bell] mixed session over the holiday weekend, with a third straight monthly advance since 2015. >> the question is, "what you miss? >> within spitting business -- spitting different -- spitting distance of an all-time high area joe: plus we dig into -- hi. joe: we day into what's driving prices higher. oliver: we live into the debt secret that reshaped saudi revelations for generations. we begin with her market minutes. major indexes of an climbing higher in the last hour so that they have almost to the positive value mark. however for the month of may we're looking at gains for the nasdaq. up marginally if we

roundup for the month of may. the s&p 500 climbing 1.5%. surprising and to the day, the dow a significant laggard. utilities leading the way, kind of a strange and unpredictable start to the week. exactly.oliver: i want to start off talking about another weird stocks move. look at the shanghai stock futures this morning before we came in. speaking of starting off on a weird foot, a bit of a flash crash that happened in china attributed to selling on a hedging account. obviously a big deal because of the dirt in the liquidity in the market. i think that investors are worried about the regulations the government is having on daily trading but here you see what's happening. very little liquidity in the market, you have the kind of tips. moving into the u.s. an

interesting kind of move in the later half a day. particularly semi-conductors ending up. a big reversal, down 50 basis points at one point during the day. the only sector with above average volume, two other stocks least threees of at standard deviations that were larger than typical. nothing particularly dependent on consolation, but medtronic did have people looking at the margins. two-year yields and their worst month since december. we know it's a short end of the hike on fed rate expectations. that was the story of may. the repricing of the fed curve, a good possibility that we get a hike in june or july and you see the hike into year yields. the biggest jump since december. the british pound took

a big spill after the league campaign was picking up momentum. looking up cable, the weakening against the rail. the fact that this is a telephone pole is significant. ahead inam is usually targeting older folks. online polls the camp has been consistently ahead. really, joe and oliver, it shows how sensitive investors are to any perceived change in opinion with just three weeks to go. joe: on the commodities front, oil has been a pretty big run. it was up for a while but then it gave up ahead of thursday's opec meeting. gold has been getting slammed a bit lately on the repricing of fed expectations had a tiny bit of a rally today. not huge, but sort of a reversal for the trends we have seen this month. those are the market

minutes. let's take a deep dive into the bloomberg using the function at the bottom of your screen. taking a look at the bloomberg economic surprise index, at the highest since 2014, of course relative to expectations. the move up does not mean that data is suddenly growing and the economy is expanding, it just means you are coming in better than expected. there has been a pattern of the week first quarter followed by a stronger second order and order to bloomberg intelligence economics is are being driven by rebounded housing in the .ersonal and household sectors personal spending was surprising to the downside and now on the upside. joe: interesting. i guess the economists making the forecasted think it would happen. scarlet: in addition, they aren't -- adjusting expectations for industrial data coming in weaker. to take a quick look

at a currency or commodity or something that has been on a huge surge lately, but coin. you may have missed it over the holiday weekend, but this is one year. in the last week it's up 20%. if i can zoom in -- one second. see the big game in the last couple of weeks, exactly, of over 20%. people think that it might be china outflows again. some people citing the economic catastrophe going on in venezuela. whatever it is, a lot of hype for this. people don't talk about it as much as they did a couple of years ago but it is doing quite walk -- quite well. oliver: did bitcoin fall into a risk on, risk off? didn't seem that way. i've never seen anything particularly compelling on it but it could be.

oliver: value versus growth this year, different from what we have seen through a lot of the bull market, we're looking at the russell 1000 value index versus the growth index. it has been in a downward trend since around 2007, meaning that growth has been outperforming. the online has been looking at gdp year-over-year, just to give an idea. the theory is that the traditional kind of stock here is that it would outperform in a slower economy because you need to look for growth so you go to the companies that are more growth oriented. transitioning into a stronger economy does value stocks might take up and you can see a very small sort of the cup this year in terms of value outperforming as an interest rate story but it will be interesting to see they can keep that story going. you can see all of

these and more on twitter. katie? katie: the s&p is kind of do or die. looking at this channel over the last year since the market reached that new high in may of last year, basically what we are getting is every time we get to that 2100 level it falters and we are seeing that again a little bit today and we peeked above 21 and fell below. what is it about that number? the downtrend on line, a year-long downtrend channel that is widely followed. because it is so widely followed, it's not uncommon to get gamed a little bit. that's what i call it. brief moves that tend to fail. we did see it clear last friday, leaving us with a breakout ending confirmation. if we see a strong close above 20100i would be more convinced.

