Safest areas, dividend payers, utilities. Not huge, but notable. It feels like there was not a single catalyst. Scarlet lots of news in the retail space. This could happen as early as this month, a bankruptcy filing, retailers knocked down as a result 14 retailers. Abercrombie fitch is the only one that is up. That is because it is coming off a low base. Months ago, the stock was trading at 70 share. Under armour is getting a big lift, eight point 8 , now at a fivemonth high. Proof perhaps that the concern that under armour was losing steam was overdone. Sales climb 64 in the quarter. Joe i mentioned in the beginning about utilities selling off. Look what is going on with u. S. , not typically what you expect to see on a selloff. Going up, meaning dividend paying stocks get slammed. This is not what you necessarily expect to see on a selloff. Lowerpect to see rates, so this is notable for the u. S. On space. , we did have the ecb meeting which means we have seen some movement on the european currency front. Swedish Bank Governor said he would take a proactive approach in terms of delivering more stimulus. Meanwhile, the ecb did not announce any big measures on that front. It is still diving into the details of its previous measures, meaning the krona finally got some relief. Joe a major surgeon iron ore. Surge in ironr ore. Earlier inen hurt the year on slow down fears, and now it is taking off. News, alphabet has , First Quartergs adjusted pershare of 7. 50 per share, compared with consensus estimates with seven dollars 96 and. When it comes to revenue, revenue passed on the partner billion, lower7 than the consensus estimate of 16. 59 billion. Once again, revenue and profit missing for out for the First Quarter. We also have numbers coming out , net revenue of 5 billion for the second quarter, compared with five point 03 billion, so pretty much in line. Of . 39 earnings share in line with what analysts were anticipating. Starbucks adding an additional 100 million Share Buyback authorization. Resultss coming in with in line with analysts. Missing on the topline line and bottomline consensus estimates. Up 29 shyaid clicks of 32 . It looks like a mess on so many different levels. Costs down 9 . They just keep coming. To give you a sense of where things stand, come inside the bloomberg. David wilson was talking about earnings estimates. Had just over 1 10 of the s p 500 having reported, and the breakdown on mrs. And beats, 4 10 of 1 on average. It is not a huge amount. Eps, a little bit better. This is the scale of surprise, and it had beaten, but keep in mind that the bar has been lowered so much. Joe if you look at any chart of estimates, you see a huge collapse in this quarter. If you go inside the bloomberg, check out what is going on with the diversions between s p 500 and 10 year yields. This is a chart going back six months. S p futures versus the 10 year yield. Thisrch, there was divergence and everyone started talking about u. S. Equity futures, while 10 year yields are heading lower. Equity selling off, but yields areing up, basically people wondering how this cap was going to get close, and it is now getting close with both of them reversing their moves. Microsoft earnings, earnings per share adjusted . 62, less than what analysts were looking sameunchanged from the ti time a year ago. Hitting itretty much on the nose in terms of the consensus estimates. One thing people were looking. Or was weak pc sales in terms of cloud revenue, fiscal third quarter, 6. 1 billion for that business, slightly better than what analysts were looking for, 6. 26 billion that is growth of 3 . Apple falling into bear market territory today, so lots of earnings, nothing that impressive, and apple going into bear market. We will be right back with more on this rapidly breaking news after a quick break. Lets get the first word news. Prince has been found dead at his minneapolis home. Told thecist Associated Press that prince was found there. Deputies were called and found the star unresponsive in an elevator. Attempts at cpr failed. He was widely acclaimed as one of the most innovative musicians james era, joining on brown, beatles, to jimi hendrix. The minneapolis native broke through in the late 1970s and soared over the falling following decade. Earlier today, i spoke by phone with the Vice President of boundary busting timeless songs sound of his like they could of been made today. Fans gathered in the rain outside his music studio, where his gold records are on the walls and the purple motorcycle is on display. Prince was reported to have been hospitalized on friday on his way back from atlanta. He subsequently appeared at a dance party. Prince was 57 years old. Donald trump has a double digit lead in california. Show trump leading the gop field with 41 . Ted cruz is second with 23 . John kasich with 21 California Holds its primarys june 7. Noes comey says there is timetable for the agency to complete its investigation into Hillary Clintons use of a private email server when she was secretary of state trade state. Director komi says the fbi does not set timetables on any investigations. Investigation is looking into whether Sensitive Information from every clintons email server was mishandled. President obama says it is committed to helping arab nations confront iran. He promised the u. S. Would approve their military capabilities improve their military capabilities. None of our nations have an interest in conflict with