Mike we have been waiting for improvement in the manufacturing economy. Its not getting any worse of that could be taken as good news. 51. 5 for the eye is some figures for april which is the same as it was in march. Its a little disappointed because we were looking for a 52. That was the consensus of analysts surveyed. Michigan sentiment comes in exactly as it was the prior month at 95. 9. A little bit down for what happened forecast at 96. The fed wants to know what people think about inflation. They have looked at Inflation Expectations as part of their gauges to whether to raise Interest Rates. Americans still think inflation is going down. The oneyear inflation forecast is for 2. 6 . The thought the 10 year inflation forecast is 2. 6 which is the same as it was in the prior reading. It suggests we are not looking for any kind of inflation breakout. The fed has been watching these survey numbers rather than adjust the tips numbers and things like that. It looks like the u. S. Economy you can say starts may in an unchanged position from april whether people consider that good or bad. That is to be determined. Stephanie our own michael mckee. Thank you. Erik lets bring in michelle meyer, the deputy head of u. S. Economics at Merrill Lynch from her office in new york. As michael just told us, not much of a change from april. What does this tell you about the economy . Michelle i think the manufacturing data was pretty disappointing. We were hoping we would see some acceleration. The trend for the last six months has been sliding lower and we are now in april. We are now past the weather excuses. The hope is that things would start to pick up a little bit and it seems the early indicators for the spring have been on balance, bit soft, after the q1 numbers came in at only. 2 percent. We are not giving up on the hope that the economy will be on better footing to the end of the year but the data remains pretty soft. Stephanie clearly, the data looks soft but if the u. S. Data is better than it is abroad, couldnt investors still say who cares . Michelle sure, its all relative. When youre are considering what it means for fed policy and thinking about what it means for the fed funds rate relative to the movement of other central banks, i think the key story is that the central bank might be easing but the fed can be approaching a hiking cycle. They could take a step toward normalization. With the tone of the u. S. Data, we are all wondering whether the fed will have the ability to start normalizing before the end of the year. It still our baseline forecast that the federal start to hike in september of and better data but we need to see the improvement to begin vents. Erik the First Quarter gdp report on wednesday was kind of hideous and the fed later that they attributed that to transitory factors. Do you disagree . Michelle i think you can argue that there were special factors. You can say maybe weather conditions in february, the port shutdown probably impacted the data flow. Is the stronger dollar hitting trade flows can . Could that be transitory . I suppose of the dollar reverses and we start to see stabilization are weakening, you can also argue the drop in oil prices is hitting energy. That could be perceived as somewhat transitory. The key is how big some of the shocks are at the beginning of the year and what are the multipliers and how long will they be with us . There is a lot of uncertainty. Erik if the dollar is a factor in the fed suggested it was a factor in exports and inflation through imports, how long will it take before we see the recent weakness of the dollar this quarter play through into some of the bigger Economic Data . Michelle most of the trade models suggest there are some lag by which the movement in the currency impacts the real activity data. It seems to us that there will still be a case for a widening in the trade deficit. Certainly, it could go into q3. If you get a big reversal, it might not play as big a role. You can argue the move we see in the dollar will still have implications in the near term of economic numbers. Erik i want to play an expert an excerpt of a conversation i had with bill gross. We were talking about the rationale for a fed hike and when it will be and why would the fed do it. Would it truly be data dependent or might it have to do with Something Else . Bill i think its often june. If some say we get a strong employment report, perhaps its back on but i think its off. They want to get off the dime. They want to prove they are not healthy but that they can stand on their own two legs matt means 25 basis point increase perhaps in september or december. Erik do you agree that even if the data does not look that strong at september that the fomc would raise 25 basis points to prove they can stand on their own two feet . Michelle i am a bit more skeptical. I think that that is very careful and very cautious and they dont want to make a policy mistake. A policy mistake would be to go to early before the economy actually is being strong. That said, it is true that federal officials have changed their language this year. They changed it to make the case for the beginning of the normalization process. Unlike this time last year when the fed still wanted to commit to low rates for a long time, they have taken that out. I think it is truly data dependent. I think the fed wants to be reasonably confident that the economy will be on a higher trajectory and i want to see momentum build. You dont need to see a closing of the output yet but you need to see indication that that trend will continue. Erik to improve. Erik thank you for joining us. Stephanie next, we will stay with the economy and talk homebuilding and the impact of the California Drought a new home sales. Erik a 350,000 ticket to the manny mayweatherpacquaio fight. Scarlett weve got some breaking