>> you are saying it becomes a self for filling prophecy? see the line and it takes hold and people sell and get the line. how high could it go, if we do get that breakout? because it would be a new all-time high clearing that last resistance, we have to use other methods of driving price targets. ,he width of that channel connecting the february low at its last point projected that 2350 from a long-term perspective. not only do we have that confirmed breakout, it would be premature to focus on that level and get it to the upside. does that boil out to a certain pe level that makes people wary? >> it's not based on economics, rather the fact that the trends tend to keep their same church a read. moving in the same fashion that it has over long-term.

scarlet: tom demarco was talking what how the chinese stock market can get jittery. we saw a flash crash, as oliver illustrated over the weekend, overnight. to what extent are you looking at them for the determination for how fragile or resilient the stocks are? >> is a great indication and we have been looking at a loss of relative strengths for the chinese stock market versus the s&p 500. coming already from a disadvantaged perspective of long-term downtrends. days of that performance being a relative relief rally, if you will, with loss as momentum and relative strength that i think is significant. do you take anything into account as far as volume? one thing feels like they haven't taking into account is

looking for january to february 11, volume being higher on the way up rather than the way down. does that mean anything to you? i will be honest, i don't look at volume indicators until the is a big spike. that tends to be an inflection point in the market emotions running high. otherwise it really the stuff of the textbook. input volume is so different in way back when and i have found that those volume trends mattered more. a little bit of doubt. , some people argue that transports are an important indication and a sign that the whole market can hold up. how significant is that to you? i'm not a theorist, but we have noticed the lack of purchase a patient in the average. when you look at that as a ratio , it's been a proper downtrend and has been for quite some time , really reflecting the loss that started in early 2015.

if you look at past periods of underperformance or sort of when the transports were more lackluster, it tended to be associated with weaker broader markets. 2015 is of course a good example . 2011 to 2012 is very volatile for the s&p 500. even prior to that in 2008. i think it does matter and it would be nice to see them capture relative strength. what about info into etf as possible investment? katie: it's not really my thing. it certainly does matter and people to track it. it's more long term that i tend to focus on the trend oversold. things like that. aiver: with a little bit of bounce back in the bull market rally, what are you looking at in terms of technical indicators after the run-up we have had?

katie: bullish reversal is the context, testing what i would call psychological resistance. this would be a natural place to stop and refresh the consolidation phase. even a pullback potentially into the mid-40's. i would welcome that as a way to get into those energy stocks. katie, thank you very much for joining us. scarlet: coming up, the american consumer coming back with a vengeance. be enough to push on central-bank raise rates in june? ♪

>> let's get to first word news. prospect routers at the line 11 war crimes tribunal in one time of a want victims relatives to testify before the trial. a federal prosecutor me the west today at a hearing, saying that many of the witnesses are sick or elderly and may not be available when the long-delayed trial starts sometime next year. they say that it should be done in private. russia is denying involvement in a wave of late-night airstrike in northwestern syria that killed 23 people. the syrian observatory for human rights relies on reports from local activist and says at least seven victims were children. russia has reportedly not conducted any, operations or airstrikes in the area. juries found a former suburban chicago police officer, drew

peterson, guilty of trying to hire someone to kill a process that are who helped to convict him of murdering his third wife. peterson faces up to 60 more years in prison. president obama is urging americans to be prepared for the coming hurricane season, warning against what he says is a growing complacency when it comes to dangerous weather. friday the government released its forecast of the hurricane season, saying that there is a 45% chance that it will be below normal. last year it included hurricane watch team. the new season begins tomorrow and ends on november 30. day,l news, 24 hours per powered by 24 hour journey -- 2400 journalists around the world. ?"arlet: "what'd you miss? today's mixed economic data

