Him and he won it to please everybody. He is serving a 150 year sentence. The Supreme Court will issue the last opinions of its term on monday according to chief justice john roberts. The court has six argued cases awaiting decision, although it auld schedule some for schedule in october. The court could act on the travel ban and any time. Food will soon run out for south sudanese sheltering in uganda according to the United Nations refugee chief where he described disturbing shortfalls in areas like food, shelter, and education. He said that malnutrition rates among refugees are alarming and said thatfood program the pipeline in uganda will try up soon or code global news 24 hours a day from our more than 2700 journalists in more than 120 news bureaus around the world. I am mark crumpton. This is bloomberg. Live from bloomberg World Headquarters in new york, i am julia chatterley. I am scarlet fu. Joe an im joe weisenthal. Towards thestocks final close of the week. Joe but the question is whatd you miss . Where do republican senators compromise to get the obamacare replacement bill passed . And we look at how Financial Markets have responded to brexit negotiations and how tax innovation and Global Inequality are correlated. Some Interesting Data to draw conclusions. You a look atet where the major averages stand. Abigail doolittle is standing by. You, joe,riday to scarlet, and all of our viewers. The dow is down ever so slightly, being weighed down by home depot. Thats an reaction to the betterthanexpected home sales, but we have the s p 500 slightly higher. The nasdaq is on its third update in a row. All three major averages are on pace for their third weekly gain. And then take a look at the russell 2000. Into the bloomberg and take a look at the s p 500 weekly sector composition. 3 . Op health care up and not surprisingly, energy is down in oil. Lets look at some of the biggest recliners, drags on the s p 500. Oil is down sharply on the week. On pace for its fifth weekly drop in a row. Oversupply concerns. All of those have been downgraded to underperform with liquidity. Energyarish action for this week. Up until today health care had put in five record closes in a row. Strategist equity inside as the top winner for the s p 500. All these Biotech Companies i did speak to a Bloomberg Intelligence analyst. He says behind this, a confluence of positive factors including data, m a, and investors going back towards the risk of buyback. Going back into the market. Composite inasdaq white. In orange we have the biotech their markets or index. Ga now, in this weeks big in, it is down 20 or less. It will be interesting to see what happens concerning those gains came when the nasdaq did not put in record highs. Its an interesting sector to Pay Attention to the end of the week. Julia abigail, thank you so much for that. Whatd you miss . Snap investors have zero say in how the company is run . They went public without giving them rights. Its not that unusual. Think google. Think facebook. It is raising eyebrows among investors. Guest, here, our joining us from boston. Great to have you on the show. Thank you for joining us. Is your only recourse year it is, i guess, to sell the stock and thats not great for anyone, liz. A newpped at the issue to level. When they went public, they went public with zero Voting Rights for shareholders. And we think that that violates a major principle for shareholder rights. Particularly important for investors because we cant our feet. Because we are index managers, if a company is in a stock, we have very little discretion to sell it. We are required to hold it. Ltimately, there are proxies see increasing Voting Rights over the last 10 years within the s p 500. I think snap ticket to a new level. This increase. In 2007, only 4 of s p 500 companies minimize Voting Rights for the public. It is now over 12 . And to your point, it does include founderbased Companies Like facebook. And is it only a problem because snap shares are doing so terribly. Mark zuckerberg created a whole new class of nonvoting shares. Investors are not pushing back against that. We think it does violate a rights. Areholder we think all investors need to be able to engage with these companies and have a vote so they can influence what theyre doing. The situation with cooper is a great example. If that had been a public not have theould ability to influence what is inside. The performance is secondary. Allianzoter rights voters concerns with management. It is a longterm correcting mechanism. Do you think that this is a natural response to the rise of indexing . No, i think the rising issue of limiting shareholder rights is the result of greater activism. It is a concern of the founders of snap or facebook that they could come into the board and influence the direction of the company and take it over and have a very shortterm view on how the company is being maverick managed. I think it is the rise of activism and their increasing ability to influence companies is why Many Companies that do choose to go public are limiting Voting Rights because of that. For us, as a longterm investor, looking for Value Creation over the longterm, it is important to work with the board so our interests are aligned. Julia so you are losing opportunities because as a passive investor you have no choice on how they hold this stock. How do you think the sec should react and respond to this . Should the index holders reweight them . Have a lower weights . At what point does a company go, ok. They want to be activists. Is that really the only way this is tackled Going Forward . Of layers inlots that question. We think that there are multiple stakeholders that can influence companies. It includes the stock exchanges where they can limit listing companies. Hese with index providers like ftse or msci we think that this undermines what the objective is. If you look at the objective of a broad market index, it is essentially to capture the Market Portfolio and represent the full opportunities of the investable universe. And