i think if that comes in seeicularly hot we could more profit taking on u.s. stocks and equities more broadly given the run that we've had. for me it's all about the fed and the wages numbers on friday. alix: without tech earnings? -- what about tech earnings? tech companies front and center at the end of the week. is there a risk there? seen of revisions and earnings that we have for other sectors. >> there i think it's is definik particularly in the case of apple. we have seen a significant selloff. i think they have had to cut production of the iphone x. was ays felt the handset bit on the pricey side and the fact that they have had to cut reduction as much as they have -- production as much as they have could suggest they warn on future revenues for the first quarter of the year. if we drop below 165 we could have a run to the downside. microsoftested in earnings and whether or not they talk about repatriating some of the 130 $8 billion they've got stashed overseas. alix: thank you. joining us now is bloomberg news's zach tracy. what do we know right now? >> we don't know much. we know that three huge iconic companies are teaming up from to tackleindustries health care costs specifically. the release they put out this morning is super vague. they're going to focus initially on technology solutions. over time they can do other things. it has health care investors scared already. like from the press release this is just for their u.s. employees and not a separate company. >> they are establishing this sort of consortium or company that's going to do some sort of health care thing. they have laid out the management team a little bit. they say it's in very early stages. you have more questions and answers. worrying aboutn amazon getting into health care for a long time. this morning health insurers are selling off. pharmacy benefit managers are selling off. whole health care supply chain right now is very worried about what this could mean for their profits. alix: fair point. -- you have tor wonder how self-serving it is for the companies. >> you have seen warren buffetto wonder how self-serving it is for the companies. call it the tapeworm of the american economy. i think he said something similar this morning. warren buffett, jamie dimon and bezos teaming up on something you are going to get a lot of attention. this is going to be -- so interesting. alix: amazon, jpmorgan, berkshire hathaway have a combined 950,000 employees. they are three of the seven biggest public companies in america. this is no joke. >> just think about that bargaining power. just putting that bargaining power together could be really powerful in health care. alix: is there anyone this is actually good for? hopefully it's good for their employees and all of us who are paying health care costs and buying drugs and things like that. pressure onut profits everywhere in the supply chain and even at hospitals and drugmakers. this could be a really big deal. alix: talk about the different levels of who it is bad for. you mentioned pbm's in terms of bargaining power. hospital margins. >> that's right. the drug supply chain. companies like cardinal. the drugmakers themselves. the health insurers. united, aetna, cigna. in the pbm's. express scripts trading down already. alix: who might need to start looking for some kind of consolidation? >> you definitely want to keep an eye on the middle of supply chain players. the pharmacy benefit managers like especially express scripts, cbs obviously they have the drugstores and the deal with aetna. keep an eye on the supply chain. those companies that are in the middle. get's a place we start to squeezed as deals like this come through. the company will be jointly spearheaded by an investment officer at berkshire hathaway. the managing director of j.p. morgan chase and a senior vice at amazon. it still is in the early stages. nonetheless those three will be spearheading it and all of the really coming out and saying this could be a huge change for the company. warren buffett saying the health as a hungry tapeworm on the american economy. what are the questions you have? what arent to know they doing. we have seen companies in the to bargain for health care. we have seen that before. the big question is will this go beyond that? what is this company going to do? going to negotiate with drug makers and hospitals or are they just want to make an app? alix: don't underestimate a bezos dimon buffett. really interesting development this morning. we have been wondered when big tech is going to disrupt health care and we might have our answer. david: if they come up with a better mousetrap they are not going to limit it to their own employees. if it's a success it is going to expand to the rest of the economy i predict. warren buffett has been on this theme for some time. alix: and will it be a template? there's not hundred 50,000 employees. david: is quite a big test group. coming up, infrastructure front and center in the state of the union address. we will talk of the head of carla global infrastructure. he is andrew marino. also carlos gutierrez about nafta. that's coming up. life from washington -- live from washington and new york, this is bloomberg. ♪ alix: this is "bloomberg daybreak." picking up some steam on the downside. we have not seen a two triple digit decline in the dow since last april. the we see that today? looks like yes. off theirs, coming worst slide since september from yesterday. getting stocks also hit, despite the strongest annual growth last year in the eurozone. yields are not really going anywhere, maybe a little bit of selling on the margins, but 270 on thewe are stabilizing 10 year. sterling, negative data coming out of the u.k., climbing by 4/10 of 1%. the stronger dollar continuing to weigh in on the commodity , what, crude getting hit kind of shakeout in positioning could we see? not adding any support to the tech sector today is amazon. you have amazon, jpmorgan, and berkshire hathaway teaming up to create an independent, nonprofit health care company to provide health care for u.s. consumers. we are trying to find out how, why, and when. we will bring you those details when they emerge. my collie has special coverage of the president's first state of the union address. i wonder what the white house would make of those headlines? big private industry. can't take care of it, we will take care of this problem for you. alix: it's ironic, seems like that is what the white house wants to do with things like infrastructure. david: we know some of the things that the president will address tonight. aings like immigration, he's certainly going to try to crow about the markets, though it sounds like it will be harder than he thought it was going to be. infrastructure, everyone agrees that we need more. washington seems to have a tough time agreeing on how to get it done. marino.h me now, andrew what is infrastructure? seems like people want to call everything infrastructure. andrew: all the basic systems needed to support the country, towns and states. it's infrastructure as a big him -- big economic impact to the economy. everyone seems to agree that we need more of it. we have the society of civil engineers saying that we need $2 trillion invested. what are they talking about? andrew: it's across the board. if you read the report, it talks about electricity grids, water you -- waternd as ,s a huge area, and as you know broadband, we are 16th in the world in terms of connectivity. it's across the board. david: let's talk about how to get that done. what is the government's role? we have a real conflict between the democrats and the republicans, with president trump saying that they will put the democratsand saying that the fed has