from bloomberg world headquarters in new york, i am scarlet fu. here is what we are watching. stocks are slipping the day after a strong rally. housing data signaling the economy may have enough for a rate increase. ?ho is wheeling and dealing shares of lending club still plunging after losing almost half its value after the surprise departure of its ceo. first we want to get a snapshot of today's trading action. julie hyman has been tracking everything and the big point this morning was inflation. it was better than expected. julie: industrial production as

well but they are not doing much for stocks. not seeing a big decline. one would think, a b that is because it is bringing forward when the fed might raise rates but we are not seeing bond yields rise or the u.s. dollar. take a look at the bloomberg map . we have energy shares trading higher, consumer staples lower. a diverse group of groups doing poorly today although it seems like there is a little bit of a rotation out of the defensive's. within the consumer staples, have kraft heinz pulling back today. it does not look like a specific catalyst that is driving them lower. in terms of the dow loggers we have coca-cola and then we have been talking a lot about the home depot. they said the first quarter

would likely be the high point for the year in terms of sales growth. it is off from january to february and february to march, slowing sales growth. that appears to be behind what we see in the selloffs. scarlet: and a bright spots? it looks like energy is the bright spot that it is not helping lift the average. nymex crude was bouncing around a little bit that now gaining ground as crude goes above $48 a barrel. the sentiment seems to be shifting as evidenced by a number of banks raising their forecasts. individually in terms of oil movers, we have the oil services stocks doing well. thank you so much, julie hyman. we will check in later on. let's get our bloomberg first word news from mark crumpton.

par -- houseegel speaker paul ryan says uniting the republican party with donald trump will not happen overnight. going to get into the day to day up and down of this campaign. i am focused on policies and principles and unifying our party. we just began this process and it is just underway. poll says most people trust donald trump to lead the gop then paul ryan. a new poll shot -- finds voters want hillary clinton to select bernie sanders as her running mate. elizabeth warren was second with

19% according to a rasmussen support survey. castro.s julian in the moments before an amtrak train went off the rails last year, the engineer was distracted by report another train had been hit by a rock. that is one finding by federal safety investigators. eight people were killed. they said a key backup safety system was not in place that would have provided a technological safety net. the world health organization says while worries about the zika virus are on the rise, it does not recommend canceling the upcoming olympics. some have called for the games to be moved or delayed. the olympics run august 5 through the 21st. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus

around the world, i am mark crumpton. by gold at the expense of u.s. stocks, that is one theme emerging from the filings released this week. raised his equities to about three and a half billion dollars. gold has become a beneficiary. my next guest says diversification is critical to success. ight joins us live from boston. what do you make of this particular rotation? : i think the gold side is in response to the fact that no country seems to want a strong currency anymore, whether it is japan, europe, or the united

states. investors are looking for a store of value that is not actively being debased by the keepers of the currency. as far as shedding u.s. stocks to position for gold, i am less convinced that that is the best move in a world that is starved for yields and a world looking for store value. there is at least some resilient and world stock markets at the moment. scarlet: that is partly why you upgraded your recommendation on u.s. stocks from neutral -- from underweight to neutral. which companies are you focusing on? dividend payers? jeff: it is an upgrade that is a worldwide upgrade. if we look at the all country index, we have not made progress for two and a half years. while the u.s. is still trading near its highs, the rest of the world is trading below their respective highs.

the optimism is very much on a global basis. within the u.s., what we are position for is that this may be the weak spot in the economic cycle for the time being. we saw some data today on inflation and housing and so forth. if this is a moment when the economy can re-accelerate, that tends to be more favorable for smaller companies that have underperformed by enough of a margin that it feels like the right positioning. scarlet: you mentioned we have not made any progress. 500milar case for the s&p even though we are within 5% of its record high. we have gone nowhere over the last month. as we approach the anniversary high, --p's record jeff: we just keep reaching the

same levels. i am open-minded to the idea that we break out to new highs by the end of this year. the fed is very important. i think a lot of the importance in financial aspects have been in response to the stimulated of monetary policy. the markets have priced the fed out of the equation for the balance of the year so i think you have gotten what you are going to get out of that side of the equation. we need to see some real growth, profit recovery, but if we see that there is no reason we cannot breakout to new highs. scarlet: you mentioned the market has priced the fed out, but the fed may be encouraged to start considering the idea of a rate increase, they be june, maybe july. that cannot be good for the emerging markets in the rest of the world. key linchpin has been

the exchange rate for the u.s. dollar and the dollar was a big headwind for profits and commodity prices. it was working its way to the financial system so i think the world economy is relieved to see the dollar weaker this year. if the fed asserts itself back i think we seet, dollar strength and get back into that problem again. i would be shocked if the fed did something in june. it is only a few weeks after their meeting when the vote in the u.k. over brexit takes place. there is uncertainty and weakness in the data, today notwithstanding, i think it is too soon to accomplish -- contemplate a rate hike in june. i would not be surprised to see the fed talk tough and elevate the probability of the market's handicapping what they will do in june or july. scarlet: you are favorable on

corporate credit. are we not on the cusp of a turn as so many people fear? we have been tightening corporate spreads ever since the financial crisis but after last year when spreads were reset, not just in the energy sector but across the complex, we still see value. as we do our credit research and anticipate various scenarios, we think we are still being generously compensated for credit risk. of course, the idiosyncratic analysis buyer by -- borrower by borrower is critical late cycle and particularly when companies are exposed to fluctuations in energy prices are close to the edge. scarlet: thank you so much. global head of investment solutions joining us from boston . our mystery stock, no discount today.

shares are trading at their highest levels other -- ever. ♪

scarlet: you are watching bloomberg markets, i am scarlet fu. julie hyman has the big reveal on our mystery stock. julie: as i told you, it should have been at their macs level ever. -- max level ever. tjx is what we are talking about and they are trading at a record. year to date up at about 8%, or at least touched a record today. the company doing very well in the wake of its earnings report. year cop sales up 7% last

and the company raised its forecast. it is seeing a left on the back of these numbers although down off its highs of the day, still up one half of 1%. i want to break down the various tjx brands and where they are located is important. you see in purple, this is tjx europe. max, here ismar home goods, and here is tjx -- tjx canada with a comparable sales gain of 4%. amazing. elsewhere in retail, francesca seeing a big 30% decline, the first quarter preliminary earnings missing estimates but it also announced the exit of its ceo, saying he resigned for personal reasons. scarlet: thank you so much.