lastly, it is regulators. We met with the investor committee. Snap. E ipos like potentially can change the source with the regulatory change. We think that is the most effective way to address the limited Voting Rights. Great to get your insight. Thank you. Up, we willing speak to former American Airlines ceo robert crandall. From new york, this is bloomberg. Scarlet whatd you miss . Cotter airlines unexpected turbulence from americans. The ceo said that we are not particularly excited about qatars outreach. Bob crandall joins us. Bob, thank you for your time. Doug parker said he is not particularly excited about the outreach. From where you sit, do you see any business merits to such investor from qatar . No, i dont. I am mystified. America has strongly opposed operations. All of the operations in the isdle east, all of which heavily subsidized by our government. I dont know if americans board is going to approve this, but doug parker has been perfectly fair. He says, look, at 10 holding is not going to modify how we run the airline in any way, shape, or form, and its not going to modify our reaction to the operation of the subsidized airlines, which is draining traffic off our flights and the middleights and eastern carrier fell subsidized operations. Why they want to do this is beyond me. Maybe they think america is just a great investment, and in that respect, i suppose i agree with them. But i dont know why an airline would want to buy a Minority Stake of another airline. Though, bob,nder under what circumstances would American Airlines say, ok, we would let you buy up to a 10 stake . I suppose any time for a long time, as you will recall, the Airline Industry lost a lot of money. When i was running the company, i had a long time rector who said to me, you know, any time someone was to give you money, take it. Notously, those shares do along to america. Two american. They want to the public. It is a publicly owned company. If qatars interest will strengthen the price of the shares and benefit other shareholders, i suppose americans board may very well say, why not. It may have a favorable impact on our shareholders, so why not do it . You think President Trump will respond to this . Thats another consideration given the tensions we see between the Saudi Arabians and qatar. Could they be particularly motivated to cause they want to cozy up to President Trump because of what they are facing back home . What do you think of that . I will tell you the truth. I think this issue of whether qatar invests in american is way below the interest threshold of anyone sitting in a senior government position. There is another issue, a different issue, and that is the major u. S. Carriers have objected strenuously, and have objected strenuously to the operation of these guys because they are running airplanes, running flights that are subsidized by their government and that has the effect of training passengers from u. S. Carriers and that has an impact on u. S. Jobs. That issue, if this happens to call attention to that issue, then it may very well be helpful to american and other u. S. Carriers. Wondering if this overture came from the emirates group, would the response be different . Not in anyway. At least i dont think so. Youve got to keep in mind, i have been retired for a long time. I dont know what americans attitude is. I see what doug parker says and i try to apply a little logic to it. Case, i think we are saying out of the same handbook, we are not excited about it one way or another. Oppositionat about to this . I do not know they have any opposition to it. They just said they are not very excited about it. I think doug and the board will take a look and say, look, if these guys want to take 10 and that might strengthen the stock, should we do that . The fact of the matter is, why say no . Payre not going to attention to what they want us to do and we are certainly not going to modify our opposition to their operation in the u. S. Is this good for us . Who knows . Robert crandall joining us on the phone from massachusetts. Thank you. Julia we have breaking news ,cross the bloomberg terminal concern about two italian banks. Of thing concerns about the health of these banks. The ecb saying those two banks are to be wound up under italys insolvency rules. They say that they do not have the resolution mechanism necessary. We did hear from the Prime Minister earlier today. He did say that italy would shield the bank. This has always been a pretty prolifically toxic issue for the government. What to think of the timing given the coming months . It will be interesting to see how this plays out. Now it is time for the Bloomberg Business flash. Tesco is boosting pay for staff as it is rating an increase to the minimum wage. Pay will see a 10. 5 increase by next year. Ofs was part of a series cost pressures facing retailers. The pounds depreciation is pushing up costs while taxes remain high. We have the first net outflow in a decade to further reduce its assets on the eve of a sale to the chinese conglomerate. No longeraramel g is involved with the firm. He is expected to take a job in the trump administration. That is your bloomberg is this flash. Joe coming up, one year since the brexit referendum in the you a in the u. K. We have three charts you cant miss. This is bloomberg. Scarlet i am scarlet fu. With all due respec whatd you miss . It is a year from the brexit referendum and the economy is not pretty. Hello, stagflation. Inflation is picking up. That is the yellow line, getting near 3 . A bighat, inflation is concern. A big response was to cut. Whate then they have do they do next . Mom at elerian says the stagflation potential is to boost productivity, but politics get in the way. They have to get through brexit and the divorce before they deal with all of that. In light of these economic conditions, how is the stock market in the u. K. Doing . It depends on how you measure it. The white line is the ftse 100 priced in pounds. You have seen it has done very well. It is up 3 in