news on yum brands. Third point is sending out a First Quarter investor letter where he talks about how he has been finding opportunity in u. S. Stocks and japan. He holds a sick of can stake in yum brands. He did not quantify what position he has taken on this Restaurant Company but he has begun a position based on the view that yum brands is in the early stages of turning the page. On its troubled china business, specifically their food safety issues with regard to pizza hut and kfc and taco bell. He says that investors should want to yum brands in china and it strong and growing franchiseled cash flow. This is the move in yum brands shares this morning. This was the last two days. It gyrated along the bottom and then the big up this morning, up 3 now. That was on the disclosure that third point has begun a position in yum brands. Additionally, dan loeb says the firm began a position in dev on energy. Saying that value is increasingly difficult to find in the exploration sector of energy companies. He says the company has significant scope for execution as management focuses its capital on fewer high return areas where the stock is not making much of a move. It got a little boost of the early going when trading began but now it is down marginally by 2 10 of 1 and we will keep an eye on these stocks for you. Erik im kind of surprised that he did not take a position in yum brands purely on the basis of the frequency with which the Hubbard Family visits kfc and taco bell and pizza hut. Stephanie i just sent dan a message. There is no way dan loeb if anyone has spent more than 30 seconds with a guy, there is no chance he has ever eaten in a tocco bell or kfc or pizza hut. Scarlett maybe he visits those places. In china when he is gone there how about that . Stephanie again, i will bet you dinner at pizza hut kfc or pizza hut that there is no chance mr. Dan loeb has ever been to one of these three establishments. I, on the other hand, have definitely been to all three. Erik we will bring everybody up to speed on the top stories of the morning beginning with linked in shares. They are tanking, down almost 20 . They missed estimates for the first time ever. The annual sales also fell short. One reason is a strong dollar. More than 1 3 of their revenue comes from outside the United States. Tesla is expanding beyond just the car business. Elon musk unveiled a of batteries to store electricity for homes and businesses. Says the technology could transform how electricity is delivered and leave the way to pollution free energy. Elon we want to show people that this is possible. That is the future we could have. The curve will slowly roll over and go to zero from co2. That is the future we need to have. That is something its the path ive talked about like solar panels and batteries its the only path i know that can do this. Erik deliveries will begin in late summer and begin at 3000 for the athome version of the battery. Disneys avengers age of ultron is expected to be the Biggest Box Office smash for this weekend. The first one grossed 1. 5 billion. Those are your top stories. And under armour executive who survived the avalanche on Mount Everest will tell us about his story of survival. Plus, the 350,000 ticket to the mayweatherpacquaio fight. Stephanie i just dont think many people are spending that. The flowers are blooming and the home buyers are headed to open houses. Its spring and it has been a strong start for the year. New hand sales new home sales hit a high of february before slipping back in march. Existing sales jumped to an 18 month high in Homebuilder Confidence is rising for the first time this year. Lets take a closer look at the state of the housing market. Jerry howard is with us, the ceo of the National Association of Home Builders. Welcome. Whats the score . Jerry things look good but you have to realize that during the housing boom, we were over 2 Million Units per year. Stephanie when was that . Jerry 2005 2004. We had a 73 decline over the next four years. We have been edging back up to just about one million starts. Its not the kind of recovery we are used to in housing but it has been a consistent recovery nonetheless. Stephanie many people are worried we were approaching a bubble. Compare the situation we were in in 2005 to what the recovery looks like now in terms of similarities. Many people are looking for signals that this is a bubble. Jerry i dont see that happening. Credit restrictions are still so severe for homebuyers. You dont have anywhere near the type of home buyer coming into the market that we had in 2005 they are highly qualified and that is an important component. I could make the case that it was the lax lending standards that led to the hubble in the last downturn. I dont think thats an issue. You also have severe supply constraints of the same time. We are not building the way we were at that time. Supply constraints, i dont think we are in that situation at all. Erik why isnt demand for new homes stronger . When prices plunged, after the financial crisis, existing homes were available at way below replacement costs. That is a killer for the new home business. Now the prices have come back, i would have expected to see demand for new homes stronger. Jerry its a market by market situation but new homes are purchased generally by move up buyers. They are the ones trying to get sales moving again but there are still situations were the have not recovered all their equity. Just as importantly, move up buyers sell to first time homebuyers and the demand is not as robust as we would have liked. Stephanie does that have to do with firsttime homebuyers having student debt issues or the argument that millennials dont want to own stuff . Jerry i dont think thats the issue. As people get married and form households, they still have the traditional american dream, singlefamily