scarlet: good afternoon. i'm scarlet fu. alix: stocks appear mixed, but the dollar rallying could hike rates. and bring on the political pain for brazil company finance chief inherited deep recession and a soaring deficit. kenny stimulate the economy while balancing a budget? scarlet: a merger of the auction space. compete with the like of southern reason christie's? scarlet: let's head over to the markets desk and check in with julie hyman. a better-than-expected retail market not do much for equities.

julie: you just abide buy today between the individual retailers in the retail sales numbers. they are showing different pictures of what's going on within the retail industry. individual retail showing sales letter disappointing even as the overall number does beat estimates. women mixed picture at the moment the major averages is the nasdaq is down thing but the dow imap is the the best technology group. telecom and consumer staples shares are lower, however today. retail, when you're looking at different times of retailers today, it's an interesting story. walmart and amazon, for example, we of walmart which is rising -- falling by 2%. but amazon is also down after her recent winning streak it had. walmart reports its warnings next thursday -- it's earnings next thursday to be head of that.

first quarter comes could come in in line or below what analyst are estimating. declining,se stocks investments and owners are falling in the session as well. got disappointing numbers, not just today but over the course of the week. really confusing. general retail sales actually held a presently well last month. julie: here's the break and what appears to be going on. if you look at the overall numbers that we are watching, that is those retail sales numbers -- this includes autos and gasoline. even if you back out autos and gasoline, we have the number coming in ahead of estimates. on the one hand we do see weakening sales at some of these individual department sales. they are selling some of these products at deep, steep discounts in many of these cases. that is something that has been affecting their individual

numbers. i'm looking to home improvement here, because these companies earlier were reacting were negatively to the idea that we saw a decline in home-improvement and building materials in the retail sales numbers today. the flipside we're looking at car dealers as well, their sales the best of the year according to this report. we are seeing not huge on performance among car dealers on the back of that. it's another one of the internal -- the most interesting number i found in the report was the nonstore reach number was the subject of joe's chart -- battle of the charts you just did read looking at the difference between nonstore retail, which is e-commerce, catalogs, direct sales of its that, which are doing very well. scarlet: no one needs to walk into a mall anymore. alix: that's my life. news,omberg first word margaret and has more. donald trump says he

does not keep money in offshore ventures was accounts, and his tax rate is no one business. refusal to his release tax returns until an audit is good. he says he doesn't think the public has a right to review his tax returns before people vote in november. he says he will gladly do so if the audit is finished by then. bernie sanders reportedly being pressured to end his bid for the white house trade. -- thetic party warriors democratic party worries he is undermining hillary clinton. he's also kept prisoner obama and vice president biden on the campaign sidelines. funeral services are scheduled today for the u.s. navy seal who was killed in iraq this month. inviting people to live in the streets in coronado, california to honor the 31-year-old. he was killed in a gunbattle with islamic state fighters on

may 3. his remains will be transported across the coronado bridge to san diego. he will be laid to rest at fort rosencrantz national cemetery. if the u.k. votes to leave the european union, it's likely to feel a cold chill from the rest of europe, that's according to the irish prime minister enda kenny. he spoke to bloomberg television in exclusive interview from dublin. >> if the british electorate were decide to leave the european union, ireland would still stand up for britain would the about those things in european level. but i could not determine the outlook of what the response from the other 26 countries who had arrangements with britain would be at that stage. mark: the prime minister says they reached out to the irish citizens living in the u.k. so they know the consequences would be. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world.

i am mark crumpton, back to you. scarlet: as julie was telling us, today's solid retail sales numbers of 100% in april, not doing much to risk -- lift risky assets. the s&p 500 is down since tuesday's big run off of about 1.25%. alix: was that had fake, and is the path of resistance pointing downward? our next guest says the answer to both of those is yes. us, every morning to give a great technical review of what's happening in the markets. why do you think the s&p has more downsides to go from here? cory: a couple of reasons --matt: a couple of reasons. everyone is looked at the transportation index. this has been particularly good this time around, because this is an early indicator last year when it rolled over early. it was an early indicator this year since it bottomed and

january the month before the rest of the market did. it started to roll over. made -- it has been a sideways range for about two months. it broke low that range yesterday. and a little bit this morning. this is only a slight break. this has been a great leading indicator and if this thing rolls over, that's going to be a problem. the other one is the commodities markets. i'm getting worried because the dollar has been strengthening a little bit. we have also seen the story out of china, they're pulling back on their lending and china has a lot of people feeling they have been a big leader in this pop act in the commodity markets in recent months. that's important, because in the first quarter, there was a lot of concerns about a recession. wasso think the bigger part the decline in commodities that was causing stresses in the credit markets. that was the real reason why

phil so hard so quickly. if the commodities markets , i could be a problem for stocks as we move through the rest of the second quarter. scarlet: that is the macro backdrop. alix: my favorite indicator for commodities is rebar prices. it is steel prices in china. if you take a look at the bloomberg, you can see the huge run-up it had and the selloff that we have seen. about how dramatic any industrial selloff can be. scarlet: another warning signal might just be apple. endave seen it into her -- ure weak spells. what did we learn about the resiliency of the broader market with a broader tech sector when apple is not participating? matt: it's going to be interesting going forward. what we're seeing right now is positive, and even though people

incrediblye is widely held, as people are starting to move out of that, to the take the money and put it in cash? they are moving in and other areas. some of the other old textile -- tech stocks are week. the market has been holding up pretty well. my concern over the markets -- we have had this unbelievable run. we had this sideways move now, a little quick breather. i mentioned my concerns that we could go in the low. major problem. this company has a tremendous amount of cash, a great company and could go low into the mid-80's. this is not the end of apple. it's not going to suddenly go out of business anytime soon. , but is an important stock it's still good company. scarlet: the two themes of the

week grappling retail. taking a look at the spider retail etf xrt, that got totally wrecked this week. investors piled in tuesday before those macy's earnings which really hurt them for the rest of the week trade what you see here? we turned negative on the group in march, especially because of what's going on in the other department store area. the question remains what does this mean? there's a sea change going on between brick-and-mortar stores and buying stuff over the internet. we do know amazon has had this great run, and as you have been saying today, the non-brick-and-mortar stores have been fine. the question is -- which is it? is retail showing the consumer is bailing out? probably not.