to put up more. we talk about public-private partnerships. we think the best solution includes private capital with public partnership. setting the stage, setting the stakeholder protection, setting the agendas. is a hugepital, there amount of capital waiting to come into the u.s. infrastructure market. the beachfront property of the world in terms of investments. we have got great rule of law, a great, stable economy, and there is a lot to do. investment should come from us but we can't do it alone. david: why is that? why is in private capital coming to say that this is a great investment, let's do it? the regulatory regime and permitting needs to come up to the 21st century. i imagine we will hear something about that this evening. that is a big part. we need to be shown the path within the regulatory environment of the united states. i will tell you, and our business, we are one of the biggest investors in the united states. about 200,000ng people across those portfolios. when we talk to state and local leaders, they really want private capital in their infrastructure. they want new water supply, new micro-grids, upgrades to their ports. we are just waiting for a framework to try to make that happen more rapidly. david: do the state and local governments have the money to put in? reportedly, the trump administration will be expecting them to do it and those leaders say that they don't have that money. andrew: that's right. we are talking about an enormous amount of investment. this is why private capital needs to be involved. david: what is the so-called low hanging fruit, here? andrew: a huge one is airports. they are an easy thing to invest in. there is a great economic model. there are a lot of great airport models around the world that are significantly better than ours. something that infrastructure investors like us have a great deal of experience in doing. david: could you decrease user fees? jack it up so it's more attractive as an investment? andrew: you don't have to worry about user fees as much, but think about other areas that have done a better job, like retail. when you go to an airport, what can you do? get a turkey sandwich. at the heathrow airport, you can get a rolex watch. the consumer oriented revenue at international airports is much greater than ours. david: china has, like, shopping mall. do you expect a bipartisan group to come together that will work, from your point of view? andrew: i don't really have that sort of -- i certainly hope there will be david:. because the country needs it. -- will be. because the country needs it. andrew: what would you advise the president? -- david: what would you advise the president? regulationeamlining is a great first step. i think he is looking at other models where infrastructure has really worked well, like the program in australia, where there is a federal incentive system to invest in their own infrastructure. if that can be crafted in the united states, we will have a huge wave of very productive investment. onid: a lot of discussions permitting and how difficult it is to get things built. how much of that is federal, as opposed to state and local? andrew: i think the federal government can bring leadership. this is a political process. it is showing state and local governments the way to get things done. the federal government can play a huge role in doing that. of that capital is the mastic, as opposed to international? andrew: there are trillions, frankly. trillions. wealthre large sovereign funds of very interested in the united states. a lot of international pension funds. frankly, the first protocol should be the local pension investors within the united states who are looking for a pathway to contribute to their own infrastructure. this includes union pension funds and private investors. the first wave will come from local investors. we have a big group of very sophisticated infrastructure investors in this country. but there is a lot of capital waiting to come in. david: andrew, thank you so much. coming up, we will hear from , formerutierrez secretary of commerce under george w. bush. if you are listening to the radio, tune into tom keene from pimm fox:00, and then joins him from 9:00 to 10:00. live from washington, and new york, this is bloomberg. this is bloomberg. ♪ ," this is "bloomberg daybreak i'm kailey leinz. hour, up in the next democratic congressman gutierrez of illinois. alix: amazon, berkshire hathaway, teaming up to change the health care system, creating a nonprofit to provide health employees.e 950,000 berkshire hathaway is the eighth largest employer in the s&p. , blowing upth potentially the health care system. , hospitals,urers generic drugmakers, all getting hit on this news. here with me now, michael mckee. mike, what was your reaction to this, when it broke? they didn't say how they were going to do this, but there are a lot of different things that they could do, and one of the keys was that this would be a nonprofit effort. we have a non-united health care system around the country. is not centralized. there is no negotiation for drug prices, except in medicare for healthcare services. they can negotiate drug prices under the part d regulations. there's a lot a large organization could do if it was not concerned with how much it had to make. it would be interesting to see what kind of things they could do if they apply technology to this, which in theory would help to bring down prices. we spend 18% of gdp on health care. coming inside the bloomberg, this is consumer medical costs versus cpi. since 1990, costs have averaged 2% higher inflation than the broader basket. you are paying a lot more for those medical costs. walk me through the longer-term deflationary impact. as more and more people retire and go into the medicare system, it's one of the biggest problems we have facing us as a society. wait until the baby boomers start retiring. and there has been no moving congress to start to fix this. there has been this idea that people could get together to create a new health care system. it could be very much a game changer. it is fed chair janet yellen's last meeting. what is the conversation about inflation in the tax law behind those close doors? -- closed doors? mike: it plays into the idea that in 2018 we might see higher inflation. we are seeing slack being used up, labor markets very tight, commodity prices starting to rise. the feeling is that inflation will start to rise. over the course of the year, to the extent that we get stimulus from the tax bill, that just pressures. for this meeting, the president is going to take a pass, sit and wait. it will be interesting to see if they have warnings on that in their statement. probably not, since this is their last meeting. march,e focus turns to the expectation priced in. you, actually, just came back from montreal, to put on your other hat, at the nafta trade talks. compare that to the fifth round of talks. betterhey ended up in a place, because they are talking about core issues, but they didn't make any progress on those issues. worthre making progress continuing, but they have some tough negotiations ahead. i spoke to robert light house or afterwards, they are not confident at all. it is still a long way to go for nafta. are still paying for couples therapy, essentially. [laughter] mike: they made progress, but not friends, so maybe couples therapy would help [laughter] . alix: michael, thank you very much. david: are still paying for couples therapy, essentially. [laughter] that seems pretty personal. little worried about you guys in new york. nafta, the sixth round has just concluded. heiser hadht something to say. let's take a listen to what he said. >> we finally began to take -- discuss