iran. That plays a iran responsible role in the region, one that takes concrete, to resultsteps conflicts by peaceful means and abides by International Rules and norms. The president said that last Years Nuclear deal with iran could not have happened without the support of the gulf nations. He is en route to london, where he will hold a News Conference with Prime Minister david cameron. Bloomberg will have live coverage. Damages from the earthquake in southern japan could cost 3 billion according to catastrophe modeler air worldwide. Fire and Disaster Management agency estimates nearly 4000 homes and 120 nonresidential buildings were damaged or destroyed. Railways,l wise bridges, and other infrastructure also took damage. Global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. I am Mark Crumpton. Thank you. Whatd you miss . Microsoft and alphabetic reporting earnings. Here to discuss is cory johnson. Microsoft when it comes to its bottom line and top line, coming in as anticipated. The bottomline missing a little bit, no change from a year ago. Refocusing the ,ompany on the cloud competitive in the area with amazon and others. This Cloud Business is getting to be a two horse race. , but not making moves anywhere near microsofts effort. Abouthat are we learning the incumbent Cloud Business today. They are doing well, and microsoft is making money at it. Selling something for more than a cost and doing a lot of it is a good thing to do. Amazon and microsoft are probably making 25 margins in in a businesses, and business where you expect to see price carding, costs coming down and margins remain strong. Revenue of almost 9. 5 billion, that is deteriorating, right . Microsoft has an active sales staff, and it is also the way they recognize revenue over time. It is a positive sign for them. Should we look at google for a second . We have actually seen a bit of a this is driven by lower than expected advertising sales. What is going on there . Google, massive machin, 2 billion in profit for the company of fantastic generating profits and free cash flow, but there is a dramatic change going on for a couple of years. The shift from desktop to mobile for advertising, so what we have seen is that the number of clicks has been going up strongly. Is that the paid clicks number . Its up 29 . That is a good thing for them. That is accelerating. At the same time, price per click has been coming down for years now. It looked like it was going to slow down once they made that shift a mobile. It look like they were going to thembrace that and go with flow, sell more ads on the mobile, take more clicks even though they are less money. The trend with the paid clicks and the cost per click is the opposite from yahoo . Joe it makes you wonder what is going on across the industry. Another thing i think about when i think about alphabets, even though it is google. Ill the come a point when people say, why did you do this . I think we will see some things impact the bottom line. On the cost side. The google fiber business is an interesting one. The financial damage are very different. Has a lot of recurring revenue, but some of these things will start to throw out money, and we will see that eventually. Does that mean we are in an awkward transition time and we should not be reading too much into one Quarter Results . That is a philosophical question. It is 4 00 p. M. On thursday, hit us with some philosophy. How you respond is different. Things the cfo has moved , those moon shops into a separate Business Unit will help us look at the rest of google like a real operating business. Cory johnson, we always enjoy. Coming up, the chief economist for Goldman Sachs saying how earnings folds into his view of the economy. Whatd you miss . The ecb announcing no major policy changes in the pipeline, but mario draghi vowing he will use all the tools at his disposal to make sure the inflation meant rate returns to its target. One tool is the new corporate on buying program. We got some more details on that today. One of the interesting things i saw was the Immediate Impact it had on spreads for european bonds. Te lawns this is the cost of insuring bonds. Te funds we have also seen the cause for ensuring european highyield come down in tandem. Joe money across the spectrum. I want to bring in the chief economist for Goldman Sachs. Did you hear anything today from mario draghi or the ecb that you thought was significant . It was pretty quiet, and that was anticipated. People were not primed for anything major. Ecb on this point about the , is this going to work to get the credit flowing in the eurozone and growth accelerating . I do think it is helping at the margins, and i think it will help the economy continue to grow above trend. But thely 1. 