the other side of it was this morning's retail sales number, is the economy really got strong? -- really that strong? look at the election, people are mad as hell, i'm not going to take it anymore. we also see little things like tax receipts which are started to turn down a little bit. you see those types of things, and even though the consumer may not be as bad as some of the retail stocks are showing this week, i don't know that it's as good as the retail sales numbers show as well. we are at a middle ground trying to see what's going to happen next. scarlet: we got to split the difference. ley good to see you. scarlet: all hands in all feet on deck for our mystery stocks. a couple of street analysts have flip-flopped on our pick, now call it a cell. alix: it is definitely shoes.

not crocs, the normative flip-flops. ♪

alix: you are watching "bloomberg markets," i'm alix steel. scarlet: i am zero through. mistry stock, julie hyman has the answer. clues?do you have the alix: flip-flopped, fuzzy. we thought it was a shoe store. somethingnk about that is fuzzy that you wear on your feet. scarlet: uggs. julie: we are having some graphical difficulties. uggs.t: let's see those

alix: really, we should say decker. julie: they also own tevas, they make sandals. look, guys want to take a is down 2.5%, downloaded underweight bb&t. that has to do with the cascade we've been hearing about in retail, decker is a big supplier to a lot of the big department store retailers. that's is going on here, the stock is been declining all week. the other thing i wanted to look at on the bloomberg is is as plc for nordstrom, specifically. you have nordstrom in the middle, i know it's a bit hard to read. decker is the third-largest supplier by cost to nordstrom. it isr way of looking at the so-called relationship exposure that is a percent of decker's revenue comes from nordstrom's alone. when you have a company like

nordstrom or macy's coming out and reporting disappointing numbers, obviously there's an extrapolation for many of the other companies that are the manufacturers trade to look at some of the other manufacturers that we've been watching today, estee lauder's trading lower, michael course rating loader, these of the various companies that are big suppliers to some of the big department stores. people aren't going to department stores, then obviously, there's less need for some of these companies merchandise that they sell to the stores. there is this whole ripple effect that happens. scarlet: changing netscape for retail, julie hyman, thank you. launches, a etf good portion tracking themes, including the one with the most assets. here to discuss why is turning into the year of the theme, eric balchunas. let's start with the gender diversity etf, number one out of 87 right now.

eric: $256 million, here's why. it's a little unfair. they just got a huge chunk of the california retirement teachers. they love this idea, called the spoke etf. an institution will give a company's visions, and the etf's are really easy vehicle for anybody in the pension to invest in privately. invite on any exchange. almost all the assets are for that. it still counts, that's how it's number one. it looks for companies that have boards and board members and executives that are higher percentage female relatively low peers. but keep in mind, the sector buckets, you want to go to heavy. they were saying you get most are consumer discretionary, so you some bands in place. s&p,ves you close to the with a focus on companies that

are more driven by women executives. scarlet: i spoke with the chief invested in -- chief executive officer, and they mention initially they put in $150 million into this etf with the goal of expanding and eventually to 200 million. after they see how things shape out or take shape, should say over time. what has been the performance so far in terms of where people thought it might be? eric: it just came out. scarlet: so no distinction just yet. eric: some really give you complete the new exposures, some are overlap. they just give you a slight tilt. this one very close to the s&p 500. you should expect that performance. i like the expense ratio. 20 basis points is a lot cheaper than most thematic etf's. it's coming in an institutional level pricing, which i think is helpful. alix: we will be hard-pressed to not ask about retail. hammeredr etf just got

with a lot of inflows coming in on tuesday. talk us through what's been happening here. eric: this is equal weighted. sectors from other spider, this is an industry one. it people waited, you're getting a lot of zip in here. it's down 3% in the past week. rt age, its market cap weighted. so the amazon waiting in rt age is 16%. that has been a buoy. large caps in your market cap weighted. xrt would have been outperforming if amazon was the bad performer. in this case, it wasn't. it's hard to time these things, but that's why. loves to be shorted by hedge funds. it has some stocks in their that hedge funds are expensive to borrow. excerpt he has such high short interest, is like a submarket on the side. scarlet: there's another one that is pex.

if you really feel who wants the performance chance, go with the momentum etf's trade this thing is flat. when a performance goes down, the technicals will be there before really goes down. this thing will kick it out utterly technicals on the price are stupid out a little bit. two weeks ago, the momentum etf from powershares a kick out apple before it's big april fall because it was wobbly a few months earlier. these things really chased the heat, if it goes down and takes it out, it looks for ones that are outperforming. this one really does that performance chasing for you, which you can argue with her that's a good strategy or not. it is based on technical analysis. alix: really interesting. thank you. scarlet: eric balchunas of bloomberg intelligence. we talk about shadow banking, industrial commodities. we hear it all from the short seller jim chanos, next. ♪

scarlet: saudi arabia's plan to sell part of its stake in aramco may suggest that leaders there are worried about the long-term profits for crude. so says jim chanos, president and founder of canada goes association. he spoke with erik schatzker yesterday. jim: one of the concerns is the long-term price of oil, and whether we get a move to electric cars and trucks, which have a huge impact on long-term demand. 80% of your trillium bash of petroleum demand is in transportation. -- of petroleum demand is in transportation. this is far out. erik: another stock you've taken a close look at and are short in connection with energy a solar city. know -- youto criticized it for being a financing company wears a lot of people think of it as a solar

