much is at stake for both sunday'ss before runoff vote or the debate marks the first time a national candidate is taking part in the free runoff tv debate. to congresstestify next week, she expressed alarm to the white house about president trump's national security adviser contest with russian ambassador. expected to account in detail on monday, her january 26 conversation about michael flynn and say she saw discrepancies tween the administration's public statements about what really happened on to a person familiar. the cost of finding zika is climbing. miami officials say the county thehes combat mosquito-borne virus, nearing $30 million, up $5 million from 2000 team. a zika outbreak in miami last

year lingered for more than a month. russia thinks it is sensible to extend the existing deal with opec on oil production cuts for at least six months. according to a government official with knowledge of the matter, russia exceeded its target of cutting production on monday and the cuts are aimed at firming up oil prices. opec ministers meet may 25 to discuss extending the agreement. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ >> live from bloomberg world --dquarters in new york, >> we are 30 minutes from the

close of trading here in the u.s. mixed. stocks trading after the fed decision. joe: the question is what did you miss? >> the fed holds rates steady. interest rates unchanged in the unanimous vote. another tech giant reported today, facebook reporting first-quarter numbers in a half hour. can they deliver on mobile ad demand? with a reportive card on the trump administration and what the next blacks one could be. joe: let's look at where the major averages stand as we head towards the close. abigail doolittle is standing by. applico: we're looking at mixed trading action with the dow fractionally higher in the s&p 500 down modestly and then a look at the nasdaq down about a half percent by more than charter and comcast the most

piercing companies reporting after the bell, a look at those stocks -- relative to kraft heinz, investors are looking at $.85 and adjusted earnings on $6.6 billion. to be the turn out focus here is the m&a discussion here. and did make a surprise failed bid earlier this year. will they be interest did in making a huge merger and acquisition? investors,aig looking for a dollar in adjustment earnings.

-- on facebook, $7.83 billion, and that represents 45 year-over-year growth for both numbers. astounding. a bloomberg intelligence analyst saying alphabet results last week that well for facebook especially around mobile ad revenue. tesla is down about 2%. it also put in record highs and the company basically preannounced and said they delivered .5 million vehicles in the last quarter. what will overshadow everything else is the model three schedule. they now are saying they will start production on the second half of the year and by the end of production, on pace to deliver 5000 cars are weak, astounding considering 25,000 overall for the past quarter. finally, square down ahead of their earnings report. the options action is really suggesting there could be an 11% move up or down.

scarlet: thank you. >> nine years ago, an investor made a ten-year bet with warren buffett and the wager pitted active against passive. with one year left in the that, it is clear buffett will prevail. he reflects back on what he is learned in a bloomberg review column. he writes warren discusses a bet explaining the high seas active management charge created a headwind. he is correct it is high and his reasoning is convincing. it is just not the whole story. we are joined now for the whole story. podcast. thank you for joining us. you list a couple of lessons you learned here the first is price matters eventually. the s&p 500 was at a high starting point and it should be

that that leads to low returns except for this time. >> history will tell you if you started a high valuation or high price point, subs when returns are subpar. over time, that is what played out. it turned out that has not really happened. the last several years, there has been an extraordinary influence in the number of people saying it is the only way to go. what does the argument get wrong and why do you still believe? >> i think it is mostly right. if i look at my parents, a doctor and a teacher who do not understand the intricacies of investing, they should be investing in the lower's -- the lowest cost here that does not mean the market will always win. passive overtime are cyclical. 10 to be the case that in bull market's, a cap weighted index like the s&p 500, money flows in and it becomes hard to

outperform. if that continues, you would ask the fed to be the case. i suspect it will not going forward. week, thatthis passive or looking out differently and they introduced by inefficiency. to go to your cyclical point, there will be opportunities effectively overlooking. that? buy >> i do. it is hard to know when that happens. there are some people like jack who think 80% of all the assets need to be vehicles before. is like 25 ormber 30, a long way to go and a lot of money if he is right. >> one thing i heard many times as hedge funds outperform in the bear markets. they are meant to be defensive investment vehicles rather than risk taking vehicles. don't they have risk maxim -- risk maximizing as well? is hard to generalize but

the whole notion of a hedge fund is there is a risk that is hedged. that is often a market risk. if you put a dollar into the hedge fund, you usually do not have as much market risk. >> these guys make hay when things are falling. >> two points. part of the math is if you could outperform by enough in the down market, you will make up for underperforming in the upmarket. >> but stocks usually go up. is that part of the problem? it is great to have these assets that perform but if you look at any long-term, it is usually just up and to the right. >> that is right. >> warren buffett picked the s&p 500. big part of the reason i was comfortable taking the bet was i thought the s&p 500 would