some of the core issues. this round was a step forward, but we are progressing very slowly. we oh it to our citizens -- owe it to our citizens to move much faster. carloswe welcome now gutierrez, good to have you here. you heard what he had to say. is that your take on what's going on with nafta? carlos: yeah. seems like recently, in the last week, it's gotten a bit better, more optimism that things are beginning to look like it has a solution. but until then, it was looking pretty bad. there's still a lot of pessimism . what the u.s. put on the table is pretty aggressive. the five-year sunset is off the table now. i'm a little bit more optimistic today. it's interesting, we have different problems with canada than we do with mexico. you can see a scenario where we come out of this with two fda's. think the administration is going to turn its sights towards china. having two traded battles at the same time is difficult. battles at the same time is difficult. there are some saying that you have to put it off until the fall, if you don't have it done by march. carlos: that's right. it's a pretty fair deal, if you get it on by march. if it is viewed that mexico got mexico wasand that pushed around, the july elections could be detrimental for the u.s.. aheadrson who is running in the polls is an anti-american, far left-wing candidate. we could create the conditions to put that man in power. we have to be very careful. that we pushed mexico around, national pride may be not included in the trade agreement, but it's really there. trade will be covered by the president, in the state of union. another one, certainly, will the immigration. yesterday we said he would have to go bipartisan. forou see a pathway forward a bipartisan compromise on the so-called dreamers? these children who were brought to the country, and border security? carlos: i wish i could say yes, but here's the problem. there is a some confusion about immigration. i hear the president say that we needed deal for dreamers and we -- need a deal for dreamers and we have to eliminate chain migration and the lottery system. those are two very different things. the dock a small sliver of comprehensive immigration reform. when we start getting into getting rid of the lottery system, getting rid of so-called chain migration, which is called family reunification, then you are talking about a immigration reform that takes nine months to negotiate and a bill that is 500, 600 pages. i'm not sure that that is clear. is it a reasonable objection to going into a merit aced system? they had this., they should take that 2006 will -- bill. reunification,ly chain migration, it's about 65%. you can take that down and make way for more merit based, but it doesn't mean that merit aced or family reunification has to be zero. we talk about it as if it is eliminating it. kellogg's, you have been a ceo of a big company. explain how this affects a company in the united states. that is to say, curtailing immigration, shipping dreamers back out. shipping dreamers out, these are kids who are working or studying, who are americans. with dreamers there is a humanitarian component that goes beyond typical immigration policy. for a corporation, if you have a star in germany and want them to work in the u.s. for a few years, that requires permits. but the economy cannot grow unless we are growing our workforce. we grant grow the workforce -- we can't grow the workforce without immigration. we have to be careful with this idea of reducing it by half. that could impact the growth of the economy. , thankcarlos gutierrez you for being here. it is the news of the morning, amazon and berkshire hathaway, jpmorgan, teaming up to create a nonprofit independent health care company to provide health care for u.s. employees. we don't know the details of how, or how far along, they are into this. onwill have a big effect health care companies, drug .ompanies, insurers s&p futures continuing to trade lower. more on the stock selloff that we are seeing, next. if you have a bloomberg terminal , watch us online, interact with us directly, scroll around, check it out. this is bloomberg. ♪ alix: what i am watching today, it's no surprise to you, earnings. we have talked a lot about how strong they are for s&p companies. was reported that the blue line has not kept up. that raises the question, david, on the strength of these earnings revisions. the quality. i wonder if that yield curve keeps going up, if interest rates keep going up, what does that do to earnings as well? wages, as well. if you can't pass that through, that will wind up hurting your profit margins. setting us up for the back half of the week, tack. h. tec prepared is the marker for that when they report on the back end of this week? andrew: coming off -- david: coming off of such a strong year, we were already talking about possible rotation, but you wonder if the fundamentals might exacerbate that. alix: amazon reports later this week as well, after the news this morning, i'm still waiting to get my mind around it. hair up jpmorgan, berkshire hathaway, amazon, how did that conversation start? that is what i want to know. david: back when i was at disney, those health care cost are a substantial portion of your cost overall as a company and they have been going up. it's not surprising they want to get that down. remember alix: -- alix: remember, jeff phase -- alix: remember, jeff bezos always wanted to get into health care. it kind of fell apart in 2011. this is sort of its final big deal. i wonder how much it jpmorgan and berkshire, how much of their contribution will be. good athey are pretty financing things over at j.p. morgan. warren buffett, including insurance bevis -- businesses, those 950,000 employees, that's quite a test group. --x: adding and amazon, whole foods, that could be 1.5 million workers. are we looking at a complete disruption of the industry? david: i keep coming back to it, of the entire economy, if you get reforms there, you could change a lot of needles in a lot of places. exciting news. coming up at 8:00, markets, the fed, am amazon -- and amazon. more on the today market selloff. this is bloomberg. ♪ we use our phones and computers the same way these days. so why do we pay to have a phone connected when we're already paying for internet? shouldn't it all just be one thing? that's why xfinity mobile comes with your internet. you can get 5 lines of talk and text included at no extra cost. so all you pay for is data. choose by the gig or unlimited. and now, get a $200 prepaid card when you buy an iphone. it's a new kind of network designed to save you money. call, visit, or go to xfnitymobile.com. alix: partnering on health, amazon, berkshire hathaway, jpmorgan, creating a health care company for the u.s. employees. health care shares, dropping -- health care stocks dropping on the news. 