company. what other companies to that profile? they're actually financing companies, then either masquerade as or are perceived to be something else. jim: if you have seen the collapse of the online lenders for the past few weeks, it's underscored an interesting aspect which is the growth of shadow banking again that we were starting to see in the u.s.. you are honing in on interesting things. businesses that really do finance their customers and depend on that for large sources of income. i'm not when a name names, but you can look at areas such as timeshares, we are in vegas. you can look at areas such as retailing, things like jewelry retailers and others where all the money is being made on financing you, your wedding ring. a long-term contract to service your wedding ring. short circuit city in the old days, selling you a contract to

service your tv set trade servicing your wedding ring. retailers, theo specialized auto retailers make an awful lot of money financing their customers with used cars off a lot. anyn't want to name additional names, but there are lots of areas where this is happening in the u.s. right now. erik: we you access in market was lending? jim: we were short one of the big ones that blew up. we were short lending club. erik: as of one? jim: we had a problem with the model itself for exactly the reasons. erik: that completely blown out, did you was out the short? jim: no comments. i can't give you a comment on that. if you're thinking about things on a structural level, what other industries work as though they have become wildly divorced from the fundamentals? intoone area that fits

what we're talking about is the industrial commodity area, which had a norm is off the february 5. -- iron ore, copper. the aging thing is the stocks have had far more of a run in the commodities have heard. commodities and gone back down. ,lix: that was jim chanos regarding his thoughts on saudi aramco. scarlet: coming up, with --helle tamir now asking acting president of brazil, does this change the game in latin america's biggest economy? ♪

alix: live from bloomberg world headquarters in new york, i am alix steel. scarlet: let's start with t headlines on blo

up what could turn into a very lucrative endorsement. in opinion article, a casino mogul says that he is backing donald trump for president. he says the alternative to him is alarming.nt in the three months since antonin scalia a has died, the supreme court has managed to avoid controversy. that is expected to end. on court is expected to rule affirmative action, abortion, and puerto rico's debt. several rulings are expected for monday. obama: the nordic fortries are a model

cooperation. our nordic partners are not large countries, but there are almost no issues that we deal ofh, whether in terms security or economics, or humanitarian assistance, where the nordic countries are not some of our most reliable and effective and important partners. mark c.: the leaders of norway, finland, and denmark are in sweden. the spokesman for vladimir putin called allegations for doping at olympics unreliable. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world.

i am mark crumpton. back to you. scarlet: thank you so much. brazil's net acting president the banking minister to run the economy. he vowed to take measures to cut government spending and went back investor trust. we're joined from washington by the global business advisory firm that specializes in latin america. it is a great pleasure to speak with you. what would be your number one piece of advice today for the acting president? >> i think he needs to focus exactly what he has done to get the trust of the brazilian people and get the house in the finance minister. following that, i think he clearly knows what he needs to

do. he best advice to him is as gains trust built the investment coming into brazil. i think he has tapped a good foreign minister to change form policy from ideology to national interest. scarlet: there is a contrast between michel temer and dilma rousseff. he wasn't elected political official for decades. what did he do during his time in government? what can he .2 for his accomplishments to give us a sense of what he will do this time? focuseds been primarily in congress, where he served. he is a constitutional law scholar and probably one of the best in brazil. he was involved in 1988 in the rewriting of the constitution. he has faced a number of constitutional changes to get

brazil back on the growth track. he has found a way to put everybody in his with a focus on getting the votes he needs in the brazilian congress. alix: there was a note out that said there is a 25 percent possibility that he will not actually complete his term and that he will be implicated in the car wash scandal. what is your probability of something like that? >> we don't make those kinds of probabilities, by think it is fair to say there are some clouds over him. he has been, and like many in brazil, is under investigation. i think he recognizes that at some point brazil needs to turn a corner and focus on what can be done for the future and do a little bit of forgiveness about the past. it is about time to turn the page. clearly, a lot of

uncertainty politically and economically. when you speak with representatives from u.s. companies and companies doing business in brazil, what is their single most important concern? the think it is whether policies being proposed now, which are business friendly, will stick. we have a possibility of president dilma rousseff 180rning and about 10 days. first, will this government stick? second, was a policies work? can brazil bring inflation under control? candy economy start growing again? the asset prices are quite low and it is a country that will still have 200 million people. there will continue to be a lot of investment and i think that is what the business community

is focused on. petrobrasou feel like can survive in its current form? >> my view is that they will need to continue to shed assets. it has become a systemic problem for brazil. intoould be broken up different pieces, perhaps. the main thing is to get the company in a position of gaining confidence of its people, and of course, the market. scarlet: is there political will to do something like that? >> i think so. there have been a number of proposals that changed the constitution to provide for ,ffshore oil exploration allowing petrobras to take a much smaller stake. froml could still benefit oil reserves, but not

necessarily have to go through petrobras. i think that is where the political will is focused now. scarlet: in addition to political turmoil is that rio is getting ready to host the summer olympics. some believe that they should cancel the olympics for the risk of the zika virus. the white house weighed in and said they do not think that is the case. >> i think the olympics are there, and they will stay. will be potentially some empty seats. i think brazil is doing what it can. i think what we know from ittorical perspective is will be the december of a big, but winter in brazil. dengue ander months, the mosquitoes carry this virusrus will be -- zika

will be low. alix: the last point on brazil has and that the central bank will cut rates. you for see that as a probability? what are the applications? is early to say what the future central-bank chief will do. all indications is that interest rates may be coming down in brazil. they are exorbitantly high at this moment. i think that will depend on the policy that this government takes and the likelihood that the president -- that president dilma rousseff will return. we will know on monday who will be the central bank chief. weevil probably here at the possibility of giving the central bank greater opportunity -- autonomy. presidentenior vice

from all right joining us from washington. thank you so much. puts coming up, tim cook anbillion behind uber rival in china. ♪

scarlet: you are watching bloomberg. i'm scarlet fu. alix: i am alix steel. this is your global business report. tide liftingsing germany's economy. alix: chrysler taking on bmw. the latest luxury vehicle goes on sale in europe. scarlet: the u.s. drowning in debt, and only getting worse. how it stacks up against other