failed to provide world interest-rate probability of the odds of a june interest rate hike, which are 24% and 53% respectively. lower than friday after the chair signaled willingness to show progress. our investors taking the message to heart? let's ask michelle meyer. michelle, friday janet yellen did not push back against the hawkish fed speak, but the market is taking it pretty much in stride. why is the market taking this as too much of a taper tantrum? or just a tantrum? michelle: as you showed, the probability of june is still significantly below 50. i think that heading into the june meeting most expectations will be cut down but they won't actually go ahead and hike. i think that what the fed is doing is preparing the markets for the normalization process to continue. to begin again after they

stopped in january and february. but it won't be abrupt. market participants perhaps understand that. so, the idea that they might go earlier than expected with a trade up being that they will go slowly? we don't have to worry about none of them and then a lot of them? start this summer in and perhaps go very slowly after that? michelle: i think that's the hope. the reality is that it is going to be dependent on the data. i think that that is what the fed has been saying over and over again. this is data dependent, dependent on the shock that we may or may not see in the economy and we will be calibrating policy based on how these things evolve. that's a difficult thing to do, which is why they rely so much on messaging. what i was going to ask about. they have been saying data dependent wherever. interior we know that they are all data dependent.

so why do these expectations seem to price again over things that they say as opposed to actual data? >> i think there is confusion as to what will actually worse the fed to move. it's not just data dependent, its risk aversion in the level the fed has. after the december hike the market prices in a fairly decent bath of higher interest rates. not the extent they put into their document, but still a path to a higher rate environment. and then you have this risk off event where the fed made it clear that they will be risk averse and they want time to assess the damage. and now they have told us they have had enough time, but that is very hard for market -- market forces to understand. scarlet: the fed and market watchers are out of sync and to that end the fed wants of using job owning as a tool. here's an example -- i love this -- the open mouth operations for

how to reserve before the fomc meeting. the janet yellen june 6 speech was reportedly scheduled pretty late to give maximum option a la the on whether there is a rate increase or not coming. so, how critical is friday's foreign payroll report? >> that's absolutely right, the fed will use these open mouth operations as an important tool. often times it will be right before a meeting or after an important labor market or economic indicator. ther the last jobs report fed president came out and reported his in the fed's take on the number we will hear from yellen. mattersthe jobs report in that it will give us an indication on the trend of market growth. that said there will be a number of things that are a bit difficult to determine from the numbers. one being how does the rise in strike play a role? our view is that it draws 40,000

from the headlines. on top of that, what are the special factors we have to account for. you always want to consider calibrating for these factors. last week we had solid housing numbers. are we in the clear? what's the next indicator? onhelle: housing is recovery. it's been bumpy but it's a clear upward trend and i have felt good about that. several instances in which you can make an argument that there is still tightness in the market. looking at the home price appreciation running in excess of income. you have to remember that it is a bumpy ride up. it will only provide a modest tailwind. do you see the nature of the housing recovery changing? since the crisis we have seen some cities with incredible

gains and obviously we have seen the big boom in multifamily. you expect the composition to change? michelle: i do. i think that one of the things that hosted the recovery in the beginning phases was apartment construction. multifamily buildings, particularly in the top urban areas. those markets are seeing more and more evidence of being saturated. now you have to see a shift in the higher-priced urban center construction to ones that are maybe a bit more on the outskirts and more affordable, which is a hard balance. joe: all right, thank you for joining us. scarlet: breaking news here. the ceo of staples has agreed with the board to step down. he's stepping down. shira goodman will be named the interim ceo of staples while ron sargent steps down. this all follows as they basically next their merger after a judge agreed with the

ftc that the combination would reduce competition for business customers. ron sargent stepping down, you can see shares moving slightly lower in after-hours trade. coming up, the king u.s. dollars ruling gold. ♪

joe: "what'd you miss?" the correlation between the u.s. dollar and gold. i'm looking at a great chart the talks about what's been driving gold lately. it is off to a great start this year, but it has been tumbling lately as the x dictations have been ratcheting up. you can see it in the inverse

