scarlet: from bloomberg world headquarters in new york, i am scarlet fu. alix: i am alix steel. it is judgment day in brazil. the senate will determine if president dilma rousseff will face an impeachment trial. today's vote could end with her immediate suspension. scarlet: when you take a look at what is happening with apple, investors contemplating futures of the smartphone market. it may get worse before it gets better. much more from las vegas at the salt conference. scarlet: we have some breaking news. nissan is in talks to take control of mitsubishi motors. this is from nhk.

the sun is in talks to take control of mitsubishi motors -- nissan is in talks to take control of mitsubishi motors. looking at the share price, it is down 1% but there is no indication it is really moving given that volume is not really heavy. 14000 and 104 shares. is the share price of nissan pus american depository receipts. americansan's depository receipts. we will continue to monitor this as the news continues but we want to get more from ramy inocencio. ramy: taking a look at the major markets and how things are react in, not much here in terms of those headlights -- headlines. across the board, we are in the red, the dow is down the most by

about two thirds of 1%. this is off the back of what happen yesterday when we saw the best game in the markets in the past two months. today, corporate earnings is one of the big ways. 90% of the s&p equities have reported and in terms of earnings growth, it is actually negative on that sense, down 8.7% year on year. ratel concerns are another . i want to show you this about volume. this is the svs function. volume is almost lower across the board except for a little bit of an uptick in utilities. look all the way over here to your right-hand side. 69% and this is what is happening in consumer retail.

basicallyetail getting a huge bump in volume, a lot of this in terms of cells because some of the worst macy's,rs include michael kors. 10 of the worst performers are in retail. let's look at the s&p intraday. we are at the mercy of earnings, and earlier earnings we can see this drop off when the markets opened. we are also at the mercy of oil. we saw oil headlights cross when we saw that unexpected decline in oil and we saw oil rise, bringing up the energy prices. here we are back down. basically retail is the main theme of the day. alix: following those pretty disastrous macy's results and outlook. mark crumpton is in the newsroom.

: house speaker paul ryan is scheduled to meet in washington with the presumptive presidential nominee, donald trump. stunned the gop when he said he was not ready to endorse mr. trump. here is what he had to say. >> this election is too important to go into the election at half strength. that means we need a real unification of our party. mark: he was then asked about his interactions with donald trump. >> i let him once in person and 2012. we had a good conversation in -- and i would rather have a conversation in person than through the media, no offense. mark: p also described the butary season as "bruising"

called the gop the big ten party . a deadly day in baghdad where a series of bombings has left 93 people dead. a car bombing hit an outdoor market insiders city followed by and anothermbing .argeting a police station islamic state has claimed responsibility for all three attacks which has left at least 165 people wounded. the justice department will not the the death penalty for benghazi. federal prosecutors offered no explanation for their decision. in brazil, the senate may decide whether it marks the end of the line or president dilma rousseff. prosecutors are debating an impeachment resolution.

they give their approval she would be required to step down. she is accused of illegally tapping banks to hide budget deficits. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. scarlet: we are keeping our close eyes on brazil given that the senate will be holding its impeachment vote later today. this could be a dilma rousseff's last day in office as president. alix: the big question in the emerging market community, does this rally continue if dilma rousseff is voted sidelined for the next 180 days. it has been trading in a range from 2013 to 2014, and then you saw the bottom dropped out.

when the political crisis intensified. it closed at its lowest level in january since 2009. then you have this incredible sharp recovery. as the impeachment speculation coincided with the dollar weakening and oil prices stabilizing. you have a calm her macro environment to support this rally. alix: a similar story with the radel. this is the dollar versus the riel. the dollar is strengthening and the realities weakening. riel.y rally within the if you see a transition of government, perhaps the new government will be able to cut rates that will help stimulate the economy and help growth. that has been behind this rally. scarlet: let's get more on the ground perspective from anna

edgerton. what is going to happen today exactly? we know there is a vote scheduled for 7:00 p.m. local time but a lot of things have happened in the past couple of days to throw it into disarray. anna: the senate is already holding the session that is going to end with the vote on office. rousseff from the supreme court did not accept the challenge that the attorney general had filed yesterday. alix: the attorney was trying to get the impeachment vote on old. -- an old. -- annulled. there is a simple majority and it will go through. that means she would be sidelined 480 days. what happens tomorrow? anna: the expectation is that

formallywill be notified of the decision and the vice president will step in. he wants to name his cabinet as soon as possible so as soon as he is able to do so, he is going to name his ministers. scarlet: has he indicated what he is likely to do first once he points his cabinet? bea: his focus is going to trying to get the budget under control, and he is probably going to name a central formal -- a former central bank had as his advisor. he will also be able to choose the central bank president. alix: your group had a note out saying if the impeachment does go through, there's a 25% chance er himself will not

finish the term and there is a 20% chance that he will be implicated. have you heard something along these lines? anna: we have spoken with people involved in the car wash investigation and they say that the evidence against temer himself is not very strong, and it is unlikely that he himself will be personally investigated. his party however, is deeply involved in the scandal. the days leading up to the vote had been pretty tense. what are you seeing on the street? is there a prospect of violence if the vote goes one way or another? anna: it is much more calm than it was last month. last month, there were people in the streets and today it is empty. there is no one on the street

and the rest of the country, some labor groups have said they will block streets, start strikes, but i do not think it will be widespread. we have seen anything the last couple of days, anything could happen. anna edgerton in brazil. alix: more coming up on bloomberg markets. ♪

alix: you are watching bloomberg markets. i am alix steel. scarlet: i am scarlet fu. let's stay with brazil. alex joining us now is moromcew.

