Transcripts For BLOOMBERG Bloomberg Go 20160517 : comparemel

stocks are going to end. ceo jimin charge, moran, joins us later in the program. first, markets. david: in the markets this morning -- jonathan: in the markets this morning, s&p 500 futures down. over in europe, a day of gains. the ftse up 510 and the dax up 1/10 of 1%. we will get through the other asset classes for you. cable, big story. the pound at 144 as i speak and the euro at 1422. 47 .75.ti up about 1/10 of 1%. around the world and check in with our bloomberg team for in-depth coverage of our top four stories. mike mckee on a barrage of u.s. economic data this morning. guy johnson has details. will kennedy is in london for the latest on the oil rally and home depot beats the street. we will break it down with matt townsend. in new york. plenty of economic data including consumer prices, and housing starts. michael mckee has great sense with his presence. this is all about inflation. how decisive will today's cpi really be? , for two't be decisive reasons. the fed's target is based on the pce index, not the cpi. i brought a chart of both the core rates, and the trend is the same but the pce runs half a percent lower. also, the last month, it went down. the forecast will be going down again this month. that fits into janet yellen's theory that the increase we have seen may be temporary. having twoflation components. sticky prices, like housing, insurance, medical care, and flexible prices like energy and cars. flexible prices have been going up and sticky prices aren't moving and that is the true story. might see an increase just because of how much oil prices have been increasing. we are getting industrial production today, how important will they be? >> they will fall into the confirmatory category because the economy has been lousy first quarter, rebound in the second quarter, and if that is to stay in place and tell the fed the economy is getting better, you want to see better numbers today. lisa: michael, thank you so much for being with us. jonathan: a lot of inflation data out in the u.k. as well. how do you strip out the noise from this one? let's bring in guy johnson. a noisy day-to-day. >> the base effect and the fact that easter was a little bit early, as a result of which we all went on holiday in the previous month and we know what the airlines do, they jack up the prices. that means -- that has been coming down. apparently we haven't been shopping as much in the u.k., as a result of which clothing came down. a bit of a miss on the inflation number, but the .5 in march, my suspicion is -- this has been made clear by the bank of england -- that the bank will look through this number. it is sitting on its hand right now, but we have the brexit referendum coming up. not sure if anyone has decided not to go out shopping just because of the referendum. on cable this morning, the pound getting the big top out side the back of an outlier poll. andou talk to the pollsters you get outlier polls and this could be one of them. 55% responded that they want to remain, and that is a decent number, the remain camp -- they are really happy with that. there is a tns poll which shows the flipside, the front foot here at the moment. , you can to the brexit see the polls and at the moment, that has leave on 38 and remain on 46. think, really, i shows you how volatile this story is and how the market is waiting to see the result. as you and i were discussing, positioning is a huge part of this. do you lighten up a touch? >> that correlation between risk assets really pumping high, guy johnson, great to have you with us. crude oilf the u.k., trading near a seven-month high this morning. advancing more than 80% since slumping to the lowest in 12 years earlier in the year. i want to head out to will kennedy. just talk me through the dynamic in the crude market at the moment as we inch higher on that contract. -- more thane real 3%, getting close to that 50 as what is really driving it is these averages. where they have knocked out a whole range of oil production, canada while some people are back to work there are still wildfires making a return to production difficult, and that has really surprised a lot of people in the market and brought the market back into a supply demand balance quicker than people were expecting. saudi arabia in focus very much but also because of the bond market as well. for the first time, we know just how many treasuries the saudi arabia owns, and what is surprising is how low it is. be one of thed to largest holders in the top 10 but it was $120 billion which is only a fraction of the 500 billion u.s. foreign-exchange assets that saudi arabia holds. a lot of people say this is fascinating. but it is likely that the saudi government actually controls more treasuries in third-party countries. jonathan: that is a discussion we will have later on in the program. thank you for joining us. lisa: home depot shares rising. after the company's first-quarter or new estimates, the world's largest home improvement retailer providing a bright spot for the retail industry. for more, we go to matt townsend. walk us through this. we know why consumers are spending at home depot and not, for example, bases? macy's?y -- >> as home prices have been going up from the drop of the beension, people have willing to invest more in their homes, whether it is remodeling them, fixing them up, and home depot has been benefiting for that -- benefiting from that for several years now. their same-store sales, which is basically the key metric that a lot of investors look at were 6.5%. overall, a big blowout for home depot. it is a big sigh of relief for people who invest in retail stocks because it looked like there was some sort of broader pullback by consumers in the u.s. and with home depot's results in home improvement, that is not what is going on. is a bige improvement industry and it is really indicative of how confident consumers are feeling about the economy. is home depot used as a bellwether for improving consumer sentiment going forward? >> i think so. one of the things home depot will talk about is the size of projects people are taking on. they report over $900 personages -- $900 purchases. their transactions were up and their average ticket for transactions were up. that shows people were spending more than ever at home depot. if people are confident about their home values going up, they are more positive about the economy, more positive about their own finances. this is a good sign overall. lisa: thank you very much. now let's get an update on what is making headlines around the world. shery ahn is here with first word news. >> the u.s. is backing libya's request for weapons to fight the islamic state. john kerry is in where he met with the russian foreign minister and diplomats from 20 other nations. army says it makes sense to libya but he rules out the use of u.s. troops. a poll shows the majority of britons want to remain in the european union. 55% want the u.k. to stay in the block. 40% want to leave. the referendum is june 23. hillary clinton will try to avoid losing both of today's prize -- democratic presidential primaries. clinton's lead over bernie sanders is almost unbeatable, still, losing in kentucky and oregon could -- the demographic failures sanders -- the demographic favors sanders. global news, 24 hours a day, powered by 2,400 journalists in 150 news bureaus around the world. i am shery ahn. coming up next, george soros goes for gold and makes a big pullback from u.s. equities, detailed next. jonathan: coming back now, a lot to get through. let's bring in julie with the latest. >> once again, lending club stock. down 15%. the company recently ousted its ceo and talked about some perhaps, things that he did not do that he should -- things he did that he shouldn't have done. the justice department is also looking into it. the company revealing that they have received a subpoena from the department of justice. they talked about in the 10k this morning as well, so that is causing the pullback. we are taking a look at 13 assets. we've got filings from hedge fund managers about what they are doing with their holdings and we have john paulson and company adding to a stake in indo international, the pharmaceutical maker tripling its stake in this company. you can see the year to date movement has been closely mirroring its. valiant. peer, to acorn,so added another biotech pharmaceutical company in the first quarter, you can see those have fallen. -- the 13 fe term providing a big story. george soros cutting his investment in u.s. equities by more than a third in the first quarter. electing to boolean, the biggest gold producer, eric old -- barrick gold. lisa: we have the chief investment strategist at pmo capital markets. is it warranted? >> i have my shovel and i am going to dig the bunker and by my four cases of water. market hase stock tripled since 2009. you have a strip -- you have a situation with investors who have never been through a real investment cycle. 2007, international growth and a housing bubble, now they are scared to be wrong so they don't want to be right. we are skating with our heads down. we are so scared of everything and reacting on what happened last quarter. we are talking about filings for first quarter. but it is may. lisa: did you say these are inexperienced people? george soros not exactly. >> the question that i would have to say is this. are they talking their books? are they always -- there are permanent -- permanent bears and permanent bowls. jonathan: on an annual basis, it returns to 30% over a couple of decades. >> that is what i would say. the issue is that everyone has their story. the good thing that we have been able to do is that we have a plethora of work that we have been doing for the 27th year in the business, so i have been through cycles before. we are the most there -- bearish people on wall street. it hasn't even started yet because mom and pop in alaska aren't buying stocks yet -- in nebraska aren't buying stocks yet. business, is the the inverse now. the retail investor starting the , if you have done that your returns of been awesome. the hedge funds are all reactive. there is no thought leadership because they are so fixated on daily and weekly returns. because of that, everybody -- nobody knows how to pick stocks anymore. we have forgotten how to pick good themes. jonathan: when does the real tale money get in? -- when does the retail money get in? >> they are going to be shocked in 2017 when all of a sudden they look at their statements and see negative signs. they are going to come back to equities. especially equities that provide longer-term value. these other things that are starting to outperform good old-fashioned fundamentals. sticking around, coming up again, black rock ceo larry fink says the world's second against economy needs to .eliver he reveals his biggest concern in a bloomberg exclusive. jonathan: despite china's reforms, black rock ceo larry fink warns that we should all be worried about the country's debt dependency. here he is earlier in an exclusive interview with bloomberg. >> i would give the chinese leadership some of the