's.s, dotting his i layident trump, expected to out his plans for immigration and infrastructure during the state of the union. a very warm welcome to you on this tuesday, "bloomberg i'm alix steel. all i myself here in new york, because my colleague is an washington, d.c. alix: i wonder if the resident -- david: i wonder if the president will have to revise his speech because of this. we are anchoring the speech live tonight at 9:00. we know that he is going to be talking about infrastructure a fair amount. frank a, i think he's going to take -- frankly, i think he's going to take a victory lap on the stock market, though it is not helping him much right now. alix: we miss you, david, but i , in terms ofhere the markets. dow jones futures are off by triple digits. we haven't seen a back-to-back triple digit decline in the dow since last april. the dollar is modestly weaker. yields are pretty steady. a little bit on offer there, up i one basis point, but can't compared to what we have seen in the last couple of days. crude commodities, though they weaker, it can get a bid. breaking earnings when it comes to mcdonald's. on the surface, looks like pretty strong numbers, yet the docket is still down. the company having earnings and sales that he estimates, 4.5 -- beat estimates. international was better than estimates. they plan to invest capital for 2018, the company meeting on the top and bottom line is well. our news of the morning, amazon. the big three, berkshire, jpmorgan, amazon, teaming up to provide a health care company that is nonprofit, giving health to u.s.urance employees. disrupting health care markets right now. joining us now, health care analyst jonathan palmer. jonathan, what is your take on all of this? hold on, are you with me? blacks can you hear me? alix: oh, sorry, go, you. like just last year we were talking about amazon disrupting the pharmacy business, now we are talking about all of health care. jpmorgan, berkshire hathaway, amazon, teaming together with three titans of industry. jeff bezos, jamie dimon, and the press is light on details. other than they are forming a health care company. alix: explain, though, how long it takes to get something like this done. jonathan: there is a lot of worry in the market, but rome was not built in a day. are they going to target insurers? drug costs? providers? doctors and hospitals? i imagine that there could be a technology solution here. in the jpmorgan expertise in capital. we don't know what the model looks like. we are in a wait and see mode. ,lix: your best educated guess on the strength of these companies and what it could be, negotiation of drug prices, apps, what might be the best solution? jonathan: it will be a multifaceted approach, based on the strengths of those companies. with insurance expertise and financing. what it will look like and how it will lower cost, i don't know. that's the end goal and that is what they are trying to do. alix: the reaction in the market when it comes to pbm's, is it justified? --athan: it's aggression it's a question that remains to be justified. -- remains to be seen. could affect big companies, like walmart. wind upat might it doing, in terms of the states? they need a shakeup. they don't have oversight for drug pricing. they are not going to touch medicare, medicaid, social security, anything like that. what could this do? it's a great question. i don't know that we have an answer. the health care markets are really difficult. there is a lot of regulation and entrenched players. players in that space now who does this meant for me? as i said before, it's going to take a while to shakeup what they are targeting. alix: really great to get your perspective, jonathan. also joining us, brent schutte, wealth management chief investment strategist. i want to get your quick take on the amazon news. if you were owning health care stock, would you have to sell today? brent: i don't know if i would have to sell, but i agree with the previous person who said that rome was not built in a day. i view it as an overall positive . if you look at inflation and the national debt, a lot of that is because health care costs have been rising faster. if we can cure that, from a societal standpoint, that's a good thing. there may be certain segments of the market that you mentioned that may not get those benefits. in general, overall positive. alix: nonetheless, the stock is causing turmoil in the markets today with futures off by triple digits. what do you make as a catalyst in the selloff? brent: i don't know if i would make too much of it. we have had a strong market for the past couple of months. to have a little bit of a selloff is not a big deal. but it does paint a template for what i worry about this year, the fact that inflation is rising. you see that in anecdotes and data showing up a little bit. it will come back in 2018 with central banks around the globe doing less and markets will have to learn to deal with that. that could cause the correction we have been waiting for for the past couple of years. alix: fair point. the dividend yield for the s&p versus the two-year treasury yield, crossing above the dividend yield for the s&p. we know that story. how much rotation do you really expect. is this the big rotation we have been waiting for? brent: a rotation from stocks to bonds? i don't think that is the case. 100ink you at least have basis points before the bonds start offering an attractive alternative to stocks. we are not there yet, but it could be coming in the next year. alix: thank you so much, brent schutte. david? .avid: thank you so much, alix it's not just the state of the union. we have the first meeting in the new year of the federal reserve today and tomorrow. maybe there is more moving for the fed in terms of the reaction they have had recently. david: data strengthened, we saw a reasonably strong fourth-quarter because of inventory and trade. the domestic spending, from consumers and businesses, has picked up. we are seeing tight labor markets right now. they are expecting wages to go up. the one up bonus because of the tax deal won't make a big deal -- big difference into the wages that they have to pay to attract workers to get the attention of the fed. there is anecdotal evidence that that is starting to happen. maybe you don't get a move this week, but by march there is definitely a feeling that we could be seeing a fed that is looking at elevated inflation numbers more, much closer to 2%. they may be starting to make noises about increasing the number of break moves this year. david: breakevens, things like that, is that likely to have any effect? are you just talking, or are these the numbers? they have egg knowledge that the breakevens are moving up and they do watch the expectations, because they feel it is a major anchor for inflation. it does make a big difference. i brought along a chart here. it shows the goldman sachs financial conditions index is at a record low. financial conditions are really loose. they see all the tender therefore inflation to break out. rise,uld see inflation which should get things going. build doubly says that this information means they should move more quickly. david: michael, thank you for joining us today. like particularly interesting times at the fed. things they need to deal with that janet yellen hasn't. alix: you are getting some more comingoming on -- hawks on, too. there will be a lot for us to learn at the upcoming fed meanings -- meetings about what they really think. david: do i hear volatility in your voice? alix: you don't. you hear -- we are the same. [laughter] thed: coming up, immigration debate. the president has said that he will reach across the aisle. will that be enough to form a bipartisan consensus? will be here, next. live from washington and new york, this is bloomberg. ♪ --kailey: the best-known companies in the u.s., collaborating on health care with their employees. they are hoping to reduce costs and improve -- improve employee satisfaction, creating an independent company focused on technology solutions that they say will be free from profit-making incentives and restraints. aetna says that the new tax law will push profits by $800 million. the health insurers says that half of that will flow to the bottom line last month. for $67 million. harley davidson came up short on the fourth quarter, missing even the lowest analysts estimates for earnings in the final three months of the year. motorcycle sales fell on every continent. they project that sales could fall over 5% more this year. that is your bloomberg business flash. davis? david: -- david? david: rhetoric over border security has gotten pretty hot at times. they say they are searching for a bipartisan approach. here is what the president said yesterday, in an impromptu preview of his state of the union. >> we covered immigration for many years. for many years, i have an talking immigration, thinking we will get something done. we hope it will be bipartisan. being republicans, we don't really have the votes. hopefully the democrats will join us. so that we can really do something great for daca, and for immigration in general. david: we welcome now luis of illinois,mocrat you can see him out there on capitol hill. welcome, congressman luis:. pleasure to be with you -- congressman. luis: pleasure to be with you this morning. chances of are the the democrats getting together with the republicans on immigration? luis: it's not going to be a big chance if this is about ending legal immigration. they will tell you it is about hornacek you're ready and stopping people from taking american jobs, i'm for that. it's about evening us safe from terrorists, i'm for that. but it is really about, if you listen, it's not really about a border security measure. it's not about a wall. it's about what they call chain migration, which is a word that is very harmful to the base. and also very offensive to people like me. it is really about family reunification. there are millions of people in line to come to america being sponsored by their fathers, their mothers, their brothers, sisters, and children who sponsor their parents. this is about keeping families together. it's the cornerstone of our immigration, and they want to end that. think about it. tout 45% of the visas go sub-saharan africa. they talk about chain migration, yet people who came here in chains, literally, as slaves, cap bring people here freely, because they want to eliminate those programs. i suggested they deal with what they originally proposed. and dreamers.y that is a fair complement that we can work on. david: you would be willing to appropriate significant money for border security, in exchange for dealing with the dreamers issue, specifically, without the chain migration lottery system -- a migration and lottery systems. when they took the dreamers hostage, you knew you had to pay a ransom. if you will not sit down with the hostage taker and pay a ransom, you might as well not negotiate. to do. what we have democrats are in the minority. i think that part of this debate and discussion has kind of gone away. the lives of 800,000 young people, who is deported will be put in the hands of human drug smuggling rings, cartels, death and murder. is that really what we want to , who these young people have been educated in this country? who are american in everything but a piece of paper? report them back to countries that they know nothing about -- divorce them back to countries send them back to countries that they know nothing about? politics do matter in this. as a practical matter, an overwhelming amount of people in the country want to allow the dreamers to stay. at the same time, they also don't want to shut down the government over it. is it worth it to shut down the government, again, over this issue? luis: i think that the senators should not have caved. i think they should have stirred -- that their ground. their ground. if you think that dreamers are a valuable component of american society, those who have stood with the government, and we want to put them in a safe, protected place, and the other side won't yield, you can't put party politics ahead of what's good for the nation, and head of principle, ahead of your values. we should have stood our ground and protected them and forced a compromise. look, they don't want to reach a decision. here is what they are saying. they are saying that my mom came over, 65 years ago, she had a fifth rate education, right? those kinds of people shouldn't come to america anymore. i think my mom did a pretty good job. but she wasn't alone. there are millions of other moms just like her, who came to this country and worked hard. how did they do it? they did it because they had their families. families create small businesses. you would think that donald trump would understand this test, given that he inherited his business from his dad and his kids will inherit him -- it from him. he surrounds himself with his family because he thinks it's good business. it's also good immigration policy. david: no one will disagree that let's take that as stipulated. but coming back to the basic question that the president has raised, what's good for the country. wouldn't allowing people to immigrate based on merit, a lot of countries around the world, including canada, for example, follow that. why is that not a sensible approach? we can do that. why not do more of it? at the same time, why are we not also investing in educating americans at the john and want to bring in i people for? i want to invest in that. i'm very pro-immigrant. yes, you can do that, but you don't do that at the expense of families. here's what's going to happen. if you stop illegal immigration, as they want to do, you create illegal immigration. because you create an incentive for the drug smugglers and the human traffickers to bring those relatives here to the united states. visas, ing them with an orderly fashion. in the past. it helped the irish, the germans, the polls. it helps millions of people, create, and build america. i assure you that the immigrants of today are creating jobs. it's almost as though family-based means dumb people are coming. no, they are smart people, industrious people, and they make america a great nation. david: congressman, is clear a lot of things need to be sorted through. are we going to shut down the government again in the next 30 days? luis: i don't think it's going to happen. i don't think it's want to happen. i don't see the senators doing that in the senate. they won't do it in the house. i don't see that happening. what i think, unfortunately march 3 to -- march 3 deadline for the drew -- for the dreamers is coming. a classroom teacher that has to say goodbye to her students. a doctor saying goodbye to her patients. look, they are losing them. the president of united states said that he was going to be great, kind, generous. let's do that. if you want more border security, lindsey graham and dick durbin went over them -- over there to offer a down payment on what he calls the wall and he rejected it. schumer went to that -- here's the money. it's not about the wall, is it? is hard to negotiate with someone who keeps changing the negotiation on you. david: particularly when you are up against the deadline. congressman luis gutierrez, thank you so much for joining us today. tox: we're looking forward the president's state of the union address tonight, but what about those approval ratings? the bloomberg is tracking his approval rating, the white line, and the disapproval rating, the blue line. this is the most disapproval rating we have seen in modern history for a president coming into his first state of the union. joining us now, libby cantrell. what can president trump do today? libby: if you unpack it, you see in his ownmbers party are quite high. this means that the numbers are quitependents low, bringing down the average. as a result, what he can do is try to be more unified, strike a more conciliatory tone. there are issues like immigration that are contentious right now. there isn't a lot of agreement between the parties. the town that he said very important. -- tone that he sets is going to be very important. alix: are you describing teleprompter trump versus twitter trump? libby: yes. trump, like last year, i think that is what we will