donald says he's actively thinking of breaking up the big banks. steve mnuchin is serious about launching ultralong. -- ultralong debt. from new york city, good morning. we are looking across the keepsic at the day that on giving. i am jonathan ferro alongside david westin and alix steel. futures down two points for the s&p 500. europe up .4 on the stoxx 600 and a firmer euro. alix: time for your morning brief, we had people u.s. auto sales expected to fall. at 9:30 a.m. eastern, the house and fisher should committee will hold a hearing on oversight of u.s. airline customer service. the united continental ceo will be testifying.

earnings will hit. david: president trump gave a interview with bloomberg news. among the things covered, his interest in bringing back glass-steagall. >> we are looking at that. there are some people who want to go back to the old system, so we're going to look at that. we are looking at it right now, and dodd-frank is going to be very, very seriously changed so the banks can go back to running -- lending money. david: kevin cirilli is with us to put his comments in a broad perspective. he did say he is looking at this. how seriously is he taking that? is this a priority? kevin: no. this was a great interview and this was in line with what president trump said on the campaign trail. the conservative and democratic bases of both parties -- we have seen this rhetoric of

reinstating glass-steagall frequently. that said, people like elizabeth warren, the way they went to implement making up the big banks is very different. democrats want to have more regulation. republicans are advocating to provide in offramp for do regulatory policies -- four deregulatory policies, so themding an incentive for to decrease regulation. they argue if that happens, they would be able to end the project big toproblem of too fail. it is a different policy and that is the point investors should be watching. david: it is ironic president trump appears to be on the side of elizabeth warren. we also hear from steven mnuchin, gary cohn. they keep talking about the 21st century version of glass-steagall. what do they mean? that any large financial

institution would have to somehow provide some regulatory disclosure in order to qualify for removing part of the dodd-frank. essentially, as lawmakers in the next couple of months begin to craft some reform to dodd-frank, they would have to put up -- banks would have to put up some incentive to qualify for getting that offramp to some of these regulations the banks have lobbied heavily against. david: we will come back to you later. jonathan: nothing to take away from yesterday? jpmorgan stock did this and then this and finished flat on the session. david: people took a look and said, not so much. jonathan: i think, believe it when i see it. i do not think it will be those brutal rates many people were thinking about. joining us is a director policy research. i just wonder what we are moving toward. they proposed an arrangement in

the united kingdom where you insulate the retail bank away from the investment bank. there was not a brutal wake-up. is that something we might move toward on wall street? realistically, we can have a conversation about the merits of vulckerg some of the cl rule if they take steps toward resentencing, but that is a broader conversation and one i think will be more of a regulatory concept and legislative concept. we saw president trump yesterday offering more of his political you then a policy proclamation. it is going to be months before we get to the point where we can start talking about real world impact, which is, what are we going to do with covolcker? jonathan: let's talk about the

timeline briefly. the united kingdom given until 2019 to get everything in place. you have to put policy into law, how many years are we talking about before these banks can radically change their business models? isaac: if you believe something is coming -- which i am not sold on -- let's use the baseball as an analogy, we are not even in the first inning. the players are still driving to the ballpark. this is nothing more than political rhetoric. it is important political rhetoric because it did have a brief impact on the price movement of big banks, but that is all that is, and the market action told you that. david: when we talk about glass-steagall, we think of congress. is it possible for the president through the circle and appointing areas people to agencies to achieve the same

results? isaac: i think one of the things that we have been recommending is to start separating the which aree actions, becoming less likely with each passing day from the administrative actions. there is a line that elizabeth warren said, which is personnel is policy. banks, they are two subparts important. number one, who are we going to name to these top spots? that theinue to think federal reserve. there are reports that the comptroller bowl be replaced, so those are important. those meaningful mile markers may be the upcoming dodd-frank status report that is due in the beginning of june from treasury secretary mnuchin. i think that will lay out the road map for administrative regulatory relief, which is more

likely than broad-based legislative action. are watching a computer yesterday, dan to be with trump flashes, you see this headline, what do think? do you dismiss it? how do you interpret that? isaac: i think we are all becoming at least trying to become experts in reading the trump t leaves -- tea leaves. i can's how you the phrase looking at when the president uses it, looking at. i place less value on that. that seems something he usually purposes -- that he usually says when discussing generalities rather than specifics. i do not place a lot of significance on things when he says he is looking at them. furthermore, i think it is important to note t had just met with 100 community bankers from the icy ba -- icba.

in his mind, he wanted to show the difference between money centers on one hand and community bankers trust just met with. jonathan: thank you for joining this program. coming up on bloomberg, tom keene interviews ben bernanke. that will come to you at 12:30 p.m. eastern time, 5:30 in london. live from new york and washington, d.c., this is bloomberg. ♪

emma: i am emma chandra. the board of italy's flagship airline alitalia has agreed to start bankruptcy proceedings. they were unable to carry out

plans after workers voted against job cuts. the last $270 million in 2015. bp reported first-quarter profits that beaded estimates. -- that beat estimates. but net debt rose again, showing how they are struggling to cover the commitments. bp stock has been the worst performing this year among europe oil majors. hire 1000 american employees the next two years. the minister should has argued other outsourcing firms are unfairly taking jobs away from u.s. workers. that is your bloomberg business flash. the: president trump is not only one looking at breaking up big banks. bloomberg tv he would be "really excited to see a breakup to increase competition and boost the economy." he spoke from a global

conference in beverly hills. ken: it is way too early to tell. at 100,000 beats, the move to reduce regulation in the united states i applaud. this is the single greatest lover they can pull together can pull- lever they together economy to grow faster. i started my business when i was in a torment harbored. i could launch a hedge fund in 1987 -- when i started my hedge fund. i could launch my hedge fund in 1987. you cannot launch on today given regulatory matters you have to deal with. that has discouraged new asset management. it is the burden of regulation. the energy space, the transportation space, it is everywhere in america, the weight of regulation reducing your business formation in america and that is a tragedy. the administration's focus on

reducing the regulatory burden on the american who has a dream, i applaud that. the last -- k: the last administration was interested in producing more transparency in the bond market. what about this one? ken: i hope they follow through on that. transparency creates confidence that you have been treated fairly, that you understand what is taking place in the marketplace, transparency is the underpinning of a healthy capital market. is opaque, that incumbents enjoy information advantage of that area and -- of that. that does not make for a good market, so this administration continues to carry that baton and shine light on how treasuries are in trading, that would be good for the market. erik: if they don't? ken: i think it is unfortunate.

bills we are looking at, whether the tax bill, the infrastructure bill, we are taking our deficit higher. i think it is important we take steps to continue to drive the u.s. fixed income market, treasury market, to be perceived at the most liquid, fairest market in the world. that will drive down the cost of borrowing, which will save money for every american taxpayer. erik: president trump told my colleagues that he is taking a serious look now at steps to break up the big banks. would you be in favor? ken: i would. i believe when a market because overly concentrated, you reduce competition. and competition is the lifeblood of what makes free economy work. when you have firms that are competing to get ahead, that is when you -- that is when creativity and innovation takes place and when consumers win. crisis in 2000l

eight, decisions were made quickly that resulted in a massive consolidation of the u.s. banking system. i do not think that serves the interest of our country well. what -- where they argue to break these banks into small banks? think aboutld we separating commercial banks from investment banks? i would be excited to see that. erik: you think it would be good for the economy? ken: i think it would be great. erik: do you think it would be good for your firm? ken: that is a mixed blessing. we would have more competitors but then it gets good for america. when american investment ranks are at the forefront of innovation, -- now, not all innovation is good, but over time, the majority of innovation creates value for our economy. david: that was ken griffin. to take us into the story of what glass-steagall would mean

in the real world, we are joined by nathan dean from washington. you heard ken griffin saying he is in favor of deregulation. what are people really talking about when they say break up the banks? nathan: they are two things. essentially returning to glass-steagall, separation of the big banks. this other is the idea that the white house is pushing -- you hear about this sometimes in congress -- more like a glass-steagall in disguise, high leverage requirements on investment banks. maybe not a pure separation under the banking sector, but similar to what is going on in the united kingdom. you say you want to push forward glass-steagall, they are also working on dodd-frank deregulation. david: there is that practical constraint. isn't thatthis,

close to a we were in the 1990's before the repealed glass-steagall act? a lot of banks are doing the things that are now permitted? -- not permitted. try to implement a ring fencing idea, i do not think you will see a portion designed to investment banks. at the qsc language about raising capital requirement. republicans now have a bill that raises capital requirements to the $240 billion for the eight largest u.s. banks. bipartisanre some might open up, this idea that if we are going to target large banks, we want you to decrease their systemic risk are the investment banking activities and we will look at capital and see what we can do. david: let's call it glass-steagall lights, do they need legislation or could the president do it through regulatory agencies?

