on a tunnel complex in the country. a pentagon spokesman said it was the first-ever combat use of the nicknamed the mother of all bombs. the pentagon said that isil is using bunkers and tonal's to thicken their defense and this is the right munition to reduce it. said last week's -- he said he believes western powers including the united states have sided with terrorists against syrian authorities. he also said syria has no chemical weapons left. north korea may be on the verge of conducting its sixth nuclear weapons test soon, according to the u.s. research institute that monitors kim young owns regime, nuclear test sites appear primed

and ready to conduct a trial. analyst wrote on the website 38 north that satellite images show activity at the site. still, south korea is downplaying expectations that a nuclear test is imminent. the united nations security council voted unanimously to wrap up the peacekeeping mission in haiti in mid-october after more than 20 years. the country has made steps followingbilization recent elections. the council voted to extend the mandate for a final six months during which 2300 military personnel will gradually leave. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. ♪

>> live from bloomberg's world headquarters, i'm julie hyman. abigail: were 30 minutes from the close of trading here in the u.s.. joe: the question is, "what'd you miss?" u.s. banks reporting their first earnings under the trump administration. will hear from the cfo of the nation's largest lender, john shrewsbury is wells fargo joins us on the banks first-quarter performance. in the church referendum just -- turkish referendum. willis plain white matters to investors. let's look at where the major averages stand as we head toward the close. taylor: we are reversing some of the early gains we saw this

morning after those banks were reporting, taking a leg down lower. perhaps some of this coming off the geopolitical risk. coming out yesterday saying u.s.-russia relations are at their lowest point. and a few hours ago to the u.s. dropped its biggest nonnuclear caves in afghanistan, so definitely taking a leg lower. i wanted to look at the tech sector. since president trump was elected, taken financials have been big winners. it looks like some of that in the tech sector is reversing over the past few weeks. it's been a slow couple, something were looking at. financials have been the big story of the day. jpmorgan,roe of 11%. bond trading the highest in three years. the fakeout from

account scandal and the mortgage lending business. so financials taken a little bit of a leg lower. let's look at maybe a reason why. correlationg the between these banks and the 10 year yield. we see a pretty significant drop in the 10 year yield this week, down 16 basis points. that might be part of the reason why we are seeing it drive down those bank stocks lower. that's something we are looking at. joe: thanks, taylor. let's stick to those banks and get more information about what we learned from today's earnings releases. joining us is limericks finance reporter who covered all the numbers and calls this morning. what is your big takeaway, the bp tro of what we know about this data on large cap banking right now? >> we saw a really strong

capital markets performance. most of the bank so far have ,ncreased fixed income trading maybe a little bit of weakness on equities but still strong overall. maybe not a slowdown in lending but definitely muted. julie: and that is surprising, at least on some level. ,e've been talking about yields they went down at the end of the quarter, but the widening are anticipated widening of the yield curve, low regulations are great news for the bank, and the stuff is not really materialized. >> they haven't really given a good answer for when that will happen. after all these factors, it doesn't seem to be quite there yet. income about fixed trading, that's been a big

driver for the banks the last few quarters. is that expected to continue? >> a think you could expect it to continue if you have the clients going out in continuing to trade. if the volatility is there, that's great for every type of asset class. if you don't have that, you as a bank don't have a lot of things to offer your clients. even for someone like wells fargo, they're saying even ,igh-grade credit mortgages they're not a huge trader compared to someone like citigroup. joe: we were just talking about the relationship between the bank stocks and the yield curve. the idea that the wider the curve, the banks do better. is that an overly simplistic way of talking about the models? were looking at trading, you talk about equities and all this

but it seems to move in line with that spread. >> it is interesting. it was a key measure profitability for the banks. right now they are able to charge more for loans and there's not a lot of competition there. right now it seems like all is good for the banks. not happening yet. do we get any guidance from them as to when we will start to see the net interest margin expand more? we are getting more questions about that deposit competition. atit's important to look each bank individually. jpmorgan had an 11 basis point rise in its net income. wells fargo was totally flat, intereste their net follow sisley. i think we will really know when

bank of america reports on tuesday. they are the ones saying they are positioned to see the interest rate rise. abigail: what about the credit card business, what did that look like, especially around charge-offs? >> there was an interesting story on chase sapphire. that card has been popular among millennial's. >> it's because of all the new customers they acquired last year. the charge of some higher but it's in line with what they are expecting. the were they like to use is normalization. maybe we start to see it pick up, but not in a way that's

worrisome to the banks. joe: you follow wells fargo closely, and the ongoing fallout and scandal last year from the fake accounts. is the bank in the cycle of getting back to normal on that front? >> that's the question that all the investors and analysts want to know. is it something that happens this year, in this quarter? there is really no consensus. thing, theykey raise the cost estimate by $20 million to almost $80 million each quarter. that's a lot of money. julie: great stuff, thank you so much, laura and jenny, are finance reporters here at bloomberg. don't forget our interview with the wells fargo cfo coming up at 4:00 p.m. today.