still ahead, is merger mania over? we are going to head out to california and the global insights leverage conference. alix steel sits lemkau.h gregg ♪

scarlet: this is bloomberg markets, i am scarlet fu. i want to head to my colleague alix steel at the leverage california,n speaking exclusively with gregg lemkau. alix: thank you so much. good to see you. last time you were on bloomberg in november he saw a pretty robust 2015 m&a pipeline. the first part of 2016 really fell off a cliff. gregg: the pipeline continues to

be strong. continues toonment be quite good although it is down from record levels. it probably understates the drop off if you look at the average weekly announced volume from last year versus this year, it is down 35%. it is just the lack of large transactions. alix: what does your pipeline look like for the rest of the year? gregg: it is good. it does not have as many big deals but the flows are strong and it is across all sectors. the health care sector continues to be strong. up ine seen a lot of pick activity and consumer and across the technology sector. i think we are bullish about the pipeline. it is the lack of mega transactions that we have not seen as much. alix: what do you make of that?

gregg: the fundamental drivers of the activity last year are still there, limited organic opportunities and keep track -- cheap capital. that still persists, which gives us reason for hope. i think the challenge is that it is greater headwinds in 2060, -- 2016, and we have seen real regulatory headlands. has been active blocking transactions for antitrust and for tax reasons. those two. distill at leverage buyout deals, one point do you think that will come back into the market? gregg: i would say it probably comes back in the second part of this year. massive record levels and additional sources of capital all desperate to put to work.

the capital markets are quite available. there is some limitations as to the amount of leverage you can get, and it is hard with limitations. there may have to be a reversion of returns required by private equity his they have to put this capital to work. alix: do you feel like there is a trigger for that or it is the clock counting down? gregg: they are going to put the money to work. either you invest the money or return it and i think they are more likely to reinvest it and drive returns. the second has been the leverage finance market to a degree. at the beginning of the year there was a backlog on the books of the investment banks. a lot of that has come through and i think as you see a lot of those commitments come off the balance sheets, you will see new commitments written. alix: in terms of the regulatory

issue, it seems like tax in versions was the way to help sell m&a for so many years. take that off the table now, what is it? texan version got a lot of headlines in some of the biggest transactions. it was really only about 5% of volumes. activity forverall 2014 and 2015, 5% was driven by tax inversions. it was not the biggest driver of activity. the bigger challenge is some of laws.titrust how manye halliburton, of those deals do you think will blowup? gregg: the biggest concern for to be in limbo for a long of time, two companies who

cannot make an independent determination. now in are seeing world where the antitrust bodies are a lot more stringent on transactions, they are thinking about a deal and they will think twice. that is what has chilled some of the activity. alix: is that where we see more asset sales versus the big leveraged buyout, billions of dollars merger due to the regulatory overhang? gregg: i think so. companies are still having the discussion so if you look at the pipeline, companies are still trying to figure it out. look at doing it with the regulatory environment, in a different environment they would probably say let's wait, let this administration move on and see if the next one is better. in this current political environment, i think people are more anxious as to what is

coming next. alix: so now rather than later because who knows what will happen? gregg: who knows? alix: dealing with tax inversions with mainly u.s. companies buying -- d.c. that dying? the texan version was probably more fuel to the fire and there were many that were -- allow there to be more flexibility in terms of how you could pay a premium. out of the system it makes harder for the math to work out but the strategic rationale will still make sense and if they can make the math work, they will continue to do it. alix: you are actually headed to china today. what is the trend? gregg: we have seen a pickup and massive outbound m&a. alix: companies looking elsewhere. gregg: buying anywhere outside

of china, and it looks like it is centrally driven. advantage while we have it with a relatively attractive currency and start to buy things. almost a quarter of volumes have been chinese companies buying companies outside of china. for five years back it would be less than 10%. more than half of the big deals have been interim loping on other announced transactions or buying assets that were about to be sold. if you think about these chinese companies, what they are doing is saying there is something that is actual. i know what the prices and all i have to do is pay a slightly larger price, and someone has done due diligence. sometimes we here they come in and announced a better deal and pull out a week later. gregg: there was a high-profile situation where that took place,

and i think a lot of these companies are still learning how to do m&a. to china,y i'm going how do you do outbound m&a? how do you transact with western companies that are going to be generally a little more skeptical? alix: you have regulatory, antitrust, and concerns in the leverage market. how about volatility? gregg: it impacts confidence to a degree and the one great factor that drives m&a is the ceo confidence. last year, the markets were first sixppy and the weeks of the year. now that the markets have recovered, i think the ceo anxiety level is still there and they are more cautious about taking out some kind of external growth. alix: such a pleasure to talk to you. that is gregg lemkau.

scarlet, back to you. scarlet: alix steel with gregg lemkau. we have a lot more coming up on bloomberg markets. talktball stadium, i will to steve cannon about the new home of the nfl's atlanta falcons. ♪

scarlet: we have some breaking news. icon enterprises of the was cut status.s cut to junk

once again, icon enterprises cut to junk status by s&p. back from thisou breaking news. we also have some more breaking news on the senate as well. mark crumpton is in the newsroom with details on that. passed: u.s. senate has legislation that would allow 9/11 victims and their families to sue other countries for their role in the 9/11 attacks. this comes one day after the treasury department disclosed , $1.68rabia's debt hold billion. they reportedly threatened to sell their stake if the bill became law. back in april, the obama

administration issued what amounted to a veto threat of the measure. haveright here, we will more details on this developing story as soon as we get them. bernie sanders is hoping to make it four in a row today. democratic presidential jaime are being held in kentucky and e more details on this developing story as soon as we get them. oregon. hillary clinton's lead is almost insurmountable, but still, he has won the last two primaries. kentucky is considered the bigger prize. former president bill clinton says he has been asked for a role in the potential hillary clinton administration. he says he wants to help parts of the u.s. that are still struggling economically. mrs. clinton said that her husband would be charged with economic revitalization, but told "the new york times" he would not have a cap net position. bergdahl'snt bowe