best marks in trying to transform their society. we are on the fourth year of the plan to reorient china away from that -- away from manufacturing, export dependency, too much more resilient domestic economies, a much greater service economy. that is a very hard thing to do. it takes many countries 50 years and countries generally have recessions in the transition. so to say that china most policyy, in form of behaviors, overstepped the market, saying that china's dependency of debt and the leverage of the balance sheet's and the continuation of investing in some of the unproductive state owned companies is not a good long-term solution. i would say it is not a good long-term solution. hopefully, this is only a short-term remedy and they get back to the basics of trying to build a better domestic economy. jonathan: that was larry fink in a bloomberg exclusive. brian, we would all like to see a china that is growing. the problem is, when the debt growth slows, the data softens. how connected is it to the china story? >> we where there, had the good fortune of being in shanghai, and i like to use the shopping bag indicator. when you see people, they are not shopping. when we are transitioning to a consumer-based society, we need to have structural reforms in china. they are worried about what is happening. use the field of dreams concept. if you build it, they will come. these people are doing what? for a longer-term perspective, china has to grow into itself. one of the concepts of investing is by scarcity, cell capacity. in respect scarcity of raw materials. now we have structured a transition into a supply base. we believe commodity prices are going to be gold. .here will be a bit in gold from a heart commodity basis, we will see prices all coming down. lisa: do you think there is a risk of having a hard landing? >> in reality? or the numbers they put up? lisa: reality. it isthe end of the day, a juggernaut in terms of growth. they will figure out how to grow somehow. can the rest of the world, both the united states and canada, understand that the economy can grow without china, and the answer is yes we can. canada,nited states and the consumer in america still remains very robust. for the most part, in the bunker. we don't need china to grow and for stock returns to be positive. jonathan: is that a u.s. specific story? i look at the overcapacity in the world and a lot of that is geared towards china. it is mostly u.s. and north america, canada as well. europe'sd of the day, weakest trading partner is china and emerging markets. i think europe is still in problems, from a fundamental expected -- fundamental perspective. at the end of the day, i think the u.s. can and should go without china. what nobody talks about, everybody is talking about inflation, we have been waiting 30 years for inflation. what you will see is, this is about growth. it has been about monetary policy. having isve been fiscal stimulus, which will incentivize companies to grow again. jonathan: just to wrap things up, what is it? >> financials. everybody is convinced we will never be able to do business again. you should be buying companies, big financials with scale. lisa: thank you for being with us. up next, a step in the right direction. mgm growth properties have sharply outperformed the s&p's. ceo jim moran joins us next. jonathan: welcome to bloomberg go. good day to the city of london with the ftse up and the pound very much in focus. i will live through the markets for you. futures going nowhere, dow futures off by not even a 10th of 1%. i said the pound was in focus. of onep 144, up a half percent. for the remain camp, at least. , and crude inains focus. wti, 47, 73. about twore just hours away from the opening bell on wall street. home depot shares are up half of a percent this morning. the home improvement retail reported profit above estimates. it raised forecasts for earnings the rest of the year. u.k. inflation unexpectedly slowed in april, highlighting the struggle to revive price growth. from zero quick incent to 0.5% to mark -- march. george soros cut his staff by more than a third and bought a quarter of a million dollars stake in the biggest boolean producer, barrick gold. what is making headlines outside the shared -- outside the business world. missing malaysia and airline or be found. martin dolan tells the guardian there is an increasing possibility -- a decreasing possibility of success. the plane disappeared more than two years ago. and amtrak engineer was distracted in the moment before his train derailed in philadelphia last year, killing eight people. that is what investigators are likely to conclude today. areport will say that rockthrowing incident involving another train caused the engineer to lose track of speed limits. hollande, president will try to head up strike this week to protest labor reform. last week, a land forced -- hollande made it easier for companies to fire workers and reduce overtime pay. news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. jonathan: the data everybody wants. in 60 minutes time, we will get inflation data out of the u.s.. i am told to get that, you need to get to cleveland. tom keene is with us from bloomberg surveillance. paying attention to the cpi, talk me through. >> the fed doesn't look at cleveland as much as bce. there is an argument about pce versus core inflation. cleveland came out a few decades ago and said, like core, where court illuminates food and energy, we are not going to do that. whate going to find out the outliers were within the different basket of things we look at. they may take out building supplies or glasses or bow ties instead of food or energy and you get a more elevated cleveland cpi then you do. we have a u.k. inflation print out today and what that showed is a below estimate inflation print because of a very volatile airfares number. that is noise and it didn't distract. the cleveland cpi looking at things, why is it always much more elegant -- more elevated. >> because of the service economy, as torsten slok wrote today, part of this is the overwhelming waiting within all the inflation series of real estate. if we are becoming rental america, another trend away from homeownership, rents play even .ore in the cpi data for we in new york, we are only 30% on real estate. that is ridiculous. you put 110% of your income into real estate. jonathan: the first thing people will say is, it matches with the fed. how does it factor into the federal reserve confirmation? >> we are not new zealand, we are not doing inflation targeting per se. new zealand known for more precise targeting. i would suggest the difference is the idea of overshoot. governor carney has talked about it. dornbusch,-- -- rudy coined the term. higher and overshoot where they want to be to provide a support to the real economy. that is the theme to focus on as we see today's data and on to the next jobs report. will that confirm what we saw? jonathan: fascinating understanding. when that comes out, it is the cleveland cpi you want to overlay it with. tom keene, thank you very much. mgm trying its luck in the real estate space after its ipo growth properties last month. it was the largest public offering last month. shares have climbed more than 9% since then. the real estate investment includes 10 resorts in las vegas. anding us now is jim murran bloomberg intelligence's brian edgar. he covers gaming, lodging, and restaurants. >> i am all fired up. lisa: what sort of brought it about and did this come as a result of shareholder pressure? >> i have covered this sector for 30 years, and i have always recognized the fact that gaming stocks have traded based on cash flow multiples without any connection to real estate. the quality of the real estate, the depth, we have looked at real estate, separating real estate from operations for 20 years. 10 national gaming did that so we started looking at that but there is no doubt our investors talked to me about what do you do once you have this incredible base of real estate? we went to different path. we did what is called an upright. -- uprate. we made it -- we made the financials so overwhelming that the people that invest in it, they had to look at this. they couldn't ignore it. they wanted to ignore it because we are gaming. that is a new asset class. there were some things we had to get them comfortable with but once they saw the asset coverage , the quality, the guaranteed accelerator, we went out to raise a billion dollars. we had $11 billion of demand and we crushed it. lisa: 58% of that, mgm can use for anything it wants. what is it using it for? back, we arewe get investing in building projects like national harbor in washington dc. we are reducing debt, we just built a new arena in las vegas, which is super cool. it, weresorts, by doing have a couple of upgrades. it turbochargers are growth. that stock is up certainly undervalued. relative to what it is today, it allows us to continue to feed with new properties we develop. trading up since we did the deal, it still trades at a triple net rate out there. our goal there is to catch up and we will be doing that through growth. jonathan: my question would be, do i want the equity? does it make everything more attractive? >> if you are my mom, she wants to yield. i like the guys that i hired to run it. they are investment bankers, deal junkies, they are going to acquire third-party transactions, and remembering that mgm gets 73% of all the dividends, we are rooting them on. from our perspective at mgm resorts, you get a d lever has operations in las vegas, which is where i have most of my money. stick with us, bloomberg intelligence brian edgar is also sticking around. jonathan: coming up after 23 straight months of declining revenue, there has been some signs of stabilization. casinoeo outlines his strategy and it might be targeted at you. jonathan: this is bloomberg go. coming up in just a few hours, goldman sachs cohead of investment -- banking, david solomon. here is your bloomberg business flash. bridgewater associates is headed to china. bridgewater has become the first foreign had monde -- hedge fund manager to set up an investment management business. bridgwater manages $154 billion. housing prices in the u.k. rose in march at the fastest rate in a year. home values increased at an annual rate of 9%, more evidence that investors rush to buy houses before a tax hike on second homes and investment property in april. twitter wants to make it easier for users to send longer messages. twitter will stop counting photos and links as part of the 140 character limiters -- character limit. links take up 23 characters even after twitter shortens them. as part of a longer term plan to give more flex ability to users. thethan: time for a look at influential personality in business and politics today. we are looking at the gaming industry. good bet for investors, outperforming the s&p over the past decade. is the international chairman and ceo and he is still with us alongside brian egger. let's start with what is happening in the gaming industry. mccalla versus nevada. >> i hope my mom didn't see that. lisa: he is betting on it. >> we are doing a lot better in las vegas. they have struggled for the last three years. we can almost call the bottom there right now. you are seeing revenues bounce along the level and i think next year, revenues will be up. up onegoing to open early next year and that will stimulate some demand. i would rather be based in las vegas because our revenues are accelerating. we are picking up market share, we have the most properties in town. lisa: also with us is brian egger. theutside of the washing -- national harbor, i think you have described that as the most profitable property outside of las vegas. can you talk about the focus of customers there? >> it sits on the potomac, three airports within a short drive, you have the tourists who go to d.c., ndc has never had a bad .ay, so no recessions everyone is making money in d.c. and there are no casinos in virginia so we believe we are going to get a tremendous amount of regional and local demand and i think it is going to make the most money of any casino that exists on a commercial platform in the united states outside of las vegas. it is going to start gushing cash in early next year. i saw that mgm has more than $9 billion of debt outstanding, and this is a he rated company. how important is it for you to delever? >> a year ago that was 12 billion. 