at 7:01 tonight does the rally continue? so, and that is because the vice president will have a narrow window to enact legislation and ken address some of the structural problems -- and can address some of the structural problems. scarlet: at the end of the day, isn't there a lot of doubt about his ability to continue his term because he can get implicated in the car wash scandal as well? to look atirst thing is who he appoints to his economic team. that will send a very strong signal to the markets. i will also caution that he has to be reelected in 2018. he has to keep the populace support. alix: could you make the

priced tohat it is perfection? there is a lot of room for that not to happen. alex: i think there is room for more. alix: how much more? alex: i cannot give you an exact number but if you show action and show that he is addressing these problems, that will give people confidence. there are a lot of fund managers who are still underweight resell. they have been sitting -- underweight brazil. they have been sitting on the sidelines, so i think we have a rally but sooner or later there will be a reality check. scarlet: what about your position, and what will you be doing tomorrow? alex: i have been country neutral as a way to balance out the volatility because we were have some of these 4% swings to the plus or minus and i thought, if i could eliminate that from

the portfolio that is a big positive. when i have been doing in the stock selection is going more , because i high beta think there is an upside. tomorrow morning at 8:00 a.m., are you going to be buying? do you shy away from the volatility? alex: i have already bought so i'm hoping to ride the rally. one of the bugaboos and brazil is inflation and inflation is coming down. of course the strong rail helps so is there -- so there is scope for the central banks to cut interest rates. scarlet: that could be a catalyst, but when it comes to companies fundamentals matter. how much can they gain traction in improving their fundamentals when you have a government that is completely distracted by a

problem of their own making? this is why we try to look for companies that would do well despite what is going on in brazil, who are not dependent on regulatory change. , a credity is clo card merchant firm. you think if the economy is weakening, retail sales weakening, that they would be doing poorly. they continue to execute well. another is a private education program. schools remain of mixed quality so there is a call for private education in brazil. scarlet: and that does not change if dilma rousseff is president or not? if we do want stronger economic data in the u.s., what does that do to offset the brazil rally? alex: brazil benefits more from

a weaker dollar and a stronger dollar but i would think people would be more focused on what is going on internally them looking at a global macro. scarlet: the gains have enough foundation they can stand on their own even if the dollar starts rallying? alex: i think so. scarlet: global manager at tiaa global asset management. alix: making the business case for lgbt inclusion. we will speak with kathleen anelius who is working with organization to make that case. ♪

scarlet: this is bloomberg markets. i am scarlet fu. alix: we are going to turn to the business case for lgbt inclusion. there has been huge fallout from

a north carolina law. school, oro ucla law than $60 million in business has been pulled on the state and this week, lgbt advocates are discussing this issue in new york. scarlet: joining us is kathleen sebelius, former head of the health and human services. we want to start with you, todd, because you guys are in town for the sixth annual out conference. mentioned is pretty large in terms of potential income lost. todd: the williams institute partnered on this research and there are a couple of key components. it is about $4.8 billion, and it is federal. it is the dollars the government gives to north carolina that they are risking.

$60 million level, has been lost and $35 million are in jeopardy. in the 46 days since this law has passed is about and 84,000 dollars loss every day. alix: are there other cases where you have states who have done something similar in passing a discriminatory law? what is the lasting economic impact? todd: it goes not just from the businesses but from the talent, and what we are seeing from the state it is very scary. almost 10% of youth in north carolina identify as lgbt and 40% are contemplating suicide or have contemplated suicide in the last 12 months. it is not just the dollars and cents that make an impact but it

is the talent and citizens of north carolina that he is putting at risk. former governor, the reputation of your state is very important so business leaders who look to locate a new call center, who are looking across the country for an environmentally sound place to do business, do people want to live here, what is the overall atmosphere? this could have a huge negative impact. we heard about how deutsche bank has pulled back from the state and other companies are likely to do the same. there is a different -- the difference in the leverage that multinational companies have as opposed to local businesses. todd: many local businesses have stepped up to say this law is bad for them. the williams institute looked at 34 out of 100 counties in north carolina get more than 1000 jobs from tourism.

residents say this impacted negatively the reputation of their state. kathleen: coming out of kansas, north carolina is the best in line. sports organizations are very leery of any overt discrimination. they will be very leery about this kind of reputation, so it can have an impact up and down the line. hence choosing to go to college in a different place, workers choosing to live in a different atmosphere. i think the impact could be on business, on students, on reputation, and on tourism, and that is huge. alix: we have to ask about the affordable health care act. we have learned some things, a foreigners -- insurers are pulling out of some states and premiums will go up. with those things in mind, can you say the aca is still a success? kathleen: i think it is

absolutely a success. about 20 million people have coverage that did not have it when the law went into effect. the lowest uninsured number ever in this country. they arests, while rising, are rising at the lowest level in 50 years. the new markets are fairly fragile, no question about it. insurers are moving in and out. one said they were pulling out of a couple of different markets. other insurers led by anthem say they are actually expanding their marketplaces so i think you will see some push and pull over the next couple of years, but i think the law is working to provide access, provide coverage, and keeping costs at an all-time low. scarlet: donald trump has already said he would repeal the affordable care act. if you were to advise the democratic candidate, how would

you suggest they improve or change the affordable care act? kathleen: stabilizing these marketplaces is a big thing. about wheredebate the subsidy level should be, how far it should go, are really legitimate issues that could be tackled that frankly, in the six years since the president signed this law there has never been a congress willing to work on improvements. i look forward to that day with the democratic president. alix: kathleen sebelius and todd sears. withet: we will be back more bloomberg markets, including our mystery stock. ♪

scarlet: here is the church and here are the clues. a fashion faux pas. alix: macy's? the gap was yesterday's news. passage of time hasn't been very kind. there you go, fossil. scarlet: again? we talked about it in yesterday's after-hours trading. ramy: stocks are falling hard. we are down 20%. we can see this really fast drop in the past day or so because of withhas been happening what is basically a slowdown for fossil. the stock is down 27%. it had been down as low as 34%, clawing back a little bit of the stock aired but this is its

biggest fall in five months. first quarter eps missed estimates. and the second-quarter guidance to $1.80. other watch retailers are also falling. movado group group down 10%. time versus may be technology kind of thing, especially with the rise of the apple watch. scarlet: my kid doesn't wear a watch at all. let's get to bloomberg's first word news. has: donald trump says he narrowed his list for a potential running mate to five or six people. publiclso against taking money to fund his campaign.