delayed until february. desertion andof misbehavior before the enemy. the international olympic committee says 31 athletes have tested positive in every analysis of doping samples from the beijing games. those athletes will be banned from competing in rio this summer. the retest of the london games will come out shortly. 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, back to you. scarlet: thank you so much. next year, the atlanta falcons will open a state of the

art stadium. you would think that an owner would jack up concession prices to help pay for the facility. instead, they promised the prices.ood and drink i spoke with steve can on why he chose to keep a lid on the prices. >> for me, it is a shifting business model. to me, the model for the concessions if they buy the right to the concessions, so they pay a significant amount, and have to make it up over the term of the contract. it has a negative impact on quality, pricing goes up, and often service is bad. we said, that is not a good model for us. we have not sold the rights to our concessionaire. they are essentially a service provider. they will pay a flat fee, but

there is no skin in the game for them, it is just about delivering quality. scarlet: at the same time, the deal you have has the power to set and control pricing, which is why you are able to lower the prices. there's that mean, if you wanted to, for the big premium events, like the super bowl, you could increase prices. is that a possibility? >> we are not going to do that. we have already said -- in these two big games that we have landed -- we will control the pricing. whether you are in for a concert, a falcons game, or the super bowl, for that matter, that is who we are, and the environment we want to create. scarlet: it is guaranteed? >> that is our pricing approach. scarlet: as it comes to concessions, margins on concessions, parking, that is one way that these venues make a lot of money -- can you do

without the big margins? >> yes, we can. in fact, it is built into the business model. ofn we factored in the cost the stadium, everything, we modeled into that this fan friendly pricing approach which concessionaires. a vibrantather create stadium with high demand, and give up some revenue to create that phenomenal experience than, revenuepoint, maximum extraction. scarlet: let's talk about the financing. costs originally going to $1 billion, and now we are talking about 1.5 alien dollars. billion. under the deal with the city,

blink is responsible for all of the cost overrun. can you explain what caused the cost overruns? >> stadiums are an expensive proposition. when you build a first of its kind stadium, which mercedes-benz will be, with the , you put all of these things together, and there are some unknowns. there have been some cost overruns. some of them are absolutely self-inflicted, meaning, when we came to a crossroads and said, we can go in the direction of the fan experience, where it would cost a little more, or almostngineering, in every case, we opted for the fan experience. we took on more cost knowing that we have a very strong financing base. the financial model will support it. for us, it is all about creating the great experience. scarlet: are there second

thoughts about the financing? will the city have to step up in any way? >> no, their commitment through the hotel-motel tax sticks. everything else, our company will take over. we are comfortable with that. cannon. that with steve here now to talk about the is ourcs of the stadium sports reporter, evan williams. the question is whether other stadiums will follow suit. i was just looking at the pricing. five dollars for a 12 ounce cup of bud light. two dollars for a bottle of water. >> it is amazing. not basketball or , the risk is not as big because there are less games.

are scratching their heads, saying, we would like to see the numbers, two years from now, three years from now. if they do not take a huge wash on the fan friendly pricing, or they end up making money because ieople will spend more -- think you would see more nfl teams doing things like what they are doing down in atlanta. scarlet: steve cannon is interesting because he was ceo of december cedi spends -- of mercedes-benz. you fast forward to last august, and mercedes-benz moved its headquarters to atlanta and signed this new deal to name the stadium in atlanta mercedes-benz stadium. there has been no president for two stadiumsfor with the same name. i asked him and this is what he

said. >> before we considered moving headquarters to atlanta, they took that on, there was an overlap because of the existing stadium deal. most would say, no, it does not make sense to be in the same conference with two different stadiums, and that contract will work its way through in due time. scarlet: a few years ago, there was talk of a bubble in the naming rights. is there still that talk? evan: the most expensive naming rights was for citi field, here in new york city, over a decade ago. in the past five years, atlantay with the stadium, levites in san francisco, at&t in dallas, we have seen some of the other most expensive naming deals that we have seen. it varies by stadium.

being totally honest, amanda is a better property then new new orleans.an when they think new orleans, they think the superdome. when you have your name on a property being built, like in atlanta, that will always be referred to as citi field, mercedes-benz stadium. scarlet: thank you so much for your perspective. picturesoking at live of capitol hill, where senate leaders are expected to comment on the legislation that would allow 9/11 victims and their families to sue other countries for the role in the attack. let's go to mark crumpton for more. mark c.: thank you so much. this is a controversial piece of legislation. the administration warned that this could cause a rift in relations between the u.s. and saudi's. however, those in favor of the

legislation said this was needed in the aftermath of the 9/11 attacks, in which there were allegations -- there were allegations that the saudis were involved in the attack. texas senator john corbin is speaking right now. he is handing over the podium to chuck schumer from new york. let's listen in. schumer: i want to really ank the families who worked so hard on this. when you lose someone from such an act, the temptation is to curse the darkness, say, why implode on yourself a bit, pull yourself inward. lit afamilies have candle. their mission is to not only bring justice for themselves, but send a loud message to

foreign governments -- if you help create terrorism on american soil, you will be brought to justice. that is such an important thing. i want to thank the families. they have had to end her so much over the last 15 years. every one of us can put .urselves in their shoes to lose someone to this kind of act is beyond words. they have had to cope with being single parents, loss of spouses, and tried to put their lives back together. these things are hard enough on their own. fight backve had to tears, pain, doubt. adding insult to their tremendous injuries, they have had to fight back in american courts. , americanes were told law prevented them from pursuing justice. the court rulings were backward, the logical, and wrong.