nathan: you do not need legislation to do it. they have the ability to put capital. the question is timing. regicide is is the -- legislative is the quickest way. if i am donald trump and i want to implement glass-steagall lite, i will direct my new agency heads to put something in increased capital, for example, but it would take a lot of time. happily nine months to 12 months -- probably nine to 12 months for a new fed chair had comes in and before the banks get to that point. alix: thank you. coming up, sky bridge capital senior portfolio manager will be joining us. live from new york, this is bloomberg. ♪

alix: it is no longer just a

hint. steve mnuchin giving his clearest sign saying that ultralong bonds could make sense for the u.s. studying ultralong bonds. that is something we are considering that treasury. we have a working group looking at it. we think it is something that can make sense for us at treasury. alix: could make sense, joining us now is citigroup's managing director. it seems note after note, will they or won't they issue ultralong bonds? what is your case? we do think it is an idea that has been around for a while. a lot of countries have gone down that route. .e think it is pretty plausible we have to see what the market reception will be before it can go down that route. alix: this ties into your role, the fed.

demandthey stack up what could be when the fed will have to be paring back but then the capital outlay will rise? >> it is a funny time for the treasury to consider this, given we are in the early stages. we will probably see balance sheet reduction later trade we think it will shrink by 300 to ponder billion dollars next year -- to $400 billion next year, which is why i think they will because just. they will test the waters and frontload some of the other issuance in the next couple of months. jonathan: we get to demands and price, what is the objective of them to do this? i think a lot of this around locking in low interest rates. interest rates are low, but inre is a demand rationale there. investors have been clamoring

for longer horizon investments and there has been some scarcity for it. jonathan: i wonder what the money will be used for? when they came in with this plan, i do not see the secretary who has the mindset to blowout the deficit and use long bonds to do that, so what will it be used for? i think part of it is interest. if interest rates were to rise, but i do not think it is on that clear what the money would be used for. alix: if they are going to have to end up wind loading friends issuance or if there is a long bond, what does it do to yields? ebrahim: in this case, i think it will be a cautious move, so they will probably issue relatively low marks. i do not think it will be dramatic, but it should be somewhat upwards and an indication of what investors will view that they will be pursuing a policy.

i do not think the fed will be to affected. -- too affected. i think they will be less affected by what the fed will be doing. david: what is the principle affects? if you did not issue more debt and you had to be longer maturities, that means the average maturities of treasury debt outstanding goes longer read what does that do? whose life is changed? ebrahim: i think these are marginal effects. there are investors -- i mean, insurance firms and pension these, butooking at i don't think as a whole, there is a deal of effectiveness. what you's talk about love, and that is the fed meeting. they have a two day meeting today. the ecb has to acknowledge the dad is getting softer while keeping june on the table.

the opposite for mario draghi last week. how do expect them to do that? ebrahim: the fed does not have a press conference this week area a number -- this week. i think it will be easy for the fed to keep a steady hand at this meeting. i think they will keep it close to where they were the last meeting, and for now, i think the approach seems to look through that mixed data we have seen him at our two q2 and help the data will pick up. jonathan: the economic assessment is near the bottom with the balance sheet conversation, does that get changed? do we push forward? byahim: not this summer, june, there could be changes and this time around, we are in the early stages. it probably will be in the minutes. jonathan: given they want to communicate at the back end of the year, if the pressure wants to get there, and they want to get the two other hikes out of the way they forecasted, is the

pressure on june and september? on the: for now, we are path that they will hike in june and september if data picks up, so it is more conditional now then we said one or two months ago. otherwise, they will continue to have a rate hike or quarter. -- per quarter. later, theoming up north star chairman and an interview with david rubenstein. from new york city and washington, d.c., you are watching bloomberg. ♪ ways wins.

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tomorrow, facebook. board, --tch the switch of the board, manufacturing is expanding at the fastest pace in three years. eurozone has the fastest pace in six. we are north of the dollar at nine cents. look at some the asset classes out there. emma: let's get you caught up. the president will meet with kim jong done. he spoke to bloomberg news yesterday. the right circumstances, i would absolutely meet with them. most political people would never say that area under the right circumstances, i would eat with him. emma: they have become the biggest foreign-policy challenge. he has defied international sanctions by continuing

long-range missile test print the ceo of united airlines testifies for the first time since they dragged a man off a plane. he is likely to get chart questions. they settle with the passenger. they also have new policies to keep it from happening again. in france, is trying to extend his reach five days before the presidential election. he told backers of marine le pen that those who backed the far left, he understands their anger. he has a double-digit lead over le pen. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. jonathan: thank you very much. it's hard to reconcile the politics economics. eurozone manufacturing is expanding at the fastest pace in six years. the optimism seems unaffected

why political uncertainty. joining us is the eurozone economist david powell. isthis evidence of a a, that recovering? does suggest is recovering. a note of caution is needed. those surveys have been very strong for several months and the hard data has not necessarily caught up with him. survey haduarter pmi gdp at 0.6%. it is unlikely to be that high. they do have good signs, things are probably not as good as they suggest. jonathan: we are coming off a lower basis. you brought up the hard data situation. let's look at unemployment. it is 9.5% in the eurozone. the conversation with draghi last week, he was asked. he did not want to go there. i that it's considerably lower.

tell me how much capacity is left across the continent and david: there is some left. our estimates at bloomberg intelligence is that spare capacity measures 1.5% of potential gdp. spareis some additional capacity to be averted. that would require growth being above the trend rate. we estimate that it 0.3%. we have first-quarter gdp coming in tomorrow. in theyfor it at 0.4% are above the trend growth and that will continue. it is still there. jonathan: are these aggregate numbers? we had a conversation about a call that was doing well. it was relative to a was happening down south in the periphery spain and italy and greece. what does the picture look like now we break down the continent into its individual countries?

david: one of the fastest growers is spain. that is a reflection of the fact that it was hit so hard by the crisis. now it's coming back quite strongly. in the first quarter, the economy expanded 0.8%. that is much stronger than the eurozone as a whole. this is not because the spanish economy is in a great place. it's recovering lost ground. jonathan: it's always great to catch up with you. he is managing director of the citigroup. the situation in europe, a lot of people say by euro. then they filed for bankruptcy. when you look at the details, there was a restructuring plan. the workers voted against their own job cuts. it'smight make sense, now

suicide bankruptcy goes through and a load or people get laid off. is that the essence of europe still? the unions, the labor laws, the workers that are too deep to understand? abraham: you raise one issue already. it is the average that your. it's distribution. at the end of the day, italy is the focus of attention for the next 18 months. when it comes to the issues that are holding countries like ittory back, they are around did issue system. same you can make the issue in france. >>t will it do for growth? by own country is not examining that's exactly a front runner. in france, the cree issue is going to be what can get done?

will the have a majority in june? will he be able to get some structural reform on the way. reform,rench managed to and i think there is a decent chance, the germans might get back to the table. alix: this raises the question of better pmi. is there a domestic demand driving that? is china doing pretty well the same time? you raise that point, we have to get that her. >> the eurozone has been a different recovery. it's been primarily consumption. typical recovery which is gaining strength. we should not discount that. at the end of the day, it will come to raising potential growth. i think there is quite a bit of work to be done. david: is this about long-term

growth? it was so bad on so many fronts. it's got to get better essentially? you've got demographic problems and immigration and political problems. you don't have a lot of reform going on. veryim: right now, it is much cyclical. in that sense it is short-term. there have been reforms in certain countries like spain. the had a tough time, but reforms are adding to their growth. for the the long-term, it's demographic. structural issues are going to weigh down europe and they have to respond to that with more emphasis on reform. david: there were some structural reforms in germany, in the labor markets. by don't other countries learn from that within your? why don't they say germany is doing well because of reform they enacted? ebrahim: things were bad in the

early 2000's. they rallied around these reforms. take a long time, even for the germans to get around to taking it to that is what is so critical right now in europe. don't waste a good crisis. don't waste this opportunity. ofathan: did the lack reforms matter if you are an equity investor question mark do they matter at this point? ebrahim: where the reform matters is where it goes in the place. that day will come. i will reemphasize policymakers need to get that straight. there are enough reasons to be optimistic. alix: what about trade? we hear president trump going after germany. what is the actual risk for the european economy? ebrahim: there is risk. europe is tied to the rest of world more than the u.s. is.

