A soft feel for a lot of these markets. Futures at the moment, 15 points on the dow. In europe, the dax down by 1. 4 ine point force the red. A break below 1. 07 for the first time in a team as per this is the kuroda pain train. Another four percentage point spirit as the dollar weakness kicks in, it is another weak dollar, sinking to another 11 month low. A weaker dollar, commodities go higher. That is intact. A lot to break down in this market ahead of those earnings across the oil majors. But now lets get to breaking news. I roe v is going to buy have the roe v stock appear over the last year. Let me throw up tivo here. To see just how it is done over the past year. It has come down over the past year, but it will surely rise today because it is trading right now for 9. 42, and it is 70 g offered for 10 10. 70. Pampers ofeenex, the whatever you call these settop boxes. Lets look at the shares in europe. Was onceell after what the most profitable carmaker in the world reported a loss for 2015, 311 million. Hitting down over there. Volkswagen, worth 3. 4 billion euros in 2014. That has gone to a loss of 403 6 billion euros this year. Of 436 billion euros this year. Net liquidity fell 25 . This is a company that needs liquidity in order to invest in new products. Although i wish they would just go back to the air cooled, handbrake, mechanical steering products they are known for. Rbs reporting the deeper First Quarter loss as it repays the u. K. Government for support received during the financial crisis, saying it will take longer than expected to resume dividends. Shareholders do not like that. The net loss is more than double, to 1. 4 billion. Amazon shares soaring in the premarket, getting back to u. S. Focused stocks after sales and profits topped estimates on robust amanda quick turnaround delivery. The kindle and the echo i do need i do not even know what that is. Carol it is a box that you talks to that you talk to and it plays music. David you just talk to it. Carol cory johnson has one. Matt i will get one and figure out how it works. If you had invested in amazon five years ago, you would have triple the money that you had been. S p byetter than the 50 . Shares in gilead are down after profit missed estimates ahead of its blockbuster treatment. John milligan said gilead is aggressively looking for ways to invest cash, including potential acquisitions. You may have never heard of auto leave, but it is a Worlds Largest acquirer of auto safety parts. Of him plate of replacement insulators for airbags, in the wake of takatas trouble with airbags. This is getting a lot of hits on the terminal. A lot of people are looking at autolivo leave this story in sweden and here. Back to you. Jon time to get some ecodata out of the eurozone. Inflation fell again last month to 0. 2 . Despite the forward Economic Growth, the price to the upside, the data highlighting a conundrum for mario draghi. Lets bring in jeff black from frankfurt. On the balance of things, is it good news for draghi . Will he take an upside risks to growth and a Downside Risk to inflation . Jeff i think it is good news. Mainly because it is better than expected growth print today. 6 versus not. 4, which was our consensus. I think mario draghi would take that any day of the week. Considering the First Quarter worries we had, this is definitely good news. We knew inflation was going to happen. That is because of oil. Jon do you think the base effects continue to weaken throughout the year . Far all of the signal so are that in the second half of euro area inflation will pick up, perhaps even markedly. It is still a long way from where it is supposed to be, but what we are really interested in here is the underlying momentum of the economy. That is why todays data is, on balance, good news. The fx channel, a lot of people said it does not matter as much to the ecb, is a wanted a year ago, two years ago. As the euro get stronger, does it become more of a headache for the ecb . Jeff it has always been something that policymakers have kept a close eye on. If it does start to get out of hand, then you will see policymakers making statements about the willingness, ability to ease Monetary Policy further. They can still do that. And if through the currency channel the financial conditions in the euro area start to tighten, then we will see a response from the ecb. Jon good news from the eurozone. Jeff black from the eurozone jeff black from bloomberg. Thank you. David the interplay between the Central Banks and the economies we want to bring in now somebody who knows about this, david stockman, the former director of omb under president reagan. Know about this interplay. This is my question. Which is the chicken and which is the egg . Are the economy is driving the economy, or are the Central Banks are the Central Banks driving the economy, or is the economy driving the Central Banks . The real economies in the world are freighted down with debt. There has been a massive credit bubble for the last 20 years. For ae had enough capex decade. As a result, we have way too many commodities. Commodity prices are falling. The export industries are now shrinking everywhere in east asia. This morning you saw taiwan had negative gdp in the First Quarter. Exports are down 10 to 20 in china, korea, japan, and so forth. When we had is a world going through a deflationary adjustment from a long credit binge that the Central Banks cannot do anything about. If they pretend that somehow they are stimulating growth, the only thing they are doing is stimulating more speculation in the Financial Markets. We are at month 89 effectively at zero Interest Rates in the United States. That i think is lunacy. What kind of pricing is that . That is falsification of pricing. Is only thing it does basically fuel speculation on wall street. David you have been consistent about this for some years, going back to your book. . Hat is different today is it the same story as 2013 . What is new . David it is the same story, we are just to the iceberg. We have had such a massive injection of credit by all the Central Banks in the world, to which of 30 trillion of debt today pit 230 trillion of debt today. A decade ago, it was 40 trillion. That is why china is falling apart. That is why australia is going into depression and why canada is in the tough shape it is in. Economya morningafter that the Central Banks are not prepared to deal with. They know one thing. If the only tool you have is a hammer, everything looks like a nail. Everything to them looks like ease further. Bear into negative Interest Rates. Isnt that crazy . Carol we want to bring in matt with an interesting chart. Matt i am looking at the stock performance. From the bottom of the financial crisis, remember, the dow was at 6000, the s p was trading at 666. Andopriately, gold in gold, cash in green, stocks have outperformed these assets since the end of the financial crisis. Why, if everything is so bad, have equities done so well . David i think that is the point i am making. All of this liquidity has never left the canyons of wall street or the equivalent Financial Markets in london and elsewhere around the world. The inflation we have had is inflation in the price of financial assets, not in the price of goods and services, because we have excess capacity around the world. A growthem we have is problem, but easy money cannot have the impact on it. Carol how do you fix it, at this point . What would you recommend to the political candidates . David demand the resignation of every Single Person on the Federal Reserve. In, andho would you put what would they do differently . David at the Federal Reserve . Whocannot have people believe you can control and 18 trillion economy with Interest Rates when we are at the zero bond already. When we have an economy that has 62 trillion of debt david be specific. Who agrees with your point of view on this . And what would they do . They wouldink what do is normalize Interest Rates by allowing the market to set the rate. In other words, Interest Rate of the most important price in all of capitalism. They ought to be set by supply and demand. The supply of real savings not credit created by the central bank that buys bonds but real savings balanced against demand for longterm investment. I think Interest Rates would be a lot higher, and they would move around and adjust as Economic Conditions change. Right now we have monetary central planning. They are setting the prices, taking the Interest Rate, and the inflation rate on a yearoveryear basis is 2. 2 encore cbi, so you cannot have negative money market rates for 90 months. So i was say they should be 3 or 4 in the money market, in the yield curve should go from there. Compare that to what we have. It means everything is mispriced. Real estate is way overvalued because the cap rate is being set by the 10year bond. You put an iceberg at the end of it. I would say we have already hit the iceberg and we are on a multidecade run of going nowhere like japan. Why in your thesis is their catastrophe at the end . Why is there not just this for multiple decades with a big debt burden . Do you factor that in . Is that something that just can happen to japan for several decades now . David the problem is, the Central Banks will not leave well enough alone. They keep trying to stimulate. Look at the madness going on in europe today. Negative Interest Rates in europe they are killing the banks, creating a huge political debate across the central bank itself. Look at japan. It is almost an oldage colony, and they have destroyed the entire yield curve on the japanese bond being below zero or close. 40 have near japanese bonds are trading at 30 basis points. In 40 years, japan will be an entirely retired country. There will not be anybody there. This is the nature of the distortion. The question is, we have got to allow get the Central Banks out of the pricing of debt, out of carol i think they would agree with you at this point. David they would agree with that because they are petrified of a hissy fit. Otherwise, they would have raised Interest Rates in march. David now you can see why we love to have David Stockton on. Lets go over now to vonnie quinn. Polandsupport of british membership in the European Union squared off today. The bloomberg the brexit debate, hosted by francine lacqua. Is valuable for jobs, it is valuable for investment, it is valuable for the future prosperity of our country. What they tell us is that they do not see any way of getting that same Market Access from outside the European Union. Situation in the u was not satisfactory, and it needed radical change. I am sorry to say i do not think that medical change that radical change was met, it was disappointed. On balance, not an easy decision, we ought to leave. Carol the referendum vonnie the referendum on e. U. Membership is june 23. In southern california, a demonstration against donald trump turned violent. While he was speaking nearby, hundreds of protesters threw rocks and stomped on cars. Police arrested 17 people. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am vonnie quinn. Carol . Carol coming up, after a week of inciting, Deutsche Bank is losing one of its Supervisory Board members. Details coming up next on bloomberg. Jon the ftse 100 is deep in the red after three quarters of 1 , led by hsbc and bp stocks. We will talk about those companies in a moment. I want to cross over to germany because after a week of infighting and turmoil, one of Deutsche Banks supervisors will step down. He was criticized for being overzealous in requesting internal probes of company executives, including the bank chairman. I want to bring in Michael Moore from london. The first question everyone is trying to get a handle on is whether this is about an executive board member that overstepped the mark, or whether this factors into the Overall Program of keeping costs down. Which one is it at this point . Michael i think that is the big question. I think we are trying to figure that out. Hasan, the Deutsche Bank been criticized for not just being slow but for spending so much on these investigations and not wrapping up the outside probes quicker. It has been an overhang for several years. John cryan has said he wants to be this up. But this is a very unusual situation, the cousin of the public nature of the fighting. Having multiple Board Members coming out and speaking out against another board member, not something you see very often. Jon is this the end of the argument . It came to light a couple of weeks ago before the Deutsche Bank numbers came out. Is it the end of the argument on who was the peacemaker, who made it a final decision to push this get rid of this guy . Michael the chairman was brought in with his mandate of fixing some the compliance issues that Deutsche Bank had, wrapping up the legal issues, and some are out there saying, what did you expect when you brought an experienced lawyer in with his mandate . He was going to be aggressive. Clearly there was a divide them, and it is interesting that act lightner withot been very public his criticisms. It has been other members of the board speaking out against thoma. So the chairman seems to be in charge here, and he has had public displays of support him some of the shareholders in recent weeks there is in recent weeks. David coming up next, who is going to be the next treasury secretary . We will talk about that next. Jon this is bloomberg. Lets get a check of the markets for you. Futures are lower, but the story to the fx market, a weaker dollar, an 11 month low. What does that mean for dollar yen . Stronger japanese yen. 107. Through more pain for governor kuroda, dollaryen down by another 9 10 of 1 . Up another full percentage point. Matt miller now with some big calls. Matt i am starting with a small one. Assetoup global strategists are thinking small after cutting Global Equities to slightly underweight from neutral. It prefers being overweight tobal Government Bonds highyielding once. Electrolux was upgraded at barclays based on improving sales of Kitchen Equipment and vacuums in the u. S. Stayingin europe are higher, and sales and brazil are holding up. Back in the usa, Bankamerica Merrill Lynch has downgraded shares of ford and fiat chrysler. Ford cut to neutral from a buy equivalent despite reporting record profits yesterday. Was it yesterday or two days ago . Yes, yesterday. Fiat chrysler load lowers to underperform. David . David it is time for bloomberg trends, where we look at top stories on the terminal. Caroline came in this morning and said we both read the same one. Take us into it. Thel c it breaks it down by potential president ial candidates. For hillary clinton, she could be one of the individuals. Donald trump is considering carl icahn. David co and jack welch. Trump has same he would name carl icahn at one point. Carol we know him well, activist investor. David ted cruz has phil graham, a former senator. He does know a lot about the economy. Carol he also talked about mitt romney. David mitt romney as to hurry secretary as treasury secretary, there is an idea. Carol a really good match. It just tells you something about the psyche, about how they are thinking. She has been out there for the individual investor, out there for consumers, so i think that is interesting. Hillary clinton, another possibility sheryl sandberg. David part of my reaction to this is, the clinton candidates are really serious candidates. Carl icahn, jack welsh yak up these are serious people, but as treasury secretary . Carol we will see what will happen. Coming up, everybody, to brexit or to remain. That is the question in everyones mind. That is coming up next. Jonathan this is a bloomberg go. Breaking news on valeant. Matt the basic story is they are saying that they have added no items that require restatement and they are in full compliance with the credit packs and senior notes. They say theres no concern of default since they have filed the 10k. They do say that internal controls were not effective. I am watching the headlines role across the terminal now. That is fairly interesting. They do plan to file statements for year and today. For year end today. They say there was existence of Material Weakness. This stuff, and armstrong is more of an expert, is kind of expected i would say. The most interesting story for me is from yesterday that it popped up to millions of dollars. Carol lets bring in armstrong. Youre looking at the 10k, what stands out at you, drew . This andt they filed that there are no major, major red flags. The stuff about internal control, we have known that this has been under significant pressure and that there are weaknesses that they had to restate or they said they would have to restate some of these and had campbells play out in public. I think what people will be pouring through later today is that they will be going through product byproduct, unit by unit and say, how are the underlying financials of the company . Actual impact the to this business of everything that has happened over the last six months. We look at the last quarter of 2015 to start to assess that. David i am reading the 10k now and it does say that they restated unaudited quarterly of 2014 andthe last the first three of 2015 and six months into june 2015 and nine months into september 2015. Was that expected . Through that was generally in line. This was related to the pharmacy, where they were recording sales that they could not have recorded and were double counting some. It is a relatively small dollar amount, at least that is what they said. I have to go through and check, but that is in line with what they were saying that they would have to do. David a larger question, a lot of the growth in the past has been they have been able to raise prices dramatically. We just that hearings in washington where they said they would not do that anymore. How will they get revenue growing at anything close to the rate from before . Dre they will not. W drew they will not. It is reflected in the stock prices as we have gone through the company and their shares. A huge part is wrapped up in scandals and investors saying, this company is not growing with massive doubledigit increases and being able to take the practices. There is a fundamental reflection of what the business is, as well as all the other things. Jonathan when you have to read a headline like this, with all the filing, that means you are in a bad, bad place. What is next . Crisis management when bill ackman talks about turning away a company that was heading toward a groep see apparently, at this heading toward bankruptcy, at this point, where they had it . Drew they were not getting financials in on time and they were debt holders that said, you are in default, a technical default, but we need to see what those are, so we can they have got a new ceo now. 67. 4 but they are paying million. Potentially more of the stock goes up. A huge amount is high to target. They will not get a lot if it does not perform an euro get much more. Hundreds of millions of the creates a similar return for shareholders. Carol is there a date on the calendar we should be watching . Drew i think we want to know the next q results now. That is when everything hits the fan. Carol we will bring you back later. Drew armstrong, thank you. Lets turnover to vonnie quinn. Verge the u. S. Is on the of giving israel the biggest military aid package ever, but the animosity between president obama and Benjamin Netanyahu has slowed matters down. Officials are insisting on more generous terms for a 10 year deal that could total more than 40 billion. The debt crisis in puerto rico is in a new phase. Unless the u. S. Can strike a deal for the 422 Million Dollar bond payment in the next few days, it is in danger of a technical fold. Congress is working on a rescue plan for puerto rico but it probably will not be ready until lawmakers return on may 10. The state of colorado is considering a radical change in health care. In november, voters will decide whether to abandon president obamas Health Care Act and create a taxpayer financed system that provides coverage for everyone. They say most people would save money. Others say that the details are too vague and costs too much. Global news 24 hours a day around the world. I am vonnie quinn. Jonathan thank you. Battle continues. Bloomberg hosted a debate today moderated by francine lacqua. Take a listen. We want free trade in europe, from the International Relations with europe. That is the right longterm place to be. This decision is about the future. It is the longterm health of this proud nation. I am afraid there will be advantages for u. K. Consumers, businesses and for the u. K. In case of leaving. The present situation in the eu is not satisfactory and needs change. I am to say i do not think that that radical change was appointed, and given that we did not achieve what was necessary then, i think it is not an easy decision. The value of the single the eu butot just in around the world through trade deals and it is valuable for jobs, investments, for the future and prosperity of our country. They do not see any way of getting that same Market Access from outside the European Union. To be looped into an tied into a political project which we do not want to be part of, we dont agree with, and is something which we will do far better with the freedom outside the European Union. I think that the u. K. Should stay and the damage will be much bigger for the u. K. Then the eu. I am pleased to say prancing joins us now from london. It was i am pleased to say francine makua joins us now from london. After about what happened june 23. The details, the regulations, what it with the gleick with without a trade deal in europe. What with arguments on either side . Are right. Ou it was very emotional and i was a little bit taken aback about some of the arguments because when you look at the trade, when you look at how they can we negotiate, at the end of the day, no one really knows. They could take a leap of faith and say, we hope we will get a better trade deal with the u. S. , i hope we would get a better trade deal and the Prime Minister of the u. K. With some of the Asian Countries or you say, why am i risking this . At the moment, the u. K. Is not doing as well as they could, but it is better than the european economy and a lot better than other countries in the world, so who of the debate was on you would renegotiate trade deals with and we just do not know. And when interesting point, made, when you look at the popularity of donald trump, the popularity of more extreme politicians around the world, a lot of countries are becoming isolationists and it might be more difficult for the u. K. As a standalone country to negotiate some trade deals. Jonathan i thought the comments around how a lot of the world is not in the eu and a lot of them are doing ok outside of the eu interesting and the rules and regulations around trade, the former chancellor arguing that one point that they would not need a complex trade deal and it would not make much of the difference. Break that down for us. Francine this was probably one of the most important points of the debate, and this is something that we have heard where certain finance ministers in europe, especially the french and german. Lets say the u. K. Decides to leave the eu, they would have to negotiate trade deals. One of the chancellor or former chancellors, who was a probrexit campaigner said it does not matter and it will not always been the best influence of germany to allow this country to sell this to them. The argument that the procampaigners were saying is that if you are the german finance minister, the french finance minister, you could also make the u. K. Pay. You do not want to be part of it, i would not give you preferential trade agreements. At the end of the day, that may be hurtful for the u. K. The other point that i would make that some of the other panelists tried to make is that president obama is coming here to the u. K. , making a point and saying, you have to remain in the eu, that makes more sense. To me, that is an indication that for the u. S. , the greatest superpower in the world, the u. K. Is much more valuable as a partner if they stay within this union, and this is something that they were refuting. Jonathan on a final point out what you said about president obama, is it an offense that this debate is more important for the rest of europe than it is for the u. K. Specifically . Francine a little bit of both. When you break down really the argument of the brexiters, people that want the u. K. To leave, they say, look at president obama, they are asking us to do something that the u. S. Would never do, give up sovereignty. They would put them in a terrible position, but it u. K. Leaves the eu, what