12 to 9.4 is a good jump. the board the are going to be investment grade by the end of next year, which means rising our cash flows to get the leverage down and also paying off some debt. we sold a huge retail mall called crystals. mgm received half $1 billion in dividends from that. we get dividends from city center, from china, so the goal is to continue to reduce that debt level into the $7 billion range and we generate over $2 billion a year in cash flow. with that metric, we will be investment grade and at least bbb. strategic decision not to be involved in mall real estate >>. was timing. we found an environment where these type of trophy assets are hard to find and hard to transact. this is the largest enclosed mall sale in 10 years. we had a great buyer in simon and they were willing to pay a 4.23 percent cap rate. .5% cash flow for enterprise public markets were valuing at 10 times. a tremendous uplift in valuation and cash and we took that money and reduce debt with it down to the 9.4 and also it allows us to reinvest some of our properties. it is just a good timing trade. lisa: your industry possibly has one of the best views on consumer sentiment right now and how willing people are to shell out there money for entertainment. do you think we are headed towards a recession? >> not close. i don't believe that. i see this in every presidential year, the world is falling apart on both sides, but i can tell you at every level, the consumer in las vegas is spending more money at the economy level, the luxury level, at the business level, our convention business has never been stronger. i am talking about better than it was before the recession. consumers are spending money. on ishey are focused value. they have some money, they have earned it, they are not willing to just dump it on something they don't feel like they are getting a return. that plays into las vegas. in las vegas, our revenues are rising because people are saying "i am getting ripped off in l.a., new york city, i want to go to las vegas and get a five diamond resort for half the price and see some fun entertainment." jonathan: his mom is not watching. bloomberg intelligences brian egger. breaking news in the last minute or so. out of brazil, they are unveiling some key positions and who will front them. finance minister enrico morales says the central bank chief will be the chief economist. he will take the position of the central bank chief. looking out at these appointments, the brazilian senate must approve these twoo. lisa: we go off the charts to see how gold miners have become stock market stars. jonathan: about one hour and 39 minutes away from the open right here in new york city. let's get you up to speed on what is happening in global financial markets. let's start with futures in the u.s.. down about 11 points on the dow. s&p 500 futures, not even a 10th of 1%. .tellar returns on the s&p 500 the dax really trimming the gains this morning. switch of the board very quickly to the fx market. single currency at one: -- at one. 1319. on the back of one poll that shows remains significantly ahead of the lead of the referendum on june 23. yields on treasury, a little higher up. 1.76%. crude very much in focus. it is time profit charts and it is time to talk commodities. the best stocks are the ones with a reputation for being amongst the worst. a bloomberg index of 14 major gold miners doubled this year after fronting 76% in the previous five. julie hyman is not a goldbug but she is here to cover it. >> george soros is joining the ranks of the gold bonds. looking at barrick gold. this has become a crowded trade this year. this is the gold price in white and you have holdings in gold etf's. just see it climb and climb. as of yesterday, it had gone up for 14 straight days. it is a common view right now, or at least a common hedge. it doesn't mean people think the sky is falling but at the very least, it is an insurance policy. jonathan: and big news on the currency trade as well. ,> we are watching currencies so we have got the rand and the ruble here. these are not the dollar versus but rather the other currencies versus the dollar. they are actually going in the direction we are seeing here. we have seen them bounce off the bottom but over the past couple of years, they have been down. that has been good for the miners costs. jonathan: the miners have been deleveraging as well. >> we are looking at the leverage, we haven't seen that much of a decrease but we have seen something of a decrease. in general, these miners have been slimming down as well. we have seen the same thing in the energy industry because things had been so tough in the prior year's that now we are seeing a bounce, they are better positioned because of the tough times that came before. jonathan: you get to the end of each quarter and these big money managers have to reveal what they hold, and at the same time, it is backward looking. we know that billionaires of behind it. -- billionaires are behind it. >> it depends on central banks. your guess is as good as mine. the other thing to know is it is also a snapshot. depending on which manager you are talking about, you are talking about them at one point in time. for soros, that is probably not the case, but other hedge fund managers that get in and out of positions frequently, they might not be in the same exact position. jonathan: the bigger the name, the more attention is paid to the move. rightly or wrongly. out, brian belski pointed they are not all created equal. the performance of many of the hedge funds, and we have talked about this a lot, it is sort of an embattled industry. everyone wants to know what these guys are holding when many of them are underperforming the market. jonathan: the billionaire bears getting behind gold. lisa: talking of gold, coming up, watch more go. talk of helicopter money will curb central-bank -- will current central bank policies keep on track? ebrahim rahbari joins us. we get cti and housing data in the u.s.. more on go next. ♪ econ recon, a slew of data across the world, give investors better data. we'll talk about monetary policy across the board. mark: companies in gender diversity lead with the strongest returns. morgan stanley reveals his study and how to trade it. john: a warm welcome. guest,ere with bloomberg lisa and david westin. will be here in 30 minutes. john: coming up come looking for to that. 30 minutes away. in 90 minutes, will have the market the feature is down. s&p is going nowhere. we have the cash open looking very boring. we are down one half of 1%. the deck is rolling open. we go very quickly through the other asset classes. focus boostingin chances of remaining. at 11320.rency crews are positive for the session at 4783. have a seven month high. going to exxon bnp which is cutting the stock which will underperform from the neutral, the company was performed with the u.s. auto leasing bubble coming to an end. they have not done enough. bp are going through the downturn from 4%. they're going in the other direction. we're watching the telecom companies earning a quarterly growth. the european network is going through december of 2010. the organic service revenue is going up. shares are rising 2%. i want to reiterate, another meager we are watching is the lending club. some concerns are down 10% after the company was late yesterday getting a subpoena from the department of justice. it was amending the financial statement. finally, freeport copper ingold has been on the rise this morning. getting positive commentary out of jeff street. they're setting back in the s five. another analyst call this yesterday. they had a winning streak. john: if you starts to walk. central banks around the world are pumping trillion -- trillions of dollars since 2008. they have all the helicopter money. can it diverge the market group economist? , this is like the last resort for the central banks. what have we seen about this prospect becoming a reality in some shape or form come we probably are. there are these two kinds of helicopter money going through this day and age. we have fiscal spending. at this point, probably only one way is it really too rebounded through the central banks. if you book to together, you'll get that money. first? ll received ebrahim: probably, japan. history tells us that it is usually the smaller economies. we will probably have an outlier candidate from somewhere else. lisa: do you think that could ignite inflation through the market? ebrahim: i think it will help bring up inflation. it might necessarily do so. if it will sustain growth, i am a little about. it is not completely clear. the different screen helicopter money and what is currently going on in japan? central-bank already owns one third of the debt pile. the balance sheet is just doing this towards 100% gdp. what is the difference between what is happening now and conceptually,ey? it is that you have a temporary stimulus but, the monetary policy is permanent. selling the dead issue, doing anything to feel like you are reversing the original expansion. we are not that far away from that. they are not sending a check to every man, lord, and child. ebrahim: from our perspective, you materialize the element whether it is heating up checks or picking up government spending itself. it is a separate issue. john: in the united states, we are having a conversation about negative interest rate is. i said it is ridiculous. does that day toward a negative interest rate? why are people concerned about with the easy side? at this point, there are a number of reasons why. part of it is the concern that maybe we are any mature phase of the cycle so what we have seen is the best economy we will likely see. yes, the fed will be under pressure to do something. there are very few places to go. john started by calling the markets born. i'm wondering if, the better word is directionless. what do you think