the senate measure aiming to undermine the obama deal with iran. heavy water isn't radioactive, but it has research and medical applications and can be used to produce weapons grade plutonium. sayseat from a top aide there will be a surge from turkey to europe. dealy was offered a visa in return for agreeing to take back refugees.

alix: let's go to las vegas where the sky bridge alternative conference is underway. david weston has an exclusive austan goolsbee. david: thank you. thank you for being with us. this is my first question. we hear these fed presence coming out almost every day saying don't rule out june. we might hike. but markets will have none of it. view, the fed kind of ,stablished this fantasyland but a credible fantasyland in which, for 30 quarters in a row, they've been saying next year conditions will be really strong and we are going to raise. and then the data comes in and it is not that strong.

and they say, well, we won't raise yet. we will wait until next quarter with the forecast says we will be great and we will raise. now we are back on that cycle. david: you advise the new york fed. in a way, the new york fed has been better than the board offeds are the governors. i think it is because -- the fed is not alone in this. i think it is mostly the forecasting models are fundamentally about reversion to we predict the future will look like the past saying ind they are the model implicitly, when house prices go up, the data from the 2000s tells us that people spend housing starts will skyrocket and the economy will come booming back. 2006 is thepened in

thing that is abnormal, not now being the thing that is abnormal. david: if you are running a company and you had a model that was running the norm -- the wrong numbers, would you change the model? austan: the job of forecasting the economy is a miserable, horrible job because fundamentally there are a lot of things that are not just repeating history. so the job is not easy. our said, if you are, in language, serially correlated errors or 30 orders in a row, you've got to change the model in a row,quarters you've got to change the model. whatever the model says, subtract a hundred basis points. that's where we are with the

thread. and then there is a group on the fomc who i think legitimately believe we are on the cusp of a inflation.ve i will say, for 30 quarters in a row, they have been saying the same thing and they have been wrong. i don't think we are all about to overheat the economy. david: that is the question. there is a 2.5% annual increase in wages. should we be at all concerned about inflation or put that to one side? austan: i think we should put that aside until we see some inflation. first of all, thank god we are finally seeing some wage increase. we have gone 10 years plus without a wage increase. it doesn't make sense in a historical context. chicago -- charlie evans say just last week they

thought -- the fed should try to overshoot on inflation. i actually agree with that. we learned over time that fred -- said credibility matters quite a lot for taking inflation expectations. and the fed has been saying year upon year our target is 2%. and then they hit 1%, 1.3%. i think to repay expectations, you've got to get above -- you've got to show to the market, to the world that you connect to get to the target and not take seven years to barely inch your way to it, but say 2%, we when we are going to get to percent or more. is the course set on weakening their authority? austan: i think it already happened. we have been going for 6, 7 years of the same dynamics,

where their forecast says it is going to be good. they say we will have 2% inflation and then we don't hear -- don't. i think that has undermined them somewhat badly. i think it has affected them some. road,the rubber hits the the problem that raises for them is that, when they change something and the market won't believe them. that is the case like now. they are saying we are going to do june or we are going to do september -- don't rule out multiple raises this year in the markets is, i don't know. all that undermines their ability to use this as a policy to influence the economy. david: in fairness, all they have is monetary policy. let's put you back in your old job, chairman of the council of economic advisers.

what is the one thing you would recommend to the president to do right now to get the u.s. economy growing? i'm going to say this and it will sell like a weird thing to say but i do think it is right. i think that we all, president, congress, everybody needs to get out of the crisis mentality. this isn't a crisis. when you are mean, in a crisis, you usually say everything to the side. we need to figure out how to jumpstart things and next six months. i think with the economy needs now is a little more focus on the medium run than the next three months. for some people, it would be investing in the economic infrastructure. interest rates are low. important,t can be but i don't see how you can look around the world and not recognize that investing in your own people skills and capabilities is the most important thing long-term for

the united states. education, training broadly defined. david: but that would take 20 years. it would take some number of years. it is not a two or three month thing. i think we ought to be paying much more attention than we are, as the market or as the government, to the events in china or the events in europe. there is a dark heart in each of those scenarios that can be pretty tough for the u.s. david: china, give us a look at that dark heart. austan: you know you cannot really rely on the government statistics. the numbers are probably overstating how well the economy is doing in my opinion. they have had an investment-led growth model for the past five years. those do not end in soft landings. that is not how the end. you go until people say, oh, we have massive upper -- massive

overcapacity and things all apart. issues associated with the rise of debt and whether they can roll over these debts and what it implies for the banking system, that is the dark heart. it is a good thing that china has a massive amount of reserves because i fear they are going to have to use a lot of reserves to prevent that thing from morphing into a horrible financial crisis. david: as we just heard from bob rubin, he is more concerned about the degree of uncertainty, not knowing the plus or the minas. austan: that is also -- the plus us.the mina austan: that is also a thing. if the world in the market starts believing that donald trump might win, this political uncertainty will start flying off the handle. trump has been calling for non-judicious, to be generous.