today, the senate has spoken about the and unanimously that the families of victims of the terror attacks should be able to hold the perpetrators, even if it is a country, a nation, accountable. this bill is narrowly tailored. mark c.: chuck schumer speaking today from the senate press gallery. by texas senator john corbyn. again, the senate passing legislation that would allow the victims -- the families of 9/11 victims to sue the government of saudi arabia. the obama administration vowed to veto the legislation. follow thisinue to story and bring your developments as they become available. ♪

scarlet: you are watching bloomberg. i am scarlet fu. this is your global business report. ipo ofs lucky with the its property division. jp morgan plans to open an investment bank in peru. they want to take it vantage of taketh america santos -- advantage of south america's fastest-growing economy. and, microsoft enters the brexit debate. mgm resorts chairman spoke with bloomberg to discuss the success of their initial offering and how they are paring

dividends with the offering. >> we took some of our best transactions and made the financial so overwhelmingly mafia,e that the rate they had to look at this. it. they wanted to ignore it because we were gaining, the asset class -- there were some things that we had to get them comfortable with. once they saw it, we went out to raise $1 billion and had $11 billion of demand, and crushed it. economy brazil's chosen the new bank

governor. the senate must still approve his nomination. staying in latin america, jp -chase isjp morgan bank ina new investment peru. they plan to hire more than 15 staffers this year. in europe, microsoft says that the u.k. should stay in the european union. they say that it is important for future investment. they have more than 5000 employees in the region. david: time now for our bloomberg quicktake, where we provide context and background on issues of interest. electronicin modern e are bidding for respectability again. the devices deliver a hit of nicotine without the typical

burning stick. bannedountries have their use altogether. 26 prohibit cells. closedtheir use in spaces. in the u.s., the u.s. food and drug administration announced .he first regulations in may also in may, the european union's court of justice banned advertising and limiting the nicotine content. global sales are estimated at more than $5 billion in 2015, of from $2.8 billion in 2014. appears to bee slowing. here is the background. a chinese pharmacist is credited for creating it in 2003. they went on cell in 2006.

they all work the same way. no burning tobacco, and thus, no smoke, or tar. there is the argument that they may be the gateway for youth to cigarettes,g especially because their ads with some celebrities smoking, and looking cool. e too new forart research on the long-term health ramifications. for more stories, visit bloomberg.com. ♪

scarlet: lending club drama keeps playing out. shares tumbled about 50% last week following the surprising

departure of the ceo. the shares once again are tumbling yet again today after they say they have received a justice department subpoena. here with some context is no, , following theah story. at its peak, you were saying it was north of $10 billion. stockafter the ipo, the spiked. since then, it has been a slow decline. recently, we have had a lot of drama that has taken a lot more market value out. scarlet: why is it so fascinating for wall street? this is not a significant company, in terms of size. noah: they were at the vanguard of peer-to-peer lending. it is based in online marketplace where borrowers show up, and behind the scenes, with line-up funding.

get individuals, someone with a little extra money, who wants to fund someone else's loan. as the industry group -- and lending club was the biggest out there in this -- lending club's of the world would go and lineup funding sources. these would be institutional engths.rs of all str some funds, eventually thibanks -- i think there was a lot of excitement about this being a growth area, something and wall street could do, the exciting, new industry to be involved in. scarlet: it was all about the search for yield. was a person who was a big part of this initially. >> he was a big proponent for the whole idea in the

marketplace model. in many cases, because lending case was so successful, he became the face of the industry. scarlet: the face of the industry, and then some stuff happened, some conflicts of interest. have we figured out what happened yet? there is a lot of conflicting reports. >> there is a deficit of information over the last week and so this all stems from $3 million of loans that had their changed.on stakes lending club realized this, but basically there was alone sell that lending club had to turn around and bite back. this sparked an investigation. the board, according to people i spoke with, looked into this, and we're getting what they felt incomplete information.

ultimately, they decided to go separate ways. .carlet: they severed ties what is next when your founder and ceo is gone? >> i think there is a lot of soul-searching going on right now. there is also a big need to lineup new sources of funding. this was an industry that was doubling every year. to keep up that growth or sustain what you had, you need nor so -- new sources of funding. scarlet: thank you so much. coming up in the next hour, alix steel sits down over at goldman sachs in california. ♪

scarlet: it is 1 p.m. in new york, 6 p.m. in london and welcome to bloomberg markets.

from bloomberg world headquarters in new york, good afternoon. here's what we're watching -- better than estimated data on inflation and housing signaling the u.s. economy may be strong enough for a rate increase the summer. offerow's fed minutes may clues and we will speak with the chief u.s. economist. we take you live to the goldman sachs leveraged finance conference in rancho palos verdes, california where we will give you an interview with some top strategists. the canadian wildfire has continued to rage spreading north and threatening the possible oil patch and a look at the severe economic toll it is taking on canada's economy. marketset's go to the desk with julie hyman. all of the indexes are down about half a percent. there was better than estimated

economic eta but it has not done much for stocks. we are seeing them lag is the session goes on. i want to bring up what we learned about george soros and his holdings. he cut his stock holdings by about 37%. he is buying gold through various means including in the spyder gold trust. he bought some negative options a net is down about 0.5%. i have an looking at some of the charts to see what other investors have been doing over the longer term. date withe spy year fun flows in and out. there has not really been a clear trend. even though the spy is higher on the year and more recently, we saw some outflows earlier last month, since then, it has turned

around. there has not really been one direction. in gold, there definitely has been a more decided direction. the price of gold is in white and in blue is an index that tracks all of the gold related etf holdings. we have been seeing investors really piling into gold. george soros is not alone. you look at abx which is eric gold, those -- which is barrett gold, those look good. scarlet: there does not seem to be a whole lot of a reason or a theme tying this together. julie: energy is higher because of oil prices and that we can see what's going on. utilities are lower and consumer staples are lower as well as health care. there is a rotation out of more defensive stocks but there does not seem to be a catalyst that technology is down as well and that's not more defensive. it's a little bit con founding. individually, united rentals is the best performer in the s&p 500 with no new headlines.

southwestern energy, little bit more reason with oil prices trading higher. a little bit of a model this session. scarlet: thank you so much. let's turn to the bloomberg first word news. mark: thank you. house speaker paul ryan says he is trying to unite the republican party around commonly held principles and policies. the process is still in its early stages. speaker paul ryan responded to an nbc survey showing more voters trust donald trump to lead the party then him saying i hope it's donald trump, he's getting the nomination. the person getting the nomination of our party is the person to lead our party. london's first muslim mayor has invited donald trump for a visit. he engage with the war of words with donald trump and donald trump calls the new mayor nasty

and challenged him to an iq test. despite the invitation, the mayor made it clear who he wants as the neck u.s. president. he says i hope hillary clinton trounces him. a wave of bombing struck outdoor markets in baghdad leaving at least 69 people dead. authorities say the bombings likely were carried out by islamic state. in the last week, the group has claimed responsibility for attacks that killed close to 200 people. the 1980 u.s. olympic hockey team's victory over the former soviet union is forever remembered as the miracle on ice. now the goaltender is selling his gold-medal. the estimate is between 1.5-2 point $5 million. there are 17 items in the auction including his jerseys and the american flag that was draped over his shoulders after the team's victory at lake placid in new york. hours a day,24 powered by error 2400 journalists in more than 150 news bureaus around the world.