countries. the euro area economy raised slightly in the first quarter. germany, grew at the fastest pace in two years. they have record low unemployment. alix: the international monetary fund is warning of dire consequences if britain votes to leave the european union. christine lagarde addressed the risk of the so-called brexit. >> we are not doing it out of politics. this is not the job of the imf. we are doing it because it is a significant downside risk. second, it is not just a domestic issue. i know it is a domestic issue for many of you, but it is an international issue. couldshe said the impact range from pretty bad to very, very bad. her comments echoed those by

mark carney on thursday. volkswagen's market share in europe fell for the month in a row. chrysler haveiat increased their shares of european sales. alfa romeo is about to go head-to-head with bmw. after three months of delays, the luxury sedan is on sale in europe. the new owner of japan's sharp electronics company ones that job cuts are on the way. the ceo of foxconn sent an e-mail to employees, calling subpar. cellblock -- they have lostthe new owner of n dollars in the last five years.

scarlet: time now for our bloomberg quicktake, where we provide context and background on issues of interest. american students oh in the average of $29,000 after leaving school. the debt burden is rippling into other parts of their lives. here is a lookout compares to the rest of the world. is second to none in higher education. thehighest prices on planet. that is why there is more than $1.3 trillion in student debt in the u.s.. thantsscarlet: think it is more every other country combined. americans cannot afford it. there is a long list of people who think the problem needs to be reformed. students took out an average of between $9,000 to pay for their education.

in the past decade, student debt has more than tripled, rising an average of 14% for year. burden is rippling into fewerareas of life with buying cars, homes. what is the problem? the cost of college or the loans ?sed to pay for college some say that part of the solution is letting students refinance the loans at a lower interest rate. obama has expanded his own program. president obama: to offer millions of students to cap eir payments to 10% of their income. suggestion, france and germany to weigh

differently. they have higher taxes to make orlic universities cheap, even free. it is a solution that is not even on the horizon of the u.s. it also would not help current students in that it to the government for years to come. scarlet: that is your bloomberg global business report. for more stories, visit bloomberg.com. alix: disturbing the world of art auctions. back.l be right ♪

abigail: you are watching bloomberg markets. right now, we have the nasdaq just slightly higher, on pace at took perhaps -- this time to perhaps not of losing streak. chinese ridesharing startup,

uber. of the blow to the biggest drag on the nasdaq, the shares of amazon snapping a winning streak on a lack of any real news. when we take a look at a one-year chart, we see the stock has an trading in a range of uncertainty. more recently, bullish news, including a positive first quarter report. buyers overtook the sellers. the question is whether or not this can last. i am abigail doolittle. now more bloomberg markets. alix: this is bloomberg markets. i am alix steel. scarlet: i am scarlet fu. let's turn to the growing online art auction market. two leaders in the field are joining forces. backers, theyable

sales.ade a few big c alix: the only copy of wu-tang album sold for $2 million last year. joining us now is the chairman paddle8, as well as the cofounder. congratulations on the merger. you are focused more on the u.s., not as much europe. what do you get out of this? expanding ourt category mix. the combined company will have the best of both worlds. lifestreamncredible video technology which i think will be quite critical going

forward. scarlet: tell us a little bit about how you make money? is there a difference in your revenue model? >> we make money in exactly the same way and similar to auction houses, but we take much less money and cut out fees. quites how we are different from the traditional model. alix: when you say you will have a combined revenue of 140 early dollars, is that sales from last year? 2016.es through alix: what are you expecting for growth? >> not disclosing it. definitely double digit growth. scarlet: in terms of your

ambitiouns for china -- clearly you have very big ambitions. talk about what you are doing there. china,st got back from and was pleased to see we are to have brand recognition in the market. eventually, demand will be asian-based and us-based and supply will remain in europe and north america. building a global operation will be key to our success. alix: we have seen that auction have struggled. do you feel that that is a company specific issue or does it signify something about the higher end auction place? >> we saw there was a new world atord set for a basquiat christie's, which proves there is still a market for quality. there are issues within larger brick and mortars and how they

necessitate a very resource-based model. they focus on a small part of the market, which is also a very lucrative part of the market. we are focused very much on the middle market. looking at how we can ring -- operational -- bring operational efficiency to reduce cost. scarlet: you focus on middle market. are your customers buying works of art as collectibles or investments? >> i think it is a mixture of the two. we try to make sure everything we are vetting is of investment grade. we have a network of specialists across the world. , in manynderstood that ways, the new lecture for the collector is to have storytelling asset items. elevate their

individuality through items of style and value. alix: you have not posted your auction results online. it is hard to get a read on how much has not sold. will you be changing the way you manage that? >> i think both companies will operate the way they have been operating for the first table future. after that, we will make a decision. the database will have to catch up to the online age. transparency is a big focus of the company. alix: why the discrepancy? why have you chosen to not post that online? >> the reason we did that is because many artists traditionally do not like the auction market and are concerned posted.e prices being we have been respectful to the wishes of the artists and very

careful. as we expand, it makes more sense for us to be more transparent, at least in those categories as it directly impacts artists. scarlet: there are a lot of online auctions out there. we mentioned christie's, sotheby's, the list goes on. 'sll us what paddle8 distinction will be after the merger? >> on the buyer side, we will have the ability to operate via live auction with a tv studio. online shop.s, and we are adding 11 categories including vintage watches, wine , cars.

our key focus will be everything from virtual reality, how will withange the engagement art. thinking about how editorial commerce can raise engagement. alix: thank you very much. >> thank you for having us. scarlet: coming up. if you thought lending club's four dollar was a screaming by, stay tuned. ♪

♪ alix: it is 1:00 a.m. in hong kong. scarlet: welcome to "bloomberg markets." ♪

alix: good friday afternoon. i'm alix steel. mark surprising numbers have traders reevaluating their best on the federal reserve raising interest rates. scarlet: confident in the economy growing. why are be taylor singing the blues? alix: apple is placing a huge bet on their rival. it is it -- is it anything to get investors excited about? let's head over to the markets desk with julie hyman. julie: we have seen deterioration as the session has gone on. some of that looks like energy stocks are down.