be a bad place to be. there are a lot of low-cost investment options. you could invest in international markets. you took a global low-cost index, it matched the returns of hedge funds. >> he chose perfectly but he chose luckily. >> he often does. >> for how many decades now? what about risk. have not talked about the fact that asset prices have risen. tough to get low-interest rates. people's risk sensitivity, they almost have to take more risks to get returns. >> if this were a bet about return, i think most people in the business understand a group of hedge funds take less risk than the s&p. you might think, to your point, you should lose because the markets will rise over time. joe: when you select hedge funds, and in theory, you will do this that again and you think there is a chance the hedge funds could a -- outperform the

s&p 500. you mentioned he picked the s&p versus the global basket. what qualities are you looking for? >> they are a lot and a lot has and process.ople you can look at high-quality people who have great pedigrees and a great process for applying what they do. >> the civic, you talk about fund,ees, you going to a what are specific things? >> you generally like investing with smarter people rather than less smarter people. there are a lot of things in hard to say in this short time -- silveris no civil bullet. >> it is like taking on norse. person go with the rather than the strategy at times. quite it is a little bit of both. you want to write entrepreneur and the right business model. >> i want to clear something up as well. andtalk about doubling down

you talk about, if you double down on this set, you have a great chance of winning, some of them are like, whoa, from warren buffett again. what did that look like nine years ago? what was the probability nine years ago today? my partnerss ago, and i said we thought the odds of winning were 85% of people thought it was not. in fact, if you look at the subsequent returns of the s&p 500 and put the bucket of valuation it started in, the chance of getting this based on history was 15%. so it is possible but we were right on the probability distribution and just got that one outcome wrong, and that can happen. >> a poker game as an analogy. we will come back. i want to see how you apply it to trading in the next 10 years.

>> host of the capital outfitters podcast. as julia said, staying with us through the break as we continue our conversation on passive versus active. from new york, this is bloomberg. ♪

>> we're back with a host of the capital held hitters podcast and we are talking about a tenure bet that five hedge funds would outperform the s&p 500. let's just get that out of the way? lookdisclosure, when you back at the lessons learned, one thing you went out is you are comparing apples and oranges

when you look at the hedge funds versus the s&p 500. asking ifthem is like the chicago bulls or the chicago bears are better. hedge funds and the s&p 500 by difference is. this has come up quite a bit. we tried to put a chart together comparing hedge fund performances versus something. what is the best way to benchmark the performance if it is not against the s&p 500? >> professor -- professional investors will look at the hedge funds. a simple example might be hacked the s&p 500 in cash. if the manager owns every dollar they invest, dollar long and expect at, you would return plus or minus the ability to add value. joe: we were talking about the idea that there would be all of these in the issuance is in the market, there is another view credit suisse points out.

if all the active people leave, it is like all the fish leaving the poker table and only the sharks play against each other. when only the good people pay -- play against each other, everybody just breaks even. trend,e is a secular could it be the opposite that makes it harder for the life of the active manager? be whatn and that may is happened in the last few years. it is not that we can collected and say what is happening, but he calls it the paradox of skill. >> the brokers and everyone but the asset manager. about the talks difference between absolute and relative skill. the skill of the individual hedge fund is higher than it has ever been but it is for all of them in their competing against each other. 20 years ago, hedge funds were smaller and might be competing against mutual funds and doctors

. when the relative skill was higher, they had a much better ability to outperform. it is entirely possible that is a driving factor that made hedge funds disappointing. >> we have seen a lot of hedge funds shut down. players there are fewer than before. where are we in the continuum? is there an endpoint? are we half of the way through? what we knownow p is hedge fund assets has equalized at the highest level they have ever been, three chilean dollars invested. they are fewer players but haven't really come out and mass. it could happen but it is a lot of money. if you were to compare it to the time of the bet, there might have an as much activity. banksll street investment have significant trading desk that have the same activities. .t is very hard in 2008, very big as well.

