Transcripts For BLOOMBERG Whatd You Miss 20170530

Victim on the portland my rail light rail has been discharged from the hospital. Jeremy Joseph Christian allegedly attacked three men who intervened, killing two of them, and wounding fletcher. Christian is charged with felony aggravated murder. Jacob zuma survived his second ousting attempt in three months. The Rejection Committee rejected a proposal recall proposal this weekend, but 51 of voters want him to step down. Antiopposition has grown. Inas term as president and december, 2017. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am ramy inocencio. This is bloomberg. Julia live from bloombergs world is in new york, im julia chatterley. Scarlet i am scarlet fu. Joe and i am joe weisenthal. We are 30 minutes away from the close of trading in the u. S. Julia investors returned from a threeday weekend. The s p 500 snapping a sevenday winning streak. Joe the question is, whatd you miss . Scarlet Energy Shares leading the selloff not really selloff retreat. How about that . Tech shares leading them the upside with amazon hitting 1000. Cash president President Trump ratcheting up a dispute with Angela Merkel that threatens to undermine relations. Elections with a u. K. , italy, and germany will. President azil michel temer says they will get to 2018 with a house in order. Speaking at an event, he also said the government cannot and should not abandon its agenda and there is no plan b for fiscal reform. We will speak with Alberto Ramos of Goldman Sachs. Now lets take a look at where the major averages and as we head toward the close. Bloombergs Abigail Doolittle is standing by. Abigail doolittle it is shaping up to be a relatively quiet trading day for the major averages the dow, s p 500, and the nasdaq down so slightly, as you mentioned, snapping right now a sevenday when history, but if they happen to turn fractionally higher, we can see the s p 500 up for its eighth day in a row, and the longest such streak since 2014. We will take you back to the bloomberg, a great way to see what is happening sector wise. Not surprising with the s p 500 down ever so slightly, we see a mix between green and red. Up top, telecom, consumer technology, and Consumer Discretionary trading higher. Slightly. On the bottom, energy, down more than 1 . When we look at what is happening oil was down on the day. It is still down on the day, well off the lows earlier. This has served as a drag for some of the enp name spirit we see losses for devon energy, range resources. A Bloomberg Intelligence Energy Analyst says these names seem to be on the far side of the beta web. It is interesting to see the divergence. It is a continuing theme. Mike at Seaport Global securities seems to think we will see a bounceback for the energy sector, not today, but maybe in the weeks ahead. Lets look at the winners first, verizon at t getting a boost from craig moffett, upgrading the sector and upgrading at t from a neutral. Ell to a sell joseph moore has picked up giving on prices, a a lift. Nvidi lets look at a longterm chart of amazon. Today, amazonries did hit 1000 a share. Not there right now. Less than five dollars away. This is a chart of amazon on the back to its ipo in may 15 on may 15, 1997. It is up nearly 1000 . In thebad for investors ecommerce giant seeming to take over in many ways right now. Joe that is an incredible chart. Whatd you miss . Lets get the latest on the increasingly tenuous relationship between President Donald Trump and u. S. Allies in europe. Kevin cirilli is washington bloombergs chief washington correspondent. President trump returning after his trip overseas. How is the white house feeling about his trip, and what is the reaction in d. C. To all the things that happened . Kevin cirilli the president is continuing his beef with german chancellor Angela Merkel, but behind the scenes the white house is preparing for a shakeup of sorts. The Deputy Communications director having resigned earlier today, and sean spicer giving his press briefings. The main headlines out of the briefings is essentially they feel they will be able to continue to move forward. They feel the trip was a success, but the russian probe the questions surrounding the russian probe are only going to be magnified, particularly as the congress is out on recess, and investigators on the u. S. Senate Intelligence Committee are in the phase of the investigation where they are starting to gather information, and they are going to keep doing that. It is a drip, drip, drip of negative headlines that are only going to continue. Julia couple of questions here. What are we hearing about a new fbi chief . Have you been developments on that story, and the second thing i read in the wall street journal over the weekend, the possibility of lawyers vetting Donald Trumps tweets what are you hearing on that front . Kevin lets start with the letter with twitter. I have spoken to several sources , julia, who have Major Concerns about the president s use of twitter, and we did notice last week during the president s First International trip that he was much more scripted then perhaps we had seen. There are anecdotes after anecdotes of the frustration of seniorlevel staff, very seniorlevel staff being frustrated with the president s use of twitter during his time in office and during the campaign. I can think back to one particular moment during the president s first 100 days in office in which the Political Consulting world world was pressing for access to the president s account, back to when the president was tweeting about various ceos. That twitter account is a story in and of itself, but definitely frustration that they need to rain that in, but he said he has no intention of doing so. Scarlet also, what about the latest with the fbi, replacing james comey, which was supposed to happen before present trump left for his President Trump left for his truck, but it was held off. Kevin i just spoke to one source who told me they are anticipating potentially sometime within the next two weeks or so. There are some names making the rounds, but as of now nothing that Bloomberg News is able to report on. Joe kevin, what about the domestic policy situation . It has been a long time since it felt like there is any momentum, and whether it is health care or texas obviously all of this russia stuff and travel has occupied the headlines, but what is happening on that front . Kevin for couple of things. Sean spicer at the latest briefing saying treasury secretary Steve Mnuchin is