will give a direction? ebrahim: it can go into ways. you want to take the optimistic side. maybe there is room for the u.s. economy. perhaps, there is more life to the emerging chinese market, if you and to call it that. in that world, we may have a turn for the better. john: is everyone rushing to thisdown side protection, was a wee market, if you want to take that market, you go through downside protection. the high since 2012. my question is, all this protection going to the fund managers, if that does not deliver, when do we get the scree's? -- squeeze? ebrahim: summers have been interesting for the last few years. for inct that we are in expanding. over the summer. we have seen hesitancy. people have been by protection not hadeans they have the tools for so far. i would not be surprised if things worked out. that, through on the summer, what assets will rally the most? ebrahim: as an economist, usually defer to my strategist. but, in line with what i said earlier, for someone to take a more benign view of things, i think the risk loving areas will be better performing. think on the equity side i will not be surprised. john: there seems to be a fundamental shift in the bond market. everybody is saying why would you want to buy that stock? it has a capital gain and it has made a fortune. if i plan bonds just on the capital gain, that means the squeeze through to the other side is going to be violent. what are your thoughts on that? ebrahim: the world i'm picturing will behere on yields giving the risk asset a little bit of life. we are in this world where yields do not want to move. that is actually not a bad thing. you think yields in the u.s. can move without corporation from the rest of the world." -- world? even drivers that we think about our sort of in this end. we see the fed inching towards another rate move, i think the transition from there into 18 your movement is very direct. john: you are sticking with us. to first news.er thrustbaghdad is being by another wave of bombings. three car bombs exploded in the iraqi capital. killing a few people. authorities say the bombings bore the mark of the islamic state. week has claimed responsibility for the blast that killed 140 people. request forbacking weapons to find islamic state. john kerry is in vienna where he met with foreign ministers. john kerry says it makes sense to arm libya. get hisrump is about to first real attack from the clinton machine. tomorrow, a pro-clinton super pac will start airing against the likely republican nominee. spendties usa plans to $136 million advertising against trump between now and november. the first ads focused on his statement against women. meanwhile, bernie sanders is into more primaries today. dayal news, 24 hours per powered by our 2400 journalists and 150 news bureaus around the world. lisa: thank you. up next, signs revealing that growth is improving. we'll preview all of the economic data on deck today. john: the south money exit is with berkshire hathaway taken in a $1 billion asset. david einhorn and warren buffett see value. lisa: several key pieces of u.s. economic data out this morning. athave industrial production 9:15. citigroup global markets economist is still with us. bloomberg intelligence chief u.s. economist is here. karl:re you watching for? it is important to see if there will be any support in consumer led growth. of a mildet evidence contribution. what is most interesting to me that the cpi at the industrial production data out. so, as long as we are glowing close to the trend come inflation numbers will eventually cooperate. industrial production -- there is a big? . we have seen some signs of life in a lot of these reduction surveys. q1 and early in the current order. as i said yesterday, things seemed to have rolled over. we have not seen much job growth. so, when we look at these production surveys, they're getting signs of life. somepect there might be downside risk through 915. it feels like we're getting a lot of economic tea leaves. what do you think would be the definitive proof we're going up or down? john: i think we have major weakness in the industrial manufacturing sector. have a broad range of countries. we saw some better signs including in china. it could go through the u.s.. manufacturing tends to improve other parts of the economy. bit of a reversal and industrials. i think that would be very hopeful sign. isl: the real issue here that we are banking on consumers to pull us out of the soft patch. that might be true, but there is not endurance to sustain the turnaround unless we pick up industrial activity. the service sector will probably not go at it alone. the factory sector is down. industrial sector is down for the year and your turn. this will take a real impact on the service sector. we need healthy job gains to pull us through. john: i just wonder how you get a read on the consumer. we had the situation where retailers are singletons ugly, but the retail number looks fantastic. how do we get a consumer read right now. ebrahim: we needed to see some baseline levels of growth to show the feds on track with their projections for overall growth this year. they're aiming for 2.2%. if we are not hitting their gross number, we can lately not hit their rate hike schedule either. given where retail sales numbers came in, should be able to handle the growth numbers in the current quarter that will satisfy the policymakers. put all of this together. i am just wondering, the data is out. aaron rosengren is saying we will stick to the plan. the market just keep saying no you will not. you cannot. it was right and who was wrong? carl: i think markets are underpricing. it has proven very tough for them. i think the answer, as in many cases the somewhere in the middle. more likely to see a rate hike in the summer. it is, at this point dealing with the very data. bloomberg intelligence chief u.s. economist. abraham brevard. the global markets economist. you will be back with us later. john: will break down all the big moves from the s filing. we have some of the most respected names in business. is it too late to go? apple gun with david einhorn. you are talking must waiting next. john: good day from our worldwide viewers. we are here in new york. hedge fund managers and focus releasing 13 as filings. give investors a chance to grab some trading ideas and decide the market trend. with this is our market reporter to look at what some investors found. we had some big names that stand out. one of the big names? >> obviously, we have a big shift from something we have been working for for a while. we had a drawdown of the health care space. there are only two sectors where health care decreased. last is in the end of 2015. seven out of 10 sectors and hedge fund managers old money out. this time was exit pretty positive. they had more money in stocks. on the flipside, we had utilities. which is what we expected to see. a lot of the consumer staples did well. verywent from being popular to being unchanged through the quarter. we have some big names that we saw. we know david einhorn got into yelp. happenedi think what to the hedge fund space is very likely what we'll see in the market. we have the momentum shift. a lot of people got hit hard by the momentum shift in those sectors. i keep hearing is people saying this is so backwards looking. they are getting into the likes of the barracks. how bad is this? all over: it is great. when you look at these filings, we say what can we get from investing strategy echoed it is hard to know, because this is what we know they have now. it is a great question, there is a huge change in the polls like soros. are you getting this exposure, you're getting a bigger move. it is very interesting. overall, and so much out there. leslie terribly surprising move. there were so much bearishness, we saw with apple david icon saying he had dumped the stock. join us now is walter. i have the by of 115 are walter:d by the news? there is always a focus on the high profile manager. with the stock that has been left for dead, you are always looking. if you are an individual or with an institutional investor, the only reason you will buy is maybe you are putting it on the back burner until the iphone seven. it could be like warren buffett. that is another reason to charter brush it off and say should we be trading at a 35% up 115.? >> we are was the wrong headline. $115. we cut our estimates. i should have downgraded it. but, at best point, we missed it. with the stock down, we're having a hard time finding buyers. broadly,vestors more with the discount of the market being 35%. lisa: what will drive an increase to apple? walter: it is an iphone company. maybe it is a major acquisition getting them through this new category. if we rely -- rely on r&d, we have the expectation of a rant. maybe there is a megadeal that would change perception. if you're investing in apple, you believe in core customers upgrading their phone. they just want to make sure it is not to too long. we look at how stock has been valued from investors. it is probably why it has been going to the 10 time earning. with the like of samsung, i wonder if you if we are trading at a much higher multiple? walter: if you believe it can return growth, multiples will grow up. of thees are function risk. we're moving through both sides, meaning apple's revenue and earnings are going through both sides. people are worried if somebody will over their phone, can they get a new product? if they have the double benefit of driving a multiple of and getting earnings growth, that is what we believe. we think of greater grace will kick back in. apple and talk about they're saying next fiscal year, will we have it all year? our belief is that it will happen and multiples that expand still exist in the market, but just higher than where it is now. lisa: i have cover debt markets. alsoget out record-breaking deal after record-breaking deal. you think that will expand? walter: cashel expand. last two quarters they spent about $7 billion. we think it is 20 billion in cash. you can access that market at a low rate. cashan by $10 billion of per quarter. then come you can lift that growth. when we look at relative earnings growth, we look at cash. at this point, it is being used for sharing purposes. thanwould argue rather spending 30 doing launcher purposes, maybe should spend that money and more are transformational acquisition. .e'll get a higher multiple until we identify a large acquisition, spending $10 billion per year is something that can be funded across the debt market. relate, bloomberg news thank you both. coming up, breaking data on the u.s. economic area. with thell get through central bankers. find out window returns. hii'm here to tell homeowners that are sixty-two and older about a great way to live a better retirement... it's called a reverse mortgage. call right now to receive your free dvd and booklet with no obligation. it answers questions like... how a reverse mortgage works, how much you qualify for, the ways to receive your money... and more. plus, when you call now, you'll get this magnifier with led light absolutely free! when you call the experts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home and here's the best part... you still own your home. take control of your retirement today! john: this is bloomberg . 