the nasdaq had been the holdout for much of the session as we saw some of the large-cap technology outperforming the dow. the underperforming today. the s&p 500 is attempting to break a losing streak two weeks. at the moment, it looks like it would be down for a third straight week. we will see where it takes out by the end of the session. the groups on the move, more red on the screen than green. i mentioned, energy down a 10th of 1%. stocks. to be dragging consumer staples are lower along with telecom shares. tech and health care remain higher. here is the push and pull on the individual stock level, on the plus side, apple snapping back. it made a $1 billion investment in the chinese ridesharing.

chipmaker the estimates and allergan being added to goldman sachs by list. negative common -- negative column -- walmart is lower. allergan lower. that is a balancing act. for now, the scales are in favor of the downside. alix: what about other assets? it has been a big week across the board. industrial metals, forget about it. prices, it isl falling at the moment. you have this balancing act between what is going on in canada. supply coming back online and continuing events in nigeria were exxon mobil is able to suspend production there, getting out of his contract in the short-term. gold not doing a whole lot on

the flipside, up slightly. in the bond market, really interesting phenomenon on that better than estimated retail sales report. we are seeing the to yield -- the two-year yield rise. and the 10 year moved lower. strange divert tense between the two. gencege diver between the two. alix: good stuff. julie hyman, thank you. let's get to bloomberg first word news. mark crumpton is in the newsroom. mark: a federal appeals court has rejected the american civil liberties community to release a report about the cia's use of harsh interrogation tactics. the court said the 6900 page report prepared by the senate intelligence committee is not

subject to freedom of information loss. the decision of -- the decision is a lower court ruling. a new report that flint, michigan water bills may double in the next five years due to increased operation cost and decreasing population. to $54 may rise to $110 by 2020. the white house is enforcing a bill for students to use bathrooms matching their identity. a threat of a lawsuit is for those who don't comply. in spain, officials have ordered the evacuation of 9000 people from homes close to a raging fire at a tire dump near madrid. the smoke is visible four 20 miles. 100,000 holds about

metric tons of used tires. russian president vladimir putin is not happy with nato's us-led defense plan. he says it is a threat to global security and promises russia will take steps for parity. president putin scoffed at u.s. claims that it is intended to fend off a missile threat from iran. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. i'm mark crumpton. back to you. mark: one of the hardest jobs in brazil has gone to henrique morales. he called his first news conference today. he says his top priority is restoring fiscal equilibrium.

joining us now from stanford, california is the president of merck investments and manager of the mark funds invested in fx. --t happens to that we all to the real? short-term, much cannot get worse. the real challenge we have with brazil long-term is their constitution was changed in the 1980's to tie entitlements to inflation. entitlements are up significantly. they are squeezing spending. with that, unless you have a strong government that can make structural changes, those problems will not go away. the new government can set a

different tone that is beneficial in the short term. if you take a look at the bloomberg. , you arehart 1306 looking at the implied volatility on the real. that is that blue line. the white line is swapped contracts. they were buying u.s. dollars and has now stopped. it is interesting, we talk about assets moving, but volatility is quite low. aboutt: what do we know how the former finance minister will approach his job as a central banker? the case for more intervention? >> if i am not mistaken, that should suggest less intervention going forward. the whole concept of the administration is to beautify the numbers. is ethicsat

intervention. it never works. it is extremely costly. to haveyou get them locals invest in the country is having policies that are plausible and encouraging. that is not achieved with investment in the markets. who knows what is going to happen. if the currency moves too much, who knows, they don't have the track record of intervening. i do think there is a side of relief things are looking better. the applied volatility is down. alix: on the flipside, you have the dollar rally. we got the stronger retail numbers. expectations of a rate hike improved. it is the fate of villareal at the fate of a stronger -- is the fate of the riel at the fate of a stronger dollar? >> it was the commodity currency

of choice. -- if yout to buy want to buy commodity currencies, by the australian dollar because you don't have the volatility like in brazil. do you want to have a commodity theme? you have all these other drivers. if you want to go to australia and by china and by brazilian, by domestic. what do you want to express and where do you so most comfortable. 's numbersearly today are looking better. i interpret janet yellen's comments is that they want to be behind the curve and only raise rates as inflation picks up. markets have to rebound. the fed is going to have to the markets are quiet. rates, there is turmoil in emerging markets. it will be a mixed picture. scarlet: that is pretty much a loop right there.

there are warnings about raising rates for too long. i want to move to the yen. the bank of japan wanted to wait at the last policy meeting. they have a month before the next doj meeting. are they likely to that stimulus? >> the japanese -- the bank of has the authority on the markets. they have done a couple of things the markets have breast aside. because again has depreciated too much. he has to think about how to regain confidence of the market. i don't see that happening any time soon. if we have a risk off in the equities markets, there is very little chance the japanese can try to keep the yen weak. alix: very perspective.

thank you very much. makes ap, apple billion-dollar investment. gesture tooodwill china? that story is next. ♪

♪ >> it is time for the bloomberg business flash. is buying -- $950 million in cash up front. 370.enaissance unit had

the move comes after an unsolicited bid was rejected. the new board members could choose to put renovation of personnel. offersid this and no fee -- like a pfizer. that is your business flash update. apple's not uber investing $1 billion in chinese ride-hailing service didi. opening up questions about more investments and increased dividends. brian joins us and asked whether they should by, sell, or hold. >> definitely a buy. cycle willthe profit

bottom in the june quarter. we have a company with $233 billion in cash. like the stock goes down it has gone down, is this a good time to deploy cash to sir holders -- deploy cash to shareholders. $250 -- the heavy 250 billion dollar cast employment. they have done a good job. i would like to see a bigger hike in a dividends. in three pointet 5% yield, that would be attractive for investors. ,> we will go back to dividends apple today saying, they want to back dede. are we going to see more of this funding for other american technology? >> this makes sense. it allows apple pray to spread throughout china.