5 , Unemployment Rate has come down almost a percentage point over the past year, so i do think it will help sustain that. The Unemployment Rate is still above 10 . We think that is probably still a couple Percentage Points away from normal, so it would take quite a long time of this above trend growth to get back to normal. Mario draghi is fielding criticism from german politicians for trying to connect the dots between negative Interest Rates and the populist party. Effects can it have on Monetary Policy . I dont know if they have a lot of effects on the efficacy, but it will make them more reluctant to potentially do more in the future. I still think you can make a given how far out you are from the target on inflation and unemployment. That thate concern is will be more difficult in the near term. In the near term, i think it is unrealistic to expect much. Soi look out another year or , i think you can make a case that more would be appropriate. Already mario draghi himself said all these attacks will require further measures. Do they . I think there is a case for potentially doing more. Closeant to get back to to 2 . I think that is the argument. I was going to ask about the inflation target. They are so far away from it, and we saw mario draghi talking about the inflation rate turning negative in the latter half of this year. Going tooint, are they be under pressure to get this up after all the stimulus measures . Coream more focused on the Inflation Numbers than the headline Inflation Numbers. The headline inflation rate does not concern me that much. What concerns me is that core inflation is still only 1 . That is still really low relative a target of 1. 9 or whatever that number is. There wasmonths ago this collective freak out about negative Interest Rates. Then, it seems like Central Banks have been eager to ease via Balance Sheet expansion. A bit morelso got Balance Sheet expansion. Is this a better path, do you think . Does this make more sense and cause less distortions . Or are negative rate something they should continue to pursue . I think it is more powerful to go via Balance Sheet expansion. Rates aregative inherently very gradual instruments. You dont really know how deeply negative you can make the level of rates. You almost have to go in very small increments, and nobody ever said that 10 basis points over 20 basis points cut was a major monetary the nature of the tool requires timidity . Thats right. It might help at the margin, but i come out more on the side that it is probably expansionary, the were not be that big of a deal. If you werent ecb banker, what would you be doing differently . Generally looking for the opportunities to ease, the right approach. I would probably also communicate more clearly about where you need to be before rate start to go up. Ford communication in the European Central bank is still not as clear as it could be. It has gotten a lot clearer. There has been a lot of movement , dont get me wrong, but i still think there is room for improvement as far as the communications are concerned. Stick around. We will talk about why you think the u. S. Economy may be facing significant headwinds. We will be right back. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Whatd you miss . Lets get a recap of todays market action. The s p 500 falling for the first time this week. Was inl action afterhours trading, because microsoft and google both reporting results, and investors dont like what they see. And out of bed getting killed on earnings, falling 4 or so. Apple is in a bear market. And energy are the big leaders, so utilities also getting slammed. Were seeing some pretty interesting rotation underneath the surface. A feeling that that rotation will bleed into tomorrows trading day. Apple is a huge stock that everyone holds in their portfolios. Joe hard to imagine this does not have a big impact tomorrow. Downogle and microsoft about 4 in afterhours trading. Whatd you miss . A bright spot in an otherwise lackluster economy. Chinas currency divided wish and cause the fed to delay left off. Financial conditions have finally ease. Joe Goldman Sachs says there has been a shift in sentiments that will lift u. S. Growth prospects. Earlier you came on the show and talked about tightening financial conditions. Note, you point out that it has eased and financial conditions are causing potential upside. We have reversed the thatening of conditions started in august 2015, currency appreciation, equity market weakness, credit market weakness. Rates are also somewhat lower than they were at the long in. Financialtening conditions were a drag on growth, Something Like a percentage point over the last few quarters, that is likely to go away over the next couple of quarters. Mean we will get a big tailwind, but we will get a lot less headwind. We saw the dovish statement from the fmo c and Janet Yellens speech, do you think they were trying to affect andosening and conditions. They realized that is pretty key. How they communicate is going to be very important for financial conditions. I think what they got was what they wanted, maybe even more. Quarter was marked by market volatility. What i noticed pose crisis is a pattern emerging where Economic Growth is relatively weak. 1 ins average 8 10 of the First Quarter, then 3. 1 in the second quarter. I think there are still some seasonal adjustment issues. Some technical components have reduced the seasonality, but there is still some. Some of the weakness we are likely to see in firstquarter , some lower than that. Some of that is more statistical than genuine. I want to bridge the macro with the micro. One of the main investor concerns for years now has been canned Profit Margins for Corporate America sustained at those levels. There are signs of wage growth, tightening labor markets, our Profit Margins doomed to rollover. The risks are to the downside. , but as io sideways look out in the next two years, i would expect some narrowing of margins. Been thehis has cyclical conquer quince of weaker wage growth, labor market , and thatping profits is becoming more of a headwind. My expectation would be a little more on the negative