desk scotland and wales become . And they could also see an implosion of the united kingdom, possibly. Jonathan thank you very much for working overtime for us today. David that was fascinating. Coming up, amazon has earnings that Beat Estimates. A big Internet Company having a good day. That is next on bloomberg. I am matt miller in the hewlettpackard enterprise greenroom. Do not miss linkedin ceo jeff weiner in the 9 00 hour on bloomberg. Vonnie your latest business flash. I am vonnie quinn. Wpp is looking for candidates to replace founder and ceo. 71 he is 71 and has not announced plans to step down. They say they have a strong move of internal and external candidates and they say that the ceo is hate and equivalent is the top paid ceo in the u. K. Mastercard and these that are trying to work out the bugs in the chipbased card. They got complaints about slow time, so they came up with new cards to make the process lasted. It will increase the checkout by 10 seconds. Spacex contract bid less than what they estimate it would cost to launch a satellite for the air force. They plan to cut costs by you reusing the first stage of the nine rocket. Cash of the falcon nine rocket. Soaring ason shares they posted firstquarter sales yesterday that the acrosstheboard. Everything was up. For, we will turn to Bloomberg IntelligenceCharles Allen, over in london, one specific thing that jumped out, we know about the Cloud Services and how that is doing well. I did not realize how important it was. About 10 of revenue comes but two thirds of the profitability was in that last quarter. Charles and 62 over the last months, so it is important and giving a real bedrock to the earnings, which we still have the volatile intel, which was good this quarter, but now you have a solid base. David do they plan to increase the petition for the likes of increased apple the competition for the likes of microsoft and apple . Charles and google. Yes, they do. The only people that quantify the revenue on this and the growth rate is extremely good and a bit behind some of the smaller people who are trying to catch them up. Ongoing debate about, yes, amazon sells 107 million worth of goods last year, we know that, but the earnings have not been there because they are spending a lot on content and other things in warehouses. Has the financial equation for the Company Really started to turn in earnest . Charles i big receipt in north america. The north american scale is pretty big, 50 bigger than best buy. So you have a company that should be making more money and i think the thing that we have been concerned about, the amount they were spending on shipping, which is still high, what the cost of the content you mentioned at some of the other programs. Were they able to sort of leverage this against continuing growth . Carol we will come back to the amazon store it in a minute, but we have a story crossing the bloomberg. Matt a number of headlines in regard to valeant with investigations. It got a subpoena demand from the l. A. Staff concerning philidor. It has an investigative demand from the state of North Carolina department of justice, document subpoenas from the new jersey state Securities Exchange commission, so it has got a number of investigative demands that we did not know about previously. Check out valeant stock. Let me kill this legend. We saw after the 10k was filed to jump to a more than 3 gain and now a drop of 3. 5 after those headlines cost the ticker. David these are new investigations. They are the habit their number of ongoing investigations that have not been resolved. Matt absolutely. I am sure they have a lot to wade through, but a lot of investors initially saw this 10k as a cure for a possible sign that valeant was back on track. These new investigations are making investors take a second look. Carol it is an opportunity for valeant to lay it all out. We will continue tracking that and get back to two armstrong it back to drew armstrong and bring you more. Lets get back to the amazon story with Charles Allen in london from a Bloomberg Intelligence theme. What is next . Whatever looking for from amazon next . Because it provided a lot of upbeat investor news. Charles the north american expansion is to be sustained after the stockbased optimization and about 2. 6 , which is low for a company that size, so we would like to see that the expand. Will justnally, it about breakeven and there are a lot of investments in india and it might be nice to see some details about the progress may be and when we expect a break, but then the rest of the international segment, mostly germany, the u. K. , japan, we would like to see more evidence that some of the things that are working in the u. S. Work there as well. David when you talk about margins coming think about cost. The cost of shipping went up in , prettyed states 42 dramatic. What can they do to try to manage the costs of shipping . Little you have to be a bit careful because shipping revenue was nearly up 40 . You have got to remember that this is the service that they do, so they are charging the third party, the people who sell to them, and amount of revenue to ship things for them and then it is a cost as well for them. Fulfilled by the amazon program, shipping costs will continue to go up. What we really want to see is the net shipping costs shrink a little bit from the 5. 56 and we hope that they are getting efficiency back. Carol they could always start their own transportation company, which they have talked about. Charles allen, thank you so much. Joining us from london. David another company that reported, linked in. We will speak to jeff weiner, the ceo, it just an hour. Jonathan coming up, the dollar it hits the lowest level in almost a year. We talk the dollar and the dollar index and what is behind the move, next. Up, we will hear march numbers for personal income and spending out that 8 30 a. M. Eastern time. We will get the latest read from the sentiment index. Tomorrow, investors flocked to omaha for Warren Buffetts annual meeting. Carol definitely looking forward to it comes out of that meeting. David always fun. Carol coming up next jonathan the fx market. Down for a second day and many of the currency stories falling, including cable that has more to do with the greenback. We will take a look at the dollar moves with matt miller. Matt i just wanted to show you first of all, the dollar index that a lot of people think of, itedxy index and the bloomberg xy and the bloomberg and blue. Been wiped and bloomberg and blue. By the way, the dollar, such incredible strength from basically 2012 to 2013 until the beginning of this year and now down 7 or 8 in 2016. Jonathan that is what i think is interesting because the headlines for fx market was the dollar at a low, but i think what is interesting is what is driving the dollar to where it is matt and it is not just the fed. What i want and it is not just the fed. Take what i want to do is a look at behind the indexes and set up the waiting. If you go to dxy go on bloomberg, you can see the dollar index. You pointed out this morning, i had never known that it has a massive euro weight in here because the index goes back, as to the donid of time, back in the day, there were european currencies, so the euro is 57. 6 of the dxy index thethe yen only 16 and pound only 12 and they do not change. That is the difference between this currency basket with the dollar index and the bloomberg dollar index, bdxy. If you want to see the is the currency and there are 10 different currencies and their trade weighted, so ours is only 32 and, 18 , almost 90 yen, there we waited every year. Jonathan and it is that 18 yenht to the y that i that i think drives the dollar. It has strengthened and headed to the best week since the financial crisis and that is why that 18 month high yen against the dollar is driving it right here. To check type in ddxy it out on your bloomberg index. Jonathan matt miller, thank you. David one thing i know for sure, that increases their earnings. Coming up, we will hear from exxon and chevron. Please, stay with us. Carol dollar heading to 11 month lows. Jonathan crude heading for the biggest monthly gain in a year. Ahead, exxon and chevron earnings. David valeant has been you state investigation probe as they filed their 10k form. Welcome to the second hour of bloomberg. I am david westin with Jonathan Ferro and carol. Carol matt miller, break it down. Matt exxon crushing it. We were looking for 29 cents but cents. Down 33 in the First Quarter and it may have something to do with exxon in the First Quarter with 5. 13 billion. I will continue to go through the numbers, but that is a real deep, 43 cents over 29 cents. Down from the last quarter, so in the fourth quarter, we had 78 cents, buty, 63 better than the street estimate. Exxon mobil in the premarket up cutting,cents, so boosting profit in the price of oil up 25 year to date. Exxon stock up 13 year to date, so not a bad year even though we have seen volatility in oil over the past 12 months. Jonathan thank you. Lets breakdown earnings with more on exxon. Take of america and Merrill Lynch francisco here with us. Also, a Senior Analyst with the recommendation on the company. He joins us on the phone from boston, jason, great savvy with us. First question, another beat from an integrated oil major. Coming in at 43 cents. Estimate at 29 cents. To deliverng harder an estimate for the oil majors when the biggest drive was traditionally offstreet and out is becoming downstream . Is it harder to get a read . Consistent point and message is that downstream as much stronger than we had expected it to be. I do think would the recovery in oil prices that we will revert back to companies having much bigger drivers and profitability, but your point is correct that the downstream has been a big driver for the last year. Carol i am looking at some of the comments by the ceo in the release, and they talk about them being such a huge company with cash on hand and that gives them an advantage. Is he right in saying that . Jason exxon mobils Financial Capacity exceeds anyone else in the industry and i think it is a huge advantage to be able to market whenal wind it is weak and theyre are not many other people in the market looking to secure longterm istracts, and i think there the potential for acquisition opportunities to be attractively priced when oil prices are low. David francisco, i have been andowing the top live blog, it seems that there are three things that are coming out of the Oil Companies. One is cost control, downstream versus upstream and the other is chemicals. Flagging the profits they made in chemicals. What do you make of that . Francisco chemical margins have been strong so far, so some things like natural gas, methane, and they are priced extremely cheaply. What happens throughout the year is that gas prices have come down a lot but crude prices have come higher and the spread has widened. That is a little bit linked to the chemical returns that they are delivering, so Global Demand for stock is actually pretty good. What we saw last year, a crisis prices, the dolly rather the dollar rallied dramatically, but in terms of quantity consumed, quite ok. Spread, so the right to speak, you would do pretty well and it seems some companies are doing ok. Carol matt miller, we have heard of the Energy Companies and the equation to create a better situation for themselves, but it still costs exxon a lot to get oil out of the ground. Matt extraction cost remains high and if you charted versus the price of crude, pretty dramatic. Which is on the terminal shows that extraction cost has not come down with the price of crude. This only goes until 2015, so the price of crude will be up another 25 do you actually see l,wn to 3 , but jason gammel when we look at the extraction cost, a Different Number from, are they able to get extraction cost down in line with . Carol and do they need to . Jason there has been a dramatic reduction in and extraction costs. We are looking at a large a large reduction in because companies are not pursuing but we have seen a 25 reduction in cast operating costs and cash operating costs. When is produced, it can be a multiyear timeframe but what opexre doing on the al side, we are seeing it across the board on earnings. Jonathan if you hold some of these companies a moment, the headline right now is exxon posting its smallest profits