correlation of the dollar and , lowest in 30 day about a year. as the dollar has strengthened and these expectations have gone up, gold has tumbled. one of the things that people like to get, gold, things they like to diversify in their folio , this really just shows that lately it has been doing the opposite of the dollar. not really so much diversification as a pure opposite indicator. oliver: particularly in this -- interesting is the percentage of daily move providing value. good insight. everyone was talking about recession, but you haven't heard that in a while. something interesting here, basically a messy chart, but these numbers came through today and personal consumption jumped up. trying to put that into

perception, but it could mean for the biggest hearts of the bull market for 2015 really was the consumer discretionary. that's the line where highlighting now. consumer discretionary stocks outperforming. you had a little bit of a flag in the last year led particularly by one stock we just tensions. stick -- staples with retailers whose performance has been abysmal. the more indications that we get from a strong consumer, it will probably be good for stocks with first futures on oil here. that's obviously a big part of the story as well. is amazon considered consumer discretionary? staples and i amazon are obviously moving in different directions and inversely correlated. coming up, donald trump courts deep pocket donors. tom barrick is helping him. why is he endorsing trump for president?

next. ♪

youlet's get to first word let'st word -- emma: get to first word news. has a lead over bernie sanders, 51% among likely democratic primary voters, percent per38 sanders. california holds its primary next week. americans overwhelmingly supporting changes to the presidential nomination process area 38% said they have little confidence that the democratic nomination process is fair or into a poll by the associated press.

44% said the same for the republican party and 40% said they only had some confidence that each party had good nomination systems. a return of more than 80,000 residents to a fire damaged oilsands city, beginning tomorrow as planned. 2400 structures were destroyed. 19% of the city remained intact. the philippine president-elect is promising a crackdown on drugs, saying he will pay bounties to military police or officials capture drug traffickers dead or alive. $64,000e will pay up to in use leftover campaign money to finance the bounties, which he says will target drug dealers , including anti-narcotics agents. his term begins june 30. global news, 24 hours day, powered by our 2400 journalists around the world.

breaking news on under armour, updating its 2016 outlook. they say they are cutting their full-year revenue forecast because of the sports authority liquidation, revising their view full year net revenue of $5.29 million. 1.4% ines were down active trading. that is because of sports authority they were able to recognize $34 million of the revenue for 2016. they will be seeing a quarter pairing of $23 million. to that end they are selling revenue growth the high 20% range. we have breaking news on staples. in sargent stepping down june 14.

we had the staples president of north american operations becoming the interim ceo. they had to call off their merger. oliver: now that it is off the table they will have to dig deep to find revenue or sales growth. when that boost for merger synergy is a way they will land with stocks down 52% sargent became ceo in 2006. that is probably the first and foremost thing to do. scarlet: the most important context. "what'd you miss?" another big-name endorsing donald trump and raising serious cash for the campaign. you got tom darrick --tom barrack, explains why he is backing trump bloomberg exclusive. i am an arab-american. i happen to be catholic, but i grew up with shia, sunni, and jews. i spent half of my time and released.

so, what he is saying, even among the arabs, is look -- islam is not bad. p ship -- people worship it is not bad. but you got to take first-line responsibility to help us stand up terrorist. if the 16-year-old kids are being taught by a mosque in the middle of your community to strap on tnt and walked through a shopping center, we are going to have a seriously different kind of dialogue. so: the dialogue taking place is a kind of hyperbole. >> i was going to say, what you say makes sense and makes sense to probably every american. but banning muslims from entering the united states doesn't make sense to a lot of americans. it away he did, you might feel different.

i know that you have to let donald b donald. for the average person, that hyperbole resonates -- saying, i'm terrified. when you have 1.5 -- 1.5 million syrians coming through, the issue is not whether they are syrian, islam, catholics are jews. those of the same issues we have with anybody. that this was at a level where we needed to walk it down -- the world will line up quickly and change for the better. getthree of them fought

terrorism to go away. --y have been the best out allies to america. but the foreign policy of america is not the end of the right? .nd the father of four sons there's no more be waged that i want my sons to go to. i don't understand what iraq was about. i don't want them going to syria . i don't want any of those boys to die. i don't want israel to be plagued with bombs and the ridiculousness of what's there. nor anyone else either. you have to have a consistent foreign policy. our foreign policy, when we one day say that the shia are the bad guys? they were the bad guys. they were all our guys until they are not. and then we all of a sudden take off sanctions off everyone?