side there. When you look ahead to next meeting, do fomc expect they will turn more hawkish because of the stabilization . Margin, yes. The big question is what happens with the balance statement. They punted on that at the march meeting, and i think we will see a little bit of an upgrade there. If you look at a lot of the risks, not just financial conditions in the u. S. , but the china data, a lot of those look less threatening than they did before. Thank you so much. The chief economist at Goldman Sachs. Lets get to Mark Crumpton for first word news. Mark the music world is railing today. France. The death of it shows deputies found the 57yearold music legend unresponsive in an elevator at his suburban minneapolis home. Wither, i spoke with phone the Vice President of mack presents. He could play everywhere. He transcended boundaries. Prince was hospitalized with flulike symptoms and illinois on friday on his way back from a concert in atlanta. He subsequently appeared at a dance party. Prince was 57 years old. Hack into iteris or phone did not come cheap. The u. S. Paid more than he will make an salary over the rest of his term to break into a mobile phone used by a shooter from the san bernardino, california attacks last year. Speaking at the aspen security form, he said the agency paid more than i will make in the remainder of this job, seven years and four months. It was in my view, worth it. Bernie sanders outpace Hillary Clinton in fundraising and spending last month. Alings show sanders with record hall of 46 million. Ted cruz took in 12. 5 million in march. Point 5ch raised four million. The red cross and United Nations are putting together a humanitarian aid convoy destined for a town under siege in central syria. Up of 65y is made trucks containing food, medicine, and medical equipment, electricity generators, and Water Treatment materials. The ceasefire now in jeopardy was intended in part to improve access to besieged areas of syria. Global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. I am Mark Crumpton. Thank you. Whatd you miss . Bb t setting its sights on expansion. Whatd you miss . Bb and t has been expanding its reach. The Company Reported better than estimated firstquarter earnings. Helped by acquisitions and Interest Rates. Joins is now from winstonsalem, north carolina. Wanted start with the energy portfolio. I would love to know what kind of spillover you might the seeing from the weakness in the Energy Sector to other parts of the portfolio. Is relativelyio small, 1. 2 of the total portfolio. It is a very conservative portfolio because most of it is upstream and midstream. We did take a next her provision today to be very conservative, but in terms of spillover, we are not seeing much. You see a bit when you get down , a bituston, odessa more, but broadly in terms of serve, weplaces we see no spillover effect on energy. Actually, energy is very stimulative. It is not good for the energy companies, but it is good for the consumer. Always been surprised that everybody is negative about energy being down. Net interest margin did fall slightly, even though we did have the Interest Rate hike by the fed in december. What is going on there, and you expect that trend of declines to continue . Actually, ill margin was up eight basis points. That is what you would have expected. Increase in the , which translated into higher returns, and we were able to manage cost funds. We were really pleased with our increase on margin. We dont think that will be increasing substantially Going Forward unless rates takeoff really fast, but we think it will hold at a court level, and there is a small chance of increase as we go forward. Of the trends we are seeing across all Financial Institutions is the extreme desire to cut costs. Increase ine was an noninterest expenses. Do you feel that same pressure to cut costs everywhere . We actually had a very good ,uarter for the First Quarter and we actually had a decline in fulltime equivalent associates, but your point is right. There is a lot of pressure on earnings on banks, expenses. We are getting hit in terms of technological calls, regulatory calls. Investing heavily in the digital transformation, so there are a lot of headwinds with regards to expenses. Hand, we have invested heavily in regulatory costs and other costs over the last couple of years. We will be able to rationalize those investments over the next threefour quarters. We think our expenses will be relatively flat to down. We think our efficiency ratio will actually improve. There is costcutting on one in and spending to bulk up on the other in. Other end. You seed of urgency do out there to bulk up acquisitions in regional banking . Had you describe this trend right now, an offensive or defensive move . It is a very offense of move from a longterm point of view because scale is still very important in our business, because what has happened the our fix costat versus variable costs have gone up dramatically. With fixed costs scale and boy am help. That is across the industry. That is why bbt has been aggressive in terms of acquisitions for the last 18 months. Thank goodness all those assets of going very well. We actually announced this morning that we will be for the next while focus more on profit performance, so it is a process where you go out and make acquisitions, bring in those institutions, and then if you do it right, which we are doing, you settle down and get the Profit Improvement from those , which is rationalizing their cost then you bulk upa with additional acquisitions. It is longterm, but a very healthy process. Coming up, argentina reenters the International Bond market and the payoff has been huge for investors. We discussed the risks and opportunities for investors, next. Scarlet it is time for the bloomberg is this flash. How for that reporting sales and profits that miss estimates. They grappled with the slowdown in advertising. Firstquarter revenue climbed below the. 47 billion, average projection of 16. 