since 1999. If i listed comparison and chose flashy dividends and made a move early, it would have the highest present for placement ratio out about the european pears. Capex cutsmain with and what will be the difference between those that have a high reserve replacement ratio . You hit on the right point for the longer term. The pullback in investment is going to affect the replacement, production down the road. In the case of exxon, they are already guiding for it to be essentially flat and hitting that target will be difficult given the pullback in investments. Do thinkame token, i that exxons cash flow is stable enough to not only support the existing dividend but have a progressive dividend and we did see that this quarter with a 2 increase in the dividend. I think that finding the right balance between shareholder distributions and investment is an important thing and i do think that in the sans case, while the perhaps could be investing more, the stability of the dividend is important and i see no risk of dividend at all. Jonathan jason, to a very much. Francisco blanch still with us. Looking atl point, these numbers, Cost Management has been terrific. Buts an example of that, reduction in the u. S. On the 19 month low, how does that set you up for your viewing crude . Francisco we still think we will see that we go higher in twoyear and. The one thing i went to be cautious about is that there is seasonality in the price. Saudi arabia is no longer trying to moderate prices throughout the various quarters, so last year, the peak of the oil and the highest point was actually may 7, that is next week. A bit of a different story second half of the year, but lets not get too excited because i think there is a seasonal downturn that goes right after this season and the gets priced in advance. Thank you. If you would like to follow the exxon earnings, it can find that on your bloomberg terminal. Lets get a check of the markets. About one hour and 20 minutes away from the open. Futures a little softer, dow futures negative 13, in europe, down. X there it is for you, wti, 4642. And downr crude price to an 18 month low with a weaker dollar story. You can see that on dollar yen n that is. 8 of 1 lower. Carol we want to get you back to one of the big stories. Valeant receiving new investigations as it filed its form, meeting the selfimposed deadline for today. True armstrong is still with us. You talked with this earlier and armstrong is still with us. You talked about this earlier and what stands out at this point . The toney talk about at the top of the organization of blame. For what a lot of what went wrong at valeant. That tone at the top and focusing on sales target and they say that resulted in Material Weakness and it has a substantial there is the key phrase and it probably has a lot to do with the fact that they announced the replacement of their ceo mike pearson. Interesting thing to see that the company is really making that official that this was a management issue that they are siding as the cause for a lot of recent problems. Carol investors wanted to hear more from the companies and said they had this 10k filing, but what has changed now with the information . W people will be pouring over the product byproduct financials to assess the business. It is the first chance to get the numbers that i think people will actually trust. Mike petersons signature is on that 10k, another thing that people were waiting to see on who would put their name on this. In addition, it does away with a lot of brisk and there is a massive overhang on the stock and the fact that valeant could possibly end up risking having to repay lenders early and it does here that stock and it wobbles up and down a little bit this morning as people react to this. The state investigation probably not as big of a deal. I would they are already facing investigations from congress, house and the senate. They have been dealing with that constantly and they will pile on and may create additional risk, but it is not as if they were not already facing major probes ongoing already. Talk about theo legal uncertainty. I recall there is the u. S. Attorney looking into possible violation time to do with medicare and medicaid reimbursements. Could that lead to a department, which would really mess with the business . Drew any type of medicaremedicaid investigation could be bad news. Alot of time, what you have company that used financial [indiscernible] andromote medicaremedicaid it was not supposed to or they have not been given the discounts they were supposed to. The government looks at that seriously and looks at it as stealing from the government essentially. That is from larger pharmaceutical companies in the past and valeant certainly does not want to beginning with that right now. I think we need to learn a lot more about what the probes are focused on what stage the investigations are at the forward can draw conclusions. It is not necessarily a great thing to add on. David thank you. That is drew armstrong. Carol lets get back to vonnie quinn with first word news. Vonnie in london, supporters of british membership in the European Union squared off with the Bloomberg Brexit debate hosted by francine. And to be linked into an tied into a political project which we do not want to be a part of, we dont agree with the objective, and it is something where we will do far better with freedom outside the European Union. The value of the Single Market to Market Access, not just in the eu but around the world for trade deals that is viable. Viable for jobs, investments, the future austerity of our country. They do not see any of it getting thats a Market Access from outside the European Union. It will take place on june 23. U. S. And china in the south china sea, they have [indiscernible] permission and they will escort ships to hong kong next week. This after weeks of diplomatic hiring. China claims more than 80 of u. S. Disputese the claim. A u. S. Citizen has been sentenced to 10 years in prison on spying charges in north korea. They pled guilty after a retrial. No other details were available. Earlier this year, north korea is sentenced in American CollegeStudent Branch a government activity an American College student for antigovernment activity. Thanks a lot. Coming up, Small Businesses may be the key to jumpstart the economy but is the government helping or hurting . We will ask the ceo of bank united, next. Vonnie you are watching bloomberg. The premarket, shows it can make money went in the best heavily in technology and entertainment. The online retailer hopes to record sales at the estimates. That is while growth is being killed by a quick turnaround delivery of the livery and devices like the kindle. Delivery and of devices like the kindle. That may satisfy bond and loan holders with no default related to financial reports, which have posted been filed in march. Valeant has lost more than 80 of the market value since august, when the controversy overdrive price hikes began. Delta airlines is on a plane buying binge. They bought 75 jets and agreed to buy planes from airbus. Of 4. 3 a listed price billion. Boeing has been losing out to airbus in the narrowbody jet category. David thank you. Lets turn to financials. Bankunited reported firstquarter earnings last jake and they missed by one whole penny. The Regional Bank operates in florida and in new york. Joining us now, john kanas, bankunited ceo. Take us into your earnings. Loans are up across the board, so tell us about how the business has been. Were upposits of loans in both quarters but significantly less the quarter before. Mostly adjusted for seasonal regions and our First Quarter tends to be lower and the pending this was related to volumes. Based on the activity in the second and third quarters, and looks like we will recover for the balance of the year. David your bank is unlike some of the big money service, dealing with real people, medium and smaller sized companies. You have a Vantage Point on how that part of the economy is going. What do you see . John that is right, we deal with real businesses and Small Businesses in new york and florida. We see robust activity and growth in the new york market, although florida continues to enjoy the recovery that began seven years or eight years ago, so we are not seeing any evidence of a slowdown in activity in Small Business lending. In fact, expect to see that increase for this year. David we had david on the program and he had something to say about the importance of small and Medium Enterprises and growth in the country. Lets take a look. David when of the key ways to get an economy going as you have optimism and people started new business. They might do it with sweat equity, meaning from personal savings or credit cards, they went up their credit card and start a new business, that is not just going on right now, so that is holding down future growth. David what is your reaction to that . Does that sound right . Ohn it does we live in our own little world in florida and new york. Miami, for instance, the highest on situation of new businesses in any city in the United States right now and they continue to grow. In new york, while it was not damaged nearly as badly as florida, continues to come back strongly. He is certainly right that some of the backbone of our business is probably the backbone of all business in general in the United States. Carol how conservative are you being in loaning to Small Businesses . Thene of the things interest is way more conservative than banks used to be and one of the things that has evolved and as a result of things we have been complaining about, i have been complaining about the excess regulation that we have to deal with and compliance. The good side of that is that banks have been retrained, if you will, to be a lot more conservative than they used to be. One of the reasons i believe i people keep running to this credit downturn that seems to be elusive and i believe may never happen is because banks are really behaving a lot differently than they once did and in gauging and not engaging in risky activities that they did. Carol good for you, john, because it could be problematic for Small Businesses that do not have access to capital. John that is exactly right, but remember that a lot of blending of Small Businesses has moved into the nonbank sector and credit is being provided by credit that did not exist three years before years ago. David john kanas, thank you for being with us. Jonathan coming up, a new call on Deutsche Bank that you do not want to miss. We will break it down, on bloomberg. Carol this is bloomberg. Francisco blanch is still with us. , linked in coming up ceo, reporting earnings after the closing bell. We have lots to talk to him about. First up, matt miller. Of calls, starting off with banking specials and they did not like what they saw on Deutsche Bank earnings and they cut the shares to underperform from market perform today. Down to basically a solid equivalent. They reported a 58 drop from profit last year and continue with business overhaul. To be fair, Deutsche Bank was expected to post a half 1 billion loss and they posted a profit. Has a drop in u. S. Crude production to an 18 month low and has caused downgrade. Patterson was cut to a whole to a by with a firstquarter loss. Kirby was downgraded to a market perform from performer. Firstquarter sales fell short. And oil explorer Whiting Petroleum was cut to neutral from buy on the u. S. Output drop. Jonathan we touched on this earlier, francisco, but a lot of people tell me that it is just the dollar moved on crude. What in on that for me. Francisco clearly, the demand is stronger than before. We had a buffer year in 2016. We continue to have Strong Demand this cycle. As you pointed out, supply in the u. S. Is falling pretty quickly and globally in the Second Quarter of this year. For the first time in more than three years, we will have a global output, so that commission of Global Supply and demand will lead to change and inventory dynamics in the second half of the year, so the market is looking stronger. I do not think it is just [indiscernible] i think there is a seasonal story and cyclical story behind it, but they are looking into the second half. Carol 60 a barrel in 2017, do we stay at that level . Francisco no, i think the market will be volatile for some time to come. You will have to keep listening to me. Carol that is ok. Willisco i dont think we see a stable market because i think the saudis will not have incentive to stabilize prices because they got close to 100. They just want to stir people and capital away and they are saying, do not keep investing. Carol thank you. Ch of bank ofn america Merrill Lynch. Up, futuresming fighting negative and a higher crude price going into numbers. Show me movies with explosions. Show me more like this. Show me previously watched. Whats recommended for me. X1 makes it easy to find what blows you away. Call or go online and switch to x1. Only with xfinity. E. T. Phone home. When you find something you love, you can never get enough of it. Change the way you experience tv with xfinity x1. It is friday, this is number go. This is bloomberg. We are one hour away from the opening bell, and we are expecting breaking economic news. We are talking about inflation data. We are also going to get readings on personal income and spending for the month of march. This inflation data, spending data, and also income data quarter, so we have a little bit of this information already. Stephen we are getting chevron earnings, that was worst than the street expected. Firstquarters earnings per share, i will wait and see if it is adjusted, because we are off . 