the latest batch ofet: data in the usa shown some improvement. today we got solid inflation and industrial production figures. the atlanta fed's unofficial forecast currently puts growth at 2.8%. we had an official read of the u.s. economy that indicated expansion of only 0.5% in the first quarter. joining us now is michael ferroli. good to see you again. what does this latest batch of data tell us? >> the retail sales are poor. i would say the industrial production report, the headline beat was driven by utilities which may have been a weather story. housing starts was mixed but it was good to see that the inflation numbers have held fairly steady. that is the progress the fed wants to see.

it's better than the first quarter. i think the atlanta fed number is now at 2.5%. it away, it should be better than what we saw in the first quarter. it's not the kind of bounce we have seen in the past few second quarters but that are than the first. scarlet: we've got this familiar pattern of the last couple of years were you had a week first quarter and a recovery in the second quarter. you attribute those previous instances to a tightening of monetary policy? >> i think some of what we have seen over the past year or two as far as the economy not really accelerate becaus may be due to the f that while the fed is only hiked once over the past two years, they have shifted from massive balance sheet expansion which a strong forward guidance to taking those things away. when you think about monetary policy, it has been somewhat restrictive over the past year or two. scarlet: in terms of the april inflation data, anything we need to be cautious about? >

you can always take out one category or another but i don't there was anything that was a screaming outlier. 4/10 is firmer than we and others have look or but the core coming in at 2/10 there were no big outliers there. overall, you see some gradual firming not only in the cpi but also the pc inflation numbers. that's a sign the economy is fairly healthy. in spite of all the concerns. scarlet: it certainly pays attention to pce and they look at inflation expectations from surveys. you have looked into how different metrics influence that. energy prices certainly but surprisingly, food prices have an influence. >> the fed looks at the longer-term inflation expectations, 5-10 years which ideally would not eat influenced by transitory movements. of those inflation expectations can get influenced

by this and protect the food. maybe because people see food every day i'm not even people who have cars. that seems to be one of the factors influencing lower inflation expectations. food price inflation has been remarkably soft over the past year. it has been the second lowest over the past 20 years if you exclude the great recession. that maybe one of the factors holding down inflation expectations. that certainly has been front and center in the fed environment. higher, start to move that can eventually get them off the sidelines. scarlet: does the cpi data pave the way for a stronger dollar? >> today it has been kind of mixed but if we see that again and again, certainly, i don't think any markets are prepared for two hikes this year. if that's what we see, that's how the fed would follow through. you would see a stronger dollar if that happens. scarlet: we have the minutes

from the last fed meeting due out tomorrow at 2:00 p.m. what to expect from the tone of the minutes to tell us about where the fed is thinking in terms of the next rate increase? of fedave heard a lot speak over the past few weeks in many including the fm oc ,resident -- the fomc president the hikes seem reasonable and that was the expectation of the majority of committee participants back in march. the minutes we will get tomorrow , i suspect what they will say is developments we were expecting in march still seem to be on track. therefore, the 2 hike plan may be on track. it sounds a little bit hawkish if it reflects the tone we have been hearing lately from various fomc officials. scarlet: final question, what must happen in terms of economic data for a july rate hike? >> we need to see good numbers

like we saw today and the employment data, it can be like it was last month that it or to decelerate further, that might be a problem. it will be the inflation and employment data that will be key. scarlet: thank you so much. coming up in the next 20 minutes, oil trading at a seven-month high and we will take a look at what is driving up the price of crude oil. manager tells us how he is navigating the risks and opportunities in emerging markets and we go live to the goldman sachs leverage finance conference for exclusive interview with the banks global go heads of leveraged finance. ♪

scarlet: you are watching bloomberg markets. let's go to the market desk and a julie hyman. julie: i want to start in the ee is falling, abv after one of the patents on its arthritis drug may be invalid. it is agreeing to consider a challenge. you can see the shares are surging. humira butpendent on there is a reasonable likelihood the challenge will be won. take a look at the bloomberg. i took a look at the revenue for humira so itre is accounts for about 61% of the companies overall sales last year. you are seeing that negative reaction in the stock today in

that challenge potentially to the drug. we are looking at hertz, the ceo and two other top managers are byecting their confidence buying 40,000 shares each of the company with the stock down 46% this year through yesterday's close. this expression of confidence of sending the shares higher by nearly 14%. scarlet: thank you so much. when you look at the commodities space, oil is building on its recent gains, rising to a seven-month high on speculation that u.s. crude stockpiles fell and there were supply excesses in nigeria that are gone. joe wiesenthal and i spoke with the chief economist at renaissance capital. we asked to my so many under estimate nigerian supply disruptions. >> we were surprised, too. we only just had announcements from ministers suggesting that output could have dropped from over 2 million earlier this year to 1.4 million.

other estimates that it was only down to 1.7 so it looks like an extra 300,000 barrels out of operation at the moment. joe: you said you are caught by surprise. joe: we have heard stories about nigerian supply disruptions in the past. what is the underlying cause and how quickly have they resolved in the past? >> part of the problem is there is not as much oil in nigeria as they think. they've got 2 million barrels per day or they should have and they think that's huge. when you spread it between 170 million people, they are producing 12 barrels per thousand people per day. compare that to 300 in united arab air mitts, 270 in saudi arabia and 12 barrels per day selling go very far between 1000 people. nigeria does not a lot of money but that militants were the oil is, they think they should be getting more of the cash and the rest of the country thinks they should get more of the cash. there isn't much cash to go around.