coming up, the former minneapolis fed president. we will hear his take on president trump's comments on chair yellen, and what will help drive inflation up. is bloomberg. ♪

>> "what'd you miss?" president trump says he will not rule out a second term for janet yellen. he indicated he had respect for her. today on bloomberg daybreak: americas, the former president of the minneapolis federal reserve was asked what is going to drive inflation up? >> i think certainly eventually, when we have unwound more of the

slack in the labor market, driving more people to the sidelines, we will see wage pressures that would translate into inflationary pressures. the fact that inflation remains as low as it does is good news for the fed. they should take advantage in -- by keeping rates low and bring more people from the sidelines. quick someone once told me to be a great central banker, you got to be a great liar. if the president comes out and says he likes low rates and a weaker dollar, how does that change the conversation? >> absolutely not. whens what i would've said i was on the fomc, but it doesn't change any of the conversation at all. i do think that people on the committee find it easier to do their job without having elected

officials commenting so directly on monetary policy choices, but they're given independence, and they will do what is best for the economy, regardless of what the president or other elected officials say. >> janet yellen may do that but if she doesn't get nominated, the next person won't have that independent mindset and will have a closer relationship with the white house so there's a red ability issue there. what are the chances of something like that? yesterday'shat comments from president trump , i welcome yellen them. i thought he seemed more open to the idea of reappointing or re-nominating her, and if you look at the outcome the fed has enjoyed, unemployment is low, inflation remains close to target. i think it's going to be hard for him to argue that she hasn't done the job that has been given

to her. i would say that i continue to be concerned that the president may be not as alive to some of the boundaries that we've seen previous presidents respect with respect to the fed. i'm still a little concerned you might see an appointment there to someone to the job that is not as independent from the white house. but it is early days. we have to get the president a chance to see what happens. >> the question on the pressure from the president, this is a transmission of the federal reserve policies in the following sense, if the president is out there saying i like low rates and yields are driven lower, does that complicate things for the federal reserve? >> i don't really think so.

it obviously create some political pressures, but that's the benefit of being as politically insulated as the fed is, that they don't really have to be taking those comments on board. if the president says something the office of the of that in his neck conversation, it won't affect the fed either. the fed is focused on achieving its economic objectives and it has independence to do that. >> if you have things like north korea pending, the growing dispute with russia over syria, things like that, is that something that can cause them to have caused in raising the rates? >> hundred talking about how political events can influence the course of the economy. that is something the fed certainly has to take on board. i've been a little concerned, i see a lot of uncertainties politically that could spill

into the economy both here at home and overseas. the you are so close to effect on interest rates, you have to be cautious about raising rates. any kind of downside risk is difficult to deal with. you just want to keep the economy as healthy as you can to avoid those down at risk. show thelitical risks least uncertainty around the outlook and the fed has to take that kind of uncertainty on board. quite how does it read overall, the question of the balance sheet? how does it affect your decision about what to do with the balance sheet? talkedk the fed has probably a little bit about these tools, the interest rate and balance sheet as being separate. they are really one combined package of stimulus the fed has

in place. if you're thinking about changing your reinvestment policy, that has to have an influence on the speed of increase on interest rates because now you're tightening through another mechanism. the economy't say really has any effect on how you would choose between those two instruments. it's just two different ways to get to the same in, which is to tighten policy save you don't have unduly high inflation. julie: that was the former president of the minneapolis federal reserve on bloomberg daybreak: americas. it's time for the bloomberg business flash, a look at some of the business -- biggest business stories in the news right now. toshiba has canceled meetings relating his memory chip business, according to people familiar with the matter. the california-based firm said the purchase may violate their contracts and wants to renegotiate exclusively before

any sale. i heart media as extended its deadline and sweetness terms to -- thes creditors largest u.s. radio broadcaster push the deadline back a week and offered investors the equivalent of $900 for every $1000 of principle. vendors have until april 21 two sign up. the euro holdings is looking to hire more bankers in the united states. saying in an interview the brokerage is once again looking to expand its m&a business in the americas in order to help capture a greater share of overseas dealmaking. silvio urlesque on his investment company sold italy's most successful international soccer team to chinese investors for 788 million dollars, according to people familiar alletee matter who say

advisers agreed to provide about $320 million of financing. that is your bloomberg business flash. loansp next, what kind of are americans falling behind on? will break down the different strands of delinquency. this is bloomberg. ♪

julie: i'm julie hyman. "what'd you miss?" ubs pointing out in a report today the growing default on subprime auto loans are the canary in the coal mine. as we heard from some of the results from the banks today, consumer lending is probably a little bit weak. here were looking at auto loans. this goes back to 2003. we saw a big uptick in these delinquencies. these are 90 day delinquencies in 2009-2012. they are trending back up. i wanted to compare it versus student loan and there were seeing a higher level of delinquencies, although it has really been steady over the past couple of years, but higher than with car loans and credit card loans. we drew the redline showing the difference between growth and

