>> big tex terrible, horrible, no good, week of fairy bad -- of very bad

earnings. plus will banks continue to struggle with different bond making? >> consumer sentiment falls to a seven-month low. we begin with our market minutes. u.s. stocks falling amid earnings report and consumer spending data. we have the s&p 500 for the worst two-day drop since february. amazon was a big story that everybody was focused on. it didn't seem to have much staying power in terms of lifting the broader market. >> we were much lower earlier in the day. if you look at the market, not that dramatic of a selloff. it speaks to how calm anthe market has been rising. ultimately not that big of a deal. , even with the disappointing close -- >> even with the disappointing close, the market

hit a new milestone print this is the -- new milestone. this is the second longest bull market in history. of course come at the top of the heap is the 1999 all market that did not end until march 2000. -- 1999 bull market that do not end until march 2000. government bond market, not dramatic but we did see a decline in yield across the board. at one point in the day we did have a situation where yields were higher across the curve. as you can see the 10 year ending flat. not all that much happening. >> a mixed day for commodities. commodities as a group extended their gain for a fourth straight

day. they are on a six month. the commodity index rounding off a gain of 8.5% since april. commodities continuing to build on their recent advance. and in currencies, we saw a we sawation of the trend all week. the dollar weakening again today. touching the lowest level since may of last year. , the boj dide yen not announce any further stimulus measures. the yen is strengthening on an 18 month high. those are today's market minutes. we want to take a deep dive into bloomberg. i wanted to take a step back and view at how the different asset have fared since the financial crisis.

the stocks in blue, dollar in red, and gold in white. the starting point is march 2009. their second longest bull market ever, the s&p 500 gaining more than 200%. the dollar rose, but the recent weakness means it is barely up. gold up about 35%. >> interesting how gold held up in their in terms of competing with stocks until 2011. i want to look into the bloomberg and talk about economic data that was a little bit disappointing. we have the unemployment index. it tries to track wages by looking at -- in addition to cash wages and benefits and such. longtime watchers will know last year there was a lot of excitement, numbers were accelerating, people thought wage growth is coming. i have shaded this white line.

this is the quarterly eci report. the green shaded area was last summer's trend. see, the last few quarters have fell back down. we haven't seen that huge breakout of average early earnings. we will see if this is the year that average early earnings breakout. >> i can't take it, we need to know now. we have the brexit referendum coming up. take a look at this chart, this is implied volatility here in white versus implied volatility of the s&p 500 in orange. the difference between the two, the spread is at a five-year high. obviously looking at british stocks and thinking there is going to maybe be a little bit of volatility and action around the referendum. certainly more than we are

seeing priced in -- >> they're going to stay in spread to close. >> you certainly need a contrast for. the range we're seeing of the the500 -- a contrast for range we are seeing of the s&p 500. good see you, ben. >> we have big tex falling 4% this week. what is our earning season telling you so far? guest: expectations are superlow. stocks, thatu.s. is relative to low expectations. i don't think we should be focusing on that low but expectations going forward, with the expectations coming down significantly. >> i have a question on this dynamic between expectations and how the market reacts to actual results. it seems like every earning

season we go into it, expectations get cut and markets are happy about that. how does that happen? this takes away from the fact that the markets are on earnings, where expectations we think meet more than half. >> if we are in an earnings recession, how does that affect how companies use their cash or deploy their cash when it comes to dividends or buybacks? we know buybacks have been a big source of support. >> buybacks have clearly been one of them. less profits with higher financing costs, buybacks are going to decline from here. that is a big deal for u.s. equity. >> you say earnings at quotations -- earnings

expectations need to go down. energy has rebounded pretty significantly. the energy sector was a huge drag overall on earnings. what is wrong with that argument? guest: we are at all-time high earnings. wages, they may not be rebounding as quick as people thought. they are not at 1.5%, 2%. there is less room for buybacks. financing costs are going up . -- are going up. tax rates have come down genetically. -- come down dramatically. upside surprise. remember that is what we need for 17 times earnings. seen a bige we have