sterling terms, but the blue line is the ftse. And thats in dollars and that is exactly lacked. It has not gone anywhere in the last year. This is a situation where there is a massive change in performance depending on your denominator. Julia im so glad you talked about sterling. It is down 15 versus the dollar since that brexit vote and gained and i will at this. Ick go we have the egyptian pound. Rra leone, congolese mongolian currency. So, its a holiday destination. Yeah. Be sure my mom and dad will visiting that anytime soon. That has done well. But some of those holiday destinations joe sterling is the second worse. Julie good thing in your in the u. S. Now scarlet good thing you are in the u. S. Now. The market closes next. We look at the major indexes. The s p 500 is up 1 . This is bloomberg. Ulia whatd you miss . The s p 500 and the nasdaq ending higher. A are drifting into a bear market. Im julia chatterley. Scarlet im scarlet fu. Im joe weisenthal. If you are tuning mliv on in live on tuning twitter, we want to welcome you. Tohing the s p and nasdaq close up in green. Without finishing there, nasdaq of one half of 1 rate if you look at it on a weekly basis, the week higher for the fifth straight week. Pretty impressive in light of the news we seen, the oil selloffs. Scarlet hard to remember. Lets get into the different sector moves. Thee modest moves in indexes really dont show whats been happening beneath the surface. Here we have the s p 500 split up into 2 groups. Growth year sectors leading the gains once again. This is within biotech, within health care. You have the tech hardware group, health care equipment. What Oliver Renick was telling us earlier is its not so much a rotation out of energy into tech, its a rotation out of energy and tech into some of the growthier parts of health care, and coming out of the growthier parts of tech. On the downside, we cant ignore Energy Stocks down by almost 3 as crude oil entered a bear market. They continue to get hit. The are not really dragging the auto market down bottom market down with them. It looks like that price were continues, in terms of the Different Service operators try to outdo each other with more limited data or super data plans, it continues. Individual movers, bed bath beyond, lowest level since 2009. Worst day in more than three years after its unexpected drop in samestore sales less quarter. Guggenheim, the countrys worst quarterly operating performance in recent history. Home builders doing well on the back of new home Sales Numbers that came out today. 500,the leader in the s p and natural gas explorer, after a pipeline that is key to moving supplies of the fuel, cleared a major regulatory hurdle. Joe lets take a quick look at government bonds around the world, on a twoyear yield, unchanged. Tenyear yield unchanged. Not an active day in the u. S. One of the bigger movers, lower yields in mexico after that Mexican Central Bank rate decision, expected tightening yesterday. The dollar on the defensive to and the week, still managing to see its first weekly gain since the end of may. Quickly want to show you whats going on. Just below that 112 level. Options expiring at 112 today, took out some of the remaining caps in place. We traded slightly softer over the second 1 2 of the session here. Oneyear look, still down. Just below 15 . Since brexit, we are one year to the day. Toant to show you the dollar give you a sense of what happened in the trading session. One heck of a week with the bailout effectively, of warren buffett, of home capital. We have hawkish commentary from the central burkes adjusting that rate cuts are over. And we have weaker inflation dates, a push back likely. Itt you can see there is kicks higher in dollar cash just as oil came off the highs of the session today. Still incredibly sensitive to oil. Joe lets look at the commodities. Today a week active day for oil. Of a little less than 1 . West texas intermediate above 43 a barrel, though of course this is very low in recent perspective. Gold not doing much either. Lets take a look at a onemonth chart of oil and you can see it falling out of bed in the last several days. A month ago oil around 752. Supplies minyan and now the stories are all about overproduction and world imbalance everywhere. Scarlet for our equity week in review, we have achieve equity strategist for Bloomberg Intelligence. I want to start with a chart here that picks up on joe plus point, which is oil pieces and the affect its head. Line is wti. Clearly investors are looking past drop in oil prices, new bear market in oil prices. Could this signal the commodity is not a meaningful indicator for you. We go back to the trend that was in place before the financial crisis, similar to the late 1990s when the two could move in different directions. Is this a shift . Straight itsis been going on for much of the last several years. If you go back to the 1990s when oil prices were 10 a barrel and the S P Energy Sector was about 10 of the index, oil prices could move on any number of days. They have in the period of 1996 yto 1998. I think we are in a similar situation today. Weve already been through our oil prices and because we have this recent biases of investors, who think Oil Prices Move the reality is, oil prices have moved a lot and stocks have only gone higher. The reason is because energy, which is the most sensitive, is the index right now. Its a lower share of the index than it was in the late 1990s. Being a part of this tells you weve had a major washout in Energy Stocks. But it also tells you oil is no longer the indicator you lost your direction on the index at large. Joe its interesting because i remember like the late 1990s, everyone going crazy for tech stocks and oil seemed like it would be low forever. I remember filling up my car for less than one dollars a gallon. Do you think people have forgotten that it works like that . Gina definitely today is very different, low 90s and one major structural difference. We are a net exporter. A net supplier of oil