contraction. it's interesting that were definitely seeing an uptick in delinquencies among auto loans and student debt as well. not necessarily surprising given the rhetoric and the talk we've heard around it, but here it is in the actual numbers. joe: nothing to freak out about justthe banks are saying normalization in the credit cycle. here's one of my favorite charts i like to look at from time to time. initial jobless claims number was superstrong today. the white line is the inverse of the four-week moving action -- average of initial jobless claims. when it goes up, that is good. years, 500 going back 10 it's nice how the charts lineup. invest or anything just based on one line, but it's pretty nice and i like to bust out this chart when people say there's no fundamentals and everything is so bad and it's all being inflated by the fed or

whatever. here's a nice measure of labor market health. it's been steadily improving since the bottom of 2009 and now the lines are meeting once again. question is, how low can that number go and if they do keep correlating, will you see sideways movement? there's probably a mathematical limit to where it could go. something that stands out relative to the uptrend of jobless claims, inverse, is nice and steady. it's good for the workers out there and good for the real world. chart has to do with the reflation trade. we do have a reversal in the reflation trade or recently. this site is risk on. we have the s&p 500 higher, the bloomberg dollar index higher and the 10 year yield going

higher, telling us that bonds are selling off. right around the first of this year and blue, the bloomberg dollar index, started to take a in lower, even as stocks put the current all-time high on march 1, the 10 year yield followed that downturn for the s&p 500 so it looks like the bloomberg dollar index is a bit of a tale of what's happening for some of the other asset classes. president trump talking about how he wants to see a week dollar. if that's true, this chart may suggest a reversal of the risk rally. if you look at the chart more recently, so me things are suggesting the so-called reflation trade, if you look at breakevens, that's especially notable. people are just sort of losing faith in that. joe: the dollar was an early sign of that. julie: let's take a quick look

at stocks as we head toward the market close. people do not want to be long going into this holiday weekend. from new york, this is bloomberg. ♪

>> u.s. stocks are closing at

the lows of the session. the s&p 500 trading at its lowest in 2 months. i'm julie hyman. >> and joe weisenthal. >> i'm abigail doolittle. joe: we want to welcome you to our closing bell coverage. with market minutes. stocks finished right near the lows, another decline for the major averages here. look at this, another day of intraday volatility at their lows. joe: by the standards of what we have been getting later, 2/3 of 1% sellafield substantial. julie: it was a substantial selloff. the groups in the s&p 500 were down today. financials, even real estate was off. if we hopped to the

lower.rg it has been said by reuters that the company looking to sell. finally, a little bit of green there. broadcom getting a bid that apple supplier coming up off of yesterday's selloff. joe: let's take a look as government bonds, a lot of action there today. julie: what happened to all the

action? joe: that's pretty remarkable. i guess because he got that selloff and danced around a lot. there we go, unchanged. longer-term chart. julie: why don't people take a dip into the bloomberg here? we have to prove joe right. we saw a lot of whip sawing around. day,at the end of the ended up unchanged. we go back to that six-month chart of the 10-year. out of aeally fallen range that has been tight for a while. you see it breaking down. that's a huge story. was something scott miner was excited about from guggenheim. he said, i can't believe we are breaking through this level while live on tv. if you look at currencies, we have been watching the dollar index. it's a same chart abigail pulled up a few minutes ago with the trendline showing the dollar has

been the leader year to date, down 2.6%. he did have a bit of an uptick following the red brick we read about in an interview with "the wall street journal" and president trump following the re read about in an interview with "the wall street journal" and president trump yesterday. as we talk about these geopolitical tensions, there was a great story on the bloomberg saying one proxy for concerns or risk aversion related to the korean peninsula has to do with the yen-yuan pair, the south korean yuan. the yen has been gaining on the yuan recently, which shows perhaps there's a bit of -- four 2017, there hasn't been that much movement. joe: finally, a quick look at the commodities, looking at oil and gold. not a ton of action. $53 a barrel on west texas intermediate. gold gaining on the risk-of sentiment. look at this one month chart of iron ore, one of the ugliest charts around. increased supply, speculation of

less demand in china down 14% in the last month. those are today's market minutes. julie: "what'd you miss?" shares of wells fargo falling today after reporting a first-quarter miss on revenues. the bank is facing challenges in mortgage banking and new customer accounts. john trues very is the cfo of wells fargo and he's joining us now from san francisco. thank you for your time on this busy earnings day. we appreciate it. when you look at the year-over-year numbers for wells fargo, we seem to still be a legacy of the fake account scandal at the bank. what do you guys do to turn this around? what do you do to stop the declines you are seeing? >> the first thing we do is recognize what our performance in the order was and put it in context of the last year, for example. we produced $5.5 billion of net income.