rally is emerging markets. what is driving that? is there something more fundamental going on? guest: right now it is a relief rally, dollar stabilization, taking off of commodities and currencies. i think that relief rally is at stage one. what is interesting is the potential turn in earnings here. earnings.ut emt one we are seeing ratios turn up. that is really important. 2009 lows, so if this is a legitimate turn in earnings, i think people need to pay attention. >> there has been more conviction towards emerging art -- emerging markets. about one third underweight, that is the biggest

the have been over the last five years. developing markets by six percentage points over the last two months. that is coming off of five years. i think that five years just pushed a lot of investors off the asset class. >> the selloff came after the .oj decided not to ease further we saw the yen surge quite a bit, now below 1.07. why isn't the boj moving this global event that causes people to sell everything? guest: i think they got to focused. i also think about waiting to see the full impact. >> we saw futures the other night that when the boj didn't move anything, why is it we live in this world where people sell

you futures because the bank of japan didn't go further into negative freights? -- negative rates? , there isn't a lot of growth, so i think we need to be sensitive to that. -- guest: there is a lot of we needo i think to be sensitive to that. japanese earnings have more than doubled over the last year. people have been sensitive to that. >> you talked to a lot of people in the equity market. what you think in terms of the idea of people hedging their portfolios against the market falling? we have seen a lot of talk about fix related products -- about relatedted -- about vix products. guest: we think that is a sensible thing to do. test global equity strategist and head of -- thank you.

>> will improve conditions from financials ever arrive? we will discuss credit market decisions next.

several hundred anti-donald trump protesters on the scene in california and san francisco, they have gathered outside the california convention. ohio governor john kasich are appearing -- donald trump and ohio governor john kasich are appearing today. last night 20 people were arrested protesting a trump campaign event.

president obama announced what he called common sense steps to curb gun violence. requirements that smart guns would have to meet. enhanced safety technology to prevent accidental shootings or to track down missing guns. officials expect to complete the process by october. say --risky operation norway say rescue operations are over. the norwegian aviation authority says it is banning all similar airbus helicopters from flying. the flight recorders have been recovered. janney played a white house secretary on "the west

wing." today she had a chance to do the real thing. the four-time emmy award winner took the podium normally reserved for a secretary josh earnest, and hopes to bring attention to the nation's opioid epidemic. a reporter asked her food -- from her old show would support for the nomination. dayal news 24 hours per powered by our 2400 journalists and more than 150 news bureaus around the world. >> the big banks can't seem to make money the way they used to. they all reported double-digit percentage declines in fixed trading. do they rethink their commitment to the business? chris white is ceo and founder of bible markets and here to talk about it market conditions. this is a big theme that has emerged from first quarter results, specifically when it comes to someone like goldman. they were supposed to be the

last one standing other than jb morgan. -- other than jpmorgan. we haven't seen trading revenues pick up. chris: this has been going on for several years, where the larger institutions have seen declines in market making and fixed income. this is not in the rates area of the market. trading has been behaving itself for a long time. theses most shocking is large banks last year in 2015 were 65% of the secondary trading volume, but they are not making money. the question remains, is there something that has changed about the model? i think the answer is yes. working about the model a few years ago that is not working now?

chris: if you speak to any trader that has been working the past few years, they have worked those positions and they had a year over year market to market gain. i think to classify it as -- trading is on the line. positioning yourself with the market -- >> still a better rather than market making. chris: i think we have seen some successful markets where market makers took that's. -- took that's -- took bets. holding on to the position would cost you more money over time. that is why we are seeing the effect of this. how much revenue is out there for market making if you are acting as --

>> you do have some volatility but you also have the unintended effect of trading. is there a difference between good and bad volatility here? >> the bad volatility is when there is a rational react -- when there is a rational reaction to the marketplace. to market making veterans in the corporate bond market, they will point to five days throughout the year in which they may boast their money for the year. that is good volatility. theirey has released first quarter earnings, and they particularly highlighted how well they did for 2016. they pointed to the fact that they aren't holding positions much anymore. for all the generations we saw, they didn't create this market to market downturn in terms of overall holding. are at sea level with one

of these large banks, you would rather have -- than the business models of the old days where when you are good you are good, but when you are bad you are very bad. then investment grade recently come how long is that going to last? chris: when does the ecb stop buying bonds? we can talk about series on the fundamental of bonds. when you have an entity in the marketplace that says i am a buyer for size, no matter what, every day, then it is going to have an impact on the performance of all bonds in that area. .e are seeing record issuance mcdonald's is issuing bonds in euros now. people are going to the market to get cheap debt. >> we know investors have been scrabbling to get corporate debt. what is the justification by the ecb for buying that asset class?