spreadllows apple pay to throughout china. it is an interesting area. there is a lot of talk about apple being involved in autonomous cars. look at the cash apple has overseas. brian, you are saying this is a good deal. would you rather apple invested more deals in 10 years could bring a bigger share price instead of bringing back dividends? brian: they can do both. they announced a $250 billion capital deployment strategy from 200 $50 billion previously. part of that is dividend, part of that a shareholder by back here it be higher dividend yield would be very attractive. alix: that was brian white of drexel hamilton. -- let'slet's all over

head over to julie hyman. month we havel seen for apple. i went back to when carl cite -- i went back to when carl icon said he sold his position, it just accelerated. this is a breaking of the losing streak. let's look at that one month performance. close to theing technical definition of a bear market for what it's worth. shares have fallen sharply over the past month and that means the market cap of the company, something we were looking at ,esterday, apple's market cap briefly dipped negatively as it did in february. for a moment, was not the largest company by market cap. let's look at the one-month performance to see the declines. 19% is the decline of the past month. what he would technically be a bear market.

when you talk about apple and the negative, negative performance, it is not just about apple. it is a ripple effects. here are some of the apple suppliers. sky works down 20%. precision, seeing steep declines because of the concern of iphone's iphone sales are weakening. a really interesting situation. alix: julie hyman. thank you. go publicmpanies have in 2016 making it the slowest start of the year for u.s. ipos since 2008. is there an end for that ipo drought?

♪ >> "bloomberg markets." this is --this is "bloomberg markets." i'm scarlet fu. alix: i'm alix steel.

the communications network company is climbing more than 30% on the trading deck. acacia it is one of the 25 ipos this year. let's go to our colleagues and radio. >> joining us now is cory johnson and carol massar. the ipo business is what you do over there. i am not calling you old. i am guessing you have experience. you have this really interesting period with underlying changes and a slowdown from last winter into the early part of the year. what are you seeing now? >> it has been a pretty elusive ipo market. only 23 deals high-priced year to date. 64 deals the same time last year. it has been incredibly slow and we have not seen a lot of activity. we are starting to see a couple

of deals and a last few weeks to give hope there is more by them to come. the secular changes in the market, but maybe the window are capital market. what are you seeing in the capital markets leading to a slight opening? improvement inan the capital market has mid february. we have not seen a lot of activity. what we need to see is good growth companies that can access the ipo market and do well. we had one last night and the optical networking space trying a deal at the top end of the range, trading up 35% today. high-growth on revenues. a profitable company. that is what investors got excited about. there is a deal and the landscape supply space. the prices in the middle of the range 30%.

thateals in the last day could provide momentum. >> been me ask you about the pipeline right now. what does it look like for potentially later in the year at the market environment stays conducive to ipos? >> about 100 companies in the pipeline that could file publicly and go public. june. more activity in a lot of companies we know of and are involved with a plan to file publicly in june. a lot of companies are looking at that. they are looking at getting out before the summer slowdown. then you have the election season, and you know, that is a bequest to do -- that is a big question mark. [laughter] that is weighing on the market heavily. the secularabout

change, the unicorn effect. we have had these companies that have gotten a lot of funding and big evaluations and have deeper pockets earlier into their lifecycle then we have seen in venture backed technologies. but, we have had a slowdowns in no -- and those investment in the last six months. we have had venture funds get resupplied with new funding. two teche only had ipos this year. one was a spinoff from del, and the other one is the one i mentioned. that is incredible. we have not seen a kind of marketing tech ipos in 15 years. really slow. >> after the.com crash. >> exactly. you are seeing a reset on evaluations. firms areenture reluctant to take out their portfolio companies because valuations in the public market that support valuations

the last round the race that a high valuation in the private market. >> the down around is the fear? >> the down around is the fear in public investors are looking for high-growth with profitability. 200 million of revenues and 45 million. that is incredible. you are not going to see those they of companies, but if have apap to near-term profitability and are growing rapidly, investors are interested in looking at that. investors want to see ipo growth , want to take meetings. if you can get that kind of marketplace, you will see the beginning of the tech ipo resurgence. >> the valuation in terms of ipo, is that a good thing in your view? >> i think it is. it takes a while to make its way through the market. i think valuations in the

private market got ahead of themselves. the amount of the so-called unicorns. you are going to see a calling of that heard. you will need to see companies come to market and do well. >> nice metaphor. [laughter] thank you for your time. i want to throw it back to you guys and television. you are still listening to bloomberg radio. alix: thank you so much cory johnson and carol massar. april was a comeback for some investors. what are department store chains being left behind? that story next. ♪

worldfrom bloomberg headquarters in new york, you're watching bloomberg markets. scarlet: let's get to first word

news. mark: president obama welcomed the leaders of five nordic countries to the white house for a summit on security, environmental, and other issues. >> the nordic countries are a model of cooperation and they consistently punch above their weight in meeting the challenges of our times. are nordic partners are not but there ares almost no issues that we deal in terms of security or economics or humanitarian assistance where the nordic countries are not some of our most reliable and effective and important partners. are:4 of those countries part of the us-led coalition against the islamic state. donald trump says he does not keep money in swiss banks are offshore accounts and that his

tax rate is no one's business. he defended his refusal to release his tax returns until an irs audit is complete. he says he does not think the public is a right to review his tax returns but he says he will gladly do so when the audit is finished. bernie sanders is reportedly being pressured to end his bid for the white house. democratic party leaders are worried he is undermining the efforts of hillary clinton to be donald trump in the fall. bernie sanders has already benched two powerful campaign advocates, president obama and vice president joe biden. the new finance minister of brazil's promising to tackle a reform of the system and will change labor laws to increase productivity. say brazil's generous pension system is one of the biggest drags him the economy and must. formed to help the country emerge from its worst depression since the 1930's.