trade isn't adding that much to growth. the worst concerns about the u.s. administration have not manifested himself. i think europe would be affected. fairly cautious look. it is great to see you. thank you very much common up, the top performer reports after the closing bell. apple is sitting at record highs, adding $120 billion in market cap. your earnings preview is next. and interview with the twitter coo and cfo. this is bloomberg. ♪

emma: coming up in the next hour, sky bridge capital senior portfolio manager. this is bloomberg. now to the bloomberg business flash. pipeline companies are pushing back on the buy american rule. departmentommerce that using american steel would disrupt operations. the steel industry is in flavor -- favorite of the rule. it may test his ability to keep promises. bill ackman lost $4 billion. the ceo of pershing square capital management appears to learn the lesson. he spoke with francine lacqua. bill: we made the mistake. we could not see what was going

on. that was a big mistake. prancing: are you going to stay away from pharmaceuticals? from we will probably stay pharmaceutical companies. ; herbalife is still his favorite. for a platinum parachute peter krause. he will walk away from $99 million after a surprising shakeup. -- nine directors were moved from the board. the majority owner wants to have more direct control. that is your bloomberg business flash. jonathan: we sat down with the pimco ceo at a global conference to discuss the fixed income equities and the future of pimco. they turn over six time what the s&p turns over. the the fact that you have

ecb and the fed as people buying bonds. buyers whove other are accounting driven. think insurance companies, think pension funds. the opportunity we think is much larger in fixed income and equities. >> there is a possibility the government could cause problem's there? they are trying to push things through because they think it's cheaper? manny: there could be legislation which would push for the lowest possible price. we think over the business cycle we can add a quarter percent. when you add this over the last time of retirement account, the difference is significant. when you consider we are talking 2.3% 1.5% when rates are

in the u.s., the performance is substantial. >> you focused on the fixed income. you haven't gone to these other things. explain that. is that purely because it's the area you can excel? manny: i think it's the reason we wanted to do something. we want to have a very focused strategy. we want to be the best at what we do. we don't think we can be the biggest or all things to all people. we think we can be good at managing. it gives us plenty to do. we want the firm to be focused on this and simply this. emco,ou look the dna of we think we have a process and an investment committee and a number of cios who all come from the fixed income background.

this is our forte, this is what we know how to do. we are focused on strategy. investor standing in front of you, what is the main thing you put in front of people russian mark --? manny: we explain how we make money. we talk about poor olio construction and solutions. we talk about what the issues are and what a may need. we try to be good about the business cycle. have added value on the table. >> will pimco be as american as it is now? will it be more global? manny: i think there is an urge for globalization ross all businesses in america. it's quite exciting, but it's hard to size. get into thet to

moment. we think there is growth in emerging markets. asia and latin america will be exciting places to invest. we have more resources. that was our editor in chief and the pimco ceo. there are some things going on there. emco, itt title at didn't work out and now the justification is about making bonds and why active investment is so radical in the bond segment. we were explaining this yesterday. in the equity segment, you put your money into and etf and you know that. they remain pretty stable. the churn is much higher. the duration has increased as well. in terms of the bulk of the index made up of low yield

securities like tragedies, where do you get the gains as a passive investor? david: for the most part, a stock is a stock is a stock. a bond can be a wide range of things. it creates an opportunity. there is also a risk if you get the wrong active manager. alix: when it comes to emerging markets, local debt is denominated and that can cause a problem. that says a lot to take in. david: you're giving me a tough time. alix: you can watch us online. you can interact with us directly. just look at your terminal. in thatissed anything interview, you can click on it and watch it again. this is bloomberg. ♪

david: emily chang got to sit down with the twitter cfo yesterday. she talked with him about what that role meant. anthony: we don't have visibility on it seen the revenue trend improve. that is based in a number of factors. significancee the we have driven. it is more attractive than it was six months ago. our audience is accelerating. our prices are down 60%. david: that was anthony noto. was talking about the fact that their traffic is up a twitter, but they are not getting the credit they deserve from advertisers. he thinks that is still to come.

we will hear about his role as cfo. anthony: i love working with jack and the rest of the team. we approach running the company as a team that is focused on specific priorities and we divide in conquer. of the day, we divide up the priorities and what's most important to accomplish. i wouldn't want to work with anyone else. jack, he is an inspiration. he had no reversals and no script and just delivered hearted soul of what twitter is. i live in paris every day to help that vision come to life and that's what is made twitter so special. he could not be a better partner. workinghat is it like with a guy who is ceo of another company? anthony: is there for 100% of the decisions.

he has insights and license to make decisions none of us could ever make it it's a powerful relationship to have with the company. i think it makes us better in the last two years that he has been at the helm of twitter. emily: we talk about the drawbacks. are there any benefits that come with that? anthony: the media wants to talk about dual roles. i don't think about it until the media asked me. we talk about it. when someone discusses a team, we talk about it as a team. we are together for 100% of the decisions. emily: you're still looking for a cfo. anthony: once we have news, we will share that with you. emily: twitter explored a sale. what's the latest. anthony: we have not commented on the situation. the board understands its duty and they support a plan and there is progress.

i've and around the internet sector since 1998 and i've seen companies come and go. i can count on one hand the ones that saw a deceleration in growth that twitter did and then re-accelerate in 2016. it's a herculean accomplishment. of our design team and the rest of the employees who make it happen every day. we have a lot to do. we are still at the beginning of the beginning. we have not come close to accounting our long-term goals. we will recognize the missteps we make and make sure we don't make them a second time. david: you see twitter as an independent company? greaty: i see it having a impact. alix: that was anthony noto. he did not what answer the question.

we are open. we will see. my focus is going to be on apple. they are reporting after the bell. right now, they are sitting at a record high. earnings are two dollars. it's really going to be about the average selling price. is it overpricing what that might be? david: it's a about the iphone. if you 5% of revenues from iphones. they have all these other initiatives. when the going to move forward on that? alix: some of the rednel checks, there is a flag. in other movers, amd missed estimates. chips are sales falling. that is still under the consensus. you have that community health reporting earnings. they have a loss of $.27 per share. full-year revenue was above estimates.

they did set a full-year earnings higher than estimates. they are trading flat, but getting a boost. bp, revenue is higher. it's at the highest level in 10 years. a silly to raise money to pay for the dividend which is not yet sustainable. jonathan: that is great work and coming up, we have the sky bridge capital portfolio manager. with markets trading and futures a little bit lower, you are watching bloomberg. ♪

jonathan: wall street races or president trump.

he is considering breaking up the big tanks. looking to lock in low rates for longer, the secretary secretary is serious about launching ultralong debt. manufacturing expands to the fastest pace in six years. new york city, good morning. i am jonathan ferro. we are alongside david and alix steel. it looks something like this in your futures are flat. these are getting back to work in europe. $1.09.o stable at alix: we will get auto sales coming out. they will fall for the fourth straight month. the transportation and infrastructure committee will hold hearing on oversight of u.s. airline consumer service after the united ceo testifies is. that should be a lot of fun.

apple is reporting earnings as the stock sits at a record high. david: in an interview yesterday, the president gave a sense of how expensive is agenda is, including breaking up the banks. >> we are looking at that. some people want to go back to the old system. we're going to look at that. we are looking at it right now. be verynk is going to seriously change to the banks can go back to loaning money. david: we did the interview with a colleague. she is here to tell us more about what she learned. congratulations. talk to us about this breaking up of the banks. where does this come from? i'm not sure if we took them seriously. margaret: he did talk about it on the campaign trail. a lot of other stuff happened between november and now. we've heard some are marines from the steve mnuchin world that there is something coming.