the jargonink it is -- the jargon around buying up the asset class, what we are seeing is unchecked logic. -- yet the central banks in both of those regions of the world have pretty much mimicked what the bank of japan is doing. my vision of what is going on, it is a bunch of people all agreeing with each other without having a contrary an opinion -- a contrary and -- a contrarian opinion. >> we are going to discuss the interests and portugal next.

scarlet: if you didn't pay attention when we broke the news, the dbs kept portugal out of the investment grade. the government bonds remain eligible for the ecb bond buying program this is the ecb

on the queuing function. portugal ranks number eight right here in the country that the ecb is buying bonds from. together they make up almost two thirds of the total bonds that the ecb buys. joe: if we could just get back to credit worthy, then we could be part of ecb qe and get going. that was a big ruling in favor of portugal. >> one of the things that sparked the crisis is this downturn in greece. joe: it is crazy we are looking at one ratings agency, one decision. scarlet bank everyone else has downgraded it. -- scarlet: everyone else has downgraded it. joe: the federal reserve has hit

a wall, here's a couple of different measures of inflation. consumer core,e, consumer core cpi. they were all going up. this redline is where they peak and then every single one fell. they all peaked in february and then march was a setback. it is just one month. the trend could easily resume. the people watching this trend, it looks like inflation -- it was a setback. would think with the oil rebound, that is another reason there is a little bit of a -- something to raise your eyebrow at. want to present to you a

market odyssey. these are two companies run by the same ceo. square and twitter down here. there has been a massive divergence this week. square is up possibly because of a hedge fund announcing a stake. this one ceo has simultaneously created lots of shareholder value and destroyed it. joe: so he has perfectly hedged the portfolio. tracy: that is one way of looking at it. scarlet: so it is a wash for him personally. are talking about jack dorsey. the next fed meeting and brexit vote are a week apart. ow will one affect the other? an exclusive interview with bloomberg television.

iaae-m" it has been a tense and raucous

scene outside a hotel inraucous california, as republican presidential front-runner donald trump has arrived to address the state republican party convention. trump was escorted into the hotel from a back entrance, away from the protests. and ohio governor john kasich are appearing at the convention today, texas senator ted cruz and his running mate carly fiorina will speak tomorrow. 20 people were arrested yesterday protesting a trump campaign event in costa mesa, california.

ash carter directed military officials to -- in a hospital run by doctors without borders from afghanistan. officials say 16 u.s. military personnel were disciplined. in a statement, secretary carter report, "provides painful lessons." captains in virginia have been by --ed by -- fibrous -- virus. there are more than 1400 passengers and crew aboard. delta airlines president ed bastion takes over as ceo of the carrier on monday. erik schatzker sat down with him on the company's headquarters in atlanta.

maintaining standards of excellence to remain at the top of the industry. >> we are running the best airline on the planet. we are going to continue to the invest on the operation. making certain the reliability and the service levels, they continue to grow what we set records three years in a row. there is more we can do. >> monday here on bloomberg television. global news 24 hours per day, powered by our 2400 journalists and more than 150 news bureaus around the world. get a recap of today's action. but -- the stock finished lower. the captured everyone's attention was the dollar, declining to the lowest in almost a year. the federal reserve is in no

rest to raise interest rates. fromd a dovish statement the federal reserve earlier this week. surge --his huge today huge two day surge that exacerbates against the yen. >> 10 pivotal days for the market. on the 14th and 15th you have the next meeting of the federal open market committee. the u.k. votes on whether it are -- whether it should stay in the eu. we ask that a asked him how much the brexit vote will factor in the fed meeting. >> i'm going to have to make an assessment on what the likelihood is. it's a little bit unclear. if it is still unclear on june 15, it is going to be a factor.