we think about what it means for loans and deposits. 1%ns were flattish, down quarter to quarter, but up 4% year-over-year. deposits, how we find our business, is a reflection of the relationship we have with customers. we are up 6% to 7% across the board. those things feel good. we also measure what's happening. we been talking with investors monthly about what's happening with consumers in branches as it relates to new account openings, new credit card openings. and those things have slowed down the most through probably december-january and have begun to tick up through then. we've rolled out a new compensation program. we've rolled out new ways of doing business. that feels like it's on the path

to recovery. it will take some time to do that. the overall numbers, loans, deposits, profitability for the company as a whole are well intact. we have higher expenses, which was noteworthy on our call this morning with it's on the path to recovery. it will take some time to do that. investors, between consultants we have an helping with analysis that's being done on our business practices, etc., in legal fees, we're probably spending about $80 million of more than we otherwise would be. that's the real impact. but that sort of sums up the pieces. i want to ask you about that cost in particular. does that mean 2018 is the one -- when you might start to see these costs abate? what is your timeline on that? bigger pieces of those costs will probably abate towards the end of next year, and there may be other costs associated with the practice of settlements. there will be litigation the needs to be settled here and there.

we'll call them out clearly when they happen. those types of items will be running through, throughout 2017. litigation lasts into 2018 or afterwards. those things tend to take more time. dealing with customers, focusing on the growth of the business, the health of the business, product capability, that seems to be on track and trending in the right direction. hile, the performance at $5.5 billion of net income for the quarter, is off the top of our game. i wouldn't lose sight of that. joe: i want to ask you a macro question, i'm looking at a chart of the year-over-year change in commercial bank loan and leases growth, and we are some of the slowest growth industrywide since the recession. really seeing deceleration over the last couple of quarters. what is the story there? is this a sign of macro weakness or something else? >> there are a few things in play. i think overall we have some bank loans being termed out in

the bond market, capital markets activity is very busy. that disappears off the books and banks. companies extending maturities, fixing rates, looking for a different capital structure for themselves. macro wise, there's a whole lot of enthusiasm for growth oriented policies to present themselves and become an acted as a result of this new administration. there's a lot of people with ideas, extension ideas, deal type of notions, that are waiting to act, waiting for clarity. when the broad business regulatory landscape is well understood, when tax reform is understood, when health care is understood, those are things that matter to businesses that are contemplating taking on more debt. in terms of total growth, not just refinancing our market share changes, those are things that have to be clarified. i think it will take a while, while the sort of cadence of policy begins to reveal itself the people that are watching and

businesses are watching carefully. abigail: how is your commercial real estate portfolio performing? >> very well. we are the large commercial real estate lender. as i suspect from your question, as you go market to market and property type,o there are some areas straight multifamily in some areas, where there is excess supply that has to be absorbed, this one area of caution. luxury single-family and some major metro areas where there are high-priced condos that have to be absorbed, that would be another one. then different forms of retail, or you have different categories of retail that are really struggling to compete in the amazon era. i would say those are areas for caution. we do our underwriting project by project, property by property in light of the supply, demand characteristics and other fundamentals in markets and with developments or properties, and we feel fine about our portfolio. it's likely that is one area you will start to see sort of a

bubbly top in lending from place to place. talking a loteen today as we have been dissecting the bank earnings here, about net interest margin and about the yield curve and a sort of unpredictability there. what do you all expect from the yield curve and therefore from net interest margins for the balance of the year? net interest margin has more to it. in theo have to factor growth rate of both of those at the same time, because that math will matter. incidentally, our focus has been on drawing dollars of net interest income and margins calculate out where it calculates out. the big drivers today are going to be policy rates moving up great you can count to one year ago in december, most recently december 16 and march of 2017. rate asset prices are

beginning to price up on the books for banks. the question is how quickly do deposit costs go up. they haven't moved that much compared to the magnitude of the move on the asset side. some banks also have some wholesale funding the moves up commensurately with moves. the expected expansion would come from that differentiation between floating rate assets moving up and deposits not moving up at the same pace. it takes a little time for us, it's re-priced. it depends what people do with deposit costs. my sense is that deposit prices are moving more slowly than people might have modeled or imagined, and the market has an move that much. assets are re-pricing. that should start to -- joe: julie talked about rates. the firsthe impact in quarter on the fairly sharp jump in rates when it comes to mortgage demand? mortgage demand, mortgage

refinancing demand was up in the first quarter because of that jump in rates. peopleso a time when aren't buying homes as much. it's a seasonal activity, it picks up in the spring and through the summer. people tend to buy an move in anticipation of school years and we should see purchase activity going in earnest in this quarter and go right through the summer. you have to think of both of those things. as you mentioned at the top, rates have retraced all the way back down into the low two's or 220's in ten-years. it's possible there are more borrowers who are backing the money for refinancing then there were recently. to the extent that people thought long-term rates would stay high and go higher, maybe there is more refinancing coming. the best estimate for the size of the u.s. mortgage market this year has been $1.7 trillion area, down somewhat from last year. but there still should be a lot of business to do, is my take. true is very, the

chief financial officer of wells fargo. thank you so much again for your time on what is definitely a long day. coming up, the dollar is rebounding just today after president trump's comments that the u.s. currency is too strong. a deeper look, next. ♪