now. Big difference from the 1990s. Oil is a much more integral part of the economy at large. When it comes to the equity market, is not as important anymore. You have to distinguish between those two things. Of course oil is important for the economy, for job creation, a good portion of the u. S. Economy. The best market, only 50 driven by the u. S. Economy, is less important. Scarlet thats a really good reminder that stocks do not reflect the economy at all at this point. Oliver made the point earlier that in 2015 we were worried about china. Today, were not so cautious about the Growth Outlook there. Strategy, i love how you recall, the second chart. You are looking at the ratio between value and growth stocks, the ratio coming down. So this is one of the most important things for sector style strategy in the market right now because of his he the market is melting higher. Everyone can take advantage of those gains. The areas of the market that are actually moving have been almost exclusively growth. Up until last week and a little bit the week prior, the financials got a bid and the value trades started to come back, but what happened is the retracedwth ratio and then hit resistance at that level. That happened at the end of last weeks rally. Ever since its reverted back, more so than i think you would have anticipated. We thought this would trace back to this initial retracement level, and that sort of sideways trend for a while. Instead, investors have jumped right back out of value. Whyat is the appeal is it there was a goldman note a couple weeks ago asking if value was ever going to come back again. One might think that would be a sign of the times. What is the underlying story that socalled value stocks seem to offer no appeal to anyone . Gina inflation expectations, theres a tight correlation between value per arm is an inflation expectation. Its a very risk on trade. They been trending downwards since. Its a financial story more than anything. When you look at the peer value index, youre looking at financials. Thats dependent on what happens at the long end of the curve, what happens with the 10year means everything for financials. Its been a tough go for the financial sector. Scarlet gina martin adams, chief strategist for Bloomberg Intelligence. Joe coming up, new home prices are at a record asked to steady demand and surge inventory. Its a trend that could squeeze firsttime buyers. How this might develop. This is bloomberg. TodayPresident Trump signed a bill that will make it easier for the department of Veterans Affairs to fire push tos, part of a overhaul an agency struggling to serve millions of military vets. At the white house the president said the law is only the beginning. Pres. Trump in just a short time weve already achieved transformative change of the v. A. Believe me, we are just getting started. Was promptedsure by a 2014 scandal at a phoenix v. A. Medical center where some veterans died as they waited months for care. ArrivesPrime Minister in washington sunday for a twoday trip that includes his First Official meeting with President Trump. The Prime Minister will look to secure on a 2 billion deal for unarmed drones. Analysts expect both leaders to build a rapport but find it unlikely they will make significant progress on immigration and Climate Change issues. The European Union is giving a thumbs down to british Prime Minister theresa mays proposal for a Citizens Rights after brexit. The European Commission president said the Prime Ministers proposal is about reducing Citizens Rights. May says almost all 3 million eu citizens in the u. K. Will be able to keep living there after the breakup. Paris has recruited its most famous landmarks to promote and boost its bid for the 2024 olympics. The city of lights is putting on a show with 100 meter races on a track floating on the sand, high divers plunging into the famous river, and cycling around the arc of triumph. Paris is completing against los angeles to host the games. Organizers hope the two day festival will help showcase the french capitals suitability. The ioc meets in july to decide. Global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Mark crumpton. This is bloomberg. Whatd you miss . New home sales grew faster than estimated in may. Prices are rising rapidly and supply remains tight. So how long will these Market Dynamics persist . Here with us is the chief economist. She joins us from our washington bureau. Great to have you back. This issue of tight supply has been a dominant theme in the market for a while, much to the consternation of wouldbe homebuyers. Is there any indication that its going to leave anytime soon . No, its not in this inventory problem is going to persist for a while. In fact, if you look at the lowest 1 3 of the market, homes priced about 250,000 and below, there hasnt been any increase in over 20 months. This is a premium market, there is inventory at the top of the market. Theres not so much, the lower you get in that price point. Thats a real struggle for firsttime buyers. Joe free markets in theory are supposed to handle this well. You have a shortage of something, then you get more supplies that brings price down, everything gets back into balance. Whats preventing the market from getting into a sustainable balance . The Housing Market is not what i would call a competitive market by any stretch of the imagination. Lets just look at the supply side. That has been the real kicker for the Housing Market. We havent seen a big uptick in supply. After the housing downturn, theres there has not been a recovery. Theres a lot of things we can blame for that. Zoning, regulation. All these things are working against the free flow of supply and theres evidence the bottleneck continues for homebuilders. Even as homes are being permitted, they are not being constructed because of regulation. Then you go to the average homebuyer, homeowner, who may even want to trade up, but cant because prices have gone up so fast and mortgages are still very tight that they may not even be able