uncertaintytical could become a big issue, too. david: a bigger discussion for another day. thank you for being with us. alix: thank you so much, david. and thanks to austan goldie. -- austan goolsbee. more great have interviews from the conference later today and tomorrow. this afternoon, tiburon pickens. tomorrow, jim chanos and michael lewis. ♪

alix: this is your global business report.

scarlet: left anza is lowering lowering itsnsa is -- sites, scaling back expansion plans. we start with disney, whose latest earnings are stoking the latest media fears. profit from the abc broadcast operation declined. this marks the first time disney has missed analyst estimates in five years. alix: mitsubishi mortars is blaming -- it's a be she motors overstating -- nine more models may not have been properly tested.

move cons is scaling back its own expansion plans. is scalinglufthansa back its own expansion plans. travelers are delaying the things because of the fear of terror attacks. the european central bank could discuss restoring greek banks' lending lines as early as june. a new waiver on the junk rated debt will probably be proposed by the ecb board wants the staff level agreement between the government and auditors is reached. and now to the latest debate over the potential grexibrexit. brexit would heavily impact the british people. look at the wave of opinion, it is overwhelmingly the case that the people that look at the case for leaving the eu counter the conclusion that

it would make the country tour and the individuals in the country poorer, too. time now for a bloomberg quick take where we provide background on topics of interest. apple sales drop for the first time at the start of 2060. at -- 2016. apple never adjusts its prices to match competitors. he poured resources into divide and conquer customer service. the iphone, one of the most profitable consumer products ever. it made up two thirds of apple's revenue, which raised concerns that apple has reached the limits of iphones growth. here's the background. apple was founded in 1976.

to became the first personal computer to achieve mainstream success. ther he was ousted in 1995, company lost market share to windows pcs. in 1997.rned a ceo he cut 90% of existing products, focusing on just four. apple-compatible itunes music store which is an internet sensation. today, more than 1.4 million u.s. developers have created ads for iphones and ipads that have been downloaded more than 100 alien times. here is the -- 100 billion times. here is the argument. tim cook has not strayed from the one block buster -- one blockbuster at a time model.

switch to services is a decadeson made famous ago by ibm, the company that steve jobs loved to hate. alix: much more coming up on apple. what the latest results from key suppliers are predicting about the future. ♪

scarlet: let's head over now to abigail doolittle live at the nasdaq, taking a closer look at apple shares. abigail: today, we have shares of apple trading demo slated one of the top -- trading down slightly. feweris attracting

first-time smartphone buyers good one analyst believes the by 14% inll grow 2017. but there are two currents left in the current fiscal year. things could just get worse for apple before they get better. alix: the last time i looked at the chart, you said shares were holding the support line. abigail: apple is still holding the support but just barely holding, very precarious. investors do see compelling value at those levels, but they appeared to be growing tired or losing resolved as the current lows are slyly below the lows in january and february, telling us there could be some bearish action ahead for apple. scarlet: thanks so much.

there is another sign that the smartphone slowed and maybe going from bad to worse. on andsuppliers in asia have an early look at what apple could be facing. what did you learn? things that has been happening over the last few years with a the iphone cycle is you used to have a low before the new product launch. and the expectations rose the installment of the iphones rose, the lull guard extended. the preceding quarters are kind of week. scarlet: the next apple launch will be september? time for then

calendar fourth quarter here in the united states. alix: so what are suppliers say? anand: in this particular quarter, you had a weak first-quarter, but the demand for the second quarter, the second calendar quarter was much .eaker than anticipated the guidance was week so everybody is taking down production numbers. the question is what happens to the quarter before the launch of the iphone 7? that is most likely going to be more the same, continued weakness. ahead of that, you are seeing supply-chain weakness ahead of the iphone 7 launch. -- let: hasn't anand: you have to think about the size of the installed base in the size and scope of the they usually pick one or a secondary supplier for

commodity parts. but important key elements of the iphone is usually just one supplier. alix: is there anything to be learned from the weekends -- the weakness and guidance in the second quarter that there will be demand later? anand: it is hard to extrapolate good if you are early in the cycle and this is the intelligence you gain looking back rather than looking forward. just because something is we can -- week into the quarter, the features on a relative bases are of her -- are underwhelming. what is the new thing that apple can do that can dramatically expand the scope of the first time iphone buyer? the android switcher? wer switching to the high-end? the first time apple buyer has to have a $650 money in the wallet to be able to for that.

and then the android to iphone dramatichas to be feature differences. usually people are locked in. there will be modest shifts from one to the other. newtell me what propels the iphone switch? scarlet: thank you very much. alix:alix: coming up in the next hour, to conversations you don't want to miss. will be talking about his latest short position. plus the chief executive of expedia will be joining us on the latest earnings report. ♪

scarlet: welcome to bloomberg markets. ♪

scarlet: from bloomberg world headquarters in new york, welcome. u.s. stocks lower right now. the s&p 500 declining for the first time in four days. alix: a glum outlook from macy's raises concerns. of --twork is the target capital management. to the chief investment officer about why he is betting against the company, which reported better-than-expected earnings less corner. scarlet: expedia flying high these days. like airbnb and big hotel chains, investing in their own technology, is expedia do for a hard landing? head over to the

markets desk where ramy inocencio has the latest. ramy we are crawling along at session lows over the past few: hours. the dow is down the most by about three quarters of a percent. -- thedaq is the biggest least of the laggards, down about a third of a percent. the what a difference one day makes. yesterday, we were talking about the biggest jump in the market. the markets are now taking a u-turn. global concerns being one. let's take a look at the imap function. i want to show you basically what has been happening over the course of the day. right now, energy is the biggest weight, up by a third of a percent after we got a surprise fall in your supplies for oil, down by about 3.4 million

barrels. the biggest weight is on the bottom. consumer discretionary down by 6%.most, down by retailers falling on earnings. that includes macy's, michael cores and even high-end stuff like tiffany's as well as nordstrom. energy, we can see chesapeake energy is up by about 6.5%. this is its biggest jump in a week. up by nearly 5%. that is the biggest jump in two weeks. switching to retail, online retail, i want to show you what is happening with amazon. a couple of days ago, the share price pushed past of the $700 a share mark. right now, it is up by about 5.3%. in the past day or so, it has jumped about 2%. but year to date, the stock has jumped by about 50%.