dropped the most powerful none nuclear bomb in its military arsenal for the first time in history today. the bomb struck and islamic state tunnel complex in eastern afghanistan. the moab, which stands for massive ordinance air blast, is also known as the mother of all bombs. during a meeting with first responders at the white house, president trump said he's

pleased with the military's actions. >> we have incredible leaders in the military. we have incredible military. we are very proud of them. this was another successful mission. mark: the bomb, known officially 443, releases 11 tons of explosives. cia releases 11 tons of explosives. cia director mike pompeo says wikileaks quote, walks and talks like a hostile intelligence service. you are looking at the director speaking life in washington. he says wikileaks is being co-opted by the russian government. director pompeo says the agency doesn't carry out operations in the u.s. and isn't, again, quoting, tapping anyone's phone in the country. a lawyer from the passenger who was dragged from a united express flight said he and his client except the ceo's public apology but think it was insincere.

he said he thinks the apology that the united ceo issued 2 days after first blaming the andenger was quote, staged, was because the airline faking a public -- taking a public relations beating. he was dragged off a flight sunday by airport guards. says the city of chicago which employs the guards is also responsible. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. joe: "what'd you miss?" said the dollar was getting too strong. he told "the wall street journal" yesterday, quote, i must be honest with you, i think our dollar is getting too strong and partially that's my fault because people have confidence in me. trump might want to be careful with what he wishes for. here to help us sort it out is

and head of fixed income at oppenheimer fund. thanks for joining us. we are used to government officials around the world jawboning down their own currencies. it's just not common in the united states, is it? >> no, it isn't. currency war of sorts, which is what it really is, i don't think is a very productive outcome for the u.s. policymakers. we areend of the day, fed policy because of the strength of the u.s. economy. there is going to be an impact on the dollar. we just have to accept that impact. right now, we are in a good situation. i think the upside potential is relatively modest. julie: given that upside potential you are talking about,

we were looking at a charter earlier that abigail created, showing the dollar -- one could argue perhaps is a leading indicator of the deflation of that itation trade, has been down this year even a s now, stocks and rates have started to go sideways. do you think that's where the future direction is as well? do you think the reflation thatt has been down this year even a s now trade is not all it was cracked up to be? >> there's two parts of the reflation trade. one was a significant turnaround in the global economic growth outlook. that happened after the first quarter of 2016. that is very much still in place. as a result, i think the likelihood that rates go back to 140, 150 in the current economic environment is small, and significant depreciation is not under the cards. on the other hand, what we are also expecting was significant policy innovation from the trump administration. and that is not really

forthcoming. withver thought we had respect to rate move and dollar move in that regard, we are giving it back. abigail: sticking with this reflation trade theme, yesterday we had the 10 year yield break a key critical technical level minerscording to scott of guggenheim, he says he thinks it means we will see the 10-year go down to 2%. the 10-year yield this week had its worst week since july of last year. the bank sector is down, really dragging on the bank sector. the banking sector had its worst month since the brexit in march. if that continues, how do you tie that into the reflation trade, considering the essential sector is the top sector behind the stock part of the reflation trade? thing to keep key in your mind with respect to that is -- is the growth outlook softening in a meaningful way? for that to be the case, it is

not just about the u.s. the change really was in emerging markets and to some extent in europe. if rates are going to go back to sub-2% or even 2%, the fact that the one conclusion you have to come to is china in emerging markets are going to slow down meaningfully. i don't think that's in the cards. butay go down some more, likelihood that you see significance for the rally and 10-year, i think it's probably not in the cards. doesn't mean that we are going back to 250, 260. but likelihood that youbut i think e can get there. significantly through that is probably very unlikely at this point. julie: we will ask you to stick around and continue the conversation.

if you want to look at the opportunities in emerging markets, krishna sees a few. from new york, this is bloomberg. ♪

joe: our guests is emerging markets are going to outperform. they've been underperforming against the msci world index since 2013. he is the cio and head of fixed income at oppenheimer funds. the latest move in the weak dollar, how does that affect this trade, or does it at all? what's the essence of your case i do the actions with u.s. monetary policy and u.s. currency matter that much?

>> there are two components to this. growththe fact that e.m. rate has turned around and turned around in a meaningful way. that has happened both from real growth standpoint, and from a nominal growth standpoint. if you look at chinese ppi, it has had a dramatic turnaround and real growth has been stable. growth in emerging markets is good. the second thing that has happened, the markets were expecting with the fed tightening to get dollar to a totally different level. that hasn't happened. in emergingassets markets, local currencies doing reasonably well. and the dollar not taking value out of the trade. as a result, i think emerging markets both from a debt standpoint and equity standpoint have performed reasonably well of late and are likely to do that for the rest of 2017. abigail: so your claim there is certainly backed up ihr we have

in the bloomberg. i will discredit for you prayed it's g #vtb 7788. purple, blue, and white, we have indexes representing china, emerging markets in europe. big outperformance, of more than 10% on the year. and yellow towards the bottom we have the s&p 500 which had been up closer to 8% at one point. it is starting to round down trade can we see a situation where we see the emerging markets in china and perhaps even europe continued to trade higher even if the u.s. markets round down, turn down on the year? krishna: the markets are definitely correlated. if you have a significant drawdown in the u.s. market, i think it will definitely take the bloom. ,ut from a relative standpoint relative between emerging markets and developed markets, i think the case for emerging markets is very strong at the moment. julie: of course it's not a