>> if you look at the polls, they are notably unreliable. how will you make that assessment? >> i'm having lots of conversations with people on how they are assessing it. if the polls aren't clear, and they show it to be very close, then you have measures that are a little more lopsided. we will have to see what is available. >> let me follow up by asking you this. from what you have heard, should the british vote to leave the european union, would that have such an effect on the global economy that it would take the fed out of the game for quite some time? >> i'm not going to comment on something -- my own senses it is still more likely than not. we will have to see.

clearly there is a whole range of impacts if it did happen. and ripple effects might have countries impact flight and quality. and if it did happen we will take some time to digest it. >> what are you learning from what is going on in japan? guest: i have lived there for almost five years. japan has two big problems. population, to the point of a shrinking population, and

second high levels of debt to gdp. central-bank easing isn't going to address any of those issues. it is not a substitute for more structural reform. that is an example of an appropriate reform. they might buy them time, but they are going to have to deal with structural issues. they can buy time and be helpful. but they are not going to deal with structural issues. >> do you think that is why the bank of japan has decided not to move. , it could be. it could be because of the ripple effects from financial institutions, from favors.

i think it is independent of this, but i don't think they expected the end to strengthen as much as they had -- as much as it has. it doesn't surprise me they .ecided to wait a little bit boj bringsabout the me to currencies. the boj and ecb has to past and it might give you a window to hike rate, without it having too much of an impact on the dollar. that. -- onorate on the risks from the dollar and other central banks? >> we had two very rough months in january and february. the fed slowed down.

my own opinion is that slowing, combined with some other factors , helped stabilize the markets and the stabilization process. and created less divergence. did -- clearly greater divergence strengthens the dollar. it makes it easier for the fed and makes it easier for us to manage the situation. that is an exclusive interview on bloomberg markets. our the philippines one president away from economic disaster? some big warning signals.

>> employee violations of internal compliance -- according to people familiar with the matter the bank is investigating cases of improper expense report padding and moneylending to colleagues. the program led to the departure of several bankers in dubai in recent months, including at least three managing directors. michael pearson got a huge incentive and generate 15 -- in january 2015. a grant the company disclosed today for the first time would have given it ceo 2.2 5 million shares. if the valiant stocks reached him of $1200 between october 2019 and april 2020.

are year's top prospects going to the rams, eagles, and chargers. the company is signing endorsement contracts with a whopping 15 members of the rookie nfl class. popularmour, the athletic apparel maker, has just .ne that is the bloomberg business flash. a controversial candidate in the philippine presidential race has made the peso it's worst-performing currency this month. the peso slumped 1.6 percent in april, reflecting concern over front-runner -- extended his lead before the main nine vote. this crime busting mayor is being likened to donald trump for his inflammatory remarks and radical policies. for more, asia director joins us now. >> a new poll -- what is it that

people has him so nervous that is calling the philippine peso >> i think why we are seeing this is the philippines presidential election, he has the weakest grasp of economic policy. his strength is in security policy that is where he has spent most of his time and attention. >> he obviously caught a lot of attention for his colorful remarks. i saw a story about how he was going to pardon himself over a murderer. >> i can't say much about his inflammatory comments in detail. he is known as a character. he has an authenticity that has been attractive to the mass were role of vote in the philippines.

he has entered the race -- mass rural vote in the philippines. he has an to the race just last year. steady rise of reports since then. those two candidates were the ones that led the presidential campaign for the vast majority. if it is really -- it is really in this last month or so you see them take off. part of that is his broad appeal among the philippines nasa vote. they have likened him to some of the other candidates who seem to be less in touch with the masses. >> how much do we know about economic policies? he is known for being a crime fighter. has he said what he will do for the filipino economy?