global news, 24 hours a day, powered by our 2400 journalists in the hundred 50 news bureaus around the world. the april retail sales may signal a consumer come back but it's not stopping jcpenney shares from tumbling today. the company posted quarterly revenue that missed analyst estimates. scarlet: they are the latest retailer to feel the drag. where are people shopping? jcpenney and these other retailers have talked about a shift in consumer spending without giving detail. what do you think is going on question mark >> i think the weather had something to do with it. that's what retailers were often defer to an march had some problematic whether you all of the retailers experience that, not just jcpenney. in april, things began to turn around.

none of the other department store retailers indicated that in the call the jcpenney did. i found that interesting. they indicated the last half of into was strong and going mother's day was a successful holidays what gave them the confidence to keep with their guidance for the full year. alix: the guidance came between 3%-4%. is that a jcpenney specific issue or are the retailers not noticing the rebound? they have notle noticed it but jcpenney is a different merchandiser than department stores. i'm not sure that the street appreciates that yet. with the strategies they employ, it's becoming more i've is -- obvious. private label is a bigger part of their business as well as adding exclusives like liz claiborne. the combination is 55% of their total sales. if you look at macy's, only 20% is private-label. prior -- private-label is

higher-margin with more promotional opportunities and if you have names like original arizona jeans or st. john's day, those used to be million-dollar brands and the company can market them and it helps complement their store growth. it's a little different. scarlet: specific to jcpenney is the debt burden. jcpenney has market cap is $2.4 billion and it has more than that in unsecured loans and more than $4 billion in first lien loans. if you go to debt distribution, you have 2.1 billion dollars in than due in 2018 and more $1.5 billion of loans available in 2019. alix: it looks like it will be painful for them. >> my free cash flow estimates indicate they can take out the

16 and 17notes due in and their 18 maturity. and that's ation 0% same-store sales growth. as far as maturities, the respect -- they repaid half $1 billion a bank that and bought $60 million in the open market. i'm sure the banks must have confidence for them to allow them to do that and that's very telling. seen in thee have retail sector in general is high yield defaults are picking up across the board but it's not just energy and materials but it's really retail. do you see retail struggling this year when it comes to credit markets? >> i do follow the defaults and it's very real and very specific to certain types of chains. scarlet: which ones question mark >> look at sports authority and the list goes on in terms of the specific leisure market that

is growing tremendously but those stores are not participating because they are stand alone. that's just an example and you have dick's sporting goods. for jcpenney is it is not the same kind of retailer experiencing those kind of defaults. alix: is the default because the companies have too much debt or no free clash low. -- cash flow? >> they have weak sales and there is too much retail square footage out there and too much department store retail square footage out there. i'm sure jcpenney a next couple of years will rationalize their store base. that's part of the problem and if you have too much debt, he gives you a disadvantage. jcpenney, you have the chance to deal every jim a coming quarters. marvin ellison has done a tremendous job in their overall cost structure and a lot of the new merchandising initiatives

will support gross profit growth. scarlet: thank you so much for joining us. loses halfa stock its value in a week, bargain hunters dive in looking for a steel but that has not been the case with lending club. scarlet: shares of the fast-growing company art down below four dollars per share. year it hase tumbled more than 60% and investors have held on the company after the ceo resigned after questions about internal controls. is there value here? let's ask oliver rennick. the trade of the year has been value over growth. does lending club fit into that? >> interesting angle. it the same company as it was before or after this incident? there is a lot of confusion about this. we surveyed analysts and talk to investors and there is a big

question out there about how two look at the stock. from the investing side, there has been short interest built up in the stock, about 20% of the shares outstanding. on the analysis side, on the sell side, some analysts have mixed views. the price estimate is about the closed his it has been to the stoxx actual trading price. you start to think about whether it goes up or down and analyst don't know. you've got half of the people on wall street that have put a hold on the stock. i think that brings up a lot of questions. it's about whether the value proposition of the company has changed. this is a great story illustrating that. this surveys the difference between a price target of lending club shares versus the analyst pricef targets and it's the smallest since 2015 and look how quickly

it goes. scarlet: it's incredible how quickly things are re-rated when there is bad news. you also have another chat -- chart about their banks stock like people financial and lending club. from december, 20 14, far above where united financial is down to where it is now. >> the reason why this is relevant is because prior to this event, this is a growth stock -- when you have a growth stock and a certain valuation you want to put on it. this was trading at a growth stock valuation. the market cap is lower and lower and now it is basically on par with more financial companies and that's what's confusing. it started out as a technology or internet stock and then was financial technology and now it's a finance company.

one analyst said i am valuing this just at book value. value orr not it has growth it's kind of hard to determine. if you think about the fundamental value proposition remains the same. maybe it's just a managerial blip -- from a rise to earnings standpoint, it's still a relative financial services company. it's still expensive relative to a basket of similar companies. can see place where you some arguable value is if you look at the price-to-book ratio which is a way to look at this company as a distressed financial and you might see it's lower than some of its peers. alix: it got clobbered but you re-rate the company and now at six offensive -- it's expensive. thank you so much. bombardierming up,

and the government is at a standstill about a federal aid package in those details are coming up next. ♪

scarlet: this is bloomberg markets. it's time for the bloomberg business flash. american and united airlines will try to beat the discount carriers at their own game. they will offer basic economy fares by the end of the year. these tickets will not include typical benefits. so-called legacy carriers are

trying to compete with roger airlines. area economy rose slightly less than estimated in the first quarter. gdp was up 0.5% and i was driven by germany. -- and that was driven by germany. they have record low unemployment and that's supporting consumer demand. scarlet: americans are growing more confident about the economy. the measure of the outlook for the next few years jumped by the most since 2006. real incomes were predicted to increase by the most in a decade. that is the bloomberg business flash. alix: let's send it over to the markets desk and julie hyman. julie: let's look at the drug industry. two of them are being affected list. goldman sachs thisn is rising despite call but allergan is investing

in the most attractive assets available. that is their own shares. they have a $10 million buyback at once it completes its sale of its generic business to teva. there are concerns about the generics business and declining pricing. myelin is holding up pretty well in the face of that. callaway golf was upgraded at suntrust to buy from neutral. the analyst says the company's organic growth can be wall street estimates over the next 12-18 months. the target on the stock is $13 and it's below $10 now and gaining 1.5%. johnson & johnson was downgraded to neutral. the analyst says the valuation issue and there is less executece that j&j will a transformational medical device acquisition.