monolith when you are talking about emerging markets. are there any in particular that you find to be more attractive than others? we don't approach emerging markets from a country standpoint. tot we approach -- you go emerging markets for growth and the way to access emerging markets for growth is at a company level. what we want to focus on his consumption driven companies in emerging markets, rather than focus too much on geographies. memani ofshna oppenheimer, thank you so much. joe: turkish voters may vote for a radical change in the way their government works this weekend. a historic referendum is set to take place on sunday. we will discuss it next. this is bloomberg. ♪

dropped the most powerful nonnuclear bomb in its military arsenal for the first time in history today. the bomb struck an islamic state -- in afghanistan. during a meeting of first responders at the white house, president trump was asked if dropping the bomb sends a message to north korea. this sends aow if message prater doesn't make any difference if it does or not. north korea is a problem. the problem will be taken care of. i think china has been working very hard. mark: the president wants china to help contain north korea but

in recent weeks he signaled a willingness to handle the issue alone. the un security council has put unanimously to wrap up the peacekeeping mission in haiti by mid-october, after more than 20 years. the move is in recognition of the steps the country has made towards stabilization following recent elections. the council voted today to extend the mandate of the mission for a final six months during which the 2300 military personnel will gradually leave. dan rooney, the chairman of the nfl's pittsburgh steelers, is dead at the age of 84. role thatted with the stipulates teams must interview at least one minority candidate for general manager or head-coaching vacancies. mr. rooney also served as former u.s. ambassador to ireland. dan rooney of the pittsburgh steelers, dead at the age of 84. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪

let's get a recap of today's market action. it turned out to be a bearish day for stocks, after adjusting slightly higher earlier, the major averages finished at session lows, down two weeks in a row. some traders and investors might consider the fact that we had the major averages finishing right at the lows, a bearish sign of what is to come next week. time will tell, of course. joe: "what'd you miss?" sunday marks a big day in global politics, as turks will head to the polls to vote on a new constitution. if the historic referendum is passed, it which dramatically increase the powers of president erdogan. earlier today i sat down with bloomberg's istanbul reporter who broke down the vote and what is at stake for turkey. go to theay, turks polls for the fifth time since early 2014. this time they are putting to change their entire system of government, basically. that is the short answer.

they are putting on a new constitution that will concentrate even more powers in the hands of president are to one and abolish the role of the prime minister. -- erdogan and abolish the role of prime and esther. he turkey into an executive presidency rather than parliamentary democracy. joe: so this is a pretty radical change their voting on. what are the polls saying at the moment about which way it is likely to go? well, the moment, polls are ever so slightly in the lead. but that hasn't been the case in polls that came out as recently as last week. andly, that kind of neck and the margin of error is large enough that either result wouldn't surprise, really. it could definitely go either way. officials,ment including advisor to the president who we spoke to this morning, making statements to the effect that a no vote

wouldn't actually me know necessarily, but there could be another referendum where text get to vote again on a slightly tweaked constitutional proposal. so, you know, too close to call, but no nothing -- doesn't necessarily mean no. joe: is this a simple referendum on whether people like erdogan, or whether there are other coalitions are factors that might determine how this goes? >> well, you are right in that the president has very much made it about himself, but the opposition have been trying hard not to make it about them. president erdogan is an incredibly popular, charismatic leader. he's proved that by winning a number of elections in the last decade, mayor of vista in, then prime minister for 11 1/2 years, then he became turkey's first popularly elected president in late 2014. so, winning elections against

him is really hard. they have been trying hard not to make it about him. by and large, turks -- joe: let's talk about the market for a moment. been akish lira has not particularly strong performing currency. do we have any sense about what the preference of international investors and traders would be in terms of the outcome? >> well, if you listen to government ministers, yes, the answer is very clear. markets are hoping for a yes vote. that's what they say the people are going to deliver. it's a bit more mixed than that, i would say. more power for president erdogan, that is a known constancy. we may have early elections, early general elections after that even in the event of a yes vote.

this may not be the end of fiscal uncertainty everyone is touting it as. on the other hand, no does plunges into something resembling the unknown. the markets may not take kindly to that. whatever doestouting it as. happen, we might see some outside moves. as you know, on monday, european markets are closed. in the case that markets do swing, those moves could be accentuated. joe: the theory could be that markets would like a yes vote if for no other reason than it would be a sign of stability, and a known quantity outcome. >> you call the vote -- you said people are voting on a radical change. of course, that is true and away. -- in a way. there is a constitution in the offing. turkey has been in a state of emergency since july's copuup