59 billion by analysts. Ad revenue will climb less than ratesis year, well below of previous years. Microsoft earnings also declined as the company plan to restore growth by focusing on cloud software. The company was also heard by a higher tax rate. ,rofit came in at . 62 a share sales adjusted were 22. 1 billion in the quarter. Monthptcy as soon as this , the teen clothing chain has suffered losses and is looking chapter 11. E under aeropostale said to prepare for bankruptcy as soon as this month. That is your Bloomberg Business flash. Time for our deep dives now. We havent talked about china yet today. It comes on the heels of george soros speaking yesterday, comparing it to the United States in 2007. The bars are the new credit extended, and last month 2. 3 million yen of credit extended. Speaking of china, i also have a china credit related chart. On localhe spread seven year aaa rated chinese corporate bonds, and it has been widening so far this year. The amazing thing is that that was after reaching the lowest since 2007 just in january last year, so we have basically had a complete turnaround from a rally , and now investors are more wary. Joe rising anxiety. Exactly. Joe lets completed. Anothercredit boom, knock on effect, commodities. Im looking at rebar prices. It is the steel that goes into cement, the steel themes that make cement strong. They have been on a tear this year. You can see this line shooting up from december 230 100 recently. December two 3100 recently. The prices have been surging recently thanks to the expansion, stimulus, credit easing of china. Chart that i see a says something about chinas booming commodities demand, i always think about the extent that that is driven by markets and speculation instead of fundamentals. Although there is some increase in fundamental demand. Bit of as getting a boost, as well as construction, so there is something there. We will have much more coming up on whatd you miss . After this. Scarlet i am scarlet fu. Whatd you miss . Drummed up about 70 billion in bids. It was opened up to capitalize on the demand. Is that demand is driven by a desire for yield. Joining us now on the phone is paul mcnamara. Thank you for joining us. What do you make of this massive demand for that from argentina, which is a pariah of the International Debt markets . Despite all the legal troubles, argentina has been servicing dollar debt issued onshore and locally, as well as the small residual restructure debt. Most emergingmarket investors are already familiar with argentina. Credits,d dominated by brazil, russia, turkey. Of this issue,ze argentina will remain only around 4 of the main emergingmarket debt index. Hear isy from what i that there is great appetite for anything that is not oil. How much does this successful bond sale tell us about argentina, versus what it tells us about the wider emerging markets face and the massive rally we have seen over all. I think it is significantly and out for thing. I think people are interested in new credits. Has happened in argentina has been hugely positive from a market point of view. It would not be an exaggeration to say that the team they have running the country, the central bank, and the ministry of , but they have achieved a huge amount. I think investors at the roadshows were impressed that they for once had a coherent plan. If you look at brazil and turkey, it is harder to get excited about what is going on in those countries. Credit,is a speculative rated dafter coming out of the fault, but at least there is a coherent plan there. Does thehow quickly sovereign bonds sales pave the way for companies to follow suit . We are some way from seeing any big issues from argentina corporates. I think some of the provinces somewhat sooner. We saw when his areas recently, iome of the problems debt isay provincial more likely to be issuesoon. The success of this issue will provide more demand for the provinces to go forward. Joe you mentioned the new aesident has already done lot, has a strong team in place. Do you think the government has the momentum and ability to continue to reform, or do you think they will continue to get bogged down . Of the things that raised eyebrows at the roadshows was they claim that to get through the first few months of the administration without social rights was one of their achievement so far. The problem they have is not so much that their plan is not a good one. There is an awful lot out there that they dont control. Of soynt have control prices, agricultural prices. They are at the mercy of events to a certain degree. Thank you so much. Ohn im John Heilemann mark and im John Heilemann. And im mark halperin. And just like everyone else in the next is, we are mourning the loss of a true prince. Mark even with princes passing, the president ial contest speeds on, so we have a family tell all, but first, a trump townhall. On the same day that sarah palin came out