to trade up in their same neighborhood. So the supply side from existing, the new construction, has a lot of bottlenecks and that is impeding transactions, but also stoking price growth. Scarlet one thing we should mention is that real estate is very local. Demanded certain parts of the country is a lot higher than other parts of the country in the same goes for supply as well. Are there any cities in which we are closer to a balance in terms of demand and supply versus those were supply and demand is completely out of whack . I would say in most of the major metro areas, demand and supply are out of whack. There are cities that have a lot of inventory, places you probably wouldnt want to live, places where the labor market or the economy is not flowing. But where there is strong labor Market Dynamics, even if its a grand rapids are omaha, we are seeing high home sales, strong price growth. Its surprising to me if you look at the data how many places have homes that are selling above list price. These arent just west coast markets. These are places right in the middle of the country that are seeing really good job growth over the last year and a half. Outlined a number of issues were seeing in the market. You were having quite a fascinating conversation earlier this week about the younger buyers, the millennials, and the fact that they are pushing back their purchases because they are getting married later, they are having children later. Is that what you are seeing and you think it is that behavior that is pulling them out of the market, or does it go back to the supply point and the fact that they simply cant get access to the market either . We do have a slanted market for millennials. The older millennials are making up for lost time, between their late 20s and early 30s, they are actually buying at stronger rates than previous cohorts, if you look at the existing research. We see that in our brokerage, a lions share of our Customer Base are millennials and gen xers. We are very comfortable and used to working with young people. However, these are generally young people you are very high income, perhaps help from their parents. I also say the lions share millennials have yet to hit the market. The average age of the First Time Buyer is 31. The biggest cohorts are in their early 20s, so we still have a long tail end here, and supply is not keeping up with this increased level of demand. Joe the Housing Market obviously interacts with the overall Macro Economy in lots of ways. What are the ways it most directly boosts gdp is through the production of homes, and its all kinds of issues on the supply side, thats not happening could you look at the bloomberg housing economics surprise index, faded in part thanks to the weakness in new home construction. What do you see right now is the most we are way that what you see in the Housing Market is acting these overall u. S. Economy . Affecting the overall u. S. Economy . I think you are right to look at new construction. We know thats what generates the most generous contribution in terms of economic growth. When you talk about the affordability crisis, its really inhibiting people to move to where the jobs are. And we are rapidly going into a situation where people arent moving to the places of growth because theres no place to buy. To live expensive there. Without new construction, especially in our urban centers where the job growth is happening, people wont have the free flow of Labor Mobility we have become used to in this country. Thats whats hampering productivity, and ultimately, lowering gdp. It is flowing through from housing to economic growth. Joe richardson nela richardson, thank you. When you are hearing comments like average annual earnings are going up nearly half the pace of home growth, thats got to be a crimp in the system. Joe cribbing affordability. Oil jumping into a bear market. We dig into some crude technicals. Charts you cant miss. From new york, this is bloomberg. Whatd you miss . Weakness in Energy Prices was the theme of the week, with crude oil slipping into a bear market had to break down the technicals of oil, here is Abigail Doolittle could. For takingank you the time to join us on friday. It turns out the longest friday of the year. Julia was talking about, a big week johnson to a bear market. Plus down five weeks in a row, first time we have seen that since 2015. Possibly suggesting we could see a nearterm bounce. I would agree with that in the near term, the moving average in the middle and then bans 10 above and below the moving averages. Back in july of 2016, and octobernovember timeframe of 2016, and even may of this year and in june we are at the bottom, lower bound of these bands. That has been a good level to get long oil for a trade to the upside. Something else i like to look at is momentum. That, theres actually a positive divergence between the price of oil and a indicator, the recent low here not confirmed by momentum. I think it trades to the upside, may be to 47, 48 cannot be ignored here. Abigail eyeballing it, i would guess up towards 50. Relative to breaking down different segments within the energy complex, we have the big oil guys, the drillers, and Andrew Cosgrove said he considers the drillers and Services Company to be way out of the beta width. This is g btv387. I spent a something lot of time looking at. I believe stocks are leading indicators for the actual modesty. Commodity. I think ultimately we are going to test the lower bound of oil support, which is around 40 straight if you look at the oih, it has broken down. Its taking out the kind of summer and fall trading range for last year. And the door is open for moves lower. It happened back in 2014 and it was a good indicator that you you make money. Keeping an eye on the services names, they are leading indicator for the commodity itself and i would not be so rise to see oil test at the 40 level. Abigail over the mediumterm we could have more weight in that . I think you want to see nearterm pop in the commodity. Abigail that might point to that 40. Another data point for the bears. Abigail you have an interesting call on the 10 year yield, called surprising to many, bond rally this year. We have the 10 year yield down the most in 2014. This is a chart we been looking at for months. Can you talk about this . Its an interesting chart, when ive been keeping an eye on as well. Even though i mostly focused on equities, i think it makes sense to Pay Attention to what is going on in the credit market. You have a strong move higher accentuated by the election of donald trump and then we went into this trading range for 5 months. The upper bound is 2. 