25 seconds from economic data at the markets. stocks pick up in last few minutes. we were down 17 points. futures are down around to. such of the board very quickly. yields go through much of the morning or up at a 10 year. cable on the front foot after a poll showing may camp in the lead. let's start with cpi. the month on month is coming in at 0.4%. the month on month survey is going in zero 3%. the month on month stripping 1.2 energy company is down percent. the survey was a 0.2%. the year on year is coming in at 1.1%. stir about food energy 1%. we go in line at 2.1%. no big surprises. lisa: none. confirmingks a are the positive side of people's expectations, saying that the u.s. economy appears to be on track. it is not appear to be playing out the way a lot of people have been concerned. john: we have these housing stocks as well. the housing stock month on month, the previous month reince lower. this month, in april, the month over month came at 6.6%. that is the price to be on that number. as you say, looking at the cpi cause for energy, it is a 2.1%. you can see market reaction off the back of that. let's turn to re:. jpmorgan's global head of have the data here. 2.1% is stripping out food and energy. that is a solid number. ebrahim: it is, it may be one of the first steps in that long road towards a potential summer hike. we have these levels of core inflation in line with the average. those were the fed will be comfortable. the normal part is dragging inflation down. this number reinforces the idea that inflation is normalizing. it is very normal. lisa: does this to you look like it justifies a right hike? >> that has been away for the last two years. we have seen it rebounding. that does mean a right hike in july. there is only one more payroll coming up. so, we do not have that many data points. will basically be on track in the u.s.. anything surprising that these numbers? weak.a was the two to 2.5% range is where the economy has been stuck. i think some normalization will be normal. that is for the second half of the year. the areas where the fed will wait on. at that number, it is the biggest gain since february 2013. it does not sound fantastic, it is decent. we have a couple of basis points to where we are on the two year yield. the long and does not have the same pace. you see it flattening. we have the temperatures staying there. what does that flat yield curve tell you about what is happening. i'll probably see it slightly differently. i would think on balance, we probably are in a relatively sure phase of the cycle. that means even if we are seeing globalization, there is an interest rate. will probably not have a high rate hike inside. what is short may not have much bearing. we are watching the two year yield. it is a light higher now. from your perspective, given the fact that the market seems to have been underpricing the risk of growth coming out of the u.s. has ay, hootie think chance to do the best in the upcoming weeks ago given this shift in understanding. >> i think that if you stick with a fixed income that is yielding, is a better place to be. wethe equity market side, think there is more downside than upside right now. as for the way earnings have been coming out. still like some of the credit markets as well in this environment. you look atthat if you as high grade, you have the acquisition of global property. a lot of companies will want to get that done during the course of the summer, emerging markets have also be going with high single gains. i think there is still value in the market. people are looking at the news out of brazil today and wondering if that is more of an opportune time to get into the market. lisa: we think of the emerging market? we have had a lot of enthusiasm for the last month or two. it is certainly true that our signs are little more benign for the markets. particularly those that have been doing poorly. i think you can punt them. i think it will always be technical. a number of these will persist. you're looking at this fantastic story. the yield quick side. then it came back down again. i thought whatever but he wanted it will not be fine for people who want to exit when everybody wants to exit. how crowded the some of that looking? they are relatively crowded. news.e big we have relatively little news. in general, we have probably mighthat is a sign they have had a crowded nature. citigroup global markets economist. thank you very much. our global head of research is sticking around. now to the morning reading. lisa: adam parker is highlighting the benefits of gender diversity. adam, walk us do this. how does having more women on a board out the performance of a company. good morning. yes, it is not just on the board. it was also a hate parity. it was also a representation. undertaking. diversity.ender they have these companies working globally. we then said to the ones more diverse on gender have better fundamentals, do they outperform? the answer is clear, which is that you get lower volatility for the same returns. i have been advertising this making moreou're money with less volatility, the research is for you. if you are plus-minus more volatility. can you strip out companies that want to detract from these voices. is it just by virtue of finding women? is its inherent with having a balance of genders to offset one another? ati'm probably better analyzing data i am at interpreting that. we want to advance the research by saying we can all agree that having more diversity results in a more robust decision. take theid is theoretical and make empirical. if you buy a basket of stocks that have the certain fundamental attributes, we find the ones there, they have a certain return of volatility. withu have the same ones gender diversity, you get much lower volatility. so, the idea is just a riskier group. you have more diverse decision-making. i am realizing week advance the research by making the theoretical empirical. lisa: we have a lot of the different months. have the we will upside with a downturn? ati am not particularly good making 2-3-month market calls. i know you guys have a lot of people who try to do that. i do think they are very good at it, but it can be entertaining. when i look at what is in the price right now, we're using 4% growth per year for the next two years, if you pay 16 times a year for now for earnings, that is an round 2015. the market discount will take some recovery. i am not sure that anything has changed much. we have the same level of earnings in the economy. we had the jam one. i think the only thing difference is that the bear cases lower. that has brought us a relief rally. i think this is hard to call. for this short horizon. terms ofou think in foreign investors? >> when you look around the world, when the problems that you see are every asset that is defensive looks expensive. the u.s. has attractive companies. you always want to allocate assets in the top 50 high-quality u.s. asset. that still looks very attractive to me. there is a 50-50 concept that goes on globally, why would you buy a french bond in the negative yield when you could buy a basket of high-quality volatility? some of these countries switch from being a bond culture to a more balanced culture. that's what we will look through the u.s. for growth and qualities. lisa: adam parker, morgan stanley. fabulous report. here is first report news. sherry: amtrak driver was distracted for his train crashed last year. investigators are likely to conclude and a meeting. according to people familiar, a report will say that a rockthrowing incident involving another train called the engineer to lose track of the speed limit. in the buildings, the son of the late date tater appears what he sees ahead in the race. with more than 95% of the vote counted, market or trails by over 2000 votes. setback forld be a the family trying to regain its political influence. has signed uperon for the dating and obtained her. it has nothing to do with his love life. to put ads on tender urging and people to vote in next months referendum on the european union. global news, 24 hours per day powered by our 2400 news journalist and news bureaus around the world. lisa: coming up next, mr. soft. after over 41 years, we are getting a look at how much u.s. debt saudi arabia holds. closer holdnday's more questions than answers? that is next. he said: this is bloomberg go. coming up the next hour, deutsche bank ceo -- that is next. after keeping numbers confidential for four decades, u.s. department is giving a breakdown of how is -- how much u.s. debt the saudi's are purchasing. the freedom of information request from bloomberg put it just under 117 billion dollars as of march. for more, i want to turn back to the jpmorgan will head of research. only treasuries the saudi's are sitting on, and actually how big the fx reserve actually is. , based onrve treasury this, which could be a lot bigger has gone up. >> it does not surprise me the world of negative yields. with the bond index, a remarkable 20% is at yield right now. if you look at the u.s. index, 40% has a negative yield. joyce: the higher yield has not been a bad place to be, particularly with concerns about growth. in april, data coming out of china had foreign currency reserve with an increase. what you make of that? joyce: capital outflows have been negative through the beginning of the year. currency to stabilize, you have capital outflows heading $130 billion. you basically sees and stabilize,. we have increased foreign exchange reserve as well. i think that you have the valuation response for a lot of outflows. destabilization we're in right now, the market is wondering, it cannot last. how much just is the stronger yen and the stronger euro? joyce: the stable euros dollar -- u.s. dollar has been key. the event hike could be a testament to that. you could see a presumption of more weakness come through that. we have seen one-to fed hikes for the year. not the normalization we have been calling for. oil prices asese the game changer for the beginning of the year. aboutyou're talking merging assets that still look very positive. what kind of assets are in this country? all of the attention is on brazil. marketave a number of friendly names. you're still looking at bonds. corporate bonds, 6-700 over. in this kind of environment -- lisa: you mean 650 basis points over the benchmark rate? i think some investors will say what are we looking at him brazil? we have had a contraction? will have a better economic team? it looks like that will be announced this morning. i think that people will feel that there is a chance in brazil for them to stabilize the situation. maybe, not have such progressive thisms, but at least have diversity for brazilian growth? john: my question to you would be, looking at that situation, how much have -- has the collapse just been economic mismanagement? how quickly can that turn things around? joyce: yuan is an excellent choice. with such a low rate environment , there is plenty for race to come down in brazil over the