that was before the company announced the $5 billion share repurchase. let's go ahead and take a look at commodities. or let's not take a look at commodities. we will hand it back to you guys. scarlet: good stuff. thank you. alix: let's get to bloomberg first word news. mark: house speaker paul ryan says the white house is within the gop's grasp. he had republican leaders meet with donald trump. ryan spoke to reporters. >> to pretend we are unified without actually unifying, then we go with fault -- we go into the fall with half strength. we need a reunification of our party. ryan stunned the political world last week when he said he wasn't ready to endorse donald trump's presidential bid him drop is in -- presidential bid.

trump is in a virtual dead heat with clinton. reuters has mrs. clinton leading trump by 13 points. lawmakers in italy are debating a bill to give rights to gay couples. it falls just short of giving of adopting gay marriage. scarlet: thank you so much. the first quarter, hedge funds were the largest since 2009. alix: but one of the biggest managers says the hedge fund industry will indeed thrive again. vegas, today from las david rubenstein told erik schatzker about his expectations

for a rebound in the industry. industrye hedge fund has grown into a gigantic industry, more than three -- more than $3 trillion in the industry. probably the same size of the private equity, slyly bigger. people are investing because they want higher rates returns. with lower rates on bank deposits and equity funds. problemsds have had this year. but people will realize that you have very smart people, highly motivated alongside the investors and is slightly they will do pretty well over a longer period of time. : is $3 trillion to much money? being a lot more is invested outside of the united states now. it does seem like a lot, but not compared to the size of the total money under management.

a locked inis not that context. what you have a preview of the others are experiencing. are you surprised by the size and scale a redemptions and the losses that hedge funds have experienced lately? david: the last five quarters, i more.you have seen money has been taken out of the industry before. will thrive again. i can't say unsurprised, but it does seem surprising that some he macro people got it wrong, or at least so far it seems they have gotten it wrong. but many of them will do pretty well in the future. erik: outside the carlyle run, heavy contemplated further diversification into other things as a way to profitably grow your assets under management? david: we have a number of businesses we are considering adding to the firm. i don't want to advertise him

right now because they are not fully formed yet. they have good ability to attract people who can manage funds very well. we do think we have the ability to add value to them so, we will continue to grow in different areas. erik: what kinds of things make sense being added to a carlyle? david: let me give you an example. right now, there is no gigantic infrastructure business among the global private equity firms. they all have really good real estate businesses, good hedge funds, buyout funds. none of them has yet a dominant position in infrastructure. it might be profitable for one of these funds to build a good infrastructure business. erik build it or buy it:? david: it might be easier to build it. we already have an of her structure fund to many of our investors around the world think that infrastructure will be a very attractive in the next couple of years and we do, too.

erik: i want to ask you about energy. you have 65 people working on energy. what are you waiting for? david: we are investing. we do think prices are down and are relatively low, but they are going to come back here we think oil prices will eventually come back. we don't know when. but carbon-related energy is one of the rest areas to invest in one of the best areas to invest in the world. the cycle comes back, which i think it will the next year or two, you will see the appreciation in assets and we can buy things at relatively low prices. /20.sight is always 20 erik: you have $12 billion to invest. house in before you spend?

it is for investing, not spending. we are doing deals now. erik do you like lending:? enp? downstream? david: it's like asking which children i like best. them. all of distressed energy is probably an attractive area because there are a lot of distressed energy credits. distressed debt will be attractive as well. i think the e&p market will thrive, so you should probably buy assets now. i think oil will go up. oil will get somewhere in the $70 range at some point in the next year. the production is not going to increase in demand will increase. as a result of that, prices will go up. erik: what is your view on brazil? the impeachment vote is taking

place today. it would immediately remove the president from power. david: for 180 days, i think it is. we are a very large investor in brazil and we have a lot of investments there. we do think the economy has been very challenged. the currency is down more than 50%. it is the biggest recession they have had in 80 years. it is likely to get better. it can't get worse. even if they shut down all of these investigations into corruption? david: i don't think it is likely to get worse. i think the worst has happened and resulted in the trend is positive. -- has happened in brazil. and the trend is positive. still ahead on bloomberg markets, shares of stables and office depot falling

sharply. at theseake a look companies when we return. ♪

alix: you are watching "bloomberg markets." scarlet: let's go to ramy inocencio. ramy: the retail sector has been one of the major themes for today. first off, let's go to shopping malls and shopping mall reits. we can see a general read for

properties. the idea is, because of the fall in retail sales we have been seeing over the past quarter or so, lower foot traffic could potentially mean there might be a hit for companies that actually hold real estate investment because companies may not be able to pay their rent. high-end retailers are taking a hit right now. basically, if it is more expensive, they are getting more of an impact. heren see a reflection with coach down nearly 5% and tiffany & co. down by my than 5%. finally, if you buy it, it probably will be affected in this current down retail climate . it also includes automobiles. autozone down 1.6%, as well as o'reilly automotive. these stocks down the most in two weeks. autonation down by my than 2%. good stuff.