6 . Weve broken below that 2. 3 level. You have a measured move set up to take yields down to 2 . Additionally, while its not on there because it would crowd the chart, take 50 retracement of the entire advanced and youve seen on this chart, that lines up with 2 per you have a measured move as well as key retracement level, both two point 2 . You mentioned you look at stocks. If we bring in oil and the 10 year yield from a macro standpoint, what you think is happening with the s p 500 . I am bullish on the s p 500. Bigail this is dan needham thank you for taking the time. Julia, back to you. He wanted to get abigails chart on your bloomberg if you missed it, fear not. You can check it out on tv go. Catch our programming live. Minutes ago, talking about oil charts as well. You can follow our charts on the righthand side, the interactive part. This is joes chart about the pound and dollars. Heres julias chart coming of us well. This is the earlier one about the data that you cant tell. Getting ahead of myself there. This is bloomberg. Mark the number of republican senators opposed to the obamacare replacement will is now up to 5. Jean heller of nevada was critical of the current draft at a press Conference Today in las vegas. [inaudible] it is simply not the answer. Im announcing today that in this forum i will not support it. A moderater, republican senator, is considered a key swing vote as Majority Leader Mitch Mcconnell tries to rally the base. Heller expressed concerns about a potential role of expanded medicaid eligibility. A vote is expected next week. British authorities have charged an unemployed welsh man with terrorism inspired murder and attempted murder in connection with mondays truck attack on a crowd of muslim worshipers near two north london mosques. Police say the man killed one person and wounded several others in the attack came as worshipers were leaving the mosque after prayers marking the holy month of ramadan. Qatar of demands given to by saudi arabia and its allies is not an ultimatum the rather the basis for talks, according to an official involved with the negotiation. Qatar was given a list of 13 demands, ending a threeweek diplomatic standoff. Qatar was told to shut down the al jazeerah tv network, cut diplomatic ties with iran, and cut ties with the muslim brotherhood. Qatar has 10 days to respond. The United Nations secretarygeneral will press congress to reject the trump administrations proposed deep funding cuts to the u. N. He will meet with members of andress, the Appropriations Foreign Affairs committees, and possibly senior cabinet members. The administrations proposed budget would cut funding for you when peacekeeping by over 50 u. N. Peacekeeping by over 50 . Global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. A little bit of a late rally pushed the s p and nasdaq into the green. The dow finishing little changed and for the week, the index led by technology pushing the nasdaq to a gain of better than 1 . Whatd you miss . Opposition mounting to the Senate Health bill as Mark Thompson reported their. Othereller joined four senators in opposing the legislation. The Congressional Budget Office is expected to release its score on the bill early next week. Expect is our to reporter in washington. And then there were five. These are the most vocal, the one set of come out and said we cant agree to this. How many more do you think have serious concerns at this stage, and whats the likelihood we actually get a bill on the senate floor for a vote next week . There are definitely senators who have concerns over not quite taking a hardline and saying they will support the bill in its current form. A lot of them say they want to read and digest that before they comment. It is interesting to see senator heller come out the way he did, saying emphatically hes not going to support the bill in its current form and hes not going to support the motion to proceed, which is the vehicle to bring it up right as is, heller will vote with the democrats to prevent it even being debated in the senate. Whats more remarkable is the way he attacked the bill. He talked about it as something that threatens critical services. Theres also the medicaid cuts. He said it takes insurance away from americans. He said its not confidence at a lower cost. Lift. Oing to be a heavy also notable that hes the first moderate to come out and draw that line in the sand. There are 4 conservative senators who did that a few hours after the bill came up. This space to the balancing act that republican leader mcconnell has to deal with. Joe there are five senators who have expressed reservations about the bill. Becauseer is unique hes actually a difficult political situation. Thats the democrats have done well in. Hes up for reelection soon. Who else among the moderates is actually erratically vulnerable theoretically vulnerable if they vote for this bill . To add to your list, hes the only republican senator facing reelection in a state that donald trump didnt win in the 2016 election. It shows the precarious position that dean heller is in. As for other republican senators, i think you have to look at the matter moderates. The perennial moderates, both of whom i spoke to on thursday, they both expressed concerns with provisions about defunding planned parenthood. Their states have expanded. They are both dealing with the Opioid Epidemic there. A lot of those constituents, if