continuing to engage in talks on tax reform and to some extent health care reform. They want to keep having those conversations, joe, on policy, but they have not been able to get out in front of the russia probe. What you see in a shakeup of the communications office, the announcement of there being a board room of sorts in the west wing, it is an effort to, number one, will be on the russia story, and number two, separate it, because those questions will only continue. I can the infighting within the Republican Party on tax reform is very much alive and well. I was speaking to a source this weekend who works on tax reform policy, and there is confident among several Industry Groups that the border adjustment tax is dead, but they are not taking anything for granted, especially in this very unpredictable political washington climate. Scarlet thank you so much to bloombergs chief washington correspondent, kevin cirilli. Kevin thank you. Scarlet as he reassessed geopolitical alignments, what will the new world order look like . It is a broad question. Lets ask carsten nickels. He joins us on the phone from brussels. My first question for you, simply, is the old world order, the transatlantic alliance, the mutual defense pledge of nato, at risk of dying in the next year . Carsten nickels definitely not from the european side. What we should see behind the macro statements of the last couple of days is really a signal from the european side and the eu are determined to hold onto that alliance. The question, of course, is what is happening in washington, and the problem from the european side his they are facing economicissues on the front, migration front, that require urgent answers. The question from the european side is when there will be greater clarity on the u. S. Side because it is clearly it is clear your past and move ahead. It is clear europe is determined to go ahead with an operation among the eu states. Julia how important is personality differences here in addition to the policy differences we see between germany and the united states, because donald trump does have a point on nato spending, which is uncomfortable for germany at this point. Perhaps it is the delivery, the tone the germans take exception to. Angela merkel has to respond because she is fighting an Election Campaign and cannot take this lying down. Carsten exactly. I think her centrist, pragmatic positioning has been selling well with german voters for more than a decade now, so there is no reason for her to change that tone. Obviously, these different personalities matter here. There is no doubt about that. I think structurally and fundamentally, what we are saying is simply a different outlook on political systems. On the one hand, the u. S. , where we are struggling with increasing polarization, and we see as a result uncertainty surrounding the u. S. Administration. Then we see Continental Europe going through different stages, but the survival of certain degrees of consensus culture, and that is what Angela Merkel is embodying and betting on with a view toward the german election. Joe i want you to listen to some comments made by german counselor Angela Merkel and get your comments. Angela merkel our transatlantic relationship is of the utmost importance, and the statement that i made, or what i said recently, is due to the fact that in the face of the present circumstances, we have additional reasons for us to realize that we have to take our own our fate in our own hands in europe. Onesten, when europe Angela Merkel talks about taking europes fate into their own hands, what does it mean specifically . How will we see policy changes differ than they otherwise would have down the road . Carsten first of all, we have to make it through the german elections, but there is a growing realization in berlin that with emmanuel in power in france, and backed up with his majority, and we will see if he manages to get that, there might be a window toward the end of the year, once we are through the german election cycle, for enhanced cooperation between germany and france. That has to happen in two arenas. One is the eurozone where we have to look at integration on the monetary fund, and the other front would be on security. Here it would be on the french leadership that germany and france need to work closer together. The other two areas to watch. Scarlet pasta keep an eye on. Carson nichols lots to keep an eye on. Nickels. Julia we should also point out that Angela Merkels comments were not just toward donald trump. It was also toward the u. K. Scarlet and she is very much talking to the german electorate. Julia absolutely. That was a point we wanted to bring up. Coming up, one will washington deliver on expectations . James bullard says the honeymoon will come to an end. The question is, when . From new york, this is bloomberg. Scarlet whatd you miss . President jim bullard warning washington needs to deliver on policy expectations that has driven the stock market to record highs since the election. The process ofys unwinding the Balance Sheet should come in baby steps. Our colleagues on daybreak asia asked bullard for his thoughts on the matter. Bullard unwinding the Balance Sheet will create policy space for the committee in the future, if we needed, and on the rate itself, i think we are not very far from an appropriate rate for the u. S. Economy that will keep inflation not too far from target, and the labor market performing well. So, what i disagree with is the idea that we have to go to hundred basis points higher to get to some sort of neutral right. I dont think that is the environment we are in. I think we can stay about where we are, possibly a little bit higher than where we are today. I have to follow up on the question of the markets taking balancesheet reduction in stride. There are no details on where the caps will be set on how much can be rolled off every month. Jpmorgan says it will be 12 billion to start. Jpmorgan pick of america is saying 5 billion. The bottom line is the banks dont have a blueprint for this. Neither do you. There will be a big source of demand removed from the situation because the fed has been buying so many bonds to replace the ones rolling off. I am guessing it will be predictive, but i am wondering why someone why everybody is so sanguine that this will be no big deal to the market. James the markets are not big enough to have a very large impact there will be some impact, but it will be relatively small. To the extent there would be months where