thank you very much. alix: we are also watching shares of staples and office depot. they are calling off their merger after a federal judge blocked the deal, saying it would create an unrivaled giant. scarlet: let's put it all together. ed hammond joins us now. thathe government consider the biggest competition for both of these players is amazon, not each other. head: the landscape has changed fundamentally from what we do. amazon really is the true unrivaled giant. the argument the government it's not the retail consumers, people like you and i going in buying stationery that don't have the ability to [indiscernible] it is the large corporate customers. if you are bloomberg and you are buying a large amount of

stationery and you are buying amble can on time, then they struggle with that. depot serveoffice that market. by putting them together, you limit that competition, the ability of those clients to get separate business. alix: what do they do now? these guys were barely hanging on for survival before the merger. unreal. ed: in all honesty, there is it much they can do. usually, there is an alternative. they can do a buyback or something. but for these companies, this was the deal. this was the only real deal left for this industry. government saying this is maximum consolidation, there is no more biggest to be done here.

scarlet: does it seemed possible they shut down their retail presence because amazon has he never once completely and they can just focus on the enterprise business and do it online? ed: that is there argument. if they are left to their own devices, they will be consumed by amazon and then there will be no staples or office depot's. think reaction today says a lot about that. both of them are down double digits and it looks like it is going to get worse. hughes pute bigger on some cost cuts and they were looking to merge with halliburton? ed: i think these companies are maturityt in their where they have done anything they can in terms of sort of rationalization of the individual companies, cost savings, and i suppose an online say presence as well.

it is difficult to see what they can do to improve their cost set. scarlet: the government seems extraordinarily active in blocking these deals. do you think it is imperative to act and before there is a new president? i think we have seen this large, very very ambitious deals in the past, particularly in the past two years. there are industries where there is already a lot of consolidation. the government happened to react. we are seeing this reaction, but not because we are under a pretty regularly stringent government is in, but because of the kind of deals being

attempted in this probably would happen under any administration. another company struggling, macy's. the retail not optimistic about the rest of the year. is the famous department store in trouble? ♪

scarlet: shares of macy's tumbling to a four and a half year low after the department store company cut its four-year forecast and reported a first-quarter revenue that missed analyst estimates. with today's selloff, macy's is down my than 50% since the start of 2015. you can see its performance against the s&p 500, which is up in comparison. weakness in sales is driving macy's underperformance.

you have comparable sales at 6% last quarter, marking the fifth straight quarter of declines. macy's is suffering from a slowdown in traffic. shopper traffic & mortar stores has been falling since the first quarter of 2012. most analysts see little chance of a sudden turnaround. an order to match the lower sales volume, macy's is tricking its store count. 870 macy's,has bloomingdale's, and bloomberg -- macy's and bloomingdale's stores. is taking star boards advice saying that it is evaluating proposals from potential partners for joint ventures. macy's hired to real estate executives. according to star wars presentation from january, macy's real estate is worth almost $21 billion, double macy's current market cap. the test the disappointing

outlook is a part of the broader look in retailers. here to talk about macy's is shannon pettypiece shannon, what was the biggest and out of this report? shannon: i think scarlet did a summarizing things. a lot of it was with the weather argument. weres not cold and people buying less codes. some were blaming tourism. i think the big reaction today is because there was no more excuses. mall traffic is down. the dollar is what it is. tourists are not going to be spending more money here. and we've got to evaluate our situation. we've got to evaluate our real estate and they cannot deny the problem much longer. the floor came

efraim below them -- the floor came out from below them. shannon: gap has been struggling. there were analysts who downgraded target today. there is a broader problem with the u.s. consumer right now and there has been this shift away from traditional apparel, traditional brick-and-mortar stores, people going online, but also people spending the money on experiences. travel is doing great right now. the airlines are expecting a record summer. not to mention all the other factors and heating for that little increase in pay that people are getting, like health care, like rent. so the consumer has a little more money you what will they do with it? pay healthse it to care, rent, paying off student loans, paying rent. macy's anding to jack or to an edgier store or a store that has a fun shopping experience were just go online?

where it's more convenient or go to the best deal? alix: so what does macy's do? shannon: these activist investors have to look at their real estate portfolio more carefully. something they didn't want to address early on. seems like that is something more they have to do. all the retailers are trying to make errors towards more of an earring. it will. and you and merchandise if you scarlet: norstrom's at off-track. does macy's do that as well? shannon: nordstrom's wasn't doing great either. and there are all these retailers tied the malls in malta affect -- mall traffic has not been great. cut the junk by fitch.

shannon: i think analysts expect them to make. -- then to make changes. scarlet: thank you. much more to come on bloomberg markets after this. ♪

bloomberget's get to

first word news. mark crumpton is in the newsroom. mark: north carolina's so-called bathroom law could cost the state $5 billion annually. the study found the state code lose nearly $5 billion in federal grants and contracts, in addition to the 40 million in business investments already withdrawn. u.s. has block a republican measure and at undercutting president obama's nuclear deal with iran here and senators stopped unamended -- an amendment that would stop the u.s. from buying anymore iranian heavy water. prince twicer. saw in the month before his death. a search warrant revealed that on doctors saw the musician april 20, the day before he died. the physician came to the

singer's home the day of his death to reveal test results. federal and local authorities searched his estate earlier this week. there will be a surge of refugees from turkey to europe if the european union doesn't allow turks to travel to the continent without a visa. turkey wants the visa deal in return for taking back refugees. nine nepalese guides have reached the peak of mount everest, the first in two years after years of disasters. nearly 300 foreign climbers and their gods are attempting to summit everest this year. alix: and it's been hard times

for hedge funds as of late. outflows in the first quarter with the largest since 2009. it may be a hard sell for wall street. insurersis driving into hedge fund holdings. mike: our survey covered sim internal and dollars in assets. the global industry is about $25 trillion in assets. our survey represented about 30% of the global assets. we think the results are supportive of where the industry is heading. it is a global survey, as i mentioned. we had over 20 different countries in the survey, 276 companies. and we had led companies, property-casualty companies, health care companies. i think the biggest take away, the biggest surprise to us was the fact that, this year for the first time in four years, the industry turned more optimistic.