see tonight. i don't expect of you will see anything very contentious on immigration, but he will say some things on trade. it is unify the more ideological sides of the party. what items do you need to see democrats standing up or clapping for? libby: infrastructure, we talked about this before, president , if he had led with infrastructure, there is so much bipartisan support for that. at this point, unfortunately, just because of what has happened over the last year on the democratic side, i don't think that there is a lot of will or appetite among democrats to meet in the middle on infrastructure. however, if president trump were to endorse a big infrastructure package, you don't see him on infrastructure, you know that they are dead on arrival. alix: good point. i'm glad you mentioned federal support. i feel like what the market will be unpacking is -- what kinds of initiatives will lead to a bigger budget deficit? of can see it here in terms the deficit that grew after the reagan-bush tax cuts. regression is really going to pick up over the president trump 10-year. tenure. analysts, including myself, think it will be difficult to get done, especially in an election year and given the polarization and partisanship on capitol hill. a bige could see is budget agreement. democrats want an increase in nondefense discretionary spending. republicans want an increase in defense spending. how do you bring that together? 100 billiond see is dollars, or more, for fiscal year 18 or 19, adding to those deficit numbers. bex: all right, libby will sticking with us. story, there. amazon, berkshire hathaway, jpmorgan, to create an independent company to create health care for its employees. it will be a not-for-profit. brent saunders saying -- well done, we need more innovation to improve the delivery of care and costs. this is just the beginning of the privatization of the health care industry and disrupting it. we will see a big selloff in the equity market. this is bloomberg. ♪ retail. under pressure like never before. and its connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's 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. >> mrs. bloomberg daybreak: europe -- this is bloomberg daybreak: europe alix: if we see a selloff today, it would be the first time we see one since last april and s&p futures taking a leg lower despite a selloff yesterday. also gettingstocks hit, despite the fact we wound up seeing the best annual growth for the eurozone since 2007 last year. other asset classes, feeling calm. in the dollar is weaker on the day, euro-dollar at 1.24. sterling making a climb higher, despite disappointing economic data. yield grinding higher in the u.s., 10 year at 271. and crude getting pummeled again. another bad day, off by about 1%. of course, the news in the market we are watching is everything having to do with amazon, berkshire hathaway and 1%. jpmorgan teaming up to create a health care coming to provide services for u.s. employees. there is a lot we do not know, but stocks taking a hit anyway. insurers nervous when you say the word amazon and industry in one sense. and david westin is in washington working like a 17,000 hour day and will be really tired tomorrow. david: i wish i was there talking about amazon. we will be doing the state of the union tonight, we will have great coverage for people. the president will talk about immigration, infrastructure and he has already made history, a typo in the tickets that were sent to those attending. they misspelled the word "union" and had to issue new tickets. in fairness, it was not the fault of the white house, it was the sergeant of arms, the house representative. they had to issue all the tickets again. alix: do you think you get a slap on the wrist for that? that is a big one. david: pretty embarrassing. if you are the president, you say, you do not have enough problems. it will be interesting. see which one we get, teleprompter trump or twitter trump? david: they say he is sticking to the script. you remember in davos, he stuck to the script. alix: very levelheaded, even when he was not on teleprompter, he was very presidential. it seems if you want to make a bipartisan presentation, that is what you have to do. david: he says he wants to reach across the aisle. we will find out if he does it. heather headlines -- the other headlines, we have kailey leinz with first word news. arabia says dozens of business executives and p rinces were detained, 65 still being held. the estimated value of settlements is more than $107 billion. kailey: the u.s. ramping up pressure on russian interference for the 2016 election. the treasury department released a list of 210 of the country's richest tycoons and allies of vladimir putin. the government says it is not a blitz, but being on it and refusing to do business with a person. the euro area economy wrapping up its best year in a decade, gdp rising in the fourth quarter. the regional economy grew 2.5%. regional has not seen -- europe has not seen that growth since the 2008 crisis. now a pillar of the global economy. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. alix: thank you, so about a year and a change to go if you are going to look at the trump presidency. you bought the dollar and sold bonds, but not a lot of the trade has worked out. the dollar will continue to grind lower, you wind up having yields below a lot of yellows -- levels we were thinking about. still with us, libby cantrill. love to talkmp about the market, but with a big selloff underway, so how does this factor into the state of the union? libby: he does like to talk about the stock market, not the bond market, which is where -- alix: he does believe that out. libby: i know. been ahis credit, it has banner year for equities. 2017, very high prices for stocks, obviously. reallye animal spirits came back because of the tax bill, so some of his policies have something to do with the market response. today's selloff he will probably say it is just noise and it will keep going up. alix: fair point. we've also seen for earnings, revisions for companies have been really high, in particular because of tax reform and the tax cut. from the work you do, you are a bond house, are the revisions sustainable or is it a frontloaded revision and will be harder later on? libby: that is out of my wheelhouse, but what we see is tax reform is impacting companies in a way that companies obviously are -- what they are doing for employees, for the compensation for employees, so from a political perspective, which is more my lane, this is feeding right into what president trump and the administration wanted. they want the tax reform to boost the after-tax incomes, it is a question of whether it is sustainable. is it public relations or something that companies will keep up? david: the state of the union looks forward and back, back in what has been accomplished, but looking forward has the president basically done what he can do for the economy for investors, in the tax cuts, also in the regulation? -- in deregulation? is there much to do going forward for investors? libby: from a deregulation perspective, which is just starting as you know, regulating takes a long time but deregulating takes a long time as well, so many agencies are just getting those trump nominees confirmed and getting traction, so we will see the deregulation story playing out over 2018 and 2019, but from a physical perspective outside of the budget agreement, we talked about you probably will not see much legislatively that will move the needle from a fiscal perspective. again i am skeptical that we will see a big infrastructure bill, it is a midterm election cycle and given the polarization on capitol hill, do not think we will