attempt. president erdogan has the power to elect high-ranking officials. he gets to rule by decree. now they are in a state of emergency where that is basically always the case. markets would prefer the status quo. joe: staying on markets, we mention the lira has not been particularly strong but the turkish stock market has been doing well. what is or who is the dude that has been popping up in stories as contributing to this strong performance? >> well, the dude, it's a phenomenon the need to little bit of unpacking. the dude first reared his head, whether it's a he or she, we don't know, but whoever is behind these trades started being known in turkish markets as the dude, i guess early 2016 by bloomberg first heard about

this phenomenon. weretrades -- huge bets being put on turkish stocks, and basically hating the direction of the market. -- painting the direction of the market. people nearing this mysterious trader. monday, for instance, turkish markets rose 3.1% in the main benchmarking index. people were looking for some macro factors that might explain this. well, we looked at the data and it seems that almost 1/2 of by orders on that day came through one single -- known to be favored by the dude. the dude is again at large and we will see what happens monday. joe: that was bloomberg's isabel fingal from istanbul, from our

conversation earlier today. julie: president trump is a joint race enters right now. he will board air force one en for the west palm beach holiday weekend. how many times has he golfed thus far in the presidency? >> at least a dozen times. only 7? it seems like so much more. >> there he is, boarding air force one. joe: that was a shout about reince priebus just coming out of the official limo as well. there he is. he's going to be heading to florida for the long easter weekend. >> exactly. coming up, stocks finishing a session lows today. is that a bearish signal of what is to come? how equities performed, next. this is bloomberg. ♪

>> "what'd you miss?" a cool week for equities. to get more insight, let's bring in kevin kelly, equity analyst for bloomberg intelligence. what a week. we've seen intraday volatility and here with quiet trading earlier, we ended at session lows. is that an ugly close? do investors, traders not like that? >> first time really since the election, which is important to note. not, it's trade or good we are heading into a long weekend. maybe investors can digest some of these moves this week. it could be a bearish signal, at least in the short term. investors have been looking at the market saying which way will it go, and trading this tight range since the beginning of march. we're starting to have this

earnings season really ramp up. >> dimension the s&p 500 closed low its 50 day moving average. let's look at the chart you put together for us in the bloomberg. this is g #btv 7761. in blue we have the 50 day moving average. in green we have the 200-day moving average. quickly down and through the 200-day moving average, similar situation around the election. do you think we are going to test that 200-day moving average or go lower than that? >> i think we could get close. it's important to note with this chart, each time we have seen has dip below -- the market pretty much moved upwards, even since brexit we had the recovery there, recovery since the election or heading into the election, after the election. about those talk postelection moves, the one industry to really stands out is

the banks. we have bank earnings today. we have a chart you put together looking at bank return on equity, still no word of the good old days pre-crisis when they are making tons of money. what did we learn today about investorshow our reassessing them versus how we saw back in december? >> absolutely. i really want to put into do really want to jump on what they've already gone over at the net interest margin. when you look at return equity and expanded out precrisis, it's interesting to look at how these returns stack up. you had arguably a good quarter from jpmorgan, citi, and on the downside today. when you look at those in aggregate and compare where they were precrisis, it's the new normal investors need to get to. what's interesting about the analyst activity, you didn't see a lot of price target drops. i thought that was interesting. analysts reiterated their price targets. even for citi, it's up a bit in terms of return potential.

julie: one of the other groups that had been in focus following the election the last attention because it hasn't been doing as well is the small caps. rty, which is right here -- you are looking at the 2 and 10 spread, the proxy, tracking the small caps. here, it's not just the white line tracking the small caps, but it's normalized against the russell 1000. it was normalized against those large cap peers. when the white line is increasing, it's actually outperforming its large cap here. surrounding that trump trade, had a really big slide in small caps. we talked about how financials, a lot of the outperforming since the election has an frontloaded. joe: so here, it's not just the white line tracking the small, we are at the start of earnings season. we are having the banks go. as we go further through earnings season, what are the big questions that you have that you want to learn about in

corporate america that you will be sort of listening to thematically across companies? >> one being earnings growth. what i really want to see this quarter is more talk about capital expenditure. that has been a hot topic. if you look at x energy, capital expenditures have been there. what was interesting from the bank earnings today, you can kind of take away, the cni loan wanting tole are see. it would be pretty indicative of where capital expenditures can go for some of these companies over the next few months. joe: when it comes to policy, we heard the cfo of wells fargo say their clients were a little anxious about the fact that there was so little clarity on policy. do we have any sense, do we hear more of that on the call, what companies are expecting regarding tax reform, health care, trade? >> i think there will be a lot of still uncertainty. you are even seeing the analyst reports will come out and say, is it a potential bull case if

we get the tax reform we are expecting? that optimism scaled off a bit. we could see some of that in the earnings call as well. people tove heard john shrewsbury, cfo at wells fargo we spoke to a moment ago, saying people are really holding off on making to spending decisions, loan decisions until the way for clarity on policy. you will hear more on that. thanks much, kevin kelly, bloomberg intelligence equity analyst. coming up, the blackrock ceo larry fink says he's more bullish on stocks than fixed income. we will debate the issue next. this is bloomberg. ♪