18. If they are comparable you are looking at a loss twice as big as they were looking for. Does say they are controlling their spending. And we had exxon just out a minutes ago who cut 33 in this quarter. Exxon beat, because of that control, it looks like chevron has missed although they are continuing to lower their cost structure. You can see it is unchanged in the free market. Have equal out as well. Spending a myth, the most important number to keep an eye on. Personal spending, we were 10, butng to grow by 2 it grew by half as much, 1 10. The prior months reading was doubled. The personal spending myth, we have personal spending income that beats the gain of 4 10 and then the employment cost index, eci is more important as the fed looks more closely at this. The employment cost came in line ,n the First Quarter at 6 10 again, overlooking for exactly that. This is what you want to pick up if you are a fan of inflation. Economic news. Vonnie the s p 500 has become the second longest rally in history, getting more than seven years ago and quickly closing in on the biggest bull market run in the 1990s that ended in the. Com bubble. Lets bring in joe. Reporter we are in the eighth year of this, we started in 2009, that is the longest since 9. 5 year span we saw from october 1990 two the market in 2000. We have seen legs in this bull market, because it hasnt always been the most favored stock market. Vonnie if you had to hone in on one factor that has really helped the move up in equities, what would that be . Reporter the durability of this rally, it is underlying a sense of pessimism that people are it is actually good. Everyone is over exuberance, piling in at the same time, superlong, then you have problems. This unwindsnes very quickly. David what to take us back in time . Matt i went to look at todays date. April 29 is carols birthday and hillary. And hillarys birthday. Happy birthday, hillary. Passed thehave 1950s bull market to become the second biggest bull market in history, the longest in history. Of course, the longest running through the 1990s into arch of 2000 and in the burst bubble. The me ask you, there are some people that could make the argument that we do not know it yet and be in the beginning of a bear market. Reporter people will tell you when you reach the market 52 week high, you could see the start of a downtrend. We saw the last high in may 2015, and has become twelvemonth says that last two week high. Hits,e that one year mark technical analysts and a lot of turn readers start to think, maybe we are in a and a lot of charge readers start to think maybe we are in a bear market. David what can we learn from this . When you look at former bull markets when they turned, is there a pattern . Reporter this is interesting that does not play by the roles. We have seen the biggest gap between annual average return for the s p and with the gdp is actually doing. This is a bull market that has done the least. We has in the slowest Economic Growth for any equity expansion of this type. It has been interesting and underpinned by low Interest Rate environment. Why is that . We have extraordinary Monetary Policy. Rate the low interest policy push people into this. Reporter it has been a huge factor, and when you look at what that means for the market, we are presumably in an rising Interest Rate environment by the end of the year, maybe early 2017, this is going to shift things. People need to look for new reasons to feel confident about equities. Jonathan people are looking at a historical rally that ended in 1956. It did not end in catastrophe, unlike the other long bull markets. 1956 . N we learn about if it does end, the kind of peaks around capacity catastrophe . It does give you the idea that it will be a more gradual easing into a bear market like you saw in 1956. You get the geopolitics and all of the economic underpinnings of the market are different, but it really might be sort of a false landing like that, maybe not 20 increase in one day or something cooper super catastrophic. Carol thank you so much. Bloomberg stocks reporter joe. Jonathan we have a whole host of you go data. A. Ecodat the losses on treasury 1. 86 . Ated, up to treasury yields are high, but a weaker dollar on the cross, dollaryen at 17. 22. 114. 28. Uro at it is heading for a year high at this point. It is a fascinating move, the break itllar, we will down throughout the morning on bloomberg. Lets go over to vonnie quinn. Vonnie voters in iran are talking about whether moderates are hardliners will control. Thisll determine the last 68 seats in the legislature. The performance of moderate people won the majority. This is opposed to last Years Nuclear deal with the u. S. In southern california, violence as a demonstration against donald trump. He was speaking nearby. Hundreds of protesters threw rocks and jumped on cars. They were demonstrating trumps comments on immigration and mexico. Police arrested 17 people. The National Football league , the university of california quarterback was drafted first. Global news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. Matt lets get to the morning meeting the right here wiki banks are looking at. Where we hear what she banks are looking at. This guy has his eye on core mark. Not really a household name, even though it distributes 7eleven. It is a drugstore to sugar, secondbiggest in the distributor, secondbiggest in the u. S. Convenienceoo store distributor. They represent a third of Retail Locations in the u. S. , and this is the secondlargest for that space. We are excited, this is normally 10 to 12 , but given big contracts they have one last ubs growthng at 20 through 2017 because they just booked murphy usa and 7eleven as new contracts. Matt Convenience Stores and gas station is a big business. Murphy usa it has a big ontact they just won. They service all of the gas stations on the walmart parking lots, and that will add 14 for coremark, and that just started. All new business. Matt i wonder how much of the business is tobacco . Recently some of the big drugstore chains obviously have said they wont sell tobacco think thatd i always must to send a lot of people into Convenience Stores who may be normally would have gone to cvs. Tobacco is 70 of their sales and 30 of earnings. When cbs exited the tobacco categories, that was a big move for the Convenience Store industry, and it helped cigarette sales last year. , andwas last years news looking ahead, we have low gas prices helping sales in the stores, and fresh food is coming into this space. Core markets have been pushing through this as well. Matt 70 is a massive amount. All of his business really hangs on tobacco usage. Is 30 of earnings, 70 of sales, only 30 of earnings. Tobacco is one of those categories that is in structural decline. The Big Tobacco Companies raise the price to protect sales. That is a nice stable cash cow for the company. Matt is that a highermargin business . His cigarettes are not making a lot of margin. Growth profit at percentages, cigarettes are 2 growth parfitt profits, but food and other noncigarette things are in 14 , and fresh food is 20 . Talking about yogurt parfait, fresh cuts images, fruit, you see them in airports and Convenience Stores. It is helping win new business because in order to do fresh product, they need to deliver to, three times a week. A demographically shift kind of story. Thank you for talking about core mark. The jeffreys Senior Analyst. Jonathan we go to puerto rico who says the region will default on monday. Looking at what to expect on the weekend. Carol this is bloomberg. In the next hour we are talking to lincoln ceo jeff weiner about the quarterly report. Those coming up next on bloomberg. Are watching bloomberg. Exxon mobil is feeling pain from the oil slump. They boosted the weakest orderly profit since 1999. It is the companys sixth straight decline. Rating iss aaa credit down. Ibo being tivo being bought. Onscreen guides for payperview listing. Talks at the in technology partnership. A deal could be announced today. The software and vehicle control capabilities for driverless cars. Withhave similar talks other companies, but they cannot agree on ownership. Rico,an on to puerto payment problems, falling millions to bondholders. They are developing dressed levels stress levels. Moody says yes. We are joined by tim blake, moodys managing director for private finance. A lot of people were saying, i thought we were technically in default. Why is the weekend so important . You are right, puerto rico has multiple classes of bond outstanding, and it is already in default and many of those. What to do on monday are several additional classes, most notably is the Government Development bank. Monday. 42 million on they will add another clash in puerto rico bonds. Jonathan what we make up on monday, what changes . There is an Additional Group of bondholders who are poised to make a legal claim against the commonwealth. What the commonwealth is doing is preserving cash so they can take over services. They are trying to continue to pay for health care, police services, school services. And the bondholders are less to pursue their claims in court. Jonathan you mentioned a health care. Yesterday, there was an unsolicited 9. 3 billion yet billion dollars bid that was substantially undervalued, and that is basically what every company says after a hostile bid has been made for it. It has rejected the unsolicited proposal and it is unanimous why the board. I just pulled up the shares, 1. 9 . Santa fe advantest, which a lot , theyple call so no fee have rejected that. [laughter] [indiscernible] vonnie tough crowd. There have been these defaults in the past. People have not gone to court yet. Why is it they are holding off . Notne class of credit has gone to court, and that is appropriation bonds where there are no legal remedies under that bond class, but there are other litigations. There is litigation. David what about the double thing . There are not received against it. There is no collateral, but there is a traction pay for many resources the bank has. We would expect there to be a legal claim for access whatever resources they have. Carol i am concerned about the financial longterm viability. Can they get to fix this situation and have a viable Economic Future . The convocation factor is all of the litigation and bondholders with different ideas, claims and arguments. Tomakes it very hard restructure and move on. That is why there is movement right now in washington to consider a bill that would , some some oversight order to this situation so reconstruction can occur out of the courtroom and more economic, logical way that can put puerto rico on a path. Jonathan but it is pretty dire. You have Us Population that is down, well over a decade at this point. Is a you really need to turn around regardless what happens to the debt. We dont provide advice on restructuring. But the bond prices are very low , reflecting the longterm affordability for the full debt is not there. To be restructuring on this in order for the government to avoid matt one of my favorite , gives you a3d picture at the curb. Areas are 35 or more yield, even though the blue are 6. 