we have recently seen stock appreciation within this group. targets are getting more expensive. largest now the proportion of their revenue. valuation, the s&p 500 is in blue and a medical device group is in white and over the past year, you can see the outperformance of new products and new companies improving operating margins. that has driven their prices up for potential acquirers. alix: thank you so much. --rlet: bombard here bombardier and the french government are still in talks over a federal aid package. alix: we go to toronto with more. what were they fighting over? for a $1ially, it's billion aid package from the federal government that would help the aerospace company make it through financing a

turnaround within its jet division. the program has suffered from a dearth of orders but until recently, it has burned through cash and it needs capital to get that program over the hump until revenue from jet orders can start rolling in. scarlet: what kind of political pressure is there for the canadian government to act questio? and theen quebec federal government, the federal government wants to take a direct stake in bombardier. the quebec government says it does not want to go that far, it wants to take an economic stake in the jet program. it want to see control of that remain in the hands of quebec. in a change for federal tax money, they want to see a wider ownership structure and the dual class share structure collapse. alix: is bombardier, do they need the cash? >> that's a great question.

until recently, the answer was yes. until about february, air canada made a firm commitment and letter of intent of about 125 c-series jets. that was seen as a boat of conference but delta had an order in late april. and intent for another 50. that's valued at 5.6 billion dollars and that is the catalyst for the snowballing of orders. you have heard things like british airways expressing interest as well as jet blue. analysts are bullish on the c- series program but they say it will require additional capital until the orders can be firmed up. these talks are still very important for bombardier. alix: thanks a lot. up, investorsg are fleeing high yield, is that bullish or are investors headed for the hills? ♪

alix: this is bloomberg markets. scarlet: investors pulled $13.6 hyg but from the etf this week, it took in $1 billion. alix: we spoke with mark howard yesterday. we asked to my investors are fleeing high yield. back toink it's a stec reload for future issuance. we see a building calendar in the month of may him rethink some investors have used a liquid proxy in the etf to create cash to buy new issues. we have seen a tightening in

spreads into the ugly days earlier this year. fedbig picture is that the is on some sort of tightening mode and we have had a long credit expansion. how much longer can it last? willd the pickup now but it inevitably slow down? >> that's a great point. in the u.s. credit market in particular, there is a tremendous technical on the demand side where investors not just domestically but global investors are looking for yield and they are looking for some stability. they can get that in the u.s. credit market now. we think it will continue a while and there could be another wave of spread widening later this year as we approached the election and other seasonal uncertainties but i and large, the u.s. at credit market is relatively safe. scarlet: what does this do in terms of volatility? it depends on which asset

classes. investment grade issuance does not have a knock on to other asset classes. most people see it as a sign of health and big companies can raise a lot of capital. seems to be in the market to finance its acquisition. transactions like that reverberate positively in the equity market. honeywell announced a deal today and there are other transactions which are big and the debt markets to function well to happen. alix: the issuance is good but these etf outlooks can be painful. the environment for high yield has been talked about all over the place. >> we are in a market where the structure of the market is very different from what it was prior to the financial crisis. pre-crisis, you had maybe 10% of the market consisting of daily fundsity etf's and mutual

and now that's a quarter of the market and the market is bigger. alix: that's why we saw 3rd avenue say they would not you back your money for a while. he things we could see more of that. what do you see? >> it's very different in multiple ways, not just the evolution of the etf market. it's a two-way market and while there may be redemptions, there are people who want to step up and buy. you could have temporary outflows that you will see big inflows as long as the fundamentals have not taken a step down. we saw that when energy was heading south and use of prolonged outflows. where the energy market has stabilized and oil in particular has stabilized, we think you will see a snap back in terms of etf's. that one is not mirrored by the other high yield etf's/ alix: joining us now is our cohost joe weisenthal.

it was interesting to get is relatively constructive take on the high-yield in credit market when that has not been the feeling in the last week. joe: we have seen more concerns this past week but it's interesting this idea that we have had this long credit expansion. even if we had a clear pick up since the beginning of the year one is that -- what was that credit ice age, you have to wonder how long this will last. it was a brief ice age. just a regular winter. we will talk about retail and the horrible week that it was for retail. this is the amount of stuff that is left in retailers back rooms because they cannot get rid of it. inventory to sales ratio for clothing -- you can get something mark down by 80% at this point. alix: it's a good sign for macy's but a bad sign for tj maxx. joe: should i be taking

advantage of this? it shows the pain and how much retailers will have to apply to move inventory. scarlet: that means it will be another bad quarter once we get those results. joe: not much light at the end of the tunnel if you are midline clothing retailers. alix: we will dive deep into retail today on : what did you miss? we will speak with the president of macro mavens at or clock p.m. eastern. scarlet: we have more bloomberg markets coming up. ♪

pressures 2 p.m.. welcome to bloomberg markets. ♪

good afternoon from bloomberg world headquarters in new york city. here is what we are working at this hour. stocks losing footing as the trading day wears on. the major averages posting third straight week of losses. in april rose 1.3%. that is the most in a year coming amid lackluster earnings reports from retailers. the latest to disappoint jcpenney just this morning. as donald trump tries to rally republicans to his side new revelations are coming out about his past including accusations that he used several alter ego's to speak to reporters. we will uncover the details. markets closing two hours from now. stocks are down across the board pretty much near the lows of the session. here we are.