the trading partner before that was saudi arabia, three miles away. what do these for court -- what do these poor countries hold? whether it is donald or hillary, just having a consistent platform policy about what we're doing in the region, we are becoming independent, which is great, but we should reward the energy producing middle east partners helping us to camp out terrorism abroad. >> when he says -- let's little while on the mexican border, ban muslims, are you saying he's just deliberately trying to be provocative in order to get people to recognize that it is an issue around which there has to be a different kind of discussion?

tom: i'm certainly not all rights to steve for him. i think he says he's going to do it unless the muslims help him. i'm saying it is hyperbole. just like he is doing with paul ryan, saying -- i'm tough enough that i will really ban muslims. ?o, what has happened what does that mean? we had better really start figuring out ourselves. we are america. i promise you that the problem has been -- or good allies are all trying to figure out how to get rid of terrorism. it's terrorism for them at home. they are losing their young sons

in this war. backed up by iran. by the way, the u.s. is just confused. i think his message is more for found. saying that he's mostly solved this and will shut it down so we figure it out. it has caused everybody thinking about how we will figure it out. my belief is that that won't happen. he will find a way to make a .eal that lessens the impact turn to coming up, we the untold story behind saudi arabia upon 41-year-old u.s. debt secret. find out how the deal shaped u.s. saudi relations. ♪

scarlet: all right, we've got some breaking news on valvoline, they have while for an ipo and are looking to raise $100 million. that appears to be just a placeholder amount. through bank of america, metal -- merrill lynch, citigroup, they are said to be completing the valvoline ipo during the fourth order of the current year 2016. sales were $925 those six months

the income was $133 million versus $90.5 million. we will continue to ethan i am this one for you. time for the is this flash. earlier, thened staples ceo is stepping down next month following a 4 -- failed merger, handing of duties on an interim basis. they say that they mutually agreed on the move. sergeant believe the job after their annual shareholder meeting on june 14. photo sharing cap instagram is letting businesses create special profile so that customers can contact them directly, offering business users data on which is getting the most traffic. facebook says they are looking to leverage their 400 million users to sustain revenue growth. a record number of candidates are scheduled to take the financial analyst exam this

weekend. 170,000 people plan to take the exam compared to the 160,000 registered last year. that is the bloomberg business .lash for more than 41 years the saudi arabian stake in u.s. treasury holdings was a national secret, but in response by bloomberg the u.s. government released details that the current king of us on $170 billion in holding. also revealed was how and why the very secrecy was granted in the first lace. injury,let's get to dignitaries documents. joe: congratulations. so, why was this a secret, andrea? and they broke up other countries, why did they not specify saudi arabia?

andrea: we have to go back to the early 70's. opecall of 1973 when the producers put an oil embargo on the united states. at that time oil prices put drupal. the economy went to the worst recession since the great depression. the economy was in bad shape. what we really needed saudi arabia to do was for them to buy bonds. we pay them a lot in petrol dollars. we kind of needed those natural dollars to recycle back into the u.s.. hence we let them buy the bonds in secret. what were the benefits of the secret arrangement? -- wee looking andrea: were looking through -- andrea: we were looking to national archives documents and there was a special cable the survey requested the buying to be kept strictly secret. at that time the u.s. is truly

an ally of israel. , saudi arabia,rs egypt among other countries, were fighting a war against israel during yom kippur. that was the reason why the oil embargo to face. they wanted to buy u.s. debt, but they didn't want to look directly at -- directly or indirectly of funding israel. the first story says that failure was not an option. so like it was accommodation between political and geopolitical economic pressure. >>. in a way saudi arabia was china. >> i like that, good analogy. >> we just needed them to buy the bonds back then and there was not a lot of disclosure around all of this stuff so why not?

you pointed out that that person was an unlikely person. andrea: right, bill simon. bonds a brash wall street trader. he ran the mutiny desk. he was recruited by nixon's administration. as the energy star. they moved him to the secretary of the treasury at that time. that was him there, right in the middle. he was known to have quite a temper more in line with the wall street personality. basically the troll of treasuries was around 170 billion. saudi arabia is talking about applying pressure right now. is that the number? can we pinpoint how much they hold?