it is hard to know exactly how different the playing field is was 10 yearsat it ago. >> there are so many unknowns here. we do not know what the impact will be. we do not know what central banks will do. i know you have laid out why you didn't win this at -- this bet, but what if you learned about how to make money over the next several years? key lessons.a few the first is investors and hedge funds are paying a lot more attention. that is something you always knew but in a low interest rate environment, the fees matter that much more. joe: another trend that comes to mind is essentially hedge fund strategies embedded into the phenomenon that identified hedge

funds working so well and then identify cheaply. to find funds just have new stuff? old ideas do not work anymore. accessing hedge fund likes strategies more cheaply did not exist 10 years ago. people asked me today, what i make that again? the s&p is more likely to do poorly than it was. the valuation is even more expensive. lot more nuance and it is harder to know. >> if something is going up, you buy it and it am thing is going down, you sell it. they would take that bet. it depends on what you're looking at. what responseder you have gotten from people on the passive side and your peers spirit what have they said in response to lessons learned? >> it has come from all over the place. the asianruns

business for vanguard. he agrees with a lot of the stronglymade and feels that low-cost is the way for most people. what i've generally seen is , people i don't to say just are happy you lost them you should take your lumps. >> have you heard from warren buffett? >> we have not talk about this that just came out today. >> get ready to defend that. a the bet was originally for million dollars that we pre-funded nine years ago. the easiest way to get it 10 years out is a coupon bond. we can talk about hedge funds, but owning a coupon bond with

prices, collateral will go to presumably warren's charity and a couple of months has tripled since we first put it in nine years ago. >> so someone wins in the end. charities. ted, thank you for joining us. he is host of the capital allocators podcast and you could read his letter online. joe: coming up, more tech earnings after the bell including facebook and tesla. in the meantime, the tries you cannot miss before the results. ♪

scarlet: the fomc has been a lot more talk of this year. its members have been. statement came out today, and once upon a time, that was a big deal. investors could get a window into policymaker thinking. it is less of a bigger now. back in 1996, and this is a bank, eachdeutsche

fomc official gave an average of four speeches a year. fast for two today, and we are looking -- fast-forward to today, and we're looking at four speeches are year in 2017. is this too much information? the risk is with too many the central voices, fed narrative gets lost in the noise and the market gets convinced with all the analyses and investigations and information, that the fed has thought through every aspect and therefore they have everything under control. that to me sounds like a precarious situation. julia: i am not looking at some of the earnings we got. facebook third quarter is what we will look at. i'm showing you what we are looking for in terms of the basic numbers. etf, $1.12. the daily active users numbers

here, you can also see that this gives you a sense of just how well they are accessing people to then monetize, where do they get the advertising spent from? instagram, what is that doing? they promise not to keep hitting facebook itself, they advertise so they have to look for other options. this is an estimate of the ad revenue growth we could see honest graham in the coming years. 2017 here, $3.6 billion. 12% ofll be around facebook's mobile revenue. this is an alternative revenue source and this could be something pretty significant. joe: you're looking at a wildly profitable company. i am looking at the opposite. here's a quick look at numbers. 2.6 billionng in at dollars. earnings per share, it is a loss per share, 82% expected.

full-year capital expenditure plans, a huge question. tesla always has to build so much for future production, that is $3.5 billion. of the tesla cash flow. look at this. look at huge negative bars. billion. treatment -- aor long as -- as long as they are delivering on the rollout -- >> that is what we want to hear. it should be free cash burn. >> burn, baby, burn. >> the market closes next with less than four minutes to go, we await phase look and tesla's results.

the nasdaq is being dried lower by apple with its disappointing results. this is bloomberg. ♪

♪ >> "what'd you miss?" stocks ending the day missed

when the fed delays the decision to keep interest rates at current levels. the dollar and treasury yields move higher. i am scarlet fu. joe: i am joe weisenthal. if you are live on twitter, we welcome you to our closing bell coverage from 4:00 to 5:00 eastern. scarlet: we begin with market minutes. nasdaq retreating from a record high. apple the big drag on the index when it came out with results that disappointed investors. on the finishing changed day, a creep back into the green after the federal reserve's decision to not raise interest rates and keep options open for a june rate hike. the fed delivering on expectations by doing nothing. you can see the very modest reaction. scarlet: that is a good way of describing it. we're seeing it across equities.

500,you look at the s&p this breaks it down into 11 sectors. we are not seeing sizable moves to the upside. financials up 6/10 of 1%. real estate down 1.3%. materials off by 1%. commodities are hard-hit. we will go into that later on. i terms of individual movers, am paying attention to time warner and comcast. worst daysast's since october following their quarterly results. time warner's cable division had a drop in ad revenue last quarter. management said the added market demand has moderated. 500's bestthe s&p performer, up almost 11%. they have autonomous driving systems into two different companies. it will be completed march 2018.

stockholders will own the parts of both companies. they search their offices as part of a wide-ranging investigation into collusion in the generic drugs business. the investigation has been going on for a couple months. joe: a look at the global bond market. 2.32% on the 10 year. still at the low end of this range. let's take a quick look at gip is the technical term we use for our intraday charts. you see yields falling later on. perhaps people interpreted there is no imminent release of ultralong bonds by the treasury. they are looking at it, they are

studying it. we see yields falling on the news. in the end, unchanged on the day. see bond yields, adding some strength to the dollar. it is all about the fed it seems. the rates are on track of this year. if we take a quick look at the dollar index, you can see where 00.are now, trading around 12 pips higher. we have the aussie dollar, the weakest day since november. the aussie index had the worst day it has had in six weeks. the banks and miners were under pressure. we expect a big -- a bit of pickup from that. joe: finally, on those commodities, a big day in commodity land.