scarlet: i come to nigeria, many people have been betting on some kind of currency could devaluation which we have not seen. it tagged to the dollar? >> we have been looking for some depreciation in the nigerian dollar since last year. we had the vice president speak at the conference last thursday -- last wednesday and he was still saying it's a matter of debate for the authorities now. : you said there isn't that much oil to go around or not as much oil as people think. everyone thinks they should get paid more. any policy moves that can improve the situation? >> it's tough. these militants in the delta i checked their website, they're looking for an independent state. they say the only way they would be better off as if they were their own country. if you divide the 2 million barrels between the people in the south, they are right.

what has happened before, the former president bore them off debt bought them off. that proved enough. all of the great idealistic gains as an independent country fated and they had enough cash. joe: is that option available now? is that a more difficult proposition now? >> it's certainly more difficult. there is even less money to go around the normal. there is an additional problem and this was flagged the year was one the presidency and people thought he might be more successful because he is from the north and the muslim at addressing the northern muslim problem. but they were concerned he would fall out the christian south and particularly the militants. this is being raised as an issue a year ago. there is a religious and ethnic undertone to this. scarlet: that was charles robertson a renaissance capital.

we will discuss oil once again later with an exclusive interview with jeff curry, global head of commodities at morgan stanley from the goldman sachs leveraged finance conference taking place in california. ahead, a mixed-signal and emerging markets and one manager says how he is playing the biggest head with -- how he is facing the biggest headwinds and tailwinds across the globe. ♪

scarlet: this is bloomberg markets. when finance chiefs and central bankers met for the imf meeting in april, the agenda was dominated by a number of factors

on the global economy. one investor says this gathering was unlike any other because the risks of tomorrow we thought were far off may be here sooner than we think. let's go to cory johnson and carol massar. carol: thank you so much. we are welcoming everybody on bloomberg television and we are here with eric fine, port folio manager on the unconstrained emerging-market bond fund and joins us here in new york city. great to have you here with us. talk to us about emerging markets. we have seen quite a rally since late january lows. how have you taken advantage question mark >> we are an unconstrained bond fund so we can be in local or hard currency. when we respect of the tailwind which was money was not going out of china. all this monetary and fiscal stimulus was boosting growth and bidding commodity prices, we were long local currencies. now we are much more respectful of the headwinds.

and we in hard currency bonds and that the top-level version of what we did and what we are doing now. cory: what are the headwinds? i think the key headwinds are europe. it's not so much brexit but it's that europe is fragile. they had a crisis and it said you cannot have one money in many thistles and financials. since then, probably for the third time, they still have individual fiscal policies and individual financial policies. when the next stress happens anther it is brexit, election in france perhaps or referendum in italy, it will be very hard for europe to say credibly that this time they will actually deal with the issue. that's number one. number two is china. that keeps rising and growth keeps declining. that cannot continue.

ofs a very important source demand for commodities which is important for emerging markets but it's also the second world's -- second-largest world economy. the last one is the fed which may be in a tough spot. if it does not hike, it's because final demand is weak. if they do hike, there could be a big challenge to local currency positions and ultimately to u.s. growth. those are the three key risks. scarlet mentioned the imf spring meetings held recently. you were there so what were the big things being talked about? >> the biggest team was a lot of these risks i mentioned reviewed for years since the global financial crisis as either very low probability scenarios and risk not thinking too much about or as very distant. i think what happened at imf was

people went in with that attitude and they came out inking that these are more likely than i taught. -- then i thought and maybe closer. china may have had a year or two on it's on to fix things but if you throw europe added maybe a that'seuro or boj targeting its currency, they may have a shorter time. .hat was the biggest conclusion another bige is downgrade in long-term growth expectations. whether you are corporate or worried about profitability or a bond person and you want good final demand and central-bank have credibility, i think they were essentially bearish. interior ration in syria and northern africa, with some problem of migrants fleeing those troubled areas, do you look at problems in europe is another potential risk over the

course of the summer? >> it may be the first, oh most important one. migration is taking all of the oxygen out of the room. it is furthering thisre -nationalization of europe. they already could not come up with a europe wide financial system solution and europe wide fiscal solutions. now this is taking all of the energy out of those discussions. aya which was the reasonable response from authorities. say you americans underestimate the political commitment to union. i think it's hard to say and i think they increasingly recognize it. policy makers like those whose livelihoods don't really depend on the existence of the union have switched.

whether it's independent business manner imf officials -- carol: so pretty bearish. thank you so much. scarlet: thank you so much. coming up next, we will go back live to our exclusive covers of the goldman sachs first annual leveraged finance conference taking place in california. alix steel will speak with the cohead of goldman's leveraged finance. ♪

show me top new artist. ah, ha ha. show me top male artist. my whole belieber fan group. it's not a competition, but if it was i won. xfinity x1 lets you access the greatest library of billboard music awards moments,

simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. scarlet: from bloomberg world headquarters in new york, you are watching bloomberg markets. let's begin with headlines. mark: thank you.

it will review the findings by the national transportation safety board on what likely led to last year's deadly derailment in philadelphia. federal regulators said the probable cause was an engineer speeding into a turn because he was distracted by news that another train had been hit by a rock. the ntsb adds the contribute in cause was the lack of a speed control system that would have slowed down the train even if the engineer tried to speed up on a curve. eight people were killed in the accident. donald trump is about to get his first real attack ad from the clinton campaign. tomorrow, pro-clinton super pac will air its first tv attack against the likely republican presidential nominee. they plan to spend 100 $37 million advertising against mr. trump between now and november. the first ads focus on his statements about women. the senate plans to vote today on president obama's request for

more money to compat zika virus. lawmakers are considering three plans to cut the 1.9 billion dollar request to 1.1 billion dollars. the white house has threatened to veto the bill if it reaches the president desk. zika can cause a serious birth defect and is expected to spread more widely during the summer mosquito season. 8000 oil rig workers north of fort mcmurray are now being ordered to evacuate. the more than two-week-old wildfire is continuing to grow. the mandatory evacuation zone has been extended by 30 miles north of the city. poor air quality is helping prevent more than 80,000 evacuees from returning home. a,bal news, 24 hours a powered by our 2400 journalists in more than 150 news bureaus around the world. scarlet: thank you. we want to go back to our exclusive coverage of the goldman sachs leveraged finance