yesterday, he put it out there. he knew he was talking to bloomberg. he wanted to make news. no one asked about dodd-frank. that was all him. he is looking at packaging these possibilities together. some reform ort bank up -- breakup. what does it all mean? what is he really going to do? we need to see the details. i would wait to hear from gary cohn and the top staff. it's a real question both in terms of messaging and politics of getting this anywhere if you decided to pursue it. david: we are waiting for the details on tax reform, health care, infrastructure. to add one more thing to the agenda? margaret: if it were part of some sort of

grand bargain. this has the potential to do some partnering with some democrats across the aisle. are we talking about bernie sanders analyst warned? sure. -- is that what he is trying to do? it was under president will clinton that it was repealed. there is so much interesting political messaging in this across the aisle as well as what he's trying to work out within his own party. there are questions about the economy, what impact us will have. it is provocative and interesting. it's not clear where it's going. david: we can go through the whole interview. an increase in the gas tax? where do that come from? margaret: jennifer asked that

question. you were interested to see where he would with it. he suggested it something is considering the cousin some of his friends in tracking mentioned it. it's hard to gauge how much he is made up his mind. sean spicer in the briefing later seemed to dial it act. if the president move forward, this represents a second potential outreach across the aisle. there are questions about is this a regressive tax. the notion that you would make the argument that this is something that business wants and something that would improve geographic areas the country that were strong some orders for him. david: he keeps it interesting. thank you so much. great reporting. is then: joining us portfolio manager. 12 months ago, i called troy

tony. it was the one time his wife watched him on bloomberg and i apologize if -- apologize. let's start with a bang. the headlines are interesting. i watched the stocks rollover. then i watched this come back and finish in positive territory. what do you take from me price signal? ssian mark -- that seems like a long shot to us. that being said, one point we have tried to make is if you look politically from a regulatory standpoint, everyone is on board with rolling back regulations regional banks. the house, the senate, the white house, there is uncertainty about the big tanks. capital is to jack up

the level of force them to dismember. now you've got others talking about glass-steagall. from regulatory relief standpoint, we see no risk and a lot of upside on regional banks. for the larger banks which have done well, there is some regulatory risk involved. alix: how does the shape your thought about bank stock? troy: the biggest concern for banks is the lack of lending growth. that is clearly an issue. that may be a one-off. the other issue is will the yield curve go back up. it looks like tanks are going through a pause after a rise post election. i think they go higher because they are relatively cheap. you will have a transfer to the financial service sector. investors have to be patient. the: the yield curve and

loan growth, at the end of the day, it feels like it is demand holding back loan growth. it's like regulation is holding the back loan growth. troy: for the smaller regional banks, the cost of meeting regulations has been enormous. that has reduced their ability to lend. larger banks it's less clear. there would be more loan growth with less regulation. how much is it? is it 10%? it's not like they are going to double their lending growth if dodd-frank is revealed in -- repealed. alix: is this good or bad for risk when it comes to banks? if you wind up taking them up, do they want that? most of the experts think repealing -- reinstating last eagle is not a win win.

it's more of a political point instead of making the economy more stable. that being said it, alyssa for an has a good point. bed-frank should not repealed and the full for rule not be repealed from the standpoint of twice and large bank able to take deposits and then speculate on high risk security. that's why we don't think it will be repealed. david: the president said he is concerned about growth. when you talk about overall growth, which is more important? regional banks or the big banks? troy: politically, regional banks are focused more on the middle part of the country. there is no exclusion, but politically if you are trying to euro in red states, regional banks would be beneficial. from an economic standpoint, you can't divide the country up and say it's ok if big banks

struggle as on his regional banks do well. there are many services big banks perform. david: we hear that most of the job creation comes from small business. not from the big as this. is there a correlation with more regional community banks in terms of their lending money to get the job growth going? troy: historically, regional lending growth has been much more robust. is that causality? it's hard to say. most reasonable economists or forecasters agree that they were handcuffed by such extreme regulatory costs. they would be more willing to lend. on the margin that would lead to better economic growth and better labor market growth. alix: that is good stuff. he is sticking with us. mastercard is that with earnings. they are trading at a record

high in the market. $2.73e is coming in billion. they see growth in the low double-digit. it was a good quarter. bigthan: coming up, a question. how do you unwind a balance sheet? ben bernanke and tom keene sit down with the former fred chair. tomorrow.ve in you are watching bloomberg. ♪

alix: steve mnuchin has a message wall street and the u.s. is serious about ultralong

bonds. it could make sense. >> we are studying ultralong bonds. that is something we are considering a treasury. we have a working group looking at it. we think it's something that could absolutely makes sense for us and treasury. alix: joining us is michael hansen. still with us is try. do we take him seriously? very early.his is they are kind of throwing things against the wall. with low interest rates, there is an attraction to it and will there be enough demand to support it and that's an open question. we'll heard mixed use our own clients. it is early days on that one. troy: it depends what the yield is. alix: at what yield would you buy? say 4.5% would be very

enticing. maybe that's not enough. jonathan: you would be lucky to get 4.5% are in troy: that would be attractive. jonathan: where's the man going to come from. most people i have spoken to are looking to 15 plus 20 basis points. who wants 50? michael: it that's a great question. we have talked to life insurers and pension funds. it comes down to the yield. troy: you would assume the liquidity would be much lower. that's why you demand extra compensation. curve, it'srice the reasonable. we think 4.5% would be attractive. jonathan: how important is the line from the treasury? how important is it in the community? michael: they want to know what

the schedule is going to be and it very much matters rum woody and understanding how the market is going to of all in jonathan: let's say they come up with a 50 year. are we talking about a billion dollars to test the appetite best and mark michael: it's very early stages. it depends what happens on the in school side. that is going to make a big difference. if they do, i think you will see experimentation early on. forward, whys goes would the government do it? is this to fund our current obligations? infrastructure? troy: the bottom line is there is a lot of demand on long-duration. if you can tap that amanda and lock-in that interest rate, it makes the picture look better

than if we get into a time where inflation comes back. david: what effect would it have on the rest of the bond market? troy: one would think more supply that far out of the curve could cost overtime. that being said, it has to do with where the other issue is is , if they suddenly shut that down. that could create a big flat in her in the curve. we think stepping back could cost some steeping. that could be driven by a substantial issue. alix: on monday the treasury will announce the schedule. what we learn about the debt ceiling limit and with the treasury think they will spend the money on. michael: probably not a lot. we're not going to know what the plans in terms of tax reform look like until much later this year. there's a chance it spills over into next year. in terms of the debt them it, this is the challenge.

when we start to really get the headlines around the debt limit comes. it will be hard to come up with a plan at the same time. especially if you're a conservative in the house or senate and i think we are going to get his the treasury is going to build up a cash buffer. i don't the we to get signals at this point. david: what about the fall? in the interview, president trump said i am going to come back on the wall. all that stuff is going to come back in the fall. how much should the markets be concerned about the crisis in the fall? troy: markets have been used to political shenanigans. his magazines try to make a big issue about this shut down. the probability was always low. the markets shrugged. life went on.

we think there are so many other reform, issues, tax regulatory relief, infrastructure. those of the things are going to move markets. forpotential for a shutdown $2 billion, we really don't think that's a huge focus for investors. they are going to be staying with us for a while. barrick.m we also have an interview with david rubenstein. from new york, this is bloomberg. ♪

emma: the insurer has raised its outlook for the year. they have benefited from better

results in the business. they have largely gotten out of obamacare. the act and lost $4 billion. ceo of pershing square capital management has learned the lesson. he spoke with francine. mistakes wasthe not being on the board. we could not see what was going on. francine: doesn't mean you will stay away from pharmaceuticals? bill: he will probably stay away from pharmaceuticals. emma: they are working on two big investments. that is your bloomberg business flash. in his interview yesterday, the president talked about his tax reform plan. he readily and that what he was putting out there was a starting point eared everything is a starting point.

maybe he won't have to change at all. everything is a starting point. we are joined by michael from morgan stanley. michael, let me start with you. what do we know about what the president is trying to take us on tax return? michael: it's tough to say. we get a lot of information from the president, but not a lot of it is useful. we have some principles to work with, but they don't tell us about the endgame. there wasn't any clear indication there was going to be a real effort toward bipartisanship. not good enough for the middle class. we are left with republicans working on their own for the budget reconciliation process. that tells us weird you with something that's going to take a long time. it's probably smaller than we expect. david: what about the direction?

we don't have a lot of details. the president has been consistent about where he wants to had. he wants lower rates. he wants to make sure we bring money back overseas. he wants to cut back of infections. he is been very explicit about that. that's some point will he get his way? michael: i don't think we learn much from reestablishing those. they're the same principles that were established in the house republican plan. the devil is in the details. investors care most about is this going to impact the deficit? will this happen sooner rather than later russian mark out of the we learned much to tell us we're going to get a major stimulus from this and it will happen within a short time frame. good news is a couple of months ago the expectations were sky

high. expectations are much more rate sized around this. alix: here are three scenarios. what is the most important for you as an investor? think it's a good point you made about how expectations of come back to reality. you don't have the danger of disappointment leading to a selloff. that being said it, you know the president is going to move ahead with regulatory relief and tax reform is the question. the one thing we did learn is it's not going to be revenue neutral. deficits are going to grow if they have their way. it's going to be temporary by definition. that should lead to a meaningful stimulus over the short and medium term with ramifications for longer-term budget pushed

out. that's different than trump saying i talked to the advisors and weird want to go for a 25% corporate tax rate. we're going to do a 5% cut ross board for consumers. he went the. he's not want to get everything he wants. it's not owing to be neutral and it's going to be short term. trading, you have to look at the curve now. new supplyricing in at the long end. bond investors and not pricing in inflation trending back up. ind market is not pricing meaningful growth going up to 3.5%. the bond market shrugged. they don't take much is going to get done. if you are long on duration, just a cautious. don't expect the tenure to go through 4% overnight.