being optimistic doesn't mean that the return its dictations are higher. in fact, their return expectations are lower. but this year, for the first time in several years, we don't have some major macro event that is looming over the marketplace, greece, collapse of the european ranking system, united states losing its aaa, potential default on the u.s. government debt. this year, there are a lot of concerns, but an absence of a catastrophic concern. >> how much of the positivity has to do with at least for the u.s. market a theoretical return to higher rates? mike: i don't think that is particularly that of you. for views on ten-year interest rates and there is belief of a modest increase. 25 to 50 basis point over the course of the year. that hasn't panned out yet. we asked about equity returns, a

view toward muted higher equity returns. but the view is not that we are going to see significantly higher interest rates, which would be quite good for the industry. i look at this bond market and everything the morning there yields juste on grinding ever lower. where on earth do you get yield in the bond market at the moment? jonathan, i have to tell you that is the single biggest concern for the global industry. if you think about it, the basic business model is i write an insurance policy, take the premium income investor premium, i get a return -- jonathan: your hope. mica: and use it to make my claims payment. as bonds come down, i'm getting less and less return for taking the same amount of risk in the same business model. so it is a real erosion of value for the insurance industry. the insurance industry favors

like pension plans and individuals and they are gay less and less return. >> you want to buy things that have similar shelflife. to john'sback question, you definitely describe the problem. but what are they doing? too heavy inequities like we saw in the last bull market. and to that in two ways. jonathan, you referred to europe with negative interest rates. we now have negative interest rates in japan. these companies in these countries are really in search for return. many are coming into the u.s. will -- u.s. corporate bond market, the u.s. treasury market, and the u.s. minutes bull market, buying these assets and providing a positive return relative to what they can get in their local markets. for u.s. companies, the story is a little bit better. we don't have negative interest .ates as yet

but it is forcing companies to search further and further away from their core interests, which is fixed income, which is ,quities -- into equities private equities, commercial mortgage loans, and market lending. scarlet: that was mark siegel. let's turn to canada where wildfires are still whipping through the alberta region, moving eastward ontario. the situation does now not appear to be as bleak as initially feared. scarlet: jamie surgeon from bloomberg tv canada joins us. tell us how effective the producers have in and the timetable to get production levels back to prefire levels. jamie: virtually all of the

facilities are unaffected. about 93% of the facilities that uperienced shutdowns ended safely. there were able to shut down in an orderly fashion. able to return to production in a fast manner. tocor will move workers back the work camps to get production back to where it was before the fires. .lix: i see many estimates most analysts seemed to think this will go on for about a week to two weeks. . what is the total economic of location for something like that? -- thethe output levels one million to 1.1 million is probably the most accurate. looking ahead, it is difficult to say what production is going to look at. off-line at 1.1 is the moment. that will gradually build up over the next few days.

that will have an impact on north american inventory levels are in from an economic perspective, it will be a big hit from a national perspective for canada in the second quarter. but in the full year, economists with 10th of a point growth coming in at about 1.7% versus 1.7% in previous estimates. so not a major economic hit from an annual basis, but definitely in the second quarter. it is going to show up in the numbers. so there will be an impact, but not necessarily enough to make the bank of canada make a move. is weighing a lot of different factors at this point. but a 10th of a point is not enough to move the needle on sunday like a rate cut. alix: what does that do for inventories here in the u.s.? canadian oilof goes to cushing. if these outages go on, we will have to see stock draws in the

u.s. and that is a big step in have -- in helping to rebalance the market. jamie: right. analysts are saying the big hit to the inventories will come next week. we will get a much clearer picture on what the upper level is like from the oilsands the week after in the week after reports thosea numbers. so it is a way and see picture. but wti will feel the effects of this for a while yet. scarlet: thanks so much for joining us from toronto. alix: coming up next, we will expedia.the ceo of we will be digging into earnings and the travel industry outlook. ♪

scarlet: this is bloomberg markets. alix: it is time for the bloomberg business/. -- business flash. attorneys -- don blankenship attorneys want him to delay entrance to prison. scarlet: nissan is in talks to take control of mitsubishi motors. more than $1.8st billion in the automaker. sales in japan have plunged since the company admitted overstating mitsubishi feel economy totals. alix: heading back to earth with

samples after one year. it is bound for an afternoon splashdown in the pacific. the caps on had been at the station since april 10, dropping off supplies as well as an expensive -- an experimental inflatable room. scarlet: let's head to the markets desk with rami inocencio. ramy: we've been talking about retail most of the day. about going to talk things happening in the nonretail sector. winners,of earnings let's head over to the biotech space. put my biotechnology is up by nearly 10%. it is rebounding today after falling about 19% yesterday. the rbc says there's no reason

for that plunge after the first quarter earnings. they were basically in line with estimates. and blue buffalo pet products also beat their first quarter earnings. a lot of people are buying more pet food. their guidance for the eps as well as their sales for the full fiscal year. let's move on to solar stock, also getting a boost right now. most -- is upthe the most. one of the reasons is they are bouncing back because the super major oil companies are dipping another few toes into the proverbial green waters of environmental energy. for example, solar city yesterday fell to 21 per's -- fell 21%. but deutsche bank as well as credit suisse are created --