next few years. the foreign-exchange reserves have stabilized. the currency has stabilized. you have seen fx become the adjusted power. and, when you have this positive growth in brazil, it does not take much for you to earn a decent yield in brazil, if you think there is stability. the economic team is focused on that. john: coming up, the treasury department has said the saudi arabia is are holding u.s. debt. we will show you who is number one, next. ♪ lisa: time for matter of the tarts. julie hyman takes on joe weisenthal. julie, you're talking about saudi holdings. looking at foreign holdings. overall, the change that we look at is the quarterly basis. when you see it at the zero line, that means we have the net sellers of u.s. treasury. buyery, there is a little come in the market. we are document the federal reserve with their change in holdings treasuries. what they have lack in foreign ownership, they have made up for in federal reserve ownership. that is the calculus we are looking at. central-bank selling coming u.s. century bank buying. home depot knocked it out of the park. they raised expectations. i take a long-term look at the stock. investback in order to $100 in that i ipo back in late 1981. it was half $1 million today. compare that to walmart, another big box retailer. that is not too bad at all. it came the public earlier. since home depot became public it came through that back in 1981. so, home depot is a monster stock. .ncredible consistency obviously, there is a surge like everything else. that is basically like the straight line up. me, it is home depot versus the treasury market. there is nowhere you're going to win this one? >> i think it is interesting. aig has known that. clearly, they of changes going the other way. the great bloomberg function is debt for our professionals. you go debt go. you'll get the breakdown. you'll see the fed it right up there. you see the change between china and japan. japan is starting to creep higher. we expect that to change. my vote goes to julie. lisa: this is a very compelling target. it does show the reversal between the u.s. century bank and florida central bank. we actually have to sell to use money for fiscal stimuli. i'm struggling to understand this. why is home depot doing so much better? you think of walmart is being the omnipresent store. makesne thing that really home depot powering ahead is that it is amazon proof. it is not the stuff you would want to buy on amazon. every other retailer, to some extent seems to be getting hurt by online sales. wither it is home depot professional clientele or, just execution is your extraordinary. they are talking about how they pay of by market rates and wages. it is extraordinarily incredible. you do not buy your lumber online? joe: no. lisa: i need it in person. i will vote for you, joe, because i lost that. got? what have we i'm here and i'm next. i will go with joe. coming up, home depot. economyking that the and the health of the u.s. consumer. why he is so bullish on u.s. equities. 34 minutes away. the future is softer. dow futures are up by 34 points. fivee features are around here we have one quarter of 1%. over in europe, the debt is firmly in the red. it is a pound at 144. it cpi is coming in a little bit firmer than expected. >> tune into today's options insights. sponsored by think or swim at td ameritrade. john: consumer prices the rise since 2014. fear and loathing. george soros goes for gold selling 37% of his hold at the u.s. stocks. he gets a stake in the world's biggest bullion producer. blackrock solaris think hosted his worry over china's growing debt problem. john: 30 minutes way from the opening bell, here in new york city. i'm jonathan ferro. we are away on assignment. lastly, we had a retail on the upside. the cci fed measure has inflation. gottenrket that has not anywhere near the feds. lisa: maybe, it will get there today. play deals are rising. perhaps, they are rising in more along the past. john: they have more to the cash open. let's look at what is treating globally. the s&p 500 futures are at negative five. over and europe, they stay in their. it is -- they drew 10,000 points quite comfortably. as we rolled towards the close come auschwitz of the board break quickly. the euro is at 114. that is way throughout the section. hangnter 45 harry dwayne it up. they had a stronger pound at 144. the also changed the 10 year at 1.76%. they had the brink contract which is creeping higher. away from the cash open here in new york. let's get you more with julie. julie: we're talking about the long-term out performance of home depot versus walmart. this is down, the first watch looks like a pretty stellar quarter of topics beating estimates. the company is raising its forecast. talked to matt who is covering this for bloomberg news. we talked about possible areas of disappointment. he said appliance sales were down through april. also, in the earnings report, a lot of suppliers to home depot have reported a strong result. that might have picked up expectations. reached 7.4%.wth that is pretty impressive. quarter 8.9ird percent gain. all those might be contributing to a debt. the company's first-quarter total sales were up 7%. it had a raised forecast for the year after its first-quarter beat estimates. this is one of the discount chains that has been doing well in a tough environment. is doingren's place relatively well, another one reason its forecast. the first quarter cops are up 5.1%. the company said week traffic will continue. down 11%.s are we have seen inventory buildup with a lot of retailers. is not only is coming out with preliminary numbers, its chairman and ceo is also resigning. he said it is for personal reasons and effective immediately. richard cook is the chairman and ceo. he has been on the board since 2013. shares are taking a big hit. lisa: it looks like there are some bright spots in retails. julie: few and far between. lisa: it is time now for the three stories that matter to markets. vickie sarkar. had the most since 2013. george soros sells u.s. stocks. learn just how much treasuries saudi arabia holds. our first story, u.s. cbi data is out showing that consumer most since charisma 2013. the biggest drop in gasoline prices in four years. they are laying the groundwork for inflation to climb higher. what do you make of this? >> the important story you want to keep your eyes on is what will happen with undermined inflation. corn inflation has been running 2% for a while. it came down from 2.3%. what i would say is that you might want to go one step deeper. if you think about core inflation in the united states, you want to think it as goods and services. they will be much farther apart with core inflation. that has been running over 3%. mind important to keep in that the core service inflation is what consumers respond to and a tight labor market. i would argue that the trend will remain very much in tenant and in place. the city ofto london over in frankfurt and tokyo, wherever it may be, the idea that high inflation is getting higher, are you trying to say to my mom that central banks are trying to push up the cost of living? yes, it is in their mandate, why? binky: the answer is much simpler than it seems. nobody is pushing for high inflation, with the central banks are pushing for is a moderate rate of inflation, like 2%. could call it below the close. it is very subtle. john: the goal is to keep it down. the ecb would argue strongly that it is trying very hardly to get that up to 2%. i would argue some other actions are probably lowering that rate. lowest interest rates, let alone negative interest rates are a tax on economic activity. they are a tax on bank earnings. lisa: i would say to your point about markets, the five-year forwards. you have the 2% target not moving through core inflation. binky: i think markets are following what i would call the misdiagnosis of the central banks. up in japan is where we have this ghost called the deflation fair problem. it is 75% of u.s. core inflation running at 3%. it is seeming like a follow-up. last i checked, that is 2% through the target. all the noise and volatility in inflation is coming through that 25%. up. prices go down, some go they will do what they will. john: this takes us to number two story. it dominated some of the stories in the financial market. george soros going for gold. revealing in his filing that they are selling 37% of u.s. equities in favor of gold. there will take a quarter billion dollars state. this is the latest worry over global economic concerns, they have that currency trend. a lot of people are going for gold. the question i will be asking is that if you get a tour gold starts to pay off in a big way, i just wonder what that means for the bond market. you have all the central banks pushing for inflation. what if they get what they want? yields will go up. we all have all of these subtle interpretations about what inflation is doing. the bigger question and the bigger story, in the near term is -- you emphasize the part about gold. is thethe biggest story decreasing negative view on u.s. equities. kaz, u.s. equities have gone really nowhere. since january of last year, we have been in this range with more and more people giving up. that is the source of return and equities. i would argue that you want to do a double take on that and, ask why have equities been arranged? one very simple way of thinking about the way equities have been arranged is because s&p 500 earnings have been negative for the last few quarters. dollar, oilat the prices, market volatility in this quarter which closed primary markets had huge outside impacts in the first quarter in the last few years. the question i would ask you is that we are in the middle of the second quarter. the dollar is down 6% for the week. while prices are up substantially. these services have moved back up. and, the vague is one third of what it was. i would argue that if you at all those things up together, it looks like there is a in u.s.ant inflection earnings. i think we should go past 6.5%. maybe he'd .5% heard we have the positive impulse coming from these factors which is dollar growth. and, we start out with positive earnings. that would be a very important signal. i would say stick with equities. i would say the short on gold. lisa: go against soros. our third story is based on our own enterprise reporting based on a freedom of information act. 100 billion holds dollars -- $100 billion of u.s. debt. it is a large zone since 19 74. they go through well blows a 750 billion dollars that saudi arabia was threatening to sell should the u.s. continue with its saudi arabia policies. number one to me mention that there are more questions. of thef the management reserve is outsourced. they have money managers with it showing up on london or belgium. that is an issue with reserve holdings globally. the more important part that i would take away from the data is the number of trends. they have this going through. they have the info into the u.s. of a trillion dollars. that is the bigger picture. that is where yields are still positive. they will hopefully remain positive. i have a staggering inflow. they