the short-term family bess short-term stimulus, will that maintain things in a significant way? the drama is of they will say it is. that's one of the reasons that we think ultimately this plan has to be smaller. outcomes, ioth would say there is not a definitive way going about it at this point. thank you very much. from new york, you are watching bloomberg area ♪] hey you've gotta see this. c'mon.

no. alright, see you down there. mmm, fine. okay, what do we got? okay, watch this. do the thing we talked about. what do we say? it's going to be great. watch. remember what we were just saying? go irish! see that? yes!

i'm gonna just go back to doing what i was doing. find your awesome with the xfinity x1 voice remote. jonathan: big earnings coming up from corporate heavyweight apple. futures marginally negative. down six points on the dow. we go nowhere on the s&p 500.

the ftse up .7. the data in europe really terrific. manufacturing expanding at its fastest pace in six years in europe. a stronger pound story. remarkable resilience of the u.k. economy continues in the face of a lot of political complexities across the continent. let's get you some headlines. here's emma chandra. >> president trump has another phone call today with vladimir putin. the white house isn't saying what the call is about. they spoke last month after a terrorist attack in st. petersburg. that was when trump said relations between the u.s. and russia may be at an all-time low. the ceo of united airlines testifies before congress for the first time since police dragged a passenger often

overbooked plane. has reached a settlement with the passenger and issued new policies. in the u.k. manufacturing unexpectedly grew last month at the fastest pace in three years. i'm emma chandra. this is bloomberg. eurozone manufacturing expanded at its fastest pace in six years showing economic optimism seems to be unaffected by the region's political uncertainty. joining us is david powell. i want to ask the question. is very on the pmi's good. the spread between the soft and

hard data, how pronounced is it. certainly is a big difference. if we look at industrial it shows that it contracted during the first quarter of this year. surveys area, the probably exaggerating the strength of the economy. to an expansion of .6% in the first quarter. when we get the actual number tomorrow it's likely to be lower. the consensus looks like .5 and bloomberg intelligence looks for .4. alitalia the airline has started bankruptcy proceedings for the second time in a decade after the workers rejected the restructuring plan. the workers and the unions have pushed this down the bankruptcy route.

what are they buying into domestically and is reform happening in a significant way? >> the by europe crowd is buying into the recovery which is being theby stimulus and reduction of austerity. they are not buying into long-term reform. more reforms still need to be done. the market italy could use additional reform. the most pressing matter is getting the banks into shape and allowing the extension of credit to be started once again in italy. banking reform is probably the key. jonathan: david powell, thank you very much. andl with us, troy gayeski michael hanson. week you said you can't like europe if you don't like the banks. do you share that as well? banks are an exceptionally

cheap part of europe. if you don't get better lending growth it's hard to see how you get better economic growth. banks would certainly wish for better economic growth. they are intimately tied together and that has been one of the soft spots for europe for quite some time. they have taken so long to reform their banking system which is one of the reasons private credit extension has been much more muted than in the united states. we had a big conversation in one of our meetings to say we have to find someone who didn't want to buy europe. that tell you about the state of affairs and positioning around the by europe trade? >> the story for the short-term is right. monetary stimulus is really having an effect. the fiscal backdrop has become more benign. existential uncertainty

hanging around the french elections has abated. europe had been underpriced for a while. there were some existential risks. alix: we found one stock investor who said i'm cautious on europe. i agree that the medium long-term picture for europe is not great. bad ashe trade is not as other places. what's going to be the negatives? >> the problem is getting any kind of sustained growth in europe is still very much an open question. that's 1.5 percent above trend. that is clearly not sustainable. that's a cyclical recovery. out overing to play

the next many months but not the next several years. alix: how do you view that investing in europe? >> europe was a disaster in 2011 and 2012. everyone fruit it off in 2013 -- and 2014.ff in 2013 ton of money flowed in. almost all of that money flowed of late 2015 through most 2016. you have meaningful discounts in terms of price versus earnings. ecb.ave an accommodative improving earnings. a verysing ingredient is good technical picture workflows have just started to turn after quarter upon quarter of liquidation. we are not wild european bowls. we are with you.

there's more opportunity on a relative basis. you still have to be cautious because italy is the biggest wild card of any of the countries in the continent. aren't investors listening to what's being said around this table? -- it'sarkets working, not such a good deal. what is the market seeing that we are not. investors have been burned on europe time and time again. we couldn't understand why people were piling in but they did. reality set in and it was liquidated. it takes a long time for people to get over the recent pain particularly relative to the united states. jonathan: let's explore that. it could look attractive forever because people won't go in. we are learning pretty quickly

aat it might just be permanent feature of being an investor in the eurozone. how crucial is that. at some point it really occupies the market. then it kind of fades into the background. you find some sort of story you can catch onto. ecbre finally seeing the getting meaningful traction now. you had a real reversal in what was a significant fiscal drag. back then it was like 14 times in europe and 15.5 times. the valuation discount wasn't even that meaningful to start with. now it actually matters. jonathan: you are bringing up equity. let's talk about credit. >> there nothing to do in

credit. jonathan: can equity outperform and can be ecb step back without credit blowing out? if german bonds are trading at 2% it's hard to see how equities go higher. that's going to be the interplay we watch closely as the ecb gets closer to winding down quantitative easing. do you get a yields spike? david: isn't there a reason why the redenomination risk will never go away? policynot have monetary separate from fiscal policy. that's inherent in the structure of the eurozone. >> there should always be a discount. the redenomination risk, the politics have always been much messier. there is much more threat you can point to.

we always expect to europe to trade a discount. the question is the next six to 12 months. on a relative basis to the u.s. if ever there was a time you would expect some degree of outperformance it's probably the next six to 12 months. bix: that is a reasonable ull case. coming up, the markets top performer reports after the closing bell. apple adding more than 120 cap.on dollars in market we have shawn harrison of longbow research next. this is bloomberg. ♪

>> this is bloomberg daybreak:

europe i'm emma chandra. later, u.n. secretary of transportation joins us live. now to your bloomberg business flash. mark -- merck's drugs have risen. it is gaining ins rates against bristol-myers squibb. profits that beat estimates. net debt rose again. bps stock has been the worst performer this year alone oil companies. alix: apple is the markets top billionr adding 120

dollars in value since the election. shares are at a record high. for more on what to expect from the company's earnings we are joined by shawn harrison. talk to me about what happens when you have a earnings for a company where everybody loves to get in and trading at a record high. there's an expectation very short-term that it's waiting for the next super cycle along with another big cash return announcement. it is still at a discount to the s&p ahead of what could be a very robust cycle for the iphone in the coming months and quarter. in the meantime you might have to deal with some softer q3 guidance of iphone sales. what kind of risk is there shorter-term for the stock? against very easy

you will see the iphone 7 plus becoming more and more popular. in the very short-term expectations are muted. growth will be relatively muted. low expectations shouldn't deter investors from being in the stock right now. alix: the other issue is their average selling price. what kind of price and power they could see when the new iphone comes out? expectations are around $660. we are well above the for this quarter based on the popularity of the seven plus. s8 is sellingss better. you could see a mid-$800 price

point driving esp is up year-over-year if that model is as possible as apple anticipates. david: it's a great company. it has done very well for the shareholders. i can't think of another company of this size that has this much hinging on one product. when was the last time we had a super cycle? >> the iphone 6 was the last in line with the s&p. a little over two years ago you had a super cycle. newe are potentially products coming to market that aren't as big as the iphone. saw ample testing and not ton of as well. jonathan: what's the appropriate multiple for this company? >> trading in line with the market would be fair. you are trading at a super cycle you have a pending cash return announcement likely

tonight. if we get any type of tax reform there's a lot of money coming could deploy to drive shareholder returns in terms of capital or incremental growth. this time last year it was trading at 10 or 11 times earnings. now we are north of 17. is it the growth stock once again? >> in the very short-term it is a growth stock. there was very low expectations for the iphone 7. it ended up being somewhat of a hit. you now have a big tax reform dynamic that could potentially help out the stock and it has also raised market valuations. alix: if we get a 10% tax on repatriation do you expect apple to bring that money back? >> i do think apple would look

to bring the money back. they could return mormoney to shareholders. apple has promised to double the size of the services business over the next four years. that requires a high growth rate. the easiest way to do that is increased revenue per user. there's been plenty of conjecture on who they would buy. in theing content services business would be an interesting opportunity for m&a with that capital. david: is there something they could buy that could be big enough that it would not be diluted? >> they would be using cash. likely be.uld alix: thank you, harrison -- shawn harrison. you can click here to ask you

guessed question. this is bloomberg. ♪

david: this is bloomberg. i'm david westin. ken griffin spoke with erik schatzker in an exclusive interview yesterday. he talked about the challenges facing hedge funds these days. here is what he had to say. >> i have been in the almost 30 years. there has been an explosion in the size of the industry. it has been an unbelievable growth story. like many growth stories we are going through a period of retrenchment. today.rder there's more competition. there's a lot of very sharp people trying to find opportunities in the marketplace. this is causing some of the second-tier players to fall by the wayside.