reiterating their call for a buy. finally, while solar is shining, the's head over to burgers, a little bit of a bust here. that is in part because of what is happening at wendy's. wendy's has fallen by almost 7.5%. the fast food company is warning of a sales slowdown in the second half of this year. this is its biggest falsehoods 2013. it is blaming a cool spring in the u.s.. coolact that there is a spring, they are blaming them for the slowdown in sales. jack-in-the-box, and restaurant and restaurant brands, which owns burger king as well as tim hortons all download on the order of 2% to two point half past 2.5%. alix: expedia has been flying

high since better than expected results due to homeaway and strength in foreign currencies. but with competitors like airbnb investing in their own technology, how long can the vacation last four expedia? ceo, darathe khosrowshahi. we are seeing consolidation on the supplier side now. what does that do to your business? dara: i think the great thing about that travel market is that it is such a huge market. this is a $1.4 trillion marketplace. so there is lots of room for lots of winners out there. our growth is very strong. last quarters 37% and 24% organically. as long as we continue innovating and building great products, as long as the travel business gives going online, we will get more than our fair

share. of innovation, big hotels are also investing in their own technology, trying to take out the middleman, i.e. you. how do you fortify us against that? dara: we spend over $800 million in technology on a nano basis. we are a tech company. we don't run hotels. we don't run airlines. that is all we do. it allows us to innovate more than the other player out there. what we really bring is a breath and depth that is unrivaled. i was looking at one of the hotel websites on a search for paris hotels and they have 17 hotels available in paris. but a semesters for us, we have 2300 hotels. there is no place you can go to get the complete picture of what is available and with the best pricing is. that is what we bring to bear. i like the you put it that you are a technology company now. but some would say you are a legacy tech of a because there

are startups entered additional take up his like google trying away.e your business how durable do you think charging big premiums at a hotel is? will it last another decade, two decades? 6 dara: as long as we keep bringing visitors to our sites -- we have more than 450 million visitors coming to our sites each month. as long as we kick innovating, -- as long as we keep innovating. bigong as we've got the brands and the visitors, as long as we keep investing in technology as we are, we can stay ahead of the pack's. you combine it with some smart equities like him away for a great accommodations deal, that put things forward for us. scarlet: can you quantify how much of your cash flow or or earnings you will be investing in r&d and technology? dara: on an annual basis, we spend over a hundred million dollars in technology and over a

billion dollars in marketing for the various brands out there. audiences we keep this , as long as travelers to coming to our brands to search for the broadest array of goods and services out there, i think we will be doing great. that investment with loyalty programs -- you look at hotels.com, if you book 10 hotels on hotels.com, you get one free. it doesn't matter what brand. so we are investing across the field. that is leading to the kind of growth you are seeing out there. alix: that is serious investing to continue to grow. talk about your margins. ibitd -- into -- our our margins have come down because we have been investing in the company aggressively. but we have more than made up for it in revenue growth. we have taken our margins down

that we charge hotels. we have taken our profit margins down. the internet is all about scale money. to saving , so we are helping our hotel partners and our air partner save money and we are helping her consumers save money. and we make up by scale and the growth good scarlet: dara khosrowshahi, think you so much, the ceo of expedia. will we see $20 to $40 oil in the next three to six months? jeff curry gives us his call. ♪

to 24t: in the last 18

months, the price of oil has been dictated by supply, not demand. there have been so many disruptions. alberta, kuwait, nigeria, labia. alix: we asked currie jeff currie -- we asked jeff currie why oil isn't at $50 a barrel. jess: most of them are transient, not persistent asruptions that can create rebalancing that draw inventories. ,ntil we see evidence of that we will start to see u.s. reduction falling off sharply enough to tip this market into a sustainable opposite. until you see that, it is difficult to take a very strong view on oil.

>> what are some historical examples we can look at that might be analogous to what we are seeing now in canada and nigeria? jeff: that is a great question. the biggest pushback we get from kleins that these are transient disruptions is that there are so many of them. when we think about strikes in kuwait or civil unrest in nigeria, is this a random event or the cause of the lower prices? notn't dismiss this as being -- there are too many of them to say that they are idiosyncratic one-off events. when we look at it historically, you typically find that these periods under stress, you are running these platforms longer than what you normally would, which creates the need to take them down for maintenance longer. i don't want to completely dismiss this as being completely independent of the price environment.

,owever, i just don't see it again, pointing to the fact that we are looking for the sustainable deficit. -- : that there this idea is a limit to how much a mentor you can have. oil does run out. if you close the well, it is over. you could literally store gold bars in your closet. you could store oil but it would be challenging. scarlet: we have a guest on housing. saysen king of barclays that the new american home is streaking in size. if you look at the square footage of the average american home, it has not grown in the last decade.

with millenial's getting to the point where they are buying homes for the first time, that has huge of locations for the industry. joe: i'm excited about this charge. the dream of homeownership is over. people are buying homes. it is just different than what they look like the whole -- before. scarlet: it is not in suburbia. alix: i want a 900 square foot apartment. i want to do that. in the next hour, we will go live to the salt conference in las vegas. we will hear from t boone pickens about why he will support donald trump. ♪

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david: from bloomberg world headquarters, i am david gura. u.s. stocks falling after the biggest gains in two months. the dow losing 150 points after we can earnings from macy's and cap, now talking about the strength of the consumer. over 3.5%prices today. andet the price outlook production. all is not well in the magic kingdom. shares of disney tumbling after the missed estimates for the first time in five years. the markets close in two hours. ramy inocencio has the latest. ramy: we are at session lows. ,he dow is down 260 points