crude oil had an interesting day, gaining in the end. they were selling earlier. low 50's a in the week earlier. gold selling off, look at those industrial metals. or 4.4% decline in copper. there has to be some concern there. let's take a six-month look at the bloomberg commodity index. it puts into context of this dive. we are at the lowest level of the year, you had to go back to november. commodities rallied right after the election. some thought there would be infrastructure spending. you can see perhaps there is some pass through with commodity prices to inflation measures, that is not an inflationary chart. and those are today's market minutes. scarlet: we are awaiting earnings any moment now from facebook. let's bring in a ceo david kirk patrick -- david kirkpatrick.

what is the number one metric you are looking for for facebook's results? topline growthll driven by global business. they're driven primarily by the revenue growth we are seeing across the board from these guys. that has company historically gotten a lot of credit from wall street for managing the migration of their business from desktop to the mobile environment. mobile users and mobile revenue is a big driver of this company. longer-term, investors want to hear about the ability to monetize nor businesses like instagram and whatsapp. scarlet: david, the reason i ask about these -- what could derail them? david: it is interesting to look at the controversy surrounding facebook lately, the behavior of people on facebook live video. no, that is not derail the

juggernaut at all. commentaryd social but not actually affected the business by any noticeable degree. we can see potentially if that happens, but i highly doubt there will be evidence. what could derail them is public sentiment shifting against them. scarlet: we have tesla results coming out. julia: yes we do, and adjusted loss of$1.33. the estimated loss we were expecting was $.82. that is wider than we were expecting. they are heading into the second quarter. i just picked up their statement, the model 3 is on track for initial production in july. the growth margin on automotive's in the fifth quarter improves to 27.4%. what are we thinking here?

thanficantly wider expected. scarlet: it was still up at 2%, at least the initial blush. joe: none of these numbers seem to matter, it is about whether the story is intact and whether people still believe in elon. david: and they do. you are pointing out the contrast between facebook's profitability business and tesla's money-losing business that is valued at a massive amount. they have one of the best stories in business, not just in tech. julia: what they are saying, they are on track for their target in the first half of this year, which was 50,000 cars. fore look at the target 2018 it is 500,000 cars. how do we get from --? >> they used to talk about reality distortion field with steve jobs. but you one must is the master

of that. but he will produce a lot more than he is doing this year and people will be impressed. capex, we were talking about being an important number. slightly over $2 billion when model 3 starts. the amount of cash burned is perhaps an issue that shareholders will care about. scarlet: when we look at these tesla numbers and the fact they slightlyease capex over $2 billion for investors, is that good news? typically with high-tech stories are growth of stories in general, investors want to see management redeployed the capital back into their businesses. if these businesses can put up these topline growth rates, generally the returns on investor capital over the long-term, would be very strong. at some point, companies need to rein in expenses and bring in

the bottom line. but as we have seen, whether they are social media companies or amazon, amazon does not deliver meaningful profits to its shareholders, yet they are willing to bet on jeff bezos and a topline growth story. it is similar with tesla and the early stages of its growth profile. julia: the tesla, the share price is based on the future. the model 3, they say it is coming in july. they were not expected to be able to do that in july. is that going to make money? if it comes at around $30,000 for the car, it is kind of cheap to read will they be able to do that? if it comes to the $50,000 price tag, it is appealing to them mass-market? i wonder if this fictional issue toh this company translates what they think will make them

money. >> if they can come up with a car less than $50,000, they will sell a humongous number of them. julia: why humongous? more in the range of $30,000. i already have a reservation for one, i love the idea. i know so many people who would buy this car. julia: do you know one million of them? are they enough? >> i think they are enough. scarlet: we have paul sweeney and david kirkpatrick, we're awaiting facebook's results. in the meantime, we have first missingadjusted shares, analyst estimates. $6.3 billion. 6nalysts were looking for $6.4 billion.

they make those things you put around your wrist. therehan expected, adjusted loss for q1 nearly $.15 versus an estimate of $.18. 2.99 billion. we are looking for a house vote on the continuing resolution. they do have the votes to keep the government open. that you can still see the house voting in action. this is bloomberg. ♪

scarlet: facebook just reported earnings. first quarter revenue that are then $8 billion.