conference in california with alix steel. with the global cohead's of leveraged finance for the americas. a pleasure to be here and a great pleasure to talk to you. you have been talking to clients. how did they feel right now about the leveraged loan environment? >> i think they feel better today than they did a few months ago. we had a very slow start to the year with volatility. in the last 6-8 weeks, we have seen a real resilience in the markets. i think everyone is excited to see investors with capital and cash looking to put money to i keep hearing the business cycle is coming to an and and the credit cycle will turn in the fall. you can get pessimistic on that end and we have seen yields moving up a little bit and investment-grade is not as strong as before. how does that coincide with what you hear question mark >> i

think our issuing and investing clients feel pretty good about where we are. at the start of the year, the markets were volatile. on february 11, the high yield index was over 10%. if you look at it today, it's close to 7.5% which give you a sense of the magnitude of the rally. investors and issuers understand these markets are cyclical but they feel good where they are now. we saw issuances from solaris who had a hard time getting up your books. have you been able to clear your backlog that you could not before? >> we have and we were very judicious in the loans we committed to and the credit we supported. in top markets, you want to be with those credits that have strong followings. when those deals have come to market, they had great receptivity. that's one of the most important

things when you think through these transactions is underwriting strong credit and ensuring that the story is well told. alix: you want investors to put money to risk and that was hard in the beginning of the year. have you been able to offload them all? most ofve had to move our inventory. there is a little bit of residual but we have been successful. there is real risk on mentality for investors. they are coming to us looking for the riskier assets. that is a big change from the beginning of the year. alix: in what areas? you specialize in energy and natural resources. where is the activity most prevalent question mark >> there has been a lot of activity in technology, media, and the telecom. a lot of activity there. we are starting to see some big deals and health care. a lot of activity there.

a little biteen slower in other areas but the market has improved across the board in each of those sectors. alix: and you will continue to go forward with that question mark >> yes, high yield has been among the best-performing asset classes in the u.s.. 7% which is up at investment-grade. that performance is attracting more money into the space. we have seen about x billion dollars of fund flow into the high-yield market this year. that gives fund managers more money to put to work they are looking to put that money to work in new issue. yet the we don't issuance you need, we cannot get the big leveraged i outdone. what do you see as the clo issuance for this year? >> beginning of the year, there's virtually no clo issue but since the end of february,

there has been $16 billion. there are signs of life in that market. the weekly and monthly trend has been positive since the end of february. alternative buyers have stepped to the four. re. clo issuance was slow and it still slower than last year but it's picking up steam. >> you have had a lot of supply of new transactions. investors have a lot of repayments. even though we had a slow clo machine, payments are coming through and investors had to put their money to work. alix: do you think that will be a trigger for that to put money to work? do we need to see 3% gdp? largese markets are very and they are very significant asset classes. the loan market has had negative outflows year to date.

that being said, we are in a lbo,t with a $7.5 billion leveraged buyout. alix: we are good on that. alix:>> we are seeing incredible demand. the order book sizes are in the billions of dollars. i am pretty optimistic the large transactions can get done and even though there is some signs of concerns over various sectors regarding the economy, people feel pretty resilient. talking to clients of the conference, people feel pretty good about their positions. alix: are there other sectors where you will see the most activity in the next nine months? quite technology space is as he and continues to be so especially software. it has been busy and health care for a number of years across multiple sectors. i would think the energy business will start to pick up. alix: you would think. when will that happen? >> i know you will have jeff curry on later on today.

i'm sure he will forecast. we have a number of energy companies at this conference and a lot of them have been following the commodity curve quite closely. many of them have access to the market right now. for some it might be on a secured basis. that money is therefore a lot of the companies and i think it's a matter of them thinking about what capital they need. alix: such a pleasure to talk to you both and thank you so much. a global co-heads of leveraged finance at goldman sachs or the americas. scarlet: thank you so much. minutes, we've20 got more from that conference and david solomon will say why he sees improvement in the sector. shares of pandora are surging to their highest in almost two months and we will tell you what is sending them higher. impact ofthe economic

the canadian wildfire and what it could mean for the oil patch. ♪

scarlet: this is bloomberg markets. home depot is the biggest drag in the dow industrials even after they posted earnings that beat analyst estimates and raised its full-year forecast. let's see what the numbers show. increased 6.5%s marking the 20th straight quarter of growth. it has not posted a negative

comparable sales since early 2012. management said sale decelerated as the first quarter progressed which is giving investors some pause but it comes to annual ,ales, it's out pacingloew's both benefit from u.s. home prices. the cfo says they continue to see strengthen the housing market. lowe's will report earnings tomorrow. what more americans are fixing up their home, home depot prospers. there is a correlation with the remodeling index. work remodelers are getting. is good butove 50 the index is holding above that. home depot also need out loew's when it comes to the stock price. this is a five-year view. analysts, one reason behind the home depot success is its restraint and building new stores.

america is seen as over retailed. home depot which has over 2000 stores as cap to its store account flat. with go to the markets ask julie hyman. julie: i want to start with lending club which has been seeing a sharp tumble again today. it's off more than 50% this week. this is after the company said investors have suspended purchases of its loans. it's appear to lenders so if you don't have someone on the other side of that loan, it's not good news. it says it received a department of justice subpoena related to the recent events surrounding the departure of its founder and ceo. the shares are now down by 10%. going in the other direction, we are watching pandora. analyst isund pressing the company's management to explore a sale saying the company has not been able to boost returns for shareholders even though it has a great product.

the investor also disclosed about a 10% stake in the shares and derivatives. the shares are up by 6%. going back in the down direction, red robin torme burgers, worst one-day decline in about nine months. the company cut its revenue forecast and scaled-back expansion plan saying revenue will only grow 8% this year but before it was a 9.5% forecast because it has been struggling from competition. the shares are down 15%. not sure what was going on with united rentals today but there is a note out from citigroup on the company saying it's viewed as a positive risk reward because of strong free cash flow and expected multiple expansion because of improved rental rates next year and that the rental equipment industry broadly is positive right now. demand growth last month outpaced supply for the first time over the past 15 months.