there would be a lot of rolloff, we would put caps on that to keep it under control, so there would be a, sort of, maximum markets would face in any particular month. Exact details are up to the chair. We will let her make the call on the in conjunction with the markets desk in new york. Betty you know, it is also a weekend, perhaps, jim, with more worries on what is going on in the in conjunction with the markets desk in newwashington. I want to pull up another chart that tells you what is on consumer minds confidence. Those numbers going up. Not bringing spending along. Spending on a divergent path from confidence, but nonetheless, jim, Consumer Confidence remains high. I am curious if you think that is on shaky grounds if we see more chaos out of washington, more distractions for President Trump do you think that eventually if we see more of this the fed will have to consider that impact on confidence not just Consumer Confidence, but is this confidence . James i think the Business Confidence numbers shot up after the election. The president was perceived as more probusiness than the previous administration. Washington does have to deliver at some point, and i think that is a concern Going Forward, whether the honeymoon period mayd end at some point, and the reality of american politics would settle in. We will see if that happens or not. I think the jury is still out on all of the. On all that. Scarlet that was st. Louis fed president jim bullard. Gm shares down about 4 this year. More could be were downside to come, at least by one technical measure. From new york, this is bloomberg. Scarlet i am scarlet fu. Whatd you miss . Trump had slammed german carmakers that flood the u. S. With exports. In the past, he complained about how you can see a mercedes and every Street Corner in manhattan, but it is hard to find a chevrolet in germany. Of its ownruggles after allegations of cheating on diesel emissions tests, and we want to look at how gm shares look from a technical perspective. Here it is at the start of 2017, matt, lets go over here shares were trading at a twoyear high, and since then they have declined 12 . Now gm is in a death cross, when the shortterm trend line, the yellow 50day moving average has theen below the green line, 200day moving average. This is happened four previous times in the last five years and each time it has happened we have seen the stock decline as a result. Gm shareholders may want to be aware braced himself for brace themselves for rocking us. Julia i would be concerned about a death cross. I want to talk about japan, and the data we got over night the strongest retail sales growth in over two years. I want to tie the directly to what we have seen in terms of job growth job rates in japan. We are the lowest level of unemployment since 1994. Where is the wage growth . You can see since 2014 it has improved, but it is still in negative territory. Our apps is less exciting than it looks, what i am showing is the propensity to spend. If it is read, it is saving. If it is green, it is spending. We are still not really seeing japanese consumers going out and spending but we see data of the strongest retail sales growth, growth expectations strengthen for next year. Perhaps this is about to turn. Joe at least by japans standards, it is impressive. Julia china. Acceleration in growth. Joe here is the deceleration we got the latest german inflation data out today. That is this white line here. It decelerated down to 1. 4 . Earlier in the year it had been over 2 . If you overlay this chart with euro zone wider inflation, they tracked themselves pretty closely each other pretty closely. There is a bigger story the diminishing i dimensioning trendshing inflationary around the world. You look at germany, china, the u. S. , we are not seeing the global inflation story everyone was talking about the beginning of the year, starting since last summer, picking up after trump was elected, and we will talk about bonds in the next block, but we see rates failing to rise , as someone people predicted. The german part of the global story. People perhaps being full disobedience wish breakout year. Scarlet and most important for the julia and most important for the fed the on the june meeting. Scarlet look at how markets are faring the s p, the dow had been climbing for seven straight days. They are giving back some of the advance. The s p 500 retreating, down 2. 5 . 08 . Sdaq off from new york, this is bloomberg. If you are tuning and live on twitter, we want to welcome you to our closing bell coverage every day, for clock5 00 eastern. Lets begin with her market minute. Nest i can s p 500 retreating from record highs. They sagged lower. Industrials losing 3 10 of 1 , biggest loser of the bunch. Smp, s and p, first decline in eight days. Joe overall not a ton of action on the headlines. Scarlet if you break about the s p 500 index and look at the from groups, this is very telling. Telecom and utilities, bond proxies outperforming, telecom up 1. 5 rewrite it from an analyst. Utilities gaining 4 10 of 1 . Energy and financials down the most. Its your breakup in terms of industry sectors. Individual movers, Telecom Media and technology have been the stars of equities. Several are still climbing to record highs. Amazon. Com reaching a high of 1001 27 1001. 20. Microsoft finishing at their best levels, comcast and tesla as well. Ig moffett coming federate Telecom Analyst says expectations are appropriately low for that sector so he has raised u. S. Telecom sector kit nutro, from underweight, following a previously, unrealistic expectation after the election. Goldman sachs down 2. 