have the outflow from the u.s. to the rest of the world. as the ecb and bank of japan were cutting rates come you wanted to check capital gains. that seems to be leaving town. lisa: you talk about belgium. out of ireland is the next belgium. there is a story that ireland are merged as the fourth largest predator holding u.s. treasury's. you have to wonder, what is going on here? for all senders, it is just the same steam. just spend somewhere there booked. lisa: those are the stories that matter to markets now. john: it is not all them and gloom for retailers. what is behind the group boost. minutes away from the opening. stock futures are down by 38. ♪ john: industrial production is coming in country. the survey month with industrial production has bureau at 0.3%. the previous month was much lower. it is at -0.9. headline number is coming in at 0.7%. it is a month by month. he had the april at 0.3. but that head of the bpr rate. in april, they are going through 2013. they have positive. they have weakness in the retail sector. they beat analyst estimates benefiting from a rising home price. our consumer is simon shot, and binky. we had home depot sales gains moving in tandem of the remodeling market. deviant get the sense that home depot represent a bigger trend? seema: i think it is a little bit of both. they are good in the remodeling trend as well wrought with -- with their products. there are doing installation and work on those projects. lisa: can you break down earnings and talk about what you found so interesting you go -- interesting? seema: consensus was that 4.4%. , people are spending more, but they're going more frequently. think that is positive for home improvement and home depot. the operating margin was up significantly. we had some why cost a late. i think that overall, it was very strong for the year. lisa: you know, looking at a company like home depot, how does it in form your view that inflation is increasing? binky: not too much for we have basically these conflicting pictures for thesest few weeks with different retailers. today, on home depot, i would argue that some of the keys to resolving's retail sales look pretty good. home depot has a fair indicator of what is going on, and, you know there is a variety of factors with a different department stores with a big impact in the dollar. so, not too many tourists are getting go to home depot. they cannot take it home. and, you know, to suggest that the consumer is good and solid, and independent. what we have seen from the start point of view is plenty of rotation. you know, to catch those and be one step of the rotation come up have a commentary on the general sense of the consumer. john: they're saying the weather boosted third-quarter sales. lisa: i cannot wrap my head around that, is a good? is a bad? thank you so much. binky, you will stay with us. coming up, china's market has rising debt. we will talk about that storewide. john: this is bloomberg go. over to china, the word continues to rise. it is at 4.6 u.s. trillion. willrock ceo larry kane talk to the money manager about remaining bullish in a bloomberg exclusive. debtld us why the mounting is not scaring him away. debtina's dependency on and the leveraging of the balance sheets and continuing to invest in some of the unproductive state economies is not a good solution. i would say indeed, it is not a good long-term solution. hopefully, this is a short-term remedy and will get back to the basics of trying to build a better domestic economy. john: speaking to us is deutsche bank's been featured in. we have the record new credit growth is wrote. we're stabilizing data. will that continue with growth? i'll suggest taking one step back and asking the simple question, what is going on in town, and rethinking the of china's balance sheet. if you have a company with a high savings rate and a closed capital market, a thing of the day, that savings has to end up on the right-hand side of the balance sheet of the system. last i checked, we had double entry booking. meaning the left-hand side of the balance sheet has to grow your assets have to grow. a lot of people look at bank assets and say oh my god, they're so much debt. the flip side of the coin is that there is a lot of saving. china is not going to leverage cycle. they're going to the tail and of the investment cycle. they have a lot of saving along the right-hand side of the balance sheet. basically have the investment. have the savor of the investor in china for the last 10-15 years. growth is down. this is a radical point you are making. it is different from what we're hearing from a lot people. they're talking about the massive debt bubble that everybody should be worried about, especially with the hedge fund managers. basically, you're saying it could be a transition into a more developed economy. that we hear about people leveraging up to buy stocks and bonds. example, the u.s. consumer has $14 trillion in debt. at 18 million. it looks very high. if you ever look at their side of the balance sheet for the u.s. consumer, it is $100 trillion in assets. there is 11 trillion in cash. more in the income assets. the u.s. household in the aggregate is not in debt. , itor lack of a better term is the same arithmetic. if i think about the u.s. household, 14 trilogy and -- 14 trillion relative to 100 trillion, it looks lower to print on how you leverage it. they have the state characteristic. the exact type of wrong arithmetic taking place in china. china's assets and banking system assets are very high. the company has a very high savings rate. rate does not necessarily correlate with people leveraging up. to look at the entities balance sheets. with the comparison to the united states, it is the right one to make. history has proven that again and again, the call for china, they cannot be that far fat. binky: you think about it in terms of balance sheets, and do not think about it just leveraging up, they basically have a high savings rate. they have an investment. meaning, when you reach later in the cycle, it goes down from a 10% growth rate for 6-7% growth rate, and the rate of investment goes down, you're going to have a variety of issues in the market. but, the savings rate is still high. you know, the market still close. act on the end up right-hand side of the balance sheet. thank you. the opening bell on bloomberg go is looking little soft. the s&p 500 is negative. futures down five points. the open is next. show me top new artist. ah, ha ha. show me top male artist. my whole belieber fan group. it's 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. fu negative. egate thinth 500. increase factory asses for yo curveyo, flattening. of the basis point on the tenure to 1.7 6% but the two-year is points.by arndwoas i want to get a check on commodity relatedran is being rd byt jeeries. the stock should be bought after recent pullback. it is inetsehalliburton raised m at fdr. analyst those chairs not seeing a lift in range resources upgraded by a number the wake of the focus. the company said people are buying its loans anymore amid all of the scrutiny of t. one of the companies out with earnings after the close yesterday, mer of sting equipment, beating estimates and raising wwe. mcmahon says he has no plans to go anywheres ceo of the company. the shares are pulling back. jon: fascinating of what fund managers bought and sold in the last quarter really generates some headlines. simone foxman, still with us. themes we are pulling away from here, it is like scared, bears and buy gold. simone: that is certainly part of it. buy gold. merger arm. investors are really excited about it. we are seeing several hedge funds. post, all thou companiesto names of valiantand then finally -- valeant, people are getting out. george soros is a poster child of bearishness selling stocks and heading into gold. i think julie hyman has a look at how he has done. julie: we talk about all these 13 apps, why do we want to know what these guys have to say? in the case of soros, if you look at vonn performance year-to-date you have about a 1% decline on a total return basis. the disclaimer is this is based on a calculation of his publicly revealed holdings. if yes foreign holdings that's not necessarily calculated in here. when you talk about the hedge fund industry, it is under fire right now because of the underperformance and fees. soros has a long history as a successful investor, but nonetheless, shouldn't we take this with a grain of salt when we look at these? binky: i think we should take them with a bit of a grain of salt. it is old news first of all. he is not telling you to much about what they are doing now. hedge funds are called fast money for good reason to read you don't want to look at old news on fast money because it does not make a lot of sense. earlier, the bearish the continues to build. equities have gone nowhere for 15 to 16 months but we may be at the cusp of potentially breaking the range as earnings inflect. lisa: one thing that i thought was fascinating, before the 13 f filings had to come in we saw a lot of trading at some etf's. a lot of withdrawals. do you get any color from your sources about how much hedge funds change rep positions before they have to file? simone: i think they do change rep positions but even more important are all of the various etf's that are following what the hedge funds are invested in. that a lot of the big movement. liquid alternatives that exist to follow hedge fund positions or etf's that exist to follow hedge fund positions. of course there's a lot of movement. say don other words we matter, you say -- as much a smart money as fast money there are certainly lots of people that are lagging that smart money that are trying to move around with it. simone: people think they can generate returns just by following in and out of things. ,ulling back to the merger arm if you followed a lot of those big names, we are talking .llergan, emc x some of those are not done well since then. a word of caution to investors who think they can just simply follow hedge fund managers. jon: sounds like a recipe to lose money. binky: i think underperformance in the first quarter was widely distributed as i would put it whether you are a hedge fund or a mutual fund. a tough quarter for performance. lisa: are you concerned about all of the money that has gone into copycat funds? all of the reverence for hedge funds over the years has led people a straight at this point and could cost some serious disruption in the market? binky: it is not my impression that the copycat funds have gotten that big. it is not a concern. jon: in your mind, i call you up, i've been watching bloomberg and heard about the 13fs. what is the conviction trade? what you tell them? binky: i would say by u.s. equities, short gold. oil.al on underrate japan and europe in your equity portfolio because the central banks continue to want to cut interest rates and that is a tax and you don't want to buy in equity market already raising taxes. lisa: given that that is your view, with u.s. equities in particular, what would you have to see to make you more bearish considering there are so many bears out there? becomingrporate's