they lose coverage under these medicaid cuts, would be very hurt by that. You can expect them to be uncomfortable with it. The state from arizona, it is a state that is trending low. Many republican nominees have won it. 2018up for reelection in and i think you will be looking at that. Scarlet over the last eight years weve seen how mcconnell has led the way in mounting a united opposition, obstruction to the executive branch. My question to you is how capable is he of cobbling together coalitions who disagree to actually sign off on legislation and get it passed. Lets just say i dont know if its possible to get 50 out of 52 republican senators on a Health Care Bill like this but if it is, Mitch Mcconnell will find a way. He is as strategic and capable a party leader as they come. He will try to negotiate this in every possible way. The conservatives want some give on the regulation, they want to go further in knocking down Insurance Regulations and things like that. Some of the moderates i mentioned will what additional Opioid Funding for their states. I suspect mcconnell will be willing to listen to them on that. Heller seems like a tough one based on what he said. He delivered the broadside against every component of the bill. Will have to try to win Lisa Murkowski and lisa collins on the planned parenthood issue, placating their concerns. I dont know how hes going to do it. If anybody can, he can. I think he really laid out what we are expecting to see, more deregulation for the conservatives, more money for the scarlet the white house has stayed back as well. That has let Mitch Mcconnell do what he has to do. Joe coming up, the role of tax invasion in Global Inequality the. Inequality. This is bloomberg. Joe just over a year ago a massive document leak known as the Panama Papers shed light on how the world of offshore havens. Our next guest used information from that leak along with other reveal just how much tax evasion is exacerbating Global Inequality. Here with us is assistant professor of economics at ucberkeley. Hes also the author of the book, the hidden wealth of nations. Thank you for joining us. What did you learn from the Panama Papers that gave you what data were you able to get out of it that gave you insight into the degree that tax evasion is exacerbating inequality . Papers and other leaks, before that from hsbc switzerland, these are the first direct evidence that we have on tax evasion of the very wealthy. We just had leagues aggregate numbers, total amount of wealth in tax havens. But we didnt know who owns that wealth. The other type of evidence that we had is, you know, tax authorities like the irs and other tax authorities in other country, they conduct random audits. Thats how they estimate the size and distribution of tax evasion. Auditey dont sufficiently rich people and even when they audit rich people, they uncover very sophisticated forms of tech evasion that involved legal and financial intermediaries. That is the first direct evidence we have on tax evasion. And the results are pretty striking. A very widespread view which is largely based on these random studies, that rich people, they dont evade taxes. They literally avoid taxes. And are more likely to evade taxes. When you take into account we evasion atead ta x the very top of the distribution. Joe we have the chart up from your paper showing as you get wealthier, that tax evasion is more common among the wealthy. You put that very well. Youre about rich people you hear about rich people. Youve shown its not necessarily legal avoidance. This data shows it is classical tax evasion. Exactly. So what we find, i did a study for scandinavia, we can talk about potential differences with the u. S. Denmarky, sweden, and on aggregate, overall tax evasion is low. Only 3 of total individual taxes owed are evaded. But that is an average for the population. When you move up to the very top of the wealth distribution, that tax evasion increases a lot. Percent of 0. 01 richest scandinavians, households with more than 40 million in net wealth, our estimation is they evade 30 of all the taxes. Gabriel joe looking at a chart showing the wealth concentration in norway excluding hidden wealth and including hidden wealth, and you can see theres greater concentration when you include that hidden wealth. What is it about these scandinavian data that give you this insight into the direct impact that tax evasion has on the distribution of the pie . Gabriel what we know is the aggregate amount of wealth that scandinavians have in switzerland, other tax havens, like luxembourg, the cayman islands, that is published by a number of central banks. Then when we see what we see, the leaks, the papers are the hsbc leak, 80 of the wealth hidden in tax havens belongs to the top 0. 1 richest households. 50 belongs to the top 0. 01 of households. Hidden wealth is super concentrated. Dozens of thousands of people have unreported income and wealth and accounts here and there. In terms of amounts, its extremely concentrated. Tax evasion is extremely concentrated at the top of the distribution. The implication is you cant study properly inequality and wealth concentration just using survey data, tax data, as economies do. You miss a lot of stuff. Some of which is legal, some of which is not legal. In the case of norway, you should take into account the wealth of the tax man doesnt see. This increases the report and wealth of the top 0. 1 richest households by yourself. 