3 , biggest increasings face risks because President Trump not nominated key regulators. Pragmatists were in favor, but the administration is siding with populists. ,uffalo wild wings down 4 company was downgraded and its price target was lowered during a midproxy vote this week. Joe lets look at movement and Government Bond markets, rates lower in the u. S. , particularly 10 year long and trade saying that move towards the lowest times of the postelection , not quite there yet but getting down there. This is a broader trend we will talk about it more in a minute. One spoil that. Youll sticking up a little bit in italy. Yields taking up a little but in italy before the election. Negative territory for italian twoyear yield. A little bit of a bump up in italian borrowing costs. Dollar index soft for the day. Weaker than expected pc inflation data. Usual questions raised about outlook for inflation there its a mixed bag for the dollar. Weaker you can see them in sterling and euros. We did see strength for the end, retail sales, the best we have seen in two years, year on year. Quick look at whats going on a dollarrand. This is the big mover today. What we saw was zima managing to merge survive the second attempt in six months tech house tim. Relative prospects of some kind of leadership change in the rand rand rallied. On the commodities fronts, not a ton of action. Oil flipping a little bit. Gold selling off of it. Big loser natural gas, warm weather in the west, perhaps snuffing out any lateseason demands. Natural gas down just under five. Those are todays market minutes. Scarlet you can find out chart using the fun shouldnt at the bottom of your function at the sign of dutch bottom of your screen. Global close study but not spectacular. The European Central bank will not change its accommodative stance any times to come the start is determined to ratchet retire. Everything causes secondguessing of the Central Banks conviction when you added up, theres less reason to believe this refund bull market is about to end. Joe the u. S. Is trending higher. Scarlet but theres still elusive inflation. Joe lets talk more about it. Whatd you miss . The trump reflation trade might be dead. Cftc shows duration weighted basis that speculators have no gun long across the treasurys future curb trade this despite the fact that still seems hawkish. The opportunities for investors . Lets bring cameron price. Christ cameron does this mean we can finally say that trump and a reflation trade is dead . Thats the signal, right . It may be arbitrary, but we can say. Maybe its necessary but not sufficient. [laughter] criterion. When talking with us before. In equities if you look at relative performance, certainly looks like the trump hope trade died a while ago. Maybe you can say, fixed income was the last vestige of it. Joe tells what were looking at. Manyis is, as im sure viewers know, there are different futures on treasury bonds, depending on the maturity of the bond. Of bonds istic duration, which is how much of the risk you are taking. The longer the maturity of the bond company more Interest Rate risk you are taking. This is an indicator that looks across the Treasury Curve and puts it into the equivalent of 10 year bond future which is the benchmark bond future. As you can see, in the last weeks reading, weve got above zero for the First Time Since last summer. Is it a sufficient condition to say trump trade is dead, yields are going to 1. 5 . No, but perhaps its necessary. Scarlet sharp turnaround there. What drove that . Do we know any better now in the aftermath . Hindsight has 2020 vision. Best fund manager i know. The point were read ratchet sharply up in midmarch as you may recall, there was a fed meeting where they hiked rates and once as aggressive in terms of economic projections, and the dot plot interestrate projections people were looking for them to move up interestrate hikes next year. It into that. Of the trajectory, shift shift in trajectory from the fed was lower than people were thinking, hence the catalyst for the rally. Scarlet like you bring up the fed, we have lebron and speaking today. She said in new york, is that persist it would be concerning and ultimately, could lead me to reassess the appropriate path of policies. We know a rate hike is baked in at this point, but its what happens after. Ask yes. Clearly, the perceived odds of a rate hike in june or not 100 , but more than maybe. Much say, its pretty in the price. Brainerd has historically been on the dovish side. Towards the end of last year, she tilted more hawkish. Thats largely a reflection of improved international environment, she has always been a bit of an internationalist. Using these elsewhere depending on your perspective, rationale or excuse. [laughter] pretty easy, and policy come as conditions elsewhere. She has taken a step back from that the way. The fed is responsible for the u. S. Economy, should be an obvious point for which is lower than we are acting they should change their mind. Julia i wondered whether you tied to risk, the pricing be on june in certain markets and a time behaved. But actually, or asq more deeply before i ask you more deeply about that, i want to get back to repricing of reflation trade in certain sectors in the equity markets, versus bond markets. What about the flatness of the curve, the outright yield level year, versus were the s p 500 is . I personally think the 10 year yield is pretty much where it should be. I tend to look at bond yields andugh the prism of the fed through the thing the fed looks at. The fed funds rate, market expectation for the fed funds rate, inflation, and unemployment you can throw those all in the mix there and come up with a model, which i believe i have here on the screen. He model is the white line the actual 10 year yield as you can see, they match up fairly well. , givenis tells me is where fed rates currently are, the expectation, trajectory a fed rate moving forward, given more employment bond yields are premature they should he. The key variable here is the expectation for fed rates. Scarlet right. As the data disappoints, you see the expectation come in, that has a natural impact on the level of yields. Whats the model here . Is a model for Interest Rates . Yes, simple mathematical regression model. If i could make one more as we just here, is, said, that we think the fed will hike rates next month, that shouldnt be a startling insights any of the viewers. What this model would suggest come all things being equal, but shall of the level of 10 year yields by about 20 basis points. No one is unsophisticated enough to wake up the day after it hikes rates and say, maybe they should go up 20 basis points. Ultimately we should expect the market to price that ahead of time. You could argue that even though this chart suggests bond yields are fairly priced, that maybe bonds are expensive, yields are too low, given that we have this event coming up that is largely expected. That would put the equilibrium rate around 240, which was not that long ago. If youre selling here, we would be happy to see this again. Julia interesting riskreward for not going in june. It is, thats most elegantly played by the shortterm Interest Rate. Crise, great to talk to you. Theresa may losing a poll ahead of the june 8 election. We will analyze the potential scenarios for the u. K. Elections, coming up next. From new