see infrastructure. look could play poorly with the market is protectionism. i think tonight that a lot of market watchers and policy watchers will be really sort of watching what the president says with regard to china, with regard to nafta. nafta seems like it is going better, but china think will be a focus and i think the market has become sanguine that we will see protection, because we have not seen it yet aside from measures last week. i think they are forthcoming, i think we should take the president at his word that he does not believe other countries are playing fairly. david: on the deregulation, it does take time for them to get off the books, but you can deregulate by who you put in to enforce them. we will give you the stress test in advance, it will make a big difference to the banks. you can hear the ceos say it makes a difference, but how do you know when it is affecting the economy and companies? libby: personnel is policy for sure, so getting the right people in place, that is why this story is more of a 2018 story, because people are just getting confirmed and into place because of sort of the slow process, both in the senate confirmation and the nomination process. round is squishy, it is a the edges and i think that we are characterizing it is this is more evolutionary. this is, yes, you will see it impact certain companies and sectors more than others, and it could lead to some sort of support in growth, but it will bigbe any sort of inflection point from a growth perspective. alix: on the agenda, some -- few others know what it means to five policy better than joe lieberman. he served for over two decades and was a democratic party nominee for vice president during the 2000 election. today he is an independent and cochair of no labels, a national group dedicated to ending partisan gridlock. it is a pleasure to have you here. >> great pleasure to be here. alix: take us inside the room tonight, if you are still a senator and you wanted a bipartisan agreement on something, what would you look for? >> it is all up to the president. it is his night and he sets the tone. so i hope he does it in tone and substance, that he reaches out to democrats. and at a fewlmaker times in his presidency, particularly that time he had an agreement with nancy pelosi and a chuck schumer to get, to give the government going. it was not only good for the government, but his popular went up too. the whole group of people in the represent, want to have happen, so it is up to him. when he talks about tough issues like immigration, i hope he will be open to democrats sitting down and negotiating. you cannot get anything done -- alix: he offered. give me $25 billion and i will give you immigrants, what is wrong with that? joe: it is not the bad -- a bad beginning for negotiation, but i'm not sure he will get enough support to get something done. if you go for 100% of what you want, usually you end up with 0%. youif you can negotiate, can come up with 50% or as my daddy is to say, a great deal is when they think they got it percent of the deal. -- 80% of the deal. some issues like infrastructure, there is an inherent bipartisan support base and he has to draw it out with a good proposal. make the democrats feel involved. his base is pretty loyal to him, so he does not want to abandon them, but they have to understand to keep the promises he made to get elected, one of which was to make the government work again, he needs to negotiate with democrats. david: senator, to keep the promises he made to get elected, that is one of my questions -- you have been a successful isitician, to what extent the president putting himself in a corner that you cannot reach out on a lot of things from a bipartisan point of view, because he has made pledges to his base that are hard to climb down off of? joe: i hope not, i think he has an understanding base. remember that line last year, maybe during the campaign, when he said he could go out on 5th avenue and issued somebody at his base would still stand with him. not quite that extreme, but he is there a voice and is there hope -- their voice and hope. he has the strength to say to them, to get something done on immigration, on infrastructure, things that you care about and i care about, i had to compromise, but we are making progress. i think he has power there that he can use and it will determine, friendly, whether he is a great president or not. david: take infrastructure that you mentioned, does he have the wherewithal to step up to the table and really put a substantial amount of money on the table, he is talking about $2 billion, people think that is a small down payment, can he cuts?like he did on tax joe: he is now coming into the infrastructure debate, having passed the tax reform, tax cut bill that will give us, that will help the economy in the short run, but in the medium run maybe, but in the long run it will increase the debt at least $1 trillion and it is something better grandkids will have to pay. there was -- it is something that are grandkids will have to pay. there was a plan to put overseas money into infrastructure, but in a way that has also been used in the tax cut bill, so he has to come up with some very clever, private sector ways to finance infrastructure. it important thing to say is is a win-win, just a long traditional lines, the business community wants it and it is good for the economy, and labor unions want it and therefore democrats will be supportive of it. it creates jobs. so let's get together and have a big national infrastructure program. sometime ago and it is embarrassing to see how effective their trains are, how good their roads are, compared to our roads. we have to catch up. alix: looking ahead, the midterms later this year, if you were running for reelection, how would you think about working with president trump? would you want to make bipartisan deals to be a brutal orto be able to sell it, would you tell the party line and say i am not talking to you? joe: that is not the way to get something done for your constituents, and it is not the office in thefor first place. the president is a president like none we have ever had before, and i have tried along the way to say, i agree on him with him on that, and i disagree on that and i will say it both ways. there is all this flack coming out, with the twitter and tweets and all the rest and personal attacks on people, but you have to try to separate it out, even though it is hard to do, and really focus on getting the job done. that is what i would do if i was running this year, to say he is the president, he got elected, and i have to work with him if i want to get something done for my country and my constituents. alix: quickly, there is talk that the rnc should give back the money that wynn helped raise? what do you think? joe: i am independent and a democrat, so -- alix: you know what it is like to raise money. joe: it is their call. it is really a tactical call, are they going to take more abuse for not returning the unbalanced, they will probably return appeared alix: it is a pleasure -- return the money. alix: it is a pleasure to have you, joe lieberman. libby as well bid david, big day -- as well. david, big day for you. david: we talked about it before, we do not know which president will show up tonight. we will be covering a here on bloomberg tv. alix: coming up, a big week in tech earnings. amazon reporting. we take a look at a new partnership between j.p. morgan and berkshire hathaway and what it says about their plans. and you can tune into our colleagues today from 7:00 a.m. until nine at 5 a.m. in new york york.il 9:00 a.m. in new it can be heard all across the u.s. on sirius xm. this is bloomberg. ♪ alix: -- i in the