second-tier firms that don't have a competitive advantage eventually have to move on. erik: why is it so hard to generate excess returns? >> they come from market inefficiencies. the work everyone has done over the last 30 years to monetize data and information means our markets today are much more efficient in the short run. erik: is there less alpha to be had? >> think of a company announcing earnings. beay those earnings would analyzed. people have preemptively decided if the company is going to announce this, here's what we are going to do. literally within seconds of the earnings announcement you are already seeing the stock price adjust to where it should be. take an inter-quarter period where you're are looking at data that comes from consumer credit cards having you insight into

how the quarters are evolving. all these dynamics are making the markets more efficient and more fair. for the industry it has reduced the amount of alpha that is available to us as a community. is your position offenses or defensive right now? >> its offense. erik: in what way? count.he quest for there are a number of really talented individuals that we can hire and bring onto our team in this environment. with firms shutting down there's a lot of good people that we want to bring in. when firms are struggling there's a chance to bring good people in to citadel. it is built on a belief that super talented individuals working together as a team can create extraordinary results. erik: what investment strategies or approaches do you believe

will be most successful in this environment. and the way you see markets evolving. well overfind works time is having a deep expertise in the area you are participating. that investment is almost certainly not going to work. i don't understand the company, the country, the pricing dynamics and what's relevant. for us, the core belief we have is deep expertise is rewarded. we organize where people specialize. there are specialists in pricing natural gas across europe. each specialization we think drives differentiated and superior returns. erik: what is working well? we have been successful

across the vast majority of our strategies. it comes back to individuals with a deep degree of expertise and professionalization who work as part of a team. teams are really important today. together the mosaic of information you need to have an insight different from your competition the teamwork dynamic is really important. they are supported by great quantitative analytics. jonathan: that was erik schatzker with ken griffin. it doesn't matter which ceo you speak to come they want to talk about regulation. john cryan of deutsche bank speaking at the moment in berlin. the banks are not well positioned to invest in infrastructure. the overall effect of regulation needs to be reviewed. do they sense an opportunity? david: on both sides of the atlantic they want less

regulation. ken griffin, the low hanging fruit has been picked. it's getting harder and harder for them. in terms of the divide between hedge funds and banks in what.s. versus europe, kind of disadvantage does that put european banks if the u.s. goes the opposite direction? have a new regulator coming to the fed. coming up in the next hour, anastasia amoroso and julian emanuel as we count you down to the market open. you're watching bloomberg. ♪

jonathan: wall street braces for regulatory overhaul.

president trump since he is actively considering breaking up the big banks. steve mnuchin is serious about launching all caps on debt -- ultralong debt. or new york city, good morning as we count you down to the big earnings report. you are watching bloomberg daybreak. i'm jonathan ferro alongside david westin and alix steel. s&p 500 futures unchanged this morning. treasuries on offer at the margin. a weaker dollar story against the stronger euro with impressive economic data. six-year highs for manufacturing in the eurozone. 16% of the rally year to date has come from apple. what's the risk into earnings?

analysts are estimated to dollars a share for earnings. you had ubs warning yesterday of a after iphone demand. he says it could be a cautionary flag. you have a super cycle coming potentially in the fall. it missed estimates s server chip sales really stalled. there was a bright spot. second-quarter revenue outlook was up 12%. we have murder tuesday for you. iac buying angie's list. trading well below that now. it's going to combine angie's list with home advisor and create a new spinoff company. 38%.ues up angie's list has been really

hammered. our top story, president trump tells bloomberg he's at least taking a look at breaking up the banks. here is what he told us yesterday. >> we are looking at that. some people want to go back to the old system. we are going to look at that. we are looking at it right now. and dodd-frank is going to be very very seriously changed. did theargaret talev interview and she is with us to tell us more about what she learned. i see that the congressman is talking in washington to community banks. endis saying his bill would too big to fail finally. past bailouts?t >> this may give us an important

piece of the puzzle. piecesu put all the together you got congress, republicans beginning to step up the tackling of dodd-frank. you've got president trump's team talking about the potential to follow through on something he talked about in the campaign. and you've got democrats who have said they want to break up big banks. it's not entirely clear who president trump is trying to make the deal with or what he's trying to do. this may help us understand and comes all fits in at a time when both president trump and republicans on the hill are meeting with community bankers who are in town. mean: what with this all -- would this all mean? in exchange for deregulation. would that help or hurt the banks? offset for the

counter offer to the protections put in place with dodd-frank. his president trump trying to crack down on banks or is he trying to give wall street more flexibility while saying he's going to address the problems that led to the 2008 crisis? it all depends on what language he is either drafting from the white house side or getting behind on the congressional side. it's not even entirely clear how fully baked his ideas are or how much he was just reflecting the fact that he is in the process of having these conversations. david: thank you, margaret talev. jonathan: this was yesterday's session. trump says he will actively consider breaking up the banks. the stock goes like this and

like this again. i want to ask anastasia amoroso about a very technical chart i just drew in thin air. what did you make of the price action? a market that went straight back up again and brushed it off. it's another element of uncertainty that was introduced into the market. necessarily a legislative or even a presidential priority. is priority that the market focused on right now is health care and tax reform. that's how i would explain that price action. everyone is focusing on tax reform. what is your base case right now? >> tax reform is not going to be what the proposal was last week. earningscase is that are not reflecting any positive outcome from tax reform and for that reason i like that we have

reset those expectations lower. any incremental change even with some adjustments is a positive for stocks. alix: in terms of banks, how much of deregulation is baked into bank stocks right now? >> i think some. i don't think that is the driver of the bank stops. the steepness of the yield curve has been the primary driver. banks theok at larger amount of risk control that has should bento place sufficient to solve for worries we might not otherwise have. the worry is that something on the commercial side may jeopardize something on the consumer side. every division of the bank has its own risk control. the risk ratios are absolutely reflective of that. how does a rollback

position u.s. banks versus european banks? i think they are going to be sticking. this is a process. i don't think we are going to unwind overnight. we have come a long way to making sure the capital ratios are where they are. both banks are on a more level playing field with respect to the capital ratios as they have been in years past. david: bank stocks like the election of donald trump. if it was the yield curve more than the deregulation what has happened on the long end of the yield curve? that how coming off of much of that valuation holds true today? >> have definitely had a reset in long-term rates and expectations. we have also had a softening. down bankragged

stocks, yields and the whole reflation trade. i am going to take the other side of that equation. dataconomic disappointments we have recently seen i think will turn around. we will see a better vehicle sales number. see better consumer spending data. the long end of the curve should continue to rise and not fall. david: we get vehicle sales today. think we will see a rebound from the number we saw in march. jonathan: you are not worried about the cracks? >> not yet. we are still optimistic and constructive on u.s. equities. what would make us not want to be in is if we see signs of accelerating inflation. if we see signs leading to a more aggressive fed that would make us a more cautious. if we see signs of can do is running out of steam that would

be the case. we don't see that now. david: what about credit growth? there is some concern that is softening. >> it is something to watch. it has been going down across the board. it has been happening in the consumer space and the commercial space. the reason we like the opportunity in the united states and we like the opportunity in europe better. credit growth in the eurozone is picking up from 2%. that's why we would give it to europe. jonathan: anastasia amoroso of jpmorgan will be sticking with us. coming up, the treasury secretary gives his pitch for ultralong bonds. that's next. , mr. tom keene will be sitting down for a conversation with former fed chairman ben bernanke. from new york city, you're