1 3 richer than what we thought they were. Joe pretty remarkable. Lets put it all together, so we have these lease in recent years. Theres been much more attention paid to the topic of inequality, thanks to research that you and others have done. Is there any momentum currently on a governmental basis to crack down on the use of offshore havens to avoid taxes . Well has beenwell, there some progress since the financial crisis. Before the financial crisis there was no exchange of Bank Information between tax havens and foreign countries. Now, in principle, swedish bankers and bankers in luxembourg and elsewhere pose to send information to the irs and other countries straight its too early to tell whether this is working. These are the same people who for decades have been facilitating tax evasion, helping their clients evade taxes. So are they now going to report truthfully . Its pretty uncertain. The main thing that is missing is clearrrent approach penalties and sanctions for the financial institutions. If there are no sanctions and if its profitable for some of them to help rich people evaded taxes, theres a demand. Under contract if you impose very stiff penalties, then you could reduce tax evasion much ore than more than currently. The other of the book the hidden wealth of nations. Thank you very much. Scarlet coming up, excerpts from the exclusive interview with mexicos bank president. Whatd you miss . Governorof mexico spoke exclusively to bloombergs editorinchief emeritus. A reporter asked carsons projections from mexicos gdp growth could perform americus by 2019 were reasonable assumptions. Listen in. I see mexico has many important structural reforms. We have seen some in some areas. We also have seen some good omens from the result of others, like for example in the terms of reform the blocks that have been auctioned. The electricity reform, and also expectation that we will find a constructive arrangement with the u. S. In terms of our relationship. So far, so good at least with the north American Free trade agreement. Agustin absolutely. When you look at other things , like inflation, which has been the preoccupation of yours of that do you see anything goes against what you have argued has essentially been a oneoff event is now under control . We dont see a major clout in the horizon. Cloud in the horizon. Are to expect inflation getting back to your target in the months ahead, somewhere in between 2 and 4 . Agustin yes. And the peso itself, as i mentioned, traders right now are reasonably bullish on the peso. Its projected leased by the analysts we surveyed to be among the Top Performing currencies over the next 2 years. That ae said in the past level of around 17 is not unreasonable. Is that still true, by your own measures . Agustin i would think its not unreasonable. These comments shouldnt be taken as a central bank forecast. He would be reasonable if you take into account the strength of the mexican economy, if you take into account the policies we have undertaken. That generateons the very sharp depreciation that was not sustainable. So yes, i mean, i think its in the realm of divi the feasible. Debt,odenominated spreading Interest Rates between dollarnominated debt and denominated debt with respect to mexico is exceptionally wide at the moment. A lot of traders see that as a buying opportunity. They think that because the peso is strengthening, this Interest Rate spread is something they can exploit and do well with. Would you say thats irrational or exuberant . Agustin to some extent. As you very well know, Monetary Policy works through different channels. What tradres do is one very important channel, and needless issay, some of our actions to invite some of that type of reflection from market participants. At the end of the day, what we rratedone is that the inte differential adjusted by any type of risk to tell you that it is attractive to take peso risk. So, we have work. And that was bank of mexico governor Agustin Carstens speaking with our reporter. Scarlet its time for the Bloomberg Business flash. Google is giving up one of its most debated ad formats, the popups inside gm mail gmail the scan messages for content. Gmail customers never received the email scanning ads, and google has been criticized and sued for utilizing the format. It offered marketers a more targeted but, controversial way to reach consumers preinjury orders a company to pay a group of the kansas farmers permits representing genetically modified corn seed. The gmo seed contaminated u. S. Crops, hurt exports to china, and resulted in a chinese ban that lower the average u. S. Corn price. Syngenta says it will appeal the decision. Heter harrison is proving has still got it when it comes to railroads. Three months into the 70yearold path seeing ceo stint, trains are running faster and the percent of ontime arrivals is up more than 20 . Csx ins arrived at march. Shares jumped over 42 percent since january when harrison first expressed interest in the chief executives job. Jeb bush joined forces with ted romney to buy the miami marlins. Play that threatens derek jeter stream of becoming one of the jeters dream of becmoing one of the owners. Governorr florida pulled out after they struggled to fiancnance it. That is your business flash update. Joe coming up, what you need to know for next week. This is bloomberg. Scarlet whatd you miss . Little change in the Dow Jones Industrial average before the week the s p 500 rounds up a 2 10 of 1 gain led by the health care companies. , dont miss this. President donald trump will host indias Prime Minister next week. It will be the first meeting of both leaders. Joe i will be walking for watching for the second part of the feds stress test. Those are out wednesday. Monsanto, nike. Will these brands align. Scarlet quite a list. That does it for whatd you miss . Joe have a great weekend. This is bloomberg. Geokinetics senator jean heller on his answers. Not the answer. Simply not the answer. Amount nothing today in this form i will not support it. President trump delivered on a campaign promise, signing a bill to make it easier for the department of Veterans Affairs to fire employees. The measure was prompted by a scandal at the phoenix v. A. Medical center, where some veterans died waiting for care. Amilitary chief will seek sixmonth delay before letting transgender people in list according to the ap. Service leaders rejected army and air force are west for a twoyear way. The defense secretary will make the final decision. The Supreme Court will issue the last opinion of his ninemonth term on monday. Hascourt