house with a backyard in a good school district. That has not changed. It may have been proper a while. Stephanie no backyard for me. Im an urban creature. Jerry you may not be the typical american. The situation is still the same for most people. Erik she was a cheerleader. Stephanie i am not typical. Im sorry, typical homebuyers still want to buy the house and picket fence. Jerry it has been put up during the course of the last recession because it was kids coming out of school for the least likely to find jobs. They have been living with their parents and have not had the expense of living like you in an urban neighborhood in a trendy time. Most of them are starting out now. When they get married and come back into the fold so to speak they will want to buy houses. Stephanie i was going to ask erik new Home Builders are responsible for some of the greatest abominations that we have seen in southern california. You have seen the photos these tract homes in the desert with Swimming Pools and lawns sucking up californias most valuable resource, water. Will that end . Jerry i have to take exception to your statement. Do you agree that homebuilders are in the business to make money question Mark Stephanie why else would they be in it . Jerry do you think any homebuilders would build massive subdivisions if there was no demand . Stephanie they might have a plan but it does not mean its a good plan or smart plan. There are fashion designers that put up close but if theyre ugly, no one buys them. Erik hang on, that argument justifies the sale of the leak of illegal drugs. Why not give it to people . Jerry builders are not building for the sake of constructing things. There are checks and balances they have to go through. I disagree with you that the situation was caused largely by homebuilders. Erik i agree. Somebody has to want to buy the home with a Swimming Pool and the lawn in the first place. Jerry right, like the people in california. Erik two homebuilders have a responsibility to perhaps try to develop different kinds of properties . Jerry absolutely, new homes are among the most energy and water efficient we have had. The real problem with California Water is in the existing homes that were built prior that do not have the access to the new technology. I think the most efficient way to address the crisis would be to retrofit the existing houses to match the standards of new homes. Stephanie the grotto at the playboy mansion is not Energy Efficient . Jerry i have no knowledge of that if kids are watching. Stephanie thank you so much. What did you just get me into . Thats what happens on a friday. Thanks to jerry howard, the ceo of the National Association of Home Builders and he will be back with us hopefully. He is just running for the door right now. Erik we will be back. Stephanie lucky you. Scarlett this is Market Makers. There was a selloff yesterday with the nasdaq rising for the first time this week. Lets get to some nasdaq companies. Expedia gained as much as 8. 8 ending a sixday losing streak. They beat analyst estimates and gross bookings rose 19 and there was no change to the fullyear outlook. The fact that it did not reduce its outlook like other tech companies, thats good enough for a big gain in the stock, up 6 right now. They say they plan to close orbitz by the end of this year. Altera went above 44 on reports that intel wanted to i it and it is above 45 on a report that talks between the chip may begin again in a few weeks. There were several reports that indicated intel had discussed offering 58 per share before it had access to the books. It was after it signed a nondisclosure agreement that intel revised its offer lower reportedly to 54 per share. We will have more on the markets when we return. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and Stephanie Ruhle. Erik you are watching Market Makers i am Erik Schatzker. Stephanie it is friday, and especially good day. Erik time for the bulletin. Manufacturing in april at the weakest pace in almost two years. The index unchanged at 51 and a half. The lack of improvement reflects lingering effects of a strong dollar and low oil prices. A separate report out of the u. K. Shows factory growth there dropping to a sevenmonth low. The cme has suspended to traders tito traders. The cme says that they and engaged in a practice called layering. The regulator has criticized the exchange for taking too long to complete investigations into improper trading. Chevron fell in the First Quarter as Falling Oil Prices took a bite out of earnings. The ceo has slashed billions of dollars in spending and put much on the auction block. But he says that chevron is sticking to plan to raise prices by 20 in the next two years. Some words from one president ial candidate to another. Commted cruz welcomed Bernie Sanders to the race on an interview with mark halperin. Hillarys Economic Policy often ends up pretty close to Bernie Sanders command will get interesting having her explain whether or not she agrees with policies that he will describe a socialist. Erik focus mostly on the middle class. It is overshadowed by the mayweatherpacquaio fight. If you do not know, the Kentucky Derby is this weekend. Stephanie there is a fight brewing, not just in vegas, but in the isles of your supermarket. He has made it his mission to get Big Food Companies like pepsico and craft to start labeling whether their product contains gm owes. But these powerful include giant have plenty of money to fight back, and they are spending to combat labeling. How does this food fight and . End . What is the whole premise here . The whole premise is that 64 nations around the world give their citizens the right to know what is in their food. Were not like about the skull and cross bones, if acorn or soy ingredient was genetically engineered, it says so. China, russia, japa