watching bloomberg. ♪

david: yesterday we heard it from steve mnuchin himself. the united states is seriously thinking about ultralong bonds. he said it could absolutely makes sense. >> we are studying ultra long bonds. that is something we are considering at treasury. we have a working group looking at it. we think that it's something that could absolutely makes sense. joining us now is michael mckee. still with us is jpmorgan's

anastasia amoroso. if i am not a primary dealer, why do i care whether they issue 50 or 100 year bonds are not? >> in essence you don't. it could cost the government a lot of money. successive treasuries have proposed this and no one has ever done it. you can see the reaction in the bond market. was a quick pop up in the yield curve. it's steepened briefly and traded absolutely flat and spend. isody thinks this necessarily going to happen. the argument is for low rates. now ifld lock that in you think the deficit is going up. leave aside any trump fiscal programs. entitled and -- entitlement spending is going to rise. every time treasury asks if it's a good idea the primary dealers pre-much all say no. david: what about the united states government? larry summers says, with

interest rates this low why don't we lock in money for a long time the way u.s. corporations are doing? generally primary dealers say their customers are more interested in the corporate bonds than they are in treasury bonds because the yield differential for taking that duration risk. it's going to be expensive for the government. the treasury has built the whole market on regular and protectable issuance. there isn't going to be a lot of demand for fifty-year paper. it's hard to say you could issue it on a regular basis. tot means the cost is going be greater to the government for doing it. 30 year bonds are primarily pension funds and they hold some maturity. the trading volume for five year bonds, you can see a significant difference. the blue line is three to six

year bond area. much more traded in the shorter maturities. if they are not traded very often it's going to cost you more and premiums are going to go up. just hold it for the next 50 years. you're not a big pension fund. if there was a 50 year bond what with the yield be for you to want to buy it? >> i think the price is right now. a lot of pension funds in japan are turning away from the domestic gdp is an looking towards it treasury market. so this looking to do year on an unhedged basis. treasuryon long-term is an attractive proposition. i think there would be foreign demand which is probably why the time is now to consider something like this. most of the dealers say

you will get a 15 to 20 point basis premium. tois going to be harder sell. you also have the problem that the fed is not going to unwind the balance sheet and that suggests there is going to be less demand because they have been the primary prop for the long end. forward vehicle sales forwardd -- forward -- ford vehicle sales. what do you think? >> let's see how the rest of the day shapes up. we will see a rebound from the first quarter. one of the biggest dragged of

consumption was the decline in motor vehicle sales. i think that turns around. the rates are still attractive. even though there are some concerns about the subprime auto issuance of the consumer space looks good to us. jonathan: how good of a read across are they for the broader economy? longer-term to be a purchase. a turning point is slower. everybody got nervous when auto sales dropped. a lot of retail layoffs. we're going to need to see more months of data. we will have to see how this plays out. david: it's ironic how this plays against president trump. up autos and what a difference he has made in the auto industry. the sectors he has gone for haven't done so well. haven't. the overall market has.

despite some of the disappointment with early expectations the overall market is up 7.3%. this puts a cloud over the fed meeting. they are going to have to reconcile keep june alive. or hardave the soft data and vehicle sales are the next example. very mildr a statement from them that doesn't suggest we are falling off a cliff. they want to keep their options open. if this continues it's going to be a red flag for june. alix: has been a trend. -- there has been a trend. >> the market has done really well. alix: michael mckee and anastasia amoroso, thank you very much. y calm, buystak

stocks. julian emanuel joins us next. this is bloomberg. ♪

hitting its lowest level in a decade. trading almost three times more if you are trading options on the vix. highest at seconds level in april. joining us now on set is julian emanuel. underneath may be seeing movement in terms of pricing. tweets saying, i want a good shut down in september. do you have to buy the vix here? >> you do. the setup coming into the brexit vote and the setup coming into the u.s. election vote was hedge yourself.

make sure you are protected. we saw the hedges were unwound immediately. outcome the market judged to be more problematic in both cases occurred in the market kept rallying. the exactit is almost opposite. people are looking at the french election. hedges are cheaper than they have been in many years. thinkt perspective we even if the market rallies volatility is so low that it's likely to stay. alix: what would you protect against? >> for the professional investor there is an element of it is a cheap but it makes sense to buy. those are the people looking at their screens. context 250%o gains. we don't think the bull market is over. we haven't had a pullback in a number of months.

the market has treaded water even though we have had great earnings. therefore these valuations -- you are susceptible to a pullback. it's the kind of situation where you would rather be a buyer into weakness that have to be a seller into weakness. that's why hedges make sense here. david: we tend to talk about a market as if it's one thing. it's a lot of things. of the low vix is explained by the reduced correlation among those individual things within the stock market and is the real question whether the same thing drives all the stocks. the phenomenonng of low correlation to an unprecedented degree. you have seen a couple times through history. is the primary reason the fix has been driven to this level and a sensible he the reason that is happening is because you with thesconnect

economy growing and confidence levels off the charts. viewa positioning point of people position for better growth and now they are waiting for the convergence of the economic data to the confidence data and that is basically causing a do-nothing attitude. david: as long as we have slow and steady growth do we remain where we are with the fix -- vix? >> you can. alwaysity market doesn't reflect that. if you strip away the bubble thes you are arguably at highest valuations that we have seen and 30 or 40 years. jonathan: you mentioned some of the events of last year and how investors have been conditioned by big event risks they took out hedges for.

that's event risks. how do you think about event risk versus just risk whole -- full stop? lasten you look at the year the concept of event risk is taking on an entirely new meaning. on the one hand we hear break up the banks. on the other hand we hear government shutdown would be a good thing. alix: a good government shutdown. the fact is we are living in an environment of heightened risk. there are some discreet ones we know. the fed is this week. likely to raise rates in june. we know there's a french election. we are remaking the geopolitical map over the course of time and we are trying to get legislation done and all of these things carry risks that investors are over discounting. goingan: some people are

to say, we also know the fed is going to go at a snails pace. we also know the french election doesn't really matter. >> i say, the fed may go at a snails pace but if the economy doesn't pick up, a snails pace may be a headwind for equities. april u.s. auto sales down 4.4 percent. not after medic as ford. another disappointment for auto sales. theill continue conversation. julian emanuel will be sticking with us. futures unchanged on the dow and the s&p 500. you're watching bloomberg tv. ♪

jon: to our viewers worldwide committee were watching bloomberg tv. futures are dead flat this tuesday morning. up a marginal three points on the dow. unchanged on the s&p 500.

toyota come a downside surprise. the auto sales figures come through for the month of april. switch up the board quickly. treasuries, yields higher by a single basis point pigot -- single basis point. alix: a little bit of poignancy here in the markets. the dow jones up 40 points. the nasdaq hitting another record high, up .1%. the nasdaq has now had six new record highs in the past nine days. apple on deck can also sitting on a record high into earnings. --got some good and some bad loss of $.27 a share.

revenues did come in just a bit light. that stock getting a boost by 12%. community health up 5%. it did beat on earnings. becton dickinson, revenue was better. it did expect revenue to rise to .5% the rest of the year. a little bit of softness in the stock. .5% the rest of the year -- 3.5%. how do earnings and stack up with the rest of the world? there come of the story is about europe. the white bar, citigroup earnings revisions index. the blue bars for the global index. seeing much more upper revisions in europe and the u.k.

than the rest of the world. profit growth over in europe, 24%. .ere in the u.s., 12-14% half of the growth we are seeing in europe. his europe a good tactical buy? will answeremanuel that question. the by europe trade. you have to sell the u.s. to buy europe? julian: you don't have to, but practically speaking, the flows we are seeing my people are trimming their exposure in the u.s. to buy europe. there isn't an unlimited buying power globally. europe really does remain a compelling story to us. really for the reasons, it's all the right reasons this time as opposed to early 2015 when it was purely a weak currency trade.

now, it is a sign of strength. the euro will appreciate over the course of the year. that is not going to hurt this time because so much business is going to emerging markets. jon: more auto sales coming out of the united states. we've got gm in just a moment. gm april auto sales down 5.8%. another downside surprise. to pivot back to the united states, bank of america merrill lynch coming out with their latest client survey. the lowest of any april since 2011. climbs -- hedge funds that -- a lot of clients elsewhere coming exposure.