the estimate was for $7.83 billion. monthlyllion active users. daily active users higher than expected. we lookeworthy here, as for the right earnings-per-share number to compare with analyst estimates, facebook says it will no longer report non-gap eps. that is following in the footsteps of alphabet. i want to bring in david kirkpatrick and paul sweeney. when you look at these numbers, what interests you the most? paul: i would start with the revenue, a came in very strong again. this extraordinary topline growth on a company that has $63 billion, they put in double-digit, topline growth.

it is driven by their baseline metric, their monthly and daily active users. we will find they monetize their mobile users, which of the fastest-growing part of their user base. from the topline perspective, this is what the bulls continue to look for. they need topline revenue growth from a higher monetization of the user base. numbers,looking at the facebook says it will no longer report adjusted earnings per share. 1.04 --the$ joe: you let out an audible gasp. >> it is not that i was not expecting a good quarter, but they did say to expect lower revenue growth in 2017. this company continues to roll

like a steamroller forward. we are in a society where everybody has this thing, looking down, bumping into people, everywhere they go. what they're doing, they are on facebook or instagram. doing itple are globally. it is likely to continue, they have the product people want. julia: they promise to they are not going to put more advertising on their initial facebook platform. people are saying, it is too much. they have to find different ways. >> it is great, the revenues are wonderful, but users, it is such a high number, it allows them to show more ads and that is the key thing. joe: we see the stock inches down a little bit. it is important to put this in context the it has been on a incredible run. remote issue for concern, as far as you can tell? paul: no, a little confusion

about the eps number. when you look at gap to gap, there was some confusion there for the first quarter. the real issue will come up in a conference call. investors are going to push the management team to talk about concrete plans about how they are going to monetize the 700 million users of instagram. the company has taken a very conservative approach to monetizing those platforms. as we think about the facebook platform becoming saturated with ads, they have indicated that over the last couple quarters, these two additional platforms have to be the drivers of growth going forward. we need concrete plans and numbers from management. that will be the focus of the call. can we see what instagram is using in addition to active users? this will buy them time to work on messenger and pull in the money, it is time they are

playing for? has done anram excellent job ramping themselves up. they are comparing instagram to snap. scarlet: i wanted to bring up the question of violence. we have seen how people have used facebook live to broadcast violence, including murder and suicides. it is negative for obvious reasons. the company devoting resources to that, saying they will have more people monitoring this, a lot more. with that have an effect on membership sign-ups on engagement, revenue? >> if anything it would be positive. it causes servers to feel more safe. they have an extraordinary amount of people working on this, 4500. probably more if you count contractors. they say they will add 3000 more people to prevent suicides, and

inappropriate content. a are getting better at it because they know they have to. joe: you talk about this company has a steamroller, we keep looking down at our phones. is the aggressiveness with which copyingear to be aspects of snap and stuff like that, can anybody compete with they spoke once they decide to go into the market and take the best attributes of the competitor? david: snap has been successfully competing with facebook. they do not own the world. but they are very responsive and have a lot of good ideas of their own. instrument was invented as something else. it has issues that are different than snap, even though they have some that are similar. facebook could be supplanted, but i do not see any sign of it. julia: instagram is stealing the best part of snap. joe: david kirkpatrick, thank you so much. and paul sweeney, thank you both for joining us.

we have breaking news. qualcomm, the maker of chips, is seeking a u.s. import ban on apple's iphone. they are asking the international trade commission to put an injunction against the importation of iphones after apple's decision to stop paying royalties on technology that qualcomm owns. a very interesting dispute here. something we will be keeping an eye on. scarlet: and we have other had result,g beating estimates by $.31. $1.36 was reported. metlife coming out with numbers. $1.41, beating estimates. metlife up by 1.7%. tesla little changed. square up 5.9%. surging 11%, second-quarter adjusted revenue $223 million.

that brings up the high end. this is bloomberg. ♪

joe: breaking news, the u.s. house passed a $1.71 trillion 8 vote.g bill, 309-11 they keep the government open until september. very few of trump's priorities in this. scarlet: -- julia: "what'd you miss?" the fed left interest rates unchanged, but on a steady tightening path. we want to bring in vincent reinhart from standish mellon. thank you so much for joining us.

expected as far as the budget is concerned, a slighted knowledge meant of the weaker dater in -- data in q1. vincent: we need to see a bounce back from the weak first quarter. at their june meeting, they are only going to have two employment reports from now and then. what we get friday and one month later. we will have to see two decent employment reports. the other one had jobs created. joe: why do you think the q1 weakness is transitory? is it because they do not think it fits into the broader economic trend? vincent: a little of both. lots of talk about the seasonal pothole. the vice chair and she did in remarks. they are probably worried a bit about the underlying momentum.