york, this is bloomberg. Im ramy inocencio. The House Committee has subpoenaed michael . Its part of the Ongoing Investigation into russias election interference, and connections to the trump campaign. Fors a longtime attorney the trump organization. In the u. K. , theresa may german carbon on the campaign trail today, warning voters that if he wins the june election, he would go quote, alone and make it into brexit talks starting next month month. Prime minister told the crowd and centrally in the Central England the corporate is not prepared for those negotiations. Corbyn said quote, there will be a deal if asked if he would be happy to leave the European Union without a deal. No panamanian dictator well maria go was asked to buy an American Invasion in 1989, died yesterday at the age of 83. One Carlos Carrillo wrote in his twitter account that quote, the death of men well noriega closes chapter in our history manuel noriega. He spent all but his final years for in prison for murder of his political opponents during his regime. Humanyuan report Rights Violations in the Central African up republic since 2003. This may amount to war crimes including massacres as entire villages burned to the ground. The report comes amid growing fears of the country once terrorist multiple armed groups, is again slipping into bloodshed that led thousands dead between late 20132015. U. N. Investigators highlight more than 600 abuses over a 12 year period. They are urging prosecution and the truth of reconciliation could committee. Global news 24 hours a day, powered by more than 2400 journalists and analysts, in more than 120 countries. Im rhyming inocencio, this is bloomberg. Julie. Julia whatd you miss . To the u. K. Elections, per minister theresa may had hoped for hand and brexit negotiations with the eu to begin later next month. Not turning out to be the landslide many predicted as opinion polls tighten. Scheck,e analysis, nina and london. Think is so much for joining us for late in the evening. It has been a tough couple of weeks for Prime Minister theresa may but there was the Manchester Attack a soso quality social policy uturn made can she wrestle the focus of the remaining campaign back to brexit, where she tends to do better . Thats what shes trying to do right now. When shethat up today, was speaking in the campaign trail in the u. K. Of course corbyn they themselves dont have a fully formulated policy on brexit. Theyre trying to get the Prime Minister on the backs of domestic issues. Theresa may is repeatedly saying, the message that she is the only leader that can deliver a strong brexit, but the truth is once those talks can underway, theresa may can say which he likes, but its going to be a twoway dialogue with facing those negotiations that will be tough. Joe i will ask the ignorant question. When may announced early election, the assumption was, it was going to be a landslide, her party would have a gigantic majority. For the people who just tuned it out there, maybe thats myself included and its assumed that would be the whole thing, explain what has really changed the story why the boat may not think this is the cakewalk. What has really changed the dynamic, in your view . Historic election. Of course we are witnessing one of the biggest political events war, the second World United Kingdom leaving the European Union. Throughout that campaign trail, brexit referendum, theres ever much of a discussion as to the brexit would look like. It was a very close referendum. 48 voted in. Think what you are seeing is the United Kingdom perhaps also similar in a certain level to rescind in the u. S. , the dynamics of politics shifting. You are saying dynamic now, where conservatives are going for voters who have traditionally been labor voters, and labor going for liberal, metropolitan elite but who traditionally perhaps, voted conservative. Where thats going to fall the conventional wisdom even if they dont have a landslide be a dear that they will still win the election seems to be true. Posted been run in this country repeatedly in the last few years so we still might be in for a surprise. As you speaking, we have banners that said, ms. U. K. Election leads of soy, author tightening. We know pollsters got the 2015 only action badly rubbed and didnt get brexit right. You think polls are more reliable now than they were two years ago question mark i certainly dont think so. Think theres been that certainly came true after as he mentioned, the general election. I do not know if the methodology has been affect did, because things are obviously changing, perhaps a traditional assess. Also no longer relevant. Well see again whether or not this is the third time theyre wrong after the general election. Can ask you the declining majority what that actually means for the outcome for the brexit negotiations . If you have bigger majority because shes able to compromise. I think the bigger majority simply means that theresa may would have more leeway in conducting negotiations domestically. Orwhen she comes to the hard exit, theresa may has artie said she wants to lead the single market. At 30 hard brexit. The redline line of the conservative party are ending people the jurisdiction of dpj. The interesting thing, even if labor were to be in a more powerful position than they suggested they might be a its still very tricky. Labor doesnt have its own policy on brexit either. I think if its a parliament and situation where labor has more seats than predicted, or theresa justould be the case means that domestically, politics gets more difficult. Be already what is going to a difficult negotiation, even if you have a strong Prime Minister in this country because of the different priorities of the eu 27. Block comes down to, will the youth vote turnout . The assumptions faked into this hinge on that question and the brexit for itself, there was a lot of claim that the reason the u. K. Voted for brexit was because the on didnt vote in high levels. Do think theres any reason to think that vote be different on that front . Its impossible to say. One of the theories is a higher youth turnout in this election will favorite flavor. Labor. Its difficult to say until we actually see what happened. Brexit back at the referendum, whats very clear now is that there was a split among educators and the noneducators. How this focus what, we dont know yet. Thank you so much. Julia dont forget the rain. carlet that was incredible goingft affect the limits to rein in the u. K. Although given the last