-- trimming exposure. , for us,fo 's certain numbers this morning are disturbing. will be focused on the numbers over the next several weeks. if you look at the isn yesterday, there was downside surprise. look at bank lending to , that slowed down. mirroring what you saw in auto sales. there are cracks in the story. but come it is nothing that we cannot get through. the expectation is that we will. data is going to be exceptionally important this time. david: we want to bring in our experts from our the trade bureau. -- detroit bureau.

here to take us through the april numbers, u.s. auto editor jamie butters. it doesn't look very good for either ford or gm right now. jamie: not looking good for the whole industry. these are the three biggest players in the u.s. market. they are all down more than analysts had anticipated. definitely some soft is playing out. gm's retail sales were up a little. there's not a lot to hang your hat on. car sales had been falling and i suv sales have been making up for it. there's just not enough growth and suvs to make up for the plunging auto sales. this is more of a car story than an automotive story. suvs, light trucks are holding up all right. tastesthe consumer

against cars shows no sign of abating. this is four months in a row of sales declines, which is a pretty solid trend. there's a strong finish to 2016 and maybe that carried over and gave a soft start to the year. we have to watch the next few weeks and see how may and june play out. it looks like we are past the peak. on the downside of a plateau and maybe starting to contract. alix: what about pricing power? jamie: prices went up again last month. which helps the push out those marginal buyers. they should start to see some better deals in the used car market. which is good for those consumers. little extra competition for the new car dealers and the manufacturers.

that's another headwind for the industry. alix: where are we in the cycle? it does appear as if .les are past the peak it is concern. it's part of the disconnect that the data from where that that is tells you the cycle is later. however, the economy hasn't had the surge that normally comes with it being later. the confidence has surged. jon: david picked up on something. up.sales have held i'm wondering if auto firms have made the switch quick enough. the volume story doesn't impact the bottom line in a majorly significant way -- are using a

strategic shift amongst the businesses? jamie: a little bit. they've seen this coming. tastes for suvs have been strong. using factories change over -- you have seen factories changeover. thatf the analysts noted last april, 3% of the car being sold were from the previous model year. this year, it is a percent. -- 8%. -- this is old inventory losing value. it is potentially a big problem. david: jim is cutting back production. will they have to cut back further? -- gm is cutting back production.

jamie: mexico does more on the small car side. they could bear more of the brunt of the cuts that need to happen. we've seen some cuts here and there. if sales keep falling and falling more than the automakers and analysts are predicting, they will have to cut deeper. we are seeing gm at 100 days supply. we're hitting the big selling season. if it doesn't selling off -- start selling off quickly, they will have to idle off some plants. jon: if the money is switching out of u.s. on valuations slowing growth, where is it going? is it more focused on europe or the yen? julian: it is europe primarily. we expect that to accelerate if the political outcome is judged by the markets to be less volatile and france -- in france.

this flows into emerging markets as well. we are getting declines in japan because of the inflation story. e.m. best is into that -- is that a relative value trade? julian: it is. notdata from china has been consistent with a growth trajectory. china has its own political issues it needs to deal with this fall. jon: thank you for joining us. we are 10 minutes into the session. higher, up little .3% on the dow. as the auto sales grab the toyota, fordgm, all deliver downside surprises. the stocks trading lower. gm down over 2%.

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emma: this is "bloomberg daybreak." coming up tomorrow, tom keene sits down with ben bernanke at 12:20 p.m. eastern time. apple stock trading at a record high again. second earnings coming out after the closing bell. adding $120 billion in value since the election in november. the stock is also responsible for sticking percent of the nasdaq's rally so far this year. -- 16%.

joins us now from credit suisse , julian emanuel of ubs still with us. we won't get much information about the super cycle. people look at these results and i'm fairly sure they will be up 50 billion in revenue -- frankly, the reason the stock has been tightening, how good the next iphone will be. quarter from a purely

near-term trading perspective is a bit more challenging. alix: also, the revenue growth . has the market accepted that point of view and is that what hear from -- expect to hear from apple this afternoon? kulbinder: revenue growth will be low. that is no surprise to anyone. as we have this iphone cycle, what is the long-term earnings power? the earnings could grow from nine dollars and change this year to more like $13. that's what investors are bracing for over the longer term. the first cap slower revenue growth is not surprised to anybody. -- first half slower revenue growth is no surprise to anybody. i think both have to occur for the stock to work. our best case scenarios the services will grow from 20% of gross profits to 30%.

that's important. the quality of the business improves. that services story playing out is something that does happen over the next 23 years. -- 2-3 years. fiat chrysler come april auto sales down 7%. we got gm and toyota and ford and now, fiat chrysler come all disappointing further auto sales. sales.their auto technology has delivered. the fourth quarter was great. this quarter was great. we think the technology is an area of the market that can sustainably grow at low double digits over the course of the year. we like the text is probably because of the growth

trajectory and the valuation is not a premium to the broad market. in point -- the cash on the balance sheet overseas from technology, health care as well -- you think about tax reform, repatriation is the thing all the politicians can agree on. what do they do with the cash on the balance sheet? kulbinder: the likelihood is they will do a balanced approach where they can do a major capital returns of they have $230 billion offshore -- they will have to pay some tax on that. sense, do think makes you increase the capital -- thed by $500 million only thing that potentially make where the services

platform is on content -- they should go after netflix. jon: why? has 700 million active iphones in circulation. apple could distribute netflix very aggressively into their user base and it would simultaneously give them some -- they don't have any content of their own to negotiate with those media suppliers. you would simultaneously get some original content and you buy a tv video content over the top layer. -- over the top player. david: how deluded would that be to earnings for apple -- diluted would that be to earnings for apple? kulbinder: for this to work, two

things have to happen. you have to have material revenue synergy. apple has a significant user base. you distribute netflix towards that. you would get leverage with the operating income and apple could improved,derately ifir earnings per share -- that is changing, there's other things apple can do with netflix. imagine of apple turns around to all the users and say here is apple music and here's our video service -- we will bundle in those services for free. that sells more phones and gives you more business on the hardware side as well. david: very interesting. where does the extra money come from? subscribee are into netflix or they can charge more to the existing people? kulbinder: definitely the

former. you have 110 million netflix users. penetrate the 700 million apple users out there. alix: great stuff. kulbinder garchainder of credit ubsse and julian emanuel of . . you can check out tv go and is online and click on our charts and graphics and indirect with us directly. watch is online and click on our charts and graphics and interact with us directly. this is bloomberg. ♪

jon: this is bloomberg tv. in mud s&p35 seconds 500 grinding on the lower into negative territory as the auto sales figures keep coming through.

april auto sales down 1.5%. nissan.de surprise from we've already had downside surprise from gm, toyota, ford gm negative three. fiat chrysler down over 4.5%. we've been waiting for the moment when things would top out and roll over. a lot of people thought it would happen last year. it is starting to lose momentum now. david: this stock has not been trading at the level it should have for any of these companies. we are joined now on the telephone by the tigris financial partners cio. thank you for joining us. what should we make of these numbers? how bad is it? it is disappointing because we've been following a strong trend in auto sales.

the expectation was it would cars.ue at 17.5 million a number of the key drivers are still in place. the average car on the road is over 10 years old. in the last trough of the otto cycle, we were at a point where it was nine years old. -- auto cycle. some of the issues, there's been lack of incentives. the manufacturers are not incentivizing as much as they have in the past. there's been concern about credit quality deterioration and auto portfolios. i don't think they have been aggressively lending as they have in the past. david: what happens to the auto sales? also, what it says about the economy -- are they prepared for this? can they whether this storm? barra says they been

preparing for a day like this. ivan: they are in the best position they've ever been -- they have plenty of cash and capability to weather a significant current -- significant downturn. bad.is not that have increased manufacturing with that allows them to adjust plans quickly and ramp up again. there's inventory in the channel. dealers are not sitting with an abundance of cars. alix: is this a reach over to the global economy? canary in the coal mine? ivan: consumer confidence has been incredible he strong and

has built up a lot since november of last year. the consumers are not spending to the level you would think based on the level of confidence. jon: thank you very much. and nissan downside surprise. stocksut of the four deep into negative territory. this looks like a bit of a correction now. david: they for this. -- they have been caring for this. -- they have been preparing for this. jon: stocks starting to roll over. you are watching bloomberg tv. ♪

vonnie: from new york, i'm vonnie quinn. mark: welcome to "bloomberg markets.

markets."erg vonnie: we will take you from new york to london this hour and cover stories out of los angeles and tokyo. president trump's next move. will it hurt his ability to get any significant reform done? mark: strong corporate earnings around the globe fueling stock gains today. havens in decline. we will look at whether any events could disrupt the market. vonnie: the pressure is on apple to deliver in today's quarterly earnings report. shares soaring this year, up 25%. can apple keep up its rate of sales as users wa