that is why they would like to have two good employment reports under their belts before they act. scarlet: there was no mention of the balance sheet or plans to address that. we will talk about that in three weeks when the fed rates are released. given the moves and equities and what isd commodities, likely the path of the fed will choose when it comes to the balance sheet? vincent: whatever path it is, it will be laid down on railroad tracks. they will announce everything pretty far in advance. this is an institution scarred by a taper tantrum. i think you work backwards. angst willly think have an elevated demand for access for a very long time. that currency demands will grow. it will probably be a $2.5 trillion balance sheet.

it took them about three years to get that last $2 trillion of assets on the books. it will take longer to run them off. julia: why are they doing this, why does it matter? this is a trading position, i , it will be a problem of treasuries go down and rates go up. vincent: profits and losses do not matter to the fed. the value of the central bank has a hold on currency. i think part of it is, there is a sincere difference of opinion up the fed about what its balance sheet should be. members, some fmoc presidents in particular, who want to get back to before 2008, a smaller balance sheet, smaller imprint on the u.s. economy.

25% of nominal gdp sounds too high. they would rather get it to the 5% to 7% in the days of greenspan. there is also the political risk. if you are sitting there with a big pot of money, at some point some future congress may think about you. there were proposals in the campaign, there were proposals coming out of the house a few years back about effectively writing down the fed's assets. if you hold a lot of them, you're just a bigger target. that political angle we can never forget about. we have much more coming out on earnings. facebook reporting blowout numbers when it comes to revenue. facebook shares moving higher in after-hours trading. this is bloomberg. ♪ the show's about to start! how do i look?

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>> i am mark crumpton, it is time for first word news. as joe weisenthal mentioned, the house of representatives has passed a spending bill that will fund the federal government through september 30. a $1.17 trillion measure passed by a vote of 309-118. president trump plans to sign it, even though democrats were able to defeat most of his wish list, including money for a wall at the u.s.-mexico border. in a white house meeting with president trump, palestinian president said he is hopeful about bringing about peace with israel, based on the vision of two states, and the borders of 1967. president abbas is calling for a

peace that is just and comprehensive. he says there is a new opportunity, new horizon that could lead to peace with israel. he isent trump believes the palestinian leader that can get a deal done. mr. trump: i want to support you in being the palestinian leader that signs his name to the final and most important piece -- peace agreement to bring peace and prosperity to the region. >> president trump's of the middle east peace process is not as difficult as people thought over the years. at the senate judiciary committee oversight hearing, fbi spoke'aboutes comey disclosed information on hillary clintons emails days before the presidential election. >> it was very important i tell them instead of concealing.

people can disagree, but i made that choice. it was a hard choice. i still believe, in retrospect, the right choice, as painful as this has been. >> director comey said he would do the same thing. french presidential candidate emmanuel macron and marine le pen are facing off in a head-to-head debate on live, primetime tv. both candidates came out swinging in their opening remarks. penon said populist le prospers on the anger of the french. as an allyto macron of the world of finance and compared herself to a candidate of the people. running his first-ever campaign for elected office with a grassroots movement. 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. scarlet: let's get a recap of today's market action. if you look at where the indexes ended, it does not look like much action. the nasdaq dragged lower by apple. the dow jones closing up for the day. the s&p 500, little changed, down slightly, making a comeback in the last 30 minutes of trading. thereggest mover in which was no change to the federal reserve interest rate was that copper fell the most since 2015. joe: an ugly day for commodities. let's get around up of the bigger earnings. let's start with aig q1 operating eps, well below estimates of $1.05. also rallying nearly 3%

after-hours. one dollararnings of 40 one cents, versus $1.28. a return on equity of 5%. facebook slipping a little bit after hours. this is such a juggernaut. we have a david kirkpatrick talking about it, it is a steamroller. $.17 ahead of where the estimates were. 94nthly active users, 1. billion, beating estimates. overall, stellar numbers. but a little pullback for a company that has been on such a tear. tesla, that is the smallest mover of all of these. you would expect them to be the biggest. they are down slightly, keeping its delivery numbers unchanged. that is always the key metric.