three of weeks in new york, quite frankly [laughter] scarlet coming up italian investors and the prospect of the early traders dumping stocks in government and on the possibility of a vote from an six months ahead of schedule. This is bloomberg. Joe whatd you miss . But steepen take a deep dive into the bloomberg, you can find the following charts using the function at the thought bottom of your screen. Lets talk about italy, where it looks like earlier elections the soon as this september this is a look at consumer crop confidence across euro area or grows, spain, italy, eurozone. One line really stands outcome im going to zoom in. The blue line at the bottom declining thats Consumer Confidence. Rising everywhere in the eurozone, every country except italy. At is as we had towards those elections and say, the political risks are fading, the one country where they are not, definitely sends up a chart. Reason the story came up this form prime former for minister matera renzi over the week and said he would consider having a italian election of the german election accepting water down for molecular of form, which is what stopping them currently. Let me show you what im looking whats joe second the bond market. If youre watching the spread between italy and germany which we are selling you and white, if theyre kind of ignoring this story really come and worrying too much about italy. The next shoe to drop has always been, if you take greece away, portugal. Portugal is the next big concern, and yet when showing you in the overlying, it has spread between portugal and italy. That tightening up, so the relative extra premium you would get for owning peach narrowing,bonds is highlighting the relative concern that youve got on italy here versus portugal. Italy is starting to be in the eyes of investors, more like absolutely, watch the relative spread between countries. Theres also concerned that italy is especially vulnerable to russian interference as well. This ambassador rice is greatest vacuum, and russia stepping in. You have the fivestar populist move and being on board with russia favors that shift away from the u. S. To russia, they see russias Strategic Partners that have been unfairly finished punished. Big Energy Companies guys advise been focused on reducing sanctions, times not just the german election. Lots going on. Coming up, well talk about uber. This is bloomberg. Ramy lets get to first word news this afternoon. Airline passengers from europe to still be able to bring their laptops into the plane cabin. The Trump Administration has opted not to expand its current ban according to politico, which says both sides have agreed to intensify talks and find a common solution. The u. S. Currently bans laptop from a muslimmajority nations. Political reports the decision was made this afternoon on a Conference Call that included Homeland Security chief john kelly and the European Home Affairs commission commissioner. In berlin, Narendra Modi says his country has made ties with germany economically. He spoke with Angela Merkel and says, the two leaders are made for each other. In washington, the Supreme Court will consider giving states more freedom to purge therefore the votedof people have not in a wild. Justices agreed to hear an appeal by the state of ohio. They will consider reinstating the state of the technique used by it a federal before federal Appeals Court blocks that. Associated press reporting former Florida Governor jeb bush is no longer interested in buying the miami marlins, according to people close to the negotiations. Mr. Bush has ended his pursuit of a professional baseball team. Former new york yankees conjure derek jeter who is part of his group, is exploring with other investors. Cheaters group is competing jeters group is conforming with the group involving the son of mitt romney. Grande willriana return to manchester this sunday to perform at a Charity Concert for victims of the terror attack. She had just finished singing last week when a bomb exploded, singing killing 22 people. Global news 24 hours a day, powered by more than 2400 journalists and analysts, in more than 120 countries. Inocencio, this is bloomberg. Scarlet. A recap ofts get todays market action. U. S. Stocks retreating from record highs. S p are nasdaq we did see bonds proxies perform better. We talking about Telecom Stocks and utilities. Points between big losers were energy names. Whatd you miss . Theer has fired 70 person end up involved in leading the self driving car disputes, under dispute of google. For more the latest camellia one to bring in hurricane walter, wide was mr. 11 dusky fired . On may 11, the judge in San Francisco, issued a partial preliminary injunction, which required someone to turn over some paperwork on exactly the plans leading into the Self Driving Technology and uber. Uber had to turn it over, or london down ski had to turn it over. If nobody was going to do so it is where the desk is. Job he threatened. The result jet deadline until june 15 of the company apparently made the decision today that it was going to part ways. Invoked his fifth amendment right not to testify in the case. What does that me ferber . Has been,stion so far whats he going to say if anything . Now hes no longer part of the case, perhaps is more likely to talk to federal investigators trying to figure out exactly how much, and to know what, leading into this, which could lead to more serious charges against uber. In the election terminating his employment, uber has said he he failed to comply with the investigation. Looks like he had to choose between his fifth amendment right and actually complying with this investigation, and continuing his employment. Is that fair . Why expect the argument theyre still making today. In response to the firing his attorney sustained this argument again that, the Court Ordered lewandowski into an unconstitutional situation, isre either you you have that men rights selfincrimination, or force him to lose his job, also a violation of rights he is protected by. In order has forced them to leave work. Whether thats fair are not as something that judges will ultimately half to decide. His lawyers have asked the culinary junction be barred from enforcement. Whats the next thing to watch now in this case question mark we will soon uber files in court next. Terms of to detail the termination, is that going to be sealed exactly how he was fired, and what he will do next, in terms of speaking to investigators, the court. Thats the big question that