4 . H are low if you take a look at this, all of the action is in the front end of the curve. You can see here, five years back, the front end of the curve gets over 35 and started 2015. G there back in inserted recovering for little bit, but he recovered a little bit but it is going back. This is a cool function. This lets go back to how gets resolved. They dont have enough money to pay all of these bonds. Something has got to give, get a haircut. You said it beautifully. There is movement in washington to consider resolving this. That means it is a ways off, doesnt it . It is taking some time for congress to assist this issue and what is the best way forward. There are serious issues at play here. There is the issue of imposing external oversight over the elected officials, that is controversial. The debt release in general, for a statelevel government like vonnie what is the likelihood it gets done . And it is a president ial election year. We think there will be something passed in washington. House speaker ryan is in support of having some sort of responsible solution, the Obama Administration and the Treasury Department are in favor of this. We dont think it is a bailout. It is not injecting money into puerto rico, but talking about some kind of fiscal oversight. Jonathan managing of moodys finance. Thank you. Battle of the the charts coming up, how Oil Companies performed in the decline of oil prices. David the battle of the chart is an old country, new country about. Is he from the old country . [indiscernible] david mark, you go first. Matt experiencingecb reaping the required fruit . This is a wonderful chart. Look at the white line. This is the expansion of the ecb Balance Sheet since 2014. It has gone up by a whopping 3 trillion euros to 3 trillion more. What is happening to inflation . It is lifting inflation. Check out the yellow line. Inflation and the euro declined by 2. 4 , and since it settled by 6 in january last year, it has become a negative number on this occasion. It hasnt been at the 2 dotted line since the beginning of 2013. Can i give draghi some hope when it comes to Inflation Expectations . The breaking rate between Government Bond in inflation, the purple line, has been treating up. It is 1 way below the ecb. [indiscernible] matt you guys can just they used in the big picture look. Im just a regular investor, looking at the thing i find interesting. Hillary figured out how to normalize these stocks on the toomberg or anything, really this commodity. The blue line is oil, these are ,xxon, chevron, and shall trading from the bottom, i use brent, the Global Benchmark for oil. It is interesting they have all over performed underperformed. Francisco told me it is because they are highly leveraged, lower Leveraged Companies would actually over performed to underlying commodity. David so who wins . Jonathan the old country. Vonnie that is a tale of woe in europe. [indiscernible] [speaking simultaneously] mark, you win. Jonathan we are talking to the link in ceo coming up. David oil is climbing, held by a weakening dollar. Futures are climbing as well. Worse the problem getting for valeant. There is another investigation. Jonathan true reality, losing aaa credit rating, exxon posted the smallest profit in over 15 years. David welcome to bloomberg go. Close to the opening bell. Jonathan lets get to the markets. Dow futures off by 63 points, s p futures negative seven. In europe, losses are piling up, over 200 points. The stronger euro, weaker stock story. Weaker dollar. Dollaryen 107 on the session, 18 months down, another 1. 10 . Yield, siewert crude is going up two basis points to 1. 5 . More stock story is not just the euro. Matt innovation is one of those stories. Medivationion bid, says it is undervalued here, so there going to turn that offer down. Santa fe advantest, turning down 4 . You can see the lower leg with european stocks, as medivation news crosses the ticker. The highestitting since november, all caps on with a quarterly profit the lowest with a999 exxon quarterly profit the lowest since 1999. Still ahead of analyst tstimates, because the hi with cap estimates. . 39 forad a big loss, share, that is more than double what analysts were looking for. They are down almost 1 in the free market. And then you had phillips 66, a big drop in firstquarter earnings. They are down 61 and phillips is down 3 in the premarket. Valeant had big swings today, initially 3 on the 10k filing saying no new issues to report. ,efore then, sharply falling and is being looked into by a number of different state regulators, new jersey, North Carolina, i believe los angeles because of some of its processing issues pricing issues. Now you see the stock rising 3. 5 . Maybe investors think they have all of the information out, it is as carol said, it is the kitchen sink quarter. Amazon shares posting records on the cloud business. Amazon shares were down 11 year to date, but at yesterdays close they are almost up that and more right now. Amazon doing very well. Linked in, and we are going to talk with jeff weiner, emily is going to, wait about 45 minutes for that interview. Look out for that interview, look over the open as well. A pretty dramatic story, 27 minutes away from the market open. We have jeff sullivan. We are talking about the u. S. Dollar and euro inflation. And valeant her cynical taking off with number one. The Central Banks, the dollar sinking to an 11 month low, economic slowdown in the u. S. , looking at the Federal Reserve rate hike in june. The yen looking at a big was weak you at the biggest weekly gain since june. Jeff, thegin with you two stories, the dollar and the yen on the wrist sides, what is more Important Movement . Jeff the dollar is more important. Going on with Global Growth, i think the fed is looking tremendously at a strong dollar as a negative for them, being able to raise rates further. A weaker dollar gives them more latitude. The juxtaposition is you have Global Growth slowing and growth in the u. S. Slowing, but at the same time, a weaker dollar lets them raise rates even more. Unclear. Personally, i dont think we will see another rate rise until after the political election. David we are so fixated on the fed and what they will do, i wonder if this really reflects the underlying economy. We had disappointing gdp numbers and the trend, one number on its own. Maybe the weaker dollar is showing the u. S. Economy is not as strong as people hope it was. Jeff i think that is the case. There is concern on the part of a lot of corporations, you are not seeing topline growth. You are seeing beats because people are taking costs out. There is a lot of stuff going on at the end of the First Quarter. It is not terrible, but we are not seeing what i would call fundamental growth that would try to drive lines organically. Also see more mergers being announced. Vonnie but that is corporate enthusiasm. Companies feel confident enough to do a deal and carry through. We saw a pullback in ipo and activity in the beginning of the year. They are starting to do it. Is there any hope optimism later on . Jeff there is more reflection of growth, a lack of growth. Costs want to take out for as adjacent region for a strategic reason. Even with the rally and equity prices of the lows in february, we have not seen you ipos. We have one new one. Nine health care ones. That is it. It tells you investors are not really believing the whole growth story yet, and when we see the return on the calendar, it will be various indications for the global u. S. Growth. Carol and we are focusing on Monetary Policy with this one. The challenge is really facing Central Banks, and that includes mario draghi. Collington 2 for april falling to 2 for april. Very different. The meantime, economy accident 0. 6 . That is the lowest level since 2011. Mario draghi in a conundrum. What can he do . Jeff i am glad i am not him. I think he really is in a conundrum. He stays the course. This is one data point we need to see whether it is a trend. I feel that even though the ecb talks about the primary mandate being inflation in check, asked and answered, that is not the problem. I think they need to continue with stimulus because, even though these are the best numbers, i think europe is lagging in terms of growth. They have worries about brexit, got to get through that. I think he does not change course at all. Theseeing how much of summers is a function on Energy Prices through the First Quarter, i feel like inflation rates could be a function of energy price. Commodity price, that is a huge factor in terms of looking at the inflation rate. David some of what he has announced has not taken effect. Do you expect that to work in the marketplace from halloween transmission . Following transmission . Jeff it is important. Central bankers will talk about it. The market will adjust for it. That is a strategy being followed in many respects by our own Federal Reserve board. I think they talk it. The market adjust, that is a strategy. I studied rational expectation. In college, i understand that. At the end of the day, it is essential part. And better late than never, Valeant Pharmaceuticals filing its overdue report while facing pressure from shareholders. They are in full compliance on the credit path, but it also reveals the Pharma Company has a new state investigation probe and they missed a counter for millions of stills to Mail Order Pharmaceuticals in 2014. What you make of what is going on with valeant . They jeff have a lot more to go. This is a classic cleanup story. They have raging change. The need to get everything regime change. Any to get everything out. It looks like the new regime is more successful at cleaning it up. This is a real shame for the entire industry. Our perception has been valeant has been an outlier for a long time. The core strategy they have pursued is not that of most companies, most every other company in the sector. We dont cover valeant. It is an outlier story, links to the rest of the industry. The shame of it is everyone is focused on this story and the challenge of drug pricing. , it is out is shadowing the real story, unbelievable Drug Discovery, which that company did not do. So lets get it all out and over with and get back to Real Companies doing innovative things around research and Drug Discovery and helping patients. That is what should be talked about in health care. Instead, we are focused on valeant. David well talk about your business. As of the three stories matter to market right now. Jeff is staying with us. Lets go to vonnie quinn. Vonnie another sign of tension in the u. S. And china in the south china sea. China has refused permission for the aircraft carriers and the escorts ships to visit hong kong next week. This is after weeks of did the medic sparring. China has 80 of the south china sea. In north korea, citizens sentenced to 10 years in prison after buying charges. They found the u. S. Citizen guilty after a brief trial. No other details were available. Earlier this year they sentenced in American College student of 15 years in prison for antigovernment activity. The state of california colorado is considering a radical change in health care whether or not they want to abandon the Health Care Act and create a taxpayer financed system that provides coverage for everyone. Supporters say most people will save money. Businesses say the cost is too much and details are too vague. Powered by more than 2400 journalists in more than 150 news bureaus around the world. Vonnie we are going to is because the companys jeff weiner coming up. Jonathan 16 minutes away from the open, futures are down, s p futures negative eight. We are counting down to the open stocks. I want to talk about the Financial ServicesFirm Calendar group. The main eps estimates and feed on revenue. Effrey solomon is here with us when i sit down and talk to investment banks, the kind of volatility we have in the First Quarter is not good, ugly, not good for their business. It is good for you, why . Jeff the brokerage business benefits from people trading more accurately, and you see volatile markets, they just need to rebalance per folios. Portfolios. You need to make sure you are relevant at the time they dont need you so much. It is the result of three or four years of really investing significantly in research and action items and