andrea: just like any other country in the world, the treasury doesn't actually know how much saudi arabia earns. what we do know is that under aroundasury it shows up 160 million. like you mentioned, they are threatening to sell u.s. treasuries and other assets. the truth is that it comes from the middle with a source saying that the saudi arabian treasury is at least as much as the advertised holding. so there's that. all right, everyone should go online and read a great story. andrea: thank you. off the memorial day weekend we take a look at the driving habits of the american and the health of the u.s. consumer. next. ♪

three charts are giving mixed signals. matt joins us now. fresh off of the memorial day weekend, where a lot of people that a lot of driving you look at the mileage that we were accumulating. >> one of the things we have been doing a lot is the first thing we do when we look at consumer spending data is removed the gas component because the prices have been so volatile. it is pretty interesting because if you adjust for gasoline prices, inflation consumption is actually surging and you can see in the chart that we have had the highest growth in gasoline

consumption since 1999, so that's interesting because it parlays nicely with that miles driven data compiled by other agencies, also at new highs. >> this is essentially looking at volume? >> exactly. oliver: he rightly is accommodation of more miles the efficiency over cars, suv posco and trucks? -- as he's, and trucks? >> that's a big part of the story. >> something else that you were looking at, how do consumers feel about business conditions? discount of it, consumers are spending and that's what matters, but it seems i'm we got a report on consumer confidence that didn't look as good.

one of the indicators in the report that ticked up was the percentage of respondents who said that business conditions right now are bad. if you zoom out of it it looks just like the unemployment rate. it goes up and down with that and it is a kind of early warning indicator that perhaps if this continues, we will have to see. it's not really clear why they say that. maybe they are picking stuff at work, but more and more are saying that it not a great time for business. scarlet: pulling up a chart again, i like your point, we don't know what customers are basing this on aside from their hunch. >> but it is interesting looking at the latest number. the biggest jump since 2012, we don't see moose of the size or a often, so it is something we will want to watch going forward.

>> we were talking left the wealth effect. will that show up in there at >> there are two main components the drive confidence. one of them is the trend of wage growth in the other one is, as you say, the wealth effect. the other survey shows that bouncing act. there is as much granular data on their, but that will certainly be a big factor going forward. joe: the last chart compares the 10 year yield versus jpmorgan and it will manufacturing pmi. new the start of the monthly look at international manufacturing data. the general decline in the treasury has forced on it the slowdown in the treasury. >> this chart always stuns me. the correlation is so tight and it speaks to help mobilize u.s. financial markets have become. therejust as idea of --

may be a shift towards services overall manufacturing is still that credit intensive portion, so it makes sense that it moves with bond yields. month data tomorrow for the global manufacturing pmi. last month it was at 50 point 1, 1 10th above the line is neutral. we could be talking to gold manufacturing. >> this is tight connection suggests that international is more important? ties their hands to some extent. like negative interest rates in down.pulling our rates this is just another reflection of that and it goes to show how globalize not only our markets but our economy has become and that could be a challenge for the fed.

>> thanks for joining us. scarlet: what you need to know for tomorrow's trading day? next. ♪

scarlet: i'm scarlet fu. "what'd you miss?" don't miss this. i can't get my words out today. spendingpanese capital at 7 p.m. eastern time. i found it interesting that was sector to rise 2.4% after the previous month. i will be looking at chinese manufacturing pmi. it is pmi day all the way around the world. of course, china is particularly crucial on this front, affecting emerging markets and its own economy. oliver: let's not forget about

u.s. manufacturing either. spending tomorrow at 10 a.m. eastern time. >> hyundai tomorrow. scarlet: that's all for "what'd

john: i'm john heilemann. mark: and i'm mark halperin. "with all due respect" to those who thought they could come back late from the holiday weekend and be late for donald trump's press conference -- mr. trump: are you ready? do you have your pen? this sleazy guy. voter cycles? no. jeff sessions. crazy bernie. lebron. --t adds up to -6 million- well, let's the that adds up to 5 million, $6,000. bob dole is a fan of mine. bob