needs to be answered. Think you very much. Resume in turmoil. We talked to about the remarks, head of economics for Goldman Sachs next. This is bloomberg. Brazils president says he will get the country in order. He spoke in sao paulo earlier today. Henry qamar ellis backed him up, brazils president says he saying, hes likely to conclude his term in 2015 despite disturbances the economy is working normally. Is described in the past brazils economy is taking on the characteristics of an outright depression. Ginnys nose over to hamas, head of anonymous economics for Goldman Sachs. Seeing as helen retheme and all was seen as a successor, should mattel what do you make of comments . The economy is more resilient than it was a year ago, two years ago, given the level of reserves, its a lot stronger. We have two knowledge that there was a shock in the political system over the last two weeks. Dish the veryrent engaged in steering the reform agenda, the minister in particular is committed to Social Security reform labor market reform coming potential, tax reform in the second half of this year. The question is out in ability. Local capital, that the president and ministers have in congress. Its possible to reveal the Broad Coalition that has sustained the administration, or is that coalition fractured because of these question mark does it . Time will tell. Seems different. What we can weird from public alsoments by policymakers, from members of congress, that will be an uphill battle. Theres the possibility that reforms will happen late, the possibility that if reforms to happen, there be more in terms of their own content and come at the extreme, we could see reforms not they would remain for the agenda for the in 2019. Nistration said its one of scenario. Lets say that song on the reform agenda comest all about. What would that mean them for of real economy . Is a lot political uncertainty. That can be very corrosive to growth dynamics. Bill him orn social defensive in terms of spending and investment decisions. As a process of weird price given financial conditions became a lot tighter. A threeyearold recession the Growth Profile has been downgraded. Of brazilslook come back and talk about the consequences of these reforms, how much is the actual economic ramification of the reform that investors are looking towards, or how much is it the signal that the government is on track, and capable of doing anything that gives investors confidence question mark its a substance of the reforms that matters. This is not about president or about thent its administration with significant political capital, and the ability to drive those reforms through congress because their critical suits best sustain the the series back problems to solve. The us what weve seen shield curve not upset by the two degree to which we saw in the brazilian riel what does this mean for the Brazilian Central Bank is a policy Going Forward . Not a lot in the shortterm. So tremendous amount of and the economy. About at right is running 13 . We operated with a significant negative up but cap output gap. Expect them to cut a basis point tomorrow this is a lot more relevant for the rate at the end of the current cycle. They outlook for reforms is the outlook for fiscal policy is weaker. After an policy slightly tighter than what has been otherwise the case. You dont think theres concern of cutting 100 basis points . People start to look at the currency and think theres a lot of risk attack to brazil assets are now, yet for the downward pressure on the riyadh. Inflation so. Inflation outlook is relatively benign at this stage. Thats a consequence of a twoyear loan recession slack in the economy, its not a major we have toint look at the outlook for the currency, capital accounts, for fiscal policy profile thats weaker. In this circumstance, sentiment should be rather than taking an amount of risk, turning Monetary Policy in the shortterm dish move it would be higher than that. Speaking of brazilian assets, and thing is uninteresting, money continues to flow into brazilian assets ssl of here on the bloomberg. You can see the brazil has seen highest 306 million heres a breakdown. 454 million and and outflows. What investors learn about political scandal brazil . Its true in the potential. This will be resolved. We dont know for how long it will drag on. We dont know if theres another political position to the extent that the next administration will be more or less able to drive the reform agenda. Its too early to see that the data, potential or corrosive effects. Its still worth it to buy the ticket the moment dip at the moment . A limited understanding about economics. This is ultimately a Legal Process speaking of other countries that have challenging political one nice ready compare them, im looking at chart on the terminal, and to what a credit south africa, each one of these countries says well known you really see brazil talking out in this chart. Intuitively come i know your focus is london the said feel like brazils issues are significantly worse than these other countries that we categorize, frequently brazil with . Over the mediumlongterm, they are we have seen limited progress towards fiscal consolidation. We had a lot of misgivings about the slow pace of this it seems that recent developments will probably slow 10 the erin moran the structure reforms. At the core of the problem. When it to show tangible pros they believe a significant import legacy. He survives are not . We dont have a view, this is a Legal Process. Endlikelihood this will prematurely has increased. Thank you so much. Coming up, the struggles for retail have been well documented. We take a look at how thats infecting real state trust. This is bloomberg. Whatd you miss . New york visit street questions continue to rise on whether the struggle is permanent or fleeting. Some owners are bullish, some are expressing contras as rents and sale prices slump. With spring in Bloomberg Intelligence senior risk analyst. Jeffrey, you know walks the streets of new york estate is the degree of vacancy that they see in retail space, including some of the trendiest, hottest shopping districts there are. This is a permanent state, failure to come to any librium rent, or is this a structural change that world impair you hit it with the rent comment. We are in a situation where the strongfor space was so and, there wasnt a lot of available space. There was a company or cycle where prince just skyrocketed, rent lay and looked at advantage of that, now