how to do portfolios. See it thrilled to happen. We saw an increase in the spike in volume, and specifically because clients are moving, we are penetrated with them. Jonathan and what about the banks . To be focused. The real discussion is active versus passive. We have seen every dollar in the u. S. Market and equity, possibly passing products. It really care about fundamental research. We spend all day every day talking about how we are different, clients are different carol how are you difference that will outperform this passive strategy . Jeff you have to make a full commitment to be able to do Action Research and help people trading more efficiently. There is a number of ways you can help these managers to provide alpha. Fundamental research is in. Independent how trading that on as people to execute nonconflicting basis, that is a rare commodity. Intoalgorithms really flow dark pools. Not sure they are conflicting here. You can use the algorithms and trade, and i feel like carol are they outperforming . Jeff what we are seeing is when you can become more relevant to those clients, they reward you with your share. Job innt doing our terms of fundamental bottomup research. We wanted to get more votes, market share, so that is what we are doing. In the third thing is the calendar, the ipo calendar. That is working, active managers outperform passive managers. We to get the calendar going again. David they need a plan enough to go for a cheaper price. A number ofare players that do outperform and they do it on a consistent basis. We try to align ourselves with clients that will help us outperform. There are very few dedicated solely to that. Carol chomping at the bit. Functionhave a great on the bloomberg it shows you volume statistics and how it is volume over the past compared to past averages. What i find is interesting, dark pools make up 38 of total u. S. Market volume. You think they will continue this dominance . Will he get a bigger market share . Jeff they will not go away anytime soon. We knew use trading, are you trading into that particular brokers firm . There are 52 different venues to do this on. We dont have any are dark pools. They would not be any different to anyone elses. The key for Portfolio Managers and buy side traders are using the market in a not conflicting way. You need to find liquidity at various venues. You need to find someone who is not conflicted. I believe dark pools are certain state, that is a function of the equity market. Thecan you navigate fraction or segmented market, and that is what we are trying to focus on, getting the ability to do that. Jonathan thank you very much for joining us. David med tech Company Athena health reported and earnings beat. They are in a Conference Call now. They will come out, the ceo and talk to us next. Vonnie we have the latest Bloomberg Business flash. Amerens cap waltons americans kept their wallet in their pockets. , savinge is increased the most money since summer 2012. American on a shopping spree, they bought 75 jets. Now they will buy 37 from airbus. Of 8. 3ets have a price million. Boeing is losing out to air ball since the largest jets. Mastercard and visa are try to work out the new chipbased cars. They come up with new software to make the process faster. The new cards increased checkout time by 10 seconds for customers, an eternity for fast food. Thank you so much. Health care is a large part of the u. S. Economy and also one of the industries being revolutionized by the advent of technology. Athena health streamlines medical keeping for doctors and hospitals. They beat analyst estimates on First Quarter earnings and coming straight from that is the Ceo Jonathan Bush who joins me from his companies. Pleasure to be here. David so talk about the Conference Call. You beat on the earningspershare, i saw. Talk about your business state. We are try to create the health care internet. We know that bearings will be there forever. People watch earnings because it is comfort food. Howstock on the network, many doctors have decided to leave the use of Enterprise Software and try to do their own billing and administration in order to join the cloud, because you want to get that doctors, you get the risk of the Health Care Continue on to connect. We are trying to get people inside of iron lungs to friend each other, break out of the iron lung and connect cares so that it gets unbroken. It is so broken the way you go from patient to patient, hospital to hospital. You do stuff over again. David give me a sense of where you are in the process. How many doctors are signed up, how many more do you need . About 10 of all ambulatory visits in the u. S. , 20 , averagerowing of 30 the year over the last 10 years. We are tracking well. Obviously it is not half of the market, but the momentum, the in,llectual kind of buy this is the way health care is going to go, is starting to be accepted. Is the new market segments. We used to only be doctors. Now we are adding whole hospitals. It is a great quarter in the hospital business. And part of that must be the change going on within the. Ealth providing business you have a particular Vantage Point specifically talk about. Bamacare talk about how that has changed the life of doctors and hospitals. Obamacare is a beautiful metaphor for Society Giving up on health care growing organically on its own and is that kind of pushing down make it more. Onnected it has been bad for the healthcare care system but quite good for athena because mandates,normous multihundred page regulations with in ordermply to get full payment. Program, which i will not torture you by anotherng, came up with restrictions. Al it changes may complexity for doctors that they cannot handle they join theso cloud and we benefit. Health care has pulled out of a lot of exchanges. Will that in danger obamacare . Jonathan bush it endangers one mytht, which is the that this is a blossoming ecosystem of a lot of different products. Health Care Insurance is very narrowly defined. Markets to emerge. Hard for payers to differentiate themselves, so they consolidate. Playera lot of consolidations. You see a lot over health care. I am sure you are carrying all of these foundations. David thank you very much. Ceo. The health to break earnings down, we are going to take you through the market open on bloomberg with futures negative across the board. Down 65 points down, s p down as well. And europe starting up with weakest dollareuro story areas show me top new artist. Ah, ha ha. Show me top male artist. My whole belieber fan group. Its not a competition, but if it was i won. Xfinity x1 lets you access the greatest library of Billboard Music awards moments, simply by using your voice. The Billboard Music awards, live sunday may 22nd, 8 5 pacific, only on abc. Jonathan this is bloomberg. We are counting you down. Alter session lows, 82 points on the dow, 10 on the s p 500. Down 200 points, almost two full percentage points. The opening bell rings in new york, we will get to the euro. The euro 114 earlier in the session. Now 3 4 of 1 . The dollaryen, stronger japanese yen, equity markets closed today. Down another 0. 8 . Basisries up three points, or reflection of what is happening with commodity market, one percentage point on wti and the just month of gains for a year. So many stocks. Matt lets take a look at the major indexes. You dont feel a lot of movement on the nasdaq like you did yesterday, the dow and s p opening on a downside. You look at the different industry groups, and i have my imap, you can see Consumer Discretionary and stocks are doing better. Oil hit the best in 2016. All of the red, health care, consumer staples. These a defensive stocks were the big winners yesterday, not big, but they were up. Take a look at earnings news, that will do it. 22 companies coming out with earnings. We had 62 yesterday. A lot of them are big oil, including exxon, was beat profit estimates as its last cap x 33 . 33 . It slashed so chevron ms. Analyst estimates. It is also trying to cut costs and not doing quite as well. Go also down. So earnings in tech, amazon having the best net profit of all time, sales up 28 . You can see amazon is up 10 . There is roby and tivo, they. Ill pay 1. 2 million for tivo i wanted to mention that. It is the last day, not just carol and hillarys birthdays, it is the last day of the trading month. So lets take a look at how stocks have done. Your looking at gains on the dow, on the s p, but the nasdaq down 1 . Maybe changes in amazon and facebook will change that, but unlikely. David thank you so much. Is stock not trading well valeant. Their shares have been halted pending more news after filing a revived and 10k earlier. We have the news leaders here with us. Investigations, a new 10k and now they stop trading. Reporter they just across the wire. They said they would be replacing five the Board Members. When we step back on this and look at the 10k today and the announcements, you look at a shakeup in this company from top to bottom. Overhauling the board entirely, comments in the 10k, the new board is going to be much more heavily involved in overseeing management. They will sit in on meetings and things like this. This company made significant strategy change, reducing pricing, distributing. Carol an innovation from top to bottom. Drew it is an effort to do a very serious recess point on valeant. Carol who is in charge of taking the Board Members . Drew they will not be standing for reelection when they come in. You look at the power on the board, it has really gone from company longstanding Board Members to people like bill ackman who have been around. He rotated on the board, he, his Company Controls another part of the board. There is an alice in bringing desk there is analysis bringing it investors, who can do serious corporate governance. They have been criticized for that before. The new ceo will not split the chairman role. Wenzhou, takes over later next week. They have when joe, takes over later this week. They have 60 of the company, ackman and purging. David the four members are replacing, the five or members. But they are sitting in on landing meetings . That is not the way a company is supposed to work. You pick the leadership and if they dont like the plan, they reject it. If you have an indicative and you have Board Members planning, that is not good. Drew attack about weakness and control. They may cut pay for Senior Executives are 2015. This company has been put on timeout by its shareholders. Your talking about the level of supervision that involves the board that speaks to the satisfaction reflected by the ys share peak in office august. Carol what did they need to do to contain the pay Going Forward . Drew when they started they talked about creating retention and here it and keeping employees. There will be significant operational changes. This there will be has been a lean, mean operation. Pr, theyfailure to do needed to do it lobby watch and stay out of one hearing after another. There is going to be something different. They have tried to keep people, and we have talked to a lot of people looking to leave. I think this company is, we are at a recess point right now. There is a lot of operational challenges they will need to work through. David drew Armstrong A Bloomberg news. He will be back reporting on this some more. Carol we will talk with jeff weiner the ceo of linked in. Reporting earnings after the closing bill, stop moving much higher. This is bloomberg on this friday. Major averages for entracte down, but look at the s p and nasdaq. 0. 