completely risk-averse. there does not seem to be any sign of that. a variety of macro indicators are pretty good indicators of jobless claims on a weekly basis, probably the best indicator. you will see layoffs first. we just had earnings season but i don't see any broad-based signs of increasing risk aversion. jon: simone foxman, thank you very much. i guess we can call them the contrarian, binky chadha. we will call him the optimist. looking at the home depot call at the moment. optimist at headlines coming through. julie: optimistic and not so optimistic ones. the company's cfo is saying that in the first quarter that the weather boosted sales by $250 million. that answers lisa's weather question. same-store sales were up 10% in february, 4.3 percent in march. the headline that caught my eyes , the first quarter is expected to be the best sales growth of the year. that appeared to already be weighing on the stock that it had seen a slowdown in u.s. couple sales from the fourth quarter -- comparable sales from the fourth quarter to the first quarter. it should slow further as the year goes on. that is what executives are indicating and shares which were down less than 1% of premarket trading, those losses are accelerating down more than 2%. lisa: coming up, one popular company is being pressed to put themselves up for sale and other investors like the idea. ♪ jon: this is bloomberg . coming up, goldman sachs cohead of investment banking, devon solomon. sherry m: the u.s. has not seen this much inflation sense -- the biggest jump since february 2013. the reason, the largest increase in gas prices in nearly four years. gas was up 8% from march. u.s. housing starts rose more than expect that last month up 6.6% in april after a slump in march. housing has been on a seesaw , atern of losses and gains signal the homebuilding industry is contributing little to economic growth. housing prices in the u.k. rose in march at the fastest pace in a year. an annual rate of 9%. more evidence that investors rushed to buy houses before a hike on investment property. general motors european unit is dismissing allegations it easel engines can turn off emissions controls. the head of the opel division says german media and an environmental group reached incorrect conclusions. the credibility of automakers is under attack. volkswagen and mitsubishi have admitted rigging engine tests. the about 13 minutes into market share soon. stocks down about one third of 1%. abigail doolittle is at the nasdaq. abigail: one stock moving on the open, intel shares have been ,igher by about one half of 1% slightly lower. all this after digitize reported intel will be supplying the modem chips for the next version of the apple iphone. hassecond time the story circulated. others are saying the degree of supply is more than anticipated. this is a news and does not seem to be helping the stock on the year. shares are down more than 10% on the year perhaps reflecting the weak guidance the company has given over the last quarterly reports. another chip stock on the move, slightly lower. qualcomm is the current supplier for those iphone modem chips. ceo steve markoff of qualcomm did say last month he was anticipating the loss of sales from "large customers. " perhaps it is largely priced in for qualcomm. lisa: thank you so much. pandora media is being pressed for a sale. core vex management, hedge fund managed by keith meister's. joining us for more, paul sweeney. why the pressure to sell? paul: the stock is trading at about $10 per share. half of where its high was in the last year. the stock has been under pressure primarily because investors are concerned about competition. they take a look at the online music business and they see the likes of apple on the horizon, google, spotify. pandora has a profitable business, a monetized audience base, a sizable base. in the context of the competitive landscape of think investors are concerned about where does pandora really fit in and we see that in the stock rice. it is right for an activist investor. lisa: what are the potential candidates to take over or by pandora? paul: it's got a great brand and user base. a proven advertising model and monetization model. apple, players would be spotify and anybody beyond that you could argue there might be some technology company that wants to get more into content that might find this music business, $2.5 billion as an easy way to get into content business. jon: the acquirer would be looking at this saying i don't want to -- i will just buy it on wall street. paul: that is part of it although this is not a huge tech play but i think what it does for you, it gets you a brand. it gets you a sales force, content. it gets you a large user base. the problem is the user base. users of the pandora service, the growth has stalled out and that is a concern for anybody who portrays itself to be a technology company. when user growth stalls, investors get concerned and that is what we see and stock price. can somebody else do it better? lisa: where do they get their revenues? paul: advertising, substitution fee. i think what's happening in the music is this, the music business is moving from an own the music, like itunes, and more to just streaming music. renting music. the model is changing but clearly when you think about internet delivered radio, it is taking share in the marketplace. over 10% share of listenership right now. the internet delivered radio is gaining traction in the marketplace. you take a look at pandora ansi stalled user growth, investors are concerned. lisa: why couldn't someone rent the music themselves and stream -- and stream it themselves? what this does get you, it does get you an embedded user base and a brand in the marketplace and a sales force. a lot of things pandora does bring to the table and i always argue in the context of the internet where there are so many brands, something has a real brand value that their israel value attached to that and i think the greatest example is netflix. anybody, a technology company, media company, still can do what netflix has done. netflix does not really all that much of its content but what they have is a first mover advantage in brand value. jon: if i look at the model in the u.k., instead of acquiring spotify, the likes of vodafone have built a partnership with them saying that if you get this contract am here is the spotify subscription and just noting that into the platform. if i needed to integrate the likes of pandora, it's much better for me to partnership with them? paul: i think so. i think what a lot of the tele-communications companies that have a huge audience base in terms of cell leadership subduction plan, they don't need to own the content. a lot of times whatever content company whether it is a hollywood studio comes up for sale, a lot of us on wall street say why don't he's big telecom .ompanies buy it what they prefer to do is partner with some of these companies. i don't need to own it, i can be a partner and get a lot of the value. a lot of the content owners don't want to do exclusive deals and so on so i think that tends to be the model. , great to have program.e bloomberg markets, betty liu, you expect to see that he but matt miller, from berlin -- you expect to see betty, but matt miller from berlin. matt: so much going on. i don't know where to begin. the pound movement is insane. brexit poll showing the u.k. is more likely to remain in the eu. has driven the currency up. i'm sure you saw hillary's charts showing the pound volatility is making it look like an emergent markets currency. the correlations are really strong. we will talk about that. we will also glad to the goldman sachs conference. we will have alix steel interview guests. david solomon, cohead of investment banking. big deal at 11:00. at the end of the 11:00 hour, -- goldman sachs's chief economist. i'm sure you will be glued to the television for that. we will talk with a number of other guests including one from -- the chief strategy officer from pgm. deco, a the ceo of a leading provider of hr solutions. you know hr terrifies me some probably going to let that he do that one alone. jon: there is a cultural the bloomberg go, and when you come around, i'm hitting it. the data has been cti, housing starts. it all looks pre-good. the action in the bond market is two-year yields rising and the longer and rallying. a flat-year-old car -- a flat yield curve. berlin,eel it in europe the heart of europe? matt: we see yields coming down in germany. about half a point right now. across the continent we had .ifferent eta i know you had strong cpi data in the u.s.. the u.k. had inflation come in lower than the estimate. about 0.3%, looking for 0.5%. it may be a different picture that's why central banks on the continent are acting differently than the central bank in the u.s.. we are seeing a lot of action in the bond market. spain and portugal, yields coming down. in sweden we see yields rising. sweden has some interesting action going on in currencies. the krone weakening against the dollar. matt miller, great to have you with us. lisa: we will be live from goldman sachs. leverage finance conference. later today, fresh off his call for $50 a barrel oil, head of commodities research at goldman sachs, jeff curry. ♪ jon: this is bloomberg and we are about 25 minutes into the session. minutes in, equities down by about half of 1%. going into the close, a bearish theme in frankfort. my eye on the bond market. yields to the front and rise. to the front and they start to go down. mark.round 93 basis point you have to go back out to 2007 to see if that flat. looking at the market moves it's been remarkable. a flatter yield curve for the bond market. really this is what is supporting such an incredible amount of money, flooding into investment-grade bonds. to back itsg bonds purchase of emc. $16 billion on deck to sell. $80 billion of offers. this is going to be a big story in the bond market today and will test the appetite of investors. the second-biggest deal behind anheuser-busch. jon: what about the coupon? lisa: at least 5.9%. jon: if you are not getting a yield on the long and for treasuries, that's is probably why the demand is there. lisa abramowicz will be with me all week. from the team at bloomberg , thank you to all. that does it for us to bloomberg markets continues next on bloomberg tv. ♪ betty: from new york, i'm betty liu. matt: and live from berlin where it is 4:00 p.m., i am matt miller in for mark barton. this is bloomberg markets on bloomberg television. betty: we will take you from new york to amsterdam to london in the next hour. here is what we are watching. home depot raises its forecast for the year, benefiting from a home improvement spree. is this a bright spot for the retail industry after lackluster results from department stores? dutch ipos may be headed for the busiest second quarter since 1999. -- the lifting frenzy companies act before next month's vote threatens the market. betty: we looked at the growth of the distilled spirits industry. mcallen shows us its most expensive whiskey to date, 65 years old, selling

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