$2.7 billion. nots about the outlook, much reaction to its delivery estimates are capital expenditures. the company has $4 billion in cash on hand heading into the second quarter. julia: let me give you a look as far as what -- how square is concerned, surging in after-hours, up more than 5%. they announced revenues better than expected in the first quarter. 204 million dollars. million.ate was $192 they did better than expected. the revenue outlook for the rest of the year coming in better than expected on that one. $2.16 billion, investors liking

what they are hearing. trading almost 10% higher in after-hours trade. aey did report a q1 loss, narrower loss than expected, $.15 a share. the estimate was $.18 a share. eps $.41.adjusted the consensus was $.35. a quick note on disney, the ratings agency rated disney to a plus from a. it is a second time they have raised their rating since 2007. they like the outlook for disney, saying it is more favorable compared to its peers. scarlet: "what'd you miss?" elaine chao sat down with us at the milken institute to discuss the future of autonomous cars

and what it will take to improve u.s. infrastructure, a huge priority for the trump administration. efforte has been a real to reach out, to all sorts of , andholders and citizens residents. people who use the system, passengers. we have really gone out to listen and hear what americans are telling us. what we are hearing are so many interesting things. number one, there was a lot of , and they arel anxious to invest in infrastructure. they are on the sidelines now because there are not enough projects that are ready to be financed. secondly, there are barriers to the private sector coming in to fund finance, the public infrastructure system.

we are watching and listening and working on the infrastructure proposal on two ends. end.s a permitting and -- we want to end duplicative bureaucracy's, so they can go online quicker and be ready to be financed. and we're looking for ways to fund the infrastructure proposal, and that is hard. there are about 16 different ways of financing or funding the infrastructure. every single one of them will have detractors. we are working with all the different ways and trying to do it in a responsible way that will not increase the deficit, and that will ultimately yield the best transportation system in the world. >> one of the key things at this conference has been technology, artificial intelligence.

intoay that plays transportation is autonomous driving, self driving cars. how do you make the case to a fairly skeptical public that this is good, this is going to be safe, and it is coming at the right pace? are asking exactly the right questions, which we are, as well. our country is so full of creative and innovative people, and we lead the world in terms of innovation and creativity and patents. but we also have to remember, we have to bring along the public, and that they have to feel comfortable. i very often challenge these wonderful people in silicon valley who are so brilliant. i say to them, you do such wonderful things, you are thinking about autonomous vehicles, which can increase butlity, increase safety,

we have to bring along the rest of our country. there are people concerned about privacy, about being in a self driving car, and not feeling comfortable that there is nobody in the drivers seat. that is an absolutely important question. our country dominates in terms of creativity and innovation. the we also have to bring along the rest of the public. scarlet: that was jason kelly speaking with transportation secretary elaine chao at the milken institute conference. earnings,la reporting confirming the highly anticipated model 3 sedan is on track to begin production on time. this is bloomberg. ♪

♪ scarlet: "what'd you miss?"

tesla confirmed its highly anticipated model 3 begins on schedule for output in july. they reported a first-quarter loss. let's bring in our auto reporter in detroit. , orarnings actually matter do losses matter when it comes to tesla? >> obviously not. a company like ford mrs. earnings estimates by a penny or nickel and their stock gets clobbered. tesla missed by 50% and their stock when up. they did not run out of money and the model 3 is on track. we have been saying it all week, and this proves it. this stock is about the bet on the model 3. is aulls can believe it game changer, the mainstream vehicle that will help tesla change the world. joe: any new developments other than saying it is on track? did we recognize the earnings don't matter, what do we know about -- know now that we did

not know an hour ago? in a lettern, they could note, have done more to reassure investors that they haven't going on. they have their suppliers in line. elon musk had talked in the past about how we are setting this deadline and we know some will miss it and they will be punished severely. it seems they got the message. not only can they start production in july as planned, but in 2017 that will reach 5000 vehicles a week in production. in 2018, 10,000 a week. that gives them the opportunity to go overseas and take this vehicle beyond the u.s.. julia: it is amazing, isn't it? inwill have a production july, but skipped some stages on the way. cash, baby.

talk to me about the cash burn. through the cash, not as much as maybe in some other periods. they burnt through less than they raised, still have about $4 billion, which is reassuring. needs,ve huge capital battery needs, lots of cash needs going forward. joe: thank you very much. up next we will be talking to nouriel roubini from the milken institute global conference. his take on the economy. this is bloomberg. ♪

joe: it is day three of our coverage from the annual milken institute global conference in beverly hills.

we are joined by the economist who called the 2008 financial crisis. , thank you very much for joining us. tell us about the mood there in beverly hills. how do people feel about the state of the economy right now? optimistic. mood is but these are mostly people from the financial world. the markets have gone higher and higher. in my view, the markets are overestimating what france will be able to do and the impact on economy and growth. they're estimating a number of downsides. they are micromanaging the corporate sector. inflationad to higher , faster and sooner, a stronger dollar, and enjoy a the jobs of

the blue collars. markets are way overestimating politics and the negatives. there is too much euphoria that is not justified i the data -- by the data. scarlet: that is applicable when you are looking at equities, since they are up near record highs. spreads are pretty compressed. some would say we are fairly late in the credit cycle. why you think that is not affected more in the prices? is happening is that credit spreads are narrow. the economy is still growing. the debt of the nonfinancial corporate sector is back to levels that in the past caused a corporate debt crisis. that is unlikely to happen right now because these high saturations and leverage are at the short and long end.