3 , 7000 777. S p 21. Nasdaq unchanged, but keep in mind it is down a lot for the week. Major equity averages, we have seen them rally in the last few weeks. A different town. David but oil is up. The correlation is off. Normally they go together. But today, oil is up. Carol if you look at the 10 major industries, the s p 500, andy energy is at the top. Energy is doing very well. We are talking about extraction cost earlier. Exxon has donet with its extraction costs until the end of the year. This is oil, exxons extraction cost. He met in this chart with the extraction cost bar, 33 bar, you are seeing again in exxon today. That is where the company Beat Estimates david for profit. But that is down substantially. That is a trends. Matt and take it down another 33 . Is in line, take down 33 , and youll see why analysts and investors are happy with exxon profit reports. Chevron has not been quite as well. They are cutting costs. Jonathan but the really interesting thing from this earnings and not just u. S. From europeans as well, two points. Ep coming out and saying they can balance around 60 previously down to 55. And the other thing is from a headline approach, downstream business did well. But there are subtle differences between what is happening with the likes of bp and exxon. Exxon the chemical story, bp was trading. Now we can get a grip on what is going on with down street business. So there is decades of looking at upstream, get a good read and get a good estimate. They can deliver the bulk of the prophets and the stories change. David people were actually surprised with xl exxon. They did not see it being a big factor. Carol i need to talk about linkedin, stock is up 60 . Thank you so much. Jeff weiner joining us from linkedin headquarters in mountain view. Thank you for joining us. , 40 . Uarter, we talked today it is surging. What have you learned from all of this . Of the day, end stock volatility, we are going to leave that to the market. They determine daytoday price. In the past, we have determined longterm value through execution. We are going to continue to focus on executing business. It was a positive quarter for us. We were able to focus on fewer things done better. Consumer engagement accelerate by virtue of a new application we launched, a mobile application, was also accelerated desktop growth. We continue to focus on the core Business Products like recruiter and sponsor contact. Emily why do you think link in shares have been so volatile after earnings . It seems like a strong reaction . Jeff you have to ask the investors. And atstand volatility times, we are going to do our best to provide as much visibility as we can into the business. As our business continues to grow, we are introducing some additional lines, and i get takes time for people to learn those businesses and calibrate expectations. The market, you set the address is 12 billion. Your penetrated 20 . If the market is large and penetration is low, why cant you grow faster like facebook . Grow the objective is to the business faster over time. We are investing in our recruiter application, and we just rolled out the next generation version of that application. It is a complete overhaul, largest of its kind in seven years. We have been operating that product. We rolled out to new skus, and the referrals business. We see a growth catalyst in that career pages. We have also been investing in our job seeker application and the active a job seeker use case, and that is the fastestgrowing part of the site. All of this will help future growth. Emily that is two thirds of your business. Is nowu say the business mature or saturated because growth is decelerating . Jeff no, hardly saturated. There is multiple billions of dollars in the media addressable we believe we can start to further penetrate by virtue of these new products we are rolling out improvements to existing products. Plenty of growth ahead. Emily lets talk about mobile engagement that is driving the ads business. How much do you see growth accelerating . Facebook and google are king. Jeff we are very focused on the b to b components of that, and we think we bring unique parts to that. Sponsored growth has been the Fastest Growing part, and we continue to see that as the case. Drivers continue to be acceleration of engagement, feed his sessions which generates inventory for the sponsor, tent for the sponsor content business. We have an increase in the number of customers sticking around and purchasing more. Improvements to targeting, well focus and develop api and improve api. We are starting to pilot off Network Cells a sponsor content as well. Could the things contribute to future growth in that part of the business. Emily in china you have 12 million members, more than when we talked about it a couple of months ago. You localized core ads, you have a chinese team, but you say you have hardly cracked the core talked with about the code. Jeff we will continue to learn the best way to meet the needs and customers of the market as long as we are there. We started by localizing the global platform, and we have seen their strong growth in terms of new members. We also launched the first localized application called chi2, and we saw a sign ups growing in parallel with the core platform, which was very encouraging. We are going to continue to learn. We have a very talented team in place there, and as we continue to grow membership, we are increasingly turning attention to engagements. Once that reaches critical mass, we will focus on modernization. Toly analysts are hoping see the sales navigator business pick up. At what point will be see that contribute more meaningfully to the business . Jeff it is contributing today. It is still early. I think everyone would like sales navigators and Sales Solutions to replicate the sale business and the recruiters. The talent solution business is north of 2 billion. It is a hard act to follow but we have a great team in place, and i think we are off to a strong start. Emily given linked in is becoming more of a mature company, do you have the right people in place . Do you need to hire more enterprise, sales focus people to take the business to the next level . Jeff we definitely have the right team in place. It is really a portfolio of products at this point. We have high growth products, durable growth, and we will continue to invest in highgrowth opportunities in the areas of more durable growth. We are focused on market expansion, and we have the right team to make those things possible. Emily how would you describe the macro environment . We have seen other Big Tech Companies take a hit due to currency issues. What are you seeing . Jeff we havent seen any Material Impact to the business. As a matter of fact, after the First Quarter, or going into the First Quarter, we talked a little bit about some challenges in india and the asiapacific in q1. We saw strength in all of our business lines. Macro ofure about the the expectations, but we do does the any Material Impact based on macroeconomic situations. Emily i want to ask you about yahoo you are to their alone time ago you worked there a long time ago. They are now evaluating things from everyone to verizon to wipe he to yp. What is the right route . Jeff i think you have to be a board andyahoo s participating in those discussions day in and day out to understand the variables that will contribute to determining the best path or word. Forward. I wish them all the best in terms of how to navigate that. Emily we saw a Record Number of job seekers on linked in up 50 . Your talking about an important Growth Strategy and adding new things to what you see on linkedin. We see things like job salary data. Tell us more about that strategy. Jeff we are much more focused today on the active job seeker use case. Historically it was about passive candidates, enabling people thato target were not looking for work, and it was made possible by engagement, people updating profiles when they werent looking for jobs. Over time, we have been increasingly focus on routing out offerings to include active job seekers, people explicitly doing job searching. At. Aunched a new job seeker we have been driving more and flagshipfic from the mobile application to the job pp. Er a we can create a better experience for you. The fasteste of sources of engagement on the entire platform. Going forward, we will continue to invest in providing more jobs liquidity, comprehensiveness. We are looking at 6. 5 million jobs. A few years ago it was the hundred billion jobs. We have more in the it was 300,000 jobs. We are going to improve relevancy of the job matching ability. And over time we would like to introduce new insights and new data and salary could be an example of that. Emily given how complex , and yet there is no natural competitor, how do you ivep yourself competit when there are startups trying to attack you from the bottom. Jeff we maintain a sense of urgency first and foremost with regards to the motion mission. Every member of the team wants to accomplish the mission to connect world professionals and make them more productive and successful and believes in our economico create opportunity. That matters more than ever in a world that is becoming increasingly divided through social economic stratification where we see a growing skills gap and use in employment in certain countries hovers around 50 . That provides a great deal of urgency. We want to make that possible. Ceo jeff weiner joining us from mountain view. Thank you for joining us on bloomberg television. Carol emily chang in San Francisco. We want to mention that valeant has a delayed open on the friday, stock is 1. 6 up at the open. We have the 10k filing finally. A lot of very active volume. Jonathan linkedin not the only tech story in town. Amazon posting stronger earnings. We will break that down 22 minutes into the session. Over 9 . Shares areed in flying on this friday. We just heard from the ceo mr. Weiner. Lets get more on the company. Will the Capital Markets managing director joining us in San Francisco. He raced to the price target on this company. Lets talk about the interview with jeff weiner. He said growth is not saturated, there is plenty ahead in his company. Do you buy that . Yes, i think the term situation is overused and secular growth of businesses. They dont disclose how much they have now, somewhere around 45,000, maybe 50,000 three at you think about the number of businesses linking customers, that number is probably in the hundreds of thousands, so we think there is a lot of growth in the core business. They have had execution challenges they have been upfront about and others they have not been. Problems, couple of macro to come but not saturation. Onlinethis is really an employment agency. It is not a social network. If you look at it as a employment agency, it is a big market. Mark mahaney it is. It is also enterprise oriented. We have macro headwinds and tailwinds as an advertising business. One of the advantages, we are not a buyer of that stock, but it is very diverse. You have enterprise cash like sales for the talent, advertising called marketing solutions, and the premium subscriptionss nest. It is one of the most diverse as this models in the internet space today. Matt i wonder about the stock historically. A fiverun eighth luncheon on the bloomberg that shows if i run a function on bloomberg that shows that technology index, link and was making huge strides until 2014, 2015. It is now down 53 , crushed from the 2015 hi. There is no shortage. What are investors doing with this . The reasons one of the stock has corrected a couple of times i know it had a massive crash earlier this year, but they were mrs. That the Company Misses of the showed. Lindo did not go as smoothly as it could have. Andad a sales force they had a sales force reissue. Three quarters of a row, if the results for a multiple high stock that has a lot of stockbased compensation in those numbers. A couple of these things compound, and the stock correctly got rerated, oversold. It should have been rerated or down. . Arol can we talk about amazon that is up 10 . We have been questioning mr. Bezos and the strategy. Making a lot of investment, we have seen earnings. Has this changed . Mark mahaney yes. This is the number one pick. It became the number one pick when the stock market was down and we saw trough levels of 475. This is the first statement, this and google the first most Diverse Businesses we covered. Amazon is showing profitability in the record business. But it is a reasonable company, so you have a high operating margins. They are showing they can do that, having success in international markets, and they had the aws market. It is the best mixed revenue. Carol talking about web services. Mark mahaney yes. It is not 10 of their business as amazon web services, it is half in terms of profit, going twice as fast as the retail profit, and they are five times greater than the core retail business. That is a great mix issued to have. Carol great to have you weigh in with us. Jonathan that wraps up bloomberg. Thank you so much. It is in a clock a. M. In new york. And 3 00 p. M. In hong kong. Marketsis is bloomberg on bloomberg television. 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