i found the reason for united rentals. scarlet: thank you so much. the levers loan market a singer's most volatile time in years but it's not necessarily scaring off investors. goldman sachs global cohead of investment banking tells us whether he trusts demand under current market conditions. he spoke with alix steel from the goldman sachs leveraged conference in california. >> markets run in cycles and one thing that happened this year that's interesting in the leveraged finance spaces we had a downward pressure on the markets with the spread widening at the beginning and market lows came in february but we have had a massive tightening since those lows and happened quickly. as a result of that, many active managers actually did not keep pace with that market rally. the result is they are looking actively at new issues and other opportunities to generate some return and keep up with some of that market tightening bay mr. lee in the year. alix: i feel like when i talk to

individuals, they look to see the credit cycle turning sometime in the fall. they don't believe the credit cycle is sustainable. on the flipside, you have covenant light still looking relatively robust. that seems to be the way the market is pricing in covenants. what is the dynamic there? >> you've got all the corporate .ebt and sponsor transactions the first thing i would say is lbo activity is quiet. there is a regulatory impact on lbo which has not impacted making the capital structures more conservative. corporate debt is different. if you look at a broadly, the economy is growing but not really robustly but it's slow. at some point, the credit cycle will turn. pundits have talked about the credit cycle turning for a number of years. it has been a long recovery but

has been a long and slow recovery. it could turn sometime in the fall. the credit cycle could go for another couple of years if we continue to see this slow, sustainable growth in the u.s. economy. alix: clients are not worried about the business cycle turning? >> it depends which ones you talk to. the one thing that created volatility this year is investors really felt like we were heading into a recession and things were slowing down. that was disconnected with the corporate clients i was talking to who said growth is a little sluggish but it still growth. that got very disconnected at the beginning of the year. cautious and we have had a long cycle and investors are cautious but when i talked to ceo's, there is no question their businesses are doing fine roughly speaking. there are some exceptions like retail. that is under a lot of pressure and there is a lot of change. there is no question we have had a bit of an industrial slowdown over the last 12 months. when you look at it as a whole,

things are growing slowly. as long as that is the case, we could continue to see a relatively robust market. alix: corporate ceos feel ok but investors are little cautious but they want to play catch-up. some of the debt issuance we saw that you guys are trying to in the beginning of the year when you could not find buyers, are you finding them now? >> yes, we are finding buyers for transactions coming to the market. in the context of a market environment, one of our jobs when we make commitments to capital structures is to bring it to market at the appropriate time. sometimes you have to wait and be patient other times, the market is buying very aggressively. the market tone has improved significantly. when we look at the commitments we had our books going into the end of the year, we basically have been able to move all of that paper with no losses. it's at the original price.

there were some that were sold at a discount when you look at the overall package of ups and downs, basically, that product has moved to the market appropriately. when you look at the market environment now, we're in a position where the demand is stronger because of some of the dynamics. at the moment, you'll see a lot of activity in the near term and we are seeing that in our shadow backlog. the markets are pretty healthy for debt issuance and people are trying to get stuff done. alix: when you're looking at veritas, are you able to shop that today? >> it was not a transaction we would lead with. it is a transaction that could be marketed today at a different price than the original price. it's a transaction but did not clear the market. scarlet: that was david solomon. up, the raging wildfires in canada have shifted toward the oilsands forcing workers to

evacuate and causing suncor to halt operations. what does it mean for the canadian economy? that is next. ♪

scarlet: this is bloomberg markets. it's time for the bloomberg business flash. icahn enterprises has been cut to junk ratings by the s&p. s&p says the outlook is stable.

itsintel partial sale of venture capital portfolio is drawing interest from investment firms. clued manye firms in other firms. they have a combined valuation of $1 billion. they often by portfolios of companies indirect deals. with iphone shipments flowing in the u.s. and europe and apple maybe sizing up a big market in india. expected to arrive there tomorrow and it would mark his first visit to india as apple ceo. apple is pushing to open its first retail stores in the country. and that is your bloomberg business flash. we want to turn to canada where the massive wildfires in the country are shifting back toward oilsands north of fort mcmurray forcing the evacuation of thousands of workers. amanda lang joins us from toronto. give us an update on the status. >> as those fires shipped north,

they close in on the oilsands operations that were only just getting operational again. suncor is the biggest and the workers were talking about 19 camps, 8000 workers on .it's aion of alert settlement in the middle of a forest. workers who get trapped by a fire in the north find themselves terribly trapped. no one is taking chances here. this fire is pushing onto ers and remains wildly unpredictable. theomes on a day we have conference board of canada putting numbers on what happened here. they were anticipating that most of the operations would be up and running by the end of the month. some of these numbers may get worse but they say what we have seen already is close to a $1 billion cost.

we have seen 1.2 million barrels per day oil taken off-line because of the fire. tot lost gdp only amounts 6/10 of 1% of the total in canada so as people rebuild, there's expectation you'll get a bump up in a quarter after. as the fire continues to burn and change direction, the economics will change as well. scarlet: so the preliminary estimates her eyebrow raising. what can you tell us about the energy companies there? you mention suncor but what about oil sand production? >> there had been hopes of getting production going again. suncor has shut down its operations justice it was getting back to work. it has evacuated its employees in the expect haitian is that most of the 8000 workers will be evacuated. the shutdown continues but we should say when you shut production, it sends the price of the commodity higher. if you look at the toronto stock exchange, the energy stocks are

one of the bright spots. au are seeing a little bit of lift because of that commodity price and we are also watching the nigerian delta and some other supply issues. that is giving a bit of a boost to the stocks in the hope that they can weather this storm but not all of them will. the price may well be higher if they can. scarlet: thank you so much. next hour,in the david will speak well -- with chief officer and the prospect of a fed rate increase in june or july. ♪ . .

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david: it is 2 p.m. in new york , 2 a.m. p.m. in london in hong kong. welcome to bloomberg markets.

from bloomberg's world headquarters in new york, i'm david gura. inflation starting to stir in the united states, does that mean a june rate hike is on the table question mark jpmorgan global head of research says janet morgan -- janet yellen is aiming for a busy year. -- it's higher oil prices and the more stable dollar that have been the game changers since the beginning of the year. david: the senate defying threats from the white house and saudi arabia passing legislation 9/11ing victims from the attacks to sue. the black rock chairman and ceo, larry fink opens up in an exclusive interview. what he has to say about the brexit