>> of the four candidates, he has the weakest grasp on economic policy. i would say to lessen the risk candidatesll four have broadly pledged the program policies of the current administration. whether it is china's slowing an economy or lower oil prices. while they have less grasp of economic policy, their policy platforms are actually quite similar. he has appointed a really well except -- a really well accepted economic adviser.

the politics he has put forth is pretty well in line with what we have expect -- what we would expect from the administration. i think you are going to see their somewhat ease in the markets. compared to the senator, who has a scrap -- who has a strong details economic policy . at the same time what he had said that he would do if elected as president is broadly in line with the paris form policies. >> can we pretty much conclude he would win the presidency if it was held tomorrow? or would there be a last-minute upset? say he is looking

very strong, stronger than we thought he would luck, even a month ago. the philippines is known for last-minute game changers and elections. the top candidates is reportedly under pressure to fold in the race. his supporters would go to back race. this is something we are watching very closely. there is one more pull that should be coming out here early next week that should give us the latest indication of how they are doing. he has pulled ahead of very late in the race. a name and to grace from the start. stay tuned. a net race from the start. -- a neck and neck race from the start.

scarlet: consumer confidence falling to a seven-month low in april as american expectations about economic growth dropped to the lowest point since september 2014. we have three charts you need to see. michiganrt with the report, and an expected decline in the headline report for consumer sentiment. matt: the consumer sentiment index is comprised of two components pre-and they are feeling about -- components. consumers how they are feeling about the situation and the year ahead. the current conditions index is looking pretty ok, but the expectation component has interior rated.

-- has deteriorated. feel the expectations component dip below the long-term average. >> what is the theory? if you dig into some of the components, there is a lot of pessimism relative to previous months over income growth. signshough we are seeing of wage growth, consumers are not buying that. it is definitely interesting, because the fed pointed to consumer confidence that, "remains high." you can't say that now, certainly not about the expectations component. scarlet: was there any mention at all of the elections? i know last month that cropped up spontaneously as a source of ferrari -- source of worry.

matt: it is hard to find an election impact. howe is one question about they feel about the government economic policies. that is something that has not deteriorated a lot. know.ers already they are fairly ok with what the government is doing in terms of economic policy. >> the second chart you show the us is consumer spending at restaurants. joe is into these indicators. the idea being that when people feel good about their fortunes they go out to restaurants. matt: you can see in the chart we had a big increase in consumer spending at restaurants. what stipulated a lot of that were those gas savings that consumers were going out to spend. you can see the white line is a three-month change. tot is definitely something

watch going forward. it is coming to healthier levels, but if it keeps falling it will be a real warning sign. that potentially, definitely the comparisons play into the back. the question is whether or not that flattens out going forward, you get that 2012-2014 average. thing that isig of crucial importance is inflation, we have the latest pce rating today. a lot of the inflation ratings show eight between -- a tip from the month before. monthw a tip from the before. >> if you exclude the small components that have these big outside the facts in these two months, then you have a much more subdued inflation picture. these big surges in

watches and jewelry prices in january and february. those are things that are steadily declining over the past several years. they had such big spikes some the fuel the overall rating? >> jewelry and watches, you don't think of it as being a big part of the consumer price gap. they were up enough to have a significant impact on core inflation. that is not something you would expect to be sustainable. >> you mentioned how the fed had mentioned consumer spending they a bright spot, are vindicated in terms of being cautious and not moving? matt: absolutely. looking at all this consumer data, if it continues to weaken, will they still be able to hold that up as a sign of confidence in the outlook that they can hang their hat on? at some point some of these measures are deteriorating to

the point where maybe that language has to get toned down already. we will see how the data plays out between now and then. hopefully we see things turning up from where they are at at this point. >> what is this current -- what is the current thinking on lower gas prices? we saw an uptick a while ago, but definitely fading. and: we saw that uptick, real consumer spending is still pretty strong, but it has been lasterating over the several months. does a flatten out from here, does it keep going down? we don't have a clear read on that. >> matt from bloomberg news, thank you so much. upt you need to know to gear for next week. we will be back.

scarlet: "what'd you miss?" berkshirennual meeting on saturday, it is always fascinating. it is fascinating listening to them talk about the markets and philosophy. people should try to pay attention. pmi,: china manufacturing -- on.m. on saturday area saturday. we were just talking about personal spending and gas prices. in other clue to that picture.

joe: we will see you back here on monday.

mark: with all due respect to ath to themp's p nomination, sometimes it looks like an obstacle course. ♪ ♪ mark: we will get jane sanders on her husband's campaign. tenthd cruz is one