its got a reversal. Now what you are starting to see his retailers pulling back, less willing to pay this high rents. You will have to see that cycle turn come around sundown, then i think you will fill that space. How long a rental contracts question mark they can vary. Retail, they tend to be much longer, several decades. Some of the big ones that were just signed, nike, under armour, apple, over 10 years. Are we going through process thatux now, or is there were beyond the decline we are seeing in retail . Of sonic everythings falling apart. It is stories about moles are dying, retails the real estate is dead, i think you see that. Theres still a series of reasons in place. A going to persist, then over time that they reprice, you will start to see it roll down. The price of this has then hammered. Well some of that landlords are trying to keep the rents at a certain level. Its in their interest to do so so they tend to offer concessions on the side. Int he think we are seeing that effective retail rents when it comes down to it. Its hard to get an exact number. Love that is not actually reported. I 2030 decline reported. A lot of it flows through and other ways. It was reported that when they signed nike to its lease on fifth avenue, they paid out the end of their lease on 57th street, in order to get them over. Thats another way where from an economic perspective, cash is cash. It rolls through. I have a chart here, speaking to this selloff, looking at the s p 500 index versus north american retail rates. Retail wreaths of that white one, and getting hammered down about 20 already this year. About there disincentive for landlords to cut prices. Again, you look at empty space to ask while they do it they have why the disinclination, while the so has to do that question mark the shut your showing, stop prices the chart you are showing reefs owns a manhattan retail in chicago and San Francisco but primarily malls and shopping centers, where you can determine his narrative of Department Stores closing, apparel retailers closing. In those types of properties, you have a decent between full properties and occupancies that are high in rents better growing. On the lower end of the spectrum, low occupancy has rents that arent going. Its really more of a solid supply and demand it the brim. In a market like fifth avenue, its a lot more it she. One big deal triggers the market. Thats right. They send they have high dividends, they changed very the rate a bond, so hike cycle, can you just a fine difference between amal rescinded freestanding the theyre far less vulnerable to ecommerce. The vivid diverse of life a diversified some sense of those renting. Theyll march shopping outers, which more diverse of retailers come heavily weighted towards Department Store anchors, freestanding often its Convenience Stores or restaurants. Theyre much more ratedriven, they tend to be longerterm leases, higher dividend payers, much less growth filled into the business model. To operated differently. Right now were seeing much more of an impact from the actual real estate cycle, retails obviously driving it. Interesting. You at the said said mall . Greece in the u. K. We use that word. Shopping center. Exactly. Next they were calling the malorys. Everyones like, really . Anyway, thank you for interpreting my american jeffrey lang bound, Bloomberg Intelligence senior retail list. Cohen hb2 Holding Chairman and ceo is coming up on this fiveyear mark after being barred by the fcc from the hedge fund industry. Speaking with bloombergs betty lynn, an exclusive interview, phil explains why moving forward is best thing he could have done come and why what he thinks the environment for the hedge fund space. And such an investment of capital out there, its tougher for the smaller guys, think the much moreas become institutionalized. A think the Fee Structure may have to change a bit that theres always going to be the need for highquality investors, and a question about that. What he mean . 20 four ofwo and funds that matches whats happening in the smp . Should any of them . Is always these guys that will outshine the rest of the group. There has to be some flexibility i think Going Forward in that Fee Structure. Tos very tough for investors look at it and say, im going to pay two and 20, yet you are barely beating the smp, is that worth two and 20 question mark think so. You have to think that there are people out there, funds there a quality talented people who deserve the two and 20. Speaking about the hedge fund world, we just got the news this morning about steve , how hes in anticipation of fcc than a left it, now raising outside money about 10 billion or so. Justis day and age you mentioned are so much cash out there. Is that too much . Knowthink i dont steves interesting civilities and capabilities, theres no question he commands that my. Substantial amount. Think his structure probably works for that type of capital, but i dont know exact play all the Details Behind it. Would you avert i asked this before, but would you a few in that position, want to be managing that much money . Im very happy doing what im doing, ultimately i look at it as market cap will hopefully get at or close to its my ultimate goal. Falcone, chairman and ceo of hb2 holdings of bloomberg tv earlier today. Coming up, which you need to know for tomorrows trading day. This is bloomberg. I will be watching President Trump the Prime Minister the white house. To miss this, the Federal Reserve released his report at 2 00 eastern. We will be all over that. Love this. That does it for what you missed. Uber technology up next. Have a great evening. This is bloomberg. Alisa i am alisa parent from washington. Lets start with a check of your first word news. President trump will meet with the former tsa boss as the search continues for a new fbi director. They are meeting with a former assistant attorney general. An Arizona Republican senator, john mccain, says trump has unsettled allies. Not alonestralia is in questioning whether america remains committed to upholding peace and justice around the world. The Supreme Court will consider giving states more freedom to people whorolls of have not cast votes. An appeal in the state of ohio, they will consider reinstating that. And the lone survivor from last weeks portland triple stabbing has been released from the hospital. He suffered a neck wound after coming to the fence of two young women. Jeremy Joseph Christian attacked the women, and the men intervened. Two of them