suppose that a was -- it was, relatively higher. you could have a real credit shock. the index credit spreads are two compressed relative to what the economy is facing overtime. there are increasing amounts of leverage in the system and forms of financing that are risky. we saw what happened when those types of things were loose. julia: when we look at the u.s. treasury market we see positioning go from extremes, extreme shorts. it slipped in the last week and people are going long. are you saying that is the right position to be in at this stage because people should be more cautious? or are they getting it wrong again? ,ouriel: i think that initially

it went higher because there was an expectation for infrastructure, tax cuts would boost growth. but the bond market is getting a reality check. many of these policies will not be implemented. it will be hard to do them. the impact on growth will be limited. first order gdp growth was anemic. that is my point, the bond market has it more right than the stock market. the stock market is in euphoria, the bond market knows it will remain anemic at 2%, plus. if there is a fiscal stimulus, it will go sharply up and the dollar will go sharply up. the dollarise of they have gone down a little bit and are moving sideways because

people are realizing we are too euphoric about growth prospects in the economy. joe: you mentioned mediocre q1 data. the fed said softness was issues withperhaps seasonality in q1. is the fed wrong? is that weakness due to a lack of momentum within the economy? nouriel: no, the fed is not wrong. seasonalitydual every time there is a first quarter number, and other temporary factors of one sort or another. if you have 0.7% and close to 2.5%, 3%, you're still averaging 2%. i do not think the economy will grow much more than the potential. in the u.s. is between 1.75% and 2%. be closer tocan

2.5%. but we are close to full employment. the fed will tighten more and that will slow down economic growth and a tightening of financial conditions. therefore, we cannot systematically draw more than 2%. i do not think the policies of trump will increase growth. ,ulia: what is the probability how low is it, we get fiscal stimulus infrastructure from president trump this year? spendinginfrastructure is now on the back burner. they tried with health care, repeal and replace, they failed. doing tax reform will be a royal mess. they will combine tax reform with infrastructure spending. they said they will do tax for now, it will take the rest of the year to find something. i think it will be a little

mickey mouse reform. 90% to the top 1%, it does not have a good impact on the economy. therefore, you will get infrastructure spending late in the year, maybe past year. we will see how much they do on infrastructure. talk is cheap. so far they have been talking about nothing on infrastructure. scarlet: a lot of talk, not much action. you are on a panel talking inutswans on the -- swans the economy. what should investors be on the lookout for in 2017? nouriel: there are risks for the trump policies, something going on in the eurozone with italy next year. but my biggest black swan would be the conflict with north korea, rather than being conventional, might become a cyber war conflict.

they are reacting by having a major attack against our financial stocks and infrastructure. there may be a conflict, the first major global cyber war between two powers. that is the biggest risk to affect the economy and the markets, a black swan. joe: nouriel roubini, thank you so much for joining us. this is bloomberg. ♪

>> instagram is a very important mobile app. along with facebook, the two most important mobile platforms. the increasing visualization of ads is why ads on instagram are so appealing. and the fact that you can buy ads through the facebook app system, is the same infrastructure, targeting, measurement, gives them a of ability to deliver results for marketers. it is early, but we also see advertisers excited. visualizationvy

and nice ability to reach people. coolet: that was facebook sheryl sandberg speaking with emily chang. investors like what they see. blowout numbers on the revenue side. on monthly active users, impressing investors. commentary on the conference call varied with optimism. after hours, they missed in their estimates on the earnings-per-share by a wide mile. it is all about the model 3. that is on track for july, and that is what we care about. joe: that is all for "what'd you

alisa: i'm alisa parenti in washington. you are watching "bloomberg technology." let's start with a tent of first word news. president trump reiterated the need for two willing parties and the push for a peace deal

between the palestinians and israel. he's been at the white house today after welcoming palestinian president of. the house passed a bill to fund the u.s. through september. tosident trump does plan sign the measure, even though it did not include a provision for a wall at the u.s. mexico border. testifying today about election fbited investigations, director james comey says it would have been catastrophic to conceal the newly discovered emails from hillary clinton. he says if given the chance for a redo, he would do the same thing. secretary of state rex tillerson trying to ramp up morale at the state department today, encouraging employees to approach work with "no constraints." they ain't to reassure staff about thousands of global job state department. former president obama and first dy