hewlett-packard enterprise green rampant coming up, the u.s. equities head from deutsche management. alix: big news, amazon finally making it foray into the health care industry, and often a partnership with berkshire hathaway and jpmorgan to form a health care company. joining me is david kirkpatrick, what did you make of this? david: i think it is brilliant and brilliant especially for amazon, which one might argue is the most brilliant company in the world. because number one, amazon is already moving toward broadening its services portfolio and everybody knows the scale of the health care industry is a great opportunity. so far it has done nothing in terms of health care services, but you know given the smartness of that place, that they have been working on all kinds of ideas. they also have over half a million employees, so they have huge health care costs themselves. so they joined with two other employers to test what is i think the future model of american health care, which is combining insurance and health care provision. in other words, the same company owns the insurance company and the doctors, and that basically aligns the incentives and gets rid of waste. they are doing what we have to do in this country, and i hope it works, because it could be a good role model. alix: good point, what is this alexa, ibe, an app, need a refill of antibiotics, is it going to be a wider array of doctors? we do not know those things. david: i think you'll be on those days to some degree. the key point is that when you cut out all these intermediaries in the health care system, you can make people healthier and save money. kaiser permanente is a great example of a company that has been around for many decades, and is the role model for american health care. i have heard it said that we are going to the kaiser-ization of the health care system, but we do not know it yet. amazon is a creative company and this is gratifying, and with everything with amazon, scary. expensive,tially because at the end of the day you need healthy people to pay more to lower the cost. do you care about the kind of effort amazon will have to put into this in terms of money, profit margins? david: no, because they think it will save them money. you have a half-million employees, or more, and you are already suffering from this enormous, chronic tragic and efficiency of american health care, which makes us competitively disadvantaged around the world and it would've frankly be not nearly enough on the front burner of policy discussion. it has nothing to do with obamacare, that is a tiny step in the right direction may be, but we have fundamental reform needed and they are saying, we will do it ourselves. alix: and it comes into a broader sector. we are looking at tech earnings, the forecast, versus the forecast for the s&p. s&p a big move up and attack has not, underperforming. but the stocks are pretty robust. what do you make of the earnings and what do you make of the strength of the equities? david: both basically super positive, you know, i mean all of the big tech companies, the lowest of the have gone up as a percent -- 8% since the beginning of the year. the whole market is doing good, but they are doing very well. some of them doing better than others. google and amazon, amazing. microsoft and facebook. are infacebook and apple a different category right now for different reasons. but if you look at amazon and google and microsoft, they are, simply all these companies are operating in one of the best economies ever, at a time when they are aggregating a larger and larger percentage of the profit of the economy to their small number of companies, because of their extraordinary scale, efficiency and of the nature of their businesses. as the economy gets better, people will advertise more, meaning google and facebook will get better. that is happening. as people realize the importance of technology, they will use cloud services and it will benefit amazon, google and what is -- and microsoft. microsoft is coming on very strong. google's third, doing ok and getting better. client services are a huge -- cloud services are a huge business. they are serving consumer and enterprise, making tons of money at a time when it is basically easy to make tons of money in this economy. alix: apple, we got a downgrade today from deutsche bank, saying there is no super cycle, it is a refresh cycle and you said apple is in a different category. david: they are a hardware company, that is where the margins are. i feel like, i have vacillated over the years on apple. when they were in the doghouse, i said they will come out of it and it they did. i get skeptical when anything is considered to be winning everything. right now, that is not the perception. i think they have a big challenge in china, because chinese companies are competing with them in new ways. the iphone x, or 10, is supposedly not doing as well, not a big deal. i think that the iphone sales will continue to be good and the company is basically fine. alix: david kirkpatrick, thank you so much. i love the passion. david, the tech community will be tuning into the state of the union. watching it up until midnight. have a lot ofhs issues here in washington. three of the possible locations for amazon headquarters, their second headquarters, are around washington, so amazon is paying attention here, no question about that. we will have coverage of the state of the union tonight at 8:00 p.m. and the president and first lady -- i do not remember a time when there has been this much buzz about the democratic response, it is joseph kennedy iii, a young congressman out of massachusetts. he has succeeded barney frank and he is a dream candidate. he is a kennedy, his grandfather was robert f kennedy, his great uncle was john f. kennedy, and he went to stanford undergraduate, he went into the peace corps and learned fluent spanish, then came back to harvard law school where he met his wife studying under elizabeth warren. and he does not like publicity. alix: that is unusual. this is a coveted spot for people, this could catapult people into the spotlight. david: they are putting forth a new generation, and one of his best friend is the number two on the republican side, the house side, mccarthy, they work out all the time and he thinks he is the best guy on the democratic side. "i think he has more potential than anybody else on the democratic side because of the way he carries himself, the homework he does and his ability to serve." alix: great stuff. we miss you, but have a good time tonight. we are still looking at breaking news, amazon, jpmorgan and berkshire hathaway teaming up to form a health care company. in the meantime, we have a selloff underway, dow futures off by double-digit. -- by triple digits. this is bloomberg. ♪ alix: from new york city, for our viewers worldwide, i'm alix steel and we are 30 minutes into the start of trading. this is the countdown to "the open." ♪ alix: coming up, health care prime, berkshire hathaway, jpmorgan and amazon announcing a plan to collaborate on healthcare services further u.s. employees. the great divide, equities taking cues from their brethren, selling off and putting in the best start to a year since 1987 in jeopardy. the president delivered his first date of the union this evening, investors hoping for clarity on spending at the gop -- as the gop agenda faces reality. 30 minutes until the open, here is what we are looking at. a selloff underway, futures off by 19 points, triple digit selloff underway and of the doubt -- in the dow. we have not seen the since last april. will we see it today? the dollar is weaker, the yields grinding higher and commodities getting hit. diamond, basis and buffett,