julie: i'm julie hyman. "what'd you miss?" let's take a deep dive into the bloomberg prayed you can find the following charts using the function at the bottom of your screen could you may have missed this today, big news for pot in canada. the canadian government has introduced a framework. the trudeau administration introduced a framework for legalizing pot in canada. even have up to 30 grams, about an ounce, for recreational use straight 18 is the minimum age to be able to use it. it looks like legalization is on a path to legalization by 2018. there are a couple of the pot companies in canada. weed is the ticker. tsx. you have the s&p pot stock have really been climbing. as you can see today, a bit of a

down take. one of the things it could be hurting them, as part of these new proposals, you can't have endorsements. apparently snoop dogg had had an agreement with canopy growth to endorse medical marijuana, so it looks like that won't be able to happen anymore. there's a lot of sort of details that need to be worked out with all of this. it's fascinating what's going on north of the border. joe: you know what i really appreciated about this chart? no puns. allte all these hot puns, the stocks are getting high, i hate that. i appreciate your deadpan approach to this. julie: i was upset with myself for not coming up with a pun. i want with alliteration instead. joe: let's talk a little bit more about this french election. i look at once again the eu go, which is our sort of dashboard for all things europe and politics. if we go the top thing, the poll tracker. check this out. this is the top 4 candidates.

folks, we have almost a four-way timeout for first place. la pen in white, fillon in yellow. red. shop in he's right there with fillon for third. this could really -- nobody knows, april 23, that's the first day. no but he knows what is going to happen. this is really exciting. take a look at a chart we looked at yesterday taa chart we looked at yesterday that created quite a stir with one of our guests. "what'd you miss?" blackrock ceo larry fink may have president trump tossed back and yesterday he spoke at the dollar strength. think it's one of the reasons our economy is slower than we wanted to be, because the dollar is strong. if the federal reserve continues to tighten -- see reason to tighten, he will be hard to have a weakening currency. if we continue to see what i

would call mediocre results theted to our economy, then dollar will probably weaken. at the economic club of washington, d.c. he emphasized he was more bullish on equities and fixed income in the long-term. they we spoke with guggenheim and partner global cio who had a warning for equity investors. going toinking we are have a significant correction this summer, early in the fall, but i don't think this is going to be a bear market. and i think the great bull market is still intact. ultimately, valuations will be higher from where we are today. abigail: interesting little bit of debates between two titans in the investing world. not really a face-to-face battle. joe: not a dramatic this agreement. neither one of them being particularly bearish. we have all these risks that are

well known that are out there. question is, whether this year those matter, whether it's whether theysk, are still relative to those ultra low yields, equities are the place to go. abigail: speaking of bond scott was, he liked the chart we pulled up. he said it's a chart he's been using all along. this is a chart we have been looking at for months. it's a long term of the 10-year yield. we see that downtrend there that tells us the great bond bull market is intact. and on the backup and race around the election, you see the 10 year yield went right to the top. now we are starting to round down. scott said he thinks he could see a measured move to 2%, right down to the middle of that

range. joe: going into this year there are two big debates. one is whether we have seen an upturn and race. due to the changing policy framework of the trump administration and the globalization, when we break the real long-term move, and this chart speaks to the fact that -- titansyou also have some within the investing world, because you had bill gross weigh in on the issues. there's really a considerable amount of disagreement about whether the bond bull market is coming to an end or whether it will continue to link through2018. great point.'s a bill gross has been making that point for some time, if it went above 265. we have not seen that. scott yesterday made the point that a downtrend would have to be a significant move up for reversal, and we don't have that. joe: everybody should read bill gross's outlook today.

he discusses the meaning of two different ways to tell someone that you love them. coming up, what you need to know to gear up for next week. this is bloomberg. ♪

julie: "what'd you miss?" on alk stocks and the week

down note. pretty low volume week heading into the long holiday weekend. turkey holds a, referendum on expanding the powers of the presidency on sunday. you heard joe's interview with isabel think on that very subject. joe: i will be looking at chinese gdp data. u.s. march housing starts, building permits, industrial production on tuesday morning. julie: earnings to netflix, bank of america, goldman sachs, morgan stanley, general electric. all of them and more could we will be reporting their first-quarter numbers. that's all for "what'd you miss?" joe: have a great weekend. this is bloomberg. ♪

mark i'm mark crupmton, and you : are watching "bloomberg technology." the u.s. dropped the most powerful nonnuclear bomb in its military arsenal for the first time today.

it struck a complex in afghanistan. it is also called the mother of all bombs. the cia director has announced wikileaks has hostile intelligence agency. he gave his first public speech since becoming director, saying the group is being co-opteby russia. he also said iran should take notice of the u.s. military strike in syria. the un security council has motivation and honestly -- vod -- imously to end the that's in recognition of the steps that haiti has taken in recent elections. the council voted to extend the mandate of the mission for a final six months. president trump has signed legislation to give states flexibility to withhold family-planning money from planned parenthood. it is part of a broader effort by republicans to cut off federal funding from organizations that